2021 Level 1 Case Questions Eng Final 20211103 PDF

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The HKICPA Accounting and Business Management Case Competition 2021-22 (Level 1)

The HKICPA Accounting and Business Management Case Competition 2021-22

(Level 1)

Bonjour Holdings Limited (Bonjour), together with its subsidiaries (hereinafter referred to as the “Group”) is one of the most leading retail stores selling beauty and lifestyle products in Hong Kong. It lists on the Main Board of The Stock Exchange of Hong Kong Limited in 2003 (Stock Code: 653). Bonjour is currently operating 27 retail stores in Hong Kong and Macau. The Group keeps understanding the changing preferences of the customers and sourced products all over the world to meet their ever-changing needs. Currently, the Group offers over 40,000 commodities and exclusively distributes 100 brands, including Suisse Reborn, Dr. Bauer, and Yumei. Since the coronavirus outbreak in Hong Kong, quality sanitizing and anti-epidemic prevention products are offered at competitive prices. Bonjour owns over 2,000,000 members and shares the latest news and promotional information with them instantly. As a retailer rooted in Hong Kong, the Group has been experiencing a challenging time when local social incidents and the COVID-19 epidemic triggered a slump in inbound tourism. Together with the dampened consumer sentiment among local customers, the Group suffered from the sharpest decline in sales performance. For the year ended 31 December 2020, the Group recorded a turnover of HK$538.8 million, representing a decrease of 63.1% from HK$1,458.8 million last year. The Group’s gross profit decreased by 64.7% from HK$490.4 million last year to HK$173.1 million. Loss for the year was HK$258.4 million, almost twice last year (2019: HK$130.6 million). Recently, Bonjour tries to upgrade from a traditional cosmetics retailer to a global ecommerce enterprise by stationing at 44 multi-channel platforms, such as SHOPSHOPS, Tmall Global, kaola.com, JD.COM, Facebook, YouTube, and Instagram, reaching customers from Mainland China to 34 overseas countries. Since 2020, the Group has trained more than 200 frontline employees as influencers on social media, sharing the latest product information through live streaming and online interaction with customers in real-time. The Group opened a new retail experience store (Bonjour Life O2O) in August 2020, which revolutionizes the traditional model by realizing the integration of online and offline commerce.

The HKICPA Accounting and Business Management Case Competition 2021-22

(Level 1)

REQUIRED Assume that you are newly employed by Bonjour as a financial analyst. Your supervisor asks you to prepare a report to analyze the Group’s financial and business environment. Your report should include the following sections: A) Financial analysis A tabular analysis of financial ratios for the past TWO years with appropriate interpretation. 1. Use the information on Bonjour’s 2019 and 2020 Annual Reports. 2. Apply “Year-end” (i.e., 31 December) figures on the Consolidated Statement of Financial Position to work out your answers for this part. 3. For all ratios, show calculation workings and keep two decimal places. Annual Report Reference Page

Ratios Formula 2020

2019

2020

2019

Profitability ratios Mark up Gross Profit Margin Net Profit Margin Return on Capital Employed

Gross Profit / Cost of Goods Sold

x 100%

%

%

p. 83

p. 80

Gross Profit / Turnover

x 100%

%

%

p. 83

p. 80

Profit (Loss) Before Tax / Turnover

x 100%

%

%

p. 83

p. 80

Profit (Loss) From Operations Capital Employed

x 100%

%

% p. 83, 86 p. 80, 83

Hints: Capital Employed for Limited Companies = Non-current Liabilities + Total Equity

Comments

Management Efficiency ratios Inventory Turnover Trade Payables Turnover

Cost of Goods Sold / Inventories

times

times p. 83, 85 p. 80, 82

Credit Purchase / Trade Payables

times

times p. 83, 85 p. 80, 82

Hints: Credit Purchase = Closing Inventories + Cost of Goods Sold – Opening Inventories

Total Assets Turnover

Turnover / Total Assets

times

times p. 83, 85 p. 80, 82

Comments

Liquidity ratios Current Ratio Quick Ratio

Current Assets / Current Liabilities

:1

:1

p. 85

p. 82

Current Assets – Inventories – Prepayments Current Liabilities

:1

:1

p. 85

p. 82

%

%

p.86

p.83

Comments

Solvency ratios Gearing Ratio

x 100% Non-current Liabilities Non-current Liabilities + Share Capital + Reserves

The HKICPA Accounting and Business Management Case Competition 2021-22

(Level 1)

Comments

Return on investment ratios Earnings Per Share (EPS)

Profit (Loss) Attributed to Owners of the Company Weighted-average No. of Ordinary Shares

cents /share

cents p. 83, 156 p. 80, 150 /share

Comments

(70 marks) B) Business analysis A business analysis for each of the following three areas with reference to Bonjour’s: i. 2020 Annual Report; and ii. 2020 Environmental, Social, and Governance Report. Identify at least four examples of achievements and make one suggestion for improvement. Achievements: Environmental Protection Improvement: Achievements: Corporate Social Responsibility Improvement: Achievements: Corporate Governance Improvement: (30 marks) (Total: 100 marks) Notes (1) In preparing your analysis, you should refer to Bonjour Holding Limited’s website. i. 2019 and 2020 Annual Reports at https://corp.bonjourhk.com/irc/financial-report/, and ii. 2020 Environmental, Social and Governance Report (announced on 08 July 2021) can be found at https://corp.bonjourhk.com/en/irc/annoucement/. (2) You are required to carry out a tabular financial analysis for the past TWO years, for the years ended 31 December 2019 and 2020. All calculations should follow the appropriate formulas and be supported by appropriate workings. Keep two decimal places in your answers. (3) Make clear references to all materials used in the analysis.

The HKICPA Accounting and Business Management Case Competition 2021-22

Useful reference HKICPA Accounting and Business Management Case Competition Website https://www.hkicpa.org.hk/amcc Competition Facebook Page https://www.facebook.com/hkicpacompetition/ Bonjour Holdings Limited website https://corp.bonjourhk.com/en/

(Level 1)

The HKICPA Accounting and Business Management Case Competition 2021-22

(Level 1)

REPORT FORMAT AND RULES 1.

Each participating student or team should submit a report in English or Chinese. The language used depends on the choice indicated on the registration form. The report should contain the following: 1. Cover sheet* (This page is not counted in the page limit.) 2. Table of contents 3. Contents – A)Financial analysis B)Business analysis 4. Appendices/ graphs/ index/ references (if any) Page limit English report – 4-6 pages of A4 paper Chinese report – 3-4 pages of A4 paper * Each report should use a standardized HKICPA cover sheet with the name(s) of the participating students, the school at which they are studying, as well as the contact number and e-mail address of the team leader. The cover sheet is appended at the end of the case question for download

2.

Font type and size: English report – Arial (12 points). / Chinese report – 新 細 明 體 (11 points). 1.5 line spacing. Margin: 1 inch for each side.

3.

The content pages SHOULD NOT include the names of team members and the school at which they are studying.

4.

Each participating student or team needs to submit the following items in SOFT COPY (PDF format): ● An analysis report; and ● An HKICPA cover sheet.

5.

Save the analysis report and cover sheet in TWO separate files with respective file names being shown as:  "Team leader full name_Team leader mobile phone no._Analysis Report" (e.g. Chan Tai Man_98765432_ Analysis Report)  "Team leader full name_Team leader mobile phone no._Cover Sheet" (e.g. Chan Tai Man_98765432_Cover Sheet)

6.

Each participating student or team should send the TWO PDF files in one email to [email protected], with the subject as "Level 1_Chan Tai Man". Multiple submissions will be disqualified.

7.

The deadline for submission: Before 23:59, 15 February 2022 (the email receiving time by the HKICPA's mailbox shall prevail).

8.

The HKICPA has the right to disqualify any participant or team if the participant or team is found to have violated the rules of the competition.

9.

Please scan the QR code on the right to complete an online questionnaire for the competition.

The HKICPA Accounting and Business Management Case Competition 2021-22 (Level 1) Cover Sheet Please attach this cover sheet to your analysis report (Please complete in BLOCK LETTERS)

School name

Format Team / Individual # (#please delete as appropriate)

Participant(s) information: *The names provided below should be identical to the name of participants’ identity card, which will be used for printing certificate.

Name of Team leader/ Individual participant Email address Contact number Team members (if any) Name of Team Member 1 Name of Team Member 2 Name of Team Member 3 Name of Team Member 4

Document checklist:

 Email this cover sheet



An analysis report in PDF format

^Any missing documents or incomplete analysis may result in the disqualification of your participation.

For official use:

The HKICPA Accounting and Business Management Case Competition 2021-22

Report received on Assigned Team no. Total marks Remarks Handled by

(Level 1)...