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assumptions

new stores
2 year stores
setablished stores
Sales per new st
Sales per 2 year st
Sales per established store
Sales

in thousands
2011
35
40
564

2012
35
35
604

2013
35
35
639

1800
2000
2200
1,383,800 $

1924
2137
2351
1,562,112 $

EBIT

163,288.40 $

184,329 $

207,354

D&A

25,844.65 $

29,174.91 $

32,819.21

Capex

20,354.23 $

22,977.02 $

25,847.13

NOPAT=EBIT*(1-T)
NOWC
Change in NOWC
FCFF

$
$
$
$

106,137
205,503
23,502.56
88,125

83,026 $
#REF!
34,000
#REF!
475,000
#REF!
72,700.00
#REF!

Terminal Value
PV(FCFF)
Enterprise Value
Value of Non Operating Assents =
Firm Value
Debt
Equity Value
Shares
Intrinsic Value per Share
Over/Undervalued

$
$

$
$
$
$

119,814
231,983
26,480
99,531

2056
2284
2512
1,757,239

$
$
$
$

134,780
260,961
28,977
112,775

88,347 $

94,310

Exhibit 1: Dollarama Financial Data (For Fiscal Years Ending February 1)

Number of stores

2007
463

2008
521
58

888
588
156

972
641
188

2009
564
43

Income Statement Data

Sales
Cost of Sales
G&A (Incl. Store Operating Expenses)

1,089
717
222

Depreciation and Amortization


Operating Income (EBIT)

14
129

18
125

22
128

Balance Sheet Data


Cash and Cash Equivalents
Accounts Receivable
Merchandise Inventories
Accounts Payable
Accrued Expenses and Other
Non Cash NOWC
Change in Non Cash NOWC

48
6
166
16
36
120

26
3
199
22
43
137
17

66
3
250
40
38
175
38

85
848

112
845
24
42
679
(141)

130
843
16
38
822
143

Property and Equipment (Net)


Goodwill and Other Intangible Assets
Capex
Capex
Long-Term Debt (incl current portion)
LTD change
Ownership Structure Post IPO
Bain Capital Partners
Rossy Family
Other Company Insiders
Public

820

Shares (millions)
42.2
8.4
2.3
19.7
72.7

%
58.0%
11.6%
3.2%
27.1%
100.0%

2014
35
35
674

Risk Free Rate


Sales g rate
EBIT Margin
Tax Rate
D&A % Sales
Capex as % Sales
2347 NOWC % Sales
2608
2869 Weight of Equity
2,207,512 Weight of Debt
2015
35
35
709

2197
2441
2685
1,971,790 $

232,671 $

36,826.29 $

41,228.76 Market Risk Premium

29,002.94 $

32,470.16 Cost of Equity

260,486 Cost of Debt

151,236
292,823
31,862
127,198

$
$
$
$

100,216 $

1,265
832
266

6.14%
2.50%

2,359,196
EBITDA 2015
EV

2010 Est
604
40
40

5%
6.8169%

169,316 Terminal Growth Rate


327,829
35,006
143,069
#REF!
106,199

79.17%
20.83%
5.5%

WACC
$
$
$
$

3.34%
6.86%
11.80%
35%
1.58%

$ 301,715.16
$ 2,176,939.65

1.85%
2.47%
14.09%

2.02%
1.47%
16.07%

#DIV/0!

26
141

38
3
256
25
52
182
7
137
842
6
32
455
(367)

average

2.02%
0.47%
14.39%

0.00%

1.87%
1.47%
14.85%

Exhibit 2. Canada's Largest Operators of Dollar Stores


Company
Dollarama
Your Dollar Store With More
Great Canadian Dollar Store
Buck or Two
Everything For A Dollar
Dollar Giant
Dollar Blitz
The $1 Store Plus & Only Deals

Corporate/Franchise
Corporate
Franchise/Corporate
Franchise
Franchise
Franchise
Corporate
Franchise
Franchise

# of Stores
594
135
104
79
70
65
40
20

Store size range


2,500 - 10,000
8,000 - 15,000
2,000 - 10,000
Up to 6,000
1,600 - 8,000
8,000 - 15,000
NA
2,000 - 3,000

Price point
$1 - $2
Up to $2
Up to $15
$1, $1.50, $2
$1
$1.25
$1
$1 - $3

Exhibit 3: Dollarama vs U.S. Dollar Store Peers (Trailing 12 months)

Total stores
Average store size (selling + nonselling)
Price point range
SKU count
Offshore sourcing
Private label
Consumables mix
Sales/selling sq ft
EBIT margin
Inv./gross sq. ft.
Inventory Days

SALES
COGS
EBIT = Average CM*Sales
NOPAT

Dollarama
594
9,700
$1 - $2
4,400
52%
52%
37%
$251
11.8%
$44
112

Dollar Tree
3,591
10,654
$1 or less
5,000
43%
10%
49%
$158
7.9%
$18

2010
1265

2011
1351.807568

149.27
$97

106.7927979
$69

93

99 Cents Only
279
21,125
$0.99
NA
NA
Yes
56%
$273
1.8%
$25

Family Dollar
6,655
8,325
$10 or less
NA
46%
19%
64%
$153
6.2%
$19

Freds
639
18,400
Multi
12,000
NA
7%
47%
$184
1.5%
$27

Big Lots
1,339
29,789
Multi
20,000
27%
NA
30%
$160
5.5%
$19

Dollar General
8,362
7,017
$10 or less
10,500
50%
21%
69%
$180
5.6%
$26

76

76

101

124

71

2012
1444.572096

2013
1543.702366

2014
1649.635211

26.00229773
$17

95.70954669
$62

24.74452816
$16

5.8%

Confidential
Exhibit 4: Data on Selected Publicly-Traded Retailers ($ millions)

Company
Dollarama (C$)

Market Value
of Equity
1,676

Debt

Cash & ST
Investments

Net Debt

475

34

441

Enterprise
Value=MV(Eq
uity)+Net
Debt

Last 12
Months
EBITDA

Last 12
Months
Revenue

EV/EBITDA

2,117

158

1,204

13.40

717

91

1,337

7.88

4,630

6.71

U.S. Dollar Stores/Discount/Off-Price Retailers


99 Cents Only Stores (US$)

845

0.6

128

Big Lots (US$)

2,377

1.0

46

-44.907

2,332

348

Dollar General (US$)

7,949

4,138

517

3620.714

11,570

1,086

11,127

10.65

Dollar Tree (US$)

4,317

272

342

-70.2

4,247

619

5,059

6.86

Family Dollar Stores (US$)

3,914

250

445

-194.691

3,719

617

7,401

6.03

367

39

-33.605

334

65

1,784

5.17

Fred's (US$)

-127.68

471

average

7.22

median

6.78
6.53

Enterprise Value

Shares

1,140

73

Page 10

Confidential

Value/Sales

Debt Ratio

Last 12
5-yr Equity
Months
Beta vs.
Gross Margin World Equity
(%)
Mkt Portfolio

W eq

0.13 0.208339731 0.791660269

D/E

Unlevered Beta

34%

NA

0.28

(0.177954)

1.177954

0.529

40%

0.45

0.00

0.45

0.50 -0.01925995

1.019260

1.127

40%

1.11

0.00

1.11

1.04 0.312938819

0.687061

30%

NA

0.52

0.84

-0.0165305

1.016531

0.525

35%

0.52

0.06

0.50

0.50 -0.05234456

1.052345

0.361

35%

0.34

0.06

0.33

0.19 -0.10069519

1.100695

0.935

28%

0.85

0.01

0.84

0.695

average

0.65

average Beta

0.64

0.54

0.60

unlevered beta

Page 11

Confidential

d Beta

Page 12

Exhibit 5: Dollarama Price Comparison


Shoppers Drug Mart and Canadian Tire

Dove Beauty Bar


50W Halogen
Axe/Max Body Wash
Reading Glasses
AAA Batteries
Tongue and Groove Plier
Muesli
Biodegradable Kitchen Sacs
Wine Glass
Total

Size
2x120g
1
354ml
1
4
6.5
350g
20
4

Price
$4.99
$5.99
$7.49
$14.99
$7.99
$17.99
$6.49
$4.99
$8.99

Price Adjusted
to Dollaramas
Size
$2.08
$5.99
$7.41
$14.99
$7.99
$17.99
$3.71
$2.50
$2.25
$64.90

Dollarama

Size
100g
1
350ml
1
4
9.5
200g
10
1

Dollarama

Savings

Price
$1.00
$1.00
$1.00
$1.00
$1.00
$2.00
$1.25
$1.00
$1.00
$10.25

$
$1.07
$4.99
$6.41
$13.99
$6.99
$15.99
$2.46
$1.50
$1.25
$54.65

%
52%
83%
86%
93%
87%
89%
66%
60%
56%
84%

Exhibit 10: Macroeconomic Data

Canadian
Real GDP
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009 (Sep)

1.8%
1.5%
2.5%
4.4%
6.9%
3.6%
4.5%
5.0%
3.4%
9.2%
8.7%
-0.4%
7.8%
3.8%
7.4%
7.2%
3.2%
6.9%
0.7%
-2.9%

Canadian
Canadian Minimum
CPI
Wage (C$)
5.0%
3.8%
2.1%
1.7%
0.2%
1.8%
2.2%
0.8%
1.0%
2.6%
3.2%
0.7%
3.9%
2.0%
2.1%
2.2%
1.6%
2.4%
1.2%
1.2%

4.0%
7.9%
3.3%
1.2%
1.5%
2.7%
3.1%
1.6%
1.5%
1.8%
1.3%
1.6%
2.4%
2.7%
1.7%
4.1%
4.6%
5.0%
5.3%
5.5%

C$/$US
1.16
1.16
1.27
1.32
1.40
1.36
1.37
1.43
1.53
1.45
1.50
1.59
1.57
1.30
1.20
1.16
1.17
1.00
1.22
1.06

West Texas
CRB
Toronto Stock
Itermediate Oil Commodities Exchange 300
Price per
Total Return Total Return
Barrel (US$)
Index (C$)
Index(C$)
28.44
19.15
19.49
14.19
17.77
19.54
25.90
17.65
12.14
25.76
26.72
19.96
31.21
32.51
43.36
61.06
60.85
95.95
39.25
75.41

5.1%
-4.4%
6.5%
10.3%
16.9%
6.0%
12.6%
8.8%
-15.0%
-3.5%
18.4%
-12.0%
17.0%
-8.2%
4.3%
14.8%
-2.6%
4.5%
-20.7%
4.9%

-14.8%
12.0%
-1.4%
32.5%
-0.2%
14.5%
28.3%
15.0%
-1.6%
31.7%
7.4%
-12.6%
-12.4%
26.7%
14.5%
24.1%
17.3%
9.8%
-33.0%
33.4%
Average Nominal GDP Growth

rage Nominal GDP Growth

Nominal GDP Growth


6.90%
5.34%
4.71%
6.18%
7.13%
5.42%
6.82%
5.75%
4.45%
12.04%
12.20%
0.29%
11.98%
5.88%
9.66%
9.46%
4.88%
9.45%
1.83%
6.86%

Exhibit 11: Candian Treasury Yields as of December 10, 2009


Maturity
3-months

Yield
0.13%

6-months

0.25%

1 Year

0.53%

2 Years

1.22%

3 Years

1.68%

5 Years

2.49%

10 Years

3.34%

15 Years

3.84%

20 Years

4.08%

30 Years

3.98%

Source: Bloomberg

Sources:
Debt
Equity
Total Sources

Amount

% Capital Expected Return Expected Return After Tax


5.50%

WACC (after tax)

EBITDA Multiple

COST OF EQUITY CALCULATION


E (re) = rf - . Pe + e

10-year Treasury Note [ rf ]


Beta for dollar store company
Equity Premium [ Pe ]
Firm Specific Risk Premium [e]
Cost of Equity

UITY CALCULATION
rf - . Pe + e
3.34%
?

5.00%
0.0%
#VALUE!

Income Statement
Sales
Cost of Sales:
COGS
Rent
Transportation
Supply Chain Cost
Total Cost of Sales
EBIT
NOPAT

2010
2011
2012
2013
2014
1265
1353.55 1422.175 1466.831 1484.433

141.4017 170.2732 178.9061 184.5238 186.738


91.91111 110.6776 116.289 119.9404 121.3797

EBIT CM
Average CM

2007
14.53%
12.58%

2008
12.86%

2009
11.75%

2010
11.18%