Pisces plc produced the following statement of financial position and income statement at the end of the third year of trading:

An analysis of the underlying records reveals the following:

1. R&D costs relate to the development of a new product in the previous year. These costs are written off over a two-year period (starting last year). However, this is a prudent approach and the benefits are expected to last for 16 years.

2. The allowance for trade receivables was created this year and the amount is very high. A more realistic figure for the allowance would be £4 million.

3. Restructuring costs were incurred at the beginning of the year and are expected to provide benefits for an infinite period.

4. The business has a 7 per cent required rate of return for investors.

5. The capital employed at the end of the year fairly reflects the average capital employed during the year.

Required:

Calculate the EVA^® for the business for the third year of trading.

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Statement of financial position as at the end of the third year £m ASSETS Non-current assets Property Machinery and equipment Motor vans Marketable investments Current assets Inventories Receivables Cash Total assets EQUITY AND LIABILITIES Equity Share capital Retained earnings Non-current liabilities Loan notes Current liabilities Trade payables Total equity and liabilities 40.0 80.0 18.6 9.0 147.6 45.8 64.6 1.0 111.4 259.0 80.0 36.5 116.5 80.0 62.5 259.0