1.1Archers Organic Foods Plc (AOF) is an established firm of 22 years, specialising in the production of organic foods within the UK. The company has to date, successfully branded their products which are mainly sold via independent quality food retails. To facilitate this, the company also successfully undertakes its own packing and distribution of products.
1.2The present Directors of AOF are now looking to further the long-term success of the company by both diversifying and expanding the existing business. This report investigates the opportunities to do this by purchasing the controlling interest in another company in mainland Europe.
1.3While there are a number of different investment projects being considered, this report is concerned solely with the expansion of the "produce" component in to Europe, specifically the French organic food market. The company that the content of this report has considered for this purpose is that of Organique, an unquoted thriving French based company that is looking to expand and establish wider European links.
Obtaining a controlling interest of Organique will require an investment of 75% of the available shares. To evaluate whether or not this company represents a worthwhile purchase will require a full financial investment appraisal.
1.4Before embarking on such an investment scheme, it has been suggested by Paul Penney, the Director of Finance, that prior to evaluating the financial position of Organique, Archers must first appraise its own position. This would be a prudent approach and allow Archers to make any necessary changes to strengthen its own financial position before embarking on any further expansions plans.
1.5Therefore, the first part of the report is concerned with the current finances of AOF. This includes analysis of the company's overall financial position, using a number of techniques and ratio's as well as performance compared to that across the industry...