Hull Fund 9 Ech 12 Problem Solutions

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Valmet Corp.

Income Statement (EUR million) 2015 2014 2013


Net sales 2,928 2,473 2,613
Cost of goods sold 2,247 1,965 2,131
Gross profit 681 508 482
Selling, general and administrative expenses 453 368 428
Other operating income 29 27 15
Other operating expenses 47 23 47
Share in profits and losses of associated companies, oper 2 0 1
Depreciation & Amortisation 92 72 82
Operating profit 120 72 -59
Financial income 4 6 7
Financial expenses (interest) 10 9 10
Other financial income and expenses -4 -2 -2
Share in profits and losses of associated companies, fina -2 0 0
Profit before taxes 108 67 -64
Income taxes, total 30 21 -2
Non controlling interests 1
Profit/loss 78 46 -63

Tax Rate 20% 20% 20%

Adjustments:

EBITDA reported 212 144 23


Share in profits and losses of associated companies, oper -2 0 -1
Impairment of fixed assets 6 2 30
Gain on sale of fixed assets -2 -1 -1
Loss on sale of subsidiaries and businesses 2 0
Loss on sale of fixed assets 1 1
Share based payments 4 2 1
Operating lease rent 17 14 12
Total Adjustments 23 20 42
EBITDA adjusted 235 164 65
EBITDA margin, adjusted 8.0% 6.6% 2.5%

Interest reported 10 9 10
Operating lease adjustment 4 3 3
Interest adjusted 14 12 13

D&A reported 92 72 82
Operating lease adjustment 13 11 9
D&A adjusted 105 83 91

EBIT adjusted calculation


EBITDA adjusted 235 164 65
D&A adjusted 105 83 91
Financial income 4 6 7
Share in profits and losses of associated companies, oper 0 0 1
EBIT adjusted 134 87 -18
Balance sheet (EUR million) 2015 2014 2013
Total intangible assets 859 537 550
Property, plant and equipment 385 381 389
Investments in associated companies 12 5 5
Financial non-current assets 25 16 4
Other non-current assets 97 101 88
Total non-current assets 1,378 1,040 1,036

Inventories 508 474 431


Trade and other receivables 575 445 436
Amounts due from customers under construction co 216 192 159
Financial current assets 21 47 19
Income tax receivables 31 22 21
Cash and cash equivalents 165 192 211
Total current assets 1,516 1,372 1,277

Total assets 2,894 2,412 2,313

Equity attributable to owners of the parent compan 854 804 808


Non-controlling interests 6 5 5
Total equity 860 809 813

Non-current debt 309 16 140


Post-employment benefits 149 144 103
Deferred tax liability 70 22 29
Other non-current liabilities 14 13 35
Total non-current liabilities 542 195 307

Current portion of non-current debt 62 51 71


Trade and accrued project costs 767 740 673
Advances received 248 146 139
Amounts due to customers under construction cont 276 327 176
Income tax liabilities 27 16 21
Other current liabilities 111 128 113
Total current liabilities 1,491 1,408 1,193

Total equity and liabilities 2,894 2,412 2,313

Adjustments:

Debt reported 371 67 211


Accrued Interest 2 0 0
Operating lease 47 40 31
Pension net liability, post tax 118 113 82
Adjusted Debt 538 220 325
Cashflow statement (EUR million) 2015 2014 2013
Cash flows from operating activities
Profit/loss 78 46 -62
Adjustments
Depreciation and amortization 92 72 82
Gain (-) / loss (+) on sale of fixed assets -1 0 0
Gain (-) / loss (+) on sale of subsidiaries and associated compan 0 2 0
Dividend income and net interests 6 2 7
Income taxes 30 21 -2
Other non-cash items 23 15 40
Change in net working capital, net of effect from business acqui -121 104 -45
Inventories 14 -40 97
Trade and other receivables -59 -10 61
Amounts due to / from customers under construction contracts, -32 116 -194
Trade and other payables -44 38 -9
Interest paid -7 -8 -21
Interest received 3 5 4
Dividends received 0 1 0
Income taxes paid -25 -24 -46
Net cash provided by (+) / used in (-) operating activities 78 236 -43

Cash flows from investing activities


Capital expenditures on fixed assets -44 -46 -54
Proceeds from sale of fixed assets 3 4 3
Business acquisitions, net of cash acquired -323 - -3
Net cash provided by (+) / used in (-) investing activities -365 -42 -54

Cash flows from financing activities


Purchase of treasury shares -7 0
Dividends paid -37 -22 0
Net borrowings (+) / payments (-) on current debt 0 -8 -321
Proceeds from issuance of non-current debt 355 0 72
Principal payments of non-current debt -61 -134 -65
Investments in available-for-sale financial assets 0 -62
Proceeds from available-for-sale financial assets 24 29
Other -15 -7 482
Net cash provided by (+) / used in (-) financing activities 259 -204 168

Net increase (+) / decrease (-) in cash and cash equivalents -28 -10 71
Effect of changes in exchange rates on cash and cash equivalent 1 -9 -18
Cash and cash equivalents at beginning of year 192 211 158
Cash and cash equivalents at end of year 165 192 211

Adjustments:

Cash flow from operations, reported 78 236 -43


Operating lease depreciation adjustment 13 11 9
Cash flow from operations, adjusted 91 247 -34

Capex reported 44 46 54
Operating lease adjustment 20 19 20
Capex adjusted 64 65 74
Operating lease adjustment

2015 2014 2013


Commitment post 5 years 6 6 6
No of years >5yrs to be considered 2 2 2
Discount rate 7% 7% 7%

Year 1 commitment 18 16 12
Year 2 commitment 14 10 8
Year 3 commitment 9 8 5
Year 4 commitment 6 5 4
Year 5 commitment 3 3 3
Year 6 commitment 3 3 3
Year 7 commitment 3 3 3

Total Lease commitment 56 48 38


Present Value of total commitment 47 40 31
Op. lease rent 17 14 12
Adjustment to interest 4 3 3
Adjustment to depreciation 13 11 9
Adjustment to capex 20 19 20
Valmet Corp.
Adjusted amounts 2015 2014 2013
Revenues 2928 2473 2613
Gross profit 681 508 482
EBITDA 235 164 65
EBIT 134 87 -18
Interest 14 12 13
Debt 538 220 325
Cash 165 192 211
Net Debt 373 28 114
Operating cash flow 91 247 -34
Capex 64 65 74
Levered Free Cash Flow 27 181 -107
Dividends 37 22 0
Levered FCF post dividends -10 159 -107

Key ratios 2015 2014 2013


% revenue growth, yoy 18.4% -5.4%
Gross Profit margin 23.3% 20.5% 18.4%
EBITDA margin 8.0% 6.6% 2.5%
Return on Capital 11.0% 8.1% -1.6%
EBITDA interest coverage (x) 17.2 13.3 5.1
Debt Service coverage (x) 1.4 1.2 0.4
Net Debt/EBITDA (x) 1.6 0.2 1.7
Debt/Equity 62.6% 27.2% 39.9%
OCF/Debt 45.5% 348.4% -29.6%
FOCF/Debt 7% 67% -94%
DCF/Debt -5% 225% -94%
Capex/Sales 2.2% 2.6% 2.8%
Dividend payout 47% 48%

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