STRATEGIC FINANCIAL DECISION AND ANALYSIS
Order Description
This is a Strategic Management assignment divided into three parts
2000 words for part 1 and 3000 words for part 2
i’ll upload a files that contain everything for part 1 and 2 . first part has its own forecast excel sheet for the whole financial figures .
Part 2 also has it’s own forecast excel sheet . so at the end you will have two excel sheet one for part 1 and part 2 , make sure you separate them .
Part 2 has a question on liquidation i’ll copy and past the figures of the question.
((PART 1))
PART 1 (40%):
The Finance; Investment; Dividend and Risk Management Strategy
You are a member of the Board of UK OIL Plc whose role is to make strategic and operational decisions.
Throughout the last few months, your Finance Department have been considering a number of issues, detailed on the attached.
Next week (week commencing 12th January) they will present their findings.
Following their presentation, your task is to submit a report justifying your decisions and highlighting the risks and considerations you have in making these decisions.
Which machine (if any) should you buy ?
British Oil Machinery who have quoted £3,000,000 OR
Munchen Machinery Germany who have quoted of €3,400,000 supported by appropriate international guarantees.
How should you finance the purchase ?
Equity (Shares) or Debt finance or a Combination
If Debt, what type of debt ?
Loan or Bond
Fixed or Floating Rate
Sterling or Foreign Currency
The company’s Risk Management (Hedging) Strategy
The company’s Dividend Policy ?
(
(( PART 2 ))
PART 2: Mergers & Acquisitions
Stage 1 (30%)
UK Oil Plc have been performing well and are now considering their growth strategy.
One possibility, is the acquisition of Arabic Oil Supplies Abu Dhabi, though you may wish to recommend alternative growth strategies
To support you:
The Finance Department have been evaluating the financial implications, costs, benefit etc and will present their findings during the Week Commencing 16th February 2015 with regard to:
method of finance
transfer price
location and operation of Group Treasury Department which may be possible/advantageous post-acquisition
Following their presentation, your task is to submit a report justifying your decisions and highlighting the risks and considerations you have in making these decisions.
Your growth strategy, include and evaluation of the proposed acquisition and alternative strategies
( apply Ansof matrix )
The Method of Financing the Acquisition
( how are you going to finance the business )
How should you finance the purchase ?
Equity (Shares) or Debt finance or a Combination
If Debt, what type of debt ?
Loan or Bond
Fixed or Floating Rate
Sterling or Foreign Currency
Location and Operation of the Treasury Department
( if it’s in UAE there will be only 30% return to UK . if it’s in Uk based calculate the tax )
Tax Management, including consideration of Transfer Pricing, Remittance Restrictions and Corporate Social Responsibility.
(( PART 2 STAGE 1 – LIQUIDATION ))
Unfortunately the acquisition which (you can now assume) was financed by issuing sterling debt equivalent to $20,000,000, proved disastrous and the company are now facing the possibility of administration or even liquidation.
Present an outline of how funds would be distributed in the event of liquidation and evaluate the position of each class of creditor including the various shareholders assuming:
Non Current Assets realize £140,000,000
Current Assets include:
Bad Stock £5,000,000
Bad Debts £10,000,000
Liquidation Fees of £500,000
Consolidated Balance Sheet of UK Oil Group as at 31.12.20×5
£000 £ 000
Non Current Assets £ 162,000
Goodwill £ 8,000
Current Assets £ 55,000
Less Current Liabilities £ 50,000 £ 5,000
£ 175,000
Less Non Current Liabilities
Loans (secured) £ 70,000 £ 105,000
Share Capital – 50p Ordinary Shares £ 50,000
Share Capital – 5% £1 preference shares £ 30,000
Share Premium £ 20,000
Retained Profits £ 5,000
£ 105,000