SECOND ILLUSTRATIVE SCRIPT AND EXAMINERS’ COMMENTS In the commentary below, extracts from the scripts are shown in italics; spelling, grammar, sentence construction and punctuation from the original script have been retained The commentary follows the order and numbering of the script with references to the topics in the marking key It should be read in conjunction with the review of the First Illustrative Script and also the full Examiners’ Report for this session Examiners’ comments – overview This script failed the exam It was an average length script (but as always this depends on the actual handwriting) which contained two competent sections, with evidence of poor time management In terms of professional skills this candidate achieved overall competent grades – Clearly Competent (CC) and Sufficiently Competent (SC) – in out of grade boxes for Assimilating and Using Information; in out of 14 boxes for Structuring Problems and Solutions; out of 11 boxes for Applying Judgement and out of 10 boxes for Conclusions and Recommendations The original 24 -page length of the manuscript version may be broken down as follows Cover and contents – page Terms of reference – page Executive summary – pages Report (main body) – 13 pages Appendices/workings – pages The 13 pages of the main body of the report address the key issues but with varying degrees of thoroughness The appendices, which are included at the end of each section, are not always easy to distinguish from the body of the report This candidate achieved a clear majority of the competent grades in Requirement (review of Australian project), and a bare majority in Requirement (financial statement analysis), but achieved insufficient competent grades in Requirement (strategic review) and none for Executive Summary Terms of reference and executive summary The report starts with a short terms of reference and disclaimer section, which acts as the introduction to the report In the introductory section to the executive summary there is an example of the quality of the numerical analysis to follow “the 2010 draft accounts show a decline in total revenue by 34.3% due to the exhaustion of the AEPS database, with only 18,873 installations remaining at the end of 2009” For the decline mentioned, the candidate provides no absolute figure as a reference point for the analysis The candidate then goes on to provide an absolute, and falsely precise, figure for the installations which might remain to be completed, which is based on a broad estimate from the Advance Information It would have been better to describe the remaining element of that installation project in comparative terms, of time or life – the reader has no way of knowing how much work 18,873 installations might represent Overall the pages of the executive summary are thin and very patchy, being split unevenly between the three main topics The summary of the financial analysis of EEE’s management accounts contains only percentage analysis of the financial information with no absolute figure against which to evaluate that analysis No mention is made of the cash flow statement analysis This section is thin on detail In the section dealing with the proposal to expand into Australia, the executive summary includes only very brief profit calculations for the project with the proposed call success rate of 1:3, and the creation of a loss if there is a reduction in the success rate to 1:5 A mention is made of reviewing the assumptions but with no details given There is little of value on the opportunities and threats for this project © The Institute of Chartered Accountants in England and Wales 2010 Page of 14 In the strategic review of the solar panel business activity section, the candidate presents a superficial summary of the economic benefits and risks with no real identification of the ethical issues or possible solutions Overall the executive summary was poor and did not cover any of the areas sufficiently There was obvious evidence of time pressure caused by poor time management and there was insufficient competence demonstrated on the use of numbers To score better grades on this section, the candidate should have: Provided more data regarding the financial analysis of EEE’s business and the Australian project Provided more discussion of EEE’s financial performance, Provided a critical review of the assumptions for the project in Australia Provided a more detailed summary of the economic benefits and risks for this project Identified and considered the ethical issues surrounding the solar panel industry Developed conclusions from the above, and made key recommendations Review of EEE’s 2010 financial performance [Requirement 1] The financial statement analysis in this section is accompanied by an appendix (see detailed commentary below) which provides the numerical analysis to underpin the answer to this requirement The review starts with a section on the business context that makes a number of points which are not very well linked The analysis identifies the overall decline in revenue in absolute and percentage terms and then moves into the detail of the business activities The detailed analysis concentrates on the solar panel success and also covers revenue from stoves, but the commentary on commissions and installation work is limited to “Commissions and insulation installation now compose 66.5% of the sales mix as a combination, compared with 86.8% in 2009” which is not a particularly helpful commentary on its own For the gross profit analysis, there is a similar lack of detailed commentary: “As a result of the changing sales mix, total gross margins are 33.6%, compared with 26.5% in the prior year” Although this is correct, it does not spell out the reasons for, or impact of, this changing percentage, nor does it set this change in the context of a falling gross profit in absolute terms The analysis of the operating profit margin starts well “The operating profit margin has remained at 8.9% underlying this however, are significant changes in overheads” but unfortunately the subsequent analysis only covers two expenses: the reduction in marketing expenses with some incorrect analysis; and the increase in staff training costs which was dealt with very briefly The analysis of the cash flow statement suffers by being a comparative exercise in places, with percentage changes against 2009 being identified: “EBITDA has fallen 29% to £1.220k as a result of the decline in sales activity” and “The net change in cash over the year however is up £549k (173%) to £867k” In order to analyse the cash flow statement, which is already a comparative document, it is necessary to explain what has happened during 2010 – this candidate has not really done this The conclusions and recommendations, whilst not fully consistent with the analysis, are sufficiently competent This is an adequate section of the report which demonstrates some competent financial statement analysis skills To score better grades on Requirement 1, the candidate could have: Provided more discussion of revenue changes in total and by business activity Provided more discussion and judgement on the gross profit margins © The Institute of Chartered Accountants in England and Wales 2010 Page of 14 Provided more detailed analysis of the components of overheads Provided more analysis of the cash flow statement such as the inflow from operations and more analysis of all working capital changes Proposal to expand into Australia [Requirement 2] The financial data analysis in this section is accompanied by Appendix 2, which provides a 5-year profitability calculation based on a 1in call success rate with a market for EEE of 100,000 households This is an appropriate numerical starting point from which to comment on the project proposal – although the candidate does question the 100,000 households versus a calculation of 75,000 households (based only in Melbourne) as being the appropriate market before using on 100,000 as the market size The candidate uses good professional scepticism to comment on the assumptions such as “Assuming the UK call centre will be used and hence applying a 90.5% margin or i.e 9.5% cost/revenue, may not provide an accurate analysis because staff may require a higher rate of pay due to the time difference between UK and Australia requiring staff to work at unconventional hours” This candidate also draws attention to the fixed costs “A further breakdown of the incremental fixed costs would allow for assessing the reasonableness of the AUS$400k per annum and £1,300k per annum” Unfortunately this candidate does not go on to consider the Australian project from a “contribution” perspective which would have provided a more complete review There is a good start to the sensitivity analysis concerning call success rates – “The key assumption made is the in success rate This is unlikely to be achieved in early years and is overly optimistic Using a rate of in to be in line with EEE’s track in the UK, EEE will install insulation on 40,000 fewer homes (appendix 2)…” However this candidate then goes on to offer a somewhat bizarre additional piece of commentary “…resulting in $146 contribution lost on each job.” which, although a contribution analysis for this project would be important, is not the appropriate contribution consideration to follow from the sensitivity analysis for this project The analysis of, and commentary on, the opportunities and threats is rather weak The comment on the exchange rate risk covers only some of the necessary issues and is not fully developed by any critical analysis The commentary on exchange rate risks is rather general, and not very well expressed; however a sensible point is made in that the exchange risk will be “mitigated through matching” There is very little judgement shown and although there are competent conclusions there are insufficiently competent recommendations To score higher marks on Requirement 2, the candidate could have: Evaluated more critically the opportunities and threats surrounding this project Provided better commercial recommendations Strategy for increasing revenue from solar panels [Requirement 3] The answer to this requirement started with a brief positive analysis of the business context for the development of the solar panel revenue stream However the benefits and risks section of this requirement is rather brief – an indication perhaps of poor time management – but there is evidence of some good analysis although it is not always clearly expressed An example is when this candidate considers how the solar panel installation activity might develop: “However, subcontractors are less reliable than in house staff, and any decision to retrain engineers, to obtain micro generation scheme certification, should be weighed against the likelihood of staff to leave EEE, or the solar stream declining in the short to medium term” The ethical section is extremely short, although it contains some relevant points © The Institute of Chartered Accountants in England and Wales 2010 Page of 14 There are some competent conclusions and recommendations which improve the quality of this section “Sourcing from various overseas suppliers often results in poor quality panels, which is worsened by poor installation all of which upsets consumers when it coincides with mis-selling and exaggerating the benefits of solar” To score better grades on Requirement 3, the candidate should have: Provided more analysis of the economic benefits and risks for EEE of the solar panel business Provided a more detailed analysis of the concerns identified by the directors, about which more information was contained in the news articles throughout the case Made better use of the articles in the Advance Information and the Exam Paper to assess critically the specific ethical issues for this business Appendices Appendix relates to Requirement and comprises pages of numerical analysis The analysis starts with revenues and contains a comparison of 2010v2009 and 2009v2008 (which was not required) For the 2010v2009 column, the absolute changes for each of the revenue streams and total revenue has been calculated together with the percentage changes There is also a calculation on the sales mix for both 2010 and 2009 For the gross profit margin calculations have been made for each business activity, and overall, showing the absolute change between 2009 and 2010 and the gross profit percentage for both 2010 and 2009 The operating profit analysis includes a detail review of changes in each element of the overheads between the years 2010 and 2009 There is a section which analyses the cash flow statement; however this is shown as a series of comparative calculations between the statement for 2010 and 2009 rather than an analysis of the 2010 cash flow statement This appendix contains some, but not all, of the necessary analysis Appendix This appendix relates to Requirement – the Australian project – and starts with a calculation of the number of potential households as the market for EEE in Victoria which arrives at 75,000 as the potential market However the candidate corrects this figure to 100,000, being the number given in the table in the Exam Paper The calculation for the 5-year project profit is correct using a 1:3 call success rate The sensitivity analysis is calculated using a 1:5 success rate which produces a loss No sensitivity analysis is conducted on exchange rates Apart from the weaknesses identified above, these appendices – although not entirely correct – demonstrate that the candidate knew what had to be done and provided the numerical evidence from which to write some of the analysis in the report Overall paper This was an answer which followed a logical format in answering the detailed requirements There were some lapses in style, the use of some jargon, and the use of the first name of a director in the report, so the structure and style was not sufficiently competent However the report attempted to answer all three requirements, but was weaker on Requirement and not sufficiently competent on the executive summary As a result although there were some sufficiently competent sections, overall this candidate failed the exam © The Institute of Chartered Accountants in England and Wales 2010 Page of 14 ILLUSTRATIVE SCRIPT DRAFT REPORT TO THE BOARD OF EEE From: GUNTER JENSEN LLP DATE: NOVEMBER 2010 CURENT YEAR PERFORMANCE AND FUTURE OPPORTUNITIES © The Institute of Chartered Accountants in England and Wales 2010 Page of 14 Terms of Reference The purpose of this report is to provide an analysis of current year performance, evaluate expansion to Australia, and consider the issues regarding solar panels It has been prepared for the Board of Eastern Energy Experts (EEE) and should not be distributed to any other parties without prior written consent No liability can be accepted in the event of such distribution This report is based solely on the information provided by the EEE board members and no attempt has been made to corroborate or independently verify any of this information Executive Summary Introduction and wider business context Although EEE has grown revenue dramatically between 2006 and 2009 (at a compared annual rate of almost 70%), the 2010 draft accounts show a decline in total revenue by 34.3% due to the exhaustion of the AEPS database, with only, 18,873 installations remaining at the end of 2009 However, government initiatives for energy efficiency around the world present new opportunities in light of Kyoto and rising energy prices to expand overseas and shift to alternative energy generation Analysis of Draft 2010 accounts Revenue from AEPS commission and installations fell by 45.9% and 50.6% respectively This is because EEE has reached the more complex remaining customers on the database However solar panel revenue growth is impressive at over 131% and the rate has increased from 90% in prior years despite the recession Revenue mix has shifted so that solar now comprises 25.2% of total revenue, indicating EEE should refocus to solar as UK loft insulation reaches the end of its life cycle EEE should consider retraining staff to focus on sales of solar To avoid engineer redundancy, EEE should analyse the benefits and costs of training engineers to obtain micro generation scheme certification to install solar EEE should seek to source panels from more ethical suppliers Australian Expansion The project is expected to make a profit of £2,650k as it stands However hit rate sensitivity indicates the project will be loss making by £270k due This is due to a 1in rate reducing the market by 40,000 EEE needs to revaluate the assumptions used for the hit rate and the fixed cost drivers EEE should understand Australian government schemes and the level of competition it will face Solar Panels (1) EEE needs to consider using more ethical suppliers to avoid brand reputation damage The roof renters venture should be considered further in order to target more households Supervision on installations needs to be increased to improve standards of workmanship Customers are aware of mis-selling FINANCIAL STATEMENT ANALYSIS BUSINESS CONTEXT The UK economy continues to suffer from the effects of the recession EEE has seen a decline in revenues from loft insulation, which has historically formed the largest most significant business stream © The Institute of Chartered Accountants in England and Wales 2010 Page of 14 As loft insulation reaches the end of its product life-cycle due to the dwindling market, the solar panel boom is picking up, as a result of increased consumer awareness of green issues and as influenced by government policy with the FIT scheme under the green deal, in meeting with the Kyoto accord Revenue Revenue has fallen by £5,185k (34.3%) (see appendix 1) in 2010 This appears very disappointing when compared with a growth rate of 15.7% in 2009, and an average growth rate of approximately 70% per annum for the past four years However, the decline, led by falling commission and installation revenue was to be expected as EEE’s remaining target AEPS market becomes more difficult to penetrate The four revenue streams have not all declined, however, as explained below Revenue mix Solar revenue formed 25.2% of total revenue in 2010 (2009:7.2%) (app 1), and is the only revenue stream to see growth in 2010; Solar revenue is up £1,425h (131.3%) on 2009 solar revenue This is a dramatic increase, and the growth rate of 131.3% exceeds the 90% growth rate seen in the previous year This will largely be due to increased public awareness of green issues and the government incentives on offer such as the Feed In Tariff scheme This is particularly noteworthy as solar has seen exceptional growth despite the negative press coverage with regards to installation and panel quality Stove revenue on the other hand, has not seen the same success as revenue With revenue down by £84k (9.2%) on prior year This is likely to be due to alternative energy stoves being regarded as a fashionable item Stoves however represent 8% of the sales mix (2009:6%) (app1) This is due to insulation related revenue falling by a much larger degree, than stoves revenue Commissions and insulation installation now compose 66.5% of the sales mix as a combination, compared with 86.8% in 2009 Due to the decline in this market, and the increasing importance of alternative energy items such as solar, EEE should seriously consider the issues discussed in parts and of this report, as a matter of urgency in deciding the future strategy of EEE As it is unlikely that focussing on loft insulation for much longer, is a viable strategy Gross profit The decline in commissions margins from 90.5% to 83.4% reflects the make up of the remaining customers on the AEPS database, as being the more difficult targets, and suggests a declining hit rate from in Margins for the other revenue streams have not changed significantly Margins on installations have increased slightly to 7.3% from 6.2%, suggesting better control of subcontractor material wastage Solar margins have largely been maintained at 56.6% (2009: 56.9%) due to continuing to source panels from the Asian suppliers, due to the shortage in the UK As a result of the changing sales mix, total gross margins are 33.6%, compared with 26.5% in the prior year © The Institute of Chartered Accountants in England and Wales 2010 Page of 14 Operating Profit The operating profit margin has remained at 8.9% underlying this however, are significant changes in overheads (appendix 1) Marketing costs have decreased £123k (28%) and reflects that as solar becomes an increasingly important revenue stream, some reliance can be placed on customers being made aware of initiatives through other organisations The increase in staff training costs by £69k (83%) is due to retraining call centre staff and engineers for solar sales Cash Flows EBITDA has fallen 29% to £1.220k as a result of the decline in sales activity The net change in cash over the year however is up £549k (173%) to £867k This reflects the improved working capital management of £270k (app1, e) in cash generated from operations and is helped by the reduction in the dividend payout by £300k to £200k compared with £500k in 2009 This appears a reasonable decision in the face of economic and strategic uncertainty for EEE Conclusions & Recommendations EEE’s performance in 2010 is, although expected due to declining insulation market, disappointing, and is the first year since trading began that total sales have declined Government incentive emphasis on alternative energy couldn’t have come at a better time as EEE needs to move away from its historically core market It is recommended that EEE: - Consider retraining staff to focus on solar sales To avoid making engineers redundant, perform a cost benefit analysis of retraining them to obtain micro-generation scheme certification to install solar Analyse whether the higher margins achievable by sourcing panels from Asia, outweigh the operational and ethical risks as raised in your emails and as discussed further in this report © The Institute of Chartered Accountants in England and Wales 2010 Page of 14 Appendix a) Revenue Growth Commissions Installations Solar Stores Total revenue 2010 v 2009 £000 % (1,150) (45.9) (5,376) (50.6) 1,425 131.3 (84) (9.2) (5185) (34.3) 2009 v 2008 £000 % (452) (15) 1,607 (17.8) 515 90 382 72 2052 15.7 b) Sales Mix Commissions Installations Solar Stores 2010 % 13.6 52.9 25.2 8.3 100 2009 % 16.5 70.3 7.2 6.0 100 c) Gross Profit Margin 2010 Commissions Installations Solar Stores Total Margin £000 1,129 384 1,421 413 3,347 2009 % 90.5 6.2 56.9 50.5 26.5 % 83.4 7.3 56.6 50.0 33.6 d) Operating Profit Operating profit Margin Depreciation Variance Loss on PPE disposal Variance 2010 £888k 8.9% £290k £51k ie 15% lower £42k £13k ie 45% higher 2009 £1,351k 8.9% £341k £29k Overheads: Staff Costs Motor Training Establishment costs Repairs & maintenance Marketing General admin Insurance Movement £’000 (156) (52) 69 15 (123) (65) 145 2010 v 2009 Movement % (14) (36) 83 (28) (34) 100 © The Institute of Chartered Accountants in England and Wales 2010 Page of 14 e) Cash Flows EBITDA Movement 2010 £1,220k (£50k) (29%) 2009 £1,721k Net change in cash over the year Variance 2010 v 2009 £867k £549k +173% 2009 v 2008 £318k 2010 £200k (£300k) (60%) 2009 £500k Dividends paid In year Variance Working capital changes: Cash generated from operations v cash flows from operating activities 2010 1,490 – 1,220 = £270k 2009 1.586 – 1721 = (£135k) Expansion to Australia Business Context As the AEPS target market reaches the end of its life cycle for loft insulation, it is worthwhile for EEE to consider the viability of emulating its business model and success in a different geographic region Australia seems attractive as two of the four Board members have links to it, and also due to having the right to work there would be able to take a hands on approach to managing operations out there In addition, Australia only signed up to the Kyoto accord in December 2007, and so EEE would potentially be able to secure some first-mover advantage in the market Expansion Project Appraisal The project will make a profit of £2,650k over the year life cycle, taking account of Dany Parker’s assumptions (see appendix 2) However, despite detailing an estimated in hit rate, the year work profile totals to 100,000 installs, as opposed to 75,000 which results from Dany’s assumptions Nevertheless, 100,000 has been taken to be the target total figure in calculating the initial profitability Assumption evaluation Using 100,000 assumes there is no cold calling occurring and this is unlikely as EEE experience that around 5% of customers are lost through cold calling in the UK Assuming the UK call centre will be used and hence applying a 90.5% margin or i.e 9.5% cost/revenue, may not provide an accurate analysis because staff may require a higher rate of pay due to the time difference between UK and Australia requiring staff to work at unconventional hours Such a time pattern change may be met with resistance and require EEE to take on additional shift workers and hence pushing up the cost © The Institute of Chartered Accountants in England and Wales 2010 Page 10 of 14 A further breakdown of the incremental fixed costs would allow for assessing the reasonableness of the AUS$400k per annum and £1,300k per annum Sensitivity Analysis The key assumption made is the in success rate This is unlikely to be achieved in early years and is overly optimistic Using a rate of in to be in line with EEE’s track in the UK, EEE will install insulation on 40,000 fewer homes (appendix 2), resulting in $146 contribution lost on each job If the success rate is in 5, then the project will make a loss of £270k (using all other assumptions) Opportunities and threats of overseas expansion Health & Safety is one area of concern as recent newspaper reports show rogue installers failing to follow precautions, resulting in house fires and falling out of roofs This could cause damage to EEE’s reputation The project depends on the level of government funding and still means EEE is reliant on the one main revenue stream The ability of Bernie and Len to work in Australia reduces the risks arising from reduced supervision Subcontractor employment law and government incentives need to be fully understood if EEE are to venture abroad Although the exchange rate has averaged $2/£1, uncertainty due to the global economic recession means that EEE’s profits are susceptible to vary Some offsetting of revenue and expenses occurs from charging AUS$ and taking on AUS$ costs, however, ie mitigated through matching Conclusion and Recommendations EEE does need to consider the ways in which it can utilise existing skills and experiences to avoid business failure Australia appears a viable option due to the government being keen on green initiatives, and the experiences the Board has working in Australia It is recommended that EEE: - Assess the initial assumptions made in order to be less optimistic Re-perform a cost benefit analysis in light of this assumption revision Understand subcontract employment law abroad Research Australian government initiatives © The Institute of Chartered Accountants in England and Wales 2010 Page 11 of 14 Appendix 2: VPS year profitability analysis - million households o 75% in Melbourne (assuming household sizes are even across city centre and outer Victoria state area) - ie leaving 2m X 75% = 1.5 million homes VPS: 1.5m at 20% = 300,000 homes Disregarding apartment blocks (25%) leaves: 300k @ 75% = 225,000 homes Assuming a in hit rate - 225k/3 = 75,000 homes likely to sign up However the work profile indicates a total market of 100,000 can be signed up over the years The $200 and $600 revenue appear inline with UK rates with AEPS However, $800/2 = £400 ie half the revenue in £GBP terms per each contract Appraisal: Contracts / installations 100,000 AUS$000 Revenue: Commission $200 X 100k Installation $600 X 100k 20 60 80 Cost of sales Call centre costs 2009: 9.5% of commission Revenue: 20m X 9.5% AUS$000 Installation project costs $578 X 100,000 AUS$000 57,800k Gross profit AUS$20,300 1,900 Incremental fixed AUS: costs: $400k X years UK: £1,300k X fxrate of X years $2,000k $13,000k Operating profit over years I.e 5,300k / $2 $5,300k £2,650,000 GBP Sensitivity Analysis eg if success rate is in (as historically the case for the UK) Revised contracts / installations: 100k X 3/5 = 60,000 homes Change in installations 40,000 homes © The Institute of Chartered Accountants in England and Wales 2010 Page 12 of 14 Decreased Contribution: Call centre [$600+$200] – 9.5% = $724 Installations - $578 per job $146 contribution 40,000 X $146 $5,840k Converted to GBP: $2/£1 = £2,920k Revised project profitability: £2,650k - £2,920 = (£270k) Loss making if change hit rate to in to be in line with the UK Solar Panels Business Context Alternative energy generation presents itself as the revenue stream to refocus EEE from loft insulation in light of government schemes such as FIT However, due to the economic recession, consumers are increasingly weighing up the benefits of such a heavy investment The shortage of panel supply in the UK has led not just EEE to source from Asia leading to widely publicised quality issues Switching suppliers to UK ones will inevitably erode the solar panel margins Economic benefits and risks Increasingly the prominence of the solar panel stream reduces the reliance on insulation through diversification A combination of expanding insulation abroad and ramping up solar in the UK may help EEE avoid having to make staff redundant However, subcontractors are less reliable than in house staff, and any decision to retrain engineers, to obtain micro generation scheme certification, should be weighed against the likelihood of staff to leave EEE, or the solar stream declining in the short to medium term To mitigate the risk of staff leaving after having invested in them, EEE should increase loyalty and motivation through bonus schemes and emphasising the career path progression which EEE offers EEE should be careful to not move too much of the installation work in-house as exit costs will increase by way of redundancies or through not reaping as many sales as required to make the training investment worthwhile Especially, for instance, due to consumers uncertainty with regards to shifting government priorities that have come with the con-lib coalition Ethical Issues - Bringing installation in-house, as noted above, may help reduce faulty workmanship, due to staff training and accountability The Asian suppliers should be vetted and panels tested for evidence of the faults as commonly reported in the press Conclusions and Recommendations Sourcing from various overseas suppliers often results in poor quality panels, which is worsened by poor installation all of which upsets consumers when it coincides with mis-selling and exaggerating the benefits of solar Its is recommended that EEE: © The Institute of Chartered Accountants in England and Wales 2010 Page 13 of 14 - Train sales staff to comply with fair and more transparent energy saving claims Increase supervision and follow up on installations, in particular those panels sourced from Vietnam Partnering with roof-renters allows EEE to target both higher and lower income households and shows it is committed to meeting government targets EEE should only use those suppliers who produce panels using renewable sources so as to reduce its own carbon footprint © The Institute of Chartered Accountants in England and Wales 2010 Page 14 of 14 ... £000 % (4 52) (15) 1,607 (17.8) 515 90 3 82 72 20 52 15.7 b) Sales Mix Commissions Installations Solar Stores 20 10 % 13.6 52. 9 25 .2 8.3 100 20 09 % 16.5 70.3 7 .2 6.0 100 c) Gross Profit Margin 20 10 Commissions... EBITDA Movement 20 10 £1 ,22 0k (£50k) (29 %) 20 09 £1, 721 k Net change in cash over the year Variance 20 10 v 20 09 £867k £549k +173% 20 09 v 20 08 £318k 20 10 20 0k (£300k) (60%) 20 09 £500k Dividends paid... ( 52) 69 15 ( 123 ) (65) 145 20 10 v 20 09 Movement % (14) (36) 83 (28 ) (34) 100 © The Institute of Chartered Accountants in England and Wales 20 10 Page of 14 e) Cash Flows EBITDA Movement 20 10 £1 ,22 0k