Larkin Conglomerates plc owns a subsidiary company, Hughes Ltd, which sells office equipment. Recently, Larkin Conglomerates plc has been reconsidering its future strategy and has decided that Hughes Ltd should be sold off. The proposed divestment of Hughes Ltd has attracted considerable interest from other companies wishing to acquire this type of business.
The most recent accounts of Hughes Ltd are as follows:

Income Statement for the year ended 31 May 20XX
£000
Sales turnover...............................................................352.0
Profit before interest and taxation..........................................34.8
Interest charges.............................................................(12.0)
Profit before taxation.........................................................22.8
Corporation tax............................................................... (6.4)
Profit after taxation............................................................16.4
Dividend proposed and paid..................................................(4.0)
....................................................................................12.4
Transfer to general reserve....................................................(3.0)
Retained profit for the year.....................................................9.4
The subsidiary has shown a stable level of sales and profits over the past three years. An independent valuer has estimated the current realisable values of the assets of the company as follows:
£000
Freehold premises................235
Motor vans............................8
Fixtures and fittings..................5
Stock................................36
For the remaining assets, the values on the the statement of financial position were considered to reflect their current realisable values.
Another company in the same line of business, which is listed on the Stock Exchange, has a gross dividend yield of 5 per cent and a price: earnings ratio of 12.
Assume a standard rate of income tax of 25 per cent.
Required
(a) Calculate the value of an ordinary share in Hughes Ltd using the following methods:
(i) Net assets (liquidation) basis
(ii) Dividend yield
(iii) Price: earnings ratio.
(b) Briefly evaluate each of the share valuation methods used above.
(c) Identify and discuss four reasons why a company may undertake divestment of part of its business.
(d) Briefly state what other information, besides that provided above, would be useful to prospective buyers in deciding on a suitable value to place on the shares of Hughes Ltd.

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Statement of financial position as at 31 May 20XX £000 £000 Fixed assets Hreehold premises at cost 240 Less Accumulated depreclation 200 Motor vans at cost 32 Less Accumulated depreciation 21 10 Fixtures and fittings at cost Less Accumulated depreciaticn 219 Current assets 34 Stock at cost Debtors Cash at bank 20 76 Crediturs: umounts fulling due within Uneyeur Trade croditors (52) Accrued expenses 10 229 Creditors: amounts falling due beyond one year 100 129 12% Loan-Cirencester Bank Capital and reserves El ordinary shares General reserve Retained profit 60 14 129