Question 3.

Imogen plc manufactures cameras and binoculars. It has provided the following information for the year ended 31 March 2021.

Income Statement for the year ended 31 March 2021
	000
Revenue	12,500
Cost of sales	(8,200)
Gross profit	4,300
Dividends received	210
Profit on disposal of non-current asset	995
Distribution costs	(2,770)
Administrative expenses		(1,803)
Profit from operations	932
Finance costs	(300)
Profit before tax	632
Tax	(56)
Profit for the year attributable to equity holders	576
Statement of Financial Position at 31 March 2021
	2020 000		2019 000
Non-current assets:
PPE at net book value	16,980		20,660
Current Assets:
Inventories	5,300		2,100
Trade and other receivables	2,828		1,230
Cash and cash equivalents	2,462
Total assets	27,570		23,990
Equity
Ordinary shares (2)	16,000		12,000
Share premium	2,460		1,960
Revaluation Reserve	300
Retained earnings	6,936		8,860
	25,696		22,820
Non-Current liabilities:
Bank Loan (repayable 2025)	1,800
Current liabilities:
Trade and other payables	14		1,074
Current tax liabilities	60		52
Bank overdraft			44
	1,874		1,170
Total equity and liabilities	27,570		23,990

Additional information:

1. On 1 April 2020, the company made a 1 for 6 bonus issue. This was followed by a 1 for 7 rights issue on 1 September 2020.
2. In February 2021, the company paid a dividend of 6.25p per share.
3. In January 2021, plant and machinery was sold for 4,175,000. There were no other disposals of PPE and there were no additions to PPE.
4. At the year end the company revalued its land and a revaluation reserve was opened to record the increase.

Required:

The directors are pleased to see that the company income statement for the year shows a profit and the cash balance has increased. They believe this is incredibly positive and have asked you to prepare the following documents:

• A Statement of Cash Flows for the year ended 31 March 2021 in accordance with IAS7. Use the indirect method. [15 marks]

1. A report to the directors, analysing the cashflow statement and highlighting any concerns you may have or advice you would give. [10 marks]

Total 25 marks