Latest AssumptionsIncome
StatementRevenue11374189100%ExpensesMaterials176599315.53%Salaries
and wages538563347.35%Benefits10360209.11%Advertising,
promotion3017402.65%Travel1018240.90%Cleaning652710.57%Consumable
supplies1860091.64%Insurance873060.77%3rd party
rent1426051.25%Property taxes854810.75%Utilities2697272.37%Office
supplies688510.61%Telephone and computers1125750.99%Professional
fees1990831.75%Bank charges and interest72410.06%Vehicle
costs777150.68%Capital tax00.00%Facilities repairs and
maintenance4259453.74%Operating expenses1031901990.72%Income before
amortization, financing, miscellaneous expenses and
taxes10551709.28%0.00%Amortization of capital
assets3863393.40%(Gain) on disposal of capital
assets00.00%Intercompany rent00.00%Royalties00.00%Management
expenses00.00%Reorganization expenses00.00%Extraordinary
items00.00%Amortization of deferred finance charges00.00%Interest
on long term debt225674612013Income before taxes443157Income
taxes7350016.59%Net income369657
AssumptionsIncome StatementAssumptions2010 A2011 A2012 E2013
E2014 E2015 E2016 ERevenuewill remain flat for 2011 with no new
impetus to the busines24.3%-1.0%1%0%0%0%0%will increase slightly -
attributable to DorsetCost of salesMaterials% of
Revenue10.6%15.5%15.5%14.4%14.7%15.0%15.3%Salaries and wages% of
Revenue42.6%47.3%47.3%48.0%48.2%48.4%48.6%Gross
Profit46.8%37.1%37.5%38.0%37.5%37.0%36.5%
ExpensesBenefits% of
Revenue7.8%9.1%9.1%9.1%9.1%9.1%9.1%Advertising, promotion% of
Revenue2.5%2.7%2.7%2.7%2.7%2.7%2.7%Travel% of
Revenue0.8%0.9%0.9%0.9%0.9%0.9%0.9%Cleaning% of
Revenue0.5%0.6%0.6%0.6%0.6%0.6%0.6%Consumable supplies% of
Revenue1.1%1.6%1.6%1.6%1.6%1.6%1.6%Insurance% of
Revenue0.6%0.8%0.8%0.8%0.8%0.8%0.8%3rd party rent% of
Revenue0.3%1.3%1.3%1.3%1.3%1.3%1.3%Property
taxesConstant0.6%0.8%0.8%0.8%0.8%0.8%0.8%Utilities% of
Revenue1.9%2.4%2.4%2.4%2.4%2.4%2.4%Office supplies% of
Revenue1.0%0.6%0.6%0.6%0.6%0.6%0.6%Telephone and computers% of
Revenue0.7%1.0%1.0%1.0%1.0%1.0%1.0%Professional fees% of
Revenue0.9%1.8%1.8%1.8%1.8%1.8%1.8%Bank charges and interest% of
Revenue0.1%0.1%0.1%0.1%0.1%0.1%0.1%Vehicle costs% of
Revenue0.5%0.7%0.7%0.7%0.7%0.7%0.7%Capital tax% of
Revenue0.0%0.0%0.0%0.0%0.0%0.0%0.0%Farm Expenses% of
Revenue1.2%0.0%0.0%0.0%0.0%0.0%0.0%Product DevelopmentOne time
cost0.2%0.0%0.0%0.0%0.0%0.0%0.0%Facilities repairs and maintenance%
of
Revenue2.6%3.7%3.7%3.7%3.7%3.7%3.7%Total23.2%27.8%27.8%27.8%27.8%27.8%27.8%
Income before amortization, financing, miscellaneous expenses
and taxes23.6%9.3%9.4%9.9%9.3%8.8%8.3%
Amortization of capital assets% of
Revenue3.2%3.4%3.4%3.4%3.4%3.4%3.4%(Gain) on disposal of capital
assetsConstant0.0%0.0%0.0%0.0%0.0%0.0%0.0%Intercompany
rentConstant0.0%0.0%0.0%0.0%0.0%0.0%0.0%RoyaltiesConstant0.0%0.0%0.0%0.0%0.0%0.0%0.0%Management
expensesConstant0.0%0.0%0.0%0.0%0.0%0.0%0.0%Reorganization
expensesConstant-0.0%0.0%0.0%0.0%0.0%0.0%0.0%Extraordinary
itemsConstant0.0%0.0%0.0%0.0%0.0%0.0%0.0%Amortization of deferred
finance chargesConstant0.0%0.0%0.0%0.0%0.0%0.0%0.0%
Income before taxesIncome
taxes3.7%16.6%16.6%16.6%16.6%16.6%16.6%Net income
Balance Sheet Assumptions2009 A2010 A2011 E2012
E2013E2014E2015ECurrent AssetsBankAccounts receivable% of
Revenue0.4%0.8%0.8%0.8%0.8%0.8%0.8%Inventories% of
Revenue1.0%1.0%1.0%1.0%1.0%1.0%1.0%Due from JPCConstantPrepaid
expenses% of Revenue0.7%1.3%1.3%1.3%1.3%1.3%1.3%
Capital AssetsCostbased on current year projections and no
investment in 20120.9%1.5%0.3%0.0%0.0%0.0%0.0%Amortizationbased on
previous years' trend-3.4%-3.4%-3.4%-3.4%-3.4%-3.4%
Capital Projects in ProgressConstant0.0%0.0%0.0%0.0%0.0%Other
AssetsTrademarksConstantAdvance to Corcair FarmsConstantAdvance to
CorcorvestConstantAdvance to JPC Holdings Inc.ConstantAdvance to
1417335 Ontario Inc.ConstantAdvance to CorservicesConstantCSV Life
InsuranceConstantInvestment in KCU sharesConstantDeferred finance
chargesConstant
Total Assets
Liabilities and EquityCurrent LiabilitiesOperating lineAccounts
payable & accrued liabilities% of
Revenue9.4%10.9%10.9%10.9%10.9%10.9%10.9%Due to
JPCConstantGovernment remittances payableConstantDeposits and gift
certificates% of
Revenue15.4%17.7%17.7%17.7%17.7%17.7%17.7%Corporate taxes
payableConstant
Long Term LiabilitiesVehicle loanssee debt pmtOther loans
payablesee debt pmtBDCsee debt pmtCUCO/KCU/Sudburysee debt
pmtAdvance from 926715 Ontario I ConstantLoan Payable - 926715
Ontario ConstantLoan payable - CorservicesConstant
Shareholder's EquityShare capitalConstantRetained
EarningsCurrent earningsTotal Shareholder's EquityTotal Liabilities
and Shareholder's Equity
Debt paymentLoan Repayment Schedule2011Repayment
20122012Repayment 20132013Repayment 20142014Repayment
20152015Repayment 20162016Vehicle loansTerm Loan
1Principal$6,674$7,251$5,167$5,851$6,357Interest$1,234$657$2,741$2,057$1,551Total$14,266$7,908$7,592$7,908$31,688$7,908$23,780$7,908$17,929$7,908$11,571
Term Loan 2$0$0$0$0$0$0$0$0$0$0$0
Term Loan
3$20,180$17,208$2,972$2,972$37,292$17,208$20,084$17,208$2,876$2,876$37,292
Term Loan
4$0$0$0$0$0$0$0$0$0$0$0Total$34,446$25,116$10,564$10,880$68,980$25,116$43,864$25,116$20,805$10,784$48,863
Other loans
payableconstant$125,057$125,057$125,057$125,057$125,057$125,057includes
leasesno further infoprovided
BDCPrincipal$160,500$160,500$160,500$160,500$160,500Interest$61,950$56,230$59,363$69,528$65,650Total$1,652,000$222,450$1,491,500$216,730$1,331,000$219,863$1,170,500$230,028$1,010,000$226,150$849,500
CUCO/KCU/SudburyPrincipal$173,220$173,220$173,220$173,220$173,220Interest$94,378$85,160$85,048$91,996$84,405Total$1,715,970$267,598$1,542,750$258,380$1,369,530$258,268$1,196,310$265,216$1,023,090$257,625$849,870
Total Interest
Payment$157,562$142,046$147,151$163,581$151,606Total Principal
Payment$357,602$343,943$356,095$356,779$342,953Prime -
20123.00%Prime - 20133.02%Prime - 20143.71%Prime - 20155.19%Prime -
20165.75%
ISIncome Statement2009 A2010 A2011 A2012 E2013 E2014 E2015 E2016
ERevenue$9,240,002$11,486,503$11,374,189$11,487,931$11,487,931$11,487,931$11,487,931$11,487,931
Cost of
salesMaterials$1,258,872$1,219,454$1,765,993$1,783,653$1,654,262$1,688,726$1,723,190$1,757,653Salaries
and
wages$4,474,389$4,896,794$5,385,633$5,439,489$5,514,207$5,537,183$5,560,159$5,583,134Gross
Profit$3,506,741$5,370,255$4,222,563$4,264,789$4,319,462$4,262,022$4,204,583$4,147,143
ExpensesBenefits$718,301$899,350$1,036,020$1,046,380$1,046,380$1,046,380$1,046,380$1,046,380Advertising,
promotion$333,135$283,778$301,740$304,757$304,757$304,757$304,757$304,757Travel$74,457$89,190$101,824$102,842$102,842$102,842$102,842$102,842Cleaning$54,896$53,191$65,271$65,924$65,924$65,924$65,924$65,924Consumable
supplies$96,829$123,685$186,009$187,869$187,869$187,869$187,869$187,869Insurance$70,516$69,105$87,306$88,179$88,179$88,179$88,179$88,1793rd
party
rent$33,777$34,140$142,605$144,031$144,031$144,031$144,031$144,031Property
taxes$82,567$71,787$85,481$86,336$86,336$86,336$86,336$86,336Utilities$207,829$215,326$269,727$272,424$272,424$272,424$272,424$272,424Office
supplies$85,474$113,598$68,851$69,540$69,540$69,540$69,540$69,540Telephone
and
computers$92,054$83,344$112,575$113,701$113,701$113,701$113,701$113,701Professional
fees$82,259$107,471$199,083$201,074$201,074$201,074$201,074$201,074Bank
charges and
interest$35,476$9,826$7,241$7,313$7,313$7,313$7,313$7,313Vehicle
costs$66,976$57,853$77,715$78,492$78,492$78,492$78,492$78,492Capital
tax$5,310$0$0$0$0$0$0$0Farm Expenses$0$132,521$0$0$0$0$0$0Product
Development$0$20,759$0$0$0$0$0$0Facilities repairs and
maintenance$301,480$295,897$425,945$430,204$430,204$430,204$430,204$430,204Total$2,341,336$2,660,821$3,167,393$3,199,067$3,199,067$3,199,067$3,199,067$3,199,067
Income before amortization, financing, miscellaneous expenses
and
taxes$1,165,405$2,709,434$1,055,170$1,065,722$1,120,395$1,062,955$1,005,516$948,076
Amortization of capital
assets$388,063$373,101$386,339$390,202$390,202$390,202$390,202$390,202(Gain)
on disposal of capital assets$7,834$0$0$0$0$0$0$0Intercompany
rent$0$0$0$0$0$0$0$0Royalties$0$0$0$0$0$0$0$0Management
expenses$0$0$0$0$0$0$0$0Reorganization
expenses$0($2,187)$0$0$0$0$0$0Extraordinary
items$0$0$0$0$0$0$0$0Amortization of deferred finance
charges$29,110$0$0$0$0$0$0$0Interest on long term
debt$269,808$253,972$225,674$157,562$142,046$147,151$161,524$150,055
Income before
taxes$470,590$2,084,548$443,157$517,957$588,147$525,602$453,789$407,819Income
taxes$0$77,937$73,500$85,906$97,547$87,174$75,263$67,639Net
income$470,590$2,006,611$369,657$432,051$490,599$438,428$378,526$340,180Net
income growth16.9%13.6%-10.6%-13.7%-10.1%CAGR-4.7%
BSBalance Sheet2010 A2011 A2012 E2013 E2014 E2015 E2016 ECurrent
AssetsBank$640,471$382,577$840,386$1,448,072$1,920,055$2,334,193$2,761,103Accounts
receivable$47,433$90,454$91,359$91,359$91,359$91,359$91,359Inventories$111,167$111,436$112,550$112,550$112,550$112,550$112,550Due
from JPC$0$0$0$0$0$0$0Prepaid
expenses$82,198$148,000$149,480$149,480$149,480$149,480$149,480$881,269$732,467$1,193,775$1,801,461$2,273,444$2,687,582$3,114,491Capital
AssetsCost$11,134,833$11,368,658$11,601,548$11,601,548$11,601,548$11,601,548$11,601,548Accumulated
Amortization($4,587,587)($4,968,147)($5,356,600)($5,748,991)($6,141,382)($6,533,773)($6,926,164)$6,547,246$6,400,511$6,244,948$5,852,557$5,460,166$5,067,775$4,675,384Capital
Projects in Progress$72,718$198,784$0$0$0$0$0Other
AssetsTrademarks$13,721$22,323$22,323$22,323$22,323$22,323$22,323Advance
to Corcair Farms$0$0$0$0$0$0$0Advance to
Corcorvest$873,834$0$0$0$0$0$0Advance to JPC Holdings
Inc.$4,373$5,168$5,168$5,168$5,168$5,168$5,168Advance to 1417335
Ontario Inc.$0$0$0$0$0$0$0Advance to Corservices$0$0$0$0$0$0$0CSV
Life
Insurance$45,067$51,217$51,217$51,217$51,217$51,217$51,217Investment
in KCU shares$4,783$6,509$6,509$6,509$6,509$6,509$6,509Deferred
finance charges$0$0$0$0$0$0$0Incorporation
expense$0$5,418$5,418$5,418$5,418$5,418$5,418$1,014,496$289,419$90,635$90,635$90,635$90,635$90,635Total
Assets$8,443,011$7,422,397$7,529,358$7,744,653$7,824,245$7,845,992$7,880,510
Liabilities and EquityCurrent LiabilitiesOperating
line$0$0$0$0$0$0$0Accounts payable & accrued
liabilities$1,085,398$1,237,976$1,250,356$1,250,356$1,250,356$1,250,356$1,250,356Due
to JPC$160,177$30,184$30,184$30,184$30,184$30,184$30,184Government
remittances
payable$132,954$63,238$63,238$63,238$63,238$63,238$63,238Deposits
and gift
certificates$1,766,880$2,013,263$2,033,396$2,033,396$2,033,396$2,033,396$2,033,396Corporate
taxes
payable$0$0$0$0$0$0$0$3,145,409$3,344,661$3,377,173$3,377,173$3,377,173$3,377,173$3,377,173Long
Term LiabilitiesVehicle
loans$68,817$34,446$10,564$68,980$43,864$20,805$48,863Other loans
payable$98,229$125,057$125,057$125,057$125,057$125,057$125,057BDC$1,812,500$1,652,000$1,491,500$1,331,000$1,170,500$1,010,000$849,500CUCO/KCU/Sudbury$2,064,311$1,715,970$1,542,750$1,369,530$1,196,310$1,023,090$849,870Advance
from 926715 Ontario I $0$0$0$0$0$0$0Loan Payable - 926715 Ontario
$0$0$0$0$0$0$0Loan payable -
Corservices$0$0$0$0$0$0$0$4,043,857$3,527,473$3,169,871$2,894,567$2,535,731$2,178,952$1,873,290Shareholder's
EquityShare capital$444$403$403$403$403$403$403Retained
Earnings($753,310)($16,404)$549,860$981,910$1,472,510$1,910,938$2,289,464Current
earnings$2,006,611$566,263$432,051$490,599$438,428$378,526$340,180Total
Shareholder's
Equity$1,253,745$550,263$982,313$1,472,913$1,911,341$2,289,867$2,630,046Total
Liabilities and Shareholder's
Equity$8,443,011$7,422,397$7,529,358$7,744,653$7,824,245$7,845,992$7,880,510
Balance check$0$0$0$0$0$0$0
D/E Ratio 13.812.46.64.33.12.42.0DSC1.372.072.682.101.942.08
CFSCash Flow Statement2010 A2011 A2012 E2013 E2014 E2015 E2016
E
Operating ActivitiesNet income
(loss)$369,657$432,051$490,599$438,428$378,526$340,180Add items not
involving cashAmortization and
depreciation$386,339$388,453$392,391$392,391$392,391$392,391(Increase)/Decrease
in Current Assets($98,602)($3,499)$0$0$0$0Increase/(Decrease) in
Current Liabilities$209,776$32,512$0$0$0$0Cash Flow Provided by
Operations$867,170$849,517$882,990$830,819$770,917$732,571
Investing ActivitiesPurchase of
Trademarks($8,602)$0$0$0$0$0Investment in Affiliated
Companies($1,726)$0$0$0$0$0Decrease/(Increase) in CSV of Life
Insurance($6,150)$0$0$0$0$0Decrease/(Increase) in Amt Due from
Related Parties$0$0$0$0$0$0Purchase of
Property/Plant/Equipment($365,670)($34,106)$0$0$0$0Proceeds from
Sale of Property/Plant/Equipment$0$0$0$0$0$0Cash Flow
Provided/(Used) in Investing
Activities($382,148)($34,106)$0$0$0$0
Financing ActivitiesIncrease/(Decrease) Amts Due to Related
Parties($795)$0$0$0$0$0Increase/(Decrease) In Bank/ Other
Debt($700,173)$0$0$0$0$0Repayment of Long Term
Debt$0($357,602)($275,304)($358,836)($356,779)($305,661)Purchase of
common Shares on Redemption$0$0$0$0$0$0Excess of Share Redemption
amount over PUC($74,860)$0$0$0$0$0Issuance of Common
Shares$0$0$0$0$0$0Dividends Paid$0$0$0$0$0$0Cash Flow Used in
Financing
Activities($775,828)($357,602)($275,304)($358,836)($356,779)($305,661)
Net Increase in Cash for
Year($290,806)$457,809$607,686$471,983$414,138$426,910Cash at
Beginning of
Year$673,384$382,577$840,386$1,448,072$1,920,055$2,334,193Cash at
End of
Year$382,577$840,386$1,448,072$1,920,055$2,334,193$2,761,103
WACCDiscount Rate Calculation - AssumptionsHistorical
BetaRisk-Free Rate:2.15%
Author: Author:Daily 20-year Treasury rate from
http://www.ustreas.gov/offices/domestic-finance/debt-management/interest-rate/ltcompositeindex_historical.shtmlStarwood
hotels1.95Equity Risk Premium:5.00%
Author: Author:Picked from middle of standard range of 3% -
10%.Marriott1.44 (beta) - Industry historical1.95Allied
hotels0.05Cost of Equity, Re11.9%Transat1.37Cost of Debt, Rd5.3%All
in west capital corp0.41Accor SA1.48MV of debtChoice
hotels0.88Total debt$3,527,473Intercontinental1.31Average
Beta1.11Cost of debt5.3%
MV of equityTotal Equity - BV$444*BVFMVFMV/BV ratioTotal
MV*$7,196,703$91$1,475,000$16,209
WACC CalcualtionDebtEquity ValueTax
Rate$3,527,473$7,196,7033.7%WACC 9.7%
DCFDiscounted Cash Flow Analysis - St. Annes
St. Annes - Cash Flow Projections20122013201420152016St. Annes -
DCF Assumptions & Output
Revenue:11,487,93111,487,93111,487,93111,487,93111,487,931EBITDA:1,065,7221,120,3951,062,9551,005,516948,076Discount
Rate (WACC):9.7%Operating
Income:675,519730,193672,753615,313557,874
Less: Taxes(85,906)(97,547)(87,174)(75,263)(67,639)Terminal
Growth Rate:0.0%Terminal Value:$9,109,939Plus:
Depreciation390,202390,202390,202390,202390,202PV of Terminal
Value:$6,014,739Inc/Dec change in Working Capital:29,0130000Sum of
PV of Cash Flows:$3,851,083Less: Capital
Expenditures(34,106)0000Enterprise Value:$9,865,822
Unlevered Free Cash
Flow$974,723$1,022,848$975,782$930,252$880,437Terminal Value %
EV:61.0%Present Value of Free Cash
Flow$930,782$890,659$774,795$673,548$581,299
Normal Discount Period:1.02.03.04.05.0Mid-Year
Discount:0.51.52.53.54.5
Sensitivity AnalysisTerminal Growth
Rate$9,865,8220.0%0.5%1.0%1.5%2.0%2.5%3.0%WACC8.0%$11,771,534$12,331,980$12,972,490$13,711,540$14,573,765$15,592,758$16,815,5508.5%$11,121,047$11,607,628$12,159,087$12,789,325$13,516,524$14,364,922$15,367,5749.0%$10,542,532$10,968,144$11,446,958$11,989,613$12,609,791$13,325,381$14,160,2369.7%$10,542,532$10,968,144$11,446,958$11,989,613$12,609,791$13,325,381$14,160,23610.0%$9,558,255$9,890,204$10,259,035$10,671,258$11,135,010$11,660,594$12,261,26210.5%$9,136,051$9,431,656$9,758,377$10,121,400$10,527,132$10,983,580$11,500,88811.0%$8,751,999$9,016,518$9,307,488$9,629,087$9,986,419$10,385,790$10,835,08211.5%$8,401,127$8,638,874$8,899,264$9,185,693$9,502,273$9,854,028$10,247,165
Spa ComparablesSpa ComparablesEV as a multiple of TTM:Price
/Price /Spas worldwideRevenueEBITDAEBITearningsbookMary Chia
Holdings LimitedMinimum0.42.83.83.20.8Modern Beauty Salon Holdings
LtdAverage1.714.814.414.42.8Steiner Leisure
Ltd.Median2.09.013.810.12.2Other comparables in North
AmericaAdjusted Average1.79.013.712.22.7Great Wolf Resorts,
Inc.Maximum2.962.228.536.14.8InterGroup Corp.Life Time Fitness
Inc.Sports Club Co. Inc.WellQuest Medical & Wellness
CorporationSte. Anne's 2011 EBITDA$1,055,170EV multiple9.0 xSource:
Capital IQEV$9,496,530
Ste. Anne's 2011 Revenue$11,374,189EV multiple1.5
xEV$17,061,284
Hotel ComparablesEV/SalesLTM - Sep/11 Actual12/31/2010
Actual12/31/2011 Expected12/31/2012 ExpectedStarwood
hotels2.12.82.22Marriott1.11.511.1Allied
hotels0.50.03Northampton1.92Royal host2.12.32.12.1All in west
capital corp6.27.3Accor SA0.91.50.90.9Choice
hotels3.94.13.93.7Intercontinental3.33.83.33.1
Average2.42.82.22.2Median2.12.32.22.1Std dev1.82.11.21.1St.
Annes 2010 Sales$11,486,50317229754.5St. Annes
EV$24,121,656$26,418,957$24,695,981
EV/EBITDALTM - Sep/1112/31/2010 A12/31/2011 E12/31/2012
EStarwood Hotels11.617.811.810.6Marriott21.218.911.411.3Allied
hotels1.42.6Northampton7.98.1Royal host10.910.112.913.1Accor
SA7.814.35.35.3Choice
hotels13.814.213.412.7Intercontinental9.1118.88.5
Average10.512.110.610.3Median10.012.611.611.0Std
dev5.75.33.12.9St. Annes 2010 EBITDA$2,709,43421675472St. Annes
EV$27,094,340$34,138,868$31,429,434
EV/EBITLTM - Sep/1112/31/2010 A12/31/2011 E12/31/2012 EStarwood
Hotels15.827.617.514.8Marriott29.623.414.213.8Allied
hotels1.53.1Transat 21.621.7Northampton12.512.8Royal
host44.321.2Accor SA24.267.41010.1Choice
hotels14.414.914.213.4Intercontinental10.813.510.610.1
Average19.422.813.312.4Median15.821.214.213.4Std
dev$12.4$18.2$3.1$2.2St. Annes 2010 EBIT$2,338,520St. Annes
EV$36,948,616$49,576,624$33,206,984
GraphsYear2010 A2011 E2012 E2013E2014E2015EDebt to
Equity12.46.64.33.12.42.0Year2010 A2011 E2012 E2013E2014E2015ENet
Income$369,657$432,051$490,599$438,428$378,526$340,180Year2010
A2011 E2012
E2013E2014E2015ERevenue$11,374,189$11,487,931$11,487,931$11,487,931$11,487,931$11,487,931Year2010
A2011 E2012 E2013E2014E2015EOperating
expense$5,733,261$6,116,248$7,151,626$7,223,142$7,168,469$7,225,909