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SyrupWorld Co.

Acquisition Case ▼

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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