The End is Nigh!

The last assessment and I must say the hardest. The spreadsheet queen has given back her crown. I felt I was able to easily complete Step 7 and 8 without to many issues. Truth be known I could have spent more time and and provided more detail however my looming economics assignment has me in knots and just what to focus on completing this.  Then along came the spider….Step 9. Honestly, I still do not understand this. I watched Maria explain over and over. I don’t know whether the cold here as frozen my brain, but I still have not much and idea of it. I hope my mash of lame understanding of this step is enough to push me to a pass at least.

I feel a little deflated by the end of this unit. My peerwise score ended miserably, starting with 100% and slowly declining. I think the secret is to get it up to level in the first few weeks. I was somewhat frustrated with the lack of my score climbing in the last few weeks and having to rely on other students in order to reach a good grade is a disappointment, this is also the case with our feedback. Not the most favorite part as I find that I have helped so many peers and still had a lack of feedback for myself.

Otherwise this unit has been somewhat enjoyable and I wish I didn’t have to focus on other units. I definately would have enjoyed this unit more.

Reflection on my ratios – this was the whole point of posting this blog. A must do on our assessment.

The net profit margin and return on assets of my firm is in negative as is with the original statements and was of no surprise to me as this negative outcome is obvious in the Annual Reports. The highest negative percentage is in 2017 and this is the year the firm faced a lawsuit and had been ordered to incur millions of dollars in payments to The City of Chicago.

Days of inventory did surprise me. Redflex Holdings supplies traffic enforcement equipment made to order with software and support. I did find it interesting that they held all this inventory for over a month as it is made to order. The total asset turnover ratio for all of my years is the higher end of being under one. As far as I can tell this is quite reasonable.

The current liquid ratio for Redflex was surprising considering they have not made any profit in the last four years. All of the years were well over one, which determines that the firm is able to cover its short-term obligations and cash flow. Had this fallen under one there may have been issues in its ability to pay its debts.

The firms financial structure ratios are interesting. As the debt/equity ratio is used to determine a firms financial leverage the fact that Redflex starts with a balanced ratio that lower and then becomes larger by the 2018 financial year show me that it is a high risk category and has been aggressive with financing its growth with debt. I am aware that they have recently organised finance with an American bank which has driven this higher. However, the equity ratio itself has lowered over the years which means it is not using all of its equity to finance the firm.

My firms market ratios in the last three years are less then ideal. Actually they are terrible. However, the firm has not released any new shares in a couple of years. No dividends have been paid in the last four years, so I have no value for these.

The return on equity has been negative for the last four years. This would be evident when perusing the annual reports as the company has not made a profit and incurred a loss in this period of time. However it has dramatically dropped in 2018 compared to 2017, I assume this would be due to a lawsuit settled in 2017.

The return on net operating assets is very similar to the return on equity figures. In comparison to the return on assets all are of similar value with the exception being 2017. The return on assets in 2017 is -25.5% whereas with the return on net operating assets this figure is -51.16% As the return on net operating assets is based on the operating area of the firm, this tells me this it is where the greatest loss is occurring; only just, as this is barely over 50%.

The net borrowing cost in 2018 rose from 1.8% in 2017 to 11.18% in 2018. This is obviously due to a newly secured loan the firm has taken out, which is discussed in its annual reports.

The net profit margin for the firm is very similar in figures to the reformulated profit margin. The difference in percentage is under 1%. Although all these figures are in negative which is a loss for the firm. This clarifies the firms loss is mainly due to operating costs and sales.

This ratio did surprise me as the company has not made any profit in the last four year I would have assume it had a large asset turnover. The firm’s asset ratio does not exceed two. This is not a lower amount but is far from what I expected it to be based on the losses incurred each year. Comparing this to the total asset turnover ratio the largest difference is only .8% which I  would not consider to large.

Redflex Spreadsheet

Steps 7-10

 

 

 

Restated Financials and draft Waffle

Oh my, oh my, oh my. Hands up who has had a maximum of 12 hours sleep this week. All jam packed into one week; assignments from everywhere, Easter, ANZAC day, birthdays and lets not forget family. Hand up who needs a holiday…..ME!!!

I am one of the lucky few with a relatively less complicated company (with the financials anyways). Even though it seemed like a very unorganized firm I was able to wade through the first two of Maria’s video quite easily. Of course with uncountable number of interruptions from general life and work.

By the third video, I was confident I would have this done quickly and eat cake. Well, I am one of the lucky ones who also had a firm who did not put expenses in a negative for e.g. (12,125) with the brackets. So, when it came to balance and the tax benefit, do you think it would balance. I spent hours going through every little section and formula. Finally, I found the issue, everything had to be calculated backwards. Instead of debiting I had to credit and vice versa. Well, I am now happy to say, I have added a few more grey hairs to my hair and will soon be a full silver queen.

My link to my spreadsheet is below. Feel free to leave a comment or feedback. Now I am off to do the dreaded KCQs for Chapter 6. I am so far behind, but nighttime seems to be my friend.

Redflex Holdings Ltd Restated Financials

Word Document Steps 3 & 4

 

Assessment 1 Completed, Marked & Slightly Disappointed

I got in a day early with submitting my assessment. In hind sight, that probably wasn’t the best decision. I think like most of us, I just wanted it done and dusted; crossed my fingers and hoped for the best.

My thoughts on my own paper – well, I tend to waffle. I am one of those people who will start to tell you a story to make a point about something, get lost in the middle and completely forget where I was going with it. I did feel perhaps my paper was like this and it would be my downfall.

However, it was not.

Feedback – I lost a mark in this area. So i went through the feedback from my peers. Like myself I think a few people feel they might offend people with feedback. I suffer from this bad and I must admit I take things to heart as well. I find it hard to offer feedback on a paper that presents well when you are not overly confident with your own work. Points to ponder, try extra hard with feedback to peers, it is to help them not hurt them.

KCQs – this was my downfall. Now, I have watched the video in Moodle on how to approach these. I have read Elizabeth’s notes on her blog. But for some reason I just didn’t cut the mustard. I am ashamed to admit, I have trouble actually clarifying what the “key concepts” actually are I am suppose to be finding and referring too. I will ponder further into this as the next with the next Step. The submission date is approaching quickly.

So I don’t waffle to much. I hope you all did well and are happy with your grades. Although, in hindsight I could have done better, I am not going to be to hard on myself.

blackboard business chalkboard concept
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Annual Report & KCQs

The company I have been allocated for this assignment is Redflex Holding Limited. Now, I have never heard of the company previously, nor I doubt have many others. However, the products and services they supply would be familiar to many. Redflex Holdings Limited supply and offer service and support for a number of traffic safety solutions; such as red light cameras, speed camera, ticketing systems and other enforcement cameras. They are proud to be the first to develop their newest product HALO, the world’s first true single-pole, multiple enforcement product. This was designed and manufactured in Australia in conjunction with a company called Design-Industry. Redflex have described themselves as “an innovative technology company, designing and creating solutions for a world on the move”. Redflex, although Australian has mainly provided services to the USA. Only in the last few years have they expanded to Saudi Arabia, UK and have finally cracked into the Australian market. For more information, background and a quick summary of the company visit their website: http://www.redflex.com/en-au

I can’t say I am overly enthusiastic about being allocated this company. I am glad it is an Australian company, however the dealings they have had in the USA have been less then ideal. Before reading the Annual Report I decided to do a little online research into Redflex. I was less than impressed with what I found. Of course I did take into consideration that most of what I had found was through news articles and relying on this information is not always the best thing to do.

The first article (https://www.toledoblade.com/local/transportation/2019/03/14/toledo-man-chester-straley-organizing-petition-traffic-cameras/stories/20190314164) is in regards to a Toledo man who was organising a petition to end the use of stationary red light cameras and handheld speed cameras. I thought that this is something I could get behind. However, reading the article it came to light that the company has had some issues. The article has stated that the company has bribed a Chicago city manager as well as other accusations of illegal campaign contributions in order to secure contracts.

Redflex seem to have had some major legal issues occurring in the USA. Other articles have revealed that they have lost contracts due to the now ongoing legal issues they are facing. Redflex’s American CEO Karen Finley pleaded guilty to bribery charges, fined ($US2 million) and sentence was to prison. Redflex has also settled a $US20 millon case with the city of Chicago. Other articles have outlined that Redflex has increased fees in USA Cities even though revenue has dropped. There are also allegations that Redflex is not properly licenced to operate is some states. I have listed the following links to the news articles I have read in reference to these incidences:

https://www.santafenewmexican.com/news/local_news/cameras-to-catch-speeders-may-return-to-santa-fe/article_e8c6342d-918f-5f7d-87b9-2ae30ec56acb.html

https://stockhead.com.au/tech/redflexs-us-fraud-legacy-is-almost-over/

https://paradisevalleyindependent.com/news/a-dip-in-revenue-photo-radar-remits-dramatically-decrease-in-fy-2017-18/

After reading all this information I am interested in how this has been reflected in the company’s Annual Report for 2018. Is this a significant issue for the Australian based company? Has it had a downturn and was this the cause?

On first eyeing the Annual Report (which can be downloaded and viewed here http://www.redflex.com/en-au/investors/financial-reports), it is presented with a shiny glossy front page of traffic in a tunnel. Oddly serene for such a photo. The presentation on scrolling through is nothing but perfection; the bold colours, formatting and different styled and coloured headings. I am impressed. The first page outlined the Corporate Governance Statement, ABN information and the Corporate Directory.  Second page…boom, Financial Performance Summary (Results from Operations). I was not expecting that straight away. It is very limited with what it has listed and a large amount of Revenue presented in $Million is right at the top of the list. Being a novice, I thought wow, that’s not too bad, less than the year before but still seems good to me. Maybe they have overcome any issues or perhaps it was all media hype.

The Chairman’s Letter was all positive and but I felt it was a little over the top with the emphasis on this year being the year to drive sales. I read a paragraph that confused me:

 “For fiscal year 2018, the overall financial result was a 15% improvement in underlying profit before depreciation, amortisation, impairment,  finance costs and tax (PBITDA) to AUD12.3 million (FY17 PBITDA: AUD10.7 million). Despite modest reductions in total revenue, right-sizing and efficiency initiatives improved PBITDA margins from 8.8% to 11.6% (with similar improvements in profit margin across each of the International and US markets).”

How I read this is – We made a profit, but we had to spend it so now we actually have a reduction in total revenue. I am not sure I understand this.

There are several other reports from other executives. I wanted to know why this company has not made a profit in the last four financial years. The amounts do differ greatly.

I read through the report as much as possible. There was not a word mentioned about the media allegations and reports. However some vague paragraphs did mention legal costs. Such as:

“Potential legal action (including putative and certified class actions) challenging the validity of our

enforcement programs, causing Redflex significant costs to defend or the loss of revenue.”

All the legal issues aside, I wonder why this company keeps operating. They seem to be running at a constant loss. However, it was mentioned in some of the reports from the executives that although the USA has slowed, they have begun negotiations in Canada, UK and back home here in Australia. It will be interesting to see what the next couple of years bring to this company. Will they break the bad luck they seem to be having?

Entering the financial data into the spreadsheet I did question a few of the items. Firstly, my data for 2017 was different in the 2017 Annual Report than the 2018 Annual Report. My brain sighed. Why? What happened? Why the difference and what do I do? Well, firstly I posted on Facebook. Straight away I had a response. Thank you Chris and Martin. From going through both financials on both reports, I discovered it was merely an incorrect allocation of data from one area to another and also an addition of interest bearing liabilities. The end totals were still the same, which was a relief.

In some areas I felt like I had to learn a different language. Like a botanist with plant botanical names. Amortisation, this sounds like something they do to after you die. I am not just on a numbers learning curve here but an entire new vocabulary learning curve as well. And just for clarification; amortisation is the action or process of gradually writing off the initial cost of an asset, the action or process of reducing or paying off a debt with regular payments and a period in which a debt is reduced or paid off by regular payments. I love the internet.

Entering and understanding the data seemed a little overwhelming but I really did seem to start to understand it as I went along (very slowly). The formulas we have learnt in the past couple of weeks really made sense when entering into the spreadsheet, particularly in regards to the end profit/loss totals. The Income and Balance sheets really did outline what we have been learning because now we had real figures to work with.

Gaining more insight into Redflex Holdings Limited with the data entry to the spreadsheet, I can see why they are continuing to push their products and service. I noted most of the costs into running and operating the company actually have reduced, this would put the company in a better position if they could increase their sales. However at this stage they need the extra sales and contracts in order to turn the company around for the better. I do wish them luck and studying this company has been quite interesting. I have a feeling I am not finished with her yet.

This link will take you to a draft of the full assessment, including reflections and other requirements. Please note it is incomplete and the red writing is me giving myself notes.

https://www.dropbox.com/s/jz354mugwrowkh8/ASSIGNMENT%20STAGE%201%20-%20STEPS%203-6.docx?dl=0

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Reading Annual Reports

When I was first allocated this company the spreadsheet listed it as a “Software & Service” company. However, upon visiting website without really clicking and reading every possible link my initial thoughts were that they provide “mainly” cameras for road safety and revenue. Upon further clicking and reading it did become obvious that the cameras themselves were produced and supplied to Redflex by an outside company and Redflex itself offers, of course the hardware it has sourced and has created its own software, ongoing monitoring and support.

The website itself did rather lack information in regards to their initial establishment and commencement date. However, it does provide a link for each product and service it offers for viewing but only very limited. Every time you wish to “read more” or want to view further information an email contact page appears. The website is user friendly however does lack information. Redflex is not a dominant brand in this market, perhaps some further research in this area is needed by the company to enhance exposure of their products and services. (Just putting it out there).

I have begun the time consuming task of reading the annual reports provided by my company “Redflex”. Martin has said it is probably not necessary to read the entire reports, but I thought I would give it a shot to indulge my entire being into understanding this company. These are rather large reports of 100 pages or more. The first part  is filled with reports from the Chairman, Group Chief Executive and Director. Of course these were all positive and appealing, however under the surface it seems there has been some difficulties in the financial year; that have had what seems to be a less that positive impact on the company. None of the reports from these high ranking Executives actually pin points an issue and seems to quickly move on to more positive marketing and dare I say “propaganda”. Personally, I would call this waffle and very much not to the point.

So now that I am all confused reading such positive work but my gut instinct has picked up something. I will begin to undertake the task of entering the financials into my spreadsheet. (This bit scares me, all the financials are spread throughout). Wish me luck.

Week 2

My Assigned “Flash for Cash” Company

I have received my assigned company in order to complete my next assessment step.

I would like to introduce you to  Redflex. Now you would have heard of this company as much as I have…..never. However, you would be very familiar with similar products and services this company produce and service, although the brands remain less then remembered.

Redflex – Supply, service and monitor our favourite “Flash for Cash” road enforcement cameras. Yes, speed cameras and other traffic camera systems.

I am pleased to receive company that is an Australian based company, however strangely enough Redflex is mainly contracted offshore with offices in the USA. As far back as I can search; being 1996, Redflex has mainly been contracted to the North American continent and the Middle East. They finally broke into the Australian market in 2002.

Now researching this company has been somewhat interesting, we have articles on the raising of petitions in order to have the cameras outlawed and the most intriguing, that I am yet to dig into the intricate details of, bribery, fraud, misconduct, jail terms and settlements.

This did seem to do the company some damage, however like any Aussie they seem to be resilient and bouncing back. In saying that I am yet to go peruse the annuals for a “real snapshot’ on the company. At face value only – my impression is that they seem to be good at what they do with the odd bad apple in the cart and powering on. A couple of weeks with some hard brain squeezing on my part will either confirm or I will have to eat my hat.

Here is a little promotion video I have found on the site if you wish to take a peek…

http://www.redflex.com/en-au/news/research-and-videos/what-we-do-how-it-works

blur cars city commuting
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Week 1

I must admit I did start this course early. Early bird gets the worm they say. Wish I knew who ‘they’ were because I got the worm alright. Internet blackout for my first week. Paper study was my saviour, all those poor trees.

I expected some really intense study material with big words and confusing chapters. But here I was visualising a stroll around Yeppoon and playing the piano. New ways of learning and new friends already. I am impressed. I imagined mundane and instead was entertained. It really is the WAY you learn that helps.

So, pretty much this week was introductions, cursing at the computer and learning pretty much how to learn, with a little introduction to accounting thrown in. So far, so good.