QUESTION 4 Pharmaniaga Berhad and Duopharma Biotech Berhad are among the companies listed on the main market of Bursa Malaysia under Health Care sector. Pharmaniaga Berhad is proud to be the largest integrated pharmaceutical Group in Malaysia, In line with our commitment to excellence, the company has established a strong reputation as a provider of quality products and services within the healthcare industry. Their corporate philosophy is grounded in their motto Passion for Patients". Above all, they are committed to delivering on our promise of high standards of excellence to their clients as part of their aim of creating a lasting legacy of doing business with a conscience. The ambit of their business interests ranges from warehousing and distribution of pharmaceutical and medical products; generic pharmaceuticals manufacturing; marketing and sales; research and development; trading and installation of medical and hospital equipment. The Group has also successfully harnessed the synergies of our businesses to expand into the community pharmacy segment Duopharma Biotech Berhad Group was incorporated in the year 2000 and is today one of Malaysia's leading pharmaceutical companies listed on the Main Market of Bursa Malaysia Securities Berhad. Duopharma Biotech has core competencies in the pharmaceutical industry inclusive of Manufacturing, Research & Development and Commercialisation & Marketing of over 300 generic drugs - among others, Omesec and Prelica as well as its Consumer Healthcare products such as Champs, Flavettes, Proviton and Uphamol, which are well recognised and accepted by consumers in Malaysia, regionally and globally. The Company has also diversified into the biosimilars space with technology and commercialisation collaborations with credible and strong international partners. Using the companies GROUP financial data from the companies' Annual Report 2020 (refer to company's financial statements in appendix), calculate the required information below. You have to show the details of your workings. Continued... HH 7/15 BFM 1014/BFBM 1014 FUNDAMENTALS OF FINANCE APRIL 2022 a. Calculate the working capital for both companies for 2019 and 2020. (4 marks) b. Calculate the operating cycle for both companies for 2020. Assume all sales (revenue) are on credit. Use the amount of trade and other receivables/payables amount in the calculations. (4 marks) c. Calculate the cash cycle for both companies for 2020. (4 marks) d. Compare the operating cycle and cash cycle for both companies. Which company has a better operating and cash cycle? Justify your answer. (2 marks) APPENDIX Pharmaniaga Berhad: Financial Statements 132 STATEMENTS OF PROFIT OR LOSS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 Note Group 2020 2019 RM'000 RM'000 Company 2020 2019 RM 000 RM'000 Revenue 4 2,725,071 2,820,530 39,367 50,500 5 Cost of sales Gross profit 12,429,8751 295,196 12,726,5491 93,981 39,367 50,500 Other income 1,276 1.245 2 Administrative expenses 1227,6101 1248,2251 (19,426) 124,748) Finance costs 6 133,7021 140,2581 16,0871 15,0561 633 2 24 Interest income Profit/Loss before zakat and taxation 1,392 [191,8651 7al 35,793 13,858 20,720 12,5221 17,002) 12,2401 44,658 9 Zakat Taxation Net profit/loss for the financial year 111 13,857 26,269 1149,4471 20,720 13,857 Attributable to: Owners of the parent Non-controlling interests Net profit/loss for the financial year 27.489 11,2201 1149,2191 1228) 20,720 26,269 1149,4671 13,857 20,720 Earnings/Loss) per share (sen): - Basic - Diluted 10 al 1016) 10.51 10.50 157.191 156.991 Included in cost of sales of the Group in the previous financial year was the amortisation of rights to supply intangible assets of RM247,320,000 Continued... HH 10/15 BFM 1014/BFBM 1014 FUNDAMENTALS OF FINANCE APRIL 2022 ANNUL 11/15 STATEMENTS OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 Note Group 2020 2019 RM'000 RM'000 Company 2020 2019 RM'000 RM'000 Net profit/loss) for the financial year 26,269 (149,4471 13,857 20,720 Other comprehensive lossl/income, net of tax: Items that will be subsequently reclassified to profit or loss Foreign currency translation flosses/gains for foreign operations 13,248) 2,544 30 295 12121 Items that will not be reclassified to profit or loss Recognition of actuarial gains/losses) Other comprehensive loss/income, net of tax for the financial year Total comprehensive income/loss), net of tax for the financial year 12,953) 2,332 23,316 1147,1151 13,857 20.720 Attributable to: Owners of the parent Non-controlling interests (147,1221 13,857 20,720 24,868 11,552) 23,316 [147,1151 13,857 20,720 STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 Note Group 2020 2019 RM 000 RM 000 Company 2020 2019 RM 000 RM 000 ASSETS 365,529 32,942 382.268 27.842 595.172 594.154 Non-current assets Property, plant and equipment Right-of-use assets Subsidiaries Intangible assets Trade receivables Other receivables Amounts due from subsidiaries Deferred tax assets 205,037 200,342 12 13 al 14 15 17 18 1911 29 26,228 23,120 50,405 48,139 658,591 653,913 621,400 617,274 617.909 16 21 17 Current assets Inventories Amount due from related companies Trade receivables and contract assets Other receivables Amount due from immediate holding company Amounts due from subsidiaries Tax recoverable Deposits, cash and bank balances 204,100 586,713 35 237,411 50,484 8zn888 33 14 24 1911 85,434 69,516 10,896 40,696 20 407 926,244 19.069 29,587 933.711 1,592,302 85,874 487 70,010 687284 TOTAL ASSETS 1,580,157 707,274 Continued... HH 12/15 BFM 1014 BFBM 1014 FUNDAMENTALS OF FINANCE APRIL 2022 135 STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 Note Group 2020 2019 RM000 RM000 Company 2020 2019 RM 000 RM000 EQUITY AND LIABILITIES 27 153.339 151,829 Capital and reserves attributable to equity holders of the Company Share capital Exchange reserve Share reserves Retained earnings 28 153,339 452 1,996 181,741 337,528 17,437 354,965 151,879 3.289 7.191 175.492 337,851 19,075 1,682 282,718 6,173 290,375 448,427 437,739 Non-controlling interests Total equity 356,926 437,739 48,427 Non-current liabilities Government grants Borrowings Lease liabilities Deferred tax liabilities Provision for defined benefit plan 25 26 1310) 29 30 3,948 337 590 16,239 10,259 4.289 316 2.125 18,066 9,999 31,373 34,795 135,837 186,087 2.230 568,994 75.286 Current liabilities Amounts due to subsidiaries Amounts due to related companies Trade payables Other payables Amount due to immediate holding company Contract liabilities Government grants Borrowings Lease liabilities Current tax liabilities 1915 21 22 23 24 3110) 25 26 1311 3,663 35 2,741 29 2,977 461,562 70,549 74 6,567 341 669,272 1,551 926 190 6,387 341 564,981 1.457 715 130,000 50,000 269,535 238,857 1,193,819 1,225,192 1,580,157 Total liabilities TOTAL EQUITY AND LIABILITIES 1.200,581 1.235,376 1.592 302 238,857 269,535 707,274 687,284 Duopharma Biotech Berhad: Financial Statements DUOPHARMA BIOTECH BERHAD FINANCIAL STATEMENTS STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 December 2020 Group 2020 Note RM '000 2019 RM 000 Company 2020 2013 RM1000 RM '000 Revenue 15 63,356 41.312 569,902 1336,701) 233,201 48 576,462 (344,395 232067 63,356 41,312 851 (81,159) 169,655) 320 1.242 85.818 169,534 (27,701) 28,316 412 16 13847 17 18 Cost of sales Gross profit Other income Distribution and marketing expenses Administrative expenses Net gain on reversal of impairment of financial instruments Other expenses Results from operating activities Finance income Finance costs Profit before tax Tax expense Profit for the year Other comprehensive income, net of tax Items that will not be reclassified subsequent to profit or loss Net change in fair value of equity instruments designated at fair value through other comprehensive income Items that are or may be reclassified subsequent to profit or loss Foreign currency translation differences for foreign operations 81,856 1,510 17,209) 76,157 (17,547) 58,610 (724 77,645 1.463 8.299 70,809 (15,536) 55.273 (1,009) 33,746 7,295 19,283) 31,758 94 31,852 7,464 (10.439) 10.872 1628) 10.244 20 63,083 1224 63,088 1224 1224) (296) 62,692 121,302 8.46 (154 378) 54,895 8.25 63,038 94,940 10,020 Total comprehensive income for the year Basic earnings per ordinary share (sen) 21 Continued... HH 14/15 BFM 1014/BFBM 1014 FUNDAMENTALS OF FINANCE APRIL 2022 FINANCIAL STATEMENTS ANNUAL REPORT 2020 STATEMENTS OF FINANCIAL POSITION As at 31 December 2020 Company Group 2020 RM 000 2013 RM 800 2020 RM 800 2013 RM 800 Note 3 1.5 22 443, 1,100 35,066 412.24 1.200 28.113 Assets Property, plant and equipment Investment property Intangible assets Investments in subsidiaries Other investments Deferred tax assets Trade and other receivables Total non-current assets 4,097 386,090 112,247 379 370 SE39 112,247 51. 8.5 47.815 552,107 558,739 562.5 433.48 10 144.003 147.046 Inventories Current tax assets Trade and other receivables Cash and cash equivalents Total current assets Total assets 151,266 5,217 142.131 158,029 459,693 1,058.432 11 145.938 120 659 437205 919.30 873 140,795 75.679 217,347 769,454 117 209.163 2.611 12.1 Equity Share capital Reserves Retained earning Equity attributable to owners of the Company 404,922 18,717 220,182 643,621 37404 27.600 182.946 529.750 404,922 10,840 52,516 478,278 37404 127.873 62.035 388.569 12 13 139.738 Liabilities Loans and borrowing Trade and other payables Deferred to liabilities Total non-current liabilities 253,281 659 10,350 253,251 215 . 30.053 150.00 253,500 14032 28,793 10.333 14 Loans and borrowing Trade and other payables Current tax liabilities Total current liabilities Total liabilities Total equity and liabilities 48.73 100,74 740 150,121 124.63 114127 6 28. 10250 10.674 416 11160 254042 42.611 39.670 293,178 30.051 19.11 1,053,492 763,454 QUESTION 4 Pharmaniaga Berhad and Duopharma Biotech Berhad are among the companies listed on the main market of Bursa Malaysia under Health Care sector. Pharmaniaga Berhad is proud to be the largest integrated pharmaceutical Group in Malaysia, In line with our commitment to excellence, the company has established a strong reputation as a provider of quality products and services within the healthcare industry. Their corporate philosophy is grounded in their motto Passion for Patients". Above all, they are committed to delivering on our promise of high standards of excellence to their clients as part of their aim of creating a lasting legacy of doing business with a conscience. The ambit of their business interests ranges from warehousing and distribution of pharmaceutical and medical products; generic pharmaceuticals manufacturing; marketing and sales; research and development; trading and installation of medical and hospital equipment. The Group has also successfully harnessed the synergies of our businesses to expand into the community pharmacy segment Duopharma Biotech Berhad Group was incorporated in the year 2000 and is today one of Malaysia's leading pharmaceutical companies listed on the Main Market of Bursa Malaysia Securities Berhad. Duopharma Biotech has core competencies in the pharmaceutical industry inclusive of Manufacturing, Research & Development and Commercialisation & Marketing of over 300 generic drugs - among others, Omesec and Prelica as well as its Consumer Healthcare products such as Champs, Flavettes, Proviton and Uphamol, which are well recognised and accepted by consumers in Malaysia, regionally and globally. The Company has also diversified into the biosimilars space with technology and commercialisation collaborations with credible and strong international partners. Using the companies GROUP financial data from the companies' Annual Report 2020 (refer to company's financial statements in appendix), calculate the required information below. You have to show the details of your workings. Continued... HH 7/15 BFM 1014/BFBM 1014 FUNDAMENTALS OF FINANCE APRIL 2022 a. Calculate the working capital for both companies for 2019 and 2020. (4 marks) b. Calculate the operating cycle for both companies for 2020. Assume all sales (revenue) are on credit. Use the amount of trade and other receivables/payables amount in the calculations. (4 marks) c. Calculate the cash cycle for both companies for 2020. (4 marks) d. Compare the operating cycle and cash cycle for both companies. Which company has a better operating and cash cycle? Justify your answer. (2 marks) APPENDIX Pharmaniaga Berhad: Financial Statements 132 STATEMENTS OF PROFIT OR LOSS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 Note Group 2020 2019 RM'000 RM'000 Company 2020 2019 RM 000 RM'000 Revenue 4 2,725,071 2,820,530 39,367 50,500 5 Cost of sales Gross profit 12,429,8751 295,196 12,726,5491 93,981 39,367 50,500 Other income 1,276 1.245 2 Administrative expenses 1227,6101 1248,2251 (19,426) 124,748) Finance costs 6 133,7021 140,2581 16,0871 15,0561 633 2 24 Interest income Profit/Loss before zakat and taxation 1,392 [191,8651 7al 35,793 13,858 20,720 12,5221 17,002) 12,2401 44,658 9 Zakat Taxation Net profit/loss for the financial year 111 13,857 26,269 1149,4471 20,720 13,857 Attributable to: Owners of the parent Non-controlling interests Net profit/loss for the financial year 27.489 11,2201 1149,2191 1228) 20,720 26,269 1149,4671 13,857 20,720 Earnings/Loss) per share (sen): - Basic - Diluted 10 al 1016) 10.51 10.50 157.191 156.991 Included in cost of sales of the Group in the previous financial year was the amortisation of rights to supply intangible assets of RM247,320,000 Continued... HH 10/15 BFM 1014/BFBM 1014 FUNDAMENTALS OF FINANCE APRIL 2022 ANNUL 11/15 STATEMENTS OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 Note Group 2020 2019 RM'000 RM'000 Company 2020 2019 RM'000 RM'000 Net profit/loss) for the financial year 26,269 (149,4471 13,857 20,720 Other comprehensive lossl/income, net of tax: Items that will be subsequently reclassified to profit or loss Foreign currency translation flosses/gains for foreign operations 13,248) 2,544 30 295 12121 Items that will not be reclassified to profit or loss Recognition of actuarial gains/losses) Other comprehensive loss/income, net of tax for the financial year Total comprehensive income/loss), net of tax for the financial year 12,953) 2,332 23,316 1147,1151 13,857 20.720 Attributable to: Owners of the parent Non-controlling interests (147,1221 13,857 20,720 24,868 11,552) 23,316 [147,1151 13,857 20,720 STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 Note Group 2020 2019 RM 000 RM 000 Company 2020 2019 RM 000 RM 000 ASSETS 365,529 32,942 382.268 27.842 595.172 594.154 Non-current assets Property, plant and equipment Right-of-use assets Subsidiaries Intangible assets Trade receivables Other receivables Amounts due from subsidiaries Deferred tax assets 205,037 200,342 12 13 al 14 15 17 18 1911 29 26,228 23,120 50,405 48,139 658,591 653,913 621,400 617,274 617.909 16 21 17 Current assets Inventories Amount due from related companies Trade receivables and contract assets Other receivables Amount due from immediate holding company Amounts due from subsidiaries Tax recoverable Deposits, cash and bank balances 204,100 586,713 35 237,411 50,484 8zn888 33 14 24 1911 85,434 69,516 10,896 40,696 20 407 926,244 19.069 29,587 933.711 1,592,302 85,874 487 70,010 687284 TOTAL ASSETS 1,580,157 707,274 Continued... HH 12/15 BFM 1014 BFBM 1014 FUNDAMENTALS OF FINANCE APRIL 2022 135 STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 Note Group 2020 2019 RM000 RM000 Company 2020 2019 RM 000 RM000 EQUITY AND LIABILITIES 27 153.339 151,829 Capital and reserves attributable to equity holders of the Company Share capital Exchange reserve Share reserves Retained earnings 28 153,339 452 1,996 181,741 337,528 17,437 354,965 151,879 3.289 7.191 175.492 337,851 19,075 1,682 282,718 6,173 290,375 448,427 437,739 Non-controlling interests Total equity 356,926 437,739 48,427 Non-current liabilities Government grants Borrowings Lease liabilities Deferred tax liabilities Provision for defined benefit plan 25 26 1310) 29 30 3,948 337 590 16,239 10,259 4.289 316 2.125 18,066 9,999 31,373 34,795 135,837 186,087 2.230 568,994 75.286 Current liabilities Amounts due to subsidiaries Amounts due to related companies Trade payables Other payables Amount due to immediate holding company Contract liabilities Government grants Borrowings Lease liabilities Current tax liabilities 1915 21 22 23 24 3110) 25 26 1311 3,663 35 2,741 29 2,977 461,562 70,549 74 6,567 341 669,272 1,551 926 190 6,387 341 564,981 1.457 715 130,000 50,000 269,535 238,857 1,193,819 1,225,192 1,580,157 Total liabilities TOTAL EQUITY AND LIABILITIES 1.200,581 1.235,376 1.592 302 238,857 269,535 707,274 687,284 Duopharma Biotech Berhad: Financial Statements DUOPHARMA BIOTECH BERHAD FINANCIAL STATEMENTS STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 December 2020 Group 2020 Note RM '000 2019 RM 000 Company 2020 2013 RM1000 RM '000 Revenue 15 63,356 41.312 569,902 1336,701) 233,201 48 576,462 (344,395 232067 63,356 41,312 851 (81,159) 169,655) 320 1.242 85.818 169,534 (27,701) 28,316 412 16 13847 17 18 Cost of sales Gross profit Other income Distribution and marketing expenses Administrative expenses Net gain on reversal of impairment of financial instruments Other expenses Results from operating activities Finance income Finance costs Profit before tax Tax expense Profit for the year Other comprehensive income, net of tax Items that will not be reclassified subsequent to profit or loss Net change in fair value of equity instruments designated at fair value through other comprehensive income Items that are or may be reclassified subsequent to profit or loss Foreign currency translation differences for foreign operations 81,856 1,510 17,209) 76,157 (17,547) 58,610 (724 77,645 1.463 8.299 70,809 (15,536) 55.273 (1,009) 33,746 7,295 19,283) 31,758 94 31,852 7,464 (10.439) 10.872 1628) 10.244 20 63,083 1224 63,088 1224 1224) (296) 62,692 121,302 8.46 (154 378) 54,895 8.25 63,038 94,940 10,020 Total comprehensive income for the year Basic earnings per ordinary share (sen) 21 Continued... HH 14/15 BFM 1014/BFBM 1014 FUNDAMENTALS OF FINANCE APRIL 2022 FINANCIAL STATEMENTS ANNUAL REPORT 2020 STATEMENTS OF FINANCIAL POSITION As at 31 December 2020 Company Group 2020 RM 000 2013 RM 800 2020 RM 800 2013 RM 800 Note 3 1.5 22 443, 1,100 35,066 412.24 1.200 28.113 Assets Property, plant and equipment Investment property Intangible assets Investments in subsidiaries Other investments Deferred tax assets Trade and other receivables Total non-current assets 4,097 386,090 112,247 379 370 SE39 112,247 51. 8.5 47.815 552,107 558,739 562.5 433.48 10 144.003 147.046 Inventories Current tax assets Trade and other receivables Cash and cash equivalents Total current assets Total assets 151,266 5,217 142.131 158,029 459,693 1,058.432 11 145.938 120 659 437205 919.30 873 140,795 75.679 217,347 769,454 117 209.163 2.611 12.1 Equity Share capital Reserves Retained earning Equity attributable to owners of the Company 404,922 18,717 220,182 643,621 37404 27.600 182.946 529.750 404,922 10,840 52,516 478,278 37404 127.873 62.035 388.569 12 13 139.738 Liabilities Loans and borrowing Trade and other payables Deferred to liabilities Total non-current liabilities 253,281 659 10,350 253,251 215 . 30.053 150.00 253,500 14032 28,793 10.333 14 Loans and borrowing Trade and other payables Current tax liabilities Total current liabilities Total liabilities Total equity and liabilities 48.73 100,74 740 150,121 124.63 114127 6 28. 10250 10.674 416 11160 254042 42.611 39.670 293,178 30.051 19.11 1,053,492 763,454