Novi Dom

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					               Republic of Serbia
 Privatisation Agency of the Republic of Serbia




     An investment opportunity

               NOVI DOM
High Street Furniture Manufacturer and Retailer

           Short Company profile




                   Jun 2006
                                                                                                   Novi Dom Short company profile



                                           PROPOSED TRANSACTION

Novi Dom (or “New Home”) (hereinafter “the Company”) once was the best upmarket High Street furniture manufacture and
retailer occupying the best retail space on the High Street. It has fallen from grace during the 1990s and the Sanctions against
Yugoslavia. It is in the process of privatisation looking for a strategic partner that will give it a new lease of life through new
management, fresh ideas and working capital.

What the Company has retained is its still prime location retail space, which with the ever expanding consumer demand in
Serbia has now getting in value and importance. Its retail network is the prime value of the Company.



An opportunity to acquire a company that has:
  1. high street retail shops, for sale of furniture, house appliances or other commodities (renting space is valuable in
     Belgrade, it is a opportunity that should not be missed)
  2. good potential for market expansion due to high brand recognition and high production volume
  3. established itself on booming market since construction of houses is experiencing high growth

    Acquisition of 69% of the total share capital of Novi Dom (hereafter “the Company”)




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                                                                                       Novi Dom Short company profile


                                          EXECUTIVE SUMMARY


 Novi Dom is operating on the fast growing market in Serbia. Since the furniture industry is characterized by
  large number of small producers and small number of large capacity producers. Acquisition of Novi Dom leaves
  opportunity for future owner to use the economy of scale. Especially if it brings the expertise and know how to
  the high production capacity of Novi Dom.

 The production facilities are located on the outskirts of Belgrade as major market in Serbia. This fact create
  potential for significant decrease of transport costs and is
                                                                                        Number of Sale Sale Area in
  favourable for sale expansion.                                            Region
                                                                                          Locations       sqm
                                                                         Belgrade                8            11,470
                                                                            Centre               4             8,966
 Novi Dom has made significant investments in retail shops all over        Other                4             2,504
  Serbia. However, the most valuable is retail network in Belgrade,      Serbia                 11             4,061
                                                                         Vojvodina               2             1,455
  as financially the most lucrative market in Serbia. Novi Dom           Total                  21            16,986
  possess 11,000 sqm of sale space in the capital. That is
  approximately 68% of retail shops owned by the Company.

 Beside premises in ownership of Novi Dom, sales network is well equipped by rented facilities. It is reasonable to
  assume that some of them are rented at beneficial prices.

 There is no need for workforce to be decreased since total number of employees has significantly decreased in
  the couple of last years.

 There is a brand recognition of their products.




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                                                                                         Novi Dom Short company profile


                              INTRODUCTION

Established in 1952 as the company for furnishing and internal decoration;
Since than it has grown organically and through mergers with similar companies have joined the Company;
Company's HQ, production units and a part of retail outlets are located in Belgrade;
Shops, mostly owned in 15 different locations across Serbia;
Company's core business is furniture manufacturing and retail;
It owns business premises of 36,448m2, most of which are located in Belgrade (factory premises 14,306 m2, department stores
10,190 m2, office building 4,110 m2)
Structure of capital: 98.68% socially owned and 1.32% share capital;
Operating income in 2005 was around €6.83M;
The Company had 377 employees in 2005;
The Company has no subsidiaries;
The Company core activity:
   o Retail – Furniture, Home Appliances
   o Wholesale – Furniture, Home Appliances
   o Production of Furniture
   o Engineering Services




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                                                                                                       Novi Dom Short company profile


                                                        MARKET OVERVIEW

Forest based industry, as an important part of the Serbian economy, has a relatively high share in GDP (1.24%) and industrial production
(3.63%). This segment of the economy, based on domestic raw materials, maintained a constant positive foreign trade balance since the
World War II.

Today, there are 2,365 companies engaged in wood processing. The majority of them produce sawn wood (1,491) and furniture (402).
Most companies are privately owned (about 96%). There has been little foreign investment in this sector (only about 2% of all
companies have foreign capital). The industry is dominated by small enterprises (98%) which predominately deal with sawn wood
production, joinery manufacturing, and production of packaging and veneer.

Furniture industry

Serbian furniture market is a demanding, versatile market which generates many possibilities for furniture producers. With the recent
developments in the economy, and increase in foreign investment and foreign company representation, the home and office furniture
markets have blossomed.

All categories of furniture and furnishings are produced in Serbia: household furnishings, furniture for offices, shops, hotels, restaurants,
nurseries and schools. A number of these companies also manufacture interior cabinets and custom furniture (small furniture units,
closets, kitchens).

Most of the production in Serbia is carried out by large companies (47.05%). Even though they account for 92% in numbers, small
companies produce 28.5% of the total output value in furniture production. Medium sized companies make up only 7% of the total
number of furniture producers and produce 24.45% of the manufactured value of all furniture. These family owned companies are well
known for producing stylish, well designed furniture and have been successfully exporting to the EU market for years. They often team
up with construction companies and provide furniture and furnishings for buildings throughout Serbia, Russia, Middle East and other
markets.




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                                                                                                  Novi Dom Short company profile


Furniture is generally produced from particle boards. Only 30% of all furniture is produced from solid wood, and great potential for
investment lies in this relatively unexplored sector. Good quality raw materials and modern design, teamed with low operational costs,
provide a solid base for investment in this sector. Demand for high quality solid wood furniture is ever present locally as well as on
foreign markets.




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                                                                                                    Novi Dom Short company profile


                                                        PRODUCT RANGE

Factory makes upholstered furniture (armchairs, couches, garnitures, bolsters) of buckskin and artificial leather. Due to inadaptable
equipment factory manufactures mainly furniture made of buckskin. It also produces panel furniture, like: chest of drawers, club tables,
cupboards, writing-tables, and lockers. Share of production of upholstered furniture in total production is about 80%, the rest refers to
the production of panel furniture.

                           Napoli II                                                     Napoli II Ecke




                  Lola                                      Berzera                                       Klio




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                                                                                                Novi Dom Short company profile



                                 PRODUCTION AND SALE BY GROUPS OF PRODUCTS

In 2005, the company has recorded a fall in production of 10.8%, while in 2004 it rose by 20.4%. The sales have similar tendencies:
they fell by 16.9% in 2005 and rose by 20.3% in 2004. The Company is capable of selling its entire annual production.
                                                                                                           In € 000’
                                                  In 2005                  In 2004                       In 2003
               TYPE OF FURNITURE
                                           Produced       Sold     Produced         Sold        Produced         Sold
             Bolsters                            437          413          607          598          670          616
             Armchairs                           167          148          219          207          104           91
             Suits                               205          179          115          140          163          187
             Three-sitters                        65           61          102           94           86          105
             Two-sitters                          48           46           85           77           46           68
             French-bolsters                      39           39           48           41           25           27
             Pillows                               1            1            1            1            4            3
             Other                                14           14           10           19           33           31
             TOTAL                               976          902        1,187        1,176        1,130        1,129




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                                                                                                                     Novi Dom Short company profile


Distribution channels                                                      Sale structure:
                                                                              100.00%

      Distribution channels               % share                              99.50%
                                                                                                                                       0.82%
                                                                                                         1.37%
      Direct sale                           0.38%                              99.00%
      Wholesale                            24.27%
                                                                               98.50%
                                                                                                                                       99.18%
      Retail                               75.35%
                                                                               98.00%                   98.63%


                                                                               97.50%
                                                                                                         2005                           2004
                                                                                                                  Domestic   Foreign


The most important customers of the Company in 2005:
                                                                       Sipad, Srbobran,
                                                                             13%

                                                                                  T elekom Srbija,
                                                                                        17%
                                            Others, 43%
                                                                                              Visa Medicinska
                                                                                             skola, Cuprija, 5%
                                                                                          8. oktobar, Becej,
                                                                                                  5%
                                   Breza, Svilajnac,                                  Afrodita, 3%
                                          5%
                                                                                    Jeftic SR, Obrez,
                                                                  Police academy,           4%
                                                                        3%
                                                       Police Academy,                    N. Sport, 2%
                                                              2%




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                                                                                                  Novi Dom Short company profile


                                          LOCATION AND COMPANY FACILITIES

The Company is located in Belgrade in the centre of furniture market in Serbia. The Company has production factory in Belgrade on
a site of about 1.4 hectares (Vojvode Stepe street).

Land and Buildings
                                                                                       2
          Name and type of land                          Purpose          Surface (m )
TOTAL BUILDING SURFACE                            Constructed buildings       37,312

                                                                                                                        2
                              Name and location of building                                      Purpose     Surface (m )

Headquarters , Cara Dusana 58, in the heart of the Old City of Belgrade, desirable location      Offices        3,879
for a HQ, the monthly rent likely to be about €15 pm2, sale value likely to be over €2000 pm2


Factory, Vojvode Stepe 310, outskirts of Belgrade                                               Production     14,553


Department stores in:                                                                                          15,465
   1. Department store in Bacvanska street 21, Vracar, the most desirable upmarket                Store         5,725
      residential area Belgrade
   2. Department store in Boulevard King Aleksandar 294, a shopping street/area, Belgrade         Store         1,502
   3. Department store in Boulevard King Aleksandar 28, a shopping street/area, Belgrade          Store         3,005
   4. Department store Zrenjanin                                                                  Store         1,171




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                                                                          Novi Dom Short company profile

                                                                                              2
                                 Name and location of building           Purpose   Surface (m )
   5. Department store Kraljevo                                           Store        608
   6. Department store Paraćin                                            Store        646
   7. Department store Užice                                              Store        683
   8. Department store Ćuprija                                            Store        648
   9. Department store Požarevac                                          Store        350
   10. Department store Niš                                               Store        476
   11. Department store Valjevo                                           Store        650


Retail stores                                                                         2,476
   1. Retail store in Vojvode Stepe 35 Belgrade, outskirts of Belgrade    Store        143
   2. Retail store in 27 Marta street 7 Belgrade, Centre of the City      Store         93
   3. Retail store in Batajnica, outskirts of Belgrade                    Store        542
   4. Retail store in Surčin, outskirts of Belgrade                       Store        133
   5. Retail store in Grocka, outskirts of Belgrade                       Store        327
   6. Retail store in Mladenovac                                          Store        165
   7. Retail store in Kragujevac                                          Store        262
   8. Retail store in Smederevska Palanka                                 Store        249
   9. Retail store in Subotica                                            Store        284




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                                                                        Novi Dom Short company profile

                                                                                               2
                               Name and location of building          Purpose        Surface (m )
   10. Retail store in Šabac                                           Store             277


   Warehouses                                                                            184
   1. Warehouse in Priština                                           Storage            50
   2. Warehouse in Gornji Milanovac                                   Storage            65
   3. Warehouse in Grocka                                             Storage            69

The Company renting out:
                                                                                2
                                Name and type of building            Surface (m )
Retail store in Batajnica, outskirts of Belgrade                               250
Part of factory in Vojvode Stepe street 310 Belgrade                         2,929
Part of department store in Užice                                               50
Retail store in Šabac                                                          277
Part of Headquarters in Cara Dusana street 58, Belgrade                      2,391
Part of department store in Boulevard King Aleksandar 28, Belgrade             192
Part of department store in Niš                                                218
Part of department store in Bačvanska 21, Belgrade                             381
Retail store in Subotica                                                       266
Part of department store in Kraljevo                                         1,090
Retail store in 27 marta street 7, Belgrade                                     87
Total                                                                        8,131




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                                                                                               Novi Dom Short company profile

The Company is renting:
                                                                                                                   2
                               Name and location of building                                  Purpose   Surface (m )
Retail store in Boulevard King Aleksandar 241, Belgrade                                        Store           395
Retail store in Knez Mihailova street 48, Belgrade                                             Store             86
Retail store in Mileševska street 34, Belgrade                                                 Store            184
Retail store in Ustanička street 34, Belgrade                                                  Store            315
Retail store in Boulevard King Aleksandar 255, Belgrade                                        Store            139
Retail store in Glavna street 38, Zemun                                                        Store            224
Retail store in Zmaj Jovina street 4, Zemun                                                    Store             81
Retail store in Gospodarska street 8, Zemun,                                                   Store             60
Retail store in 27 marta street 115, Belgrade                                                  Store            240
Total                                                                                                         1,724


Plant owns three production departments:

   1.     Carpentry department - section for processing wood panels (1,787 m2)
           Line for processing massive panels (main equipment: slicer)
           Line for processing panels made of spall, etc. (main equipment: machinery for boring, heaving logs, and raw scheming
             panels)
           Department for case assembling

   2.     Upholstery Department - section for preparing, covering, and assembling (2002 m2)
           Line for sewing and tailoring of buckskin
           Line for sewing and grinding of sponge




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                                                                                              Novi Dom Short company profile

          Line for upholstery covering - sponge coaxing with buckskin
          Line for upholstery assembling

   3.    Maintenance department- section for production of metal cases (307 m2)

                                                         EMPLOYEES

For the past three years, the Company has aimed to balance the number of employees with objective needs by reducing the number of
employees from 667 at the end of 2002 to 500 at the end of 2005 to 377.

YEAR                             2005                    2004                     2003                   2002
Number of employees               377                    395                       445                    500




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                                                                  Novi Dom Short company profile


                                 FINANCIAL INFORMATION

Summary Balance Sheet in € 000’
Description                              In 2005    In 2004         In 2003
Property, plants & equipment                9,552        10,601       12,706
Other fixed assets                             37            29            6
Inventories                                 2,272         2,117        2,276
Trade receivables                             701           631          533
Cash                                           95         1,104        1,320
Other current assets                          114           160          646
Non - operating assets                                        0          146
 Total assets                              12,772        14,642       17,634
Total capital                              10,608        11,711       14,075
Long term provisions                           39            57           66
Short term liabilities                      2,125         2,874        3,395
Non - operating sources                                       0           99
 Total liabilities and capital             12,772        14,642       17,634




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                                                                                                                        Novi Dom Short company profile

Summary of Income statement € 000’
                        Description                                            In 2005               In 2004                In 2003
                        Operating income                                               7,108                 8,906              8,121
                        Costs of direct materials and goods                            4,122                 5,316              5,033
                        Gross operating profit                                         2,987                 3,589              3,088
                        Costs of materials                                             1,062                 1,195              1,147
                        Labour costs                                                   1,416                 1,474              1,678
                        Depreciation                                                     254                   365                392
                        Other operating costs                                            709                   717                761
                        Profit (loss) from operations                                  (454)                 (161)              (890)
                        Financial profit (loss), net                                      74                    72                 74
                        Non operating profit (loss),net                                  137                    96                213
                        Profit (loss) before taxes                                     (244)                     7              (602)
                        Taxes                                                                                    2                  3
                        Profit (loss) after taxes                                       (244)                    4              (605)

2005 financials in brief
Operating income                                                                          €7,108,000
EBITDA                                                                                     €(201,000)
EBITDA margin                                                                                 -2.82%
EBIT                                                                                       €(454,000)
EBIT margin                                                                                   -6.39%
Operating income per m2 of the Company stores (department stores, saloons, retail stores)    €697.50

Pursuant to Article 20 of the Privatisation Law, in the process of privatisation by; tender, as it is in case of this Company, certain creditors such as utility
companies, the Tax Revenue Office, Social Security and Pension Fund, Fund for Development of Republic of Serbia and other republic organisations (“state
creditors”), are obliged to conditionally write-off their claims against the Company as of 31st December 2004. Such write off of the liabilities shall apply only in
case of a successful privatisation of the Company but not otherwise as the state creditor settle their claims out of the proceeds of sale of the Company.




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                                                                                                                              Novi Dom Short company profile

                                                ACQUISITION TIME TABLE – KEY FACTS

                                                               PURCHASE OF THE TENDER
            PUBLIC INVITATION
                                                                     DOCUMENTS                                       DATA ROOM + SITE VISITS
              15th May 2006
                                                                    15th June 2006



                                                         Tender documents consists of:
Tender participants have to meet                            Information Memorandum (IM)                       Bidders are allowed to visit the Company
stringent prequalification criteria in order                Draft Sale and Purchase Agreement                 and Data room and to perform Due
to participate on the tender                                 (SPA)                                             Diligence
                                                            Instruction to bidders (ITB)


                                                                                                     30 days                                                   5 days
           SUBMISSION OF BIDS                                                                                       BID EVALUATION AND RANKING
                                                               OFFICIAL OPENING OF BIDS
              15th July 2006




                                                                                                                Privatization Agency and its Advisor
                                                         Tender Commission and Privatization                    evaluate and shortlist the bidders based
All bidders must submit their bids by the
                                                         Agency invite all bidders on the official              on their proposals and then select the
deadline determined by the Privatization
                                                         public opening of subbmited bids                       winner by assessing the value of their
Agency
                                                                                                                offers



                                                                                                     Max 10
                                               30 days                                                days
       BID RANKING NOTIFICATION                              NEGOTIATIONS- SIGNING OF SPA                                      CLOSING




 After the ranking approval by Tender
 Commission the Privatization Agency                     First ranked bidder negotiates the SPA                 After signing the SPA, the Bidder officially
 announces the winner of tender                          with the Privatization Agency                          takes the control over the Company




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                                                                                                 Novi Dom Short company profile


 Tender code: ND08/06

 Offered for sale: 70% of the total socially owned capital

 Deadline for purchasing tender documents: 15th June 2006

 Tender documentation are available for purchase as from 22nd May 2006

 Submission of the final binding offer: expires on 15th July 2006 at 5 pm (CET)

 Tender documentation fee: €6,000.00

 Eligibility criteria for potential bidders:
     Has purchased the Tender Documents, and
     Fulfils one of the following requirements:
      It has either been engaged in production and/or trade of furniture for at least the last 3 years in continuity, and achieved
      operating revenues of at least €10,000,000 (Euro ten million) in 2005 or,
      Is a financial investor (legal entity whose core activity is investment of money, which exists for at least the last 3 years, and
      includes investment companies, mutual funds, insurance companies, pension funds and investment banks) with total operating
      assets exceeding € 50,000,000 (Euro fifty million) in 2005 or,
      Is an investor that achieved operating revenues exceeding € 30,000,000 (Euro thirty million) in 2005.

 Eligibility Criteria for Consortium bidders:
     All Consortium members have made the decision on organizing and entering into the Consortium,
     All Consortium members have signed a written Consortium Agreement and duly notarized it at Court or other relevant authority
     (in case of foreign legal entities and individuals),



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                                                                                              Novi Dom Short company profile

Each member of the Consortium assumes joint and several liability under the Consortium Agreement,
The Consortium Agreement specifies each member’s percentage in the acquisition of the capital of the Entity undergoing
privatization,
All Consortium members have signed a notarized power of attorney for the representing member of the Consortium,
At least one of the Consortium members has purchased the Tender Documents,
Majority Consortium Member, with at least 30% share in the Consortium, fulfils at least one of the following requirements:
 It has been engaged in production and/or trading of furniture for at least the last 3 years continually, and it achieved operating
 revenues of at least € 10,000,000 (Euro ten million) in 2005; or
 It is a Financial Investor (legal entity whose core activity is investment of money, which exists for at least the last 3 years, and
 includes investment companies, mutual funds, insurance companies, pension funds and investment banks) with total operating
 assets exceeding € 50,000,000 (Euro fifty million) in 2005; or
 Is an investor that achieved operating revenues in excess of € 30,000,000 (Euro thirty million) in 2005.




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                                                                         Novi Dom Short company profile

                                          SERBIA & MONTENEGRO OVERVIEW

Invest in Serbia!

      Strategic Geographic Position
      Macroeconomic Stability
      Valuable Human Resources
      Low Overheads
      Favourable Taxes
      Solid Legal Framework
      Positive FDI Track Record
      Privatisation Opportunities
      Capital Market Investments

Location

      Crossroads of 2 Pan-European transportation axes: VII
      and X
      Vicinity of other European capitals
      (1-2 hours by plane)
      Vicinity of regional capitals (1-2 hours by car)




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                                                            Novi Dom Short company profile



FREE TRADE WITH OVER 650 MILLION CONSUMERS

    Serbia is in the middle of the South East Europe Free
    Trade Area – access to market of up to 55 million
    consumers
    FTA with the Russian Federation – access to market
    of 150 million consumers
    General System of Preferences for exports to USA
    Autonomous Trade Measures with EU – access to
    market of 462 million consumers
    Border crossings reconstruction - EU border rules
    implemented
    Elimination of NTBs




BUT NOT AT EU MANUFACTURING COSTS!!!




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                                                                        Novi Dom Short company profile



Business Environment Scores and Ranks (EIU)

                                      Regional rank 1998-2002   Regional rank 2003-2007
                                            (out of 27)               (out of 27)
Estonia                                         1                         1
Czech Republic                                  3                         2
Poland                                          4                         5
Bulgaria                                        9                         10

Serbia and Montenegro                           25                       14
Macedonia                                       13                        16
Ukraine                                         18                        17
Bosnia & Herzegovina                            20                        22




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                                                                                               Novi Dom Short company profile



Stable Financial Sector

      Open and competitive banking market – 35 banks operating:
      Foreign banks` subsidiaries: Alpha Bank, EFG Eurobank, HVB Banka, Hypo Alpe-Adria-Bank, LHB Banka, National Bank of
      Greece, ProCredit Bank, Raiffeisen Bank, Societe Generale, Volksbank, Intesa Bank, Erste bank, Credit Agricole, Piraeus Bank
      Leasing - Raiffeisen Leasing, Hypo Leasing, TBI Leasing, S-Leasing, Volksbank Leasing, SB Leasing, Procredit Leasing
      Strict Central Bank supervision under Basel II

Stable Financial Sector
      First credit rating ever: B+ (Standard & Poor’s) in November 2004.
      Currently: BB- (Fitch Ratings; Standard & Poor’s)
      Debt reduction
      • 66% of Paris Club old debts, and
      • 62% of London Club old debts
      Foreign currency reserves increased from $524 million in December 2000 to $6,7 billion in March 2006
      Net budget surplus $1,3 blrd in 2005
      New private bank entries:
      • Findomestic Banca (BNP Paribas), Italy
      • OTP Bank, Hungary




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                                                                                                   Novi Dom Short company profile

Valuable Human Capital
Number of graduated students from universities in Serbia
                              1998         2,880                            9,982

                              1999         2,692                                      11,228

                              2000         2,699                                               11,968

                              2001         2,678                                            11,879

                              2002         2,721                                                   12,099

                                                           students from technical faculties


   Source: Republic Statistical Office
                                           Percentage of Population Speaking Foreign Languages

                                50

                                40

                                30

                                20

                                10

                                 0
                                             English               French                  German

                                     Czech Republic    Poland   Hungary     Romania     Bulgaria    Serbia

   Source: Republic Statistical Office



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                                                                                               Novi Dom Short company profile

Low Labour Costs per Employee (€)

                                Serbia
                                Serbia                       258

                                Romania
                                Romania                          329

                                Hungary
                                Hungary                                  539

                                Czech R.
                                Czech R.                                       560

                                Poland
                                Poland                                                  763

                                Croatia
                                Croatia                                                       798


Favourable Tax Regime
                                                       Among the Lowest Corporate
                                Serbia
                                Serbia           10%
                                                 10%   Profit Tax rates in Europe !!!

                                Bulgaria
                                Bulgaria                         15%
                                                                 15%

                                Hungary
                                Hungary                              16%
                                                                     16%

                                Poland
                                Poland                                         19%
                                                                               19%

                                Croatia
                                Croatia                                            20%
                                                                                   20%

                                Czech Republic
                                Czech Republic                                                  26%
                                                                                                26%




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                                                                                                    Novi Dom Short company profile

                                                        Individual Income Tax Rates
                                        Serbia
                                        Serbia                   14-24%*
                                                                 14-24%*

                                        Bulgaria
                                        Bulgaria                            12-29%
                                                                            12-29%

                                        Hungary
                                        Hungary                                       18-38%
                                                                                      18-38%

                                        Poland
                                        Poland                                          19-40%
                                                                                        19-40%

                                        Croatia
                                        Croatia                                                15-45%
                                                                                               15-45%

                                        Slovenia
                                        Slovenia                                                   16-50%
                                                                                                   16-50%

*10% flat tax rate only on portion of income surpassing the tax threshold


Taxes and Contributions

Tax Procedure Law and Tax
    Administration Law                Value Added Tax                                  Social Security Contributions
                                      rates - 18% and 8% (13 groups of products)       • pension and disability
Under jurisdiction of                                                                       contributions – 11%
Tax Authority, regulate:              Corporate Profit Tax
                                                                                       • health insurance – 6,15%
• assessment                          rate - 10%
                                                                                       • unemployment contributions –
• collection                          Salary Tax                                            0,75%
• control of tax liabilities               rate - 14%




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                                                                                                     Novi Dom Short company profile

Serbian Tax System

Corporate Profit Tax

The Law on Corporate Profit Tax provides certain tax incentives in order to encourage investments in the economy:

      Accelerated depreciation
      Tax incentives for concession investments
      Tax incentives for investments in underdeveloped areas
      Tax incentives for investments in fixed assets
      Tax incentives for newly employed worker
      Tax incentives for large investments
      Tax incentives for investments in the territory of special interest

Investment Incentives in Serbia

      Among the lowest corporate profit tax rates – 10%
      Large investment projects: 600 mill CSD (around 7 mill €) and 100 working places
                                        10 year tax holiday (applies cumulatively!)
      Tax relief up to 2 years for hiring new employees
      Tax credit up to 80% of investment amount for investing in fixed assets
      Accelerated depreciation
      Import of equipment as investment is free from custom duties, VAT is charged
      Possible to achieve 0 % VAT via VAT rebates upon exporting of finished goods




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                                                                                         Novi Dom Short company profile



Improved Economic Legal Framework

Specific legislation enacted outlining guarantees and safeguards for foreign investors


     Foreign Investment Law
     Foreign Investment Law                                                  Bankruptcy Law
                                                                             Bankruptcy Law



             Company Laws
             Company Laws                                         Law on Execution Procedure
                                                                  Law on Execution Procedure



           Foreign Trade Law
           Foreign Trade Law                                                  Mortgage Law
                                                                              Mortgage Law




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                                                                                               Novi Dom Short company profile


 Serbia has enacted appropriate legislation outlining guarantees and safeguards for foreign investors



                                         Foreign Investment Law
                                         Foreign Investment Law

     Extends national treatment to foreign investors
     Permits free and unlimited transfer/repatriation of profits and dividends
     Provides guarantees against expropriation
     Duty free import of equipment for foreign investor


 Serbia has enacted legislation consistent with evolving international standards, providing streamlined procedure with clear
  deadlines and consequences, sufficient flexibility and a more effective mechanism for restructuring



                                                   Company Laws
                                                   Company Laws
     New Law on Registration of Companies establishes an independent Companies Registry
     Incorporation of companies and branches within 10 days
     Companies Act drafted under OECD model improves:
          Overall corporate governance



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                                                                                     Novi Dom Short company profile

        Protection of minority shareholders
        Simplifies procedures for increase of share capital
    Forms of corporate presence: Joint stock companies, Limited Liability
    Companies, Limited Partnerships, Partnerships, Foreign and
    Domestic branches, Representation offices

 New Foreign Trade legislation is compatible with WTO requirements and EU acquits



                                            Foreign Trade Law
                                            Foreign Trade Law

    Fully affirms freedom of foreign trade
    Allows only foreign trade restrictions under WTO rules and EU acquits




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                                                                               Novi Dom Short company profile

Major Foreign Investors in the Past Two Years
                                                                            INVESTMENT
                         COUNTRY OF                           TYPE OF
      COMPANY                                SECTOR                         AMOUNT (MIL
                           ORIGIN                           INVESTMENT
                                                                               EUR)
  Philip Morris – DIN         USA               Tobacco     Privatisation         518
 Interbrew – Apatinska
                            Belgium              Beer        Brownfield           326
         pivara
  Intesa – Delta Banka        Italy             Banking      Brownfield           333
   Lukoil – Beopetrol        Russia               Oil       Privatisation         210
 Holcim – Novi Popovac    Switzerland           Cement      Privatisation         185
  Alpha – YU Banka          Greece              Banking      Brownfield           152
  US Steel – SARTID          USA                 Steel       Brownfield           150
   Lafarge – Beočin          France             Cement      Privatisation         126
   Titan – Kosjerić          Greece             Cement      Privatisation          94
     BAT – DIV            Great Britain         Tobacco     Privatisation          87
    Ball Packaging
                              USA                Cans        Greenfield            75
     Corporation
   Henkel – Merima          Austria         Cosmetics       Privatisation          70
   Tarkett Sommer –
                            Germany       Floor Coverings   Joint Venture          67
       Sintelon




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                                                                                                 Novi Dom Short company profile


                                             SEECAP’s view and recommendations

      The Company has presence throughout Serbia and possesses 28 facilities with total area of 36,448 m2, most of which are located
      in Belgrade (area of 30,233 m2).
      It has well-known, protected and easily recognized trade mark.
      It has good business relationships with other furniture producers.
      For the past three years, the Company has aimed to balance the number of workers with objective needs by reducing the number
      of employees from 667 at the end of 2001 to 377 at the end of 2005.
      The strong activity in the Serbian residential real estate market over the past year has been a result of continued construction
      activity in the three largest cities (Belgrade, Nis and Novi Sad), there for demand for furniture is growing from year to year.

                                                  ABOUT SEECAP and IMAP

SEECAP was the first independent investment banking boutique to be formed in Serbia & Montenegro after the political changes of
October 2000. Operating from London & Belgrade it mainly covers the countries of South East Europe. SEECAP’s senior principals
come from investment banking, auditing and legal backgrounds. Our key strength lies in the skills and experience of our international
and local staff who deliver a combination of extensive Western expertise and local presence within South East Europe, providing
customised and focused advice to governments, international & local investors, multinational and local corporate.

SEECAP has successfully advised/co-advised on the privatisation of over 20 companies attracting over € 250 million of foreign direct
investment into Serbia & Montenegro.

SEECAP is a member of a M&ACEE (www.macee.net) operating in 9 Central and Eastern European countries, from Czech Republic to
Turkey, from Serbia to Russia. As a MACEE member we are also a strategic alliance member of IMAP (www.imap.com), a global
association of M&A offices throughout Western Europe, NAFTA countries, India, Hong Kong, etc. Our membership in MACEE and
IMAP is a show of our professionalism, skill and experience in the services we provide.




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                                                                                                    Novi Dom Short company profile


Our services to you

We offer a range of investment banking, financial and other advisory services in Serbia & Montenegro to enable you smooth acquisition
of the intended target.

    “One stop shop” approach to all your needs in the country, whether financial, auditing, legal, technical, environmental or any
     other advice or dealing with the Serbian authorities, advising on tender documentation, valuation, due diligence, data room
     attendance, documentation and company analysis, and similar,
    Negotiation assistance and support throughout the acquisition process with proven track record in such negotiations as well as in
     debt work out and rescheduling them being either sovereign or corporate debts,
    Relationship with local banks if and when necessary,
    Liaison with another IMAP member in your home country and their involvement in dealing with the intended acquisition if and
     when required and subject to efficiency and your needs,
    IMAP members’ assistance in sourcing investors and/or partners for a bidding Consortium (if appropriate and so required) or for a
     subsequent non core business asset disposals,
    Full range of post privatisation assistance as to investment plans, social programs, company restructuring, asset disposal and other
     services.




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                                                                                           Novi Dom Short company profile


DISCLAIMER

This document is based on the information obtained from the management of the Company and/or their advisors. SEECAP has not
conducted independent revision of the data included in the document. The main purpose of this document is to show the initial
information about the Company.
                                            For further information please contact:

                                                        Zoran Mitić
                                                       SEECAP d.o.o
                                                    Maršala Birjuzova 22
                                                      11000 Belgrade
                                                   Serbia and Montenegro

                                                   Tel: (+381 11) 328 3100
                                                   Fax: (+381 11) 328 3101
                                                  zoran.mitic@seecap.com




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