Strategic Financial Analysis Report

This report analyzes the financial performance of Booker Group PLC and Tate & Lyle PLC over a 5-year period using various financial analysis tools. It compares their profitability, liquidity, efficiency, and leverage, and explores contemporary methods to overcome limitations of traditional analysis. The report concludes with an assessment of the viability and financial strength of both companies.

Strategic Financial Analysis

TABLE OF CONTENTS
1. INTRODUCTION.......................................................................................................................4
1.1 Strategic financial analysis and its importance ...............................................................4
1.2 Report objectives..............................................................................................................4
1.3 Introducing 2 selected organization .................................................................................4
1.4 Introduction and method of analysis................................................................................5
2. Ratio Analysis (5 year trend and benchmarking)....................................................................5
2.1 Profitability Ratio.............................................................................................................6
2.2 Liquidity ratio...................................................................................................................8
2.3 Efficiency ratio.................................................................................................................9
2.4 Investors/ Leverage ratio................................................................................................11
2.5 Common Size analyses...................................................................................................13
2.6 DuPont Analysis.............................................................................................................14
3. Merits and demerits of particular analysis.............................................................................16
3.1 Ratio Analysis................................................................................................................16
3.2 Common size analysis....................................................................................................16
3.3 DuPont analysis..............................................................................................................17
4. Contemporary methods for overcoming limitations of above analysis................................18
4.1 Capital Asset pricing model...........................................................................................18
4.2 Economic value added....................................................................................................19
4.3 Efficient market hypothesis............................................................................................19
CONCLUSION..............................................................................................................................20
REFERENCES..............................................................................................................................21
APPENDIX....................................................................................................................................23
1. Financial statements of Booker Plc .......................................................................................23
2. Financial statements of Tate & Lyle......................................................................................28
3. Vertical analysis of Booker Group Plc..................................................................................34
4. Vertical analysis of Tate & Lyle Plc.....................................................................................39
5. Horizontal analysis of Booker Plc.........................................................................................45
6. Horizontal analysis of Tate & Lyle Plc.................................................................................50
7. Benchmarking ratio of Booker Group Plc ............................................................................54

8. Benchmarking ratio of Tate & Lyle Plc ................................................................................56
9. Dupont analysis of Booker Group Plc ..................................................................................58
10. Dupont analysis of Tate & Lyle Plc ....................................................................................59

1. INTRODUCTION
1.1 Strategic financial analysis and its importance
Strategic financial analysis is replicated as value creating and powerful framework which helps senior executives for assessing
strategy, analysing business value with its performance. It also weighs potential acquisition and to assess global competition. It lays
special emphasis on process of valuation which is relevant for decision makers. This financial analysis helps in exploring best
practices for improving and benchmarking its performance. Hence, by obtaining financial information, it helps business for taking
rationale decisions and future planning as well. It raises organization's profitability for doing well and usually this concept is used in
various corporate.
1.2 Report objectives
The main objective behind initiating current study is to assess or evaluate financial position and performance of Booker Group
PLC over the period of 5 years and in comparison to Tate & Lyle PLC.
1.3 Introducing 2 selected organization
Booker Group PLC
Booker Group PLC is a Britain food wholesaler organization located in United Kingdom. It was founded through George and
Richard Booker in 1835. This group consists of Makro Booker Direct, Booker wholesale, Ritter Couriyard, Family Shopper, Chef
Direct, Budgen Londies along with booker India operates through 13000 employees and 1.5 million customers are served.
Tate & Lyle PLC
It is a British multinational company which operates in agribusiness. It had merger in year 1921 and formed through Henry
Tate & Sons along with Abram Lyle & Sons. The organization has produced product of refining sugar and in year 1970 it started
diversifying and divests in sugar business in year 2012. It had attained expertise with application of innovative technology for
4

changing raw materials such as oats, tapioca and corn in high quality with different ingredients which aggregates taste, nutrients,
texture with increment in functionality to beverage and food, animal food and industrial chemicals.
The Booker and Tate & Lyle PLC both are comprised in food segment of industry, similar target consumers and market
capitalization could be compared.
1.4 Introduction and method of analysis
Both organization are directly listed on London Stock Exchange in FTSE 250 Index. With reference to above aspect, this study
would be evaluating business performance, financial capacity, industry outlook, overall firm situation and framework of Tate & Lyle
and Booker Group PLC. It had analysed tools such as calculation of ratio such as profitability and liquidity ratio. It would be
signifying vertical and horizontal analysis with context of balance sheet and income statement. Further, there will be representation of
DuPont analysis, asset and profit efficiency and financial statement notes which allows lenders and investors for sharpening analysis
with understanding of performance of organization.
2. Ratio Analysis (5 year trend and benchmarking)
In the present scenario, financial statements are effectively used for determining and measuring performance of organization
on basis of current and past financial condition. The future trend is forecasted with reference to its financial position. The financial
statements are prepared through management with objective of reflecting period which had attained progress. The ratio analysis is
considered as very effective and widely used tools for monitoring and evaluating financial performance of company. It helps
management and investor for giving easier and effective aspect of understanding the figure's abundance in financial statements ( Sales,
Ghirardi and Jorquera, 2017).
5

2.1 Profitability Ratio
It is class of financial metrics which helps in assessing capability of business for generating earnings on basis of associated
expenses. In simple words, it is referred to profit earning of business through revenue of sales and efficiency of its operations. It helps
in examining its performance and comparison among current year and past records of performance.
 Gross Profit Margin: It expresses efficiency of company about its raw material and labour in process of working. If there is
presence of high gross profit margin which shows that organization is efficient for controlling their labours and raw materials.
Interpretation: The above table is signifying gross profit margin of Tate & Lyle and Booker which had increased over period of
five years. The Booker's Gross profit has been raised at constant aspect, but steady growth has been not maintained through Tate &
Lyle. With reference to annual report of Booker, it had been shown that non-tobacco product has contributed in huge aspect such as
61.92%, 62.66%, 67.74%, 68% and 68.74% of five year duration respectively. The amount has articulated about robust growth of Tate
& Lyle as 5.3% due to emerging markets. On the contrary, Booker had shown lower margin as compared to Tate & Lyle. It is
indicating on basis of cost of sales which is incurred through Booker. It has presence of effective control by maintaining the best
6

relationship with its suppliers. These are comparatively higher from cost of sales occurred by Tate & Lyle by lower base of material
cost with consolidating its US facility in production.
 Operating Profit Margin: It is also referred as operating margin ratio, as it measures total revenue's percentage which is formed
through operating income. In simple words, it could be stated about amount of revenue and left over variables with payment of
operating cost. The revenue proportion reflects availability for recovering various non operating costs such as interest expense
(Wüst, 2018).
Interpretation: The above graph is reflecting operating profit margin of Booker and Tate & Lyle. It is denoting net sale
percentage which is transformed in operating profit. It has been anticipated through this ratio that Booker has less margin as compared
to Tate & Lyle. The Booker's margin has rose with steadily in duration of five years and performance of operating in year 2015 which
has rose by 0.4% as its outcome.
On the contrary, operating profit margin of Tate & Lyle has decreased significantly in specific duration of year 2015. It had
implied about sales revenue had increased over period. Its operating expenses has increases with high rate as compared to sales growth
because of sucralose supply has exceeded the demand.
7

2.2 Liquidity ratio
It is an indicator where current asset of organization are enough for accomplishing obligations of organization when they are
due. This ratio impacts credit rating and credibility of business entity. In simple words, it is class of financial metrics used for
identifying ability of debtor for repaying its current debt obligation with absence of raising external capital.
 Current ratio: It is a liquidity ratio which helps in measuring ability of firm to repay its short term liabilities through current
assets.
Interpretation: The above graph is representing comparison among current ratio of Tate & Lyle and Booker across duration of
5 year. It has been observed that Tate & Lyle has better current ratio from Booker. As in year 2012 it was 0.85 which got increased
from year to year but was not able to meet target of ideal ratio which is 2:1.The current ratio of Tate & Lyle was 2.01 and 2.19 in year
2012 and 2013 respectively which is best position as it was repaying its short term obligations through its current assets. But from
2014 to 2015 it decreased and in 2016 it rose to 1.64 which was not good. Booker might surfer various liquidity issues if organization
was not able to handle it efficiently. Although Tate & Lyle has significant decrement in this specified duration which shows inability
for maintaining liquid assets in proper manner.
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 Quick ratio: It is indicator of organization's position of short term liquidity with company's measure about capability for
accomplishing short term obligations through its liquid assets.
Interpretation: The above graph is reflecting quick ratio of Booker and Tate & Lyle across 5 years period. It had been observed
that Booker has quick ratio under 0.5 which shows in appropriate maintenance of liquid asset for repaying its current liabilities. It has
high possibilities for facing difficulty to repay its debt by current assets by excluding inventories. On the contrary, Tate & Lyle's quick
ratio is decreasing from year 2012 to 2016 but in 2012, 2013 and 2016 it was above 1 which states paying short term liability via quick
assets as compared to Booker.
2.3 Efficiency ratio
These ratios are also known as activity ratios which gives appropriate use of asset along with company's effectiveness with
application of asset for generating revenues and sales.
 Days of sale outstanding
9

Interpretation: It is denoting average credit period given to its customers as both Booker and Tate & Lyle has raised in its
specified duration of 5 years. On the contrary, Tate and Lyle has recovered its credit sales in 35 days but Booker and gathered in 4 to 6
days. Simultaneously, Booker has replicated in efficient aspect for collecting its receivable of accounts which are due. Tate & Lyle has
not impaired previous due outstanding and is collectible in 90 days.
 Cash conversion cycle
10

Interpretation: This cycle is signifying period of transforming its current asset in cash. The Booker's cycle is negative in 5 year
duration on basis of cash driven in business with few receivables. On the contrary, Tate & Lyle has maintained its cash conversion
cycle with increment from year 2012 to 2016 with reference to high inventory.
2.4 Investors/ Leverage ratio
It helps to evaluate ability of organization to pay its debts for long term perspective.
 Debt to equity ratio
11

Interpretation: The above table is reflected capital structure of both organization. In duration of 5 years both are increasing as
total liabilities are considers as debt for extracting debt equity ratio. It is reflecting dependency on huge debt capital for operations of
business. The debt of Tate & Lyle was fallen in year 2014 as compared to previous year. Booker had built huge cash reserve with
ability for repaying its borrowing.
 Gearing ratio
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Interpretation: It had increased over 5 year period but near to 0.5 which could be disadvantage for heightening interest prices.
It is indicating liabilities of long term of both organization which are about 50% of its aggregate of employed total capital. Booker's
capital structure is high as compared to Tate and Lyle.
2.5 Common Size analyses
Common size analysis helps in gauging comparison of balance sheet and income statements from past period across
organization. It reflects each item in percentage formats through its figure.
Vertical analysis:
 Income statement: It had denoted about decrement of operating expenses of Booker and increment in net profit. On the
contrary, Tate & Lyle has failed for transforming sales in net profit in efficient aspect.
 Balance sheet: These are denoting that both organization had appropriately maintained it specific inventory amount.
Consequently, Booker has maintained huge amount of various intangible assets. Tate & Lyle had included great amount of
plant, equipment and property (Minnis and Sutherland, 2017).
 Cash flow: The cash flow of Booker from year 2012 to 2016 decreased by 2% but Tate and Lyle's cash flow had raised with
huge amount.
Horizontal analysis:
 Income statement: Booker has raised its margin over the year but Tate & Lyle was not capable to maintain similar profit level
of 5 years.
 Balance sheet: It had implied value of equity with its profit level as Booker has increased upwards but Tate & Lyle has
decreased over period of five years.
 Cash flow: It is reflecting vice versa situation from vertical analysis as Tate & Lyle has low percentage as 88% and Booker has
high by 201% (Altman and et.al., 2017).
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2.6 DuPont Analysis
It is also replicated as DuPont model as financial ratio on basis of ratio of equity which is generally used for analysing ability
of company for raising return on equity (Gujjar and Manjunatha,, 2018). It breaks down ratio of return on equity by giving explanation
about increment in investor's return. It is segregated in three components such as:
 Profit margin
 Total Asset turnover
 Financial Leverage
DuPont: Net profit margin
DuPont: Asset turnover
14

DuPont: Equity multiplier
Interpretation: The asset turnover, equity multiplier and net profit margin according to DuPont analysis has depicted similar
outcome from ratio analysis (Sheela and Karthikeyan, 2012).
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3. Merits and demerits of particular analysis
3.1 Ratio Analysis
Merits
 It helps in analysing financial statements.
 The long array of accounting data had been simplified and summarized.
 It helps in giving specific comparison on basis of profitability and financial soundness could be formed among the firm and
industry as well.
 The ratio of present year could be compared with previous and extracts weak spots for correcting it.
 It is useful for forecasting and effective control.
Demerits
 If accounting policies differ from each other than comparison is not possible.
 Alteration in level of prices makes ratio analysis as ineffective aspect.
 There is lack of appropriate standards (Advantages and Limitations of Ratio Analysis, 2018).
 Ratios are not sufficient for getting final and appropriate conclusion.
 If accounting data consist of errors then it would be giving false ratios which gives discrepancies in financial position.
3.2 Common size analysis
Merits
 This aid helps in demonstrating various capital sources along with other fund sources and use of aggregate of fund in
organisation's assets.
 It will help in analysing structural composition of common size statement (Advantages and Limitations of common size
Analysis, 2018).
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 It is very easy for comparison perspective in its own industry.
 In the similar aspect, more than two organization could be used for comparison at same point.
 It is very useful for analysing time series.
Demerits
 It is replicated as useless because of absence of established standard proportion of every item to its aggregate.
 There is consideration of specific percentage with decrement and increment in different elements of revenues, asset and
liabilities.
 There are various organization which might not apply the similar accounting regulations so adjustments will lead to various
differences.
 Absence of accounting period which is not comparable on direct aspect.
 Impact of window dressing on financial statements could not be avoided.
3.3 DuPont analysis
Merits
 It is referred as an excellent technique for identifying weakness and strengths of firm. Every weak financial ratio could be
decomposed for attaining deep insights.
 The activities could be immediately exercised for improving expense control on basis of asset management and marketing for
strengthening ratio of ROE.
 It is useful for extracting financial statement's accuracy.
 It helps in providing analysis of return on equity (Stephens, Palchak and Reese, 2017).
Demerits
 It does not consider capital's cost as it creates difficulties for getting outcome and data of accurate accounting should be
directly in-putted.
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 With reference to analysis of financial ratio systems, it performs its best for comparing organization with operation at similar
size.
 It is heavily relied on data of accounting which could be changed for reflecting actual condition.
 It supplies irrelevant and negligible elements and analyst has need of creating components which are very weak.
4. Contemporary methods for overcoming limitations of above analysis
The contemporary methods could be utilized for strategic financial analysis for accomplishing insufficiency or ratio, DuPont
and common size analysis are:
4.1 Capital Asset pricing model
The Capital asset pricing model was framed with associate along with foresights of portfolio theory and it is altered
understanding and mindset of shareholders and investors on basis of investment. It is used for finance for assessment of cost of capital,
diversification of portfolio, value investments, portfolio strategy and performance. Usually, investors pose reasonable rate and risk
return with reference to efficient market (Bellalah and Zhang, 2018).
As per this model, the expected returns of stocks are highly dependent on its beta coefficient. The measurement of systematic
risk with application of Beta for correlating return and risk of market along with risk free rate. The beta's value might differ on basis of
industry such as Booker's beta value is 0.54 contrast along with median of peer as 0.64. On the contrary, Tate & Lyle has value of beta
as 0.81 contrast with peer median as 0.68. It is denoting Booker's stock price along with less volatility as compared to Tate & Lyle on
basis of alteration in market prices (Siddiqi, 2018).
Benefits Drawbacks
 It considers systematic risk with reality which
consists of diverse portfolios through investors
through which unsystematic risk is substituted.
The yield is on securities of short term government with
problem of using input with alteration in yield on daily
aspect as it creates volatility.
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 Theoretically derived relationship
4.2 Economic value added
This model is management tool which directly surplus creation of value on basis of investment. The value of growth is created
as cooperation via increment in measuring capital usage with alteration in investment structure by decreasing cost of capital. It
provides explanation on return of capital which is true for financial control on basis of rhetoric and trend of particular event. There is
increment in net operating profit after tax and invested capital over the duration where both of financial factors of Tate & Lyle has
decreased. Hence, expected earning of Booker will raises and Tate & Lyle has slightly decreased with context of analysis (Singh and
et.al., 2018).
Benefits Drawbacks
 Lays emphasis on mangers' attention with impact of
decisions in increment in wealth of shareholders
 Basis for valuation of shares along with goodwill
 Practicability of calculation
 No applicable for each company
 To extract cost of equity
4.3 Efficient market hypothesis
This theory was laid through Roberts who had performed difference among strong and weak form of market efficiency. It is
proposition of current price of asset which is fully reflected through information which is publicly available on basis of future
economic fundamentals impacting value of asset. In year 1970, it was proposed through Eugene Fama for studying behaviour of price
in securities market. It is directly linked to idea of theory of random walk on basis of extreme big logic where returns could be
predicted. It would be prevailing misuse of investor for purpose of producing unlimited incomes. In the similar aspect, historical data
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could be availed of both organization along with availability of publicly information of these organizations easily in market. On the
contrary, the organization's private information are not available publicly for estimation of stock price. Hence, as per efficient market
hypothesis, both organization has their belonging to semi-stong form of efficient market (Jin and et.al., 2017).
Benefits Drawbacks
Combination of empirical evidence but does not sup[port
strong form of EMH
Speculative economic bubbles as anomaly in market which
will appear to be driven through buyers operating in
irrational exuberance.
CONCLUSION
From the above study it had been concluded that Booker is viable which gives the best return as shown by extracting return. It
had shown that profitability is low and consequently overall returns are directly enhanced because of huge turnover. It had been
evaluated about capability for maintaining the best level of cash which reflects strong financial position. In the similar aspect, prices of
stocks are traded with context of high valuations. On the contrary, reliability of company with acquisition for pushing top line along
with underlying growth is weak if in case revenue has not improved business of core cash. Further, Tate & Lyle has high gearing
ration across period of 5 years which is financially semistrong.
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REFERENCES
Books and Journals
Altman, E. I. and et.al., 2017. Financial Distress Prediction in an International Context: a Review and Empirical Analysis of Altman's
Z‐Score Model. Journal of International Financial Management & Accounting. 28(2). pp.131-171.
Bellalah, M. and Zhang, D., 2018. An intertemporal capital asset pricing model under incomplete information and short sales. Annals
of Operations Research. pp.1-17.
Gujjar, P. and Manjunatha, T., 2018. Profitability Analysis of Indian Information Technology Companies using DuPont Model. Asian
Journal of Management. 9(3). pp.1105-1108.
Jin, Y. H., and et.al., 2017. To Survive and Thrive under Hypercompetition: An Exploratory Analysis of the Influence of Strategic
Purity on Truckload Motor-Carrier Financial Performance. Transportation Journal. 56(1). pp.1-34.
Minnis, M. and Sutherland, A., 2017. Financial statements as monitoring mechanisms: Evidence from small commercial
loans. Journal of Accounting Research. 55(1). pp.197-233.
Sales, E .A., Ghirardi, M .L. and Jorquera, O., 2017. Subcritical ethylic biodiesel production from wet animal fat and vegetable oils: A
net energy ratio analysis. Energy conversion and management. 141. pp.216-223.
Sheela, S. C. and Karthikeyan, K., 2012. Financial performance of pharmaceutical industry in India using dupont analysis. European
Journal of Business and Management. 4(14). pp.84-91.
Siddiqi, H., 2018. Anchoring-Adjusted Capital Asset Pricing Model. Journal of Behavioral Finance. 19(3). pp.249-270.
Singh, D., Gál, Z., Huseynov, R. and Wojtaszek, M., 2018. Determining the Performance Measurement of SME from Economic Value
Added: Study on Hungary, Somogy County. Problems of World Agriculture/Problemy Rolnictwa Światowego, 18(33, Part 2).
Stephens, J.C., Palchak, E. and Reese, B., 2017. Divestment and Investment: Strategic Financial Decisions in Higher Education to
Promote Societal Change Toward Sustainability. In Handbook of Theory and Practice of Sustainable Development in Higher
Education (pp. 305-315). Springer, Cham.
21

Wüst, M., 2018. Authenticity Control of Natural Products by Stable Isotope Ratio Analysis. In Biotechnology of Natural Products (pp.
267-279). Springer, Cham.
Online
Advantages and Limitations of common size Analysis. 2018. [Online]. Available through: <https://efinancemanagement.com/financial-
analysis/common-size-financial-statements>.
Advantages and Limitations of Ratio Analysis. 2018. [Online]. Available through:
<https://accountingexplained.com/financial/ratios/advantages-limitations>.
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APPENDIX
1. Financial statements of Booker Plc
BOOKER GROUP PLC INCOME STATEMENT
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BOOKER GROUP PLC STATEMENTS OF FINANCIAL POSITION
2011 2012 2013 2014 2015 2016
Assets
Current Assets
Inventories 220.4 268.5 267.1 327.6 328.1 354.1
Trade Receivables, Net 44.4 50.1 58.1 64.6 74.4 121.6
Other Receivables 38.00 31.6 38.5 49.0 50.1 59.3
Other Current Assets - - - - - -
Available-for-sale
financial assets - - - - - -
Derivative financial
instruments - - - - - -
Other financial assets - - - - - -
Cash And Cash
Equivalents 46.2 63.5 77.2 149.6 147.0 127.4
Total current asset 349.0 413.7 440.9 590.8 599.6 662.4
Non-Current Assets
Property Plant and
Equipment 60.5 71.9 71.9 204.5 207.1 229.8
Available for sale
financial assets - - - - - -
Derivative financial
instruments - - - - - -
Intangible Asset 437.3 437.1 436.9 438.7 439.8 466.7
Trade and other -
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receivables - - - - -
Retirement benefit surplus - - - - - -
Investment In Associates - - - - - -
Investment In Joint
Venture - 0.5 0.6 1.1 1.4 1.5
Other Investment - - 144.9 - - -
Deferred Tax Assets 13.7 13.3 13.5 20.1 28.1 25.3
Total non-current asset 511.5 522.8 667.8 664.4 676.4 723.3
TOTAL ASSETS 860.5 936.5 1,108.7 1,255.2 1,276.0 1,385.7
Liabilities
Current Liabilities
Trade Payables 367 420.4 428.1 496.2 505.4 573.3
Other Payables 57.20 51.4 58.4 90.0 80.6 104.6
Loans And Borrowings 0.3 0.1 - - - -
- - - - - -
- - - - - -
Tax Liabilities 17.1 15.2 21.2 15.8 19.9 21.2
Total current liability 441.6 487.1 507.7 602.0 605.9 699.1
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Non-Current Liabilities
Loans and Borrowings 18.8 - - - - -
Other payables 28.3 28.2 28.0 27.5 26.9 26.0
Derivative financial
instrument 0.0 0.0 0 0 0 0
Retirement benefit
liabilities 8.0 19.0 6.8 3.6 19.7 29.6
Provisions 34.6 32.8 28.1 25.5 25.4 40.8
Deferred Tax Liabilities
Total non-current liability 89.7 80.0 62.9 56.6 72.0 96.4
Total Liability 531.3 567.1 570.6 658.6 677.9 795.5
Equity
Share capital 15.3 15.7 17.3 17.4 17.6 17.7
Share premium 45.3 49.1 34.9 36.4 41.2 44.0
Merger reserve 260.8 260.8 260.8 260.8 260.8 260.8
Capital redemption
reserve - - - - 60.9 122.8
Other reserves - - 136.8 136.8 75.8 14.0
Share option reserve 4.1 3.8 6.6 8.5 11.2 12.4
Retained earnings 8.4 40.0 81.7 136.7 130.6 118.5
Total Equity 333.9
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369.4 538.1 596.6 598.1 590.2
TOTAL LIABILITIES
& EQUITY 865.2 936.5 1,108.7 1,255.2 1,276.0 1,385.7
BOOKER GROUP PLC CASH FLOW STATEMENT
2012 2013 2014 2015 2016
Net cash provided by (used in) operating activities 84.4 85.7 126.2
Net cash provided by (used in) investment activities (24.5) (34.9) (8.8)
Net cash provided by (used in) financing activities (42.6) (37.1) (45.0)
Increase (decrease) in cash and cash equivalents 17.3 13.7 72.4
Cash and cash equivalents at beginning of year 46.2 63.5 77.2
Cash and cash equivalents at end of year 63.5 77.2 149.6
A5 BOOKER CASH FLOW
STATEMENT
Capital employed 418.90 449.40 601.0
0
653.20 670.10 686.60
Average capital
employed 434.15 525.2
0 627.10 661.65 678.35
EPS 4.83 4.51 6.73
Dividend per share 2.28 2.63 3.2 3.66 4.6
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(pence)
Share price 84.3 121.5 166.7 147.7 163.5
2. Financial
statements
of Tate &
Lyle
TATE & LYLE
INCOME
STATEMENT
2012 2013 2014 2015
Total Revenue 3,088 3,256 2,754 2,341
Cost of Sales
(2,155) (2,281) (1,927)
(1,51
5)
Gross Profit 933 975 827 826
Operating
Expenses
Other operating &
Selling Expenses (393) (429) (388) (475)
Other Operating
Expenses (136) (212) (188) (318)
Operating
Income or Loss 404 334 251 33
Finance income 8 1 2 1
Earnings Before
Interest And
412
335 253 34
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Taxes
Finance Cost (33) (34) (37) (32)
Share of profit
after tax of joint
ventures and
associates - - 61 23
Profit Before Tax 379 301 277 25
Income Tax
Expense (72) (46) (32) (21)
Profit for the year
from continuing
operation
307 255 245 4
Profit for the year
from discontinued
operations 2 18 28 26
Profit
Attributable to
T&L
Shareholders
309 273 273 30
TATE & LYLE STATEMENTS OF FINANCIAL POSITION
2011 2012 2013 2014 2015 2016
Assets
Current Assets
Inventories 454 450 510 372 363 389
Trade Receivables, Net 263 264 330 231 248 238
Other Receivables
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28 68 53 34 42 63
Current Tax Assets 25 3 4 1 2 3
Available-for-sale financial assets - - - - 16 4
Derivative financial instruments 135 80 86 78 62 43
Other financial assets - - - - 2 -
Cash And cash equivalent 654 424 379 346 195 317
Total current asset 1,559 1,289 1,362 1,062 930 1,057
Asset held for sale 67 100 1 - - 7
Non-Current Assets
Property Plant and Equipment 855 922 958 732 750 926
Available for sale financial assets 19 23 27 28 15 19
Derivative financial instruments 48 57 54 23 30 21
Goodwill & Intangible Asset 320 325 356 307 340 390
Trade and other receivables 1 2 3 - 2 1
Retirement benefit surplus 103 146 12 - 25 45
Investment In Associates 5 5 6 4 4 3
Investment In Joint Venture - - - 308 323 82
Other Investment
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-
Deferred Tax Assets 74 37 8 4 4 3
Total non-current assets 1,425 1,517 1,424 1,406 1,493 1,490
TOTAL ASSETS 3,051 2,906 2,787 2,468 2,423 2,554
Liabilities
Current Liabilities
Trade Payables 245.0 256 264 198 228 218
Other Payables 161 126 118 85 88 119
Loans And Borrowings 227.00 141 75 323 305 200
Derivative financial instruments 126 94 60 49 25 22
Provisions for other liabilities and
charges 44 10 20 13 13 23
Tax Liabilities 33 49 53 38 45 66
836 676 590 706 704 648
Liabilities held for sale 5 15 - - - 2
Total current liability 841 691 590 706 704 650
Non-Current Liabilities
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Loans and Borrowings 887 805 821 437 463 556
Other Liabilities 1 4 3 2 13 13
Derivative financial instrument 56 19 21 2 15 19
Retirement benefit deficit 242 286 277 220 252 253
Provision for others liability and
charges 21 18 15 9 8 13
Deferred Tax Liabilities 30 25 24 42 32 21
1,157 1,161 712 783 875
Total Liability 841 1,848 1,751 1,418 1,487 1,525
Equit
y
Share Capital 117 117 117 117 117 117
Share premium 406 406 406 406 406 406
Merger reserve - - - - - -
Capital redemption interest 8 8 8 8 8 8
Other reserves 175 128 139 58 61 127
Share option reserve - - - - - -
Retained earnings
32

244 374 366 460 343 370
Non controlling interest 23 25 - 1 1 1
Total Equity 973 1,058 1,036 1,050 936 1,029
TOTAL LIABILITIES & EQUITY 1,814 2,906 2,787 2,468 2,423 2,554
TATE & LYLE CASH FLOW STATEMENT
20
12 2013 2014 2015 2016
Net cash provided by (used in) operating activities 231.0 251.0 179.0
Net cash provided by (used in) investment activities (117.0) (83.0) (164.0)
Net cash provided by (used in) financing activities (315.0) (236.0) (185.0)
Increase (decrease) in cash and cash equivalents (201) (68) (170)
Cash and cash equivalents at beginning of year 654 446.0 420.0
Effect of changes in foreign exchange (7.0) (27.0) 19.0
Cash and cash equivalents at end of year 446 379 269
A6 TATE & LYLE CASH FLOW
STATEMENT
Capital employed
2,210.0 2,2
2,197.00
1,762.00 1,719.00 1,904.00
33

0 15.
00
Average capital
employed
2,2
12.
50
2,206.00 1,979.50 1,740.50 1,811.50
EPS 66.35 58.82 6.46
Dividend per share
(pence)
24.
9 26.2 27.6 28 28
Share price 70
5 850 667.5 597.5 578
3. Vertical analysis of Booker Group Plc
BOOKER GROUP PLC
34

BOOKER GROUP PLC
Common Size Statements of financial position (as a % of total assets)
2012 2013 2014 2015 2016
Assets
Current Assets
Inventories 28.67% 24.09% 26.10% 25.71% 25.55
%
Trade Receivables, Net 5.35% 5.24% 5.15% 5.83% 8.78
35

%
Other Receivables 3.37% 3.47% 3.90% 3.93% 4.28
%
Other Current Assets 0.00% 0.00% 0.00% 0.00% 0.00
%
Available-for-sale financial assets 0.00% 0.00% 0.00% 0.00% 0.00
%
Derivative financial instruments 0.00% 0.00% 0.00% 0.00% 0.00
%
Other financial assets 0.00% 0.00% 0.00% 0.00% 0.00
%
Cash And Cash Equivalents 6.78% 6.96% 11.92% 11.52% 9.19
%
Total current asset 44.18% 39.77% 47.07% 46.99% 47.80
%
Non-Current Assets
Property Plant and Equipment 7.68% 6.49% 16.29% 16.23% 16.58
%
Available for sale financial assets 0.00% 0.00% 0.00% 0.00% 0.00
%
Derivative financial instruments 0.00% 0.00% 0.00% 0.00% 0.00
%
Intangible Asset 46.67% 39.41% 34.95% 34.47% 33.68
%
Trade and other receivables 0.00% 0.00% 0.00% 0.00% 0.00
%
Retirement benefit surplus 0.00% 0.00% 0.00% 0.00% 0.00
%
Investment In Associates 0.00% 0.00% 0.00% 0.00% 0.00
%
Investment In Joint Venture 0.05% 0.05% 0.09% 0.11% 0.11
%
Other Investment 0.00% 13.07% 0.00% 0.00% 0.00
36

%
Deferred Tax Assets 1.42% 1.22% 1.60% 2.20% 1.83
%
Total non-current asset 55.82% 60.23% 52.93% 53.01% 52.20
%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00
%
100.0
0%
Liabilities
Current Liabilities
Trade Payables 44.89% 38.61% 39.53% 39.61% 41.37
%
Other Payables 5.49% 5.27% 7.17% 6.32% 7.55
%
Loans And Borrowings 0.01% 0.00% 0.00% 0.00% 0.00
%
Tax Liabilities 1.62% 1.91% 1.26% 1.56% 1.53
%
52.01% 45.79% 47.96% 47.48% 50.45
%
Non-Current Liabilities
Loans and Borrowings 0.00% 0.00% 0.00% 0.00% 0.00
%
Other payables 3.01% 2.53% 2.19% 2.11% 1.88
%
Derivative financial instrument 0.00% 0.00% 0.00% 0.00% 0.00
%
Retirement benefit liabilities 2.03% 0.61% 0.29% 1.54% 2.14
%
Provisions 3.50% 2.53% 2.03% 1.99% 2.94
37

%
Deferred Tax Liabilities 0.00% 0.00% 0.00% 0.00% 0.00
%
8.54% 5.67% 4.51% 5.64% 6.96
%
Total Liability 60.56% 51.47% 52.47% 53.13% 57.41
%
Equity
Share capital 1.68% 1.56% 1.39% 1.38% 1.28
%
Share premium 5.24% 3.15% 2.90% 3.23% 3.18
%
Merger reserve 27.85% 23.52% 20.78% 20.44% 18.82
%
Capital redemption reserve 0.00% 0.00% 0.00% 4.77% 8.86
%
Other reserves 0.00% 12.34% 10.90% 5.94% 1.01
%
Share option reserve 0.41% 0.60% 0.68% 0.88% 0.89
%
Retained earnings 4.27% 7.37% 10.89% 10.24% 8.55
%
Total Equity 39.44% 48.53% 47.53% 46.87% 42.59
%
TOTAL LIABILITIES & EQUITY 100.00% 100.00% 100.00% 100.00
%
100.0
0%
BOOKER GROUP PLC
38

4. Vertical analysis of Tate & Lyle Plc
TATE &
LYLE
39

TATE &
LYLE
Common
Size
Statements
of financial
position (as a
% of total
assets)
2012 2013 2014 2015 2016
40

Assets
Current Assets
Inventories 15.49% 18.30% 15.07% 14.71% 15.76%
Trade
Receivables,
Net
9.08% 11.84% 9.36% 10.05% 9.64%
Other
Receivables 2.34% 1.90% 1.38% 1.70% 2.55%
Current Tax
Assets 0.10% 0.14% 0.04% 0.08% 0.12%
Available-for-
sale financial
assets
0.00% 0.00% 0.00% 0.65% 0.16%
Derivative
financial
instruments
2.75% 3.09% 3.16% 2.51% 1.74%
Other financial
assets 0.00% 0.00% 0.00% 0.08% 0.00%
Cash And cash
equivalent 14.59% 13.60% 14.02% 8.05% 12.41%
Total current
asset 44.36% 48.87% 43.03% 38.38% 41.39%
Asset held for
sale 3.44% 0.04% 0.00% 0.00% 0.27%
Non-Current
Assets
Property Plant
and
Equipment
31.73% 34.37% 29.66% 30.95% 36.26%
Available for
sale financial
assets
0.79% 0.97% 1.13% 0.62% 0.74%
41

Derivative
financial
instruments
1.96% 1.94% 0.93% 1.24% 0.82%
Goodwill &
Intangible
Asset
11.18% 12.77% 12.44% 14.03% 15.27%
Trade and
other
receivables
0.07% 0.11% 0.00% 0.08% 0.04%
Retirement
benefit
surplus
5.02% 0.43% 0.00% 1.03% 1.76%
Investment In
Associates 0.17% 0.22% 0.16% 0.17% 0.12%
Investment In
Joint Venture 0.00% 0.00% 12.48% 13.33% 3.21%
Other
Investment 0.00% 0.00% 0.00% 0.00% 0.00%
Deferred Tax
Assets 1.27% 0.29% 0.16% 0.17% 0.12%
Total non-
current asset 52.20% 51.09% 56.97% 61.62% 58.34%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00% 100.00%
Liabilities
Current
Liabilities
Trade
Payables 8.81% 9.47% 8.02% 9.41% 8.54%
Other
Payables 4.34% 4.23% 3.44% 3.63% 4.66%
Loans And 4.85% 2.69% 13.09% 12.59% 7.83%
42

Borrowings
Tax Liabilities 1.69% 1.90% 1.54% 1.86% 2.58%
23.78% 21.17% 28.61% 29.05% 25.45%
Non-Current
Liabilities
Loans and
Borrowings 27.70% 29.46% 17.71% 19.11% 21.77%
Other
Liabilities 0.14% 0.11% 0.08% 0.54% 0.51%
Derivative
financial
instrument
0.65% 0.75% 0.08% 0.62% 0.74%
Retirement
benefit deficit 9.84% 9.94% 8.91% 10.40% 9.91%
Provision for
others liability
and charges
0.62% 0.54% 0.36% 0.33% 0.51%
Deferred Tax
Liabilities 0.86% 0.86% 1.70% 1.32% 0.82%
39.81% 41.66% 28.85% 32.32% 34.26%
Total Liability 63.59% 62.83% 57.46% 61.37% 59.71%
Equity
Share Capital 4.03% 4.20% 4.74% 4.83% 4.58%
Share
premium 13.97% 14.57% 16.45% 16.76% 15.90%
Merger
reserve 0.00% 0.00% 0.00% 0.00% 0.00%
Capital
redemption
interest
0.28% 0.29% 0.32% 0.33% 0.31%
43

Other reserves 4.40% 4.99% 2.35% 2.52% 4.97%
Share option
reserve 0.00% 0.00% 0.00% 0.00% 0.00%
Retained
earnings 12.87% 13.13% 18.64% 14.16% 14.49%
Non
controlling
interest
0.86% 0.00% 0.04% 0.04% 0.04%
Total Equity 36.41% 37.17% 42.54% 38.63% 40.29%
TOTAL
LIABILITIES &
EQUITY
100.00% 100.00% 100.00% 100.00% 100.00%
TATE & LYLE
44

5. Horizontal analysis of Booker Plc
45

Common Size Statements of financial position (2012 as the base year)
2012 2013 2014 2015 2016
Assets
Current Assets
Inventories 100% 99% 122% 122% 132%
46

Trade Receivables, Net 100% 116% 129% 149% 243%
Other Receivables 100% 122% 155% 159% 188%
Other Current Assets
Available-for-sale financial
assets
Derivative financial
instruments
Other financial assets
Cash And Cash Equivalents 100% 122% 236% 231% 201%
Total current asset 100% 107% 143% 145% 160%
Non-Current Assets
Property Plant and Equipment 100% 100% 284% 288% 320%
Available for sale financial
assets
Derivative financial
instruments
Intangible Asset 100% 100% 100% 101% 107%
Trade and other receivables
Retirement benefit surplus
Investment In Associates
Investment In Joint Venture 100% 120% 220% 280% 300%
Other Investment
Deferred Tax Assets 100% 102% 151% 211% 190%
Total non-current asset 100% 128% 127% 129% 138%
TOTAL ASSETS 100% 118% 134% 136% 148%
Liabilities
Current Liabilities
47

Trade Payables 100% 102% 118% 120% 136%
Other Payables 100% 114% 175% 157% 204%
Loans And Borrowings 100% 0% 0% 0% 0%
Tax Liabilities 100% 139% 104% 131% 139%
Total current liability 100% 104% 124% 124% 144%
Non-Current Liabilities
Loans and Borrowings
Other payables 100% 99% 98% 95% 92%
Derivative financial instrument
Retirement benefit liabilities 100% 36% 19% 104% 156%
100% 86% 78% 77% 124%
Deferred Tax Liabilities
Total Non-current liability 100% 79% 71% 90% 121%
Total Liability 100% 101% 116% 120% 140%
Equity
Share capital 100% 110% 111% 112% 113%
Share premium 100% 71% 74% 84% 90%
Merger reserve 100% 100% 100% 100% 100%
Share option reserve 100% 174% 224% 295% 326%
Retained earnings 100% 204% 342% 327% 296%
48

Total Equity 100% 146% 162% 162% 160%
TOTAL LIABILITIES & EQUITY 100% 118% 134% 136% 148%
Common Size Cash Flow Statement (2012 as the base year)
2012 2013 2014 2015 2016
Net cash provided by (used in) operating activities 102% 150% 159%
Net cash provided by (used in) investment activities 142% 36% 100%
Net cash provided by (used in) financing activities 87% 106% 265%
Increase (decrease) in cash and cash equivalents 79% 418% -15%
Cash and cash equivalents at beginning of year 137% 167% 324%
Cash and cash equivalents at end of year 122% 236% 231%
49

6. Horizontal analysis of Tate & Lyle Plc
Common Size Statements of financial position (2012 as the base year)
2012 2013 2014 2015 2016
Assets
Current Assets
Inventories 100% 113% 83% 81% 86%
50

Trade Receivables, Net 100% 125% 88% 94% 90%
Other Receivables 100% 78% 50% 62% 93%
Other Current Assets 100% 133% 33% 67% 100%
Available-for-sale financial assets
Derivative financial instruments 100% 108% 98% 78% 54%
Other financial assets
Cash And Cash Equivalents 100% 89% 82% 46% 75%
Total current asset 100
% 106% 82% 72% 82%
Asset held for sale 100% 1% 0% 0% 7%
Non-Current Assets
Property Plant and Equipment 100% 104% 79% 81% 100%
Available for sale financial assets 100% 117% 122% 65% 83%
Derivative financial instruments 100% 95% 40% 53% 37%
Intangible Asset 100% 110% 94% 105% 120%
Trade and other receivables 100% 150% 0% 100% 50%
Retirement benefit surplus 100% 8% 0% 17% 31%
Investment In Associates 100% 120% 80% 80% 60%
Investment In Joint Venture
Other Investment
Deferred Tax Assets 100% 22% 11% 11% 8%
Total non-current asset 100
% 94% 93% 98% 98%
TOTAL ASSETS 100
% 96% 85% 83% 88%
Liabilities
Current Liabilities
Trade Payables 100% 103% 77% 89% 85%
51

Other Payables 100% 94% 67% 70% 94%
Loans And Borrowings 100% 53% 229% 216% 142%
Derivative financial instruments 100% 64% 52% 27% 23%
Provisions for other liabilities and charges 100% 200% 130% 130% 230%
Tax Liabilities 100% 108% 78% 92% 135%
100% 87% 104% 104% 96%
Liabilities held for sale 100% 0% 0% 0% 13%
Total current liability 100
% 85% 102
% 102% 94%
Non-Current Liabilities
Loans and Borrowings 100% 102% 54% 58% 69%
Other Liabilities 100% 75% 50% 325% 325%
Derivative financial instrument 100% 111% 11% 79% 100%
Retirement benefit deficit 100% 97% 77% 88% 88%
Provision for others liability and charges 100% 83% 50% 44% 72%
Deferred Tax Liabilities 100% 96% 168% 128% 84%
100% 100% 62% 68% 76%
Total Liability 100
% 95% 77% 80% 83%
Equity
Share Capital 100% 100% 100% 100% 100%
Share premium 100% 100% 100% 100% 100%
Capital redemption interest 100% 100% 100% 100% 100%
Other reserves 100% 109% 45% 48% 99%
Retained earnings 100% 98% 123% 92% 99%
Non controlling interest 100% 0% 4% 4% 4%
52

Total Equity 100
% 98% 99% 88% 97%
TOTAL LIABILITIES & EQUITY 100
% 96% 85% 83% 88%
7. Benchmarking ratio of Booker Group Plc
Ratio Formula 2012 2013 2014 2 2016
53

Liquidity Ratios
Current Ratio (Current Assets / Current Liabilities) 0.85 0.87 0.98 0 0.95
Quick Ratio (Current Assets - Inventories)/ Current
Liabilites 0.30 0.34 0.44 0 0.44
Cash Ratio Cash and Cash equivalent / Current Liabilites 0.13 0.15 0.25 0 0.18
Working Capital Mgt Ratios
Days of Sales Outstanding
(DSO) (Average Receivables /Net Revenue)x365 4 5 5 5 7
Days of Inventory on Hand
(DOI) (Average Inventory /Cost of Sales)x365 24 26 24 2 26
Days of Payables (DOP) (Average Payables /Cost of Sales)x365 38 40 38 4 42
Cash Conversion Cycle (CCC) DSO + DOI - DOP (10) (9) (9) ( (9)
Total Asset Turnover (Revenue / Average Total Assets) 4.38 3.90 3.96 3 3.75
Profitability Ratios
Gross Profit Margin (GPM) (Gross Profit / Revenue) 3.78% 3.99% 4.40% 4 5.08%
Net Profit Margin (NPM) (Net Income / Revenue) 2.28% 2.38% 2.64% 2 3.06%
Return on Capital Employed
(ROCE) (operating profit/ Average Total Capital) 20.64% 18.07% 19.74% 2 22.53%
Cash Flows Ratios
Operating Cash Flow to Sales (Operating Cash Flow / Sales) 0.021 0.021 0.027 0 0.035
Operating Cash Flow to Net
Income (Operating Cash Flow / Net Income) 1.13 1.13 1.20 1 1.37
Cash Flow to Total Debt (Operating Cash Flow / Average Total Debt) 0.154 0.151 0.205 0 0.238
54

Leverage Ratios
Debt-to-Equity Ratio (D/E) (Total Debt / Total Equity) 0.03% 0.00% 0.00% 0 0.00%
Gearing (Total debt / (Total debt+Total Equity) 0.03% 0.00% 0.00% 0 0.00%
Investor Ratios
EPS (pence)
Net profit attributable to ordinary
shareholders / WANS 4.83 4.51 6.06 6 7.24
Dividend Payout Ratio Dividend per share / EPS 47% 58% 53% 5 64%
Price-Earnings Ratio Share price / EPS 17.45 26.94 27.51 2 22.58
8. Benchmarking ratio of Tate & Lyle Plc
Ratio
TATE &
LYLE
2012 2013 2014 2015 2016
Liquidity
Ratios
Current Ratio 1.87 2.31 1.50 1.32 1.63
Quick Ratio 1.21 1.44 0.98 0.81 1.03
Cash Ratio 0.61 0.64 0.49 0.28 0.49
Working
Capital Mgt
Ratios
Days of Sales 31 33 37 37 38
55

Outstanding
(DSO)
Days of
Inventory on
Hand (DOI)
77 77 84 89 93
Days of
Payables
(DOP)
42 42 44 51 55
Cash
Conversion
Cycle (CCC)
66 68 77 75 76
Total Asset
Turnover 1.04 1.14 1.05 0.96 0.95
Profitability
Ratios
Gross Profit
Margin
(GPM)
30.21% 29.94% 30.03% 35.28% 37.54%
Net Profit
Margin
(NPM)
13.08% 10.26% 9.11% 1.41% 5.39%
Return on
Capital
Employed
(ROCE)
18.26% 15.14% 12.68% 1.90% 7.01%
56

Cash Flows
Ratios
Operating
Cash Flow to
Sales
0.075 0.077 0.104 0.076 0.080
Operating
Cash Flow to
Net Income
0.75 0.92 1.05 5.97 1.15
Cash Flow to
Total Debt 0.172 0.139 0.180 0.123 0.125
Leverage
Ratios
Debt-to-
Equity Ratio
(D/E)
89.41% 86.49% 72.38% 82.05% 73.47%
Gearing 47.21% 46.38% 41.99% 45.07% 42.35%
Investor
Ratios
EPS (pence) 66.35 58.81 58.82 6.46 35.11
Dividend
Payout Ratio 38% 45% 47% 433% 80%
Price-
Earnings
Ratio
10.63 14.45 11.35 92.49 16.46
57