Section A: Case Analysis (40 marks) Answer ALL questions. The followings are the financial statements (statement of financial position and consolidated income statement) for Aeon Stores (Hong Kong) Co., Limited' and Lifestyle International Holdings Limited?. (a) Perform vertical analysis for the two companies for the years of 2019 and 2020. (12 marks) (b) Perform ratio analysis for the two companies for the year ended 31 December 2020. The scope of analysis should include liquidity, profitability, and solvency. Please show the workings of the accounting ratios. (14 marks) (c) Recommend with reasons which company is considered to have better financial performance. (14 marks) Aeon Stores (Hong Kong) Co., Limited: CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 2020 NOTES 2020 HKS'000 2019 HK$ 000 5 7 8 Revenue Other income Investment income Interest income from rental deposits Purchases of goods and changes in inventorius Staff costs Depreciation of investment properties Depreciation of property, plant and equipment Depreciation of right-of-use assets Louse expenses Other expenses Pro-operating expenses Other gains and losses Interest on lease liabilities 21 18 19 9,961,893 583,928 22,411 10,767 (7,082,877) (1,061,224) (83,913) (204,694) (724,225) (01.275) (1,040,881) (2,823) (14,581) (292,755) 9,493,774 545,918 27.430 10,316 (6.656,159) (1,077,474) (85.247) (209,789) (749,094) (34,831) (1,063,992) 12,694) (12,719) (303,414 9 10 11 Loss bofore fax Income tax expense (20,240) 19,987) 12 (167,965) 21,032) Loss for the year 13 (30,236) (188,987) Source: https://www1.hkxnews.hk/listedco/listconews/schk/2021/0423/2021042300817.pdf 2 Source: https://media.lifestylehk.com.hk/2021033017080276229680831_te.pdf CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2020 NOTES 2020 HK$ 000 2019 HK$ 000 Non-current Assets Property, plant and equipment Right-of-use assets Investment properties Goodwill Equity Instruments at PVTOCI Pledged bank deposits Deferred tax assets Rental and related deposits paid 18 19 21 22 23 24 25 26 645,756 3,762,037 479,890 62,838 19,848 22,417 44,819 201,724 679,741 3,902,352 488,352 94,838 23,598 21,305 46.944 184,349 5,239,329 5,441.479 Current Assets Inventories Trade receivables Other receivables, prepayments and deposits Amounts dun from fellow subsidiaries Tax recoverable Time deposits Pledged bank deposits Bank balances and cash 27 26 26 28 889,997 37,809 102,112 62,600 935.949 35,316 83,346 63.905 8,532 327,567 10,751 1,470,515 29 24 30 463,740 10,230 1,537,837 3,104,415 2,935,971 Current Liabilities Trade payables Other payables, accrued charges and other liabilities Lease liabilities Contract abilities Dividend payable Amount due to ultimate holding company Amounts on to follow subsidiarios Tax liabilities 31 31 32 31 1.231,199 753,530 711,073 441,548 295 26,906 28,933 5,150 1,250,087 729,068 782,137 409,426 354 28.665 100,979 16.859 33 3,198,726 3,297,575 Net Current Liabilities 194,311) (361,604) Total Assets Less Current Liabilities 5,145,018 5,079,875 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2020 NOTES 2020 HK$ 000 2019 HK$'000 Capital and Reserves Share capital Reserves 115,158 587,490 115,158 658,374 702,656 146,976 773,532 132,752 849,632 906,284 Equity attributable to owners of the Company Non-controlling interest Total Equity Non-current Liabilities Rental deposits received and other liabilities Lease abilities Deferred tax liabilities 31 32 25 135,579 4,159,573 234 133,916 4,038,563 1,112 4,295,386 4,173,591 5,145,018 5,079,875 Lifestyle International Holdings Limited: Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2000 REE_41=T-REX Note 4 EH , 2020 HKS'000 1,993,024 (519,387) 1,473,637 218,878 (578,107) (114,634) 2019 HK$ 000 3,542,032 (888,869 2,653,163 147,165 (697,34) (137,787 Revenue Cost of sales Gross profit Other income, gains and losses Selling and distribution costs Administrative expenses Interest income and investment gains/losses Fair value changes on investment properties Finance costs Profit before taxation Tacation Profit for the year 7 34,559 740,176 14 8 10 9 (418,056) (369,314) 246,963 TH, 138,510 (173,959 (365,2389 2,166,176 (275,500 1,890,676 Consolidated Statement of Financial Position bears the An 31 December 2020 HKS'000 31 December 2019 HS000 Note 14 15 6,541,161 5. 1 6.5 Non-current Investment properties Property, plant and equipment Financial assets at fair value through other comprehensive income Pinancial sets at fair value through profit or los Deposits Deferred tax , 18 1,320,281 633,121 19 15,871 72218 25 16,530 82.839 87,451 16,116,629 12.432,772 16 17 25,795 644.378 38,615 102.11 Current Inventories Trade and other receivables Pinancial assets at fair value through profit or los Bank deposits Cash and cash equivalent 4,814.485 19 20 20 4.175.789 9,660,947 3.306082 1,508,898 7,112,561 12,068,767 Current liabilities Trade and other payables Contract liabilities Lease liabilities Tak payable Bank borrowings-doe within one year Financial abilities for value through profit or low 21 22 15 662,249 121,824 16,574 105,162 826.275 138.294 76,164 0.926 23 9.620,937 4,070,956 19 220,836 10,825,582 12 5. ATTA Non-current abilities Bank borrowings-dewer one year Bonds de after one year Lease abilities Deferred tax liabilities 23 24 15 25 2,074,125 6,836,181 134.697 260,067 11.107.070 7.641.212 6.92233 210,076 15.057.618 3,841,304 3,845,124 Costed on SAS I boarding ALCO 31 December 2020 31 December 2019 Not HKS 000 HKS 000 26 Capital and Share capital Reserve Equity butable to owner of the Company 7,510 3,837,614 7,510 3,845,124 3,841,300