CLH - City Lodge Income Statement 30-Jun-16 30-Jun-17 30-Jun-18 Turnover 1,493,163,000 1,520,410,000 1,498,426,000 Cost of Sales - - - Gross Profit 1,493,163,000 1,520,410,000 1,498,426,000 Expenses 872,367,000 921,281,000 925,668,000 Depreciation 94,500,000 97,684,000 99,221,000 Operating profit (EBIT) 524,397,000 496,350,000 467,541,000 Total Interest Paid 23,709,000 23,709,000 23,709,000 Interest Received 2,268,000 6,603,000 4,031,000 Profit Before Tax 496,510,000 473,554,000 454,818,000 Taxation 136,854,000 130,254,000 128,267,000 Profit After Interest and Tax 359,656,000 343,300,000 326,551,000 Ordinary Dividends Paid 184,316,000 192,955,000 178,904,000 Retained Profits 111,965,000 84,170,000 97,922,000

Balance sheet Year 30-Jun-16 30-Jun-17 30-Jun-18 Total Equity 871,828,000 934,311,000 1,057,866,000 Ordinary Share Capital 4,341,000 4,357,000 4,357,000 Share Premium 163,617,000 175,020,000 175,146,000 Non-Distributable Reserves (379,212,000) (412,318,000) (386,811,000) Distributable Reserves 1,083,082,000 1,167,252,000 1,265,174,000 Outside Shareholders Interest - - - Preference Shares 397,500,000 - - Deferred Tax 144,685,000 151,171,000 175,147,000 Other Non-Current Liabilities 302,374,000 89,517,000 777,352,000 Director's & Shareholders Loans 37,893,000 - - Long Term Interest Bearing 314,120,000 320,000,000 494,120,000 Total Capital 2,068,400,000 1,494,999,000 2,504,485,000 Fixed Assets 1,844,140,000 1,917,022,000 2,285,396,000 Intangible Assets 45,558,000 50,486,000 54,678,000 Investments & Loans - 200,000 200,000 Other Non-Current Assets 5,747,000 10,785,000 12,410,000 Net Current Assets 172,955,000 (483,494,000) 151,801,000 Current Assets 306,648,000 372,367,000 333,046,000 Inventory 7,734,000 6,845,000 7,298,000 Trade Receivables 190,216,000 249,858,000 264,373,000 Cash & Near Cash 104,309,000 115,664,000 53,093,000 Dividends Receivable - - - Tax Receivable 4,389,000 - 8,282,000 Current Liabilities 133,693,000 855,861,000 181,245,000 Trade Payables 130,546,000 757,810,000 178,915,000 Dividends Payable 3,147,000 2,860,000 2,330,000 Tax Payable - 7,543,000 - Short-Term Interest Bearing - 87,648,000 - Net Assets 2,068,400,000 1,494,999,000 2,504,485

Discuss the performance of City Lodge over the years 2016, 2017 and 2018. Assume that shareholders are expecting a minimum Return on Equity of 18% per annum. Calculate the ratios that you think you need to use to make this determination. [10 Marks] 2. Show how the levers that drive ROE are changing from one year to the next between 2016, 2017 and 2018. Comment on what you see.