2019 RM'000 Statements of Financial Position as at 30 June 2019 and 2020 2020 RM'000 ASSETS Non-current assets Property, plant and equipment 489,505 Investment in subsidiaries Intangible assets 2,200 Deferred tax assets 2.205 Total non-current assets 493,910 400,353 2,145 5,139 407,637 172,694 202,929 30,119 160,521 202,352 30,647 Current assets Inventories Trade receivables Other receivables, deposits and prepayments Amount due from subsidiaries Tax recoverable Deposits, cash and bank balances Total current assets TOTAL ASSETS 10,967 429,716 846,425 1,340,335 656 529,962 924,138 1,331,775 EQUITY AND LIABILITIES EQUITY Equity attributable to owners of the Company Share capital Other reserves Retained earnings Non-controlling interests Total equity 650,450 29,995 437,973 1,118,418 3,541 1,121,959 607,781 14,832 439,525 1,062,138 8,679 1,070,817 14,545 LIABILITIES Non-current liabilities Borrowings Deferred rental Retirement benefits obligations Deferred tax liabilities Total non-current liabilities 244 8,709 185 407 8,583 17.884 44 6,393 21,226 81,764 79,012 6,161 Current liabilities Trade payables Other payables, accruals and other liabilities Borrowings Preference shares Tax payable Dividend payable Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES 1,786 31,769 200,492 218,376 1,340,335 88,467 80.773 9,010 2,307 9,054 50,121 239,732 260,958 1,331,775 Comparative Statement of Profit or Loss with Global Industry Average for the Financial Year Ended 30 June 2020 Group Global Industry Average (GIA) RM'000 Revenue *1,152,860 100.00 (*50% of total sales were on credit terms) Cost of sales **(883,411) (**50% of total purchases were on credit terms) Gross profit 269,449 46.69 Other income 12,478 Finance income 9,370 Gain on disposal of assets Administrative expenses (73,819) Operating profit 217,478 22.48 Finance costs (1,273) Profit before tax 216,205 21.61 Tax expenses (23,858) Profit for the financial year 192,347 19.77 The following information relates to the existing capital of the firm as at 30 June 2019: The market price of ordinary shares RM2.00 The following information relates to the existing capital of the firm as at 30 June 2020: The market price of ordinary shares RM2.69 Weighted average number of ordinary shares 3,164,975,000 units Beta of company (1) 6.8% Yield of a 3-month Malaysian Islamic Treasury Bill (RF) 1.60% Expected returns on a market portfolio (RM) 5.02% MS Tech annual dividends for the last five (5) years: Year 2016 2017 Dividend per share (RM) 0.044 0.052 2018 0.084 2019 0.084 2020 0.098 The average ratios for the subsector of semiconductor Ratio Global Industry Average (GIA) Current ratio 1.96 times Quick ratio 0.89 times Debt-to-equity ratio 0.08 times Interest coverage ratio 25.76 times Receivable turnover ratio 6.30 times Inventory turnover ratio (Revenue) 8.72 times Inventory turnover ratio (Cost of sales) 4.67 times Asset turnover ratio 0.53 times Return on asset 10.52% Return on investment 16.57% Return on equity 19.17% You are now required to calculate for MS Tech concerning their operations during the FYE 30 June 2019: i. Calculate the growth rate for MS Techs dividends from 2016 to 2019. Briefly explain what the number means. (3 marks) ii. Calculate MS Tech's cost of equity in 2019 using the dividend growth model. Briefly explain what the number means. (3 marks) iii. In 2019, MS Tech had non-cumulative preferred stocks issued at RM1.00 with annual dividend of RM0.02. If flotation costs for its preferred stock was 7%, What is MS Tech's cost of preferred stock in 2019? Briefly explain what the number means. (3 marks) iv. Calculate the WACC for the firm in 2019, if MS Tech's capital structure in 2019 consists of 80.4% common stock, 0.2% preferred stock and 19.4% debt. Briefly explain what this number means. (3 marks) You are now required to calculate for MS Tech concerning their operations during the FYE 30 June 2020: i. Calculate the growth rate for MS Tech's dividends from 2016 to 2020. Briefly explain what the number means. (3 marks) ii. Calculate MS Tech's cost of equity in 2020 using the dividend growth model. Briefly explain what the number means. (3 marks) ili. Calculate the WACC for the firm in 2020, if MS Tech's capital structure in 2020 consists of 83.7% common stock and 16.3% debt. Briefly explain what this number means. (3 marks) 2019 RM'000 Statements of Financial Position as at 30 June 2019 and 2020 2020 RM'000 ASSETS Non-current assets Property, plant and equipment 489,505 Investment in subsidiaries Intangible assets 2,200 Deferred tax assets 2.205 Total non-current assets 493,910 400,353 2,145 5,139 407,637 172,694 202,929 30,119 160,521 202,352 30,647 Current assets Inventories Trade receivables Other receivables, deposits and prepayments Amount due from subsidiaries Tax recoverable Deposits, cash and bank balances Total current assets TOTAL ASSETS 10,967 429,716 846,425 1,340,335 656 529,962 924,138 1,331,775 EQUITY AND LIABILITIES EQUITY Equity attributable to owners of the Company Share capital Other reserves Retained earnings Non-controlling interests Total equity 650,450 29,995 437,973 1,118,418 3,541 1,121,959 607,781 14,832 439,525 1,062,138 8,679 1,070,817 14,545 LIABILITIES Non-current liabilities Borrowings Deferred rental Retirement benefits obligations Deferred tax liabilities Total non-current liabilities 244 8,709 185 407 8,583 17.884 44 6,393 21,226 81,764 79,012 6,161 Current liabilities Trade payables Other payables, accruals and other liabilities Borrowings Preference shares Tax payable Dividend payable Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES 1,786 31,769 200,492 218,376 1,340,335 88,467 80.773 9,010 2,307 9,054 50,121 239,732 260,958 1,331,775 Comparative Statement of Profit or Loss with Global Industry Average for the Financial Year Ended 30 June 2020 Group Global Industry Average (GIA) RM'000 Revenue *1,152,860 100.00 (*50% of total sales were on credit terms) Cost of sales **(883,411) (**50% of total purchases were on credit terms) Gross profit 269,449 46.69 Other income 12,478 Finance income 9,370 Gain on disposal of assets Administrative expenses (73,819) Operating profit 217,478 22.48 Finance costs (1,273) Profit before tax 216,205 21.61 Tax expenses (23,858) Profit for the financial year 192,347 19.77 The following information relates to the existing capital of the firm as at 30 June 2019: The market price of ordinary shares RM2.00 The following information relates to the existing capital of the firm as at 30 June 2020: The market price of ordinary shares RM2.69 Weighted average number of ordinary shares 3,164,975,000 units Beta of company (1) 6.8% Yield of a 3-month Malaysian Islamic Treasury Bill (RF) 1.60% Expected returns on a market portfolio (RM) 5.02% MS Tech annual dividends for the last five (5) years: Year 2016 2017 Dividend per share (RM) 0.044 0.052 2018 0.084 2019 0.084 2020 0.098 The average ratios for the subsector of semiconductor Ratio Global Industry Average (GIA) Current ratio 1.96 times Quick ratio 0.89 times Debt-to-equity ratio 0.08 times Interest coverage ratio 25.76 times Receivable turnover ratio 6.30 times Inventory turnover ratio (Revenue) 8.72 times Inventory turnover ratio (Cost of sales) 4.67 times Asset turnover ratio 0.53 times Return on asset 10.52% Return on investment 16.57% Return on equity 19.17% You are now required to calculate for MS Tech concerning their operations during the FYE 30 June 2019: i. Calculate the growth rate for MS Techs dividends from 2016 to 2019. Briefly explain what the number means. (3 marks) ii. Calculate MS Tech's cost of equity in 2019 using the dividend growth model. Briefly explain what the number means. (3 marks) iii. In 2019, MS Tech had non-cumulative preferred stocks issued at RM1.00 with annual dividend of RM0.02. If flotation costs for its preferred stock was 7%, What is MS Tech's cost of preferred stock in 2019? Briefly explain what the number means. (3 marks) iv. Calculate the WACC for the firm in 2019, if MS Tech's capital structure in 2019 consists of 80.4% common stock, 0.2% preferred stock and 19.4% debt. Briefly explain what this number means. (3 marks) You are now required to calculate for MS Tech concerning their operations during the FYE 30 June 2020: i. Calculate the growth rate for MS Tech's dividends from 2016 to 2020. Briefly explain what the number means. (3 marks) ii. Calculate MS Tech's cost of equity in 2020 using the dividend growth model. Briefly explain what the number means. (3 marks) ili. Calculate the WACC for the firm in 2020, if MS Tech's capital structure in 2020 consists of 83.7% common stock and 16.3% debt. Briefly explain what this number means