AFNR315 Advanced Financial Reporting: CSR Reporting and EPS Impact

This report provides a financial analysis of Wesfarmers and Woolworths, focusing on the impact of Corporate Social Responsibility (CSR) reporting on their Earnings per Share (EPS). The analysis considers the companies' operations, financial performance, and CSR activities. It examines the CSR initiatives undertaken by both companies, including gender diversity, climate change initiatives, and community contributions. The report also analyzes the EPS trends of both companies over a five-year period, highlighting the volatility in 2016 and the overall downward trend in EPS. The findings suggest that while both companies have engaged in CSR activities, there is no significant material impact on the financials and the EPS of the company after the reporting of the same in the financial year. The report emphasizes the importance of maintaining long-term EPS growth for sustainable development.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student:
Name of the University:
Author’s Note:

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Executive Summary
The aim of the assignment is to conduct a financial analysis of the Wesfarmers Company and the
Woolworths Company. The main activities and the operations of the companies and the financial
performance of the company were taken into account by the reported EPS of the company.
Corporate Social Responsibility of a company is the most important and crucial part and the
same has been discussed from both the company perspective. The CSR activities done by both of
the companies were some of the crucial part taken into consideration for the analysis.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Corporate Social Responsibility..................................................................................................4
Earnings per Share.......................................................................................................................6
Wesfarmers and Woolworths EPS...............................................................................................7
Conclusion.......................................................................................................................................9
Reference.......................................................................................................................................10

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Introduction
The financial analysis of the Wesfarmers Company and Woolworths Company were
conducted for evaluating the financial performance of the company. Corporate Social
Responsibility activities followed by the firm and the relevant activities performed by the
companies in the same field were discussed. Wesfarmers Company was established in the year
1914 as a cooperative company. The Wesfarmers Company is located and headquartered in
Perth, Western Australia where the operations of the company is primarily distributed in the
Australia and New Zealand. Chemicals, retail coal mining and industrial products are some of
the common portfolio products by which the operations of the company is diverse. Wesfarmers
has taken several initiatives for the overall development and sustainability performance of the
company with the help of the social activity taken by the company (Rangan, Chase and Karim
2015). Climate Change, Workforce Diversity, people Development and Ethical Sourcing and
Human Rights are some of the common base of Corporate Social Activities performed by the
company. The company has also made relevant disclosure about the operations and the activities
performed by the company. Woolworths Company an Australian Grocery Shop founded in the
year 1924 having a market share of about 80% of the Australian Market. The company primarily
sells groceries, packed foods, health foods, baby supplies products. The company has 1000 stores
currently in Australia where 976 stores are in the form of Supermarkets and others are in the
form of Convenience Stores. The company constructs various corporate responsibility
programmes and activity for the long-term enhancement and development of the company.
Climate Change, gender diversity in the work force and taking necessary steps for protecting the
environment are some of the CSRT activities performed. The company has made several

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disclosure in regards to the director report financial data and other operational information,
which might be helpful for the investor for assessing the financial performance of the company.
Discussion
Corporate Social Responsibility
The CSR activities conducted by Woolworths Company shows the business approach
showing contribution of the sustainable development activities undertaken by the company for
delivering economic, social and environmental benefits to the various stakeholders of the
company. The CSR Activities undertaken by the Woolworths Company helps the company in the
long-term development of the company by incorporating various internal and external factor
thereby looking for the growth of the company (Hur, Kim and Woo 2014). The growth of the
company is significantly dependent on the activities and the role played by the company on
behalf of the stakeholders of the company (Abugre and Nyuur 2015). The company has taken
several initiatives for the Corporate Social Responsibility in the form of gender diversity
programme taken by the company. The Company promotes a mix and an optimal balance
between the male female ratio in the workforce base it has so that the company has a wide and a
mixed base of employee base in the work force of the company. Giving an equal and a fair
opportunity to the employees of the company to every male and female in the workforce base of
the company has been the primary activity undertaken by the company (de Jong and van der
Meer 2017). Woolworths Company has received various and several recognition for maintaining
and creating opportunities for the workforce base of the company. Woolworths received the
Australian Workplace Equality Index Awards in accordance with the recognition and efforts
taken by the company for the creation of various opportunities taken by the company in
recognizing the efforts of the employees. Responding to the climate change by taking several

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initiative in the field of the reducing carbon emission has been some of the initiatives taken by
the company for the improving the economic and social life balance in which the company
operates (Poret 2014). The company responds to the climate change by taking several steps like
reducing climatic effect and reducing carbon emission by 2020.
Wesfarmers Company undertakes several initiatives and programmes as a part of the
Corporate Social Responsibility Activities performed by the company in the form of gender
diversity, climatic change activity, and safety programmes for the employees of the company,
community contribution and ethical sourcing and human rights of the society and the employees
of the company (Chan, Watson and Woodliff 2014). The company publishes the sustainability
report for the various activities and the work done by the company in the field of community
contribution activities so that the stakeholders of the company are benefited from the same.
Market forces in which the company are some of the important factors that marls the growth and
development of the company in the long run. Product Safety and having a proper maintenance of
the customer data is also some of the key points in which the company focuses. Responding to
the climatic change and taking several initiative in respect to the same are also the ley addressed
that are taken by the company by initiating several programmes like reducing global carbon
emission programme and reducing water wastage are some of the key initiative taken by the
company in the field of the CSR Activities. Contributing Community in various programmes and
activities are some of the key facts, which the company undertakes so that the management of
the company get to know about the environment and the business environment under which the
operation so the company is directly linked. Business factors and Macro Economic Factors are
some of the key factors that should be taken into consideration for the analysis of the operations
of the company and the long-term growth and development of the company (Kim and Ferguson

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2014). The company has maintained and disclosed several policies and notes of the company in
correspondence to the operations of the company and the various activities of the company.
Wesfarmers have disclosed several informations and data in correspondence data about the
company in the annual report of the company. The company has shown the sustainability report,
classification of the financial data in the financial footnotes of the company. The company has
also disclosed and reported the sustainability report of the company where the social initiative
taken by the company in the field of the community contribution, social activities were
highlighted in the report.
Earnings per Share
The Earnings per Share reflects the portions of company earnings in respect to the
profitability of the company net of taxes. The earnings per share of the company represents the
total number of the earnings of the company in respect to the net earnings done by the company.
The earnings per share of a company is calculated by taking the net profit after taxes divided by
the common outstanding shares of the company. EPS is a key measure, which is used by various
companies reflecting the potential of the company in terms of the profitability of the company
and how well is the company managing the operation s of the company. Application of EPS is
mostly done by the companies for the assessment of the financial performance of the company in
the trend period and the return generated by the company on the net capital employed by the
company. EPS is commonly used by investors and institutions for assessing the financial
performance of the companies operating in the same industry this acts as a common tools for
assessing the financial performance (Almeida, Fos and Kronlund 2016).
EPS is a key driver for the share price of the company as the same shows the potential of
the company in generating positive returns for the shareholders of the company. EPS can be

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calculated via two different methods which are basic EPS and Diluted EPS (Jatoi et al. 2014).
Basic EPS is generally (Net Income – Proffered Dividends / Outstanding Equity Shares) easy to
calculate. Diluted EPS is a more complex derivation showing the profitability of the company on
a per share basis after taking the warrants, stock options and other convertible debentures into
factors for determining the Earning per share of the company. The application of EPS in the
financial analysis of the company is common and the analyst also applies the Weighted Number
of Average Outstanding Shares for the Company after taking the weighted number of
outstanding shares of the company (Farrell, Unlu and Yu 2014). There are many analyst which
incorporates the application of the normalized EPS in the analysis which is called the Adjusted
EPS that removes the non-core profits of the company and instead focus on the main cored
profits of the company so that the investors can get a better and an easier way of assessing the
financial performance of the company.
Wesfarmers and Woolworths EPS
The Earning per share of the Wesfarmers and Woolworths Company was taken into
account for the analysis of the return provided by the company in the trend period. The trend
period taken into consideration for the analysis of the company was from the five year period
that was analysed for the company. A graphical representation of the movement of the change in
EPS was shown thereby analysing the trend followed by the company. The year 2016 was a
volatile year for both the companies where the EPS of both the companies saw a major
downward trend and the same could be attributed to the operational issues and the macro and
business factors which were unfavourable for the companies (Woolworthsgroup.com.au 2018).
The Change in EPS was not much seen after the CSR reporting or the sustainability report which
was published by the company. CSR activities and initiatives and programme have been taken by

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both of the company and not much of the material difference was found in the financials and the
EPS of the company after the reporting of the same in the financial year. EPS of both the
companies have shown a downward trend for the companies in the financial trend period for the
company. It is important for the companies to maintain and have a long term growing EPS for
the companies so that the growth and development of the company in the terms of the
performance of the companies is well
sustainable (Wesfarmers.com.au 2018).
Figure 1: Woolworths and Wesfarmers EPS Trend
2014-06 2015-06 2016-06 2017-06 2018-06
0
0.5
1
1.5
2
2.5
3
Wesfarmers EPS
Basic EPS Diluted EPS
2014-06 2015-06 2016-06 2017-06 2018-06
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
Woolworths EPS
Basic EPS Diluted EPS
Woolworths Earning Per Share
Earnings per share 2014-06 2015-06 2016-06 2017-06 2018-06
Basic EPS 1.97 1.7 -0.98 1.19 1.33
Diluted EPS 1.95 1.7 -0.98 1.19 1.32
Westfarmers Earnings Per Share
Earnings per share 2014-06 2015-06 2016-06 2017-06 2018-06
Basic EPS 2.39 2.16 0.36 2.55 1.06
Diluted EPS 2.38 2.16 0.36 2.54 1.06

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(Source: Wesfarmers.com.au 2018)
Conclusion
The analysis of the various activities and operation for the Wesfarmers and Woolworth
Company was conducted thereby analyzing the performance of the company in terms of the
profitability of the company. The profitability of the company was well addressed with the help
of the reported EPS of the company and the trend followed by the company in the five year of
time frame. The various CSR activities taken by the company and the core activities of the
companies were some of the key areas that were discussed in the body of the assignment and the
relevant analysis based in the following was made. EPS acts as a common tool that is used by
many of the analysts for assessing the performance of the company in terms of the financial
performance of the company and the return that is generated by the company. From the
recommendation point of view the EPS of both the companies have been falling as assessed in
the five year trend period and investors must assess various business and macro-economic factor
in which the company operates.

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Reference
Abugre, J.B. and Nyuur, R.B., 2015. Organizations’ commitment to and communication of CSR
activities: insights from Ghana. Social Responsibility Journal, 11(1), pp.161-178.
Almeida, H., Fos, V. and Kronlund, M., 2016. The real effects of share repurchases. Journal of
Financial Economics, 119(1), pp.168-185.
Baah, B.K., Tawiah, R. and Opoku, F.E., 2014. Industry sector determinants of dividend policy
and its effect on share prices in Ghana. International Journal of Economics, Business and
Finance, 2(5), pp.1-19.
Chan, M.C., Watson, J. and Woodliff, D., 2014. Corporate governance quality and CSR
disclosures. Journal of Business Ethics, 125(1), pp.59-73.
Chung, K.H., Yu, J.E., Choi, M.G. and Shin, J.I., 2015. The effects of CSR on customer
satisfaction and loyalty in China: the moderating role of corporate image. Journal of Economics,
Business and Management, 3(5), pp.542-547.
de Jong, M.D. and van der Meer, M., 2017. How does it fit? Exploring the congruence between
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Farrell, K., Unlu, E. and Yu, J., 2014. Stock repurchases as an earnings management mechanism:
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Hur, W.M., Kim, H. and Woo, J., 2014. How CSR leads to corporate brand equity: Mediating
mechanisms of corporate brand credibility and reputation. Journal of Business Ethics, 125(1),
pp.75-86.

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source/asx-announcements/2018-annual-report.pdf?sfvrsn=0 [Accessed 27 Jan. 2019].
Woolworthsgroup.com.au. (2018). [online] Available at:
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Jan. 2019].