Financial Analysis Of Field Solutions Holding Group Ltd

Background Information

Description of the Company 

As stated earlier, this paper has selected Field Solutions Holding Group Ltd as the company on which the financial analysis would be undertaken. Field Solutions Holding Group formerly known as Freshtel Holdings Ltd is an ASX listed company and functions under the telecommunication industry of Australia. This is a relatively new company as the year of establishment for the company was in 2012 (InvestSMART 2018). The company is associated with delivering telecommunication services and their key operational area has been working on providing cheaper and better internet services to their customers in all over Australia. The company in order to expand their business has been looking for business opportunities and have recently expanded their product line. One of the key products that the company provides has been the “voice over internet protocol”. The products that are offered by the company have additional features like making phone calls with the assistance of internet. Free calls are even offered and therefore the company with the help of this strategy has been looking to increase their extent of sales and maintain a significant level of market base (Hotcopper.com.au 2018). Cloud computing services are even offered by the company and therefore they have been developing several cloud based applications and software. The company has been looking to provide customised solutions related to software with the help of which better products according to the needs of the customers can be identified. The company operates within a private network and therefore the services that are offered by them are exclusive. There are several internet plans that are offered by the company and some of them include Freshtel 29.95 and Freshtel 14.95. The special features related to their products are inclusive of the “FireFly Soft Phone” these phones offer messaging and instant calling services (Fieldsolutions-group.com 2018).

The company has its head office located in New South Wales in the city of Belrose. The services that are rendered by the company is provided in a better manner with the help of the use of satellite, NBN, microwave and Ethernet (Limited 2018). The explanation that has been given in this paper would be influential for taking the paper forward and accordingly understand the several features and aspects of Field Solutions Holding Group Ltd.

Ownership and Corporate Governance 

This section of the paper is looking to create an idea about the ownership of the business and the governance structure that is available for the company. The ownership of the business determines the level of efficiency that is available within the business and even has an understanding of the policies and plans that are incorporated by the company (Asx.com.au 2018). The Executive Director as well as the Chief Executive Officer of the firm is Mr. Andrew Jake. The independent or the non-executive directors of the company are Dr, Kenneth Martin Carr, Mr. Peter Oswald Buttery, Mr. Wayne Wilson and Mrs. Mithila Nath Rnawake. The company secretary of the company is Mr Graham Anderson (Fieldsolutions-group.com 2018). These are the personnel who are extensively involved in constructing plans and policies and accordingly create assist in the process of making effective decisions for the business.

Ownership and Corporate Governance

Gigler et al. (2014) explained that it is pertinent to have a clear understanding of the shares that are issued by the company and the percentage of shares that are under the directors and other investors. The sources that have been used for the purpose of analysis have not been able to provide any kind of information about the percentage of shares that are in the hands of the Executive and the Independent Directors. However, the information has stated that the highest percentage of shares of Field Solutions Holding Group Ltd are in the hand of Convergent Technology and the percentage of shares that are in their hands is 51.09% which is the largest percentage of shares for the company. The information that is attained explains the fact that Convergent Technology has extensive control and authority over the company and therefore this company related to the public (Fieldsolutions-group.com 2018).

The website of the company offers the corporate governance report and this report has been assessed in order to understand their plans and policies are in order to maintain an effective and precise business related with the Australian market and their customers. The customers of the company consist of the people who are residing within the society and therefore the plans and policies that are constructed by the firm should look to address and take care of the wellbeing and the welfare of the company (Fieldsolutions-group.com 2018). The analysis of the report has explained the fact that the directors are on the look out to perform in an ethical manner with the help of which true and fair products and services are provided in the market with the help of which the standard of living of the economy improves without having any kind of adverse impacts on their mental and physical life. The company even tries to take care of the natural environment as well and therefore looks to maintain an eco-friendly working ambience and maintains measures with the help of which the radiations emitted from the microwaves and the satellites can be reduced but accordingly quality services can be attained. The company maintains risk management strategies and plans with the help of which they are able to administer the associated risks and thereby take measures with the help of which these issues can be minimised. The risk plays a significant role in the performance of the business and therefore the monitoring of the same becomes essential for the company (Jung, Park and Chung 2016). The firm even tries to maintain the reliability in their process of corporate reporting so that the report disclosed would be true and in this manner would be helpful in the development trust among the stakeholders.

Management Involved in Corporate Governance

Management Involved in Corporate Governance 

The corporate governance framework is managed by the management of the company and therefore the CEO and the other directors are liable for the maintenance of corporate governance.

Financial ratio

Liquid ratios:

Profitability Ratio

Efficiency Ratio

Market Value Ratio

The analysis of the financial ratios with the help of the financial data from the annual report has been helpful in creating an understanding of the fact that in the year 2016, the performance of the company had been relatively better than the ratios that are seen in the year 2017. The negative values that are seen in the year 2017 explain that the company has not been making profits and the debt and equity scenario of the company has not been well at all. The liquidity position of the company in 2016 has been better than the ratios attained in 2017 (Fieldsolutions-group.com 2018). The assessment of the all the ratios that have been prepared for the organization explains the fact that the company in line with their financial performance has not been effective and therefore addressing the company is not financially stable in the economy and has not been making profits (Bonsall IV et al. 2017).  

Stock Returns 

The return on stock refers to the yields that are given out by the shares in accordance to the performance in the market. The analysis of the performance of the percentage provided by the stock explains the fact that stock has not been performing in an effective manner as it is seen that there are several ups and downs in the shares. In certain time period the return on stocks have been very much negative indicating the company has been performing very poorly in the economy. Again after a certain the time, the stocks have reached their optimum level. Thereafter, return on stock has declined rapidly and in this manner had creation a doubt in the minds of the investors. The shares after a certain period of time became stable but the returns have not been effective for the investors (Fieldsolutions-group.com 2018). However, the stock had a massive fall and the percentage value was lower the pervious fall. In this manner it is seen that the return on stock has been very much ineffective and thereby explaining the fact that the stocks of the company has not been providing effective level of returns to their investors. The return has been mostly negative but after several declarations that have been made by the company there has been a rise in the return on stock and therefore it is seen that the performance of the stock has not been noteworthy.

Financial Ratios

Movement of the Share Price              

The analysis of the figure explains the fact that the company stock price is very low and therefore has the potential to attract investors for the purpose of investment. However, investment in their stock has not been high as the performance of the company in the economy has not been effective. The prices have remained within the $0.1 to $0.5 and at a certain point of time the prices have remained stable. Thereafter, there has been a fall in the prices of the shares and thereby explaining the fact that the ineffective performance in the market has been one of the significant reasons for this effect. The results indicate that the share price of the company has been low and has not been providing any sort of revenue and capital to the company from the market. The outcome is not healthy and therefore it is essential for the company to change their plans and polices in order to sustain their business in the economy.

Announcements of Field Solutions Holding Ltd on the share price

The company has been concerned about their poor level of performance in the market and therefore has been looking for strategies with the help of which the company can improve their performance, gain the trust from the investors and even increase the level of investment from the shares and increase their working capital. In this manner, the company has tried to make several changes in their strategies and accordingly has disclosed the same in the market (Fieldsolutions-group.com 2018). As mentioned earlier, the company was formerly named Freshtel Holdings Ltd and in the year 2017, the company changed their name to Field Solutions Holding Ltd, in order to make a new mark in the economy and construct a new outlook for them in from of the investors. The company had even announced their introduction in the cloud based applications and software and this marked to their entry into a new product line. The enhancement of the services would be helpful in development of trust from the market that would have a significant role in the development of the business (Frias?Aceituno, Rodríguez?Ariza and Garcia?Sánchez 2014). In the earlier time period, the company made several acquisitions and few of them includes the acquisition of BMS Network Solutions and the assets of Australian National Pty Ltd. Recently, an announcement made by Field Solutions Holding Ltd created a curiosity in the minds of the investors when the company decided to suspend their shares from the market until the time they had made their announcement. Accordingly the announcement was made in which the company decided to acquire Southern Western Wireless (SWW). This symbolised the changes that the company was looking to make and thereafter declared of issuing new shares in the market with a value of $0.02 each. The company decided to issue 56, 00,000 shares approximately in the market out of which 15% of them would be on the issue and estimated that that the 15% of the issue share would be able to provide a return of $1,121,000 (Fieldsolutions-group.com 2018). The actions that have been declared were a boon for the company because of the fact that this would be helpful in the generation additional capital and assets which would be useful for the development for the company with respect to their financial and operational activities. A chaos was created in the market as the investors were influenced to purchase the shares at such a low price with the expectation of gaining higher amount of yields. The company thereafter decided to issue the shares in the market after their announcement in order to offer them to the investors for the purpose of purchase. This announcement had a massive role to play in the share price of Field Solutions Holding Ltd.

Stock Returns

Calculation of Beta and the Required Rate of Return under CAPM          

Beta

The financial analysis for Field Solutions Housings Ltd has even looked to assess the beta for the company and the beta value is -1.45.   

Required Rate of Return

The overall required rate of return for the company has been -4.70% and this outcome for the company is because of the fact that the risk free rate is 4% and the market risk premium has been 6% respectively.

Investment 

The report has been constructed in order to have an idea about the financial performance of the company and accordingly have an understanding as to investments on this company can be undertaken or not. The results that have been gathered explain that the financial performance of the company has been poor in accordance to the previous years and this has been due to several factors (Ndofor, Wesley and Priem 2015). There is practically no return from investment from the firm and it is even seen that the company has been incompetent in undertaking plans in order to change this scenario. However, in the year 2017, the announcements that have been made with respect to the issue of shares and the acquisition of SWW has signified the fact that this changes can improve the scenario of the company and accordingly the company would be able to make progress as well and therefore investments in a conservative manner can be taken with the help of which the margin profit that can be attained from the dividend can be understood and accordingly further investment plans can be constructed.

Weighted Average Cost of Capital 

The overall weighted average cost of capital for the company has been found to be -4.70% and this value have been attained from the overall equities only.

Debt Ratio 

The results that have been obtained in accordance to the debt ratio explain the fact that the debt ratio of the company has been poor as the company has been ineffective to pay for the debts in a timely manner.

Movement of the Share Price

Dividend Policy 

The analysis of the financial scenario suggests that the company does not have any policies related to dividend and therefore has been incompetent paying dividend to their shareholders in the last two years (Fieldsolutions-group.com 2018).

Letter of Recommendation 

To,

XYZ Ltd,

Dear Sir,

With respect to your request to evaluate and assess the operational and the financial activities of Field Solution Holding Ltd, the outcome we have come to is not satisfactory. The financial performance of the company has been poor and has not been making profits. The debt equity and the liquidity scenario of the company are not healthy and therefore the company has been unable to pay dividends to their shareholders. The return on stock has been poor as well and there has been no consistency in the movement of the share price. However, a silver lining on this company is observed with respect to the fact that the current announcements that they have made can improve the overall business scenario of the company. Hence, we would like to let you know that investment on this company can be taken but the investment should be conservative in order to understand the trend of their share price and the development of their performance with the help of which the company would be able to make profits and deliver the same as dividends.

We hope that our advice would be of your help and we can come to your assistance any time later as well.

Thank You

Conclusion:

The outcome of the paper has led to the belief that the company has been performing poorly and as the firm is not making profits and does not have the arsenal to safeguard them from any kind of financial distress. The company presently with the help of their new strategies are looking to overcome their issues and it is expected that successful incorporation of the strategies would create profit for the firm and would even investors for the purpose of investment.

This paper is associated to constructing a financial analysis of a company that has been selected. The financial analysis comprises of the constriction of the financial ratios along with understanding the share prices of the company. The movement of the stocks that have been taking place for the past two years would even be assessed and accordingly the weighted average cost of capital would be constructed in order to have an understanding of the overall performance of the business (Francis et al. 2015). This paper in order to construct these aspects has selected Field Solutions Holding Group Ltd as the company and therefore extensive assessment of the firm would be done in order to understand their current operational and financial scenario in the working environment. This company is operational in Australia and therefore a comparison with their peer companies and the industry in which the company performs would be dine in order to have a proper understanding of how the company has been performing and accordingly plan and suggest ways with the help of which the company would be able to enhance their business and would even provide an idea to the readers with respect to the actual position of the company with respect to which they take the decision of whether to invest in the company or not (Leuz and Wysocki 2016).

The data that is required in order to perform these kinds of activities would be collected from several valid and authentic sources. The main source for the collection of the data has been the utilisation of the annual report of the company that is available in the company website. There are several other internet sources as well that has been used in order to have an understanding of the overall market and the performance that has been taking place in the industry in which this company is actually operational (Amiram et al. 2018). The changes in the market would even be analysed with the help of the information sources and accordingly the comparison of the financial performance can be undertaken in an effective manner. The paper is even looking to assess the board structure of the company and their effectiveness in handling and managing the business. The corporate governance structure of the company would even be analysed in this paper in order to have a clear understanding about the steps and the policies that have been undertaken by the company in order to take care of the environment as well as the community where the company operates (Davidson, Dey and Smith 2015). The movement of the shares for the company would be represented in the form of figures in order to assist the readers to have a clear idea about the movement of the shares. The debt scenario as well as the dividend policies of the company would be taken into consideration with the help of which a letter of recommendation can be prepared that would advise the investors whether to undertake investments or not.

Reference:

Amiram, D., Bozanic, Z., Cox, J.D., Dupont, Q., Karpoff, J.M. and Sloan, R., 2018. Financial reporting fraud and other forms of misconduct: a multidisciplinary review of the literature. Review of Accounting Studies, 23(2), pp.732-783.

Asx.com.au. (2018). [online] Available at: https://www.asx.com.au/asx/share-price-research/company/FSG [Accessed 24 May 2018].

Bonsall IV, S.B., Leone, A.J., Miller, B.P. and Rennekamp, K., 2017. A plain English measure of financial reporting readability. Journal of Accounting and Economics, 63(2-3), pp.329-357.

Davidson, R., Dey, A. and Smith, A., 2015. Executives’“off-the-job” behavior, corporate culture, and financial reporting risk. Journal of Financial Economics, 117(1), pp.5-28.

Fieldsolutions-group.com. (2018). Field Solutions Group | Cloud Based Business Solutions. [online] Available at: https://www.fieldsolutions-group.com/ [Accessed 24 May 2018].

Francis, B., Hasan, I., Park, J.C. and Wu, Q., 2015. Gender differences in financial reporting decision making: Evidence from accounting conservatism. Contemporary Accounting Research, 32(3), pp.1285-1318.

Frias?Aceituno, J.V., Rodríguez?Ariza, L. and Garcia?Sánchez, I.M., 2014. Explanatory factors of integrated sustainability and financial reporting. Business strategy and the environment, 23(1), pp.56-72.

Gigler, F., Kanodia, C., Sapra, H. and Venugopalan, R., 2014. How frequent financial reporting can cause managerial short?termism: An analysis of the costs and benefits of increasing reporting frequency. Journal of Accounting Research, 52(2), pp.357-387.

Hotcopper.com.au. (2018). FIELD SOLUTIONS HOLDINGS LIMITED (ASX:FSG) – ASX Share Price & News, page-1 | HotCopper Forum. [online] Available at: https://hotcopper.com.au/asx/fsg/ [Accessed 24 May 2018].

InvestSMART. (2018). Field Solutions Holdings Limited. [online] Available at: https://www.investsmart.com.au/shares/asx-fsg/field-solutions-holdings-limited [Accessed 24 May 2018].

Jung, W.O., Park, S.O. and Chung, H., 2016. Debt financing and voluntary adoption of the international financial reporting standards: Evidence from Korean unlisted firms. Emerging Markets Finance and Trade, 52(1), pp.39-51.

Leuz, C. and Wysocki, P.D., 2016. The economics of disclosure and financial reporting regulation: Evidence and suggestions for future research. Journal of Accounting Research, 54(2), pp.525-622.

Limited, F. (2018). Field Solutions Holdings Limited: Private Company Information – Bloomberg. [online] Bloomberg.com. Available at: https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=410621176 [Accessed 24 May 2018].

Ndofor, H.A., Wesley, C. and Priem, R.L., 2015. Providing CEOs with opportunities to cheat: The effects of complexity-based information asymmetries on financial reporting fraud. Journal of Management, 41(6), pp.1774-1797.

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