Financial Statement Study: Caltex Australia Limited & Whitehaven Coal

This report presents a comprehensive financial analysis of Caltex Australia Limited and Whitehaven Coal Limited, both prominent corporations listed on the Australian Securities Exchange (ASX) within the energy sector. The analysis encompasses a detailed examination of their annual reports, focusing on key financial aspects such as owner's equity, cash flow statements (operating, investing, and financing activities), and the accounting for corporate income tax over the years 2017, 2016, and 2015. The study compares their performance, revealing that Whitehaven Coal Limited demonstrates superior performance in managing investing and financing activities and exhibits a stronger solvency position with a lower debt-to-equity ratio compared to Caltex. The report includes a comparative analysis of debt and equity structures, highlighting the financial risks associated with each company's capital structure. Furthermore, the report provides insights into the cash flow statements, analyzing the inflows and outflows from operating, investing, and financing activities of both companies. The report also includes a detailed analysis of the tax structure of both the companies.

Financial Statement Study 1
Financial Analysis
Caltex Australia Limited & Whitehaven Coal Limited

Financial Statement Study 2
Executive summary:
This report presents the financial analysis of two large corporations which are listed on ASX
and are operating under the energy sector of Australia. The companies chosen herein are:
Caltex Australia and Whitehaven Coal Limited. The annual reports of both the companies
have been analysed thoroughly and it has been observed that Whitehaven Limited is
performing better than Caltex in various aspects such as management of investing and
financing activities and it terms of solvency as Caltex is holding 51% of debt in its capital
structure whereas Whitehaven is holding merely 17% of the total capital structure. Though
the effective rate of Whitehaven is lesser than Caltex, the cash tax rate of Whitehaven is
higher than that of Caltex. The cash tax rate of Whitehaven is 29.43% whereas Caltex has the
cash tax rate of 27.60%

Financial Statement Study 3

Financial Statement Study 4

Financial Statement Study 5
Table of Contents
Executive summary:..............................................................................................................................2
Introduction:..........................................................................................................................................5
Part 1: Owner’s equity:..........................................................................................................................6
Part 2: Cash-flows statement..............................................................................................................10
Part 3: Other Comprehensive income statement................................................................................16
Part 4: Accounting for Corporate Income Tax.....................................................................................18
References:..........................................................................................................................................21

Financial Statement Study 6
Introduction:
For the purpose of this assignment, two companies which are listed on the Australian
Securities Exchange are selected. These companies are: Caltex Australia and Whitehaven
Coal Limited. In order to analyse the financial performance of the selected companies, the
said companies are chosen from the energy industry of Australia. The selection of the
companies from the same industry will allow performing comparative analysis of
performance of both companies on the same grounds.
Caltex Limited is one of the leading manufacturers and supplier of petroleum products in
Australia. However, the company exports its products to Singapore and New Zealand also.
Caltex is in operations since 1900 and is headquartered in Sydney, Australia. It is operating
its business through two prime segments: Supply & Marketing Segment and Lytton Segment.
The former segment undertakes the selling function of Caltex’s products such as fuels,
lubricant & diesel oils, liquefied petroleum gas, speciality products and so on. The Lytton
segment, on the other hand undertakes the refining function in respect of crude oil to convert
the same into diesel oil, fuel and other petroleum products.
Whitehaven Coal Limited is also an Australian leading corporation in energy sector,
headquartered in Sydney. It is engaged in the business of development of coal mines in the
New South Wales, Australia. The company started its operations in 1999 and presently it is
supplying its coal products to various domestic units and also to various different foreign
countries such as Japan, Taiwan, India, China, Korea, Malaysia, Indonesia, Vietnam, the
Philippines and Chile. Whitehaven Limited also operates its business through two segments
i.e. pen Cut Operations and Underground Operations. Also, the company owns six mines in
North West New South Wales. It basically offers thermal coal and also the metallurgical coal
products.

Financial Statement Study 7
To assess and analyse the financial performance of Caltex Limited and Whitehaven Limited,
various aspects of financial statements have been studied in detailed for the last three
financial years: 2017, 2016 and 2015. The major financial aspects that have been taken into
account for the purpose of this report are: company’s equity structure, capital structure, cash
flows from operating, investing and financing activities and the tax structure of both the
companies.
Part 1: Owner’s equity:
The term equity refers to owner’s interest in the business of the corporation. Technically, it is
the residual interest in the company’s assets after deduction of all the business liabilities. It
basically represents the amount owned by company to its owners (Hermanson, Ivancevich,
Edwards, 2016).
Caltex Limited
Amount in Australian Dollars Thousands
2017 2016 2015
Issued capital $ 378,505.00 $ 524,944.00 $ 543,415.00
Treasury stock -$ 1,210.00 -$ 344.00 -$ 644.00
Reserves -$ 39,511.00 -$ 7,955.00 -$ 9,223.00
Retained earnings $ 2,610,195.00 $ 2,280,754.00 $ 2,241,981.00
Equity $ 2,947,979.00 $ 2,797,399.00 $ 2,775,529.00
Non-controlling
Interest $ 13,843.00 $ 12,816.00 $ 12,276.00
Total Equity $ 2,961,822.00 $ 2,810,215.00 $ 2,787,805.00

Financial Statement Study 8
From the annual report of Caltex Limited for the year 2017, 2016 and 2015, the items
contained in the above table (Table 1) have been identified.
Issued capital is the part of share capital held by business, which has been issued to the
shareholders of the company to seek funds for the operations of business (AASB, 2005).
There has been reported a material change in the value of issued capital of Caltex Limited in
2017 since 2016. The reason from the same is that Caltex has announced a buy-back plan for
its shares during 2016 in order to adequately management its capital (Caltex, 2016).
Treasury stock covers the amount of shares bought-back by the company and it is shown as
the negative amount in the financial statements because it reflects reduction in the share
capital of the reporting entity on account of share buy-back. The changes in the treasury stock
account have taken place because of Caltex’s decision of buying back its shares from the
market.
Reserves contain the profits of the business which are appropriated for some particular
purpose. Caltex has prepared various reserves such as foreign currency translation reserve,
hedging reserve, equity compensation reserve. The reserves of Caltex are showing negative
balances in 2016 and 2017 which shows that it is not able to maintain adequate funds for the
other non-operating operations of the business (Caltex, 2016). The reduction in the reserves
amount over the last 3 reported years is due to negative differences in the foreign currency
translation, hedging losses and due to the actuarial gains.
Retained earnings are the part of profits earned by business during the given period which is
set aside for the subsequent use in the daily operations of business only and for the purpose of
payment of dividend. The balance of retained earnings has increased over the previous 3
financial years due to the increased profitability of Caltex in those periods. The company has
not merely earned from the sales of its products but also it has earned other incomes by way

Financial Statement Study 9
of hedging and changes in fair valuations. Though the company has made buy-back of its
shares, still it has maintained adequate amount for the internal functions because of large
profits.
There are certain shareholders who do not hold more than 50% of the outstanding shares of
the company and hence they do not enjoy the voting rights for the important decisions that
are made by the company. They do not have control on the decisions of the company. These
shareholders are also known as minority interest. In the present case of Caltex, the minority
interest in the company’s shareholding has slightly been increased due to the introduction of
various share based plans.
Whitehaven Coal
2017 2016 2015
Issued capital $ 3,136.94 $ 3,144.94 $ 3,146.15
Share based
payments
reserve $ 7.83 $ 18.42 $ 36.54
Hedge reserve $ 1.28 -$ 0.55 -$ 1.38
Retained
earnings $ 146.25 -$ 275.17 -$ 317.35
Parent
Company
Interest $ 3,292.30 $ 2,887.64 $ 2,863.96
Non-
controlling
interest $ - $ 1.08 $ 1.08
Total Equity $ 3,292.30 $ 2,888.72 $ 2,865.03
The above table (Table 2) enlists the items that have been identified as the components of
equity of Whitehaven Limited.
Issued capital of Whitehaven has not significantly varied in all the three reported years and
this shows that there is no major event or activity taken on part of the company in respect of
its capital structuring. Merely some share based incentive plans have been exercised by few

Financial Statement Study 10
of the employees which has caused slight change in the quantum of issued capital of the
company.
Share based payment reserves are prepared for the payment of goods and services received
during the course of the business to be made in the form of equity instruments. This enhances
the capital of the company when such shares are issued to the dealers of the company. In the
case of Caltex, there are some share based payment options which have been lapsed in the
respective years and due to this balance of these reserves have been reduced.
Hedge reserves are maintained by the firm to undertake hedging activities. The company has
earned profits on its hedging transaction in 2017 due to which its hedging reserves have
increased (Woodhaven, 2017).
Retained earnings have also increased in 2017 and this due to higher profits earned by the
company in this particular year. Even though, there was negative in 2016 due to inadequacy
of profits in 2015, the company has earned sufficient income in 2017.
The parent company is the company which holds maximum portion of shareholders of the
company. The portion of parent company’s control has increased due to increase in the
number of shares issued to them in 2017 (Woodhaven, 2017).
Comparative analysis of debt and equity structure:
Comparati
ve Analysis Caltex Limited Proportion Whitehaven Coal
Proporti
on
Equity $ 3,108.26 49%
$ 3,292.30
83%
Debt $ 3,247.32 51.%
$ 674.74
17%
Capital
Structure $ 6,355.58 100.00%
$ 3,967.04
100.00%

Financial Statement Study 11
In terms of insolvency, Caltex is facing high risk because of its higher debt proportion in the
total capital structure. Caltex is relying more on debt financing than the internal financing for
its business operations and hence it has high financial leverage. On the other hand,
Whitehaven is highly relying on equity financing and hence it has no or negligible financial
risk but there is greater risk of loss of control over the ownership of the company due to
heavy reliance on equity in case of Whitehaven.
Part 2: Cash-flows statement
Caltex Limited
Cash Flow Statement 2017 2016 2015
Cash flows from
operating activities
Receipts from customers
$
23,693,457.00
$
20,025,940.00
$
22,895,469.00
Payments to suppliers,
employees and
governments
-$
22,654,228.00
-$
19,014,981.00
-$
21,896,673.00
Shares acquired for
vesting employee benefits
-$
10,540.00
-$
10,952.00
-$
29,304.00
Dividends and
disbursements received
$
300.00
$
400.00
$
3,014.00
Interest received
$
3,125.00
$
7,077.00
$
5,561.00
Interest and other finance
expenses paid
-$
57,693.00
-$
65,687.00
-$
61,729.00
Income taxes paid
-$
239,389.00
-$
13,595.00
-$
31,672.00
Net operating cash
inflows
$
735,032.00
$
928,202.00
$
884,666.00
Cash flows from
investing activities
Purchase of investment
-$
17,686.00
Purchases of businesses,
net
-$
425,902.00
-$
7,268.00
Acquisition of property,
plant and equipment
-$
324,077.00
-$
290,288.00
-$
340,096.00
Major cyclical -$ -$ -$

Financial Statement Study 12
maintenance 38,820.00 32,933.00 91,422.00
Purchases of intangibles
-$
49,004.00
-$
30,241.00
-$
15,414.00
Sale of property, plant and
equipment
$
37,455.00
$
13,865.00
$
43,095.00
Net investing cash
outflows
-$
800,348.00
-$
357,283.00
-$
411,105.00
Cash flows from
financing activities
Proceeds from borrowings
$
5,001,095.00
$
6,630,000.00
$
7,676,000.00
Repayments of
borrowings
-$
4,842,447.00
-$
6,630,000.00
-$
7,676,000.00
Repayment of finance
lease( principal)
-$
561.00
-$
342.00
-$
219.00
Dividends: non-
controlling interest
-$
1,000.00
-$
800.00
Shares bought back
-$
270,079.00
Dividends paid
-$
292,107.00
-$
319,405.00
-$
261,900.00
Net financing cash
outflows
-$
135,020.00
-$
589,826.00
-$
262,919.00
Net (decrease) in cash and
cash equivalents
-$
200,336.00
-$
18,907.00
$
210,642.00
Opening Cash and cash
equivalents
$
244,857.00
$
263,764.00
$
53,122.00
Closing Cash and cash
equivalents
$
44,521.00
$
244,857.00
$
263,764.00
Whitehaven Coal
WHITEHAVEN COAL 2017 2016 2015
Cash flows from
operating activities
Receipts from customers
$
1,737,063.00
$
1,188,341.00
$
740,162.00
Payments to suppliers &
employees
-$
1,081,737.00
-$
919,010.00
-$
527,738.00
Interest received
$
1,405.00
$
1,056.00
$
4,752.00
Interest paid
-$
49,087.00
-$
56,123.00
-$
39,914.00
Income taxes paid/refund -$ $