Unit: Advanced Financial Reporting and Analysis
9 Questions| Statement of comprehensive income for the year ended 31 March 2016: | ||||
| D Ltd. Sh."million" | S Ltd. Sh."million" | E Ltd. Sh."million" | A Ltd. Sh."million" | |
| Revenue | 26,400 | 24,000 | 20,000 | 15,000 |
| Cost of sales | (12,000) | (12,000) | (16,000) | (12,000) |
| Gross profit | 14,4000 | 12,000 | 4,000 | 3,000 |
| Investment income | 3,520 | 540 | - | - |
| 17,920 | 12,540 | 4,000 | 3,000 | |
| Distribution cost | (3,320) | (2,360) | (1,360) | (800) |
| Administrative expenses | (3,880) | (2,440) | (1,140) | (900) |
| Finance cost | (420) | - | ||
| Profit before tax | 10,300 | 7,740 | 1,500 | 1,300 |
| Income tax expenses | (2,440) | (2,400) | (580) | (500) |
| Profit for the year | 7,860 | 5,340 | 920 | 800 |
| Other comprehensive income: | ||||
| Adjustment of available for sale | ||||
| financial assets | 500 | - | - | - |
| Total comprehensive income | 8,360 | 5,340 | 920 | 800 |
| Statement of financial position as at 31 March 2016: | ||||
| D Ltd. | S Ltd. | E Ltd. | A Ltd. | |
| Non-current assets: | Sh."million" | Sh."million" | Sh."million" | Sh."million" |
| Property, plant and equipment | 8,760 | 2,200 | 4,500 | 3,500 |
| Investment in: S Ltd. | 6,720 | - | ||
| E Ltd. | - | 4,600 | ||
| A Ltd. | 4,480 | |||
| Available for sale tinancial assets | 3,000 | |||
| 22,960 | 6,800 | 4,500 | 3,500 | |
| Current assets: | ||||
| Inventories | 2,100 | 2,200 | 1,650 | 1,270 |
| Trade receivables | 2,640 | 6,600 | 500 | 800 |
| Financial assets at fair value through profit and loss | 1,000 | |||
| Cash and cash equivalents | 400 | 2,200 | 300 | 430 |
| 6,140 | 11,000 | 2,450 | 2,500 | |
| Total assets | 29,100 | 17,800 | 6,950 | 6,000 |
| Equity and liabilities: | ||||
| Equity: | ||||
| Ordinary share capital (Sh.100 par value) | 6,000 | 3,200 | 2,000 | 2,500 |
| Share premium | 3,000 | 1,600 | 1,000 | 1,250 |
| Revenue reserves | 9,580 | 5,600 | 2,120 | 1,650 |
| 18,580 | 10,400 | 5,120 | 5,400 | |
| Non-current liabilities: | ||||
| 12% loan stock | 3,500 | |||
| Deferred tax liabilitv | 2,660 | 2,200 | 370 | |
| Current liabilities: | ||||
| Trade and other payables | 2,020 | 3,000 | 790 | 460 |
| Current income tax | 2,340 | 2,200 | 670 | 140 |
| 10,520 | 7,400 | 1,830 | 600 | |
| Total equity and liabilities | 29,100 | 17,800 | 6,950 | 6,000 |
| 1 | D Ltd. acquired its investments in S Ltd. and A Ltd. when the revenue reserve balances of S Ltd. and A Ltd. were Sh.2,600 million and Sh.650 million respectively. |
| 2 | The revenue reserves of E Ltd. amounted to Sh.2,400 million as at 1 July 2010 and Sh.2,750 million as at 1 April 2011. |
| 3 | During the year ended 31 March 2016, S Ltd. sold goods atanormal mark up of 33/,% at a price of Sh.2,400 million to D Ltd. 20% of the goods remained unsold by D Ltd. as at 31 March 2016. |
| 4 | The financial assets held at fair value through profit and loss in the books of D Ltd. have not been adjusted to their fair value of Sh.1,200 million. Revenue reserves of D Ltd. include the fair value adjustment of available for sale financial assets. |
| 5 | Investment income includes dividends received from subsidiaries. D Ltd. received Sh.3,200 million from S Ltd. while S Ltd. received Sh.360 million from E Ltd. Total dividends paid by D Ltd. amounted to Sh.2.000 million. |
| 6 | The disposal proceeds from the sale of shares in A Ltd. on 30 June 2015 amounted to Sh.1,500 million received in cash. D Ltd. will account for the remaining interest in A Ltd. using the equity method in accordance with IAS 28. |
| 7 | Included in trade receivables and trade payables are the following balances:
|
| 8 | Inventories sold by S Ltd. to D Ltd. worth Sh.60 million at normal mark up had neither been received nor recorded by D Ltd. as at 31 March 2016. |
| 9 | All goodwill of the investee companies had been impaired by 25% during the year ended 31 March 2015. No impairment occurred in the year ended 31 March 2016. The group uses the partial goodwill method in preparing the group financial statements. |
| Samaki Group Statement of comprehensive income for the year ended 31 December 2015 | |||
| Sh."million" | Sh."million" | ||
| Revenue | 24,600 | ||
| Cost of sales | (19,230) | ||
| 5,370 | |||
| Other incomes: | Share of profit after tax from associate | 249 | |
| Gain on disposal of property, plant and equipment | 45 | ||
| Interest income | 141 | ||
| 5,805 | |||
| Distribution costs | 2,406 | ||
| Administrative expenses | 1,110 | ||
| Finance costs | 111 | (3,627) | |
| Profit before tax | 2,178 | ||
| Income tax expense | (594) | ||
| Profit after tax for the year | 1,584 | ||
| Attributable to: | |||
| Parent | 1,254 | ||
| Non-controlling interest | 330 | ||
| 1,584 | |||
| Samaki Group Statement of financial position as at 31 December: | ||
Assets: | 2015 Sh."million" | 2014 Sh."million" |
| Non-current assets: | ||
| Property, plant and equipment | 3,957 | 3,270 |
| Goodwill | 270 | 246 |
| Investments | 2,310 | 810 |
| 6,567 | 4,326 | |
| Current assets: | ||
| Inventories | 2,400 | 1,914 |
| Trade receivables | 1,830 | 1,440 |
| Cash and cash equivalents | 135 | 420 |
| 4,365 | 3,774 | |
| Total assets | 10,932 | 8,100 |
| Capital and liabilities: | ||
| Capital and reserves: | ||
| Ordinary share capital (Sh.10 par value) | 540 | 450 |
| Share premium account | 255 | 45 |
| Revaluation reserve | 90 | 30 |
| Retained earnings | 597 | 306 |
| Non-controlling interest | 753 | 450 |
| Long-term liabilities: | ||
| Interest bearing borrowings | 4,194 | 3,180 |
| Current liabilities | 4,503 | 3,639 |
| 10,932 | 8,100 | |
| Statement of changes in equity for the year ended 31 December 2015: | |||||
| Share capital Sh."million" | Share premium Sh."million" | Revaluation reserve Sh."million" | Retained earnings Sh."million" | Total Sh."million" | |
| Balance brought down (1 January 2015) | 450 | 45 | 30 | 306 | 831 |
| Gain on revaluation of property | 60 | - | 60 | ||
| Net profit for the period | 1,254 | 1,254 | |||
| Dividend paid | (378) | - | |||
| Exchange difference: On retranslation of foreign investment | (615) | - | |||
| Exchange difference: On loan to finance equity investment | 30 | 30 | |||
| Issue of share capital | 90 | 210 | - | - | 300 |
| Balance carried down (31 December 2015) | 540 | 255 | 90 | 597 | 1,482 |
| 1 | Samaki Ltd. acquired 80% of the ordinary shares in Zebra Ltd. on 1 January 2015. The fair value of the assets of Zebra Ltd. as at 1 January 2015 were as follows: |
| Sh."million" | ||
| Property, plant and equipment | 180 | |
| Inventories | 120 | |
| Trade receivables | 45 | |
| Cash and cash equivalents | 105 | |
| Trade payables | (48) | |
| Accruals | (12) | |
| Current tax | (90) | |
| Net assets | 300 |
| The purchase consideration was Sh.291 million and comprised 6 million ordinary shares of Sh.10 par value in Samaki Ltd. (issued at Sh.40 each) and Sh.51 million in cash. | |
| 2 | The summary of property, plant and equipment was as follows: |
| Sh."million" | ||
| Balance as at 1 January 2015 | 3,270 | |
| Additions (including Zebra Ltd.) | 834 | |
| Revaluation of property, plant and equipment | 60 | |
| Disposal | (90) | |
| Depreciation | (117) | |
| Balance as at 31 December 2015 | 3,957 |
| There have been no sales of investments. The investments included under non-current assets were made up of the following items as at 31 December: |
| 2015 Sh."million" | 2014 Sh."million" | ||
| Investment in associate company | 900 | 660 | |
| Trade investments (including purchases of foreign equity investment) | 1,440 | 150 |
| Interest receivable included in trade receivables was Sh.45 million as at 1 January 2015 and Sh.51 million as at 31 December 2015. | |
| 3 | Current liabilities comprised the following items as at 31 December: |
| 2015 Sh."million" | 2014 Sh."million" | ||
| Trade payables (including interest payable of Sh.27 million as at 31 December 2015) | 3,579 | 2,739 | |
| Current tax | 609 | 600 | |
| Accruals | 315 | 300 | |
| 4,503 | 3,639 |
| 4 | The exchange differences included in the statement of changes in equity relate to a transaction involving a foreign equity investment. An interest bearing loan of Sh.900 million was obtained during the year to finance the foreign equity investment. Both amounts are after retranslation as at 31 December 2015. |
| 5 | During the year ended 31 December 2015, an interest bearing loan amounting to Sh.300 million was obtained to acquire additional property, plant and equipment. The assets were acquired in the course of the year. |
| Hasara Ltd. Statement of financial position as at 31 March 2016 | |
| Assets: | Sh."000" |
| Non-current assets: | |
| Property, plant and equipment | 10,957.4 |
| Available for sale financial assets | 647 |
| Goodwill | 120 |
| Preliminary expenses | 87.8 |
| Current assets: | |
| Inventories | 872.5 |
| Accounts receivable | 689.9 |
| Financial assets at fair value through profit and loss | 216.4 |
| Total assets | 13,591 |
| Equity and liabilities: | |
| Equity: | |
| Ordinary share capital (Sh.10 par value) | 6,000 |
| 7% cumulative preference share capital (Sh.10 par value) | 4,000 |
| Revaluation reserves | 400.8 |
| Revenue reserves | (3,822.7) |
| 6,578.1 | |
| Non-current liabilities: | |
| 10% debentures | 4,000 |
| Current liabilities: | |
| Bank overdraft | 775.8 |
| Accounts payable | 1,962 |
| Current income tax | 275.1 |
| Total equity and liabilities | 13,591 |
| 1 | Zawadi Ltd. issued 3 new ordinary shares of Sh.10 each for every five 7% cumulative preference shares in Hasara Ltd. In addition, the 7% cumulative preference shareholders in Hasara Ltd. were issued with two new 10% preference shares of Sh.10 par value in Zawadi Ltd. for every five 7% cumulative preference shares held. |
| 2 | The preference dividends in Hasara Ltd. were three years in arrears. The 7% cumulative preference shareholders in Hasara Ltd. will accept three fully paid ordinary shares of Sh.10 each in Zawadi Ltd. and Sh.20 of 8% debentures in Zawadi Ltd. for every Sh. 100 of the preference dividend in arrears. |
| 3 | The existing 10% debenture holders in Hasara Ltd. were issued with five fully paid ordinary shares of Sh.10 each in Zawadi Ltd. and Sh.40 of 8% debentures for every Sh.100 of 10% debentures. |
| 4 | The ordinary shareholders in Hasara Ltd. were issued with 2 new ordinary shares of Sh.10 each in Zawadi Ltd. for every five ordinary shares held. |
| 5 | The current liabilities of Hasara Ltd. were taken over by Zawadi Ltd. at book value. |
| 6 | The assets of Hasara Ltd. were taken over by Zawadi Ltd. at their fair values as follows: |
| Sh. "000" | ||
| Property, plant and equipment | 9.486.8 | |
| Available for sale financial assets | 810 | |
| Inventories | 698.7 | |
| Accounts receivable | 477.1 | |
| Financial assets at fair value through profit and loss | 216.4 |
| 7 | The liquidation expenses of Hasara Ltd. amounted to Sh.30,000 and were paid by Zawadi Ltd. |
| 8 | All the above transactions were completed on 1 April 2016. |
| Number of staff | 1,000 |
| Number of options to each member of staff | 500 |
| Vesting period | 3 years |
| Fair value at grant date (per option) | Sh.30 |
| Expected employee turnover (per annum) | 5% |
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