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

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

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

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

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

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

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

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

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