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This is a solution of Business Finance Assignment Help in which we discuss financial analysis of Altona Mining Limited which is a mining company having its operations in Australia.

Introduction

This report contains the financial analysis of Altona Mining Limited which is a mining company having its operations in Australia. The financial analysis has been done on the basis of annual reports of the company for the last few years, publications and information about the company from the ASX website and other sources through research via internet. The financial analysis includes calculation of financial ratios, gearing analysis, estimation of cost of capital using CAPM and calculation of WACC for the company. A letter of recommendation has also been provided in this report for assisting in investment decision in the shares of the company.

Company Description

Brief description and History

Altona Mining Limited is a copper company having many significant copper projects in Australia and registered office located in Western Australia. It operates in the mining of copper, zinc, gold and other minerals throughout the country. The company is listed on Australian Stock Exchange as well as Frankfurt Stock Exchange. In October 2014, the company sold its copper-zinc-gold mine and processing plant in Finland after which it focused its operations towards the Cloncurry Project in Queensland. The business and financial performance of the company depends upon the global economy, world markets for copper, gold and other metals and market perception of mining industry in Australia as well as throughout the world. The company is listed therefore it is also affected by the Australian dollar-US Dollar exchange rates. The input costs such as labour and power in Australia also determines the financial performance apart from effect of world markets. During past few years the company has developed good business relationships with the communities of Australia where its operations were conducted such as municipalities of Polvijarvi, Kaavi and Outokumpu in south-eastern Finland and Cloncurry region of Queensland.

Operations

Surface projection of mineralisation and drilling at Little Eva and Turkey Creek

The core asset of the company is the Cloncurry Copper Project established near Mt. Isa in Queensland. It is one of the biggest underdeveloped copper mining projects in Australia. The resource indulged in this project contains around 1.65 million tonnes of copper and 0.41 million ounces of gold. The first reported development of the project is Little Eva open pit copper-gold mine and concentrator with capacity of 7 million tonnes per annum. The proposed annual production of Little Eva is 38,800 tonnes of copper and 17,000 ounces of gold every year for at least 11 years. The Feasibility study of the project was completed in May 2012 which was again revised in March, 2014.

 Ownership-Governance structure

Ownership

The list of substantial shareholders of the company with higher than 5% shareholdings as at 26^thAugust 2015 is presented in the following table:

Holder name	Ordinary shares Number	Ordinary shares %
RBC Investor Services Australia Nominees Pty Ltd	79,841,324	14.93%
JP Morgan Nominees Australia	59,956,543	11.21%
Citicorp Nominees Pty Ltd	46,071,884	8.61
HSBC Custody Nominees (Australia) Limited	44,479,325	8.32
Tulla Resources Group Limited	35,348,000	6.61
BBY Nominees Limited	28,770,810	5.38

It can be observed none of the shareholders is holding more than 20% shares of the company. However there are 6 shareholders from the list of twenty substantial shareholders who have shareholdings higher than 5%. Out of these the chairman of the company is related to Tulla Resources Group Limited holding 6.61% shareholdings. Thus the company cannot be classified as a family company on the basis of shareholdings. Hence Altona Limited is a non-family company whose shares are held by group of investor companies and general public and not the directors or family members of directors (Halili, 2015).

Governance

Mr. Kevin Maloney – Chairman
Dr Alistair Cowden – Managing Director
Mr. Paul Hallam – Non-Executive Director
Mr. Steve Scudamore – Non-Executive Director

Mr Eric Hughes – Chief Financial Officer/Company Secretary

None of the above holds more than 20% shareholding in the company. Also none of them is with the same surname or interested in the shareholders holding moiré than 20% of shareholding. Thus the governance and management of company is separate from ownership. However, Mr. Kevin Maloney holds more than 5% shareholding in the company indirectly through Tulla Resources Group Limited in which he is interested. The total number of issued shares by the company is 534,800,592 and the number of shares held by the related company of Chairman is 35,348,000 which represent 6.6% of the total share holding. Thus shareholder holding more than 5% shares is included in the governance of the company indirectly as Chairman. Apart from this all the directors are independent.

Calculation of Performance ratios for lat four years

1. Return on Assets = (NPAT/ Total Assets)

Year 2015

NPAT = ($ 7,716,000)

Total Assets = $ 62,783,000

Thus, Return on Assets = (7,716)/62,783 X 100

= -12.29 %

Year 2014

NPAT = ($ 8,592,000)

Total Assets = $ 139,084,000

Thus, Return on Assets = (8,592)/139,084 X 100

= -6.18 %

Year 2013

NPAT = $ 12,647,000

Total Assets = $ 144,351,000

Thus, Return on Assets = 12,467/144,351 X 100

= 8.64 %

Year 2012

NPAT = ($ 25,046,000)

Total Assets = $ 114,458,000

Thus, Return on Assets = (25,046)/114,458 X 100

= -21.89 %

2. Return on Owners Equity = (Net Profit after Tax / Owners Equity)

Year 2015

NPAT = ($ 7,716,000)

Owners’ Equity = $61,779,000

Thus, Return on owners’ Equity = (7.716)/61,779 X 100

= -12.49%

Year 2014

NPAT = ($ 8,592,000)

Owners’ Equity = $118,730,000

Thus, Return on owners’ Equity = (8,592)/118,730 X 100

= -7.24%

Year 2013

NPAT = $ 12,647,000

Owners’ Equity = $103,752,000

Thus, Return on owners’ Equity = 12,467/103,752 X 100

= 12.02%

Year 2012

NPAT = ($ 25,046,000)

Owners’ Equity =$ 81,661,000

Thus, Return on owners’ Equity = (25,046)/81,661 X 100

= -30.67%

3. Gearing Ratio = Total Liabilities / Total Assets

Year 2015

Total Liabilities = $1,004,000

Total Assets = $62,783,000

Thus Gearing Ratio = 1004/62783

= 0.016

Year 2014

Total Liabilities = $20,354,000

Total Assets = $139,084,000

Thus Gearing Ratio = 20,354/139,084

= 0.15

Year 2013

Total Liabilities = $40,599,000

Total Assets = $144,351,000

Thus Gearing Ratio = 40,599/144,351

= 0.28

Year 2012

Total Liabilities = $32,797,000

Total Assets = $114,458,000

Thus Gearing Ratio = 32,797/114,458

= 0.29

To Prove (Year 2015)

EBIT   x          NPAT  x          TA       =          NPAT

TA                   EBIT               OE                     OE

Earnings before Interest and Tax (EBIT) = ($ 7,122,000)

Net profit after tax (NPAT) = ($ 7,716,000)

Total Assets (TA) = $62,783,000

Owners’ Equity (OE) = $61,779,000

EBIT   x          NPAT  x          TA       =          NPAT

TA                   EBIT               OE                     OE

7,122   x          7,716   x          62,783 =          7,716

62,783             7,122               61,779             61,779

7,122/62783 X 7,716/7,122 X 62,783/61,779 = 0.1249

0.1249 = 0.1249

Hence, proved.

The variable TA/OE    is the coefficient which determines the relationship between Return on Assets and Return on Equity. The phenomenon captured by these terms is the proportionate relationship between TA/OE and ROA/ROE. The variable representing TA/OE       indicates total assets as part of Owners’ Equity. The return on assets is calculated for net profit as part of Total assets whereas the return on equity indicates net profit as part of Owners Equity. Thus the variable TA/OE directly affects the relationship between Return on assets and Return on Equity.

The Return on Equity in all the four years above is greater than the Return on Assets of the company. The reason behind this is the TA/OE variable. The amount of total assets of the company is always greater than the amount of Owners’ Equity due to the current liabilities and long-term debt. This makes the variable TA/OE greater than one. As a result the return calculated as part of total assets represents less value as compared to the return calculated as part of Total Equity of the company attributable to its owners (Petty, 2012).

Graphs and results

The following is the graph of movement of stock of Altona Mining Limited for the last two years:

(History of ASX, 2016)

The following chart shows the movement in the stock of All Ordinaries Index for the last two years:

The following chart shows the movement of stock of Altona Mining Ltd against the movement of All Ordinaries Indexfor the last two years:

Analysis – From the above comparison of the movements in the price of shares of company with the movements in the All Ordinaries Index it can be observed that there is a positive correlation between the two variables which are movements in share price of company with respect to movement in the index price of All Ordinaries Index. The two graphs are very close to each other and at some places also overlapping each other. Mostly the line representing the movement in share price of company is above the line of All Ordinaries Index. Thus it can be concluded that the share price of company is less volatile with regards to the index price (Balan, 2011).

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Unit-20 External Business Environment Assignment

Unit-20 External Business Environment Assignment

AC1.4: Analyse the social structure of people employed in a major UK hotel group

People who are employed in hospitality sector face comparatively tougher situation when it comes to social stature. The impression of working in hospitality sector and other related tourism and leisure sector is the reflections of facts which are present on the ground level at workplace. Few factors which play key role in determining the image of the work are conditions of workplace, amount of wage or compensation, social structure, amount of professionalism at workplace, and status because of the job. Interaction of the companies with each other, both within the hospitality sector and also with the outside sector also matters in determining the social structure of the employees. Employees at InterContinental Hotels Group try to compare the factors with other similar industries and measure their social structure with respect to other peers. However the company makes sure that the employees should understand the sector is labour intensive and they should not feel underestimated or develop any sort of poor image (Hoque, 1999). In most of the developing countries employees face unfavourable condition in hotel industry and the factor gets coupled with lower payment, it gives rise to lower esteem for themselves and also from outsiders. InterContinental Hotels Group makes sure to understand the social structure of its employees before hiring them. The practice is uniform across all geographies and places of operation. Social structure is the way people lead their lives differently in various social contexts. The human resource department at Inter Continental Hotels Group hires employees carefully and trains them according to the company’s requirement, but keeping in mind that the employees’ social structure should not play a role in their job (Wood, 1997). Inter Continental Hotels Group practices giving importance to employees by proving timely information about business performance and company’s business strategies so that everybody is aligned with a same organisational vision. Proper communication is given utmost importance at the company and employees are made aware about international customer trends and developments in the hospitality sector. It treats the lower level employees in such a way that they can develop their soft and hard skills in order to excel at their workplace.

AC2.1: Discuss the structure, operation, and influence of local government on a major UK hotel group

The major UK hotel group which I choose is Inter Continental Hotels Group plc. The company follows a business model which suits its organisational vision and long term strategies. The business model which is termed “asset light” is followed by the hotel, through which it has ownership in a limited number of hotels. However the company has management contracts and franchising agreements and it has helped in the growth of the business. The business or organisational structure is to own, manage and franchise the hospitality business. The business works on the fundamental of making best use of outsider’s capital and being able to deliver stable and quality stream of revenue income. Almost 85% of the company’s hotels are being operated under the franchising model, and rest majority of the hotels are operating under the management contracts. A very small number of hotels are actually owned by the company. The company takes responsibility of the branding and marketing activities for all the hotels operating under various ownership models. The flagship Intercontinental Hotels are owned by the company, and the rest brands are given opportunity to reap benefit of the company’s management dividend and expertise. The companies which are operating under the InterContinental Hotels Group plc fall under the beneficial ownership of the group. It has hotels spread across different countries and continents, including presence in the UK, the United States, Hong Kong, and France. The company also works towards increase awareness about environment in order to gain implied benefit from its activities of corporate social responsibility.

The company follows the regulations of the countries wherever it has presence. In few jurisdictions the tax rates are multi-levelled and comparatively complicate to follow. Some local government require the hotel to abide by certain social norms in order to keep security and other social factors. Other major factors of running a smooth business are also influenced by the local governing authorities’ requirement. A number of such regulations affect affordability and availability of capital required, provision of suitable business sites, business planning and development of business under franchising and management agreements. Other factors such as market saturation and consumer behaviour also matters while dealing with different local governments.

AC2.2: Evaluate the role and influence of EU, its impact on the business and services industries

The European Union was founded to foster trading relationship between the participating members. The economy policy which is rational and helpful provides mutual beneficial business environment. The decisions are centralised through the centralised decision-making machinery, which are made for the trading with foreign entities (even in the Europe but outside the EU). Some of the proficiencies possessed by member countries are encouraged to be shared with the other members. Moreover centralised decision making power makes the lobbying capability of the EU members even stronger. The EU doesn’t hamper the member countries’ tendency towards getting closer with non-EU members in term of trade and mutual beneficial matters. However it is difficult to comment on the success rate of providing a multifaceted liberalisation by the EU (Zielonka, 2006).

European countries, especially members of the European Union are historically known for the service sectors, and advanced manufacturing sector. But the role of service sector in enhancing the importance of European economy has been seen in a number of exhibitions. The role of service sector is very important in terms of providing employment opportunity for most of the workers. With advent of EU, there has been increase in the free movement of services and goods. The positive effect on the free movement of labour and capital is also significant. With open opportunities, business and service sector firms have taken steps towards being competitive enough in order to exceed each other in terms of quality and efficiency. The service sector has benefited from the single market concept. It has also resulted in improved efficiency, more investments, reduction in cost, and availability of labour and capital.

AC2.3: Assess role of pressure groups and their political influence in relation to national issues in regards to hospitality industry

Pressure groups are non-governmental and mostly non-profit organisation working towards benefitting a particular cause of the political or social system. They do not have active political decision making participation, but they play vital role in influencing the political machinery of a country by lobbying or by pressurising. The groups are also known as lobby groups or interest groups. These groups externally play their roles in changing the policies of a government by not being part of it.

The British Hospitality Association is probably the largest and most influential pressure group present in the hospitality sector of the UK. It represents the interests of a number of sectors falling under the hospitality umbrella; hotels, leisure facilities, restaurants, and other similar organisations have their interests promoted through the association. The patrons of the pressure group are the large corporate from the hospitality industry, and also from the related but non-hospitality industries. Most of the pressure groups operate through a membership based system, which allows the individual members to represent their company or sub-sector in the hospitality industry.

An example can be exhibited in regards to the pressure groups’ role in active policy making. Action on Smoking and Health is a lobbying group which works towards increasing awareness about bad effects of smoking and other harmful health related practices. The group had long tried to pose a ban on smoking in the UK, which was opposed by the tobacco industry. But over a period of time, the lobbyists from the hospitality industry in coalition with other health advocacy groups were able to convince the health selection committee of the UK government. The results were partly shown in the practice by the British government. Recent actions taken by the pressure groups of the UK hospitality industries are towards cutting down the Value Added Tax for accommodation, meals, and tourism related services. The pressure groups have been successful in lobbying for tax changes, fee structure in some of the hospitality sectors, and rising up the minimum wage in the industry.Order Now

UKCBC Unit 7 Research Skills

UKCBC Unit 7 Research Skills

Introduction

Research is the process of analysing, processing and managing several sources of historical data and information regarding a particular topic. This process is basically a combination of several types of processes that help the organisations use to identify, collect, process, store and manage relevant information about a particular issue, which in turn helps the organisation to take major business decisions in the present time. The methods of research allow the already present data and historical events in the past to affect the decisions to be taken in the present and future. The methods of research can also be defined as the processes in which the works of others are referred to complete the current work. The methods of research are used by the organisations in various different situations
. An organisation may use a research techniques to determine the demand of a particular product in the market, determine the needs of the customers, determine the trends in the market along with its size and cost, determine the available resources in the market, determine the threats and opportunities in the market, determine the marketing strategy and promotional strategies to be used for a particular product and to stay responsive to the changes in the market. The methods of research allow an organisation to gain and maintain a competitive advantage over its competitors in the same industry. The basic steps of a research method include identifying the issue, determining the purpose of research, determining the method to be used, collecting data, analysing and evaluating the collected data, reporting the evaluations of the research and communicating the research reports to people who require those data.

LO1 Understand different research methodologies

1.1 Different research methodologies

There are several methods of researches which are differentiated by the purpose of the research, the type of the issue, the data to be collected, and the subject of the research, scope of the research and the importance of the research. The various established methods of research focus on each of these factors to a different extent. Some of the different types of research methodologies are mentioned below for development of Research skills.

Experimental research – This type of research is done when a particular experiment is being performed in a particular scope or a particular theory is being tested. There are several factors that can affect the result of the experiment or can affect the events that occur during the experimentation. This type of research allows the researcher to gain a complete perception of all those factors (Cooper, 2003).

Survey research – This type of research is done by the organisation in a situation in which they are trying to collect data regarding a particular issue from the primary sources of data. This type of research is done by the organisations trying to communicate directly to their current and potential customers (Kothari, 2004).

Evaluative research – This type of research is done by the organisations to determine and analyse the impact of a particular process, method or policy. The effect of that process is evaluated to determine the success rate.

Observational research – This type of research is based on the concept of taking a step back and observing from a distance. This type of research method observes and records the behavioural patterns of individuals, groups or organisations. This type of research helps the organisation to gather data regarding the occurrence of various processes (Kothari, 2004).

Applied research – This type of research is used by organisation to gather information to decide the course of action of a particular event, situation or issue. This type of research helps the organisation to take business decisions regarding a particular issue or problem in the business environment (Cooper, 2003).

1.2 Use of a research methodology

Research proposal is the document which describes the course of action that should be taken by the organisation while carrying out a research. The research proposal describes the issue for which research is being done, the methodology to be used for the research, the type of data and information to be collected in the research, the evaluation methods to be used to process the collected data and the type of report to be created describing the findings of the research. The research proposal is the most important piece of document that is needed before the research process begins. This is the document which explains the requirement of the research to the management and higher authorities in the organisation (Harris, 1997).

The research methodology to be used in the research process is clearly defined in the research proposal. The choice of research methodology depends on the number of the required subjects, the type of the issue being solved, the environment in which the research is being done and the amount of the required data and information. There are several research methodologies that can be used in a research process depending on the set of factor mentioned above.

Primary and secondary data collection – The research methodology of primary data collection involves the processes in which the organisation conducting the research collects the data and information regarding a particular issue or event from the primary sources of data. The primary sources of data are the customers, potential customers, employees and critics. So the data collection is done directly by the organisation carrying out the research (Robson, 1997).

In the case of secondary data collection methodology, the organisation carrying out the research collects relevant data and information from secondary sources of data. Secondary sources of data are the repositories of data being managed by several private and government organisations which collect data and information regarding the particular issue or event. These secondary sources of data are analysed and processed to determine the result of the research.

Observatory research methodology – This type of research methodology is used by the organisation which aims to observe the current trends in the environment along with the demands and needs of the customers. This type of research methodology is used in a research where the major aim of the process is to observe the behavioral pattern of individuals or groups (Cooper, 2003).

Experimental research methodology – This type of research methodology is used in a research method in which the researcher wants to check the validity of a particular theory, process or theory in a particular environment. This methodology is proposed in the research proposal document to determine the effect of a policy on the environment (Robson, 1997).Order Now