Understanding Annual Reports: A Case Study of Brickworks Limited

TASK 1
Question 1 – Research Task
Q. 1(a)
The annual report is a comprehensive document outlining the company's activities done
throughout a specified period, and it’s intended to provide information regarding the
company's activities and financial performance to shareholders and stakeholders.
On this assignment, I will use Brickworks Limited as Reference Company to answer
below questions;
How is the report disseminated and who is it given to? – The annual report can be found
on this link, https://www.brickworks.com.au/annualreport/ or Australia Security
Exchange website under the listed company. The annual report aims to provide
financial information to shareholders, government, employees, suppliers, analysts,
customers, leaders among others, (A guide to understanding Annual Report 2012). As
per the requirements, shareholders remain to be the primary target for the use of the
annual report.
Q. 1(b)
Reasons to each of the above party need the annual report
Shareholders – Directors are the trusted shareholders’ stewards. Shareholders need to
know how directors have discharged their duties and whether capable to continue
running offices. Reports also provide information to the shareholders on how the
business has been doing, whether going concern or not.
Government – The critical need here is to levy taxes. The government wants to know
whether the business is paying taxes from proceeds and on overall profitability. Other
government agencies such as environmental agency may need the report to know
safety stated is maintained or not.
Suppliers – They need an annual report to determine the solvency ratio of the company,
whether capable of meeting long or short-term debts. Such annual report stipulates the
milestone taken by the company on the issue of quality and commitment which enable
suppliers to understand better on the level of services needed.
Employees – Annual report creates a big picture on employees input to achieving the
company's objectives. Employees use the story to gauge their investment and to remind
them, the impact of the work they do in the company. The management also uses the
annual report as the appraisal tool to reward employees on their performance. It’s also
used as a learning guide about company market position and product line.
Leaders and Investors – Financial institution such as banks require an annual report to
evaluate the company's creditworthiness and also to decide whether they should
continue investing in the company.

Analysts and the general public – Groups such as investment analysts on the same
business line, requires information to strategize their competitive traits. Such companies
quoted in stock exchange are the target. The general public also requires information to
gauge the company's growth probability and employment.
Q. 1(c)
The Brickworks Limited annual report 2015 contains the following information;
 Five years performance summary report
 Director’s report
 Review of operation
 Directors Remuneration
 Auditors Independence declaration report
 Consolidated profit /Loss and other comprehensive income statements
 Consolidated statement of financial position
 Statement of changes of Equity
 Cash flow statement
 Note to the financial statement
Q. 1(d)
Brickworks Limited uses digital format on presenting the annual report, that is, the report
can be found on the website.
Q. 1(e)
Brickworks Limited is a group of companies with subsidiaries diversified in operations
and running in different divisions such as building products, land and development, and
business acquisition. This signifies that there is a consolidated account in the report.
Books of account of Brickworks limited are referred to as "consolidated statement...."
Also, the journals entries are reported as consolidated.
Q. 1(f)
Brickworks limited employ fair value method on the valuation of the asset. For instance,
trade receivables and other debtors have carrying amounts that are approximate fair
value. Impairment on Brickworks assets is calculated based on fair market value.
Q. 1(g)
During the valuation, there is the discrepancy on goodwill and other intangible assets
reported on 2014 and 2015 annual reports due to the impairment losses.
Q. 1(h)
To examine the financial position, the company provides clear total income and
expenditure account. The company reports the net profit after the tax expenses totaling

to $78,090,000 up 18.8% on the prior year which was as a result of diversified
contribution from various business divisions.
Q. 1(i)
Note, the annual report provided is clear and concise since it provides detailed parts as
required by reporting entities and accounting standards. For instance, notes are given to
every item reported on books of account.
Q. 1(j)
Brickworks Limited registered high tax rate during the 2015 financial year due to the
increased sales, and this consequently reduced the net profit after tax down to $ 78
million from 120 million for the prior year.
Q. 1(k)
There are no charts or diagrams used by management in presenting the annual report.
Brickworks annual report meets the statutory requirements since it highlights most
issues required by the reporting entity and as it is provided by generally accepted and
accounting standards. As stated by the independent auditor, the report provides a fair
view with all significant materials reported.
Q. 1(m)
Brickworks overall performance is of an average, currently showing a significant
decrease in the net profit by approximately 24% which was due to increased sales. The
reduced debt to capital ratio indicates the company has little debts compared to its
equity which signifies good company standing
Q. 2(n)
Yes, the brickworks Limited uses accrual accounting method in recording the financial
transaction since the revenue is recorded when earned and the expense when incurred.
Question 2
Q. 2(a)
In-house coding and data classification should comply with the following;
 Safety standards
 Security standards
 Testability standards
 Portability standards
 Maintainability standards
 Reliability standards