The current sales team have a total annual salary package of $332,000 and if the new facility is built their roles will be expanded to include sales and marketing responsibility for the new facility's products. All costs associated with the new facility are incurred once sales commence, unless stated.
1. At the Poly Novo 2023 Annual General Meeting (" AGM) heid on 3 November, 2023 they revealed plans to construct a new manufacturing facility adjacent to its existing facility, PolyNovo has already performed a substantial amount of design analysis related to the new facility at a cost of $70, 000. The capital expenditure of $845, 000 associated with the construction of the new facility and the annual operating expenses are substantial. 2. The capital cost of the new facility is expected to be $845, 000 today. PolyNovo must also purchase $300, 000 of plant and equipment ("P&E"). At the end of FY23 PolyNovo had" $46.8m of cash on hand and it plans to use S0.3 million of their cash balance to pay for the building which will reduce the capital cost to just $545,000. If the new facility is built, a piece of obsolete manufacturing equipment must be sold. The equipment had a total capital cost in 2020 of $220,000 and is being depreciated at 511,000 per annum for the years 2021 to 2030 inclusive The equipment can be sold today for $180, 000 and PolyNovo will use the entire sale proceeds to distribute a $180, 000 dividend to its shareholders today. 4 Poly Novo plans to commence construction of the new facility in the year 2024 and it is "scheduled for completion in CY26". Therefore, the first year of cash sales in 2026 are anticipated to be 5 800,000. Management
5. At the 2023 AGM, Poly Novo referred to "Total FY23 revenue of $66.5m" Furthermore, they outlined a clear path to profitability and in 2023 appointed a new Chief Information Officer (CIO) at an annual salary of $ 395,000 to manage the introduction of multiple new information systems across PolyNovo's existing operations. 7. For cost accounting purposes Poly Novo must allocate overheads across each business unit. Therefore, it is proposed that the new facility be charged $25, 000 of the head office costs of $118,000 p a. B. Annual variable cash costs at the new facility are expected to be 63% of each year's cash sales. Because the new facility is co located adjacent to an existing facility, it will incur annual fixed operating costs of S 37,000 compared to annual fixed costs of $466, 000 at the existing facility. The current sales team have a total
annual salary package of $332,000 and if the new
facility is built their roles will be expanded to include
sales and marketing responsibility for the new facility's
products. All costs associated with the new facility are
incurred once sales commence, unless stated.
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