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▲
SyrupWorld Co.
Acquisition Case ▼
▲
SyrupWorld Co.
Acquisition Case ▼
▲
SyrupWorld Co.
Acquisition Case ▼
Indirect method
Syrup mixer №1 Gross Book Value
Total trend factor
RCN indirect value
7,342 mln ₽ 1,39 10,181 mln ₽
Average Xrate
Price trend Factor
Year Average xrate –
EUR
Average xrate –
USD
2012Q4 40,23 30,37
1,17
1,18
Date Price trend index (Italy)
2012Q4 107,5
RCN indirect value
Asset Name
Gross book value,
as of reporting
date
xrate trend factor price trend factor final trend factor RCN indirect
Syrup mixer #1 7 342 045 1,18 1,18 1,39 10 180 790
Syrup mixer #2 5 283 452 n/a n/a n/a n/a
Interim storage tank #1 4 922 904 1,14 1,20 1,37 6 752 853
Interim storage tank #2 5 831 277 1,00 1,11 1,11 6 450 047
Interim storage tank #3 3 117 450 1,35 1,20 1,63 5 088 606
Vial filling line #1 8 600 000 1,16 1,20 1,39 11 943 001
Vial filling line #2 12 000 000 1,15 1,12 1,29 15 448 903
Vial filling line #3 10 000 000 1,15 1,12 1,29 12 874 086
Packaging robot
combined with
palletizer 7 500 000 1,00 1,04 1,04 7 804 973
CIP washer 3 000 000 1,18 1,18 1,39 4 159 927
Technological pumps 1 245 000 1,15 1,17 1,34 1 671 025
Technological piping 1 000 000 1,15 1,04 1,19 1 192 839
Water preparation 1 475 003 1,00 1,23 1,23 1 813 586
Electrical networks 2 000 000 1,14 1,04 1,19 2 384 827
Monitoring and testing
equipment 2 000 000 1,15 1,20 1,38 2 764 021
Storage racks 5 000 000 1,14 1,04 1,19 5 962 068
Lift trucks 3 000 000 n/a n/a n/a n/a
Year Average xrate – EUR Average xrate – USD xrate trend factor -eur xrate trend factor -
USD
2000 25,99 28,13 1,55 1,08
2001 26,13 29,18 1,54 1,04
2002 29,69 31,36 1,35 0,97
2003 34,68 30,67 1,16 0,99
2004 35,82 28,81 1,12 1,05
2005 35,16 28,31 1,14 1,07
2006 34,11 27,14 1,18 1,12
2007 35,03 25,55 1,15 1,19
2008 36,45 24,87 1,10 1,22
2009 44,20 31,77 0,91 0,96
2010 40,22 30,38 1,00 1,00
2011 40,90 29,39 0,98 1,03
2012 39,86 31,11 1,01 0,98
Q4 2012 40,23 30,37 1,00 1,00
Year
Euro area
(18
countries)
France Italy Germany Euro area (18
countries) CAG USA Russia
2000Q2 85,61 86,37 83,97 95,8
2001Q2 89,88 91,17 86,41 96,81
2002Q2 88,71 90,87 87,41 98,12
2003Q2 89,05 91,4 89,79 98,07
2004Q2 90,42 92,6 90,49 98,04
2005Q2 89 91,3 90,06 88,63 98,15
2006Q2 91,26 92,83 91,42 90,82 98,36
2007Q2 94,83 95,97 91,98 93,9 98,49
2008Q2 101,72 104,63 102,97 100,8 98,87 82,34
2009Q2 97,65 100,83 102,01 94,88 99,76
2010Q2 99,17 99 99,87 98,87 99,92 176,5
2011Q2 106,49 107 103,32 107,57 100,67
2011Q4 107,47 107,87 105,06 108,87 101,06
2012Q2 108,48 107,23 106,31 109,5 102,3 101,56
2012Q4 112,09 109,47 107,5 113 102,3 183,7 101,24
XRATES
FACTO
R T
REN
D P
RIC
E
Direct method – cost-to-capacity, replacement vs. reproduction considerations and adjustments
𝑅𝐶𝑁 𝑖𝑛𝑑𝑖𝑟𝑒𝑐𝑡 × (2,5
3)0,66
𝑅𝑒𝑝𝑙𝑎𝑐𝑒𝑚𝑒𝑛𝑡 𝑐𝑜𝑠𝑡 𝑓𝑜𝑟 𝑀#2
Syrup mixer #2
9 026 551
RCN for the core equipment 85 986 638
12% 10% 7%
10 318 397 8 598 664 6 019 065
Piping, electrical networks, monitoring and testing equipment
I&CC VFL#2 VFL#3
13 619 496
12 874 086
11 972 900
12 332 087
7%
3%
Vial filling lines
Direct method – cost-to-capacity, replacement vs. reproduction considerations and adjustments
IST
2
3t 6 450 047 𝟒
𝟑
𝟎,𝟔𝟔
7 798 704
15 597 408
4t
2 4t
4 367 274
5 615 067
5 615 067
Interim storage tanks
0,36
0,36
0,28
General Age/Life
Date On NUL RUL RUL(manual) RUL final Physical
depreciation
Syrup mixer #1 2006 15 9 9 40%
Syrup mixer #2 1988 15 -9 3 3 80%
Interim storage tank #1 2005 25 18 18 28%
Interim storage tank #2 2010 25 23 23 8%
Interim storage tank #3 2002 25 15 15 40%
Vial filling line #1 2003 22 13 13 41%
Vial filling line #2 2007 22 17 17 23%
Vial filling line #3 2007 22 17 17 23%
Packaging robot combined with palletizer 2010 12 10 10 17%
CIP washer 2006 12 6 6 50%
Technological pumps 2007 12 7 7 67%
Technological piping 2007 10 5 5 50%
Water preparation 2008 12 8 8 33%
Electrical networks 2005 15 8 8 47%
Monitoring and testing equipment 2007 7 2 2 71%
Storage racks 2005 10 3 3 70%
Lift trucks various 10 - - -
Determining depreciation
2013 2014 2015 2016
loss 400 000 400 000 400 000 400 000
DR 15% 15% 15% 15%
DF 0.870 0.756 0.658 0.572
Loss 347 826 302 457 263 006 228 701
1 141 991
Discount rate
Remaining useful life
Annual changeover loss
Accumulated loss
400 000
15%
4
VFL #1
𝐷𝑉 (%) = 𝑅𝑒𝑠𝑖𝑑𝑢𝑎𝑙 𝑉𝑎𝑙𝑢𝑒 ^ (𝐴𝑔𝑒/𝑁𝑈𝐿)
MV 1 119 235
𝑃ℎ𝑦𝑠𝑖𝑐𝑎𝑙 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 = 1 − 𝐷𝑉
𝑀𝑉 = 𝐼𝑛𝑑𝑖𝑟𝑒𝑐𝑡 𝑅𝐶𝑁 ∗ 𝑃𝐷
Technological pumps
8 780 790
New mixer device cost 1 400 000
RCN of new mixer 10 180 790
Syrup mixer #1
Market Approach
y = -33261x + 740683
R² = 0,353
0
100000
200000
300000
400000
500000
600000
700000
800000
0 2 4 6 8 10 12
Price (excl.VAT), rubles
Asset name lifting
capacity Height
Year of
manufacturing Age Price
ETV 213 #1 1 300 3 000 2005 7 507 856
ETV 213 #2 1 300 3 000 2007 5 574 378
ETV 213 #3 1 300 3 000 2008 4 607 639
ETV 213 #4 1 300 3 000 2009 3 640 900
TOTAL PRICE FOR 4 ETV 2 330 773
Regression Linear - model
Observations: 20
R2 0,3
Model Y=-33261*x+740683
Specification of the model
Linear
R2=0,35
Exp-model
R2=0,30
Box-Cox test: H0 isn’t rejected => models are equal => choose with max R2
Final Estimations
Asset Name RCN indirect RCN direct RCN final Physical
depreciation - "direct dollar"
Physical depreciation -
percentage
Functional obsolescence - "direct dollar"
Market value – Cost approach
(before economic
obsolescence)
Syrup mixer #1 10 180 790 - 10 180 790 -1 400 000 40% 5 268 474
Syrup mixer #2 n/a 9 026 551 9 026 551 80% 1 805 310
Interim storage tank #1 6 752 853 4 367 274 4 367 274 28% 3 144 438
Interim storage tank #2 6 450 047 5 615 067 5 615 067 8% 5 165 862
Interim storage tank #3 5 088 606 5 615 067 5 615 067 40% 3 369 040
Vial filling line #1 11 943 001 - 11 943 001 41% 1 141 991 6 372 596
Vial filling line #2 15 448 903 13 619 496 13 619 496 23% 10 487 012
Vial filling line #3 12 874 086 13 619 496 13 619 496 23% 10 487 012
Packaging robot combined with palletizer
7 804 973 - 7 804 973 17% 6 478 127
CIP washer 4 159 927 - 4 159 927 50% 2 079 963
Technological pumps 1 671 025 - 1 671 025 67% 551 438
Technological piping 1 192 839 10 318 397 10 318 397 50% 5 159 198
Water preparation 1 813 586 - 1 813 586 33% 1 215 103
Electrical networks 2 384 827 8 598 664 2 384 827 47% 1 263 958
Monitoring and testing equipment
2 764 021 6 019 065 6 019 065 71% 1 745 529
Storage racks 5 962 068 - 5 962 068 70% 1 788 620
Lift trucks n/a - - - 2 330 773
Total M&E 68 712 453
Current Assets
Inventories
Obsolete
Raw Materials Finished Goods
34 155 000 22 080 000 Fair Value = 56 235 000
RUB
Not Included!
Accounts Receivable
Book Value Uncollectible AR
10 000 000 35 000 000 Fair Value = 25 000 000 RUB
Cash Book Value Fair Value
80 749 000 RUB
Intangible Assets: Land Rental Agreement
With the agreement Without the agreement
• Rental rate = 300 k RUB per month
• WACC = 20% • Tax rate = 20%
• Rental rate = 350 k RUB per month
• WACC = 20% • Tax rate = 20%
• DCF2013 = 301,25 k RUB • DCF2014 = 273,63 k RUB • DCF2015 = 259,91 k RUB
• DCF2013 = 351,46 k RUB • DCF2014 = 319,24 k RUB • DCF2015 = 303,28 k RUB
Differential method
Land rental agreement pre−tax value = 𝑪𝑭𝒊
𝟏
(𝟏+𝑾𝑨𝑪𝑪)𝒊𝒊 − 𝑪𝑭𝒊
𝟐
(𝟏+𝑾𝑨𝑪𝑪)𝒊𝒊 = 1 669 664 RUB
Fair Value of the land rental agreement = Land rental agreement pre−tax value*(1 – Tax rate) 1 335 731 RUB
Supply Contract
CF = (Total Sales – COGS – Variable SG&A – D&A)*(1-t) +D&A - △NWC
EBIT
Total Sales = P1*CPI*Q1+P2*CPI*Q2 COGS% of Revenue = 45% Variable SG&A % of Revenue = 5,6% D&A% of Revenue = 12,1%
Current assets = Inventory + Accounts Receivable+0,02*Sales Current Liabilities = Accounts Payable NWC = Current Assets – Current Liabilities NWC/Salesaverage= 52,5%
2013 2014 2015 2016 2017 2018
CF 5420,17 5977,60 6431,57 7370,30 8362,00 8924,39
DCF 4713,19 4519,92 4228,86 4213,99 4157,39 3858,26
FAIR VALUE OF SUPPLY CONTRACT 25 691 620 ₽
WACC=15% Tax Rate=20%
Long-Term Liabilities
200 000 000 RUB 10% annually
Discount rate: 15% Maturity: 31.12.2013
200 000 USD 8,75% annually
Discount rate: 8% Maturity: 31.12.2015
89 254 000 RUB 9,5% annually
Discount rate: 15% Maturity: 31.12.2014
DCF2013 = 191 304 348 RUB DCF2013 = 4 921 502 RUB DCF2013 = 7 373 157 RUB
DCF2014 = 73 900 287 RUB DCF2014 = 4 556 927 RUB
DCF2015 = 52 441 052 RUB Fair Value = 334 497 293 RUB
GOODWILL 212 984 498 ₽
ACQUISITION PRICE
450 000 000 ₽
FAIR FALUE OF EQUITY
237 016 512 ₽
Contribution
Vorozhtsov Sergey: M&E valuation, presentation, analytical report Glinskaya Anastasiya: intangible assets valuation, analytical report, presentation Lomparter Elena: inventory valuation, analytical report, presentation Rozhin Alexey: M&E valuation, analytical report, presentation Khafizova Liya: intangible assets valuation, analytical report, presentation