VALUE OF ASSETS OF PRZEDSIĘBIORSTWO ROBÓT KOMUNIKACYJNYCH W KRAKOWIE S.A. WITH REGISTERED OFFICE IN CRACOW AS AT 1 JULY 2013

Size: px

Start display at page:

Download "VALUE OF ASSETS OF PRZEDSIĘBIORSTWO ROBÓT KOMUNIKACYJNYCH W KRAKOWIE S.A. WITH REGISTERED OFFICE IN CRACOW AS AT 1 JULY 2013"

Melvin Scott
8 years ago
Views:

1 VALUE OF ASSETS OF PRZEDSIĘBIORSTWO ROBÓT KOMUNIKACYJNYCH W KRAKOWIE S.A. WITH REGISTERED OFFICE IN CRACOW AS AT 1 JULY The document has been prepared at the request of ZUE S.A. Warsaw, 12 August 1

2 CONTENTS 1 INTRODUCTION PURPOSE OF SERVICE AND SOURCE OF INFORMATION RESERVATIONS DEFINITIONS AND ABBREVIATIONS VALUATION OF PRK S.A VALUATION METHODS DESCRIPTION OF VALUATION METHODS VALUATION RESULTS PROFIT AND LOSS ACCOUNT AND BALANCE SHEET

.. 4 2 VALUATION OF PRK S.A.... 5 2.1 VALUATION METHODS... 5 2.2 DESCRIPTION OF VALUATION METHODS.

3 1 INTRODUCTION 1.1 PURPOSE OF SERVICE AND SOURCE OF INFORMATION This Document has been prepared according to the agreement by and between BRE Corporate Finance S.A. and ZUE S.A. This document contains, in particular: Results of the valuation of PRK S.A. using the income method prepared according to the APV approach; Results of the valuation of PRK S.A. using the NAV method; PRK S.A. valuation consensus. The valuation of the equity of PRK S.A. has been prepared on the basis of the following source information: Source materials provided by ZUE S.A. including, in particular:» audited financial statements of PRK S.A.;» Profit and loss account and balance sheet of PRK S.A. for the period ;» Projected items of the income statement of PRK S.A. in the period -2016; Detailed written and oral information and explanation provided by the representatives of ZUE S.A.; and Information available to general public including, in particular, the analyses of the market the Company operates in. The valuation of the Company has been prepared to determine the share exchange ratio in connection with the intended merger of ZUE S.A. and PRK S.A. 1.2 RESERVATIONS BRE CF is not responsible for any decisions made by ZUE S.A. or any third parties on the basis of this Document. The source information provided by ZUE S.A. and the ZUE Group Companies and used in this Document has not been verified by BRE CF. In particular, BRE CF has not been obliged to conduct and has not conducted any legal, tax or financial due diligence of ZUE S.A. or the acquired company. The valuation results contained in this Document do not take account of any events or undisclosed agreements or liabilities BRE CF was unaware of on the valuation preparation date or any events or undisclosed agreements or liabilities in respect of which BRE CF was not able to determine the related risk due to limited scope of information but whose existence, if any, could influence the valuation and, consequently, the exchange ratio. 3

A. including, in particular:» 2010 2012 audited financial statements of PRK S.A.;» Profit and loss account and balance sheet of PRK S.A. for the period 01.01. 01.07.

4 1.3 DEFINITIONS AND ABBREVIATIONS The following abbreviations and definitions have been used in this Document: ZUE S.A. PRK S.A., Company ZUE Group BRE CF, Consultancy Firm Document NAV APV ZUE S.A. with registered office in Cracow. Przedsiębiorstwo Robót Komunikacyjnych w Krakowie S.A. with registered Office in Cracow. ZUE Capital Group. BRE Corporate Finance S.A. This document entitled: Valuation of assets of Przedsiębiorstwo Robót Komunikacyjnych w Krakowie S.A. with registered office in Cracow as at 1 July. Net Asset Value. Adjusted Present Value approach to valuation using the income method. 4

BRE Corporate Finance S.A. This document entitled: Valuation of assets of Przedsiębiorstwo Robót Komunikacyjnych w Krakowie S.A. with registered office in Cracow as at 1 July.

5 2 VALUATION OF PRK S.A. 2.1 VALUATION METHODS The valuation of 100% of the equity of PRK S.A. has been conducted using:» income method; and» on the basis of the net assets value (NAV) of PRK S.A. as at 1 July. The following weights have been applied to the abovementioned methods: Table 1 Weights applied to calculate the consensus Valuation method Weight Income method 50% NAV 50% Source: Prepared by BRE CF. 2.2 DESCRIPTION OF VALUATION METHODS INCOME METHOD APV APPROACH An income-based valuation with the DCF method is used to determine the value of assets and shareholders equity on the basis of projected financial results of the valued Company. The valuation of assets with the DCF method is performed by discounting future cash flows generated by these assets to obtain their present values using the risk-based cost of capital the assets are financed with. In practice, the three most common approaches to the DCF valuation producing, in model conditions and under correct formulas and consistent assumptions, identical valuation results include: 1. WACC based on cash flow to shareholders and cash flow to creditors, and weighted average cost of capital; 2. CFE based on cash flow to shareholders and cost of equity; 3. APV based on cash flow to shareholders and cash flow to creditors, and required rate of return on assets (unlevered cost of equity). This valuation has been prepared using the APV approach. Its key features are that calculations are made sequentially and that the business value consists of two basic elements: The value generated by operating activities without debt (Business Value without leverage); and Value generated in connection with debt financing of assets (including the value of tax shield). The value of 100% of the Company s equity has been calculated using the APV approach in the following steps: 1. Calculation of Business Value; and 2. Calculation of net Business Value, net of the market value of net debt. 5

2.2 DESCRIPTION OF VALUATION METHODS 2.2.1 INCOME METHOD APV APPROACH An income-based valuation with the DCF method is used to determine the value of assets and shareholders equity on the basis of

6 2.2.2 NET ASSETS VALUE (NAV) METHOD The value of a company determined with the NAV method is based on the data contained in the company s balance sheet. It is equal to the difference between the value of (fixed and current) assets and the current and long-term liabilities of the company. Thus, it is equal to equity. 2.3 VALUATION RESULTS Valuation of PRK S.A.» The income valuation of PRK S.A. implies the value of 100% of the company s equity at PLN 143,681, » The book value of equity; i.e. the net assets (NAV) of PRK S.A. as at 1 July is PLN 60,639, » Given the results of the abovementioned methods, the weights specified in section 2 and the share illiquidity discount at 20%, BRE CF has determined PRK S.A. valuation consensus at PLN 81,728,

3 VALUATION RESULTS Valuation of PRK S.A.» The income valuation of PRK S.A. implies the value of 100% of the company s equity at PLN 143,681,352.61.» The book value of equity; i.e. the net assets (NAV) of PRK S.

7 3 PROFIT AND LOSS ACCOUNT AND BALANCE SHEET Table 2 Profit and loss account of PRK S.A. for the period Profit and loss account Sales revenue 96,080, Cost of sales 77,971, Gross profit (loss) on sales 18,109, General and administrative expenses 2,915, Other operating income 559, Other operating expenses 601, Profit (loss) on operating activities 15,152, Financial income 996, Financial expenses 148, Pre-tax profit (loss) 16,000, Corporate income tax 3,035, Net profit (loss) on activities 12,965, Net profit (loss) 12,965, Source: ZUE S.A. 7

22 Other operating expenses 601,248.16 Profit (loss) on operating activities 15,152,080.92 Financial income 996,384.55 Financial expenses 148,160.

8 Table 3 Balance sheet of PRK S.A. as at Balance sheet - ASSETS Tangible fixed assets 42,358, Investment real property 4,554, Intangible assets 100, Investments in subsidiaries 0.00 Advance payments for investments in subsidiaries 0.00 Retentions on construction contracts 92, Deferred tax assets 8,269, Other assets 21, Total fixed assets 55,398, Inventories 8,611, Trade and other receivables 36,400, Retentions on construction contracts 0.00 Current tax assets 0.00 Other assets 1,079, Loans advanced 0.00 Cash and cash equivalents 41,568, Total current assets 87,660, Total assets 143,058,

45 Deferred tax assets 8,269,992.00 Other assets 21,850.00 Total fixed assets 55,398,137.70 Inventories 8,611,061.53 Trade and other receivables 36,400,865.

9 Balance sheet Equity and liabilities Share capital 9,500, Retained earnings 51,139, Total equity 60,639, Long-term bank borrowings and other debt instruments 1,253, Retentions on construction contracts 1,075, Other financial liabilities 0.00 Liabilities under employee benefits 2,268, Deferred tax provision 6,217, Long-term provisions 11,260, Deferred income 0.00 Other liabilities 0.00 Total long-term liabilities 22,074, Trade and other payables 45,493, Retentions on construction contracts 1,307, Short-term bank borrowings and other debt instruments 1,666, Other financial liabilities 0.00 Liabilities under employee benefits 4,030, Current tax liabilities 764, Short-term provisions 7,080, Total short-term liabilities 60,344, Total liabilities 82,419, Total equity and liabilities 143,058, Source: ZUE S.A. 9

00 Long-term provisions 11,260,357.15 Deferred income 0.00 Other liabilities 0.00 Total long-term liabilities 22,074,955.31 Trade and other payables 45,493,722.

Consolidated balance sheet

Consolidated balance sheet Non current assets 31/12/2009 31/12/2008 (*) 01/01/2008 (*) Property, plant and equipment 1,352 1,350 1,144 Investment property 7 11 11 Fixed assets held under concessions 13,089