Speedy PLC – How the Rights Issue Will affect Balance Sheet?
Speedy PLC – How the Rights Issue Will affect Balance Sheet?
Speedy has announced that it plans to raise £100million to cut debt in the business by issuing more shares to existing share holders in a 9 to 1 offer.
Below I have typed up what I think the balance sheet may look like if they do manage to raise the £100m and use it to cut long term liabilities (borrowings) – this is just an estimate, they may not raise the £100m and may use it in a different way to what i have done below. It’s just a guess so don’t take it too seriously.
Screenshot of balance Sheet from the 2009 annual report
Speedy Balanace Sheet 2009
If they use the £100m to cut long term borrowing then it should mean it will decrease £259.2m (note 18) to £159.2m.
This will mean that overall net assets would look to be around £267.5m instead of £167.5 currently displayed. This is an average guess as costs and borrowings may change again throughout the year, but this is what £100m raised would do to the current balance sheet.
Compared to 2008, the balance sheet should see an increase of 11.4% in 2009 compared to 2008.
Worked out as:
100% / 240.1m (2008) = 0.4164
0.4164 * 267.5m (2009 guess) = 111.4
We will look at the effect this will have on the Gearing Ratio of the company in a bit.
