You work for Barclays as a credit analyst and have been approached by one of the firms listed below for a substantial loan. These firms are listed on the AIM market. From their annual report suggest why they may need this loan, and as a credit analyst using all the tools of financial analysis recommend whether you would lend to this firm or not, giving clear reasons for your choice based on your financial analysis. You should also discuss “other factors” that you have considered in the decision to lend or not to this firm (Note: the presentation by Barclays should help you identify these issues). Finally, you should identify from Barclay’s perspective the main risks in the decision to lend to this firm. If you choose not to lend to the firm, you must make it clear the reasons for your decision and what you would need from the firm to give a positive response to the loan request. Choose one of these AIM listed firms Industry sector From their websites the annual reports are available from: SDI GROUP Industrials 2009 GAMMA COMMUNICATIONS Telecommunications 2012 TRIBAL GROUP Technology 2011 The report should also consider what competitors are doing and how the firm is performing in relation to the industry and other benchmarks. Therefore, industry/peer comparative analysis should be included in your report.

You   are  required   to   submit  an   individual/group   assignment  that  is   expected   to  be approximately  1,500  words  in  length.  Note  that  the  amount  of  work/length  of  the assignment will depend on the group size and this is taken onto account.

THE AIM OF THE ASSIGNMENT

The aim of the assignment is to enable you to be familiar with the financial reports that are published by companies to provide information to the interested parties. You will use your accounting and finance knowledge. It is intended that you should interpret the information from both the financial statements  and the other reports that are included in  the Annual  Report and also  in  the  other announcements that companies make in your period of analysis.

Financial statements to be examined will include statement of financial position (balance sheet), income statement (profit and loss), and cash flow statement.

The period you should cover is a minimum of four years and you can consider a longer period for your analysis.

You should also include a comparison to peer firms/industry average to help put the financial ratios in context.

 

INTRODUCTION Part A (60%)

You work for Barclays as a credit analyst and have been approached by one of the firms listed below for a substantial loan. These firms are listed on the AIM market. From their annual report suggest why they may need this loan, and as a credit analyst using all the tools of financial analysis recommend whether you would lend to this firm or not, giving clear reasons for your choice based on your financial analysis.

You should also discuss “other factors” that you have considered in the decision to lend or not to this firm (Note: the presentation by Barclays should help you identify these issues). Finally, you should identify from Barclay’s perspective the main risks in the decision to lend to this firm. If you choose not to lend to the firm, you must make it clear the reasons for your decision and what you would need from the firm to give a positive response to the loan request.

 

Choose one of these AIM listed 

firms

 

Industry sector

From their websites the annual 

reports are available from:

SDI GROUP Industrials 2009
GAMMA COMMUNICATIONS Telecommunications 2012
TRIBAL GROUP Technology 2011

 

 

The report should also consider what competitors are doing and how the firm is performing in relation to the industry and other benchmarks. Therefore, industry/peer comparative analysis should be included in your report.

 

 

 

 

 

 

 

Part B (40%)

 

Given your knowledge of your chosen firm you have been approached by the investment banking team at Barclays to provide a valuation of the firm. They have a client who is interested in a takeover of this firm. Using dividend valuation models and any other appropriate methods provide a valuation for the firm. Clearly outline the sensitivities and assumptions to this valuation and using the current market valuation discuss what sort of offer, if any, you would advise the client to make for the firm.

 

SOURCES OF INFORMATION

You have no access to the company beyond information available in the public domain and so the starting point will be the annual report of the company that is available on its website. The company website may have more information in the section for ‘investor relations’. You may wish to use other reference sources that are available on the university library website and on financial information websites. Give clear reference to all sources used and numbered footnote references should be included in the text of your report.

OUTLINE OF REPORT –YOU ARE FREE TO STRUCTURE THE REPORT ANYWAY THAT YOU THINK BEST ANSWERS THE QUESTIONS IN THE TASKS.

 

 

IN YOUR REPORT – Make clear which sources you have used and what information you have found.  Show which sources led to each item of information or opinion taken from elsewhere. It is a good thing to use other sources and refer to them.  Referencing other work also protects you in the event that there is an error in the source material.

WARNING – It is possible that these websites use different ratios, and it is important that they are used with great care. Do not plagiarise websites that have company information. This will be easily identified and be significantly penalised.