BUSN8006: DRIVING FINANCIAL PERFORMANCE

RATIO ANALYSIS ASSIGNMENT

Student Name: Brendah
Student Number: 12353637
To: Members of the Executive Team
1. Managing Director & Chief Executive Officer - Seven Group Holdings
2. Chief Financial Officer - Seven Group Holdings
3. Chief People Officer - Seven Group Holdings
4. Chief Operating Officer – Seven Group Holdings
5. Chief Executive Officer – WesTrac
6. Chief Executive - WesTrac NSW/ ACT
7. Chief Executive Officer - Coates Hire
8. Chief Executive Officer - SGH Energy
9. Company Secretary and -Legal Council
From: Brendah, Analyst at DFP Pty Ltd.
Date: 15 April 2024
ANALYSIS OF FINANCIAL PERFORMANCE AND FINANCIAL POSITION OF
SEVEN GROUP HOLDINGS LIMITED.

Introduction
On behalf of the executive team, I present this report assessing the financial performance and
position of Seven Group Holdings Ltd (SGH) for the fiscal year ended 30 June 2023.
Seven Group Holdings Limited (SGH) is a diversified operating Group with market-leading bu
sinesses across Industrial Services, Energy, and Media sectors.
During FY23, SGH focused on strengthening its current ventures through operational efficiency
and catering to customer requirements. It demonstrated a commitment to innovation and
technology, leveraging partnerships with industry leaders like Cat and WesTrac to deliver
productivity-enhancing solutions.
The objective of this report therefore, is to evaluate the financial performance and financial
position of Seven Group Holdings Ltd (SGH) through a comprehensive ratio analysis. This
analysis will consider profitability, liquidity and solvency ratios to draw conclusions on SGH's
financial health and potential as a long-term investment. Additionally, the report will compare
SGH's performance with it’s competitors to identify trends in the industry, opportunities for
growth and risks associated with SGH's operations.

Background of the company.

Seven Network Limited was formed in 1991 from assets of Christopher Skase's failed Quintex.
In 2002, it acquired Pacific Magazines and later partnered with Yahoo! to launch Yahoo7.
Shareholders voted in 2006 to create Seven Media Group, spinning off 'old media' assets. In
2008, National Hire Group and Carlyle Group took over Coates, forming Coates Hire, while
WesTrac merged with Seven Network, forming Seven Group Holdings. SGH acquired full
ownership of Coates in 2017 and remains a major stakeholder in Seven West Media. Recently,
SGH acquired majority ownership in Boral in July 2021.
SGH is a diversified operating group with market-leading ventures including Industrial Services,
Energy, and Media sectors. The company directs investments towards mining production,
infrastructure, construction, and renewable energy under it’s umbrella including WesTrac,
Coates, Boral, Allight, SGH Energy, Beach Energy, and Seven West Media. WesTrac is a
Caterpillar dealer in several Australian regions, while Coates stands as the country's largest
industrial equipment hire business. Allight specializes in mobile lighting and power solutions,
while Boral dominates Australia's construction materials sector. SGH’s goal is to deliver
sustainable returns to stakeholders through prudent financial management and diversified
portfolio oversight, driven by its core values of Respect, Ownership, Courage, and Agility.
Overview of Performance FYE 2023
Industrials
Entity Shareholding Sites Staff Revenue EBIT($)
%age ($)
Westrac 100 28 4500 4.9Bn 500.1M
Coates 100 150 2200 1.1Bn 300.2M
Boral 72.6 360 4700 3.5 Bn 231.5M
Energy
Beach 30 113.8M
SGHE 100 800
Media
Seven West Media 39.8 2400 61.2M

Investment
From the review of the FYE 2023 report, it is clear that SGH emphasizes strategic capital
allocation as essential for realizing its long term goal of optimizing shareholder. The company's
approach to capital allocation rests on five fundamental principles: strategic coherence, risk
mitigation, sustainable value generation, adaptability, and a commitment to ownership mentality.
The report highlights SGH's reliance on debt and debt-like instruments to fund its operations,
alongside minority investments in various ASX-listed and unlisted companies, including a 39.8%
stake in Seven West Media and a 30% shareholding in Beach Energy.
In FYE 2023, SGH strategically expanded it’s presence in supplying transitional energy to the
Australian East and West Coasts, as well as global LNG markets, through investments in Beach
and SGH Energy. Beach achieved a 12% production growth in the final quarter of FY23,
attributed to significant increases in production from the Otway and Western Flank projects,
marking a 51% and 21% rise, respectively. A cashflow investment of $528.9 million comprised
net capex on Property, Plant and Equipment (PPE) (excluding intangibles) totalling $460.5
million, showing a decrease from the previous year. Investments in Coates' hire fleet increased,
while capital expenditure by WesTrac and Boral decreased. Additionally, $103.3 million was
invested in the Crux development project.
The Group delivered Earnings Before Interest and Tax (EBIT) from continuing operations of
$1,186.5 million for the year ended 30 June 2023 which is 20.2% increment from prior year
(PY). Revenue from continuing operations grew to $9,626.5 million. The strong growth is
attributable to the Industrial Services businesses, led by Boral with 117.4% increase in EBIT as
well as WesTrac and Coates up 17.5% and 22% respectively.
Financial Analysis
The objective of the financial statements is to provide information about the financial situation,
financial performance and changes in an entity's financial position that are usable by a wide range
of users in making their economic decisions (Lewis, & Pendrill, 2004). According to Harry
(2015, 138) Financial Ratios are numbers obtained from the comparison between one financial
statement post and other items that have a relevant and significant relationship. Ratio analysis is
one of the most commonly used financial analysis tools. The results of ratio calculation become
more useful when compared to the results of ratio calculation in the previous year (Hery, 2012).
The main indicators of financial analysis are the following ratios (Helfert, 2001): Liquidity Ratio,
Profitability Ratio, Assets turnover ratio and Ratio of long-term solvency (debt).
Liquidity is perceived a one of the factors ensuring sustainable growth (Pera, 2017). Liquidity
ratios, such as the Current Ratio (CR), Quick Ratio, and Cash Ratio, are important indicators for
shareholders of SGH, SDB and Sandvik as they assess the entities’ ability to meet short-term debt
obligations without relying on external capital. These ratios directly impact shareholder value by
providing insights into the company's financial stability and its capacity to manage liquidity
effectively. Shareholders of these entities need to understand that failure to maintain adequate
liquidity can lead to default or bankruptcy, resulting in significant losses.
Assessing a business's performance holds significance not only for its internal management but
also for external stakeholders interacting with the business. This importance arises from the
nature of performance evaluation, which allows for diverse interpretations and understandings.
Examining profitability through different profitability ratios including gross profit margin, net
profit margin, return over total assets and return over equity becomes imperative to gain
comprehensive insights into a company's financial health. It is important to note that, Investors'
use these ratios to select suitable companies to invest in is largely influenced by the presumptions
that have informed the preparation of those financial statements (Malikova and Brabec, 2012).
For purposes of this review, we selected ratios from different categories including profitability,
liquidity, capital structure, solvency and investor ratios as analysed below.

1. Earnings per share

EPS information shows the amount of company net profit ready to be distributed to company
shareholders. The number of EPS of a company can be known from financial statement
information (Eprima Dewi et al., 2015). Earnings per share is the amount of income earned in one
period for each share outstanding and will be used by the company's management to determine
the number of dividends to be distributed.
Year Seven Group Holdings Limited Sime Darby Berhad Sandvik
 2021 1.84 21.70 11.53
2022 1.22 17.20 8.95
2023 1.66 19.70 12.20
Source: Ratio analysis workings- EPRS12
Analysis of Seven Group Holdings Limited (SGH)
Over the three-year period from 2021 to 2023, SGH's EPS ratio exhibited fluctuations. In 2021,
the EPS ratio stood relatively high at 1.84, indicating solid profitability per share. However, by
2022, there was a sharp decline to 1.22, suggesting a decrease in profitability. FY 2023, the EPS
ratio rebounded to 1.66, indicating an improvement in profitability compared to the previous
year. Basic earnings per share (EPS) is calculated by dividing the profit or loss attributable to
ordinary shareholders of the Company by the weighted average number of ordinary shares
outstanding during the year. The significant increase in revenue for WesTrac, driven by stronger
revenue across all Industrial Service businesses and Boral's Building material sales, contributed
to the growth in profit attributable to ordinary shareholders. Boral's sales, up by 18.6% from the
previous year, alongside increased product sales and higher revenue from product support and
hire, positively impacted the overall financial performance. However, challenges in the oil and
gas sector, with revenue declining by 13.0%, and lower contributions from equity accounted
investments, particularly from Beach Energy and Seven West Media, led to a decrease in the
Group's share of results from equity accounted investments by 22.4% compared to the prior year.
These factors collectively influenced the Profit or loss attributable to ordinary shareholders,
affecting the Earnings Per Share (EPS) ratio. Despite these challenges, WesTrac's continued
growth in revenue and profitability contributed to the improvement in the EPS ratio from 1.22 in
2022 to 1.66 in 2023, indicating a favourable financial performance for the year.
Analysis of competitors.
Sime Darby Berhad's Earnings Per Share (EPS) fluctuated over the years 2021 to 2023. In 2021,
the EPS stood at approximately RM21.70, driven by a profit attributable to ordinary shareholders
of RM147,603.40 million and a weighted average number of ordinary shares outstanding of 6,802
million. However, in 2022, the EPS declined to around RM17.20 despite a relatively stable profit
attributable to ordinary shareholders of RM117,080.40 million, with a slight increase in the
weighted average number of ordinary shares outstanding to 6,807 million. The trend reversed in
2023, with the EPS improving to approximately RM19.70, propelled by an increase in profit
attributable to ordinary shareholders to RM134,216.10 million and a corresponding increase in
the weighted average number of ordinary shares outstanding to 6,813 million.
Sandvik's Earnings Per Share (EPS) exhibited fluctuations across the years 2021 to 2023. In
2021, the EPS was SEK 11.53, supported by a profit attributable to ordinary shareholders of SEK
14,461 million and a weighted average number of ordinary shares outstanding of 1,254.39
million. However, the EPS experienced a decline in 2022 to SEK 8.95, despite the weighted
average number of ordinary shares outstanding remaining constant at 1,254.39 million, indicating
a decrease in profitability with a profit attributable to ordinary shareholders of SEK 11,225
million. This trend reversed in 2023, as the EPS increased to SEK 12.20, reflecting improved
profitability with a profit attributable to ordinary shareholders of SEK 15,300 million and the
weighted average number of ordinary shares outstanding remaining stable at 1,254.39 million.
It is important to note that for the three (3) years, the average EPS for SGH is 1.57, SDB 19.53
and 10.89 for Sandvik. Based on the analysis of the three companies i.e. SGH, SDB, and
Sandvik, it's evident that SDB consistently maintains the highest average Earnings Per Share
(EPS) over the three-year period, with an average EPS of RM19.53, followed by Sandvik with an
average EPS of SEK 10.89. While SGH experiences fluctuations in its EPS ratio over the years,
with an average EPS of 1.57, it falls significantly behind SDB and Sandvik. SDB's EPS
performance reflects a robust financial standing and consistent profitability, as indicated by its
steady EPS growth over the years. Sandvik also demonstrates an improvement in EPS from 2021
to 2023, despite fluctuations which indicates its ability to rebound and maintain profitability.
Thus, for investors seeking companies with higher EPS and potentially stronger shareholder
value, Sime Darby Berhad emerges as the preferable choice among the three.
2. Rate of Return over Share Capital
Return On Equity (ROE) serves as an indicator of a company's capacity to generate post-tax
profits utilizing it’s own invested capital. Shareholders, upon purchasing stocks, are keenly
interested in assessing the magnitude of this profitability that can be distributed among them.
ROE essentially quantifies the effectiveness of management in optimizing returns for
shareholders, reflecting their adeptness in maximizing shareholder value (Hanafi and Halim,
2012).
Year Seven Group Holdings Limited (%) Sime Darby Berhad (%) Sandvik (%)
2021 15.61 9.41 18.73
2022 10.35 7.25 13.81
2023 14.22 8.75 17.45
Source: Ratio analysis workings- ROER5
Analysis of Seven Group Holdings Limited (SGH)
The Return on Equity (ROE) ratio for Seven Group Holdings Limited (SGH) demonstrates
fluctuations over the three-year period from 2021 to 2023. In 2021, SGH achieved an ROE ratio
of 15.61%, indicating a strong performance in generating profit relative to shareholders' equity.
However, the ratio experienced a slight decline in 2022 to 10.35%, suggesting a decrease in
profitability or less efficient use of equity during that period. The trend reversed in 2023, with
SGH's ROE ratio rebounding to 14.22%, indicating an improvement in profitability and/or better
utilization of equity compared to the previous year. This was majorly driven by increase in
revenue surging to $9,626.5 million, a significant 20.1% rise from the PY 2022. SGH
demonstrated top-line growth across its Industrial Service businesses including and not limited to
Boral's Building material sales that contributed to this growth, climbing 18.6% to $3,163.6
million, indicating increased demand across quarries, cement, concrete, and asphalt. Additionally,
product sales saw a substantial uptick of 26.5% to $1,844.6 million, driven by strong customer
demand for new machines, mitigating the impact of supply chain disruptions. The strengthening
of mining and construction activity in key regions like WA and NSW further increased revenue.
Additionally, revenue from product support soared by 23.1% to $3,168.4 million, supported by
higher parts volume and prices, while hire revenue increased by 12.7% to $1,148.9 million,
benefiting from increased market activity.
Analysis of the competitors.
Sime Darby Berhad (SDB), the Return on Equity (ROE) ratio demonstrates fluctuations over the
three-year period from 2021 to 2023. In 2021, SDB achieved an ROE ratio of 9.41%, indicating a
robust performance in generating profit relative to shareholders' equity. However, there was a
slight decline in the ratio in 2022 to 7.25%, suggesting either decreased profitability or less
efficient utilization of equity during that period. Nonetheless, the trend reversed in 2023, with
SDB's ROE ratio increasing to 8.75%, indicating an improvement in profitability and/or better
utilization of equity compared to the previous year. In FY2023, Sime Darby Berhad achieved a
post-demerger record net profit of RM1.458 billion, marking a substantial 32.2% increase from
the RM1.103 billion recorded in FY2022. This growth contributed to a rise in the Return on
Equity (ROE) to 8.9% from 6.9% in the previous fiscal year.
Sandvik, the Return on Equity (ROE) ratio displays fluctuations across the three-year period from
2021 to 2023. In 2021, Sandvik achieved a robust ROE ratio of 18.73%, indicating a strong
performance in generating profit relative to shareholders' equity. However, there was a decline in
the ratio in 2022 to 13.81%, suggesting either decreased profitability or less efficient utilization
of equity during that period. Nevertheless, the trend reversed in 2023, with Sandvik's ROE ratio
increasing to 17.45%, indicating an improvement in profitability and/or better utilization of
equity compared to the previous year. While all three companies experienced changes in ROE
ratios, investors should consider factors beyond just profitability, such as market conditions,
industry outlook, and strategic initiatives. Based solely on ROE, Sandvik exhibits the highest
average ROE over the three-year period (16.66%), followed closely by SGH (13.73%), and then
SDB (8.80%). However, investors should consider a comprehensive analysis considering other
financial metrics highlighted in this review and qualitative factors to make an informed
investment decision.
3. Rate of Return over total Assets
High Retun On Asset will increase the attractiveness of investors so that stock prices increase,
thus Return On Asset has a positive effect on stock returns (Robbert Ang; 1997: 23). According
to findings from a study by Ratna Prihantini (2009), there exists a correlation between Return On
Asset (ROA) and satisfactory stock returns. The research indicates that higher ROA positively
influences stock returns, implying that companies with more efficient asset utilization tend to
yield more acceptable returns for investors.
Year Seven Group Holdings Limited (%) Sime Darby Berhad (%) Sandvik (%)
2021 7.25 5.37 9.31
2022 3.26 3.93 6.35
2023 4.82 4.08 8.78
Source: Ratio analysis workings- ROAR4
Analysis of Seven Group Holdings Limited (SGH)
The Rate of Return over Total Assets (ROA) for SGH demonstrates the efficiency with which the
company utilizes its assets to generate profits. Over the years 2021 to 2023, SGH's ROA
exhibited fluctuations. In 2021, SGH achieved a relatively high ROA of 7.25%, indicating that
for every million dollar of assets, the company generated a profit of 7.25 Millions. However, this
figure declined in 2022 to 3.26% before rebounding in 2023 to 4.82%. While the 2023 ROA
represents an improvement from the previous year, it remains below the level observed in 2021.
The disciplined execution of both Group’s capital allocation and scalable operating models, along
with the quality of humanresource and businesses, has supported the Group’s outperformance in
2023 compared 2022. Additionally, During the year, $96.0 million was incurred as non-cash
investing expenditure in relation to the Group’s investment in Boral. In fiscal year 2023, WesTrac
made strategic investments aimed at enhancing productivity throughout its operations.
Additionally, WesTrac invested in an automated warehousing solution, AutoStore, implemented
at its Tomago facility in New South Wales (NSW).Under Coates, the focus on fleet management
and R&M optimisation over the CY saw asset utilisation (TU) lift 200bp to 61.6% and the
average level of fleet tied up in checks and servicing reduce, contributing to the strong margin
result of USD 656Million.
Comparison with Competitors.
On average SGH has a 5.11%, Sime Darby Berhad (SDB)4.46% and Sandvik 8.15% for the
three years. This indicates that Sandvik was efficient in utilizing its assets to generate profits.
Over the last 5 years SDB has achieved remarkable growth, doubling their net profit from
RM618 million in FY2018 to RM1.46 billion. Concurrently, their Return on Average
Shareholders’ Equity has shown a steady upward trajectory, climbing from 7.25% to 8.75%
during CY. This is due to strategic expansion initiatives, including key transactions such as the
acquisition of Gough Group in New Zealand, aimed at broadening the Caterpillar operations. It is
imperative to note that in Australia the group’s perfomance was strengthened through the
acquisition of Salmon Earthmoving and Onsite Rental Group (Onsite). New auto dealerships,
both in Australia and China were introduced in CY marking significant strides in expanding the
entties global reach and diversifying their revenue streams. Sandvik average return on over
investment/Assets is 8.15 for the last 3 years. In the current year the return increased from 6.5%
to 8.78% while in 2021 it was 9.31%. The EBITA increased to SEK 24,530 million (22,471),
corresponding to 19.4 percent (18.2) of revenues. In the entirety of 2023, the company's
expenditures on non-current assets totaled SEK 5,354 million, marking an increase from the
previous year's SEK 4,530 million, equivalent to 153% of scheduled depreciation. Additionally,
proceeds from the divestment of companies and shares, after accounting for cash, amounted to
SEK 164 million, which is an improvement from the previous year's SEK 34 million. Moreover,
investments in internally generated intangible assets stood at SEK 1,085 million, showing a rise
from the previous year's SEK 680 million. This saw the total assets grow as well as the total
revenue.
4. Debt to Equity Ratios
Kasmir (2007: 158) states for investors, the greater the Debt to Equity Ratio ratio, the more
unprofitable the result because the greater the risk borne for the failure that may occur in the
company and the lower the company's stock price.
Year Seven Group Holdings Limited Sime Darby Berhad Sandvik
2021 1.15 0.75 1.01
2022 2.17 0.85 1.17
2023 1.95 1.14 0.99
Source: Ratio analysis workings-DER7
Analysis of Seven Group Holdings Limited (SGH)
Over the three-year period from 2021 to 2023, the D/E ratio for the company has fluctuated. In
2021, the ratio stood at 1.15, indicating that the company had a lower level of debt relative to its
equity. However, by 2022, the ratio increased to 2.17, signaling a significant rise in financial
leverage as liabilities grew substantially compared to equity. In 2023, while the D/E ratio remains
high at 1.95, there appears to be a slight improvement compared to the previous year, indicating a
potential effort to moderate debt levels accompaigned with additions to Equity. The Group’s
cash holding was $876.5 million as at year end,down from $1,254.6 million in the prior year.
This decrease is as a result of net repayment of debt during the year from free cash flow. Net debt
as at year end June 2023 was $4,016.7 million, down $391.3 million from that of Financial
Year2022. In as far as investment is concerned, it is important to note that SGH relies partially on
debt and debt-like instruments to support its business activities. As part of its financial strategy,
SGH and its subsidiaries will need to renew or replace debt and derivative facilities as they reach
maturity. However, as per our review of the report, SGH faces exposure to adverse shifts in
global equity or credit market conditions. In the event of a significant decline in cash generation
from its business operations, there is a risk that SGH could encounter challenges in securing
financing on favorable terms. This could impede the company's ability to execute its strategic
initiatives or pursue investments and may lead to an increase in funding costs. Managing these
financial risks effectively is crucial for SGH to maintain its operational flexibility and sustain its
growth trajectory. The Group has exposure to equity price risk arising from its portfolio of listed
equity securities. The Group utilises derivatives to hedge this exposure as well as to gain
economic exposure to equity securities.
Comparison with Competitors.
Compared to the competitors, SDB nd Sandvik SDB had Total Equity: RM17,283 million,Total
liabilities 19,757 with a Debt/Equity (%):14. Furthermore, it's important to note that in April
2023, the Group completed the acquisition of the entire equity stake in Onsite Rental Group
Limited ("Onsite") for a total sum of AUD690 million (equivalent to RM2,035 million). This
encompassed the acquisition cost of Onsite's equity interest amounting to AUD150 million
(RM443 million), the settlement of Onsite's debts totaling AUD498 million (RM1,467 million),
and specific operational expenditures totaling AUD42 million (RM125 million) this enabled
growth in Equity. Sandvik had a total of 1,254,385,923 shares outstanding, each with a nominal
value of SEK 1.2. The company's total share capital stood at SEK 1,505,263,108. All shares of
Sandvik belong to a single series, entitling each shareholder to equal voting rights and dividend
entitlements. It is also imperative to note that Sandvik does not retain any shares in its treasury.
5. Current ratio.
This ratio shows a direct proportion between short term assets and short term liabilities. Through
this, it is measured the ability of a firm to pay short-term liabilities at the maturity date (expiry
date of payment) (Mayo, 2012).
Year Seven Group Holdings Limited Sime Darby Berhad Sandvik
2021 1.04 1.63 1.66
2022 1.41 1.52 1.73
2023 1.68 1.48 1.64
Source: Ratio analysis workings- CR1
Analysis of Seven Group Holdings Limited (SGH)
In 2021, SGH had a current ratio of 1.04, indicating that its current assets were just enough to
cover its current liabilities as and when they fall due. In 2022, the current ratio increased to 1.41,
indicating a slight improvement in liquidity as the current assets increased relative to liabilities. In
2023, the current ratio further increased to 1.68, indicating a more significant improvement in
liquidity. There has been improvement year on year (YOY) since the Group adopts a cautious
strategy towards managing liquidity risk. This strategy entails retaining substantial liquid
reserves, including cash deposits, publicly traded shares, and accessible credit facilities, which
can swiftly be accessed or liquidated to fulfill the Group's financial obligations. Additionally, as
per the review it is clear that management regularly assesses the Group's evolving cash flow
needs on a regular basis. The increase in current assets was driven by increase in Current
inventory across the Group which increased from $153.4 million to $1,501.0 million. The
majority of the increase is attributable to WesTrac’s further investment in new machines and
parts to mitigate supply chain shortages and support future salesdemand as well as the impact of
Cat price increases.
Comparison with Competitors.
On the contrally, for the competotor SDB, its current ratio has decreased YOY since 2021 to
Current Year (CY). It is impartant to note that despite the reduction YOY the entity is still able to
meet its present obligations as and when they fall due as it has an average ratio of 1.55 for all the
years. As of June 30, 2023, the Group's total cash and cash equivalents stood at RM2,938 million
(compared to RM1,658 million in 2022), encompassing cash on hand and deposits held at call
with banks, net of bank overdrafts. Additionally, as of the same date, the Company reported total
cash and cash equivalents of RM85 million (compared to RM150 million in 2022). These among
other current assets kept the entity at at FYE 31 December 2023 able to meet its obligations as
and when they fall due by 1.48 as per the closing current ratio. Refer to Apendice 3 Ratio
analysis. It is important to note that Sandvik had a better average CR of 1.68 comapred to the
others. Sandvik maintained excess 0.68 liquidity by allocating it into bank deposits and short-
term money market instruments with durations not exceeding 90 days as per the report. For
purposes of investment this is a prudent strategy as it minimizes exposure to interest rate
fluctuations, thereby mitigating the risk of value changes associated with these investments.
Moreover, managers use liquidity ratios to ensure business goals (Kochalski & Łuczak-
Trąpczyńska, 2017).
Conclusion
The analysis of the financial statements is a very important process, even necessary for making
right decisions. Information obtained from financial analysis, together with accounting, are the
basis for making decisions, both internally and externally.
SGH reported a 20.2% increase in EBIT and revenue for the year ended June 30, 2023, driven by
its Industrial Services businesses, particularly Boral, WesTrac, and Coates. However, the Group's
share of results from equity accounted investments, including Beach Energy and Seven West
Media, declined. The investment risks involved in this are driven by SGH maintaining
investments in various ASX-listed and unlisted companies, such as Seven West Media and Beach
Energy, where it lacks control over the investee entities. In such instances, SGH may find itself
subject to the operational decisions made by others, potentially impacting its financial
performance. Additionally holding minority shareholdings exposes SGH to risks such as reduced
distributions to security holders and challenges in exiting investments profitably. The equity
market risk is driven by volatility of listed equity markets which introduces uncertainty, as
fluctuations in share prices can be influenced by factors like market sentiment, economic
conditions, inflation rates, interest rates, and regulatory changes. These dynamics may affect
SGH's overall market performance and financial outcomes. Sandvik, listed on Nasdaq Stockholm
had a market capitalization of SEK 274 billion, ranking it as one of Nasdaq Stockholm's largest
companies. The company's shares traded actively across various markets, with 25% volume
traded on Nasdaq Stockholm and the remainder on other platforms. With a proposed dividend of
SEK 5.50 per share for 2024, Sandvik demonstrated commitment to shareholder returns. Sime
Darby Berhad has demonstrated growth in Invested Capital, reaching RM23.4 billion as of June
30, 2023, driven by capital expenditures and acquisitions. Strategic initiatives focus on growing
core businesses and disposing non-core assets, resulting in increased invested capital share in
Industrial and Motors segments. Geographically, the share of invested capital in Malaysia
declined, indicating a shift towards international expansion.
Based on the above, Bushman and Smith (2001) suggests that high-quality financial reporting
reduces information asymmetry, a conclusion that was also supported by Ramalingegowda et al.
(2013). Lev et al. (2010) argued that if capital providers want to choose which company to invest
their resources in, they need to compare the contemporary financial position and performance of
their chosen company to other relevant entities, and use this information to forecast their
company's future developments. It is from this background that I conclude that each entity
presents distinct investment opportunities and associated risks. Sandvik offers stability and
shareholder returns, while SGH shows growth potential amidst investment uncertainties. Sime
Darby Berhad's strategic initiatives suggest long-term growth prospects, particularly through
international expansion. Investors should carefully evaluate each entity's financial performance,
strategic direction, and risk profile before making investment decisions as guided in the ratio
analysis.
References

Ang, Robert. 1997. Buku Pintar Pasar Modal Indonesia (The Intelligent Guide To Indonesian Capital
Market). Jakarta: Mediasoft Indonesia.
Bushman, R., & Smith, A. (2001). "Financial accounting information and corporate governance", Journal
of Accounting and Economics, 31: 237-333.
Eprima Dewi, L., Trisna Herawati, N. S., & Gede Erni Sulindawati, L. S. (2015). Analisis Pengaruh NIM,
BOPO, LDR, DAN NPL Terhadap Profitabilitas (Studi Kasus Pada Bank Umum Swasta Nasional
Yang Terdaftar Pada Bursa Efek Indonesia Periode 2009-2013 ).
Hanafi, Mahduh dan Abdul Halim, 2012, Analisis Laporan Keuangan. Yogyakarta: (UPP) STIM YKPN.
Harry. (2012). Financial Statement Analysis. First Printing, Publisher Bumi Aksara. Jakarta. Harry. (2015).
Managerial Performance Analysis. Jakarta : PT. Grasindo.
Hery. (2012). Analisis Laporan Keuangan. Bumi Aksara. Hery. (2014). Analisis Laporan Keuangan. Bumi
Aksara.
Helfert, E. A. (2001). financial analysis-tools and techniques, McGraw-Hill, United States, 107-129.
Retrieved from http://alqashi.com/book/book17.pdf
Kasmir. 2008. Analisis Laporan Keuangan. PT. Rajagrafindo Persada: Jakarta
Kochalski, C., & Łuczak-Trąpczyńska, M. (2017). Determinants of controlling in foreign subsidiaries of
MNEs: On the explanatory potential of the institutional perspective. Entrepreneurial Business and
Economics Review, 5(3), 79-94. http://doi.org/10.15678/EBER.2017.050304
Lewis, R., & Pendrill, D. (2004). Advanced Financial Accounting, seventh edition, 4-5, 96, 154, 547.
Retrieved from http://ek-sk.com/files/Kontabiliteti_financiar_avancuar .pdf
Lev, B. & Thiagarajan, S.R. (1993). "Fundamental information analysis", Journal of Accounting Research,
31(2), Autumn: 190-215.
Malikova, O. & Brabec, Z. (2012). "The influence of a different accounting system on informative value of
selected financial ratios", Technological and Economic Development of Economy, 18(1): 149-
163.
Mayo, H. (2012). Principles of Finance, UET Press, Tirana, 251-276.
Pera, J. (2017). An enterprise’s financial stability and its sustainable growth. A risk-based perspective.
Przedsiębiorczość Międzynarodowa, 3(2), 49-62.
Ramalingegowda, S., Wang, C., & Yu, Y. (2013)."The role of financial reporting quality in mitigating the
constraining effect of dividend policy on investment decisions", The Accounting Review, 88(3):
1007-1039.
Ratna Prihantini. 2009. Analisis Pengaruh Inflasi, Nilai Tukar, ROA, DER DAN CR terhadap Return
Saham (Studi Kasus Saham Industri Real Estate and Property yang Terdaftar di Bursa Efek
Indonesia Periode 2003 – 2006). Universitas Diponegoro, Semarang, Indonesia.
Tyas, YI (2020), Financial Ratio Analysis to Assess Financial Performance at Elzatta Probolinggo.
Scientific Journal of Economics and Business.