The approach to valuations at the Normandy
Poseidon Group is a measured and methodical process
that utilises skills sourced from a number of different
disciplines. Whilst being subject to a strict set of
guidelines, it is also sufficiently flexible to be able to
cope with the considerable variety across the resources
industry. The group uses Discounted Cash-Flow (DCF)
techniques extensively in order to develop a base
valuation. Other external factors (eg the market) are,
however, also taken into account when forming a view
on value. Other methods of valuation are used in tandem
or as alternatives depending on the task. DCF
techniques are an important tool but would never be
used in isolation. Considerable care must be given to
developing the DCF analysis as its components (eg
discount rate) are prone to misuse. Whilst the valuation process is quite detailed and
scientific, it is really only as good as the inputs or
assumptions (technical, financial, etc) that are used.
The methodology used remains consistent whether the
group is undertaking the corporate planning process or
making an acquisition.