1.1. Background
Human capital has for a long time been acknowledged as a significant aspect when determining the competitive advantage of Contemporary concepts of human capital are essentially based on the contributions of Theodore Schultz and Gary Becker due to their distinct expressions, for instance, ‘general’ and ‘specific’ human assets. For the first time in the history, it has delivered a proportional understanding of the incentives to build up capacities. It is worth noting that some scholars have focused on assets while others have recognised how the fruitful supremacies of the workforce may be amplified through the improvement of talents or abilities, especially enlightening a tangible resource.
Human capital is strongly connected to the level of the firm’s performance. Firm performance is a relevant construct in the process of strategic management which is frequently used as a dependent variable. However, human capital refers to the knowledge, health, skills, and motivation of people, which offer economic value useful in fulfilling and satisfying a particular process. In some circumstances, employees can build a tangible and intangible asset through the contribution of knowledge and ideas which are helpful (Kamath, 2015). In essence, organisations require competent and skilled employees to help them mitigate problems and make the organisations meet set objectives.
Human capital is an extensively applied theory with multifaceted and diverse meanings which are somewhat ambiguous. Earlier contributions to the topic have provided a wealth of analytical platforms and descriptions of human capital. In some frameworks, human investment is explained in terms of education, while in other cases it can incorporate a wider set of investments that could affect the well-being and production of people, organisations and nations (Mincer, 1996). Investments in human capital could thus involve investments in health and nutrition and in occupational training. Additionally, given operationalisation complications, human capital repeatedly appears in the research as compatible ideas, which might, at best, be deceptive.
The current research focuses on Zegona Communications PLC, a UK-based firm that specialises in network-based communications and entertainment prospects. The company’s primary goal is to generate substantial portfolio resources with enterprise values ranging from £1 billion to £3 billion. More importantly, Zegona was established to acquire commercial activities in European Telecommunications, Technology and Media (TMT) to strategically attract stakeholder returns.
A more comprehensive concept than human capital is ‘human skills’. Besides tangible assets in learning and off-the-job exercise (i.e., human capital as it is commonly defined), ‘human skills’ include insubstantial (unspoken) knowledge acquired by people in the course of their actions. This paper considers the theoretical and empirical frameworks on the connection between human capital and firm performance within a conceptual context in which organisational performance is scrutinised at the monetary, technological and survival level.
1.2. Justification and rationale for the study
There is a gap in the existing literature on how human capital influences a company’s success and overall performance. Most studies conducted in the past focused on the relationships between human capital and firm performance from the point of view of financial performance. Notably, most of the studies that considered human capital and associated issues, namely those linked in human capital theory, assume that survival is not a challenge for a company. In fact, most of the existing empirical literature, both the literature that focuses on record analysis (e.g. Bartel and Lichtenberg, 1987; Bartel 1989, 1991; Michie and Sheehan, 1998) and case studies (e.g. Blanch flower and Burgess, 1996; Mason and Wagner, 1998) overlook the issue of survival, focusing their analysis on financial success (economic perspective).
This research thus contributes to the literature by providing the most recent evidence on the impacts of human capital on the success of Zegona Communications Plc., a UK-based firm specialising in telecommunications and entertainment visions. Furthermore, based on a detailed assessment, the research establishes the impact of human capital upon every international company, with specific focus on Zegona Communications PLC. As Kamath (2015) notes, human capital is among the very basic determinants of the success of a company, considering that human effort is what ultimately keeps an organisation operational. Furthermore, without human capital, production in a firm is deemed to be unorganised and thus, a failure, upon dependence of non-human efforts in every step of the process (Noudhaug, 1998).
1.3. Aim
1.4. Research questions
- What are the levels of human capital?
- How is human capital applied in business and what effect does it have on the entire business performance?
- To what extent does human capital create an impact on a company’s performance?
1.5. Research Objectives
- To identify different levels of human capital (experience, knowledge, idea, principle, technology, creativity and values)
- To identify the determinants of a firm’s performance
- To investigate the impact of human capital on a firm’s performance
CHAPTER TWO
LITERATURE REVIEW
2.1. Introduction
The research focuses mainly on the impact of human capital on the performance of Zegona Communications Plc. In the evaluation of the importance of human capital on this organisation’s performance, the research answers several questions, including how human capital is applied to business operations. Additionally, the study evaluates the various types of human capital and identifies the extent to which human capital is related to financial activities.
The research is governed and directed by study objectives that play an integral role in the successful completion of the entire project. The research objectives include an The research applies recognised human capital structures to record the human capital aspects of Zegona Communications Plc. Human capital structures include structural capital, human capital and relational capital and are believed to be the key indicators to determine the performance of any organisation, whether commercial or private. The current research also determines how organisations listed in the stock exchange determine the relationship between the book value and the market value to ensure that the needs of different financial users are satisfied.
Most importantly, the research focuses on how Zegona Communications Plc. recognises and registers the available human capital in organisational operations. The hypothesis of the research, which is the analysis of human capital about organisational performance and productivity, is relented and substantial considering the modern setting of businesses. The hypothesis is of great importance since it provides significant information that is essential for Zegona Communications Plc. and other organisations. The study is not only of significance for Zegona Communications Plc., but also for other companies that struggle with sustainability, productivity and employee retention. Currently, various organisations seem to be facing a wide range of challenges relating to human capital.
According to Hashim, Osman and Alhabshi (2015, p. 79), both emerging and existing businesses experience difficulties in managing integral issues relating to employee competence, organisational competitiveness, and firm development and growth. Hashim, Osman and Alhabshi (2015, p. 79) further argue that most organisations have collapsed due to inappropriateness, ineffectiveness and mismanagement of factors that play a significant role in the organisation setting, such as employee retention. Hashim, Osman and Alhabshi (2015, p. 79) claim that the firms that are still operating, but take little or no consideration of fundamental aspects risk closure, loss and financial instability. Therefore, the significance of this study cannot be understated. The study promotes improvement in Zegona Communications Plc, but could also enhance sustainability, stability and competitiveness in other organisations that are currently facing stiff competition and constant challenges. Most significantly, organisations offering services different from Zegona Communications Plc can apply the findings and recommendations of the study to promote performance improvement, increased productivity and competitiveness.
2.2. Discussion and critique of seminal and previous research
In his seminal research, ‘Investment in Human Capital: a Theoretical Analysis’, Becker (1962) suggested that perspective of human capital activities, for instance, formal education and general human capital and . According to Becker and many other scholars who embraced the human capital context, education, skills and human resource are compatible models. More specifically, in most human resource literature, “education is the imperative issue of human capital” (Schultz, 1993: 17). However, an increasing number of scholars argue and confirm that recognised learning is only one way to create skills. Arrow (1962) and Young (1992), amongst other scholars, have concentrated on talent development, such as for instance learning by doing and on-the-job training. Having such attributes is deemed to increase the organisational performance of Zegona Communications PLC, establishing a valuable base for the company’s future existence and operations. Similarly, increasing human resource as a way of increasing human capital enables the enhancement of creativity and innovation among the workers, for the better of the firm (Abeysekra, 2009, p. 49).
Shaffer’s study on the concept of human capital (Schultz, 1961a) explains the impracticality of splitting the investment and consumption mechanisms of human capital. According to this study, there are other reasons why people or organisations invest in education alongside the ultimate financial yield it may convey. Even though Schultz (1961b) acknowledged the social influence of education, he contended that its financial influence is even bigger. Although Walsh resolved that institutional training may be a system of capital creation, he noted that at times it is conceited of key issues not all indistinguishable by means of those that tolerate other systems.
2.3. The connection between human capital and firm performance
Human capital refers to the skills, knowledge and experience possessed by a worker. The concept of human capital involves two major mechanisms, namely individuals and organisations. Moreover, the concept is associated with four key attributes, namely flexibility and adaptability, improvement of workers’ competencies, the improvement of a company’s competencies, and worker employability. Human capital is essential, since intellectual capital adds value to individual and organisational outcomes. Several studies indicate that intellectual capital is highly associated with higher performance, long-term sustainability, competitive advantage, improved organisational commitment and enhanced personnel retention (Robertson et al., 1991).
According to Ozkan, Nasif and Murad (2016, p. 15), human capital is used in fulfilling and satisfying a particular process. The authors argue that human capital represents the ability of employees to build a tangible and intangible asset through the contribution of knowledge and ideas which are helpful. In essence, organisations require competent and skilled employees to mitigate problems and make the organisation accomplish its objectives. An organisation thus needs a group of professional managers who are skilled, and customer oriented, experienced with technology, flexible and highly qualified and can meet the challenges in the market and deliver the required professional services. Highly skilled human capital has become essential for the organisation and is no longer merely a luxury (Ozkan, Nasif, & Murad, 2016, p. 15).
2.4. Conceptualising human capital
According to Edvinsson (2016, p. 89), human capital is a strategy of the performance measure. Human capital plays an important role in promoting the development of new structures and processes for supporting the company’s productive assets. According to Edvinsson (1997, p. 89), human capital is the most significant competitive advantage of the corporation in the market. However, from an accounting point of view, Edvinsson (1997, p. 89) argues that human capital is the equivalent of the market and book value differential of the company’s assets. It has the potential to turn into profit and benefits despite it not being on the balance sheet because of its unknown nature.
Human capital is measured using different methods. However, Edvinsson (1997, p. 89) supports the VAIC method as the best approach to measure it. The method was first introduced in 1998. It is one of the best direct measurement methods of human capital. In his review, Edvinsson (1997, p. 89) states that the model creates a good relationship between customer and product or service. It also creates a connection between established value and applied resources in production. Physical capital efficiency, human capital efficiency and structural capital efficiency are the components of human capital according to this measurement method (Edvinsson, 1997, p. 89).
2.5. Critical evaluation of the theoretical framework
2.5.1. Human capital and firm performance
Finance function has a key role to play in appreciating the source of a company’s value. The study conducted by Najibullah (2015, p. 145) shows that there is a strong relationship between human capital on the one hand and business performance and the market value of the company on the other. An Indian bank proved the idea of VAIC and its operation with the help of annual reports. As stated by Najibullah (2005, p. 145), human capital is closely associated with organisational performance since the performance of human capital influences the profit realisation of every organisation. For instance,
On an individual level, Garavan et al. (2001) suggest that the relevance of human capital in every firm depends heavily on the level at which this factor contributes to the creation of competitive advantage. Viewing the same from an economic perception, organisations achieve a competitive advantage if they own specific resources that rivals in the industry can incorporate in their operations. With the increase in the uniqueness of human capital, firms thus develop different avenues to invest into while at the same time reducing risks, thereby capitalising on production ability. As such, for organisations to be competitive in the industry, individual parties in every firm need to upgrade their relevant skills appropriately.
The study proved the relationship between physical capital, bank performance and human capital. Liu and Pong (2009, p. 178) several studies show that human capital has a significant impact on the performance of every sector of the financial statement. This affects the financial reporting of most companies in every industry. The result of the investigation indicates that there are significant positive links between human capital and a company’s financial performance. However, there are some studies which have shown that there is no relationship between human capital and a company’s financial performance. However, it could be argued that this is because not all companies have invested in human capital. The organisations which have invested in human capital have realised its benefits and the impact it has on the financial performance of such companies.
According to Zerenler and Hasiloglu (2009, p. 96), information technology (IT) companies have invested a lot in human capital, because of the nature of their business. Human capital impacts the financial performance of such companies, because their service delivery depends on the competence of their employees, which are critical assets to companies dealing with the provision of services. Human capital management has been the most important factor of the enterprise operation in the knowledge era. It is used by theorists in seeking ways to make the system work more efficiently. Human capital is the sum of everything everyone in the company discerns that gives a modest edge in the marketplace (Burgman, 2005, p. 167). Human capital has created wealth for the enterprises through empowering every employee in the firm.
The primary role of human capital management is to deliberate the goals of the organisation. It also comprises the non-physical sources of value connected to the staff. Human capital is an intangible asset that forms a source of sustainable competitive benefit. It is also positively and significantly concomitant with structural performance. Philosophers have described the concept as an important constituent of a firm’s market value and the cost of substituting its possessions (Bontis, 2000). The study also provided a confident contribution to human capital and total firm productivity constructed on net value.
Kovacs (2014) conducted a detailed analysis to determine the relationship between human capital and the organisational performance of companies. Their research established that human capital indicators have a positive relationship with organisational performance. Several factors, including relevant training and team work, significantly improve results in specific performers, upon where productivity could have the opportunity for further translations into performance of organisations. There is also a clear correlation between the quality of several developers and market shares volumes. It can therefore be assumed that indicators of human capital enhance the performance of different firms either directly or indirectly.
The value-added human coefficient (VAIC) can be used as a measurement of human capital performance. The theory is used to determine how proficiently human capital creates investment value for the firm. Saengchan (2008) investigated the public’s . The study showed that human capital, organisational capital and investment employed are most important measures of a firm’s performance. The study also discovered that there is a direct relationship between human capital and the performance of the enterprise. The value-added human coefficient is, therefore, an analytical procedure designed to enable administration and effectively display the company’s performance.
2.5.2. Book values and market values
The significance with which human capital is credited depends on the responsibilities of the different components to bring competitive advantage by organisations. People’s expertise and skills, the level of understanding, commitment, brand awareness, established the network, a database of customers are of recent been recognised as superior business benchmarks to put organisations in a growing wheel. Therefore, they have been acknowledged as the most valuable assets which the organisations can have. If a business does not have such intangible assets or values, it will lack the vigour to compete, because human capital gives organisations a competitive advantage.
An organisation without human capital cannot compete, because it does not have any additional value to provide to customers. This is likely to affect their performance and thus impact profitability (Berzkalne & Zelgalve, 2014, p. 76).
According to Berzkalne and Zelgalve (2014, p. 76), market value is the total value of the company, which includes tangible and intangible assets. The company’s value is essential because the book value is used to determine the total worth of the organisation. This includes everything including knowledge, skills, and experience of both human and rational capital of the company.
2.5.3. Financial performance
Liquidity and capital adequacy are some of the essential independent variables that affect the return on asset of enterprises. The return on asset of Zegona communications plc increases liquidity and capital adequacy of the company. Every company has its own way of calculating return on asset. Return on asset increases as the capital adequacy and liquidity increase, which improves the companies’ performance. Return on asset is one of the essential factors that confirm the performance the company. Several studies have indicated that the performance of the company is significantly affected when anything happens to liquidity and capital adequacy of companies. An increase in the return on asset is good for the performance of enterprises in the telecommunication sector, because these assets are used as a tool to generate more income which results to more liquidity and capital adequacy. When an organisation invests in more assets or injects more assets into the organisation, this increases the liquidity and thus the profitability.
As a result of this, changes in the liquidity and capital adequacy of an organisation are reflected in the general performance of the organisation. This is because telecommunication companies are asset-oriented businesses and provision of services is based on the level of investment one has made in infrastructure (Karlyn, 2010, p. 83). Return on assets is the main influential factor in the liquidity and capital adequacy in the telecommunication industry. The investment in this industry cannot be easily ignored, because most of these investments have resulted in improved performance of companies in this industry. Return on asset is the key to performance and to increasing the efficiency of the organisations in the industry. Return on asset is to IT companies what interest rate is in the banking sector. In the IT sector, profitability relies on return on asset, and in the banking sector, profitability relies on the interest rates charged by the banks.
The financial results of the company are represented by the financial performance of the total earnings, made up of return on assets (ROA) and return on equity (ROE). Additionally, the current fiscal policies that govern debt restructuring, reduced tariffs and trade barriers are significant, since they greatly influence the industry’s sustainability and competitiveness. Return on assets is a good measurement of market value and indicates the net profits made by all the assets of the company. Return on equity indicates the return of the shareholders on the money that they have invested. Return on assets is a better measure of financial performance, since ROE ignores some of the risks which come along with high leverage. Below, ROA and ROE are used to show the financial performance of Zegona Communication Plc.
Fig. 1. Return of assets and ROE showing the financial performance of Zegona Communication Plc.
| VARIATION RATIOS | ||
| P/E Ratio TTM | – | 325.45 |
| Price to Sales TTM | 2.73 | 1.58 |
| Price to Cash Flow MRQ | 40.2 | 72.14 |
| Price to Free Cash Flow TTM | 26.58 | 31.01 |
| Price to Book MRQ | 1.06 | 2.09 |
| Price to Tangible Book MRQ | – | 3.91 |
| Per Share Data | ||
| Revenue/Share TTM | 0.63 | 4.5 |
| Basic EPS | -0.02 | 0.01 |
| Diluted EPS | -0.02 | 0.01 |
| Book Value/Share MRQ | 1.62 | 2.7 |
| Tangible Book Value/Share MRQ | -0.88 | 1.07 |
| Cash/Share MRQ | 0.1 | 0.77 |
| Cash Flow/Share TTM |
| Growth Ratio of the Company | ||
| EPS(MRQ) vs. Qtr. 1 Yr. Ago | 85.24% | -800.45% |
| EPS(TTM) vs. TTM 1 Yr. Ago | 83.18% | -141.19% |
| 5 Year EPS Growth | – | 2.62% |
| Sales (MRQ) vs. Qtr. 1 Yr. Ago | 32.77% | 0.01% |
| Sales (TTM) vs TTM 1 Yr. Ago | 165.83% | 0.16% |
| 5 Year Sales Growth | – | -1.07% |
| 5 Year Capital Spending Growth | – | 8.66% |
| Financial Strength of the organisation | ||
| Quick Ratio MRQ | 0.89 | 0.8 |
| Current Ratio MRQ | 0.91 | 0.83 |
| LT Debt to Equity MRQ | 73.67% | 103.09% |
| Total Debt to Equity MRQ | 77.29% | 131.45% |
| Efficiency of the company | ||
| Asset Turnover TTM | 0.19 | 0.46 |
| Inventory Turnover TTM | 160.55 | 58.02 |
| Revenue/Employee TTM | 640.08K | 421.78K |
| Net Income/Employee TTM | -24.95K | 22.28K |
| Receivable Turnover TTM | 20.61 | 5.9 |
| Dividend | ||
| Dividend Yield | – | 4.9% |
| Dividend Yield 5 Year Avg | – | 7% |
| Dividend Growth Rate | – | -4.08% |
| Payout Ratio | – | 608.78 |
TTM = trailing twelve months 5YA = 5-year average MRQ = most recent quarter
The importance of content analysis in an organisation performance
As stated by Susan and Abeysekra (2009, p. 52), several studies have been conducted using content analysis technique in both developing and developed companies. The results of these studies show that several key elements of intellectual capital are not adequately presented or are poorly comprehended, inadequately identified, poorly managed and poorly and inconsistently reported in the annual corporate statement. It is believed that content analysis conducted on Zegona Communication Plc. as a company listed on the London Stock Exchange would provide more information to understand whether there is any indication of improvement in the way intellectual capital is reported since the last research was conducted.
The companies which are listed on the London Stock Exchange are required by law to publish or report their financial performance. The report must contain all areas of financial performance and all the company’s strategic decisions taken in the last year. Intellectual capital is one of the primary drivers for the creation of value in a company and it should thus be used adequately. The management of intellectual capital is expected to improve the general performance of a company. However, intellectual capital and strategic assets play an important role in the decision-making process. It is anticipated that the reporting of the existing accounts and how they contribute to the value addition of a company should meet the requirements of the London Stock Exchange (Gheisari & Amozesh, 2013, p. 213).
2.6. Zegona’s incentive arrangements
Several reviews have been conducted regarding the impacts of human capital. These reviews include Zegona’s incentive arrangements, which show the importance of human capital in the productivity and performance of the organisation. Zegona Communication Company formulated arrangements shortly after the company decided to create incentives for those employees expected to make key contributions to the success of the company. According to Hashim, Osman and Alhabshi (2015, p. 79), the organisation’s success directly depends on the sourcing of attractive investment opportunities, the improvement of the target businesses and their subsequent sale to realise attractive returns for shareholders. Accordingly, the incentive scheme was primarily established to appreciate individuals who contribute significantly to the success of the company.
The incentive scheme has been formulated in a way that is easy to understand and apply. The management team has been given significant shares in Incentive Co pursuant. Markedly, these shares give management the right to certain benefits. Management can receive up to 15% of the growth in value of the company. The management incentive arrangements are subject to shareholders achieving a preferred return of 5% per annum on a compounded basis on their net invested capital. The rights attached to the management shares are effective within a specified period. The rights are exercised by management in the period from three to five years after the initial acquisition. Management is free to exercise all their rights at any time within the specified period. The rights may be exercised within the first three years under certain specific conditions, including a takeover or change of control of the company, as set out in Part IX of the Admission Document. After an exercise of management shares, the management incentive mechanism will be renewed on a similar basis such that management will continue to have rights to 15% of the future growth in value of the company, subject to shareholders achieving their preferred return of 5% per annum. On renewal, shareholders’ preferred return will be calculated from a starting baseline of the market capitalisation of the company on the last date the management shares were exercised (provided this is not below the net shareholder invested capital).
Fig. 2. TELECABLE SUMMARY PRO FORMA FINANCIAL RESULTS (UNAUDITED)
| Q4 | Full Year | |||||
| Figures in € million | 2015 | 2014 | Change | 2015 | 2014 | Change |
| Consumer Revenue | 25.1 | 24.4 | 2.9% | 99.0 | 97.7 | 1.3% |
| Business Revenue | 9.3 | 8.4 | 11.1% | 35.5 | 33.1 | 7.0% |
| Total Revenue | 34.4 | 32.8 | 5.0% | 134.4 | 130.9 | 2.7% |
| Direct Costs | 7.5 | 5.7 | 31.0% | 24.5 | 21.0 | 17.0% |
| Gross Profit | 26.9 | 27.0 | (0.6%) | 109.9 | 109.9 | 0.0% |
| Other Costs | 10.7 | 11.4 | (5.9%) | 44.9 | 47.0 | (4.4%) |
| EBITDA | 16.2 | 15.7 | 3.3% | 65.0 | 62.9 | 3.3% |
| Capex | 7.3 | 7.1 | 3.2% | 28.9 | 27.7 | 4.5% |
Fig.3. TELECABLE SUMMARY PRO FORMA OPERATING RESULTS (UNAUDITED)
| Q4 | Q1 | Q2 | Q3 | Q4 | Full Year | Full Year | ||
| 2014 | 2015 | 2015 | 2015 | 2015 | 2015 | 2014 | ||
| Consumer * | ||||||||
| Revenue (€m) | 24.4 | 24.4 | 24.7 | 24.9 | 25.1 | 99.0 | 97.7 | |
| Customers (AOP K) | 144 | 145 | 144 | 143 | 142 | 144 | 143 | |
| RGUs (K) | 454 | 456 | 458 | 457 | 456 | 456 | 454 | |
| RGUs/Customer | 3.14 | 3.15 | 3.18 | 3.19 | 3.23 | 3.23 | 3.14 | |
| ARPU (€/month) | 56.3 | 56.1 | 56.9 | 57.9 | 57.4 | 56.8 | ||
| Consumer Mobile | ||||||||
| Revenue (€m) | 5.9 | 6.2 | 6.5 | 6.8 | 6.7 | 26.1 | 22.3 | |
| Post-paid Customers (AOP K) | 70 | 72 | 73 | 75 | 77 | 74 | ||
| Post-paid Lines (AOP K)
|
93 | 96 | 99 | 103 | 108 | 102 | 88 | |
| Post-paid ARPU (€/month)
|
20.9 | 21.1 | 21.5 | 21.6 | 20.6 | 21.2 | 20.9 | |
| Mobile Penetration (%) | 45% | 46% | 47% | 49% | 51% | 51% | 45% | |
| Quad Play (%) | 31% | 31% | 32% | 33% | 35% | 35% | 31% | |
To discover the impact of intellectual capital on the fixed assets, Nasif (2013, p. 12) argues that it is important to understand a company’s operational and financial activities. The literature review has provided significant information necessary for the success of the research. Moreover, the review promotes and ensures the credibility and reliability of the research findings. Nonetheless, research gap has been realised due to several factors that are not addressed in the above reviews.
2.7. Uniqueness of the study
The study is of great importance since it provides significant information that is essential for both emerging as well as existing organisations. The study is of significance to Zegona Communications Plc., but also to other companies that struggle with sustainability, productivity and employee retention. Currently, various organisations seem to be facing a wide range of challenges relating to human capital.
According to Berzkalne and Zelgalve (2014, p. 78), both emerging and existing businesses experience difficulties in managing integral issues relating to employee competence, organisational competitiveness and firm development and growth. Berzkalne and Zelgalve (2014, 78) further argue that most organisations have collapsed due to inappropriateness, ineffectiveness and mismanagement of factors such as employee retention that play a significant role in the organisation. Berzkalne and Zelgalve (2014, p. 78) claim that firms that are still operating but have little or no consideration for
The literature review conducted reveals a research gap relating to human capital and performance. The literature has focused on enhancing individual knowledge through teaching and on the provision of incentives to apply this knowledge. However, the study of human capital is as much focused on the organisational distribution of facts, making it handy and exchangeable. There are four major processes for supporting corporate learning and innovation: egalitarianism, shared knowledge, continuous experimentation and integrating the external knowledge that is associated with openness to others. Egalitarianism is related to the act of owning/solving problems. The existing literature does not explain the concept of social capital, which is important to any organisation and promotes performance. The stronger the sense of collective community within the firm (social capital), the more probable it is that understanding will be shaped and transported (Ameneh, Bagher & Zhale, 2014, 78). Correspondingly, if a mixture of administrative processes and margins are in place, this may hamper efforts to turn knowledge into action.
The literature also ignores the fact that human capital and productivity are mostly connected to dualistic hypothetical components. The linkage of human assets and performance is grounded on two hypothetical strands. The foremost strand is the asset-based view of the firm. The other strand is the expectation theory of motivation, which has three elements: the valence or value devoted to rewards, the instrumentality or the position that the member of staff will gain upon accomplishment of certain level of act, and the anticipation of the idea that representatives can really realise the performance level. The literature does not explain how human resource methods lead to augmented production or consider the option that more productive firms may have more assets to invest in better human resource management. In order to study the direction of causality, it is necessary to specify the variables of human wealth organisation and performance. Nonetheless, the literature review reveals that organisations which do not require qualified or knowledgeable employees usually fail to have an edge in the market due to high competition offered by other companies. The literature review has also revealed that human capital is a hidden asset to the success of the entire organisation; therefore, it is important to learn how to report this in the financial statement of the organisation. It affects the profit margin, sales return, ROI and general market performance of the organisation. Above all, human capital has different components such as relation capital, structural capital, human capital and organisational capital. All these are significant for the growth and success of all companies.
2.7.1. Concluding summary and research gap
As discussed above, most of the previous research focuses on issues related to human investment (human resource theory) and assumes that survival is not a challenge for the company. As a matter fact, most of the current pragmatic literature, particularly studies that focus on database scrutiny (Bartel and Lichtenberg, 1987; Bartel, 1989, 1991; Michie and Sheehan, 1998) or case studies (Blanch flower and Burgess, 1996; Mason and Wagner, 1998), abandon the subject of endurance, basing their examination on firms that are in business. Survival and technological performance are however a critical issue in business. The concept of survival has for a long time been only minimally attended to in the literature on education and skills than it plays in the manufacturing dynamics. Nonetheless, such studies refer only in passing to human resource as an applicable variable for establishment survival.
This paper is thus important, since it considers the bond between human capital and performance in the firm context. This is approached from financial, technical and survival angles. Existing studies ignore major concerns, such as for instance, the analysis of human capital and skills, the determinants of human capital and how those determinations change, the influence of the social and institutional context on the accumulation of human capital, and the rapport between human capital and companies’ ability to survive at both hypothetical and experiential grounds.
CHAPTER THREE
3.1. Research design
The study used a combined research approach to address the situation in depth. In essence, this method combines both quantitative and qualitative research and serves the purpose of accruing the benefits and reducing the limits of each approach (Saunders, Lewis, & Thornhill, 2007). To fulfil the key intention, a secondary purpose was developed to analyse the extent to which human capital has an impact on an organisation’s success and its implications on the financial statement of a company. The quantitative approach serves to determine the financial performance or output of human capital, whereas the qualitative approach helps achieve the primary aim of the research. Below, a brief overview of both approaches is provided to elucidate their constructs and applicability.
3.1.1. The quantitative approach
This method is based on the positivist model and reveals the current state of the financial performance of Zegona communications plc. In this context, reactions can be measured to reach a definite conclusion (Lihong & Miguel, 2013). Since the information needs quantification, a close-ended and controlled approach was employed for the current research. Thereafter, a structured questionnaire was formulated, using a Likert scale and yes/no answers to collect controlled data. Additionally, the research used a quantitative approach because of its reasonable and systematic way of data collection and assessment alongside direct questions and numerical analysis for improved levels of truth and accuracy (Hanson, 2010).
3.1.2. The qualitative approach
The quantitative method is based on the interpretivist model and was employed to discover the constraints encountered due to lack of sufficient human capital. This paradigm was also used to analyse the various implications of human capital in fostering the company’s performance. The interpretive model holds that truth is based on individual experiences and opinions (Kune & Jerry, 2012). As a result, a descriptive approach was employed to collect data to comprehend personal characteristics of the participants (Saunders, Lewis, & Thorn hill, 2007).
3.2. Data and sampling
The study obtained primary data collected from the workers of Zegona Communications Plc. and secondary data from online libraries, books and journals. Random sampling was employed to obtain a representative sample from the overall population. This nature of sampling allows for easy generalisation of findings. The sampling structure was represented by employees from the company (both executive and subordinate staff).
The data was collected using questionnaires (close ended), open discussions and face-to-face interviews. Thirty individuals filled out the survey, 80% subordinate staff and 20% executive officers. Participants were selected from all groups to give each employee an equal chance to take part in the study. Therefore, a stratified random sampling technique was used to select the group to be investigated and collect comparable reactions from each segment of the group (Kune & Jerry, 2012, p. 46). The use of structured questionnaires is a credible method of collecting information from the company workers considering that the method provides first-hand information from the ground. As such, this gives the research a quality outlook and justification of the discussed issues concerning human capital in relation to organisational performance. Furthermore, this method is rather cheap compared to most other ways of data collection, as it involves respondents filling out of the structured questionnaires and mailing them back to the researcher. The use of face-to-face interviews presents an advantageous aspect to the study, since interviewers allow the researcher to clarify any unclear issue from the study. Together, the data collected for the research is reliable.
3.3. Methods of analysis and presentations
The findings were evaluated using descriptive statistics to expose demographic statistics based on the rate of response, gender, the experience of employees, age and the level of education (qualitative data). The regression method was then applied to the statistics for further evaluation of the analytical weight of human resource development on the company’s performance (quantitative data). Notably, the quantitative data was obtained from the investigations on financial reports. The analysed data using tables, graphs, frequency tables and charts based on the characteristics and method of analysis
3.4. Limitations
- The study sample was obtained from a communication and networks company, therefore, the study results may not be compared to other organisations.
- Within the communication industry in the UK, human capital and performance evaluation regarding human capital is still not well known.
iii. The rationale for valid results of research is the method applied. Even though the concepts have been defined as precisely as possible, based on the appropriate literature and confirmation by specialists, the measurement applied may not impeccably represent all the scopes.
CHAPTER FOUR
ANALYSIS AND PRESENTATION OF FINDINGS
4.1 Introduction
This chapter analyses and presents the results of the study. The variables analysed were human capital and firm performance. This research used the descriptive method to answer the research questions. The approach was chosen to gather information without manipulating research respondents and variables in an attempt to understand the influence human capital has on an organisation’s performance. Descriptive analysis was followed by regression analysis of dependent and independent variables (relationship between human capital and financial performance).
4.2 Descriptive statistics/analysis
In this section, the researcher presents the demographic characteristics relating to the response rate of respondents, gender and level of education. These are followed by characteristics such as work experience of the workers, number of employees working in the company and capital invested by shareholders of the firm.
4.2.1 Response rate of respondents
Forty questionnaires were disseminated to the required sample of 30 individuals working in Zegona Communications Plc. in the United Kingdom. The sample size comprised 20% executive staff (shareholders, directors and management staff) and 80% support staff. Out of 30, 25 individuals responded (83.3%).
Table 1: Response rate of respondents
| Categories | Sample size (s) | Responsiveness | %age rate |
| Executive Staff | 6 | 4 | 66.7% |
| Support Staff | 24 | 21 | 87.5% |
| Total | 30 | 25 |
The table above shows that 25 out of the required sample of the population (30 individuals) were studied contributing to an 81% response rate. Out of six executive staff, four individuals filled in and submitted their questionnaires. These included the company’s shareholders, chief executive officer, directors and managers from all the departments of the company, such as manager, marketing and sales manager, field manager, administrative and human resource manager. A small portion of the required sample failed to take part in the process. Therefore, the workforce of Zegona Communications is well informed because of their high rate of response.
4.2.2 Gender distribution
The gender of the respondents is shown in the table below.
Table 2: Gender distribution of the Respondents
| Gender | Frequency (f) | Percentage (%) |
| Male | 18 | 72% |
| Female | 7 | 28% |
| Total | 25 | 100% |
Source: primary data
Table 2 above shows that most of the respondents were men (72%), while women formed 28% of the sample. This reveals that there is gender disparity in the company, meaning that women are not given the same opportunities as men. For the firm to achieve a competitive advantage in the industry, both genders should feel well represented. The study shows that perhaps the major reason for the lack of a credible relationship between human capital and company performance is the low representation of women in the company, who would rather play a critical role in a certain field of the company’s operations.
4.2.3 Age bracket of the respondents
The age bracket of all the respondents was analysed to define the employee’s maturity on the job. Ages are shown in Table 3 below.
Table 3: Age bracket of the respondents
| Age of respondents | Frequency (f) | Percentage |
| Below 25 years | – | – |
| 25-35 years | 11 | 44% |
| 35-55 years | 7 | 28% |
| 45-55 years | 5 | 20% |
| Above 55 years | 2 | 8% |
| Total | 25 | 100% |
Source: Primary information
Table 3 above shows that most of the respondents are in the age bracket of between 25-35 years (44%), which is 11 respondents out of 25. Respondents of 35-45 years (28%) are the second-largest group with seven out of 25, followed by the age group of 45-55 years (20%) with five out of 25 respondents. Two respondents (8%) were over 55 years. From the data above, it can be noted that most workers are mature and can give evidence about the company very confidently.
4.2.4. Education level of the interviewees
The education level of the interviewees was used to indicate the standard of competency regarding the topic of discussion and the results are presented in the table below.
| Level of education | Frequency (f) | Percentage |
| Certificate | – | – |
| Diploma | 3 | 12% |
| Degree | 12 | 48% |
| Masters | 7 | 28% |
| Others | 3 | 12% |
| Total | 25 | 100 |
Source: Primary data
The results in table 4 above show that the majority of the individuals interviewed, 12 out of 25 (48%) had at least a degree. This was followed by respondents with a Master’s degree (28%, seven out of 25 respondents). None of the respondents had a certificate, according to the data collected. Both diploma and others are represented by 12% each which is three respondents each out 25. Consequently, because the majority had a degree as the maximum qualification, it is implied that employees of Zegona (respondents) are knowledgeable enough and understand what they are doing.
4.2.5 Work experience of the respondents
The duration of respondents’ work experience with the firm as an important factor to consider was studied and below are the findings
Table 5: Work experience of the respondents
| Duration | Frequency (f) | Percentage (%) |
| Less than a year | 2 | 8% |
| Between 1-5 years | 5 | 20% |
| Between 5- 10 years | 6 | 24% |
| Between 10-15 years | 10 | 40% |
| Above 15 years | 3 | 12% |
| Total | 25 | 100% |
Source: Primary data
As depicted in Table 5 above, most of the respondents have been working in the company between 10-15 years (40%, 10 respondents out of 25). These were followed by respondents with work experience of between 5-10 years (24%, six respondents out of 25). Next were respondents with work experience of 1-5 years (20%, five respondents out of 25), followed by three respondents with over 15 years experience (12%), while two respondents had work experience of less than one year (8%). Since most of the workers interviewed had work experience of over 10 years, it can be concluded that those workers had a true understanding of the processes of the firm being studied.
4.2. Analysis of the relationship between dependent and independent variables
In this research, three companies which are listed on the London Stock Exchange have been used to analyse the financial position in line with United Kingdom standards. These companies are of Zegona from 2010 to 2015. I have taken the data from annual reports and income statements. In the table below, several variables in the study and their likely effect on the financial performance of the industry are described. The table describes the variables that were used for this particular research. To define the influence of human capital on the financial performance of Zegona, it is important to use ROA as the measure of the financial performance. Most of the independent factors discussed above fall into three categories: liquidity, mark value, and quick ratio.
| Symbol | Variables | Representation |
| Dependent Variables | ||
| ROA | Return on Average Assets | Net income/Total Asset |
| Independent Variables | ||
| Liquidity | Liquidity Risk | Total Assets/Total liabilities |
| Capital | Capital Adequacy | Total Equity/Total Assets |
| Cost of Operation | Cost of operations | |
P-square is a statistical measure that shows how close the data are to the regression line.
R-square should be between 0.38 and 0.80. If R-square is less than 0.38, it cannot be put into a linear equation Y = a+bx1+bx2…+ and if it is more than 0.87 or 0.90, there is a problem, because it seems too good to be true. According to the data analysis above, the R-square of the data is 0.38, so it is between 0.38 and 0.80. R-square is used to summarise the statistical relationship. The p value of each independent variable should be less than 0.05 to be significant, p = 0.05 means 5% significance. This shows that the independent variable significantly affects the dependent variable at 5% significance or 95% confidence level. P = 0.01 means that the independent variable is highly significant (1% significance or 99 % confidence level).
P = 0.1 means there is significance but it is weak (90% confidence level).
If p = more than 0.05, the independent variable does not impact the dependent variable.
The regression analysis shows that none of the independent variables influence the dependent variable, expected efficiency (0.1) it is weak. When the t value of an independent variable is greater than 2 or less than -2, it means that the independent variables significantly impact the dependent variable. The capital adequacy t value is -3, which is less than -2, so the independent variable significantly impacts the dependent variable. This shows that the other independent variables do not impact the dependent variable.
Multiple regression equation:
Yit = α0 + α1 βit + α2 βit + α3 βit + α4 βit + α5 βit + α6 βit …. +
Y is the dependent variable (which in this case is ROA, which can be net incometotal asset)
It is for year 1 and a telecommunication company 1.
α2 βit is represented liquidity of an organisation.
α3 βit is represented cost of operation.
α4 βit is represented capital adequacy ratio.
α5 βit is represented management efficiency (by total expenses to total income ratio).
α6 βit is represented cost of operations.
is represents error
Yit = α0 + α1 oilit α1 inflit + α2 intit + α2 carit+ α2 effieit+ α2 gdpit …. +
4.4. Performance Analysis
| Independent Variables | ||||||
| Company | Years | Liquidity | Return on Assets | Quick Ratio | Market Value | Solvency |
| Zegona communications | 2010 | 10.88% | 16.26% | 21.40% | 68.22% | 5.60% |
| 2011 | 10.67% | 21.26% | 22.20% | 89.45% | 9.90% | |
| 2012 | 11.10% | 26.26% | 22.10% | 43.18% | 10.80% | |
| 2013 | 12.35% | 31.26% | 19.70% | 43.75% | 8.70% | |
| 2014 | 14.07% | 32.26% | 24.10% | 38.58% | 8.00% | |
| 2015 | 10.95% | 14.26% | 24.50% | 26.36% | 7.40% |
Zegona Communication Performance
Descriptive characteristics of finance
| Liquidity | Return on Assets | Quick Ratio | Market Value | ||||
| Mean | 0.119033333 | Mean | 0.272938889 | Mean | 0.227422222 | Mean | 0.428933333 |
| Standard Error | 0.003667977 | Standard Error | 0.018415249 | Standard Error | 0.003880288 | Standard Error | 0.033140783 |
| Median | 0.111 | Median | 0.2826 | Median | 0.22615 | Median | 0.3916 |
| Mode | 0.1235 | Mode | 0.2126 | Mode | #N/A | Mode | 0.3723 |
| Standard Deviation | 0.015561907 | Standard Deviation | 0.078129283 | Standard Deviation | 0.016462669 | Standard Deviation | 0.140604435 |
| Sample Variance | 0.000242173 | Sample Variance | 0.006104185 | Sample Variance | 0.000271019 | Sample Variance | 0.019769607 |
| Kurtosis | 1.267208368 | Kurtosis | -1.192854975 | Kurtosis | -1.116702319 | Kurtosis | 7.524915379 |
| Skewness | 1.236548785 | Skewness | -0.25214645 | Skewness | -0.199689959 | Skewness | 2.64597733 |
| Range | 0.0607 | Range | 0.24 | Range | 0.054 | Range | 0.6309 |
| Minimum | 0.0988 | Minimum | 0.1426 | Minimum | 0.197 | Minimum | 0.2636 |
| Maximum | 0.1595 | Maximum | 0.3826 | Maximum | 0.251 | Maximum | 0.8945 |
| Sum | 2.1426 | Sum | 4.9129 | Sum | 4.0936 | Sum | 7.7208 |
| Count | 18 | Count | 18 | Count | 18 | Count | 18 |
1 Year Zegona Chart
Source; secondary data
Zegona Communications PLC Half-year Report
07/09/2016 7:00Am
UK Regulatory (RNS & others)
Zegona (LSE: ZEG)
Historical Stock Chart
2 Years: From Oct 2015 to Oct 2017
ZEGONA COMMUNICATIONS PLC
ZEGONA – INTERIM REPORT FOR THE SIX MONTHSED 30 JUNE 2016
Zegona H1 Merged (1) Telecable
H1 (2)
EUR69.2
Revenue EUR70.5 million
EUR33.3
EBITDA (3) EUR31.4 million
EUR20.4
Cash Flow (4) EUR18.5
– Revenue up 4.4% to EUR69.2 million
-EBITDA up 1.9% to EUR33.3 million
– Cash flow up 10.6% to EUR20.4 million
Outcomes regarding Zegona full year guidance
– Constant YoY revenue growth in Business segment driven by growth in both customer numbers and ARPU
– Mid-single digit revenue growth and double-digit cash flow growth
– Strong cash returns to shareholders
– 4.5 pence bonus per share for 2016 confirmed
– 2.25 pence to be paid in October 2016 (GBP4.4 million), with balance to be paid in March 2017
More observations
– Telecable continues to deliver strong performance with growth in income, EBITDA, and Cash Flow
– Noteworthy development being made on the main strategic initiatives
-Zegona carries on seeing many attractive stock opportunities across the European TMT landscape
CHAPTER FIVE
DISCUSSION, CONCLUSION AND RECOMMENDATIONS
5.1. Discussion
5.1.1. The relationship between human capital and firm performance
Evidence from the data collected exposes how prominent human capital is to organisational success, both when it comes to long-term operations (survival) and when it comes to economic viability (financial performance). In this case, factors such as gender, age, work experience, approachability and the level of education indicate the capability of human resources to better understand the operations and activities of the company, thereby enhancing its ability to exist or survive both financially and technologically. Significantly, advancing in human support is a sure bet on company’s achievement of its goals and objectives? Moreover, to enhance skills, knowledge and competency of an individual, it is advisable for the firm to increase training and workshops for the employees.
Human resources concentrate on two central components, individuals and organisations. Garavan et al. (2001) conceptualise that the concept has four significant qualities: tractability and malleability, development of competencies, the improvement of managerial proficiencies, and individual employability. Additionally, they argue that these characteristics, in turn, add value to individual and organisational consequences. According to Noudhaug (1998), the evidence links intellectual assets to higher growth and sustainable and improved managerial existence (Robertson et al., 1991). Hence, from the descriptive data analysed above, Zegona Communications is not exceptional.
Collis and Montgomery (1995) contend that, at the personal level, the significance of intellectual capital is influenced by the level on which it acts on the establishment of a competitive advantage. Economically, transaction costs specifically show that businesses gain an economical advantage if they have specific assets that cannot be copied by competitors. Thus, as the uniqueness of these assets increases, corporations create incentives to make more investments into their management, thereby reducing threats. As a matter of fact, it takes advantage of productive potentials. Hence, staff need to enhance their competency and skills to be more competitive in their establishments.
From the organisational viewpoint, human capital is a crucial player in strategic planning and the creation economic advantages. According to Snell et al. (1999), an organisation’s human asset is guided by two distinct scopes, value and uniqueness. In this perception, resources are more valuable if there is an enhancement of efficiency, exploiting chances and counteracting risks. In the context of an active organisation, assessment concentrates on maximising income in contrast to the related budget. In this sense, a firm’s human capital can be of value if it reduces costs, which it can do by increasing performance.
The current study reveals a steady growth of telecom in the last 10 years, due to human capital. The descriptive analysis of Zegona shows an improvement of financial ratios of the two companies. This is clear evidence of growth and improvement of the implementation of the budget. The descriptive analysis of financial performance shows improvement in liquidity, the cost of operations and ROA. The study shows that the liquidity has increased by 60% in last 10 years and the cost of operation has increased by 90%. This is due to demand services by various clients from a different part of the region. The difference in the two factors indicates that with a low level of liquidity in the firm, operation costs for various activities in the organisation tend to reduce significantly, which reduces the level of performance or the firm. Zegona’s annual net revenue has increased significantly to £31.9 billion. The net profit of £7.631 billion is a vast improvement compared to the performance registered by the company in the last decades. Net revenue has increased to £12.34 million and net income or profit to £1,946.69 million. The two figures show an improved performance of the two major telecom firms in United Kingdom (Kovacs, 2014).
Despite the volatile business environment, the telecommunication industry has experienced great growth and the performance of the main telecom firms has improved significantly. This can be credited to advances in technology infrastructure and globalisation, which have increased telecom subscriptions due to the demand to communicate with other people around the world and increased market openness and demand for mobile internet. The increase in subscriptions has improved the net revenue of telecom companies and hence their profitability. The research found that the ROA and ROE of Zegona Communication has improved significantly in the last five years.
Based on the descriptive analysis of the financial statements of Zegona Communication, the researcher discovered that in the last decade the company’s financial ratio liquidity has improved by 40%. The cost of operations has also improved, because of an increase in subscriptions. The study shows that subscriptions to both data and call services have increased by almost 60% compared to the last ten years. This indicates that the performance of telecommunication has improved and most telecom companies are making a profit instead of loss as experienced in the earlier years.
The mean performance of the market is r = 0.548545. This translates to the financial ratio of the organisation. The ROA of Zegona Communication increased by 90% by the end of the fiscal year 2015 and return on investment grew by 85%. These are clear signs of a good performance of the industry. Having an increase in both the returns on assets and investment consecutively indicates significant growth for the company, reflecting the essence of human capital in organisational performance. Moreover, such increases provide the company with a credible basis on which to predict the future performance of the organisation, thereby suggesting significant approaches that the firm can adopt to further increase performance. For this reason, the telecommunication industry has attracted many investors, both local and international. The fact that banks and other private investors have begun to invest in the telecom industry shows that the telecom sector is performing well.
5.2. Conclusion
The current dissertation has analysed the literature on human capital and its impact on firm performance. The perception of this concept is meticulously connected to the basics of money matters and strong performance. The reviewed literature shows that human resources in organisations stimulate the innovative capacity and productivity of that organisation. In essence, both primary and secondary data show that financial performance is positively influenced by intellectual resources.
Deductively, conceptualisation of the two aspects of the research should not be defined as an occurrence which only contributes ‘additional zeros’ in a business; it is relatively changing the whole staff as the most ‘valued advantages’ for the business to surface ways for greater accomplishments through innovations and creativity. Nevertheless, firms should establish effective strategies to invest more in the aspects of human resources, because this enables them to realise high productivity as well as allowing them to become more competitive for sustainable development.
5.3. Recommendations
The research findings lead to the following recommendations:
This investigation reveals a clear knowledge of human capital mechanisms as well as their implications for business performance. It is also shown that increasing a corporation’s progress might only be possible by means of appropriate control of human resources. Accordingly, firms ought to strengthen enterprises to inspire better knowledge and reception of human capital mechanisms which may boost the performance of telecommunication firms in the United Kingdom.
As evidenced by the analysis of findings, there is a significant correlation between human resources and firm performance. Significant effort thus has to be made to invest in employees’ capacity building, that is, timely training to enhance their skills, knowledge and competencies to help co-op up with the diverse business environment and technological development. As a result, the workforce will be well equipped to engage with the current and future shifts in demand by clients. Also, it maintains the uniqueness of the company helping them outperform their business rivals in a competitive market.
Lastly, management should focus on the survival capacity of the firm regarding finance and technology. This will make all the operations possible and thus increase productivity from the human force.
5.4. Recommendations for further research
This study focused on human capital and firm performance of a business organisation concerned with communications and networks. A further study ought to be carried out on how to increase human capital in other types of firms. Most directors in this area are not aware that human capital is of great worth to an enterprise. Detailed research on exactly improving human capital in an organisation to sustain it in commerce is indispensable.
Additional explorations need to be carried out to establish how human capital can be periodically weighed and how the depths can help in decision making for companies. A third study should to be conducted on human capital and its impacts on provision of service (customer care services) within the firms in the United Kingdom.
APPENDIX A
Fig.1. Return of assets and return of equity showing financial performance of Zegona Communication Plc. Company.
| VARIATION RATIOS | ||
| P/E Ratio TTM | – | 325.45 |
| Price to Sales TTM | 2.73 | 1.58 |
| Price to Cash Flow MRQ | 40.2 | 72.14 |
| Price to Free Cash Flow TTM | 26.58 | 31.01 |
| Price to Book MRQ | 1.06 | 2.09 |
| Price to Tangible Book MRQ | – | 3.91 |
| Per Share Data | ||
| Revenue/Share TTM | 0.63 | 4.5 |
| Basic EPS | -0.02 | 0.01 |
| Diluted EPS | -0.02 | 0.01 |
| Book Value/Share MRQ | 1.62 | 2.7 |
| Tangible Book Value/Share MRQ | -0.88 | 1.07 |
| Cash/Share MRQ | 0.1 | 0.77 |
| Cash Flow/Share TTM |
| Growth Ratio of the Company | ||
| EPS(MRQ) vs. Qtr. 1 Yr. Ago | 85.24% | -800.45% |
| EPS(TTM) vs. TTM 1 Yr. Ago | 83.18% | -141.19% |
| 5 Year EPS Growth | – | 2.62% |
| Sales (MRQ) vs. Qtr. 1 Yr. Ago | 32.77% | 0.01% |
| Sales (TTM) vs TTM 1 Yr. Ago | 165.83% | 0.16% |
| 5 Year Sales Growth | – | -1.07% |
| 5 Year Capital Spending Growth | – | 8.66% |
| Financial Strength of the organisation | ||
| Quick Ratio MRQ | 0.89 | 0.8 |
| Current Ratio MRQ | 0.91 | 0.83 |
| LT Debt to Equity MRQ | 73.67% | 103.09% |
| Total Debt to Equity MRQ | 77.29% | 131.45% |
| Efficiency of the company | ||
| Asset Turnover TTM | 0.19 | 0.46 |
| Inventory Turnover TTM | 160.55 | 58.02 |
| Revenue/Employee TTM | 640.08K | 421.78K |
| Net Income/Employee TTM | -24.95K | 22.28K |
| Receivable Turnover TTM | 20.61 | 5.9 |
| Dividend | ||
| Dividend Yield | – | 4.9% |
| Dividend Yield 5 Year Avg | – | 7% |
| Dividend Growth Rate | – | -4.08% |
| Payout Ratio | – | 608.78 |
TTM = Trailing Twelve Months 5YA = 5-Year Average MRQ = Most Recent Quarter
APPENDIX B
Fig.2. TELECABLE SUMMARY PRO FORMA FINANCIAL RESULTS (UNAUDITED)
| Q4 | Full Year | |||||
| Figures in € million | 2015 | 2014 | Change | 2015 | 2014 | Change |
| Consumer Revenue | 25.1 | 24.4 | 2.9% | 99.0 | 97.7 | 1.3% |
| Business Revenue | 9.3 | 8.4 | 11.1% | 35.5 | 33.1 | 7.0% |
| Total Revenue | 34.4 | 32.8 | 5.0% | 134.4 | 130.9 | 2.7% |
| Direct Costs | 7.5 | 5.7 | 31.0% | 24.5 | 21.0 | 17.0% |
| Gross Profit | 26.9 | 27.0 | (0.6%) | 109.9 | 109.9 | 0.0% |
| Other Costs | 10.7 | 11.4 | (5.9%) | 44.9 | 47.0 | (4.4%) |
| EBITDA | 16.2 | 15.7 | 3.3% | 65.0 | 62.9 | 3.3% |
| Capex | 7.3 | 7.1 | 3.2% | 28.9 | 27.7 | 4.5% |
| Cash Flow | 8.9 | 8.6 | 3.3% | 36.1 | 35.2 | 2.4% |
APPENDIX C
Fig.3. TELECABLE SUMMARY PRO FORMA OPERATING RESULTS (UNAUDITED)
| Q4 | Q1 | Q2 | Q3 | Q4 | Full Year | Full Year | ||
| 2014 | 2015 | 2015 | 2015 | 2015 | 2015 | 2014 | ||
| Consumer * | ||||||||
| Revenue (€m) | 24.4 | 24.4 | 24.7 | 24.9 | 25.1 | 99.0 | 97.7 | |
| Customers (AOP K) | 144 | 145 | 144 | 143 | 142 | 144 | 143 | |
| RGUs (K) | 454 | 456 | 458 | 457 | 456 | 456 | 454 | |
| RGUs/Customer | 3.14 | 3.15 | 3.18 | 3.19 | 3.23 | 3.23 | 3.14 | |
| ARPU (€/month) | 56.3 | 56.1 | 56.9 | 57.9 | 57.4 | 56.8 | ||
| Consumer Mobile | ||||||||
| Revenue (€m) | 5.9 | 6.2 | 6.5 | 6.8 | 6.7 | 26.1 | 22.3 | |
| Post-paid Customers (AOP K) | 70 | 72 | 73 | 75 | 77 | 74 | ||
| Post-paid Lines (AOP K)
|
93 | 96 | 99 | 103 | 108 | 102 | 88 | |
| Post-paid ARPU (€/month)
|
20.9 | 21.1 | 21.5 | 21.6 | 20.6 | 21.2 | 20.9 | |
| Mobile Penetration (%) | 45% | 46% | 47% | 49% | 51% | 51% | 45% | |
| Quad Play (%) | 31% | 31% | 32% | 33% | 35% | 35% | 31% | |
APPENDIX D
Table 1: Response rate of respondents
| Categories | Sample size (s) | Responsiveness | %age rate |
| Executive Staffs | 6 | 4 | 66.7% |
| Support Staffs | 24 | 21 | 87.5% |
| Total | 30 | 25 |
APPENDIX E
Table 2: Gender distribution of the Respondents
| Gender | Frequency (f) | Percentage (%) |
| Male | 18 | 72% |
| Female | 7 | 28% |
| Total | 25 | 100% |
Source: primary data
APPENDIX F
Table 3: Age bracket of the respondents
| Age of respondents | Frequency (f) | Percentage |
| Below 25 years | – | – |
| 25-35 years | 11 | 44% |
| 35-55 years | 7 | 28% |
| 45-55 years | 5 | 20% |
| Above 55 years | 2 | 8% |
| Total | 25 | 100% |
Source: Primary information
APPENDIX G
| Level of education | Frequency (f) | Percentage |
| Certificate | – | – |
| Diploma | 3 | 12% |
| Degree | 12 | 48% |
| Masters | 7 | 28% |
| Others | 3 | 12% |
| Total | 25 | 100 |
Source: Primary data
APPENDIX I
Table 5: Work experience of the respondents
| Duration | Frequency (f) | Percentage (%) |
| Less than a year | 2 | 8% |
| Between 1-5 years | 5 | 20% |
| Between 5- 10 years | 6 | 24% |
| Between 10-15 years | 10 | 40% |
| Above 15 years | 3 | 12% |
| Total | 25 | 100% |
Source: Primary data
APPENDIX J
Analysis of the relationship between dependent and independent variable using return of assets
| Symbol | Variables | Representation |
| Dependent Variables | ||
| ROA | Return on Average Assets | Net income/Total Asset |
| Independent Variables | ||
| Liquidity | Liquidity Risk | Total Assets /Total liabilities |
| Capital | Capital Adequacy | Total Equity/Total Assets |
| Cost of Operation | Cost of operations | |
APPENDIX K
Performance Analysis
| Independent Variables | ||||||
| Company | Years | Liquidity | Return on Assets | Quick Ratio | Market Value | Solvency |
| Zegona communications | 2010 | 10.88% | 16.26% | 21.40% | 68.22% | 5.60% |
| 2011 | 10.67% | 21.26% | 22.20% | 89.45% | 9.90% | |
| 2012 | 11.10% | 26.26% | 22.10% | 43.18% | 10.80% | |
| 2013 | 12.35% | 31.26% | 19.70% | 43.75% | 8.70% | |
| 2014 | 14.07% | 32.26% | 24.10% | 38.58% | 8.00% | |
| 2015 | 10.95% | 14.26% | 24.50% | 26.36% | 7.40% |
Zegona Communication Performance
Descriptive characteristics of finance
| Liquidity | Return on Assets | Quick Ratio | Market Value | ||||
| Mean | 0.119033333 | Mean | 0.272938889 | Mean | 0.227422222 | Mean | 0.428933333 |
| Standard Error | 0.003667977 | Standard Error | 0.018415249 | Standard Error | 0.003880288 | Standard Error | 0.033140783 |
| Median | 0.111 | Median | 0.2826 | Median | 0.22615 | Median | 0.3916 |
| Mode | 0.1235 | Mode | 0.2126 | Mode | #N/A | Mode | 0.3723 |
| Standard Deviation | 0.015561907 | Standard Deviation | 0.078129283 | Standard Deviation | 0.016462669 | Standard Deviation | 0.140604435 |
| Sample Variance | 0.000242173 | Sample Variance | 0.006104185 | Sample Variance | 0.000271019 | Sample Variance | 0.019769607 |
| Kurtosis | 1.267208368 | Kurtosis | -1.192854975 | Kurtosis | -1.116702319 | Kurtosis | 7.524915379 |
| Skewness | 1.236548785 | Skewness | -0.25214645 | Skewness | -0.199689959 | Skewness | 2.64597733 |
| Range | 0.0607 | Range | 0.24 | Range | 0.054 | Range | 0.6309 |
| Minimum | 0.0988 | Minimum | 0.1426 | Minimum | 0.197 | Minimum | 0.2636 |
| Maximum | 0.1595 | Maximum | 0.3826 | Maximum | 0.251 | Maximum | 0.8945 |
| Sum | 2.1426 | Sum | 4.9129 | Sum | 4.0936 | Sum | 7.7208 |
| Count | 18 | Count | 18 | Count | 18 | Count | 18 |
1 Year Zegona Chart
Source; secondary data
