Business and Corporate Law Report

This report analyzes the financial health and performance of Automotive Holding Group Limited, an ASX-listed company operating in the Australian automotive industry. It examines key financial ratios, share price trends, and significant announcements, providing insights into the company's liquidity, solvency, profitability, and overall financial performance. The report also includes a calculation of the company's CAPM and WACC, offering valuable information for potential investors.

BUSINESS AND
CORPORATE LAW

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
QUESTIONS...................................................................................................................................1
1 Overview of Automotive Holdings Group..........................................................................1
2.Specifying the ownership and governance structure...........................................................2
3. Identifying fundamental ratios of Automotive Holding Group..........................................3
4.Analysing the share price of Automotive Holding Group with the help of ASX disclosures. 8
5. Determining the significant announcement of Automotive Holding Group....................10
6. Measuring the CAPM of Automotive Holding Group.....................................................11
7. Analysing WACC for Automotive Holding Group..........................................................12
8.Determining the debt ratio of Automotive Holding Group...............................................13
9. Discussing the dividend policies of company..................................................................13
10. Recommendation for client............................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
To have appropriate governance over the company's activities and performance in market
there is need to have effective legal control over the business. In relation with that Australian
corporation laws are proposed to serve the best legal execution and activities all over the nation.
It manages the trade practices, legal issues and the monetary system of the corporations with
influences of various laws and amendments. It also includes various statutes and laws that were
enacted by Corporate Act 2001 under administration of Australian Securities and Investments
Commission. In the present report there will be analysis base on ASX listed Automotive Holding
Group which is operating in manufacturing serving motor vehicles in Australis. The analysis will
be made over share prices, market value, current beta rate, risk free rate which helps in
determining liquidity, portability, efficiency of the organisation.
QUESTIONS
1 Overview of Automotive Holdings Group
This organisation operates in manufacturing and facilitating the motor vehicles,
refrigerated logistics and relevant products in Australia. It has approximately covered the 190
motor vehicle franchises at 110 dealership locations which are stated in Australia and New
Zealand. It is the largest Automotive industry in Australia which operates in various
segmentation such as Western Australian, New south Wales, Queensland and Victoria. On the
other side, it not only operates Australia but it has wider operational scope in the various cities of
world. It includes subsidiary organisation such as Rand Transport, Harris Refrigerated Transport,
JAT Refrigerated Road Services and Scott's Refrigerated Freight-ways. Similarly, KTM
Sportmotorcycles, Higher Bus, AMCAP and HQVA are also denoted as the subsidiary
businesses of this organisation (AHG Annual report, 2017). Therefore, to bring the appropriate
increment in the revenue, financial health as well as capital structure of the firm there is need to
have appropriate analysis over the facts.
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2.Specifying the ownership and governance structure
Main substantial shareholders:
Main people of Automotive Holding Group Role in organisation
Chairman  John McConnell [Managing director]
Board members  John McConnell [Managing director]
 Giovanni (John) Groppoli [Non-
Executive Director]
 Greg Duncan OAM [Chartered
Accountant, investor and Consultant]
 Howard Critchley [Non-Executive
Director]
 Jane MacKellar [Non-executive
director]
 Andrea Hall [Board of director]
CEO  John McConnell [Managing director]
2

3. Identifying fundamental ratios of Automotive Holding Group
Ratio analysis:
To analyse the growth, profitability, revenue collection and capabilities of firm inn
meeting the financial requirements of the business. Therefore, there will be need to analyse the
financial stability and capital structure of the firm (Klettner and et.al, 2014). Moreover, in
relation with these Automotive Holding Group will have effective revenue generation as well as
profitable gains as per analysing the financial ratios. Similarly, there has been consideration of 2
years which will be analysed such as 2016 and 2017. In addition, there will be appropriate
analysis over the financials of the firm in these periods. It can be said that there are various
changes into operations which will be helpful as to analyse the growth and profitability of the
firm. Moreover, in the basis of such analysed ration the professionals will be suggested to make
necessary changes and plan appropriate future growth strategies.
Particulars Formulas 2016 ratios 2017 ratios
Liquidity ratios
Current ratio Current Assets 1401911 1.14 1304866 1.19
Current liabilities 1224557 1099341
Quick ratio
Current assets-
inventories 502115 0.41 476755 0.43
Current liabilities 1224557 1099341
Financial ratio
Long term solvency
ratio
Solvency ratio
Net income+
Depreciation 136914 0.09 180535 0.12
Short+long term
liabilities 1583050 1471932
Debt ratio Total debt 1583050 0.66 1471932 0.67
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Total assets 2385393 2191435
Debt to Equity Ratio Total liabilities 1583050 1.97 1471932 2.05
shareholder's
equity 802343 719503
Equity ratio
shareholder's
equity 802343 0.34 719503 0.33
Total assets 2385393 2191435
Efficiency turnover
ratios
Asset turnover ratio net sales revenue 6081745 2.55 5625999 2.57
Total assets 2385393 2191435
Profitability ratios
Net profit net profit *100 89994 1.48% 137149 2.44%
net sales revenue 6081745 5625999
ROE Net income *100 89994 11.22% 137149 19.06%
shareholder's
equity 802343 719503
ROA Net income *100 89994 3.77% 137149 6.26%
Total assets 2385393 2191435
Market Value ratios
EPS Profit After tax 61093 0.09 96886 0.18
Ordinary shares 653134 541532
4

PE ratio
Market value per
share 4.23 0.25 3.88 0.13
EPS 17 29.4
Interpretation: On the basis of above report it can be said that there are various
techniques which helps in identifying the accurate analysis over the facts and have fruitful
determination of outcomes. Therefore, there has been analysis over the accounts and the
financial details of the organisation is on the basis of various ratios which presents the clear
estimation of the financial health of Automotive Holding Group Limited. However, it brings the
transparent and clear view to the investors regrading company's financial condition among the
shareholders. It benefits them in investment decisions that will be provoking and helpful as to
enhance the probability of firm for long period. Similarly, the outcomes has been derived by
such analysis can be interpreted such as:
Liquidity ratio:
To analyse the liquidity of the firm there has been measurement based on short term
revenue and expenditures of the firm. There has been consideration of various elements such as
current ration and quick ration. These are the factors which were analysed over current assets,
inventories and current liabilities of the firm in the period (Dörrenbächer and Geppert, eds.,
2017). It bluings the clear estimation and analysis over the ability of firm in meeting the short
term debts on the right time. Moreover, the current ratio of Automotive Holding Group Limited
in year 2016 was 1.14 while in 2017 it becomes 1.19. Thus, it can be analyse here that the
current status of firm will be helpful in bringing the most relevant analyse which states that they
are capable of meeting their short term needs in the market. On the other side, the quick ratio of
the firm in the year 2016 was 0.41 and in 2017 it was 0.43. It has been determined here that the
firm on positive liquidity and which will be helpful and capable to meet the short term
requirement on the right time. The management of cash flows, inventories, debtors and creditors
are on right state as it bring the most satisfactory outcomes to business.
The Financial ratio:
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To analyse the long term ability of the firm which prevents the financial health of the
firm from the long term damages which will be effective and helpful to them. Therefore, there
has been appropriate analysis over the solvency of the firm in the respected period (O'kelley and
Thompson, 2017). The solvency ration of firm in 2016 was 0.09 while in 2017 it has increased to
0.12. It has been analysed here that the firm has adequate increment in solvency which indicates
fruitful outcomes as the firm is capable of meeting the solvency in the right time. Therefore, it
can e said that there are various operations which in turn will be effective and helpful as to meet
the debt requirement on the right time.
On the other side, as per analysing the debt ratio of the firm in the business which in 2016
was 0.66 and in 2017 it becomes 0.67. Thus, it can be said that there are various operations
which in turn will be indicative and helpful as to meet the current requirements and gains for the
long time. Moreover, in the current year there has been reduction in the total debts of the firm
which has results in improving the debt ratio. Thus, it can be determined here that the firm is
having appropriate debt ability and are capable of meeting the debts on right time. The debt to
equity ratio can be analysed as 1.97 in 2016 and 2.05 in 2017. Therefore, in the current year there
has been increment in the total equity capital of the firm which in turn will be effective and
helpful as to meet the current business requirements. Thus, it can be said that the revenue and
gains retained with the help of shareholder's investment in the firm which in turn will be assistive
for Automotive Holding Group Limited as they have sound capital and favourable capital gains
in the business.
Moreover, in accordance with the Equity ratio of the firm which will be determined by
considering the equity capital and the total assets of the firm in a period. Therefore, the outcomes
has been derived by the entity in 2016 as 0.34 and ion 2017 it was 0.33. Thus, it can be said that
in the current year there has been reduction in the equity ration as the total equity capital is not
increased as compared with the propionate rise in the total assets of the firm (Mitchell and et.al,
2016). Moreover, it will be suggested to the professionals of this business is that they must make
fruitful plans and strategies which in turn will make appropriate rise in the firm's gains.
Efficiency Turnover Ratio:
In relation with analysing the efficiency of the firm in meeting the short terms as well as
long terms gains in the right them there will be analysis over the assets and gains retained by
6

them in a financial year (Huggins and et.al, 2015). Therefore, to analyse the efficiency of firm
there will be assessment of asset turnover ratio which comprises with analysing the net sales
revenue of the entity over total assets. Thus, in 2016 the asset turnover ratio of entity was 2.55
and in 2017 it raised up to 2.57. It has been determined here that the firm will have effective
revenue and sales of its goods and services which will make the increment in the ration and
develop the favourable efficiency in the market.
Profitability Ratio:
These are the ration which will be indicative and helpful to the business as to have
appropriate rise in the revenue or gains of the firm in the recent times. Therefore, it will be
helpful to communicate these details among the shareholder or investors of the firm which in
turn will be impressive and attractive to them for retaining the dividend benefits. However, with
the help of such analysis will enable them to analyse the profitability of firm in making return to
their shareholders over the period (Godwin, 2015). It will help them in generating the large
number of investors which in turn makes necessary improvements in the share capital of
Automotive Holding Group Limited.
On the other side, the net profit of the firm in the year 2016 was 1.48% and in 2017 it
becomes 2.44% therefore, in the current year there has been rise in the sales revenue as well as
reduction ion the operating expense. Moreover, to make it appropriate and rise it to have
satisfactory gains Automotive Holding Group Limited needs to manage this ratio between 4-8%
of margin. Similarly, the return of equity has been analysed by the researcher is that in 2016 the
firm is capable of giving returns at 11.22% while in 2017 it has risen up to 19.06%. Moreover, in
relation with the total income and equity collected in these period which together represents the
most appropriate and satisfactory analysis over the outcomes on which it can be said that they are
able to bring the satisfactory returns to the investors (Leung and et.al, 2014). There return on
assets of the firm in these respective years has been analysed as per determining the satisfactory
gains such as net income and total assets in a period. In 2016 the returns was 3.77% while in
2017 it was 6.26%. However, in comparison with the previous period Automotive Holding
Group Limited is capable of giving the satisfactory return in the current year.
Market value ratio:
7

These are the ratios which ascertains the current prices of the marketable securities on the
publicly held shares of firm. Therefore, it brings the clear determination of the share prices of the
organisation which will be assistive to the equity holder in relation with analysing the prices are
under valued or over valued (Evans, Lignier and Tran-Nam, 2016). Moreover, the shares will be
traded in the capital market over their fair value. Thus, the chances of beating the stock market
become impossible for the investors. However, in relation with Automotive Holding Group
Limited there has been analysis over the market value price of its shares have been analysed
through EPS and PE ratio. Moreover, the earning per share of entity has been analysed here in
2016 as 0.09 and in 2017 it was 0.18. Therefore, in comparing with the last year the firm is more
capable in the current year in terms of making favourable earning per share. Therefore, the firm
is base to have the earning over the invested share capital by the investors in the firm.
On the other side, in a term with PE ratio where the consideration of market value per
share and EPS generated by the firm in the period will have effective gains as to analyse these
ratios. Therefore, in 2016 it was 0.25 and in 2017 it becomes 0.13. Therefore, in the current year
there has been reduction in the market value of Automotive Holding Group Limited's shares.
4.Analysing the share price of Automotive Holding Group with the help of ASX disclosures
To analyse the fruitfulness of Automotive Holding Group Limited there will be analysis
based on various shares and its prices over the market (Klettner and et.al, 2014). To ascertains
the growth and market value of organisation there will be consideration over the fluctuations in
its share price. Moreover, to ascertain such changes the information will, be collected as on a per
month operational changes in share prices of the entity by considering the period from
30/04/2016 to 30/04/2018.
Date share price Rate of return
2016-04-30 0 0
2016-05-31 3.232067 0.00%
2016-06-30 3.704843 14.63%
2016-07-31 4.031488 8.82%
2016-08-31 3.679055 -8.74%
2016-09-30 3.630173 -1.33%
2016-10-31 3.289564 -9.38%
8

2016-11-30 3.540539 7.63%
2016-12-31 3.504686 -1.01%
2017-01-31 3.576393 2.05%
2017-02-28 3.692917 3.26%
2017-03-31 3.456942 -6.39%
2017-04-30 2.724774 -21.18%
2017-05-31 3.10476 13.95%
2017-06-30 3.549621 14.33%
2017-07-31 2.965741 -16.45%
2017-08-31 3.076956 3.75%
2017-09-30 3.12181 1.46%
2017-10-31 3.237432 3.70%
2017-11-30 3.507218 8.33%
2017-12-31 3.449407 -1.65%
2018-01-31 3.574665 3.63%
2018-02-28 3.38196 -5.39%
2018-03-31 3.38 -0.06%
2018-04-30 2.9 -14.20%
9

2016-04-30
2016-07-31
2016-10-31
2017-01-31
2017-04-30
2017-07-31
2017-10-31
2018-01-31
2018-04-30
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
s hare pric e
2016-04-30
2016-06-30
2016-08-31
2016-10-31
2016-12-31
2017-02-28
2017-04-30
2017-06-30
2017-08-31
2017-10-31
2017-12-31
2018-02-28
2018-04-30
-0.25
-0.2
-0.15
-0.1
-0.05
0
0.05
0.1
0.15
0.2
Rate of return
ii. Report:
10

Interpretation: By considering the ASX index there has been rise and fall of the share
prices of Automotive Holding Group Limited it can be said that there are huge variation in the 2
years. There has been analysis over the share prices of this organisation by considering the
variation incurred in the last 2 years such as 2016 and 2017 on monthly basis. Along with this
there has been rise in the prices of the shares in the period on which the average amount of
shares are 3.4 has been redetermined. Moreover, it can be said that there will be increment in the
share prices of the firm as the financial operators, accountant and the auditor will reflect the
transparency in the financial disclosure. Similarly, the better corporate governance will be
helpful in rising the financial health of the business.
On the other side, to analyse variations in the returns made by a firm in the respective
period which has huge fluctuating. However, in relation with ascertaining the appropriate again
and losses by the firm in due period it can be said that there are several drawbacks and gains in
the share value of Automotive Holding Group Limited. Therefore, in relation with such analysis
the aggregate market rate of return has been analysed as -0.26% which will be indicative to the
business. Therefore, there is need to pay attention over rising the share capital of the firm in the
market as well as generating the adequate income that will be satisfactory to make suitable
dividend payments to the equity share holders. On the other side it will be suggested to the
professionals as they must make necessary control over the operating expenses, tax payments
and the costs of manufacturing goods.
5. Determining the significant announcement of Automotive Holding Group
By considering the operational activities of Automotive Holding Group Limited it can be
said that there has been various announcements which were made in favour of the equity holders.
Thus, director Jane McKellar has bought direct shares worth $4997.28 on 4.79 dollars of price.
Therefore, there are various other board members which has made purchases and sales of shares
in the current time. However, in relation with analysing the benefits of the firm there will be an
adequate rise in the share prices as well as capital collection of the firm in context with meeting
the financial requirements (Dörrenbächer and Geppert, eds., 2017). Therefore, on the other side,
it has been planned by the professionals as to manage the financial condition of the organisation
in all the segmentation of it operations. There will be insurance to the shareholders of the firm
over their invested capital which in turn effecting in fetching their trust and bring them the
reliable trust that they are making secured investment in organisation. Moreover, in the recent
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times the firm has appropriate revenue collection as well as balanced debts in Automotive
Holding Group Limited. Thus, such information will bring the plethora of details on which the
auditing committee as well as the risk management committee will be effective in managing the
business operations. Moreover, in relation with acquiring the fruitful gains there will be
informative changes into operations as the business will have satisfactory revenue gains in the
coming time. It gives the clear analysis over operational activities of the firm in the proposed
period. Therefore, which will be indicative and helpful as to make clear estimation and the
decision that will enhance the forecasting techniques of firm. The reliable information will bring
comparatively fruitful forecasting estimation. On the other side, there will be negative impacts of
the economic condition in the country as well as the changing plans and policies of competitors
too. The prices of the products ceded to be accurate as it will be challenging to the rivalries as
well as cost effective to consumers.
6. Measuring the CAPM of Automotive Holding Group
Beta value:
In accordance with measuring the beta value of Automotive Holding Group Limited
which is 1.21. Therefore, it can be said that the beta value needed to be 1 or equivalent to 1.
However, in relation with the organisational beta value of this industry which is more than 1
which indicates that the security prices of these shares will be fluctuating. Therefore, it will give
the sudden income or gains or it may affect the losses (O'kelley and Thompson, 2017).
Therefore, to trade the security there will be need of financial expert as well as the correct
timing.
Capital Assets price Model:
This is the technique which in turn helps the managerial professionals as to have the most
accurate outcomes and determination of the costs of assets which bounds them to make decision
relevant with rising the prices of reducing it (Mitchell and et.al, 2016). Therefore, wit the helpful
of such determination the Automotive Holding Group Limited will have satisfactory outcomes
which will be assistive to the directors in term so having variations in the selling price of
securities.
RM 6.00%
RF 4.00%
12

Premium =RM-RF 2.00%
Beta value 1.21
CAPM 6.42%
Interpretation: By considering the measurement of Capital asset pricing model which
comprises with the various values. Therefore, the market rate of risk is 6% while the risk free
rate of market is 4%. The beta value will be considers which is 1.21%. Therefore, on contrary
with the same there has been analysis of market premium of 2%. Moreover, the CAPM has been
analysed for 6.42%. In addition, it can be said that Automotive Holding Group Limited will
make effective estimation over the costs of the assets. Therefore, the costs of equity of firm is
6.42% which will be effective to the professionals as to have appropriate gains over the securities
and assets of the firm.
Conservative investment:
This is the investing strategies which seeks to present over the portfolio and investing
risks that will be effective to secure the risk securities in the money market. However, it will
bring them clear analysis over the fixed income, money market securities and appropriate risk
tolerance in Automotive Holding Group Limited. Therefore, it can be said that lower tolerance of
risk will comparatively less comfortable in the financial market (Huggins and et.al, 2015).
However, the conservative strategy will be suitable as to manage the current capital levels.
7. Analysing WACC for Automotive Holding Group
Equity 802343
RM 6.00%
RF 4.00%
Premium =RM-RF 2.00%
Beta value 1.21
cost of equity 6.42%
Debt 1583050
maturity year 10
13

corporate tax 30.00%
Interest rate 0.0173
cost of debt 1.21%
weight After tax Total weight
Total asset 2385393
Weight of equity 33.64% 10.09% 3.39% 0.02
Weight of debt 66.36% 1.15% 0.76% 0.01
cost of equity 6.42% 0.46
Cost of debt 1.21% WACC 4.16% 49.42%
Interpretation: In relation with analysing the Weight average cost of capital in te firm
there will e adequate increment and gains to business as to have most appropriate analysis over
costs of equity and costs of debts of the businesses. Therefore, in the present assessment the
outcomes of Automotive Holding Group Limited has the accurate WACC as 4.16%.
8.Determining the debt ratio of Automotive Holding Group
Debt ratio:
Particulars Formulas 2016 ratios 2017 ratios
Debt ratio Total debt 1583050 0.66 1471932 0.67
Total assets 2385393 2191435
Gearing ratio:
Particulars Formulas 2016 ratios 2017 ratios
Debt to Equity
Ratio Total liabilities 1583050 1.97 1471932 2.05
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shareholder's equity 802343 719503
9. Discussing the dividend policies of company
Investors of the organisation mainly seeks for the dividend policies made by firm which
in turn bring the appropriate amount of funds. To have the satisfactory level of gains there will
be increment in the revenue of organisation. However, there are various dividend policies which
will be helpful to manage the equity holding the business such as Residual Dividend policy,
Dividend Stability policy, Hybrid Dividend Policy etc.
10. Recommendation for client
On the basis of above report it can be said that there need to have appropriate
development of various policies and strategies in Automotive Holding Group Limited which will
be effective and helpful as to meet the financial gains. The current ratio of Automotive Holding
Group Limited in year 2016 was 1.14 while in 2017 it becomes 1.19. Thus, it can be analyse here
that the current status of firm will be helpful in bringing the most relevant analyse which states
that they are capable of meeting their short term needs in the market. On the other side, the quick
ratio of the firm in the year 2016 was 0.41 and in 2017 it was 0.43. It has been determined here
that the firm on positive liquidity and which will be helpful and capable to meet the short term
requirement on the right time. The solvency ration of firm in 2016 was 0.09 while in 2017 it has
increased to 0.12. It has been analysed here that the firm has adequate increment in solvency
which indicates fruitful outcomes as the firm is capable of meeting the solvency in the right time.
Similarly, the debt ratio of the firm in the business which in 2016 was 0.66 and in 2017 it
becomes 0.67. Moreover, to make it appropriate and rise it to have satisfactory gains Automotive
Holding Group Limited needs to manage this ratio between 4-8% of margin. Similarly, the return
of equity has been analysed by the researcher is that in 2016 the firm is capable of giving returns
at 11.22% while in 2017 it has risen up to 19.06%. In 2016 the returns was 3.77% while in 2017
it was 6.26%. However, in comparison with the previous period Automotive Holding Group
Limited is capable of giving the satisfactory return in the current year. However, in relation with
analysing the benefits of the firm there will be an adequate rise in the share prices as well as
capital collection of the firm in context with meeting the financial requirements. Therefore, on
the other side, it has been planned by the professionals as to manage the financial condition of
the organisation in all the segmentation of it operations (Leung and et.al, 2014). There will be
15