4 Hatchback Motors plc

Hatchback Motors plc has prepared summarised financial statements as set out below.
Statements of profit or loss for the years ended 30 April
20X7 20X6
£'000 £'000
Revenue 74,680 69,937
Cost of sales (51,595) (47,468)
Gross profit 23,085 22,469
Distribution and administrative costs (17,551) (16,920)
Finance cost (130) (170)
Profit before tax 5,404 5,549
Income tax expense (2,634) (1,093)
Profit for the year 2,770 4,456
Statements of financial position as at 30 April
20X7 20X6
£'000 £'000 £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 26,146 25,141
Investments 7,100 –
33,246 25,141

Current assets
Investments 50 25
Inventories 16,487 15,892
Trade and other receivables 12,347 8,104
Cash 813 699
29,697 24,720
Total assets 62,943 49,861

20X7 20X6
EQUITY AND LIABILITIES £'000 £'000
Equity
Ordinary share capital (£1 ordinary shares) 13,000 10,000
Share premium 12,500 5,000
Revaluation surplus 2,650 2,650
Retained earnings 24,776 22,856
52,926 40,506
Non-current liabilities (borrowings) 3,250 4,250

Current liabilities 6,767 5,105

Total equity and liabilities 62,943 49,861
Additional information
(1) Analysis of property, plant and equipment
20X7 20X6
£'000 £'000
Land 20,300 19,780
Fixtures and fittings 5,846 5,361
26,146 25,141
(2) There were no disposals of land during the year.
(3) Additions to fixtures and fittings during the year totalled £1,365,000 at cost. There were no
disposals.
(4) Current liabilities

ICAEW 2024 91
 20X7 20X6
£'000 £'000
Trade and other payables 2,771 2,632
Accruals 1,200 1,235
Tax liability 2,796 1,238
6,767 5,105
(5) During the year, the company made a rights issue of shares on the basis of three new shares
for every ten shares held at a price of £3.50 per share.
(6) The short-term investments are highly liquid and management has decided to classify them as
cash equivalents.
(7) Included in accruals at 30 April 20X7 is £25,000 in respect of interest payable. The
corresponding figure in 20X6 was £30,000.
(8) Included in trade payables is £15,000 which relates to the purchase of fixtures and fittings.
(9) The long term borrowings consist of redeemable preference shares.
Requirement
Prepare a statement of cash flows for the year ended 30 April 20X7 in accordance with IAS 7.
Hatchback Motors plc
Statement of cash flows for the year ended 30 April 20X7
£'000
Cash flows from operating activities
Profit before tax
Finance cost
Depreciation
Movement in inventories
Movement in trade receivables
Movement in trade payables
Movement in accruals
Cash generated from operations
Income tax paid
Interest paid
Net cash from / used in operating activities

Cash flows from investing activities

Purchase of property, plant and equipment
Purchase of investments
Net cash from / used in investing activities

Cash flows from financing activities

Proceeds from issue of shares
Movement in borrowings
Dividends paid
Net cash from / used in financing activities

Net increase / decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

92 ICAEW 2024