Solved - 1CWK50 - Swishcars Plc - Financial Strategy

Faculty of Business and Law Assignment Brief 2025/26 Module Code: |5R620018 Credits: 15 Assignment Identifier: 1TCWKS50 ( Module Leader: Tim Watt | J Contact Details: t.k.watt@mmu.ac.uk | Submission Deadline and Feedback Return Dates — Click here to go to assignment hand in area Submission Instructions

• Students must submit one document only to the Moodle submission area. Your

document can only be in either Word or PDF format. Please submit your assignment by the submission deadline. If you are having difficulty with uploading any work to a summative assessment and are not able to resolve the issue with your tutor or other teams then you can use this form. Please ensure that this is done BEFORE the due date and time passes. On-time submissions will be uploaded to Moodle reflecting the date/time the form was submitted. Moodle has a file size limit of 100MB on any file submission. Videos submitted via Kaltura have a 2GB file size limit. Files exceeding the size limit cannot be accepted. Files sent via OneDrive or any external file sharing software cannot be accepted. You can find more information about how to create and submit your assessment here Assessment Type: Assessment Length: 1500 words (+/-10%) Report Weighting: excluding references, titles and 50% of module subtitles

Assignment Task

Background You are the Finance Director for Swishcar PLC, an electric vehicle manufacturer based in Manchester, UK. Between the period 2021-2024, there was unprecedented growth in demand for electric vehicles in the market resulting in the number of Swishcars sold increasing by 25% per year. Swishcar PLC currently sell their cars in the UK and throughout Europe. However in 2025, the demand for electric cars in Europe has dropped significantly due to a lack of suitable charging points, removal of tax incentives by the UK government for businesses and retail customers buying electric cars and a general increase in the price of electricity in the UK. Swishcar PLC purchase all of the raw materials to make their cars from Japan. There has been an increase in the export tariffs charged by the Japanese government combined with a significant decline in the value of UK sterling (GBP) against all major currencies on the foreign exchange markets. This has resulted in the cost of producing each car increasing by 35%. For the first time in the company’s history, Swishcar have seen a significant fall in their revenue and made a financial loss for the year ending 31 December 2025. In a recent board meeting, the Board of Directors were very excited to discuss the advancement of their top-secret project entitled ‘Project Supply Chain’. Using the technology developed for their electric cars, the company have designed a 100% electrically powered heavy goods vehicle (lorry). The project is now at an advanced stage and is ready to start producing the new lorries. It is estimated that the initial funding needed to start production from their UK factory will be in the region of £200m. There have been lengthy discussions around the possible methods that could be used to raise the £200m needed to start production. The board have narrowed the options down to the following:

• Take out a “Green Loan’ for the full £200m or issue £200m of Social Bonds to the market

by May 2026 or

• Reduce the ordinary dividend payout this year by £200m and use the cash that would have

been paid to fund the project. Specific concerns raised at the Board Meeting + Ayesha Haider (Chief Executive Officer) is very concerned that if we reduced the dividend then this would be seen as “bad news’ by the market resulting in a dramatic fall in the company’s share price. Other important information Exhibit 1 — Swishcar PLC Dividend History and Proposed Payout for 2025 financial year 2021 | 2022 | 2023 | 2024 2025 Profit after Tax (Earnings) [£227m{£340m|e485mles08m|(£280m) loss Ordinary Dividend Paid out to £172m Shareholders £200m{£265m]E£343miE372m| (Proposed) Ordinary Dividend per Share [ 40p | 53p 6s.6p] T44p| 344p Number of Shares in issue Note: The 2025 dividend has not yet been annownced to shareholders or paid, it is proposed that a dividend per share of 34.4p (totalling £17 2m) will be officially declared to shareholders in May 2026 and subsequently paid in une 2020 if the board of directors suggestion is approved.

ASSIGNMENT REQUIREMENTS:

You are required to write a 1,500 word report (+/- 10% allowed) to the board of directors of Swishcears Plc that evaluates which funding method would be the most appropriate to use to finance ‘Project Supply Chain’.

Your report should be in the following format:

To:

From:

Date:

Subject:

Write the content of your report here

Your report should cover the following:

1. Evaluate whether a green loan or social bonds would be a suitable method to raise the

finance for the project as an alternative to a dividend cut.

(Recommended - 400 words)

1. Using Microsoft Co-Pilot, produce an academic discussion on whether dividend

announcements (such as a reduction) do have an impact on the share price of companies in practice and put this in the appendix (Please note: This discussion is not included as part of your word count). Briefly address Ayesha Haider’s concern about a dividend reduction using relevant information from the discussion produced by Co-Pilot. Critically discuss the usefulness of this A.L (Artificial Intelligence) produced information for your board of directors. (Recommended - 400 words)

1. Identify three real world examples of listed companies that have made an ordinary

dividend decrease announcement within the last ten years and analyse the impact it had on their share price (your company examples can be from any country). (Recommended - 300 words)

1. Using the information in Exhibits 1-5 in the assignment brief and your findings for parts 1

• 3 above, recommend (with justification) which of the two proposed financing methods

should be chosen to raise the £200m to fund ‘Project Supply Chain’. (Recommended - 400 words)

You must include a references page at the end of your report. We would expect to see a minimum of 10 different references (all cited in the main body of your text) for this assignment. However, evidence of deeper research results in higher marks.

A penalty will be applied to your overall mark if you exceed the word count by more than 10%. A 10 mark deduction will be applied if you exceed this limit i.e. greater than 1,650 words.

Assignment Mark Weightings

1. Evaluation of using a green loan or social bonds — 25%

1. Critical discussion on Al findings — 30%

1. Evaluation of cutting the dividend — 10%

1. Recommendation — 30%

1. Presentation - 5%

The following is an excerpt from the signed loan agreement between Swishcar PLC and Bank of Manchester for the loan that is due to be repaid on 1st February 2027: 6.2.1 Financial Covenants The borrower undertakes to comply with the following financial covenants during the term of the borrowing: (i) The quick ratio (asset test ratio) must always be maintained at a minimum level of 0.95:1 (ii) The debt-to-equity ratio must never go above 0.4. For this covenant, the ratio is to be calculated as follow: Debt-to-Equity ratio = (iii) The payment of a dividend can only be made after prior written consent from the Bank of Manchester. (iv) The payment of a dividend can only be paid if Earnings for the financial year is above £100m. Exhibit 5 — Newspaper article from today’s Financial Times Greenhaul Logistics Ltd Unveils Groundbreaking Fully Electric Lorry 14™ February 2026 — London: Greenhaul Logistics Ltd has announced the launch of its first fully electric lorry, the GH-E1, marking a major leap toward sustainable freight transport. The GH-E1 offers a 500-mile range on a single charge and zero exhaust emissions, aiming to revolutionize long-haul logistics. CEO Carla Mendes stated, “This is not just a truck—it’is a commitment to the planet.” With rapid-charging capabilities and smart fleet integration, the GH-E| positions Greenhaul at the forefront of green transport. Production is expected to begin in the summer of 2026, with the first deliveries expected by December

1. Industry experts call it a “game-changer” for logistics sustainability.

Exhibit 2 — Project Supply Chain Swishcar PLC paid a consultancy company to investigate the potential of the electric lorry project. The report was received from the consultants on 10™ December 2025. Report Highlights: Initial investment required: £200m Net Present Value of the project: £190.9m Exhibit 3 — Swishcar PLC Statement of financial position for the year ended 31* December 2025 As at 31 As at 31 December December 2025 2024 £ million £ million Non-Current Assets Property, plant, and equipment 270 340 Intangible assets 15 15 Investments 120 120 405 475 Current Assets Trade receivables 72 281 Inventories 198 209 Cash and cash equivalents 325 695 595 1,185 Current Liabilities Trade payables (160) (175) Acerued expenses (16) (15) Other current Liabilities (104) (94) (280) (284) Net Current Assets 315 901 Non-Current Liabilities Long Term Loans (Repayable 1 Feb 2027) (180) (180) Deferred tax liabilities - (16) (180) (196) Net Assets 540 1,180 Shareholders’ Equity Share Capital 250 250 Share Premium 175 175 Retained Earnings (Distributable Profits) 100 752 Other Reserves 15 3 Total Equity 540 1,180