Emerging Europe Opportunities - October 2017 Presentation of Karoll Capital Management

1. October 2017
Emerging Europe
Opportunities

2. CONTENTS
I. Karoll Capital Overview
II. The Market Opportunity
III.Emerging Europe Opportunities Strategy
IV.Track Record
V. Summary / Terms and Conditions
VI.Appendix: Thematic Strategy – Emerging
Europe High-Growth Exporters

3. I. KAROLL CAPITAL
OVERVIEW

4. Emerging Europe Opportunities
Strategy at a Glance
Invests in the stock markets of Emerging Europe
(Central & Eastern Europe, the Baltics, Balkans)
Provides access to a robustly growing region, achieves better
performance vs. benchmarks
Invests in regional large-cap, but also small & mid-cap fast
growing companies, benchmark agnostic
Managed by a seasoned team with long tenure, based on the
ground, with profound understanding of local markets
10+ years track record of strategy
4

5. Karoll Financial Group
Product Offering
Bulgarian &
Regional Capital
Market
Global Capital
Markets
Brokerage
Wealth Management
•Advance Invest (Balkans)
•Advance Eastern Europe
•Advance Emerging
Europe Opportunities
•Advance Global Trends
•Advance Conservative
•SMAs
•Schroder Investment
Management (Luxembourg
umbrella of 100+ global funds)
Institutional
Mandates
•Emerging Europe
Opportunities
•Central Europe
•Balkan
•Thematic equity
•Mixed
Asset
Management
IPO & SPO
Capital
Markets
M&A
Restructuring
Consulting
Investmet
Banking
Real Estate
ADVANCE
TerraFund
REIT
Private Equity
ADVANCE
Equity
Holding
5

6. Karoll Financial Group
Karoll Brokerage
Karoll Capital
Management
Advance Terrafund
Advance Equity
Karoll Investment
Leader by number of stock exchange transactions for 15 years
30% market share by trade volume
Pioneered 1st mutual fund in Bulgaria in 2004
Strategic local partner of Schroders
Largest farm land REIT
IFC (World Bank) - key stakeholder
First private equity fund in the country in 2006
Executed the first IPO in Bulgaria in 2004
25 EXCITING YEARS OF SUCCESS | TEAM OF 200 EXPERTS
6

7. Our Unique Value Proposition
“Emerging Europe offers a unique investment theme
with strong upside potential and low correlation to the
developed world. It is a truly overlooked opportunity!
We select high-growth sectors in a high-growth region.
We generate alpha in Emerging Europe while helping
global investors overcome local barriers.”
Daniel Ganev
Managing Director,
Karoll Capital Management
Independent
Flexible
Entrepreneurial
Deep
understanding
of local
markets
7

8. Karoll Capital Management Overview
Unique heritage in Emerging Europe
Founded in Sofia in 2003, our roots are truly in Emerging Europe
Independent and skilled Eastern Europe-based team with long tenure
Part of Karoll Financial Group with support of 200 professionals + 70 local offices
Steady business growth on solid reputation
AUM of USD 300+ mln. in various mutual funds, investment trusts, wealth mgt & mandates
Manages 5 UCITS funds and multiple SMAs
Adheres to UN 6 Principles of Responsible Investing
Crisp focus on Emerging Europe
Helping clients harness the potential of Emerging Europe
Deep understanding of the cultures and dynamics of our markets
On-the-ground research coverage of strategically important holdings
Partnership with top international names
Local representative of Schroder Investment Management, UK
Partners with IFC (World Bank), European institutions and global players
Cheverny Capital – our Canadian representative
8

9. Karoll Capital’s Investment Committee
Seasoned investment team with long tenure and unique combination of skills:
Daniel Ganev, MBA, Managing Director
 15+ yrs of experience in in fund management, financial products development and marketing,
business development in emerging markets
Nadia Nedelcheva, CFA, Head of Portfolio Management
 15+ yrs of experience in portfolio management, research, valuations and modeling in Central &
Eastern Europe
Tihomir Kaundzhiev, Portfolio Manager
 12+ yrs of experience in portfolio management, financial analysis, technical analysis on the US,
European and CEE markets
Katerina Atanassova, Portfolio Manager
 15+ yrs of experience in portfolio management, technical analysis and trading on the global
developed and emerging markets
Georgi Georgiev, Portfolio Manager
 13+ yrs of experience in research, fundamental analysis, valuations, portfolio management and
trading in the global emerging markets and USA
9

10. Karoll Capital’s Analytical Support
Our analysts have easy access to regional companies in search of
investment opportunities:
Dimitrios Latitaris, Investment Analyst
 4+ yrs of experience in research, investment banking and fundamental analysis,
in Central & Eastern Europe
Georgi Raykov, Investment Analyst
 3+ yrs of experience in research, fundamental analysis, valuations in Central &
Eastern Europe
10
Oguz Ziddioglu , Investment Analyst
 10+ yrs of experience in banking, buy-side equity research and analysis with
focus on Turkey

11. Karoll Capital
Adheres to UN’s Principles for Responsible Investment
PRINCIPLE 1: WE WILL INCORPORATE ESG ISSUES INTO INVESTMENT ANALYSIS AND DECISION-
MAKING PROCESSES
PRINCIPLE 2: WE WILL BE ACTIVE OWNERS AND INCORPORATE ESG ISSUES INTO OUR
OWNERSHIP POLICIES AND PRACTICES
PRINCIPLE 3: WE WILL SEEK APPROPRIATE DISCLOSURE ON ESG ISSUES BY THE ENTITIES IN
WHICH WE INVEST
PRINCIPLE 4: WE WILL PROMOTE ACCEPTANCE AND IMPLEMENTATION OF THE PRINCIPLES
WITHIN THE INVESTMENT INDUSTRY
PRINCIPLE 5: WE WILL WORK TOGETHER TO ENHANCE OUR EFFECTIVENESS IN IMPLEMENTING
THE PRINCIPLES
PRINCIPLE 6: WE WILL EACH REPORT ON OUR ACTIVITIES AND PROGRESS TOWARDS
IMPLEMENTING THE PRINCIPLES
11

12. International Partners and Clients
12

13. II. THE MARKET
OPPORTUNITY

14. While Central & Eastern Europe is a diverse region, it offers appreciable scale:
350+ mln
combined
population
USD 4+ trln GDP
(1/3 of euro-zone
total)
3,000+ listed
companies
USD 1+ trln total
market cap
Emerging Europe
buoyant region converging with the rest of Europe
incubator for thriving companies
increasingly participating in European & global supply chains - vast number of
companies shifting production here
14

15. Emerging Europe
among the fastest growing regions
Source: IMF WEO October 2017
15
2015 2016 2017f 2018f 2019f 2020f
World 3.4% 3.2% 3.6% 3.7% 3.7% 3.7%
Advanced economies 2.1% 1.7% 2.2% 2.0% 1.8% 1.7%
Euro area 2.0% 1.8% 2.1% 1.9% 1.7% 1.6%
European Union 2.4% 2.0% 2.3% 2.1% 1.8% 1.8%
Emerging market and developing economies 4.2% 4.3% 4.6% 4.9% 5.0% 5.0%
Commonwealth of Independent States -2.2% 0.4% 2.1% 2.1% 2.1% 2.2%
Emerging and developing Asia 6.7% 6.4% 6.5% 6.5% 6.5% 6.5%
Emerging and developing Europe 4.7% 3.1% 4.5% 3.5% 3.3% 3.2%
Latin America and the Caribbean 0.1% -0.9% 1.2% 1.9% 2.4% 2.6%
Middle East and North Africa 2.6% 5.1% 2.2% 3.2% 3.2% 3.3%
Sub-Saharan Africa 3.4% 1.4% 2.6% 3.4% 3.4% 3.7%

16. Emerging Europe
growing much faster than developed Europe
Emerging Europe
growing at a much
faster pace vs.
developed Europe:
+3.9% on average
b/n 2005 - 2015 vs.
+0.9% for the euro-
area
Trend to persist in
the following years
GDP growth (%)
16
Source: IMF WEO October 2017
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2015 2016 2017f 2018f 2019f 2020f 2021f 2022f
Euro area
Emerging and developing Europe

17. Low levels of GDP p.c. = solid catch-up potential
GDP per capita (EUR), 2016
Source: Eurostat, IMF
Rising but still
very low levels
of GDP per
capita: 6.6 to
52% of euro-
zone average
17
0 5000 10000 15000 20000 25000 30000 35000
Euro area
Czech Republic
Estonia
Lithuania
Latvia
Hungary
Poland
Croatia
Turkey
Romania
Russia
Bulgaria
Serbia
Ukraine

18. 18
Emerging Europe
stock markets lagging behind
MSCI EFM
Europe+CIS,
€ as of
18.10.2017
MSCI EFM
Europe+CI
S ex RU, €
as of
18.10.2017
YTD 1.66% 20.09%
3M 6.47% -0.14%
1Y 14.62% 22.61%
3Y,
annualized
0.30% -2.31%
5Y,
annualized
-3.94% -3.59%
10Y,
annualized
-6.03% -5.71%0.000
50.000
100.000
150.000
200.000
250.000
EFM EUROPE + CIS (E+C)
EFM EUROPE + CIS (E+C) ex
RU
EM ASIA
EM LATIN AMERICA
EUROPE
NORTH AMERICA

19. Emerging Europe
attractive valuation ratios across the region
Source: Reuters
P/E 2017f
19
P/B, mrq
0.0 5.0 10.0 15.0 20.0 25.0
North America
Developed Europe
Euro Zone
Emerging Asia Pacific
Global Emerging Markets
Middle East and Africa
Latin America
Emerging Europe
21.4
16.9
16.6
15.4
14.1
13.9
10.5
8.4
0.0 2.0 4.0 6.0 8.0
Latin America
North America
Global Emerging Markets
Emerging Asia Pacific
Developed Europe
Euro Zone
Middle East and Africa
Emerging Europe
7.0
2.9
2.5
2.1
1.9
1.8
1.7
1.5

20. Emerging Europe
attractive valuation ratios across the region
Source: Reuters
20
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5%
Emerging Europe
Middle East and Africa
Latin America
Developed Europe
Euro Zone
Global Emerging Markets
North America
Emerging Asia Pacific
4.3%
3.7%
3.4%
3.1%
3.0%
2.3%
1.9%
1.9%
Dividend yield

21. Emerging Europe
P/E ratios by country (ttm)
21
Source: KCM calculations
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0 14.9
14.0
13.7
12.8
12.2
11.8 12.5
10.4
9.0 9.4
7.5
7.2
2.8

22. Compelling opportunities in Emerging Europe
Strategic location of the region  ideally situated for building trade links
b/n Western Europe, Middle East and Asia. Infrastructure has significantly
improved with major investments planned in the mid-term
 region now deeply integrated with pan-European transport corridors
Most countries are members of EU, OECD and NATO  major changes in
economies and business environment. Some have already adopted the
Euro. Legal, regulatory and business conditions have marked solid
improvement; regulatory framework synchronized following EU accession.
Emerging Europe boasts well-educated and relatively inexpensive
workforce
 labor force with tertiary education on the rise. Wages growing, but still
far below EU ave.
Favorable tax regimes  significantly lower tax rates (e.g. 10% corporate
income tax in Bulgaria)
22

23. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%
Euro area
Croatia
Ukraine
Serbia
Hungary
Poland
Lithuania
Czech Republic
Romania
Latvia
Turkey
Bulgaria
Russia
Estonia
89.2%
83.7%
81.2%
74.1%
74.1%
54.4%
40.2%
36.8%
37.6%
40.1%
29.1%
29.5%
17.0%
9.5%
Stable economies
with low level of government debt
Government debt/GDP, 2016
Source: Eurostat, IMF
Gov’t debt in
Eastern Europe at
much lower levels:
below 50% of GDP
on ave. for the
region vs. 89% for
euro-zone
23

24. Emerging Europe boasts favorable tax regimes
Corporate tax rates
Corporate and other
taxes much lower in
Central & Eastern
Europe vs. developed
world and major
manufacturing hubs
Most regional states
provide tax incentives
and additional stimulus
to attract foreign
investors
24
55%
35%
34%
30%
30%
30%
25%
25%
22%
20%
20%
20%
19%
19%
18%
18%
16%
15%
15%
15%
10%
9%
0% 10% 20% 30% 40% 50% 60%
France
USA
Brazil
Mexico
India
Germany
China
Indonesia
Slovak Republic
Russia
Turkey
Estonia
Poland
Czech Republic
Croatia
Ukraine
Romania
Serbia
Latvia
Lithuania
Bulgaria
Hungary

25. Emerging Europe boasts
highly educated and qualified workforce
17.1
24.1
35.3
15.1
9.2
15.1
11.7
9.5
7.5
26.5
33.1 32.7
27.8
24.3 23.9
20.9
19.7 18.6
14.7
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
2000
2015
People with tertiary education (% of population)
Share of people with tertiary education in CEE steadily on the rise
Source: Eurostat
25

26. Labor costs significantly below
those in the developed world
Labor costs per hour (€), 2016
While convergence
has been driving
wage growth, they
are still far below
European averages
Min wages range
b/n €194 in
Bulgaria and € 425
in Turkey, vs. €1,473
in Germany and
€1,500 in UK
Source: Eurostat
26
0 10 20 30 40 50 60
Norway
Denmark
Belgium
Sweden
Luxembourg
France
Netherlands
Finland
Germany
Austria
Ireland
Euro area average
Italy
United Kingdom
Spain
Slovenia
Cyprus
Greece
Portugal
Malta
Estonia
Slovakia
Czech Republic
Croatia
Poland
Hungary
Latvia
Lithuania
Romania
Bulgaria
50.2
42
39.2
38
36.6
35.6
34.3
33.2
33
32.7
30.4
29.8
27.8
26.7
21.3
16.2
15.8
14.2
13.7
13.2
10.9
10.4
10.2
10
8.6
8.3
7.5
7.3
5.5
4.4

27. 0%
5%
10%
15%
20%
25%
30%
35%
27%
25%
24%
22% 21%
30%
24%
21% 21%
25%
17%
32%
30% 30%
28% 29%
31%
28%
24%
26%
24%
19%
2005
2015
High growth of employment in science & tech
HR in science & tech (% of active population)
Science and tech
play an increasing
role with R&D
expenditures
rising fast
The Czech
Republic, Estonia,
Hungary, Lithuania
now spending over
1% of GDP on R&D
While this figure is
still low compared
to EU average of
2%, it is rapidly
rising
Source: Eurostat
27

28. Emerging Europe enjoys solid FDI flows
Services were the main recipient of FDI flows in the transition period driven by
extensive privatization processes + market seeking and supply cost optimization
Banking systems and telecom operators now mostly in the hands of foreign
investors, primarily from EU
FDI in manufacturing concentrated in: automotive sector, transport equipment,
electrical equipment, food, chemicals & metals
Source: UNCTAD
28

29. Emerging Europe
abundant resources provided by EU
EU co-financing now an essential development factor  EU Structural and
Cohesion Funds accounted for 11.3 - 25% of annual GDP in 2007-2013,
fostering regional cohesion
Large part of EU SCF financed major infrastructure projects, but also
environment projects, renewable energy, SMEs, education & health,
information society, increasing the adaptability of workers and enterprises
Poland
Czech
Republic Hungary Romania Slovakia Lithuania Bulgaria Latvia Slovenia Estonia Croatia
EU funds, 2007-2013
(EUR, bln.) 67.19 26.3 24.92 19.18 11.65 6.77 6.67 4.54 4.1 3.4 1
EU funds/GDP (%) 17.2% 17.6% 25.4% 13.4% 16.2% 19.6% 16.7% 19.4% 11.6% 18.5% 2.3%
Total: €175.7 bln = 16.2% of GDP on ave
29

30. EU cohesion policy 2014-2020 to provide
further boost to regional competitiveness
0
10
20
30
40
50
60
70
80
77.6
32.8
28.6
23 22 21.9 21.5
19.2
15.915.5 14 11.8
8.6
7.6 6.8 4.5 3.6 3.1 2.3 2.1 1.5 1.4 1.2 1.2 0.7 0.7 0.6 0.1
EU cohesion policy 2014-2020, allocation by country (€ bln)
CEE to receive over 50% of EU 2014-2020 Cohesion Policy = more than €190 bln
EU 2014-2020 Cohesion Policy targets: R&D, ICT sector, sustainable transport,
SMEs, renewable energy & energy efficiency, environment, employment and
education
30

31. Competitiveness of local economies
steadily on the rise
Country
Rank,
2006
Rank,
2016
Change
of
position
Estonia 18 16 2
Lithuania 22 20 2
Poland 56 25 31
Slovenia 42 29 13
Slovakia 32 29 3
Czech Republic 59 36 23
Romania 62 37 25
Mexico 58 38 20
Bulgaria 48 38 10
Hungary 46 42 4
Thailand 23 49 -26
Russia 95 51 44
Turkey 60 55 5
Croatia 115 65 50
Vietnam 75 78 -3
China 89 90 -1
Serbia 78 91 -13
Indonesia 114 114 0
India 116 130 -14
Competitiveness of local
economies has registered
rapid advance as
measured by the Ease of
Doing Business Ranking by
the World Bank
Most CEE countries are in
top 50
5 countries hold a
position in top 30
31

32. Rising role in European value chains
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
56.7
114.0
54.0
41.6
36.2
15.8
5.7 6.2 8.7
4.8
1.2 4.5 3.2
141.6
135.7
119.1
72.4
61.6
40.2
14.9 14.1 12.8 8.7
7.9 7.7 7.5
2005
2015
Export of Emerging Europe countries to
EU (€ bln)
Export of CEE countries to EU have
jumped by more than 80% b/n 2005 -
2015
Share in total EU imports now above
37% (2005: 29.8%) and significantly
lower before that
Most countries export over 50% of
production to EU
2016
Czech Republic 83.7%
Hungary 81.4%
Poland 79.6%
Romania 75.1%
Estonia 73.9%
Latvia 69.7%
Bulgaria 67.9%
Serbia 67.6%
Croatia 65.5%
Lithuania 60.7%
Turkey 47.9%
Russia 44.4%
Ukraine 24.2%
Share of export to the EU in total
export (2016)
Source: Eurostat, KCM calculations
32

33. Emerging Europe
now a major production & services hub
Eastern European countries now
major automotive producers
 26% of motor vehicles in Europe
are produced here
Local suppliers steadily moving up the
value chain
Emerging Europe is the old continent’s
new Silicon Valley
 IT sector rapidly increasing share of
GDP with fast growing number of
employees
Booming outsourcing sector
 Eastern Europe countries in top 20
for Business Process Outsourcing
33

34. Eastern Europe
becoming a major manufacturing hub for multinationals
For 15 years the region has seen
massive inflows of foreign investors
Following GFC Emerging Europe
establishing itself as a major
manufacturing hub
Much lower production costs – labor,
office rentals, electricity, taxes and
other incentives  many
multinationals shifting production to
Eastern Europe
Location becoming more important –
proximity, both in geographical and
cultural terms, favors Eastern Europe
over Asia and Latin America
EU membership and accession make
trading much easier
NEARSHORING
gaining popularity
34

35. III. EMERGING EUROPE
OPPORTUNITIES STARTEGY 35

36. Karoll Capital’s
Emerging Europe Opportunities Strategy
Investment theme: invests across the stock markets of Emerging Europe (Central &
Eastern Europe, the Baltics, Balkans)
Investment style: blended (value and growth), stock-picking, bottom up combined with
top down and sector views
Target: to achieve higher return than the market at lower risk
Market cap: regional large cap, but also small & mid cap
Portfolio components: 70-100 positions
Low portfolio turnover and limited volatility
Offering format: Separately Managed Account
Minimum size of investment: €0.250 mln.
Fees: up to 1.5% on assets p.a. +15% performance fee, high-watermark
Highly-experienced team with long tenure & excellent understanding of local markets
Launch: October, 2006
36

37. Karoll Capital’s Investment Process – the 4 S’s
Screen
The process starts with our on-the-ground analyst team screening the landscape in search of investment
opportunities in Emerging Europe. We apply filters in terms of liquidity (time needed to enter/exit investment),
market cap, transparency, corporate governance, etc. As a result, our investment universe comprises around 500
stocks out of some 3 000 listed companies in Central and Eastern Europe. Our major advantage is the freedom to
deviate from local indices based on our views. This gives us flexibility in our investment choice, regularly leading to
superior results and outperformance of benchmarks and peers. Using proprietary analytical tools and exchange
with local contacts, we seek to pinpoint stocks that are trading at a discount or that are in a position to undergo
some fundamental change. Examples of such events are turnaround situations, management changes, financial
results surprises, etc.
Study
The generation of investment ideas leads to the next step -- a thorough in-depth analysis conducted in house.
Because of market inefficiencies we believe Emerging Europe is abundant with mispriced assets. In estimating the
true value of a stock we study the firm’s business model and its ability to realize returns greater than the cost of
capital, the shareholder structure and management capabilities, sector dynamics and overall market position. We
strive to find companies with improving profitability margins and low debt levels that are traded at a discount to
peers. On-site visits and regular contact with company representatives are a key part of research as well. In
addition to employing valuation methods, we also consider investor psychology, liquidity and order flows. The
outcome of the investment assessment is the analyst proposal to the investment committee, which summarizes
the case, the rationale behind it, potential upside and associated triggers, as well as the risks involved.
Shape
Karoll Capital’s 4-member investment committee, supported by our analyst team, examines the selected
investment proposals in view of portfolio construction. In the case of managed accounts / mandates the decision
is collective. Convening each month, the committee decides on position weight changes and/or liquidations. At
each stage, compliance with regulatory guidelines and client-tailored requirements are factored in.
Scrutinize
Finally, the investment portfolio is monitored with all different positions being systematically scrutinized. The
investment team applies in-house processes and practices enabling it to adequately react to the different triggers
causing distortions to the investment case. As part of the process our analysts and portfolio managers follow up
with the companies’ management, screen the sector competitors and general business/political environment.
Conducting attribution and risk management analysis on the portfolio holdings is essential. Any resulting concerns
related to the investment case prompt reviews of the rationale behind the decision to add / hold/ reduce the stock
as a portfolio component.
37

38. Our Investment Universe
3,000+ listed companies in CEE
Investment Universe – 1,500
750
500
250
Survivors
150
Selection Filters:
Sector Outlook & Company Competitiveness
Mkt cap & Liquidity
Corp Governance & Transparency
Financial Strength
In-house Valuation
38

39. Karoll Capital’s Investment Process
In-house valuation
Our PMs and analysts use the following valuation methods:
- Peers comparison
- Discounted cash flows model
Financial strength
- Earnings: earnings cyclicality, recurring earnings, forecast sales and earnings
- Analyze profitability, Leverage and funding, Debt service, Liquidity, Asset quality
Sector outlook and competitiveness
- Identify key growth drivers and themes, assess sustainable competitiveness
Corporate governance and transparency
- Study and evaluate board composition, executive remuneration, communication with
shareholders, provided access to documents
Market cap and liquidity filter
- For more liquid markets: up to 3 days for entry/exit
- For less liquid markets: up to 7 days for entry/exit
- Free-float > 25%
39

40. Investment team meetings
Weekly meetings
- PMs and analysts
interact and exchange
ideas
Monthly meetings
- Portfolio reviews of
mutual funds / managed
accounts, contribution
analysis
- Overview of market
development -> modify
portfolios if necessary
Quarterly meetings
- In-depth analysis of
investment portfolios
- Strategic asset allocation
decisions
Ad-hoc meetings
- In the event of a trigger
from the in-house
surveillance system
40

41. We aim to achieve sound risk-
adjusted performance
We define risk indicators/limits
regarding market risk, liquidity
risk, exposure to a single issuer,
to less liquid stocks/markets,
etc.
Risk management is executed on
a day-to-day basis by portfolio
managers who assess risk at
each level of the investment life-
cycle  investment selection,
portfolio construction and
portfolio monitoring
The risk management
department supports the
investment process by
implementing and monitoring
the policy and procedures for
risk identification  constantly
monitors risk factors/indicators,
performs contribution analysis
and risk assessment
The risk management
department prepares a
monthly report for the Board,
as well as notifies portfolio
managers immediately upon
approaching of critical levels
of key risk indicators
Risk Management
41

42. IV. TRACK RECORD

43. Karoll Capital Management
Investment Capabilities & Results
Main strategies offered to institutional investors:
Emerging Europe Opportunities (Eastern Europe), Central Europe, Balkan, Thematic,
as well as mixed strategies based on specific mandate
Karoll Capital’s Investment Committee aims to construct for our institutional clients
Individually Managed Accounts / Mandates portfolios designed to take advantage of
the L.T. trends as well as hot opportunities in the market
43
Strategies results vs. benchmarks,
as of 30.09.2017 YTD 1 year
3 years,
annualized
5 years,
annualized Volatility Alpha
MSCI EFM Europe +CIS -0.34% 15.07% -1.94% -4.05% 21.74%
MSCI EFM Europe +CIS ex RU 17.19% 21.96% -4.59% -3.50% 18.57%
Balkan strategy 21.33% 35.37% 5.98% 9.50% 9.39% 5.17%
Emerging Europe Opportunities strategy 18.85% 15.57% 2.21% 2.15% 10.68% 3.45%
Central Europe strategy 19.59% 26.26% 4.75% 2.00% 6.80% 5.38%
Emerging Europe High-growth exporters
strategy 18.47% 24.88% 22.88% n.a 11.91% 17.07%

44. Emerging Europe Opportunities Strategy
Geographic breakdown (30.09.2017) Sector breakdown
Top 5 positions % of portfolio Country Sector
WIZZ Air Holdings 2.64% Hungary Transportation
X5 Retail Group N.V 2.56% Russia Retail
GMK Norliski Nikel 2.49% Russia Metals
CD PROJEKT SA 2.45% Poland IT
Fortuna Entertainment Group
2.44% Czech Republic Entertainment
44
Ukraine
2.43%
Baltics
2.82%
Austria
2.89%
Serbia
3.03%
Croatia
3.28%
Bulgaria
4.31%
Romania
5.47%
Cash
5.59%
Turkey
7.58%
Hungary
10.62%
Czech Republic
11.23%
Russia
19.98%
Poland
20.77%
Other
35.53%
Oil and gas
14.19%
Banks
11.87%
Retail
6.24%
Transportation
5.74%
Metals
5.63%
IT
5.17%
Healthcare
4.90%
Conglomerates
3.98%
Industrial
3.59%
Utilities
3.16%

45. Outperformance of Strategy
vs. benchmark
45
Strategy vs. Benchmark
performance,as of
30.09.2017 1 month YTD 1 year
3 years
(annualized)
5 years
(annualized)
Since inception
(annualized) Volatility Alpha
MSCI EFM Europe +CIS -1.04% -0.34% 15.07% -1.94% -4.05% -4.40% 16.00%
Emerging Europe
Opportunities Strategy -0.11% 18.85% 15.57% 2.21% 2.15% -0.95% 10.68% 3.45%
0%
20%
40%
60%
80%
100%
120%
140%
160%
01.10.2006 01.10.2008 01.10.2010 01.10.2012 01.10.2014 01.10.2016
 Strategy
 Benchmark

46. Case study 1: CD Projekt / CDR /
A Polish-based company active in the field of videogames – a dynamically growing branch of digital
entertainment, focusing on 2 key areas:
creating cutting-edge innovative entertainment in the form of world-class videogames
proprietary distribution platform for direct digital sales of videogames to global customers
Primary markets - USA /55% of sales/ and the EU /27% of sales/  favorable FX exposition.
Relative Valuation P/E, ttm P/S, ttm P/B, ttm
EV/EBITDA,
ttm ROE, ttm
CD Projekt SA 47.9 21.2 13.8 35.5 32.4%
Software industry 30.9 3.6 3.1 17.8 4.6%
Portfolio weight: 2.45 % /as of 30.09.2017/
Market Cap /USD, bn/ 3.06
Free float 70.06%
Revenue 5y CAGR 37.4%
Net Income 5y CAGR 72.8%
Debt/Equity 0.05%
Stock price development
46

47. Case Study 2: X5 Retail Group /PJPq/
Regained leadership on the Russian food retail market in 2016: 3% above ex-leader Magnit in terms of
sales
Top pick among first-tier players amid strong market consolidation opportunity, as the modern
retail format share (estimated at 68% for 2016) gradually converges to ca. 80% (average for developed
markets)
Operates in all 3 segments: discounters, supermarkets, hypermarkets
Strongest growth among listed retailers (both LFL and total revenue growth)
Higher exposure to affluent regions: Moscow and Moscow area, Saint Petersburg, etc.
Relative Valuation P/E, ttm P/S, ttm P/B, ttm EV/EBITDA, ttm ROE, ttm
X5 Retail Group 22.8 0.55 4.4 9.3 21.3%
Food & Staples Retailing (global median) 20.5 0.5 1.8 10.5 8.5%
Portfolio weight: 2.56% /as of 30.09.2017/
Market Cap /USD, bn/ 11.15
Free float 26.27%
Revenue 5y CAGR 17.87%
Net Income 5y CAGR 20.25%
Debt/Equity 117.11%
Stock price development
47

48. V. SUMMARY / TERMS &
CONDITIONS 48

49. Why invest in Emerging Europe now
Solid catch-up potential based on lagging performance in
recent years
Improving sentiment towards emerging markets as a
whole has sparked uptrend
Attractive valuation ratios with multiples lower than peers
and historic averages
Low market penetration = strong catch-up potential
Improving liquidity
Take advantage of the regional potential via Karoll Capital’s
flagship investment strategy:
>>> Emerging Europe Opportunities
49

50. Karoll Capital’s
Emerging Europe Opportunities Strategy
Investment theme: invests across the stock markets of Emerging Europe (Central &
Eastern Europe, the Baltics, Balkans)
Investment style: blended (value and growth), stock-picking, bottom up combined with
top down and sector views
Target: to achieve higher return than the market at lower risk
Market cap: regional large cap, but also small & mid cap
Portfolio components: 70-100 positions
Low portfolio turnover and limited volatility
Offering format: Separately Managed Account
Minimum size of investment: €0.250 mln.
Fees: up to 1.5% on assets p.a. +15% performance fee, high-watermark
Highly-experienced team with long tenure & excellent understanding of local markets
Launch: October, 2006
50

51. VI. APPENDIX
THEMATIC STRATEGY:
EMERGING EUROPE HIGH-GROWTH EXPORTERS51

52. Emerging Europe High-Growth Exporters
Strategy at a Glance
Karoll Capital’s highest alpha-yielding thematic strategy
(15+% p.a)
Invests in high-growth exporting companies with strong
competitive edge due to low labor costs, highly skilled
workforce and lowest taxes in a fast-growing region with
strategic location
Invests in small and mid-cap industrial, outsourcing and
ICT companies
Managed by seasoned team, based on the ground with
profound understanding of local markets
52

53. Emerging Europe High-Growth Exporters
Karoll Capital’s highest alpha generating strategy
Investment theme: to invest in high-growth industrial, outsourcing and ICT companies
benefiting from low labor costs, highly skilled workforce and lowest taxes in a fast-growing
region with strategic location
Investment style: growth, benchmark agnostic, bottom-up
Market cap: small and mid cap.
Concentrated portfolio: ~ 30 positions
Low portfolio turnover (<20%) and limited volatility
Offering format: Separately Managed Account
Minimum size of investment: EUR 0.25 mln.
Fees: up to 1.5% on assets p.a. +15% performance fee, high-watermark
Highly-experienced team with long tenure and excellent understanding of local markets
Launch: April, 2013
53

54. 54
 Strategy
 Benchmark
Outperformance of Strategy
vs. benchmark
Strategy vs. Benchmark,
performance,
as of 30.09.2017 1 month YTD 1 year
3 years
annualized
Annualized
(since
inception) Volatility Alpha
MSCI EFM Europe +CIS -1.04% -0.34% 15.07% -1.70% -4.38% 21.74%
Emerging Europe High-
Growth Exporters
Strategy 3.16% 18.47% 24.88% 22.88% 20.08% 11.91% 17.07%

55. Emerging Europe High-Growth Exporters strategy
Geographic breakdown (30.09.2017) Sector breakdown
Top 5 positions % of portfolio Country Sector
CD Project 10.25% Poland IT Services and Consulting
Novolipetsk Steel PAO 6.77% Russia Metals and mining
GMK Noril'skiy nikel' PAO 6.09% Russia Metals and mining
Tofas Turk Otomobil Fabrikasi AS 5.60% Turkey Auto&Multi-Utility Vehicles
Fabryki Mebli Forte SA 5.34% Poland Furniture
55
Poland
36.42%
Russia
23.58%
Turkey
14.54%
Romania
10.63%
Hungary
4.93%
Bulgaria
4.57%
Czech
3.26%
Ukraine
2.09%
IT services and
consulting
22.12%
Basic materials
22.28%
Wood products
Furniture
10.16%
Machinery
10.41%
Household appliances
8.64%
Chemical
10.23%
Pharmaceutical
8.48%
Auto & Multi Utility
Vehicles
5.60%
Agriculture
2.09%

56. 56

57. Contact us at:
Daniel Ganev, MBA
Managing Director,
Karoll Capital Management
E-mail: ganevd@karoll.bg
Tel: +359 2 400 8 382
Nadia Nedelcheva, CFA
Head of Portfolio Management and Research
Karoll Capital Management
E-mail: nnedelcheva@karoll.bg
Tel: +359 2 400 8 386
Headquarters Sofia
1 Zlatovrah Str., Sofia 1164, Bulgaria | (+359 2) / 4008 382 | kcm@karoll.bg www.karollcapital.bg

58. Disclaimer
This presentation is for information purposes only and does not represent a proposal for buying of selling
securities. While reasonable care has been taken to ensure that the information contained herein is not untrue or
misleading at the time of publication, Karoll Capital Management makes no representation that it is accurate or
complete. The information contained herein is subject to change without notice. Karoll makes no representations
or warranties whatsoever as to the data and information provided in any third party referenced website and shall
have no liability or responsibility arising out of or in connection with any such referenced website. Karoll does not
maintain a predetermined schedule for publication of research and will not necessarily update this presentation.
Karoll Capital Management and any of its officers, employees, related and discretionary accounts may, to the
extent not disclosed above and to the extent permitted by law, have long or short positions or may be otherwise
interested in the investments or securities referred to in this document, or in options on such investments or
securities, or in related investments (including other securities of the same issuer). Karoll, or its clients or
customers, may trade as market maker in the investments or securities that are the subject of this document, or
in related investments, and may have acted upon, bought for their own account or used the information
contained in this document, before its publication. In addition, Karoll Financial Group may provide banking,
insurance or asset management services for, or solicit such business from, any company referred to in this
presentation.
Any investments referred to herein may involve significant risk, may be illiquid and may not be suitable for all
investors. Investors should note that income from such investments or other securities, if any, may fluctuate and
that price or value of such securities and investments may rise or fall. Accordingly, investors may receive back
less than originally invested. Past performance is not indicative of future results. Foreign currency rates of
exchange may adversely affect the value, price or income of any security or related investment mentioned in this
presentation. This presentation should not be regarded by recipients as a substitute for the exercise of their own
judgment. Investors should make their own investigations and investment decisions without relying on this
presentation. Only investors with sufficient knowledge and experience in financial matters to evaluate the merits
and risks should consider an investment in any issuer or market discussed herein and other persons should not
take any action on the basis of this presentation. Before entering into any transaction, investors should consult
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of any local laws governing such securities or investments.
58

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