QUESTION 15.4 (A) Used with kind permission of Walter Sisulu University. (17 marks: 20 minutes) The statement of comprehensive income and statement of financial position of The Spar Group Ltd for the year ended 30 September 2011 are provided at the end of this question. The Spar Group is a grocery chain, which, according to the company website, has three store formats: SPAR for neighbourhood shopping, SUPERSPAR for one-stop, competi- tively priced, bulk shopping, and KWIKSPAR for everyday convenience. The Spar Group listed on the Johannesburg Stock Exchange in 2011. YOU ARE REQUIRED TO: 1. Briefly explain what you understand by the term "working capital cycle (2 marks) 2. Calculatc thc working capital cycle of The Spar Group for the year cndcd 30 September 2011 (6 marks) 3. Assume the share price was 9 847 cents as at 30 September 2011 and 9 160 as at 30 September 2010 a) Calculate the price earninys ratio for the years ended 30 September 2011 and 2010. (2 marks) b) Briefly explain what the change in the PE ratio could indicate about the company. (2 marks) 4. Assuming that The Spar Group had 171 936 604 issued shares as at 30 September 2011. a) What is the term that is comununly used to define the market valuation of a company? (1 mark) b) Calculate the net asset value and the market valuation of the business as at 30 September 2011 (2 marks) c) Briefly indicate why the net asset value and the market valuation of a company can differ. (2 marks) STATEMENTS OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2011 Rrillion CROUP 2011 COMPANY 2011 Notes 2010 2010 2006.0 2 123.8 1550.4 381.9 1 521.0 299.7 ASSETS Non-current assets Property, plant and equipment Coodwil Investment in subsidiaries Investment in associates Cther investments Operating lease receivables Loans Deferred taxation asset Other non-current assets Current assets 9 10 34 12 133 11 13 14 22.1 15 119.3 34,8 13.2 0.6 170 15 139.1 230 3.2 1.5 2 035.0 1433.3 245.6 170.7 15.1 1.5 131.2 34.B 2.2 0.5 5 939.5 1 963.9 1457.7 245.6 78.3 16.2 1.5 139.1 23.2 0.8 1.5 5 276.9 5 177.8 1 135.0 5 5229 959 2 Inventories 15 1 099.5 942.1 STATEMENTS OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2011 Notes 16 million Trade and other receivab es Prepayments Operating lease receivables Loans Taxation receivable Bank balances Guilds GROUP 2011 4 857.3 26.5 36.7 15.3 2010 4 412.0 28.0 25.7 22 10.C 85.2 COMPANY 2011 2010 4734.4 4259.1 25.9 27.3 36.7 25.7 43.1 130 9.7 11 13 25 17 96.4 B 301.6 7 528.9 /9/4.6 1 240.8 2 187.2 2 529.3 2 193.0 49.6 33.4 18 19 2 489.5 49.6 (27.8) (0.1) 292.0 2 175.8 33.4 (10.8) (0.2) 261.2 1 903.0 292.0 2 187.7 261.8 1 897.8 208.2 216.5 209.5 215.7 Total assets EQUITY AND LIABILITIES Capital and reserves Share capital and premium Treasury shares Currency translation reseve Share based payment reserve Retained earnings Non-current liabilities Deterred taxation ability Post retirement medical aic provision Operating lease payables Current liabilities Trade and other payables Operating lease payables Provisions Taxation payable Bank overdrafts 14 0.6 21 85.5 11130.4 85.5 130.2 75.1 133.1 22 11 23 5 595.6 5 391.5 37.0 11.6 40.6 114.9 75.1 134.4 5 132.2 1 565.0 299 5.8 0.4 5311 5 229.5 5 016.7 37.0 9.7 40.6 125.5 4 B39.6 1 246.0 29.9 4.6 17 559.1 Total equity and liabilities 8 301.6 75289 7974.6 7 240.8 STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 SEPTEMBER 2011 GROUP 2011 COMPANY 2011 Famillion Notes 2010 2010 1 38 819.6 3 35 35 159.6 1 316.3 (13.0 34 526.7 1 315.9 (13.0) 1 4173 (12.9) 1 404.4 182 (24.7) 5.7 37 943.3 1 438.6 (12.9) 1.425.7 18.7 (24.3) 4 4 12 1 303.3 24.6 (20.9) 0.4 1 302.9 21.6 (20.9) Revenue Trading profit BBBEE transactions Operating profit Interest received Interest paic Share of equily accounted associate income Profit before taxation Taxation Profit for the year attributable to ordinary shareholders Other comprehensive income Exchange differences from translation of foreign operations Total comprehensive income Earnings per share cents) Basic Diluted 5 1.404.6 (452.0) 952.6 1 307.4 (399.5 915.B 1420.1 (450.4) 969.7 1 306.6 (385.6) 921.0 0.1 0.1 952.7 915.9 969.7 921.0 6 555.6 521.4 536.D 506.2