Equity Analysis: Net Income Impact in BHP and Whitehaven Mining

This report investigates the effects of net income on equity within the mining industry, focusing on BHP and Whitehaven Mining Companies. The analysis utilizes financial data extracted from the companies' annual reports, incorporating a preliminary literature review to contextualize the research. The report establishes a research aim and questions the impact of net income on equity, including an examination of share values. The methodology includes a research plan outlining data collection and analysis techniques, supported by a Gantt chart for project management. The study considers financial feasibility and aims to identify how equity is affected by various financial indicators. The project's organization includes a review of annual reports, focusing on balance sheets, income statements, cash flow statements, and statements of stockholder's equity to assess financial health and performance over a ten-year period. The project also examines the different production and financial performances of both companies and their contributions to the economy, and the different strategies employed by both companies. The report incorporates a critical literature review to support its findings and conclusions.

Running head: IMPACT ON EQUITY IN MINING INDUSTRIES
Impact on equity in mining industries
(BHP and WHITEHEAVEN mining company)
Name of the student:
Name of the university:
Author Note
Author Note

1IMPACT ON EQUITY IN MINING INDUSTRIES
Executive summary
The following proposal analyzes the effects of equity are found to be occurring in the net income of
the various business. To understand the scenario, the study demonstrates the annual report of White
Heaven Mining and BHP Mining for providing information about stakeholders and others. It has
involved the company’s activities and performance in the financial years. A short literature review is
conducted here with a discussion on various research aims. A research plan is included here to
suggest methods of data collection and data analysis.

2IMPACT ON EQUITY IN MINING INDUSTRIES
Table of Contents
CHAPTER 1: INTRODUCTION:.........................................................................................................3
1.1. FEASIBILITY OF THE PROJECT WITHIN TIME-FRAME:.................................................3
1.2. DISCUSSION ON AIMS AND OBJECTIVES AND RESEARCH QUESTIONS:.................5
CHAPTER 2: PRELIMINARY CRITICAL LITERATURE REVIEW:..............................................6
CHAPTER 3: THE ORGANISATION OF THE PROJECT:.............................................................10
CHAPTER 4: RESEARCH METHODOLOGY:................................................................................16
4.1. RESEARCH PLAN:.................................................................................................................16
4.2. IDENTIFICATION OF DATA SOURCE:..............................................................................17
4.3. GANTT CHART:.....................................................................................................................18
4.4. DATA SOURCES:...................................................................................................................20
REFERENCES:...................................................................................................................................22

3IMPACT ON EQUITY IN MINING INDUSTRIES
CHAPTER 1: INTRODUCTION:
The annual report is a comprehensive study which is intended to provide information for
shareholder and various other interested people. This includes activities of companies and
performance of finance across the preceding year.
Here, to derive the data, the annual report of BHP Mining and White Heaven Mining
Company is understood. The following proposal demonstrates a short literature review. Then various
research aims are discussed with one research question. Further, a research plan is included with an
analysis of the suggested method of data analysis and data collection.
1.1. FEASIBILITY OF THE PROJECT WITHIN TIME-FRAME:
For evaluating the economic feasibility of investment project, relates measurements and
various important criteria is to be specified. These evaluation methods are to be categorized in five
primary categories. This include net present value processes, return rate process, methods of ratio
and payback methods. Here, the financial feasibility is helpful to be measured on the basis of
accounting profits retrieved from annual reports of BHP and White Haven Mining Company. These
are the activities of business is not available for different prospective projects. However. The
projections of statements is used to gain effective understanding the finances of projects. These flow
of cashes of financial statements of projects are the records of real economic activities of different
entities of business. This it is nor available for prospective projects.

4IMPACT ON EQUITY IN MINING INDUSTRIES
Figure 1: “Process of Project Feasibility”
(Source: Harrison & Lock, 2017)
Hence, through analyzing the costs and revenue of entity, the statements are to be projected
and examined for gaining smart understanding of the entity’ performance. Here, the understanding
of investing in unproven or new investment project must nevertheless be based solely over the
results of the analysis. Further, decision of making financing the project is highly vital for
managerial decision. Additionally, the project finance to method to finance the economically capable
projects. This is on the basis of intended cash flows created by the projects. The flow of cash of the
project is be segregated from sponsoring organizations as the project is a distinct entity. In this case
project financing is helpful to provide particular benefits on conventional financing like sharing risks
and reduction of agency costs of their debt. This must also include the cost of debt and free flow of
cash and expanding the debt capacity of sponsors.
Innitiation and
Business Case
Review
Projet
Identification
Project
Definition
Project
Agreement Implementation

5IMPACT ON EQUITY IN MINING INDUSTRIES
Figure 2: “Feasibility Study of Project”
(Source: Myers, 2016)
1.2. DISCUSSION ON AIMS AND OBJECTIVES AND RESEARCH QUESTIONS:
The proposal intends to analyze different share of profit and loss of associated and different
joint ventures. They are accounted for using the method of equity. This is to be presented in distinct
line item over the face of that statement. Further, it is needed to identify how standard and regulators
settlers have specific jurisdictions that have been recommending and accepting the share of loss and
profit of equity methods investees. They are intended to be presented concerning whether those
activities of investees. They are also related nearly with that reporting entity. This has also needed
to understand that the share of loss and profit of equity method investees are presented as one lone
line item. It has been causing. Here, every intragroup liabilities and asset, an income of equity and
various cash flows are to be analyzed (Hutchinson, Seamer & Chapple, 2015). As there is any
modification on ownership of a subsidiary, there is a need of disclosure that is needed to be
The case where the alternative
option, strategic plan, designong and
different location prvides
economically preferable.
The case where no alterative scope
id demmed suitable under
environmenal and cosial terms
The case where probable
construction and project operatuon
is financally viable and manageable.

6IMPACT ON EQUITY IN MINING INDUSTRIES
understood for the schedules. This must highlight the impacts of the equity of changes to the
ownership in that subsidiary that has not resulted in any loss of control.
The various research questions to be identified are discussed below:
 What is the effect on equity because of net income over mining industries?
 How can the net income over various mining industries be determined?
 What are the values of shares that are issued by BHP and White Haven Mining
Company?
CHAPTER 2: PRELIMINARY CRITICAL LITERATURE REVIEW:
BHP Billiton Limited has been delivering the return on investment of about 13% since the
previous year. This has been in-line with the average of 10% at a similar period. For instance, ,
Penrose (2017) mentions that let BHP has invested about 1 Australian dollars equity, this would
create about 0.1 dollars in earnings from that. The investors who have been diversifying the portfolio
on the basis on the industry has needed to maximize the return over diversified mining sectors. This
must be done by choosing the greatest returning stocks. This has been deceiving as the organization
consisted of a variation of costs of dent levels and equity. This has been pushed up exaggeratedly
ROE. This has been at the same time since accumulating the expense of high interest as shown by
Chen (2016).

7IMPACT ON EQUITY IN MINING INDUSTRIES
Figure 3: “Various productions of BHP in FY18”
(Source: BHP, 2018)
Here, ROE is measured against the cost of equity for determining the deployed equity capital
of BHP Billiton. Their value of equity is examined to be about 11%. Provided with the discrepancy
of -0.0078% taking place between cost and return, Rees, Smith and Hall (2016) has shown that BHP
Billiton has been paying extra for the capital that what it has provided in return, Further, ROE is
broken down to various ratios like financial leverage, asset turnover and net profit margin.

8IMPACT ON EQUITY IN MINING INDUSTRIES
Figure 4: “Strong financial performance achieved by BHP in FY18”
(Source: BHP, 2018)
Schneider, Michelon and Maier (2017) mentions that in the previous financial year, the
Whitehaven has generated a maiden profit of 20.5 million dollars. This can be seen as a great
development in the loss of 342 million dollars. The net debt is down from 936 million dollars to 859
million dollars. The cash per tonne has been decreased by 8% to 56 dollars. Moreover, Freebairn
(2015) the organization has gathered an average of 70 dollars per tonne in that year. This is because
of lesser coal prices. However, the production cost of Whitehaven has fallen by 5 dollars.

9IMPACT ON EQUITY IN MINING INDUSTRIES
Figure 5: “First Group of Operational Highlights of Whitehaven”
(Source: Whitehaven Coal Newsroom, 2018)
Downes, Hanslow and Tulip (2014) has shown that it has been two years that Whitehaven
has returned their profit. Moreover, Black, Chapman and Windsor (2017) argues that it was reported
that 205 million dollars of net income were done in 2016. On the other hand, the net debt has been
859 million dollars. They have a 15% through the cycle gearing target. They have a current 1 billion-
odd dollars debt facility that could be drawn on. In this situation, the miner understood to be staring
at the latest package of debt. They have consisted of a bunch of lending banks. They are involved as
an effective element of Rio Tinto process.

10IMPACT ON EQUITY IN MINING INDUSTRIES
Figure 6: “Second Group of Operational Highlights of Whitehaven”
(Source: Whitehaven Coal Newsroom, 2018)
CHAPTER 3: THE ORGANISATION OF THE PROJECT:
The steps of reviewing annual reports for Whitehaven and BHP Mining is illustrated below.

11IMPACT ON EQUITY IN MINING INDUSTRIES
Figure 7: “Steps to review the current annual reports”
(Source: Grayson & Hodges, 2017)
The data for the project is retrieved from Whitehaven and BHP Mining company’s annual
reports. For this last ten years are considered. For BHP is seen that capital discipline, solid prices and
strong operating prices in the financial year 2018 has resulted on 33% increase in the underpinning
attributable profit. The amount is 8.9 billion U.S. Dollars. This has enabled to declare a variable
dividend of 6.3 billion U.S. Dollars for the year (O’Faircheallaigh, 2015). They have focused
restlessly on productivity and security that has released extra volumes around the supply chain. This
has 8% growth of volume for that year.
Using balance sheet to review the financial condition.
Basic Equation: Asset = Liability + Equity
Reviewing income statement report to understand
overall performance, profit or loss, in a specific
period.
Using Cash Flow Statement for understanding
movement of cash in specific time
Checking Statement of Stockholder’s Equity for
getting details on movement of equity account
Analyzing Financial Statement to read the overall
financial statement.

12IMPACT ON EQUITY IN MINING INDUSTRIES
Figure 8: “Analyzing the overall financial contribution of BHP”
(Source: BHP, 2018)
Moreover, they have developed a free cash flow of about 12 billion U.S. dollars. They have
invested about 6.8 billion dollars back in the business with decrease net debt by U 5 billion dollars.
Besides, they have secured clean, all-cash and quick exit from that shale. This has been the
assimilated consideration of 10.8 U.S. dollars billion payable in cash. As the transactions are
finished, they expected to return the overall proceeds to the shareholders (Hutchinson, Seamer &
Chapple, 2015).

13IMPACT ON EQUITY IN MINING INDUSTRIES
Figure 9: “Reconciliation of taxes paid to tax expenses”
(Source: BHP, 2018)
Thus, BHP’s strategy of operating and owning various long-life assets indicated that they had
been needed to plan and think in decades. They can develop long-term values as they can secure and
sustain their operations with the support of communities where they work. To perform that, they
should be maintaining and forming respectful, authentic and deep relationships with every
stakeholder (Dixon & Nassios, 2016).

14IMPACT ON EQUITY IN MINING INDUSTRIES
Figure 10: “Total Financial contribution of BHP for the year 2018”
(Source: BHP, 2018)
On the other hand, Whitehaven Coal has turned into a single non-government employer in
their nation. Since the last decades, they have comprised of the workforce of about 1600 people who
are employed at around six mines. It is seen from the past five years they have invested about 1.5
billion dollars in the economy of NSW or North West (Gitman, Juchau & Flanagan, 2015). Their
large quality coal has been exported to the emerging and established markets around Asia. There
have used that to develop steel and electricity.

15IMPACT ON EQUITY IN MINING INDUSTRIES
Figure 11: “Five Year Financial record of Whitehaven”
(Source: Whitehaven Coal Newsroom, 2018)
They have been delivering important building blocks for different sustainable financial
development within the present carbon-conscious world. Irrespective of the local communities where
they have been investing or operating or developing and advanced economies where the product is
put to perform, they are proud of powering the sector (Freebairn, 2016). This is through developing
value for every shareholder, irrespective of size. It is seen in June 2018 they have about 1026045885
shares of various issues.

16IMPACT ON EQUITY IN MINING INDUSTRIES
Figure 12: “Organizing project management activities”
(Source: Whitehaven Coal Newsroom, 2018)
CHAPTER 4: RESEARCH METHODOLOGY:
4.1. RESEARCH PLAN:
Here quantitative data analysis is to be done. This is helpful to change the raw data into
meaningful information. This is to be done through critical and rational thinking. This includes the
measurement of frequencies of different variable and differences taking place between the variables.
This is related with findings of evidence to reject or support hypothesis that is formulated in the
early stages of the research process. This belongs to the experimental and social realm instead of
mathematical data. Here the competitive advantages and business model are the primary components
of the analysis. The plan includes the following:

17IMPACT ON EQUITY IN MINING INDUSTRIES
Determination of the factors providing the organizations with the enduring forces to compete with rivals
The data also helps in understanding how they have implemented new technologies that are difficult for the competitors to find hard to replicate and secure the intellectual property
in understanding the unique approaches to solve the issue with the customers. The information collected from the website is also helpful to examine the unique strategies to resolve the issue of the customers and how the
Next, it also helps in recognizing how their products have cultural resonance.
Furthermore, the data is helpful to understand their market for the coming twenty years.
Figure 13: “The ways in which data retrieved from the annual reports are useful”
(Source: Created by Author)
4.2. IDENTIFICATION OF DATA SOURCE:
4.2.1. DATA COLLECTION:
Here web analytics must be implemented. It is the analysis, reporting and collection of
website data. Here, the focus is to determine the calculations on the basis of the user an
organizational goals. The using of BHP and Whiteheaven’s data for finding the failure and success
of the aims and drive strategy and develop the experience of users. Here, variable tools like
Chartbeat, Woopra and Google Analytics can be used. Here, the approach towards web analytics
must be learnt to understand the annual reports for 2012-2018 better. This is helpful to get the most
effective position in optimizing the website and thus develop the user’s experience as they visit.
Thus it is vital to understand what the users have needed to say in words and allow to share the
experience in simple and accessible way.

18IMPACT ON EQUITY IN MINING INDUSTRIES

19IMPACT ON EQUITY IN MINING INDUSTRIES
4.2.2. Data analysis:
Here, it must be reminded that proper insights must be chosen that are relevant. Proper
insights trigger actions to create success and ways of defining success. Some of the steps to be
focused are discussed below. The first step is targeting. Here, the most vital goals and most
significant Web visitors are to be targeted. The web traffic data is to be analyzed for uncovering
what has been happening on the web site. The gaps must be identified are to be identified. Next,
these gaps are to be defined, and a plan is to be mapped to close the gap and calculate the overall
progress. Further, the execution of the plan must be done and the success is to be gauged through
Web analytics. Then the process of refining must be done through setting new goals.
This analysis has included finding of the likelihood of dollar volumes of purchase that is
made by distinct customers and specific group of customers from 2012 to 2018. Besides it helpful to
determine the geographic sectors from where most and minimum amount of purchasing is done. It is
helpful to predict what elements are most and least likely to be bought in future.
4.3. GANTT CHART:
Task Name Duration Start Finish Predecessors
Analyzing the annual report of
BHP and Whitehaven
195 days Wed
8/29/18
Tue
5/28/19
Analyzing Corporate information 6 wks Wed
8/29/18
Tue
10/9/18
Analyzing products overview and
financial highlights for the past
decade
4 wks Wed
10/10/18
Tue
11/6/18
2
Understanding MDA or 4 wks Wed Tue 3

20IMPACT ON EQUITY IN MINING INDUSTRIES
Management discussion and
analysis
11/7/18 12/4/18
Assessing report on corporate
governance
7 wks Wed
12/5/18
Tue
1/22/19
4
Understanding information on
shares of the company
4 wks Wed
1/23/19
Tue
2/19/19
5
Predicting optimum control
factor levels with performances
5 wks Wed
2/20/19
Tue
3/26/19
6
Determining auditors report 2 wks Wed
3/27/19
Tue
4/9/19
7
Understanding financial
statements
2 wks Wed
4/10/19
Tue
4/23/19
8
Preforming data analysis and
notes to accounts
5 wks Wed
4/24/19
Tue
5/28/19
9

21IMPACT ON EQUITY IN MINING INDUSTRIES
Figure 14: Gantt Chart for the present proposal”
(Source: Created by Author)
4.4. DATA SOURCES:
 The site of Whitehaven Coal is used here, that determines the power generated by
various in multiple years: http://www.whitehavencoal.com.au/
 The site of BHP is utilized here, that highlights how they have been working with
complete integrity: https://www.bhp.com/our-approach/operating-with-integrity
The above proposal shows how long-term value for the shareholders is created by BHP. All
of these are done through marketing, development, acquisition and discoveries of natural resources.
On the other hand, since last decades Whitehaven Coal has turned into one of the biggest and
popular independent coal producer at North West New South Wales. The study has highlighted how
equity has been affecting the firms because of the changes in their net income. Thus it is helpful to
understand the methods to increase the capital across the sale of shared for the mining companies.
Moreover, the study is useful to know how essentially the deal of ownership interest is significant to
increase the funds for business.

22IMPACT ON EQUITY IN MINING INDUSTRIES
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