QUESTION 3 (20 MARKS)

(a) Ambipure Bhd is a public listed company engaged in manufacturing and distributing of
various types of air fresheners in South East Asia. Since its incorporation, the company has
acquired a number of subsidiaries in similar industry to strengthen its position as one of the
leading air freshener distributors in Malaysia. The consolidated financial statements of the
company as at 30 November 2011 are as follows:

Consolidated Statement of Comprehensive Income

RM’000
Revenue 85,000
Cost of sales (59,750)
Gross profit 25,250
Operating expenses (5,650)
Finance cost (1,400)
Gain on sale of property (note 2) 1,250
Profit before tax 19,450
Tax (6,250)
Profit for the period 13,200

Other comprehensive income: -

Attributable to:
Non-controlling interest 655
Equity holders of the parent 12,545
13,200

Summarised Consolidated Statement of Changes in Equity (in respect to equity holders of

the parent)

Ordinary Share Retained

Share premiu Profits
Capital m
RM’000 RM’000 RM’000
Balance at 1 December 2010 18,000 10,000 18,340
New shares issued 2,000 2,000
Total comprehensive income for the 12,545
period
Dividends paid (6,000)
Balance at 30 November 2011 20,000 12,000 24,885
 Consolidated Statement of Financial Position as at:

30 November 2010 30 November 2011

RM’000 RM’000 RM’000 RM’000
Non-Current Assets:
Intangible asset (note 3) 4,160 6,410
Property, Plant and Equipment 44,050 48,210 50,600 57,010

Current assets:
Inventories 28,750 33,500
Trade receivables 26,300 27,130
Cash 3,900 58,950 1,870 62,500
107,160 119,510

Ordinary share capital of RM1 18,000 20,000

each
Share premium 10,000 12,000
Retained profits 18,340 46,340 24,885 56,885

Non-controlling interests 1,920 3,625

Long term loans 19,200 18,200

Current liabilities:
Trade payables 32,810 33,340
Interest payables 1,440 1,360
Tax payable 5,450 39,700 6,100 40,800
107,160 119,810

Notes:

(i) Several years ago, Ambipure Bhd acquired 80% of the issued ordinary shares of its
subsidiary, D’Wangi Bhd. On 1 January 2011, Ambipure Bhd acquired 75% of the issued
ordinary shares of Nanochem Bhd in exchange for a fresh issue of 2 million of its own
RM1 ordinary shares (issued at a premium of RM1 each) and RM2 million in cash. The
net assets of the subsidiary at the date of acquisition were as follows:

RM’000
Property, plant and equipment 4,200
Inventories 1,650
Trade receivables 1,300
Cash 50
Trade payables (1,950)
Tax payable (250)
5,000
(ii) On 20 February 2011, Ambipure Bhd disposed of a noncurrent asset of property for
proceeds of RM2,250,000. The carrying value of the asset at the date of disposal was
RM1,000,000. There were no other disposals of noncurrent assets. Depreciation of
RM7,950,000 was charged against consolidated profits for the year.
(iii) Intangible assets for the year 2011 comprise goodwill on acquisition of D’Wangi
Bhd and Nanochem Bhd whereas for the year 2010, the amount of intangible assets was
for D’Wangi Bhd only. Goodwill has remained unimpaired since acquisition

Required:

(a) Prepare a consolidated statement of cash flow for the year ended 30 November 2011
using the indirect method, in compliance with FRS 107, Cash Flow Statement. Show all
your workings.
(16 marks)
(b) What suggestions can you make to help the management improving the company’s cash
flow?
(4 marks)