Connolly – International Financial Accounting and Reporting – 4 th Edition CHAPTER 33 STATEMENT OF CASH FLOWS (CONSOLIDATED)* * See Chapter 19 for single company statement of cash flows

Connolly – International Financial Accounting and Reporting – 4 th Edition Figure 19.1: Summarised statement of cash flows €’000 Cash flows from operating activitiesX Cash flows from investing activitiesX Cash flow from financing activitiesX Net increase/ (decrease) in cash and cash equivalents during periodX Cash and cash equivalents at the beginning of periodX Cash and cash equivalents at end of periodX

Connolly – International Financial Accounting and Reporting – 4 th Edition Cash flows from operating activities By direct method = encouraged, or By indirect method = required

Connolly – International Financial Accounting and Reporting – 4 th Edition 33.2 Special issues when preparing a consolidated statement of cash flows The mechanics of preparing a consolidated statement of cash flows are the same as for a single entity statement of cash flows. However, it may be necessary to also consider: Dealing with the non-controlling interests in subsidiaries Dealing with associates and joint ventures Acquisition of a subsidiary during an accounting period Disposal of a subsidiary during an accounting period Dealing with foreign operations

Connolly – International Financial Accounting and Reporting – 4 th Edition Dealing with NCI Carrying value increases may be due to:  Subsidiary profit attributable to NCI  NCI element of subsidiary acquired during the year Decreases may be due to:  NCI component of subsidiary disposed of during the year  Payments to NCI (dividends paid by subsidiaries to shareholders other than the parent)

Connolly – International Financial Accounting and Reporting – 4 th Edition Non-controlling interests €€ Cash (dividends paid) bal figXBal b/d (per opening consolidated SFP)X Bal c/d (closing consolidatedShare of profit after tax SFP)X (per consol. SPLOCI)X XX i.e. Operating or Financing Cash Flows

Connolly – International Financial Accounting and Reporting – 4 th Edition Dealing with associates and joint ventures Increases in carrying value may be due to:  New investments in associates and joint ventures  Share of profits of associates and joint ventures Decreases in carrying value may be due to:  De-recognition of investment in associate or joint venture  Share of losses of associates and joint ventures  Impairment of investments  Dividends paid by associates and joint ventures

Connolly – International Financial Accounting and Reporting – 4 th Edition Investment in Associates € Bal b/d (opening CSFP)XShare of assoc taxX Share of associate profit X Divs rec’d from A X Bal c/d (cl. CSFP)X XX i.e. Operating Cash Flows

Connolly – International Financial Accounting and Reporting – 4 th Edition Acquisition of a subsidiary during an accounting period Consideration transferred to acquire the subsidiary  Cash consideration paid is an investing cash flow  Subsidiary cash and cash equivalents acquired are netted against the cash consideration paid Net assets of the subsidiary are recognised as part of the net assets of the group  Movements in individual asset and liability accounts therefore include the acquired assets and liabilities when calculating amounts for inclusion in a consolidated SCF Movement in goodwill may be attributable to an acquisition See Chapter 33, Example 33.1

Connolly – International Financial Accounting and Reporting – 4 th Edition Disposal of a subsidiary during an accounting period Proceeds received (net of cash balances transferred) are included in investing cash flows Net assets of the subsidiary are de-recognised from the consolidated financial statements  Movements in individual asset and liability accounts therefore include the de-recognised assets and liabilities when calculating amounts for inclusion in a consolidated SCF Profit/loss on disposal is an adjusting item in the operating activities Movement in goodwill may be attributable to an disposal See Chapter 33, Example 33.2

Connolly – International Financial Accounting and Reporting – 4 th Edition Movements in goodwill Carrying value increase attributable to acquisition of a subsidiary Decreases may be attributable to:  Disposal of a subsidiary  Impairment

Connolly – International Financial Accounting and Reporting – 4 th Edition Acquisition/Disposal of Subsidiaries One Figure for Aggregate Cash Flows from: Acquisitions; and Disposals (Reported in Investing Activities) Notes to the Statement of Cash Flows Total purchase or disposal consideration Portion in cash and cash equivalents Cash and cash equivalents in entities purchased/sold Other assets and liabilities for entities purchased/sold

Connolly – International Financial Accounting and Reporting – 4 th Edition Foreign currency cash flows Translate cash flows from transactions at the rate applicable at the date of the cash flow Translate foreign subsidiary’s cash flows at the date of the cash flows 1.Prepare the SCF for each subsidiary 2.Translate each into ‘sterling’ using the average rate 3.Consolidate each into the group SCF 4.Analyse FX differences into their constituent parts (long term assets, receivables, cash, payables and non- controlling interests)

Connolly – International Financial Accounting and Reporting – 4 th Edition See Chapter 33, Example 33.3: Consolidated statement of cash flows Drumview plc

Connolly – International Financial Accounting and Reporting – 4 th Edition Challenging question 33.1: VOYAGE plc

Connolly – International Financial Accounting and Reporting – 4 th Edition Workings 1. Interest paid€’000 Balance at beginning of year11 SPLOCI447 Balance at end of year(54) Paid during the year Dividends paid€’000 Balance at beginning of year592 SPLOCI4,400 Balance at end of year(764) Paid during the year4,228

Connolly – International Financial Accounting and Reporting – 4 th Edition Workings 3. Dividends paid to NCI€’000 Balance at beginning of year619 SPLOCI83 Balance at end of year(483) Paid during the year Tax paid€’000 Balance at beginning of year (2,357+3,301),658 SPLOCI3,081 Acquired from Christy 908 9,647 Balance at end of year (2,515+5,479)(7,994) Paid during the year1,653

Connolly – International Financial Accounting and Reporting – 4 th Edition Workings 5. Cash from sale of property, plant and equipment€’000 SPLOCI388 NBV of assets disposed (1, )312 Cash received Purchase of property, plant and equipment€’000 Balance at end of year (NBV)24,062 Net book value of assets acquired (5,178-3,303)(1,875) Net book value of disposals 312 Depreciation charge3,052 Increase in PPE creditor (2,391-2,357)(34) 25,517 Balance at start of year (NBV)(19,940) Cash paid 5,577

Connolly – International Financial Accounting and Reporting – 4 th Edition WORKINGS 7. Capital element of finance leases€’000 Balance at beginning of year ( )917 Balance at end of year ( )(617) Medium term loans€’000 Balance at end of year3,453 Acquired from Christy(967) 2,486 Balance at beginning of year - 2, Amortisation of patents€’000 Balance at beginning of year540 Balance at end of year(324) Amortised during the year216

Connolly – International Financial Accounting and Reporting – 4 th Edition Workings 10. Decrease in inventory€’000 Balance at end of year1,939 Inventory acquired from Christy (456) 1,483 Balance at beginning of year(1,771) Decrease in inventory(288) 11. Decrease in trade receivables€’000 Balance at end of year9,792 Receivables acquired from Christy(1,170) 8,622 Balance at beginning of year(9,085) Decrease in trade receivables(463)

Connolly – International Financial Accounting and Reporting – 4 th Edition Workings 12. Increase in trade payables€’000 Balance at end of year8,217 Payables acquired from Christy(705) 7,512 Balance at beginning of year(7,039) Increase in trade payables473

Connolly – International Financial Accounting and Reporting – 4 th Edition Reconciliation of Operating Profit to Net Cash Flows from Operating Activities €'000 Operating profit 9,166 Profit on sale of property, plant and equipment(388) Amortisation of patents (W9)216 Depreciation3,052 Decrease in inventory (W10)288 Decrease in trade receivables (W11)463 Increase in trade payables (W12) ,270 Interest received616 Interest paid (W1)(404) Tax paid (W4)(1,653) Dividends paid (W2)(4,228) Net cash flows from operating activities7,601

Connolly – International Financial Accounting and Reporting – 4 th Edition Voyage Limited Consolidated Statement of Cash Flows Year Ended 31 December 2012 €’000 Net cash flows from operating activities7,601 Cash flows from investing activities Receipts from sales of tangible fixed assets (W5) 700 Payments to acquire tangible fixed assets (W6) (5,577) Purchase of subsidiary undertaking(4,431) Net cash flows from investing activities (9,308) Cash flows from financing activities Dividends paid to NCI in subsidiary undertakings (W3) (219) Capital element of finance leases (W7)(300) Share issue expenses (120) Medium term bank loans (W8) 2,486 Net cash flows from financing activities 1,847 Increase in cash and cash equivalents 140 Cash and cash equivalents at 1 st January 20123,679 Cash and cash equivalents at 31 st December 2012 (€3,923k - €104k)3,819