Vocus Group Limited (ASX code: VOC) FIN3CSF 代写

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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