MPA14: Human Resource Management | Assignment
Added on 2020-04-01
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Finance
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1Program Code: MPA14Subject Name: Managerial FinanceSubject Code: MPA108
2Section A: Background & Review of LiteratureHistoryPeninsula Energy Limited is an ASX listed uranium mining company which along withits subsidiaries is involved in exploring of uranium mines in the United States. It was initiallyestablished as Peninsula Minerals Limited but has modified itself as Peninsula Energy Limited inthe year 2010. It has an interest of 100% in the Lance uranium projects located in Wyoming. Thecompany was established in the year 1993 and has about 38 employees. It has a wholly-ownedsubsidiary of Strata Energy Inc that has began its operations in the year 2015 in Lance Projectsin Wyoming USA. Industry and Products/ServicesThe company is carrying out its activities in the energy market of Australia and as suchfaces the competitive pressure from the dominant energy companies in the sector such as AGLEnergy and Origin Energy Ltd. The company mining activities mainly involves the explorationand production of uranium ores. Location of Business ActivitiesThe company and its subsidiaries commenced in-situ recovery uranium operations atLance Projects in Wyoming, USA. In addition to this, the company also carries out its businessactivities in parallel in an Internal Pre-Feasibility at Karoo Uranium Projects in South Africa(Peninsula Energy Limited, 2018). Market ShareThe company at present is having market capitalization of 607.6 m AUD in the energyindustry of Australia (PEN General Information, 2018). DirectorsThe company Board is composed of executive and non-executive directors who hold theresponsibility of providing strategic direction to the company. Board is composed of non-executive chairman, chief executive officer, non-executive directors and Chief Financial Officer.
3Mr. John Harrison is the non-executive chairman possessing a rich wealth of experience andresource sector knowledge of about 45 year. Mr. Wayne Heili is the Chief Executive Officerhaving about 30 year professional carrier in the uranium mining industry. He is holding theresponsibility of overseeing the designing, construction and ramping of the in-situ uraniumproject in the USA. Mr. Evgenij Iorich, Mr. Harrison and Mr. Mark Wheatley are the non-executive directors of the company have a vast experience in the resource sector. Mr. DavidCoyne is the finance director having about 20 years of experience in mining and constructionindustries (Peninsula Energy Limited, 2018).Latest P/E RatioLatest Market Price as on 9 May, 2018 = 0.25 (As given on yahoo finance)Earnings per Share = -0.13 (As given on yahoo finance) (Yahoo Finance, 2018)P/E ratio: 0.25/-0.13 = -1.923Dividend PolicyThe dividend policy is referred as standard guidelines used by a company for decidingover the matter related to earnings paid out to shareholders. The company has not disclosed itsdividend policy as analyzed from its financial report and it can be stated that the company is notpaying divided over the past few years (Brigham & Michael, 2013).Environment Impact & policyThe company is involved in mining operating activities and as such faced highenvironmental risk due to nature of its operational activities. The company has to comply with allthe relevant environment regulations for ensuring its sustained growth and development. Thecompany has taken into consideration the adoption of significant procedures and reportingprocesses for meeting its environmental responsibilities effectively. The company prepares theEnvironment Impact Assessment report as per the Australia and international legislations relatingto environment protection (Peninsula Energy Limited: Annual Report, 2017).Beta as Given in Literature
4Beta determines the systematic risk associated with a company and the beta of Peninsulaas stated in the literature is 1.36 (Yahoo Finance, 2018).Section C:Solution 1: Standard deviation is generally used to measure the risk of stock and risk of portfolio ofstocks. Standard deviation is considered to be as measurement of volatility. It means more astock varies from the average stock return the more will be the volatility of the stock. The fact isthat standard deviation only considers changes (Volatility) in the return of stock over the periodof time in order to compute the risk of a particular stock (Lumby & Jones, 2007). There are several reasons why standard deviation is not considered reliable measurementof risk because of its limitation. There are mainly two types of distributions of returns,symmetrical distribution and asymmetrical distribution. Volatility only considers thesymmetrical distribution and completely ignores the asymmetrical distribution. Most of the bestinvestment options have return distribution in asymmetrical manner. So it can be said thatstandard deviation does not consider the asymmetrical return distribution and it is very importantfor measurement of risk. Standard deviation is based on past information that might be usefulfor predicting the future performance but it is certain that results changes overtime. Standarddeviation itself cannot determine the riskier stock when there is comparison of the two stocks. Itneed some base to define the stock with highest risk. The base can be expected return or anyother factor that help to provide some base for decision. Standard deviation does not consider thequantifying aspects of human behaviour while taking the investment decision. On the basis ofoverall discussion it can be said that standard deviation does not provide reliable measurement ofrisk (Reilly & Brown, 2011). Solution 2:Period 1 January 2006 to 1 January 2012DatePeninsulaS&P 200SharePriceMonthlyReturnsMarketIndexMonthlyReturn
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