MAC3702 ASSIGNMENT 2 SEMESTER 1 OF 2023 []
QUESTION 1 (36 Marks)
Rezesco Ltd (“Rezesco”) is an investment company that holds various investments across several industries. The company’s investments are limited to the Southern African Development Community (SADC) member countries. Rezesc...
QUESTION 1 (36 Marks)
Rezesco Ltd (“Rezesco”) is an investment company that holds various investments across several
industries. The company’s investments are limited to the Southern African Development Community
(SADC) member countries. Rezesco’s has a 28 February financial year-end.
1. Rezesco’s wholly owned companies for the 2022 and 2023 financial years
Investment Industry
territory Tele- Electronics
communications
South Africa Tectab (Pty) Ltd (“Tectab”) Electron (Pty) Ltd (“Electron”) is in
manufactures and sells two types of the business of manufacturing and
tablets, a basic-home tablet (“BhT”) selling two types of CPUs. These
CPU’s are used in the
and a professional tablet (“PfT”).
manufacturing of tablets. Electron
The main manufacturing is required to prioritise the supply of
component of each tablet is a the CPUs to Tectab. In this regard,
central processing unit (CPU). All for each product type, 40% of the
CPUs are bought internally within manufactured CPUs are currently
the group and exclusively from sold to the external market while
Electron (Pty) Ltd ("Electron"). 60% are sold internally to Tectab.
2. Possible close-down of Electron
Electron’s costs of manufacturing electronic components has increased significantly over the past
three years. Due to this cost increase, Rezesco is considering the possibility to discontinue
Electron’s operations effective from 1 March 2023. Rezesco is currently exploring the possibility of
acquiring a 75% equity stake in Super Electronix Ltd as a suitable replacement for Electron. Super
Electronix Ltd is situated in Namibian and is currently owned by a Namibian individual. Their
operations are similar to Electron’s. Negotiations have already started with regards to the possible
acquisition.
Within the SADC region, acquisitions of this nature require various co-operations and approvals
from amongst others, the relevant competition commissions, the respective revenue authorities,
trade unions – approvals from South Africa, Namibia and from the SADC.
For the 2023 financial year, if operations continue normally, the loss (excluding non-cash items)
from normal operations is expected to be R0,625 million.
3. Proposal to acquire 75% equity stake In Super Electronix Ltd
In the instance that Rezesco acquires the 75% equity stake in Super Electronix, the following
information will be applicable:
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