Statements of Financial Position as at 30 September 2021 Kerem ('000) Bursin (RM 000) Ercel ('000) Investments Subsidiary 11,170 Associate 3,200 Land 10.500 5,600 2.200 Property, plant & equipment 8,850 4,770 3,560 Intangible assets 120 Current assets: Inventory 5,660 3,340 1,890 Trade receivables 5,980 3,116 2.110 Current account 300 Bank 4,830 1,300 Total assets 50,490 19,216 11,060 2,270 12,000 6.900 32,830 2,000 1.760 5,880 1,260 Ordinary shares 5% Preference shares Revaluation reserve Retained earnings Long term loan 8% Debentures Trade payables Current account Tax payables Total equity & liability 700 1,370 1,000 300 3,510 250 86 19,216 6,120 2,500 1.900 50,490 400 11,060 (2.830) Statements of Profit & Loss as at 30 September 2021 Kerem ('000) Bursin ('000) Ercel ('000) Sales 25.300 12.900 6,600 -) Cost of sales (13,800) (8,440) (4,130) Gross profit 11,500 4,460 2,470 -) Administration expenses (4,590) (1,310) -) Other expenses (1.860) (920) (200) +) Gain from sale of PPE 200 Profit before tax 5.250 700 960 -) Tax (1.800) (200) Profit after tax 3,450 510 700 RE b/ bir 2,430 860 560 Dividends declared in September 2021 Ordinary shares 780 10 100 Preference shares 100 (260) Additional information: 1. Kerem Bhd acquired 80% of ordinary shares issued by Bursin Sdn Bhd on 30 September 2020 with consideration transferred of RM7.17 million which has been fully recorded, retained earnings was recorded at RM860,000. Revaluation reserve balance on acquisition date was recorded as RM500,000. There had been no new shares issued by Bursin Sdn Bhd since acquisition date. 2. During the year 2021, Kerem disposed of a plant with carrying value of RM600,000 for RM800,000 of which payment received was in cash. 3. Bursin sold inventory to Kerem at cost plus 25% with invoice price of RM800,000. 10% of Kerem's closing inventory is related to this transaction. 4. On 1 October 2020, Kerem acquired 40% of Ercel with consideration transferred of RM3.2million. Ercel had bank balance of RM460,000 on the date of acquisition. Dividends paid by the new associate must be taken into consideration when calculating investment in associate. 5. Depreciation for the year is estimated at RM2.4 million and partial goodwill impairment estimated at 50% for year 2021. 6. The group's statement of financial position as at 30 September 2020 is as follows: RM'000 RM000 Goodwill 482 Land 16,100 PPE 14,900 Intangible assets 150 Current assets: 18,256 Inventory 8,652 Trade receivables 8,114 Bank 1,490 Total assets 49,888 Ordinary shares 29,030 5% preference shares 2,000 Group revaluation reserve 1,760 Group retained earnings 2,430 Non-controlling interest 2,672 8% Debentures 300 Trade payables 10.250 Tax payables 1.446 Total 49,888 Required: (a) Prepare the following financial statements for Kerem's group for year ended 2021: i. Group statement of financial position ii. Group statement of profit & loss iii. Group statement of changes in equity iv. Group statement of cash flow Show ALL relevant workings. (75 marks) (b) You are assessing this group's financial health for investment purposes. Based on the group's financial statements, provide your analysis on following: i. Gearing ratio (total liabilities/total assets) ii. Net operating cashflow and liquidity ratio iii. Improvements on cash management, supported by your analysis of investing and financing cash flows (25 marks) Statements of Financial Position as at 30 September 2021 Kerem ('000) Bursin (RM 000) Ercel ('000) Investments Subsidiary 11,170 Associate 3,200 Land 10.500 5,600 2.200 Property, plant & equipment 8,850 4,770 3,560 Intangible assets 120 Current assets: Inventory 5,660 3,340 1,890 Trade receivables 5,980 3,116 2.110 Current account 300 Bank 4,830 1,300 Total assets 50,490 19,216 11,060 2,270 12,000 6.900 32,830 2,000 1.760 5,880 1,260 Ordinary shares 5% Preference shares Revaluation reserve Retained earnings Long term loan 8% Debentures Trade payables Current account Tax payables Total equity & liability 700 1,370 1,000 300 3,510 250 86 19,216 6,120 2,500 1.900 50,490 400 11,060 (2.830) Statements of Profit & Loss as at 30 September 2021 Kerem ('000) Bursin ('000) Ercel ('000) Sales 25.300 12.900 6,600 -) Cost of sales (13,800) (8,440) (4,130) Gross profit 11,500 4,460 2,470 -) Administration expenses (4,590) (1,310) -) Other expenses (1.860) (920) (200) +) Gain from sale of PPE 200 Profit before tax 5.250 700 960 -) Tax (1.800) (200) Profit after tax 3,450 510 700 RE b/ bir 2,430 860 560 Dividends declared in September 2021 Ordinary shares 780 10 100 Preference shares 100 (260) Additional information: 1. Kerem Bhd acquired 80% of ordinary shares issued by Bursin Sdn Bhd on 30 September 2020 with consideration transferred of RM7.17 million which has been fully recorded, retained earnings was recorded at RM860,000. Revaluation reserve balance on acquisition date was recorded as RM500,000. There had been no new shares issued by Bursin Sdn Bhd since acquisition date. 2. During the year 2021, Kerem disposed of a plant with carrying value of RM600,000 for RM800,000 of which payment received was in cash. 3. Bursin sold inventory to Kerem at cost plus 25% with invoice price of RM800,000. 10% of Kerem's closing inventory is related to this transaction. 4. On 1 October 2020, Kerem acquired 40% of Ercel with consideration transferred of RM3.2million. Ercel had bank balance of RM460,000 on the date of acquisition. Dividends paid by the new associate must be taken into consideration when calculating investment in associate. 5. Depreciation for the year is estimated at RM2.4 million and partial goodwill impairment estimated at 50% for year 2021. 6. The group's statement of financial position as at 30 September 2020 is as follows: RM'000 RM000 Goodwill 482 Land 16,100 PPE 14,900 Intangible assets 150 Current assets: 18,256 Inventory 8,652 Trade receivables 8,114 Bank 1,490 Total assets 49,888 Ordinary shares 29,030 5% preference shares 2,000 Group revaluation reserve 1,760 Group retained earnings 2,430 Non-controlling interest 2,672 8% Debentures 300 Trade payables 10.250 Tax payables 1.446 Total 49,888 Required: (a) Prepare the following financial statements for Kerem's group for year ended 2021: i. Group statement of financial position ii. Group statement of profit & loss iii. Group statement of changes in equity iv. Group statement of cash flow Show ALL relevant workings. (75 marks) (b) You are assessing this group's financial health for investment purposes. Based on the group's financial statements, provide your analysis on following: i. Gearing ratio (total liabilities/total assets) ii. Net operating cashflow and liquidity ratio iii. Improvements on cash management, supported by your analysis of investing and financing cash flows (25 marks)