THE BULGARIAN RATING AGENCY

1. Annex 5 THE BULGARIAN RATING AGENCY New Horizons for Rating Services in Bulgaria With the support of the Ministry of Economy of the Republic of Bulgaria

2. Our Mission • The Bulgarian Rating Agency is an integral part of the infrastructure supporting the smooth operation of the national financial markets, providing the integrity and transparency, which makes markets work. • BRA provides a public service – free, available, accurate and useful information, compressed into a standard ratings scale, on many market participants, to all market participants.

3. Our Vision • The Bulgarian Rating Agency (BRA) is established with the primary goal of being the leading national rating institution in Bulgaria, with strong brand name based on sustainable performance. • BRA helps create an investor-friendly environment, based on quality, thoroughness and accuracy of work. BRA sets the standards and provides benchmarks for the investment community in Bulgaria. • BRA focuses on providing accurate, comprehensive and useful assessments of risks, well-communicated among all market participants. • BRA intends to develop a leadership role in the implementation of cutting-edge technologies for risk assessment of companies operating in the region. • BRA is determined to maintain high working standards, employing motivated and well-trained team of professionals.

4. Our Goals • BRA intends to combine the right people, products and methodology, with the goal of producing rating services in Bulgaria, by providing accurate and thorough information to the financial markets and the investment community in general. • BRA will use a rating methodology suitable for servicing the Bulgarian business environment and compatible with the services provided by the leading rating companies worldwide. • BRA will provide value-added services on the base of data warehousing in strategic partnerships with other private and public institutions.

5. Our Shareholders The Bulgarian Rating Agency AD is established as a limited liability company with the support of the Government through the Bulgarian Export Insurance Agency. Our shareholders are: • The Bulgarian Export Insurance Agency AD • Established by a special law in 1998 and owned 99.995% by the Government, BEIA is the only entity to insure risks for Bulgarian exporters. It holds an insurance license. 25% stake. • BRAVO Investments Ltd. • A newly-established SPV. 75% stake.

6. Our Board of Directors • Mr. Toshko Georgiev – Chairman • Currently CFO of Boni Oborot Holding AD. A career banker, Mr. Georgiev holds a number of post-graduate qualifications from institutions in the USA, Europe and Japan. • Mr. Nicola Yankov • Currently Deputy Minister of Economy. Mr. Yankov has a degree in Economics from Cornell University, and has worked consecutively as country treasurer for Kraft in Bulgaria, as CFO of Solvay in Bulgaria and as CEO of Naftex in Bulgaria. • Mr. Petrozar Petkov • Currently CEO of the Bulgarian Export Insurance Agency AD. For the last few years Mr. Petkov has served as a director in Allianz Bulgaria. • Mr. Dimitar Valkov • Currently Regional Director of Hebrosbank AD for Eastern Bulgaria. Mr. Valkov has extensive experience in the financial industry. For the last few years he has lead the Trade Finance Division of BNP-Paribas Bulgaria. • Mr. Bojidar Arshinkov – Executive Director • Former Regional Director of Hebrosbank AD for Western Bulgaria, Mr. Arshinkov has also worked for Demirbank. He currently heads the RIME Information Bureau (Dun & Bradstreet correspondent for the region).

7. Rules on Operations • Independence of the functions related to rating determination, guaranteed by the Ratings Committee. The Ratings Committee is an independent body of the Agency. It does not report to the Board of Directors for the outcome of their work and for a determined rating grade. It consists of well-known practitioners and experts in the financial and industrial sectors. • Compressing the analyses of companies and risks into a standard scale of ratings, allowing comparison with the results of the leading rating agencies worldwide.

8. Our Core Business Is Assessing Ratings on: • 1. Industrial Enterprises • They are the main borrowers at present. Banks supply almost 100% of the financing to the industrial enterprises in Bulgaria. The trend moves to debt issues as the industrial sector aims to attract funding on the capital markets. Some of the biggest industrial conglomerates state as their goal the launching of corporate bonds in the next two years. • 2. Municipalities • They have the right to finance their investments by issuing bonds on the capital market. The current trend of deregulation and decentralization will contribute to the development of new sources for financing used by local municipalities. • 3. Financial Institutions • They are not only the main users of rating services, but also the subjects of rating. A rating is contributing to the integrity of a financial institution in front of the investment community worldwide. Ratings contribute to the development of financial services such as trade finance and forfeiting. The ongoing process of privatization, and changes in the ownership structure is another ratings demand driver. • 4. Issues of Bills and Bonds • Ratings aim to assess risks linked with different obligations of an economic entity. Bills rating contributes to the development of factoring services in Bulgaria. • 5. Project Financing • Ratings require analytical depth to understand new financial techniques and transactions in order to submit long-term assessment over the quality of a project. • 6. Investment Funds • Will be developed with regard to the newly-established Pension and Venture-capital Funds. A fund rating is assigned to a financial entity bearing collective investments with the goal to evaluate its ability to pay back and further increase all received and invested capital, excluding own capital.

9. Side Business SupportingOur Core Services: (1) • 1. Risk Management Services • Estimates of credit default probabilities • Portfolio analysis • Loan pricing services • Outsourcing elements of the decision-making in crediting processes • More than 7,000 credit applications will be rated before the end of 2003 • 2. Data Warehousing • Provides platform for better implementation of economic models • Focus on using real data collected from the industry participants • Maintain information on more than 50,000 active companies in Bulgaria • 3. Payment Habits and Counterparty Risks • Analysis of the value chain and the relationships between buyers and suppliers • Analysis of correlated risks imposed by group companies

10. Side Business SupportingOur Core Services: (2) • 4. Business Planning • Strategy development • Consulting • Financial advisory services • 5. Market Reporting • Industry specifics • Macro data • Business intelligence • 6. Indexing • Stock market • Secondary debt market • Local commodity market • 7. Benchmarking and Comparative Analysis Reports

11. Our Partners We are proud to benefit from strategic partnerships and cooperation agreements with: • The National Statistical Institute • The Customs Agency • The National Tax Service • The Bulgarian Export Insurance Agency • The Agency for Collection of Public Receivables • The Privatization Agency • The Ministry of Justice • The Ministry of Economy • The Bulgarian National Bank • The National Center for Information and Documentation

12. Why Does BRA NeedDonor Support • BRA provides a public service. • BRA is indispensable to the national financial and capital markets – without accurate and reliable information, without integrity and transparency, there is no market. • BRA is not intended to be a profit-oriented enterprise in the near future, therefore private financing is difficult to obtain.

13. Start-up Costs • BRA needs donor support for its start-up costs. The details (in USD): • Office renovation 36,000 • Furniture 51,000 • Equipment 189,000 • Specialized Software 550,000 • Other (website, training etc.) 200,000 TOTAL START-UP 1’026’000

14. Project Timeframe • BRA intends to launch fullscale operations by mid 2003. First ratings will be produced with the help of outside partners (outsourcing). Own staff will be retained after substantial part of the start-up costs are invested and a suitable working environment is created.

15. THE BULGARIAN RATING AGENCY www.bra.bg Welcome to a new market full of growth opportunities! office@bra.bg