1 CFs & funds flows 2 IAS 7 - SOCF: single company 3 Consolidated SOCF

1 CFs & Funds Flows CFs - advantage Profit - misled 2 IAS 7 - SOCF: single company Step -by-step preparation procedures Step 1: Set out the proforma Step 2: Complete the reconciliation of operating profit to net cash from operating activities Step 3: Calculate the following where appropriate Tax paid Dividend paid Purchase and sale of NCA Issues of shares Repayment of loans Step 4: Work out the profit if not already given using: opening & closing balances, tax charge & dividends Step 5: Complete the note of gross CFs Step 6: Slot the figure into the statement and any notes required 3 Consolidated SOCF Additional complications. Acquisitions & Disposals of sub undertaking Cancellation of intra-group transactions NCI Associates and joint ventures Finance leases

x charge & dividends

Question - Single company - page 386 Profit before tax Adjustments for: Depreciation Loss on disposal of long-term assets Interest payable Changes in WC Increase in inventory Increase in trade receivables Increase in trade payables Cash generated from operations Dividends paid Interest paid Income taxes paid Net cash from operating activities CFs from investing activities Purchase of PPE Proceeds from sale of equipment Net cash used in investing activities CFs from financing activities Proceeds from issue of share capital Payment of long-term borrowings Net cash used in financing activities Net decrease in C&CE at beginning of period at end of period per G/L Check 392 118 18 28 556 (4) (18) 12 546 (72) (28) (108) 338

(90) 12 (78)

32 (300) (268) (8) 56 48 48 -

NBV of PPE 1336 148 118 90 1426 1278 1426

Cost 1560 54 90 1,596 1650 1,650

Acc. Dep 24 318 342

Acc. Dep 224 118 342

Question - Consolidated CF 1 - pages 390 Profit before tax Adjustment Depreciation (W1) Profit on sale of plant Share of assocaite's profit after tax Investment income Interest payable Operating profit before WC changes Increase in inventory Increase in receivables Increase in payables Cash generated from operations Interest paid (W2) Income taxes paid (W3) Net CF operating activities CFs from investing activities Purchase of sub undertaking (W4) Purchase of PPE (W5) Proceeds from sale of plant Dividends from investment Dividends from associate (W6) Dividends paid to NCI (W7) Net CFs from investing activities CFs from financing activities Issue of ordinary share capital (W8) Issue of loan notes (W9) Capital payaments under finance leases (W10) Dividend paid Net cash flows from financing activities Net increase in C&CE Opening Closing $'000 5,655.00 975.00 (300.00) (1,050.00) (600.00) 450.00 5,130.00 (2,829.00) (1,641.00) 456.00 1,116.00 (300.00) (750.00) 66.00 $'000

294.00 (3,255.00) 1,500.00 465.00 750.00 (144.00) (390.00)

7,359.00 2,760.00 (810.00) (900.00) 8,409.00 8,085.00 5,460.00 13,545.00

W1

Depreciation $'000 Buildings Plants Closing balance Opening balance Depreciaiton on disposal $'000 375

3600 3300 300 300 600 975

W2

Interest & financial charges Accrued interest b/f Incur Discount of loan Interest paid (bal) Acrued interest c/d $'000 90 450 -120 -300 120

W3

Taxation Opening balance Income tax Deferred tax Incur Closing balance Income tax Deferred tax

651 39 690 1485 1386 90 -1476 699 51 750

On acquisition Cash outflow W4 Purchase of sub Cash received on acquisition Less cash consideration Cash inflow W5 PPE Cost at 31 Dec X7 Cost at 1 Jan X7

336 -42 294

9000 4200 4800

Disposal On acquisiiton Leased Cash outflow W6 Dividends from associate Opening balance Share of profit after tax Closing balance 495 2550

1500 6300

-3045 3255

3000 1050 4050 3300 750

W7

Dividends paid to NCI Opening balance Profit for year On acquisition Closing Cash outflow

300 189 489 -345 144

W8

Issue of ordinary share capital Closing blance Shares Premium Non-cash consideration Shares Premium Opening balance Shares Premium Cash inflow

11820 8649 20469 660 165 -825 6000 6285 -12285 7359

W9

Issue of loan notes Closing balance Opening balance Finance cost 4380 1500 2880 120

Cash inflow W10 Capital payments under leases Opening balances Current Long-term New lease commitment Closing blances Current Long-term Cash outflow

2760

600 510 1110 2550 720 2130 -2850 810

Question - Consodlidated CF 2 - page 396 $'000 666.00 78.00 (120.00) 624.00 (41.00) (37.00) 221.00 767.00 (160.00) 607.00 $'000

Profit before tax Adjustment Depreciation Share of profit of associates Operating profit before WC changes Increase in inventory Increase in receivables Increase in payables Cash generated from operations Income tax paid (W1) Net CF operating activities CFs from investing activities Purchase of sub undertaking Purchase of PPE Dividends from associates Net CF from investing activities CFs from financing activities Issue of ordinary share capital (W2) Issue of loan note (W3) Dividend paid

(48.00) (463.00) 100.00 (411.00)

(63.00) (63.00) 133.00 (266.00) (133.00) -

Opening Closing Check

W1

Tax paid $'000 Opening Current Deferred Incur Closing Current Deferred Cash outflow $'000 200 180 380 126 235 111 -346 160

W2

Issue of ordinary share $'000 Opening Capital Premium Non-cash transfer Capital Premium Closing Capital Premium 4776 0 -4776 120 216 -336 4896 216 5112 0 $'000

W3

Issue of loan note $'000 Opening Non-cash transfer Closing Cash inflows $'000 -653 -695 1348 0

20 Porter (25 marks) page 533 Profit before tax Adjustment Depreciation Investment income Exchange gains or losses Share of profit of associate Impairment of g/w Interest incurred Operating profit before WC changes Decrease in inventory Increase in trade receivable Increase in trade payable Cash generated from operations Interest paid Income tax paid (W1) Net CFs from operating activities CFs from investing activities Purchase of Sub undertaking Purchase of PPE (W2) Purchase on financial assets Dividends from associates Dividends paid to NCI Net CFs from investing activities CFs from financing activities Issue of ordinary share capital (W3) Issue of loan notes Dividend paid $'000 112.00 44.00 (6.00) 2.00 (12.00) 3.00 16.00 159.00 34.00 (4.00) (17.00) 172.00 (12.00) (37.00) 123.00 $'000

(18.00) (25.00) (10.00) 11.00 (4.00) (46.00)

18.00 60.00 (45.00) 33.00 110.00 48.00 158.00 -

Opening Closing Check

W1

Income tax Opening Current Deferred Incur (include tax on OCI) Closing Current Deferred From Sub Cash outflows

22 26 48 51 28 38 -66 4 37

W2

PPE - NBV Opening Purchase Purchase on credit Depreciation for the year Revaluation surplus From Sub Closing 812 25 15 -44 58 92 958

W3

Issue of ordinary share capital Closing Capital Premium Non-cash transfer Capital Premium Opening Capital Premium Cash inflows

332 212 544 24 30 -54 300 172 -472 18

W4

G/w Opening Incur Impairment (balance) Closing 10 8 -3 15

W5

Revaluation surplus Opening Incur Closing 54 58 101