Financial Performance Analysis: Amcor, Orora, and BHP Limited

This report presents a comparative financial analysis of three publicly listed companies: Amcor Limited, Orora Limited, and BHP Limited, all operating within the materials industry and listed on the Australian Securities Exchange. The analysis encompasses key financial aspects, including changes in owners' equity (contributed equity, reserves, and retained earnings), the positions of debt and equity, and the dynamics of cash flows across the companies over a specific period. Additionally, the report examines the items presented in the comprehensive income statements of each company, providing a detailed assessment of their financial performance. The study further delves into the accounting practices for corporate income tax and concludes with an overview of the comparative debt to equity ratios of Amcor, Orora, and BHP Limited, offering insights into their financial leverage and overall financial health. The analysis draws upon the annual reports of each company for the years 2016-2018.

STUDENT NAME
STUDENT NUMBER

TABLE OF CONTENTS
S.No. Particulars
1. Executive Summary
2. Introduction – Amcor Limited, Orora Limited and BHP Limited
3. Equity & Liability
4. Cash Flow Statement
5. Other Comprehensive Income Statement
6. Accounting for Corporate Income Tax
7. Conclusion
8. References

EXECUTIVE SUMMARY OF THE REPORT
This report contains study on three public companies, Amcor Limited, Orora Limited and BHP
Limited listed on the Australian Securities Exchange that are engaged in Materials Industry. The
comparative analysis has been done on various aspects like changes in owner’s equity, position
of debt and equity, changes in cash flows of both the companies over the period, items shown in
comprehensive income statement of the above companies, etc.
INTRODUCTION- AMCOR LIMITED, ORORA LIMITED AND BHP LIMITED
Amcor Limited is one of the top companies which develops and produces packaging products
that are of excellent quality and responsible for packaging of wide variety of beverage, food,
personal-care, home, medical-device, pharmaceutical and some more products.
Orora Limited is the second largest public company listed on Australian Stock Exchange that is
manufacturing and supplying packaging products. Products in which Orora Limited deals
includes corrugated boxes, recycled paper linerboard, folding cartons, lass bottles and jars,
closures, beverage cans of aluminum.
BHP Limited in one of the largest public company listed on ASX in materials industry.. It
primarily deals in Coal, Copper, Iron Ore and Petroleum. It has mining operations in Australia,
North and South America, and petroleum operations in the U.S., Australia, Trinidad, Tobago, the
UK and Algeria.
EQUITY & LIABILTY:
(i) EQUITY:

Contributed Equity: Contributed Equity is the paid-up share capital of the company
that the shareholders have taken from the company in exchange of the cash or any
other asset. In simple terms the price paid by the shareholders for buying ownership
in the company is termed as Contributed Equity.
Reserves: Reserves are the amounts appropriated by the company from its profits to
meet expected and unexpected future payments.
Retained Earnings: Retained Earnings are the cumulative earnings that the company
retain over the period of years after paying out dividend.
a. Amcor Limited:
Change in items of equity over past year:
Contributed equity was USD 1,416.9 million as on 30th June 2017 (Annual Report
AMCOR, 2017) which has decreased to USD 1,400.7 in year 2018 (Annual Report
AMCOR, 2018). The reason behind this decrease is acquisition of shares by the
Amcor Employee Share Trust and settlement of forward contracts.
Reserves were having a debit balance of USD 881.7 million (Annual Report
AMCOR, 2017) at year end 2017 as compared to USD 907.1 million (Annual Report
AMCOR, 2018) at 30th June 2018. This increase in negative balance of reserves was
mainly because of Currency translation differences.
Retained earnings of Amcor Limited has increased by 163.2 million from 264.9
million (Annual Report AMCOR, 2017) to 528.1 million (Annual Report AMCOR,
2018) as compared to last year. Retained earnings of the company has increased as
the profits for the financial period ending 30th June 2018 were 778.7 million (Annual

Report AMCOR, 2018) and the company has paid dividends of 515.5 million (Annual
Report AMCOR, 2018).
b. Orora Limited:
Change in items of equity over past year:
Contributed equity was AUD 508.7million (Annual Report Orora, 2018) as on 30th
June 2017 which has decreased to AUD 499.7 in year 2018. The reason behind this
decrease is treasury shares of AUD 24.8 million (Annual Report Orora, 2018) has
been used for satisfying granst under Employee Share Plans.
Balance of reserves have increased from balance of AUD 144 million (Annual Report
Orora, 2018) at period ending 30th June 2017 to AUD 152.1 million (Annual Report
Orora, 2018) as on 30th June 2018. This increase balance of reserves was mainly
because of Cash flow hedge reserve.
Retained earnings of Orora Limited has increased by AUD 68 million from 930.5
million (Annual Report Orora, 2018) to 998.1 million (Annual Report Orora, 2018) as
compared to last year. Retained earnings of the company has increased as the profits
for the financial period ending 30th June 2018 were AUD 212.2 million (Annual
Report Orora, 2018) and the company has paid dividends of AUD 144.2 million
(Annual Report Orora, 2018).
c. BHP Limited:
Change in items of equity over past years:
Share Capital has been same in past years at $ 1186 million (Annual Report BHP,
2018) for BHP Bilton Limited and $ 1057 Million (Annual Report BHP, 2018) for
BHP Biliton PLC. There has been no major change in Treasury shares.

Reserves are decreasing from 30 June 2016 to 2018 from $ Million 2538 (Annual
Report BHP, 2018) to $ Million 2290 (Annual Report BHP, 2018) due to
comprehensive income/ loss and employee shares forfeited / awarded.
Retained earnings increased from $ Million 54290 in 2016 to $ Million 55592 in
2018. This increase is due to increase in profits and distribution of dividend by the
company.
(ii) LIABLITY:
Liabilities include following items:
Current liabilities: This include liabilities which are payable within one year or less
from end of financial year.
Non-Current liabilities: This include liabilities which are payable in one year or more
from end of financial year.
Trade Payables: It includes payables relating to main business i.e. payables relating to
purchases or any expenses.
Interest Bearing Liabilities: It includes liabilities relating to interest on loans taken by
company.
Tax payable: It includes payables relating to tax being payable to government for
profits earned during the year.
Provisions: Provisions are being made relating to any expenses which are being
incurred in current financial year but are being payable in next or future financial
years.

Other liabilities: All other payables not covered in above are given other liabilities
head.
a. Amcor Limited:
Change in items of liabilities over past year:
There has been no major change in trade payables. Interest bearing liabilities have
increased from $ Million 1124 in 2017 (Annual Report AMCOR, 2017) to $ Million
1822 (Annual Report AMCOR, 2018) in 2018 due to increase in loans taken by
company. Tax liabilities have increased from $ Million 86.5 in 2017 (Annual Report
AMCOR, 2017) to $ Million 139.9 (Annual Report AMCOR, 2018) in 2018 due to
increase in profits earned by the company. Provision have decreased from $ Million
170.9 (Annual Report AMCOR, 2017) to $ Million 91.7 (Annual Report AMCOR,
2018) due to less future expenses of company.
b. Orora Limited:
Change in items of liabilities over past year:
Trade payables have increased from $ Million 826.9 (Annual Report Orora, 2018) to
952.4 (Annual Report Orora, 2018) due to increase in purchases during the year.
Interest bearing liabilities have increased from $ Million 711 (Annual Report Orora,
2018)in 2017 to $ Million 753 (Annual Report Orora, 2018) in 2018 due to increase
in loans taken by company. Tax liabilities have increased from $ Million 2.8 (Annual
Report Orora, 2018) in 2017 to $ Million 8.7 in 2018 due to increase in profits earned
by the company. There has been no major change in provisions for the year.
c. BHP Limited:
Change in items of liabilities over past year:

Trade payables have increased from $ Million 5551 in 2017 (Annual Report BHP,
2018) to 5977 (Annual Report BHP, 2018) in 2018 due to increase in purchases
during the year. Interest bearing liabilities have increased from $ Million 1241
(Annual Report BHP, 2018) in 2017 to $ Million 2736 (Annual Report BHP, 2018) in
2018 due to increase in loans taken by company. Current tax payable has decreased
due to lower profits in 2018 as compared to 2017. Provision in total have decreased
due to lower expenses payable in future.
(iii) Comparative Analysis of Debt and Equity Position of Amcor Limited and Orora
Limited:
Particulars ( $
Million)
Amcor (Annual
Report AMCOR,
2018)
Orora (Annual
Report Orora,
2018)
BHP(Annual
Report BHP, 2018)
Debt: Includes
Current and Non-
Current Liabilities
for 2018
7956 1986 51323
Equity: 1090 1630 60670
Debt to Equity
ratio
7.2 1.2 0.84

Above table clearly shows that Amcor is heavily levered as compared to Orora and BHP
in financial year 2018.
CASH FLOW STATEMENT
(iv) Cash Flow Statement of any company is broadly categorized in three types viz. cash
flow from operating activities, cash flow from investing activities and cash flow from
financing activities.
Items reported under Cash Flow Statement and their understanding:
Items reported in the firm’s cash flow statement under cash flow from operating
activities are as under:
a) Profit for the financial period: In indirect method of preparing cash flow, we first
take profits earned by the firm as its cash inflow, then we do the adjustments for
non-cash items, changes in working capital, etc. to reach cash flow from
operations.
b) Depreciation, etc.: Depreciation is a non-cash expense, and while calculating
profits of the company it must have been deducted.
c) Finance Costs: Finance costs relates to financing activity, thus to nullify the its
effect from profits to calculate cash from operating activities, the same is added
here and will be subtracted in financing activity.
d) Profit or Loss on Disposal of Fixed Assets: Non-current assets sale and purchase,
and their profit/loss is part of investing activity.
e) Profits on Equity Accounted Investments: This relates to investing activity, thus
the effect of this is nullified here to reach operating cash flow. The same will be
shown under investing activity.

f) Share-based payments: This is a non-cash expense; thus it has been added back to
the profits so as to reach cash flow from operating activity.
g) Income Tax Expense: Actual income tax paid by the company in cash is deducted
to arrive at cash flow from operating activities.
h) Working capital changes: Increase in current assets is deducted and decrease is
added, while increase in current liabilities is added and decrease is deducted.
Items reported in the firm’s cash flow statement under cash flow from investing
activities are as under:
i) Loans to associated enterprises: The company grants loans to its associated
enterprises for which it receives interest. The same is recorded in investing
activity.
j) Acquisition or disposal of entities: This relates to the amount of investment made
or the disposal of investment by the company in other entities by purchasing
shares etc.
k) Purchase and sell of property plant and equipment: Purchasing or disposing fixed
asset by an entity will be considered as investing activity.
Items reported in the firm’s cash flow statement under cash flow from investing
activities are as under:
l) Issue and purchase of Shares: Company raises finance from many sources, equity
is one of them.
m) Borrowings: The loans taken by the company to finance its operations and
projects is reported under financing activity.

n) Dividend Paid: Dividend paid to equity shareholders is considered under
financing activity.
o) Cash and Cash Equivalents: Here cash includes currency notes and demand
deposits made by the company.
(v) Comparative analysis of cash flows from three broad categories and their comparative
evaluation over three years:
Amcor Limited
Amcor Limited
Category
Net cash flows from/(used in)
Total
2018 ($M)
(Annual
Report
AMCOR,
2018)
2017 ($M)
(Annual
Report
AMCOR,
2017)
2016 ($M)
(Annual
Report
AMCOR,
2017)
Operating Activity 937.1 1,027.4 1,099.4 3,064
Investing Activity (229.4) (632.6) (997.0) (1,859)
Financing Activity (715.5) (337.0) (126.9) (1,179)
Net increase/
(decrease) (7.8) 57.8 (24.5)
The cash inflows from operating activities is near about same in all three years, i.e.
cash flow from operating activity is decreasing slowly. While in investing activity,
cash outflows of Amcor Limited had decreased from $ 997 million in 2015-16
(Annual Report AMCOR, 2017) to $ 632.6 million in 2016-17 (Annual Report
AMCOR, 2017) and has further decreased to 229.4 million in 2017-18. While cash
outflows in Financing activity has increased from 126.9 million in year 2015-16
(Annual Report AMCOR, 2017) to 337 million In year 2016-17 (Annual Report
AMCOR, 2017) and then to 715.7 million in year 2017-18. Overall the company had

decrease in cash and cash equivalent in year 2015-16 and 2017-18 and net cash
inflow in year 2016-17.
Orora Limited
Orora Limited
Category
Net cash flows from/(used in)
Total2018 (AUD M)
(Annual Report
Orora, 2018)
2017 (AUD M)
(Annual Report
Orora, 2018)
2016 (AUD M)
(Annual Report
Orora, 2017)
Operating Activity 329.0 351.2 305.0 985
Investing Activity (156.2) (271.5) (199.7) (627)
Financing Activity (140.6) (91.5) (108.2) (340)
Net increase/
(decrease) 32.2 (11.8) (2.9)
The cash inflows from operating activities has increased from 305 million (Annual
Report Orora, 2017) in 2015-16 to 351.2 million (Annual Report Orora, 2018) in
2016-17 and then decreased to 329.0 million (Annual Report Orora, 2018) in year
2017-18. While in investing activity, cash outflows of Orora Limited had increased
from $ 199.7 million (Annual Report Orora, 2017) in 2015-16 to $ 271.5 million
(Annual Report Orora, 2018) in 2016-17 and then decreased to 156.2 million (Annual
Report Orora, 2018) in 2017-18. While cash outflows in Financing activity has
decreased from 108.2 million in year 2015-16 to 91.5 million (Annual Report Orora,
2018)in year 2016-17 but increased to 140.6 million (Annual Report Orora, 2018) in
year 2017-18. Overall the company has decrease in cash and cash equivalent in year
2015-16 and 2016-17 and net cash inflow in year 2017-18.