CONSOLIDATED STATEMENT OF CASH FLOW

Introduction
The approach to consolidated statement of cash flow is similar to that of a single company
statement of cash flows with the following four further issues to be dealt with;

i. Dividend paid to NCI (financing activities): when a subsidiary that is not wholly owned pays
dividends, some of those dividends are paid outside of the group to the NCI. Such dividend paid
should be disclosed separately in the statement of cash flows. To calculate the amount paid,
reconcile the NCI in the SFP from the opening to the closing balance.

Illustration 1
(a) The following information was extracted from the consolidated financial statements of JB for
the year ended 31st December, 2007

2007 2006
₦’000 ₦’000
NCI in consolidated SFP 780 690
NCI in consolidated SPLOCI 120 230
What is the dividend paid to NCI in the year 2007?

(b) The following are extracts of the consolidated results for Hapa Ltd for the year ended
31/12/2008.
Consolidated statement of profit or loss (extract)
₦’000
Group profit before tax 90
Income tax expense (30)
Profit for the year 60
Profit Attributable:
Parent 45
NCI 15
60
Consolidated statement of financial position (extract)
2007 2008
₦’000 ₦’000
Non-controlling interest 300 306
Calculate the dividend paid to the NCI during the year

Illustration 2
Group A’s statement of profit or loss shows the profit attributable to parent shareholder of
₦3,200,000 and to NCI of ₦500,000. The opening and closing statements of financial position
show the following:
Closing opening
₦’000 ₦’000
Retained earnings 4,325 1,625
NCI 580 440
 Required:
a. Calculate the dividends paid to NCI
b. Calculate the dividends paid to parent shareholders

ii. Dividend Received from Associate & Joint Venture: associate generates cash flows into
the group to the extent that dividends are received out of the profit of the associate. Such
dividends received from associate or joint venture should be disclosed separately in the
statement of cash flows. To calculate the amount received, reconcile the investment in
associate in the statement of financial position from the opening to the closing balance.
The share of profit/loss of the associate is a non-cash item included within profit and
therefore requires an adjustment in the operating activity
Illustration 3
(a) Group B’s statement of profit or loss report share of profit of associate of ₦750,000. The
opening and closing statement of financial position show;
Opening closing
₦’000 ₦’000

Investment in Associate 500 200

Required: How much cash was received by the group from the associate in the year?

(b) The following information has been extracted from the consolidated financial statements of
H Ltd for the year ended 31/12/2001
Group statement of profit or loss for the year ended 31/12/01

₦’000
Operating profit 734
Share of profit of Associate 48
Profit before tax 782
Tax (304)
Profit for the year 478

Group statement of financial position as at 31/12/01

2001 2000
₦’000 ₦’000
Investment in Associate 466 456
You are required to show relevant figures to be included in the group statement of cash flows for
the year ended 31/12/2001

iii. Acquisition and Disposal of Subsidiaries: if a subsidiary joins or leaves a group during a
financial year, the cash flow of the group should include the cash flows of that subsidiary for the
same period that the results of the subsidiary are included in the statement of profit or loss.
Cash payments to acquire subsidiaries and receipts from disposals of subsidiaries must be reported
separately in the statement of cash flows under investing activities
Acquisition: in the statement of cash flows, actual cash flow for the purchase, not the net asset
acquired. The cash flow is net of any cash balances purchased with the subsidiary. All assets and
liabilities acquired must be included in any working to calculate the cash movement for an item
during the year. This applies to all assets, liabilities, and NCI reconciliation (while calculating
dividends paid to NCI)
Disposal: Statement of cash flows will show the cash received from sale of the subsidiary, net of
any cash balances that were transferred out with sales.
When calculating the movement between opening and closing balances of an item, the assets and
liabilities that have been disposed off must be taken into account in order to calculate the correct
cash figure. As with acquisitions, this applies to all assets, liabilities, and NCI reconciliation (to
calculate dividend paid to NCI).

Illustration 4
The extract of a company’s statement of financial is shown below;
2008 2007
₦ ₦
Inventory 74,666 53,019
Receivable 52,335 48,911
i. During the year, a subsidiary was acquired. At the date of acquisition, the subsidiary had
an inventory balance of ₦9,384
ii. During the year, a subsidiary was disposed off. At the date of disposal, the subsidiary
had a receivable balance of ₦6,546.
You are required to calculate the movement on the inventory and receivable for the statement of
cash flows
b. GROUP P’s opening and closing statements of financial position show the following;
Closing Opening
₦’000 ₦’000
Non-current assets (Carrying Value) 500 150

During the year, depreciation of ₦50,000 was charge. Also, during the year, the group acquired a
75% shareholding in a subsidiary which held non-current assets of ₦200,000 and disposed of a 60%
shareholding in a subsidiary which held non-current asset of ₦180,000 at the date of disposal.

Required: How much cash was spent on non-current assets in the year

Foreign Currency Transactions: Exchange differences arising on the retranslation of a foreign

operation have no impact on profit; they are recorded instead within other comprehensive income.
Therefore, no adjustment is required within the operating activities section.

However, their impact on the statement of financial position balances should be taken into account
when reconciling opening to closing balances in the cash flow working.

Illustration 5

The following are extracts from a group’s financial statements

Closing Bal. Opening Bal.

₦’000 ₦’000
Group statement of financial position extracts:
Non-current assets 500 400
Loans 300 600
Tax 200 300
Statement of profit or loss extracts
₦’000
Depreciation 50
Loss on disposal of non-current asset (sold for ₦30) 10
Tax charge 200
During the accounting period, a subsidiary was sold and another acquired. Extracts from the
statements of financial position are as follows;
Sold Acquired
₦’000 ₦’000
Non-current asset 60 70
Loans 110 80
Tax 45 65
During the accounting period, the following exchange gains/losses arose in respect of overseas net
assets:
₦’000
Non-current Assets-forex gain 40
Loans forex loss (5)
Tax forex loss (5)
Required: calculate the group cash flows for non-current asset, loans and tax

Illustration 6
HAPA Group’s opening and closing statement of financial position show the following;
Closing Opening
₦’000 ₦’000
Inventory 100 200
Receivable 300 200
Payables 500 200
During the period, the group acquired a subsidiary and disposal of a subsidiary with the following
working capital;

Acquired Sold
₦’000 ₦’000
Inventory 50 25
Receivable 200 45
Payable 40 20
During the period, they experienced the following exchange rate gains/losses;

₦’000
Inventory 11 Gain
Receivables 21 Gain
Payables 31 Loss
Required: What are the adjustments required in respect of movements in working capital that
should be shown in the operating activities section of the statement of cash flows?
Illustration 7
Consider the following abridged group financial statements of Chibok Plc
Consolidated Income Statement for the year ended 31/12/2014
₦ ₦
Profit from operations:
Group companies 23,240,000
Associated company 1,372,000
Profit before taxation 24,612,000
Taxation:
Group companies 11,060,000
Associate 588,000 (11,648,000)
Profit for the year 12,964,000
Attributable to:
Parent 10,796,000
Non-controlling Interest 2,170,000
12,964,000

Consolidated statement of financial position as at the year ended 31/12/2014

2014 2013
₦ ₦
Assets
Non-current Assets
PPE 29,680,000 23,660,000
Goodwill 616,000 392,000
Investment in Associate 8,680,000 7,980,000
Current Assets
Inventory 23,240,000 17,080,000
Receivables 21,000,000 13,020,000
Cash 70,000 2,023,000
Equity and Liabilities
Equity
Ordinary share capital 19,600,000 18,200,000
Share premium 3,703,000 2,303,000
Reserves 17,934,000 10,080,000
Non-controlling interest 11,480,000 9,240,000
Non-current liabilities
10% Debentures 2,317,000 7,392,000
Current Liabilities
Payables 10,780,000 8,120,000
Taxation 12, 740,000 6,860,000
Proposed dividend 2,940,000 1,960,000
Bank overdraft 1,792,000
Additional information:
i. On July 2014, Chibok Group acquired 80% of the issued share capital of Boko Plc, whose
net assets as at that date were as follows:
₦
PPE 3,640,000
Inventory 1,260,000
Receivables 1,372,000
Cash 280,000
Payables (1,932,000)
Taxation (420,000)
4,200,000

The purchase consideration was ₦3,900,000 in cash

ii. Depreciation charge in the year amounted to ₦3,080,000. There was no disposal of
property, plant and equipment during the year
iii. Dividend in 2013 was paid to the shareholders of Chibok Plc
Required: Prepare a Statement of cash flows for Chibok Plc