Pisces plc produced the following statement of financial position and income statement at the end of the third year of trading:

Statement of financial position (balance sheet)

as at the end of the third year

£m Non-current assets Property 40.0 Machinery and equipment 80.0 Motor vans 18.6 Marketable investments 9.0 147.6 Current assets Inventories 45.8 Receivables 64.6 Cash 1.0 111.4 Total assets 259.0 Equity Share capital 80.0 Retained earnings 36.5 116.5 Non-current liabilities Loan capital 80.0 Current liabilities Trade payables 62.5 Total equity and liabilities 259.0 Income statement for the third year

£m Sales revenue 231.5 Cost of sales (143.2)

Gross profit 88.3 Wages (43.5)

Depreciation of machinery and equipment (14.8)

R&D costs (40.0)

Allowance for trade receivables (10.5)

Operating loss (20.5)

Income from investments 0.6

(19.9)

Interest payable (0.8)

Ordinary loss before taxation (20.7)

Restructuring costs (6.0)

Loss before taxation (26.7)

Tax –

Loss for the year (26.7)

An analysis of the underlying records reveals the following:

1 R&D costs relate to the development of a new product in the previous year. These costs are written off over a two-year period (starting last year). However, this is a prudent approach and the benefits are expected to last for 16 years.

2 The allowance for trade receivables was created this year and the amount is very high. A more realistic figure for the allowance would be £4 million.
3 Restructuring costs were incurred at the beginning of the year and are expected to provide benefits for an infinite period.
4 The business has a 7 per cent required rate of return for investors.
Required:
Calculate the EVA® for the business for the third year of trading.