UNIVERSITY OF PORTSMOUTH

BAL – SCHOOL OF ACCOUNTING,

ECONOMICS AND FINANCE

CORPORATE VALUATION
M32253

COURSEWORK ASSIGNMENT
2022-23

Module Co-ordinator:
Dr Paraskevas Pagas
 COURSEWORK ASSIGNMENT

This is an individual assignment and accounts for 100% of the final module mark.
The assignment is based on the River Island Clothing Co Limited and you are required
to prepare a valuation report. The hand-in date for the assignment is FRIDAY 19th
MAY 2023.

The Intended Learning Outcomes of the Assignment are:

 Critically assess fundamental features of corporate valuation.

 Compare, contrast and differentiate the fundamental features of a range of key
business valuation models.
 Critically evaluate and assess the empirical research literature and case studies in
corporate valuation.

Assignment – River Island Clothing Case Study

Required:

From a consideration of the case study background and synthesis of the data
contained in the information pack attached (pages 10-27) relating to River Island
Clothing Co Limited; you will prepare a valuation report in which you will critically
evaluate, analyse, discuss and comment upon the key issues in the valuation of River
Island Clothing Co Limited. The report will explicitly address the following matters:

a) An analysis of the current business and financial situation of River Island Clothing
Co Limited.
b) A discussion and analysis of your forecast of the company’s future expected
economic benefits stream.
c) An appraisal and assessment of the appropriate weighted average cost of capital
to be applied in the valuation.
d) A quantitative assessment of value using a discounted cash flow methodology and
a relative valuation approach.
e) An appraisal and discussion of the key assumptions contained within the valuation
and a sensitivity analysis showing how value might change given a range of
appropriate assumptions.
f) A brief critical evaluation of the methodologies applied, analysing issues which in
this specific valuation may impact upon the propriety of the value conclusion.
g) A conclusion of value, with a recommendation for the maximum price to be offered
per share.

The report will be assessed and marked on the level of considered and knowledgeable
discussion of the appraisal of value, not on a “right” value.

Your report must not exceed 4,000 words in length.

M32253 Corporate Valuation Assignment 2|Page

Hand-in Date

The hand-in date for Coursework Assignment is FRIDAY 19th MAY 2023. The
coursework report and any supporting Excel files must be submitted via Moodle.

Note: This is the latest date we are allowed to give for handing in the
assignment. No extensions beyond this date are possible.

Late Submission of Coursework

Coursework submitted after the published submission date without a valid Extenuating
Circumstances Form (ECF), but within ten working days of that date, will be marked.
The mark awarded will be limited to the module pass mark (40% unless otherwise
specified in the module handbook).

Coursework submitted more than ten working days after the published submission
date will not be marked, and a mark of zero will be recorded on the student's record.
It will be recorded as a non-submission.

Students are strongly advised to keep a copy of their work. Corruption of computer
disks is not an adequate excuse for late hand in, as work should be adequately backed
up.

Word Count

The coursework word count is a MAXIMUM OF 4,000 WORDS (THERE IS NO ±10%

MARGIN) excluding reference list, bibliography, appendices, the cover page, abstract,
glossary and list of tables, figures, charts and abbreviation. Tables are expected to be
primarily for the presentation of numerical data. Work that exceeds 4,000 words will
not be read beyond the stated word count.

The word count should be stated at the top of your submission. A falsely stated word-
count is an assessment offence, which will be referred to BaL Student Assessment
and Assessment Regulations Lead.

Formatting

The work should be word processed. Font size should be between 12 and 14 and
‘easy to read’ e.g. Calibri, Arial, Times New Roman. Line spacing should be between
1.5 and 2 with (approx.) 2.5 cm margins all round. The Header must include the
student number and the Footer must include a page number. There are no extra marks
for excessive presentation; for example, elaborate graphics on the cover sheet.

M32253 Corporate Valuation Assignment 3|Page

Written Report

Before embarking on any summative assignment, you should ensure that you are
familiar with the Assessment Criteria on pages 7-8. Overall, markers look for a clear
structure, logic and internal consistency. You need to read the requirements of the
assignment very carefully and ensure that your analysis is well focused on the main
relevant issues. The following are some general guidelines.

River Island Clothing Co. Limited is a real company and to fulfil the requirements of
your assignment you should use the latest available financial information on the
company and the main competitors, information from the company’s web site, as well
as information from newspapers. Some of the above information to get you started is
included in the information pack as well as on Moodle.

The use of literature and referencing is one of the main weaknesses encountered
in the work of past cohorts. Your analysis needs to be embedded into the relevant
theory and empirical evidence. Although this is a report, you would notice that you are
required to ensure that your arguments reflect the “latest academic thinking”!
Therefore, relevant recent references need to be discerningly used to support and
strengthen your arguments. It is not a competition to maximise the number of
references, but markers will look for the appropriateness and quality of the references
and evidence of wider reading, beyond the module reading list. You must include a list
of references at the end of your assignment, not a bibliography. In other words, the
reference list must include only sources referred to in the text of your assignment, and
must comply with the style specified in the Referencing Requirements section below.
This requirement relates to the Marking Criteria that require your work to be well
researched and findings fully evaluated. Your assignment needs to provide evidence
of well-developed analytical skills and satisfy the Marking Criteria. To give you just
some examples, you are expected to demonstrate awareness of the relevant literature
by explicitly refer to the literature; show that you researched your work well by
referencing your sources of information; fully evaluate findings and conclusions by
comparing your findings with related studies found in the literature.

In conclusion:

 Read the assignment very carefully and identify the exact requirements.
 Research the relevant issues thoroughly before embarking on the assignment.
Textbooks are key reading but not enough at this level.
 Use references appropriately to support and substantiate your analysis, as well as
demonstrate that your knowledge of the literature is appropriate for this level.
 Ensure that the information used is up-to-date and acknowledge the source of any
material, such as tables and figures, included in your assignment.

Above all, use your assignment as a learning tool and enjoy it!

Your Essay Should

 Be written in a plain style, using subheadings and lists where appropriate.

M32253 Corporate Valuation Assignment 4|Page

 Be properly referenced acknowledging all the sources you have used, and only the
sources you have used.
 Include evidence of locating and reading sources beyond the suggested initial
reading.

Referencing Requirements

All sources should be acknowledged and appropriately cited within your work,
following the University's approved referencing conventions [APA 7th ed.]. For further
guidance see: https://library.port.ac.uk/w165.html

Referencing is required to give intellectual credit to your source, help your reader
recover your source easily and to avoid being accused of plagiarism.

Students are reminded that the University will not tolerate academic dishonesty in any
form. This is cheating. For further guidance see Examination and Assessment
Regulations:

https://regulations.docstore.port.ac.uk/ExamRegs12AssessmentOffences.pdf

Please include a Reference List of all items cited in your work and follow this with a
Bibliography to show your wider background reading.

Further guidance on report writing, referencing as well as links to useful websites are
on the Corporate Finance and Business Valuation Moodle site

Plagiarism

Students are reminded of the need to avoid plagiarism in all assessments. The
definition of plagiarism includes claiming somebody else’s work as your own, for
example through inadequate referencing of sources of material used (including
Internet sources). Direct quotations must be enclosed in quotation marks and
referenced. Using other people’s ideas requires a reference even if it is not a direct
quote. The University Regulations describe plagiarism as:

the incorporation by a student in work for assessment of material which is not

their own, in the sense that all or a substantial part of the work has been copied
without any adequate attempt at attribution, or has been incorporated as if it
were the student’s own when in fact it is wholly or substantially the work of
another person or persons.

Any student suspected of plagiarising will be referred to the PBS Student Assessment
and Assessment Regulations Lead and an Academic Misconduct Hearing will be
arranged.

If any student has a query about any of the above matters and wishes to obtain
clarification or further information please contact the module co-ordinator or your
personal tutor.

M32253 Corporate Valuation Assignment 5|Page

Marking Scheme

Part (a) 20 marks

Part (b) 10 marks
Part (c) 10 marks
Part (d) 10 marks
Part (e) 20 marks
Part (f) 10 marks
Part (g) 10 marks
Formatting and Presentation 10 marks
Total 100 marks

Marking and Feedback

Marking will be done in accordance with the marking criteria grid below (Table 1) and
the University of Portsmouth grading criteria for PG level 7 (Table 2). Marks and
feedback will be available by Monday 19th June 2023. Marks will be posted on the
Student Portal, and your marked coursework and tutor’s feedback will be available on
Moodle once it has been marked and processed. If there is any delay in the processing
of marks, the module co-ordinator will communicate this to you and make
arrangements for the marks to be posted on Moodle so that you receive them as soon
as they are ready.

Individual feedback, which will be released via Moodle, will highlight the strengths of
the work and identify development points to help you to work out where you went
wrong and how you can improve your performance in the future.

M32253 Corporate Valuation Assignment 6|Page

Table 1: Marking Criteria - Essay Type

Component and Failure < 40% Pass Good Pass Distinction

Suggested Marks 40 – 55% 56 – 69% >70%
Introduction and Limited Topic well Introduction As for good
background to introduction not focussed but clearly pass
topic focussed on aims introduction and expressed;
of assignment context context well
incomplete defined
Understanding of Minimal Main issues All issues clearly Issues clearly
key issues understanding of largely identified, understood, with understood and
key issues but some lack of some differentiated in
focus differentiation in terms of
terms of importance
importance
Evidence of Little evidence of Evidence of Good critical Demonstrates
reading and/or reading or limited reading or literature review high level of
choice of /inappropriate use appropriate use of or well-justified scholarship.
appropriate of module module material choice of
concepts material; unclear but with some module material.
theoretical gaps. Literature Theoretical
framework; /concepts framework
important work adequately but supports study.
uncited or key not critically
concepts ignored reviewed.
Analysis Largely Some critical Relevant and Comprehensive
descriptive; analysis of central full analysis and critical
practically no issues, but with analysis of
analysis of central some central issues.
issues. inaccuracies.
Qualitative or
quantitative data
analysis
inaccurate.
Presentation and Some evidence to Appropriate Full, critical Full, critical
evaluation of support evidence, assessment of assessment of
evidence arguments but generally discriminatingly discriminatingly
uncritical assessed selected selected
acceptance of critically; weak material; some material;
material; poor or interpretation of evidence of evidence of
incomplete qualitative independent independent
citation; aspects; some thought thought;
unjustified gaps in linkages substantial
conclusions. between evidence individual
and conclusions. insights evident
Presentation: Poor: lack of Reasonably clear Demonstrates Excellent
Structure, clarity, structure and presentation; very good communication
use of grammar, clarity; reasonable communication skills; accurate
correct spelling grammatical referencing; few skills; accurate referencing;
mistakes; grammatical/spelli referencing; virtually no
inadequate ng mistakes very few/no errors; scholarly,
referencing grammatical or well-organised
spelling errors treatment of
material
Attainment of Attainment of Attainment of a Attainment of Attainment of
learning few/none of the good majority of substantial nearly all of the
objectives relevant learning the relevant majority of the relevant learning
objectives learning relevant learning objectives
objectives objectives

M32253 Corporate Valuation Assignment 7|Page

Table 2: University of Portsmouth General Grading Criteria for Level 7

% mark Level 7
As below plus:
80+ ● Excellent work – able to express an original reasoned argument in a lucid manner
by reviewing and critiquing a wide range of material. Original, critical thinking
based on outstanding insight, knowledge and understanding of material. Material
contributes to current understanding and is of potentially publishable quality in
70-79 terms of presentation and content.
● Wide reaching research showing breadth and depth of sources.
As below plus:
● Clear, balanced coherent critical and rigorous analysis of the subject matter.
60-69 Detailed understanding of knowledge and theory expressed with clarity.
● Extensive use of relevant and current literature to view topic in perspective,
analyse context and develop new explanations and theories.
As below plus:
● Detailed review and grasp of pertinent issues and a critical contextual
50-99 overview of the literature. Thorough knowledge of theory and methods and
uses this to underpin arguments and conclusions.
● Confidence in understanding and using literature.

● Demonstrates grasp of key concepts and an ability to develop and support an

argument in a predominately descriptive way with valid conclusions drawn from the
40-49 research.
● Familiarity with key literature which is cited and presented according to convention.
● Logical and clear structure, well organised with good use of language and
supporting material.

Threshold statement for use of English

● Verbal and listening skills are sufficient to enable a student to play an active part
in all learning activities at an adequate level for level 4 study. Written skills are
sufficient to produce basic documents that have some coherence in structure
and argument and include basic citation and referencing. Documents have made
use of spelling and grammar checking software.

30-39 FAIL – Some knowledge of relevant concepts and literature but significant gaps in
understanding and / or knowledge. Little attempt at evaluation, conclusions vague,
ambiguous and not based on researched material. Limited or inappropriate research.
0-29 Deficits in length, structure, presentation and / or prose.

Recommended threshold marking criteria statements for development of English, for

written work and oral presentations.

For written work (typically a maximum of 10% of the overall mark) – Level 7
Formatting and presentation of the work meet the published requirements for the
assignment. The work exhibits only a small number of spelling and grammatical errors. The
clarity of explanation and technical use of English meet the expected threshold level for a
first year undergraduate.

For spoken presentations (typically 10% of overall mark) – Level 7

Professional and appropriate / audible speaking volume, appropriately paced with some eye
contact. The verbal presentation was structured, presented clearly and could be understood

M32253 Corporate Valuation Assignment 8|Page

by an audience with a basic knowledge of the subject area. The technical use of English and
the complexity of the presentation meet the threshold expected level for a first year
undergraduate.

M32253 Corporate Valuation Assignment 9|Page

 River Island Clothing Co Limited

Valuation as of February 2023

Potential Private Equity Bid

Information Pack for Valuation Analysts

University of Portsmouth

Corporate Valuation

Assignment: 2023

M32253 Corporate Valuation Assignment 10 | P a g e

 River Island Clothing Co. Limited
It was Thursday the 16th February 2023, the sun was shining in a cloudless sky after
a period of heavy rain and Martin Halusa, the chairman of Apax Partners, one of the
world’s leading private equity firms, was driving to meet his valuation team, for a first
meeting on the potential River Island bid. It was only a week ago that he had been
directly approached by Richard Bradbury to start confidential exploratory discussions
on a possible leveraged buyout of the company he left in 2010. Richard was a long
serving chief executive of River Island who had taken early retirement from the
company in 2010, with a payout of some £15m.

Martin had taken some convincing that the Lewis family, who own River Island, would
be open to an offer. The family with Bernard Lewis at the head had run the company
since it started in 1948. Bernard had just celebrated his 97th birthday and Richard felt
confident that now was the time for a buyout approach.

In the car Martin played back the podcast recording of his initial meeting with Richard
and dwelled on the long history of the potential target.

It was seventy-seven years ago that Lewis had opened his first “shop” aged 20 selling
fruit and vegetables from a corrugated iron shed on a bombsite on Holloway Road,
north London, and he had now become the patriarch of a business empire.

While others struggled in the past, River Island had gone from strength to strength.
Even though the like-for-like sales across the high street falling in recent years as a
result of the global recession, River Island is believed to be in a good position to its
competitors in the past 12 months across its over 350 stores. The latest accounts filed
at Companies House show River Island had a pre-tax profit of £62.5m for the year to
December 25 2021, compared to a loss in pre-tax profits to (£32m) for the year to
December 26 2020. Prior to that the company had a 37.1% decrease in pre-tax profits
to £28.5m for the year to December 28 2019, a 51.3% decrease in pre-tax profits to
£45.3m for the year to December 29 2018, a 32.9% decrease in pre-tax profits to £93m
for the year to December 30 2017, a decrease of 7% to £138.6m for the year to
December 31 2016, a small 1.9% increase to £148.6m for the year to December 26
2015 and a substantial increase of 69.3% in the year of 2014. The company is still
opening new stores with expansion in Moscow, Australia, Holland and Poland, in
addition the family’s near term expansion strategy seems to be concentrating on
evaluating the potential in the USA market.

Lewis has always shunned the limelight, yet despite the low profile few in the retail
industry make the mistake of underestimating him. Philip Green, the owner of Arcadia
and BHS, describes him as a brilliant retailer. “He is an old-style dyed-in-the-wool
retailer, which they do not manufacture anymore,” said Green.

Fruit and veg had always been the Lewis family business. During the Second World
War the family sold their wares from the back of a lorry. When Lewis left the air force
in 1946 he opened his greengrocer’s shop at 478 Holloway Road – today the site is a
River Island store. But within two years of opening his greengrocer’s he had realised
that his future did not lie in cabbages and carrots. So, in 1948 Bernard Lewis – and
his brothers David, Godfrey and Geoffrey – opened “Lewis” a womenswear shop in

M32253 Corporate Valuation Assignment 11 | P a g e

Mare Street Hackney, east London. Within 10 years they had a chain of shops across
Britain with stores in Brighton, Hull and Glasgow as well as London. By 1980 Godfrey
and Geoffrey had left the business and most of the shops had been rebranded as
Chelsea Girl. It would not be the last time that Lewis reinvented the retailer. In 1988
River Island began to replace Chelsea Girl.

Richard Hyman, chairman of Verdict research, the retail research consultancy,

believes that the reinvention of the brand is one of the reasons that Lewis has survived
while so many of his high-street rivals have faltered. “They have invented three
separate businesses, transforming Lewis Separates into Chelsea Girl and Chelsea
Girl into River Island,” said Hyman. “The timing has been impeccable. Bernard has a
natural instinct. You cannot teach timing like that at a business school.” Lewis was
also one of the first retailers to bring design in-house and to move production overseas.

By the early 1990s Chelsea Girl was no more, replaced by River Island. The business
went from strength to strength, driven by Bernard Lewis. Over the past decade River
Island’s success has enabled Lewis Trust Holdings – the family’s ultimate holding
company – to pay hundreds of millions of pounds in dividends. Eleven members of the
family, an Israeli company and Guernsey-based offshore trusts now own stakes of
between 3% and 18% in the business.

The success on the high street has enabled the Lewis family to invest in property and
other businesses and the family empire now extends much further than River Island.
The Lewis Trust Group owns hotels in Europe, Israel and America. Although one of
the younger members of the Lewis family had been appointed chief executive of River
Island, Richard Bradbury held the belief that the older family members would soon
want to retire and the family would be open to an approach so that they could
concentrate on their other interests, which also embraced a large property division.

Martin mulled over these issues and concluded that any approach would have to be
very attractive for the Lewis family to give up what has obviously been an exceptional
cash generating company.

He decided that he must stress, to his team, the importance of the initial approach
valuation being set at the right level. Although, not at such a value that the assets will
have to sweat too hard for good returns to be made when they float the company in a
few years’ time, or decide upon a trade sale exit route.

John Megrue, Chairman of Apax Partners in the USA and head of their retail group,
called Martin on his mobile phone cautioning him and suggesting that the retail sector
did not appear to be a good play at the moment, unless the business was unique and
its franchise was in growth markets with a strong online presence.

Martin was lost in thought when he pulled into the car park of 33 Jermyn Street, where
he had arranged to meet the valuation team. Richard Bradbury would also be at the
meeting and Martin wanted this to be a positive meeting which would take the bid
forward. He mentally prepared himself to give a detailed briefing to his team.

M32253 Corporate Valuation Assignment 12 | P a g e

 Financial Market Data as of 16th February 2023

15 year UK Gilt yields as of 16 February 2023 – 3.856%

10 year UK Gilt yields as of 16 February 2023 – 3.500%
30 year UK Gilt yields as of 16 February 2023 – 3.898%
(Source: Marketwatch)

UK Equity risk premium – 5.00% (Fernandez, 2014)

Corporate tax rate 19% (with effect from 2017)

Fernandez, P. (2014). Market Risk Premium used in 88 countries in 2014: A survey.

Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2450452

M32253 Corporate Valuation Assignment 13 | P a g e

 River Island Clothing Co Limited

Financial Report

For the Six Years Ended

25th December 2021

M32253 Corporate Valuation Assignment 14 | P a g e

 River Island Clothing Co. Limited > Private Company Profile

Company Overview
Company Type: Private Company
Company Status: Operating Subsidiary
Website: www.riverisland.com
Number of Employees: 2,382
Year Founded: 1948
† This number reflects the estimated value of the total new money raised through private placement rounds.
** This value is an estimate of the total number of funding rounds this company has received.

Business Description
River Island Clothing Co. Limited operates and franchises a chain of apparel stores. It offers clothing, dresses, tops, T-
shirts/vests/sweats, coats/jackets, leather/leather look jackets, capes/kimonos, blazers, knitwear, jeans, skirts, trousers,
shorts, leggings, coordinates/matching sets, playsuits/jumpsuits, swimwear/beachwear, and lingerie/nightwear; and
shoes/boots, bags/purses, accessories, jewelers, watches, sunglasses, gifts, beauty products, and socks for women and girls.
The company also provides clothing, T-shirts/vests, blazers, coats/jackets, chinos, hoodies/sweatshirts, jeans, joggers,
jumpers/cardigans, polo shirts, pyjamas/onesies, shirts, shorts, suits, swim shorts, tops, trousers, underwear/socks, and
waistcoats; and accessories, bags, gifts, jewelers, shoes/boots, sunglasses, and watches for men and boys. In addition, it
designs and manufactures apparel. River Island Clothing Co. Limited was formerly known as Chelsea Girl Limited and
changed its name to River Island Clothing Co. Limited in 1988. The company was founded in 1948 and is based in London,
United Kingdom. It has stores in the United Kingdom, Ireland, Asia, the Middle East, Europe, and internationally. River Island
Clothing Co. Limited operates as a subsidiary of River Island Holdings Limited.

Primary Industry Classification

Apparel Retail

Primary Office Location

Chelsea House Westgate | London, Greater London | W5 1DR | United Kingdom
Phone: 44 34 4576 6444 Fax: 44 20 8991 8968

Parent Company
River Island Holdings Limited

Financial Information (Currency: GBP, in mm)

Total Revenue 675.1 Operating Income 62.5 Total Assets 368.6
Gross Profit 117.0 EBITDA 81.2 Total Debt 11.7
Net Income 54.2 Estimated Number of 2,382 Net Debt (132.9)
Employees
Private Co. Financial Data as of Dec-30-2017. * Hover over data point numbers for date and source.

Key Professionals
Name Title
Lewis, Clive Robert Chief Executive Officer

Last 5 Transactions
Announced
Date Closed Date Transaction Type Role Target Buyer/Investors Sellers Size($mm)
Jul-1-2013 Jul-1-2013 Merger/Acquisition Buyer Waterview River Island Clothing Co. -
Fashion B.V. Limited
Jan-14-2013 Jan-14-2013 Private Placement Buyer The Hut.com Artemis Fund Managers 14.45
Ltd Limited,River Island
Clothing Co. Limited
* denotes that the relationship is proprietary

M32253 Corporate Valuation Assignment 15 | P a g e

 Last 5 Key Developments
Date Event Type Headline
Jul-01-2013 M&A Transaction Closings River Island Clothing Co., Ltd. acquired a 50% stake in Waterview Fashion
B.V.
Mar-19-2013 Product-Related Announcements River Island Clothing Co., Ltd. Launches New Menswear Brands
Jan-14-2013 Private Placements The Hut Group Ltd. announced that it has received £9 million in funding
from Artemis Fund Managers Limited, River Island Clothing Co., Ltd., and
other investors.
Dec-11-2012 Product-Related Announcements River Island Clothing Co., Ltd. Launches New Brands Online
Oct-08-2012 Product-Related Announcements River Island Clothing Co., Ltd. Introduces Style Insider

Current and Pending Subsidiaries / Investments

LTM LFQ LFQ
Total Total Total
Primary Rev.($m Assets Debt
Company Name Business Description Geography Industry m) ($mm) ($mm)
Waterview Waterview Fashion B.V. is based in the Europe Multi- - - -
Fashion B.V. Netherlands. As of July 1, 2013, Sector
Waterview Fashion B.V. operates as a Holdings
subsidiary of River Island Clothing Co.,
Ltd.

River Island Ret Family Clothing Europe Apparel 40.79 - -

Clothing Company Retail
(Ireland) Limited
River Island Ret Family Clothing Europe Apparel - - -
Clothing Company Retail
Limited
The Hut.com Ltd. The Hut.com Ltd., trading as THG Europe Internet 1,932.70 - -
Ingenuity, operates as an online retailer and Direct
of apparel, homeware, beauty, and Marketing
lifestyle products. It offers sports nutrition Retail
products and vitamins; cycling and
endurance products; gifting products;
prestige hair and skin care products;
weight management products; clothing
products, footwear, and accessories;
and toys, gifts, computing, electronics,
games, DVDs, Blu-ray, and phones. The
Hut.com Ltd. was formerly known as
Hurrell Limited and change its name to
The Hut.com Ltd. in February 2004. The
company was founded in 2004 and is
based in Northwich, United Kingdom.
The Hut.com Ltd. operates as a
subsidiary of THG Plc.

Regulatory News Service data provided by

M32253 Corporate Valuation Assignment 16 | P a g e

Income Statement
For the Fiscal Period Ending Dec-31-2016 Dec-30-2017 Dec-29-2018 Dec-28-2019 Dec-26-2020 Dec-25-2021
Currency GBP GBP GBP GBP GBP GBP
Revenue 923.3 901.9 877.7 843.5 576.4 675.1
Total Revenue 923.3 901.9 877.7 843.5 576.4 675.1

Cost Of Goods Sold 752.1 758.4 770.6 736.8 544.8 558.1

Gross Profit 171.2 143.5 107.1 106.7 31.6 117.0

Selling General & Admin Exp. 37.9 55.8 64.9 78.3 - -

Depreciation & Amort. - - - - 26.2 18.7
Amort. of Goodwill and Intangibles - - - - - -
Other Operating Expense/(Inc.) - - - - 37.9 35.8
Other Operating Exp., Total 37.9 55.8 64.9 78.3 64.1 54.5

Operating Income 133.3 87.7 42.2 28.4 (32.5) 62.5

Interest Expense (0.4) (0.4) - (0.2) (0.1) (1.7)

Interest and Invest. Income 5.7 5.7 3.1 0.3 - -
Net Interest Exp. 5.3 5.3 3.1 0.1 (0.1) (1.7)

Other Non-Operating Inc. (Exp.) - - - - 0.6 -

EBT Excl Unusual Items 138.6 93.0 45.3 28.5 (32.0) 60.8

Other Unusual Items - - - - - -

EBT Incl. Unusual Items 138.6 93.0 45.3 28.5 (32.0) 60.8

Income Tax Expense 28.9 18.4 8.3 6.4 (8.4) 6.6

Minority Int. in Earnings - - - - - -
Earnings from Cont. Ops. 109.7 74.6 37.0 22.1 (23.6) 54.2

Net Income 109.7 74.6 37.0 22.1 (23.6) 54.2

Supplemental Items
Advertising Exp. 20.8 20.9 20.2 20.9 - -
EBITDA 162.2 117.3 71.8 58.0 (6.3) 81.2
EBIT 133.3 87.7 42.2 28.4 (32.5) 62.5
General and Administrative Exp. 17.1 34.9 44.7 57.4 - -

As Reported Items
Net Sales 923.3 901.9 877.7 843.5 576.4 675.1
Cost of Sales 752.1 758.4 770.6 736.8 544.8 558.1
Gross Profit 171.2 143.5 107.1 106.7 31.6 117.0
General Expenses 17.1 34.9 44.7 57.4 - -
Total Payroll Costs 158.2 167.4 166.3 169.6 153.6 130.1
Salaries - - - - 138.9 115.5
Fixed Asset Depreciation 28.9 29.6 29.6 29.6 - -
Amortization
Net Operating Income 133.3 87.7 42.2 28.4 (32.5) 62.5
Interest Payable on Loans 0.4 0.4 - 0.2 0.1 1.7
Interest Received from Loans 5.7 5.7 3.1 0.3 - -
Total Financial Income 5.7 5.7 3.1 0.3 0.6 -
Profit before Tax 138.6 93.0 45.3 28.5 (32.0) 60.8
Total Tax 28.9 19.6 9.3 7.0 8.4 (6.6)
Other Taxes - (1.2) (1.0) (0.6) - -
Profit after Tax - - - - (23.6) 54.2
Profit after Tax and before 109.7 74.6 37.0 22.1 - -
Extraordinary Items
Net Profit 109.7 74.6 37.0 22.1 - -

Consolidation Unconsolidated Unconsolidated Unconsolidated Unconsolidated Unconsolidated Unconsolidated

M32253 Corporate Valuation Assignment 17 | P a g e

Balance Sheet
For the Fiscal Period Ending Dec-31-2016 Dec-30-2017 Dec-29-2018 Dec-28-2019 Dec-26-2020 Dec-25-2021
Currency GBP GBP GBP GBP GBP GBP
ASSETS
Cash And Equivalents 119.4 101.4 127.1 163.2 204.3 144.6
Total Cash & ST Investments 119.4 101.4 127.1 163.2 204.3 144.6
Accounts Receivable 21.5 26.8 28.1 30.4 33.8 27.3
Other Receivables 311.2 376.9 130.2 146.7 149.2 25.3
Total Receivables 332.7 403.7 158.3 177.1 183.0 52.6
Inventory 81.8 95.8 81.0 81.0 80.1 112.4
Prepaid Exp. 30.6 31.1 27.7 27.6 - -
Other Current Assets 5.1 - 5.4 - - -
Total Current Assets 569.6 632.0 399.5 448.9 467.4 309.6
Gross Property, Plant & Equipm. 94.4 103.2 106.1 89.4 - -
Net Property, Plant & Equipm. 94.4 103.2 106.1 89.4 58.5 44.4
Accounts Receivable Long-Term - - - - 16.1 14.6
Total Assets 664.0 735.2 505.6 538.3 542.0 368.6
LIABILITIES
Accounts Payable 58.9 62.0 61.0 31.8 47.2 62.1
Accrued Exp. 51.8 60.2 64.5 87.4 102.2 87.9
Short-term Borrowings - - - - 5.6 11.7
Curr. Income Taxes Payable 18.3 9.8 12.3 14.1 0.2 17.4
Other Current Liabilities 7.2 7.7 5.0 14.2 7.7 8.6
Total Current Liabilities 136.2 139.7 142.8 147.5 162.9 187.7
Long-Term Debt - - - - - -
Pension & Other Post-Retire. - - - - 18.5 -
Benefits
Def. Tax Liability, Non-Curr. 11.9 - - - - -
Other Non-Current Liabilities 15.3 13.9 21.3 34.4 33.8 28.3
Total Liabilities 177.8 163.4 153.6 164.1 181.9 216.0
Common Stock 3.4 3.4 3.4 3.4 3.4 3.4
Retained Earnings 497.2 578.2 338.1 359.2 325.1 325.1
Comprehensive Inc. and Other - - - (6.2) (1.7) (1.7)
Total Common Equity 500.6 581.6 341.5 356.4 326.8 326.8
Total Equity 500.6 581.6 341.5 356.4 326.8 326.8
Total Liabilities And Equity 664.0 735.2 505.6 538.3 542.0 542.0
Supplemental Items
Total Debt - - - - 5.6 11.7
Net Debt (119.4) (101.4) (127.1) (163.2) (198.7) (132.9)
Raw Materials Inventory 4.3 4.6 3.9 1.8 - -
Work in Progress Inventory 4.1 5.4 2.7 1.7 - -
Finished Goods Inventory - 15.2 - - - -
Machinery 86.0 95.0 98.3 82.6 - -
As Reported Items
Cash and Liquid Assets 119.4 101.4 127.1 163.2 204.3 144.6
Trade Debtors 21.5 26.8 28.1 30.4 33.8 27.3
Total Receivables - - - - 183.0 52.6
Net Stocks and Work in Progress 81.8 95.8 81.0 81.0 80.1 112.4
Total Current Assets 569.6 632.0 399.5 448.9 467.4 309.6
Total Tangible Fixed Assets 94.4 103.2 106.1 89.4 58.5 44.4
Total Assets 664.0 735.2 505.6 538.3 542.0 368.6
Trade Creditors 58.9 62.0 61.0 31.8 47.2 62.1
Total Current Liabilities 136.2 139.7 142.8 147.5 162.9 187.7
Provision for Pension - - - - 18.5 -
Total Long Term Liabilities - - - - 52.3 28.3
Issued Capital 3.4 3.4 3.4 3.4 3.4 3.4
Retained Earnings 497.2 578.2 338.1 359.2 325.1 148.4
Total Reserves - - - (6.2) - -

M32253 Corporate Valuation Assignment 18 | P a g e

Total Stock Holders Equity 500.6 581.6 341.5 356.4 326.8 152.6
Net Worth 500.6 581.6 341.5 356.4 - -
Total Liabilities 664.0 735.2 505.6 538.3 - -
Consolidation Unconsolidated Unconsolidated Unconsolidated Unconsolidated Unconsolidated Unconsolidated

M32253 Corporate Valuation Assignment 19 | P a g e

 Example Market Reports

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M32253 Corporate Valuation Assignment 21 | P a g e
 Examples of News Extracts

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M32253 Corporate Valuation Assignment 23 | P a g e
M32253 Corporate Valuation Assignment 24 | P a g e
M32253 Corporate Valuation Assignment 25 | P a g e
 Financial Summary Data

Sector Comparators

February 2023

M32253 Corporate Valuation Assignment 26 | P a g e

Details
As-Of Date: Feb-16-2023

Company Comp
Set
Company Name Day Close Shares Market LTM Net Total LTM LTM Total 5 Year
Price Latest Outstanding Capitalization Debt Enterprise Tangible Revenue Beta
Latest Latest Value Book
Latest Value/Share
French Connection - - - 24.3 - 0.1 105.5 -
Group plc
(LSE:FCCN)
Superdry Plc 1.39 81.4 112.9 270.3 383.2 0.61 744.3 2.24
(LSE:SDRY)
Next Plc (LSE:NXT) 82.17 123.8 10,176.0 2,320.2 12,492.1 8.13 5,869.5 1.37

ASOS Plc (AIM:ASC) 9.91 99.8 988.9 640.3 1,629.2 3.99 4,728.9 2.89

Ted Baker PLC - - - 146.4 - 0.6 514.4 -

(LSE:TED)
Mulberry Group plc 2.76 59.5 164.4 79.6 236.6 0.68 182.1 1.41
(AIM:MUL)
Marks and Spencer 1.85 1,964.6 3,629.7 3,499.5 7,135.0 1.72 13,596.2 1.64
Group plc (LSE:MKS)
Mothercare plc 0.12 562.9 66.8 13.9 80.7 ( 0.01) 95.3 0.85
(LSE:MTC)
Moss Bros Group plc - - - 60.9 - 0.28 156.1 -
(LSE:MOSB)
N Brown Group plc 0.43 457.3 198.9 284.2 483.1 0.92 840.7 2.23
(LSE:BWNG)
Burberry Group plc 30.43 376.5 11,457.2 595.8 12,060.2 3.98 3,553.4 1.16
(LSE:BRBY)

Summary Statistics Day Close Shares Market LTM Net Total LTM LTM Total 5 Year
for Sample Price Latest Outstanding Capitalization Debt Enterprise Tangible Revenue Beta
Latest Latest Value Book
Latest Value/Share
High 82.17 1,964.6 11,457.2 3,499.5 12,492.1 8.13 13,596.2 2.89

Low 0.12 59.5 66.8 13.9 80.7 ( 0.01) 95.3 0.85

Mean 16.13 465.7 3,349.3 721.4 4,312.5 1.91 2,762.4 1.72

Median 2.31 250.2 593.9 270.3 1,056.2 0.68 744.3 1.53

Displaying 12
Companies.

Excel Comp Set ID: IQ549696808

All values in millions, except per share data and ratios.
Values converted at today's spot rate.
Companies by default are sorted by S&P Capital IQ’s proprietary relevancy score.

M32253 Corporate Valuation Assignment 27 | P a g e