17:27 Vol 61% . 2 . ANNEXURE F. FORMATIVE ASSESSMENT 1 QUESTION 1 (45 marks) ) Bud Ltd. ("Bud") is a South African smartphone manufacturer and seller with a a 31 January financial year-end. They have 45 retail outlets nationwide strategically located in each of the nine provinces to maximise their revenue and availability to current and potential customers. Websites and orders Additional to the 45 physical retail outlets, Bud also has an e-commerce store on their website. International and local customers can browse their product catalogue and purchase Bud-smartphones via the website, The website was designed and set up a few years ago, at the cost of R50 000, by an external entity, eCraft (Pty) Ltd. ("eCraft"), who specialises in website-related services. cancy Bud's website is updated annually by eCraft at a nominal fee to ensure the latest information (such as smartphones on offer and prices) is available. The website ( continues to function effectively and is as visually stimulating and user-friendly as possible Once a customer places an order and makes their payment on the website (through a secured payment portal), the order is processed, and Bud's distribution department arranges appropriate distribution Should a customer not be able to pay the total purchase price of a smartphone on the purchase date, credit terms are available. However, a strict approval process is conducted once these customers apply for credit to ensure that repayment is made appropriately. This process assists Bud in achieving their target average collection period of 120-days. Distribution department Bud's distribution department consists of suitably trained and qualified employees to manage the process as efficiently as possible. Should an international order be received, the e order will be shipped to the customer while local orders are delivered by Bud's delivery trucks. Bud owns a fleet of 21 delivery trucks. Bud maintained an average delivery time of 5 days for local orders and 13 days for international orders in the 2022 financial year to ensure client satisfaction. This is made possible not only by the efficiency of Bud's 63 HEMN331.1. Jan-Jun2022-FA1-V4-E5-17012022 ANNEXURE E: FORMATIVE ASSESSMENT 1 distribution department but also as Bud pre-manufactures a set quantity of each smartphone on offer, which is kept in inventory. This inventory on hand is based on each smartphone's current and estimated popularity, backed by thorough market research conducted by Bud's sales and marketing department. Bud's target inventory turnover is 1:1. >> Products and production Bud sells five different smartphones which offer different functionalities and qualities to the customer based on their needs and price point. Bud themselves manufactures all smartphones on offer. Bud's manufacturing factory is located in Cape Town, South Africa, where their innovation and development department is also based. The factory and innovation and development department have a total of 72 specialised employees in the fields of technology, science, and engineering. Once Bud's innovation and development department has developed a 61% . 2 Voll 17:28 B Products and production Bud sells five different smartphones which offer different functionalities and qualities to the customer based on their needs and price point Bud themselves manufactures all smartphones on offer. Bud's manufacturing factory is located in Cape Town, South Africa, where their innovation and development department is also based. The factory and innovation and development department have a total of 72 specialised employees in the fields of technology, science, and engineering. Once Bud's innovation and development department has developed a suitable new product, the product is trademarked. Consequently, all five of Bud's smartphones are trademarked. Human and natural resources Bud aims to employ South African residents, who come from various backgrounds, ethnic groups and genders, as far as possible. However, this proves challenging as it has been identified that the average South African high school pupil performs poorly in science, mathematics, and technology development and innovation, resulting in South Africa not being on par with international competitors. Bud has set up a social responsibility committee within the entity as a response. The committee is tasked to suitably identify and distribute funds to high schools and appropriate organisations to promote their science and mathematics programs (eg.. NGOs that promote the science and mathematic performance of high school students). According to the agreement, these parties must provide a semi-annual feedback report to Bud outlining how the funds have been utilised and the latest student performance to ensure that Bud's funding is efficiently and effectively employed. Bud also offers bursaries to tertiary students who wish to study science, mathematics, and technology development and innovation. The committee approves students based on the student's needs and historical academic results. 54 HEMN331-1-Jan-Jun2022-FA1-V4-E5-17012022 ANNEXURE F: FORMATIVE ASSESSMENT 1 In the 2022-financial year, R8 million in funding was provided by Bud for all social responsibility activities combined The manufacturing of smartphones may be harsh on the environment. Bud aims to employ green energy le.g., solar panels) as far as possible and has compiled an environmental committee. This committee monitors Bud's environmental footprint and reports to the directors quarterly. The directors are also made aware of any alr, land, and water pollution and the quantity thereof. For example, water is utilised as efficiently as possible in the factory, and in the 2022-financial year, the CO2 emission by the factory was 0.03 tonnes of co2e/KRW 100 million Finalised, audited Integrated report extract The following are extracts from Bud Ltd.'s finalised and audited integrated report for the 31 January 2022-financial year-end >> Target Financial key performance indicators (KPI's) Inventory turnover Average collection period Total asset turnover Gross profit margin 3013 Net profit margin ROE 1:1 120 days 0.20 52% 35% 17% Debt: Equity 0.35 : 0.65 17:28 B ) + Vedl 60% ANNEXURE : FORMATIVE ASSESSMENT 1 Bud Ltd Statement of Financial Position as at 31 January 2022 2022 2021 Rm Rm 1 204 1 303 896 896 2 100 2 2 199 ASSETS Non-Current Assets Property, plant, and equipment Intangible assets Total Non-Current Assets Current Assets Inventory Trade receivables Cash and bank Total Current Assets 257 249 226 591 203 578 1 1 030 1 074 3 273 Total Assets 3 130 EQUITY AND LIABILITIES Equity Share capital Retained earnings Total equity 350 350 796 673 1 023 1 146 Non-Current Liabilities Long-term borrowings Total Non-Current Liabilities 1 237 1477 1 237 1 477 390 130 Current Liabilities Trade and other payables Short-term borrowings Total current liabilities 500 500 890 630 Total Equity and Liabilities 3 273 3 130 Number of shares in issue 35 35 56 HEMN331-1-Jan-Jun2022-FAI-V4-E5-17012022 ANNEXURE F: FORMATIVE ASSESSMENT 1 Bud Ltd Statement of Changes in Equity for the year ended 31 January 2022 Retained earnings 2022 2021 >> Rm Rm Opening balance 673 564 Profit for the year 213 197 Dividends (90) (88) Closing balance 796 673 5 of 13 Bud Ltd Statement of Comprehensive Income for the year ended 31 January 2022 2022 2021 Pm 17:28 B et LTE1 Vreml 60% Finalised, audited integrated report extract The following are extracts from Bud Ltd.'s finalised and audited integrated report for the 31 January 2022-financial year-end: Target Financial key performance indicators (KPI's) Inventory turnover Average collection period Total asset turnover Gross profit margin Net profit margin ROE Debt: Equity 1:1 120 days 0.20 52% 35% 17% 0.35: 0.65 Non-financial KPI's CO2 Emission Target Below 0.05 tonnes of CO2e/KRW 100 million annually. Minimum of R6.7 million annually Local orders: 1 week (7 days) International orders: 2 weeks (14 days) Social responsibility funding Delivery time 65 HEMN331-1-Jan-Jun 2022-FA1-V4-ES-17012022 ANNEXURE F: FORMATIVE ASSESSMENT 1 Bud Ltd Statement of Financial Position as at 31 January 2022 2022 2021 Rm Rm 1 303 1 204 896 896 2 199 2 100 ASSETS Non-Current Assets Property, plant, and equipment Intangible assets Total Non-Current Assets Current Assets Inventory Trade receivables Cash and bank Total Current Assets Total Assets 257 226 591 249 203 578 1 030 3 130 1 074 3 273 >> EQUITY AND LIABILITIES Equity Share capital Retained earnings Total equity 350 350 796 673 1 146 1 023 Non-Current Liabilities Long-term borrowings Total Non-Current Liabilities 1 237 1 237 1477 1 477 Current Liabilities 60%. 17:29 ! B LTE1 Bud Lia Statement of Changes in Equity for the year ended 31 January 2022 Retained earnings 2022 2021 Rm Rm Opening balance 673 564 Profit for the year 213 197 Dividends (90) (88) Closing balance 796 673 Bud Ltd Statement of Comprehensive Income for the year ended 31 January 2022 2022 2021 Rm Rm Sales income 708 634 Cost of sales ( (322) (298) Gross profit 386 336 Selling, marketing, and distribution expenses (10) (7) Other operating expenses (72) (44) Profit before interest and tax expenses 304 285 Finance costs (11) (13) Profit before tax expenso 293 272 Income tax expense (80) (75) Profit for the year 213 197 SES 67 HEMN331-1-Jan-Jun2022-FA1-V4-ES-17012022 ANNEXURE : FORMATIVE ASSESSMENT 1 REQUIRED: 1.1. Assess and comment on Bud Ltd.'s overall performance for the 2022-financial year As Bud Ltd. is target-driven, base your assessment on their achievement of the entity's key performance indicators, both financial and non-financial, rather than , focussing on movements from prior financial years. >> (25 marks) 1.2. Analyse Bud Ltd.'s performance for the 2022-financial year based on the six (6) capitals. (12 marks) ) 1.3 Discuss how Bud Ltd aligns with the UN sustainable goals. (5 marks) 5 1.4. Discuss any other non-financial KPIs which Bud Ltd. may set for their entily (3 marks 17:27 Vol 61% . 2 . ANNEXURE F. FORMATIVE ASSESSMENT 1 QUESTION 1 (45 marks) ) Bud Ltd. ("Bud") is a South African smartphone manufacturer and seller with a a 31 January financial year-end. They have 45 retail outlets nationwide strategically located in each of the nine provinces to maximise their revenue and availability to current and potential customers. Websites and orders Additional to the 45 physical retail outlets, Bud also has an e-commerce store on their website. International and local customers can browse their product catalogue and purchase Bud-smartphones via the website, The website was designed and set up a few years ago, at the cost of R50 000, by an external entity, eCraft (Pty) Ltd. ("eCraft"), who specialises in website-related services. cancy Bud's website is updated annually by eCraft at a nominal fee to ensure the latest information (such as smartphones on offer and prices) is available. The website ( continues to function effectively and is as visually stimulating and user-friendly as possible Once a customer places an order and makes their payment on the website (through a secured payment portal), the order is processed, and Bud's distribution department arranges appropriate distribution Should a customer not be able to pay the total purchase price of a smartphone on the purchase date, credit terms are available. However, a strict approval process is conducted once these customers apply for credit to ensure that repayment is made appropriately. This process assists Bud in achieving their target average collection period of 120-days. Distribution department Bud's distribution department consists of suitably trained and qualified employees to manage the process as efficiently as possible. Should an international order be received, the e order will be shipped to the customer while local orders are delivered by Bud's delivery trucks. Bud owns a fleet of 21 delivery trucks. Bud maintained an average delivery time of 5 days for local orders and 13 days for international orders in the 2022 financial year to ensure client satisfaction. This is made possible not only by the efficiency of Bud's 63 HEMN331.1. Jan-Jun2022-FA1-V4-E5-17012022 ANNEXURE E: FORMATIVE ASSESSMENT 1 distribution department but also as Bud pre-manufactures a set quantity of each smartphone on offer, which is kept in inventory. This inventory on hand is based on each smartphone's current and estimated popularity, backed by thorough market research conducted by Bud's sales and marketing department. Bud's target inventory turnover is 1:1. >> Products and production Bud sells five different smartphones which offer different functionalities and qualities to the customer based on their needs and price point. Bud themselves manufactures all smartphones on offer. Bud's manufacturing factory is located in Cape Town, South Africa, where their innovation and development department is also based. The factory and innovation and development department have a total of 72 specialised employees in the fields of technology, science, and engineering. Once Bud's innovation and development department has developed a 61% . 2 Voll 17:28 B Products and production Bud sells five different smartphones which offer different functionalities and qualities to the customer based on their needs and price point Bud themselves manufactures all smartphones on offer. Bud's manufacturing factory is located in Cape Town, South Africa, where their innovation and development department is also based. The factory and innovation and development department have a total of 72 specialised employees in the fields of technology, science, and engineering. Once Bud's innovation and development department has developed a suitable new product, the product is trademarked. Consequently, all five of Bud's smartphones are trademarked. Human and natural resources Bud aims to employ South African residents, who come from various backgrounds, ethnic groups and genders, as far as possible. However, this proves challenging as it has been identified that the average South African high school pupil performs poorly in science, mathematics, and technology development and innovation, resulting in South Africa not being on par with international competitors. Bud has set up a social responsibility committee within the entity as a response. The committee is tasked to suitably identify and distribute funds to high schools and appropriate organisations to promote their science and mathematics programs (eg.. NGOs that promote the science and mathematic performance of high school students). According to the agreement, these parties must provide a semi-annual feedback report to Bud outlining how the funds have been utilised and the latest student performance to ensure that Bud's funding is efficiently and effectively employed. Bud also offers bursaries to tertiary students who wish to study science, mathematics, and technology development and innovation. The committee approves students based on the student's needs and historical academic results. 54 HEMN331-1-Jan-Jun2022-FA1-V4-E5-17012022 ANNEXURE F: FORMATIVE ASSESSMENT 1 In the 2022-financial year, R8 million in funding was provided by Bud for all social responsibility activities combined The manufacturing of smartphones may be harsh on the environment. Bud aims to employ green energy le.g., solar panels) as far as possible and has compiled an environmental committee. This committee monitors Bud's environmental footprint and reports to the directors quarterly. The directors are also made aware of any alr, land, and water pollution and the quantity thereof. For example, water is utilised as efficiently as possible in the factory, and in the 2022-financial year, the CO2 emission by the factory was 0.03 tonnes of co2e/KRW 100 million Finalised, audited Integrated report extract The following are extracts from Bud Ltd.'s finalised and audited integrated report for the 31 January 2022-financial year-end >> Target Financial key performance indicators (KPI's) Inventory turnover Average collection period Total asset turnover Gross profit margin 3013 Net profit margin ROE 1:1 120 days 0.20 52% 35% 17% Debt: Equity 0.35 : 0.65 17:28 B ) + Vedl 60% ANNEXURE : FORMATIVE ASSESSMENT 1 Bud Ltd Statement of Financial Position as at 31 January 2022 2022 2021 Rm Rm 1 204 1 303 896 896 2 100 2 2 199 ASSETS Non-Current Assets Property, plant, and equipment Intangible assets Total Non-Current Assets Current Assets Inventory Trade receivables Cash and bank Total Current Assets 257 249 226 591 203 578 1 1 030 1 074 3 273 Total Assets 3 130 EQUITY AND LIABILITIES Equity Share capital Retained earnings Total equity 350 350 796 673 1 023 1 146 Non-Current Liabilities Long-term borrowings Total Non-Current Liabilities 1 237 1477 1 237 1 477 390 130 Current Liabilities Trade and other payables Short-term borrowings Total current liabilities 500 500 890 630 Total Equity and Liabilities 3 273 3 130 Number of shares in issue 35 35 56 HEMN331-1-Jan-Jun2022-FAI-V4-E5-17012022 ANNEXURE F: FORMATIVE ASSESSMENT 1 Bud Ltd Statement of Changes in Equity for the year ended 31 January 2022 Retained earnings 2022 2021 >> Rm Rm Opening balance 673 564 Profit for the year 213 197 Dividends (90) (88) Closing balance 796 673 5 of 13 Bud Ltd Statement of Comprehensive Income for the year ended 31 January 2022 2022 2021 Pm 17:28 B et LTE1 Vreml 60% Finalised, audited integrated report extract The following are extracts from Bud Ltd.'s finalised and audited integrated report for the 31 January 2022-financial year-end: Target Financial key performance indicators (KPI's) Inventory turnover Average collection period Total asset turnover Gross profit margin Net profit margin ROE Debt: Equity 1:1 120 days 0.20 52% 35% 17% 0.35: 0.65 Non-financial KPI's CO2 Emission Target Below 0.05 tonnes of CO2e/KRW 100 million annually. Minimum of R6.7 million annually Local orders: 1 week (7 days) International orders: 2 weeks (14 days) Social responsibility funding Delivery time 65 HEMN331-1-Jan-Jun 2022-FA1-V4-ES-17012022 ANNEXURE F: FORMATIVE ASSESSMENT 1 Bud Ltd Statement of Financial Position as at 31 January 2022 2022 2021 Rm Rm 1 303 1 204 896 896 2 199 2 100 ASSETS Non-Current Assets Property, plant, and equipment Intangible assets Total Non-Current Assets Current Assets Inventory Trade receivables Cash and bank Total Current Assets Total Assets 257 226 591 249 203 578 1 030 3 130 1 074 3 273 >> EQUITY AND LIABILITIES Equity Share capital Retained earnings Total equity 350 350 796 673 1 146 1 023 Non-Current Liabilities Long-term borrowings Total Non-Current Liabilities 1 237 1 237 1477 1 477 Current Liabilities 60%. 17:29 ! B LTE1 Bud Lia Statement of Changes in Equity for the year ended 31 January 2022 Retained earnings 2022 2021 Rm Rm Opening balance 673 564 Profit for the year 213 197 Dividends (90) (88) Closing balance 796 673 Bud Ltd Statement of Comprehensive Income for the year ended 31 January 2022 2022 2021 Rm Rm Sales income 708 634 Cost of sales ( (322) (298) Gross profit 386 336 Selling, marketing, and distribution expenses (10) (7) Other operating expenses (72) (44) Profit before interest and tax expenses 304 285 Finance costs (11) (13) Profit before tax expenso 293 272 Income tax expense (80) (75) Profit for the year 213 197 SES 67 HEMN331-1-Jan-Jun2022-FA1-V4-ES-17012022 ANNEXURE : FORMATIVE ASSESSMENT 1 REQUIRED: 1.1. Assess and comment on Bud Ltd.'s overall performance for the 2022-financial year As Bud Ltd. is target-driven, base your assessment on their achievement of the entity's key performance indicators, both financial and non-financial, rather than , focussing on movements from prior financial years. >> (25 marks) 1.2. Analyse Bud Ltd.'s performance for the 2022-financial year based on the six (6) capitals. (12 marks) ) 1.3 Discuss how Bud Ltd aligns with the UN sustainable goals. (5 marks) 5 1.4. Discuss any other non-financial KPIs which Bud Ltd. may set for their entily (3 marks