Investment Banking 2005 – 2010 Competitive Opportunities Twain Luu, 08 August 2005 © Copyright Twain Luu, 2005 --- 2007. All rights reserved. This presentation contains animation and sound effects.

Content Recommendations Banking outlook US Europe China Exchanges, clearing and settlements Basel II Key players’ growth strategies Bank of America, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Morgan Stanley, Salomon SB CSFB, Deutsche Bank, HSBC, UBS Appendix: Chinese banking – an overview on foreign participation

Recommendations

Banking outlook

US

Europe

China

Exchanges, clearing and settlements

Basel II

Key players’ growth strategies

Bank of America, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Morgan Stanley, Salomon SB

CSFB, Deutsche Bank, HSBC, UBS

Appendix: Chinese banking – an overview on foreign participation

Recommendations

Recommendations Compare and contrast differentials in revenue growth projections for FI products Mercer Oliver Wyman: over25 percent for ABS BCG: 2-4 percent for ABS/MBS McKinsey, BAH, Greenwich Associates: to be obtained Deeper analysis on Sino-American investment banking JVs Impact on future profit pools Strategic structure. M&A mandates, NPL securitization Potential Chinese bank candidates Market size clarity 2005-2010 2005 onwards… Source: People’s Bank of China, Almanac of China’s Finance and Banks, Bankscope, company reports Notes: RoA is based on Chinese GAAP for 2001, IFRS means RoA would be significantly lower. * denote banks which have gained foreign ownership since Nov 2001. * CICC (MS’s jv) 2001 Profitability: RoA (%) 0.0 1.2 0.6 0.2 0.4 0.8 1.0 10 20 30 80 300 400 500 * Yautai Housing * Shenzhen Development * Fuijian Industrial * Bank of Communications * CITIC = = * China Merchants * Shanghai Pudong Development * Hua Xia * China Minsheng * Guangdong Development * Agricultural Bank Joint stock banks State-owned banks * China Construction Bank * Bank of China * Industrial & Commercial Bank of China (ICBC)

Compare and contrast differentials in revenue growth projections for FI products

Mercer Oliver Wyman: over25 percent for ABS

BCG: 2-4 percent for ABS/MBS

McKinsey, BAH, Greenwich Associates: to be obtained

Deeper analysis on Sino-American investment banking JVs

Impact on future profit pools

Strategic structure. M&A mandates, NPL securitization

Potential Chinese bank candidates

Banking outlook

US Central banks, particularly in Asia Pacific, will continue to buy US$-denominated assets such as Treasuries to limit the extent to which their own currencies depreciate. The US$200+ billion wholesale market will continue to be oriented towards… Fixed Income 1 . Mercer Oliver Wyman and BCG estimate high revenue growth for ABS and CD issuance to 2007. Increased M&A activity from further consolidation in commercial banking sector is anticipated. For banks with AUM<US$100 million, FDIC forecasts 2,351 banks in 2008 – down 868 from 2003. By 2013, 1661 commercial banks will remain. Source: 1 Mercer Oliver Wyman, J. Colas presentation March 2005, BCG 31 May 2005 market report, FDIC Outlook Summer 2005

Central banks, particularly in Asia Pacific, will continue to buy US$-denominated assets such as Treasuries to limit the extent to which their own currencies depreciate.

The US$200+ billion wholesale market will continue to be oriented towards… Fixed Income 1 .

Mercer Oliver Wyman and BCG estimate high revenue growth for ABS and CD issuance to 2007.

Increased M&A activity from further consolidation in commercial banking sector is anticipated.

For banks with AUM<US$100 million, FDIC forecasts 2,351 banks in 2008 – down 868 from 2003.

By 2013, 1661 commercial banks will remain.

Europe The equity culture is returning. In H1 2005, European share prices increased by 4 percent while US’s declined France is leading the way - proceeds from 16 offerings totalled EUR16.8 billion Continued growth in prime brokerage revenues from servicing hedge funds. As ABS/MBS issuance declines, covered bonds are gaining interest and acceptance. Basel II allows a lower risk rating (and therefore return) for MBS and will be less attractive to fund off-balance sheet. Moreover, covered bonds have a yield pick-up over government bonds, supras, agencies 2 . UK, Italy, Portugal, Sweden and Norway are pushing for legislation to develop covered bond issuance. Source: 2 According to iBoxx analysis Ju 2004-2005; Thomson Financial ECM Review Q2 2005; RBS and Reuters figures for covered bonds. Outstanding Jumbo volume of European Covered Bonds Total EUR Jumbo volume as of 7 June 2005: EUR 625bn

The equity culture is returning.

In H1 2005, European share prices increased by 4 percent while US’s declined

France is leading the way - proceeds from 16 offerings totalled EUR16.8 billion

Continued growth in prime brokerage revenues from servicing hedge funds.

As ABS/MBS issuance declines, covered bonds are gaining interest and acceptance.

Basel II allows a lower risk rating (and therefore return) for MBS and will be less attractive to fund off-balance sheet. Moreover, covered bonds have a yield pick-up over government bonds, supras, agencies 2 .

UK, Italy, Portugal, Sweden and Norway are pushing for legislation to develop covered bond issuance.

China In 2007, five years after WTO,… no limits on foreign banks’ commercial presence. US$100-US$150 billion of NPLs will need to be disposed by the four state-owned commercial banks in 2005 alone, prior to any stock market listing (scheduled H2: Bank of China, China Construction Bank). securitisation expertise from foreign banks will be increasingly valuable Morgan Stanley predicts a US$150 billion IPO market for listings in China and Chinese companies abroad over the next five years. Total investment of foreign banks reached US$513.72 billion at end of December 2004…and is growing… Stock market reforms will encourage continued growth. Source: People’s Bank of China statistics, National Bureau of Statistics, Twain Luu analysis. Notes: 1. Equity trading turnover is provided as the total of A and B shares on Shanghai and Shenzhen stock exchanges. Bond trading turnover is the total of spot and repo trading on Shanghai and Shenzhen stock exchanges. Both turnovers were given in RMB Yuan100 million. Yuan:US$ rates were taken at month-end to convert into US$ billion. 2. 2005-2010 growth trends used CAGR calculations of 14.8 percent for equity trading, 12.4 percent for bond trading, and 29 percent for FX trading. CAGR 15.5%

In 2007, five years after WTO,… no limits on foreign banks’ commercial presence.

US$100-US$150 billion of NPLs will need to be disposed by the four state-owned commercial banks in 2005 alone, prior to any stock market listing (scheduled H2: Bank of China, China Construction Bank).

securitisation expertise from foreign banks will be increasingly valuable

Morgan Stanley predicts a US$150 billion IPO market for listings in China and Chinese companies abroad over the next five years.

Total investment of foreign banks reached US$513.72 billion at end of December 2004…and is growing…

Stock market reforms will encourage continued growth.

Exchanges, clearing and settlements This simple exchange structure promotes concentration of market liquidity: equity listing and cash product transactions on the NYSE and Nasdaq, derivatives transactions on the Chicago Board of Trade and the Chicago Mercantile Exchange, and a single Clearing & Settlements provider for all of them. The US model is more rationalised… … when compared with European exchanges… Source: Twain Luu analysis NYSE CBOT Nasdaq DTCC (formed from merger of DTC and NSCC in 1999) + Omgeo joint venture with Thomson Financial G.E.M Other Exch. CME Archipelago 21 July 2005: SEC filing of proposed merger

DB-LSE-Euronext Consolidation remains highly probable. Consistent with EU Financial Services Action plan. Enables European exchanges to compete more effectively with the NYSE. LSE’s own analysis concluded that, on average, European investors pay six times more per transaction for clearing and settlement than in the US, which it attributed to higher operating costs and higher margins (29 percent compared with O percent by the DTCC). Deutsche Boerse and Euronext have until August 18 to respond to UK Competition Commission’s recommendations for any proposed offer for LSE to proceed: Euronext divest control of LCH.Clearnet DB dispose of Eurex Clearing May 9, 2005: Werner Seifert, CEO of DB, resigned . Corporate governance differences were highlighted.

Consolidation remains highly probable.

Consistent with EU Financial Services Action plan.

Enables European exchanges to compete more effectively with the NYSE.

LSE’s own analysis concluded that, on average, European investors pay six times more per transaction for clearing and settlement than in the US, which it attributed to higher operating costs and higher margins (29 percent compared with O percent by the DTCC).

Deutsche Boerse and Euronext have until August 18 to respond to UK Competition Commission’s recommendations for any proposed offer for LSE to proceed:

Euronext divest control of LCH.Clearnet

DB dispose of Eurex Clearing

May 9, 2005: Werner Seifert, CEO of DB, resigned .

Corporate governance differences were highlighted.

Regulatory: Basel II Competitive opportunities can be pursued within certain risk management constraints. Basel II will have a significant impact on how investment banks determine whom and where they lend and underwrite to. Source: Bank of International Settlements (BIS) Recently the China Banking Regulatory Commission (CBRC) emphasized the importance of Basel II compliance;. Credit assessment processes and IT systems to forecast potential loan defaulters is one revenue opportunity where foreign experience is required. Foundation IRB capital requirements for credit risk, operational risk and market risk may not fall below 95% of the current minimum required for credit and market risks. IRB capital requirements for credit risk, operational risk and market risk may not fall below 90% of the current minimum required for credit and market risks. IRB capital requirements for credit risk, operational risk and market risk may not fall below 80% of the current minimum required for credit and market risks. BIS Committee and/or national supervisors may extend floor if warranted. 2005 2006 2007 2008 2009 2010 Banks continue refining internal risk management models. Basel II capital requirements to apply to all standardised and foundation IRBs by year-end.

Competitive opportunities can be pursued within certain risk management constraints.

Basel II will have a significant impact on how investment banks determine whom and where they lend and underwrite to.

Recently the China Banking Regulatory Commission (CBRC) emphasized the importance of Basel II compliance;. Credit assessment processes and IT systems to forecast potential loan defaulters is one revenue opportunity where foreign experience is required.

Key players’ growth strategies

US banks Source: Company websites, Financial Services Conferences (SSB, Jan 2005; Credit Suisse, Feb 2005; UBS, May 2005) + future revenues from China Construction Bank (June 2005: US$3 billion acquisition of 9 percent )

European banks Source: Company websites, Financial Services Conferences (MS, April 2005; UBS, May 2005; GS, June 2005)

Advisory strength will be key Sourcing and executing high value mandates in a timely manner is needed. Timing of squeeze-out Attitude of minority shareholders Co X plc € 30 m bridging loan € 20 m cash Co X operating assets 80.0% Co Y AG Free float 20.0% € 100 m cash Co X plc € 30 m bridging loan € 20 m cash Co X plc operating assets 80% investment in Co Y 80.0% Co Y AG Free float 20.0% € 100 m cash € 100 m cash Co X plc Co Y AG € 20 m cash Co X plc operating assets € 30 m bridging loan repaid Bid costs € 5 m Co X, Co Y 10.0% Co A 10.0% 80.0% Co X plc mgmt € 20m cash offer € 20 m cash (net of costs) Co X plc operating assets Company A attitude Co B Stage 2: weeks 9-17 Stage 3: weeks 18-24 (a) 100% Acquired or… (b) 70% - 94.99% Acquired Stage 1: weeks 1-8 Co X Mechanism for accessing cash (reverse merger?) Timing of bridging loan repayment

Sourcing and executing high value mandates in a timely manner is needed.

Timing of squeeze-out

Attitude of minority shareholders

€ 30 m bridging loan

€ 20 m cash

Co X operating assets

€ 30 m bridging loan

€ 20 m cash

Co X plc operating assets

80% investment in Co Y

€ 20 m cash

Co X plc

operating assets

€ 30 m

bridging loan

repaid

Bid costs

€ 5 m

€ 20 m cash (net of costs)

Co X plc operating

assets

Company A attitude

Mechanism for accessing cash (reverse merger?)

Timing of bridging loan repayment

Appendix Chinese shares and QFIIs QFIIs: Foreign institution licences and quota levels Foreign ownership of Chinese banks Foreign participation in Chinese NPLs

Chinese shares and QFIIs

QFIIs: Foreign institution licences and quota levels

Foreign ownership of Chinese banks

Foreign participation in Chinese NPLs

Chinese shares and QFII: overview A shares securities of Chinese incorporated companies that trade on either the Shanghai or Shenzhen stock exchanges. They are quoted in Chinese Renminbi (RMB) Yuan. They can only be traded by residents of the People’s Republic of China (PRC). B shares securities of Chinese incorporated companies that trade on either the Shanghai or Shenzhen stock exchanges. They are quoted in US dollars (US$) on the Shanghai Stock Exchange and Hong Kong dollars (HK$) on the Shenzhen Stock Exchange. They can be traded by non-residents of the PRC and also residents of the PRC with appropriate foreign currency dealing accounts. H shares securities of companies incorporated in the PRC and nominated by the Chinese Government for listing and trading on the Hong Kong Stock Exchange. They are quoted and traded in Hong Kong dollars (HK$). Like other securities trading on the Hong Kong Stock Exchange, there are no restrictions on who can trade H shares. Red Chips securities of Hong Kong incorporated companies that trade on the Hong Kong Stock Exchange. They are quoted in Hong Kong dollars (HK$). Red Chips are companies that are substantially owned directly or indirectly by the Chinese Government and have the majority of their business interests in mainland China. QFII On November 5, 2002 the China Securities Regulatory Commission (CSRC) and the People’s Bank of China (PBOC) introduced the QFII (Qualified Foreign Institutional Investor) program as a provision for foreign capital to access China’s financial markets. Chinese QFII regulations relax some capital controls and allow foreign institutions to invest in RMB-denominated equity and bond markets. Effectively, QFII is a Chinese brokerage business, which allows qualified foreign institutions to trade Chinese A-shares via special accounts opened at designated custodian banks, for their clients.

A shares

securities of Chinese incorporated companies that trade on either the Shanghai or Shenzhen stock exchanges. They are quoted in Chinese Renminbi (RMB) Yuan. They can only be traded by residents of the People’s Republic of China (PRC).

B shares

securities of Chinese incorporated companies that trade on either the Shanghai or Shenzhen stock exchanges. They are quoted in US dollars (US$) on the Shanghai Stock Exchange and Hong Kong dollars (HK$) on the Shenzhen Stock Exchange. They can be traded by non-residents of the PRC and also residents of the PRC with appropriate foreign currency dealing accounts.

H shares

securities of companies incorporated in the PRC and nominated by the Chinese Government for listing and trading on the Hong Kong Stock Exchange. They are quoted and traded in Hong Kong dollars (HK$). Like other securities trading on the Hong Kong Stock Exchange, there are no restrictions on who can trade H shares.

Red Chips

securities of Hong Kong incorporated companies that trade on the Hong Kong Stock Exchange. They are quoted in Hong Kong dollars (HK$). Red Chips are companies that are substantially owned directly or indirectly by the Chinese Government and have the majority of their business interests in mainland China.

QFII

On November 5, 2002 the China Securities Regulatory Commission (CSRC) and the People’s Bank of China (PBOC) introduced the QFII (Qualified Foreign Institutional Investor) program as a provision for foreign capital to access China’s financial markets.

Chinese QFII regulations relax some capital controls and allow foreign institutions to invest in RMB-denominated equity and bond markets. Effectively, QFII is a Chinese brokerage business, which allows qualified foreign institutions to trade Chinese A-shares via special accounts opened at designated custodian banks, for their clients.

QFIIs (26 foreign institutions have licenses as at 30 December, 2004 in quota order) Source: China Asset Management Council, August 2005 n/a Bank of China 04/08/2004 Invesco n/a n/a 26/09/2004 Franklin Templeton Investments (Asia) 50 HSBC 02/09/2004 Societe General 50 China Construction Bank 21/10/2004 Power Corporation of Canada 50 Citibank (Shanghai Branch) 23/05/2003 Nomura Securities Co. Ltd. 50 HSBC (Shanghai Branch) 30/09/2003 JPMorgan Chase Bank 50 Standard Chartered Bank 10/09/2003 ING Bank N. V. 50 China Construction Bank 10/05/2004 Hang Seng Bank 50 HSBC (Shanghai Branch) 04/07/2003 Goldman Sachs &Co 50 China Commercial Bank 10/05/2004 Daiwa Securities SMBC Co. Ltd. 50 China Commercial Bank 24/10/2003 Credit Suisse First Boston (Hong Kong) Ltd. 75 Bank of China 11/12/2003 Standard Chartered Bank 75 HSBC (Shanghai Branch) 30/04/2004 Merrill Lynch International 75 China Agriculture Bank 06/07/2004 Lehman Brothers International (Europe) 75 China Commercial Bank 15/09/2004 Dresdner Bank 75 China Agriculture Bank 11/10/2004 BNP Paribas 75 Standard Chartered Bank 21/09/2004 Barclays 75 HSBC 19/07/2004 Bill & Melinda Gates Foundation 75 HSBC 02/09/2004 ABN AMRO 100 China Construction Bank 04/08/2003 HSBC 100 Bank of China 11/10/2004 Fortis 200 Citibank (Shanghai Branch) 30/07/2003 Deutsche Bank Aktiengesellschaft 250 Bank of Communications 11/12/2003 Nikko Asset Management Co Ltd. 300 HSBC 05/06/2003 Morgan Stanley & Co. International Ltd. 400 Standard Chartered Bank (Shanghai Branch) 05/06/2003 Citigroup Global Markets Ltd. 800 Citibank (Shanghai Branch) 23/05/2003 UBS Ltd. Quota (US$m) Custodian Bank Approval Date QFII Name

Foreign ownership of Chinese banks (post-Nov 2001 WTO ascension) Source: company annual reports, website research In October 1994, the first Sino-foreign investment bank was founded. China International Capital Corp (CICC) was a 35-35 joint venture between Morgan Stanley and China Construction Bank. CICC can only underwrite A shares and is one of the leading underwriting firms in the region. Since 1997, CICC has been involved in more than US$40 billion of equity financings, starting with US $4.2 billion China Telecom IPO in October, in which it acted as global coordinator, joint bookrunner and joint lead underwriter. IFC purchased 15 percent for US$27 million. International Finance Corporation (IFC) Nanjing Commercial Bank Nov-01 HSBC acquired 8 percent which meant foreign ownership in Bank of Shanghai was 18 percent in total. HSBC Bank of Shanghai Dec-01 Citigroup bought 4.6 percent for US$65 million. This increased to 5 percent in Nov 2003. Citigroup Pudong Development Bank Aug-02 IFC's stake was 12.5 percent while RBC's was 12.4 percent. IFC and Royal Bank of Canada (RBC) Xi'an Commercial Bank Sep-02 The first foreign acquisition in the South Western region. DEG, a subsidiary of KfW Nanchong Commercial Bank Jan-03 CLSA owns 33 percent of the 500 million yuan (US$60.4 million) venture with Xiangcai holding the rest. Credit Lyonnais Securities Asia (CLSA), Xiangcai Securities China Euro Securities Apr-03 IFC took up 1.6 percent. IFC China Minsheng Banking Corp Ltd. Nov-03 The consortium secured 24.98 percent; this was just below the 25 percent limit set by the Chinese government at the time. Hang Seng Bank, IFC, Government Singapore Investment Corporation Fujian Industrial Bank Dec-03 HSBC and Ping An acquired Fujian to create Ping An Bank. HSBC, Ping An Asset Management Fujian Asian Bank Mar-04 Newbridge acquired 17.9 percent previously owned by four state banks. Newbridge Asia AIV III LP Shenzhen Development Bank May-04 HSBC purchased 19.9 percent of the Chinese bank for US$1.75 billion. The Chinese bank had 2,700 branches nationwide and about US$115 billion in assets at the end of 2003. In 2005, HSBC was a bookrunner on its US$1.88 billion IPO. HSBC Bank of Communications Jun-04 Goldman will own 33 percent while Beijing Gao Hao Securities, a partnership of banker Fang Fenglei and Legend Holdings, will own 67 percent. Goldman is expected to invest about US$190 million in the brokerage firm. Gao Hua is expected to have registered capital of 1.1 billion yuan (US$132.8 million), according to the Securities Commission. Goldman Sachs, Beijing Gao Hao Securities Goldman Sachs Gao Hua Securities Dec-04 BOA will acquire its 9 percent in CCB step by step. It will first invest as much as US$2.5 billion in the bank, and then allocate another US$500 million when CCB goes public sometime later in 2005. It also retains the option to increase its stake to 19.9 percent. CCB has US$475 billion of assets. Bank of America China Construction Bank Jun-05 Transaction summary Foreign institution Chinese bank Date

Foreign participation in China’s NPLs Source: Deloitte ‘Asia Pacific Banking Structures’, Mar2005; PwC China NPL Nov 2004; E&Y Global NPL report 2004 - China

© Copyright Twain Luu, 2005 --- 2007. All rights reserved. Film production + distribution Film library FILM Internet Film Technology Mobile Film education + training Audience analytics

A strategy… Studio E will leverage its creative talent, business partnerships and their associated networks to take advantage of dedicated film financing and production and distribution expertise, to cultivate an environment conducive to writers and film-makers. Develop a writer-led film studio, both through organic growth and M&A Each country team (North America, Europe, Orient) owns creative responsibility Country-specific marketing will be led by country team Centralised financial and technology support Add film libraries and film training operations where they bring annuity income or Group synergy Develop technology-led JVs to facilitate the Group’s core activities. Online movie streaming Mobile device trailers Mobile polling Be a leading provider of European audience analytics Weekly / monthly newsletters Quarterly in-depth reports Annual film production bible Manage on-going costs at a minimum level: Efficient “Green-lighting” process Marketing and distribution strategy tailored according to audience analytics and management controls Profit share on a basis that will ensure Studio E’s longevity and long-term relationships with talent

Studio E will leverage its creative talent, business partnerships and their associated networks to take advantage of dedicated film financing and production and distribution expertise, to cultivate an environment conducive to writers and film-makers.

Develop a writer-led film studio, both through organic growth and M&A

Each country team (North America, Europe, Orient) owns creative responsibility

Country-specific marketing will be led by country team

Centralised financial and technology support

Add film libraries and film training operations where they bring annuity income or Group synergy

Develop technology-led JVs to facilitate the Group’s core activities.

Online movie streaming

Mobile device trailers

Mobile polling

Be a leading provider of European audience analytics

Weekly / monthly newsletters

Quarterly in-depth reports

Annual film production bible

Manage on-going costs at a minimum level:

Efficient “Green-lighting” process

Marketing and distribution strategy tailored according to audience analytics and management controls

Profit share on a basis that will ensure Studio E’s longevity and long-term relationships with talent

… strategic alliances… Individual production company’s growth curve Studio E’s Value Individual country producers + directors + talent Educational training + research services global rollout Studio E’s Growth Curve Pool & co-ordinate expertise Film Libraries (e.g., Lumiere, Kirch) Banking & Private Equity Media Funds (e.g., Apax, Goldman Sachs) Book Publishers (e.g., HarperCollins) Media Groups, e.g. Pearsons Film Training Specialists, e.g. film schools Technology Groups (e.g., HP) Market Research Groups (e.g., Mintel)

PR Strategy Templates Twain Luu, 2005 © Copyright Twain Luu, 2005 --- 2007. All rights reserved.

PR: A seamless approach for IPO Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Pre-offer period Offer, Transaction & Post-transaction Period Cornerstones of Offer discussed with Target’s Executive and Non-Executive Management Continue discussions with Target’s Management Seeking Due Diligence and Recommendation of Offer First approach to Target Request by Target for proposal. Initial rejection Discussions & Preliminary Filings with Authorities Continue discussions with Authorities Drafts submitted to cartel offices CONSOB / AMF / FSA discussions initiated Communication with Investors Communication with Customers PR services & relationships Management of Information to Media Pre-Conditional Offer for Target

Media Monitoring Over time we may work closely with our clients to develop a series of tailored newsletters and media monitoring tools to extract optimal knowledge of: peer group valuations and performance analysis perception dynamics from current and potential shareholders press sentiments and their trends Communique de Presse Paris, le 24 janvier 2005 Une nouvelle étape dans la stratégie d'opérateur intégré de France Télécom - Accélérer la mise en oeuvre d'une stratégie unifiée pour le marché entreprises, en cohérence avec le modèle d'opérateur intégré - Tirer parti des atouts d'Equant : base de clients internationale, distribution et réseaux mondiaux, qualité de service sans équivalent et leadership reconnu en matière de technologie IP VPN Répondre à l'évolution des besoins des clients entreprises grâce au déploiement de solutions et de services intégrés, d'offres et d'infrastructures convergentes et d'une interface client unique Une proposition attractive pour les actionnaires minoritaires d'Equant Wider and deeper products and services

Over time we may work closely with our clients to develop a series of tailored newsletters and media monitoring tools to extract optimal knowledge of:

peer group valuations and performance analysis

perception dynamics from current and potential shareholders

press sentiments and their trends

Communique de Presse

Paris, le 24 janvier 2005

Une nouvelle étape dans la stratégie d'opérateur intégré de France Télécom

- Accélérer la mise en oeuvre d'une stratégie unifiée pour le marché entreprises, en cohérence avec le modèle d'opérateur intégré

- Tirer parti des atouts d'Equant : base de clients internationale, distribution et réseaux mondiaux, qualité de service sans équivalent et leadership reconnu en matière de technologie IP VPN

Répondre à l'évolution des besoins des clients entreprises grâce au déploiement de solutions et de services intégrés, d'offres et d'infrastructures convergentes et d'une interface client unique

Une proposition attractive pour les actionnaires minoritaires d'Equant

Corporate Instant Messaging: Predictions from 2003 Corporate Instant Messaging Market: US$2 billion business potential IDC predicts 225 million worldwide users by 2006 from 80 million in 2002 Instant messaging is evolving from the AOL/ Yahoo/ MSN retail offering into corporate Sectors Financial services were first-mover adopters in 1999 70,000 seats in 20 financial institutions Corporates IBM uses in-house developed system CSC uses Novell ystems Key Players (all US) Reuters/ Microsoft MSN joint venture established October 2002 Divine’s MindAlign Webb Interactive’s Jabber product Lotus Sametime IMLogic Legislation Financial Services IM Association (FIMA) established Oct 2002 to work with vendors on: Operability Security Audit trails Internet Engineering TaskForce (IETF) standards Underlying trends Corporate IM penetration has substantial growth potential to become as business-critical as email It has no significant presence in Europe as yet Wireless technology improvements (largest European ‘hotspot’ network is well under-development between BT and The Cloud) Corporate IM has potential to become a outsourced service Deal potential Ex-CEO FTSE100 IT company + acquisition story + PE funding => create pan-European vendor of Corporate IM and collaboration solutions

Corporate Instant Messaging Market:

US$2 billion business potential

IDC predicts 225 million worldwide users by 2006 from 80 million in 2002

Instant messaging is evolving from the AOL/

Yahoo/ MSN retail offering into corporate

Sectors

Financial services were first-mover adopters in 1999

70,000 seats in 20 financial institutions

Corporates

IBM uses in-house developed system

CSC uses Novell ystems

Key Players (all US)

Reuters/ Microsoft MSN joint venture established October 2002

Divine’s MindAlign

Webb Interactive’s Jabber product

Lotus Sametime

IMLogic

Legislation

Financial Services IM Association (FIMA) established Oct 2002 to work with vendors on:

Operability

Security

Audit trails

Internet Engineering TaskForce (IETF) standards

Underlying trends

Corporate IM penetration has substantial growth potential to become as business-critical as email

It has no significant presence in Europe as yet

Wireless technology improvements (largest European ‘hotspot’ network is well under-development between BT and The Cloud)

Corporate IM has potential to become a outsourced service

Most importantly…P+L, balance sheet + cash flow 5-year pessimistic / realistic / optimistic projections with assumptions and flexible parameters are needed to generate NAV, EBITDA, ROIC, WACC and other key financial ratios and graphs. #VALUE! #VALUE! #VALUE! #VALUE! Total Revenues abc, def abc, def abc, def abc, def Total abc, def abc, def abc, def abc, def abc, def SMS income abc, def abc, def abc, def abc, def abc, def Online referrals abc, def abc, def abc, def abc, def abc, def Advertising sponsorship Secondary Revenues abc, def abc, def abc, def abc, def Total abc, def abc, def abc, def abc, def abc, def Publishing income abc, def abc, def abc, def abc, def abc, def Consulting fees abc, def abc, def abc, def abc, def abc, def Membership subscription Primary Revenues REVENUES Total Q4 Q3 Q2 Q1 3mths Year 1 2007

Valuation for asset management Weighted average on comparable = € mln Highest Mkt cap (07/12/2006) = € mln Comparable peer sales multiple = € mln EV of Company A = € mln Net Asset Value (including goodwill) = € mln Net Asset Value (excluding goodwill) = € mln CORPORATE ACTIONS: 1 Write Company A down by €10 mln. Book into Business Unit X. Assess sale plan. 04/07/2007: conference call with management suggested current burn rate exceeds available cash flow for the next six months => capital raising => dilution of holding NOTES permanent diminution in value over the last 18 months founding CEO and CFOs have recently announced their departures. SIGN-OFFS REQUIRED: Board

CORPORATE ACTIONS:

1 Write Company A down by €10 mln.

Book into Business Unit X.

Assess sale plan.

04/07/2007: conference call with management suggested current burn rate exceeds available cash flow for the next six months

=> capital raising

=> dilution of holding

NOTES

permanent diminution in value over the last 18 months

founding CEO and CFOs have recently announced their departures.

SIGN-OFFS REQUIRED:

Board

© Copyright Twain Luu, 2005 --- 2007. All rights reserved. Networking all these experiences and skills…. It makes sense for a woman to create a super-platform to share innovation insights… Where participants can collaborate and may invent the “Next Big Things.” Thank You! 2020 knowhow L E T’ S I N T E R A C T + I N N O V A T E ™

Networking all these experiences and skills….

It makes sense for a woman to create a super-platform to share innovation insights…

Where participants can collaborate and may invent the “Next Big Things.”