Larkin Conglomerates plc owns a subsidiary, 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 businesses wishing to acquire this type of business. The most recent financial statements of Hughes Ltd are as follows:

Statement of financial position (balance sheet) as at 31 May Year 5 £000 Non-current assets (cost less depreciation)
Property 200 Motor vans 11 Fixtures and fittings 8 219 Current assets Inventories 34 Receivables 22 Cash at bank 20 76 Total assets 295 Equity £1 ordinary shares 60 General reserve 14 Retained earnings 55 129 Non-current liabilities 12% loan: Cirencester bank 100 Current liabilities Trade payables 52 Tax and accruals 14 66 Total equity and liabilities 295 Income statement for the year ended 31 May Year 5 £000 Sales revenue 352.0 Profit before interest and taxation 34.8 Interest charges (12.0)
Profit before taxation 22.8 Tax (6.4)
Profit for the year 16.4 A dividend of £4,000 was proposed and paid during the year.
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 business as follows:
£000 Property 235 Motor vans 8 Fixtures and fittings 5 Inventories 36 For the remaining assets, the statement of financial position (balance sheet) values were considered to reflect their current realisable values.
Another business in the same industry, 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 tax rate 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 state what other information, besides the information provided above, would be useful to prospective buyers in deciding on a suitable value to place on the shares of Hughes Ltd.