Vocus Group Limited (ASX code: VOC) FIN3CSF 代写
CASE STUDIES IN FINANCE (FIN3CSF) – SEMESTER 2, 2017CASE STUDY 4: FINANCIAL STATEMENT ANALYSIS AND SECURITYVALUATIONOn June 7 th 2017, Vocus Group Limited (ASX code: VOC) received an unsolicited proposalfrom Kohlberg Kravis Roberts & Co. (KKR) to acquire all of the issued capital in VocusGroup Limited for a cash offer price of $3.50 per share. On the day prior to the receipt of themerger proposal, the closing price of Vocus Group Limited shares was $2.86. The proposedacquisition is to be completed using a scheme of arrangement bid process if it is supported bythe Board of Directors of Vocus Group Limited. The Board of Directors formed anIndependent Board Committee (IBC), which held an initial meeting on the evening of June7 th 2017 to assess the acquisition approach from KKR and to determine a response strategyfor the wider Board of Directors and communication to the company’s shareholders regardingthe proposal. The indicative timetable was for the company to announce its response to theacquisition proposal from KKR to the market by August 21 st 2017.Vocus Group Limited is an ASX-listed, vertically integrated telecommunications providerwhich operates in the Australian and New Zealand telecommunications markets. Thecompany owns a national fibre infrastructure network connecting all capital cities and mostregional cities across Australia and New Zealand, with its fibre communications networkdirectly connecting to more than 5,500 buildings. Vocus Group Limited provides a portfolioof communications brands and products for corporate, small business, government andresidential customers across Australia and New Zealand. The company also providesinternational internet protocol (IP) transit services, including submarine cable capacityconnecting Australia to Singapore, New Zealand and the United States. It also operates datacentres supporting the provision of its communication services.Kohlberg Kravis Roberts & Co. is a well-known unlisted private equity business which isbased in the United States, but has undertaken various acquisition transactions and otherinvestments involving listed and unlisted businesses in Australia. The company raises fundsby issuing debentures and similar debt securities, and uses the proceeds raised for investmentpurposes, taking either minority or majority ownership stakes in businesses. The companythen actively engages in the management and restructuring of businesses in which it investsand crystallises any value creation using investment exit strategies such as trade sales andsharemarket listings.The following table provides a summary of financial, structural and performance informationfor Vocus Group Limited for the June 30 th financial year ends from 2013 to 2017 (All figures,except for per share, issued capital and percentage statistics, are expressed in A$Million):22013 2014 2015 2016 2017Key indicators No. of issued shares (Mill.) 76.2234 90.8869 101.5036 528.2674 619.9819Market capitalisation 160.0691 432.622 585.6758 4,500.8382 2,089.3390Share price ($) 2.100 4.760 5.770 8.520 3.370Price/Earnings ratio (times) 18.261 32.828 23.648 42.814 -1.452Market / Book ratio (times) 2.2523 3.1550 2.9845 1.4179 0.9072Earnings per share ($) 0.1146 0.1500 0.2441 0.1986 -2.3214Dividends per share ($) 0.0100 0.0180 0.0830 0.1750 0.0600Dividend payout ratio (%) 8.7260 12.0000 34.0025 88.1168 -2.5846Trading Information Operating revenue 66.4998 91.7530 149.0040 829.9380 1,820.5770Operating expenses 39.8472 59.4120 104.7970 616.0130 2,991.6770Earnings before interest,taxes, depreciation andamortisation (EBITDA)22.220033.073057.1700234.8980-1,170.9710Earnings before interest andtaxes (EBIT)13.3545 21.3610 38.4860 156.4110 -1,364.5360Profit before tax 12.3195 19.5400 33.2080 132.8260 -1,405.4410Net profit after tax beforeabnormals8.7375 13.6290 24.7730 104.9120 -1,439.2020Net profit after tax afterabnormals5.0983 12.9250 19.8500 64.2520 -1,464.8700Net interest expense 1.0350 1.8210 5.2780 23.5850 40.9050Income tax expense 3.5820 5.9110 8.4350 27.9140 33.7610Net operating cash flows 16.6902 24.1700 34.6940 98.0680 219.0720Return on total assets (%) 5.2101 6.4342 6.4623 2.2350 34.5000Return on equity (%) 12.2944 9.9392 12.6239 3.3051 62.8912Structural information Cash and cash equivalents 14.1691 44.5570 15.1700 128.6290 50.1940Current assets 25.4160 56.0680 41.9300 333.6840 327.4850Property, plant & equipment 50.7770 63.3840 204.6190 522.4130 1,542.9790Total assets 167.7028 211.8220 383.3440 4,694.0190 4,171.5960Current liabilities 36.2137 26.3310 40.8780 400.5640 396.7500Long-term debt 56.9864 41.9310 117.9590 872.3820 1,065.8160Total liabilities 96.6339 74.6980 187.1050 1,519.7340 1,868.4720Share capital 46.0687 98.5940 144.2440 3,100.7380 3,774.8340Retained earnings 24.0954 35.8910 48.1480 57.0800 -1,494.4130Total shareholders’ equity 71.0689 137.1240 196.2390 3,174.2850 2,303.1240Long-term debt to Totalassets (%)33.9806 19.7954 30.7710 18.5850 25.5494Total liabilities toshareholders’ equity (%)135.9721 54.4748 95.3455 47.8764 81.12773Other relevant information relating to Vocus Group Limited or the wider corporate andsharemarket sectors is: The beta coefficient for Vocus Group Limited is 0.61, compared to the average betacoefficient for the telecommunications industry of 0.75. The 10-year Australian Government Bond yield was 2.675% on June 30 th 2017. The S&P/ASX 200 Accumulation Index has provided an average annual return of 9.976%over the most recent 8-year period. Consensus analyst forecasts for EBITDA and earnings per share (EPS) for the 2018financial year are $300 million and $0.250 per share, respectively. Long-term earnings (including residual earnings) and dividend growth forecasts forVocus Group Limited are 4.00% and 5.00%, respectively. The issued share capital for Vocus Group Limited at the end of 2018 financial year isexpected to be 670 million shares. Assume that the analysis is being undertaken on June 30 th 2017.The following table provides information on Australian listed peer companies operating inthe same industry as Vocus Group Limited as at June 30 th 2017 (figures are in A$Millionunless otherwise stated):MNF GroupSpark NewZealandTelstraCorporationTPGTelecomMarket capitalisation 318.0412 6,684.2827 51,141.1810 4,836.2967No. of issued shares (Mill.) 72.7783 1,856.7452 11,893.2979 848.4731Share price ($) 4.3700 3.6000 4.3000 5.7000Book value of Equity 68.3470 1,572.3810 14,808.000 590.7770Enterprise value 276.8730 7,488.7131 67,487.1807 12,224.2101EBITDA 22.5310 969.5238 11,029.9000 791.0000Net profit after tax 12.5640 219.2467 4,224.900 326.6000Sales revenue 191.752 3,500.1174 25,912.0000 2,387.8000In relation to recent acquisition activity in the telecommunications sector in Australia, thefollowing table provides deal multiples information for target companies from thetelecommunications sector involved in acquisitions in the last 7 years:DateannouncedTarget companyOffer price /Book valueOffer price /
Vocus Group Limited (ASX code: VOC) FIN3CSF 代写EPSBid PremiumOffered22/11/10 Clever Communication AustraliaLimited1.570 10.187 28.574%12/07/13 Inabox Group Limited 2.632 13.866 15.550%28/09/15 M2 Group Limited 2.280 26.014 28.651%13/09/16 BigAir Group Limited 1.910 20.923 29.787%As the lead financial advisor to Vocus Group Limited on the acquisition proposal from KKR,the Independent Board Committee has requested your firm to prepare an independent expert’s4report to assist them in forming a response and recommendation for shareholders relating tothe proposal. This expert’s report should include the following content: The results and conclusions from a financial analysis of Vocus Group Limited, withparticular focus on operating, efficiency and performance aspects of the business and,from this, identification of potential sources of value creation from acquiring VocusGroup Limited. An estimate of the current intrinsic (fundamental) market value of Vocus GroupLimited’s equity shares. This valuation estimate should be determined from using anumber of valuation metrics and approaches, and can either be presented as a point orrange estimate. Based on the above analysis and any other relevant information or considerations, theprovision of a recommendation as to whether the price offered in the acquisition proposalis fair and reasonable or otherwise.Required:This independent expert’s report is due to be submitted to the Independent BoardCommittee (IBC) of Vocus Group Limited by 6.00pm on Tuesday 3 rd October 2017, viathe FIN3CSF subject LMS site. This case study contributes 15% to the overall finalassessment in the FIN3CSF subject. This case study is to be completely individually, andthe maximum word limit, excluding calculations and financial analysis reporting (suchas tables), is 1,000 words. Vocus Group Limited (ASX code: VOC) FIN3CSF 代写
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