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EBOS GROUP LIMITED

Financial Due Diligence Report

[ABC Limited]Date:June 3, 2010


NOTICE TO READER
KESPR has been engaged by [*] to perform [limited] financial due diligence on
[ABC limited] and its subsidiaries.Our report has been prepared solely for the use
of the directors of [*]. This report should not be referred to, in whole or in part, or
quoted by expertise or referenced in any manner, or distributed in whole or in
partor copied to any third party without our prior written consent. The scope of
the work has been limited to the purpose of our engagement detailed in the
engagement letter dated [DATE]
Verification
All material herein was prepared by KESPR based upon information obtained by
the company or other sources believed to be reliable. The information contained
herein is not guaranteed by KESPR to beaccurate, and should not be considered
to be all-inclusive.
Projections
This report may contain statements that constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E the Securities Exchange Act of 1934,as amended. The
words "may" "would," "will," "expect," "estimate," "anticipate," "believe,"
"intend," and similar expressions and variations thereof are intended to identify
forward-looking statements. Readers arecautioned that any such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties, many of which are beyond KESPR's ability to estimate, forecast or
project, andthat actual results may differ materially from those projected in
the forward-looking statements as a result of various factors.
Disclaimer on Post-Dated Events
KESPR has no responsibility to update this report for events and circumstances
occurring after the date of completion of our field work, which was completed on
[DATE].
Limited Review report
Because the scope of our work has been limited by the time available and/or by
the information made available to us, you should not rely on our work and our
report as being comprehensive as we may not havebecome aware of all facts or
information that you may regard as relevant. Accordingly, KESPR is not in a
position to make a representation, and cannot make a representation as to the
sufficiency of these duediligence procedures for your purposes.
Matters excluded
Areas that were excluded from this due diligence review includes:- issues of lawfixed assets and work-in-progress valuation- intangible assset valuation-

EBOS GROUP LIMITED

regulatory issues- other specialist area beyond the expertise of KESPRYou should
consider whether to obtain expert advice in relation to these areas.This report is
issued on the understanding you have drawn our attention to all matters of
which you are aware concerning the companys financial position or the
proposed transaction which may have an impacton our report up to the date of
signature of the finalized report.
KESPR Business Advisors
Richmond, British ColumbiaCanada
The estimate P/E ratio EBOS Group Ltd. is 10.3% more than the current P/E ratio,
which means the value-added gap for EBO is 10.3%. The estimate EV/EBIT ratio
of Dominos Pizza Enterprises Limited is 5% more than the current EV/EBIT ratio,
which means the value-added gap for EBO is 5%. The estimate Price to Book
Value of Starwood Trust Inc. is 2.2% more than the current Price to Book Value,
which means the value-added gap for EBO is 2.2%. The estimate Price to Book
Value of Tech target is 13.4% more than the current Price to Book Value, which
means the value-added gap for EBO is 13.4%.
EBO Group Ltd. and TTGT have bigger value-added gap for gaining high
profitability in increase in shares which are10.3% and 13.4% respectively, while
Dominos Pizza Enterprises Limited and Starwood Property Trust Inc. have small
valued added gaps. Hence, we would strongly recommend our client to hold
EBOS Group Ltd.s stock if they previously owned the firms share, or to buy the
stock while it is still undervalued.
The bargaining power of customers in this filed is weak because of Healthcare
Equipment and Services industry is relatively unaffected by choice of buyers. In
general, prices for medicines and medical tests are fixed and individual patient
are less sensitive to pricing, they make decisions depend on the advice of
doctors and professional medical staffs.
Bargaining power of supplier in this industry is various. Physicians, healthcare
professionals and qualified doctors have been important and powerful to
healthcare institutions in Australian and New Zealand. However, other suppliers
such as pharmaceutical companies, drug firms supply medicine to hospitals and
medical facilities may have low power over this industry due to the competitive
international market.
Healthcare competitor rivalry is intense between public hospitals and private
clinics, because public hospitals offer lower treatment fee or Medicare services,
while private clinics provides fast and customize services.
The threat of new entrants in this industry is fairly high as government regulation
is the main barriers for them to entry into. Within the healthcare industry, huge
initial capital is required to establish an entity and its supply chain network, and
technology is required for new drug invention and update medical facilities.
The healthcare industry experiences a very low threat of substitute. The
Medicare provides benefits for consultation fees for doctors, health examination
and most surgical and other therapeutic procedures performed by doctors, which
decrease the threat for consumers to buy cheaper drugs for illness.

EBOS GROUP LIMITED

2.1.3 EBOS Group Ltd. Performance


EBOS is the largest provider of medical and healthcare products to the human
and animal markets in Australian. According the 2015 annual report of EBOS
Group Ltd, it generated total revenue of $6.1 billion and net profit of $105.9
million after tax with 15% increased, which is higher compared with its industry
peers. Even though EBOS Group remained on the growth stage corresponds to
fast-food industry life cycle, it strives for leadership in its business segments that
acquired Symbion and Lyppard two veterinary wholesaler in 2013. This company
have other potential opportunities on new products innovation, well-organized
services, increasing demand for healthcare.
2.2 Ratio Analysis
The return on asset for EBOS has decrease from 14,89% to 7,61% during past
four years. ROA for EBOS is over the market average line in this industry. The gap
between industry average and EBOS is getting larger from 2013.
The profit margin has decreased almost 50% in 2015 since 2012, which leads to
huge reduce in return on equity. Therefore, EBOSs profitability is decreasing and
trend to below the industry average level.
2.3.1 Total accrual ratio using financial statement approaches
The accrual ratio is decreasing and smaller than balance sheet approach
illustrates higher accounting quality.
2.3.2 Total accrual ratio using jones model
Low Total accruals ration indicates the better accounting quality. The negative DA
Ratio indicates a strong over-conservative earning management decision
2.4 Relative valuation
EBOS Group is trading at $18 currently in the ASX with 151.31 million share
outstanding. To determine the investing strategy in the retailing company, a
research using P/E ratio ratio to identify if EBOS Group undervalued.
The price to earnings per share is calculate as a multiple in PE ratio is considered
to be one of the useful valuation methods to define the value of the company. To
process valuation of equity more accurately, growth rate would be worked out
from payout ratio and the ROE. A group of comparable companies over AUD
$100 million are considered. Table in Appendix presents the statistics of PE Ratio
for all industrials firms recently.
In retailing company, high account receivable drives lower cash inflow and
negative profit margin occurs in mass market that have the effect on the
industry s PE ratio. The inventory turnover and the inventory to revenue are also
considered in comparing with its peers. R- Square shows there are 34.3% P/E
ratio can be explained by this multiple.
Based on the regression model: Industy
PE=14+6.8Size+62Growth+7.5Payout4.2Receivable22Profit
Margin19.6Inventory to Revenue

EBOS GROUP LIMITED

The expected P/E ratio would be 25.5, that is higher than the market P/E ratio of
23.09. The company is undervalued, but it has chances to rise their share price
to the P/E value of 25.5.