Tailored valuation

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<ol><li> 1. Strictly Private and Confidential This document is an extract of the full reportwww.evaluation.usTAILORED VALUATION[Company XYZ]January 2011 New York - London Miami - Madrid </li><li> 2. Strictly Private and Confidentialwww.evaluation.usINDEX Page 1. Aim of the report and Executive Summary4 2. Financial Hypothesis 6 3. Valuation Methodology 12 4. Trading Valuation 19 5. Private Transactions Valuation22 6. DCF Valuation 26 7. Conclusion: Valuation Range 30Appendix I. e-Valuation Company Presentation32 II. WACC Calculation 33III. Historical and Projected Financial Statements34IV. Difference Between Value and Price37 V. Glossary38VI. e-Vauations References 39VII. Contact Details40 </li><li> 3. Estrictamente Privado y ConfidencialJanuary 2011 COMPANY XYZ TAILORED VALUATION 3. Valuation Methodology www.e-valuation.us www.evaluation.us Introduction In order to carry out XYZs valuation, e-Valora has used contrasted, generally accepted valuationmethodologies: the Discounted Cash Flows methodology (DCF), the Multiples of Trading ComparableCompanies methodology and the Multiples of Private Transactions methodology. The application of each ofthese methodologies, results in a specific valuation range for XYZ. In order to establish an estimated valuationrange for the company, e-Valora calculates a weighted average of the results of the different methodologies,where the different weights are estimated using its own criteria and experience. We believe that the use ofall of these methodologies improves the reliability of the valuation obtained given that they arecomplementary. Furthermore, it allows us to contrast the results of one and other (including the basicassumptions made). In the case of the DCF methodology, the assumptions that are considered are based on e-Valoras estimates.Such information allows a qualitative and quantitative analysis of the current and expected future situation ofXYZ. If the strategy carried out by the Company in the future is different from the one that has been consideredaccording to the information provided by the Client, or if such information differs from reality, our view aboutthe value of XYZ would vary accordingly. Each of the methodologies mentioned take into account the information of XYZ in a different way, providing acomplementary view of the companys value. 12 </li><li> 4. Estrictamente Privado y Confidencial January 2011 COMPANY XYZ TAILORED VALUATION 4. Trading Valuation www.e-valuation.us www.evaluation.us Valuation using Multiples of Trading Comparable Companies (continuation)According to the multiples found and weighting each of them as indicated in the following table, the companys valuation range would be of between 169.172 and 186.980 Euros. VALUATION USING MULTIPLES OF TRADING COMPARABLE COMPANIESCompanies E.V./TurnoverE.V./EBITDA1E.V./EBIT2PER3Euros2010 2011 2012 2010201120122010 201120122010 20112012 Mean0,35x0,36x 0,30x 10,9x 7,4x5,4x16,9x 9,9x 7,0x25,9x15,6x 10,3x Company XYZs Magnitudes 4.421.7564.386.531 4.474.26114.549 17.41419.49014.372 17.06218.95810.77912.796 14.219 Results: Value of the Company1.564.7381.559.332 1.322.394 159.030 129.028 105.893 242.783168.805 132.625 170.328 91.225 145.949 Weights5% 5% 5%50% 50% 50% 25% 25%25% 20% 20%20% 2010 2011 2012 Value of the Company 388.776 275.907298.172 Value of the Company reduced by 20%311.021 220.726238.538 Company Value Estimation USING MULTIPLES OF TRADING COMPARABLE COMPANIES256.761 Euros RANGE 5% COMPANYS VALUATION RANGE USING MULTIPLES OF TRADING COMPARABLE COMPANIES 243.923 269.599 Euros - Net Debt (Negative) 108.765 108.765 VALUATION RANGE OF THE COMPANYS EQUITY USING MULTIPLES OF TRADING COMPARABLE COMPANIES 352.688 378.365 Euros Note 1 : EBITDA stands for Earnings before interest, taxes, depreciation and amortisation Nota 2: EBIT stands for Earnings before interest and taxes Nota 3: PER is equal to the companys market capitalization divided by the profit/loss (after taxation)21 </li><li> 5. Estrictamente Privado y Confidencial January 2011 COMPANY XYZ TAILORED VALUATION 5. Private Transactions Valuation www.e-valuation.us www.evaluation.us Valuation using Multiples of Private Transactions (continuation) According to this approach, the companys valuation range would be of between 162.226 and 179.303 Euros. The weight of the results obtainedtrough this methodology in the companys final valuation are low for the reasons that have been previously explained.XYZS VALUATION USING MULTIPLES OF PRIVATE TRANSACTIONSEurosE.V./ TurnoverE.V./EBITDAE.V./EBIT PERMean0,34x7,86x9,29x18,88xMagnitudes 2009 of the Company 4.421.75614.549 14.37210.779Results: Valuation of the Company1.510.237114.413133.494 271.260Weights5%50% 30%15%Company Value Estimation USING MULTIPLES OF PRIVATE TRANSACTIONS213.456 EurosValue of the company dicounting a 20% 170.765RANGE5%COMPANYS VALUATION RANGE USING MULTIPLES OF PRIVATE TRANSACTIONS 162.226 179.303 Euros - Net Debt (67.806) (67.806)VALUATION RANGE OF THE COMPANYS EQUITY USING MULTIPLES OF PRIVATE TRANSACTIONS94.420 111.497 Euros 24 </li><li> 6. Estrictamente Privado y Confidencial January 2011COMPANY XYZ TAILORED VALUATION7. Conclusion: Valuation Range www.e-valuation.us www.evaluation.us Conclusion: Final Valuation Range Taking into account the results obtained using the different methodologies described, and considering that our reference methodology is the DCF (with a weight of 85%, compared to 10% for the multiples of Trading Comparable Companies methodology and the 5% of the multiples of Private Transactions methodology), we obtain an average value, to which we apply a reliability range of +/- 5%. Taking into account such assumptions, we conclude that the final valuation range for XYZ is the following : between 247.163 and 273.180 Euros.DCF 256.971284.021 Private Comparable Transactions 162.226179.303Trading Comparable Companies169.172186.980 Total 247.163 273.18050.000 100.000150.000 200.000250.000 300.000 Equitys Market Value To calculate the market value of XYZs shares (Equity Value), the companys net debt (it shows a companys overall debt situation by netting the value of a companys liabilities and debts with its cash and other similar liquid assets) at the moment of the valuation has to be subtracted from the enterprise value previously calculated. Based on the historical data provided by the company, and considering the companys net debt as of December of 2008 (1,669,850 Euros), the valuation range of the its Equity would be of between 179.357 y 205.374 Euros.30 </li><li> 7. Estrictamente Privado y Confidencial January 2011 COMPANY XYZ TAILORED VALUATION Appendix I. e-Valora Company Presentation www.e-valuation.us www.evaluation.us e-Valora offers financial consulting services to the private as well as to the public sector, and is specialized incompany valuations. Among other services provided, we must highlight advisory services towards mergers andacquisitions, the elaboration of economic and financial studies, business and viability plans, and financial andbusiness consulting services. Since its foundation in November of 2000 by a team of experts coming from international investment banks, e-Valora has carried out more than 1,000 valuations of Spanish and foreign companies, from companies with less than1 million Euros of turnover to companies with more than 500 million Euros of turnover, from start-ups to companieswith more than 80 years of history, including services and industrial companies. At the end of 2008, e-Valora increased its professional team with members that have a wide experience ininvestment banking, coming from entities such as Bank of America or Rothschild, that have worked in projectsbelonging to every economic sector. e-Valora has got ISO 9001 Certification in Business Valuation Services, Corporate Finance Advisory Services andElaboration of Valuation Multiples. Its offices locations and contact details are the following :e-Valuation Financial Services North America e-Valuation Financial Services Northern Europe 14 Wall Street, 20th Floor One Canada Square, 29th Floor, Canary Wharf New York City, New York 10005London E14 5DY United States of America United Kingdom e-Valuation Financial Services Central and South America e-Valuation Financial Services Southern Europe Brickell Avenue, 11th Floorc/ Jos Ortega y Gasset, 42 Miami, 33131 Madrid, Madrid 28006 United States of America Spain 32 </li><li> 8. Estrictamente Privado y Confidencial January 2011COMPANY XYZ TAILORED VALUATION Appendix II. WACC Calculation www.e-valuation.us www.evaluation.us Calculation of the Weighted Average Cost of Capital The cost of capital is equal to the weighted average of the cost of debt and equity To calculate the DCF we need to estimate the companys cost of capital: When valuing XYZ, the WACC has been calculated as the mean of the WACC of other companies that operate in the same industry In the following table we detail how such discount rate has been calculated:Comparable CompaniesWACCCompany A ADECCO 9,5%Company B RANDSTAD 9,7%Company C MANPOWER10,9%Company D USG People 9,8%Company E Kelly services 9,8%Company F Kforce10,0%Company G Inc.Administaff, 10,5%Average10,0% + 5 percentage points5,0% WACC15,00% The calculated and adjusted discount rate is of 15,0%. A 5% has been added to such rate to take into consideration the companys risk premium given that it is smaller than its comparables, its equity has no liquidity and its turnover is very concentrated.33Nota 1: WACC: Weighted Average Cost of Capital </li><li> 9. Estrictamente Privado y ConfidencialJanuary 2011 COMPANY XYZ TAILORED VALUATION Appendix III. Historical and Projected Financial Statements www.e-valuation.us www.evaluation.usBalance Sheet (Euros)ASSETS 2007 2008 2009 N 2010 2011 2012 2013 2014FIXED ASSETS 242 242 0 7071.2321.5961.8021.846Tangible assets 242 24207071.2321.5961.8021.846 Machinery2.019 2.0192.0192.1502.2802.4122.5492.689 Other Installations 10.50410.504 10.504 11.184 11.860 12.548 13.258 13.989 Tangibles1.123 1.1231.1231.1961.2681.3411.4171.495 Accumulated Depreciation(13.404)(13.404) (13.645) (13.822) (14.175) (14.706) (15.422) (16.327)CURRENT ASSETS 387.336 486.0151.283.384826.409832.153861.447900.304944.446Debtors 390.341 484.5551.261.830696.037690.860704.677725.818747.592 Clients Average payment days from invoice385533127 57 57 57 57 57 Accounts Receivable80.93969.235 1.261.830 696.037690.860 704.677 725.818747.592 Other Debtors309.402415.320 0 00 0 00Cash and cash equivalents(3.005) 1.46021.554 130.372141.293 156.770 174.486196.853TOTAL ASSETS 387.578 486.2571.283.384827.117833.385863.043902.106946.291LIABILITIES2007 2008 2009 N 2010 2011 2012 2013 2014EQUITY14.38516.166 24.719 35.498 48.294 62.513 77.594 97.314Shareholders Equity 14.38516.166 24.719 35.498 48.294 62.513 77.594 97.314 Capital3.005 3.0053.0053.0053.0053.0053.0053.005 Reserves 89511.379 13.161 13.161 13.161 13.161 13.161 13.161 Retained Surpluses/(Accumulated losses)572 008.553 19.331 32.128 46.346 61.428 Profit/loss9.912 1.7828.553 10.779 12.796 14.219 15.081 19.720CURRENT LIABILITIES373.193 470.0901.258.665791.619785.091800.531824.512848.977Short term debts0 0 40.00000000 Debts held with financial institutions 0 0000000 Other short term debts 0 0 40.00000000Short term debts with associated companies0 0 49.36000000Accounts Payable373.193 470.0901.169.305791.619785.091800.531824.512848.977 Suppliers (87) 0000000 Creditors372.755 447.286171.59200000 Companys payment days form invoice 8001.98236500000 Pending remunerations (432)7.992 344.635245.837243.879 248.756 256.219263.906 % over sales 0,1% 2,4% 8,7% 5,6% 5,6% 5,6% 5,6% 5,6% Income tax payable(2.303)10.946496.344350.240347.449 354.398 365.030375.981 % over sales 0,6% 3,3%12,5% 7,9% 7,9% 7,9% 7,9% 7,9% Social Security Institutions Payable3.2603.867 156.734195.542193.763 197.376 203.262209.090 % over total staff costs 1,8% 1,6% 4,7% 4,7% 4,7% 4,7% 4,7% 4,7% Public Treasury, Output VAT00 (0) 00000TOTAL LIABILITIES387.578 486.2571.283.384827.117833.385863.043902.106946.29134 </li><li> 10. Estrictamente Privado y Confidencial January 2011 COMPANY XYZ TAILORED VALUATION Appendix V. Glossary www.e-valuation.us www.evaluation.us Intangible Assets or Intangible Fixed Asset: Non-physical assets such as franchises, trademarks, patents, copyrights, goodwill,shares, securities and contracts (as distinguished from physical assets) that grant rights and privileges. Tangible Assets or Tangible Fixed Asset: Physical assets (such as machinery, property, etc). Amortization: Accounting procedure that gradually reduces the cost of value of an asset, tangible or intangible, (e.g.investments in research &amp; development), through periodic charges to the profit and loss account in order to fix the costs duringits estimated useful life. Trading Comparable Companies: Those enterprises whose business value is obtained through methods that compare thecompany to be valued to similar enterprises. It is calculated dividing the market value of the last ones by a financial magnitudeof the companies profit and loss account (such as net income, net sales, etc). When multiplying by the same enterprisesmagnitude of the company to be valued, we will obtain its approximate value. EBITDA: EBITDA refers to operating profit before amortizations. EBIT: Earnings Before Interest and Taxes. Balance Sheet: Statement of a companys financial position at a given point in time. Lists the assets of a company and howthey have been financed. Total assets is equivalent to liabilities plus shareholders equity. Cost of Supplies: Cost related to the production, supply, transport and storage of raw materials and the materials used in theproduction process. In this section can also be included the cost of outsourcing services to provide the customer. Profit and Loss Account: Financial statement that shows the expenses and revenues generated during a period of time. Weighted Average Cost of Capital: Calculated as the cost of equity * (equity value / firm value) + cost of debt * (net debt /firm value) * (1- corporate tax). It is a discount rate typically used to discount future free cash flows to the moment ofvaluation. Discounted Cash Flows (DCF): Companys valuation method based on the idea that the value of a company is related to what itis able to generate in the future. It is calculated as the future cash flows of a company, discounted back to present value usingan appropriate discount rate. Net Debt: Total debt of the company minus any cash or liquid funds that the company has but does not require for its operatingactivity.38 </li><li> 11. Estrictamente Privado y Confidencial January 2011COMPANY XYZ TAILORED VALUATIONAppendix VI. e-Valuations References www.e-valuation.us www.evaluation.us 2008 - 2009 Advertising Ecological and Recycling Logistics Renewable Energies Automotive Editorial Media Restaurant Aviation Education and Training Metallurgy Retail Biotechnology Electronics Quality Consulting Software and Data Security Brokerage and Financial Services Engineeri...</li></ol>