Conday and Co. Ltd has been in operation for three years and produces antique reproduction furniture for the export market. The most recent set of financial statements for the business is set out as follows:

Balance sheet as at 30 November

£000 £000 £000 Non-current assets Property, plant and equipment Freehold land and buildings at cost 228 Plant and machinery at cost 942 Less Accumulated depreciation 180 762 990 Current assets Inventories 600 Trade receivables 820 1,420 Less Current liabilities Trade payables 665 Taxation 48 Bank overdraft 432 1,145 275 1,265 Less Non-current liabilities 9% debentures (Note 1) 200 1,065 Equity Ordinary shares of £1 each 700 Retained profit 365 1,065 Income statement for the year ended 30 November £000 £000 Revenue 2,600 Less Cost of sales 1,620 Gross profit 980 Less Selling and distribution expenses (Note 2) 408 Administration expenses 194 Finance expenses 58 660 Net profit before taxation 320 Less Corporation tax 95 Net profit after taxation 225 Less Dividend paid 160 Retained profit for the year 65 Notes:
1 The debentures are secured on the freehold land and buildings.
2 Selling and distribution expenses include £170,000 in respect of bad debts.
The directors have invited an investor to take up a new issue of ordinary shares in the business at £6.40 each making a total investment of £200,000. The directors wish to use the funds to finance a programme of further expansion.
Required:

(a) Analyse the financial position and performance of the business and comment on any features that you consider to be significant.

(b) State, with reasons, whether or not the investor should invest in the business on the terms outlined.