See attached
Page 1 of 1 MSc Financial Management Venture Capital & Private Equity – A1 – Individual Assignment Assignment Instructions: Assignment Reference (subject title) VCPE-StudentNumber-Mar22-A1 Due Date 25 May 2022, 23:59 UK time Word Count (if applicable) 2,000 +/- 10%. (Tables included in word count, excluding spreadsheets supporting financials.) Weighting 40% File Format MS Office or PDF Submission Details Instructions provided on Blackboard Assignment Questions: CASE STUDY: Troo You are to assume that you are a PE House investment manager, and you wish to buy Troo, as it fits into your portfolio of investments. You will put together a paper to present to your investment committee which recommends that they purchase 100% of the equity from the current shareholders, both individuals and the VC house. This paper must comprise the following elements: • Investment Hypothesis, with appropriate risk analysis/mitigation. (25%) • Market review of the sector, and investment within it. (15%) • Enterprise Value: (25%) Provide a current Enterprise Value (EV) analysis, with reasons for the means of valuation chosen. (This is a key issue for the investment committee). There must be more than one means of valuation. • Exit and Return: (20%) Estimate the EV at the point of exit, and hence the equity value of your investment at exit. Then calculate the money multiple return and IRR on the investment. • Exit Options: (15%) Provide the investment committee with a review of possible exit options, and consider which might be most advantageous for the Investment House. Notes: It is important to provide external validation where appropriate. For example, the valuation multiples chosen will need to conform with industry norms, both at investment and exit. Any market data needs to be referenced to independent analysis via a recognized trade body, or information provider. For exit options, you might wish to consider who would wish to buy the business, and why. End of Assignment Troo Accounts Pack January 22.xls Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 INCOME Energy Introductions 281,101 348,427 147,403.53 317,723.77 Other income 0 0 2,000 0 281,101 348,427 149,404 317,724 COST OF SALES Commission 13,697 29,562 18,142 12,554 Third Party Costs 0 7,500 30 31,815 Credit Checking/Data etc. 4,513 4,182 691 3,839 Staffing 121,831 112,328 111,984 115,563 Marketing 2,326 2,140 203 1,354 Provision 0 0 0 0 142,367 155,712 131,050 165,125 GROSS PROFIT/ (LOSS) 138,734 192,715 18,353 152,598 Admin Salaries 5,866 5,866 5,866 5,866 Recruitment fees 0 0 0 3,500 Rent 7,400 7,400 7,400 7,400 Gas and electric 884 955 1,078 1,775 Travel and Entertainment 1,569 1,843 32 2,193 IT costs 11,887 17,434 12,951 17,233 Telephone 2,731 562 2,922 1,716 Legal and Professional 2,440 3,902 2,322 2,302 Insurance 350 508 508 158 WEB Development 0 0 0 0 Repairs and renewals 1,021 100 0 605 Bank Charges 22 25 29 84 General Expenses 1,203 2,624 3,402 3,496 35,374 41,219 36,509 46,328 NET PROFIT / (LOSS) before tax 103,360 151,496 (18,156) 106,270 Exceptional Costs 0 0 0 0 Interest 842 1,183 1,012 979 Corporation Tax 0 0 0 0 NET PROFIT after tax 102,518 150,313 (19,168) 105,292 MONTHLY PROFIT & LOSS Actual Forecast Variance Actual Forecast Variance INCOME Energy Introductions 317,724 225,600 92,124 1,094,655 801,600 293,055 Other income 0 0 0 2,000 0 2,000 317,724 225,600 92,124 1,096,655 801,600 295,055 COST OF SALES Commission 12,554 12,837 283 73,954 45,611 (28,343) Third Party Costs 31,815 (31,815) 39,345 (39,345) Costs associated with referrals revenue stream Credit Checking/Data etc. 3,839 1,750 (2,089) 13,225 7,000 (6,225) Staffing 115,563 121,663 6,099 461,706 486,651 24,945 Marketing 1,354 6,750 5,396 6,023 25,000 18,977 Provision 0 0 0 0 165,125 142,999 (22,126) 594,254 564,262 (29,992) GROSS PROFIT/ (LOSS) 152,598 82,601 69,998 502,401 237,338 265,062 Admin Salaries 5,866 5,178 (688) 23,465 20,712 (2,754) Recruitment fees 3,500 0 (3,500) 3,500 0 (3,500) Costs associated with team expansion Rent 7,400 7,415 15 29,601 29,660 59 Gas and electric 1,775 1,000 (775) 4,692 4,000 (692) Travel and Entertainment 2,193 1,000 (1,193) 5,636 4,000 (1,636) IT costs 17,233 6,000 (11,233) 59,505 24,000 (35,505) Investment into enhanced IT systems Telephone 1,716 3,000 1,284 7,931 12,000 4,069 Legal and Professional 2,302 2,000 (302) 10,966 8,000 (2,966) Insurance 158 500 342 1,524 2,000 476 WEB Development 0 0 0 0 0 0 Repairs and renewals 605 250 (355) 1,726 700 (1,026) Bank Charges 84 0 (84) 160 0 (160) General Expenses 3,496 1,000 (2,496) 10,725 4,000 (6,725) 46,328 27,343 (18,985) 159,430 109,072 (50,359) NET PROFIT / (LOSS) before tax 106,270 55,258 51,013 342,970 128,266 214,704 Depreciation 0 626 626 0 2,504 2,504 Interest 979 3,038 2,059 4,015 12,398 8,383 Corporation Tax 0 0 0 0 0 0 NET PROFIT after tax 105,292 51,594 53,698 338,955 113,365 225,591 CURRENT MONTH YTD VARIANCE TO FORECAST Sales in the month and financial year have outperformed forecast, with initiatives such as third party referrals and investment in staff driving revenue. Further growth is expected as we expand the sales team. Strong EBITDA performamce driven by increased revenue Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Office And IT Equipment 37,568 37,568 37,568 39,893 Trade Debtors 305,639 315,000 143,348 18,840 Other Debtors 0 0 1,469 1,435 Accrued Revenue 1,549,539 1,622,741 1,632,210 1,871,661 Prepayments 66,671 106,862 100,737 109,774 VAT 0 0 0 0 Bank and cash 126,348 215,165 182,491 180,946 Trade Creditors 88,281 119,745 39,108 40,662 Accruals 109,255 111,500 110,986 142,603 PAYE 208,779 46,740 46,665 41,468 Other Creditors 4,587 4,171 4,030 4,107 VAT 147,857 149,819 66,816 74,209 CT Liability (66,940) (66,940) (66,940) (66,940) Directors' Loan account 28,208 28,208 28,208 28,208 Loans 658,410 846,451 830,475 814,465 Net Assets 907,329 1,057,643 1,038,474 1,143,766 Share Capital 962,085 962,085 962,085 962,085 Reserves (440,851) (440,851) (440,851) (440,851) Accum in current year 386,095 536,409 517,240 622,532 Total Shareholder funds 907,329 1,057,643 1,038,474 1,143,766 Difference - - - - - - - - - - - - BALANCE SHEET Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Opening Balance 46,085 126,348 215,136 182,261 CASH IN Receivables 278,856 320,909 337,174 218,435 Government Grants 2,000 Loans/Investments 278,856 320,909 339,174 218,435 CASH OUT Salaries & Associated Costs 136,111 132,250 130,826 134,472 Suppliers 43,447 77,844 118,552 68,890 Loan Repayment 19,035 22,026 16,818 16,818 VAT 105,852 198,594 232,120 372,048 220,180 NET CASH MOVEMENT 80,262 88,788 32,875- 1,745- Closing Balance 126,348 215,136 182,261 180,517 CASH FLOW STATEMENT Company Registration No. 10293408 (England and Wales) TROO LTD ANNUAL REPORT AND UNAUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2020 TROO LTD COMPANY INFORMATION Directors Mr Andrew Richardson Rachel Richardson Mr Malcolm Smith Mr Steven Goldsmith (Appointed 20 November 2020) Secretary Mr Andrew Richardson Company number 10293408 Registered office 1 Azure Court Doxford International Business Park Sunderland SR3 3BE Accountants Murray and Lamb 12 Bessemer Court Hownsgill Industrial Park