Question 1 (40 marks) Large Ltd is a company listed on the Johannesburg Stock Exchange. The company is considering a takeover of Small Ltd, which has been performing well in recent years Financial details of the two companies are presented below Statement of financial performance for the year ending 31 March 2014 Large R (million) Small R (million) Profit before tax Tax Profit after tax 300 (80) 220 150 (50) 100 Statement of Financlal position as at 31 March 2014 Small Large R (milion) E (million) 2 000 700 Total assets Equity Ordinary share capital Other equity Non-current liability 100 1 000 900 50 500 150 Other information: The shares of Large Ltd have a par value of R1 each. The shares of Small Ltd have a par value of 50c each. The shares in Large Ltd are currently trading at R15 ech. The shares in Small Ltd are currently trading at R7 eath The board of directors believe that there will be R50 nillion increase in after tax profits due to synergies existing between the ompanies should a takeover be successful