Exercise - Purpose Payback.pdf - Exercise LTG Smurfit...

Exercise
LTG, Smurfit Kappa, X5 Retail, Volkswagen
L:\Content\Tailored and Public Learning\Content - work in progress\Diane\Public Courses\2021\000 Portal
Courses\Corporate Credit Analysis\Folder 3 Analyical Overview\Exercise - Purpose Payback.docx 13-May-21
Source:
Annual reports of the above companies
HCW : May 2021
Purpose Payback
Content
• Objective, company profiles and assignment
• Attachments – balance sheet and cash flow statements of:
o LTG plc 2020
o Smurfit Kappa 2020
o X5 Retail 2020
o Volkswagen 2020
Objective
The purpose of this exercise is to introduce a structured approach to analysis of a company’s funding needs
and available sources of repayment, using a quick look at headline numbers in the financial statements.
Profiles
Learning Technologies Group plc
(LTG) is a fast-growing provider of workplace digital learning and
talent management software and services. LTG has a Software & Platforms division that accounts for
approximately 75% of Group revenues. The division typically sells multi-year ‘Software as a Service’ (SaaS)
licences and enjoys high customer retention rates. The Content & Services division typically delivers shorter-
term, fixed price projects to clients and the Group. Approximately 70% of LTG’s business is undertaken in the
US, with the UK and Europe accounting for the majority of the balance. Established in 2014, the company
embarked on embarked on a ‘buy and build’ strategy and with a number of acquisitions now employs over 700
people in 17 locations across Europe, the United States, Asia-Pacific and South America. In May 2018, LTG
completed the acquisition of PeopleFluent, a US independent provider of cloud-based integrated recruiting,
talent management, and compensation management solutions, for a cash consideration of $150 million. At the
time of the acquisition the existing debt was refinanced with a $42m amortising secured term loan (LIBOR +
1.6%) and a $21m multicurrency revolving credit facility (LIBOR + 2.1%), both available for five years. In 2020
LTG made 5 acquisitions for a total cash consideration of £39m net of cash acquired, notably OpenLMS for
consideration of $32m (£22m) and eThink Education for $20m (£16m), financed from available cash and
existing bank facilities.
Smurfit Kappa Group
is one of the leading providers of paper-based packaging solutions in the world, with
around 46,000 employees in over 350 production sites across 35 countries in Europe and the Americas,
generating revenue of EUR8.5bn in 2020. The group’s European production sites generated 78% of 2020
revenues. It manufactures, distributes and sells containerboard, corrugated containers and paper-based
packaging products such as solid-board, graphic-board and bag-in-box. The products are 100% renewable
and produced sustainably. The company is vertically integrated with resulting lower exposure to volatility of
containerboard prices. The group has made significant progress on its medium-term plan with targeted
investments and acquisitions, including the acquisition of Reparenco mill in the Netherlands for €466m in
2018. In 2018 SKG issued a €600m bond and in Jan uary 2019 increased this to €1,000m (expiry 2026). In
January 2020 the group obtained the agreement of all lenders in its core €1.350m R evolving Credit Facility to
extend the maturity date by a further year to January 2025, and subsequently in December 2020 extended by
a further year to January 2026 (EUR 100m drawn under this RCF facility on 31 December 2020).