Corporate Reporting and Financial Analysis of BHP Billiton Company

Corporate Reporting and Financial Analysis of BHP Billiton Company 1
CORPORATE REPORTING AND FINANCIAL ANALYSIS OF BHP BILLITON COMPANY
By (Your Name)
Corporate and Financial Accounting
Professor’s Name
Name of your Institution (Holmes Institute)
Location of Your Institution
Date

Corporate Reporting and Financial Analysis of BHP Billiton Company 2
Corporate Reporting and Financial Analysis of BHP Billiton Company
Executive Summary
BHP Billiton is a multinational mineral resources mining company that is headquartered
in Melbourne, Australia. Having it roots dating back to 1885 at a mining town called Broken
Hill, the company has been dealing with the mining of metals such as iron ore, copper, Uranium
and Metallurgical coal and petroleum. BHP is listed on the Australian Stock Exchange (ASX)
and it as Australia's third largest company by revenue and first by market capitalization. BHP is
divided into a number of segments including the Coal segment, copper segment, petroleum
segment and Iron ore segment.
The coal segment deals with the mining of thermal coal and metallurgical coal while the
copper segment is engaged with the extraction of lead, zinc, uranium-molybdenum and gold. The
company operates mainly in Australia and America where it extracts mineral ores and gases from
areas where it owns mineral reserves. When it comes to market, BHP has a wide market
coverage in Australia, USA and all over the world where its target customers are reached through
direct supply agreements and global commodity exchange chains. On matters of financial and
sustainability disclosure, BHP Billiton has been on the front line in reporting financial,
sustainability and corporate social responsibility practices according to the expected standards.
The reporting has been bringing a lot of positive impact on the reputation of the company, apart
from the major Sermarco dam disaster that really discredited its image in 2015. Nonetheless, the
corporation has been determined to put health and safety of the workers and the community
ahead trough environmental responsibility by supporting the communities in environmental
conversation.

Corporate Reporting and Financial Analysis of BHP Billiton Company 3
Introduction
There has been an increasing need for companies to provide adequate, relevant and
comparable financial statements in their annual reports in the recent years. This need has
compelled many corporations to adopt a modern mode of reporting where both financial and
non-financial information is required to be disclosed and included in the annual reports. BHP
Billiton is not an exception to this. A number of both local and international accounting
standards such as IFRS, IAS and AASB have been responding appropriately to a number of
emerging issues concerning how financial and non-financial reports should be presented. AASB
10 prescribes the manner in which both financial and non-financial information that is required
to be provided by corporations in Australia when it comes to the presentation of financial
statements in the annual reports. A close look at the financial statements of BHP is taken to
assess the reporting policy adopted by the company. This paper seeks to examine the qualitative
characteristics of BHP Billiton annual reports including their relevance, comparability and
completeness of the financial statements and sustainability reports.
Qualitative Characteristics of BHP Billiton’s 2016 and 2017 Annual Reports
The main aim of a company’s financial statements contained in the annual report is
usually to provide information that is useful for making decisions. For the accounting
information to be useful for decision making, it has to conform to certain qualities that are
required by both local and international financial reporting standards. The international financial
reporting standards (IFRS), International Accounting Standards Board (IASB) and the Australian
Accounting Standards Board (AASB) provide the guidelines in which corporations should
disclose and report its financial statements (iasplus.com. 2018; "IFRS Qualitative Characteristics
Of Financial Reporting - CAKART", 2018, np.). Most of the guidelines require that a company's

Corporate Reporting and Financial Analysis of BHP Billiton Company 4
financial statements should adhere to the four main qualitative characteristics namely:
Relevance, comparability, understandability and reliability.
Looking at the annual reports for BHP Billiton for the financial periods 2016 and 2017, it
is evident that most of the qualitative requirements of financial statements presentation have
been adhered to. For instance, both 2016 and 2017 financial statement sections of the annual
report are comprised of the same items. This provides a room for comparability. The section
provides a report on the consolidated financial Statements, the director's declaration, the
statement of Director's responsibilities and information about BHP Billiton Plc 217 (BHP
Billiton | 2016 Annual report, 2016, pp.156-225; BHP Billiton | 2016 Annual report, 2017,
pp.155-229). With such uniformity in the manner of reporting that has been adopted by the
company, any user can be able to clearly look for a comparison between the annual reports for
the two periods. A lot of information contained in the annual reports for the two years is also
easily understood. The understandability, in this case, is in terms of nature of the language that is
being used to report the figures and statements made by the directors. Aspects of reliability and
relevance can also be seen in the BHP's annual reports because an independent auditor was
involved in examining the financial records of the company to ascertain that they have been
prepared according to accounting standards and that they represent a true and fair view of the
company.
Sustainability Reporting by BHP Billiton
Since sustainability reporting in accounting is becoming a very important part of business
reporting and financial reporting today, the practice has gained widespread acceptance
(Globalreporting.org. 2018). BHP Billiton has not been left behind in this and it has considered
disclosing a number of social, environmental and sustainability activities it undertakes in the