Ann: Appendix 4E, Annual Accounts & Performance Guidance, page-14

"On a basic analysis one should back out the increase in inventory to calculate cash profits." - Do so at your own peril. I wouldn't.

To determine whether SNL's growth strategy is an efficient use of capital, a bit of ratio analysis should help. I've used sales to Inventory:

	Column 1	Column 2	Column 3	Column 4	Column 5
0	{colgroup}
1	{col=251x@}{/col}{col=113x@}{/col}{col=113x@}{/col}{col=113x@}{/col}{col=113x@}{/col}
2	{/colgroup}
3	Sales	50,501	60,767	67,679	81,216
4	Inventory	15,546	17,933	20,977	27,817
5	Sales to Inventory (times)	3.25	3.39	3.23	2.92

As you can see, sales have decreased from 3.25x inventory in FY11 (sorry didn't add the years in) down to 2.92x in FY14. Or to put another way over the period FY11 to FY14, the average annual sales growth of 12.61%, required an increase in inventories of 15.66%. If you compound that differential out over a few years, it makes a big impact. It'll be interesting to see how this trend has progressed over FY15. Ideally, this ratio should be decreasing as the business grows.

Regards
Gralynchett.