Group Project FINA5527 (Private Wealth Management) – Semester 2, 2017
Page 1 of 3 © John King 2016-17
Group Size: Four persons (Except where student numbers require one or two groups to have three
persons)
Due Date: Two parts with due dates as indicated below.
In Class: A hardcopy of your project report is to be submitted. The hardcopy version submitted will
be the version which is assessed for your course mark
LMS: Submit your project reports on LMS (Blackboard), by attaching your files (in Word, pdf
and/or Excel formats) at the ‘Assessments’ tab on LMS (Blackboard)
Weight: 30% of final grade
Format: A4-pages. Font size: 12 Times New Roman, double spacing, Normal margins (about 2.5
cm top, bottom, left and right).
Required [Total Marks: 30 marks; which is 30% of final grade for the course]
You are to evaluate an whether your private equity company is to make a bid to acquire a publicly
listed company.
Your group is to act as if it is a team which has been assigned to evaluate the publicly listed
company as a potential acquisition. Your reports will be sent to the Board of your company.
There are two parts to the project:
1. Private equity proposal
2. Private equity plan of action
The two parts require submission of a report.
Clarity of presentation of reports – (20% of marks in each part)
For each of the reports, 20% of the marks are for the clarity of presentation of the report. As the
reader I consider:
How easy it is follow your report? This includes format of the report.
Group Project FINA5527 (Private Wealth Management) – Semester 2, 2017
Page 2 of 3 © John King 2016-17
Part 1: Private Equity Proposal [10 Marks; 10% of final grade for the course]
Due Date:
Wednesday 23 August at 2:00 pm [Hardcopy submitted in class].
Maximum Length: 1,000 words (Appendices of tables & graphs can be added)
Required:
You are to decide on the structure of the private equity proposal.
This does not include analysing the target company, or determining its value nor the price which
you recommend for the bid. Part 2 is for analysis, valuation and price.
The proposal is to include at least the following details, with reasons as to why to are recommending
each item, and why it is fair and reasonable to both your private equity company and the potential
investors:
Fees to be paid out of the target company to your private equity company
Fees to be paid by investors to your private equity company
Performance targets
Expected timeframe from acquisition of the target company to disposal.
Expected method of disposal of the target company and distributions to investors.
Any other information about the structure, costs and rewards of the deal which you consider
important to the board of the private equity company and the investors.

Group Project FINA5527 (Private Wealth Management) – Semester 2, 2017
Page 3 of 3 © John King 2016-17
Part 2: Private equity plan of action [20 Marks; 20% of final grade for the course]
Due Date:
Wednesday 4 October at 2:00 pm [Hardcopy submitted in class].
Maximum Length: 2,000 words (Appendices of tables & graphs can be added)
Required:
Attached is summary information about the target company for the past 5 years.
Perform a financial analysis of the target company. This should involve at least the last three years.
The purpose of the analysis is to:
Understand current performance and trends
Determine where improvements can be made
Value the target company based on current performance and trends
Determine the maximum price you would recommend to acquire the company
Determine a plan of action to improve its performance
Determine how many years your company expects to own the target company before its disposal
and distribution of proceeds to investors.
Determine the risks of the investment and a plan to manage them.
You might change some of the details in the Part 1 report, based on your analysis and plan. The deal
can be different than you expected in Part 1. Report any changes to the Part 1 proposal, and why the
change is recommended.
Your report is to summarise the major details of the plan and deal, including:
Current valuation of the target company
Costs and benefits of the plan of action, including timing.
Expected income to your private equity company
Expected return to investors (Total return and per annum)
Based on the risk analysis, what are other possible financial outcomes?
Tip: A common mistake in this project is weak decision-making. Be decisive and bold in your
action plan. That is what distinguishes private equity from typical management. Your
decisions have to be supported by business logic. Remember that private equity is not a longterm investor in the businesses they acquire. Their cycle is: ‘Buy-fix-sell-next investment’.
Notes on the Financial Statements:
For purposes of this project you are performing the analysis in July 2016.
The financial statements are for the year ended 30 June. As we are assuming that ‘now’ is July
2016, you have the results for the year ended 30 June 2016.
The sum of the segments does not equal the results for the whole company. The difference is head
office and minor other segments, investments and businesses. All major segments have been
included in the information provided to you.

Target Company
Balance Sheet

 

Balance Sheets 2016 2015 2014 2013 2012
$’m $’m $’m $’m $’m
Current Assets
Cash 546 482 441 849 905
Receivables 429 391 677 647 346
Inventories 2,946 2,852 3,155 3,032 2,837
Other 28 156 21 41 28
Total Current Assets 3,949 3,881 4,294 4,569 4,116
Non-Current Assets
Receivables 41 44 34 50 121
Investments 14 134 145 113 106
Property, plant & equipment 3,468 3,141 3,857 3,396 3,341
Intangibles 1,670 1,412 611 576 517
Other 579 523 405 333 252
Total Non-Current Assets 5,772 5,254 5,052 4,468 4,337
Total Assets 9,721 9,135 9,346 9,037 8,453
Current Liabilities
Accounts payable 3,058 3,080 3,001 2,809 2,476
Interest bearing liabilities 200 30 216 261 11
Other financial liabilities 62 24 0 0 0
Provisions 622 762 608 570 541
Current tax liability 39 67 125 162 14
Other 0 0 0 0 0
Total Current Liabilities 3,981 3,963 3,950 3,802 3,042
Non-Current Liabilities
Accounts payable 0 23 0 0 0
Interest bearing liabilities 1,286 974 1,213 713 1,143
Other financial liabilities 22 16 0 0 0
Provisions 292 321 397 391 420
Other 233 240 56 48 49
Total Non-Current Liabilities 1,833 1,574 1,666 1,152 1,612
Total Liabilities 5,814 5,537 5,616 4,954 4,654
Net Assets 3,907 3,598 3,730 4,083 3,799
Shareholders’ Equity
Contributed share capital 2,199 2,144 2,084 2,307 2,210
Reserves (16) 4 485 430 469
Retained Profits 1,724 1,450 1,161 1,346 1,120
Shareholders’ Equity Attributable to Members 3,907 3,598 3,730 4,083 3,799
Minority Interests 0 0 0 0 0
Total Shareholders’ Equity 3,907 3,598 3,730 4,083 3,799
0 0 0 0 0

© AJK Consulting Pty Ltd 2016
Target Company
Income Statements

Income Statements 2016 2015 2014 2013
$’m $’m $’m $’m
Revenue
Sales revenue 34,688 34,212 36,185 32,082
Cost of sales (26,190) (26,069) (27,287) (23,915)
Gross Profit 8,498 8,143 8,898 8,167
Share of equity accounting profits of associates 35 22 0 0
Other income 257 134 354 361
Operating expenses (7,697) (7,448) (8,287) (7,582)
Earnings before interest and tax [EBIT] 1,093 851 965 946
Net interest expense (103) (99) (74) (71)
Operating profit before income tax 990 752 891 875
Income tax expense (271) (216) (266) (258)
Profit after income tax and before abnormal items 719 536 625 617
Trading profit of sold businesses (1) 43 0 0
Profit from sale of Business 29 584 0 0
Profit after income tax 747 1,163 625 617
Less: Profit attributable to minority interests 0 0 0 0
Profit after income tax attributable to shareholders 747 1,163 625 617

© AJK Consulting Pty Ltd 2016
Target Company
Statement of Cash Flows

Statement of Cash Flows 2016 2015 2014 2013
$’m $’m $’m $’m
Cash Flows From Operating Activities
Cash receipts from customers 37,249 39,814 39,251 34,539
Cash payments to suppliers and employees (35,920) (38,012) (37,660) (32,905)
Distributions received from associated entities 2 10 10 7
Interest received 37 24 29 55
Interest paid (113) (113) (71) (70)
Income taxes paid (313) (423) (402) (288)
Other 0 0 0 0
Net cash provided by/(used in) operating activities 942 1,300 1,157 1,338
Cash Flows From Investing Activities
Payments for property, plant and equipment (1,041) (1,043) (925) (704)
Proceeds from sale of property, plant and equipment 170 20 24 90
Payment for purchase of business (160) (203) (120) (192)
Payment for investments 0 0 (3) (2)
Proceeds from sale of investments/Business 174 1,323 4 32
Loans to related entities 0 0 0 0
Loans repaid by related entities 0 0 15 66
Dividend received 0 0 0 0
Net cash provided by/(used in) investing activities (857) 97 (1,005) (710)
Cash Flows From Financing Activities
Proceeds from share issues 77 123 108 37
Payments for buy-back of shares (78) (838) (704) 0
(Repayment of)/proceeds from short term deposits 0 0 0 0
Proceeds from borrowings 5,884 8,309 3,172 1,363
Repayment of borrowings (5,403) (8,497) (2,692) (1,773)
Dividends paid (501) (453) (437) (308)
(Advances)/repayments of employee loans 0 0 0 0
Net cash provided by/(used in) financing activities (21) (1,356) (553) (681)
Net increase/(decrease) in cash held 64 41 (401) (53)
Effect of exchange rate changes on foreign currency 0 0
Net cash at the beginning of the financial year 482 441 842 895
Net cash at the end of the financial year 546 482 441 842

© AJK Consulting Pty Ltd 2016
Target Company
Segment Results

Year: 2016 Segment Segment Segment Segment Segment Segment Total Trading
A X K T O M Segments
$’m $’m $’m $’m $’m $’m $’m
Revenue
Sales revenue 20,437 5,793 3,889 3,306 1,262 34,687
Earnings before interest and tax [EBIT] 693 45 97 290 85 1,210
Capital Employed (Year End) 3,072 174 550 411 140 4,347
Capital Employed (Year Beginning) 2,533 143 681 429 175 3,961
Capital Employed 2,803 159 616 420 158 4,154
Segment Segment Segment Segment Segment Segment Total Trading
Year: 2015 A X K T O M Segments
$’m $’m $’m $’m $’m $’m $’m
Revenue
Sales revenue 19,626 6,187 4,000 3,170 1,229 2,486 36,698
Earnings before interest and tax [EBIT] 552 30 63 234 73 62 1,014
Capital Employed (Year End) 2,533 143 681 429 175 675 4,636
Capital Employed (Year Beginning) 2,150 136 694 465 178 844 4,467
Capital Employed 2,342 140 688 447 177 760 4,552
Year: 2014 Segment Segment Segment Segment Segment Segment Total Trading
A X K T O M Segments
$’m $’m $’m $’m $’m $’m $’m
Revenue
Sales revenue 19,176 5,494 4,026 3,102 1,236 3,151 36,185
Earnings before interest and tax [EBIT] 740 24 96 222 67 3 1,152
Capital Employed (Year End) 2,150 136 694 465 178 844 4,467
Capital Employed (Year Beginning) 2,089 161 699 453 171 606 4,179
Capital Employed 2,120 149 697 459 175 725 4,323
Year: 2013 Segment Segment Segment Segment Segment Segment Total Trading
A X K T O M Segments
$’m $’m $’m $’m $’m $’m $’m
Revenue
Sales revenue 18,015 3,177 3,799 2,852 1,100 3,184 32,127
Earnings before interest and tax [EBIT] 630 20 101 151 52 46 1,000
Capital Employed (Year End) 2,089 162 699 453 171 606 4,180
Capital Employed (Year Beginning) 1,974 28 685 453 157 629 3,926
Capital Employed 2,032 95 692 453 164 618 4,053

© AJK Consulting Pty Ltd 2016

Competitor
Balance Sheet

 

Balance Sheets 2016 2015 2014 2013 2012
$’m $’m $’m $’m $’m
Current Assets
Cash 799 526 434 349 287
Receivables 485 1,160 596 209 242
Inventories 2,739 2,316 1,969 1,847 1,843
Other 138 119 65 371 248
Total Current Assets 4,161 4,121 3,064 2,776 2,620
Non-Current Assets
Investments 256 59 1 32 3
Property, plant & equipment 4,623 4,056 3,359 2,468 2,349
Intangibles 5,004 4,759 2,047 572 555
Other 372 351 304 297 359
Total Non-Current Assets 10,255 9,225 5,711 3,369 3,266
Total Assets 14,416 13,346 8,775 6,145 5,886
Current Liabilities
Accounts payable 4,185 3,573 2,916 2,731 2,621
Interest bearing liabilities 380 612 236 18 151
Provisions 650 604 524 348 328
Other 288 85 105 132 144
Total Current Liabilities 5,503 4,874 3,781 3,229 3,244
Non-Current Liabilities
Interest bearing liabilities 2,691 3,704 2,610 1,078 1,079
Provisions 382 341 290 365 323
Other 325 170 94 4 0
Total Non-Current Liabilities 3,398 4,215 2,994 1,447 1,402
Total Liabilities 8,901 9,089 6,775 4,676 4,646
Net Assets 5,515 4,257 2,000 1,469 1,240
Shareholders’ Equity
Contributed share capital 3,351 2,861 879 575 606
Reserves (38) (289) 31 185 184
Retained Profits 1,963 1,455 1,064 704 445
Shareholders’ Equity Attributable to Members 5,276 4,027 1,974 1,464 1,235
Minority Interests 239 230 26 5 5
Total Shareholders’ Equity 5,515 4,257 2,000 1,469 1,240
0 0 0 0 0

© AJK Consulting Pty Ltd 2016
Competitor
Income Statements

Income Statements 2016 2015 2014 2013
$’m $’m $’m $’m
Revenue
Sales revenue 42,587 37,833 31,481 28,481
Cost of sales (31,833) (28,389) (23,679) (21,523)
Gross Profit 10,754 9,444 7,802 6,958
Share of equity accounting profits of associates 0 0 3 0
Other income 140 145 105 154
Operating expenses (8,783) (7,867) (6,608) (6,047)
Earnings before interest and tax [EBIT] 2,111 1,722 1,302 1,065
Net interest expense (234) (250) (150) (90)
Operating profit before income tax 1,877 1,472 1,152 975
Income tax expense (566) (446) (335) (287)
Profit after income tax 1,311 1,026 817 688
Less: Profit attributable to minority interests (17) (12) (1) 0
Profit after income tax attributable to shareholders 1,294 1,014 816 688

© AJK Consulting Pty Ltd 2016

Competitor
Statement of Cash Flows

 

Statement of Cash Flows 2016 2015 2014 2013
$’m $’m $’m $’m
Cash Flows From Operating Activities
Cash receipts from customers 46,021 39,938 33,259 29,682
Cash payments to suppliers and employees (42,955) (37,505) (31,485) (28,043)
Dividend received 0 0 0 0
Interest received 24 17 10 10
Interest paid (274) (270) (172) (106)
Income taxes paid (522) (475) (398) (324)
Other 0 0 0 0
Net cash provided by/(used in) operating activities 2,294 1,705 1,214 1,219
Cash Flows From Investing Activities
Payments for property, plant and equipment (1,113) (1,412) (1,181) (718)
Proceeds from sale of property, plant and equipment 778 329 98 138
Payment for purchase of business (222) (1,644) (1,292) (83)
Payment for investments (173) 0 0 0
Proceeds from sale of investments/Business 0 1 1 0
Loans to related entities 0 0 0 (70)
Loans repaid by related entities 0 0 0 153
Dividend received 5 0 6 1
Net cash provided by/(used in) investing activities (725) (2,726) (2,368) (579)
Cash Flows From Financing Activities
Proceeds from share issues 47 24 108 28
Payments for buy-back of shares 0 0 0 (141)
(Repayment of)/proceeds from short term deposits 0 0 0 0
Proceeds from borrowings 10,097 11,089 10,883 9,717
Repayment of borrowings (11,096) (10,010) (9,570) (9,850)
Dividends paid (363) 0 (202) (347)
(Advances)/repayments of employee loans 16 17 20 15
Net cash provided by/(used in) financing activities (1,299) 1,120 1,239 (578)
Net increase/(decrease) in cash held 270 99 85 62
Effect of exchange rate changes on foreign currency 3 (6)
Net cash at the beginning of the financial year 526 433 349 287
Net cash at the end of the financial year 799 526 434 349

© AJK Consulting Pty Ltd 2016
Competitor
Segment Results

Year: 2016 Segment Segment Segment Segment Segment Segment Total Trading
A X B K C H Segments
$’m $’m $’m $’m $’m $’m $’m
Revenue
Sales revenue 27,745 4,837 3,940 3,465 1,285 1,032 42,304
Earnings before interest and tax [EBIT] 1,597 83 155 139 71 184 2,229
Capital Employed (This Year) 2,163 109 2,263 471 312 2,451 7,769
Capital Employed (Last Year) 2,058 98 2,115 440 297 2,297 7,305
Capital Employed (Avge) 2,111 104 2,189 456 305 2,374 7,537
Year: 2015 Segment Segment Segment Segment Segment Segment Total Trading
A X B K C H Segments
$’m $’m $’m $’m $’m $’m $’m
Revenue
Sales revenue 25,458 4,390 2,605 3,119 1,167 850 37,589
Earnings before interest and tax [EBIT] 1,286 53 109 123 64 151 1,786
Capital Employed (This Year) 2,058 98 2,115 440 297 2,297 7,305
Capital Employed (Last Year) 1,703 80 0 372 236 1,438 3,829
Capital Employed (Avge) 1,881 89 1,368 406 267 1,868 5,877
From 2/11/14
Year: 2014 Segment Segment Segment Segment Segment Total Trading
A X K C H Segments
$’m $’m $’m $’m $’m $’m
Revenue
Sales revenue 23,570 3,308 2,909 1,007 416 31,210
Earnings before interest and tax [EBIT] 1,077 36 118 52 55 1,338
Capital Employed (This Year) 1,703 80 372 236 1,438 3,829
Capital Employed (Last Year) 1,328 59 326 220 0 1,933
Capital Employed (Avge) 1,516 70 349 228 934 3,096
From 1/11/13
Year: 2013 Segment Segment Segment Total Trading
A X K Segment C Segments
$’m $’m $’m $’m $’m
Revenue
Sales revenue 21,997 2,195 2,718 886 27,796
Earnings before interest and tax [EBIT] 941 19 116 44 1,120
Capital Employed (This Year) 1,328 59 326 220 1,933
Capital Employed (Last Year) 1,411 46 269 245 1,971
Capital Employed (Avge) 1,370 53 298 233 1,952

© AJK Consulting Pty Ltd 2016

 

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Group Project FINA5527 (Private Wealth Management) – Semester 2, 2017