Section A
From a consideration of the case study background and synthesis of the data contained in the information pack attached (pages 9-25) relating to River Island Clothing Co Limited; you will prepare a valuation report in which you will critically evaluate, analyze, discuss and comment upon the key issues in the valuation of River Island Clothing Co Limited. The report will explicitly address the following matters:
a) An analysis of the current business and financial situation of River Island Clothing Co Limited.
b) A discussion and analysis of your forecast of the company’s future expected economic benefits stream.
c) An appraisal and assessment of the appropriate weighted average cost of capital to be applied in the valuation.
d) A quantitative assessment of value using a discounted cash flow methodology and a relative valuation approach.
e) An appraisal and discussion of the key assumptions contained within the valuation and a sensitivity analysis showing how value might change given a range of appropriate assumptions.
f) A brief critical evaluation of the methodologies applied, analyzing issues which in this specific valuation may impact upon the propriety of the value conclusion.
g) A conclusion of value, with a recommendation for the maximum price to be offered per share.