FLP Plus SCS

May/Aug 23 - Daistruk

Kim Lawley
Schedule

○ Preparation and approach

○ Exam Format and Story Line
○ Use of Mocks
○ Approaching the pre-seen
○ Other tools and resources
○ Conclusion

Kim Lawley
Preparation and approach

○ Understand the exam format

○ Review the syllabus
○ Develop your analytical skills
○ Collaborate with others
○ Stay up to date

Kim Lawley
Exam Format and Story Line

○ Exam Format
○ Story Line

Kim Lawley
Exam Format

○ 3 tasks of one hour

■ May be split into sub-tasks
○ Material provided
■ Pre-seen
■ Reference material
■ Scratch pad
■ On screen Calculator

Kim Lawley
Exam Storyline

○ R1 -
■ Discuss the advantages and disadvantages to Pixlwizz of acquiring
Skrenplae
■ Explain the significance of the movement in Skrenplae’s share price in
response to rumours about an acquisition by Pixlwiss

Kim Lawley
Exam Storyline

○ R2 -
■ Discuss the key risks (other than currency risks) that may arise from
Pixlwiss having a manufacturing facility for mobile consoles in
Eastland and recommend suitable responses
■ Discuss the exposure to economic currency risk that may arise from
Pixlwizz having this factory in Eastland

Kim Lawley
Exam Storyline

○ R3 -
■ Discuss the governance challenges that the board will face after the
acquisition of Skrenplae, which was previously an independent quoted
company
■ Recommend the approach that Pixlwizz should take when managing the
interests of the minority shareholders in Skrenplae

Kim Lawley
Exam Format - Marking

Kim Lawley
Exam Format - Marking

Kim Lawley
Exam Format - Marking

Kim Lawley
Exam Format - Marking

Kim Lawley
Exam Format - Marking

Kim Lawley
Exam Format - Marking

Kim Lawley
Use of Mocks

○ Practice in a simulated exam environment

○ Identification of knowledge gaps
○ Feedback on performance
○ Prepare for different scenarios
○ Practice time management
○ Practice your writing skills
■ https://hbr.org/2022/06/how-to-write-concisely

Kim Lawley
Use of Mocks

○ Practice time management

Kim Lawley
Other tools and resources

● CIMA
○ Eg question walkthrough by Clancy Peiris
● Youtube
○ Many results
● Facebook
○ Student groups
● Newspapers
○ What’s happening in real life
■ Eg Just an example

Kim Lawley
Approaching the pre-seen

○ Read Thoroughly
○ Financial performance
○ Industry and market
○ Strengths and Weaknesses
○ Company Strategy
○ What are the Key Issues/Topics?
○ Possible solutions

Kim Lawley
Approaching the pre-seen- Daistruk

Daistruk 2022 (R$m) Daistruk 2021 (R$m)

Capital Employed 708 670

ROCE 19.6% 16.3%

Asset Turnover 2.8 2.7

OP 7.0% 6.0%

ROE (return on equity) 25.7% 20.5%

Kim Lawley
Approaching the pre-seen- Daistruk

Daistruk 2022 Caree 2022 Daistruk 2021 Caree 2021

(R$m) (R$m) (R$m) (R$m)

Capital 708 732 670 705

Employed

ROCE 19.6% 29.9% 16.3% 30.5%

Asset Turnover 2.8 3.2 2.7 3.1

OP 7.0% 9.3% 6.0% 10.0%

ROE (return on 25.7% 42.1% 20.5% 44.2%

equity)

Kim Lawley
Approaching the pre-seen

● What are the Key Issues/Topics?

○ Reliance on IT systems
■ Cybersecurity
○ Legal Requirements
○ Asset/Capital requirements
○ Environmental concerns

Kim Lawley
Conclusion

P
P
P
P
P

Kim Lawley
Conclusion

Proper
Preparation
Prevents
Poor
Performance

Kim Lawley
Sample task (if time)

Kim Lawley
Sample task (if time)

Kim Lawley
Sample task planning

Rights Issue (set the scene)

Signalling
Issue Price
Recommendation

Kim Lawley
Sample task planning

Rights Issue (set the scene)

A rights issue to raise R$ 200 million is a significant rights issue.
Currently Daistruk has equity (book value) of R$ 428 million, so the new
issue will increase this by nearly 50%. To encourage stakeholders to put
their funds at risk, either as shareholders or underwriters, we’ll have to
present detailed explanations of how the new funds will be used to create
wealth. An issue of this size could easily fail if the stock market has
doubts about the likely success of the venture. If there are concerns that
the issue will not be taken up, then underwriters could be nervous about
offering insurance
Signalling
Issue Price
Recommendation
Kim Lawley
Sample task

Rights Issue (set the scene)

A rights issue to raise R$ 200 million is a significant rights issue.
Currently Daistruk has equity (book value) of R$ 428 million, so the new
issue will increase this by nearly 50%. To encourage stakeholders to put
their funds at risk, either as shareholders or underwriters, we’ll have to
present detailed explanations of how the new funds will be used to create
wealth. An issue of this size could easily fail if the stock market has
doubts about the likely success of the venture. If there are concerns that
the issue will not be taken up, then underwriters could be nervous about
offering insurance
Signalling
Issue Price
Recommendation
Kim Lawley