Company Valuation Under IFRS : Interpreting and Forecasting ...

Chapter Six – The awkward squad
3. Nominal cash flows
Year 0 1 2 3 4 5 6 7
Nominal
Year 0 capex cash flows (100.00) 41.69 43.78 45.97
Opening NPV 100.00 73.06 40.06
Closing NPV 100.00 73.06 40.06 0.00
Impairment (26.94) (33.00) (40.06)
Profit 14.75 10.78 5.91
Nominal IRR 14.75% 14.75% 14.75% 14.75%
Year 1 capex cash flows (105.00) 43.78 45.97 48.27
Opening NPV 105.00 76.71 42.06
Closing NPV 105.00 76.71 42.06 0.00
Impairment (28.29) (34.65) (42.06)
Profit 15.49 11.32 6.20
Nominal IRR 14.75% 14.75% 14.75% 14.75%
Year 2 capex cash flows (110.25) 45.97 48.27 50.68
Opening NPV 110.25 80.55 44.16
Closing NPV 110.25 80.55 44.16 0.00
Impairment (29.70) (36.38) (44.16)
Profit 16.26 11.88 6.52
Nominal IRR 14.75% 14.75% 14.75% 14.75%
Year 3 capex cash flows (115.76) 48.27 50.68 53.21
Opening NPV 115.76 84.57 46.37
Closing NPV 115.76 84.57 46.37 0.00
Impairment (31.19) (38.20) (46.37)
Profit 17.08 12.48 6.84
Nominal IRR 14.75% 14.75% 14.75% 14.75%
Year 4 capex cash flows (121.55) 50.68 53.21 55.87
Opening NPV 121.55 88.80 48.69
Closing NPV 121.55 88.80 48.69 0.00
Impairment (32.75) (40.11) (48.69)
Profit 17.93 13.10 7.18
Nominal IRR 14.75% 14.75% 14.75% 14.75%
4. Adjusted HCA accounts
Year 0 1 2 3 4
Adjusted balance sheet
Opening net capital 0.00 100.00 178.06 227.02 238.37
Capital expenditure 100.00 105.00 110.25 115.76 121.55
Impairment 0.00 (26.94) (61.29) (104.41) (109.63)
Closing net capital 100.00 178.06 227.02 238.37 250.29
Cash flow from 41.69 87.56 137.90 144.80
operations
Adjusted profit 14.75 26.27 33.49 35.17
Return on opening 14.75% 14.75% 14.75% 14.75%
capital employed
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