The draft financial statements of Hanford Ltd are given below: Balance sheet as at 31 December

The draft financial statements of Hanford Ltd are given below:

                                                                         Balance sheet as at 31 December

                                                                                2002                           2001

                                                                      $'000        $'000            $'000      $'000

Non-current assets

Property, plant & equipment                         5,670                            5,490

   (net)

      Intangible assets

      Goodwill                                                   540        6,210              600      6,090

    Current assets

    Inventories                                               8,260                              6,820

    Trade and other receivables                    6,465                              5,260

     Provision for bad debts                           (240)                               (160)

     Cash at bank                                          210       14,695                   30      11,950

Current liabilities

    Trade and other payable                      3,625                                  3,190

    Bank overdraft                                          85                                      425

    Interest payable                                        45                                        15

    Tax payable                                              390      (4,145)                  480   (4,110)

    Net current assets                                             10,550                              7,840

   Total assets less current liabilities                 16,760                               13,930

    Non-current liabilities             

     10% note payable                                  900                                   300

  Government grant                                      780                                  900

          Plant maintenance provision                  -           (1,680)                80    (1,280)

Net assets                                                                15,080                           12,650

  Capital and reserves

       Issued capital,                                                     

                   Ordinary Shares of $1 each                        2,250                           1,500

        Reserves

        Share premium                                 1,050                                 300

        Revaluation                                         450                                     -

    Accumulated profits                           11,320    12,830                 10,850   11,150

                                                                             15,080                              12,650

Income Statement for the Year Ended 31 December 2002

                                                                                 $'000                         $'000

Turnover                                                                                                11,460

Cost of sales                                                                                            (7,860)

Gross profit                                                                                               3,600

Operating expenses

                       Depreciation                                           960

                       Amortisation of goodwill                           60

                      Interest expense                                       90                    (1,110)

Profit before tax                                                                                         2,490

Taxation                                                                                                      (810)

     Profit after tax                                                                                         1,680

    Dividends                                                                                                1,200

The following information is available:

(1)     Cost of sales includes a loss on sale of plant of $150,000, and a credit for the amortisation of government grants.

(2)     The plant maintenance provision was released to the income statement in the year to 31 December 2002 as these provisions are no longer required, following the company’s change of accounting policy to account for maintenance costs on an actual incurred basis.

(3)     The company revalued its buildings by $600,000 on 1 September 2002. The surplus was credited to a revaluation reserve.

(4)     New plant was acquired during the year at a cost of $750,000 and a government grant of $150,000 was received for the plant. The remaining movement on property, plant and equipment was due to the disposal of obsolete plant.

(5)     On 1 July 2002 a bonus issue of 1 new share for every 10 held was made from the revaluation reserve. In addition to the bonus issue, the company made a further issue of ordinary shares for cash.

Required:

Use the indirect method to prepare a statement of cash flows for Hanford Ltd for the year ended 31 December 2002