Q2.

i) Create a complete version of the restated Financials for Capricorn Energy Plc using the table            below. Your answer should be submitted in MS Word AND Excel. In Excel you are required to link all data. Hardcoding of data will incur nil marks.                                                                              (10 Marks)

Q2. Contd)

ii) Create a complete version of Table 2 below. You should include your answer in MS Word AND     Excel. In excel you should show how all you data is linked from the dataset provided. Hardcoding of data will incur zero marks.

Apply the following assumptions for 2022 to 2026 and Beyond:

     The WACC is 5.94% and constant from 2022 onwards

     Revenues grow 10% YoY from 2022.

     Operating Margins of 25% and constant from 2022 onwards.

     Net Operating working capital as a % of Sales remains constant from 2021 onwards      Non Current assets as a % of Sales remains constant from 2021 onwards.                        Net Finance costs are a function of the cost of debt and debt levels

     Other income is nil

     Tax Rates are nil.

     The number of shares in issue is 312.8 million. (Source: S&P Capital IQ)

     Gearing (Debt/Debt + Equity) where Debt is defined as Long Term, Short Term Debt and

capital leases. Gearing stays constant from 2021 calculated levels.

     Dividends are nil.

     The current share price is 202p.

     The US$/£ FX rate is 1.22.

Q2. Contd)

iii) Calculate the Abnormal Earnings (EVA) using the assumptions in Q1 & Q2 and the Table 3 below, which is available in the data spreadsheet. Assume a terminal value growth rate of 0%. Is the            company generating positive freecashflow? What issues might there be in using this valuation

technique? Is the stock overvalued or undervalued according to the EVA?                           (10 Marks)

iv) What is the ROCE of the company in 2021? What is the ROE in 2021? Explain why they might be different? Show all workings.                                                                                                           (5 Marks)

v) Examining the share price performance in the last 3 years of Capricorn Energy (see Figure 1) relative to Tullow Oil and FTSE 100 index what can you say about the overall share price

performance

of the company?

(5 Marks)