The company was just listed early this year and was targeting at reaching the market capitalisation of SAR 10,000,000 million by 2021 (taking into account the number of shares outstanding of 200,000 million shares).

Required:

Question 1

1. What should be the target share price at the end of 2021? (2m)
2. What should be the targeted Profit after tax to be achieved to meet the targeted share price? (6m)
3. What should be the targeted revenue to achieve the targeted share price? (9m)
4. If the current share price is achieved based on the average crude oil price of SAR 64, what should be the targeted crude oil price in 2021 (with 13,172 Total hydrocarbon productions (million barrel per day). (5m)
5. What are the other possible strategies and ways of achieving the targeted share price? (8m)

Question 2

Based on the Balance sheet presented above:

1. Determine what is the Net Tangible asset (NTA) per share of the company both in 2019 and 2018? What is your evaluation of the NTA value in relation to the share price? (4m)
2. Based on your evaluation, is the assets management of the company efficient? (7m)
3. Is the gearing/leverage ratio of the company optimal?
4. Based on the degree of the Financial leverage (DFL) of the company, is the company expected to benefit from the leverage level? (4m)

Question 3

1. Based on the Cash Flow statement of the company, does the company show better performance as compared to what was presented in the income statement? What is the implication? (5m)
2. What is the Free cashflow of the company? What is the implication? (5m)

Question 4

1. Based on your analysis of the financial statement of the company above, what is the safety level of the company in term of revenue level? (4m)
2. What is the performance potential of the company based on the upswing projection in the crude oil price? (3m)
3. If crude oil price go down as far as USD 15 per barrel compared to the current USD 25 per barrel price, how bad will the company performance be? (3m)

Question 5

The company receive a long term contract proposal from a group of least-developed nations in Africa and South America to purchase the companys products at 45% discount as part of a Corporate Social Responsibility (CSR) contribution of the company to these countries. The contract is for 5 years and this will be about 10% of the companys current output level. The company has the capacity to increase its production to meet the above contract obligation. There will be an extra costs of logistics and transportation that is estimated to be about RM 24,000 million per annum.

1. Should the company sign the special contract? Show the financial implications? (6m)
2. What are the qualitative factors that need to be taken into account in the decision? (4m)

Question 6

The company is implementing a strict budgeting system in trying to achieve the targeted market capitalisation.

1. How can budgeting system used effectively to strive to achieve the targeted performance? (5m)
2. How could Management by Exception be employed in the Budgeting system to control performance and ensure that the company meet the targeted performance as planned. (7m)
3. How else the company to strive to meet the targeted performance? (3m)

Question 7

The company is trying to implement the Activity based costing system (ABC) to cost the multi products of the company.

1. Advise the company of the strength and weaknesses of the proposed system. (7m)
2. What is your recommendation to the company? (3m)

Note: All the calculations should be clearly shown.

Consolidated statement of income 2018 Note 23 Revenue Other Income related to sales Revenue and other Income related to sales Royalties and other taxes Purchases Producing and manufacturing Selling, administrative and general Exploration Research and development Depreciation and amortization Operating costs Operating Income share of results of joint ventures and associates Finance and other income Finance costs Income before Income taxes Income taxes Net Income SAR Year ended December 31 2019 2018 1,105,696 1.194.376 131,089 152,641 1,236,785 1,347,017 (182,141) 208,505) (225,170) (201,176) (58.249) 56.202) (36.647) 31.2501 (7.291) 7.928) (2.150) 2,217) (50,266) (41,334) (561.914) (548.612) 674,871 798.405 19,455) (1,415) 7.351 3.865 (6.026) (2.959) 666,741 797.896 (1336.04.8) 381.378) 330.692 416.518 USD Year ended December 31 2019 294,852 318,500 34,957 40,704 329,809 359,204 (48,571) (55,601) (60,045) 53,647) (15,533) (14.987) (9.773) (8.222) (1.944) 12,114 (573) (13,404) (11.023) (149,843) (146.296) 179,966 212.908 (2,521) (377) 1.960 1.030 (1.607) (789) 177,798 212,772 (89,613) (101.701) 88.185 111.071 590) Net Income (loss) attributable to Shareholders' equity Non-controlling interests 416,196 110,985 230.816 (122) 330.692 322 88.218 (23) 88,185 416.518 111,071 Earnings per share (basic and diluted) 1.65 2.08 0.44 0.55 - Supplementary information is converted at afbad rate of US dollar 1.00 = SAR 3.75 for convenience only Consolidated statement of comprehensive income SAR Year ended December 21 2019 2018 330,693 416,518 USD Year ended December 31 2019 2018 88,185 111,071 Note Net Income Other comprehensive Income (loss), net of tax Items that will not be reclassified to net income Remeasurement of post-employment benefit obligations Change in post-employment benefit deferred tax due to Income tax rate change Share of post-employment benefit obligations remeasurement from joint ventures and associates Change in equity Investment deferred tax due to income tax rate change Changes in far value of equity Investments classified as fair value through other comprehensive Income Share-based payment reserve items that may be redassified subsequently to net Income Cash flow hedges and other Changes in far value of debt securities classified as fair value through other comprehensive Income Share of other comprehensive loss of joint ventures and associates Currency translation differences 59 (487) (1,027) (762) (283) (1.1101 3.871 420 389 16 (130) (274) 202 88.387 (203) (76) (296) 1,032 112.103 756 Total comprehensive Income 231.449 Total comprehensive Income (loss) attributable to Shareholders' equilty Non-controlling Interests 331,896 (447) 331,449 420,524 (135) 420,389 88,506 (119) 88,387 112,139 3.6) 112.103 Supplementary information is converted at ate rate of US do 100 SAR375 for convenience only Consolidated balance sheet 982,014 261,670 21,021 26.896 Asset Non-current assets Property plant and equipment intang ble anses Investments in v entures and associates Delamod income tax asas Others and receivables Investments in securities 12.728 21,372 13.177 1.901 VO 256,906 1,085,930 963,509 289,581 Current asset Inventories Trade receivables Due from the Government Other assets and receivables Short-term investments Can and cash equivalents 42.507 93_525 36,781 431580 93 815 48,854 13.775 194 183,152 383,383 1,346,892 11.352 24. MO 9,800 3230 12.125 11,621 2018 11.00 15 45.457 177,706 408.195 1,494,125 104 353 398,434 4,841 1092 193171 Total assets 50 000 26.981 16,000 60,000 25.981 (3,750) Equity and liabilities Shareholders' equity Share capital Additional paid in capital They shares Retained earnings Unappropriated Appropriated Other reserves 16.000 7,195 (1,000) 943.758 920.625 251.469 245 100 1600 1035.055 0170 275,017 Non-controlling interests 1,046 235 1028,435 274,729 19,021 Non-current liabilities Borrowings Deferred income tax labies Post employment benefit obligations Providers 150.590 44,471 21.174 71.329 23 77 23 209 11,859 5.646 59 232320 134,021 61,952 78,231 20,862 Current liabetes Trade and other payables Obligations to the Government Income taxes Cuidend payable 52243 15.59 14727 24,895 215 571 29,989 5.539 119,433 398 434 Total quity and abilities 1494 125 1346 892 Consolidated statement of changes in equity USD Shareholders equity Retained emings s e na h ar Uncorporated Appropriated Other Non serve controlling Note 18) Interests Total Total 50,000 2,981 6000 670 715.107 416,196 12.556 322 14 416,518 2209 111,071 4328 ) Balance at January 1, 2018 Not income Other comprehensive Income foss) Total comprehensive Income boss) Transfer of post employment benefit obligations Tomasurement Didend Note 34 Change in control 416, 196 4328 (135 420,389 112,100 16,822) 6,822 (217.500 - 134 902) 17,500 134 900 (8,000) 36 DAO Dudenck to non controlling interests 60,000 26.981 Balance at December 11, 2018 Not income Other comprehensive 920,625 330,816 3.176 - 11.651 1,028,435 (123) 330,693 274,249 88,185 1,080 202 330,816 LORO (324 7 56 (447) 331.449 - 3,7501 ,750) - (1,000) Total comprehensive Income los Arion of treasury shares Note 10 Transfer of post employment benefit obligations romeasurement Transfer of share of post employment bent obligation romanement from joint ventures and dates Didenda Nota 340 Didiends to non-controlling interests - 309,863) 36) 82,6301 (10 - 6 Balance at December 31, 2019 60.000 26.981 .750 .000 2.075 1170 1045 235 272.995 Consolidated statement of cash flows Note Year anded December 31 2019 2018 666 741 797896 Year ended December 31 2018 177,798 212,772 5.6 12,404 11,072 2423 022 50.266 3.217 (1.2780 9.455 (5.534) 6,026 (509) 41.234 2.951 (877 1.415 (2 8402 2959 (1423 694) (757) (241) 2.521 (1.476) 1,607 (126) (165) 1520) 240 1257 103 1,417 235 Income before income taxes Adjustments to reconcile income before income taxes to net cash provided by operating activities Depreciation and amortization Exploration and evaluation costs written off Gain on meromont of axisting interest in equity investments Share of results of an entures and associates Finance income Finance costs Dividends from investments in securities Change in fair value of investments through profit or loss Change in joint ventures and associates inventory profit elimination Other Change in working capital Inventories Trade receivables Due from the Government Other assets and receivables Trade and other payables Royalties payable Other changes Other assets and receivables Provisions Post-employment benefit obligations Settlement of income and others Not cash provided by operating activities 1,869 727 12.083 3,268 3.430 499 194 2.222 16.455 15.696) (7,968 105 5.343 3548 (1,720 (1,5190 0.12.40 (1950 915 1425 2.865 763 0.279 2.65.40 (299 (9.951) 330 1.119 (328 472) 416.529 (1117) 0400 (2 606 GSE.205 453.701 298 (87.592) 111074 0953 M748 170,087 (122,882) 7,33 (131.750 18.571) 1,073 (35.138) 0.285 (13,628) (32.769) (3.614) 207 778 7,25 341) 00 091 Capital spenditures Acquisition of alfatos, net of cash acquired Distributions from joint ventures and associates Additional investments in joint ventures and associates Dividends from investments in securities Interest received Not investments in securities Net purchases marities of short form investments Not cash used in investing activities 4561 1868) (45.2733 (177,144) 2942 1619 5090 1,216 220 (12,072 47.229) (164) 10 BA (131,205 31.34 274.388) 72. 170 58.000 017.500 9020 7 48 010 Dividends Dividends paid to non controlling interests Interest paid Acquisition of troury shares Proceeds from borrowings Repayments of borrowing Nutcash used in financing activities 16 (57151 750) 51.950 (122002) 244831) 11.560 (11.096 020089 (1.520 (1.000) 13.856 24401 155.78.30 2.109 SR 5.446) 183.152 177.706 Net (decrease) Increase in cash and cash equivalents Carth and cha n s at beginning of the year Cash and cash equivalents at end of the year pengetary de s de 1.00-22.m 101 910 81242 1152 1.452 ER 3.41 27175 21.665 arily Consolidated statement of income 2018 Note 23 Revenue Other Income related to sales Revenue and other Income related to sales Royalties and other taxes Purchases Producing and manufacturing Selling, administrative and general Exploration Research and development Depreciation and amortization Operating costs Operating Income share of results of joint ventures and associates Finance and other income Finance costs Income before Income taxes Income taxes Net Income SAR Year ended December 31 2019 2018 1,105,696 1.194.376 131,089 152,641 1,236,785 1,347,017 (182,141) 208,505) (225,170) (201,176) (58.249) 56.202) (36.647) 31.2501 (7.291) 7.928) (2.150) 2,217) (50,266) (41,334) (561.914) (548.612) 674,871 798.405 19,455) (1,415) 7.351 3.865 (6.026) (2.959) 666,741 797.896 (1336.04.8) 381.378) 330.692 416.518 USD Year ended December 31 2019 294,852 318,500 34,957 40,704 329,809 359,204 (48,571) (55,601) (60,045) 53,647) (15,533) (14.987) (9.773) (8.222) (1.944) 12,114 (573) (13,404) (11.023) (149,843) (146.296) 179,966 212.908 (2,521) (377) 1.960 1.030 (1.607) (789) 177,798 212,772 (89,613) (101.701) 88.185 111.071 590) Net Income (loss) attributable to Shareholders' equity Non-controlling interests 416,196 110,985 230.816 (122) 330.692 322 88.218 (23) 88,185 416.518 111,071 Earnings per share (basic and diluted) 1.65 2.08 0.44 0.55 - Supplementary information is converted at afbad rate of US dollar 1.00 = SAR 3.75 for convenience only Consolidated statement of comprehensive income SAR Year ended December 21 2019 2018 330,693 416,518 USD Year ended December 31 2019 2018 88,185 111,071 Note Net Income Other comprehensive Income (loss), net of tax Items that will not be reclassified to net income Remeasurement of post-employment benefit obligations Change in post-employment benefit deferred tax due to Income tax rate change Share of post-employment benefit obligations remeasurement from joint ventures and associates Change in equity Investment deferred tax due to income tax rate change Changes in far value of equity Investments classified as fair value through other comprehensive Income Share-based payment reserve items that may be redassified subsequently to net Income Cash flow hedges and other Changes in far value of debt securities classified as fair value through other comprehensive Income Share of other comprehensive loss of joint ventures and associates Currency translation differences 59 (487) (1,027) (762) (283) (1.1101 3.871 420 389 16 (130) (274) 202 88.387 (203) (76) (296) 1,032 112.103 756 Total comprehensive Income 231.449 Total comprehensive Income (loss) attributable to Shareholders' equilty Non-controlling Interests 331,896 (447) 331,449 420,524 (135) 420,389 88,506 (119) 88,387 112,139 3.6) 112.103 Supplementary information is converted at ate rate of US do 100 SAR375 for convenience only Consolidated balance sheet 982,014 261,670 21,021 26.896 Asset Non-current assets Property plant and equipment intang ble anses Investments in v entures and associates Delamod income tax asas Others and receivables Investments in securities 12.728 21,372 13.177 1.901 VO 256,906 1,085,930 963,509 289,581 Current asset Inventories Trade receivables Due from the Government Other assets and receivables Short-term investments Can and cash equivalents 42.507 93_525 36,781 431580 93 815 48,854 13.775 194 183,152 383,383 1,346,892 11.352 24. MO 9,800 3230 12.125 11,621 2018 11.00 15 45.457 177,706 408.195 1,494,125 104 353 398,434 4,841 1092 193171 Total assets 50 000 26.981 16,000 60,000 25.981 (3,750) Equity and liabilities Shareholders' equity Share capital Additional paid in capital They shares Retained earnings Unappropriated Appropriated Other reserves 16.000 7,195 (1,000) 943.758 920.625 251.469 245 100 1600 1035.055 0170 275,017 Non-controlling interests 1,046 235 1028,435 274,729 19,021 Non-current liabilities Borrowings Deferred income tax labies Post employment benefit obligations Providers 150.590 44,471 21.174 71.329 23 77 23 209 11,859 5.646 59 232320 134,021 61,952 78,231 20,862 Current liabetes Trade and other payables Obligations to the Government Income taxes Cuidend payable 52243 15.59 14727 24,895 215 571 29,989 5.539 119,433 398 434 Total quity and abilities 1494 125 1346 892 Consolidated statement of changes in equity USD Shareholders equity Retained emings s e na h ar Uncorporated Appropriated Other Non serve controlling Note 18) Interests Total Total 50,000 2,981 6000 670 715.107 416,196 12.556 322 14 416,518 2209 111,071 4328 ) Balance at January 1, 2018 Not income Other comprehensive Income foss) Total comprehensive Income boss) Transfer of post employment benefit obligations Tomasurement Didend Note 34 Change in control 416, 196 4328 (135 420,389 112,100 16,822) 6,822 (217.500 - 134 902) 17,500 134 900 (8,000) 36 DAO Dudenck to non controlling interests 60,000 26.981 Balance at December 11, 2018 Not income Other comprehensive 920,625 330,816 3.176 - 11.651 1,028,435 (123) 330,693 274,249 88,185 1,080 202 330,816 LORO (324 7 56 (447) 331.449 - 3,7501 ,750) - (1,000) Total comprehensive Income los Arion of treasury shares Note 10 Transfer of post employment benefit obligations romeasurement Transfer of share of post employment bent obligation romanement from joint ventures and dates Didenda Nota 340 Didiends to non-controlling interests - 309,863) 36) 82,6301 (10 - 6 Balance at December 31, 2019 60.000 26.981 .750 .000 2.075 1170 1045 235 272.995 Consolidated statement of cash flows Note Year anded December 31 2019 2018 666 741 797896 Year ended December 31 2018 177,798 212,772 5.6 12,404 11,072 2423 022 50.266 3.217 (1.2780 9.455 (5.534) 6,026 (509) 41.234 2.951 (877 1.415 (2 8402 2959 (1423 694) (757) (241) 2.521 (1.476) 1,607 (126) (165) 1520) 240 1257 103 1,417 235 Income before income taxes Adjustments to reconcile income before income taxes to net cash provided by operating activities Depreciation and amortization Exploration and evaluation costs written off Gain on meromont of axisting interest in equity investments Share of results of an entures and associates Finance income Finance costs Dividends from investments in securities Change in fair value of investments through profit or loss Change in joint ventures and associates inventory profit elimination Other Change in working capital Inventories Trade receivables Due from the Government Other assets and receivables Trade and other payables Royalties payable Other changes Other assets and receivables Provisions Post-employment benefit obligations Settlement of income and others Not cash provided by operating activities 1,869 727 12.083 3,268 3.430 499 194 2.222 16.455 15.696) (7,968 105 5.343 3548 (1,720 (1,5190 0.12.40 (1950 915 1425 2.865 763 0.279 2.65.40 (299 (9.951) 330 1.119 (328 472) 416.529 (1117) 0400 (2 606 GSE.205 453.701 298 (87.592) 111074 0953 M748 170,087 (122,882) 7,33 (131.750 18.571) 1,073 (35.138) 0.285 (13,628) (32.769) (3.614) 207 778 7,25 341) 00 091 Capital spenditures Acquisition of alfatos, net of cash acquired Distributions from joint ventures and associates Additional investments in joint ventures and associates Dividends from investments in securities Interest received Not investments in securities Net purchases marities of short form investments Not cash used in investing activities 4561 1868) (45.2733 (177,144) 2942 1619 5090 1,216 220 (12,072 47.229) (164) 10 BA (131,205 31.34 274.388) 72. 170 58.000 017.500 9020 7 48 010 Dividends Dividends paid to non controlling interests Interest paid Acquisition of troury shares Proceeds from borrowings Repayments of borrowing Nutcash used in financing activities 16 (57151 750) 51.950 (122002) 244831) 11.560 (11.096 020089 (1.520 (1.000) 13.856 24401 155.78.30 2.109 SR 5.446) 183.152 177.706 Net (decrease) Increase in cash and cash equivalents Carth and cha n s at beginning of the year Cash and cash equivalents at end of the year pengetary de s de 1.00-22.m 101 910 81242 1152 1.452 ER 3.41 27175 21.665 arily