~$tumn 2005- TBS 907- Tutorial 5 - Share valuations

~$tumn 2005- TBS 907- Tutorial 5 - Share valuations - TBS...

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TBS 907- AUTUMN 2005 TUTORIAL 5- SHARE VALUATION Question 1 The board of directors of Oxclose OLC is considering making an offer to purchase Satac Ltd, a private limited company in the same industry. If Satac is purchased it is proposed to continue operating the company as a going concern in the same line of business. Summarized details from the most recent financial account of Oxclose And Satac are shown below: Oxclose PLC Satac Ltd. Balance Sheet Balance Sheet As at 31 March As at 31 March ($ million) ($ million) Freehold property 33 460 Plant and equipment (net) 58 1310 Stock 29 330 Debtors 24 290 Cash 3 20 Less: Current liabilities (31) 25 (518) 122 ------ -------- -------- --------- 116 1892 -------- --------- Financed by Ordinary shares 35 160 Reserve 43 964 ------ ---------- Shareholders equity 78 1124 Medium-term bank loans 38 768 ------- ---------- 116 1892 ------- ---------- TBS 907- A UTUMN 2005 T UTORIAL 5- S HARE V ALUATION P AGE 1 OF 5
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Oxclose PLC, 50cents ordinary shares; Satac Ltd. 25cents ordinary shares. Oxclose PLC Satac Ltd. ($ million) ($ 000) Profit after Profit after Year tax Dividend tax Dividend t – 5 14.30 9.01 143 85 t – 4 15.56 9.80 162 93.5 t – 3 16.93 10.67 151 93.5 t – 2 18.42 11.60 175 102.8 t – 1 20.04 12.62 183 113.1 t– 5 is five years ago, t – 1 is the most recent year etc. Satac`s shares are owned by a small number of private individuals. The company is dominated by its managing director who receives an annual salary of £80 000, double the average salary received by managing directors of similar companies. The managing director would be replaced if the company were purchased by Oxclose.
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This note was uploaded on 07/10/2009 for the course FIN FIN taught by Professor Dr. during the Spring '09 term at Baptist College of Health Sciences.

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~$tumn 2005- TBS 907- Tutorial 5 - Share valuations - TBS...

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