Wh Smith
Financial Accounting Group Assignment
Module: ACFI 3201 Accounting 3
Name: Jiefeng LIU p09011270 Chen GONG p09011375 Ting ZHANG p09260791 Ling WANG p09259669
Time: 16 December, 2010
Summary
With TUI Travel PLC group revenue for 2009 was slightly lower than the prior year at £13,863m (2008: £13,932m) and adjusted profit kept showed deficit in recent years. TUI Travel needs to take over a company (WH Smith Plc) which has a strong free cash flow to rebalance its financial weaknesses. Simultaneously, the operation principles by WH Smith are useful to TUI Plc to keep further profit growth and strong cash generation. This report aims to evaluate the necessity and feasibility for the acquisition of WH Smith by TUI travel.
Content 1.0 Introduction - 5 - 2.0 SWOT Analysis of TUI Travel - 5 - 2.1 Strength - 5 - 2.2 Weakness - 6 - 2.3 Opportunity - 6 - 2.4 Threat - 7 - 3.0 Porter five forces & SWOT Analysis - 8 - 3.1 Porter five forces - 8 - 3.1.1 The intensity of competitive rivalry - 8 - 3.1.2 The threat of the entry of new competitors - 8 - 3.1.3 The threat of substitute products or services - 8 - 3.1.4 The bargaining power of suppliers - 9 - 3.1.5 The bargaining power of customers - 9 - 3.2 SWOT - 10 - 3.2.1 Strength - 10 - 3.2.2 Weakness - 10 - 3.2.3 Opportunity - 11 - 3.2.4 Threat - 12 - 4.0 Financial SWOT - 12 - 4.1 Strength - 12 - 4.2 Weakness - 13 - 4.3 Opportunity - 14 - 4.4 Threat - 15 - 5.0 Share Price Review - 15 - 6.0 Justification - 17 - 7.0 Valuation - 18 - 7.1 Net Assets Basis - 18 - 7.2 Adjusted Earning Basis - 19 - 7.3 Dividend Basis - 19 - 7.4 Free Cash Flow Basis - 19 - 7.5 Results summary and Suggested Price - 20 - 8.0 Finance - 21 - 8.1 Cash Offer - 21 - 8.1.1 Rights Issue - 21 - 8.1.2 Debentures - 22 - 8.1.3 Other methods of cash offer - 22 - 8.2 Share Exchange - 22 - 9.0 Pro Forma Group Accounts - 22 - 9.1 Consolidated Statement
Module: ACFI 3201 Accounting 3
Name: Jiefeng LIU p09011270 Chen GONG p09011375 Ting ZHANG p09260791 Ling WANG p09259669
Time: 16 December, 2010
Summary
With TUI Travel PLC group revenue for 2009 was slightly lower than the prior year at £13,863m (2008: £13,932m) and adjusted profit kept showed deficit in recent years. TUI Travel needs to take over a company (WH Smith Plc) which has a strong free cash flow to rebalance its financial weaknesses. Simultaneously, the operation principles by WH Smith are useful to TUI Plc to keep further profit growth and strong cash generation. This report aims to evaluate the necessity and feasibility for the acquisition of WH Smith by TUI travel.
Content 1.0 Introduction - 5 - 2.0 SWOT Analysis of TUI Travel - 5 - 2.1 Strength - 5 - 2.2 Weakness - 6 - 2.3 Opportunity - 6 - 2.4 Threat - 7 - 3.0 Porter five forces & SWOT Analysis - 8 - 3.1 Porter five forces - 8 - 3.1.1 The intensity of competitive rivalry - 8 - 3.1.2 The threat of the entry of new competitors - 8 - 3.1.3 The threat of substitute products or services - 8 - 3.1.4 The bargaining power of suppliers - 9 - 3.1.5 The bargaining power of customers - 9 - 3.2 SWOT - 10 - 3.2.1 Strength - 10 - 3.2.2 Weakness - 10 - 3.2.3 Opportunity - 11 - 3.2.4 Threat - 12 - 4.0 Financial SWOT - 12 - 4.1 Strength - 12 - 4.2 Weakness - 13 - 4.3 Opportunity - 14 - 4.4 Threat - 15 - 5.0 Share Price Review - 15 - 6.0 Justification - 17 - 7.0 Valuation - 18 - 7.1 Net Assets Basis - 18 - 7.2 Adjusted Earning Basis - 19 - 7.3 Dividend Basis - 19 - 7.4 Free Cash Flow Basis - 19 - 7.5 Results summary and Suggested Price - 20 - 8.0 Finance - 21 - 8.1 Cash Offer - 21 - 8.1.1 Rights Issue - 21 - 8.1.2 Debentures - 22 - 8.1.3 Other methods of cash offer - 22 - 8.2 Share Exchange - 22 - 9.0 Pro Forma Group Accounts - 22 - 9.1 Consolidated Statement