Financial Analysis of Burberry Group Plc - Coursework Example

Financial Analysis of Burberry Group Plc Burberry Group Plc is a British luxury fashion house established in 1856 and listed in the London Stock Exchange since 2002. Its business’s mainline involves the sourcing, designing, manufacturing, and marketing of high-end clothing as well as non-apparel accessories for customer segments including women, men, and children. Customers can reach Burberry products through its diversified distribution network of retail, wholesale, digital and licensing channels operated in the United Kingdom and across the world. In year 2012, Burberry was ranked the 82nd best global brand in the world with regards to its high operating value and such ranking has been improved for the past few years (Bloomberg, 2012). Therefore, it is worth studying its financial information to see how its operation has developed causing increasing company’s value. This report shall therefore carry out a financial analysis and equity valuation of Burberry Group Plc using information from its financial statements for the four-year period ended on 31st March 2012. The report shall then carry out a forecasting of its financial performance for the next five years including a sensitivity analysis to show how the valuation would be affected by the variation in the forecast. A recommendation on whether to buy or sell the share will be given at the end of this part. For the second part of the report, I shall analyze the importance of income statement vis-à-vis that of the balance sheet as the primary financial statement from the perspective of an equity investor. Finally, the report shall explain under IAS 19 the key pension actuarial assumptions which are considered as the most important in computation of present values of defined benefit obligations. Analysis of Burberry’s financial performance from 2009-2012 For the purpose of carrying out a financial performance analysis of Burberry, the financial statements of the company pertaining to the last three financial years have been reformulated (See Appendix). The reformulation of balance sheet reveals the net operating assets (NOA) of the company, net debt and net equity. On the other hand, the reformulation of income statement has revealed the recurring items and non-recurring or exceptional items in the income statement of Burberry. The income statement has been reformulated in two ways, i.e. full reformulation and basic reformulation. The basic reformulation does not include exceptional or non-recurring items in the income statement, whereas in full reformulation, each and every time has been included in the reformulated income statement. The overall analysis of the income statement for Burberry pertaining to the last four financial years shows that the sales growth declined in 2010 in comparison with 2009, whereas the growth rate showed improvement on consistent basis in 2011 and 2012. The main reason behind this consistency in sales growth is considerable increase in the retail sales of the company in the last two years. In addition to this, as the company is also engaged in the wholesales, there is a insignificant increase in wholesales also noted, which has contributed to the growth in sales revenue to some extent. Reformulated Income Statement (Full) 2012 2011 2010 2009 (Sales growth based on previous financial year) 1.24 1.17 1.07 1.21 As per the reformulated income statement, common size income statements for full and basic income statements have been prepared. Common Sized Income Statement Based on Full Reformulation (Excludes Unusual Items)   2012 2011 2010 2009 Sales 100.0% 100.0% 100.0% 100.0% Cost of Sales -30.1% -32.7% -37.2% -44.6% Gross Profit 69.9% 67.3% 62.8% 55.4% Administrative and other expenses -49.6% -47.1% -49.4% -56.2% Operating Profit from core activities 20.3% 20.1% 13.4% -0.8% Tax on core operations -5.4% -5.5% -6.4% 1.0% NOPAT before exceptional items / unusual items 14.9% 14.6% 6.9% 0.2% Net interest expense 0.0% -0.2% -0.4% -0.5% Other financing expense -0.5% -0.2% 0.0% 0.0% Tax relief on net interest expense 0.0% -0.1% -0.1% -0.1% Net profit before exceptional / unusual items 14.3% 14.2% 6.4% -0.4% Exceptional items 0.0% -0.3% 0.0% 0.0% Exceptional tax 0.0% -0.1% 0.0% 0.0% Net Profit - check 14.3% 13.7% 6.4% -0.4% Common Sized Income Statement Based on Basic Reformulation (Excludes Unusual Items)   2012 2011 2010 2009 Sales 100.0% 100.0% 100.0% 100.0% Cost of Sales -30.1% -32.7% -37.2% -44.6% Gross Profit 69.9% 67.3% 62.8% 55.4% Administrative and other expenses -49.6% -47.1% -49.4% -56.2% Operating Profit from core activities 20.3% 20.1% 13.4% -0.8% Exceptional operating charges (or income) 0.0% -0.4% 0.0% 0.0% Tax on core operations -5.4% -5.5% -6.5% 0.9% Net operating profit after tax (NOPAT) 14.9% 14.2% 6.8% 0.1% Net interest expense 0.0% -0.2% -0.4% -0.5% Other financing expense -0.5% -0.2% 0.0% 0.0% Tax relief on net interest expense 0.0% 0.0% 0.0% 0.0% Net Profit 14.3% 13.7% 6.4% -0.4% It is pertinent to note here that due to insignificant amount and nature of exceptional items in the income statement, there are no major changes in common size income statement based on full reformulation and basic reformulation. It is therefore possible to analyse common size income statement on the two bases together. Analysis of Value-oriented ratios analysisFollowing is the financial performance analysis of Burberry on the basis of value-oriented ratio analysis. The first ratio, i.e. the return on equity indicates that there is a consistent increase in the return on capital raised through equity financing by the company. However, the growth rate of ROE has decreased considerably due to significant increase in the ordinary share capital of the company. Valuation-oriented Ratio Analysis Based on Full Reformulation   2012 2011 2010 2009 ROE 29.77% 28.96% 13.62% -0.94% RNOA 41.48% 42.20% 23.80% 0.43% FLEV -0.28 -0.30 -0.38 0.09 NIR -0.36% -1.86% -2.82% 15.32% ATO 2.89 2.92 3.43 2.02 NOPM 14.34% 14.43% 6.93% 0.21% Based on Basic Reformulation   2012 2011 2010 2009 ROE 29.74% 28.12% 13.62% -0.94% RNOA 41.43% 40.99% 23.80% 0.43% FLEV -0.28 -0.30 -0.38 0.09 NIR -0.36% -1.86% -2.82% 15.32% ATO 2.89 2.92 3.43 2.02 NOPM 14.32% 14.01% 6.93% 0.21% The RNOA (return on net operating assets) has on the other hand declined in 2012, which showed remarkable increase from 2009 to 2011. The main reason behind this decrease in RNOA in 2012 is the increase in tangible assets of the company which also resulted in an increase in the net operating assets. Similarly the financial leverage of the company, as determined by FLEV, has shown decline in the last three years. The primary reason behind this decline is that although both debt and equity of the company have increased, but the increase in equity has been considerably higher than the increase in debt. The net interest rate for the debt financings obtained by Burberry is also on a declining side during the last four years. Moreover, the average turnover for Burberry increased in 2010, but then showed decline on consistent basis from 2011 to 2012. Lastly, the net operating profit margin of the company has shown remarkable improvements from 2009 to 2012. However, there is a slight decline in it in 2012 due to the exceptional items. Forecasting NOPAT and FCF of 2013-2017 While forecasting the sales and other financial performance indicators of the company for the next five years, following assumptions have been considered: 1. From 2013-2016, company’s sales will grow at 14% in 2013, 17% in 2014, 14% in 2015, 14% in 2016. 2. From 2017 onward, company’s sales will reach its saturated point and eventually grow at the GDP rate of 3% 3. Other financial performance indicators have been forecasted on the basis of average growth rates determined for each of them during the past four years. On the basis of these assumptions, Burberry’s financial statements have been forecasted (See Appendix). Since the sales growth rate is not same for the next five years, therefore sales revenue will continue to increase at varying rates. On the other hand, a flat average rate has been used for operating profit margin, return on net operating assets and weighted average cost of capital, which results in a consistent forecasted increase in these ratios. Apart from sales, the forecasted rates for operating profit, return on net operating assets and weighted average cost of capital will grow at a consistent rate in the forecasted period. Following these rates, the financial statement outputs, which include sales, operating income and net operating assets, will continue to show increase on consistent basis. Similarly, the calculations shown under the Average Operating Profit Valuation Model, the WACC charge using opening NOA, abnormal operating profit and present value of average operating profit show that these determinants of Burberry’s operational value will show growth on consistent basis and are dependent on the ratio inputs discussed earlier. Lastly, the free cash flow model used to determine changes in net operating assets and free cash flows also show similar pattern of increase in the next five years. The value of operations under the two models used has come out to be the same, i.e. 4,238.5. Sensitivity Analysis For the purpose of conducting sensitivity analysis, following assumptions have been considered: 1. Company will do really well due to great management team and right strategy of designing and marketing 2. Year 2013, company’s sales will grow at the same rate as 2012 which is 24% 3. From 2014 until 2016 company’s sales will grow substantially by 10% each year 4. In the long-term, from year 2017 and onward, company’s sales will eventually go down to the GDP rate of 3%. Considering these changes in assumptions made for forecasting, the forecasted NOPAT and FCF have been determined (See Appendix). Having considered the changes in assumptions, the sales revenue of the company will grow at a considerably higher rate and will as a consequence result in an increase in the operating margin for each year. Similar will be the impact on return on net operating assets; however no change will be observed in the WACC (weighted average cost of capital) for the company. Moreover, as per the two models used for forecasting the value of business at the end of forecasted period, there will be a considerable improvement in the value of operations, provided that changes take place as per assumptions included in this sensitivity analysis. Buy / Sell Suggestion Based on the forecast analysis, the project value of equity per share is $8.0 which is below the current share price of the company that is prevailing at $13.8. This implies that the share of the company is trading at a higher multiple of P/E. This may suggest that the market has a positive outlook for the company as investors are willing to pay additional price for its shares. Based on the sensitivity analysis, the forecasted price of the company’s share is $16.5 which is also above the current share price. It has to be noted that the sensitivity analysis that has been performed to provide a positive outlook of the company’s sales and resulting profits and free cash flows. Therefore, it can be suggested that the share price of the company could remain in the band from $8.0 to $16.5. However, since the downward movement could results in greater loss for investors as compared to the possible gain from the upward movement in the share price therefore it is suggested that investors must hold their current holdings or sell their stocks to book capital gains.  Financial Reporting Standard-Setters Focus on the Balance Sheet or the Income Statement as the Primary Financial Statement Ohlson, et al. (2010) are of the view that in the current conceptual framework of financial reporting the indicate that the primary aim of financial reporting is to present the financial information to the stakeholders of the businesses including investors of the company. However, there have been major disagreements between views on the basis purpose of financial reporting. After the recent financial crisis, many argue that the reporting should focus on promoting macroeconomic stability that is affected by businesses. Casey (2009) presented her views regarding the purpose of financial reporting and possible changes in the focus of standard setters suggesting that the focus of financial reporting should on promoting greater financial stability and protection of investors’ interests in businesses. Fulfilling needs of investors should remain the main focus and information that is disclosed by businesses should be made more transparent and without adding burden on businesses the financial reporting should add value to investors. This has led to a change in the accounting model that accounting standard setters now follow. There has been an obvious motivation behind this change that is to enhance the relevance of the financial information provided to investors. In the recent years, standard setters have been working on promoting and implementing ‘balance sheet approach’ which has its focus on setting standards and requirements for business for proper valuation of their assets and liabilities. This has replaced what previously the focus remained which was related to the determination of income. The previous model made use of the residual income to form basis for equity valuation by investors. This include the use of book value of net assets or reported earnings to determine the value of equity which is argued to be only possible in the idealistic world and in reality the actual value of the equity may be different from the book value and the model is considered to be somewhere between the flow and stock based approach. The flow based approach is based on the income statement where as stock based accounting is based on the balance sheet and valuation of assets and liabilities as per their current values. This could impair the value of information provided in the financial reports for investors. However, Kusano (2012) put forth that the use of income as a valuable piece of information for investors is undermined when the basis for accounting is changed from flow based accounting to stock based accounting. It has been argued that from the investors’ equity valuation perspective this approach adds higher value to the financial reporting made by companies as compared to the previous approach (Demerjian, 2010). It has been observed that it is much easier for companies to manipulate the financial information provided in their income statements and there are various loopholes or alternatives in the accounting standards which allow management of companies to take benefit from. The shift in the focus of standards setters has led to prescribing methods for valuation such as fair value recording and reporting of assets and liabilities which have an existing market and their values can be ascertained rather than using historical costs. Moreover, standards have been changed to deal with accounting for goodwill and asset securitization (Dichev, 2008). The information provided in the balance sheet is therefore measure on the basis of their current values and thereby, reduces the gap between the actual value and book value of assets and liabilities. This therefore contributes positively to the information available to investors for decision making. An argument has been presented by Kusano (2012) favors stock based approach adopted by the FASB and IASB as opposed to relying on the financial information provided in the income statement. The stock based approach to financial reporting that depends on the balance sheet of organizations however it is suggested that the balance sheet approach is not always responsible for increasing the usefulness of the financial information published by businesses as the changes in the market for assets and liabilities are often difficult to track their exact current values. From the above discussion, it can be concluded that balance sheet is rightfully considered as the primary financial statement for investors. Key Pension Actuarial Assumptions in Determining Present Values of Benefit Obligations and Importance of Related Disclosure for Investors and Analysts Defined benefit obligations, is a term used to refer to the amount a corporate entity is obliged to pay to its employees as per defined benefits under its pension plans. The International Accounting Standard 19, Employee Benefits, sets the requirement regarding the determination of benefits obligations by a company. In this regard, the guidelines presented in the standard require a company to determine and report present value for that company’s defined benefit obligations in its balance sheet. Therefore, in order to determine the amount of benefit obligations, a company through actuarial professionals calculates the present values of such obligations. However, for the purpose of determining amount of benefit obligations, actuaries make use of certain important assumptions (Glaum, 2011). There are several assumptions which shall be considered for determining the present values for defined benefit obligations which are required to be ‘unbiased and mutually compatible’ as per IAS 19 and should be made on the basis of market expectations that are prevailing at the time of the reporting (Glaum, 2011). Assumptions regarding the determination of present values for defined benefit obligations refer to the estimates made regarding two types of variables, which include demographic and financial variables which can be expected to influence the benefit obligations to be determined. In this regard, following assumptions are noted in the IAS 19, which are classified as assumptions related demographic and financial variables: Actuarial Assumptions on the basis of Demographic Variables Keeping in view the demographic variables associated with the determination of present values for defined benefit obligations, following are the actuarial assumptions: The mortality rate of employees, as per organization’s record, for working employees and retired employees. The rate at which employees are switching from the organization to other organizations, i.e. the turnover rate. The total number of pensioners who are qualified for the defined benefits, or in case of their death, their dependents. The total number of claims filed by employees in lieu of medical plans (IASB, 2009). Actuarial Assumptions on the basis of Financial Variables Keeping in view the financial variables associated with the determination of present values for defined benefit obligations, following are the actuarial assumptions: The rate that is considered while determining the present value, i.e. the discount rate. The expectations regarding remunerations and other performance related perquisites. The anticipated health expenditures by the organization on its employees, which also include the administration and other related expenses. The expected rate at which returns are expected to flow from assets which form part of the benefits plans of the organization (IASB, 2009). From the above assumptions presented from IAS 19, two assumptions are considered to be important that are also empirically discussed in various studies are the discount rate used for calculating the present value of employee benefits. The discount rate must be calculated on the basis of yields of different corporate bonds. The impact of discount rate could be material on the amount of pension realized by employees (IASB, 2009). There have been various views of the rate which should be used for discounting defined benefits. Some argue that the company’s future cost of capital should be estimated and used for this purpose (Glaum, 2011). However, IAS requires market yields to be used. Moreover, demographic assumptions regarding employees salaries, benefits, and medical costs are of high importance (IASB, 2009). Their future estimated amounts and basis for these estimations must be disclosed by companies in order for investors and employees forecast the payout in the future. Demographic assumptions are evaluated on the basis of their relevance and reliability. The information regarding actuarial assumptions in the company’s disclosures is sought by employees who depend upon their pensions after retiring from their current jobs. These actuarial assumptions form basis for the benefit formula that companies develop for determining the value of pensions to be made to their employees. The companies often use highly sophisticated models for calculating the present value of employee benefits which are also based on a series of assumptions that companies make for determining values of their pension funds (Beam & MacFadden, 2001) Their disclosure would ensure that investors can estimate the amount that is placed into pension funds from the earnings of the business and how much is paid to employees. Till 1960s or 1970s, pension funds were considered to be voluntary in which employees and employers contributed however over the years changes in the regulatory requirements have sought companies to make a defined contribution into the pension funds. The amount paid by companies as pension is recorded as expense and any liabilities related to the pension fund are recorded in the balance sheet (Glaum, 2011). It is therefore important piece of information relevant to those who use the financial information of any business including investors and analysts. In case of inappropriate or insufficient information provided by companies the use of financial information would become of less value to investors. It has also been argued that the pension accounting has direct implications of the company’s share price and therefore, detailed and understandable disclosure about the assumptions used by companies for pension could have positive impact on the share price, which is of primary concern to investors (Glaum, 2011). The government can access this information and determine whether businesses are contributing to the employees’ pension appropriately. The clarity in the information regarding actuarial assumptions related to employee benefit would help in better understanding of investors (Anantharaman, 2009). List of References Anantharaman, D., 2009. Actuarial independence, client importance, and pension asumptions. Newark: Rutgers Business School. Beam, B.T. & MacFadden, J.J., 2001. Employee benefits. Chicago, IL: Dearborn Trade Publishing. Bloomberg, 2012. Interbrand Releases 13th Annual Best Global Brands Report. [online] Available at: < http://www.bloomberg.com/article/2012-10-02/aeaRY_GX_zqc.html> [Accessed 7 May 2013] Casey, K.L., 2009. Speech by SEC Commissioner: Lessons from the Financial Crisis for Financial Reporting, Standard Setting and Rule Making. [Online] Available at: http://www.sec.gov/news/speech/2009/spch111709klc.htm. Demerjian, P., 2010. Accounting Standards and Debt Convenants: Has the "Balance Sheet Approach" Damaged the Balance Sheet? Atlanta, GA: Emory University. Dichev, I., 2008. On the balance sheet-based model of financial reporting. Accounting Horizons, 22(4), pp.453-70. Financial Times, 2013. ft.com/marketsdata. [online] Available at: < http://markets.ft.com/research/Markets/Tearsheets/Summary?s=BRBY:LSE> [Accessed 7 May 2013] Glaum, M., 2011. Pension Accounting and Research: A review. Accounting and Business Research, 39(3), pp.237-311. IASB, 2009. International Accounting Standard 19 Employee Benefits. London: IASB. Kusano, M., 2012. Does the Balance Sheet Approach Improve the Usefulness of Accounting Information? The Japanese Accounting Review, 2, pp.139-52. Ohlson, J.A. et al., 2010. A Framework for Financial Reporting Standards: Issues and a Suggested Model. Accounting Horizons, 24(3), p.471–485. Appendix Reformulated Financial Statements Reformulated Balance Sheet 2012 2011 2010 2009 Tangible assets 339.9 298.3 256.1 258.6 Intangible assets 133.1 114.7 64.6 57.5 Net pension asset (and other non-current assets) 22.3 15.2 11.0 9.5 Deferred tax and provisions 59.4 40.4 (2.3) 14.0 Net pension liabilities (0.8) (0.6) (0.5) (0.6) Net long-term operating assets 553.9 468.0 328.9 339.0 Stock 311.1 247.9 166.9 262.6 Debtors 155.3 140.8 129.1 204.3 Creditors and current tax liabilities (378.1) (343.4) (252.0) (211.5) Other non-current liabilities (0.2) - (0.2) (0.4) Working capital 88.1 45.3 43.8 255.0 Net operating assets (NOA) 642.0 513.3 372.7 594.0   2012 2011 2010 2009 Short-term debt 210.5 172.3 215.4 301.8 Long-term debt 104.9 84.4 26.5 23.8 Preference shares - - - - Financial assets (non-current) (14.7) (9.2) (1.7) - Cash and other financial assets (550.1) (467.9) (471.0) (275.5) Net debt (249.4) (220.4) (230.8) 50.1 Ordinary shareholders' funds 867.3 713.6 590.1 539.3 Minority interest 24.1 20.1 13.4 4.6 Equity Capital 891.4 733.7 603.5 543.9 Net Capital 642.0 513.3 372.7 594.0         (Unit: £m) Reformulated Income Statement (Basic) 2012 2011 2010 2009 Sales 1,857.2 1,501.3 1,279.9 1,201.5 Cost of Sales (558.3) (491.6) (475.9) (535.7) Gross Profit 1,298.9 1,009.7 804.0 665.8 Administrative and other expenses (932.2) (710.8) (632.9) (675.7) Operating Profit from core activities 366.7 298.9 171.1 (9.9) Exceptional operating charges (or income) (0.3) (6.2) - - Tax on core operations (100.4) (82.3) (82.4) 12.5 Net operating profit after tax (NOPAT) 266.0 210.4 88.7 2.6 Net interest expense (0.7) (3.2) (5.1) (6.2) Tax relief on net interest expense (0.2) (0.9) (1.4) (1.5) Net Profit 265.1 206.3 82.2 (5.1) Tax rate 26.7% 27.9% 27.4% 23.8% Reformulated Income Statement (Full) 2012 2011 2010 2009 Sales 1,857.2 1,501.3 1,279.9 1,201.5 Cost of Sales (558.3) (491.6) (475.9) (535.7) Gross Profit 1,298.9 1,009.7 804.0 665.8 Administrative and other expenses (932.2) (710.8) (632.9) (675.7) Operating Profit from core activities 366.7 298.9 171.1 (9.9) Tax on core operations (100.4) (82.3) (82.4) 12.5 NOPAT before exceptional items / unusual items 266.3 216.6 88.7 2.6 Net interest expense (0.7) (3.2) (5.1) (6.2) Tax relief on net interest expense (0.2) (0.9) (1.4) (1.5) Net profit before exceptional / unusual items 265.4 212.5 82.2 (5.1) Exceptional items (0.2) (4.5) - - Exceptional tax (0.1) (1.7) - - Net Profit - check 265.1 206.3 82.2 (5.1) Reformulated Cash Flow Statement 2012 2011 2010 2009 Reported cash flow from operations 482.5 366.4 425.6 242.0 Tax paid (108.2) (98.1) (51.3) (26.3) Tax relief on net interest paid (0.2) (0.9) (1.4) (1.5) Cash flow from operations 374.1 267.4 372.9 214.2 Total investment cash flow (176.6) (160.3) (64.5) (90.1) Free cash flow 197.5 107.1 308.4 124.1   2012 2011 2010 2009 Capital contributions by non-controlling interest (4.9) (7.0) (0.2) (5.1) Equity dividend 99.2 68.7 52.5 51.7 Purchase/(Disposal) of own share 60.6 6.3 5.4 5.2 Issue of new share (0.6) (0.8) (1.9) - Net dividends (or free cash flow to equity) 154.3 67.2 55.8 51.8 Net interest paid after tax 0.4 2.3 3.6 4.5 Loans decrease / (increase) - 0.1 38.5 73.5 Financial assets increase/(decrease) 42.8 37.5 210.5 (5.0) Interest and Net debt cash flow 43.2 39.9 252.6 73.0 Free cash flow 197.5 107.1 308.4 124.8 Forecasting NOPAT and FCF of 2013-2017 Forecasting NOPAT and FCF Ratio inputs   2013F 2014F 2015F 2016F 2017F onward Sales Growth   1.14 1.17 1.14 1.14 1.03   Operating Profit Margin (PM)   13.05% 13.05% 13.05% 13.05% 13.05%   ATO using opening NOA   3.30 3.30 3.30 3.30 3.30   RNOA   43.04% 43.04% 43.04% 43.04% 43.04%   WACC   10.73% 10.73% 10.73% 10.73% 10.73%   Financial statement outputs 2012 2013F 2014F 2015F 2016F 2017F   Sales 1,857.2 2,117.2 2,477.1 2,823.9 3,219.3 3,315.9 3,415.3 Operating Income (after tax)   276.3 323.3 368.5 420.1 432.7   NOA opening   642.0 751.1 856.3 976.2 1005.5 1035.6 AOPVM   2013F 2014F 2015F 2016F 2017F   WACC charge using opening NOA   68.9 80.6 91.8 104.7 107.8   Abnormal operating profit   207.4 242.7 276.7 315.4 324.9   PV of AOP   187.3 198.0 203.8 209.8 2797.6   Value of operations   4,238.5       FCFM output   2013F 2014F 2015F 2016F 2017F   Change in NOA   109.1 105.2 119.9 29.3 30.2   Free cash flow   167.1 218.1 248.6 390.8 402.5   PV of FCF   151.0 177.9 183.2 260.0 3466.5   Value of operations   4,238.5           Sensitivity Analysis Forecasting NOPAT and FCF Ratio inputs   2013F 2014F 2015F 2016F 2017F onward Sales Growth   1.24 1.34 1.44 1.54 1.03   Operating Profit Margin (PM)   13.24% 13.24% 13.24% 13.24% 13.24%   ATO using opening NOA   3.59 3.59 3.59 3.59 3.59   RNOA   47.49% 47.49% 47.49% 47.49% 47.49%   WACC   10.73% 10.73% 10.73% 10.73% 10.73%   Financial statement outputs 2012 2013F 2014F 2015F 2016F 2017F   Sales 1,857.2 2,302.9 3,085.9 4,443.7 6,843.3 7,048.6 7,260.1 Operating Income (after tax)   304.9 408.6 588.4 906.1 933.3   NOA opening   642.0 860.3 1238.8 1907.8 1965.0 2023.9 AOPVM   2013F 2014F 2015F 2016F 2017F   WACC charge using opening NOA   68.9 92.3 132.9 204.6 210.8   Abnormal operating profit   236.1 316.3 455.5 701.5 722.5   PV of AOP   213.2 258.0 335.5 466.7 6221.8   Value of operations   8,137.2       FCFM output   2013F 2014F 2015F 2016F 2017F   Change in NOA   218.3 378.5 669.0 57.2 58.9   Free cash flow   86.6 30.1 -80.6 848.8 874.3   PV of FCF   78.2 24.5 -59.4 564.7 7529.1   Value of operations   8,137.2           Read More