New Heritage Doll Company

Summary

MMDC DYODNPV 7,160 7,063 IRR 24.0% 17.9%PI 2.37 1.32

Payback period 7.5 >10

MMDC DYOD

(136) (3,373)

PV of terminal value 7,296 10,436 Total 7,160 7,063

PV of explicit forecasting period

MMDCModerate riskTax rate 40%Discount rate 8.40%Growth rate after 10 years 3.0%Exhibit 1Year 2010 2011 2012Revenue growth rate Exhibit 1 52.40%Revenue Exhibit 1 0 4,500 6,858 Expenses

Exhibit 1 0 575 575

Variable production expenses Exhibit 1 0 2,035 3,404 Depreciation Exhibit 1 0 152 152

Total production expenses Summation 0 2,762 4,131 Upfront R&D 625

Upfront marketing 625 SGAE Exhibit 1 1,155 1,735 Total operating expenses Summation 1,250 3,917 5,866

EBIT Difference (1,250) 583 992 PAT=EBIT(1-t) Derived (750) 350 595

Capex Exhibit 1 1,470 952 152

Exhibit 1 3.0% 3.0%Days sales outstanding X Exhibit 1 59.2 59.2 Inventory turnover X Exhibit 1 7.7 8.3

Days payables outstanding Exhibit 1 30.8 30.9

Current assetsCash 135 206 Accounts receivables days 730 1,112 Inventory 359 498 Total current assets 1,224 1,816

Fixed production expenses excluding depreciation

Initial expenditure expnsed (p.5, para 1, line 1)

Assumptions about working capitalMinimum cash balance as % sales

Accounts payables 331 497 Net working capital 800 893 1,319 Increase in NWC 800 93 426

FCF (3,020) (543) 169 Terminal valueTotal FCF (3,020) (543) 169 Cumulative total FCF (3,020) (3,563) (3,394)PVF 1.000 0.923 0.851PV (3,020) (501) 144 NPV 7,160 IRR 24.03%PI 2.37 Payback period 7.5

(3,020) (543) 169

(3,020) (501) 144 Terminal valuePV of terminal valueTotal PV

Explicit forecast period cash flowsPV of explicir forecasting period

2013 2014 2015 2016 2017 2018 201922.60% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%

8,408 9,081 9,807 10,592 11,439 12,354 13,342

587 598 610 622 635 648 660

4,291 4,669 5,078 5,521 6,000 6,519 7,079 152 152 164 178 192 207 224

5,030 5,419 5,852 6,321 6,827 7,374 7,963

2,102 2,270 2,452 2,648 2,860 3,089 3,336 7,132 7,689 8,304 8,969 9,687 10,463 11,299

1,276 1,392 1,503 1,623 1,752 1,891 2,043 766 835 902 974 1,051 1,135 1,226

152 334 361 389 421 454 491

3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 59.2 59.2 59.2 59.2 59.2 59.2 59.2 12.7 12.7 12.7 12.7 12.7 12.7 12.7

31.0 31.0 31.0 31.0 31.0 31.0 31.0

252 272 294 318 343 371 400 1,364 1,473 1,591 1,718 1,855 2,004 2,164 396 427 461 498 538 581 627 2,012 2,172 2,346 2,533 2,736 2,955 3,191

606 653 705 762 823 889 960 1,406 1,519 1,640 1,772 1,913 2,066 2,232 87 113 121 131 142 153 165

678 540 583 631 680 735 794

678 540 583 631 680 735 794 (2,716) (2,175) (1,592) (961) (280) 454 1,248

0.785 0.724 0.668 0.616 0.569 0.525 0.484 533 391 390 389 387 385 384

678 540 583 631 680 735 794

533 391 390 389 387 385 384

20208.00%

14,410

674

7,685 242

8,601

3,603 12,204

2,206 1,323

530

3.0% 59.2 12.7

31.0

432 2,337 677 3,447

1,037 2,410 179

857 16,344 17,201 18,449

0.446 7,678

Total

857

383 (136) 16,344 7,296 7,296

7,160

DYODHigh riskTax rate 40%Discount rate 9.00%

Growth rate after 10 years 3.0%Exhibit 2Year 2010 2011 2012 2013Revenue growth rate % 139.30%Revenue - ### 6,000 14,358

Expenses

- ### 1,650 1,683

- 435 - ###

- ### 2,250 7,651 Depreciation - ### 310 310

Total production expenses - 435 4,210 9,644 Upfront R&D 841 Upfront marketing 360 SGAE - ### 1,240 2,922

Total operating expenses 1,201 435 5,450 12,566

EBIT (1,201) (435) 550 1,792 PAT (721) (261) 330 1,075

Capex 4,610 - 310 310

3.0% 3.0%Days sales outstanding 59.2 59.2 Inventory turnover 12.2 12.3

Days payables outstanding 33.7 33.8

Current assetsCash - 180 431

Fixed production expenses excluding depreciationAdditional development expenseVariable production expenses

Assumptions about working capitalMinimum cash balance as % sales

Accounts receivables - 973 2,329 Inventory 345 784 Total current assets - 1,498 3,544 Accounts payables - 503 1,164 Net working capital - 1,000 995 2,380 Increase in NWC - 1,000 (5) 1,385

FCF (5,331) (1,261) 335 (310)Terminal valueTotal FCF (5,331) (1,261) 335 (310)Cumulative total FCF (5,331) (6,592) (6,257) (6,566)PVF 1.000 0.917 0.842 0.772PV (5,331) (1,157) 282 (239)NPV 7,063 IRR 17.90%PI 1.32Payback period >10

(5,331) (1,261) 335 (310)

(5,331) (1,157) 282 (239)Terminal valuePV of terminal valueTotal PV

Explicit forecast period cash flowsPV of explicir forecasting period

2014 2015 2016 2017 2018 201940.80% 6.00% 6.00% 6.00% 6.00% 6.00%

20,216 21,429 22,715 24,078 25,522 27,054

1,717 1,751 1,786 1,822 1,858 1,895

- ### - - - -

11,427 12,182 12,983 13,833 14,736 15,694 310 436 462 490 520 551

13,454 14,369 15,231 16,145 17,114 18,140

4,044 4,287 4,544 4,817 5,106 5,412

17,498 18,656 19,775 20,962 22,220 23,552

2,718 2,773 2,940 3,116 3,302 3,502 1,631 1,664 1,764 1,869 1,981 2,101

2,192 826 875 928 983 1,043

3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 59.2 ### 59.2 59.2 59.2 59.2 12.6 12.7 12.7 12.7 12.7 12.7

33.9 ### 33.9 33.9 33.9 33.9

606 643 681 722 766 812

3,279 3,476 3,684 3,905 4,140 4,388 1,068 1,131 1,199 1,271 1,348 1,428 4,953 5,250 5,565 5,899 6,253 6,628 1,625 1,733 1,837 1,947 2,064 2,187 3,328 3,517 3,728 3,952 4,189 4,440 948 189 211 224 237 251

(1,199) 1,085 1,140 1,208 1,281 1,358

(1,199) 1,085 1,140 1,208 1,281 1,358 (7,766) (6,681) (5,541) (4,333) (3,052) (1,695)

0.708 0.650 0.596 0.547 0.502 0.460 (850) 705 680 661 643 625

(1,199) 1,085 1,140 1,208 1,281 1,358

(850) 705 680 661 643 625

20206.00%

28,677

1,933

-

16,712 584

19,229

5,737

24,966

3,711 2,227

1,105

3.0% 59.2 12.7

33.9

860

4,651 1,514 7,026 2,319 4,707 266

1,439 24,705 26,144 24,450

0.422 11,044

Total

1,439

608 (3,373) 24,705 10,436 10,436

7,063

SummaryMMDCDYOD