Page 21 - CIMA SCS Workbook August 2018 - Day 2 Tasks

FINANCIAL STRATEGY (F3) - PRACTICE TASKS

EXERCISE TWO

UPDATE

You have just received the following email from Den Rice, the FNG Chief Financial Officer.
TRIGGER

Email

To: Senior Finance Manager
From: Den Rice
Subject: Dividends

Over the last couple of days I have received two interesting emails.

One is from Fiona Finch, who owns 10% of FNG’s shares and is the cousin of our Chairman Alan
Finch. The other is from our bank manager, John Small. I’ll send you a copy of both these emails
(see reference materials).

I’m afraid both Fiona and John are unhappy with the level of dividend we paid out recently. I’m
going to meet John to discuss this later in the week, and I’ll also telephone Fiona to explain what
is going on. To help me with this, I’d like you to prepare some notes for me on dividend policy.

First, could you explain in general terms what are the key issues to consider when setting a
dividend policy? Don’t worry yet about applying your ideas to FNG. I want an overview of all the
key issues first.

Second, could you look at the issues raised by these two important stakeholders. I need you to
explain why they aren’t happy and also to give a suggestion of how we should address their
concerns.

Please could you put your thoughts in an email, and send it to me by the end of the day.

Thanks.

TASK

Prepare an email in response to Den Rice’s request. (Time allowed: 60 minutes)

(Refer to the Reference Materials overleaf)

KAPLAN PUBLISHING 35