hesketh motorcycles limited

8/2/2019 Hesketh Motorcycles Limited

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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


7/17


8/17

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


15/17

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


16/17

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

hesketh motorcycles limited

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