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Hawthorn Ltd Income Statement for the period ended 31 August 2016
 

Hawthorn Ltd       
Income Statement for the period ended 31 August 2016     £
        
Sales       2,945,000
        
Less: cost of sale       
Opening stock    384,000   
Purchases    1,375,000   
Closing stock    (396,000)   (1,363,000)
        
Gross Profit       1,582,000
Other Operating Income       27,600
        1,609,600
        
Less: Operating Expenses       
Administration (Note 1)    (661,800)   
Distribution Note 2)    (320,080)   
Marketing    (279,300)   
        
Reduction in allowance for receivables (Note 3)    5,800   
Audit Fee    (7,000)   (1,262,380)
Operating Profit       347,220
        
Interest expense       (13,500)
Tax expense       (67,544)
Net profit       266,176
        
        
        
        
Note 1       
Admin Balance brought forward       217,000
Depreciation – equipment (307,000*0.1)       30,700
Energy expense (16,300 + 2,700) * 0.7       13,300
Salaries (534,000*0.7)       373,800
Rent (24500+5000-2500)       27,000
        661,800
        
Note 2       
Distribution Balance brought forward       130,100
Depreciation – M.V (235,000+23,000-137,600)*0.2       24,080
Energy expense (16,300 + 2,700) * 0.3       5,700
Salaries (534,000*0.3)       160,200
        320,080
        
Note 3       
Receivables Balance       436,500
Less: written off       (6,500)
        430,000
Allowance at 4%       17,200
Previous allowance       23,000
Reduction       5,800
        

 

Hawthorn Ltd       
Statement of Financial Position as at 31 August 2016     £
        
 Non Current Assets       
 Equipment at cost    307,000   
 Accumulated depreciation (195,000+30,700)    (225,700)   81,300
        
 Motor Vehicle at Cost    258,000   
 Accumulated depreciation (137,600+24,080)    (161,680)   96,320
        177,620
 Current Assets       
 Non-current investments    12,500   
 Stock    396,000   
 Receivables    412,800   
 Cash    354,200   
 Prepaid expense    4,000   1,179,500
 Total Assets       1,357,120
        
 Equity and Liabilities       
 Ordinary £1 shares       175,000
 Share premium       75,000
 Retained earnings (From SOCE)       492,976
        742,976
 Non-current liabilities       
 6% debentures       225,000
        
 Current liabilities       
 Energy payable    2,700   
 Trade payables    298,400   
 Tax payable    67,544   
 Interest payable    13,500   
 Audit fee payable    7,000   389,144
        1,357,120
        

 

Hawthorn Ltd        
Statement of Changes in Equity for the period ended 31 August 2016  £
          
 Retained earnings at 1 September 2015      244,300
Profit for the year        266,176
 Dividends Paid        (17,500)
          492,976
          

 

   
Citron plc  
Ordinary dividend paid during the year ended 31 December 2016  
   
Retained earnings @ 31 December 2015  157,478
Profit for the year (302,365-15,000-70,470)  216,895
Retained earnings @ 31 December 2016  289,373
Dividend Paid  85,000
   
   
Citron plc  
Statement of Cash Flows for the year ended 31 December 2016  
Profit before taxation  302,365
Add: Depreciation (Note 1)  147,102
Add: Loss on disposal (Note 2)  5,000
   454,467
   
Less Tax paid (Note 3)  (68,624)
   
Changes in Woking Capital  
Increase in Inventory (385,245 – 299,993)  (85,252)
Increase in receivables (273,669 – 194,625)  (79,044)
Increase in payables (234,596 – 138,443)  96,153
   (68,143)
Cash generated from operations  317,700
   
Cash flow from investing activities  
Additions in Property, plant and equipment (Note 4)  (309,500)
Disposal proceeds  55,000
   (254,500)
   
Cash flow from financing activities  
Equity issued (60,000*1.5)  90,000
Loan added  80,000
Interest paid  (15,000)
Dividends paid  (85,000)
   70,000
   
Net Cash flow during the year  133,200
Cash and Cash Equivalents at the start of the year (o/d)  (120,352)
Cash and Cash Equivalents at the end of the year  12,848
   
Note 1  
Accumulated depreciation @ 31 December 2015  214,110
Depreciation on asset sold  20,000
Accumulated depreciation @ 31 December 2016  341,212
Depreciation for the year  147,102
   
Note 2  
Equipment at NBV  60,000
Disposal proceeds  55,000
Loss on disposal  (5,000)
   
Note 3  
Tax payable @ 31 December 2015  95,985
Tax expense for the year  70,470
Tax payable @ 31 December 2016  97,831
Tax paid  68,624
   
Note 4  
Property, plant and equipment at cost @ 31 December 2015  411,750
Disposals at cost  80,000
Property, plant and equipment at cost @ 31 December 2016  641,250
Additons during the year  309,500
   

 

   31 December 2016 31 December 2015     
Current Assets 671,762494,618     
Current Liabilities 332,427354,780     
Inventory 385,245299,993     
         
Current Ratio  2.02 1.39     
Acid Test Ratio  0.86 0.55     
         
         
Citron Plc has substantially improved on the liquidity and solvency position over the year. At the end of 2015 it only had £1.39 worth of liquid assets to repay £1 worth of current liabilities, however, the liquidity poistion significantly improved the next year where it had £2.02 worth of current assets for every £1 of short term obligations.The primary driver for growth in cash flows has been the trading performance during the year. While it can be argued that the working capital management was not entirely impressive during the year, the movements in inventory and debtor balances make sense as greater investment in debtors and stocks is required when the company aspires to increase sales. The growth in payable balances is greater than thee movement in inventory implying that good credit terms have been negotaiated with the suppliers.Furthermore, substantial investments in PPE have been made which appear natural given the increase in sale as the company should require suffficient sustenance capex to meet the volumetric needs for the upcomming year. The growth in cash flows was further attributable to the additional financing obtained by the company with almost equal financing obtained through the debt and equity medium. All in all, Citron plc was quite successful from converting a net overdraft position in 2015 to a positive cash flow in 2016.

 

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