c

 


 

 













  



  c  !"




#$%
$


&'
Metropole Plc is a UK based investor owned company. It has three operating
divisions, Home Decorating, Household Goods, and DIY Stores.
( "  

' This division manufactures wall papers, curtains and other soft
furnishings for the top end of the market. Some of the stock (approx 30%) is sold
through the DIY stores owned by the group. The remainder is sold through high end
retailers. The company provides µsamples¶ in the stores and customers orders are
passed through to the factory for direct delivery to the client. The business has been
very successful, but operates on tight margins.
(   ) ' This division manufactures fridges, freezers, cookers, dish
washers, washing machines. These are retailed through the major retailers. They have
a reputation for quality, which is reflected in their prices. Sales have been strong,
other than last year. Some of the products (fridges freezers) are priced at mid range
and high end. The remaining products are priced at the top end of the market.
* ' This division is very profitable and has seen significant growth in the
last 4 years. It¶s stock covers a range of price levels. It has a specialist section for
small tradesmen, which has been successful in attracting this type of customer. It has
large garden centres in each store, which is again very profitable.

The company is concerned about the current recession and the likely impact on the
different divisions. The financial statements and notes for year ended 31 December
2009 and 31 December 2008 are shown in appendix 1.

+,'
-' Construct a forecast Income Statement/Statement of Comprehensive Income,
Statement of Financial Position, Statement of Cash Flows and Statement of Changes
in Equity for the year ended 31 December 2010. These must be accompanied by
comparative figures and the required notes for items on all four statements (see notes
1-5 on Appendix 1). Workings should be separate. These must be consistent with the
opening position of the company as stated in the financial statements in Appendix 1.
The forecast statements must also be consistent with each other
50 marks
-' Detailed discussion of operating assumptions. This must give reasons for the
changes in revenue and expenses of each segment. It must also include tax, dividends,
revaluation, acquisition and disposal of non current assets and changes in finance.
Guideline word limit 1000 words.
40 Marks
-


' The statements must be presented in full compliance with international
accounting standards. The operating assumptions should be clearly stated.

10 Marks
Total 100 Marks
  - "
 .



 - 



/0 /0
$ $
1 2

 

Intangible 48.0 53.0
Tangible (Note 1) 1688.3 1579.4
1736.3 1632.4

 

Inventories 188.8 175.0
Trade Receivables 169.3 128.5
Short term deposits 198.7 22.2
Cash 0.5 9.3
557.3 335.0

3   2293.6 1967.4

4
#
Ordinary Share Capital 498.7 427.5
Share Premium Account 273.2 225.7
Revaluation Reserve 306.7 113.9
Retained Profits 623.8 535.0
1702.4 1302.1
Non Current Liabilities 186.3 368.6
Current Liabilities (Note 2) 404.9 296.7

3  4
#
c
!


 2293.6 1967.4

  - "
 .


4
#$"!1
Share Share Reval Income Total
Capital Premium Reserve Stat
£000¶s £000¶s £000¶s £000¶s £000¶s
Balance at 31 December 2008 427.5 225.7 113.9 535.0 1302.1
Share Issue 71.2 47.5 118.7
Revaluation 192.8 192.8
Profit for year 176.3 176.3
Dividends -87.5 -87.5
Balance at 31 December 2009 498.7 273.2 306.7 623.8 1702.4

  -  
 ""
5"
 . "


 "
/0 /0
$ $
1 2
Revenue (Note 3) 1433.8 1246.8
Cost of Sales -889.6 -715.3
Gross Profit 544.2 531.5

Operating Expenses -305.8 -295.0

Operating Profit (Note 3) 238.4 236.5

Finance Costs -27.8 -33.5

210.6 203.0
Income Tax -34.3 -38.0
Profit for the year 176.3 165.0

Other Comprehensive Income

Revaluation 192.8 0
Total Comprehensive Income for the year 369.1 165.0

  -  "
 . 
/0 /0
$ $
1 2
- .
!. 3& 210.6 203.0
Interest 27.8 33.5
Depreciation 159.2 123.0
Goodwill impairment 5.0 5.0
Profit/Loss on disposal of Non Current Asset -20.8 12.0
381.8 376.5
Decrease/Increase in Trade Receivables -40.8 30.5
Decrease/Increase in Inventories -13.8 35.0
Increase/Decrease in Trade Payables 76.3 -21.0
Increase/Decrease in Accruals 14.6 -11.0

. " 

 418.1 410.0
Finance Costs paid -24.9 -22.0
Income Tax paid -35.7 -32.0
 . "6




 357.5 356.0
 . "






Purchase of Property Plant and Equipment -200.3 -360.0
Sale of Property Plant and Equipment 145.8 30.0
-54.5 -330.0
 . "








Dividends paid -87.5 -60.0
Proceeds from Share Issue 118.7 0.
Debt Reduction/Increase -182.3 20.0
-151.1 -40.0
Net Increase in Cash and Cash Equivalents 151.9 -14.0
Cash and Cash Equivalents at start of year (Note 4) 25.2 39.2
Cash and Cash Equivalents at end of year (Note 5) 177.1 25.2
  


$' Movement on Non Current Assets
Land and Plant Equipment Total
Property
£000¶s £000¶s £000¶s £000¶s
 
Opening Balance 1150.0 300.2 450.0 1900.2
Additions 141.6 58.7 200.3
Disposals -66.7 -200.0 -266.7
Revaluation 192.8 192.8
1342.8 375.1 308.7 2026.6




Opening Balance 105.0 65.8 150.0 320.8
Disposals -33.3 -108.4 -141.7
Charge for year 10.5 68.5 80.2 159.2
115.5 101.0 121.8 338.3
Net Book Value 1227.3 274.1 186.9 1688.3

' Analysis of Current Liabilities

£000¶s £000¶s
31 Dec 31 Dec
2009 2008
Trade Payables 247.0 170.7
Accrued Charges 87.6 73.0
Finance costs 11.6 8.7
Income tax 36.6 38.0
Bank overdraft 22.1 6.3
404.9 296.7
: Segmental Analysis year ended 31 December 2009
Home Household DIY
Decorating Goods Stores
£000¶s £000¶s £000¶s
Revenue 573.5 645.2 215.1
Cost of Sales -404.6 -396.0 -89.0
Operating Expenses -120.0 -155.2 -30.6
Operating Profit 48.9 94.0 95.5

7 Analysis of Cash and Cash Equivalents at 31 December 2008

£000¶s
Cash at Bank 9.3
Bank Overdraft -6.3
Bank Deposit 22.1
25.1

8: Analysis of Cash and Cash Equivalents at 31 December 2009

£000¶s
Cash at Bank .5
Bank Overdraft -22.1
Bank Deposit 198.7
 177.1




 
. "

:
 $' Impairment of goodwill was £5,000, no new acquisitions were made during
the year.

Revaluation of £192,800 during the year was of the land element, which brought its
value to £525,000.

Depreciation policy:

Property is 2% per annum, straight line.

Plant is 20% per annum, reducing balance
Equipment is 30% per annum, reducing balance.