SyrupWorld

Co.
Acquisition
Case

Indirect method

7,342 mln
Syrup mixer 1
Gross Book Value

1,39
Total trend
factor

Average Xrate

1,17
Year

Average xrate
EUR

Average xrate
USD

2012Q4

40,23

30,37

10,181 mln

1,18
Price trend Factor

RCN indirect value

Date

2012Q4

Price trend index (Italy)

107,5

RCN indirect value

Year

2000Q2
2001Q2
2002Q2
2003Q2
2004Q2
2005Q2
2006Q2
2007Q2
2008Q2
2009Q2
2010Q2
2011Q2
2011Q4
2012Q2
2012Q4

Euro area
(18
countries)
85,61
89,88
88,71
89,05
90,42
89
91,26
94,83
101,72
97,65
99,17
106,49
107,47
108,48
112,09

28,13
29,18
31,36
30,67
28,81
28,31
27,14
25,55
24,87
31,77
30,38
29,39
31,11
30,37

France

Italy

86,37
91,17
90,87
91,4
92,6
91,3
92,83
95,97
104,63
100,83
99
107
107,87
107,23
109,47

83,97
86,41
87,41
89,79
90,49
90,06
91,42
91,98
102,97
102,01
99,87
103,32
105,06
106,31
107,5

1,55
1,54
1,35
1,16
1,12
1,14
1,18
1,15
1,10
0,91
1,00
0,98
1,01
1,00

Germany

88,63
90,82
93,9
100,8
94,88
98,87
107,57
108,87
109,5
113

Euro area (18

countries) CAG
95,8
96,81
98,12
98,07
98,04
98,15
98,36
98,49
98,87
99,76
99,92
100,67
101,06
102,3
102,3

USA

Russia

82,34
176,5

183,7

101,56
101,24

Asset Name

FACTOR TREND PRICE

Year

25,99
26,13
29,69
34,68
35,82
35,16
34,11
35,03
36,45
44,20
40,22
40,90
39,86
40,23

xrate trend factor USD

1,08
1,04
0,97
0,99
1,05
1,07
1,12
1,19
1,22
0,96
1,00
1,03
0,98
1,00

XRATES

2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Q4 2012

Average xrate EUR Average xrate USD xrate trend factor -eur

Gross book value,

as of reporting xrate trend factor price trend factor final trend factor
date

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

Direct method cost-to-capacity, replacement vs.

reproduction considerations and adjustments
Syrup mixer #2
#2

Vial filling lines

2,5

( 3 )0,66

VFL#2

I&CC

VFL#3

9 026 551

12 874 086
Piping, electrical networks, monitoring and
testing equipment
RCN for the core equipment
85 986 638

12%
10 318 397

7%
8 598 664

10%
6 019 065

7%

11 972 900

3%

12 332 087

13 619 496

Direct method cost-to-capacity, replacement vs.

reproduction considerations and adjustments
Interim storage tanks
IST

2
6 450 047

3t

4t

0,28

4 367 274

0,36

5 615 067

0,36

5 615 067

7 798 704

4t

15 597 408

General Age/Life

Syrup mixer #1
Syrup mixer #2
Interim storage tank #1
Interim storage tank #2
Interim storage tank #3
Vial filling line #1
Vial filling line #2
Vial filling line #3
Packaging robot combined with palletizer
CIP washer
Technological pumps
Technological piping
Water preparation
Electrical networks
Monitoring and testing equipment
Storage racks
Lift trucks

Date On

NUL

RUL

2006
1988
2005
2010
2002
2003
2007
2007
2010
2006
2007
2007
2008
2005
2007
2005
various

15
15
25
25
25
22
22
22
12
12
12
10
12
15
7
10
10

9
-9
18
23
15
13
17
17
10
6
7
5
8
8
2
3
-

RUL(manual) RUL final

9
3
18
23
15
13
17
17
10
6
7
5
8
8
2
3
-

Physical
depreciation
40%
80%
28%
8%
40%
41%
23%
23%
17%
50%
67%
50%
33%
47%
71%
70%

Determining depreciation
Syrup mixer #1

RCN of new mixer

10 180 790

VFL #1
Annual changeover loss

400 000

Discount rate

15%

Remaining useful life

New mixer device cost

1 400 000
8 780 790

Technological pumps

(%) = ^ (/)
= 1
=

MV

1 119 235

2013

2014

2015

2016

400 000

400 000

400 000

400 000

DR

15%

15%

15%

15%

DF

0.870

0.756

0.658

0.572

347 826

302 457

263 006

228 701

loss

Loss

Accumulated loss

1 141 991

Market Approach
Price (excl.VAT), rubles

Specification of the model

800000
700000

Linear
R2=0,35

Exp-model
R2=0,30

y = -33261x + 740683
R = 0,353

600000
500000
400000

Box-Cox test: H0 isnt rejected => models are

equal => choose with max R2

300000
200000
100000
0
0

Regression
Observations:

Linear - model
20

10

12

Asset name

lifting
capacity

Height

Year of
manufacturing

Age

Price

ETV 213 #1

1 300

3 000

2005

507 856

1 300

3 000

2007

574 378

3 000

2008

607 639

640 900

R2

0,3

ETV 213 #2
ETV 213 #3

1 300

Model

Y=-33261*x+740683

ETV 213 #4

1 300
3 000
2009
TOTAL PRICE FOR 4 ETV 2 330 773

Final Estimations
Asset Name
Syrup mixer #1
Syrup mixer #2
Interim storage tank #1
Interim storage tank #2
Interim storage tank #3
Vial filling line #1
Vial filling line #2
Vial filling line #3
Packaging robot combined with
palletizer
CIP washer
Technological pumps
Technological piping
Water preparation
Electrical networks
Monitoring and testing
equipment
Storage racks
Lift trucks

Physical
depreciation "direct dollar"

Physical
depreciation percentage

-1 400 000

40%
80%
28%
8%
40%
41%
23%
23%

Functional
obsolescence "direct dollar"

Market value
Cost approach
(before
economic
obsolescence)
5 268 474
1 805 310
3 144 438
5 165 862
3 369 040
6 372 596
10 487 012
10 487 012

RCN indirect

RCN direct

RCN final

10 180 790
n/a
6 752 853
6 450 047
5 088 606
11 943 001
15 448 903
12 874 086

9 026 551
4 367 274
5 615 067
5 615 067
13 619 496
13 619 496

10 180 790
9 026 551
4 367 274
5 615 067
5 615 067
11 943 001
13 619 496
13 619 496

7 804 973

7 804 973

17%

6 478 127

927
025
839
586
827

10 318 397
8 598 664

4 159 927
1 671 025
10 318 397
1 813 586
2 384 827

50%
67%
50%
33%
47%

2 079 963
551 438
5 159 198
1 215 103
1 263 958

2 764 021

6 019 065

6 019 065

71%

1 745 529

5 962 068
n/a

5 962 068
-

70%
-

1 788 620
2 330 773

4
1
1
1
2

159
671
192
813
384

Total M&E 68 712 453

1 141 991

Current Assets
Obsolete

Not Included!

Raw Materials

Finished Goods

22 080 000

34 155 000

Book Value

Uncollectible AR

Fair Value = 25 000 000

RUB

35 000 000

10 000 000

Cash

Book Value

Fair Value

Inventories

Fair Value = 56 235 000

RUB

Accounts

Receivable

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%

DCF2013 = 301,25 k RUB

DCF2014 = 273,63 k RUB
DCF2015 = 259,91 k RUB

Differential method

Land rental agreement pretax value =

(+)

(+)

Rental rate = 350 k RUB

per month
WACC = 20%
Tax rate = 20%

DCF2013 = 351,46 k RUB

DCF2014 = 319,24 k RUB
DCF2015 = 303,28 k RUB

= 1 669 664 RUB

Fair Value of the land rental agreement = Land rental agreement pretax 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%

WACC=15% Tax Rate=20%

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

Long-Term Liabilities

200 000 000 RUB

10% annually
Discount rate: 15%
Maturity: 31.12.2013

89 254 000 RUB

9,5% annually
Discount rate: 15%
Maturity: 31.12.2014

200 000 USD

8,75% annually
Discount rate: 8%
Maturity: 31.12.2015

DCF2013 = 191 304 348 RUB

DCF2013 = 7 373 157 RUB

DCF2013 = 4 921 502 RUB

DCF2014 = 73 900 287 RUB

DCF2014 = 4 556 927 RUB

Fair Value = 334 497 293 RUB

DCF2015 = 52 441 052 RUB

ACQUISITION
PRICE
450 000 000

FAIR FALUE
OF EQUITY
237 016 512

GOODWILL
212 984 498

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