Reference no: EM132571183
ave the Rhino Foundation Limited ("Foundation") is listed on the Namibian Stock Exchange (NSX) and is the holding company of the Save the Rhino Trust ("Trust") which has been active in countries in Southern Africa including Namibia for the past 20 years. The Foundation's reporting period ends 31 December. They have made great strides in conserving the life of the Rhino. Until recently, the Trust was able to finance itself by means of donations and charity campaigns but have been forced to consider the alternative financing opportunities. One of the critical projects (Project Surveillance Safety) required the installation of solar powered CCTV monitors in the national parks where rhinos roam freely. This would cost the Trust N$35 million to acquire and install 2 000 of these monitors by 1 January 2020. This Project would answer the plight for the survival of these precious creatures.
The Foundation is looking to assist its subsidiary by the following financial measures:
1. Issuing of a bond The Foundation anticipates issuing a 100 000 10% N$35 bonds on 1 July 2019, to be redeemed at a premium of 5% in five years' time on 30 June 2024. The market related rated of similar bonds is 10.8060%.
2. Issuing of shares The Foundation has 250 000 10% cumulative non-redeemable Class B shares in issue and is authorised to issue 1 000 000 shares. The current market value of each share is N$50 each. Share issue costs will amount to N$50 000. Dividends are payable annually. The share issue is deemed to take place on 1 July 2019 and consideration is received on the same date. The Foundation's Profit for the period for is anticipated to be N$6 500 000. Opening Retained Earnings was 12 550 000.
Question 1: Present each of the financing alternatives in an extract to the Statement of Financial Position of Save the Rhino Foundation Limited as at 31 December 2019.
Please note:
Round off all amounts to the nearest Namibian Dollar, and percentages to the 4th decimal
Show all your workings as marks are awarded for these.
Question 3: GIVE a memorandum to the management of the Save the Rhino Foundation Limited advising them on which option would be most viable or sustainable for the Trust. Your answer needs to weigh the advantages and disadvantages of each financial option. (10) 2.3 Determine the Basic Earnings per Share in accordance with IAS 33 Earnings per Share for the holding company for the year ended 31 December 2019