INCOME STATEMENT (in LKR Millions) 2004A 2005A 2006A 2007A

Revenue
Shiprepair 2,279 2,860 3,317 4,685
Ship Building 1,355 1,769 3,472 3,579
Heavy Engineering 276 165 252 200
Offshore Engineering 915 1,183 343 262
Material Sales 110 133 102 134
Less: Revenue Tax (1) (1) (1) (1)
4,933 6,109 7,485 8,859
Cost of Production (4,198) (5,390) (5,922) (6,662)
Gross Profit 735 719 1,563 2,197
Other Non-Operating Income 96 97 222 208
SG&A Expenses (484) (559) (704) (866)
Other Operating (Expenses)/Reversals 1 (8) (8) (33)
EBITDA 348 249 1,073 1,507
Depreciation and Amortisation (131) (133) (159) (177)
EBIT / Net Income 217 116 913 1,329
Net Finance Income/ (Expense) (11) (54) (58) (8)
EBT 206 62 855 1,322
Income Tax (Expense)/Reversal (11) 13 (224) (219)
Earnings for the period 195 75 631 1,103
Profit to Non-Controlling Interest (3) (2) (5) (2)
Profit available to shareholders 192 73 626 1,101
2008A 2009A 2010A 2011A 2012E 2013E 2014E 2015E

6,045 6,729 4,217 4,406 5,160 4,498 4,540 5,518

4,271 5,650 9,566 7,682 8,088 9,745 10,863 13,203
106 923 510 447 418 450 486 591
563 - - - - - - -
173 199 216 276 279 300 324 394
(2) (2) (3) (7) (8) (9) (10) (12)
11,155 13,498 14,506 12,803 13,937 14,983 16,204 19,695
(8,561) (9,985) (11,224) (10,492) (10,803) (11,206) (12,159) (14,329)
2,594 3,514 3,282 2,311 3,133 3,778 4,045 5,365
333 272 83 632 821 616 647 679
(1,128) (1,157) (1,352) (1,052) (1,254) (1,348) (1,782) (2,166)
(27) (68) (1) 58 (45) (48) (52) (63)
1,772 2,560 2,012 1,950 2,656 2,997 2,858 3,815
(209) (371) (267) (296) (299) (357) (413) (468)
1,563 2,189 1,745 1,653 2,357 2,640 2,445 3,347
159 184 184 180 205 348 423 342
1,722 2,373 1,929 1,833 2,562 2,988 2,868 3,689
(267) (216) 156 (22) (231) (269) (258) (332)
1,455 2,157 2,085 1,811 2,331 2,719 2,610 3,357
(2) (4) (4) (7) (5) (6) (5) (7)
1,453 2,152 2,081 1,804 2,326 2,713 2,604 3,350
2016E

6,820
16,319
731
-
487
(15)
24,343
(16,760)
7,583
713
(2,678)
(78)
5,540
(524)
5,016
428
5,444
(490)
4,954
(10)
4,944
BALANCE SHEET (in LKR Millions) 2004A 2005A 2006A 2007A
ASSETS
Property, Plant and Equipment 1,114 1,368 1,608 1,828
Other Investments 0 0 0 0
Other Non-Current Assets - - - -
Total Non-Current Assets (A) 1,114 1,368 1,608 1,828
Inventories 312 569 520 928
Trade and Other Receivables 1,602 1,857 2,102 7,277
Other Current Assets 748 1,614 1,674 -
Cash and Cash Equivalents 679 116 116 1,720
Total Current Assets (B) 3,340 4,156 4,412 9,926
Total Assets (A+B) 4,455 5,524 6,021 11,754
EQUITY AND LIABILITIES
Stated Capital 621 621 652 652
Retained Earnings 1,199 1,148 1,693 2,594
Exchange Fluctuation Reserve - - - 8
Attributable to Equity holders 1,820 1,769 2,345 3,253
Minority Interest 12 14 19 22
Shareholder Funds (C) 1,832 1,783 2,364 3,275
Interest Bearing Borrowings 218 287 253 231
Other Non-Equity Compnents 438 456 499 533
Total Non-Current Liabilities (D) 656 743 752 763
Interest Bearing Borrowings 480 1,427 1,047 1,685
Trade and Other Payables 795 1,059 1,231 5,392
Bank Overdraft 656 450 369 301
Other Current Liabilities 36 63 259 337
Total Current Liabilities (E) 1,966 2,998 2,905 7,716
Total Equity and Liabilities (C+D+E+F) 4,455 5,524 6,021 11,754

Check - 0 - -
2008A 2009A 2010A 2011A 2012E 2013E 2014E 2015E

2,147 2,061 2,273 2,546 2,719 3,247 3,755 4,254

57 57 57 59 59 59 59 59
24 54 79 124 130 130 130 130
2,227 2,171 2,410 2,729 2,908 3,436 3,944 4,443
993 779 641 667 756 784 851 1,003
5,768 7,073 5,319 6,991 7,238 7,500 7,805 8,678
- - 629 109 150 150 150 150
3,657 3,939 5,565 4,098 6,957 8,457 11,386 14,254
10,419 11,791 12,154 11,865 15,102 16,892 20,193 24,085
12,646 13,962 14,564 14,593 18,010 20,327 24,136 28,528

684 684 684 684 719 719 719 719

3,819 5,492 7,025 8,282 9,999 12,137 13,879 16,367
9 9 6 3 3 3 3 3
4,512 6,186 7,716 8,969 10,721 12,859 14,601 17,088
25 30 31 36 39 45 50 57
4,537 6,216 7,747 9,006 10,760 12,904 14,651 17,146
150 96 61 36 26 21 1,766 3,261
692 791 959 973 2,434 2,434 2,434 2,434
842 887 1,020 1,009 2,460 2,455 4,200 5,695
1,247 317 899 374 124 274 524 774
5,515 6,128 4,859 4,074 4,531 4,560 4,626 4,778
153 82 24 47 35 35 35 35
353 332 15 83 100 100 100 100
7,267 6,859 5,797 4,578 4,790 4,968 5,285 5,687
12,646 13,962 14,564 14,593 18,010 20,327 24,136 28,528

0 (0) 0 0 (0) (0) 0 0

2016E

4,765
59
130
4,953
1,173
9,840
150
17,668
28,831
33,784

719
20,448
3
21,170
68
21,237
4,506
2,434
6,940
524
4,948
35
100
5,607
33,784

(0)
STATEMENT OF CASHFLOWS (in LKR Millions) 2012E
Cashflow from Operating Activities
EBT 2,562
Depreciation, Impairment and Amortization 299
(Increase)/Decrease in Inventory (89)
(Increase)/Decrease in Trade and Other receivables (247)
Increase/ (Decrease) in Trade and Other Payables 457
Change in Provisions (25)
Net Interest Income (205)
Total Cashflow from Operating Activities 2,752
Interest Paid (100)
Income Tax Paid/Set offs (231)
Net Cashflow from Operating Activities (A) 2,422
Cashflow from Investing Activities
Net CAPEX (473)
Interest Received 305
Acquisition of Intangible Assets (3)
Net Cash from/(used in) Investing Activities (B) (171)
Cashflow from Financing Activities
Repayment of Long Term Loans (10)
Repayment of Short Term Loans (4,750)
Long Term Loans Obtained -
Short Term Loans Obtained 4,500
Repayment of Leases (1)
Dividend Paid (575)
Net Cashflow from/(used in) Financiang Activities (C) (836)
Net Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) 1,415
Cash and Cash Equivalents at the beginning 5,542
Cash and Cash Equivalents at the end 6,957

697
350
1,047
2013E 2014E 2015E 2016E

2,988 2,868 3,689 5,444

357 413 468 524
(28) (67) (152) (170)
(262) (305) (873) (1,162)
28 67 152 170
0 (0) 0 (0)
(348) (423) (342) (428)
2,736 2,552 2,943 4,378
(100) (100) (100) (100)
(269) (258) (332) (490)
2,367 2,194 2,511 3,788

(885) (921) (967) (1,034)

448 523 442 528
- - - -
(437) (398) (526) (507)

(5) (5) (5) (5)

(4,850) (5,000) (5,250) (6,000)
- 1,750 1,500 1,250
5,000 5,250 5,500 5,750
- - - -
(575) (862) (862) (862)
(430) 1,133 883 133
1,500 2,929 2,868 3,414
6,957 8,457 11,386 14,254
8,457 11,386 14,254 17,668

749 810 985 1,217

250
999 810 985 1,217
 2007A 2008A 2009A
Minority Interest % 0.15 0.11 0.21

Net PPE/Revenue % 20.64 19.24 15.27

Net PPE 1,828 2,147 2,061
Depreciation 177 209 371
Depreciation/PPE % - 9.74 18.01
Investments
Net CAPEX

Equity Holders
Retained Earnings B/F 1,688 2,594 3,819
Profit available to shareholders 1,101 1,453 2,152
Dividends Paid (196) (196) (479)
Other adjustments - (33) -
Retained Earnings C/F 2,594 3,819 5,492

Minority Interest
Retained Earnings B/F 19 22 25
Profit share of minority 2 2 4
Dividends Paid - - -
Other adjustments 2 1 1
Retained Earnings C/F 22 25 30

Average Inventory/COGS % 13.93 11.60 7.80

Average Receivables/COGS % 82.15 51.71 52.40
Average Payables/COGS % 80.94 64.42 61.38

Interest Bearing Borrowings

B/f Short term
Loans Obtained
Loans Repaid
C/f Short term

B/f Long term

Loans Obtained
Loans Repaid
C/f Long term

Debtors
Trade Debtors 5,190.59 3,364.68 4,208.91
Other Debtors 67.41 62.09 82.11
Other Current Assets 2,019.44 2,341.40 2,781.71
Adjustments
7,277.45 5,768.17 7,072.73

Payables
Trade Payables 384.56 523.49 403.70
Other Payables 87.22 122.20 119.34
Other Current Liabilities 5,257.31 5,222.14 5,937.49
Adjustments (336.75) (352.78) (332.38)
2010A 2011A 2012E 2013E 2014E 2015E
0.21 0.39

15.67 19.88 17.00 17.00 17.00 17.00

2,273 2,546 2,719 3,247 3,755 4,254
267 296 299 357 413 468
11.74 11.65 11.00 11.00 11.00 11.00
350.00 350.00 300.00 300.00
473 885 921 967

5,492 7,025 8,282 9,999 12,137 13,879

2,081 1,804 2,326 2,713 2,604 3,350
(547) (547) (575) (575) (862) (862)
- - (34) - - -
7,025 8,282 9,999 12,137 13,879 16,367

30 31 36 39 45 50
4 7 5 6 5 7
- - - - - -
(3) (2) (2)
31 36 39 45 50 57

5.71 6.36
36.67 54.60
43.29 38.83

373.93 123.93 273.93 523.93

4,500.00 5,000.00 5,250.00 5,500.00
(4,750.00) (4,850.00) (5,000.00) (5,250.00)
123.93 273.93 523.93 773.93

36.43 26.43 21.43 1,766.43

- - 1,750.00 1,500.00
(10.00) (5.00) (5.00) (5.00)
26.43 21.43 1,766.43 3,261.43

2,651.39 3,345.83 3,484.19 3,745.81 4,051.09 4,923.69

130.99 179.20 179.20 179.20 179.20 179.20
3,166.07 3,574.67 3,574.67 3,574.67 3,574.67 3,574.67
(629.42) (108.91)
5,948.45 7,099.70 7,238.06 7,499.67 7,804.96 8,677.56

775.46 382.40 756.24 784.39 851.14 1,003.06

370.41 152.88 152.88 152.88 152.88 152.88
3,728.32 3,622.34 3,622.34 3,622.34 3,622.34 3,622.34
(14.91) (83.46)
4,531.46 4,559.61 4,626.35 4,778.27
2016E

17.00
4,765
524
11.00
300.00 (1.6Bn investment in cranes)
1,034

16,367
4,944
(862)
-
20,448

57
10
-

68

773.93
5,750.00
(6,000.00)
523.93

3,261.43
1,250.00
(5.00)
4,506.43

6,085.69
179.20
3,574.67

9,839.55

1,173.20
152.88
3,622.34

4,948.41
 2012E 2013E 2014E 2015E
Income Statement
Revenue 8.9% 7.5% 8.2% 21.5%
Revenue Tax 0.06% 0.06% 0.06% 0.06%
Cost of Sales 78% 75% 75% 73%
Non-Operating Income Growth 30% -25% 5% 5%
SG&A 9% 9% 11% 11%
Operating Expenses 0.32% 0.32% 0.32% 0.32%
Interest Income 5% 5% 5% 3%
Effective Tax Rate 9% 9% 9% 9%

Balance Sheet
Net PPE 17% 17% 17% 15%
Depreciation 11% 11% 11% 11%
Inventory 7% 7% 7% 7%
Trade Receivables 25% 25% 25% 25%
Stated Capital 5% 0% 0% 0%
Exchange rate fluctuation reserve 100% -50% -15% 0%
Minority Interest 0.21% 0.21% 0.21% 0.21%
Other Non Equity Components 94% 0% 0% 0%
Trade Payables 7% 7% 7% 7%
Other Payables 40% 25% 10% 10%

Cashflow
Dividends Paid 8 8 8 8
2016E Metric

23.6%
0.06%
69%
5% YoY%
11% SG&A/Revenue
0.32% Operating Expense/Revenue
3% Interest Income/Cash
9%

13% Net PPE/Revenue

11% Depreciation/Net PPE
7% Inventory/COGS
25% Trade Receivables/Revenue
0%
0%
0.21%
0% Growth
7% Trade Payables/COGS
10%

8 Dividend Per Share

 Assumption

Gloom outlook for the next 24 months, exponential growth thereafter

Remains constant
Refer COP Sheet
The rupee depreciation is expected to cause FOREX gain, and then stabilise
SG&A remains stable until expansion takes place in 2014E
Neglible and expected to remain constant
The advanced payments from customers are invested in financial instruments
Weigthed average effective tax rate for the company

Remains constant
Average % used as it is expected to reduce as better facilities are provided
Lack of finance will cause a high % and then may reduce in medium term
Bonus issue in 2012 and no further share issues are expected in the short to medium term
Unexpected rupee depreciation in 2012 and thereby stabilised

Take advantage of the terms with the suppliers

 Q = -122041+.0
2007A 2008A
Quantity ('000 CGT) 169,600 88,000
Price (US $'000) 40,000 46,000
World Trade ('000 tonnes) 5,132,000 5,328,000
Baltic Dry Index 9,143 774
Business Confidence Index 69 57

Total Revenue (USD '000) 6,784,000,000 4,048,000,000

Exchange Rate (LKR/USD) 108 113
Price (LKR '000) 4,334,000 5,202,140
Total Revenue (LKR '000) 735,046,400,000 457,788,320,000

Company Revenue (LKR Mn) 8,859 11,155

Company Revenue (USD '000) 81,764 98,639
Market Share 0.001205% 0.002437%

Elasticity -0.40 -0.88

Revenue Proportions
Shiprepair 53% 54%
Shipbuilding 40% 38%
Heavy Engineering 2% 1%
Off-Shore Engineering 3% 5%
Material Sales 2% 2%
100% 100%

GDP Growth

Assumptions
Exchange Rate LKR/USD rate at the corresponding year end depreciates at 3% YoY
World Seaborne Trade Directly proportional to annual trade growh (World Bank)
Baltic Dry Index Captures the changes in the freight rates
Price Moves in proportion to the BDY from 2013 onwards
Business Confidence Index Calculated as an average index of Europe and Asian regions
122041+.00706WT+8.567BD+1571.01BC
2009A 2010A 2011A
33,600 82,400 53,343
34,000 30,000 27,500
5,053,000 5,668,000 6,033,000
3,005 1,773 1,738
21 53 53

1,142,400,000 2,472,000,000 1,466,932,500

114 111 114
3,884,500 3,324,600 3,132,250
130,519,200,000 273,947,040,000 167,083,611,750

13,498 14,506 12,803

118,145 130,894 112,407
0.010342% 0.005295% 0.007663%

-1.70 -0.61 -0.87

50% 29% 34%

42% 66% 60%
7% 4% 3%
0% 0% 0%
1% 1% 2%
100% 100% 100%

r end depreciates at 3% YoY

owh (World Bank)

013 onwards
pe and Asian regions
BD+1571.01BC+1.77P
2012E 2013E 2014E
63,561 62,579 68,637
26,000 27,000 28,500
6,256,221 6,575,288 6,936,929
1,250 1,400 1,500
54 50 50

1,652,581,717 1,689,644,210 1,956,147,934

132 135 139
3,428,100 3,645,000 3,962,925
217,892,899,355 228,101,968,379 272,002,370,282

13,945 14,992 16,214

105,765 111,053 116,606
0.006400% 0.006573% 0.005961%

-0.66 -0.83 -0.86

37% 30% 28%

58% 65% 67%
3% 3% 3%
0% 0% 0%
2% 2% 2%
100% 100.0000% 100.0000%

3.7% 5.1% 5.5%

 2015E 2016E
78,786 87,801
29,000 31,000
7,339,271 7,772,288
1,700 1,800
53 54

2,284,799,028 2,721,829,553
143 148
4,153,424 4,573,062
327,232,343,939 401,519,246,635

19,707 24,357
137,595 165,114
0.006022% 0.006066%

-0.85 -1.01

28% 28%
67% 67%
3% 3%
0% 0%
2% 2%
100.0000% 100.0000%

5.8% 5.9%
MODEL 1

Shipbuilding (65%) Ship repair (30%) Weightage

Materials 60% 15% 49%
Labour 10% 8% 14%
Others 5% 12% 12%
Fixed 25% 65% 41%
Source: Company Data

COSTS % 2007 2008 2009 2010

Cost of Production 6,662 8,561 9,985 11,224
YoY% in Revenue 26% 21% 7%
Materials 49% 3,231 4,069 4,923 5,291
Labour 14% 926 1,166 1,411 1,516
Others 12% 789 994 1,203 1,293
Fixed 41% 2,715 2,332 2,448 3,124
Currency Depn
Change in steel prices

Assumptions
Overheads and other costs are assumed to grow at the expected inflation rate of 10%
The respective percentages are indicative percentages reported by the management of DOCK
FY2007 is the base year
Materials move in line with changes in steel prices in the future and adjusted for depreciation in LKR/U
ce: Company Data

2011 2012E 2013E 2014E 2015E 2016E

10,492 10,803 11,206 12,159 14,329 16,760
-12% 9% 8% 8% 22% 24%
4,670 4,595 4,549 4,890 5,971 7,047
1,338 1,457 1,566 1,694 2,059 2,545
1,141 1,242 1,335 1,444 1,755 2,169
3,343 3,510 3,756 4,131 4,544 4,999
16% 2% 3% 3% 3%
-15% -12% -5% 8% 4% Source: Economist Intelligenc

te of 10%
agement of DOCK

d for depreciation in LKR/USD

ource: Economist Intelligence Unit
 2011 2012
EBIT (1-t) 1,190,309,040 1,648,472,294
+ Depreciation 296,000,000 299,117,757
- Capital Expenditure 546,000,000 472,613,098
- Change in WC 475,000,000 (121,262,382)
= FCFF 465,309,040 1,596,239,336
WACC 18.12%
Discount Factor 1 0.85
Present Value 465,309,040 1,351,428,130
Terminal Value
Perpetual Growth Rate

Value of Firm 15,666,173,560.28

+ Cash and marketable securities 4,051,000,000.00
- Value of Debt (410,363,000.00)
Value of Equity 19,306,810,560.28
Number of shares outstanding 71,860,000.00
Value of Equity per Share 268.67
 2013 2014 2015 2016
1,750,673,354 1,885,670,009 2,544,771,712 3,256,387,115
357,186,326 413,021,512 467,963,834 524,101,259
885,082,406 920,614,108 967,439,493 1,034,441,486
261,611,883 305,283,230 872,604,728 1,161,991,892
961,165,391 1,072,794,183 1,172,691,326 1,584,054,995
18.12% 18.12% 18.12% 18.12%
0.72 0.61 0.51 0.43
688,950,494 651,030,368 602,508,940 689,040,872
11,217,905,715
3.50%
Assuming 28% Corporate Tax Rate
11% of Net PPE
Maintenance CAPEX of 17% (Net PPE/Revenue) plus an apportined 1.6Bn investment throughout the p
25% of revenue

50-50 debt-equity ratio

In line with world GDP

vestment throughout the period
Industry Average PE 8.81 Industry Median of 12months forward PE
DOCK's Expected Earnings 2012 2,265.16 Expected Earnings is 2012
Market Value 19,963.80
No.of shares 71.86
Market Price per Share 277.82
nths forward PE
Peer group EV/EBITDA 6.18
Expected EBITDA-2012 2,588.66
EV 15,988.96
(-)Debt (410.36)
(-) Minority Interest (36.28)
(+) Cash 4,097.70
Market Value of Equity 19,640.01
No. of shares outstanding 71.86
Expected price per share 273.31

Reference: DOCK - EV/EBITDA is 4.68

Average Industry PEG 0.90 Industry median PEG 12 months forward
5 year growth in EPS (%) 10.00
Expected Earnings 2,265.16 Expected Earnings in 2012
Market Value 20,429.15
No. of shares outstanding (Mn) 71.86
Market Share Price 284.30
months forward
 Company Forward PEG (x)
Mills Estruturas e Servicos de Engenharia 0.90
China Shipbuilding Industry Corporation 1.98
Huntington Ingalls Industries 0.37
General Dynamics 1.30
Sumitomo Heavy Industries 4.48
ASL Marine Holdings 0.53
Otto Marine
Coastal Contracts BHD
ABG Shipyard
Yangzijian Shipbuilding -1.07
Baharati Shipyard
Hyundai Mipo Industries
Daewoo Shipbuilding Industry
COSCO Corp
Great Eastern Shipping Co Ltd
Median 0.90
Forward PE (x) Fwd EV/EBITDA (x)
8.74
17.67 11.23
22.44 5.20
8.81 5.36
8.82
7.85 4.14
13.94
5.13
9.59 6.45
4.82 4.42
4.79
12.60 8.49
8.04 6.18
9.50
4.63
8.81 6.18
The marginal investor is diversified, therefore CAPM could be used

Items
Risk-free rate (Rf)

Equity Risk Premium (ERP)

Beta

Cost of Equity
is diversified, therefore CAPM could be used

Assumption Value
10-year treasury bond rate as at 02.07.2012 - Default spread
14.3% - 4% 14.30%
7.50%

Bottom up regression 1.1

10.75%+ (1.1*12.53%) 22.55%

WACC 18.12%
 Average Weightage Weighted Average

Cost of Debt 19.00%

Cost of Debt (after-tax) 13.68%