Interpreting Financial & Accounting Information Assignment Questions

Interpreting Financial & Accounting Information Assignment Solutions

Prepare a separate table showing the computations for the numerator and denominator of ratio equations as illustrated below:

	Genting Need Help Writing an Essay? Tell us about your assignment and we will find the best writer for your project Write My Essay For Me Plantations		Hap Seng Plantations
Operating Profit	2023	2022	2023	2022
Profit before tax
+ Finance cost
– Other income
Operating profit
Average Capital Employed
Average Equity
Average NCL
Average Capital Employed

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Genting Plantations Berhad – An Overview

Genting Plantations Berhad (“Genting Plantations” or “the Company”) was incorporated as a private limited company on 29 September 1977. It commenced operations in 1980 as the plantation arm of the Genting Group, founded by the late Tan Sri Lim Goh Tong, and in 1982, it gained a listing on Bursa Malaysia, then known as the Kuala Lumpur Stock Exchange.

Since the commencement of operations, Genting Plantations has successfully transformed itself from a modest, predominantly rubber-based enterprise into one of the region’s leading oil palm plantation groups. Starting with a mere 13,700 hectares in Peninsular Malaysia in 1980, Genting Plantations’ landbank has increased by leaps and bounds to about 243,300 hectares currently, spread over Malaysia and Indonesia.

The rapid expansion of Genting Plantations’ landbank in Malaysia occurred primarily during two major waves of greenfield and brownfield acquisitions in Sabah, namely between 1988 and 1991, when the Company acquired 21,863 hectares, and between 2001 and 2004, when it acquired a further 25,706 hectares. With the availability of arable land becoming scarce domestically, Genting Plantations moved to tap the attractive opportunities overseas by venturing into Indonesia. In June 2005, the Company embarked on its maiden foray into Indonesia by establishing a joint venture to cultivate oil palm in West Kalimantan.

In demonstrating its confidence in the long-term prospects of the oil palm plantation business in Indonesia, Genting Plantations has continued to strengthen its foothold by entering into other joint ventures. Genting Plantations is developing some 178,900 hectares in West, Central and South Kalimantan, and continues to explore opportunities to increase its landbank further.

As part of its upstream plantation operations, Genting Plantations has also invested in oil mills in strategic locations over the years. Currently, the Company owns thirteen oil mills, comprising one in Peninsular Malaysia, six in Sabah and six in Indonesia, with a combined capacity of 725 metric tonnes per hour. The progress achieved by Genting Plantations over the years goes beyond just landbank expansion.

Consistently achieving productivity standards well above the industry average, the Company is today widely-recognised in the investment community as one of the best-managed and lowest-cost palm oil producers. Nowhere is the remarkable growth achieved by Genting Plantations more evident than in the Company’s solid track record in growing its profits and generating positive returns for shareholders year after year. The Company is also an industry leader when it comes to conservation and respect for the environment.

Genting Plantations positioned itself at the forefront of cutting-edge scientific research for crop improvement with the establishment of its wholly-owned subsidiary ACGT Sdn Bhd in 2006. Set up as a centre of excellence in genomic science, ACGT aims to develop solutions to increase productivity and enhance value creation from the oil palm and other crops. It has been awarded BioNexus Status by Malaysian Biotechnology Corporation Sdn Bhd, an agency under the purview of the Ministry of Science, Technology and Innovation.

In 2014, Genting Plantations embarked on a journey that saw the Company transform into a fully integrated palm oil producer. The downstream venture involved the setting up of Genting Integrated Biorefinery Complex, the main feature of which was a 240,000 mt/year-capacity metathesis biorefinery. To complement its biorefinery, a 600,000 mt/year-capacity palm oil refinery was set up in collaboration with Musim Mas Group, one of the world’s leading palm oil refiners.

While the oil palm plantation business remains the core activity of Genting Plantations, the Company has diversified into property development to unlock the value of its strategically-located landbank through its wholly-owned subsidiary Genting Property Sdn Bhd.

Starting with its maiden project, Genting Cheng Perdana in Cheng, Melaka, in 1993, Genting Property has since established its reputation as a developer of quality residential and commercial properties, and has developed two major mixed development projects in Johor, namely Genting Indahpura in Kulai, and Genting Pura Kencana in Batu Pahat.

In December 2011, Genting Plantations officially opened Johor Premium Outlets®, the first Premium Outlet Center® in Malaysia and Southeast Asia, under a 50:50 joint venture with the Simon Property Group of the US. The centre is located at the intersection of the North-South Expressway and Second Link Expressway and is about an hour’s drive from the City of Singapore.

Johor Premium Outlets is a collection of 150 designer and name brand outlet stores featuring savings of 25% to 65% every day with a gross leasable area of 313,000 square feet. Johor Premium Outlets was awarded the “Best Brand in Retail – Outlet Shopping Destination” at the Brand Laureate Best Brands Award 2012- 2013. A second Premium Outlet Center, Genting Highlands Premium Outlets® opened in June 2017, with gross leasable area of 275,000 square feet and 150 name brand outlet stores.

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Hap Seng Plantations Holdings Berhad

Hap Seng Plantations Holdings Berhad and Hap Seng Consolidated Berhad share a common history, with their founding some 38 years ago in Tawau, Sabah.

Starting as a sundry shop in 1946 under the name Hap Seng (which means “Unity and Success”), the Company expanded into the timber business and thereafter rubber, cocoa and oil palm plantations with the incorporation of The River Estates Ltd in 1950, the precursor of Hap Seng Plantations Holdings Berhad.

Hap Seng Plantations covers 39,803 hectares. The plantation activities progressively focused on oil palm plantations. Hap Seng Plantations operates on one contiguous block of plantation land of approximately 36,354 hectares between Lahad Datu and Sandakan region in Sabah.

It has three group of estates, notably the Tomanggong Group of Estates, Sungai Segama Group of Estates, and Jeroco Group of Estates. Hap Seng Plantations Holdings Berhad now includes the Ladang Kawa Estate (1,276 hectares) in Tawau and Pelipikan Estate (2,173 hectares) in Kota Marudu.

Hap Seng Plantations Holdings Sdn Bhd was incorporated in Malaysia as a private limited company on 18 April 2007 before it was converted into a public limited company on 3 May 2007 and then known as Hap Seng Plantations Holdings Berhad.

As at 16 November 2017, Hap Seng Plantations Holdings Berhad was listed on the Main Board of Bursa Malaysia Securities Berhad.

Hap Seng’s 35,697 hectares of planted area comprises of 30,455 hectares of matured oil palm and 5,096 hectares of immature plantings.

The main milling operations are based in four estates – Jeroco Palm Oil Mill 1, Jeroco Palm Oil Mill 2, Tomanggong Palm Oil Mill and Bukit Mas Palm Oil Mill. These four mills have a combined milling capacity of 175 FFB tonnes per hour.

The milling process usually takes place within 24 hours of harvesting of the fresh fruit bunch (FFB). The harvested FFBs are first transported to be sterilised at the palm oil mills before the palm fruits are separated from the palm bunches.

The sterilisation process involved the application of high-pressure steam. After steaming, the palm fruitlets are collected and crushed in a pressing machine resulting in the production of crude palm oil (CPO) and palm kernel. A centrifuge separates the waste and the liquid (water from CPO), with the cleared CPO collected and sent for refining.

The palm kernel nut is then sent for crushing while the empty fruit bunches and liquid wastes are recycled as fertilisers for use in the plantations.

All of Hap Seng’s mills are RSPO certified, and thus Hap Seng is now internationally accredited as a sustainable palm oil producer in compliance with global standards of production.

Genting Plantations Berhad

STATEMENTS OF PROFIT OR LOSS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023

STATEMENTS OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023

STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2023

STATEMENTS OF FINANCIAL POSITION (cont’d) AS AT 31 DECEMBER 2023

HAP SENG PLANTATIONS HOLDINGS BERHAD

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2023

STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2023

Question 1 (a)

Calculate 20 ratios mentioned in the study text under the following five categories for the two years in the financial statements for each of the group of companies mentioned:

• Profitability Ratios (5 ratios)
• Asset Efficiency or Turnover Ratios (6 ratios)
• Liquidity or Solvency Ratios (2 ratios)
• Gearing or Debt Ratios (4 ratios)
• Investment or Market Value Ratios (3 ratios)

Note: Where information is not available in the financial statements given candidates then must look for the information in the respective annual reports which can be accessed through the internet. If not, all necessary information is available for a particular ratio, then leave

the ratio uncalculated but state clearly what information is not available for that ratio in the annual report.

Question 1 (b)

Write a report from an analyst point of view comparing the financial performance and financial health of the two groups for the years 2023 and 2022. The assessment report should cover four areas namely: profitability, liquidity, efficiency, and gearing. Information from the financial statements can be used in the comparison. Only eight sets of ratios should be selected for the comparison, and they are as follows:

Profitability:

• Return on Equity
• Return on Capital Employed

Liquidity:

• Current Ratio
• Quick Ratio

Efficiency:

• Total Assets Turnover Ratio
• Non-current Assets Turnover Ratio

Gearing:

• Capital Gearing
• Equity Gearing

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Question 2 (a)

Explain operating leverage and financial leverage. Compare the benefits of high leverage under both leverage concepts and discuss the possible negative consequences of high leverage. Consider similarly the reverse situation of low leverage under both leverage concepts.

Question 2 (b)

A foreign company has intention to set up a business in Malaysia. Advise it, through a discussion document, about the financial reporting requirements of three types of entities in Malaysia, namely private company, unlisted public company and listed public company.

INDIVIDUAL ASSIGNMENT

LO.2: Understand how financial statements and reports are prepared and evaluate them to provide insightful interpretation.

Performance levels
No	Traits	Poor (1, 2, 3, 4)	Fair (5, 6)	Good (7, 8)	Excellent (9, 10)
1	Understanding	Did not demonstrate understanding of numerical concepts – very poor in using numerical concepts for problem solving.	Demonstrated a fair degree of proficiency in solving problems using numerical reasoning. Did not have knowledge of multiple tools.	Demonstrated a good degree of understanding in solving numerical problems. Had some knowledge of multiple tools.	Demonstrated a high degree of understanding and reasoning in solving numerical problems. Had knowledge of multiple tools.
2	Interpretation of data	Did not demonstrate the ability to interpret data – very poor in interpreting data.	Demonstrated a fair degree of data interpretation.	Demonstrated a good degree of data interpretation.	Demonstrated a high degree of accuracy in interpreting data.
3	Analysis	Did not demonstrate the ability to use quantitative analysis of data to firm judgement and conclusions – very limited ability to use quantitative analysis of data to draw conclusions.	Demonstrated a fair level of ability to use quantitative analysis of data and draw conclusions.	Demonstrated a good ability to use quantitative analysis of data and draw meaningful conclusions.	Used quantitative analysis of data for the basis of deep and thoughtful judgement, drawing insightful and carefully qualified conclusions.
4	Data Presentation	Did not demonstrate the ability to present data – very poor in presenting data.	Demonstrated a fair degree of presenting data.	Demonstrated a good degree of data presentation.	Demonstrated a convincing way of presenting data in an interesting manner.
5	Link theory to practice (Application)	Did not demonstrate critical reflections that link theory to practice – very limited in reflection and very poor in linking theory to practice.	Demonstrated fair reflections and a moderate link between theory and practice.	Demonstrated a good level of reflection and a good link between theory and practice.	Demonstrated critical reflections that link theory to practice in a meaningful way.

Appendix:

Financial Ratios extracted from the Study Text

Profitability
Return on capital employed (ROCE) or accounting rate of return (ARR)	???????????????????????????????????? ???????????????????????? ???????????????????????????? (????ℎ???????????? ???????????????????????????? + ???????????????????????????????? × 100 +???????????? ???????????????????????????? ????????????????????????????????????????????)
Return on shareholders’ equity	???????????????????????? ???????????????????? ???????????? (???????????? ???????????????????? ???????????????????????????????????????? ????????????????????????????????) (???????????????????????????? ????ℎ????????????ℎ????????????????????′???? ????????????????????????)
Operating profit percentage	???????????????????????????????????? ???????????????????????? × 100 ????????????????????
Gross profit percentage	???????????????????? ???????????????????????? × 100 ????????????????????
Net profit percentage	???????????? ???????????????????????? × 100 ????????????????????
Note: operating profit = profit before interest and taxation

Efficiency
Total asset turnover	???????????????????? ???????????????????????????? ???????????????????? ????????????????????????
Non-current asset turnover	???????????????????? ???????????????????????????? ???????????? ???????????????????????????? ????????????????????????
Rate of inventories turnover (number of times)	???????????????? ???????? ???????????????????? ???????????????? ???????????????????????????? ???????????????????????????????????????????? ????????????????????
Rate of inventories turnover (in days)	???????????????????????????? ???????????????????????????????????????????? × 365 ???????????????? ???????? ???????????????????? ????????????????
Rate of collection of trade receivables (in days)	???????????????????????????? ???????????????????? ???????????????????????????????????????????? × 365 ???????????????????????? ????????????????????
Rate of payment of trade payables (in days)	???????????????????????????? ???????????????????? ???????????????????????????????? × 365 ???????????????????????? ????????????????ℎ????????????????

Liquidity
Current ratio	???????????????????????????? ???????????????????????? ???????????????????????????? ????????????????????????????????????????????
Quick ratio	(????????????ℎ ???????????? ????????????ℎ ???????????????????????????????????????????? + ???????????????????????????????? ????????????????????????????????????????????) ???????????????????????????? ????????????????????????????????????????????
Gearing
Equity gearing	???????????????? ???????????????????????????????????? + ???????????????????????????????????????? ????ℎ???????????? ???????????????????????????? ???????????????????????????????? ????ℎ???????????? ???????????????????????????? + ????????????????????????????????
Total or capital gearing	???????????????? ???????????????????????????????????? + ???????????????????????????????????????? ????ℎ???????????? ???????????????????????????? ???????????????????? ???????????????? ???????????????? ????????????????????????????
Interest gearing	???????????????? ???????????????????????????????? + ???????????????????????????????????????? ???????????????????????????????????? ???????????????????????????????????? ???????????????????????????? ???????????????????????? ???????????????? ???????????????????????????????? ???????????? ????????????
Interest cover	???????????????? ???????????????????????? ???????????????????????????????? ????????????????????????????????

Investment
Earnings per share	???????????????????????? ???????????????????? ????????????????????????????????, ????????????, ???????????? ???????????????????????????????????????? ???????????????????????????????????? ???????????????????????????? ???????????????????????????????????????????? ????ℎ????????????????
Price/Earnings	???????????????????????? ???????????????????? ???????????? ????ℎ???????????? ????????????
Dividend payout	???????????????????????????????????? ???????????? ????ℎ???? ???????????????? × 100 ???????????????????????????? ???????????????????? ???????????? ???????????? ???????????????????????????????????????? ????????????????????????????????

 

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