This document discusses valuing companies and the Estonian economy. It begins by explaining that analysts often fail to accurately predict the future when using quantitative valuations. It then discusses using both quantitative and qualitative factors when valuing companies. The document notes some of the tax rates and take home pay in different countries to dispel the myth that Estonia is a tax haven. It summarizes Estonia's economic recovery in recent years and growth outlook. It also discusses some opportunities for Estonia going forward including its drive to excel, culture of innovation, and potential to serve as a "window on the West."

1. The Art of Valuing a Company
Making qualitative judgments
James Oates
Pärnu
April 2012

2. Analysts try to Predict the
Future…
…and they almost always FAIL
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3. Current v. Forecast
Valuations
Quantitative Qualitative
• P/BV • PEG
• Current P/E • Prospective P/E
• Current P/CF • Forecast Growth
• EBIT/EBITDA
• EV
• DCF:NAV …DYNAMIC VALUES
…STATIC VALUES
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4. Investment: Reward versus
Opportunity
• Price/Earnings • Size of Economy
• Price/Book Value • Economic Freedom
• Price/Cash Flow • Leverage
• PEG: Price/Earnings • Taxation
Growth • Administration Cost
• EBIT
• EBITDA
• EV/EBITDA
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5. Myth: Estonia tax haven
Salary after tax
Salary after tax
(based on gross pay of $25,000) (based on gross pay of $200,000)
Germany $18,149 72.60% Italy $108,189 54.10%
Net pay India $18,663 74.70% Netherlands $109,417 54.70%
after tax France $18,750 75.00% Ireland $111,905 56.00%
Italy $18,800 75.20% Germany $111,953 56.00%
Estonia $19,518 78.10% Israel $112,363 56.20%
Mexico $20,534 82.10% France $117,519 58.80%
UK $20,799 83.20% UK $121,819 60.90%
Egypt $20,847 83.40% Spain $127,332 63.70%
Brazil $21,023 84.10% Canada $129,340 64.70%
Netherlands $21,087 84.30% Malaysia $137,128 68.60%
Malaysia $21,140 84.60% USA $139,709 69.90%
Israel $21,177 84.70% India $141,163 70.60%
Canada $21,204 84.80% Japan $144,083 72.00%
Spain $21,328 85.30% Mexico $146,377 73.20%
Russia $21,750 87.00% Brazil $148,088 74.00%
USA $22,660 90.60% Estonia $152,515 76.30%
Japan $22,704 90.80% Egypt $160,847 80.40%
Ireland $23,937 95.70% Russia $174,000 87.00%
Dubai $25,000 100.00% Dubai $200,000 100%
Source: UHY
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6. Myth: Estonia small state
Government has
reshaped a bit,
but Private sector
took more of the
pain.
Unemployment
continues to be
high.
Source: Statistics Estonia, www.stat.ee
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7. Economic Recovery…
Sharp recovery to
above EU trend &
Growth Outlook
looks good for
the coming years
Industry and
Exports leading
the way
Source: Statistics Estonia, www.stat.ee
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8. Euro crisis and Estonia
• Euro default is a risk to Estonian
reserves- could wipe them out
• Yet Estonian policy is to retain a link to
the “D-Mark” bloc, i.e. the Northern Euro
• This implies maintaining fiscal discipline
• Euro crisis is structural- Estonia OK
• Problem of Infrastructure & Investment
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9. The Opportunities
• Estonian Drive to Excel
• Culture
• Innovation
• Moral Voice in the World
• Trade & Economy
• Lifestyle
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10. Estonian “Maximalism”
• In 1920, the target was to be “the
most democratic state in the
World”
• In 1990, the target was to be “the
most open economy in the world”
• Now so much is done, what could
the next national project be?
• Estonians want to excel, but at
what?
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11. Estonia- Window on the West?
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12. Over to You...
James Oates
+372 5081769
+447767 402446
James.oates@ciceroinvest.com
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