CFA Institute

Investment Research Challenge

2012

hosted by Czech CFA Society

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

Current situation► 60+ years tradition► More than 100.000 members and 130.000 candidates from 135 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 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 portfolio management► More than 89.000 investment professionals has earned the CFA Charter since 1963

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; winner of CFA Institute 2009 Revitalization Award► Successfully serving CFA charterholders and CFA Program candidates locally since May 2002► Promoting the highest professional and ethical standards in the Czech investment industry► Providing a networking platform for the financial community in the Czech Republic► www.czechcfa.cz

Members’ profile► Over 120 members and nearly 400 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, CFA, FCCA, President ” Executive Director at Bonus Group ► Marek Jindra, CFA, FCCA, Vice President ” Senior Manager at Ernst & Young► Jan Brázda, CFA, Member ” Senior Manager at PricewaterhouseCoopers► Lubomír Vystavel, CFA, Member ” Investment Manager at ING Wholesale Banking► Jana Jandová, CFA, Treasurer ” Manager at Deloitte► Radka Kucerová, CFA, Member ” Partner at Avenida Research► George Formandl, CFA, Past President ” Partner at Enercap► Michal Mares, CFA, Past President ” Partner at NBFA► Olga Kuiper, Member ” previously Senior Relationship Manager at Citibank

Executive Director: Petra Roberts, CFA ” Regulatory Compliance Consultant and Partner at Roberts & Co

About Czech CFA Society

We have a solid track record in reaching our target community and organizing high profile events.* Data as of August 2011. 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 over 110 members, about 90% of whom hold the CFA Charter* Data as of August 2010

TOP MEMBER EMPLOYERS

Ernst & Young

KPMG

ING

Czech National Bank

Deloitte

Generali/ PPF

Members by Country of Ordinary Residence

The Czech Republic 82

Slovakia 21

USA 4

United Kingdom 2

Switzerland 2

Belgium 2

Hungary 1

Total 114

Total Paying Members 113

Charterholders 102

Candidates 11

Member Positions

Executives 20

Senior Management 33

Middle Management 19

Portfolio Management 19

Consulting, Analysts, Associates, etc. 14

Academia 1

Candidate Demographics*

Czech CFA Society has over 370 registered candidates, vast majority is directly reachable in the Czech Republic.

* Data as of August 2010

TOP CANDIDATE EMPLOYERS

Ernst & Young

Česká spořitelna

Deloitte

ČSOB

PriceWaterhouseCoopers

Atlantik

PPF

Česká národní banka

Reiffeisen

Komerční banka

ING

Active Candidates (by country of ordinary residence)

The Czech Republic 366

Slovakia 4

Austria 1

USA 1

TOTAL 372

Candidate Positions

Executives 13

Senior Management 28

Middle Management 34

Portfolio Management 12

Consulting, Analysts, Associates, etc. 164

Academia 1

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 reports and evaluate the presentations. Further, each team of 3-5 students will be assigned a mentor, CFA Charterholder.

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.

CFA Institute Investment Research Challenge®hosted by Czech CFA Society

* INVESTMENT RESEARCH CHALLENGE® is the registered trademarks of CFA Institute in many countries around the world

Investment Research ChallengePhases and Time line

The Investment Research Challenge 2012 will stretch over the entire winter semester

so that there is enough time available for the teams to prepare a ‘perfect’ report:

Presentat ion for students

Registrat ion

Teams selected by the part icipat ing inst itut ions

Teams or ientat ion

Teams meet with mentors

Company presentat ion

Init ial analyses, teams prepare and submit Qs to company

Q&A session/ analyst calls, 2nd meeting with mentors

Draft reports submission to mentors, opt. 3rd meeting with mentors

Final reports submission

Grading of reports, panel presentat ions preparat ion

Teams presentat ions and winner announced

Czech CFA Society Forecast ing Dinner - winners presented

Regional f inal - London

Global f inal - New York, USA April 2012

March 2012

October 2011

November 2011

December 2011

January 2012

February 2012

We have selected a major company operating in the Czech Republic and traded on the Prague stock exchange.

Target Company’s involvementTarget Company Investors relationship (IR) team will provide an initial presentation, 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

Company overviewTelefónica Czech Republic is a major integrated operator in the Czech Republic. It is now operating more than seven million lines, both fixed and mobile, making it one of the world’s leading providers of fully converged services. The organization offers the most comprehensive portfolio of voice and data services in this country. It is paying special attention to the exploitation of the growth potential, particularly in the data and Internet sector. Telefónica Czech Republic operates the largest fixed and mobile network including a 3rd generation network, CDMA (for data), and UMTS, enabling voice, data and video transmission. Telefónica Czech Republic is also a notable provider of ICT services.

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.

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

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

Investment Research ChallengeCzech Top investment professionals involved

Investment Research Challenge 2011Top Czech investment professionals involved

MentorsJan Hajek, CFA, IS CS Michal Mares, CFA, NBFAMichal Misun, CFA, RedbaenkDan Karpíšek, CFA, KBMiroslav Kubenka, CFA, Generali PPFKarel Tregler, CFA, Generali PPF

PanelistsPavel Cyrani, CEZGeorge Formandl, CFA, EnerCapLubomir Vystavel, CFA, INGJiri Benes, CFA, 3TSMarek Janca, EPHPetr Sosik, CFA, Allianz

GradersYancey WadeRoman Florian, CFA, J&T BankaJan Vejmelek, CFA, KBMiroslav Fliega, CFA, CitibankBarbara Seidlova, CEZJuraj Barta, CFA, Slovenska sporitelna

Academic PartnerJiri Hnilica, VSE Praha

MentorsKarel Trégler, PPFMichal Mišun, RedbaenkJan Hájek, CFA, IS CSMiroslav Kuběnka, CFA, Generali PPFDan Karpíšek, CFA, KBTomáš Krsička, CFA, Glisco

PanelistsPavel Cyrani, CEZDaniel Prager, TelefonicaJiří Beneš, CFA, 3TSLubomír Vystavěl, CFA, INGJiří Hnilica, VSERoman Florián, CFA, J&T BankaMarek Janča, EPHPetr Sosík, CFA, Allianz

Investment Research Challenge 2012Top Czech investment professionals involved

GradersJan Vejmělek, CFA, KBMiroslav Fliega, CFA, Citibank (R)Jaroslav Trojan, Credo VenturesFilip Mach, CitibankMartin Fischer, CFA, TraderMilan Jalový, EPH

Academic PartnerJiří Hnilica, VSE Praha

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

Invitation for the EMEA Regional final in LondonThe winning team will get a chance to compete with other EMEA IRC winners, this year in London. If they succeed they may proceed to the global final in New York, USA.

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 750plus a subsidy for the study materials.

Invitation to the CFA Forecasting Dinner 2012The 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 2012, 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.

Material prizes from sponsorsThe winning team will receive material prizes from sponsors.

Investment Research ChallengePrizes for winners

The CFA Institute Investment Research Challenge is governed by the rules approved by the CFA Institute. Local organising committee, appointed by the Czech CFA Society Board of Directors, includes:

Marek Jindra, CFA, FCCA ” Czech CFA Society, Vice-president, Education Chair

Lukáš Brych, CFA, FCCA ” Czech CFA Society, President

Petra Roberts, CFA ” Czech CFA Society, Executive Director

Jiří Hnilica ” VSE Praha, Vice-dean for academic affairs, CEMS Academic Director

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 following institutions were invited to participate in the local round of IRC 2012:

University of Economics, PragueJiří Hnilica ” Associate Professor, Vice-Dean for Academic Affairs, CEMS Academic Director

Institute of Economic Studies, Charles University, PragueJiří Novák ” Assistant Professor, Boston Consulting Group Corporate Chair

University of New York, PragueTanweer Ali, Lecturer

Masaryk University, BrnoDagmar Linnertová ” Faculty of Economics and Administration

Anglo-American University, PragueKatarina Svitkova ” Dean, School of Business Administration

VSB-TU Technical University, OstravaKateřina Kořená ” Assistant Professor, Department of Finance

Investment Research ChallengeParticipating Institutions ” local round

The registration process will be administered by each participating institution.

Qualifying conditions“ The teams will consist of no less than three and no more than five members.“ All team members are students of the participating institutions enrolled for the academic year 2011/2012 in either undergraduate or graduate programs“ Teams are selected at discretion of the participating institutions, typically by assessing their motivation letters but they may apply other criteria.“ Participants have to sign a Release letter

Team representative or individual applicants will send an email registration to designated contacts at each participating institut ion, cc: GIRC@VSE.CZ by 17 October 2011. The application shall include for each team member:

“ Name, address, email contact, mobile nr.“ Semester of study, faculty, major“ Brief resume“ Optional if required by the university: a letter of motivation (up to A4)

All team representatives or individual applicants will be notified by email by 21 October 11

Investment Research ChallengeHow to register

Investment Research ChallengeMaterial support to the students teamsTravel & accommodation costs for students from non-PRG institutions will be reimbursed.

Travel expenses“ The outward trip of the ticket has to be on the date (or prior day) of the company presentation, mentors meeting(s) (max. 2x), the final presentation and the

Forecasting dinner.“ Trains should be booked in 2nd class, all train categories (incl. SC/IC/EC/R) are allowed“ Any types of buses are allowed“ Personal cars’ use will be reimbursed at CZK 5.00/km, up to the maximum of the sum of equivalent bus/train tickets for the participants travelling together (as

if booked reasonably in advance)“ If single ticket or return ticket price exceeded CZK600 or CZK1,200 per person respectively, it needs to be approved upfront by CCFAS (at

marek.jindra@czechcfa.cz, cc: info@czechfa.cz, )

Accommodation“ Accommodation will be arranged for the participants on the night following the final presentation in rooms for two or three“ Accommodation will be provided for the winning team (if not from Prague) on the night of the Forecasting Dinner

All the costs will be reimbursed in cash right before the final presentation or by bank transfer to the team representatives afterwards, if preferred by the team. Expenses shall be summarized in excel format (form attached) and submitted 3 days before.

Investment Research Challenge 2011Presentation of winners on CFA Forecasting dinner in CNB

Investment Research Challenge 2011Presentation of winners on CFA Forecasting dinner in CNB

Teams

“ There can be no alternates. Number of team members cannot drop below 3 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 (cumulatively).

“ 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 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 and one follow-up

“ 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.

“ PLAGIARISM WILL RESULT IN AN IMMEDEATE DISQUALIFICATION. ALL SOURCES HAVE TO BE REFERRENCED, SEVERE PENALTIES

WILL APPLY IF TEAMS WILL FAIL TO DO SO.

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

“ Each presentation will last 10 minutes with 10 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.

“ All teams will make an oral presentation of their research to a panel of experts selected by the Society.

“ A winner will be selected 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

Investment Research ChallengeSupporting Companies

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

Local IRC Sponsor

Local round Target IRC sponsor

Main Society Sponsor Society sponsor Society Partner

Registration and questions : GIRC@vse.cz

Universities : VSE Praha ” jiri.hnilica@vse.czFSV UK - novakji@fsv.cuni.czUNYP ” tali@faculty.unyp.czMU Brno ” dagmar.linnertova@seznam.czAAU Praha - katarina.svitkova@aauni.eduVSB Ostrava ” katerina.korena@vsb.cz

Organization and CFA related Qs : info@czechcfa.czMarek.Jindra@czechcfa.czLukas.Brych@czechcfa.cz

Company : jakub.hampl@o2.com, Head of IR

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

Investment Research ChallengeKey contacts

Czech CFA Society

c/o Ernst & Young, s.r.o.

Karlovo nam. 10

120 00 Praha 2

Czech Republic

Mobile: +420 603 489 663

E-mail: info@czechcfa.cz

www.czechcfa.cz