*** P4 June 2012 Exam was … Comments and Instant Poll ***

NGOSYVINH- yes for question1, part ii, in the valuation of shares after the share repurchase I used PE ratio to find the value of the existing share, which I then used to compare the value of the share after the repurchase.

Don’t know if it was right but I really couldn’t find any other way to find the difference in value.

@lakeside said:
I wish examiners will be more direct with what they want and stop making us look like fools because we are not!.

Beta of Efflu is 1.4 in total but 1.25 for other activities which excludes production componet, so does that mean the Beta to use is 0.15 ? i thought so much about this and wasted time? To complicate it, he also gave us the percenates attributable to other activities for Debt and Equity in Efflu (this is why i ask, what did the examiner actually expect). We dont need these kinds of twist in the exam hall under time pressure.

In practise, all these twists and turns are not like the way it is made out to be in the paper.

I have tried my best, no time to complete this paper in 3 hours, too many confusions to derail us!

I totally agree..the whole 25% and 80% parting of business attributable to other activities or to components…it was all completely unnecessary! i have never seen anything like that in any of the past year questions.

good luck to you all guys!!

I spent 30minutes stuck on 0.26 = r^3, eventually i had to try out a few growth rates and settled on an estimate of 8.5 %.
For some reason i ve gone blank on the figures i managed to arrive at in question one. i rushed to question two after an hour and half as usual in Q1.
Tried so hard not to repeat my last attempt.
good luck to everyone. all the best

One positive thing about the exam was a good distribution of marks.Q 1 was very challenging. Its only method marks that can make one pass that one. Its amaising though how people are worried about the their final answers, In this exam like P2 its next to impossible to get the exact answer. The exam is about your grasp of the concepts not how accurate you are with numbers because there is no time for that.

i think Eps should not be the same. because nente was an unquoted co. and M was a quoted co. i took 8 PE for Nente. ..:)

i didn’t find a share price for nente and i think the synergy savings needs to be estimated into the foreseeable future. i didn’t get that far.

ngosyvinh said 47 minutes ago:
Arunah: Still use PE, but i am not confident on my answer. I assume number of share is the same for Mije (10 Mil). Earning for Mije co increase 150,000 $ (cost-based synergies) so the share price of Mije increase= (3,350,000/10,000,000) – current trading price of Mije ( i do not remember). The share price for Nente, i think i totally wrong when assume earning per share is the same. What about your answer?

Oh hmmmm..u used it to value Mije’s share and I used it to value Nente’s share, cos they did mention that after the purchase the PER would be the same as Mije’s. I went completely blank in trying to find Mije’s share value, but it makes sense to me now that I could have used PER for that also. Sigh.
Sorry but I really cannot remember my figures exactly but I used it to calculate the share price and not the PER. So, even though we used the same method it was used in different ways to derive different answers..gosh…fingers crossed ***

I have been passing all exams uptil now in the first attempt but this one blew the shit out of me. The questions demanded so much time in grasping the exact requirements & the paper was clearly kinda undoable in the alloted time. The pressure of the overall difficulty level of the paper made many(including me) to mess up with the ones they knew even. Good luck to all & an advice to forget abt this paper & focus on your next papers(if any!). Regards.

I did something strange in q1. I used my firm value after fcff – value of debt to get the market value of the shares. I then used this to get the price per share. I used the premium paid as a reduction to the post acq value of the predator in the cash proposal. I used the changes in the shares outstanding to also answer q 2. My wacc was based on a regeared beta. If 75% of equity and 80% of debt is non component activities, the 1 – the above percentages gives me the debt and equity values for the component activity. I used this to regear given the percentages available and got a wacc of 11%. That’s what I used to discount my fcff.

@virgilbucur said:
Yes with the value of equity: used FCF under dividend growth model and substracted debt to get the value of equity.
For Q4- yes, we should have used the date from the question- Ve and Vd specific for compoenent parts. I assumed that beta equity of my source data was and average of its two activities and obtained the beta and then so forth with ungearing and gearing…I have obtained a WACC of 13%.

Someone said that in Q1 – point d, they asked us to comment on shareholders reactions and also estimates used: I think here we should have spoken about dividend groth model, the groth rate assumption, the estimated synergies given in the question and the BS model used in poind c.
Correct me if I am wrong.

To be honest I stayed on Q1 more with 20 minutes that I should. This left me only 15 minutes for last question: I tried Q5 and writte like 1.7 pages about 3-4 risks and mitigation.

Hope we pass. Its a very time pressure exam !

There has to be some moderation. I’m usually pretty good with time but had to drop 15-18 marks on q2 this time. But on the plus side q5 was nice and I also did q4 which I feel happy with. Hoping for 30-35 marks from those.

I only really criticised the growth assumption but cut ally really didn’t have time to say more. The assumptions are a lot on that one. It’s a shame really.

I know they better give me the professional marks. Also I am really hoping that there is some form of moderation on the marking scheme.

Otherwise I’ve just pissed away my all first time pass record

Strange paper. Can’t decide if it was easy and I missed the point as I expected it to be harder or if it was hard…….q1 I definitely went way over. Took a long time to work out MV of shares and I think in the end did something with the P/E ratio and Earnings figures. BSOP was ok but put 5 years in instead of the delay of 2! Q2 then seemed too easy which ,ales me wonder if it was correct/ along the right path. Q4 was ok except again took a long time to decide what to do with the Betas. In the end I took the 1.4 and u geared on the 20% and 25% values. Then the other Beta I unguarded with the remaining values. Took a proportion of both, added together and then re-geared with our company MVs. Not sure if I read way too much into this. Unfortunately only had 15-20 mins to then do Q5 which was a nice question but no time to get into it. My fingers will remain crossed until result day!