9 Seville ple is a rapidly expanding trading and manufacturing company. It is currently soking to extend its product range in new markets. To achieve this growth it needs to raise 6800000 The directors are considering two sources of funds: # A rights at 2.00 per share. The shores are trading at 2.50 (2000 2201 per share A bank loan at an interest rate of 15% and repayable by installments aher two years. The bank would want to secure the loan with a charge over the company's property The following are extracts from the draft financial statements. Seville pile Draft P&L account extract your ended 31.12.01 2000 2001 6000 E000 Turnover 1991 Operating profit 638 698 Interest payable (45) (55) Profit before taxation 591 643 Taxation (150) (140) Profit after taxation 441 500 Extraordinary tem (90) Profit for the year 361 Fixed assets tangible 1132 1504 Intangible 247 298 Draft balance sheet 1379 1802 Current assets stocks 684 679 debtors 471 511 cash in hand and at bank BO 117 Creditors: due within one year (336) (308) taxation (140) (190) dividends (80) Creditors: due after more than one year 10% debentures, repayable 2004 (450) (650) finances (100) 1608 1981 Capital and reserves Ordinary share capital E1 shares 800 800 revaluation reserve 344 144 profit and loss 664 1037 1 608 Operating profit Operating profit has been arrived at after charging or crediting the following 2000 2001 000 000 Depreciation 110 950 Gain on disposal of property (as part of a sale and leaseback transaction) Notos: Estraordinary hom The extraordinary lo consists of recranization con branch where a reduction into ity involved various measures including redundancies. Atributable to credit is 38.000 Deferred tovation Deferred to as not been provided because it is not considered probable etablere Contingere ably There is a contingent liability of GS 000 12000 CRO 000) in respect of bile of exchange courted wehbarkers Purther investigation has revealed that stock includes tems subject to reservation of ste of 40 000 and slow moving items of 28 000 (2000 28 000) Anage rays of debtors have at there by more than one year amount to 00200000 trade The auditors are yet to report and there is some discussion as to the classification of the The directors forecast at the winds wil generate an operating proof 300 000 and that the 2001 operating profit will be repeated now shares we issued the dividend will gain on disposal and the reorganization costs Prepare a full report on progress, strength and weakoupes supponed by ratio analysis increase to 150 000 Required: 503 9 Seville plc is a rapidly expanding trading and manufacturing company. It is currently seeking to extend its product range in new markets. To achieve this growth it needs to raise 800 000 The directors are considering two sources of funds: A rights issue at 2.00 per share. The shares are trading at 2.50 (2000 220) per share. A bank loan at an interest rate of 15% and repayable by instalments after two years. The bank would want to secure the loan with a charge over the company's property The following are extracts from the draft financial statements. ille pic Draft P&L account extract year ended 31.12.01 2000 2001 000 000 Turnover 1967 1991 Operating profit 636 698 Interest payable (45) (55) Profit before taxation 591 643 Taxation (150) (140) Profit after taxation 441 Extraordinary item (90) Profit for the year 361 453 Fixed assets tangible 1132 1504 intangible 247 298 Draft balance sheet 1379 1 802 Current assets stocks 684 679 debtors 471 511 cash in hand and at bank 80 117 Creditors: due within one year trade (336) (308) taxation (140) (190) dividends (80) (80) Creditors: due after more than one year 10% debentures, repayable 2004 (450) (450) finance lease (100) 1 608 1981 Capital and reserves ordinary share capital E1 shares 800 800 revaluation reserve 144 profit and loss 664 1037 1 608 1981 Operating profit Operating profit has been arrived at after charging or crediting the following: 2000 2001 000 000 Depreciation 110 750 Gain on disposal of property (as part of a sale 95 and leaseback transaction) e yet to report and there is some discussion as to the classification of the 144 Notes: Extraordinary item The extraordinary loss consists of reorganization costs in a branch where a reduction in activ- ity involved various measures including redundancies. Attributable tax credit is 38 000. Deferred taxation Deferred taxation has not been provided because it is not considered probable that a liability will crys- talize. If deferred taxation had been provided in full then a liability for the year of 7000 would have arisen (2000 8000). Contingent liability There is a contingent liability of 85 000 (2000 80 000) in respect of bills of exchange dis- counted with bankers. Further investigation has revealed that stock includes items subject to reservation of title of 40 000 and obsolete or slow moving items of 28 000 (2000 28 000). An age analysis of debtors has revealed that debts overdue by more than one year amount to 40 000 (2000 40 000). The auditors are yet to report and there is some discussion as to the classification of the gain on disposal and the reorganization costs. The directors forecast that the new funds will generate an operating profit of 300 000, and that the 2001 operating profit will be repeated. If new shares are issued the dividend will increase to 150 000 Required: Prepare a full report on progress, strengths and weakesses, supported by ratio analysis. 9 Seville ple is a rapidly expanding trading and manufacturing company. It is currently soking to extend its product range in new markets. To achieve this growth it needs to raise 6800000 The directors are considering two sources of funds: # A rights at 2.00 per share. The shores are trading at 2.50 (2000 2201 per share A bank loan at an interest rate of 15% and repayable by installments aher two years. The bank would want to secure the loan with a charge over the company's property The following are extracts from the draft financial statements. Seville pile Draft P&L account extract your ended 31.12.01 2000 2001 6000 E000 Turnover 1991 Operating profit 638 698 Interest payable (45) (55) Profit before taxation 591 643 Taxation (150) (140) Profit after taxation 441 500 Extraordinary tem (90) Profit for the year 361 Fixed assets tangible 1132 1504 Intangible 247 298 Draft balance sheet 1379 1802 Current assets stocks 684 679 debtors 471 511 cash in hand and at bank BO 117 Creditors: due within one year (336) (308) taxation (140) (190) dividends (80) Creditors: due after more than one year 10% debentures, repayable 2004 (450) (650) finances (100) 1608 1981 Capital and reserves Ordinary share capital E1 shares 800 800 revaluation reserve 344 144 profit and loss 664 1037 1 608 Operating profit Operating profit has been arrived at after charging or crediting the following 2000 2001 000 000 Depreciation 110 950 Gain on disposal of property (as part of a sale and leaseback transaction) Notos: Estraordinary hom The extraordinary lo consists of recranization con branch where a reduction into ity involved various measures including redundancies. Atributable to credit is 38.000 Deferred tovation Deferred to as not been provided because it is not considered probable etablere Contingere ably There is a contingent liability of GS 000 12000 CRO 000) in respect of bile of exchange courted wehbarkers Purther investigation has revealed that stock includes tems subject to reservation of ste of 40 000 and slow moving items of 28 000 (2000 28 000) Anage rays of debtors have at there by more than one year amount to 00200000 trade The auditors are yet to report and there is some discussion as to the classification of the The directors forecast at the winds wil generate an operating proof 300 000 and that the 2001 operating profit will be repeated now shares we issued the dividend will gain on disposal and the reorganization costs Prepare a full report on progress, strength and weakoupes supponed by ratio analysis increase to 150 000 Required: 503 9 Seville plc is a rapidly expanding trading and manufacturing company. It is currently seeking to extend its product range in new markets. To achieve this growth it needs to raise 800 000 The directors are considering two sources of funds: A rights issue at 2.00 per share. The shares are trading at 2.50 (2000 220) per share. A bank loan at an interest rate of 15% and repayable by instalments after two years. The bank would want to secure the loan with a charge over the company's property The following are extracts from the draft financial statements. ille pic Draft P&L account extract year ended 31.12.01 2000 2001 000 000 Turnover 1967 1991 Operating profit 636 698 Interest payable (45) (55) Profit before taxation 591 643 Taxation (150) (140) Profit after taxation 441 Extraordinary item (90) Profit for the year 361 453 Fixed assets tangible 1132 1504 intangible 247 298 Draft balance sheet 1379 1 802 Current assets stocks 684 679 debtors 471 511 cash in hand and at bank 80 117 Creditors: due within one year trade (336) (308) taxation (140) (190) dividends (80) (80) Creditors: due after more than one year 10% debentures, repayable 2004 (450) (450) finance lease (100) 1 608 1981 Capital and reserves ordinary share capital E1 shares 800 800 revaluation reserve 144 profit and loss 664 1037 1 608 1981 Operating profit Operating profit has been arrived at after charging or crediting the following: 2000 2001 000 000 Depreciation 110 750 Gain on disposal of property (as part of a sale 95 and leaseback transaction) e yet to report and there is some discussion as to the classification of the 144 Notes: Extraordinary item The extraordinary loss consists of reorganization costs in a branch where a reduction in activ- ity involved various measures including redundancies. Attributable tax credit is 38 000. Deferred taxation Deferred taxation has not been provided because it is not considered probable that a liability will crys- talize. If deferred taxation had been provided in full then a liability for the year of 7000 would have arisen (2000 8000). Contingent liability There is a contingent liability of 85 000 (2000 80 000) in respect of bills of exchange dis- counted with bankers. Further investigation has revealed that stock includes items subject to reservation of title of 40 000 and obsolete or slow moving items of 28 000 (2000 28 000). An age analysis of debtors has revealed that debts overdue by more than one year amount to 40 000 (2000 40 000). The auditors are yet to report and there is some discussion as to the classification of the gain on disposal and the reorganization costs. The directors forecast that the new funds will generate an operating profit of 300 000, and that the 2001 operating profit will be repeated. If new shares are issued the dividend will increase to 150 000 Required: Prepare a full report on progress, strengths and weakesses, supported by ratio analysis