QUESTION $1$

The scenario

MyShop Plc is a renowned supermarket operating across the UK$.$ It was founded in $1906$ and is a market leader by market share. MyShop Plc is headed by Ethel Rupert $($the Group Chief Executive Officer$),$ an experienced leader in the UK & Europe Supermarket space. MyShop Plc currently operates fuel forecourts, big supermarkets, pharmacies and some financial services business unit. MyShop Plc$$s major competitors are ALDI, Sainsburys, ASDA, Morrisons and Lidl.

Over the past three decades, MyShop Plc has and is facing fierce competition. Whilst it still enjoys the largest market share, this has substantially declined. Price wars, loyalty cards and non$-$price competition dominate the market. MyShop Plc seeks to enhance its competitiveness and coverage across the UK to assure a maintained top position. To achieve this, MyShop Plc$$s Strategic Business Committee resolved to acquire a good fit and are seeking to either expand the fuel forecourt business or acquire farms. The Strategic Business Committee believes the acquisition of existing, troubled fuel forecourts will improve its coverage and exposure whilst the acquisition of farms will enhance supply chain control for its fresh produce, meats and dairy products.

The Strategic Business Committee has identified two possible acquisition targets and would want you to perform some ratio analysis, evaluate the findings and advise the committee on which one they should acquire and why. The target companies are below:

Energy Hub Ltd: A purely UK private label fuel forecourt retailer with huge coverage across the UK$.$ Energy Hub Ltd has been facing challenges from big name fuel retailers who also enjoy downstream advantage. Profitability has thus declined over the past years and Energy Hub Ltd is now facing challenges servicing its debts and there has been headed by four Managing Directors over the past six years.

Fresh Farms Ltd: Led by founder Edren Moffat, Fresh Farms Ltd specialises in fresh farm produce including vegetables, milk, meat $($lamp$,$ beef, pork$)$ which it sells to MyShop Plc and its competitors. UK farmers were hit by farm labour shortages resultant of Brexit $($UK Parliament $,2022)$ and Fresh Farms Ltd is not spurred. Resultant of this, COVID$-19$ effects and Russo$-$Ukranian War and other issues, Fresh farms is facing major profitability and going$-$concern issues. Fresh Farms Ltd recently made huge farm mechanisation investments acquiring farm machinery, financed by a $6-$year bank loan.

Financial results for Energy Hub Ltd and Fresh Farms Ltd are given below:

Statements of Financial Position $($SoFP$)$ as at $31$ December $2023$