31/12/2017 GHS 000 25,500 The following information relates to the draft financial statements of Star Capital Ltd. Summarized statement of financial position as at: 31/12/2018 GHS 000 ASSETS Non-current assets Property, plant & equipment (note 1) 19,000 Current assets Inventory 12,500 Trade receivables 4,500 Tax refund due 500 Bank Total assets 36,500 EQUITY AND LIABILITY Equity Equity shares of GH51 each (note ii) 10,000 Share deals (notei) 3,200 Retained earnings 4,500 17,700 Non-current liabilities 10% loan note (note ii) nil Finance lease obligation 4,800 Deferred tax provision 1,200 4,600 2,000 nil 1.500 33,600 8,000 4,000 6.300 18,300 5,000 2,000 800 Current liabilities 10% loan note (note ii) Tax Finance lease obligation Bank overdraft Trade payables Total equity and liabilities 5,000 nil 1,700 1,400 4.700 36,500 nil 2,500 800 nil 4,200 33,600 Summarized income statement for the year ended: 31/12/2018 Revenue Cost of sales Gross profit Operating expenses Finance cost (note iv) Profit (loss) before tax Income tax relief (expense) Profit (loss) for the year 31/12/2017 GHS 000 55,000 143,800) 11,200 (12,000) (1.000) (1,800) 700 (1.100) GHS'000 40,000 (25,000 15,000 (6,000) (600) 8,400 (2.800) 5.600 The following additional information is available: ti) Property, plant & equipment is made up of: 31/12/2018 Property Leased plant Plant 31/12/2017 GHS 000 nil 6,500 12.500 19,000 GHS 000 8,800 2,500 14,200 25,500 During the year, Star Capital sold its property for GHS8.5m and entered into an arrangement to rent it back from the purchaser. There was neither disposal nor addition to owned plant. The depreciation charges (to cost of sales) for the year ended 31/12/2018 were: GHS 000 Property (before disposal) 200 Leased plant 1,800 Owned plant 1.700 3.700 fi) On 01/04/2018 there was a bonus issue of shares of one new share for every 10 held, credited at GH51 per share (utilizing share deals balance). On 01/07/2018, there was a fully subscribed cash issue of shares at GHS1 per share. () The 10% loan note is due for repayment on 31/03/2018. Star Capital is in negotiations with the loan provider to refinance the same amount for another five years. (iv) The finance costs are made up of: 31/12/2018 31/12/2017 GHS'000 Finance charge on lease 300 Overdraft interest 200 Loan note interest 500 500 1.000 600 Required: i) Prepare a statement of cash flows for Star Capital Ltd for year ended 31/12/2018 in accordance with IAS 7 Statement of cash flows. (ii) Based on the information available, advise the loan provider on the matters you would take into consideration when deciding whether to grant Star Capital a renewal of its maturing loan note. GHS'000 100 31/12/2017 GHS 000 25,500 The following information relates to the draft financial statements of Star Capital Ltd. Summarized statement of financial position as at: 31/12/2018 GHS 000 ASSETS Non-current assets Property, plant & equipment (note 1) 19,000 Current assets Inventory 12,500 Trade receivables 4,500 Tax refund due 500 Bank Total assets 36,500 EQUITY AND LIABILITY Equity Equity shares of GH51 each (note ii) 10,000 Share deals (notei) 3,200 Retained earnings 4,500 17,700 Non-current liabilities 10% loan note (note ii) nil Finance lease obligation 4,800 Deferred tax provision 1,200 4,600 2,000 nil 1.500 33,600 8,000 4,000 6.300 18,300 5,000 2,000 800 Current liabilities 10% loan note (note ii) Tax Finance lease obligation Bank overdraft Trade payables Total equity and liabilities 5,000 nil 1,700 1,400 4.700 36,500 nil 2,500 800 nil 4,200 33,600 Summarized income statement for the year ended: 31/12/2018 Revenue Cost of sales Gross profit Operating expenses Finance cost (note iv) Profit (loss) before tax Income tax relief (expense) Profit (loss) for the year 31/12/2017 GHS 000 55,000 143,800) 11,200 (12,000) (1.000) (1,800) 700 (1.100) GHS'000 40,000 (25,000 15,000 (6,000) (600) 8,400 (2.800) 5.600 The following additional information is available: ti) Property, plant & equipment is made up of: 31/12/2018 Property Leased plant Plant 31/12/2017 GHS 000 nil 6,500 12.500 19,000 GHS 000 8,800 2,500 14,200 25,500 During the year, Star Capital sold its property for GHS8.5m and entered into an arrangement to rent it back from the purchaser. There was neither disposal nor addition to owned plant. The depreciation charges (to cost of sales) for the year ended 31/12/2018 were: GHS 000 Property (before disposal) 200 Leased plant 1,800 Owned plant 1.700 3.700 fi) On 01/04/2018 there was a bonus issue of shares of one new share for every 10 held, credited at GH51 per share (utilizing share deals balance). On 01/07/2018, there was a fully subscribed cash issue of shares at GHS1 per share. () The 10% loan note is due for repayment on 31/03/2018. Star Capital is in negotiations with the loan provider to refinance the same amount for another five years. (iv) The finance costs are made up of: 31/12/2018 31/12/2017 GHS'000 Finance charge on lease 300 Overdraft interest 200 Loan note interest 500 500 1.000 600 Required: i) Prepare a statement of cash flows for Star Capital Ltd for year ended 31/12/2018 in accordance with IAS 7 Statement of cash flows. (ii) Based on the information available, advise the loan provider on the matters you would take into consideration when deciding whether to grant Star Capital a renewal of its maturing loan note. GHS'000 100