Pilot (pre 2007)
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Question 1a
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<p>In November 2005 Beeski purchased Xstatic Co, a competitor group of companies.</p>
<p>Significant revenue, cost and capital expenditure synergies are expected as the operations of Beeski and Xstatic are being combined into one group of companies</p>
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<p>The following financial and operating information consolidates the results of the enlarged Beeski group:</p>
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<td>2006 (Estimate)</td>
<td>2005 (Actual)</td>
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<td>Revenue</td>
<td>6,827</td>
<td>4,404</td>
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<td>Cost of sales</td>
<td>-3,109</td>
<td>-1,991</td>
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<td>Distribution costs and administrative expenses</td>
<td>-2,866</td>
<td>-2,866</td>
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<td>Research and development costs</td>
<td>-25</td>
<td>-22</td>
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<td>Depreciation and amortisation</td>
<td>-927</td>
<td>-661</td>
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<td>Interest expense</td>
<td>-266</td>
<td>-266</td>
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<td>Loss before taxation</td>
<td>-366</td>
<td>-172</td>
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<td></td>
<td></td>
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<td>Customers</td>
<td>14·9m</td>
<td>14·9m</td>
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<td>Average revenue per customer (ARPC)</td>
<td>$437</td>
<td>$556</td>
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<p>In August 2006 Beeski purchased MTbox Co, a large cable communications provider in India, where your firm has no representation.</p>
<p>The financial statements of MTbox for the year ending 30 September 2006 will continue to be audited by a local firm of Chartered Certified Accountants.</p>
<p>MTbox’s activities have not been reflected in the above estimated results of the group.</p>
<p>Beeski is committed to introducing its corporate image into India</p>
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<p>In order to sustain growth, significant costs are expected to be incurred as operations are expanded, networks upgraded and new products and services introduced</p>
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<p><b>Required</b></p>
<p>Identify and describe the principal business risks for the Beeski group. (9 marks</p>
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