Analyzing Financial Statements of AGL Energy, Oil Search, and Santos: Corporate Accounting Report

In this report we will discuss about corporate accounting and below are the summaries point:- The report analyzes the financial statements of AGL Energy, Oil Search, and Santos. It reveals that the companies have high leverage due to increased borrowing and fundraising. The comprehensive income statement and cash flow statement reflect the impact on net profit and investment activities.

Corporate Accounting

CORPORATE ACCOUNTING 1
EXECUTIVE SUMMARY
The main aim of this report is to understand the financial statement of the company. In this
report, three companies have been taken into consideration to analyse the financial statement
and these are AGL Energy, Oil Search and Santos. It has been evaluated that the company
has high leverage due to raising funds and increasing borrowings. The cash flow statement of
the company states that the companies invest high amount in shares, assets and acquisition. In
this report, comprehensive income statement is also discussed which reflects that the items of
comprehensive statement is not reported in the income statement of the company. The items
of comprehensive statement affect the net profit of the company. As per the analysis of the
deferred tax asset and liability, it is observed that the companies have balance amount of
deferred tax asset and deferred tax liability except AGL. The amount of deferred tax asset and
liability is increases and decreases of the companies as per the financial statements. It has
been seen that the companies have the scope to survive in the market for long time.

CORPORATE ACCOUNTING 2
Contents
Introduction...........................................................................................................................................3
Task 1- Equity and Liabilities................................................................................................................4
Task 2- Cash Flow Statement..............................................................................................................11
Task 3- Other Comprehensive Income Statement................................................................................15
Task 4- Accounting For Corporate Income Tax..................................................................................18
Conclusion...........................................................................................................................................21
References...........................................................................................................................................22

CORPORATE ACCOUNTING 3
Introduction
Corporate Accounting is a special branch of accounting which deals with the accounting of
companies by preparing the final statement. It also analyse the financial results of the
companies and accounting for the specific events like amalgamation, absorption, preparation
of consolidated balance sheet. It is a process of accounting that calculates the operations of a
single company. The company uses this process in order to evaluate the value of assets and
liabilities. It is also use to identify the financial position of the company in the terms of
finance. There are many activities which are involved in the process of Corporate Accounting
such as creation and maintenance of a company accounting system, special expense
management, managing accounts payable, managing accounts receivable and many others. It
is necessary for the company to maintain and analyse the financial statements to evaluate the
financial position. In this report, three companies have been taken into consideration to
analyse the financial position and stability. AGL Energy Limited, Santos, and Oil search are
the companies taken to analyse the financial statements.
The report is classified into four parts to analyse the financial position of the companies. In
the first section of the report, Equity and liabilities of the companies has been analysed in
order to evaluate the debts position. After that, Items of cash flow statement have been
evaluated in order to analyse the financial position of the companies in the market. The third
section is based on the comprehensive income statement of the companies. The last section of
the report will base on the corporate tax.
Overview of the companies

CORPORATE ACCOUNTING 4
AGL Energy is an Australian listed company which is retailing in electricity and gas for the
residential and commercial use. AGL generates the energy from power station that uses the
thermal power, natural gas, wind power, and Coal seams gas source.
Santos Limited is an Australian energy company which large overseas investors and
shareholders. It is the second largest company in oil and gas producer in the country.
Oil Search Limited is the largest oil and gas exploration and development company which are
publically listed on the Australian stock exchange.
Task 1- Equity and Liabilities
I
Santos
Equity component 2017 ($m) 2016 ($m) 2015 ($m)
Issued capital 9034 8883 8119
Reserves 51 (510) (699)
Accumulated Losses (1934) (1293) 1
Total Equity 7151 7080 7421
From the above table, it has been seen that the equity component includes the issued capital,
reserves, and accumulated losses. Share Capital has been issued to shareholder is called
Issued Capital. The issued capital of the company is increases in the year 2017 as compare to
2016 and 2015. Reserves are always a credit balance of the company and part of
shareholders. Reserves of the company is increases in the year 2018 but it has been seen that
the company has the negative value in the past year such as 699 and 510 in 2015, and 2016
respectively. Accumulated Losses is the opposite of accumulating gain which means the

CORPORATE ACCOUNTING 5
business debts are greater than the earnings. As per the financial position of the company, the
company accumulated losses is reduces.
Oil Search
Equity component 2017 ($m) 2016 ($m) 2015 ($m)
Share Capital 3152.4 3147.3 3147.3
Reserves (6.4) (10.7) (12.97)
Retained
earnings/(losses)
1,791. 7 1588.7 1574.995
Total equity 4,937. 7 4725.3 4709.36
As per the above table, it has been seen that the company report the share capital, reserves,
retained earnings in its equity. The share capital of the company is increases in the year 2017
as compare to the other years such as 2015 and 2016. Reserves amount of the company states
that the company reserve more and invest less in the year 2017 as compare to the year 2016.
Retained Earnings is the accumulated income that is retained by the corporation at a
particular point of time. Retained earnings are increases in the year 2017 with the amount of
1791.7 and in the year of 2016 the amount of the earning is 1588.7 which reflect the
increasing earnings of the company (Oil Search, 2015).
AGL Energy
Equity component 2017 ($m) 2016 ($m) 2015 ($m)
Issued capital 6223 6696 6696
Reserves 16 (24) (65)

CORPORATE ACCOUNTING 6
Retained
earnings/(losses)
1335 1234 2175
Total equity
attributable to
owners of AGL
Energy Limited
7574 7915 8806
Non-Controlling
Interest
- 11 9
Total equity 7574 7926 8815
As per the above table, it has been evaluated that the issued capital of the company is
decreases in the year 2017 but in the year 2016 and 2015 the amount remains same. It states
that the company did not invest due to fewer funds. Non-controlling interest is decreases in
the year of 2017 which is beneficial for the company because it is also known as minority
interest (AGL, 2017).
II
Liabilities of Santos
Total Liabilities 2017 ($m) 2016 ($m) 2015 ($m)
Current Liabilities
Trade and Other
Payables
495 520 618
Deferred income 8 23 7
Interest-bearing loans
and borrowings
207 420 152

CORPORATE ACCOUNTING 7
Current tax liabilities 17 3 8
Provisions 142 121 125
Other financial
liabilities
82 366 2
Liabilities directly
associated with assets
held for sale
- 103 14
Total Current
Liabilities
951 1556 926
Non-current
liabilities
Deferred income 114 99 158
Interest-bearing loans
and borrowings
3736 4819 5246
Deferred tax
liabilities
240 221 153
Provisions 1494 1464 1736
Other financial
liabilities
20 23 309
Total non-current
liabilities
5604 6626 7602
Total liabilities 6555 8182 8528
The company contain all the items in the liabilities which are included in the above table.
Deferred income refers the unearned revenue which is not earned by the company. These are

CORPORATE ACCOUNTING 8
not affected the net profit or loss of the company. The amount of deferred income is
fluctuated. Provision of the company is an amount of cash which is put aside in the accounts
to cover a future liability. Provision of Non-current liabilities of the company is increases in
the year but it remains same in the year 2017 and 2016.
Liabilities of AGL Energy
Total Liabilities 2017 ($m) 2016 ($m) 2015 ($m)
Current Liabilities
Trade and other
payables
1507 1519 1377
Borrowings 173 22 443
Provisions 201 226 191
Current tax liabilities 13 102 86
Other financial
liabilities
827 460 269
Other liabilities 10 - 7
Liabilities directly
associated with assets
classified as held for
sale
- 224 -
Total current
liabilities
2731 2553 2373
Non-current
liabilities
Borrowings 3173 3086 3439
Provisions 520 487 456

CORPORATE ACCOUNTING 9
Other financial
liabilities
293 301 387
Other Liabilities 167 251 363
Total non-current
liabilities
4153 4125 4645
Total liabilities 6884 6678 7018
As per the table, the company reported the above items in their liabilities. Borrowings are the
total amount of collateral against which a lender lends funds to a business. The amount of
borrowing is decreases as per the passing years which reflect that the debts are decreases. The
company also reported the other liabilities. Other liabilities include the small transaction of
the company which affects the net profit (Kennon, 2018). As per the annual report, it has
been seen that other liabilities under the non-current liabilities is fluctuated with the
increasing and decreasing amount.
Liabilities of Oil search
Total Liabilities 2017 ($m) 2016 ($m) 2015 ($m)
Current Liabilities
Payables 199.15 161.64 214.58
Provisions 290.33 179.12 15.98
Borrowings 334.13 315.87 290.3
Current tax payable 644.59 564.03 55.65
Total current
liabilities
626.77 551.83 576.5

CORPORATE ACCOUNTING 10
Non-Current
Liabilities
Payables 24787 19717 186.7
Provisions 584.72 384.299 394.7
Borrowings 3424.77 3758.9 4012.2
Deferred tax
liabilities
913.6 686.05 631.1
Total Non-Current
Liabilities
4947.9 4848.97 5056.87
Total Liabilities 5574.74 5400.81 5633.47
The above items in the table are reported by the company in their liabilities. As per the above
table, it has been seen that the amount of borrowings is increases as compare to the other
years. Deferred tax liabilities are the liability which is due for the current period but yet has
not been paid (Oil Search, 2015). The amount of deferred tax is increases in the year 2017
which reflects that the company has to pay more in future on tax.
III
Financial Analysis of 2017
Santos
Oil
Search AGL

CORPORATE ACCOUNTING 11
Debt Equity Ratio Total Liabilities 6555 5574.7 6884
Total shareholder
equity 7151 4937.7 7574
0.92 1.13 0.90
Debt equity ratio is to evaluate the financial leverage of the company. The formula of Debt
equity ratio is total assets over total share liabilities. As per the above table, it has been
evaluated that the Santos has the debt ratio is 0.92, Oil search has 1.13 and AGL has 0.90
(AGL, 2017). It states that Oil search has high debt equity ratio as compare to the other
companies. Increasing debt ration reflect the issue for the company in generating the cash.
Task 2- Cash Flow Statement
IV- Items of Cash Flow Statement
Cash Flow from operating activities
Dividend received
Dividend received is the earning which is received by the company from the shareholders
based on a specific percentage of the company earnings. AGL and Santos reported the
amount of dividend received in its cash flow statement. But the Oil Search did not report in
its cash flow statement. AGL and Santos has high amount of dividend received with the
amount of 22 and 12 in millions (AGL, 2017).
Income Taxes Paid
Income tax paid is the item which is contain in the operating activities of the company. The
company had to pay the tax on it profit. In the year 2017, AGL has 292 reported as the

CORPORATE ACCOUNTING 12
income tax paid. Santos and Oil search has to pay the 28 and 59.74 in million which states the
tax is increasing as compare to the others (Santos, 2017).
Cash Flow from Investing Activities
Payments for exploration and evaluation asset
Payments for exploration and evaluation is the another item which is reported in the operating
activities of cash flow statement. The amount of payment for exploration and evaluation asset
is not reported by the AGL in their cash flow statement. The amount of payment of
exploration and evaluation is increases as reflected from the previous year with the amount of
128 in the cash flow statement of Santos (Santos, 2015). The amount of Oil search of the
company is increases which reflects that the company has investing more in the evaluation of
asset (Oil Search, 2017).
Payments for acquisition
Payment of Acquisition refers that the company buy the other company (Accounting Tools,
2018). The amount of acquisition is constant in the year 2017 and 2016 in the AGL
Company. The amount of acquisition is increases with the higher amount which reflects that
Santos invest high amount in acquisition. As per the cash flow statement of Oil search, it has
been states that the company does not invest in acquisition.
Cash Flow from Financing Activities
Repayment of borrowings
Repayment of borrowings is an item which is included in the financial activities of the cash
flow statement of the company. It refers the amount which is paid by the company in the
exchange of borrowings (Peerform, 2018). AGL has to pay the borrowing amount more as

CORPORATE ACCOUNTING 13
compare to the 2016. The amount of repaying borrowing is increase which states that the
company generated less cash. The repayment borrowing amount of Santos is also increases
but with the higher amount which states that the company borrow large amount in 2017 as
compare to 2016 and 2015. Oil search also has to repay the large amount in 2017 as compare
to 2016.
Dividend Payment
Dividend payment refers the amount which is paid by the company to the shareholders. The
amount of dividend payment is increases in the 2017 from 2016 in the case of Oil search
which reflects that the company has large number of equity shareholders. In the year 2017,
Santos did not report the amount of dividend payment which states that the company does not
have shareholders. In the case of AGL, it is reflected that the dividend payment is increases in
2017 from 2016 with the amount of 517(AGL, 2016).
V – Comparative Analysis
AGL Oil Search Santos
201
7 2016 2015 2017
201
6 2015 2017
201
6 2015
Net Cash Provided by Operating
Activities
891
1,18
6
1,04
4
843.
5 -374
952.
7
1,24
8
840 811
Net cash used in Investing Activities
-302 81
-
2175
-267 -229 -536 -534 -205
-
1,59
2
Net cash used in Financing
Activities
-687 -
1,27
924 -424 -374 -467 -
1,51
543 1,05
5

CORPORATE ACCOUNTING 14
4 8
AGL
It has been seen that the company investment activities of the company is increases in the
year 2016 as compare to the 2015. It reflects that the company earn more amounts by selling
the asset. The operating activities of the company is increases which reflects that the
company generate the less cash but in the year 2017 as compare to 2016 and 2015. The
Financing activities of the company are decreases with the negative amount which states that
the company generate less cash.
Oil Search
The investment activities of the company are reduces which states that the company stop
investing in shares and assets. In operating activities of the company is fluctuated with the
increasing and decreasing amount. In 2016, the amount of operating activities is reduces
which states that the company generated less cash and paid more.
Santos
The investment amount of the company is reduces which reflects that the company have less
capital due to which it invest low amount. But in 2017, the company again invest in
acquisition due to which the cash is reduces. The operating activities of the company are
increases which states that the company generates the cash and paid less amount. In 2017, the
amount of financing activities is reduces which states that the company paid the large amount
as compare to 2016 and 2015 (Santos, 2015).
VI

CORPORATE ACCOUNTING 15
By comparing the cash flow activities of the companies, Santos has high value of operating
activities as compare to AGL and Oil Search. In the 2017, the company has $1248 million
which is the higher amount as compare to the others. The companies invest large amount in
assets, shares and acquisition in order to earn profit. The amount of investment of companies
is in negative but in the year 2016, AGL has the positive amount in the investing activities.
The investing activities of the company states that the company sale the asset in the market.
The financing activity of the company reflects that the Oil Search is in the position of risk
because the company has large amount of borrowings (Oil Search, 2016). Santos has positive
amount in 2015 but after that the amount of financing activity is reduces. In 2017, Oil Search
paid fewer amounts as compare to the other companies.
Task 3- Other Comprehensive Income Statement
(Source: AGL, 2017)

CORPORATE ACCOUNTING 16
(Source: Santos, 2017)
(Source: Oil Search, 2017)
VII
Comprehensive income statement contains the different items such as reclassified
subsequently to profit and loss, not be reclassified subsequently to profit or loss, and other

CORPORATE ACCOUNTING 17
comprehensive income. Oil Search company reported the items such as gross profit,
operating activities, profit before income tax and net profit after tax.
VIII
The comprehensive income is an advance statement as compare to the normal income
statement. It has been seen that the amount of different income and expenses bring together in
the comprehensive income statement in order to calculate their sum separately. Items of
comprehensive income statement are not recorded in the normal income statement. These
items affect the amount of net profit of the company.
IX
The different comprehensive income statement is prepared for the calculation of different
income and expense. In 2017, the AGL, Santos and Oil Search have 654,279,302 million
comprehensive incomes.
By comparing the comprehensive statement of the companies, it has been seen that the
company adjust the gain amount in the books. It is observed that the amount of adjustment of
gain is decreases in the 2017 in the books of AGL, and Santo. Oil Search dis not reported the
amount of gain adjustment which states the non-adjustment of profits by the company.
The items of comprehensive income were not included in the income statement because it
affects the net profit of the company. It is reported that the amount of tax is charge on the net
profit that is why the amount of net profit is not to be affected. The profit amount of the
company is share between the shareholders but the items recorded in comprehensive
statement are not the core items of the company that is why it is not distributed between
shareholders. If these items are included in the income statement then the amount of profit of
shareholder would be affected.

CORPORATE ACCOUNTING 18
X
No, the other comprehensive income is not included in the evaluation of performance of
manager. The evaluation of performance of manager is evaluated on the basis of his work and
his capacity. Assessment of the performance of manager is a risk for the company due to
include the evaluation of manager performance in the other comprehensive income statement.
Task 4- Accounting For Corporate Income Tax
XI
AGL, Oil Search and Santos have tax expenses in the year of 2017.
XII
Calculation of Effective Tax Rate
AG
L
Oil
Search
Santo
s
Effective Tax
Rate=
INCOME TAX
Expenses 225 138.7 -211
EARNING BEFORE
TAX 764 440.9 -585
Rate 29% 31% 36%
XII
Deferred Tax is the difference between the accounting income and the taxable income. The
value of accounting income is calculated as per the Companies Act and the calculation of
taxable income is calculated as per the Income Tax Act. Deferred Tax is classified in the two

CORPORATE ACCOUNTING 19
parts and these are deferred tax asset and deferred tax liability. Deferred tax liability is
recorded on the liability side and deferred tax asset is recorded on the Asset side of the
company. Deferred Tax Asset means reduction in tax income and deferred tax liability means
the amount of tax which is pay by the company in future.
As per the financial statement of AGL, it has been seen that the company does not reported
the amount of deferred tax liability. 792 are reported as the amount of deferred tax asset
which states that the company save more in the future from tax payments. Santos reported the
both amount in their balance sheet with the amount of 1419 as deferred tax asset and 240 as
deferred tax liability. It states that the company save more from tax payment and pay less in
taxes. The financial statement of the company states the current position of deferred tax
liability and deferred tax asset. The company reported 678.14 as deferred tax asset and
913.68 as deferred tax liability which is higher amount as compare to the other companies
(AGL, 2015).
XIV
Yes, there is increase and decrease in the deferred tax assets or in the deferred tax liability of
the companies.

CORPORATE ACCOUNTING 20
XV
Calculation of Cash Tax Rate
Cash tax 2018 AGL Oil
Search Santos
2017 2017 2017
Opening balance provision of tax 102 56.4 3
Add: Current tax 2018 225 18.12 0
Less: Deferred tax 2018 792 678.1 1419
Add: Deferred liability 2018 0 913.68 240
Less: Closing balance provision of tax 13 64.4 17
Cash tax -478 245.7 -1193
Cash tax rate
Cash tax -478 245.7 -1193
Net profit before tax 1140 440.8 -585
-
41.93
%
56% 203.93
%
Note :
It is assumed that Santos has not current tax expenses and the company faced loss in the year
AGL Energy has not deferred tax liability that is why the cash rate of the company is negative.
Oil Search has high Cash Tax Rate as compare to the AGL and Santos with the percentage of
41.93%.
XVI
Cash Tax Rate states the accurate tax rate as per the activities of the companies in a year.
Book tax rate refers the 30% rate which states that the company has to pay the tax as per the
rate of 30%. Cash tax rate is different from the book tax rate because in book tax rate it is
restricted to be pay 30% but in cash tax rate the actual amount of tax will pay by the company
(Collins, 2018).

CORPORATE ACCOUNTING 21
Conclusion
From the above discussion, it has been concluded the companies have the high leverage in the
context of equity and liability which raise the issues. In the report, cash flow statement,
comprehensive income statement and corporate tax have been analysed in order to analyse
the financial position of the companies. The data of three years have been analysed in order
to evaluate the changes of the company.

CORPORATE ACCOUNTING 22
References
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https://www.accountingtools.com/articles/2017/5/4/acquisition-payment-methods [Accessed
1/2/19].
AGL. (2015) Annual Report 2015. [online] Available From:
https://www.agl.com.au/-/media/aglmedia/documents/about-agl/investors/annual-reports/
2015-annual-report_about-agl.pdf?la=en&hash=EF6D5954E77D1CECE351EC908A60430D
[Accessed 1/2/19].
AGL. (2016) AGL Annual Report 2016. [online] Available From:
https://www.agl.com.au/-/media/agl/about-agl/documents/investor-centre/
160828_ar_1587084.pdf?la=en&hash=0EDB57B4CA8D00BBC93F3E25B44E917A
[Accessed 1/2/19].
AGL. (2017) AGL 2017 Annual Report. [online] Available From:
https://www.agl.com.au/-/media/aglmedia/documents/about-agl/investors/annual-reports/
170825-agl-207-annual-report-asx.pdf?
la=en&hash=D4FDA733073543FB7268B46186134039 [Accessed 1/2/19].
Collins, J. (2018). How to Compute Cash Taxes. [online] Available From:
https://www.sapling.com/8007127/compute-cash-taxes [Accessed 1/2/19].
Kennon, J. (2018). Assets, Liabilities, and Shareholder Equity on the Balance Sheet. [online]
Available From: https://www.thebalance.com/assets-liabilities-shareholder-equity-explained-
357267 [Accessed 1/2/19].

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Oil Search. (2015) Annual Report2015. [online] Available From:
https://www.oilsearch.com/__data/assets/pdf_file/0018/1566/OSH_AR16-a3d8b18e-1b65-
4a66-a4a0-34826fa5db87-2.PDF[Accessed 1/2/19].
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https://www.oilsearch.com/__data/assets/pdf_file/0003/7788/170407-OSH-2016-Annual-
Report.pdf [Accessed 1/2/19].
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https://www.oilsearch.com/__data/assets/pdf_file/0009/19737/HC_OS_AR17_final.pdf
[Accessed 1/2/19].
Peerform. (2018) Loan Repayment Process. [online] Available From:
https://www.peerform.com/how-it-works/repayment-process/ [Accessed 1/2/19].
Santos. (2015) Annual Report 2015. [online] Available From:
https://www.santos.com/media/3310/2015_annual_report.pdf [Accessed 1/2/19].
Santos. (2016) Annual Report 2016. [online] Available From:
http://www.annualreports.com/HostedData/AnnualReportArchive/S/ASX_STO_2016.pdf
[Accessed 1/2/19].
Santos. (2017) Transform Build Grow. [online] Available From:
https://www.santos.com/media/4319/2017-annual-report.pdf [Accessed 1/2/19].