REQUIREMENTS: Due to your strong performance in the Introduction to Financial Accounting course this past semester, you and a group of your classmates have been hired by Fontana Pharmacy Ltd as part of an accounting internship programme. Your first task is to perform a detailed financial analysis of the company. More specifically, you have been asked to prepare a single comprehensive report which addresses the following requirements: 5. You are also to prepare a summary commenting on the general liquidity, solvency, profitability, asset management, and investment performance of the company. The discussion of each ratio category should span one to two well-developed paragraphs. 2 Please note the following: You are to use the Jamaica Stock Exchange website or Fontana's website to retrieve the annual reports for the company for 2020 and 2021, as these reports contain the financial statements and other background information which will form the basis of your analysis. You will also be expected to pull on other research sources to support your analysis and to meet the requirements of the task. Your report is expected to include headings and sub-headings as appropriate. Your report should include an appendix which shows the workings for all ratio calculations completed (the workings should not be shown in the body of the report). Information retrieved from research sources should not be copied and pasted verbatim, but should instead, should be significantly paraphrased and reworded to express your own interpretation and analysis. Copying and pasting and other forms of plagiarism will be heavily penalised where observed. In-text citation according to the APA format is to be used to reference quotations and other material retrieved from research sources. A full reference list is to be provided with all research sources used, and this reference list is to be compiled in accordance with the APA format. The body of the report (not including the cover page, project management report, references and appendices) is expected to span a minimum of six pages. 38 22 FONTANA LIMITED Statement of Financial Position AS AT JUNE 30, 2021 (Expressed in Jamaican dollars unless otherwise stated) ASSETS Non-current Assets Property, plant and equipment Right of use asset Intangible asset Deferred tax asset Current Assets Inventories Due from related parties Due from directors Trade and other receivables Taxation recoverable Cash and cash equivalents 12 9299 5 716,424,433 769,835,263 6 747,665,716 839,764,477 7 165,461,145 165,461,145 14,086,711 1.629.551.294 1,789,147,596 @2:22 9 835,761,847 10 11 133,473,836 13 1,056,372 14 859 232 250 599,256,692 1,840,986,049 1,359,635,168 7,741,281 3,720,463 650,602,515 9,058,886 6,062,887 94,309,180 345,008 TOTAL ASSETS 3,470,537,343 3,148,782,764 EQUITY AND LIABILITIES Equity Share capital 15 252.589.301 Accumulated surplus 1,552,645,555 252,589,301 1,240,218,249 1,805,234,856 1,492,807,550 Non-current Liabilities Deferred tax liability 8 14,967,478 Non-current portion of lease liability 6 796,095,303 836,705,219 Bank loans payable 16 143,034,760 177,057,318 954,097,541 1,013,762,537 Current Liabilities Current portion of lease liability 6 86,692,435 83,508,196 Current portion of bank loans payable 16 43,284,916 Trade and other payables 17 577,516,884 45,669,181 512,723,239 Due to related parties 18 3,710,711 312,061 711,204,946 642.212.677 TOTAL EQUITY AND LIABILITIES 3,470,537.343 3,148,782,764 APPROVED, on behalf of the Board on September 10, 2021 har Charg Chairman Director The accompanying notes form an integral part of the financial statements It's All GOOD inside FONTANA LIMITED Statement of Comprehensive Income YEAR ENDED JUNE 30, 2021 (Expressed in Jamaican dollars unless otherwise stated) Revenues Cost of sales Gross profit Administrative and other expenses Selling and promotion Operating profit Other income Finance costs Profit before taxation Taxation (charge) / credit Net profit, being total comprehensive income Fortina Note 2021 2020 $ 4 5,151,940,367 4,509,856,155 19 (3,203,802,006) (2,811,452,015) 1,948,138,361 1,608,404,140 22 23 20 21 (1,244,040,911) (55,670,715) (1,231,508,360) (69,309,755)* 22 648,426,735 397,586,025 60,180,286 51,650,408 708,607,021 449,236,433 24 (167,225,554) (185,344,733) 541,381,467 263,891,700 25 (29,054,189) 12,616,396 for the year 512,327,278 276,508,096 Earnings per share for profit attributable to the equity holders of the Company during the year 26 $ 0.41 0.22 Restated to conform to current year presentation The accompanying notes form an integral part of the financial statements 39 FONTANA LIMITED Statement of Changes in Equity YEAR ENDED JUNE 30, 2021 (Expressed in Jamaican dollars unless otherwise stated) Page 9 Share Accumulated Capital Surplus Total $ $ Balance at June 30, 2019 252,589,301 1,013,685,146 1,266,274,447 Transactions with owners: Dividend paid (note 30) (49,974,993) (49,974,993) Net profit, being total comprehensive income for the year 276,508,096 276,508,096 Balance at June 30, 2020 252,589,301 1,240,218,249 1,492,807,550 Transactions with owners: Dividend paid (note 30) Net profit, being total comprehensive income for the year Balance at June 30, 2021 (199,899,972) (199,899,972) 512,327,278 512,327,278 252,589,301 1,552,645,555 1,805,234,856 FONTANA LIMITED Statement of Cash Flows YEAR ENDED JUNE 30, 2021 (Expressed in Jamaican dollars unless otherwise stated) Note 2021 $ 2020 $ CASH FLOWS FROM OPERATING ACTIVITIES: Profit before interest and taxation 27 555,701,928 275,179,627 Adjusted for: Depreciation on right of use asset Depreciation on property, plant and equipment Interest expense on right of use asset 92,098,761 65,441,559 65,541,946 88,858,565 56,257,174 60,837,804 Reclassification of work in progress (Increase) / decrease in operating assets: Inventories Due to related parties Trade and other receivables Taxation recoverable Increase in operating liabilities: 186,717 778,784,194 481,319,887 (185,159,332) (79,612,684) 1,317,605 4,554,294 (39,164,656) (27,316,575) (711,363) Trade and other payables 64,793,645 52,433,068 Due to directors 3,398,651 312,061 Cash flows provided by operating activities 623,258,744 431,690,051 Taxation paid (19,184,989) Net cash provided by operating activities 623,258,744 412,505,082 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment (12,030,729) (125,392,988) Net cash used in investing activities (12,030,729) (125,392,988) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid (199,899,972) (49,974,993) Proceeds from loans 302,653,405 Repayment of loans (36,406,824) (237,369,332) Lease liability, net Directors' loans, net Interest paid Net cash used in financing activities (102,967,623) (69,247,431) 2,342,423 1,507,063 (14,320,461) (11,287,927) (351,252,457) (63,719,215) NET INCREASE IN CASH AND CASH EQUIVALENTS 259,975,558 223,392,859 CASH AND CASH EQUIVALENTS - Beginning of the year 599,256,692 375,863,833 CASH AND CASH EQUIVALENTS - End of the year 859,232,250 599,256,692 REPRESENTED BY: Short term investments 46,441,365 41,577,635 Cash and bank deposits 812,790,885 557,679,057 859,232,250 599,256,692 41