COMMONWEALTH BANK OF AUSTRALIA AND BHP BILLITON
Commonwealth Bank of Australia
Commonwealth Bank of Australia is one of the top 3 banks in Australia and has it business in
other countries like New Zealand, UK, US and parts of Asia. The company was founded in 1911
and became public in 1991, the company posted a total revenue of more than A$ 26 billion and
profits of nearly A$9.5 billion in 2017, the company employs more than 51,000 individuals
worldwide. (CAB, 2017)
BHP Billiton is a leading mining and metals companies which is headquartered in Victoria,
Australia. The company was formed in 2001 with the merger between Broken Hill Proprietary
company (BHP company) and Billiton PLC, the company was listed in ASX and is highest by
market capitalisation, in 2017 some of the assets were rebranded as South 32 and therefore the
company was scaled down from BHP Billiton to BHP.
The company has the closing balance of share capital to a value of $33,845 million in 2016 and it
increased to $34,971 million in 2017. The company posses the closing balance of shares
1,711,061,742 in 2016 and it has increased to 1,726,013,398 in 2017. The company holds
ordinary shares and treasury shares in the share capital of the company.
In case of BHP, the total equity attributed to 54,290 million in 2016., however this value has
increased to 57,258 million, this is mainly due to the increase in the retained earnings, the
company did not issue any additional capital for BHP Billion Ltd, BHP Billiton PLC, the treasury
shares has reduced from 33 million in 2016 to 3 million in 2017.
Cash flow statement
The cash flows statement of Commonwealth bank is mainly comprises of 3 categories: Cash flow
from operating activities, net cash which is being used in investment activities and cash provided
in the financing activities. The changes in the operating assets and liabilities posses a higher
turnover of cash, which is purchase of assets accounting to nearly 54,000 million. On the overall
analysis of the cash flow statement it is noted that the cash at the end of 2016 is 14,447 million
and it increased to 23,117 million due to the increase in the issue of debt securities accounting
for 94,560 million in 2017 and the redemption of debt securities is 81,758 million. One of the
key aspect noted in the cash flow statement is the presence of Changes in operating assets and
While analysing the cash flow of BHP it is noted that there are 3 major categories of cash flows
stated: operating cash flows, investing cash flows and financing cash flows. From the statement
it is noted that the cash generated from the operating activities were high in 19,377 million in
2017 whereas it was only 12,671 million in 2016. The business held a closing balance of cash of
10,276 million in 2016 whereas it has increased to 14,108 million in 2017. However, the net
increase in cash flow for the year 2016 was 3,664 million whereas it was 3,510 million in 2017.
Other comprehensive income
Based on the annual report it is noted that the other comprehensive income of the company is
719 million in 2017, it is mainly comprised of foreign currency translation, loss on cash flow
hedging, loss on investment net to tax
Based on the financial report it is noted that the other comprehensive income is -49 million in
2017 which comprises of cash flow hedge profits and fluctuations in FX translations’
Based on the annual report of the company it is identified that the deferred tax asset for 2017 is
962 million and the tax liabilities is 332 million. The business has created a overall provisions on
the impairment of the loans and others which amounts to 1032 million in 2017.
The case of BHP it is noted that the deferred tax balances at the end of the year is 2,023 million.
The company has a deferred tax assets which is amounting to 856 million in 2017 and the
liabilities to a tune of 2500 million, this is mainly due to the undistributed earnings towards the
subsidiaries and these has not been recognised as the group was not able to control the overall
timing of the temporary aspects and it is not mainly probably that these aspects will get
reversed in the near future.
From the annual report the deferred tax assets of CAB was 389 million in 2016 and this has
increased to 962 million in 2017. Whereas the deferred tax liabilities was 340 million in 2016 and
this value has reduced to 332 million in 2017.
From the annual report the deferred tax of BHP was 1823 million in 2016 and this has increased
to 2023 million in 2017.
Profit before taxes 13,944
IT rate at 30% 4,183
The effective value which is not non-deductible
Tax offsets and other key adjustments -11
Tax adjustments which is related to policyholder incomes 22
Tax losses which are not previously considered in the
Tax differentials - Offshore -76
Banking units related to Offshore -42
Changes in the rates 4
IT paid in previous years -66
Total IT expenses of company 3,992
Corporate taxe expenses 3,960
Policy holder expenses towards tax 32
The total tax stated in income statement 28.50%
IT expenses of the company different from standard rate
Profit before taxes 10,322
IT rate at 30% 3,097
Tax on the fx earnings 478
Non tax which iis impacting the operating losses and Capital
Value which is under previous period 199
FX adjustments - offshore 88
Changes in rates 25
Other allowance - Investment related -53
Tax impact on equity investments -82
Recognition on the unrecognised tax assets related -106
Impact on offshore rates -189
Corporate taxes 3,933
Royalty taxes 167
Total tax stated in income statement 4,100
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