Company Valuation Under IFRS : Interpreting and Forecasting ...

Chapter Six – The awkward squad
Exhibit 6.1: Current cost accounts model
1. HCA accounts
Inflation 5.00%
Asset life (years) 3.0
Real cash on 39.71%
cash return
Year 0 1 2 3 4
Cash flows
Capital expenditure (100.00) (105.00) (110.25) (115.76) (121.55) 5.0%
Cash flow from 0.00 41.69 43.78 45.97 0.00 -100.0%
Year 0 capex
Cash flow from 0.00 0.00 43.78 45.97 48.27 5.0%
Year 1 capex
Cash flow from 0.00 0.00 0.00 45.97 48.27 5.0%
Year 2 capex
Cash flow from 0.00 0.00 0.00 0.00 48.27 na
Year 3 capex
Total cash flow 0.00 41.69 87.56 137.90 144.80 5.0%
from operations
Net cash flow (100.00) (63.31) (22.69) 22.14 23.25 5.0%
HCA gross balance
sheet
Opening gross capital 0.00 100.00 205.00 315.25 331.01 5.0%
Capital expenditure 100.00 105.00 110.25 115.76 121.55 5.0%
Retirements 0.00 0.00 0.00 (100.00) (105.00) 5.0%
Closing gross 100.00 205.00 315.25 331.01 347.56 5.0%
capital
Cumulative 0.00 33.33 101.67 106.75 112.09 5.0%
depreciation
Cum depr/gross 0.00% 16.26% 32.25% 32.25% 32.25%
closing capital
HCA net balance
sheet
Opening net capital 0.00 100.00 171.67 213.58 224.26 5.0%
Capital expenditure 100.00 105.00 110.25 115.76 121.55 5.0%
Depreciation 0.00 (33.33) (68.33) (105.08) (110.34) 5.0%
Closing net capital 100.00 171.67 213.58 224.26 235.48 5.0%
HCA profit and loss
account
Cash flow from 0.00 41.69 87.56 137.90 144.80 5.0%
operations
Depreciation 0.00 (33.33) (68.33) (105.08) (110.34) 5.0%
Profit 0.00 8.36 19.22 32.82 34.46 5.0%
HCA ROCE
Profit 0.00 8.36 19.22 32.82 34.46 5.0%
Opening capital 0.00 100.00 171.67 213.58 224.26 5.0%
ROCE 0.00% 8.36% 11.20% 15.37% 15.37%
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