Case Study

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The case study extends students understanding of issues in corporate finance to practical problems in capital budgeting, valuation, cost of capital and financing policy. It will require students to demonstrate proficiency in using analytical techniques to address financial problems. The maximum length of this assignment is 5 pages. Document Preview: Corporate Finance: Theory & Practice Case Study ABC Group was a leader in outsourced engineering, property services and asset management. The group consisted of two businesses: Engineering and Property. The Engineering division provided engineering, construction and maintenance services across the sectors of rail, transport, water, power, resources and defence. The Property division provided clients with end-to-end property solutions and facility management. Difficult trading conditions in the Engineering division adversely affected ABC’s financial performance in 2013 following the slowdown in the capital investment across the resources and infrastructure sectors. However the Property division delivered its eleventh consecutive year of earnings growth. During the 2013 financial year, ABC’s underlying operating revenue declined 14% to $382 million. Reported net profit after tax was $3.65 million, which included the impact of restructuring costs, rebranding and underperforming projects. Underlying net profit after tax was $9.2 million and underlying earnings per share was 55.4 cents. A summary of ABC’s financial performance over the last five years was set out below: For the year ending 31 December 2013* 2012 2011 2010 2009 Revenue ($ millions) 382 445 429 419 475 EBIT ($ millions) 7.2 20.3 23.7 21.7 21.9 NPAT underlying ($ millions) 9.2 16.8 16.4 15.1 15.0 Net debt ($ millions) 58.1 43.5 17.8 23.4 32.4 Total assets ($ millions) 291.4 280.8 240.9 250.5 253.4 Shareholders’ funds ($ millions) 111.8 117.0 116.6 115.8 111.9 Earnings per share underlying (cents) 55.4 101.3 99.0 91.7 91.9 Dividends per share (cents) 34** 70 70 64 64 Net debt/(net debt + equity) (%) 34.2 27.1 13.2 16.8 22.5 * Based on preliminary results. ** The final dividend was yet to be determined and included. 4. The Board was comprised of seven non-executive independent directors and the CEO Richard Hall. Meetings were generally held monthly with ad hoc meeting called to consider... Attachments: Corporate-Fin....docx

 

Solution ID:565814 | This paper was updated on 26-Nov-2015

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