ITC 2019 JUNE EXAMS MOCK 2: REQUIRED

Required

Question 1 Marks
Subtotal Total
a) Advise the Board on the implications to Twenty First and its
Shareholders on the Offer 1 by FVCF. 9 9
b) Discuss with reference to offer 2, the approach you would take
to allocate the purchase price of shares between Class A and
Class B shares. (No calculations required). 5 5
c) i. Discuss the accounting treatment of the guest-for-
life membership for the year ended 31 December
2018. 20
ii. Discuss the IAS 12 tax implications resulting from the
prepayments by the guest-for-life members as at 31
December 2018. 5 25
d) For the purposes of determining an offer price for the business
of Q - Brand:
i. Calculate the forecast period financial information
and free cashflows for Q-Brand for the forecast years
that will give the MAXIMUM purchase price. 17
ii. Using the exit multiple methodology for the terminal
value (in RTGS Dollars), calculate the maximum
enterprise value of the business of Q Brand as at 31
December 2018. 4

Communication: Presentation and layout 1 22

e) Assuming Q-Brand has accepted an acquisition offer from
Twenty First, describe the due diligence procedures that would
need to be performed by Twenty First before finalising on the
acquisition transaction. 12

Communication skills: Clarity of expression 1 13

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ITC 2019 JUNE EXAMS MOCK 2: REQUIRED

f) With regards to Twenty First’s evaluating the financing of the

acquisition of Q-Brand through the medium-term loan or
through the issue of preference shares –
i. Determine with supporting calculations which
instrument will be more cost effective for Twenty First
to use; and 8
ii. Discuss any other factors Twenty First should consider in
deciding which instrument to use. 6 14
g) With reference to the Zimbabwe Rugby Union offer, what key
factors should Twenty First consider in deciding whether to
accept the offer from Zimbabwe Rugby Union. (No calculations 11
required)

Communication: Logical argument 1 12

Total 100 100

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