Assignment

June 2012

PLAGIARISM WILL NOT BE TOLERATED and may lead to subsequent penalties being imposed.There are three questions. All three questions should be attempted and submitted together.Your answer should be typed and submitted in Word format. This should be carefully checked before submission for the use of appropriate grammar and the use of correct ENGLISH
剽竊是不被允許的，并可能導致后續的處罰。嘗試所有這三個問題，essay答案應鍵入Word格式文檔提交。這應該是經過仔細檢查后才提交的并使用適當的語法和使用正確的英語書寫。

spelling.
When determining the amount of effort and the words for each section of the assignment it will beadvisable to examine the weighting of the marks allocated to each question. If any part of theassignment is ignored then this reduces the maximum marks that potentially could be earned.
This assignment will require a considerable personal investment of time and effort. This is an individual assignment and all calculations and analysis submitted must be your own work.在確定的工作量和各部分的分配，檢查的權重分配給每一個問題。如果任何部分被忽略，那么這會使分數降低。
這項任務將需要一個相當大的個人投資的時間和精力。這是一個個人的分配，所有的計算和分析必須是你自己的獨立完成。

Word limit is 1,200 words excluding appendices and calculations for question three only字數上限為1200字，不包括附錄和計算問題三只
 

MSc Managerial Finance Resit Assignment June 2012
Q1
Presented below are the financial statements of the Yell Group Plc.

Yell Group Plc     
   2011 2010 2009
Statement of Comprehensive Income 
   £m £m £m
As at 31st March      
Revenue    1,877.6 2,122.7 2,397.9
      
Opening Inv & WIP   251.3 306.8 273.6
Purchases & manufacture  803.5 899.8 1,083.4
Closing Inv & WIP   234.1 251.3 306.8
      
COS    (820.7) (955.3) (1,050.2)
      
Gross Profit   1,056.9 1,167.4 1,347.7
      
Distribution costs   (76.60) (84.7) (91.3)
Administrative expenses  (650.4) (673.4) (720.3)
Impairment of goodwill  0 0 (1,272.3)
      
Operating profit/Loss  329.9 409.3 (736.2)
      #p#分頁標題#e#
Finance costs   (265.5) (340.8) (299.4)
Finance income   1.9 1.8 2.7
      
Profit/Loss before taxation  66.3 70.3 (1,032.9)
      
Taxation    (19.6) (23.5) (108.5)
      
Profit/Loss for the year   46.7 46.8 (1,141.4)

 
Yell Group Plc Consolidated Statement of Position      
as at 31st March     2011 2010 2009
      £m £m £m
Non Current Assets        
Goodwill      3,123.9 3,218.3 3,329.2
Other intangible assets    1,157.0 1,266.9 1,423.5
Property, plant and equipment   100.5 104.6 119.8
Deferred tax assets     69.3 114.5 142.6
Retirement benefit surplus    37.3 0 0
Investments and other assets    9.9 7 6.5
Financial assets – derivative financial instruments  1.1 6.2 0
        
Total non-current assets    4,499.00 4,717.50 5,021.60
        
Current assets       
Inventory     10.4 8.9 14.9
Work in progress     223.7 242.4 291.9
Trade and other receivables    763.1 905.1 1,132.8
Financial assets – derivative financial instruments  0.6 1.9 0.6
Cash and cash equivalents    200.5 160.4 51.1
        
Total current assets     1198.3 1318.7 1491.3
        
Total Assets     5,697.3 6,036.2 6,512.9
        
Equity and Liabilities      
Equity         
Share capital     1,858.2 1,848.8 1,226.5
Other reserves     229.1 154.7 128.9
Retained earnings/losses     (573.8) (617.9) (664.4)
        
Total Equity     1,513.5 1,385.6 691.0
        
Non Current Liabilities      #p#分頁標題#e#
Financial liabilities – loans and other borrowings  2,840.3 3,200.4 3,876.6
Financial liabilities – derivative financial instruments 2.1 7.4 141.4
Deferred tax liabilities    592 594.2 624.8
Retirement benefit obligations   0 63.3 21.9
Trade and other payables    15.8 13.6 19.2
        
Total non-current liabilities    3,450.2 3,878.9 4,683.9

Current liabilities       
Financial liabilities – loans and other borrowings  125.3 54.6 381.7
Financial liabilities – derivative financial instruments 13.1 97.8 64.9
UK corporation and foreign income tax   73.4 85.2 100.6
Trade and other payables    521.8 534.1 590.8
        
Total current liabilities    733.6 771.7 1138
        
Total  Liabilities     4,183.8 4,650.6 5,821.9
        
Total equity and liabilities    5,697.3 6,036.2 6,512.9

Required

Analyse the company’s performance over the three financial periods and prepare a narrative business report for submission to the company’s board of directors.

50% Marks

 Q2
Ambridge Organics Ltd is a small organic market gardening company, which is planning its optimal production for the next growing season in 2013, and it has consulted you for your advice. The company has provided you with the following data relating to its next financial year,

Vegetables Potatoes Turnips Parsnips Carrots
    
Area occupied in hectares 25 20 30 25
Product yield  in tonnes per hectare 10 8 9 12
    
£ Sales per tonne 1,000 1,250 1,500 1,350
    
Variable Costs per hectare    
£ Organic Fertiliser 300 250 450 400
£ Organic Seed 150 200 300 250
£ Direct machinery operating costs 250 150 200 250
£ Direct wages 4,000 4,500 5,000 5,700
    
    
£ Annual Fixed Overheads  540,000   

Required:
a) Present a marginal cost budget statement to show the contribution across each of the product range and in total and the overall profit for the current year#p#分頁標題#e#

b) The land used for cultivating the carrot crop may become unavailable. This is because it may lose its Organic Soil Association accreditation because a slurry spill could render it unsuitable for organic production. The land may consequently have to be left fallow for one year. 

Calculate what product mix should be adopted assuming that the remaining available land can be used to cultivate all of the available crops and produce a revised product range and total marginal cost statement forecast.

c) 
If the company has no market commitments to supply the range of crops identify which crop it should concentrate on to maximise overall profitability if there was no land cultivation restriction and what the breakeven sales point would be.

Advise the company as to what course of action it should to adopt based on financial grounds

30% Marks
Q3
A new shareholder of the Yell Group Plc, Mr Carson Yeung has been reading the company’s annual report and notes that the company’s reported asset value as disclosed in the 2011 balance sheet is £5,697.3 million but its market capitalisation (i.e. market value) is £121.69m giving it a market price to its book value of 0.02 (as at 29 June 2011–source digital look.com)
He approaches you as a business student for an explanation as to why there is such a divergence in the company’s valuation between these two sources of financial information and which of the two is the more reliable.
Write a letter in response to address the shareholder’s concerns.
20% Marks