Investment Research Challenge

University of Economics, Prague 2009/2010

CFA Institute mission► Global, not-for profit member association of investment professionals► The mission: “To lead the investment profession globally by setting the highest standards of ethics, education and professional

excellence.”► Administers the Chartered Financial Analyst (CFA) Program and awards the world-wide prestigious CFA designation► www.cfainstitute.org

About CFA Program► The CFA Program is understood as a benchmark of the highest professional excellence and ethical standards on a global basis► The CFA designation is one of the most prestigious and respected designation in the investment and financial industry globally► Successful pass of three exams during the minimum of three years, four years of relevant work experience and adherence to strict

ethical standards is necessary to earn the CFA charter; only 1/5 of enrolled candidates completes the program (excluding no-shows)

► Topics examined include ethics and standards of professional conduct, investment analysis and valuation, economics and portfoliomanagement

► More than 82.000 investment professionals has earned the CFA Charter since 1963

Current situation► 60+ years tradition► More than 93.000 members and 130.000 candidates from 131 countries across the world► The membership has grown more than fivefold since 1990, when CFA Institute had 15.000 members mostly in the US► Growing membership in Asia and Europe in particular► Headquarters in Charlottesville, representative offices in Hong Kong, London and New York

About CFA Institute

CFA Institute is one of the leading, globally recognized organizations in the investment industry. The CFA designation is increasingly understood as a near equivalent of the prestigious MBA in finance.

Who we are► Non-profit organization, the 113th member society of the CFA Institute► Successfully serving CFA charterholders and CFA Program candidates locally since May 2002► Winner of CFA Institute 2009 Revitalization Award► Promoting the highest professional and ethical standards in the investment industry► Providing a networking platform for investment community as well as other stakeholders► www.czechcfa.cz

Members’ profile► Over 100 members and more than 300 registered candidates* ► Candidates typically at entry-level position to investment banking industry, CFA charterholders hold mid to senior level

executive positions

Czech CFA Society Board of Directors► Lukáš Brych, president – Manager at Ernst & Young Transaction Advisory Services► Petra Roberts (née Lapková), vicepresident – Partner at Klímová Roberts & Partners► George Formandl, past president – Partner at Kilcullen Kapital Partners and EnerCap Capital Partners► Lubomír Vystavěl, member – Investment Manager at ING Wholesale Banking► Marek Jindra, member – Assistant Director at Ernst & Young► Jana Jandová, member – Manager at Deloitte► Radka Kučerová, member

About Czech CFA Society

We have a solid track record in reaching our target community and organizing high profile events.

* Data as of September 2009. Registered candidates are those candidates who have registered for the CFA Program, but who may not be currently enrolled for an upcoming exam

Member Demographics*

The Czech CFA Society has 101 members, 94% of whom hold a CFA Charter

* Data as of September 2009.

Members by Country of Ordinary ResidenceThe Czech Republic 70Slovakia 22USA 3Belgium 2UK 2Switzerland 1Hungary 1Total 101

Total Paying MembersCharterholders 95Candidates 6

TOP EMPLOYERS OF MEMBERS

Ernst & Young KPMGINGDeloitteCzech National BankCitibankCeska SporitelnaAtlantik - Kilcullen Asset ManagementTatra AM

* Data as of November 2008

Candidate Demographics*

Czech CFA Society has over 330 registered candidates of which vast majority is directly reachable in the Czech Republic.

* Data as of September 2009

Active Candidates by Country of Ordinary ResidenceThe Czech Republic 325Slovakia 5USA 1Austria 1Total 332

Active candidates split

57%28%

15%

Level I Level II Level III

In order to promote best practices in equity research and company analysis, students will get a chance to research, analyze, and report on a listed company as if they are practicing analysts.

Unique opportunity for studentsThe challenge gathers students, investment industry professionals, publicly traded companies, and corporate sponsors together for a real world competition. An existing European listed company will provide presentation and their investment department will be available for the ‘analysts calls’.

Top Czech investment professionals involvedCzech CFA society’s members being top Czech investment professionals will be grading the research studies and evaluate the finalists’ presentations. Czech CFA society’s members being top Czech investment professionals will be grading the research studies and evaluate the finalists’presentations. Further, each team of 3-5 students will be assigned a mentor, coming either from academia or practice.

Not just an exerciseAdditionally, all participants are introduced to and held to the standard of the CFA Institute Code of Ethics and Standards of Professional Conduct.

Investment Research ChallengeOverview

Investment Research ChallengePhases and Time line

The Investment Research Challenge 2009/2010 will stretch over the entire winter semester so that there is enough time available for the teams to prepare a ‘perfect’report:

[ For recent timeline see czechcfa.cz – Universities ]

We have selected a company traded on a global stock exchange, operating in the Czech Republic, as well as other Central and Eastern European markets

Company overviewCentral European Media Enterprises is the leading television broadcaster in Central and Eastern Europe. The company was founded by Ronald Lauder in 1994 and along with its local partners, it operates TV Nova, Nova Sport and Nova Cinema in the Czech Republic, PRO TV, PRO TV International, ACASA, PRO CINEMA, Sport.ro and MTV Romania in Romania, TV Markíza, Nova Sport and Television Doma in the Slovak Republic, POP TV and Kanal A in Slovenia and Studio 1+1, 1+1 International and Kino in Ukraine, NOVA TV in Croatia and Pro.BG and Ring.BG in Bulgaria. CME is a Bermuda company, with subsidiaries in the Netherlands, London and in each operating country. CME is listed in New York on the NASDAQ exchange and in the Czech Republic on the Prague Stock Exchange under the ticker symbol "CETV".

Target Company’s involvementTarget Company Investors relationship (IR) team will provide an initial presentation, held as a part of their actual analysts/investors’quarterly road show, providing the teams with the most up-to-date information at the same quality as the real analysts get.Further, the IR team will be available for ‘analysts calls’ once the teams complete their initial analysis.

Investment Research ChallengeTarget Company

The quality of the Challenge will be guaranteed not only by the professional standards of the CFA Institute and the Czech CFA Society Board members but most of all by a selected group of leading Czech investment community practitioners.

Graders and PanelistsGraders and Panelist, recruited from the Czech CFA Society membership, represent senior investment and analytical professionals, well known in the Czech republic.

MentorsThe mentors will be academics and professionals that will assist by discussions the teams in their research process, including preparation for the analyst calls and report writing.

Investment Research ChallengeCzech Top investment professionals involved

The most important reward for the winning team will be the experience of successfully completing the challenge as the best team. Nevertheless, in line with the mission of the Czech CFA Society, we would like to award the winners with the following prizes:

CFA Program ScholarshipEach team member will be eligible to receive a free scholarship for one level of the CFA program, including program registration, worth of approx. USD 750.

Invitation to the CFA Forecasting Dinner 2010The team will be invited to and presented at the flagship event of the Czech CFA Society in the premises of the Czech National Bank in February 2010, where for the eight time will meet prominent investment and other financial professionals in the Czech Republic. The event hosts several speakers including renowned international names.

Investment Research ChallengePrizes for winners

The Investment Research Challenge 2009/2010 will be governed by the rules approved by the organising committee appointed by the Czech CFA Society Board of Directors.

Organising committeeMarek Jindra – Czech CFA Society, Education ChairLukas Brych – Czech CFA Society, PresidentRadka Kučerová – Czech CFA Society, Board memberPetr Musílek – VSE Praha, ProfessorJiří Hnilica – VSE Praha, Associate Professor

High ethical standardsEthical approach to the entire investment process is a cornerstone to the CFA idea and the Czech CFA Society will require all the participants to attain the same ethical level.

Rules publicly availableThe detailed rules will be published on the web pages of VSE and the Czech CFA Society from the beginning of the registration phase.

Investment Research ChallengeOrganising committee and basic rules

The registration process will be administered by Zuzana HYNOUŠOVÁ (administrator) and guaranteed by Jiří HNILICA

Qualifying conditions• The teams will consist of no less than three and no more than five members.• All team members are VSE students enrolled for the academic year 2009/2010 in either

undergraduate, graduate or postgraduate programs• Maximum of 5 teams will be admitted. In case of excess interest, the organizing committee will select

five teams by assessing their motivation letters • Participants have to sign a Release letter

A representative of the team will send an email registration to GIRC@VSE.CZ by 16 October 2009. The application shall include for each team member:

• Names, addresses, email contact• Semester of study, faculty, major• Brief resume• Letter of motivation – one for a team, up to A4

The admitted teams will be notified by email addressed to the team representative.

Investment Research ChallengeHow to register

Teams

• There can be no alternates. Number of team members cannot drop below 2 otherwise the team will

be disqualified.

• Students may not have been or currently be employed in a role whose primary duty involves

fundamental company analysis; with the exception of students who have had an internship in that

function for six months or less.

• CFA Charterholders are not eligible to participate on Investment Research Challenge teams.

• Students must be enrolled in the current term at the university at the time of the local Challenge

final.

• Students must disclose any ownership position in the securities of the subject company.

• Students must confirm that their participation in the Challenge does not represent a conflict of

interest.

Investment Research ChallengeRules - extract

Company

• The subject company/ies will make a presentation to students for the purposes of this educational

exercise, and participate in Q&A following the presentation. The teams' direct contact with the

subject company will be limited to this meeting, plus one follow-up contact.

• The subject company will not present any information to students that is not within the public

domain.

• Each team will prepare five questions for subject company management before the meeting, and

submit these to the Administrator. Management will take these questions under advisement when

preparing their remarks, but is not required to cover each question within their presentation.

Students will be allowed to ask the subject company additional questions during the Q&A session of

the presentation.

Investment Research ChallengeRules - extract

Research Process• Students may use only publicly available information to conduct their research, and must confine

the information in their written reports and oral presentations to publicly available information.

• Contact with the subject company will be limited to the company presentation plus one follow-up

contact (if such follow up contact is allowed by the company).

• Teams may use their mentors as resources, but may not enlist the help of any other investment

industry professionals in conducting their research or writing their reports.

Primary Research

• When conducting primary research, students must identify themselves as students and disclose

their involvement in the Investment Research Challenge.

• Teams may contact the subject company’s customers, competitors and suppliers. They must

confine their conversations to corporate officers who normally interact with investors, such IR

officers, CEO’s or CFO’s. Any other entity must be approved by the Society.

• Teams must submit their questions to a mentor prior to any calls.

Investment Research ChallengeRules - extract

Mentors• Student contact will be limited to a maximum of 3 face-to-face meetings with their mentors, not to

exceed 6 hours total, prior to submitting the written report. The above-referenced phone call(s) to

conduct primary research, and any additional contact (i.e. e-mail, telephone), are included in these

6 hours.

• Mentors will be allowed to review students’ written work and provide comments only. Mentors will

not be allowed to perform any research or write any portion of the report.

• Mentors may not contact the subject company, or any of its affiliates, distributors, suppliers or

competitors within the context of the Challenge, with the exception of supervising the student

contacts.

• Mentors may not participate in the company presentation. If they are allowed by the local society to

be present, it is only in a supervisory role, to ensure that no material non-public information is

discussed. Mentors may not ask any questions to or provide any opinions of the company.

Attendance at the company presentation in this capacity will not count toward the 6 hour maximum.

Investment Research ChallengeRules - extract

Reports

• Reports must conform to the format of the Investment Research Challenge Template, and be

reproduced on standard-sized paper.

• Reports should not exceed 10 pages, including an investment summary. Any additional charts

and/or graphs will be included in the appendix. There is no limit to the length of the appendix.

Presentations

• Each finalist team will make a presentation in front of the panel of experts selected by the Society.

• Each presentation will last 20 minutes with 15 additional minutes of panelist Q&A.

• The presentations and Q&A will be timed, and teams may not exceed the time allotted.

Investment Research ChallengeRules - extract

Assessment

• Assessment will be based on the written reports referenced above.

• The written reports will be assessed by a team of graders selected by the Society. Grading will

consist of a blind process in which the identity of the teams is not known to the graders. The teams

that receive the top three scores will be selected as finalists.

• The finalist teams, selected on the basis of the written report scores, will make an oral presentation

of their research to a panel of experts selected by the Society.

• A winner will be selected from the finalists based on the combined scores received for the written

reports and the oral presentations. The scores will be weighted 50% for the written report and 50%

for the oral presentation.

• In the event of a tie, the team receiving the highest score on the presentation will be the winner.

Investment Research ChallengeRules - extract

Graders

• Each Grader will assess each report to ensure that the assessment is consistent across all reports.

• Graders will be asked to provide short comments to the different sections of each report to serve as

constructive feedback for the students.

Panelists

• Panelists may be at the same time also graders.

• Panelists may be provided with copies of the written reports prior to the panel presentations for

reference; however, panelists will base their scores on the oral presentation only.

Investment Research ChallengeRules - extract

Organizing the IRC would not be possible without our corporate partners.

Main Society Sponsor: Society partners:

Reuters will provide the teams with temporary access to the Reuters market data services

Investment Research ChallengeSupporting Companies

Registration : GIRC@vse.cz

Organisation and University liaison : Jiri.Hnilica@vse.czxhynz00@vse.cz

General and CFA related questions : info@czechcfa.czMarek.Jindra@cz.ey.comLukas.Brych@cz.ey.comRadka.Kucerova@jtfg.com

Web pages : www. cfainstitute.orgwww.czechcfa.czcemsmim.vse.cz

Investment Research ChallengeKey contacts

Czech CFA SocietyFrancouzska 4120 00 Praha 2Czech Republic

Mobile: +420 604 290 160 E-mail: info@czechcfa.czwww.czechcfa.cz