Jasmine is a large company which manufactures children's toys. It is a private UK limited company with a diversified shareholder base. The company has its headquarters in London, and as part of a group structure, wholly owns subsidiary companies in the UK, China and the US. A new chief executive (CEO), Mr Harold Jordan, was recently appointed by the Board to replace the retiring CEO, Mr James Hannah, who led the company for the past twenty-five years. During this time, Jasmine has produced an extensive range of products for the children's toy industry. Many of the toys manufactured are protected through patents and trademarks held by the company. The manufacturing business has a small innovation team which is tasked with improving or developing products for markets. Over the last few years, however, the company's profitability has declined through a combination of factors including increasing competition and rising costs. Mr. Jordan has been tasked with reinvigorating the company, and providing growth in the business lines, ultimately improving profitability and the overall value of the company. After undertaking a full review of the company's operations, Mr Jordan has announced a five-year strategic plan which he calls "Vision 2027". Mr Jordan has suggested that the company needs to restructure, reduce staffing, and crucially, focus on entering new markets in Europe. As part of Vision 2027, Mr Jordan plans to introduce new environmentally friendly technology to manufacture drones and robots for the toy market; to develop a series of family orientated toys to encourage family bonding; and produce a new range of educational toys. Vision 2027 will require new manufacturing plants to be opened up, and because of Brexit, Mr Jordan is thinking of moving the company's headquarters to Paris. He has yet to discuss these plans with the Board, and although he knows he has been hired to provide a new direction for the company, he recognises that Vision 2027 will raise several concerns with his senior colleagues. Supporting financial and operational information appears in the Appendices.

Appendix Q1.1 Mr Jordan plans to introduce new environmentally friendly technology into the manufacture of the drones. Jasmine currently produces three types of drone which are manufactured on two specialist machines in a UK factory that produces no other toys. Table 1 shows revenue and cost information for the last month.

Table 1: Operating Statement Total Fixed Wing Hybrid Multi-rotor Sales 772,000 125,000 410,000 237,000 Varaible expenses 320,000 87,000 145,000 88,000 Contribution 452,000 38,000 265,000 149,000 Marketing 89,000 23,000 47,000 19,000 Depreciation of equipment 108,000 36,000 46,000 26,000 Line supervisor's salaries 43,000 17,000 14,000 12,000 Factory overheads 193,000 31,250 102,500 59,250 Total overheads 433,000 107,250 209,500 116,250 Net operating profit (loss) 19,000 69,250 55,500 32,750Table 2: Information for replachg old machine Did mathlne Original cost 100,000 Remaining book value 80,000 Remaining life 4 years Disposal vaue now 30,000 Disposal value In five years 0 Annual variable operating expenses 230,000 Annual revenue from sales 400,000 New machine List price new 250,000 Expected life 4 years Disposal value in five years 0 Annual variable operating expense 215,000 Annual revenue fro m sales 450,000