The financial statements of Danube Engineering plc for the year that has just ended are as follows:

As in previous years, a dividend of 25 per cent of the profit for the year was proposed and paid during the year.

The following information is relevant for Year 6:

1. Sales revenue is expected to be 20 per cent higher than in Year 5.

2. All sales are on credit.

3. Non-current assets of the business have plenty of spare capacity.

4. The tax rate will be the same as in Year 5 and all of the tax due will be outstanding at the year-end.

5. The business intends to maintain the same dividend policy as for Year 5.

6. Tax due at the end of Year 5 will be paid during Year 6.

7. Half of the loan notes in issue will be redeemed at the end of Year 6.

8. Any financing gap will be filled by an issue of shares at nominal value. The new shares will not, however, rank for dividend during Year 6.

Required:

Prepare a projected income statement and statement of financial position for Year 6 using the per-cent-of-sales method. (All workings should be to the nearest £ million.)

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Income statement for the year ending 31 March Year 5 £m 500 (350) 150 Sales revenue Cost of sales Gross profit Selling expenses Distribution expenses Other expenses Profit before taxation Tax (20%) Profit for the year (30) (40) (25) 55 (11) 44