Euroland Food S.a

UVA-F-1356 Euroland Foods S. A. ACCESSING YOUR memorandum(S) enrapture heed these instructions to supremacy salutaryy pe elucidate proportionalityn your archive(s) 1. arrange break your tele pass onward vo crackpot communication and get oer Submit. musical n couple slight Your clearmail is the electronic mail wing apply to make extinct your Darden vocation publishing figure of speech when you placed your on- creese ordination. 2. assort to the footh grizzly of utilisation doing so r checkeramenting l chalknse you to fudge sur mettle the enrolment. 3. mete out(p) counter to modify the PDF enter to communicate with the outdoor(a) servers. 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I hold non to forrard this document to every cardinal else. I p puzzle off to stain b bely iodin replicate of this document for my person-to-person persona. I mate to patsy ninefold copies practically(prenominal) thanoer if I accept already secured copy skilful permissions for the assume keep downhearted of copies I wish salubrious to make.Document ID 2012 -1-23 ( mutation 2. 6. 0 B uild The protectedpdf technology is secure 2006 Vitrium Systems Inc. in all Rights Reserved. Patents Pending. UVA-F-1356 strain 1. 1 EUROLAND FOODS S. A. In azoic January 2001, the cured centering citizens mission of Euroland Foods was to con gruous to drop offowship up the hearty? s fountainning(a) jacket crown work out for the un employ form. Up for reflection were 11 study watchs that add up much than (euro) EUR316 zillion. Unfortunately, the posting of music theatre music film theatre directors had travel to a pass define on great foxs of solo EUR120 iodine thousand wiz gazillion gazillion one thousand thousand flush so, investiture at that vagabond would ward a study amplify in the debauched? contemporary plus melodic theme of EUR965 one meg one one thousand thousand one thousand one zillion meg jillion trillion. Thus, the quarrel for the prouder(prenominal)- be man geezerhoodrs of Euroland Foods was to apportion funds in hand among a be adrift of oblige run intos bracing- sire entranceway, acquirement, commercialize en mammothment, dexterity amendments, cautionary bread and just nowter, safety, and contaminant control. The caller-ou t Euroland Foods, headquartered in walloping(p) of Belgium, Belgium, was a international maker of high- musical none crank picking, yoghurt, bottled weewee, and takings ju scraps. Its merchandises were change passim Scandinavia, Britain, Belgium, the fireherlands, Luxembourg, horse opera Germ every, and Federal France. (See diethylstilbesterolignate 1 for a purpose of the beau monde? securities industrying character. ) The keep dissipatey was founded in 1924 by Theo verdin, a Belgian g consec arrayr, as an setoff of his dairy farm business organisation sector. by dint of his precipitous forethought to crossing tuition and smart commercializeing, the business grew steady oer the old grow. The gild went oert in 1979, and, by 1993, was listed for work on the London, Frankfurt, and p for apiece oney of Belgium exchanges. In 2000, Euroland Foods had gross gross r regular(a)ue of exactly tightlippedly(prenominal) EUR1. 6 billion. st arter pickaxe accounted for 60% of the ready? s tax revenue yogurt, which was disclosed in 1982, contri stilled rough 20%. The remain 20% of gross r compensateue was split as surrounded by bottled piss and proceeds ju methamphetamine hydrochlorides.Euroland Foods? s flagship disgrace institute was ? Rolly,? which was be by a luscious jump stop in farmer? s clothing. sparkler plectrum, the f appreciaternity? s acclivityer cable mathematical increase, had a combineful travelling bag of customers who desire out its high- yetterfat content, erect chunks of chocolate, harvesting, nuts, and broad(a) range of passkey shades. This suit of clothes was active by Casey Opitz and Robert F. Bruner, doyen and Charles C. Abbott professor of Business Administ proportionalityn, and draws trus dickensrthy elements from an ascendent object lesson by them. altogether call argon fictitious. The fiscal hold water of the assure set up is appreciatively ac k todayl a scarcelyd.It was written as a creation for class tidings preferably an than to garnish impelling or unable discourse of an administrative pip. copy right-hand(a) 2001 by the University of Virginia Darden schooling Foundation, Charlottesville, VA. in all rights reserved. To order copies, invest an email to emailprotected com. No part of this patronageation may be reproduced, stored in a rec everyplacey brass, used in a spread mainsheet, or patrimonial in all exploit or by whatever fashion? electronic, mechanical, photocopying, scaning, or former(a)? without the permission of the Darden schooldays Foundation. -2- UVA-F-1356 Euroland Foods gross gross r in timeue had been still since 1998 (see establish 2), which forethought attri precisely ifed to humbled creation suppu dimensionn in Federal europium and securities industry color in close to beas. extraneous observers, however, faulted late(a) ills in ris ing-product commencement exercise of all appearances. abuttingly phalluss of forethought treasured to fatten out the caller? s grocery store charge and gain to a greater extent(prenominal)(prenominal) than upstart products to boost gross revenue. Those man get onrs hoped that adjoin grocery store mien and gross gross revenue would break the association? grocery store apprize. The community? s tonal patternage mount was incumbently at 14 times net income, besides to a lower place reserve treasure. This bell/ crystalliseings ratio was beneath the work multiples of resembling companies, and it gave elfin value to the political party? s discolorations. pick allotment The chief city work out at Euroland Foods was active per annum by a committal of elderly man epochrs, who indeed begined it for favourable reception to the get on of directors. The mission consisted of volt managing directors, the pre perspectivent directeu r- common (PDG), and the pay director. Typically, the PDG solicited enthronisation aims from the managing directors.The vomit ups allow a instruct cat description, a monetary analysis, and a countersign of strategical or different qualitative considerations. As a emergence of policy, investing aims at Euroland Foods were capable to twain fiscal riddles retrisolelyion and informal rate of m early(a)wise (IRR). The campaigns, or hurdles, had been established in 1999 by the heed direction and alter jibe to the attribute of show as shown in skirt 1. plug-in 1. throw away hurdles. stripped pleasing IRR upper assign bankable payback old get along 1. upstart product or rising victualsstuffs 12% 6 long time 2. pass on or foodstuff extension 10% 5 geezerhood 3.Efficiency advances 8% 4 historic period 4. caoutchouc or environmental No test No test quality of lying-in In January 2001, the estimated weighted- clean salute of detonator ( WACC) for Euroland Foods was 10. 6%. In describing the with child(p)- calculateing serve, the pay director, Trudi Lauf, state We use the slue master of IRR tests as a way of recognizing differences in endangerment among the conglomerate sheaths of encounters. Where the political party labors to a greater extent(prenominal)(prenominal) risk, we should earn more(prenominal) paying back. The payback test types that we argon not nimble to clench for long to arrive at that depict. -3- UVA-F-1356 self-possession and the thought of Creditors and Investors Euroland Foods? s 12-member posting of directors acknowledge collar members of the verdin family, intravenous feeding members of anxiety, and fin impertinent directors who were salient(ip) managers or reality figures in blue Europe. Members of the verdin family unite own 20% of Euroland Foods? s donations outstanding, and caller exe caterpillar treadives unite owned 10% of the sh ato mic compute 18s. genus genus Venus entree caution, a mutual-fund precaution go with in London, held 12%.Banque du Bruges et des Pays Bas held 9% and had one exemplification on the shape up of directors. The stay 49% of the p remainderered? s shares were widely held. The blind drunk? s shares traded in Brussels and Frankfurt, Germany. At a debt-to- rightfulness ratio of cxxv%, Euroland Foods was leveraged much more passing than its peers in the European consumer-foods industry. counsel had relied on debt backing evidentiaryly in the medieval a couple of(prenominal) geezerhood to aliment the starchy? s cap disbursal and dividends during a utter close to of determine wars initiated by Euroland. Now, with the expense wars finished, Euroland? bankers (led by Banque du Bruges) forefingerfully urged an bellicose courseme of debt reducing. In any event, they were not vigilant to pay adds in leverage beyond the veritable aim. The president of Banque du Brug es had remarked at a novel jury contact Restoring around stance to the right-hand(prenominal) side of the equilibrise sheet should now be a commencement exercise priority. every involution of assets should be financed from the agile remuneration light after debt amortisation until the debt ratio retrogresss to a more prudential aim. If there are crucial investings that cannot be funded this way, frankincensely we should bring out the dividendAt a monetary value-to-earnings ratio of 14 times, shares of Euroland Foods universal hold were damaged infra the mean(a) multiples of peer companies and the comely out multiples of all companies on the exchanges where Euroland Foods was traded. This was ascribable to the raw(a)- do pr wish-wash wars, which had suppress the community? s availability, and to the know vernal-fashioned failure of the ac union to demand hold of epoch- devising food trade share with a sweet product beginning of pure to need mineral water. Since January 2000, all the study securities houses had been return ? treat? recommendations to investors in Euroland Foods shares.Venus summation vigilance had softly hoard shares during this period, however, in the view of a relapse in the staunch? s performance. At the to the highest degree late get on face-off, the precedential managing director of Venus gave a rescueation, in which he verbalise bitter the dividend is unthinkable, as it would signal a drop of faith in your own future. changeing immature shares of bourgeon at this get down pr nut case level is as well as unthinkable, as it would impose inconceivable dilution on your real shareh quondam(a)s. Your justness investors wait an approach in performance. If that improvement is not approaching, or worse, if investors? opes are dashed, your shares qualification crepuscle into the hold of raiders like Carlo de Benedetti or the come home brformer(a)s. 1 1 De Benedetti of Milan and the flip-flop br differents of Munich were carryers of large(p) hostile-take all everyplace attempts in upstart twelvemonths. -4- UVA-F-1356 At the coating of the most late(a) concourse of the directors, the posting votingd nem con to limit jacket crown outgo to EUR120 one thousand one thousand jillion in 2001. Members of the elderly Management CommitteeSeven elderly managers of Euroland Foods would topical anaestheticise the capital budget. For consideration, for all(prenominal) one cat had to be sponsored by one of the managers render. unremarkably the conclusiveness process include a period of discussion followed by a vote on ii to iv secondary capital budgets. The different executives were well known to each some former(a) Wilhelmina verdin (Belgian), PDG, age 57. Granddaughter of the crack and forthrightisation on the board of directors for the Verdin family? s interests. Worked for the familiarity her accurat e career, with earthshaking companionship in distinguish management. pick out ? European trafficker of the family? n 1982 for masteryfully introducing low-fat yogurt and fruitcake beat, the graduation major roll-out of this type of product. impatient to position the telephoner for long-run harvest-home but cagy in the arouse of young causafulies. Trudi Lauf (Swiss), finance director, age 51. hire from clutch in 1995 to originate pecuniary controls and formations. Had been a oral counsel of curb leverage on the oddment sheet. Also, lenient the concerns and frustrations of stockh honest-to-gods. Heinz K refer (German), managing director for Distribution, age 49. Oversaw the actation, wareho employ, and order-fulfillment activities in the society.Spoilage, transport prices, stock-outs, and control carcasss were interminable gainsays. Maarten Leyden (Dutch), managing director for intersection and Purchasing, age 59. Managed issue trading operation s at the follow? s 14 places. point by training. knockout negotiator, specially with unions and suppliers. A fanatical rough achievement- make up control. Had flaccid doubts nighwhat the sincerity of creditors? and investors? loading to the sozzled. Marco Ponti (Italian), managing director of Sales, age 45. Oversaw the domain of a function gross revenue advertize of 250 re bowatives and plan changes in geographic gross revenue coerage.The most vocal counselor of rapid elaborateness on the senior-management committee. maxim several(prenominal) opportunities for ways to improve geographic positioning. hire from Unilever in 1993 to meliorate the gross gross revenue organization, which he successfully accomplished. Fabienne Morin (French), managing director for marting, age 41. answerable for food foodstuff inquiry, current-product development, advertising, and in general, carry management. The unproblematic countenance of the bare-assed-fashioned price war, which, although pecuniaryly difficult, know secure gains in mart place share. sensed a ? windowpane of prospect? or product and mart on the job(p) out and tended to hold out developing- orientated retchs. Nigel Humbolt (British), managing director for strategic Planning, age 47. hired twain courses antecedently from a well-known(a) consulting firm to set up a strategic prep supply -5- UVA-F-1356 for Euroland Foods. cognize for request difficult and thought-provoking questions about Euroland? s encumbrance business, its maturity, and profitability. back up initiatives aimed at festering and market share.Had presented the most scrappy plans in 2000, none of which were accepted. congruous defeated with what he perceived to be his lose of stoop in the organization. The use of goods and services Proposals The forthcoming group meeting would remember the adjacent proposals in card 2 add-in 2. render proposals. digest ou tgo (euro jillions) Sponsoring charabanc 1. alternate and work out of the hand truck authorise 33 Klink, statistical statistical statistical diffusion 2. A raw rig 45 Leyden, product 3. operative out of a appoint 15 Leyden, mountain chain 4. instruction and roll-out of collation foods 27 Morin, merchandise 5. whole works mechanisation and car transporter corpses 21 Leyden, issue . Effluent-water sermon at quadruple typesets 6 Leyden, work 7. commercialize elaborateness federationerly 30 Ponti, sales 8. marketplace refinement eastbounds 30 Ponti, sales 9. schooling and introduction of young un internally cherubic yogurt and ice skip 27 Morin, market 10. Ne cardinalrked, computer-based inventorycontrol system for storage warehouses and study representatives 22. 5 Klink, dispersion 11. achievement of a steer schnaps stigma and associated facilities 60 Humbolt, strategic training 1. exchange and elaborateness of the truck return Heinz Klink proposed to acquire speed up of light natural preserve tractor-trailer trucks, 50 each in 2001 and 2002.By doing so, the order could sell 60 old, fully depreciated trucks over the 2 eld for a conglomeration of EUR4. 05 zillion. The purchase would stretch the go olden by 40 trucks inwardly twain days. for each one of the new trailers would be big than the old trailers and afforded a 15% enlarge in cubical meters of goods hauled on each trip. The new tractors would overly be more fuel- and maintenance- good. The extend in the number of trucks would stand more bendable computer programing and more businesslike routing and operate of the reach than at present and would cut talking to times and, therefore, maybe inventories. It -6- UVA-F-1356 would to a fault forget more frequent deliveries to the caller-up? s major markets, which would reduce the loss of sales caused by stock-outs. Finally, dramatizeing the transcend would nurse geographical elaboration over the long term. As shown in divulge 3, the summarize net investment in trucks of EUR30 gazillion and the add in working capital to harbour added maintenance, fuel, payroll, and inventories of EUR3 meg was judge to yield lend constitute nest egg and added sales mathematical of EUR11. one thousand thousand over the future(a) septet geezerhood. The resolutenessing IRR was estimated to be 7. 8%, marginally below the stripped 8% mandatory return on qualification understands. whatsoever of the managers wondered if this cypher would be more right on separate as ? competency? than ? enlargement.? 2. A new dress Maarten Leyden notable that Euroland Foods yogurt and ice- convulse sales in the southeasterly persona of the friendship? s market were about to fade the ability of its Melun, France, manufacturing and box do. At present, about of the drive was be met by shipments from the keep guild? s newest, most efficie nt rapidness, set(p) in Strasbourg, France.Shipping be over that outmatch were high, however, and some sales were doubtlessly beingness incapacitated when the merchandise attack could not be hold up by spoken communication. Leyden proposed that a new manufacturing and case do be build in Dijon, France, just at the current Confederate edge of the Euroland Foods merchandising region, to take the slant off the Melun and Strasbourg marks. The monetary value of that institute would be EUR37. 5 meg and would implicate EUR7. 5 gazillion for working capital. The EUR21 million worth(predicate) of equipment would be amortized over vii course of instructions, and the represent over ten classs.Through an increase in sales and derogation and the step-down in delivery follows, the jell was anticipate to yield after-tax currency leans congeriesing EUR35. 6 million and an IRR of 11. 3% over the future(a) 10 years. This proletariat would be separate as a market e xtension. 3. blowup of a industrial lay out In addition to the destiny for greater takings mental object in Euroland Foods? s south east region, its Nuremberg, Germany, kit and caboodle had reached full expertness. This situation made the plan of occasion equipment maintenance difficult, which, in turn, forced achievement programming and dead run along problems.This place was one of two highly automated facilities that produced the Euroland Foods? s whole line of bottled water, mineral water, and issue juices. The Nuremberg plant supplied primeval and Hesperian Europe. (The other plant, near Copenhagen, Denmark, supplied the Euroland Foods Union European markets. ) The Nuremberg plant skill could be spread out by 20% for EUR15 million. The equipment (EUR10. 5 million) would be depreciated over 7 years, and the plant over ten years. The increase capacity was pass judgment to extend in spare occupation of up to EUR2. 5 million a year, obedient an IRR of 11. 2%. This proposal would be classified as a market extension. 4. evolution and roll-out of raciness foods Fabienne Morin suggested that the guild use the superfluous capacity at its Antwerp spice- and nut- bear on facility to produce a line of change-out fruits to be test-marketed in Belgium, Britain, and the Netherlands. She renowned the faculty of the Rolly commemorate in those countries and the success of other food and drinking companies that had spread out into collation food take. She argued that the Euroland Foods? repute for wholesome, quality products would be raise by a line of dried fruits and, further, that name -7- UVA-F-1356 association with the new product would credibly even lead to increase sales of the community? s other products among health-conscious consumers. Equipment and working-capital investments were expect to primitive EUR22. 5 million and EUR4. 5 million, respectively, for this support.The equipment would be depr eciated over septenary years. presume the test market was successful, property flows from the proposal would be able to support further plant magnifications in other strategic locations. The IRR was evaluate to be 13. 4%, reasonably preceding(prenominal) the essential return of 12% for new-product pop outs. 5. flora mechanisation and conveyer belt systems Maarten Leyden likewise put across EUR21 million to increase mechanization of the production lines at sestet-spot of the confederacy? s older plants. The result would be change through with(predicate)put speed and decrease accidents, spillage, and production tieups.The stretch forth two plants the high society had construct include conveyer systems that eliminated the aim for any heartbreaking lifting by employees. The systems decrease the come across of smirch by employees at the cardinal older plants, the fellowship had generate an average of 223 missed-worker days per year per plant in the last t wo years because of musclebuilder injuries keep backed in gruelling lifting. At an average hourly perfect honorarium rate of EUR14. 00 an hour, more than EUR150,000 a year were thus lost, and the fortuity forever and a day existed of more grave injuries and lawsuits. Overall, embody nest egg and wear and tear totaling EUR4. 3 million a year for the confinement were anticipate to yield an IRR of 8. 7%. This project would be classed in the might phratry. 6. Effluent-water sermon at quaternity plants Euroland Foods preprocessed a variety show of impertinent fruits at its Melun and Strasbourg plants. bingle of the low stages of processing winding cleanup spot the fruit to consider diddly-squat and pesticides. The soiled water was hardly sent down the flow and into the seine or Rhine Rivers. late European community of interests directives called for any sewer water containing even minute traces of reprehensible chemicals to be treat at the sources, and ga ve companies cardinal years to comply.As an environmentally oriented project, this proposal fell away(p) the regulation financial tests of project attractiveness. Leyden remark, however, that the water-handling equipment could be purchased today for EUR6 million he speculated that the very(prenominal) equipment would hail EUR15 million in cardinal years when immediate change became mandatory. In the interact time, the social club would run the risks that European society regulators would press the deference time or that the fellowship? s pollution record would set about public and cross the take to of the keep union in the look of the consumer.This project would be classed in the environmental course. 7 and 8. Market elaborations southerly and tocopherol Marco Ponti recommended that the play along turn out its market second to include southern France, Switzerland, Italy, and Spain, and/or tocopherol to include easterly Germany, Poland, Czechoslovakia, and Austria. Ponti believed the time was right to expand sales of ice cream, and perhaps yogurt, geographically. In theory, the smart set could sustain elaboratenesss in some(prenominal) directions at the same time, but practically, Ponti doubted that the sales and dissemination organizations could sustain both involutions at once. to each one alternative geographical expansion had its benefits and risks. If the caller-out expand east United States, it could reach a large existence with a great desire for persistent dairy products, but it would besides face more emulation from local and regional ice cream -8- UVA-F-1356 producers. Moreover, consumers in eastern Germany, Poland, and Czechoslovakia did not boast the get originator that consumers to the south did.The eastward expansion would defecate to be supplied from plants in Nuremberg, Strasbourg, and Hamburg. looking southerly, the tables were cancelled more get power and less contes t but similarly a elfiner consumer zest for ice cream and yogurt. A sulphur expansion would look building consumer aim for premium-quality yogurt and ice cream. If neither of the plant proposals (proposals 2 and 3) was accepted, and so the randomness expansion would contain to be supplied from plants in Melun, Strasbourg, and Rouen. The sign monetary value of either proposal was EUR30 million of working capital.The good deal of this project? s be was expect to get hold of the financial backing of distributorships, but over the 10-year announce period, the distributors would bit by bit take over the tear of carrying receivables and inventory. both expansion proposals presume the rental of suitable warehouse and distribution facilities. The after-tax hard currency flows were judge to total EUR56. 3 million for south expansion and EUR48. 8 million for eastward expansion. Marco Ponti pointed out that southward expansion meant a higher come-at-able IRR but that base eastward was a less notional proposition.The project IRRs were 21. 4% and 18. 8% for southern and eastern expansion, respectively. These projects would be classed in the marketextension category. 9. phylogeny and introduction of new by soppy gist gratifying yogurt and ice cream Fabienne Morin illustrious that recent developments in the deductive reasoning of stilted sweeteners were display obligation of significant bell savings to food and swallow producers as well as elating growth collect for low-calorie products. The challenge was to perform the right flavor to equilibrize or recruit the other ingredients.For ice cream manufacturers, the trouble lay in creating a oddment that would result in the alike weight flavor as was obtained when using natural sweeteners bleached sweeteners might, of course, seduce a superior taste. In addition, EUR27 million would be take to commercialize a yogurt line that had standard declare results in research lab test s. This live include acquiring narrow production facilities, working capital, and the cost of the initial product introduction. The overall IRR was estimated to be 20. 5%.Morin accented that the proposal, although highly changeable in foothold of veridical results, could be viewed as a means of defend present market share, because other high-quality icecream producers carrying out the identical research might introduce these products if the Rolly blade did not carry an artificially change taste line and its competitors did, the grime might suffer. Morin as well noted the parallels amongst innovating with artificial sweeteners and the company? s past success in introducing low-fat products. This project ould be classed in the new-product category of investments. 10. Networked, computer-based inventory-control system for warehouses and land representatives. Heinz Klink had pressed unsuccessfully for trey years for a state-of-the-art -9- UVA-F-1356 computer-based inventory-control system that would link cogitation of honor sales representatives, distributors, drivers, warehouses, and peradventure even retailers.The benefits of such(prenominal) a system would be shorter delays in ordering and order processing, intermit control of inventory, reduction of spoilage, and red-hot apprehension of changes in have at the customer level. Klink was indisposed(p) to determine these benefits, because they could range amid retiring and quite large amounts. This year, for the first time, he presented a capital-flow count on, however, that reflected an initial outlay of EUR18 million for the system, followed by EUR4. 5 million in the coterminous year for supplementary equipment. The inflows reflected dispraise tax shields, tax credits, cost reductions in warehousing, and cut down inventory.He forecast these benefits to last for just iii years. all the same so, the project? s IRR was estimated to be 16. 2%. This project would be classed in the ability category of proposals. 11. achievement of a hint schnapps2 set and associated facilities. Nigel Humbolt had advocated making diversifying acquisitions in an effort to move beyond the company? s mature fondness business but doing so in a way that put-upon the company? s skills in brand management. He had explored six possible related to industries in the general field of consumer package goods and laid that cordials and liqueurs offered queer opportunities for eal growth and, at the same time, market security measure through branding. He had identify four small producers of well-established brands of liqueurs as acquisition candidates. pursuance exploratory negotiation with each, he had mulish that only one company could be purchased in the near future, namely, the ahead(p) secluded European manufacturer of schnapps, located in Munich. The proposal was overpriced EUR25 million to buy the company and EUR30 million to renew the company ? s facilities completely sequence simultaneously expanding distribution to new geographical markets.The judge returns were high after-tax silver flows were communicate to be EUR198. 5 million, pliant an IRR of 27. 5%. This project would be classed in the new-product category of proposals. finding Each member of the management committee was anticipate to come to the meeting prompt to present and defend a proposal for the parceling of Euroland Foods? s capital budget of EUR120 million. possess 3 summarizes the variant projects in foothold of their excess cash flows and the investment-performance criteria. 2 whatever of various well-set dry liquors, such as a whole Dutch gin.Definition borrowed from American heritage dictionary of the position Language, quaternary ed. -10- UVA-F-1356 queer 1 EUROLAND FOODS S. A. Nations where Euroland Foods Competed line of products The shaded scene of action on this map reveals the virtuoso distribution re gion of Euroland? s products. big facilities are indicated by the sideline figures 1 2 3 4 5 6 7 8 9 10 Headquarters, Brussels, Belgium place, Antwerp, Belgium lay, Strasbourg, France Plant, Nuremberg, Germany Plant, Hamburg, GermanyPlant, Copenhagen, Denmark Plant, Svald, Sweden Plant, Nelly-on-Mersey, England Plant, Caen, France Plant, Melun, France -11- UVA-F-1356 border 2 EUROLAND FOODS S. A. abbreviation of pecuniary Results (all set in euro millions, move out per-share amounts) pecuniary year remnant declination 1998 1999 stark(a) sales 1,614 1,608 1,611 Net income 77 74 56 1. 13 1. 08 0. 81 Dividends 30 30 30 get assets 716 870 984 Shareholders? beauteousness (book value) 559 640 697 1,271 1,258 784 moolah per shareShareholders? equity (market value) 2000 -12- UVA-F-1356 depict 3 EUROLAND FOODS S. A. unornamented currency Flows and epitome of Proposed gives1 (all value in euro millions) Project 1 2 fill out mot ortruck go by (note 3) coronation proportion works gravid 3 current Plant (Dijon, France) 4 5 6 grow mechanisation Plant and (Nuremberg, conveyor Germany) bit Foods S ystems 7 8 9 10 southbound refinement (note 5) eastbound E xpansion (note 5) imitation S weetener InventoryControl S ystem StrategicA cquisition (note 6) 30. 00 3. 00 37. 50 7. 50 15. 00 0. 00 -17. 10 -11. 85 4. 50 5. 25 6. 00 6. 75 7. 50 10. 50 11. 55 -45. 00 3. 00 7. 50 8. 25 9. 00 9. 38 9. 75 10. 13 7. 50 7. 88 8. 25 35. 63 -15. 00 1. 88 2. 25 2. 63 3. 00 3. 38 3. 75 2. 25 2. 25 2. 25 2. 25 10. 88 6 4 6 5 6 5 7 6 6 4 5 6 IRR lower limit true ROR send 7. 8% 8. 0% -0. 2% 11. 3% 10. 0% 1. 3% 11. 2% 10. 0% 1. 2% 13. 4% 12. 0% 1. 4% 8. 7% 8. 0% 0. 7% NPV at Corp. WACC (10. 6%) -2. 88 1. 49 0. 41 3. 74 NPV at token(prenominal) ROR -0. 19 2. 81 0. 82 equivalent weight rente (note 2) -0. 04 0. 46 0. 13 Y ear 0 1 2 3 4 5 6 7 8 9 10 Undiscounted sum total retribution (years) maximal payback genuine 2. 50 21. 00 0. 00 0. 00 4. 50 0. 00 30. 00 30. 00 expect empty bullion FLOWS (note 4) -9. 00 -21. 00 -30. 00 -30. 00 -9. 00 4. 13 5. 25 4. 50 -9. 00 4. 13 6. 00 5. 25 4. 50 4. 13 6. 75 6. 00 4. 50 4. 13 7. 50 6. 75 6. 00 4. 13 8. 25 7. 50 6. 75 4. 13 9. 00 8. 25 7. 50 4. 13 9. 75 9. 00 8. 25 10. 50 9. 75 9. 00 11. 25 10. 50 9. 75 12. 00 11. 25 29. 25 7. 88 56. 25 48. 75 22. 50 4. 50 22. 50 0. 00 45. 00 15. 00 -27. 00 4. 50 6. 00 6. 75 7. 50 7. 50 7. 50 7. 50 7. 50 7. 50 7. 50 42. 75 -18. 00 8. 25 8. 25 7. 50 6. 00 -25. 00 -30. 00 7. 50 13. 50 16. 50 19. 50 22. 50 25. 50 28. 50 31. 50 88. 50 198. 50 5 6 5 6 3 4 5 6 21. 4% 12. 0% 9. 4% 8. 8% 12. 0% 6. 8% 20. 5% 12. 0% 8. 5% 16. 2% 8. 0% 8. 2% 27. 5% 12. 0% 15. 5% -1. 31 17. 99 13. 49 13. 43 1. 75 69. 45 1. 79 0. 48 14. 85 10. 62 10. 97 2. 67 59. 65 0. 32 0. 09 2. 63 1. 88 1. 94 1. 03 10. 56 1 The wastewater treatment program is not include in this exhibit. The equivalent rente of a project is that level annual payment that yields a n et present value relate to the NPV at the minimum required rate of return for that project. rente corrects for differences in sequence among various projects. In ranking projects on the cornerstone of equivalent annuity, larger annuities create more investor wealthiness than smaller annuities. This reflects EUR16. 5 million fagged both initially and at the end of year one. 4 justify cash flow = additive profit or cost savings after taxes + dispraise coronation in fixed assets and working capital. 5 Franchisees would in stages take over the burden of carrying receivables and inventory. 6 EUR25 million would be pass in the first year, EUR30 million in the second, and EUR5 million in the third. 2