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Assess the purpose of the calculations and results. How does it help the company's financial strategy? What changes could be made? Discuss anything else pertinent to the exercise. Integrate 2-3 external references (in addition to the book) to support your thoughts.

3/ The table below appears on page 2 of the annual report of the Norne group. Key financials (unaudited, in millions of $, excluding earnings per share and dividends): 1996 1997 1998 1999 2000 13 289 20 273 31 260 40 112 100 789 493 515 698 957 1266 91 -410 5 64 -287 584 105 703 893 979 0.91 0.87 1.00 1.18 1.47 0.17 -0.71 0.01 -0.08 -0.35 Sales Net income: Recurring net income Items impacting comparability Total Diluted earnings per share: Recurring net income Items impacting comparability Total Dividend per share Total assets Cash from operating activities (excluding change in working capital) Capital expenditure Share price at 31 Dec 1.08 0.16 1.01 1.10 1.12 0.43 0.46 0.48 0.50 0.50 16 137 22 552 29 350 33 381 65 503 742 276 1873 2228 3010 1483 2092 3564 3085 3314 22 21 29 44 83 State your views. 1/Identify the sector to which each of the following types of company belongs: electricity producer, supermarket, temporary employment agency, specialised retailer, construction and public infrastructure. Company 1 2 3 4 5 100 100 100 100 100 100 100 104 99 0 23.0 24.8 0 0 0 0 23.6 0 Sales Production Trading profit Raw materials used Other external charges Personnel cost EBITDA Depreciation and amortisation 0 7.8 } 46.6 7.0 46.9 14.1 9.3 11.7 21.5 24.1 88.2 6.8 6.7 28.1 3.7 4.6 2.6 0.9 14.4 1.2 0.7 Operating income 4.2 5.8 7.1 2.9 3.1 2/Identify the sector to which each of the following types of company belongs: cement, luxury products, travel agency, stationery, telecom equipment. Company 1 2 3 4 5 100 100 100 100 100 35.9 84.0 67.7 44.3 52.2 37.0 4.4 14.0 23.1 21.8 Sales Cost of sales Marketing and selling costs Administrative costs R&D costs Operating income 11.1 10.0 6.6 10.7 9.3 0 0 20.1 6.6 2.1 16.0 1.6 -8.3 15.3 14.6 3/In January of year 0, the Swiss group Schmidheiny published the following projected figures: 0 1 2 3 106 70.2 29.4 132 44.3 161 53.8 35.4 22.2 29.4 36.7 41.1 Production Raw materials used Personnel cost Taxes Other external services Outsourcing Depreciation and amortisation 0.5 0.7 0.7 0.8 13.7 19.8 24.6 30.5 2.5 8.9 11.2 11.3 5 1.4 2.7 3.6 (a) Calculate the breakeven point for each year. The cost structure is as follows: o variable costs: raw materials used, outsourcing, 50% of other external services; fixed costs: all other costs. (b) Schmidheiny is planning a capital expenditure programme which should increase its production capacity threefold. This programme, which is spread over years 0 to 1, includes the construction of four factories and the launch of new products. The income statements for years 1, 2 and 3 factor in these investments. State your views. (c) The company will need to raise around 30m to finance this capital expenditure programme. Financial expense before this capital expenditure programme amounts to 1.6m, and Schmidheiny is planning to finance its new requirements using debt exclusively (average interest rate: 10% before tax). What is your view of the debt policy the company intends to pursue? 3/ The table below appears on page 2 of the annual report of the Norne group. Key financials (unaudited, in millions of $, excluding earnings per share and dividends): 1996 1997 1998 1999 2000 13 289 20 273 31 260 40 112 100 789 493 515 698 957 1266 91 -410 5 64 -287 584 105 703 893 979 0.91 0.87 1.00 1.18 1.47 0.17 -0.71 0.01 -0.08 -0.35 Sales Net income: Recurring net income Items impacting comparability Total Diluted earnings per share: Recurring net income Items impacting comparability Total Dividend per share Total assets Cash from operating activities (excluding change in working capital) Capital expenditure Share price at 31 Dec 1.08 0.16 1.01 1.10 1.12 0.43 0.46 0.48 0.50 0.50 16 137 22 552 29 350 33 381 65 503 742 276 1873 2228 3010 1483 2092 3564 3085 3314 22 21 29 44 83 State your views. 1/Identify the sector to which each of the following types of company belongs: electricity producer, supermarket, temporary employment agency, specialised retailer, construction and public infrastructure. Company 1 2 3 4 5 100 100 100 100 100 100 100 104 99 0 23.0 24.8 0 0 0 0 23.6 0 Sales Production Trading profit Raw materials used Other external charges Personnel cost EBITDA Depreciation and amortisation 0 7.8 } 46.6 7.0 46.9 14.1 9.3 11.7 21.5 24.1 88.2 6.8 6.7 28.1 3.7 4.6 2.6 0.9 14.4 1.2 0.7 Operating income 4.2 5.8 7.1 2.9 3.1 2/Identify the sector to which each of the following types of company belongs: cement, luxury products, travel agency, stationery, telecom equipment. Company 1 2 3 4 5 100 100 100 100 100 35.9 84.0 67.7 44.3 52.2 37.0 4.4 14.0 23.1 21.8 Sales Cost of sales Marketing and selling costs Administrative costs R&D costs Operating income 11.1 10.0 6.6 10.7 9.3 0 0 20.1 6.6 2.1 16.0 1.6 -8.3 15.3 14.6 3/In January of year 0, the Swiss group Schmidheiny published the following projected figures: 0 1 2 3 106 70.2 29.4 132 44.3 161 53.8 35.4 22.2 29.4 36.7 41.1 Production Raw materials used Personnel cost Taxes Other external services Outsourcing Depreciation and amortisation 0.5 0.7 0.7 0.8 13.7 19.8 24.6 30.5 2.5 8.9 11.2 11.3 5 1.4 2.7 3.6 (a) Calculate the breakeven point for each year. The cost structure is as follows: o variable costs: raw materials used, outsourcing, 50% of other external services; fixed costs: all other costs. (b) Schmidheiny is planning a capital expenditure programme which should increase its production capacity threefold. This programme, which is spread over years 0 to 1, includes the construction of four factories and the launch of new products. The income statements for years 1, 2 and 3 factor in these investments. State your views. (c) The company will need to raise around 30m to finance this capital expenditure programme. Financial expense before this capital expenditure programme amounts to 1.6m, and Schmidheiny is planning to finance its new requirements using debt exclusively (average interest rate: 10% before tax). What is your view of the debt policy the company intends to pursue

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