Reformulated Balance Sheet Blue Cap Limited (in millions) Net operating assets (NOA): Operating assets Cash and cash equivalents Accounts receivable, less allowance of doubtful accounts Inventories Current tax assets Property, plant and equipment, net Goodwill Identifiable intangible assets Deferred income taxes and other assets Right-of-use assets Total operating assets Operating liabilities Trade and other payables - non-interest bearing Accrued liabilities (provisions) Current tax liabilities Deferred government grant Deferred tax liabilities Deferred goverment grants Retirement benefit liabilities Share based payments Total operating liabilities Net operating assets (NOA) Net financial assets (obligations) Financial assets Cash equivalents Other financial assets Total financial assets Financial liabilities Derivative financial instruments Interest-bearing liabilities and borrowings Total financial liabilities Net financial assets (obligations) Common Shareholders' Equity (CSE) 2020 2019 2018 2017 2016 2015 87.97 82.05 75.88 66.16 59.10 54.59 1,703.90 1,821.70 1,478.00 1,170.40 1,107.20 1,003.70 3,509.50 3,038.80 2,692.80 2,575.80 2,152.00 1,755.60 35.10 6.60 6.20 1.60 20.40 21.40 4,484.30 5,366.00 3,551.40 2,942.70 2,389.60 1,841.30 1,101.80 1,102.00 688.30 674.30 705.30 2,140.20 776.50 700.50 367.10 268.30 221.60 544.40 380.20 405.40 502.10 394.00 282.00 939.40 14,326.47 11,706.75 10,012.58 8,318.76 7,046.10 5,884.49 1,525.40 1,407.70 1,256.80 1,155.80 996.10 700.80 (287.20) (222.30) (205.30) (159.30) (170.40) (190.60) 253.70 162.20 248.40 202.50 207.30 143.90 3.20 2.80 3.10 3.20 3.10 2.10 352.00 168.70 193.70 138.20 119.20 138.20 40.10 34.60 37.70 35.90 35.00 31.90 347.50 307.00 226.60 255.30 326.60 221.10 223.80 86.50 126.60 25.80 18.80 17.20 2,458.50 1,947.20 1,657.40 1,535.70 1,064.60 1,887.60 9,759.55 8,124.98 6,661.36 11,867.97 5,510.40 4,819.89 1,106.43 575.75 738.82 778.34 497.51 502.21 17.50 10.30 7.80 9.10 3.50 3.10 1,123.93 586.05 746.62 787.44 501.01 505.31 6.00 1.80 5,992.80 4,662.80 4,386.30 3,975.20 3,143.30 2,280.90 3,975.20 3,149.30 2,282.70 5,992.80 4,662.80 4,386.30 (4,868.87) (4,076.75) (3,639.68) (3,187.76) (2,648.30) (1,777.39) 6,999.10 5,682.80 4,485.30 3,473.60 2,862.10 3,042.50 Reformulated Income Statement Sheet Blue Cap Limited (in millions, except for per share data) Operating revenue Cost of sales. Gross margin Operating expenses Research and development expenses Selling and marketing expenses General and administration expenses Amortization of intangibles Total operating expenses Core operating income (before tax) Tax on operating income Income tax expense reported Tax on other operating income Tax benefit from net interest expenses Total tax on operating income Core operating income (after-tax) Other operating income (before tax) Gain on acquisition Pandemic Facility Reservation Fees Royalties and License Revenue Other income Total other operating income (before- tax) Tax on other operating income Other operating income (expense) (after-tax) Exchange differences on translation of foreign operations, net of hedges on foreign investments Actuarial losses/(gains) on defined benefit plans, net of tax Total other operating income (expense) Operating income (after-tax) Financial income (NFE) Interest expense Interest income Net interest income (expense) before tax Tax benefit on net interest income Net interest income (expense) after tax Comprehensive income (available to common shareholders) 2020 8,796.6 (3,924.4) 4,872.2 (921.8) (896.2) (619.3) (72.5) (2,509.8) 2,362.4 (470.2) 106.3 (43.1) (407.1) 1,955.3 145.4 158.5 50.3 354.2 (106.3) 247.9 13.3 (13.6) 247.6 2,203.0 (150.8) 7.0 (143.8) 43.1 (100.7) 2,102.3 2019 2018 2017 2016 2015 7,587.9 6,615.8 5,909.5 5,458.6 8,205.4 (3,761.2) (3.531.6) (3,329.4) (3,034.8) (2,605.9) 4,444.2 4,056.3 3,286.4 2,874.7 2,852.7 (831.8) (702.4) (666.9) (613.8) (462.7) (866.8) (786.2) (697.0) (620.9) (498.3) (472.5) (457.0) (413.4) (371.7) (262.4) (102.3) (57.8) (71.4) (36.6) (25.1) (2,273.4) (2,003.4) (1,848.7) (1,643.0) (1,248.5) 2,170.8 2,052.9 1,437.7 1,231.7 1,604.2 (422.4) (552.3) (352.4) (313.5) (335.0) 100.0 98.2 99.4 118.7 50.8 (48.9) (29.7) (23.7) (17.3) (13.2) (371.3) (483.8) (276.8) (212.1) (297.4) 1,799.5 1,569.1 1,160.9 1,019.6 1,306.8 176.1 133.4 117.7 94.0 171.1 144.8 203.3 28.7 64.9 33.9 219.7 169.4 333.2 327.4 331.2 395.8 169.4 (100.0) (98.2) (99.4) (118.7) (50.8) 233.2 229.2 231.8 277.1 118.6 (34.8) (96.9) 97.5 (126.9) (444.1) (67.1) 29.6 75.5 (71.9) (64.3) 131.3 161.9 404.8 78.3 (389.8) 1,930.8 1,731.0 1,565.8 1,097.9 917.0 (90.0) (71.6) (59.6) (176.7) (108.4) 13.8 9.3 10.9 13.9 15.6 (162.9) (99.1) (79.1) (57.7) (44.0) 48.9 29.7 23.7 17.3 13.2 (114.0) (69.4) (55.4) (40.4) (30.8) 1,816.8 1,661.6 1,510.4 1,057.5 886.2 H Question 1 Calculate Free Cash flow using Method 1 and Method 2 for 2020 Question 2 (10 Marks) (15 Marks) a. Provide first and second-level breakdown of the company's return on common equity (ROCE) for 2018, 2019, and 2020. Use the average values in the denominator for profitability formulas were necessary. (12 Marks) b. Discuss the drivers of profitability for 2018, 2019, and 2020. (3 Marks) Reformulated Balance Sheet Blue Cap Limited (in millions) Net operating assets (NOA): Operating assets Cash and cash equivalents Accounts receivable, less allowance of doubtful accounts Inventories Current tax assets Property, plant and equipment, net Goodwill Identifiable intangible assets Deferred income taxes and other assets Right-of-use assets Total operating assets Operating liabilities Trade and other payables - non-interest bearing Accrued liabilities (provisions) Current tax liabilities Deferred government grant Deferred tax liabilities Deferred goverment grants Retirement benefit liabilities Share based payments Total operating liabilities Net operating assets (NOA) Net financial assets (obligations) Financial assets Cash equivalents Other financial assets Total financial assets Financial liabilities Derivative financial instruments Interest-bearing liabilities and borrowings Total financial liabilities Net financial assets (obligations) Common Shareholders' Equity (CSE) 2020 2019 2018 2017 2016 2015 87.97 82.05 75.88 66.16 59.10 54.59 1,703.90 1,821.70 1,478.00 1,170.40 1,107.20 1,003.70 3,509.50 3,038.80 2,692.80 2,575.80 2,152.00 1,755.60 35.10 6.60 6.20 1.60 20.40 21.40 4,484.30 5,366.00 3,551.40 2,942.70 2,389.60 1,841.30 1,101.80 1,102.00 688.30 674.30 705.30 2,140.20 776.50 700.50 367.10 268.30 221.60 544.40 380.20 405.40 502.10 394.00 282.00 939.40 14,326.47 11,706.75 10,012.58 8,318.76 7,046.10 5,884.49 1,525.40 1,407.70 1,256.80 1,155.80 996.10 700.80 (287.20) (222.30) (205.30) (159.30) (170.40) (190.60) 253.70 162.20 248.40 202.50 207.30 143.90 3.20 2.80 3.10 3.20 3.10 2.10 352.00 168.70 193.70 138.20 119.20 138.20 40.10 34.60 37.70 35.90 35.00 31.90 347.50 307.00 226.60 255.30 326.60 221.10 223.80 86.50 126.60 25.80 18.80 17.20 2,458.50 1,947.20 1,657.40 1,535.70 1,064.60 1,887.60 9,759.55 8,124.98 6,661.36 11,867.97 5,510.40 4,819.89 1,106.43 575.75 738.82 778.34 497.51 502.21 17.50 10.30 7.80 9.10 3.50 3.10 1,123.93 586.05 746.62 787.44 501.01 505.31 6.00 1.80 5,992.80 4,662.80 4,386.30 3,975.20 3,143.30 2,280.90 3,975.20 3,149.30 2,282.70 5,992.80 4,662.80 4,386.30 (4,868.87) (4,076.75) (3,639.68) (3,187.76) (2,648.30) (1,777.39) 6,999.10 5,682.80 4,485.30 3,473.60 2,862.10 3,042.50 Reformulated Income Statement Sheet Blue Cap Limited (in millions, except for per share data) Operating revenue Cost of sales. Gross margin Operating expenses Research and development expenses Selling and marketing expenses General and administration expenses Amortization of intangibles Total operating expenses Core operating income (before tax) Tax on operating income Income tax expense reported Tax on other operating income Tax benefit from net interest expenses Total tax on operating income Core operating income (after-tax) Other operating income (before tax) Gain on acquisition Pandemic Facility Reservation Fees Royalties and License Revenue Other income Total other operating income (before- tax) Tax on other operating income Other operating income (expense) (after-tax) Exchange differences on translation of foreign operations, net of hedges on foreign investments Actuarial losses/(gains) on defined benefit plans, net of tax Total other operating income (expense) Operating income (after-tax) Financial income (NFE) Interest expense Interest income Net interest income (expense) before tax Tax benefit on net interest income Net interest income (expense) after tax Comprehensive income (available to common shareholders) 2020 8,796.6 (3,924.4) 4,872.2 (921.8) (896.2) (619.3) (72.5) (2,509.8) 2,362.4 (470.2) 106.3 (43.1) (407.1) 1,955.3 145.4 158.5 50.3 354.2 (106.3) 247.9 13.3 (13.6) 247.6 2,203.0 (150.8) 7.0 (143.8) 43.1 (100.7) 2,102.3 2019 2018 2017 2016 2015 7,587.9 6,615.8 5,909.5 5,458.6 8,205.4 (3,761.2) (3.531.6) (3,329.4) (3,034.8) (2,605.9) 4,444.2 4,056.3 3,286.4 2,874.7 2,852.7 (831.8) (702.4) (666.9) (613.8) (462.7) (866.8) (786.2) (697.0) (620.9) (498.3) (472.5) (457.0) (413.4) (371.7) (262.4) (102.3) (57.8) (71.4) (36.6) (25.1) (2,273.4) (2,003.4) (1,848.7) (1,643.0) (1,248.5) 2,170.8 2,052.9 1,437.7 1,231.7 1,604.2 (422.4) (552.3) (352.4) (313.5) (335.0) 100.0 98.2 99.4 118.7 50.8 (48.9) (29.7) (23.7) (17.3) (13.2) (371.3) (483.8) (276.8) (212.1) (297.4) 1,799.5 1,569.1 1,160.9 1,019.6 1,306.8 176.1 133.4 117.7 94.0 171.1 144.8 203.3 28.7 64.9 33.9 219.7 169.4 333.2 327.4 331.2 395.8 169.4 (100.0) (98.2) (99.4) (118.7) (50.8) 233.2 229.2 231.8 277.1 118.6 (34.8) (96.9) 97.5 (126.9) (444.1) (67.1) 29.6 75.5 (71.9) (64.3) 131.3 161.9 404.8 78.3 (389.8) 1,930.8 1,731.0 1,565.8 1,097.9 917.0 (90.0) (71.6) (59.6) (176.7) (108.4) 13.8 9.3 10.9 13.9 15.6 (162.9) (99.1) (79.1) (57.7) (44.0) 48.9 29.7 23.7 17.3 13.2 (114.0) (69.4) (55.4) (40.4) (30.8) 1,816.8 1,661.6 1,510.4 1,057.5 886.2 H Question 1 Calculate Free Cash flow using Method 1 and Method 2 for 2020 Question 2 (10 Marks) (15 Marks) a. Provide first and second-level breakdown of the company's return on common equity (ROCE) for 2018, 2019, and 2020. Use the average values in the denominator for profitability formulas were necessary. (12 Marks) b. Discuss the drivers of profitability for 2018, 2019, and 2020