Impairment Analysis

Impairment Analysis

Glossary of Terms

CGU Cash Generating Unit

Key Findings

Impairment Analysis Summary:

• We have estimated a VIU of [SGD 106.5 Million] for 100% equity value of the [PL] CGU.

Key Assumptions

Revenue

• From the third year on, [revenues are expected to trend down to the historical revenue growth rat at approximately 4% followed by a subsequent drop to 3%], before settling on a terminate growth rate of [2.5]% which is maintained.

Margins

• Projected gross margins [ ]

Capital expenditure and depreciation

• Capital expenditure is expected to be approximately [6]% of revenue, in line with historical spending.

  
  

• Based on the forecasted capital expenditures, depreciation is expected to be approximately [5.6]% of revenues.

Terminal Growth Rate

• A terminal growth rate of [2.5]% is assumed, which is based on EIU's long-term inflation expectations for [Singapore].

Discount Rate

• A rounded discount rate of [11.0]% is applied which takes into account the risk of the cash flows.

Value In Use Analysis

VIU Analysis

As at 31 [December] 20X6

Figures in [SGD]'000 [31-Dec-X7] [31-Dec-X8] [31-Dec-X9] [31-Dec-X0] [31-Dec-X1]

Total Revenue

Growth Rate

Less: COGS

% of revenue

Gross Profit

GP Margin

Less: Operating Expenses

% of revenue

EBITDA

EBITA Margin

Less: Depreciation

EBIT

EBIT Margin

Less: Tax Expense

Net Operating Profit After Tax (NOPAT)

Operating Margin

Add: Depreciation

Less: Capital Expenditure [6]%

Less: Changes in Net Working Capital [-16.0]%

___

Free Cash Flow To Firm

Terminal Value [2.5]%

Discount Period

Discount Factor 11.0]%

___

Present Value of Cash Flows

Enterprise Value

Add: Net Cash

___

Equity Value

___

Appendix II: Discount rate applied

Weighted Average Cost of Capital (WACC)

The figure below presents our estimation of Weighted Average Cost of Capital.

Cost of equity

Risk Free Rate [2.5]%

MRP [6.0]%

Beta [0.88]

CRP [0.0]%

Size premium [3.58]%

= Cost of Equity

Cost of debt

Pre-tax Cost of Debt [5.9]%

(1-tax rate) (1 - [17.0]%)

=

After-tax Cost of Debt [4.9]%

Capital Structure

Cost of Equity x [94.2]%

After-tax Cost of Debt x [5.8]%

= Cost of Capital (Rounded) [11.0]%

Cost of Capital (Rounded) [11.0]%