You have been appointed as a financial advisor to Construct Ltd, a UK based private limited company. The three founding directors of the company, who still work full-time in the business, are looking to retire and want to evaluate their options. The two alternative courses of action being considered are to sell the business to a competitor, or, obtain a stock market listing.

Construct Ltd provides specialist engineering services in relation to green technology and employs specialist technical staff, it is challenging to find and retain this expertise. The market for the type of services that Construct Ltd offers is growing.

Assume today iS 1^st December 2020

Current financial information:

Revenue: for year ended 30th November 2020	36.2 million
Profit after tax: for year ended 30th November 2020	14.5 million
Issued share capital (owned equally by the three directors)	6 million shares
Dividends paid	None
Book value of net assets An independent valuer has advised that Construct Ltds property is worth 1.2 million more than its book value.	15.1 million

Forecast financial information:

Revenue forecast For the year to 30th November 2021	39.5 million
Operating Costs	60% of revenue
Tax rate	30%, paid in year in which it arises
Cash flows other information	Assume investment in replacement of non-current assets equals depreciation. Assume operating profit equals cash flow. Extra investment in non-current assets for the years ending 30th November 2021, 2022 and 2023 is 2 million per annum.
Growth	For the years 2022 and 2023 growth is forecast to be 10% per annum. After that growth is expected to be 3% per annum into perpetuity.

Industry Statistics

The average P/E ratio for the industry is 13 with a range of 8 to 24. The average cost of capital for the industry is 10%. Cost of capital figures by individual companies are not available.

Required

Calculate a range of values for Construct Ltd using Free Cash Flow, P/E ratio and the net assets method.