Prepare a management report that critically discusses
Your assignment relates to TUI AG. “TUI Group is the world’s number one tourism business. From now on, the broad portfolio gathered under the Group umbrella will consist of strong tour operators, 1,800 travel agencies and leading online portals, six airlines more than 130 aircraft, over 300 hotels with 210,000 beds, 13 cruise liners and countless incoming agencies in all major holiday destinations around the globe. This integrated offering will enable us to provide our 30 million customers with an unmatched holiday experience in 180 regions. A key feature of our corporate culture is our global responsibility for economic, environmental and social sustainability. This is reflected in more than 20 years of commitment to sustainable tourism. In 2014/54 financial year the TUI Group with a headcount of 76,000 recorded turnover of €20.1 bn and an operating result of €1.069 bn. The TUI Group’s share is listed on the London Stock Exchange in the FTSE index and in the regulated market of the Frankfurt Stock Exchange. Information on the company’s operations is available from the company website: http://www.tui-group.com/ Information on the company’s finances is available from • the company website, by following the link to Investor Relations • the Thomson One Banker database, accessible through the Oxford Brookes University library web pages Share price data, charts and other technical information are available on uk.finance.yahoo.com or Thomson One Banker. Bond data is available from www.boerse-frankfurt.com . Required: Prepare a management report that critically discusses: 1. TUI’s capital structure in light of relevant finance theory. [15 marks] 2. TUI’s market valuation. Your analysis should include the following: a. Estimate the Weighted Average Cost of Capital for TUI (10 marks) b. Present a Shareholder Value Analysis model (SVA) (Rappaport, 1986) for TUI using available information. You should present your SVA using Excel (15 marks) c. Develop and justify value drivers and clearly state all assumptions. .(10 marks) d. Discuss the difficulties in applying SVA in practice. (5 marks) e. Discuss the market value of TUI in light of the calculations undertaken (10 marks) [50 marks] 3. The effect of changes in key assumptions in the SVA model and discuss these. You should present any sensitivity or scenario analyses developed using Excel [15 marks] 4. Prepare a powerpoint presentation that summarises the findings from your report. You should assume that the intended audience are TUI’s institutional investors and that the presentation should not last longer than 15 minutes. [15 marks] Style and format marks [5 marks] Assignments must be presented in the following format: The word limit for this assignment is 2000 words excluding the contents page, references and appendices. Assignments must be word-processed in 11 point Arial font and double spaced All pages must be numbered The assignment must be presented with a front cover showing the programme title, module number and name, title of the assignment, student number and submission date Margins must be as follows: Top: 1 inch, Bottom: 1 inch (2.5 cm), Left: 1.25 inches, Right: 1.25 inches (3.2 cm) Harvard referencing must be used Assignments not complying with this format will be returned to students unmarked.