The following information has been taken from the financial statements for Payne plc (Payne) for the year ended 31 March 2013.
*Statement of Profit or Loss and Other Comprehensive Income (extracts) for year ended 31 March 2013:€ʼ000
|Profit before interest & tax||981|
|Profit before tax||873|
|Income tax expense||(305)|
|Profit for the year||568|
|Other comprehensive income|
|Revaluation surplus on property, plant and equipment||418|
|Total comprehensive income||986|
|Statements of Financial Position as at 31 March|
|2013 €ʼ000||2012 €ʼ000|
|Property, plant and equipment||11,250||10,500|
|Trade and other receivables||260||210|
|Cash and cash equivalents||5||30|
|EQUITY AND LIABILITIES|
|Ordinary share capital||6,000||5,250|
|Share premium account||1,800||1,425|
|Preference share capital (redeemable)||760||600|
|Trade and other payables||222||210|
|Ordinary dividend payable||750||600|
|Total equity and liabilities||12,893||12,335|
Statement of Changes in Equity for the year ended 31 March 2013 (extract)
|Retained Earnings||Revaluation Surplus|
|Balance at 1 April 2012||3,369||356|
|Total comprehensive income for the year||568||418|
|Transfer from revaluation surplus to retained earnings||24||(24)|
|Balance at 31 March 2013||2,011||750|
* In June 2011, the IASB issued amendments to IAS 1 Presentation of Financial Statements. One of these proposed the adoption of the title Statement of Profit or Loss and Other Comprehensive Income for the performance statement. The title Statement of Comprehensive Income could have been used above. The following additional information is relevant:
(i) During the year Payne issued both ordinary shares and redeemable preference shares for cash. The latter were issued at par.
(ii) Investments classified as current assets are held for the short term and are readily convertible into the stated amounts of cash on demand. (iii) During the year, Payne sold plant and equipment with a carrying amount of €840,500 for €900,000. Total depreciation charges for the year amounted to €1,100,000. Plant costing €50,000 was purchased on credit. The amount is included within trade and other payables.
(iv) Trade and other payable include accrued interest of €5,000 as at 31 March 2013 (2012: €10,000). (v) Intangibles relate to development costs capitalised in accordance with IAS 38 Intangible Assets. Costs amounting to €70,000 were capitalised during the year.
(a) Prepare a Statement of Cash Flows for Payne for the year to 31 March 2013 in accordance with IAS 7 Statement of Cash Flows.
(b) You have been provided with the following additional information in relation to Payneʼs trading performance for the years ended on the stated dates:
|Revenue|| €ʼ000 |
|Cost of sales||(2,040)||(1,400)|
Write a report concisely analyzing the cash flow, profitability and working capital management of Payne Ltd during the year ended 31 March 2013. Your report should be supported by appropriate ratios (a total of 4 marks is available for the calculation of ratios).