Analyzing Peninsula Energy Limited's Financial Performance

This report provides an in-depth analysis of Peninsula Energy Limited, assessing its financial performance from 2016 to 2018 using data like net profit after tax (NPAT), earnings per share (EPS), price-earnings ratio (PER), dividend payout ratio, book value per share, and return on equity (ROE). The company's stock return and risk are compared against market benchmarks, revealing challenges such as high competition from AGL and Origin Energy and an unclear dividend policy. Despite its efforts in managing uranium assets across multiple countries, Peninsula Energy Limited faces substantial growth hurdles due to the competitive energy sector in Australia. Consequently, based on the financial and qualitative analysis, it is recommended that investors avoid purchasing or holding shares in Peninsula Energy Limited.

1
Program Code: MPA14
Subject Name: Managerial Finance
Subject Code: MPA108

2
Section A: Background & Review of Literature
History
Peninsula Energy Limited is an ASX listed uranium mining company which along with
its subsidiaries is involved in exploring of uranium mines in the United States. It was initially
established as Peninsula Minerals Limited but has modified itself as Peninsula Energy Limited in
the year 2010. It has an interest of 100% in the Lance uranium projects located in Wyoming. The
company was established in the year 1993 and has about 38 employees. It has a wholly-owned
subsidiary of Strata Energy Inc that has began its operations in the year 2015 in Lance Projects
in Wyoming USA.
Industry and Products/Services
The company is carrying out its activities in the energy market of Australia and as such
faces the competitive pressure from the dominant energy companies in the sector such as AGL
Energy and Origin Energy Ltd. The company mining activities mainly involves the exploration
and production of uranium ores.
Location of Business Activities
The company and its subsidiaries commenced in-situ recovery uranium operations at
Lance Projects in Wyoming, USA. In addition to this, the company also carries out its business
activities in parallel in an Internal Pre-Feasibility at Karoo Uranium Projects in South Africa
(Peninsula Energy Limited, 2018).
Market Share
The company at present is having market capitalization of 607.6 m AUD in the energy
industry of Australia (PEN General Information, 2018).
Directors
The company Board is composed of executive and non-executive directors who hold the
responsibility of providing strategic direction to the company. Board is composed of non-
executive chairman, chief executive officer, non-executive directors and Chief Financial Officer.

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Mr. John Harrison is the non-executive chairman possessing a rich wealth of experience and
resource sector knowledge of about 45 year. Mr. Wayne Heili is the Chief Executive Officer
having about 30 year professional carrier in the uranium mining industry. He is holding the
responsibility of overseeing the designing, construction and ramping of the in-situ uranium
project 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. David
Coyne is the finance director having about 20 years of experience in mining and construction
industries (Peninsula Energy Limited, 2018).
Latest P/E Ratio
Latest 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 = -1.923
Dividend Policy
The dividend policy is referred as standard guidelines used by a company for deciding
over the matter related to earnings paid out to shareholders. The company has not disclosed its
dividend policy as analyzed from its financial report and it can be stated that the company is not
paying divided over the past few years (Brigham & Michael, 2013).
Environment Impact & policy
The company is involved in mining operating activities and as such faced high
environmental risk due to nature of its operational activities. The company has to comply with all
the relevant environment regulations for ensuring its sustained growth and development. The
company has taken into consideration the adoption of significant procedures and reporting
processes for meeting its environmental responsibilities effectively. The company prepares the
Environment Impact Assessment report as per the Australia and international legislations relating
to environment protection (Peninsula Energy Limited: Annual Report, 2017).
Beta as Given in Literature

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Beta determines the systematic risk associated with a company and the beta of Peninsula
as 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 of
stocks. Standard deviation is considered to be as measurement of volatility. It means more a
stock varies from the average stock return the more will be the volatility of the stock. The fact is
that standard deviation only considers changes (Volatility) in the return of stock over the period
of 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 measurement
of risk because of its limitation. There are mainly two types of distributions of returns,
symmetrical distribution and asymmetrical distribution. Volatility only considers the
symmetrical distribution and completely ignores the asymmetrical distribution. Most of the best
investment options have return distribution in asymmetrical manner. So it can be said that
standard deviation does not consider the asymmetrical return distribution and it is very important
for measurement of risk. Standard deviation is based on past information that might be useful
for predicting the future performance but it is certain that results changes overtime. Standard
deviation itself cannot determine the riskier stock when there is comparison of the two stocks. It
need some base to define the stock with highest risk. The base can be expected return or any
other factor that help to provide some base for decision. Standard deviation does not consider the
quantifying aspects of human behaviour while taking the investment decision. On the basis of
overall discussion it can be said that standard deviation does not provide reliable measurement of
risk (Reilly & Brown, 2011).
Solution 2:
Period 1 January 2006 to 1 January 2012
Date Peninsula S&P 200
Share
Price
Monthly
Returns
Marke
t
Monthl
y

5
Index
Return
s
31/12/200
5
0.685
3
4929.6
0
31/01/200
6
1.066
0 0.5556
4921.3
0 -0.0017
28/02/200
6
1.408
7 0.3214
5129.7
0 0.0423
31/03/200
6
1.066
0 -0.2432
5258.8
0 0.0252
30/04/200
6
0.989
9 -0.0714
5001.7
0 -0.0489
31/05/200
6
0.761
4 -0.2308
5073.9
0 0.0144
30/06/200
6
0.799
5 0.0500
4986.0
0 -0.0173
31/07/200
6
0.799
5 0.0000
5115.4
0 0.0260
31/08/200
6
1.066
0 0.3333
5154.1
0 0.0076
30/09/200
6
1.027
9 -0.0357
5384.4
0 0.0447
31/10/200
6
2.170
1 1.1111
5482.1
0 0.0181
30/11/200
6
2.627
0 0.2105
5669.9
0 0.0343
31/12/200
6
2.779
2 0.0580
5773.4
0 0.0183
31/01/200
7
3.236
1 0.1644
5832.5
0 0.0102
28/02/200 3.083 -0.0471 5995.0 0.0279

6
7 8 0
31/03/200
7
3.693
0 0.1975
6166.0
0 0.0285
30/04/200
7
3.045
8 -0.1753
6313.5
0 0.0239
31/05/200
7
3.197
4 0.0498
6274.9
0 -0.0061
30/06/200
7
2.768
4 -0.1341
6144.2
0 -0.0208
31/07/200
7
2.300
5 -0.1690
6247.2
0 0.0168
31/08/200
7
2.105
6 -0.0847
6567.8
0 0.0513
30/09/200
7
1.871
6 -0.1111
6754.1
0 0.0284
31/10/200
7
1.754
6 -0.0625
6533.1
0 -0.0327
30/11/200
7
1.637
7 -0.0667
6339.8
0 -0.0296
31/12/200
7
1.286
7 -0.2143
5650.3
0 -0.1088
31/01/200
8
1.169
8 -0.0909
5572.1
0 -0.0138
29/02/200
8
0.935
8 -0.2000
5355.7
0 -0.0388
31/03/200
8
1.013
8 0.0833
5595.4
0 0.0448
30/04/200
8
1.520
7 0.5000
5654.7
0 0.0106
31/05/200
8
1.247
7 -0.1795
5215.3
0 -0.0777

7
30/06/200
8
1.169
8 -0.0625
4977.4
0 -0.0456
31/07/200
8
0.974
8 -0.1667
5135.6
0 0.0318
31/08/200
8
0.818
8 -0.1600
4600.5
0 -0.1042
30/09/200
8
0.584
9 -0.2857
4018.0
0 -0.1266
31/10/200
8
0.623
9 0.0667
3742.5
0 -0.0686
30/11/200
8
0.623
9 0.0000
3722.3
0 -0.0054
31/12/200
8
0.728
0 0.1668
3540.7
0 -0.0488
31/01/200
9
0.623
9 -0.1430
3344.5
0 -0.0554
28/02/200
9
0.857
8 0.3750
3582.1
0 0.0710
31/03/200
9
1.286
7 0.5000
3780.5
0 0.0554
30/04/200
9
1.403
7 0.0909
3818.0
0 0.0099
31/05/200
9
1.200
0 -0.1451
3954.9
0 0.0359
30/06/200
9
1.520
0 0.2667
4244.0
0 0.0731
31/07/200
9
1.680
0 0.1053
4479.1
0 0.0554
31/08/200
9
2.400
0 0.4286
4743.6
0 0.0591
30/09/200 2.000 -0.1667 4643.2 -0.0212

8
9 0 0
31/10/200
9
1.880
0 -0.0600
4701.4
0 0.0125
30/11/200
9
1.720
0 -0.0851
4870.6
0 0.0360
31/12/200
9
2.000
0 0.1628
4569.6
0 -0.0618
31/01/201
0
1.800
0 -0.1000
4637.7
0 0.0149
28/02/201
0
1.720
0 -0.0444
4875.5
0 0.0513
31/03/201
0
1.640
0 -0.0465
4807.4
0 -0.0140
30/04/201
0
1.400
0 -0.1463
4429.7
0 -0.0786
31/05/201
0
1.160
0 -0.1714
4301.5
0 -0.0289
30/06/201
0
1.320
0 0.1379
4493.5
0 0.0446
31/07/201
0
1.400
0 0.0606
4404.2
0 -0.0199
31/08/201
0
1.520
0 0.0857
4582.9
0 0.0406
30/09/201
0
1.920
0 0.2632
4661.6
0 0.0172
31/10/201
0
2.200
0 0.1458
4584.4
0 -0.0166
30/11/201
0
3.000
0 0.3636
4745.2
0 0.0351
31/12/201
0
3.960
0 0.3200
4753.9
0 0.0018

9
31/01/201
1
5.400
0 0.3636
4831.7
0 0.0164
28/02/201
1
3.560
0 -0.3407
4837.9
0 0.0013
31/03/201
1
3.280
0 -0.0787
4823.2
0 -0.0030
30/04/201
1
3.400
0 0.0366
4708.3
0 -0.0238
31/05/201
1
2.960
0 -0.1294
4608.0
0 -0.0213
30/06/201
1
2.880
0 -0.0270
4424.6
0 -0.0398
31/07/201
1
2.280
0 -0.2083
4296.5
0 -0.0290
31/08/201
1
1.920
0 -0.1579
4008.6
0 -0.0670
30/09/201
1
1.720
0 -0.1042
4298.1
0 0.0722
31/10/201
1
1.440
0 -0.1628
4119.8
0 -0.0415
30/11/201
1
1.440
0 0.0000
4056.6
0 -0.0153
31/12/201
1
2.000
0 0.3889
4262.7
0 0.0508
31/01/201
2
2.520
0 0.2600
4298.5
0 0.0084
Peninsul
a
S&P
200
Average Return 4.27% -0.09%
Variance 0.0591 0.0019
Standard 24.48% 4.43%

10
Deviation
(Yahoo Finance, 2018)
Period 2 January 2012 to 1 January 2018
Date
Peninsula S&P 200
Share
Price Monthly
Returns
Marke
t
Index
Monthl
y
Return
s
31/12/201
1
2.000
0
4262.7
0
31/01/201
2
2.520
0 0.2600
4298.5
0 0.0084
29/02/201
2
2.560
0 0.0159
4335.2
0 0.0085
31/03/201
2
2.120
0 -0.1719
4396.6
0 0.0142
30/04/201
2
1.440
0 -0.3208
4076.3
0 -0.0729
31/05/201
2
1.320
0 -0.0833
4094.6
0 0.0045
30/06/201
2
1.200
0 -0.0909
4269.2
0 0.0426
31/07/201
2
1.200
0 0.0000
4316.1
0 0.0110
31/08/201
2
1.120
0 -0.0667
4387.0
0 0.0164
30/09/201
2
1.440
0 0.2857
4517.0
0 0.0296
31/10/201
2
1.480
0 0.0278
4506.0
0 -0.0024
30/11/201 1.560 0.0541 4649.0 0.0317

11
2 0 0
31/12/201
2
1.560
0 0.0000
4878.8
0 0.0494
31/01/201
3
1.320
0 -0.1538
5104.1
0 0.0462
28/02/201
3
1.240
0 -0.0606
4966.5
0 -0.0270
31/03/201
3
1.040
0 -0.1613
5191.2
0 0.0452
30/04/201
3
1.160
0 0.1154
4926.6
0 -0.0510
31/05/201
3
0.960
0 -0.1724
4802.6
0 -0.0252
30/06/201
3
1.040
0 0.0833
5052.0
0 0.0519
31/07/201
3
1.040
0 0.0000
5135.0
0 0.0164
31/08/201
3
1.080
0 0.0385
5218.9
0 0.0163
30/09/201
3
0.920
0 -0.1481
5425.5
0 0.0396
31/10/201
3
0.880
0 -0.0435
5320.1
0 -0.0194
30/11/201
3
0.840
0 -0.0455
5352.2
0 0.0060
31/12/201
3
0.960
0 0.1429
5190.0
0 -0.0303
31/01/201
4
1.040
0 0.0833
5404.8
0 0.0414
28/02/201
4
1.400
0 0.3462
5394.8
0 -0.0019

12
31/03/201
4
1.280
0 -0.0857
5489.1
0 0.0175
30/04/201
4
1.200
0 -0.0625
5492.5
0 0.0006
31/05/201
4
0.920
0 -0.2333
5395.7
0 -0.0176
30/06/201
4
1.000
0 0.0870
5632.9
0 0.0440
31/07/201
4
0.960
0 -0.0400
5625.9
0 -0.0012
31/08/201
4
0.960
0 0.0000
5292.8
0 -0.0592
30/09/201
4
1.000
0 0.0417
5526.6
0 0.0442
31/10/201
4
0.840
0 -0.1600
5313.0
0 -0.0386
30/11/201
4
0.800
0 -0.0476
5411.0
0 0.0184
31/12/201
4
0.840
0 0.0500
5588.3
0 0.0328
31/01/201
5
0.720
0 -0.1429
5928.8
0 0.0609
28/02/201
5
0.720
0 0.0000
5891.5
0 -0.0063
31/03/201
5
0.760
0 0.0556
5790.0
0 -0.0172
30/04/201
5
0.920
0 0.2105
5777.2
0 -0.0022
31/05/201
5
0.880
0 -0.0435
5459.0
0 -0.0551
30/06/201 1.000 0.1364 5699.2 0.0440