1. QUESTION 1 (20 marks)

With reference to Dairy Farm International Holdings Ltd describe examples of executional and structural cost drivers.

2. QUESTION 2 WORKING CAPITAL MANAGEMENT (25+10+10 + 35 = 80 marks)

Dairy Farm International Holdings Ltd (DAIR)

DAIR operates some of the most well-known names in Singapore, including Cold Storage supermarkets and 7-Eleven convenience stores, among others. The retail business spreads across various segments such as food, health and beauty, home furnishing and restaurants. Although the retail business covers mostly consumer non-cyclicals, DAIRs business remains exposed to the economic risks in the Asian countries it operates in. Consumer confidence in these regions can be seen as a good indicator of future cash flow for the company. Extracts from the income statements, balance sheets and other internal reports for the last five years are provided below. Assume that 10% sales are on credit and all purchases are on credit.

	2018	2017	2016	2015
Extract from Consolidated Profit and Account	US$ million	US$ million	US$ million	US$ million
Sales	11,749.3	11,288.7	11,200.7	11,137.3
Cost of sales	8,100.5	7,856.1	7,815.2	7,852.1
Purchases	8063.6	7823	7861.5	8788.9
Net profit	77.6	391.8	470.1	418.0
Extract from Consolidated Statement of Comprehensive Income	US$ million	US$ million	US$ million	US$ million
	2018	2017	2016	2015
ASSETS
Cash at bank	296.2	332.4	323.8	258.5
Accounts receivable	372	350.7	290.5	233.8
Inventory	913.1	950	983.1	936.8
Marketable securities	15	17.3	9.4	5.2
Other assets	20.2	21	10	6
Total current assets	1,616.5	1,671.4	1,616.8	1,440.3
Total non-current assets	3,773.1	3,795.8	3,512.1	3,380.6
TOTAL ASSETS	5,389.6	5,467.2	5,128.9	4,820.9
LIABILITIES AND EQUITY
Accounts payable	2,398.6	2,469.5	2,327.9	2,354.5
Current borrowings	1,025.7	412.7	369.6	729.6
Current provisions	104.1	52.5	14.8	10.6
Other current liabilities	84.3	77.8	58.6	56
Total current liabilities	3,612.7	3,012.5	2,770.9	3,150.7
Total long-term liabilities	286	699	778.6	215
Total liabilities	3,898.7	3,711.5	3,549.5	3,365.7
Total equity	1,490.9	1,755.7	1,579.4	1,455.2
TOTAL LIABILITIES AND EQUITY	5,389.6	5,467.2	5,128.9	4,820.9