Study on Taxation - Free Essay Example

Sample details Pages: 7 Words: 2146 Downloads: 7 Date added: 2017/06/26 Category Law Essay Type Cause and effect essay Topics: Taxation Essay Did you like this example? Introduction This case considers the issue of the ordinary income and whether or not a gift of shares to an accountant Lewis Hays by the owner of the company Richardson’s Meat Industries Ltd. is assessable as ordinary income for the accountant’s personal services to the private company and the owner. He worked for company for many years and the company upon transition from private to public company the owner gave the accountant a substantial amount of shares. However, when reached by the Federal Commissioner of Taxation the accountant was of the stance that the shares are not been awarded to him in return to his past services but as a gift therefore are not subject to taxation as ordinary income. The Case: In the year 1951, the Taxation Board of Review taxed 12,000 shares of Richardsons Meat Industries owned by George William Richardson. These shares of 5s each were given to Lewis Hayes as a gift by his ex-employer and boss George Richardson. Th e Commissioner decided to tax the shares at a total face value of 3,000 pound as a part of taxpayers assessable income. Similarly, the majority of board keeping the same view in mind were of the opinion that the commissioners decision was rightly made and the shares must be taxed since Richardson received constant advice from Hayes and for that Hayes was never paid. Lastly, Richardson’s statement, â€Å"were given in recognition of services rendered in the past by the recipients and as an inducement or incentive to continue good service in the future† stamped the matter. The commissioner was of the view that the shares issued to Hayes should be constituted as assessable income since the payment of money or a transfer of property although given in form of a gift, as there was no obligatory reason to present it, may in certain cases be income in the hands of the recipient. He was concluding his hypothesis on the basis of English cases that of Squatting Investment Co L td and Squatting Investment Co Ltd. Lewis and Christine Hayes both decided to appeal to the High Court on this matter and the court decided to hear the matter for appeal stating that the board of reviews decision of marking the shares as assessable income based on statutory definition of value of allowances ect. was in fact a matter of law under sections No. 27 of 1936, No. 48 of 1950 and ss. 6, 26 (e) and 196 (I) of Income Tax and Social Services Contribution Assessment Act 1936-1951. Section 196 (I) of the act gave Hayes the right of appeal to the High Court from any decision of a board of review, which involves a question of law. The Judgement: Judge Fullagar gave a detail judgement on the matter that covered all the aspects of the case starting from 1939 when Hayes was residing in Melbourne. Hayes was an accountant by profession and Richardson was carrying on business in Hobart in meat and small goods under the name of Richardsons Choice Provisions. Richardson’s wa s expanding, and was searching for a qualified accountant with special experience in costing. Hayed on Richardson’s invitation relocated to Hobart and entered into his employment. Although his designation was not decided he performed duties as both supervising accountant and general financial adviser. Later on in 1944 Richardson transformed his business into Richardson’s Choice Provision Pty Ltd. Richardson held two fifths of the shares in the company established with a paid up capital of 17,000 pounds. Hayes had about 3000 shares of 1 pound in the company, and also held the positions of the director in the company and its secretary but retained the right of private practise. Hayes stated that Richardson lent him 500 pounds for payments on his shares. However, Hayes only had his private practice. Following the course of events in 1947 Richardson decided to retain control of his deteriorating business and he wanted to hold all shares or none at all. He bought all shares but 500 held by his son including those of Hayes at 22s 6d or 23s 0d a rate lower than what Hayes wanted yet he sold his share anyway by August 1947. At this point every shareholder agreed that Richardson must regain complete control and Hayes considered himself under a moral obligation to facilitate the change for the greater good. However, Richardson told him that he would not lose anything and he would make it up to him someday. In the years to follow the business flourished and expanded until 1950 when it was decided to be transformed into a public company in 1950. The company was incorporated on 22nd may 1950 under the name Richardson’s Meat Industries Ltd. However, the liquidation of the proprietary company did not happen and continued to exist as operating organization, though the shares passed on to the new public company. At this point Richardson acquired 212,000 shares of 5s. 0d. each in the public company and these were given to him against his share in the pro prietary company and other property acquired from him. Upon acquiring these shares Richardson stated that he felt he had done particularly well that he had achieved an ambition and made a success of things. Thus primarily in a spirit of generosity, prompted by these not unnatural reflections, that he decided to make certain voluntary dispositions. He made large monetary gifts to certain public institutions, as to which no question arises. He also, by letter dated 27th June 1950 directed the secretary of the public company to issue 52,000 of the 212,000 shares, to which he was entitled, to the following persons 4000 to D. C. Richardson, 4000 to G. H. Richardson, 12,000 to Henri Albert Christie, 12,000 to Lewis Hayes , and 20,000 to Christie and Hayes on behalf of the staff of the proprietary company. Fullugar stated in his judgement that â€Å"It is true that the decision was a decision on a question of fact in the sense that there was an ultimate factum probandum: the taxpa yer had to prove that what he received was not income, and the board determined that he had failed in his proof. But that determination involved a consideration of what constitutes income, and that is a question of law. The board had also to consider the construction of s. 26 (e) of the Act. The decision turned on the view taken by the board on those matters, and that decision is right or wrong according as the boards view on those matters was right or wrong.† He at this point referred to the case of Lord Parket of Waddington in Farmer v Cotton’s Trustee (1915) and stated that several taxation cases create serious difficulty in relation to the distinction, which often has to be drawn, between questions of fact and questions of law. He was of the view that the factum probandum (the ultimate fact in issue) that is ultimately dependant on the facta probantia (the facts adduced to prove or disprove the ultimate fact) where the factum probandum involves a term used in a s tatute, the question whether the accepted facta probantia establish that factum probandum will generally so far as I can see, always be a question of law. He further stated that, in his opinion, the decision of the board involves a question of law, and the appeal lies. He also scrutinized the facts which led the majority of the board to the conclusion that what the appellant received was income. He accepted all relevant facts as they were presented including Hayes employment by Richardson as a supervising accountant and general adviser in the business and receiving a salary. He pointed that 1942 he ceased to be a full-time employee of Richardson, and since that year he has been in private practice as a public accountant. He also accepted that Hayes has been remunerated for his services as director and secretary in Richardson’s companies from 1944 – 1947 and then till 1950 as secretary. And yet was not paid for services of a trifling nature, such as the preparation of land tax returns and giving advice to Richardson. He also accepted that one gathers that the advice was generally accepted, and the result seldom, if ever, regretted and Richardson felt that he had made a success of things, he was disposed to give a real measure of credit for that success to advice and assistance received over the years from his business associate and personal friend. However, Fullugar rejected that Richard’s statement signed in December 1952 at the time of interview in the Commissioner’s office in Hobart contained only part of the truth and not the complete truth about why the 41385 shares were given out. Richardson had stated that these were in recognition of the services in past and to continue good service in the future. He also objected on the matter that Hayes statement regarding his understanding that all the shares given by Richardson in June 1950 were subject to tax in the hands of the recipients and he did not intend to claim exemption . Fullugar stated the matter though of small importance should have been objected and disallowed but the board ignored it at that point. Neither advice received by Hayes, nor his own view of the legal position, nor his intention at that time to contest or not to contest his assessment, could have any possible bearing on the question before the board. Therefore, the receipt of the shares in question here was not, in my opinion, a receipt of income by Hayes. What was done, as I think, amounted to a simple gift of property and nothing more. To conclude the matter Fullugar stated that Richardson was motivated by both services render and gratification for the continued advice he received from Hayes as well as keeping up his promise that he would make it up to him some day. Further he stated that, a voluntary payment of money or transfer of property by A to B is prima facie not income in Bs hands. If nothing more appears than that A gave to B some money or a motor car or some shares, w hat B receives is capital and not income. But further facts may appear which show that, although the payment or transfer was a gift in the sense that it was made without legal obligation, it was nevertheless so related to an employment of B by A, or to services rendered by B to A, or to a business carried on by B, that it is, in substance and in reality, not a mere gift but the product of an income-earning activity on the part of B, and therefore to be regarded as income from Bs personal exertion. A very simple case is the case where A employs B at a salary of 1000 pounds per annum, and at the end of a profitable year gives him a bonus of 100 pounds. Obviously the bonus is income. It is paid without obligation, but it is clearly in truth part of what B has earned during the year.† Whereas, the commissioner contended that the receipt was an income receipt because it fell within the general conception of income, or alternatively that it fell within the terms of s. 26 (e) of t he Act. Section 26 provides that the assessable income of any person shall include . . . (e) the value to the taxpayer of all allowances, gratuities, compensations, benefits, bonuses and premiums allowed, given or granted to him in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by him, whether so allowed, given or granted in money, goods, land, meals, sustenance, the use of premises or quarters or otherwise. I doubt very much whether s. 26 (e) has the effect of bringing into charge any receipt which would not be brought into charge in any case either by virtue of the general conception of what constitutes income or by virtue of the definition of income from personal exertion in s. 6. The words directly or indirectly are doubtless intended to cast the net very wide, but it is clear that there must be a real relation between the receipt and an employment or services. If the receipt in the present case does not fall within the genera l conception of income, it is not, in my opinion, caught by s. 26 (e). The Verdict: Fullugar added that, if as a result of his friend’s advice A buy shares of a company Z and make great profits then a gift of 1000 pounds to his friend is by no means income earned by his friend B. If the receipt of the shares were a receipt of income, the amount to be added to assessable income would seem to be not the amount of their face value but the amount of their market value. It may be, of course, that face value and market value were identical. Thus Fullugar ordered that the assessment must be reduced by 3000 pounds which was the value of the shares. Don’t waste time! Our writers will create an original "Study on Taxation" essay for you Create order

Dependency Reduces Conflict - 1344 Words

Conflict is something that is inherent in human nature, however when one is dependent on another it reduces the likelihood of conflict. This is apparent in the new world economic and international system. The creation of interdependence not only reduces the probability of war between nations but it allows for more peaceful resolutions. This essay will focus on firstly understanding the way in which economic interdependence is possible (embedded liberalism), highlighting issues of what would happen if this system weren’t in place and finally how this system renders war an unattractive solution. Economic globalization and economic integration does not annihilate conflict but it does reduce the probability of war by providing incentives to dialogue between nations due to economic interdependence. Economic globalization and economic integrations are possible due to embedded liberalism. 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Health Promotion Substance Abuse Samples †MyAssignmenthelp.com

Question: Discuss about the Health Promotion Substance Abuse. Answer: Substance abuse is a global peril and is a threat to humanity and sustenance of mankind. Substance abuse can affect an individuals life at any point of time. People have been using drugs and alcohol on a long term basis. Drugs find use in the treatment of ailments within an individual. However, the drugs can be further divided into schedule and no-schedule drugs, which is the main contributor to substance abuse. Drugs and alcohol has been doing harm to the society and deaths by substance abuse are reportedly higher in many developing and developed countries. Health promotion motivates us to embrace the idea of well-being. Many programs have been initiated worldwide to eliminate the problem of substance abuse, which is often short term and it is concentrated on simple facts and situational analysis. However, the lack of community based approaches hinders the success of much of the programs. The current study discusses in detail in the generic strategy for health promotion, designing an action plan for promotion of the health objectives. The Ottawa charter for health promotion has also been discussed in the current regards. The generic strategy Health promotion and prevention of disease is two distinct topics and are related. Prevention generally identifies the problem and helps in avoiding similar situations in the future. The focus of prevention in the field of substance abuse is reduction in the drug usage, reduction in the use of alcohol or tobacco. Health promotion works as a broader level of prevention, which mainly focuses on the all-over well being of the patients (Eldredge et al., 2016). Health promotion targets to reduce the stigma along with addressing the root cause of drug abuse. Health promotion is a process of providing sufficient knowledge and autonomy in the hands of the individuals and community in general for controlling their own health. Like every other things which makes human feel good, the psychotic substances like drugs, alcohol and tobacco changes the way we feel. These psychotic substances have the potential to do both good and bad by taking the charge of life from our hands. The traditional prevention programs focuses on the ways to prevent and treat the negative outcomes of this problem (Neiger et al., 2012). This has led the government to apply many policies and legislation, which restricts the supply of the drugs, alcohol and tobacco. Health promotions does not necessarily seek to protect people from harm, it encourages and enables people to gain control over their health (Soubhi, Potvin, 2010). The health promotion interventions always focus on the well-being of the people. Each substance has its associated side effects and produces different symptoms and expressions in an individual; every environment has different cultures, which adds elements of resiliency. In this respect, porters generic strategy model could be used for affective promotion of health objectives within the population. The model was suggested by Michael Porter in 1980 to establish the relation within organizations at the grassroot level and the industry as a whole. The strategy in general believes in maximization of the core capabilities of an organization to provide it with a competitive advantage over other similar market players (Benavides-Vaello, Strode, Sheeran, 2013). The strategic model can be divided into three different objectives such as cost leadership, differentiation, differentiation focus, cost focus, stuck- in-the middle. There are some of different aspects of the model which could be elaborated further based upon the requirements and scope of health promotion. The cost leadership focuses upon designing and promotion of strategies for health promotion which would provide the best in class services to the desired section of audiences. In this context, the target audience would be the one suffering from drug abuse. The goal of the health promotion objective would be to provide them with best possible alternatives or medication for management of the side effects of the drug abuse. Therefore designing health promotion campaign where the patients are provided with cost effective medicines such as opoids for pain management and central nervous system depressant such as diazepam and alprazolam can help in the establishment of cost leadership. The success of the campaign lies in the differentiation of the promotional strategies, which can help in reaching out to the maximum number of audiences. In this respect, using different modes or platforms for promotion such as handmade posters, pamphlets along with large scale online campaign can help in diversification of the audience bases. The differentiation focus here means drafting out promotional plans and awareness messages for individual audience section. The peril of drug abuse is common within the youth as well as the aged who have suffering from long term addiction ("Lives of Substance - personal stories of addiction", 2017). Therefore, the mode of treatment and strategic promotional plan varies according to the section of audiences being addressed. The cost focus here refers to the designing and mitigation of cost effective alternate solutions which could help in controlling and regulating the incidence of drug abuse. There is a need to identify the focus group and reach out to them individually, through effective collaboration with multiple state and federal government health channels. As commented by Loss, Lindacher Curbach (2014), regular blood tests, vaccination, affective medication management along with following a holistic care regimen can reduce the dependence on such illicit sources. The stuck in the middle situation can be encountered in case proper research and evaluation is not done before the implementation of the promotional objectives and campaign. An example of the strategy in action The health promotionstrategies, which are specific to a substance, in general, works to reduce the available supply of that substance, it also works to reduce the individual demand of that particular substance. In another way, these strategy works to reduce the potential of harming the individual and the society using it. The specialty of the health promotion strategies is the works to reduce the risks such a way that the interactions of these risk factors are complex. The substance abuse related health promotion strategies offer many opportunities for the policy change (Bennadi, 2013). The health promotion strategy discussed here is demand reduction. It works at all three level (individual, community and environmental). The demand reduction comprises intervention in such a way that it also aims on to the reduction of the harmful consequences of using alcohol, tobaccos and drug. The scope of the demand reduction intervention is wide. The demand reduction health promotion strategies can be applied in two ways. One is through school-basedcampaign, which works by mass education (Onnela et al., 2014). Another is through providing the abused people with drug dependence treatment. The first approach is focused on the youth. The most effective programs for youth are the one, which are long-term, and comprehensive. The most effective programs can be embedded in the existing curriculum (Kania et al., 2012). It is also necessary to target those people who are not in the school. Therefore, the approach should also be on the street level. The campaigns, which are held in the schools, are often anti-drug.However, through the health promotion approach, it should be pro-heath. These campaigns should emphasize on building self-esteem to the students (Drewitz-Chesney, 2012). However, the first approach could not provide the patients with expected outcome, whereas the second approach is safer and effective. For example, the treatment for heroin independence using the substitution drugs in structured settings with psychological assistance has shown immensely positive response. The intervention method includes the attraction and retention of the substance abuse patientslong enough to make the treatment work. It can make the drug and alcohol demand for this particular community to decrease gradually. This provision is available and affordable. There are many other benefits of this approach such as reduction in the number of drug overdose death. The majority of people who suffers from the addiction problem like alcohol, tobacco and drugs opt for a detoxification prevention program. Detoxification or detox is one of the safe and comfortable management to treat the withdrawal symptoms (Stafford, Allsop, Daube, 2014). The Detoxification program cannot be considered as a distinct form of treatment, rather than it can be considered as a prelude to the treatment. However, the drawback of the det oxification program is that, the addicts availing this service can relapse back into the addiction. This makes them in exposure of drug overdose or alcohol overdose. The heroin users are often treated with supplement drugs such as Methadone. Methadone treatment is the most effective one and is more extensively studied. It reduces deaths by drug overdose, crimes and HIV infection. The main drawback of this treatment is that Methadone is often poorly supervised and is available in the black market. It can be used as another legal medical drug, which can be used again as a substance. The health-promotion strategy approach of using Methadone should be promoted on the community level (Herrman, 2012). The campaign should be focused about letting people know about the bad effect of the drug. Another campaign, which could raise awareness amongst the common people including the young, is the media campaign. Media campaign is also an effective tool to reduce the drug demand. However, intervention campaign through media is often ineffective. Best practiceI: Planning, evaluation, context According to the WHO stated health promotion principles, a successful health promotion strategy will involve the population in a whole rather than focusing on the people with one specific disease. It is directed towards the action on the health determinants. An effective Health promotion strategy, combines many complementary methods or approaches. A particularly effective health promotion strategy aims an effective participation and the health professionals who work to the primary healthcare have an important role in enabling the health promotion (Roden, Jarvis, 2012). Many approaches of theabove-mentioneddrug demand reduction strategies and intervention has maintained the health promotion principles apart from the closed setting treatment. The media campaign approach is cost-efficient and involves the people in mass, but it does not influence the community as a whole. The youth oriented school based interventions also targets a mass population, but is not always effective. The interventions using drugs such as Methadone as a substitute along with psychological counseling is the most effective approach involving substance abuse. Counseling and detoxification therapy can be an effective approach together for any people, who are suffering from any kind of substance abuse. The framework of intervention with many clear goals needs evaluation for effective outcome. Before implementing the framework, consideration of three essential phases needs to be considered. These are, assessment of the strength and framework of the community, planning of the approach and implementation of the approach. To do this connection with the key stakeholders such as school, street, parents is necessary. For planning the approach against substance abuse, nurturing the key partnership among colleagues, peers and community is alsoimportant (Roden, Jarvis, 2012). Identification and evaluation of the intended outcome of the health promotion strategy is necessary. To develop and evaluate a conceptual framework, engagement of stakeholders in developing and disseminating is necessary. Best Practice II: Ottawa Charter in action The Ottawa chartered Health promotion (1986) has been influential in guiding the all over development of the health promotion concept. The Ottawa Chartered can be used at any population settings and the action areas shows more chance of promoting health than when they are in isolation (Woodall, J. R., Warwick-Booth, Cross, 2012). The Ottawa chartered highlights the potential role of the every organization, system and also the community as well as the individual level. The problem of substance abuse, such as alcohol and drug abuse is prevalent among the individuals of Australia. The studies revealed that, in recent years there have been many reports, which highlighted more young people, are consuming more alcohol and drugs. The need of a proper health policy: Building a healthy public policy is necessary to implement this health promotion framework. A healthy policy ensures that the people are safe. This includes about making a policy about increasing the age limit of using alcohol (Ayo, 2012). Create a supportive framework: Creating a supportive framework is important as it ensures the creation of the supportive environment. Misusage of substance is not just affects the young people as it affects the whole community. The supportive environment would help them to be free from the influence of alcohol and psychotic substances. Strengthen community action: Strengthening community action includes the involvement of the whole community to the approach, not just in individual level. If the actions are taken at the community level, it will help all the addicted people within the community to kick of the addiction. Develop personal skills: Development of personal skills is important as people feels more control over their lives. This can empower a person as they can feel that they are empowered enough to not to be dependent over alcohol, tobacco drugs or any substance. Reorient health service: Reorientation of the health care is an important approach as reorienting health service needs that the nurses have an important role in collaboration between the different stakeholders (McPhail-Bell, Fredericks, Brough, 2013). When they are partnered with the other healthcare providers, the nurses can encourage the positive health practices. From a perspective of health promotion, developing health literacy is the most important part of the health promotion. A person should develop certain knowledge and skills to manage its influence over substance abuse rather than about lifestyle marketing. The prevention programs should focus on disrupting the harmful pattern of the use of drugs ande alcohol. The intervention programs should empower the patients to select their own goals, which would meet their individual need. The focus of the health promotion should be the development of capacity in bothindividual and community level. Building a proper health policy is important, rather than on fixing the problems. References: Ayo, N. (2012). Understanding health promotion in a neoliberal climate and the making of health conscious citizens.Critical public health,22(1), 99-105. Benavides-Vaello, S., Strode, A., Sheeran, B. C. (2013). Using technology in the delivery of mental health and substance abuse treatment in rural communities: a review.The journal of behavioral health services research,40(1), 111-120. Bennadi, D. (2013). Self-medication: A current challenge.Journal of basic and clinical pharmacy,5(1), 19. Drewitz-Chesney, C. (2012). Posttraumatic stress disorder among paramedics: exploring a new solution with occupational health nurses using the Ottawa Charter as a framework.Workplace health safety,60(6), 257-263. Eldredge, L. K. B., Markham, C. M., Ruiter, R. A., Kok, G., Parcel, G. S. (2016).Planning health promotion programs: an intervention mapping approach. John Wiley Sons. Herrman, H. (2012). Promoting mental health and resilience after a disaster.Journal of Experimental Clinical Medicine,4(2), 82-87. Kania, A., Patel, A. B., Roy, A., Yelland, G. S., Verhoef, M. J. (2012). Capturing the complexity of evaluations of health promotion interventions: a scoping review.The Canadian Journal of Program Evaluation,27(1), 65. Lives of Substance - personal stories of addiction. (2017). Lives of Substance. Retrieved 14 November 2017, from https://www.livesofsubstance.org Loss, J., Lindacher, V., Curbach, J. (2014). Online social networking sitesa novel setting for health promotion?.Health place,26, 161-170. McPhail-Bell, K., Fredericks, B., Brough, M. (2013). Beyond the accolades: a postcolonial critique of the foundations of the Ottawa Charter.Global health promotion,20(2), 22-29. Neiger, B. L., Thackeray, R., Van Wagenen, S. A., Hanson, C. L., West, J. H., Barnes, M. D., Fagen, M. C. (2012). Use of social media in health promotion: purposes, key performance indicators, and evaluation metrics.Health promotion practice,13(2), 159-164. Onnela, A. M., Vuokila?Oikkonen, P., Hurtig, T., Ebeling, H. (2014). Mental health promotion in comprehensive schools.Journal of psychiatric and mental health nursing,21(7), 618-627. Roden, J., Jarvis, L. (2012). Evaluation of the health promotion activities of paediatric nurses: Is the Ottawa Charter for Health Promotion a useful framework?.Contemporary nurse,41(2), 271-284. Soubhi, H., Potvin, L. (2010). Health Promotion Settings.Settings for health promotion: Linking theory and practice, 44. Stafford, J., Allsop, S., Daube, M. (2014). From evidence to action: health promotion and alcohol.Health promotion journal of Australia,25(1), 8-13. Whitelaw, S., Baxendale, A., Bryce, C., MacHardy, L., Young, I., Witney, E. (2001). Settings based health promotion: a review.Health promotion international,16(4), 339-353. Woodall, J. R., Warwick-Booth, L., Cross, R. (2012). Has empowerment lost its power?.Health education research,27(4), 742-745.

Management Report Newcrest Mining Limited

The discovery of gold deposits in Victoria Australia changed the country’s economy fundamentally. Edward Hargraves is claimed to have discovered small amounts of gold in a water hole in Bathurst. As a result, there have been numerous developments socially, economically and environmentally. This discovery led to an influx of immigrants into Australia (Government of Australia Para 1, 6, 13).Advertising We will write a custom report sample on Management Report: Newcrest Mining Limited specifically for you for only $16.05 $11/page Learn More However, the most significant developed is on the economy. Numerous mining companies being formed by entrepreneurs who sought to exploit Australia gold reserves. One of the biggest mining companies in the Australia as well as in world is Newcrest Mining Limited (NCM). NCM is an explorer, miner and exporter of gold and copper. Its activities are centrally located in Australia but with branches in Indonesia, Papua N ew Guinea and Fiji. In 1919, the company changed its name from Newmont Australia Ltd. The company business model involves controlling regions with the biggest potential in gold deposits such as Cadia and Telfer as well as joint ventures and outsourcing with local and international firms interested in exploration, mining and export of minerals (Invest Smart Para 1-4; Newcrest(a) Para 9). The company’s fortune took an upward trend, mostly because of the appointment of Mr. Ian Smith as the new CEO in 2006, which resulted in the company achieving positive results for first time since 2001. It is planed that by 2014, the company will, increase its gold pdrodcutin significantly to 2.3 million ounces (Fat Prophets para 7, 9). By the end of the year 2009, the company controlled about 17 business entities in mining supplies, exploration and exporting. As such the company has a very healthy business profile which yielded A$248.1 million after tax profits for the year 2009 (Newcrest (a) Para 14). This report thus endeavors to give a comprehensive analysis of the company especially in regard to its financial performance and the effects at the local and international level. The financial performance as well as the business model of NCM was affected largely by the global financial crisis, which started in 2007, and the effects are being felt currently in some quarters.Advertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The crisis has been attributed to several factors such as the collapse of the mortgage industry in the USA, while some technocrats have credited the banks in US for involuntarily triggering the crisis by offloading their bad loans as securities (Shah para 17). the crisis was so catastrophic that even the most developed countries has to commit colossal amounts of money to save their financial sectors (para 1). The mining industry was nom exception and the effects were severe. This is because the industry depends a lot on the fluidity of major world currencies. When the exchange rates are affected, the supply of minerals across the globe is also affected. Prices and demand of minerals therefore plummets. The situation is worsened by the rising of production cost occasioned by the rising cost of energy. As such, an industry that depends largely on the forex trade cannot go unharmed by a crisis that touches on the world financial market. Newcrest Mining Limited as one of the leading gold miners and exporter in Australia was not spared the effects of the global financial crisis. Its manager Ian Smith reports that the year 2009 was so tough because of the aforementioned crisis. The company has had to adjust its human resource management principles to shield itself from further losses. It reduced the number of its employees by 3% because of the unpredictable future occasioned by the crisis. Thus the company took several initiative to ensure the r etention of the best employees in the industry. These initiatives included organizing and being a major participant in mining fairs, graduate internship/apprenticeship programs and the establishment of an up to date website with information about careers in Newcrest (Newcrest(c) Para 19 ). To retain the best employees and avoid the cost of hiring new ones the company engaged a new scheme that involved financial incentives for its most talented employees (Para 20).Advertising We will write a custom report sample on Management Report: Newcrest Mining Limited specifically for you for only $16.05 $11/page Learn More The company also embarked on a program aimed at training and hiring the locals, mostly from the aboriginal community to meet its human resource needs at minimum cost. The figure below indicates the human resource trends for up to 2009 and that the numbers slightly reduced that year. Source: Newcrest c), 2011 Other than tightening employee hirin g and retention strategies, Newcrest also shelved efforts to mine and sell gold from one of the most lucrative sites in the world. The site at O’Callaghans is estimated to be the world most valuable tungsten mining area and has a market value of about 4 billion US dollars (Chambers para 1). Newcrest rested the efforts to exploit this site during the global financial crisis and cushion itself from any losses that would have occurred had it exploited the site. Now that the crisis seems to have abated and effects contained significantly, the company is reconsidering utilizing this valuable site through a number of ways. There are thoughts to just sell it with interested bidders coming from China, Japan and Europe. Other possible alternatives include joint venture with interested partners or just mine and sell the tungsten itself (para 13). To improve its cash flow the company decide to â€Å"Elimintae its gold hedge positions which resulted in greater financial gains† (Ne wcrest (d) 6 ). The result was a significant improvement in the prices of copper. As mentioned earlier, the mineral trade largely depends on foreign exchange rates. Foreign exchange rates are so unpredictable and the slightest occurrence in the international arena can trigger massive differences amongst the world major currencies. If this industry is affected, then the effects are directly transferred to the mining industry.Advertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More As a result, this company has undertaken several measures to minimize the risk of any fluctuation in foreign exchange rates. Newcrest activities are spread in different countries such Chile the US, Indonesian and Australia. Under normal circumstances business would be conducted in local currencies. However the unpredictable nature of foreign exchange would result in increased cost of doing business. There would also be massive losses associated with the risk of fluctuation in foreign exchange. There is a lot of movement of its minerals and mineral products between these countries and as such fluctuations in the exchange rate will hurt it business so much. To minimize the risk, Newcrest avoids as much as possible the amounts of balances in cash held by its subsidiaries in these countries. However there is need to keep operations of these foreign subsidiaries moving, while minimizing the losses that may result from the said fluctuations. Thus, to facilitate operations in foreign count ries, the company only transfers enough in foreign currencies to facilitate business (Exeter Resource Corp 7). Furthermore, the company has taken to secure its financial assets and liabilities from losses accrued from forex interest rates. As such, all its financial assets are only exposed to minimum foreign exchange risk, as they are short term investments that have a very short period to maturity (8). This translates to disposal of such assets before any major shift in forex rates occurs. The company has also has a established a policy that allows its foreign subsidiaries to have an agreed and fixed forex rate. This means that they can to conduct foreign trade with consistent and constant exchange rate and thus evade any losses that may occur out of any unpredicted fluctuation (9). The company operates many branches in many countries and as such operational and administrative cost may sore up if no sufficient effort is implemented to counter this. To cushion the company from any i nflated administrative fees occasioned by an uncertain forex trade the company calculates this expenditure by excluding foreign exchange interests (6). This means that administrative costs are kept at a minimum and do not fluctuate with the volatile forex rates thus saving the company a lot of money. Financial position A thorough analysis of the company’s statements of account reveals a very impressive performance during the post global crisis era. The company’s future outlook has been secured as a result of the effective policies implemented to manage the global economic crisis. some of these policies include mergers with credible miners such as Lihir Gold limited, Bonikro and Mt Rawdon, which in effect increased the companies production and the thus the profits also increased significantly. As a result the company’s account for the six months ended December 31 2011, show a very healthy financial base which guarantees a brighter future for the company and its s hareholders. The increase in profits in the said period is not only attributed to the increase in mining and processing of minerals from existing mines but also the consolidation of all financial and physical assets through mergers. This increased gold production by a massive 70%. The company increased its financial commitment inform of increased investment especially in its fixed assets. For that six months duration the company increased its investment in developing its mines by more than 90% (up to A$802.2), while expenditure on its exploration of minerals went up to A$61.8. This increased investment has realized a total assets worth of A$16 billion, up from A$ billion six months prior (Newcrest (d) 3). As a result, the profits portfolio for Newcrest Mining Limited is as follows. It profits from the Underlying asset portfolio increased by 96% to 523.1 million Australian dollars. After the company deducted its total expenses and losses in such areas as forex trade and increase in e nergy costs, it realized a Statutory Profit increaments of aboput 148%, amounting to A$437.8 million for the corresponding period. After deducting all operational expenses, the company realized a 92% increase in compared to the same period in the previous financial year. This increase is equivalent to 922.1 million Australian dollars. The significant gain in profits can be attributed to the increase in supply and sale of gold during this period by an impressive 86% realizing 1,641.6 million Australian dollars. In the previous year the increase in gold sales revenue was recorded at 58%. For the six months leading up to 31 Dec 2011, the prices of gold went up 16%. However, volumes of sales in copper experience a decrease but still reflected a 19% improvement from the previous year. All these put into consideration, the company realized an incredible before tax profit margin of 80%, (equivalent to 768.1 Australian million dollars). The impressive results can be considerably attributed to gains made by reducing significantly losses from foreign exchange, which secured the company’s international trade. After all taxes were deducted, the company realized the most impressive growth in recent years: a 140 % increase profit (equivalent to 142.1 Australian million dollars). The company has thus found it worthy to reward its shareholders with a dividend of 10 cents for every share held (2). The company financial ratios also show a very good performance, where its assets realized a profitable returns for the said period. There was an impressive return on assets at 9.32% compared to 4.99 the previous year. The return on invested capital rose almost double to 12.00 %. This means that the company investments was paying handsome dividends as it was realizing better returns from each of the assets and thus the increased profits (Morning Star n.pgn.). The table below is a summary of the company’s financial ratio for the six month ending December 31, 2010 Profi tability 2001-06 2002-06 2003-06 2004-06 2005-06 2006-06 2007-06 2008-06 2009-06 2010-06 TTM Tax Rate % — — — — — — — — — — — Net Margin % 6.05 -11.01 15.14 17.07 13.66 24.23 4.18 5.61 9.62 19.48 19.48 Asset Turnover (Average) 0.54 0.37 0.38 0.33 0.36 0.40 0.39 0.54 0.52 0.48 0.48 Return on Assets % 3.25 -4.09 5.73 5.58 4.87 9.64 1.63 3.00 4.99 9.32 9.32 Financial Leverage (Average) 2.76 2.59 2.09 2.59 2.70 28.57 5.03 1.34 1.30 1.28 — Return on Equity % 9.00 -10.91 13.07 13.14 12.88 55.04 13.49 6.48 6.58 12.02 12.02 Return on Invested Capital % 7.75 -9.22 11.81 12.05 10.79 42.18 12.33 6.42 6.57 12.00 12.00 Source: Morning Star. The companies share is one of the most lucrative in the Australian stock exchange. It has experienced a significant growth in value for the lastt one year. Shareholders have seen their fortunes in Newcrest stock go up by 24%. The trend has been on an up ward growth in the last one year, averaging 2% increase in share value per month. This is despite depreciation in value by a marginal 1% in a three-month analysis of its performance in the stock exchange. Currently the share is selling at an average price of 38 Australian dollars. This has been influenced by a number of factors such as a 5 point improvement on the value o asset returns, increase in mine investment activities and profitable mergers that in effect increase Newcrest Supplies and sales in Gold. The effect is also seen in the impressive increase in total asset worth. Importantly Newcrest has acquired a valuable assets in O’Callaghans mines a significant tungsten resource that will increase the companies resource significantly in the very future. These factors combined with its meticulous and ingenious way of reducing to a bare minimum not only the risk associated with foreign exchange but also its international operations costs results to a very healthy and solid outlook. As such, the price in its share is expected to remain stable and continue its impressive performance in the Australian stock exchange. Shareholders should thus hold on to their shares to benefit from the 10 cents per share dividends, which will be paid mid 2011, and the future benefits that will results from its expected growth. The table below shows the performance of Newcrest shares in Australia stock exchange. Source: Digital Look Newcrest Mining Limited is a company with a very promising future. This is facilitated by the commendable effort of its management lead by Mr. Ian Smith in solidifying the current gains while expanding opportunities for future benefit. It has some of the best recruitment and employee retention practices in the world that aims to appraise its employee’s thorough continuous training as well as tapping the most talented workers through apprenticeship. The company has acquired the best gold and copper mines in Australia as well ass expanded its exploration activities. The investment in exploration has also yielded the O’Callaghans mines, which will make Newcrest the largest exporter of the mineral, sought for its use manufacturing drilling equipment. Newcrest also has a very healthy business profile that includes at least 27 subsidiaries and it continues to expand by seeking mergers with credible companies such as Lihir Gold. This leads to an increase in production of mineral and thus improves its financial outlook. Significantly, the company has had an ingenious way of evading losses especially from forex rate fluctuations. As such, it employs a standard rate for all its subsidiaries while, excluding interest when factoring administrative charges. The Newcrest shareholder is currently happy with the performance of the company under the leadership of Mr. Ian Smith. However, the only dark spot in its otherwise bright future is his resignation. This leaves a doubt as to how the new CEO will cons olidate gains made during Mr. Ian’s tenure while moving the company forward. However, the fears should be rested as the company is on solid ground and the minerals market is looking good at the present Works Cited Chambers, Matt. â€Å"Newcrest Talks up Tungsten Resources in WA.†Top Stocks. 2009. 2 March, 2011 http://www.topstocks.com.au/stock_discussion_forum.php? action=show_threadthreadid=381989 Digital Look. â€Å"Newcrest Mining Limited: Share Price.† Digital look. 2011. 2 March, 2011..http://www.digitallook.com/companyresearch/822431/Newcrest_Mining_Limited/share_prices.html Exeter Resource Corp. â€Å"Managements Discussion And Analysis.† Docstoc.  2011. 2 March, 2011 http://www.docstoc.com/docs/62181331/ Managements-Discussion-And-Analysis—EXETER-RESOURCE-CORP— 11-17-2010 Fat Prophets. â€Å"Newcrest Mining.† Fat Prophets. 2010. 2 March, 2011 http://www.fatprophets.com.au/Member%20Area/Product%20Landing/Re port%20List/Report %20Page/Article%20Page.aspx?id=7d918951-addf- 4abe-9ba13a6d7a9390b3product=Australasian%20Equities pt=paidp=1 Government of Australia. â€Å"The Australian Gold Rush.† Ciulcture.gov.au. 2010. 2 March, 2011http://www.cultureandrecreation.gov.au/articles/goldrush/ Invest Smart Para 1-4). Newcrest Mining Limited (NCM) 2011. http://www.investsmart.com.au/shares/asx/Newcrest-Mining-NCM.asp Morning Star. â€Å"Newcrest Mining Limited.† Morning Star. 2011. 2 March, 2011 http://financials.morningstar.com/ratios/r.html?t =NCMregion=AUSculture=en-US Newcrest (a). â€Å"Organisational Profile.† Newcrest, 2011. 2 March, 2011http://www.newcrest.com.au/reports/gri_report/org/GRI_ORG_profile.asp Newcest (b). â€Å"Chairman’s Address – 2010 AGM.† Newcrest, 2011, 2 March, www.newcrest.com.au/upload/726_10x28x201015026PM.pdf Newcrest(c). â€Å"Labor Practices and Decent Work.† Newcrest, 2011. 2 March, 2011 http://www.newcrest.com.au/reports/gri_report/ soc/GRI_SOC_labour.asp#a Newcrest (d). Financial Results. Newcrest Mining Limited, 2011. 2 March 2011 http://www.newcrest.com.au/upload/771_2x11x201184748AM.pdf. Shah, Anup. â€Å"Global Financial Crisis.† Global issues, 2010. 2 March, 2011 http://www.globalissues.org/article/768/global-financial-crisis This report on Management Report: Newcrest Mining Limited was written and submitted by user Kinsey Q. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.