UNIVERSITY OF SOUTH AFRICA
College of Accounting Sciences
⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄⋄
MAC3702: Application of Fi-
nancial Management Techniques
Assignment 2 | Semester 2, 2026
⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄⋄
Module Code: MAC3702
Application of Financial Management Tech-
Module Name:
niques
Valuations, Capital Structure and Risk Man-
Assignment Topic:
agement
Assignment Number: 2
Due Date: 10 September 2026
Total Marks: 100
Submitted in partial fulfilment of the requirements for MAC3702, UNISA 2026
, UNISA | MAC3702 Assignment 2 – Semester 2
Question 1: Business Valuation – Proposed Acquisition of BioSense
Ubuntu Health’s proposed acquisition of a 70% equity stake in BioSense requires an assess-
ment of whether the R15 million cash offer tabled on 1 September 2026 is reasonable. The
price/earnings (P/E) multiple method values a business by applying a market-derived multiple
to a normalised, maintainable level of earnings; the underlying premise is that the multiple paid
by investors for a rand of earnings in comparable listed businesses can be used, after adjust-
ment, to infer a fair value for an unlisted target (CFA Institute, 2026).
1.1 Reasonableness of the R15 million offer using the P/E multiple method
Normalising BioSense’s earnings
The net profit before tax reported for 2026 and 2025 includes once-off penalties and remedi-
ation costs of R3 million and R5 million respectively (pre-tax), arising from historical regulatory
and quality-control failures. These amounts are not expected to recur and must be added back
to establish a maintainable earnings base before the P/E multiple is applied. No adjustment is
required for 2024 or 2023, as no non-recurring items are disclosed for those years (R0 adjust-
ment). The applicable corporate tax rate is 25%. “‘latex
Table 1: Normalisation of BioSense’s earnings (R’000)
Year Reported NPBT Add back once-off Normalised NPBT Tax @ 25% Normalised earnings
2026 10 000.00 3 000.00 13 000.00 (3 250.00) 9 750.00
2025 8 500.00 5 000.00 13 500.00 (3 375.00) 10 125.00
2024 8 000.00 R0 (nil) 8 000.00 (2 000.00) 6 000.00
2023 9 000.00 R0 (nil) 9 000.00 (2 250.00) 6 750.00
Average maintainable earnings over the four years available is used as the earnings base, since
a single year would not adequately smooth the effect of the fluctuating profitability evident in
the results:
9 750.00 + 10 125.00 + 6 000.00 + 6 750.00
Average maintainable earnings = = R8 156.25 thousand
4
Page 2 of 12
College of Accounting Sciences
⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄⋄
MAC3702: Application of Fi-
nancial Management Techniques
Assignment 2 | Semester 2, 2026
⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄⋄
Module Code: MAC3702
Application of Financial Management Tech-
Module Name:
niques
Valuations, Capital Structure and Risk Man-
Assignment Topic:
agement
Assignment Number: 2
Due Date: 10 September 2026
Total Marks: 100
Submitted in partial fulfilment of the requirements for MAC3702, UNISA 2026
, UNISA | MAC3702 Assignment 2 – Semester 2
Question 1: Business Valuation – Proposed Acquisition of BioSense
Ubuntu Health’s proposed acquisition of a 70% equity stake in BioSense requires an assess-
ment of whether the R15 million cash offer tabled on 1 September 2026 is reasonable. The
price/earnings (P/E) multiple method values a business by applying a market-derived multiple
to a normalised, maintainable level of earnings; the underlying premise is that the multiple paid
by investors for a rand of earnings in comparable listed businesses can be used, after adjust-
ment, to infer a fair value for an unlisted target (CFA Institute, 2026).
1.1 Reasonableness of the R15 million offer using the P/E multiple method
Normalising BioSense’s earnings
The net profit before tax reported for 2026 and 2025 includes once-off penalties and remedi-
ation costs of R3 million and R5 million respectively (pre-tax), arising from historical regulatory
and quality-control failures. These amounts are not expected to recur and must be added back
to establish a maintainable earnings base before the P/E multiple is applied. No adjustment is
required for 2024 or 2023, as no non-recurring items are disclosed for those years (R0 adjust-
ment). The applicable corporate tax rate is 25%. “‘latex
Table 1: Normalisation of BioSense’s earnings (R’000)
Year Reported NPBT Add back once-off Normalised NPBT Tax @ 25% Normalised earnings
2026 10 000.00 3 000.00 13 000.00 (3 250.00) 9 750.00
2025 8 500.00 5 000.00 13 500.00 (3 375.00) 10 125.00
2024 8 000.00 R0 (nil) 8 000.00 (2 000.00) 6 000.00
2023 9 000.00 R0 (nil) 9 000.00 (2 250.00) 6 750.00
Average maintainable earnings over the four years available is used as the earnings base, since
a single year would not adequately smooth the effect of the fluctuating profitability evident in
the results:
9 750.00 + 10 125.00 + 6 000.00 + 6 750.00
Average maintainable earnings = = R8 156.25 thousand
4
Page 2 of 12
