Calculating ratios is indeed what most people (including me) thought what Financial Statement Analysis is all about. But after reading the first chapter of TKWAV, my view has changed whereby I realised they are of no good to me in assessing my firm’s value mainly because the figures are historical – they tell us little about the future. However, to my disbelief, as I am doing this write up, my view has changed again. Financial ratios are of much assistance in fact. They tell me what has happened in the business in the past, what’s happening now, and some hints about where the firm is heading in the future. I feel like I can talk about Dexion with greater confidence.
After calculating the come financial ratios, I thought I should compare them to the industry trend, but unfortunately I can’t find a firm similar...
When going about restating Dexion’s financial statements, I found myself smiling throughout the process because Dexion has a relatively straightforward business operation whereby, with reasonable diligence, readers of its financial statements can easily comprehend its business. Dexion has no minority interests, neither does it enter into agreements like interest rate swaps or forward rate agreements. Unlike Ryman Healthcare, Dexion does not even revalue its assets, except for intangible assets which they are required to under the IFRS. Therefore, I spend more time comparing Dexion’s FS with that of other firms.
On the balance sheet, I found only one item to be classified as financial activity i.e. loans and borrowings. But after reading through the notes, I found that Dexion has many other financial activities. For example, Note 5 discloses that Dexion uses forward exchange contracts to hedge any currency risk. This is further explained in Note 28 which discloses that at balance date, Dexion had taken out foreign exchange cover for the initial payment due for the acquisition of Shanghai Xiao Bao Storage Systems Equipment Co Ltd (from Note 34) by purchasing forward RMB12million (AUD equivalent $1.9million) for delivery in March 2008. $1.9million is a material amount,...
Dexion Ltd's Shares - A bargain, or going down the drain?
July 24, 2008
I am doing analysis on Dexion Limited, a leading Australian firm who manufactures and distribute a broad range of storage products in Australia and the Asia Pacific. Their core product range is pallet racking and shelving products designed for efficient space utilisation and logistics solutions, for both the industrial and commercial sectors. While they were listed on the ASX in April 2005, the firm have a 60-year history. Despite this, neither me nor my friends have heard of this firm before (until Martin give it to me), so I dare not comment on the firm’s brand being either well-known or not.
Their mission is to create value for their stakeholders by being the first choice provider of commercial workspaces, integrated systems and industrial storage solutions. Dexion’s dream or vision or management philosophy is “to be better than anyone else at what they do”. Their strategy is to defend and extend its position in established markets, to build and grow businesses in attractive markets and to create new growth platforms through driving innovation. They go by the tagline “Smarter Thinking”. Based on what I have read so far, I feel that this tagline suits their identity perfectly. They provide solutions...
