Software of the Month Club (Business) 1997 November

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ABC CO LIMITED Date: 21-Feb-95 Page: 1 FIRST YEAR REPORT - ABC CO LIMITED ══════════════════════════════════ This First Year Report covers the twelve months to end Dec 1996 based on detailed monthly projections and assumptions. The following table analyses sales and gross profit margins by main product group for the full year: ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ Year to end Dec 1996 Total Gross Gross Sales Profit Profit as Product Group £000 £000 % Sales ──────────────────────────────────────────────────────── Group 1 287.0 107.6 37.5 Group 2 311.0 94.6 30.4 Group 3 266.0 101.9 38.3 ────── ────── ────── Totals 864.0 304.1 35.2 ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ [ Press (1) F10, A, M, S and (2) F10, R, M, R ] This shows that Group 1 will account for 33% of projected sales (35% of gross profits); that Group 2 will account for a further 36% (31% of gross profits); and that Group 3 will account for the balance of 31% (34% of gross profits). The projected overall gross profit margin is 35%. Based on projected sales of £864,000, ABC CO LIMITED expects to report a pretax profit of £8,000 for the year. The following table analyses these projections: ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ Result - 12 mths to end Dec 1996 £000 % Sales ──────────────────────────────────────────────────────── Sales 864.0 100.0 Cost of sales 559.9 64.8 ────── Gross Profit 304.1 35.2 Overheads: -Operational 47.4 5.5 -Selling & distribution 65.9 7.6 -Management/admin staff 66.0 7.6 -Research & Development: 41.0 4.7 -Administration 21.0 2.4 -Establishment & general 34.2 4.0 ────── Total overhead costs 275.4 31.9 ────── Trading profit 28.6 3.3 Less: Bad debts 4.3 0.5 Depreciation 15.3 1.8 Intangible asset writedowns 12.0 1.4 Interest payable 13.0 1.5 Finance lease charges 13.5 1.6 Operating lease & HP payments 13.2 1.5 Plus: Interest receivable 0.3 0.0 Other income 24.0 2.8 ABC CO LIMITED Date: 21-Feb-95 Page: 2 Revenue grants receivable 12.0 1.4 Capital grant amortisation 2.7 0.3 Profit(loss) sale of F Assets 12.0 1.4 ────── Net profit before tax 8.3 1.0 ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ [ Press F10, R, 1, P ] Based on detailed monthly projections, the net cash OUTFLOW for the twelve months will be £54,000. The projected year-end bank position will be a £76,000 OVERDRAFT. The next table compares the projected results with those for the previous year which ended in Dec 1995. ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ Year to end Year to end Year on Year Dec 1995 Dec 1996 Percent £000 £000 Change ──────────────────────────────────────────────────────── Sales 380.0 864.0 127.4 Cost of sales 270.0 559.9 107.4 ────── ────── Gross profit 110.0 304.1 176.4 Overheads 198.0 275.4 39.1 ────── ────── Trading profit -88.0 28.6 NA Depn.interest etc. 0.5 -20.3 NA ────── ────── Net profit before tax -87.5 8.3 NA Tax .. 0.6 NA ────── ────── Profit after tax -87.5 7.8 NA Dividends .. .. NA ────── ────── Retained -87.5 7.8 NA ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ [ Press F10, R, 1, P ] This indicates that sales could increase by £484,000 while the pretax position could improve by £96,000 over the year. The following key assumptions regarding rates etc. were used in compiling the projections for the year to end Dec 1996. ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ Items Value Basis ──────────────────────────────────────────────────────── Employment: Direct 11 Average monthly numbers All other 20 Average monthly numbers Bad debts 0.5 As percent sales Depreciation: Land & Buildings 3.0 Annual % rates Plant, Machinery et 10.0 Annual % rates Motor Vehicles 25.0 Annual % rates Interest rates (% pa): ABC CO LIMITED Date: 21-Feb-95 Page: 3 Cash at bank 4.0 Monthly average Overdraft 13.5 Monthly average Longterm debt 12.5 Monthly average Working capital: Debtor days 51 Based on full-year sales Stock days 33 Based on full-year sales Creditor days 36 Based on full-year costs VAT rates (%): Sales 13.2 Effective overall rate Inputs 10.9 Effective overall rate ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ The following key ratios have been derived from the 12-month projections for the year ending Dec 1996: ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ Max/min Full Year monthly value or Year End ──────────────────────────────────────────────────────── Profitability: Gross profit margin (%) 39.5 Max 35.2 Net profit margin (%) 12.3 Max 1.0 Current asset ratio (times) 1.0 Min 1.1 Debt/equity - max. is 200 (%) 200.0 Max 200.0 Sales/capital employed (times) 3.0 Trading profit/capital employed (%) 9.8 Projected sales as % breakeven 110.4 ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ [ Press (1) F10, R, M, R and (2) F10, R, 3, R ] This table indicates that the following financial indicators derived from the detailed projections, may be out-of-line with generally-accepted norms: * Current asset ratio may be too low * Debt/equity asset ratio may be too high * Return on capital employed may be low ─────────────────────────────────────────────────────────────── ABC CO LIMITED Date: 21-Feb-95 Page: 4 FIVE YEAR REPORT - ABC CO LIMITED ═════════════════════════════════ This Report covers the five years to the end of Dec 2000. It has been based on detailed monthly projections for the first year and quarterly/full-year projections for the following years. The following table summarises the projected trading performance: ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ Years to end Dec 1995 1996 1997 1998 1999 2000 Act/Est Proj Proj Proj Proj Proj £000 £000 £000 £000 £000 £000 ─────────────────────────────────────────────────────────────── Sales 380 864 1048 1259 1448 1593 Cost of sales 270 560 670 761 890 972 ────── ────── ────── ────── ────── ────── Gross profit 110 304 378 498 557 621 Overheads 198 275 329 371 410 450 ────── ────── ────── ────── ────── ────── Trading profit -88 29 49 127 147 171 Depn.interest etc. 1 -20 -7 -7 -23 -33 ────── ────── ────── ────── ────── ────── Net profit before tax -88 8 41 120 124 138 Tax .. 1 3 10 6 10 ────── ────── ────── ────── ────── ────── Profit after tax -88 8 39 110 118 129 Dividends .. .. 10 25 30 35 ────── ────── ────── ────── ────── ────── Retained -88 8 29 85 88 94 ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ [ Press F10, R, Y, P ] For the first 3 years under review, sales should change by 231% and projected pre-tax profits for the third year are £120,000. For the fifth year, sales should reach £1593,000 and projected pre-tax profits could be £138,000. The projected cashflows for ABC CO LIMITED during the years under review are summarised below: ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ Years to end Dec 1996 1997 1998 1999 2000 £000 £000 £000 £000 £000 ─────────────────────────────────────────────────────────────── Net cashflows from: Operations -31 15 69 96 127 Investments & servicing of finance -2 7 -9 -2 -16 Taxation .. -1 -3 -10 -6 Investing activities -129 -20 -10 -15 -35 Financing 108 78 -39 113 40 ────── ────── ────── ────── ────── Increase (decr) in cash -54 80 7 182 109 ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ ABC CO LIMITED Date: 21-Feb-95 Page: 5 [ Press F10, R, Y, C ] The projected cumulative net cash inflow over the five years is £323,000. The next table shows projected balance sheets. ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ Years to end Dec 1995 1996 1997 1998 1999 2000 Act/Est Proj Proj Proj Proj Proj £000 £000 £000 £000 £000 £000 ─────────────────────────────────────────────────────────────── Fixed & intan. assets 144 276 303 311 360 368 Current assets: Cash 2 .. 3 11 192 301 Other 133 241 251 309 366 395 ────── ────── ────── ────── ────── ────── Total 135 241 254 319 558 696 Current liabilities: Overdraft 24 76 .. .. .. .. Other 109 147 222 237 327 350 ────── ────── ────── ────── ────── ────── Total 133 224 222 237 327 350 Net current assets 2 17 32 82 231 347 Creditors after one y 59 193 177 150 199 229 Capital employed 87 100 158 244 392 486 ────────────────────────────────────────── Share capital 170 175 205 205 265 265 Reserves -83 -75 -47 39 127 221 ────── ────── ────── ────── ────── ────── Shareholders' funds 87 100 158 244 392 486 ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ [ Press F10, R, Y, B ] The projected change in shareholders' funds is £399,000 and the expected closing net cash position is £301,000. The overall projected performance of ABC CO LIMITED for the years under review is assessed in the following table: ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ Years to end Dec 1996 1997 1998 1999 2000 Proj Proj Proj Proj Proj ─────────────────────────────────────────────────────────────── Gross profit margin (%) 35.2 36.0 39.5 38.5 39.0 Net profit margin (%) 1.0 4.0 9.5 8.6 8.7 Sales as % breakeven 110 115 134 136 138 Trading profit/cap empl (%) 9.8 14.5 32.2 24.9 23.9 Sales/cap empl (times) 3.0 3.1 3.2 2.4 2.2 Net borrowings as percent shareholder funds (Max=200%) 200 105 53 NA NA Net assets per share (£) 0.97 1.29 1.98 2.84 3.52 ABC CO LIMITED Date: 21-Feb-95 Page: 6 Earnings per share (£) 0.08 0.34 0.90 0.91 0.93 Dividend per share (£) .. 0.08 0.20 0.22 0.25 ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ [ Press F10, R, Y, R ] This table indicates that the following financial ratios may be out-of-line with generally accepted norms for one or more years: * Net borrowings as % shareholder funds may be too high * Return on capital employed may be low ******** End of EASI-PLAN's Textual Summary Report ********