In its Annual Report for the year ended 31 December 2013, IHH Healthcare Berhad, a Malaysian listed company disclosed that it had adopted Malaysian Financial Reporting Standard (MFRS) 10, Consolidated Financial Statements. MFRS 10 is based on IFRS 10 Consolidated Financial Statements. Following the adoption of MFRS 10, IHH Healthcare Berhad consolidated Parkway Life Real Estate Investment Trust (PLife Trust) and equity accounted Khubchandani Hospitals Private Limited (Khubchandani). IHH Healthcare Berhad Limited had 35.8% and 50% interest in PLife Trust and Khubchandani respectively. PLife Trust was previously accounted for as an associate and Khubchandani was accounted for as an indirect subsidiary.

The retrospective application of MFRS 10 resulted in IHH Healthcare Berhad presenting restated comparatives for 2012 in Note 45 of its 2013 Annual Report. Go to the company’s website http://www.ihhhealthcare.com and locate the 2013 Annual Report under investor relations. Under Note 45, review the impact of the changes for comparative figures for year ended 31 December 2012.

Required:
1. In the case of a business trust or a real estate investment trust, why are voting rights in themselves not necessarily a conclusive basis to determine control?
2. Calculate the following ratios for IHH Healthcare Berhad before and after the change and explain how the accounting change affects each ratio:

a. Net profit margin (Profit for the year/Revenue)

b. Return on total assets (Profit for the year/Total Assets)

c. Return on total equity (Profit for the year/Total Equity)

d. Leverage ratio (Total Liabilities/Total Equity)

e. Interest coverage ratio (Profit before interest and tax/Interest expense)