Institut for Regnskab, Tom Hansen Corporate Valuation Workshop Teams, groups, buyer/seller and companies Work plan - presentations from groups Exercises

Institut for Regnskab, Tom Hansen Corporate Valuation Teams, groups and companies Team from# Groups, # Persons, Comments Buyer/Seller MarriottRyan Pirnat3 groups, 3 (4?) S, 4 B, 4 BCompany? B&OSilvia Pagh Sølvsteen3 groups, 3, 3, 2Buyer / seller B&ORasmus Opstrup2 groups, 3, 4Buyer/Seller MiconAgnieszka Konkel3 groups, 4 B, 4 B, 3 S- VestasJurgen Jansen1 group, 4 BOther groups VestasJakob Bendixen1 group, 3 BOther groups Color Print ?Jakob Loenbro Jensen1 group, 4Other groups, Buyer/seller ?Kristian Marthedal3 groups, 4, 3, 4Company, Buyer/seller ?Geir Midtmoen1 group, 2Company, other groups, Buyer / seller

Institut for Regnskab, Tom Hansen Corporate Valuation Work plan (I) Tasks, dates & responsibilities Information gathering & learning Annual reports, other relevant materials from the company (homepage) Roadshow - information from company Contacting / Meeting the company (investor relations / CFO) Important competitors (annual reports) Trade / Industry association Stock exchange Share analysts Market information (library) Search on www Read and understand the information you have gathered

Institut for Regnskab, Tom Hansen Corporate Valuation Work plan (II) Chapter 4, 5, 6 & 7 on 30 September Chapter 8-13 on 7 October Business Strategy analysis (chapter 11) Accounts analysis (chapter 9) Financial analysis (chapter 10) Prospective analysis (chapter 11, 12 & 13) ·Building model - accounts, prospects (CD) Mid stage report - Oct 21, evening Draft report & price - Nov 13, evening Negotiation - Nov 16th Final report - Nov 25

Institut for Regnskab, Tom Hansen Corporate Valuation Exercise 2.7 (1) Current valuation: EG performance from shareholder view Woodco acquisitions accompanied by stock price downturns. Consumerco growing at rate of inflation only Consumerco cash flow subsidized Woodco and Foodco projects Foodco’s high capital requirements reduced earnings growth Analysts consistently revised EG forecasts downward

Institut for Regnskab, Tom Hansen Corporate Valuation Exercise 2.7 (2) As is value: Discounted cash flow analysis Historical value is below EG market value Foodco value is less than the invested capital (focus is on growth) Consumerco cash flow comprises most of EG’s value (focus is on cash flow) Woodco consolidation adds significant component of value Headquarters' costs are a large drag on value

Institut for Regnskab, Tom Hansen Corporate Valuation Exercise 2.7 (3) Internal improvements: key value drivers. Benchmarking with comparable firms and business system analysis Consumerco: holding prices down, no investments in R&D, sensitive to sales, sales force lack productivity, relatively high costs of goods sold. Woodco needs to focus on higher margins and less on growth, stick to the basic, mass-market segment of the business Foodco has no advantages in its extremely competitive markets, cut back to only profitable locations, franchise to decrease cost of capital. Eliminate 50% of overhead.

Institut for Regnskab, Tom Hansen Corporate Valuation Exercise 2.7 (4) External improvements: Sale to strategic buyer, flotation, MBO, liquidation Breakup based on comparable PE’s and market-to- book would not outperform current market value. Consumerco is natural acquisition target with high cash flows. Foodco real estate holdings make it a partial liquidation candidate. Sell consumer finance portfolio since operating costs exceeds net interest income. Because of consolidation, Woodco would not attract a buyer for the risk of reconstructing Woodco’s many components. EG is a takeover target with Consumerco’s cash flow

Institut for Regnskab, Tom Hansen Corporate Valuation Exercise 2.7 (5) New growth opportunities: Long-term growth alternatives. Acquisition and other growth initiatives is on the agenda. New business in Consumerco, exploiting brand name. Build on the restructuring initiatives already identified. Potential value of financial engineering: debt management alternatives. Use stable cash flows to support more debt. Raise debt to repurchase shares or pay special dividends.

Institut for Regnskab, Tom Hansen Corporate Valuation Exercise 2.9 & 2.10 focus performance on value creation develop value-based performance targets restructure incentives evaluate strategic decisions in terms of impact on value. communicate value to investors reshape the role of CFO B

Institut for Regnskab, Tom Hansen Corporate Valuation Next Next workshop and lecture will be in 14 days (30 September) Workshop ( ) Dialog and coaching Exercises 4.3, 4.11, 7.10 Lecture: Strategy & Metrics CKM: 4, 5, 6, 7 + Articles (2*Ghemawat)