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).

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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.

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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.