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FAC3247(A2)Oct2020 (1).pdf - Adobe Acrobat Reader DC File Edit View Window Home Tools FAC3247(A2)Oct20... X ? Sign In 6 / 11 0 50% Share Search 'Add Link Section B - 50 Marka Export PDF Edit PDF Create PDF Comment Question Five You have been approached by a friend who is considering Investing in EMS, a fast growing entity that has had significant positive media coverage in the last year. Your friend performed a brief review of the financial statements and sent you this message: "I am concerned that EMS appears to have invested heavily in property, plant and equipment in the year, which seems to have resulted in an overdraft at the year end. Is this an Indication of poor management? I am a little confused because everything I have read about this entity and its management has been positive and its share price Increased significantly from R5.68 on 31 December 2011 to R9.27 on 31 December 2012. EMS paid a dividend of R50 million in 2012 (R100 million in 2011). The financial statements of EMS are provided below. statement of financial 2012 2011 position as at 31 December Rm Rm ASSETS Non-current assets Property, plant and 766 equipment Available for sale 298 200 Investments 1,054 728 Current assets Inventories 290 130 Receivables 468 402 Cash and cash equivalents 144 75A 67 Total asseto 1.822 1.404 EQUITY AND LIABILITIES Equity Share capital (R1 equity 300 300 shares) Revaluation reserve 155 75 Other reserves 66 44 Retained earnings 001 638 Total equity 1,322 1.052 448 Combine Files El Organize Pages " ble Bag gs Redact Protect Non-current liabilities 5% convertible borrowings. 200 2014 Deferred tax 43 188 30 Create, edit and sign PDF forms & agreements Current abilities Payables Short-term borrowings (note 1) 134 199 58 Total liabilities Total equity and labilities 1.404 Actiate Windows Got C settings to act Start Free Trial ws. e d ? ENG 08:17 PM 2020-06-17 INTL FAC3247(A2)Oct2020 (1).pdf - Adobe Acrobat Reader DC ? Sign In Share Search 'Add Link Export PDF Edit PDF Gains on esive Income that may be reclassed to proft or loss File Edit View Window Home Tools FAC3247(A2)Oct20... X 1 7 / 11 50% Statement of 2012 2011 comprehensive Income for the year ended 31 December Rm Rim Revenue 2.400 2,020 Cost of sales (1.7251 11.50 Gross pront 665 515 Administrative expenses (144 (103) Distribution costs 67 (287 (220) Finance costs (20) (6) Investment Income Pront before tax Income tax expense 1901 Profit for the year Other comprehensive income that will not be reclassified to prostor loss Revaluation gain on 100 25 property, plant and equipment Gains on available for sale 30 12 Investments Tax effects of other 120 (15) comprehensive income Other comprehensive 102 22 Income for the year, net of tax Total comprehensive 320 148 Income Note 1 In September 2012 EMS secured a short term overdraft-facility of up to R80 million for nine months. The directors submitted an application for long term borrowings of 100 million in November 2012 The directors were awaiting a response from the lender at the year end Create PDF Comment Combine Files El Organize Pages Redact A Protect Required: (a) Analyse the financial performance of EMS for the year ended 31 December 2012 and its financial position at that date. Your analysis should have as ts primary focus the areas that would be of particular relevance to a potential Investor. (Note: 8 marks are available for the calculation of relevant ratios) (21 marks) The convertible borrowings are due for conversion or redemption in December 2014 (b) Explain the impact on the investor ratios if the majority of the holders choose to convert to equity shares (4 marks) Create, edit and sign PDF forms & agreements Actiate Windows Goi PC settings to act Start Free Trial ws. e d ENG INTL 08:18 PM 2020-06-17 FAC3247(A2)Oct2020 (1).pdf - Adobe Acrobat Reader DC File Edit View Window Home Tools FAC3247(A2)Oct20... X ? Sign In 6 / 11 0 50% Share Search 'Add Link Section B - 50 Marka Export PDF Edit PDF Create PDF Comment Question Five You have been approached by a friend who is considering Investing in EMS, a fast growing entity that has had significant positive media coverage in the last year. Your friend performed a brief review of the financial statements and sent you this message: "I am concerned that EMS appears to have invested heavily in property, plant and equipment in the year, which seems to have resulted in an overdraft at the year end. Is this an Indication of poor management? I am a little confused because everything I have read about this entity and its management has been positive and its share price Increased significantly from R5.68 on 31 December 2011 to R9.27 on 31 December 2012. EMS paid a dividend of R50 million in 2012 (R100 million in 2011). The financial statements of EMS are provided below. statement of financial 2012 2011 position as at 31 December Rm Rm ASSETS Non-current assets Property, plant and 766 equipment Available for sale 298 200 Investments 1,054 728 Current assets Inventories 290 130 Receivables 468 402 Cash and cash equivalents 144 75A 67 Total asseto 1.822 1.404 EQUITY AND LIABILITIES Equity Share capital (R1 equity 300 300 shares) Revaluation reserve 155 75 Other reserves 66 44 Retained earnings 001 638 Total equity 1,322 1.052 448 Combine Files El Organize Pages " ble Bag gs Redact Protect Non-current liabilities 5% convertible borrowings. 200 2014 Deferred tax 43 188 30 Create, edit and sign PDF forms & agreements Current abilities Payables Short-term borrowings (note 1) 134 199 58 Total liabilities Total equity and labilities 1.404 Actiate Windows Got C settings to act Start Free Trial ws. e d ? ENG 08:17 PM 2020-06-17 INTL FAC3247(A2)Oct2020 (1).pdf - Adobe Acrobat Reader DC ? Sign In Share Search 'Add Link Export PDF Edit PDF Gains on esive Income that may be reclassed to proft or loss File Edit View Window Home Tools FAC3247(A2)Oct20... X 1 7 / 11 50% Statement of 2012 2011 comprehensive Income for the year ended 31 December Rm Rim Revenue 2.400 2,020 Cost of sales (1.7251 11.50 Gross pront 665 515 Administrative expenses (144 (103) Distribution costs 67 (287 (220) Finance costs (20) (6) Investment Income Pront before tax Income tax expense 1901 Profit for the year Other comprehensive income that will not be reclassified to prostor loss Revaluation gain on 100 25 property, plant and equipment Gains on available for sale 30 12 Investments Tax effects of other 120 (15) comprehensive income Other comprehensive 102 22 Income for the year, net of tax Total comprehensive 320 148 Income Note 1 In September 2012 EMS secured a short term overdraft-facility of up to R80 million for nine months. The directors submitted an application for long term borrowings of 100 million in November 2012 The directors were awaiting a response from the lender at the year end Create PDF Comment Combine Files El Organize Pages Redact A Protect Required: (a) Analyse the financial performance of EMS for the year ended 31 December 2012 and its financial position at that date. Your analysis should have as ts primary focus the areas that would be of particular relevance to a potential Investor. (Note: 8 marks are available for the calculation of relevant ratios) (21 marks) The convertible borrowings are due for conversion or redemption in December 2014 (b) Explain the impact on the investor ratios if the majority of the holders choose to convert to equity shares (4 marks) Create, edit and sign PDF forms & agreements Actiate Windows Goi PC settings to act Start Free Trial ws. e d ENG INTL 08:18 PM 2020-06-17