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MN 0458:

INVESTMENT AND PERFORMANCE


ANALYSIS

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Table of Contents



PART-1 (B) 

Part-1 (c): CRITICAL EVALUATION OF THE USEFULLNESS OF RETURN ON CAPITAL
EMPLOYED (ROCE), ECONOMIC VALUE ADDED (EVA) AND SHARHOLDER VALUE
ADDED (SVA) 

PART-2(A): TOP-DOWN ANALYSIS 

PART-2 (B): CALCULATION OF CURRENT INTRINSIC VALUE OF THE COMPANY 

PART-2 (c): Valuation Methods ± Future Cash Flow (FCF) method and Price to Book
value ratio (P/B) 

CONSIDERATION OF VODAFONE INTO PORTFOLIO 

REFERENCES 

APPENDICES 


c 

PART-1 (B)


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1. Performance evaluation on the basis of Industries

ROCE (%) EVA (£ million) SVA (£ million)


Industry Company
2007 Avg'07 2008 Avg'08 2009 Avg'09 2007 Avg'07 2008 Avg'08 2009 Avg'09 2008/09
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Part-1 (c): CRITICAL EVALUATION OF THE USEFULLNESS OF
RETURN ON CAPITAL EMPLOYED (ROCE), ECONOMIC VALUE
ADDED (EVA) AND SHARHOLDER VALUE ADDED (SVA)

INT ROD UCT ION

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Own Experience in Using ROCE, EV A and SV A

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PART-2(A): TOP-DOWN ANALYSIS

ECONOMIC AN AL YSIS

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Source: Archer (2010), IHS Global Insight Source: Archer (2010), IHS Global Insight

Table 1- ---  
MEASURE IMPACT MEASURE IMPACT
GDP c ;-  6 $"83F=c  7 9: ,1 48+F1 
1-  48"F=c  71- 
INFLATION c -  -   #F= )@ c:  @1/%"F=c  71- 
c  71- 
INTEREST c -  /
6 '8+F= @  c -  -   
RATE 9 ? - -  =c  7 c@) &F=c  71- 
Source: Archer (2010), IHS Global Insight


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COMP ANY AN ALYSIS


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Vodafone British Telecom
Revenue-08-09 (£ mln.) 41017 21390
Revenue-07-08 (£mln.) 35478 20704
Income 08-09 (£mln.) 3078 -83
Income 07-08 (£mln.) 6660 1738
P/E (%) 8.30 7.85
Dividend- 2008 7.51 15.8
2009 7.77 6.5
Beta Value 0.810 0.826


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PART-2 (B): CALCULATION OF CURRENT INTRINSIC VALUE OF
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Growth %        
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Enterprise Value 


Net Funds / (Debt) m
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Value Per Share 181.099327 

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REFERENCES

"8 / .88.:  88 8. 6 .8:8&''4.E$< %

7 ?.uhe Journal of Porlfolio anage enl8#'4.1183"=*#8
&8  -$ .8&'"'E@ ?. IHS Global Insight.118"&2="#58EBS 
L
M87
/
  $ 1 GG  -$8/ -$ 8---  & %&'"'8

#8  / . 8)% .8"225 Shareholder de ystified: An ex lanation of
ethodologies and use . 
)   -- 
7
1 %%8
48 
.:8)8.6.8 8(

-.88"22*.E < 
  N7- -  6 $ ->   9 <
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Journal of Accounting and Econo ics .&4#.118#'"##*8
+8  $1.88"232E88)8  
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- 
?. ong ange
Planning.&&.1185'=5*8Science DirectL
M87
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$ 1 GG6668 -- - 8---  4 %&'"'8
38 .O8..8  - .88&''2 Invest ents85 $8 -
: 6

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*8  6 .c8)8.)$ .:8->.)88"222E--<

<  @      ?.Sa  Advanced anage ent Journal8c84=
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M87
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  $ 1 GG  -$8/ -$ 8---  3
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58 )$.8&''"E9-  $   - $
6    7
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he ical ar !et eorter.&+2"&.118"&=&58

28 )$  %.:8)8&''3 "ree ash "lo #: A u o hour ri er for anage ent
and the board.>
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.8.

 .8  .8&''' Valuation: easuring and


anaging the Value of o anies .# 8(
% />.8
""8   &''2Global teleco unication services: Industry Profile 8c18
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c  $ .   .118" =*58EBS  L
M87
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$erfor (ance indicator8c18"="487
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"38A/.)88&''". )odern advanced financial accounting: uheory
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APPENDICES

Appendix-I: Holding Period Return

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Appendix -II: Realised and Unrealised Gain (Loss)

 

      
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 R             
SSE Scottish & Southern Energy PLC 30-Apr-10 400 X  X  X

NG.L National Grid Co PLC 30-Apr-10 700 X  X



 X
 
UU. United Utilities Group PLC 30-Apr-10 500 X 
 X  
 X


BATS British American Tobacco PLC 30-Apr-10 1,300 X

 X 
 X 


VOD.L Vodafone Group PLC 30-Apr-10 2,000 X

 X 
 X X
 
RB Reckitt Benckiser Group PLC 30-Apr-10 300 X
  X  X


TRG TR European Growth Trust 30-Apr-10 5,000 X 
 X 
 X
BP. BP PLC 30-Apr-10 1,000 X
 X


 X


TLW Tullow Oil 30-Apr-10 2,000 X
 X   X 
BHY Boot (Henry) PLC 30-Apr-10 2,000 X  X   X
MRW Morrison(Wm) Supermarkets PLC 30-Apr-10 3,500 X 
 X  X  

X 
 X   X X   

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Appendix-III: Beta Value

Ô  Ô 

   

  
  
        
 
SSE Scottish & Southern Energy PLC 30-Apr-10 1123 0.78 400 £ 449,200.00 0.040395357 0.031508378
NG.L National Grid Co PLC 30-Apr-10 654.5 0.84 700 £ 458,150.00 0.041200206 0.034608173
UU. United Utilities Group PLC 30-Apr-10 572.5 0.79 500 £ 286,250.00 0.025741698 0.020335942
BATS British American Tobacco PLC 30-Apr-10 2185.5 0.84 1300 £ 2,841,150.00 0.255497033 0.214617508
VOD.L Vodafone Group Plc 30-Apr-10 145.27 0.809 2000 £ 290,540.00 0.026127486 0.021137136
RB Reckitt Benckiser Group PLC 30-Apr-10 3403 0.61 300 £ 1,020,900.00 0.091806811 0.056002155
TRG TR European Growth Trust 30-Apr-10 339 0.87 5000 £ 1,695,000.00 0.152426824 0.132611337
BP. BP PLC 30-Apr-10 575.5 0.99 1000 £ 575,500.00 0.051753178 0.051235646
TLW Tullow Oil 30-Apr-10 1147 1.2 2000 £ 2,294,000.00 0.206293294 0.247551953
BHY Boot (Henry) PLC 30-Apr-10 96.5 0.54 2000 £ 193,000.00 0.017355975 0.009372226
MRW Morrison(Wm) Supermarkets PLC 30-Apr-10 290.4 0.74 3500 £ 1,016,400.00 0.091402138 0.067637582
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SSE Scottish & Southern Energy PLC 15-Apr-05 929.5 0.57 400 371800 0.051395808 0.029295611
NG.L National Grid Co PLC 15-Apr-05 574.04 0.6 700 401828 0.055546732 0.033328039
UU. United Utilities Group PLC 15-Apr-05 643.5 0.5 500 321750 0.044477142 0.022238571
BATS British American Tobacco PLC 15-Apr-05 950.5 0.38 1300 1235650 0.170810195 0.064907874
CBRY Cadbury PLC 15-Apr-05 541.5 0.62 1000 541500 0.074854304 0.046409668
RB Reckitt Benckiser Group PLC 15-Apr-05 1688 0.45 300 506400 0.070002252 0.031501013
TRG TR European Growth Trust 15-Apr-05 259 0.7 5000 1295000 0.179014447 0.125310113
BP. BP PLC 15-Apr-05 530 1.06 1000 530000 0.0732646 0.077660476
TLW Tullow Oil 15-Apr-05 176 0.45 2000 352000 0.048658753 0.021896439
BHY Boot (Henry) PLC 15-Apr-05 486 0.01 2000 972000 0.134364512 0.001343645
MRW Morrison(Wm) Supermarkets PLC 15-Apr-05 201.75 0.59 3500 706125 0.097611256 0.057590641
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Appendix-IV: Jensen¶s Alpha

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