Condensed Statement of Income for Base Case

Actual ($mm)
Year
2015
Sales
16,000
Net operating profit after tax
1,264
Net income
1,184

2016
17,600
1,408
1,232

Condensed Balance Sheet for Base Case (as @ 31 Dec

Actual ($mm)
Year
2015
Net working capital
320
Net long-term assets
7445
Net assets
7,765
Net debt
4,465
Common stock
3,300
Net capital
7,765

Forecasted ($mm)
2017
2018
19,360
21,296
1,452
1,491
1,258
1,278

of each year)
Forecasted ($mm)
2016
2017
2018
352
387
426
7883
8319
8751
8,235
8,706
9,176
4,735
5,006
5,276
3,500
3,700
3,900
8,235
8,706
9,176

Free Cash Flow Analysis for Base Case

Year
Net Income
=- Change in net working capital
=- Change in net long-term assets
=+ Change in net debt
Free cash flow to equity

2016
1,232
-32
-438
270
1,032

Forecasted
2017
2018
1,258
1,278
-35
-39
-435
-432
271
271
1,058
1,078

2019
1,288
-43
-428
271
1,088

2016
10.00%
8.00%
7.00%
2.00%
57.50%
8.00%
2.50%

Forecasted
2017
2018
10.00%
10.00%
7.50%
7.00%
6.50%
6.00%
2.00%
2.00%
57.50%
57.50%
8.00%
8.00%
2.50%
2.50%

2019
10.00%
6.50%
5.50%
2.00%
57.50%
8.00%
2.50%

Assumptions Used for Base Case Forecast

Year
Sales growth rate
NOPAT margin
Net profit margin
Working capital to sales
Debt ratio
Cost of equity
After tax cost of debt

Under the Best case scenario, sales growth is projected to grow at 12% per year from 2016 till 2020
Under the Worse case scenario, sales growth is projected to grow at 8% per year from 2016 till 2020
The current market capitalisation of Mama Chicken is $10.2 billion.

asted ($mm)
2019
23,426
1,523
1,288

2020
25,768
1,546
1,288

asted ($mm)
2019
469
9179
9,647
5,547
4,100
9,647

2020
515
9602
10,118
5,818
4,300
10,118

2020
1,288
-47
-424
271
1,088

2020
10.00%
6.00%
5.00%
2.00%
57.50%
8.00%
2.50%

er year from 2016 till 2020 while NOPAT and net profit margins are a constant 8% and 7% respectively till 2020.
er year from 2016 till 2020 while NOPAT and net profit margins are a constant 6% and 5% respectively till 2020

7% respectively till 2020.

5% respectively till 2020.

(a)
Year
Sales
Net operating profit after tax
Net income

Actual ($mm)
2015
16,000
1,264
1,184

2016
17,920
1,434
1,254

Forecasted ($mm)
2017
2018
20,070
22,479
1,606
1,798
1,405
1,574

Under the Best case scenario, sales growth is projected to grow at 12% per year from 2016 till 2020
Sales
NOPAT Margin
Net Profit Margin

12%
8%
7%

(b)
Year
Sales growth rate
NOPAT margin
Net profit margin
Working capital to sales
Debt ratio
Cost of equity
After tax cost of debt

2016
12.00%
8.00%
7.00%
2.00%
57.50%
8.00%
2.50%

Forecasted
2017
2018
12.00%
12.00%
8.00%
8.00%
7.00%
7.00%
2.00%
2.00%
57.50%
57.50%
8.00%
8.00%
2.50%
2.50%

2019
12.00%
8.00%
7.00%
2.00%
57.50%
8.00%
2.50%

Condensed Balance Sheet for Best Case (as @ 31 Dec of each year)
Actual ($mm)
Forecasted ($mm)
Year
2015
2016
2017
2018
Net working capital
320
358
401
450
Net long-term assets
7445
7883
8319
8751
Net assets
7,765
7,877
8,305
8,726
Net debt
4,465
4,529
4,775
5,018
Common stock
3,300
3,348
3,529
3,709
Net capital
7,765
8,235
8,706
9,176

Year
Net Income
=- Change in net working capital
=- Change in net long-term assets
=+ Change in net debt
Free cash flow to equity

2016
1,254
-38
-438
48
826

Forecasted
2017
2018
1,405
1,574
-43
-48
-436
-432
182
179
1,108
1,273

2019
1,762
-54
-428
177
1,458

asted ($mm)
2019
25,176
2,014
1,762

2020
28,197
2,256
1,974

per year from 2016 till 2020 while NOPAT and net profit margins are a constant 8% and 7% respectively till 2020

2020
12.00%
8.00%
7.00%
2.00%
57.50%
8.00%
2.50%

asted ($mm)
2019
504
9179
9,143
5,257
3,886
9,647

2020
1,974
-60
-423
174
1,665

2020
564
9602
9,554
5,494
4,060
10,118 assume net capital is fixed

7% respectively till 2020.

(a)
Year
Sales
Net operating profit after tax
Net income

Actual ($mm)
2015
16,000
1,264
1,184

2016
17,280
1,037
864

Forecasted ($mm)
2017
2018
18,662
20,155
1,120
1,209
933
1,008

Under the Worse case scenario, sales growth is projected to grow at 8% per year from 2016 till 2020
Sales
NOPAT Margin
Net Profit Margin

8%
6%
5%

(b)
Year
Sales growth rate
NOPAT margin
Net profit margin
Working capital to sales
Debt ratio
Cost of equity
After tax cost of debt

2016
8.00%
6.00%
5.00%
2.00%
57.50%
8.00%
2.50%

Forecasted
2017
2018
8.00%
8.00%
6.00%
6.00%
5.00%
5.00%
2.00%
2.00%
57.50%
57.50%
8.00%
8.00%
2.50%
2.50%

2019
8.00%
6.00%
5.00%
2.00%
57.50%
8.00%
2.50%

Condensed Balance Sheet for Base Case (as @ 31 Dec of each year)
Actual ($mm)
Forecasted ($mm)
Year
2015
2016
2017
2018
Net working capital
320
1
373
403
Net long-term assets
7,445
7,883
8,319
8,751
Net assets
7,765
7,884
8,692
9,154
Net debt
4,465
4,533
4,998
5,264
Common stock
3,300
3,351
3,694
3,890
Net capital
7,765
7,884
8,692
9,154

Year
Net Income
=- Change in net working capital
=- Change in net long-term assets
=+ Change in net debt
Free cash flow to equity

2016
864
319
-438
51
796

Forecasted
2017
2018
933
1,008
-372
-30
-436
-432
344
196
468
742

2019
1,088
-32
-428
196
824

asted ($mm)
2019
21,768
1,306
1,088

2020
23,509
1,411
1,175

per year from 2016 till 2020 while NOPAT and net profit margins are a constant 6% and 5% respectively till 202

2020
8.00%
6.00%
5.00%
2.00%
57.50%
8.00%
2.50%

asted ($mm)
2019
435
9,179
9,614
5,528
4,086
9,614

2020
1,175
-35
-423
195
912

2020
470
9,602
10,072
5,792
4,281
10,072

d 5% respectively till 2020.

Abnormal operating ROA

Abnormal ROE
Abnormal NOPAT
Abnormal earnings
Free cash flow to debt and equity
Free cash flow to equity

WACC
Operating ROA
ROE

13.62%
8.15%
1,057.97
633.20
957
826

15.55%
9.84%
1,207.26
746.13
1,127
1,108

16.82%
10.95%
1,377.16
877.04
1,318
1,273

18.24%
12.20%
1,570.22
1,028.26
1,532
1,458

4.84%
18.46%
16.15%

4.84%
20.38%
17.84%

4.84%
21.65%
18.95%

4.84%
23.08%
20.20%

(1) Abnormal operating ROA is the difference between operating ROA and the weighted
average cost of debt and equity (WACC), where operating ROA is the ratio of NOPAT during
the year to net assets at the beginning of the year;
(2) Abnormal ROE is the difference between ROE and cost of equity, where ROE is the
ratio of net income to beginning-of-year equity;
(3) Abnormal NOPAT is NOPAT less total net capital at the beginning of the year times
the weighted average cost of capital;
(4) Abnormal earnings is net income less shareholders equity at the beginning of the
year times cost of equity;
(5) Free cash flows to debt and equity are NOPAT less the increase in operating working
capital less the increase in net long-term assets; and
(6) Free cash flow to equity is net income less the increase in operating working capital
less the increase in net long-term assets plus the increase in net debt.

19.83%
13.59%
1,789.12
1,202.06
1,772
1,665

4.84%
24.67%
21.59%

d the weighted
o of NOPAT during

re ROE is the

e year times

inning of the

rating working

working capital

Abnormal operating ROA

Abnormal ROE
Abnormal NOPAT
Abnormal earnings
Free cash flow to debt and equity
Free cash flow to equity

8.51%
3.13%
661.17
242.80
918
796

9.37%
3.84%
738.36
302.40
311
468

9.08%
3.59%
788.84
312.39
747
742

9.43%
3.89%
863.24
356.06
846
824

WACC
Operating ROA
ROE

4.84%
13.35%
11.13%

4.84%
14.20%
11.84%

4.84%
13.91%
11.59%

4.84%
14.27%
11.89%

(1) Abnormal operating ROA is the difference between operating ROA and the weighted
average cost of debt and equity (WACC), where operating ROA is the ratio of NOPAT during
the year to net assets at the beginning of the year;
(2) Abnormal ROE is the difference between ROE and cost of equity, where ROE is the
ratio of net income to beginning-of-year equity;
(3) Abnormal NOPAT is NOPAT less total net capital at the beginning of the year times
the weighted average cost of capital;
(4) Abnormal earnings is net income less shareholders equity at the beginning of the
year times cost of equity;
(5) Free cash flows to debt and equity are NOPAT less the increase in operating working
capital less the increase in net long-term assets; and
(6) Free cash flow to equity is net income less the increase in operating working capital
less the increase in net long-term assets plus the increase in net debt.

3300
864
3500
933.12
3700 1007.7696

264
280
296

3900 1088.3912
4100 1175.4625

312
328

9.83%
4.23%
945.46
406.31
953
912

4.84%
14.67%
12.23%

d the weighted
o of NOPAT during

re ROE is the

e year times

inning of the

rating working

working capital

600
653
712

0.9259259259 555.5556
0.8573388203 559.9451
0.793832241 565.0257

776
847

0.7350298528 570.6707
0.680583197 576.7687
Terminal Value