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Statement of Financial Position
As of 31st December 30-Jun-80 30-Jun-81 30-Jun-82 30-Jun-83
Current Assets (Motorcycle Parts) 4,385FA(book cost 13004) 10,365
Investment in non-motorcycle subsidiary 2
Deffered research and development exp. 494,681
Total assets 509,433
Share capital 90
Rev. deficiency (21,419)
Loan from ultimate holding company 530,762
Total liabilities 509,433
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Year No.of motorcycles No. of superbikes
1975 497,444 12,500
1976 594,295 18,812
1977 621,863 25,000
1978 511,750 35,000
1979 534,000 53,375
1979(1st H)
1980
(b)
M.countryPincipal
ManufacturersNo. of superbikes sold
japanHonda,Suzuki,Kaw
asaki,Yamaha6600
Germany BMW 2270
Italy
Motoguzzi,Ducati,
Laverda,benelli 1200
USA Harley davidson 200
UK triumph
(a)Sales of superbikes as a proportion of all motorcycle sales
Europe(excluding Italy)
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UK only
No. of Motorcycles No. of superbikes
174,751 3,800
188,627 4,800
176,031 5,002
174,095 6,995
206,812 10,270
94,742 6,041
112,645 6,912
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Price Inflation in Industry
Model Mar-80 Jan-81 % Honda CBX 1000 2,899 3,150 8.66%
laverda 100 jota 3,199 3,500 9.41%
Kawasaki Z1300 3,199 3,500 9.41%
BMW R100RS 3,199 3,700 15.66%
Hesketh V1000 3,750 3,950 5.33%
Harley Davidson FX5-80 3,939 4,300 9.16%
Harley DavidsonFLH-80 4,279 4,700 9.84%
Harley Davidson FLH-80(low rider) 4,369 4,800 9.86%
Harley Davidson FTL-80 4,759 5,200 9.27%
Munch(west Germany) 8,500 9,200 8.24%
Van Veen(Holland) 12,500 13,500 8.00%
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Inflation 0% 000' Base Case
1,000 Units Per
Annum1981E 1982E
Units of Sales 1,000 1,700
Recommended Retail Sales Price 3,950 3,950 6,715
VAT and Dealers Margin 1,114 1,114 1,894
Net Sales Revenue from Motor Bikes 2,836 2,836 4,821Revenue from Spare Parts 425 723
Total Sales Revenue 3,261 5,544
Materials:
Engine and Gear Box 1,100 1,100 1,870
Frame and Running Gear 800 800 1,360
Assembly Materials 40 40 68
Total materials 1,940 1,940 3,298
Direct labour 116 17 30
Total Prime Cost 2,056 1,957 3,328
Gross Margin 780 879 1,494
Overheads:
Indirect Labour 110 110 187
General Overheads 130 130 221
Research and Developments 100 100 170
Marketing expense 100 100 170Warranty 30 30 51
Total Overheads 470 470 799
Net Lease Expenses 36 2 36 2
Particulars
Without Inflation Adju
Statement of Comprehensive Income
Year ended 31st March
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0%
1983E %
2,000
7,900
2,228
5,672
851 15%
6,523
2,200 39%
1,600 28%
80 1%
3,880
35 4%
3,915
1,757
220 4%
260 5%
200 4%
200 4%60 1%
940
36 2
stment
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Average Case Optimistic
1 500 Units Per
Annum
2,000 Units
Per Annum
000' 000'
5925 7900
1671 2228
4254 5672
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000' %Total Sales Revenue 3,261 5,544 6,523
Particulars 1981E 1982E 1983E
Cash 326 554 652 10%
Accounts Receivable 489 832 978 15%
Inventory 815 1,386 1,631 25%
Investment in Short Term Securities 565 115 183
Total Current Assets 2,195 2,887 3,444
Non-current Assets 500 500 500
Accumulated Depreciation 100 200 300
Net Non-current Assets 400 300 200
Total Assets 2,595 3,187 3,644
Accounts Payable 489 832 978 15%
Notes Payable - - -
Total Current Liabilities 489 832 978
Long Term Liabilities - - -
Total Liabilities 489 832 978
Share Capital 2,000 2,000 2,000
Retained Earnings 106 355 666
Total Owners' Equity 2,106 2,355 2,666
Total Liabilities and Owners' Equity 2,595 3,187 3,644
Excess Fund Need or Surplus (Short -term) 565 115 183
TRUE TRUE TRUE
Net Working Capital 1,141 1,941 2,283
in Net Working Capital 1,141 799 342
Without Inflation Adjustment
Statement of Financial Position
As of 31st March
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Without Inflation Adjustment
1,631 2,772 3,261
400 300 200
2,031 3,072 3,461
489 832 978
489 832 978
2,106 2,355 2,666
2,595 3,187 3,644
565 115 183
Workings
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Without Inflation Adjustment 000'Particulars 1981E 1982E 1983E
Net Operating Profit after Tax (NOPAT) 106 249 311
Depreciation 100 100 100Increase in Non-current Liabilities - - -
Capital Expenditure (500) - -
in Net Working Capital (1,141) (799) (342)
FCF to Firm (1,435) (450) 68
Terminal Value at the End of Year 1983 25 x 7,763
Total FCF over Projected Years (1,435) (450) 7,831
PV of FCF (Discount Rate =(14%+16%)/2+5%)=20%) (1,196) (312) 4,532
Discount Rate 20.0%
Firm Value 3,023
Debt -vg ax n
Equity Value 3,023 3,325 2,721
Estimated Number of Shares (000') 100 100 100
Value of Per Share or Offer Price (FCF Method) 30 33 27
(Face Value Per Sahre of 10)
000' % 000'
Fund to be Raised through Equity Issue 2,000
Flotation Cost 5%
No of Shares to be Issued (Face Value Per Sahre of 10) 73.51
Offer Price Per Share (Minimum) 27
Lord Hesketh will Hold (at least): per share 000' 000'
Value of Per Share or Offer Price (FCF Method) 27
Number of Shares 26
Stock Value 721
Original Investment by Mr. Alexander Hesketh 500
Estimated Return for Mr. Lord Hesketh 44% 221
FCF Valuation
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