B A Accounting and Finance Advanced Financial Reporting Coursework DEADLINE Submission date is as per module booklet Context: Cermar

Plc is a UK based retail company. It has three operating segments, Food, Clothing and Household goods. Food: They sell a wide range of products, perceived by the public to be at the top end of the market. They have a large part of the lunch market in City Centre stores. They compete aggressively with other stores and constantly watch prices to ensure they retain the competitive edge. There has been a reduction in sales this year. Clothing: This segment have been very successful and it is anticipated this will continue. They are situated all over the UK and in mixed economy areas. They keep a close eye on the competition to ensure they match prices and keep their stock up to date. They have reduced prices in the current year to encourage customers to buy. Household: This is a relatively new area of business for the company and is beginning to show a profit. These are delivered to customers homes. The company is concerned that the delivery service does not always meet customers expectations. This has resulted in additional costs during the year. The company is concerned about the current recession and the likely impact on the different segments. The financial statements and notes for year ended 31 December 2010 and 31 December 2009 are shown in appendix 1. REQUIRED: Part A: Construct a forecast Income Statement/Statement of Comprehensive Income, Statement of Financial Position, Statement of Cash Flows and Statement of Changes in Equity for the year ended 31 December 2011. These must be accompanied by comparative figures and the required notes for items on all four statements (see notes 1-5 on Appendix 1). Workings should be separate. These must be consistent with the opening position of the company as stated in the financial statements in Appendix 1. The forecast statements must also be consistent with each other 50 marks Part B: Detailed discussion of operating assumptions. This must give reasons for the changes in revenue and expenses of each segment. Do not consider disposing of any of the segments.. It must also include tax, dividends, revaluation, acquisition and disposal of non current assets and changes in finance. Guideline word limit 1000 words. 40 Marks Presentation: The statements must be presented in full compliance with international accounting standards. The operating assumptions should be clearly stated and give sufficient discussion of where you see the business going in the future. 10 Marks Total 100 Marks

Cermar Plc Statement of Financial Position 000s 31 Dec 2010 Non Current Assets Tangible (Note 1) 3845.3 3845.3 000s 31 Dec 2009 4101.2 4101.2

Current Assets Inventories Trade Receivables Short term deposits Cash

543.7 387.7 250.0 123.5 1304.9 5150.2

504.0 370.0 64.0 26.8 964.8 5066.0

Total Assets Equity Ordinary Share Capital Share Premium Account Revaluation Reserve Retained Profits Non Current Liabilities Current Liabilities (Note 2) Total Equity and Liabilities

1436.3 786.8 328.0 996.6 3547.7 1266.6 335.9 5150.2

1231.2 650.0 328.0 941.0 3150.2 1661.4 254.4 5066.0

Cermar Plc Statement of Changes in Equity at 31 Dec 2010 Share Share Reval Income Total Capital Premium Reserve Stat 000s 000s 000s 000s 000s Balance at 31 Dec 2009 1231.2 650.0 328.0 941.0 3150.2 Share Issue 205.1 136.8 341.9 Profit for year 335.6 335.6 Dividends -280.0 -280.0 Balance at 31 Dec 2010 1436.3 786.8 328.0 996.6 3547.7

Cermar Plc Income Statement/Statement of Comprehensive Income 000s 000s 31 Dec 31 Dec 2010 2009 Revenue (Note 3) 3379.5 3590.9 Cost of Sales -2012.1 -2060.2 Gross Profit 1367.4 1530.7 Operating Expenses Operating Profit (Note 3) Finance Costs Income Tax Profit for the year Other Comprehensive Income Revaluation Total Comprehensive Income for the year Cermar Plc Statement of Cash Flows -880.8 486.6 -52.1 434.5 -98.9 335.6 -849.6 681.1 -64.1 617.0 -109.4 507.6

0 335.6 000s 31 Dec 2010 434.5 52.1 472.7 -80.0 879.3 -17.7 -39.7 59.4 42.4 923.7 -43.7 -109.4 770.6 -576.8 440.0 -136.8 -280.0 341.9 -394.8 -332.9 300.9 72.6 373.5

0 507.6 000s 31 Dec 2009 617.0 64.1 336.2 34.2 1051.5 87.8 100.8 -60.5 -31.7 1147.9 -30.9 -92.1 1024.9 -1036.8 86.4 -950.4 -172.8 0 57.6 -115.2 -40.7 113.3 72.6

Operating Profit Interest Depreciation Profit/Loss on disposal of Non Current Asset Decrease/Increase in Trade Receivables Decrease/Increase in Inventories Increase/Decrease in Trade Payables Increase/Decrease in Accruals Cash generated from operations Finance Costs paid Income Tax paid Net Cash Flow from Operating Activities Cash Flows from Investing Activities Purchase of Property Plant and Equipment Sale of Property Plant and Equipment Cash Flow from Financing Activities Dividends paid Proceeds from Share Issue Debt Reduction/Increase Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents at start of year (Note 4) Cash and Cash Equivalents at end of year (Note 5)

Notes to the Accounts Note 1: Movement on Tangible Non Current Assets Land and Fixtures Equipment Property Fittings Vehicles 000s 000s 000s Cost Opening Balance (01/01/10) 2864.6 864.6 1296.0 Additions 407.8 169.0 Disposals -192.2 -576.0 2864.6 1080.2 889.0 Depreciation Opening Balance (01/0/10) Disposals Charge for year Net Book Value (31/12/10)

Total 000s 5025.2 576.8 -768.2 4833.8

302.4 44.6 347.0 2517.6

189.6 -96.0 197.3 290.9 789.3 000s 31 Dec 2010 131.1 72.4 33.5 98.9 0 335.9

432.0 -312.2 230.8 350.6 538.4 000s 31 Dec 2009 71.7 30.0 25.1 109.4 18.2 254.4

924.0 -408.2 472.7 988.5 3845.3

Note 2: Analysis of Current Liabilities

Trade Payables Accrued Charges Finance costs Income tax Bank overdraft Note 3: Segmental Analysis year ended 31 Dec 2010 Food Clothing 000s 000s Revenue Cost of Sales Operating Expenses Operating Profit 1182.8 704.2 273.0 205.6

1284.2 724.4 343.5 216.3

House hold 000s 912.5 583.5 264.3 64.7

Total

3379.5 2012.1 880.8 486.6

Note 4 Analysis of Cash and Cash Equivalents at 31 Dec 2009 000s Cash at Bank 26.8 Bank Overdraft -18.2 Bank Deposit 64.0 72.6 Note 5: Analysis of Cash and Cash Equivalents at 31 Dec 2010 000s Cash at Bank 123.5 Bank Deposit 250.0 373.5

Additional Information: Depreciation policy: Property is 2% per annum, straight line. Fixtures is 20% per annum, reducing balance Equipment is 30% per annum, reducing balance.

Revaluation: There has been no revaluation of non current assets for five years.