Opinion of the Independent Financial Advisor - Investor Relations

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The Opinion of the Independent Financial Advisor on the Asset Acquisition of Thai Union Frozen Products Plc.HistoricalP/E RatioAverage Historical P/E ratio27 July 2010 30-day 60-day 90-day 180-day 360-dayTropical Canning 11.05 8.71 8.00 7.54 6.67 4.98International peersMarine Harvest 6.97 8.89 10.14 10.72 25.10* 35.22*Nippon Suisan Kaisha 1,835.44* 1,856.54* 1,791.56* 1,774.61* 1,774.61* 1,525.28*Dongwon Industries 5.55 5.85 5.74 5.57 5.57 6.93Pacific Andes 4.71 4.71 4.67 4.98 5.64 4.92Peer Group AverageHistorical P/E8.67 8.60 8.53 8.31 7.56 6.55Source: Bloomberg, numbers marked with (*) are excluded from calculation due to being excessively high and consideredthe outliner.The average Historical P/E ratio derived from the above table is in a range of 6.55 – 8.67 times.Provided is the MWBrands net profit as of 31 March 2010 of EUR 36.6 million, the valuation resultunder this approach is thus calculated as the following;Unit: EUR million27 Jul 10 30-day 60-day 90-day 180-day 360-dayAverage Peer Group Historical P/E 8.67 8.60 8.53 8.31 7.56 6.55Multiply: MWBrands net profitas of 31/3/1036.6 36.6 36.6 36.6 36.6 36.6Market value of equity 317.2 314.6 312.1 304.0 276.9 239.7Plus: Interest Bearing Debt 295.9 295.9 295.9 295.9 295.9 295.9Deduct: Cash 18.2 18.2 18.2 18.2 18.2 18.2Enterprise Value of MWBrands 594.9 592.3 589.8 581.7 554.6 517.4Range of fair value under HistoricalP/E ApproachEUR 517.4 – 594.9 millionFrom above calculation, the fair enterprise value of MWBrands under the Historical P/E approach is ina range of EUR 517.4 – 594.9 million. However, IFA viewed that the valuation from Historical P/Eapproach may not be appropriate to use as the main approach to determine fair valuation since thecalculation of the fair valuation base solely on the performance in the specific period which may notrepresent the long-term future profitability of the company. In addition, the calculation under thisapproach does not take into account of control premium, brand value possession and long-termmanagement decision to reflect on-going profitable capacity. Therefore, we recommend not usingHistorical P/E to be the main approach to determine the fair valuation of MWBrands.3.2.3 Forward Price to Earnings Ratio Approach (Forward P/E)Similar to the Historical P/E Approach, the Forward P/E Approach calculates the fair enterprise valueof MWBrands using the net profit of MWBrands and the average multiples of its peers. However, TheForward P/E Approach use the forecasted net profit of MWBrands to multiply with the averageForward P/E of the comparable companies.IFA has calculated the average Forward P/E of peers group on the different intervals to avoid theeffect from the short-term movement in the market. We have calculated the Forward P/E as at 27 July2010, which is the last trading day prior to TUF disclosing the Transaction information to public as wellas previous 30-day, 60-day, 90-day, 180-day and 360-day intervals. The calculation of the averagepeers’ Forward P/E multiples are shown belowPage 28
The Opinion of the Independent Financial Advisor on the Asset Acquisition of Thai Union Frozen Products Plc.Forward P/E RatioAverage Forward P/E ratio27 July 2010 30-day 60-day 90-day 180-day 360-dayLocal peersThai Union Frozen 11.03 10.16 9.83 9.45 8.74 8.16Asian Seafoods n/a n/a n/a n/a n/a n/aTropical Canning n/a n/a n/a n/a n/a n/aInternational peersMarine Harvest 7.86 7.64 8.32 8.88 9.48 9.64Nippon Suisan Kaisha 18.11 19.34 19.68 19.74 18.65 20.48Dongwon Industries 5.57 5.71 5.66 5.58 5.51 4.95Pacific Andes 5.95 5.96 5.88 5.88 5.88 5.88Peer Group AverageForward P/ESource: Bloomberg9.70 9.76 9.87 9.91 9.65 9.82The average Forward P/E ratio derived from the above table is in a range of 9.65 – 9.91 times.Provided is the MWBrands forecasted net profit for FY2011 of EUR 40.0 million, the valuation resultunder this approach is thus calculated as the following (The details of financial projection prepared bythe IFA can be referred to in Section 3.3 Discounted Cash Flows Approach);Unit: EUR million27 Jul 10 30-day 60-day 90-day 180-day 360-dayAverage Peer Group Forward P/E ratio 9.70 9.76 9.87 9.91 9.65 9.82Multiply: MWBrands forecasted net profit 40.0 40.0 40.0 40.0 40.0 40.0of FY2011Market value of equity 388.2 390.5 394.9 396.2 386.0 392.8Plus: Interest Bearing Debt 295.9 295.9 295.9 295.9 295.9 295.9Deduct: Cash 18.2 18.2 18.2 18.2 18.2 18.2Enterprise Value of MWBrands 665.9 668.2 672.6 673.9 663.7 670.5Range of fair value underForward P/E ApproachEUR 663.7 – 673.9 millionFrom above calculation, the fair enterprise value of MWBrands under the Forward P/E approach is ina range of EUR 663.7 – 673.9 million. However, IFA viewed that the valuation from Forward P/Eapproach may not be appropriate to use as the main approach to determine fair valuation sincealthough it take into account of the future profitability, it is based solely on the performance in thespecific period which may not represent the long-term future profitability of the company. In addition,the calculation under this approach also does not take into account of control premium, brand valuepossession and long-term management decision to reflect on-going profitable capacity. Therefore, werecommend not using Forward P/E to be the main approach to determine the fair valuation ofMWBrands.3.2.4 Historical Enterprise Value to Earnings before Interest, Tax, Depreciations andAmortizations Ratio (Historical EV/EBITDA)The Historical EV/EBITDA approach calculates MWBrands fair enterprise valuation by multiplying thecompany’s the most updated earnings before interest, tax, depreciations and amortizations (EBITDA)with an average Historical EV/EBTIDA ratio of the comparable companies.Page 29
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