Pharmascience Ltd is a specialty consumer health company in the UK. In early 2020, Pharmascience Ltd launched a project to develop and produce a new range of home fitness equipment which has required significant investment in non-current assets. The Statements of Financial Position for Pharmascience as at 31 December 2020 and 2019 are shown below: 2020 'm 2019 'm 275.70 107.20 168.50 121.90 48.30 73.60 Assets Non-current assets Cost Accumulated depreciation Net book value Current assets Inventories Trade receivables Cash Total assets 49.80 64.50 68.20 51.00 11.20 204.00 282.80 Equity and liabilities Equity Share capital Share premium Retained earnings Total equity 60.00 40.00 83.10 183.10 40.00 20.00 63.00 123.00 Non-current liabilities Long-term loan 40.00 21.40 Current liabilities Trade payables Interest payables Current tax payable Dividend payable Bank overdraft Total equity and liabilities 42.10 5.50 12.00 29.00 7.30 8.50 4.50 10.40 282.80 204.00 Notes: 1) A dividend of 4.5m was approved and declared in December 2020. This dividend will be paid in March 2021. 2) During 2020, Pharmascience Ltd disposed of non-current assets costing 25m with an accumulated depreciation of 7.7m. These assets were sold for 20m. There were no other disposals during 2020. 3) Pharmascience's Income Statement for the year ended 31 December 2020 showed a finance cost of 8m and corporation tax on profits for 2020 was 6m. a. Prepare a Statement of Cash Flows in accordance with IAS 7 - Statement of Cash Flows for Pharmascience Ltd in respect of the year ended 31 December 2020. (14 marks) b. The directors of Pharmascience Ltd are surprised at the movement on cash for the year given the profits that were recorded. Explain: a) why differences arise between cash flows and profits b) the main differences between profit and cash flows in Pharmascience's accounts in 2020 c) your assessment of Pharmascience's cash flow and prediction for future profitability (8 marks)