Solved:Business Economics and Finance in a Global Environment

Timed Test and Report Assessment

Part B         Report

A. Report Question

In this report you must use the information provided in the examination paper. You must also use the figures which you have calculated in the examination.

You will be penalised if you use figures which are not consistent with your examination answers.

You will not be further penalised in the report exercise for using figures which you have submitted as examination answers, even if your submitted answers contained errors.

B. Report Exercise

You have been engaged as a management consultant by Scylace plc, a grocery retail chain. You have been asked to evaluate two alternative proposals for building a new superstore and a proposal to make a takeover bid for Helibeb plc. You have the option to build the superstore at one of two locations.

Using the figures which you have calculated in your examination, write a report with recommendations on whether to build either or both of the two superstores and on whether to make a bid for Helibeb plc.

If you recommend that

(a)      both superstores should be built or

(b)      at least one superstore should be built while Scylace also seeks to acquire

Helibeb,

You must provide a recommendation on which investments should take priority if resources are insufficient to make all the investments you are recommending.

Your report must contain:

1.  An executive summary, which must, as a minimum include a statement of the purpose of your report and a summary of your recommendations (up to

300 words)

2.  An introduction (up to 200 words)

3.  A methodology for evaluating the proposed new superstore locations and prospective acquisition, in the light of available finance (up to 500 words)

4.  An evaluation of the proposed new superstore locations and prospective acquisition (up to 1,000 words)

5.  Conclusions (up to 250 words)

6.  Recommendations (up to 250 words)

7.  References

Footnotes are not permitted. Appendices are not permitted.

C. Further Information

Scylace plc has total assets of £6,312 million, including £144 million in cash, with total liabilities of £2,148 million.

Helibeb’s present market capitalisation is £332 million. Over the last 12 months it has ranged between £255 million and £391 million.

Helibeb’s financial statements for the last 10 years provide the following information:

Year Ended September 30th.   2010   £m 2011   £m 2012   £m 2013   £m 2014   £m 2015   £m 2016   £m 2017   £m 2018   £m 2019   £m Sales Income 600 582 625 660 678 688 693 695 681 697 Cost of Sales (437) (411) (462) (482) (471) (510) (501) (495) (492) (500) Gross Profit 163 171 163 178 207 178 192 200 189 197 Distribution Costs (72) (67) (68) (76) (75) (77) (81) (86) (85) (87) Administration Expenses (81) (75) (74) (73) (73) (76) (78) (79) (79) (83) Operating Profit 10 29 21 29 59 25 33 35 25 27 Finance Income 0 0 0 0 0 0 0 0 0 0 Finance Costs (8) (11) (8) (9) (9) (8) (7) (7) (6) (5) Net Profit Before Tax 2 18 13 20 50 17 26 28 19 22 Taxation (1) (5) (3) (5) (11) (3) (5) (6) (3) (4) Net Profit After Tax 1 13 10 15 39 14 21 22 16 18 Dividends 0 (5) (6) (8) (14) (4) (5) (6) (6) (7) Retained Profit 1 8 4 7 25 10 16 16 10 11    

Helibeb plc

As at September 30th.
  2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
  £m £m £m £m £m £m £m £m £m £m £m
Non-Current Assets 166 141 151 152 160 168 179 192 203 209 211
Inventory 28 3 7 10 7 11 12 14 12 14 16
Accounts Receivable 14 13 6 3 3 2 2 1 2 2 3
Cash 0 0 0 1 2 3 3 4 5 6 10
Current Assets 42 16 13 14 12 16 17 19 19 22 29
Current Liabilities (83) (32) (34) (34) (35) (35) (37) (38) (37) (38) (40)
Non-Current Liabilities (109) (108) (105) (103) (101) (88) (88) (86) (82) (80) (76)
Shareholders’ Equity 16 17 25 29 36 61 71 87 103 113 124

D. Project 1 Submission Guidelines

Length 2,500 words, +/- 10% (excluding tables, graphs,   appendices and references)
Presentation Arial 12 fonts, 1 ½ spacing, justified text
References A minimum of 20 references using APA Referencing Style   (articles from academic periodicals, textbooks, official data and information sources)

E.  Marking criteria and weights

CRITERIA WEIGHTS
Executive Summary 10%
Introduction 10%
Methods 10%
Investment Evaluation 30%
Conclusions and Recommendations 20%
Quality and Formatting of References 10%
Presentation 10%
Total 100%