1. Evaluate potential reputational risks associated with social impact/ accidents?

 Potential significant = loss revenue of user  damage their favorite = unsafe firm
- Already present = increase perceived risk = even lower than other forms
 Easy target for local authority = observe and take action soon
- Other accident protections = media/PR attach RA
 RA acknowledged these  recognized in its risk report (safety, and regulation and
licensing sections)  but not effective change  take action to mitigate risks
- Reporting risks and highlight concerns  RA draw attention = easy to target
- Stated mitigation = very limited and in general (not quantify + ranking)  add risks
 Risk: difficult to manage and quantify, even good policy and control system
- Difficult to monitoring all users = comply 100% to eliminate risk
- 30.27 m users at 15 cities  cost-benefits to do  profit motivate
 Hopefully, not capture public’s imagination (become a story)  local authority revise their
perspectives to with draw
- HB: trial/ experimental period = waiting for observation and taking actions to control

2. How to finance 20 b to expand business in two new cities? (Dock, HB, IT system)
 Impact funding on FS position
- Current gearing ~ 55% debt (62.5/ (62.5+51.5), higher level?  If borrowing 100%,
increase gearing significantly? Increase to ~ 61.5% ((62.5+20/ (62.5+20+51.5)
- 100% equity = reducing gearing? Down to ~ 53.3% ((51.5+20/ (62.5+20+51.5)
- Accounting ratio = gearing increase = riskier
 Recent funding strategy = Capex 19 b ~ 7 b debt (~ 37%) + 12 equity (increase RE)
- Reducing gearing vs. last year (55% vs. 59%)  Risk appetite
 Growing and profitable business (+15%)  easy to fund via debt or equity  guarantee to
pay interest and principle + future dividend?
 Nature of assets (Dock, IT, HB)  specialize in HB sharing and micro-mobility
- Limited demand and users = high commitment costs = lower disposal value
- Risks: new cities/ new market + possible accidents + depend on local authorities 
plan and manage effectively + solid business plan.
- Our debt ~ 48% PPE  room to raise?
 Consider existing covenant = limiting on gearing levels + interest coverage?
 Reducing dividend payout as alternative (36.5% x 19 b)  invest in future
- Currently, good share price performance + 233% recent 10 months.
 Debt prefer, tax shield + lower funding costs + flexible for low amount  but require
ongoing amount of cash outflow = interest and principle  manage business effectively and
profitability.

3. How to manage relationships within HB sharing business: RA, Minniring, and local authorities?
 Local authorities = prevent/ make fines to HB users ridding on pavement = 100$
 RA: accept responsibility for managing  Suppliers and local authority: not rely on + RA
depend upon them
- HB: increase accidents on pavement  increase perceived risks to pedestrians
- RA work with Minnirring to improve safety HB
 - RA: policy and procedure to mitigate accidents
 RA: only a customer, but big customer = large PO, HB replaced each 6 months
- Min business Geeland = not just RA, other customers in Micro-mobility
- Local authorities = reduce demand = reduce PO
- Other contract directly with local authority = high rate of urbanization
 RA: contribute to reduce traffic congestions, esp. in rush hours = ridding over pavement
- If not permit: ride down to road = increase risk of accidents with other form  not
dedicated lanes for HB  Building a new.

4. Minnirring supplier has strong power over HB purchasing? Our decision to exclude the risks?
 Risk report = SH: understand risks associated with RA business = their investment in RA
- Imply to provide all significant risk, even if also providing useful info for third parties or
competitors – compete against RA
- Exclusion = BOD has evaluated  decided not matter/ insignificant
 Exclude significant risk  SH: impress BOD is unaware of the threat
- Reduce SH’s confidence  other important info – FS.
 Exclusion = counterproductive  Supplier: RA depend upon a steady of supply of HB
(replaced each 6 m)  RA: should acknowledge this risk + state clearly in mitigation.
 Legal/market requirements  efficient market = capable of making use of all available info
 BOD not permit to withdraw info which is required  if known risk is excluded = infer the
missing facts  reduce market confidence, then market capitalization.

5. Ask IA Department to check that conversion of IT system?

 Follow defining the duties = BOD’s wishes  include the checking of the conversion of
the system if the Board so wished
 BOD = best possible use of the internal auditors’ expertise in devising tests and gathering
evidence  avoid the risk of distracting other staff from their normal responsibilities + less
likely to cause delays or omissions
 BOD: announce plan = encourage staff to do their work properly and might deter
dishonesty  set a tone from the top = sound control environment  invest internal audit
resources in this activity signals that the directors take this matter seriously.
 Quoted companies = IA = compliance test systems rather than conduct detailed tests of
files and records  annual IA plan that will be disrupted if internal audit staff are diverted to
test the implementation of the new system
- Checking = responsibility if the IT staff and staff responsible for applications such as
purchases or payroll, although IA staff will be more objective
 Risk that the independence of IA = compromised by this assignment  Check initial
implementation = reluctant to report on any problems at a later date  lack of
independence, IA team, their future tasks and results.

6. Safeguard to protect the data on team’s laptop?

 Strict instructions to prevent colleagues from looking at their screens  exclusive use of
the team and non-members should be discouraged from entering that area  not be
permitted to leave their laptops  away from their desks = take their laptops or lock them
  Sign non-disclosure agreements
 Secured by passwords + always be switched off when not in use  not be stored
anywhere on the laptops  Staff should access all files on the server + Not permitted to
store any data or file extracts on their laptop hard drives
 Clear policy concerning working away from the office
 Fully trained in computer security + anti-malware software  active at all times + kept up to
date  assess server through an internal network or via a secure VPN.

7. Conduct test to check the compliance?

 Reviewed every few months = treat their task in area of priority  remind the team that
the controls are important  expected to adhere to them. But, not too frequently =
counterproductive by demotivating the team.
 Reviewing evidence that computer security training  in-house or external expert = form
of record of the participants’ involvement
 Training covered all relevant areas identified as necessary to ensure the security of
access?
 Review the behavior = security whenever they happen to be in the office  signs that
laptops are being locked when staff are away from their desks  time of IA present?
 Annually, conduct an unannounced inspect of the laptops = password is required to log in
when switching the machine on
 Check that the software = protect the laptops is running by inspecting the machines and
checking that all updates have been applied
 Access the server = machines had not been set to log in automatically
 Content of the hard drive = check that it does not have any files = prohibit?

8. Key political and legal risks to RA business?

 For RA: changes in Transport regulations at national level + revising existing/ new licenses/
permission at local authority level
- Transport/ Local authority = key player = keep their interest and power into business
development and operating
- HB sharing = high politicized business = require building strong relationships
 Local authority prohibit HB user ridding on pavement  reduce RA’s advantages to users
+ personal ownership  But there are no evidence to make this decision, just increase
perceived risk
 Proposed laws = change significant business prospectus of RA and similar companies 
Reduce RA’s CA = not faster than other esp. rush hours  reduce demand, then charges.
Increase accidents when HB users is in roads (vs. other forms, bigger and faster)
 RA: build complex system of relationship with partners + Transport ministry + each local
authorities  manage risk effectively. Uncertainty in political change = increase risks to RA
= focus  RA: maintain good relationship in 4 years – HB development since 2016.

9. Building strong relationship with new Capital authority?

 Goal – Local traffic + pedestrian safety
 - New regulations – protect pedestrian but increase HB users when ridding in road +
increase traffic jams, esp. rush hours.
 Address
- Forming an internal team: communicate clearly and confidently our position +
protect our interests + persuade and influence them + update proposals and news
- Hire external lobbyist: influence Ministry and Local counselor  well connected and
work on personal basis  protect micro-mobility industry and RA business.
- Positive action plan: aggressively monitoring HB users = reduce accident  present
data: accident trends + vs. other forms + purchase HB domestically, and building
dedicated lanes for HB + promote e-bicycles and e-scooter.
- Redundant to protect bottom line = 15,000 staffs = negative signal + reduce options
- Collaborate with other (micro-mobility industry) = stronger bargaining power
- National key press = influence on political positions = National + Capital city.

10. How RA take approach to develop strategy, and take business environment into?
 Follow freewheeling: from establishment (2005) to listed 2010
- Informal and short-term approach – driven by search for a new market opps
- High risk but potentially high returns – suitable for small entities?
 Continually focusing on, and exploiting product and market opportunities
- Sharing business: require innovative business model + switching from pedaling
bicycle to e-bicycle (2012)  significant change (Dock-compatible, IT system, Staff…)
- Micro-mobility: dynamic and fast-changing industry (user lazy, and unwilling to cycle,
even short distance  adjusting plans and strategies to make relevant to market
- Compete other to go ahead  others: change to adapt as us.
 2016: Switching from e-bicycling to HB sharing (no any effort to ride)
- Follow emerging approach – emerging from strategic course of action/ formal planning
(both from tactical and operational level – innovate to adapt)
- Quoted company  improved corporate governance = Increase No. Board members,
NED  Balance ST profit and LT benefits  more LT focus and risk mitigation.
- Changing market = a lot of “unanticipated” events  bottom up from operating of
Dock, HB
 Emerging = react change quickly  re-position itself and our strategies to market demand
- 2000 planning and analysis staff – user insight and source of innovation – data-driven
- Culture: flexibility enough, dynamisms, and learning in our business.
- More formal – still guided by the need for strategies – require detail understanding of
market ( flow of local traffics + flow of local pedestrian)
 Continued to succeed with emerging
- Big size, structured management, sophisticated operating model (IT base wholly) +
some solid strategies (planned new dock sitting, new targeted cities…)

11. How innovative culture of RA match and support the business development and operation?
 RA: a ‘community-based’ culture based on a drive for continuing improvement through
involvement of everybody  Change business = change culture to reflect and support 
flex and change if it is to reflect this change in our business
 Strict regulations = stretch our resources = satisfying the regulatory and legal requirements
  Senior team = away from the day-to-day  strong enough to sustain the business without
active guidance
 Business now has to take the needs and requirements of shareholders into account 
our culture will need to change  our innovative organisation = deliver long-term profitability
together with customer excellence.
 Elements of the cultural web = power structure = formal board structure, but still have an
informal relationship  bring more bureaucracy into the way that staff go about delivering
the service  initially hinder productivity
 Control systems - need to be more formalized in order to comply regulations.
 7 S model in mind, the staff will have shared values about why Zoom exists  business
grow and to enjoy their work = earning a fair day’s pay + aspirations of career progression
 CEO and leadership team = require a renewed and positive emphasis on strong and
inclusive culture development = working on employee engagement with the new structure.
 Our culture = important as providing realistic forecasts about future prospects.

12. What is appropriate performance measures to monitor the success of RA?

 KPI ~ key determinants of our success  important to our key stakeholders  key
measures of our continued success and growth
- Market and business: No. user (30.27m) + No. dock (32) + No. City (15) + No.
Journey/transaction (16.9 b/y)
- Internal: IT application and security + speed of service
- Financial: Revenue and net profit growth
- SH: Dividend payout and share price performance.
 SH: EPS growing + DPS growing  long term risks and return = their investment into RA
- Quoted – high level of scrutiny  wide range and consistent KPI  specific to
potential returns to investors.
 BSC approach – balance ST profit (financial) and LT benefit (Customer, Internal process,
and learning and capabilities)
- Measuring in CSF area: IT capabilities + User satisfactions + Profitability  driving
our strategic decision
 User satisfaction: increase membership level + maintaining current membership
- Staff training days + technology process and mobile experience
- Detail understanding and assessing RA’s performance and manage.

13. Evaluate proposed strategy of developing new range of e-scooter sharing?

 Suitability = good fit with overall strategy
- Rapid growing HB sharing = Vision: keep Geeland moving + Mission: Microbility focus
- RA: shifting from pedaling bicycle to e-bicycle to HB sharing
- Increasing demand for e-vehicle (e-bicycle, e-scooter, and HB)
- But not increase demand  cannibalize revenue
- ST: keep change with industry + prevent decline, not growing
- Past: switching from pedal to e-bicycle
- Expanding customer base = new cities/ new demographic users
- Network of dock – 32 dock at 15 cities  easy to modify to be compatible
 - Convenience with prime locations + increase options to user
- Reduce political and legal risks from local authorities.
 Feasibility = practical happen + Skills, experiences, money and other resources to
successful implementation
- Raising money to fund: $? + debt/equity financing?, but growing and profitable
business  easy to raise.
- Skills and experiences = not experience with 1-wheel HB and e-scooter, but 15 years
of experience with pedal, e-bicycle, and HB = strong successful.
- Need transforming skills and knowledge to implement = Dock/ Staff/ Software/
procedures + Recruit experienced staffs.
 Acceptability = key stakeholders = accept anticipated outcomes (risks and returns)
- Investor accept if leading to financial gain  sensitive analysis = verify the project
- Positive NPV = value creation = accept
- Senior team: diversify their product portfolio + reduce business risk  safeguard the
future of RA
- Need a license or permission from local authority to operate.
 Overall: ok, Senior: risk identification and risk mitigation  future of industry
- Keep RA relevant to industry dynamic  Remain CA

14. Which controls to be used to response to risks, referring TARA?

 Major accidents resulting in litigation:
- Control to RA: not accidents + RA not negatively affected from other micro-mobility’s
accidents = new form/ innovative
- RA: lowest risk
1. Testing strictly before use  battery overheating, and reduce ankle injuries
when ridding more frequently
2. Strictly monitoring whilst in use: reduce ridding irresponsibly, high level of
speed  procedures for reporting problems + process for fixing issues 
How to react for each type (sight to serious)
- Transfer to third parties = provide comprehensive insurance  important: HB is ridded
on ongoing basis  probability high + high damage = for each HB.
- RA: not control other/ whole industry  but avoiding risk = maintaining high level of
safety and control
 Low level of experience  Recruit experienced staff + training for senior (key business)
 Theft/ damage of HB at docks  safety and security of HB  responsibility of each dock
manager?
- Control to protect = insurance, training for staff + procedures to storage and
monitoring when ridding  real time tracking ( 22m/journey), accident (slight to
serious), check damage before user re-dock?
- Camera: record actual evidence = what happen?
- GPS tracking in real time = team: monitoring status of use, and accident if arise +
inform during registration process
 Lack of electronic chargeable + mobile data coverage
- Optimize dock sitting and mapping  full charges 24 km ~ 6-8 journey
- Sensor to check (warning and inform early – enough charge to complete journey)
 - Max distance from dock location + area: good mobile data coverage (urban area)
- Government support: sitting dock + increase mobile data coverage  existing and
potential new area.
 HB hacking = security issues  max 10km/h  controlled by software system + physical
security
- Software network  steps to fully protect against any cyber threats
- Work with software providers  min risk of vehicle and system hacking
- Cyber threats omnipresent  difficult to predict  widest possible range of steps to
reduce risks  cost-benefits to mitigating risk  high level of risk appetite (than
normal)

15. Merits of keeping accident quiet vs. making public knowledge?

 Tempting to keep this quiet + Victim willing to react silent  but unethical course  Open
and honest: HB: innovative  How to improve to become normal?
 Risk: most of user ride carefully, but some ride irresponsibly, fast  esp. time saving in rush
hours  Pedestrian: increase perceived risks  raise issues  publicity  Local
authorities: take actions to reduce: not permission
 RA: clear what happens? Clear what plan to do? One-off accident, not impact over LT
 Risk of keeping quite: higher in LT, even nothing in ST  social media: spread  if
becoming public  what else is RA hiding?  Accidents = part of bigger picture of
accidents  reduce reputation?
 Releasing the facts in controlled manners.

16. Evaluate social and environmental demands on developing e-vehicles?

 Safety of society in general and road users  increase safety on roads  motorist ride
slowly  reduce across accidents  huge social benefits
- Reduce traffic congestions and delays, esp. xin rush hours  current: huge
inconvenience and costly
- Sharing business  reduce ownership + optimize social resources  increase
journey of vehicle
 HB or e-vehicle = new form/ innovative  limited evidence to demonstrate whole impact 
convince or predict  proven challenge
- General perception = more dangerous  esp. pedestrian: increase perceived
risks
- Cheaper mode vs. other form such as car  same route/ distance  cost
saving
 Environmental: e-vehicle = reduce greenhouse gas emission  huge positive influence for
government and society  Set goal = increase no. zero-emission vehicle. But increase
electricity provision + recycling used HB/ battery
 Reduce congestion and require less space/ material  when ridding and at dock  local
city prefer saving a lot of money  building more roads  matching increasing demand for
car  instead sitting dock + charging system.
 Weighing up costs and benefits  strategic direction and recommendation. Increase
demand for e-vehicle  reduce price. Lifecycle of e-vehicle  industry leader as past.
17. Benefits to RA of developing a knowledge management strategy?
 Focus on how we acquire, store and utilise the knowledge  RA most effective problem
solving, decision making, dynamic learning and strategic planning.
 Information and transforming this into knowledge = key competitive approach for a
dynamic and innovative business like sharing business  Exploits data in its day to day
operations + shape its strategic direction.
 Encourage the sharing and dissemination of organisational knowledge and experience
throughout the organization  everyone use and build on what is already known = create
new opportunities  encourages a culture of sharing and learning
 Allow RA to formalize its acquisition, storage and use of the data and information it holds
at a strategic level  set the tone from the top in terms of sharing organisational knowledge
 Create a knowledge sharing culture  motivate staff to see the benefit of knowledge
sharing and the key strategic importance of the data and information held and used by RA
 encourage creativity and learning in RA  increase our competitive advantage

18. How RA exploit Big data analytics as strategic resources?

 Collect user’s data and activities: journey, traffic and pavement conditions, location of
docked and returned  detailed understanding of every aspect of each journey taken, not
just start and end place
 Use to identify trends and correlations in the data  identify and focus on routes that are
safest/ quickest/ most beneficial to users in real time. Identify a correlation between time of
day and road conditions (i.e. recurring rush hour bottlenecks).
 Help us to re-route drivers to safer, quicker routes, thus improving our customer service
and our customer relationship management  sitting new docks? Pavement area mapping?
 Huge amounts of data we hold relating to our customers, such as age category, usage
patterns, transaction amounts and journey profile  target customers more effectively with
the right ride at the right time  saving resources in time and effort and pinpointing and
predicting their needs with a greater degree of accuracy.
 Data from our apps, and from our AI data  identify patterns of behaviour, journey
preferences, and user frequency
 Segment our customer base to identify high-value customers (tourist)  fine-tuning our
pricing model and our sales and marketing efforts  cost savings + usage of our service
 Contextual information: start and end point locations of our customers, time of day of
journeys taken, length and frequency of journeys, age ranges and demographic information
 provide valuable correlations
 Employed to test longer-term tactics and strategies = advertising expenditure. Planning
for new business case – setting up in new cities + acquiring similar company..

19. Unethical to sharing user’s data with third parties?

 Not illegal = common practices in business  honest with customers as to our intentions
for use of their data  ensure that our partner use our customers’ data in an appropriate
and ethical way
  User’s concerns: making a profit from selling their data to external parties  How objective
we can be in this transaction?  RA clear how we manage our relationship with partners
and how we expect them to use customer information.
 Allowed access to it  Not deny any responsibility for how partner  to protect their
information
 Not pass on any sensitive customer data, such as address, banking info  put our
customers at harm or risk  Security of customers, and how their information is used, must
be a top priority  system and policies to control
 Completely open and honest with customers as to how their data will used  When users
sign up  explicit reference to partner and that their data may be used by third parties 
users = opportunity to opt in or out of any use of their personal data.

20. Key risks of expanding into new cities?

 New cities = always face new risks, as the environment is unfamiliar and it takes time to
gain an understanding of all the factors that will impact on operations
 Magnitude of the new risk = how different  few differences in culture, regulations,
conditions, economic factors and the currency is the same  too many new risks, just
financing issues and political changes, issuing licenses and permission.
 Similar business environment = quite short-term  simply familiarises with the new
country and tweaks its mode of operation to best suit the ways of working it finds at the new
location
 Next election = which party win? Their intention/ support? Specific to RA/ HB sharing or
micro-mobility or traditional transport
 Increase regulation in many areas relevant to Zoom including emissions, human resource
management and employment law  some difficulties operating + potentially some
additional costs OR ‘save the environment’, reduce traffic congestion/ jams?
 Key problems  currently unknown  Large scale changes to areas relevant to RA 
entry into Noland financially unviable  without understanding how things will change =
project that turns out to be considerably less lucrative than projected  Uncertainty =
increase risk to RA.

21. How to use scenario planning to help us with this strategic direction?
 Help decide whether entering is a good idea  conceptualize different visions of how the
future may evolve and respond accordingly
 Several scenarios in virtual environment, with numbers generated to reflect the financial
outcome in each different scenario  based on forecasts and assumptions about different
things that will happen in the future.
 Reduce limit thinking and mislead decision making  different circumstances transpired
 if the ‘Modern Purple’ party fails to win the election
 Use scenario planning to identify high-impact, high-uncertainty factors  ranking 
bring clusters of factors together to identify several different potential future states or
‘scenarios’.
  For each = construct a detailed analysis showing the likely financial outcomes and
strategic implications = different courses of action  optimize performance in these
conditions
 RA: forecast how many Dock, HB will launch, how many journeys will make, the distances
it anticipates being travelled and what fares it will charge, and calculate all the costs
associated with this activity  start with a scenario that is based on variables that are like
those experienced in Geeland  look at the financial impact if key variables turn out to be
different
 Some variables = relative accuracy – No. HB, dock intends to launch. Other = less certain
 levels of fares + licensing and staffing the administrative office may be higher or lower
than anticipated
 Several ‘pictures’ of how things may turn out  improve foresight  more informed
decision about whether or not to invest in the expansion  focus on key variables = makes
the difference between a profit making or a loss-making venture  work out what things it
can do to reduce uncertainty and take control of the situation.
 Only going to be financially viable if certain conditions unfold  Look at the probability of
those conditions occurring  additional actions = make the decision not to invest?

22. What actions to achieve RA’s market penetration and development?

 HB sharing has grown rapidly in Geeland  coverage rate (10% cities?) + increasing no.
users (+20% in 2019 t0 30.27 m?) + forecasting continue to growth in 2020  facilitated by
demand from both the government and society for more environmentally friendly transport
solutions
 Only HB sharing in Geeland = enter the market without any direct competition
 HB sharing market = be growing  Both market penetration and development = viable
 Market penetration: stimulate increased usage of our bike sharing service by our existing
customers  increase advertising, offer discounts for increased usage
- For every ride taken = give bonus points = used to buy credits for more rides, or
free ride after every set amount of kilometres covered = every 10 kilometres
completed, gets 1 free kilometre
- Offer partnership arrangements = converted to bonus points to be redeemed at local
stores or restaurants
 Current high level of loyalty ~ 11 journey/w
 Attract customers from our BD – e-bicycle  strong marketing campaigns and promotional
offers which are better than  investigate our price compared to = offer a same price or
service improvement?
 Up bonuses or discounts for the first 6 months of registration as a promotional offer
 New cities in Geeland = less require us to invest in new competencies or skills (similar
business operating environment)  look for ways to advertise our services in these new
locations  via our social media feeds or through our current sharing app
 Usage by different demographic groups = limiting 18 years  male/ female  type of
customer: tourist, student, shopper..  present our advertising message in different media
and in different ways  suitable for their daily activities and needs and preferences.
23. Potential current risks of doing business with Minnirring supplier?
 Minnirring: HB supplier in Geeland  our main financial risks = arises from currency risk
 economic, transaction and translation risks.
 Economic risk = changes in the Geeland economy that have an impact on RA 
experienced short period of high inflation? Charge higher cost of HB to RA?  Reduce our
financial performance?
 Transaction risk = purchases on credit terms  rate move = between the time of the
transaction and the date of payment exchange  Geeland: historic issues with an unstable
exchange rate  impacts cash flows (positive or negative effect), depending on the
direction of the movement  create uncertainty = increase risk of doing business.
 Translation risk = if asset or liability denominated in Geeland currency  unlikely

24. How to manage these risk effectively?

 Economic risk: carefully monitor economic conditions at Zeeland  if highly unstable:
seek a supplier elsewhere. Manage the risk of soaring prices = agree a medium-term pricing
structure  avoid inflation affect.
 Transaction risk: if plan to spend a material amount = volume of business (AOP) 
Internal (lagging/leading, and invoicing) and external hedging (options and futures contracts,
set up to to offset movements, but at cost)
 Reduces the financial risk = move by passing that risk to another party  provide
certainty of cash flows and reduce risk  value of the transactions undertaken are large
enough to warrant the effort  costs involved in arranging hedging and managing the
arrangements on an ongoing basis.
 Potential gain + loss  In short-term imbalance  LT: overall same.

25. How to reduce potential pressure on us from increasing pedestrian accidents?

 Regulators and local authorities are already interested in our activities  increasing
industry regulation in environmental and safety requirements  maintain good and close
relationships with them when considering and developing our HB sharing.
 Local politician – influence us to use domestically  open up a dialogue with him: why we
use Minniring  setting out our long-term position + our overall impact as a business, on the
environment - wider population and economy  environmental and social reasons for
Explain the importance of our service to their towns and cities  financial contribution to
local road schemes – reducing traffic congestion during rush hours. Provide environmental
awareness schemes = working local schools to promote more bike usage
 Many sharing business = buy our bikes from overseas, not RA. Towns and cities may
receive much needed additional revenue from tourists  visiting attractions.

26. Impact of new city development on RA’s beta co-efficient + change in beta?
 Beta coefficient reflects the systematic risks faced by an entity  affect all market
participants and cannot be diversified away
 In principle, continue to do HB sharing business at Geeland  company’s systematic risk
may be left largely unchanged, expanding two cities = increasing risk, but relative small
business vs. overall + similar business operating
  Expansion = change RA’s overall gearing = effect on beta  Increasing debt, through the
lease HB  increase gearing  increase the company’s geared beta
 Currency movement + charging floating interest rate?
 Stable customer base = revenue + growing (market penetration %)  reducing the
sensitivity of RA’s profits to changes in the business environment. If protected then its beta
coefficient may decline
 Change in beta = cost of equity will change, with an increase in beta increasing the cost of
equity  reduce the share price  no direct impact on the company itself, but it will reflect
a decrease in shareholder wealth (Marcap).
 Increase in cost of equity = hurdle rate for new projects may increase  more difficult for
RA to expand or to maintain its competitive position by investing in new cities facilities or IT
infrastructure upgrade.
 Directors may also feel pressured + convince the markets  lead to problems with
governance if the board misleads the shareholders about the risks or the likely returns to be
had from investments
 Efficient market = nothing to alter its share price or restore it to previous levels, not unless
release positive news that had not been anticipated by the markets

27. Make innocent explanation of the increase in share price?

 Strong-form: share price will reflect all information, whether it is public knowledge or not
- Meeting was announced on Tuesday  analysts were aware that something
important  attempting to predict what likely to be?
- Quoted companies frequently attempt to play down bad news + release good news 
share price rise in advance of the announcement
 Followed by a smaller dip afterwards  If leaked the whole story = Not required
correction after the news was released officially  but slightly disappointed when the news
was a little less positive than had been hoped  whole story cannot have been known in
advance.
 Semi-strong = reflect all publicly-available information  Once that information is made
available then it will be quickly and accurately incorporated into the share price.
- Market has the information  The precise timing of the publication = no effect 
formal analysts’ meeting would not actually affect the share price
- Not receive the information  why Novak’s share price was moving or risk being left
behind?
 ST fluctuation = no impact on the long-term share price  greater volatility and so
increased risk, but any such overreaction would quickly be rectified
- Root cause of that had little to do with the company’s cash flows.
- L quickly settle on a more realistic equilibrium price that is based on future
expectations rather than past observations.