[uja27]

Morning John. Just a quick simple question regarding the FCFF format. I have a query regarding the tax calculation. If i’m not mistaken it should be more or less like this right :

PBIT xxxx
(-) Tax @ n% (xxxx)
(+) Dep xxxx
(-) Capex (xxxx)
(+/-) WC xxxx
_______ _____
FCFF xxxx

My question is, in the calculation part of b(i), the answer scheme derive the tax figure on the last part after taking into account other things ie after PBIT deducting the depriciation. Shouldn’t it be derived from PBIT in the first place before proceeding with other calculations?

Kindly verify this for me. Thankyou john. Wish u well 🙂

[uja27]

Evening john. Just out of curiosity as i’m not able to fully understand the reason behind of the calculations. Hope u don’t mind to explain to me the reasons and logic behind it so that i wouldn’t be confuse anymore.

1) Part b, On share exchange basis, why do we have to use the additional value created (different between value of combined company and both individual company) instead of combined company value, to deduct the premium so that we can arrive at post merger valuation?

2) Another problem is the answer scheme. There is “share exchange calculation” part (SEC) and towards the end there is “impact on shareholder” part (IOS). As u can see, it already stated in the SEC part about the pre acquisition value and post merger value. cant we just use that value to identify the percentage gain in SHH? for example, Kerrin co, on the SEC part, the gain should be 2% ((4041.2/3960)-1) but in the IOS part, the answer is 1.7%.. Is the 2% figure acceptable or totally wrong?

I hope u can rectify my problem and wish u could explained further. Thankyou for your time and stay safe! wish u well

[uja27]

thankyou john 🙂 have a good day

[uja27]

Hello John. Hope u re doing well. I have one question regarding to options hedging in Casasophia. May i know why do we divide the amount with spot rate of $1.3585 rather than spot rate of $1.3618 upon calculating the premium for the options. As what i learn so far, i believe we should divided by $1.3618. A bit confused here.

hope u can enlighten me. thankyou and stay safe ?

[uja27]

Hello John. Hope u re doing well. I have one question regarding to options hedging in Casasophia. May i know why do we divide the amount with spot rate of $1.3585 rather than spot rate of $1.3618 upon calculating the premium for the options. As what i learn so far, i believe we should divided by $1.3618. A bit confused here.

hope u can enlighten me. thankyou and stay safe 🙂

[uja27]

good afternoon.

in Pursuit co answer scheme, t
the synergy benefits = 189,169,000 – (140,000,000+ 40,095,000) = 9,074,000

may i know where did 140,000,000 came from?

[uja27]

Hi could anyone rectify me why we are not calculating the new shares issue for Louieed for the initial bid and through that we can calculate the PE for Tided as well

Given the initial bid is 5 Louieed shares for 3 Tided shares that make the share exchange basis is 5:3. By this we are going to have 150 new shares (5/3 x 90 shares of Tided).
Meaning total new number of shares will be 490 (340 + 150)

Noted that the PE for Tided given in the question is 15.9 in the extract of f/s
By having Tided Eps of $1.42 ($128/90), we can calculate Tided share price before the merge which is $22.58

Combining the value of Louieed = 4141.2 ($12.18 x 340)
value of Tided = $2032.2 ($22.58 x 90)
synergy tax value = $20

That give a total value of $6193.4 and divided by total number of shares it will give a value of Louieed new share price which is $12.64

By this we can calculate the new share price for Tided which is $21.07 (5/3 x $12.64)
Thus the new PE for Tided is 14.8 ($21.07/$1.42)

The answer scheme shows that it’s 14.3. Basically i’m using the approach in Siqra question and i’m so confused right now as why the answer is not the same

Hope u can help me rectify my problem here.

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