Analysis Of Financial Performance Of KYCKR LIMITED For Investment Recommendation

Description of the Company

The report is based on understanding the financial performance of the KYCKR Ltd and providing the necessary financial advice to the investors so that a viability related to sound investment can be provided. The report would be focusing on the segments of ownership of the KYCKR Ltd along with a descriptive summary of the overall existence. To better gauge into the financial performance of the KYCKR Ltd a computation of ratios has been performed to understand the liquidity, profitability, solvency, market leverage and gearing of KYCKR Ltd. The movement in the share prices would be reflected with the help of the graphical description of the results for KYCKR Ltd.

The study would also place emphasis on the significant factors that would be creating an influence on the share price of the KYCKR Ltd. Additionally, to support the identified factors of share price movement a weighted average cost of capital will be computed that would highlight the required the rate of return for KYCKR Ltd. Emphasis would also be placed on the debt ratio for the KYCKR Ltd to understand whether the company has followed debt structure in the management of its capital. Analysis of the dividend policy would be made for KYCKR Ltd and a letter of recommendations would be provided to address the potential investors regarding the viability of making investment in KYCKR Ltd.

KYCKR Ltd is regarded as the worldwide business register that is established in Waterford, Ireland from the year 2007. KYCKR Ltd is controlled and publicly traded company on the Australian Securities Exchange (Kyckr 2018). The business of KYCKR Ltd began with the simple idea of creating a business for the customers that could obtain the access in real time from several countries across the Europe. Ben Cronin and Robert Leslie are regarded as the founder of the KYCKR Ltd with the initial idea of creating a Global Business Register Limited in the year 2007.

The website of GBDR initially went live for the first time in the year 2009 went about in eighteen European countries. From thereon, the company rapidly grew and turned out to be leader in the providing the official live company information to electronically source the single point admission (Kyckr 2018). The GBDR Direct recognized the rising demand for the instant access of the real time company information that are sourced from registered business across the world. The company became the largest authoritative company that searches the company network that is available online and connects more than 150 business registries across the world through API or the web portal.

In the annual report of the KYCKR Ltd the substantial shareholders of the company are laid out and the same is stated below;

Name of the Shareholders	Total Number of Ordinary Shares Held	Percentage of total shares issued
Mr. Robert Leslie	9,619,247	9.53%
Citicorp Nominees Pty Ltd	9,031,760	8.95%
Mr Benjamin Cronin	8,519,129	8.44%

As evident from the above stated tabular representation of the substantial shareholdings of the KYCKR Ltd stood below the 20% holdings as the table represents that none of the shareholders held 20% or more of the total ordinary shares (Kyckr 2018). Nevertheless, the three shareholders that are presented in the table holds more than 5% of the total ordinary shares. This included Mr Robert Leslie that held 9,619,247 number of total ordinary shares and comprised of 9.53% of the total shares.

Corporate Governance Structure and Ownership

The Citicorp Nominees Pty Ltd held 9,031,760 of total ordinary shares and that constituted 8.95% of the total shares that was issued (Kyckr 2018). Other shareholders include Mr Benjamin Cronin held 8,519,129 held total number of shares that constituted 8.44% of the total shares. Based on the overall analysis of the substantial shareholdings an argument can be bought forward by stating that the company cannot be classified as the family company since none of the shareholders held more than 20% of the substantial shares in KYCKR Ltd (Kyckr 2018). Additionally, the three substantial shareholders that stood for the company held greater than 5% of the shares but not higher than 20% of the total shares.

Name	Position Held	Interest in Shares	Interest in Options	Interest in Rights
John Van Der Weilen	Chairman	734,404	2,000,000	Nil
David Gerard Cassidy	Chief Executive Officer and Managing Director	4,930,212	1,500,000	3,000,000
Benjamin Michael Cronin	Executive Director	8,529,129	Nil	6,500,000
Robert Leslie	Executive Director	9,619,247	Nil	6,500,000
Albert YL Wong AM	Non-Executive Director	4,930,213	1,500,000	3,000,000
John Walsh	Non-Executive Director	300,000	Nil	Nil
Patrick Curry O.B.E	Non-Executive Director	Nil	1,000,000	Nil

As evident from the above stated table it can be stated that main people that are involved in the governance structure of the company does not hold more than 20% of the shareholdings. An argument can be presented by stating that there is no such presence of family members in the corporate governance of the company (Kyckr 2018). Additionally, only Robert Leslie and Benjamin Cronin held more than 5% of the total shareholdings in the corporate governance of the company with each holding 9.53% and 8.44% of the total shareholdings.

As evident from the graphical representation for the company shares price movement against the all ordinary index reflects that the KYCKR Ltd has reported a highly volatile movement. The company in the month of July reported a higher share price against the all ordinary index (Scott 2015). This share prices of the KYCKR Ltd went as high as 67.65% during the month of June whereas the all ordinary index stood as low as 6.28%. While in the subsequent month of July the share price movement of KYCKR Ltd reflected decline as the share prices stood negatively at -14.04% (Moffett et al. 2014). Though the company has managed to claw its way back in the month of August to stand positively at 2.04 against the all ordinary index of -0.08 but in the following month of September the company reported a major decline in the share prices of -24.00%.

The share price since then have considerably reflected a declining trend with the share prices standing negatively against the all ordinary index (Robson, Young and Power 2017). The share prices throughout the course of 2016 stood negatively except in the month of June where the company reported a highest positive share price movement against the all ordinary index of 67.55 whereas the company also recorded as low as -24.00% in the month of September. There is a higher amount of volatility in the share price movement throughout the financial year of 2016 (Schaltegger and Burritt 2017). Moving to the next financial year of 2017 the share price have reflected more or less the identical volatility as the company recorded some positive as well as the negative instances of share price movement against the all ordinary index.

The share price for the KYCKR Ltd in the month of February stood positively at 11.76% while in the following month of March 2017 the share price declined to negatively stand at 5.26%. Instances obtained in the latter half of the financial year suggest that the share price movement stood higher against the all ordinary index (Macve 2015). As in the month of August 2017 the share price of KYCKR Ltd stood positively at 41.38% against the all ordinary index of -0.54% after recording a low of -17.07% in the previous month of July at -14.71%. In the subsequent month of September, the share prices increased to stand at 46.34% while the all ordinary index stood 4.03% (Hoyle, Schaefer and Doupnik 2015). However, in the later months the declining trend in share prices continued its way.  

Major People Involved in the Governance of the Firm

There are certain important factor that govern the share price movement of the company. This includes the change focus of the company. KYCKR Ltd has uniquely placed its focus on the business of technology that provides the solution to the people to protect them against the money laundering and fraud along with tax evasion (Martin and Roychowdhury 2015). The company is trading in the direction of raising the capital and ASX consequently has granted a trading halt in the preparation of the market entry. This ultimately created a significant impact on the share prices of the company resulting the share prices to fall negatively against the all ordinary index.

Macroeconomic factors include the currency and the exchange rate fluctuations. The current financial contribution of the group is largely reliant on the movement in the exchange rates among the Australian dollar and certain number of overseas currencies (Hoitash and Hoitash 2017). The exchange rate among the numerous nations fluctuates substantially and this results in fluctuations that adversely create an impact on the operating results of the group and the financial position. As a result of this share prices of the company is considerably impacted.

The industry factors include the market risks as the KYCKR Ltd is exposed to the risk of currency because of the foreign exchange fluctuations in rate of currency (Henderson et al. 2015). The foreign currency risks originate from the future commercial transactions and the same that is identified in the financial assets of the KYCKR Ltd. As a result of this there is a significant movement as well as volatility in the share price movement of KYCKR Ltd.

KYCKR Ltd in the last two financial year reported a significant volatile in price. The share price of the company been relatively low (Horton 2018). The future cash flow of the company is poor and this can be primarily reflected on the dividend data as company has not provided any divided in the past nor there is any plan of providing dividend to its shareholders in the future. Gauging into the data of the company it can be stated that KYCKR Ltd is a loss making company and comparatively the share price of the company stands below Australian internet industry average.

Gauging into the past performance of the company the KYCKR did not reported an instance of profit making and the company’s yearly average earnings growth stood negative over the period of five years (Horton 2018). Due to the unavailability of the growth over the past five year the company has not reported any instances of profit. Findings from the analysis represents that the it is not possible for the company to establish if KYCKR Ltd has efficient shareholders as the company is a loss making (Lallemand and Strauss 2016). The rationale behind the analysis of the financial health is that the company does not has the instances of providing dividend to its shareholders. Furthermore it is difficult to establish the efficiency of the company in making an effective use of its assets in comparison to the last year Australian internet industry average because the company has reported loss (Engel 2016). The capital structure of the company also stood negatively as over the last three years the company is presently viewed as the loss making firm. Hence, the overall analysis suggest that the company is viable option of making an investment.

Calculations of the Fundamental Ratios

The entire source of capital along with the common stock, preferred stock, bonds and any other forms of long term debt are involved at the time of computing the WACC calculations (Gleim, Kustanovich and Irwin 2017). An organizations weighted average cost of capital rises with the rise in the beta along with the increase in the rate of return on the equity. With the rise in the weighted average of cost of capital there is a fall in the value and rise in the risk. A higher WACC has higher implications on the management assessment of the investment prospects and that typically provides a signal that there is a higher sum of risk related with the operations of the organizations.

The WACC of the organizations is usually used to project the anticipated costs relating to most of its debt financing sources. This comprises of the payments that is made on the debt obligations or cost associated with the financing of the debt (Thomson 2017). The WACC is regarded as the vital aspect in the considerations of the company loan request and for functional valuation. Therefore, there are organizations that look forward to reduce the WACC with the help of cheaper sources of financing (Chen, Shroff and Zhang 2017). As a result of this the investors may express their concern relating to higher WACC and may move somewhere else in the market for deriving better return.    

The debt ratio can be defined as the financial ratio that is used in measure the degree to which the company extends its leverage (Toms and Fleischman 2015). The debt ratio for the company stood during the financial year of 2016 0.17 while the debt ratio for the company stood 0.19 for the financial year of 2017. KYCKR Ltd does not has any debt and the company over the past five years have not taken any debt. The capital structure of the company is efficiently maintained by the directors.

In an attempt to amend their gearing ratio the company has issued to its vendors 46,297,500 of fully paid shares as a consideration of acquisition (Maheshwari 2015). There is no such changes in the capital structure of the company.

During the financial year of 2017 there were no dividends paid by the KYCKR Ltd to its shareholder neither did the company recommend or declared present or the earlier financial year.

We would like to draw your attention from the above stated analysis that the company is not suitable for making investment. The share prices of the company over the last 12 months have reported a higher amount of volatility against the all ordinary index. The future cash flow of KYCKR Ltd appears to be low and the share prices of the company been trading at a low of A$0.17. The company is a loss making firm and its value is not comparable against the value of the Australian internet industry average.

The growth of the KYCKR Ltd is also uncertain and with limited availability of the information the earnings of the company stood relatively lower in comparison to the Australian internet market. KYCKR Ltd does not generates profits and their yearly average growth rate has been negative over the period of five years. The company has also not reported dividend payment to its shareholders neither the company recommend in future of paying any dividend. A recommendations can be drawn by stating that the company is not suitable for making investment and the investors are request to abstain from making any investment in the KYCKR Ltd.

Evaluation of Share Prices Volatility

We anticipate that the information provided in analysis is helpful in meeting your anticipation and look forward to provide you service in future.

Conclusion:

The report can be concluded by stating that company has been a loss making venture over the period of five year trend. The share prices of KYCKR Ltd has traded in the ASX as low as A$ 0.17 and there is no such instances of providing the returns to the shareholders appear. With the limited availability of the information the efficiency in the areas of return on assets is not adequate as the company is a loss making venture. On a conclusive note it can be stated that the company does not provide any dividends to its shareholders and hence it is not a suitable venture of making an investment for the shareholders.

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