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A notes Case study 2: Buraq Ceramics Tile Company SAOG is the manufacturer of ceramics tiles in the Sultanate of Oman. The company is listed on Oman stock market. Based in Ibri, the plant is well equipped with the state-of-the-art machinery and technical know-how of leading Italian companies with digital printing machines. the last 20 years, Buraq commenced its journey with a single production line with a capacity of 4,000 SQM per day to five production lines with a total installed capacity of 75,000 SQM per day. For year 2019 has been a satisfactory one for the company. During the year, it registered a gross revenue of RO 20.85 million and a Net Profit of RO 3.02 million. This represents a revenue increase of 3.7% and a Net Profit increase of 171%. For the year 2020 the company had evaluated the following Opportunities and Threats: Opportunities The construction industry in the GCC has been fueled by the following factors: The population growth rate in the GCC is among the highest in the world. 70% of the regions indigenous population is under 30 years of age. This has fueled demand for new dwelling units, which is one of the factors driving building construction Reto page Pageview For the year 2020 the company had evaluated the following Opportunities and Threats: Opportunities The construction industry in the GCC has been fueled by the following factors: The population growth rate in the GCC is among the highest in the world. 70% of the regions indigenous population is under 30 years of age. This has fueled demand for new dwelling units, which is one of the factors driving building construction. Permitting expatriates to own property in Dubai and other GCC countries has significantly increased the demand for new housing. Threats: The major threat for the company is the continuing low-priced competition from the east mainly India and China. The other threat would be the high dependence on the building and construction industry. Being almost a commodity, particularly in the price points the company operates, its pricing power is limited. Board of directors meeting in the month of January 2020 resolved that there will be right issue with the purpose to increase the operating capacity by 50,000 SQM per day. All the proceeds from such issue will be utilized in improvement of capacity by importing technology and required infrastructure from Germany The issue period will be; Opening Date: 7th April 2020 Closing Date: 21st April 2020 a o file/Users/DELIS20112/Desktop/CA220V1.20upload.pdf of 11 A Read mood Board of directors meeting in the month of January 2020 resolved that there will be right issue with the purpose to increase the operating capacity by 50,000 SQM per day. All the proceeds from such issue will be utilized in improvement of capacity by importing technology and required infrastructure from Germany. The issue period will be; Opening Date: 7th April 2020 Closing Date: 21st April 2020 Rights Entitlement: Every shareholder as on the Record Date is entitled to about 19.2 Offer Shares for every 100 shares held as on the Record Date. Eligibility for Subscription: Subscription for the Rights Issue is open to the Shareholders whose names appear in the Bank's shareholder register as on the Record Date. Persons who purchase the rights on the MSM within the trading period of the Rights Issue are also eligible to subscribe for the Offer Shares before the Rights Issue closes. The eligibility to subscribe for Offer Shares shall lapse in case the Shareholder neither exercises his/her right of subscription to the Rights Issue nor'sells its rights' on the MSM during the prescribed period Issue Price Baiza 352 per Offer Share, consisting of issue price 350 plus Baiza 2 towards issue expenses, payable in full on submission of Application Form Allotment and refunds would be within 3 days of the closure of the Rights Issue. Estimated issue expenses: The issue expenses of the Rights Issue are estimated at RO 76,000. The issue expenses of the Rights Issue will be met from the amounts collected from Applicants at 2 Baiza per Offer Share and the remainder will be borne by the Bank. Any surplus of the collection towards Issue Expenses over the actual expenses incurred will be retained by the Bank and credited to company's legal Type here to search of 11 RUSKOPLARZOV1.20upload pdf + to page A read out Minotes Offer Share and the remainder will be borne by the Bank. Any surplus of the collection towards Issue Expenses over the actual expenses incurred will be retained by the Bank and credited to company's legal reserve or a special reserve to be established pursuant to Article 126 of the CCL The Financial Advisor & Issue Manager are Gulf Capital Markets SAOC; Legal Advisor to the Issue A & D Law Firm and Statutory Auditor Ernst & Young LLC The authorized share capital of the Company consists of 650,000,000 shares of RO 0.100 each. The details of the equity before the right offer and the other details are as below: 7 old/C/USER/DELL 0112/Desktop/C220V1.20upload.pdf of 11 | + Dopage the equity before the right offer and the other details are as below: Share capital Legal reserve Retained earnings Capital Reserve General Reserve Revaluation Reserve RO 29,621,368 6,665,959 2,052,872 629.289 125,865 152,356 70% of the shareholders subscribed to this offer. Post right issue in pursuant with the provisions of Oman commercial law the company board also decided to come up with a bonus issue for its equity shareholders. The bonus share of the company can be issued when the articles of the association is authorized to issue the bonus shares. It is essential to know that if the articles of association do not permit to issue bonus shares, the company should pass a special resolution at the general meeting of the company. As part of the procedure, the company has checked the articles of association which allowed issue of bonus shares and the company confirmed enough authorized capital is available. The bonus issue took place in the month of May 2020. It was accorded that a sum of RO 125,800 can be utilized for bonus out of general reserve and set free for distribution amongst the equity shareholders. Each shareholder will be eligible for I share for every 50 shares held. to page A Read Lou pass up on COUTULIUL ELLA LLIUS VEL Lpany. Tie par un prou, w company has checked the articles of association which allowed issue of bonus shares and the company confirmed enough authorized capital is available. The bonus issue took place in the month of May 2020. It was accorded that a sum of RO 125,800 can be utilized for bonus out of general reserve and set free for distribution amongst the equity shareholders. Each shareholder will be eligible for 1 share for every 50 shares held. You are required: a. In your own words highlight upon the various situations presented in the case and how it will affect the company? (3 marks - Min 150 words) b. Pass necessary journal entries for the rights and bonus taking place in the given scenario. Ignore the entry for share issue expenses. (4 marks) c. Prepare necessary abstract to represent such transactions in Statement of Financial Position. (3 marks) AR A A notes Case study 2: Buraq Ceramics Tile Company SAOG is the manufacturer of ceramics tiles in the Sultanate of Oman. The company is listed on Oman stock market. Based in Ibri, the plant is well equipped with the state-of-the-art machinery and technical know-how of leading Italian companies with digital printing machines. the last 20 years, Buraq commenced its journey with a single production line with a capacity of 4,000 SQM per day to five production lines with a total installed capacity of 75,000 SQM per day. For year 2019 has been a satisfactory one for the company. During the year, it registered a gross revenue of RO 20.85 million and a Net Profit of RO 3.02 million. This represents a revenue increase of 3.7% and a Net Profit increase of 171%. For the year 2020 the company had evaluated the following Opportunities and Threats: Opportunities The construction industry in the GCC has been fueled by the following factors: The population growth rate in the GCC is among the highest in the world. 70% of the regions indigenous population is under 30 years of age. This has fueled demand for new dwelling units, which is one of the factors driving building construction Reto page Pageview For the year 2020 the company had evaluated the following Opportunities and Threats: Opportunities The construction industry in the GCC has been fueled by the following factors: The population growth rate in the GCC is among the highest in the world. 70% of the regions indigenous population is under 30 years of age. This has fueled demand for new dwelling units, which is one of the factors driving building construction. Permitting expatriates to own property in Dubai and other GCC countries has significantly increased the demand for new housing. Threats: The major threat for the company is the continuing low-priced competition from the east mainly India and China. The other threat would be the high dependence on the building and construction industry. Being almost a commodity, particularly in the price points the company operates, its pricing power is limited. Board of directors meeting in the month of January 2020 resolved that there will be right issue with the purpose to increase the operating capacity by 50,000 SQM per day. All the proceeds from such issue will be utilized in improvement of capacity by importing technology and required infrastructure from Germany The issue period will be; Opening Date: 7th April 2020 Closing Date: 21st April 2020 a o file/Users/DELIS20112/Desktop/CA220V1.20upload.pdf of 11 A Read mood Board of directors meeting in the month of January 2020 resolved that there will be right issue with the purpose to increase the operating capacity by 50,000 SQM per day. All the proceeds from such issue will be utilized in improvement of capacity by importing technology and required infrastructure from Germany. The issue period will be; Opening Date: 7th April 2020 Closing Date: 21st April 2020 Rights Entitlement: Every shareholder as on the Record Date is entitled to about 19.2 Offer Shares for every 100 shares held as on the Record Date. Eligibility for Subscription: Subscription for the Rights Issue is open to the Shareholders whose names appear in the Bank's shareholder register as on the Record Date. Persons who purchase the rights on the MSM within the trading period of the Rights Issue are also eligible to subscribe for the Offer Shares before the Rights Issue closes. The eligibility to subscribe for Offer Shares shall lapse in case the Shareholder neither exercises his/her right of subscription to the Rights Issue nor'sells its rights' on the MSM during the prescribed period Issue Price Baiza 352 per Offer Share, consisting of issue price 350 plus Baiza 2 towards issue expenses, payable in full on submission of Application Form Allotment and refunds would be within 3 days of the closure of the Rights Issue. Estimated issue expenses: The issue expenses of the Rights Issue are estimated at RO 76,000. The issue expenses of the Rights Issue will be met from the amounts collected from Applicants at 2 Baiza per Offer Share and the remainder will be borne by the Bank. Any surplus of the collection towards Issue Expenses over the actual expenses incurred will be retained by the Bank and credited to company's legal Type here to search of 11 RUSKOPLARZOV1.20upload pdf + to page A read out Minotes Offer Share and the remainder will be borne by the Bank. Any surplus of the collection towards Issue Expenses over the actual expenses incurred will be retained by the Bank and credited to company's legal reserve or a special reserve to be established pursuant to Article 126 of the CCL The Financial Advisor & Issue Manager are Gulf Capital Markets SAOC; Legal Advisor to the Issue A & D Law Firm and Statutory Auditor Ernst & Young LLC The authorized share capital of the Company consists of 650,000,000 shares of RO 0.100 each. The details of the equity before the right offer and the other details are as below: 7 old/C/USER/DELL 0112/Desktop/C220V1.20upload.pdf of 11 | + Dopage the equity before the right offer and the other details are as below: Share capital Legal reserve Retained earnings Capital Reserve General Reserve Revaluation Reserve RO 29,621,368 6,665,959 2,052,872 629.289 125,865 152,356 70% of the shareholders subscribed to this offer. Post right issue in pursuant with the provisions of Oman commercial law the company board also decided to come up with a bonus issue for its equity shareholders. The bonus share of the company can be issued when the articles of the association is authorized to issue the bonus shares. It is essential to know that if the articles of association do not permit to issue bonus shares, the company should pass a special resolution at the general meeting of the company. As part of the procedure, the company has checked the articles of association which allowed issue of bonus shares and the company confirmed enough authorized capital is available. The bonus issue took place in the month of May 2020. It was accorded that a sum of RO 125,800 can be utilized for bonus out of general reserve and set free for distribution amongst the equity shareholders. Each shareholder will be eligible for I share for every 50 shares held. to page A Read Lou pass up on COUTULIUL ELLA LLIUS VEL Lpany. Tie par un prou, w company has checked the articles of association which allowed issue of bonus shares and the company confirmed enough authorized capital is available. The bonus issue took place in the month of May 2020. It was accorded that a sum of RO 125,800 can be utilized for bonus out of general reserve and set free for distribution amongst the equity shareholders. Each shareholder will be eligible for 1 share for every 50 shares held. You are required: a. In your own words highlight upon the various situations presented in the case and how it will affect the company? (3 marks - Min 150 words) b. Pass necessary journal entries for the rights and bonus taking place in the given scenario. Ignore the entry for share issue expenses. (4 marks) c. Prepare necessary abstract to represent such transactions in Statement of Financial Position. (3 marks) AR A