Using the company Group Summary audited financial report below:

1.Complete the contribution /variable format of the income statement and compare it with the

absorption format.

2. Critique both formats giving the pros and con.

3. Show also the break-even position of the company in terms of dollar sales.

4. Show also dollar sales with the following profit positions Net profit margin of 5%, 10% and 20% respectively

SUMMARY GROUP STATEMENT OF PROFIT OR LOSS J$'000 Notes Revenue Cost of sales Gross profit Operating expenses Operating earnings before other (expenses) income, net 7 Other (expenses) income, net 8 Operating earnings Financial income Financial expenses Loss on foreign exchange Earnings before taxation Taxation charge CONSOLIDATED NET INCOME Earnings per stock unit (expressed in J$ per stock unit) 3 AUDITED 2019 2018 17,764,664 17,573,931 (10,596,112) (11,230,161) 7,168,552 6,343,770 (2,494,189) (2,213,492) 4,674,363 4,130,278 (426,566) 29,484 4,247,797 4,159,762 11,719 12,442 (881,740) (664,777) (640,362) (212,766) 2,737,414 3,294,661 (853,736) (828,568) 1,883,678 2,466,093 2.21 2.90 SUMMARY GROUP STATEMENT OF OTHER COMPREHENSIVE INCOME J$'000 AUDITED 2019 2018 CONSOLIDATED NET INCOME 1,883,678 2,466,093 Items that will not be reclassified subsequently to the profit or loss: Net actuarial gains from remeasurement of employee benefits obligation 29,840 29,149 Deferred income tax recognised directly in other comprehensive income (7,460) (7,287) 22,380 21,862 Items that are or may be reclassified subsequently to the profit or loss: Effects from derivative financial instruments designated as cash flow hedge (13,715) (73,472) (13,715) (73,472) Total items of other comprehensive income (loss), net 8,665 (51,610) TOTAL COMPREHENSIVE INCOME 1,892,343 2,414,483 7. Operating earnings before other income (expenses), net [expressed in J$'000) Operating earnings before other income (expenses), net by nature are as follows: AUDITED 2019 2018 Revenue 17,764,664 17,573,931 Expenses: Raw material and consumables 1,229,620 1,460,709 Fuel and electricity 3,396,908 3,480,111 Personnel remuneration and benefits 2,133,613 1,967,124 Repairs and maintenance 867,341 799,346 Equipment hire 894,159 586,908 Cement transportation, marketing and selling expenses 707,642 771,356 Other operating expenses 1,202,431 1,854,460 Depreciation, impairment and amortisation 1,603,850 1,159,187 Changes in inventories of finished goods and work in progress 1,054,737 1,364,452 Total expenses 13,090,301 13,443,653 Operating earnings before other income (expenses) 4,674,363 4,130,278 8. Other (expenses) income, net [expressed in J$'000) The details of the line item "Other (expenses) income, net in 2019 and 2018 were as follows: AUDITED 2019 2018 Manpower restructuring costs (87,166) Demolition expenses (99,215) (13,990) Environmental costs (49,615) (49,595) Management Fees (117,948) (114,146) Fixed asset write-off (90,769) Insurance compensation 249,438 Other, net 18,147 (42,223) (426,566) 29,484 Chairman February 27, 2020 Director February 27, 2020 SUMMARY GROUP STATEMENT OF CASH FLOWS J$'000 AUDITED 2019 2018 1,883,678 2,466,093 1,603,850 7,490 (4.071) (11,719) 774,810 853.736 76,285 1,159,187 2.832 (16,571) (12,442) 665,438 828,568 4,513 72,742 15,076 67,985 89.772 797 16,361 84,993 116.413 (661) 673,027 (164,709) 209.494 SUMMARY GROUP STATEMENT OF FINANCIAL POSITION J$'000 AUDITED 2019 2018 ASSETS CURRENT ASSETS Cash at bank and on hand 544,570 420,790 Trade accounts receivable, net 509,424 352,038 Other accounts receivable 78,698 340,068 Inventories, net 2,208,560 1,733.265 Accounts receivable from related parties 73,648 58,294 Other current assets 56,103 104,045 Total current assets 3,471,003 3,008,500 NON-CURRENT ASSETS Property, machinery and equipment, net 23,629,545 23,783.937 Total non-current assets 23,629,545 23,783,937 TOTAL ASSETS 27,100,548 26,792,437 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Other financial obligations 826,647 Trade payables 2,469,260 1,963,528 Accounts payable to related parties 527,383 749,734 Other current liabilities 1,284,881 939,464 Total current liabilities 4,954,551 4,479,373 NON-CURRENT LIABILITIES Long-term debt 9,155,656 11,387,028 Other financial obligations 2,496,746 3,021,805 Employee benefits obligation 839,047 832,804 Deferred income tax liabilities 1,285,723 614,128 Long-term accounts payable to related parties 4,207 Other non-current liabilities 54,094 39,118 Total non-current liabilities 13,835,473 15,894,883 TOTAL LIABILITIES 18,790,024 20,374,256 STOCKHOLDERS' EQUITY Share capital: Ordinary stock units 1,808,837 1,808,837 Capital contribution 3,839,090 3,839,090 Reserves: Realised capital gain 1,413,661 1,413,661 Other equity reserves 1,254,506 350,864 Accumulated losses (5,570) (994,271) Total stockholders' equity 8,310,524 6,418,181 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 27,100,548 26,792,437 Approved and authorised for issue by the Board of Directors on February 27, 2020 and signed on its behalf by: Parvis A. Lyan-Ayre Chairman Director Parris A. Lyew-Ayee Yago Castro OPERATING ACTIVITIES Consolidated net income Non-cash items: Depreciation, impairment and amortisation of assets Loss on disposal of property, machinery and equipment Net recovery of impaired receivables Interest income Interest expense Taxation charge Fixed asset write-off Rehabilitation cost Inventory impairment allowance Employee benefit expenses Unwinding of discount on preference shares Unwinding of discount on rehabilitation provision Unwinding of discount on lease liabilities Unrealised foreign exchange gains, net Changes in working capital, excluding taxes Net cash flow provided by operating activities before financial expenses and taxes Employee benefits paid Interest received Interest paid Taxation paid Net cash flows provided by operating activities INVESTING ACTIVITIES Property, machinery and equipment, net Proceeds from disposal of assets Net cash flows used in investing activities FINANCING ACTIVITIES Repayment of long-term debt, net Other financial obligations: Repayment of redeemable preference shares Repayment of lease liabilities Net cash flows (used in) provided by financing activities Increase (decrease) in cash at bank and on hand Cash conversion effect, net Cash at bank and on hand at beginning of year CASH AT BANK AND ON HAND AT END OF YEAR Changes in working capital, excluding taxes: Trade accounts receivable, net Other current assets Inventories Trade payables Other current liabilities Changes in working capital, excluding taxes 5,579,969 (31,902) 11,719 (794,251 (33,048 4,732,487 5,209,971 (37,109) 12,442 (644,328) (174,496) 4,366,480 (1,334,340) (16,663,006) 1303 (1,333,037) (16,663,006) (2,207,878) 11,446,224 (399,760 (1,043,134) (50.580 (3,301,592) 97,858 25,922 420,790 544,570 11,046,464 (1.250,062 12,215 1,673,067 420,790 (158,413) 122,684 (490,371) 506,596 135,917 116,413 95,880 (113,817) (271,570) (440,662) 939,663 209,494 SUMMARY GROUP STATEMENT OF PROFIT OR LOSS J$'000 Notes Revenue Cost of sales Gross profit Operating expenses Operating earnings before other (expenses) income, net 7 Other (expenses) income, net 8 Operating earnings Financial income Financial expenses Loss on foreign exchange Earnings before taxation Taxation charge CONSOLIDATED NET INCOME Earnings per stock unit (expressed in J$ per stock unit) 3 AUDITED 2019 2018 17,764,664 17,573,931 (10,596,112) (11,230,161) 7,168,552 6,343,770 (2,494,189) (2,213,492) 4,674,363 4,130,278 (426,566) 29,484 4,247,797 4,159,762 11,719 12,442 (881,740) (664,777) (640,362) (212,766) 2,737,414 3,294,661 (853,736) (828,568) 1,883,678 2,466,093 2.21 2.90 SUMMARY GROUP STATEMENT OF OTHER COMPREHENSIVE INCOME J$'000 AUDITED 2019 2018 CONSOLIDATED NET INCOME 1,883,678 2,466,093 Items that will not be reclassified subsequently to the profit or loss: Net actuarial gains from remeasurement of employee benefits obligation 29,840 29,149 Deferred income tax recognised directly in other comprehensive income (7,460) (7,287) 22,380 21,862 Items that are or may be reclassified subsequently to the profit or loss: Effects from derivative financial instruments designated as cash flow hedge (13,715) (73,472) (13,715) (73,472) Total items of other comprehensive income (loss), net 8,665 (51,610) TOTAL COMPREHENSIVE INCOME 1,892,343 2,414,483 7. Operating earnings before other income (expenses), net [expressed in J$'000) Operating earnings before other income (expenses), net by nature are as follows: AUDITED 2019 2018 Revenue 17,764,664 17,573,931 Expenses: Raw material and consumables 1,229,620 1,460,709 Fuel and electricity 3,396,908 3,480,111 Personnel remuneration and benefits 2,133,613 1,967,124 Repairs and maintenance 867,341 799,346 Equipment hire 894,159 586,908 Cement transportation, marketing and selling expenses 707,642 771,356 Other operating expenses 1,202,431 1,854,460 Depreciation, impairment and amortisation 1,603,850 1,159,187 Changes in inventories of finished goods and work in progress 1,054,737 1,364,452 Total expenses 13,090,301 13,443,653 Operating earnings before other income (expenses) 4,674,363 4,130,278 8. Other (expenses) income, net [expressed in J$'000) The details of the line item "Other (expenses) income, net in 2019 and 2018 were as follows: AUDITED 2019 2018 Manpower restructuring costs (87,166) Demolition expenses (99,215) (13,990) Environmental costs (49,615) (49,595) Management Fees (117,948) (114,146) Fixed asset write-off (90,769) Insurance compensation 249,438 Other, net 18,147 (42,223) (426,566) 29,484 Chairman February 27, 2020 Director February 27, 2020 SUMMARY GROUP STATEMENT OF CASH FLOWS J$'000 AUDITED 2019 2018 1,883,678 2,466,093 1,603,850 7,490 (4.071) (11,719) 774,810 853.736 76,285 1,159,187 2.832 (16,571) (12,442) 665,438 828,568 4,513 72,742 15,076 67,985 89.772 797 16,361 84,993 116.413 (661) 673,027 (164,709) 209.494 SUMMARY GROUP STATEMENT OF FINANCIAL POSITION J$'000 AUDITED 2019 2018 ASSETS CURRENT ASSETS Cash at bank and on hand 544,570 420,790 Trade accounts receivable, net 509,424 352,038 Other accounts receivable 78,698 340,068 Inventories, net 2,208,560 1,733.265 Accounts receivable from related parties 73,648 58,294 Other current assets 56,103 104,045 Total current assets 3,471,003 3,008,500 NON-CURRENT ASSETS Property, machinery and equipment, net 23,629,545 23,783.937 Total non-current assets 23,629,545 23,783,937 TOTAL ASSETS 27,100,548 26,792,437 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Other financial obligations 826,647 Trade payables 2,469,260 1,963,528 Accounts payable to related parties 527,383 749,734 Other current liabilities 1,284,881 939,464 Total current liabilities 4,954,551 4,479,373 NON-CURRENT LIABILITIES Long-term debt 9,155,656 11,387,028 Other financial obligations 2,496,746 3,021,805 Employee benefits obligation 839,047 832,804 Deferred income tax liabilities 1,285,723 614,128 Long-term accounts payable to related parties 4,207 Other non-current liabilities 54,094 39,118 Total non-current liabilities 13,835,473 15,894,883 TOTAL LIABILITIES 18,790,024 20,374,256 STOCKHOLDERS' EQUITY Share capital: Ordinary stock units 1,808,837 1,808,837 Capital contribution 3,839,090 3,839,090 Reserves: Realised capital gain 1,413,661 1,413,661 Other equity reserves 1,254,506 350,864 Accumulated losses (5,570) (994,271) Total stockholders' equity 8,310,524 6,418,181 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 27,100,548 26,792,437 Approved and authorised for issue by the Board of Directors on February 27, 2020 and signed on its behalf by: Parvis A. Lyan-Ayre Chairman Director Parris A. Lyew-Ayee Yago Castro OPERATING ACTIVITIES Consolidated net income Non-cash items: Depreciation, impairment and amortisation of assets Loss on disposal of property, machinery and equipment Net recovery of impaired receivables Interest income Interest expense Taxation charge Fixed asset write-off Rehabilitation cost Inventory impairment allowance Employee benefit expenses Unwinding of discount on preference shares Unwinding of discount on rehabilitation provision Unwinding of discount on lease liabilities Unrealised foreign exchange gains, net Changes in working capital, excluding taxes Net cash flow provided by operating activities before financial expenses and taxes Employee benefits paid Interest received Interest paid Taxation paid Net cash flows provided by operating activities INVESTING ACTIVITIES Property, machinery and equipment, net Proceeds from disposal of assets Net cash flows used in investing activities FINANCING ACTIVITIES Repayment of long-term debt, net Other financial obligations: Repayment of redeemable preference shares Repayment of lease liabilities Net cash flows (used in) provided by financing activities Increase (decrease) in cash at bank and on hand Cash conversion effect, net Cash at bank and on hand at beginning of year CASH AT BANK AND ON HAND AT END OF YEAR Changes in working capital, excluding taxes: Trade accounts receivable, net Other current assets Inventories Trade payables Other current liabilities Changes in working capital, excluding taxes 5,579,969 (31,902) 11,719 (794,251 (33,048 4,732,487 5,209,971 (37,109) 12,442 (644,328) (174,496) 4,366,480 (1,334,340) (16,663,006) 1303 (1,333,037) (16,663,006) (2,207,878) 11,446,224 (399,760 (1,043,134) (50.580 (3,301,592) 97,858 25,922 420,790 544,570 11,046,464 (1.250,062 12,215 1,673,067 420,790 (158,413) 122,684 (490,371) 506,596 135,917 116,413 95,880 (113,817) (271,570) (440,662) 939,663 209,494