Scope of work
1.1. Business overview and Quality of earnings
Business overview
Summarise the Target’s history, ownership, operational structure, and major milestones. Graphically summarise the Target’s current footprint in terms of operating divisions, location, service and product offerings.
Analyse financial information available and discuss with management material ‘one-off’ nonrecurring items identified in the financial statements, any changes in accounting policies and/or any
structural changes in the business over the period under review.
Consider related party transactions and comment on whether arrangements are at arm’s length.
Comment on any pro forma adjustments to take account of recent or expected changes in the
Target’s operating structure, revenue or cost base.
Prepare an Adjusted OPBTDA schedule for the review period.
Income statement
Comment on overall historical results (e.g., Gross margin, EBITDA margins, operating expenditure and all
KPIs where possible).
Comment on the following for each historical period:
Sales
Perform analysis by year, products customers etc. Investigate any discrepancies
Review sales contract taking cognizance of punitive clauses and its impact on the periods under review
Outcome
Reviewed quality of earnings, quality of net assets, quality of cash flow, quality of financial information as well as the taxes (New Age Agric Limited) relating to Corporate, withholding employee, VAT for compliance for the financial years ended 31 December 2018 to 31 December 2021, & 30th June 2022
Client made an informed investment decision on the Target