Financial Performance Comparison: Myer and Kathmandu Holdings Limited

This report provides a comparative financial analysis of Myer Holdings Limited and Kathmandu Holdings Limited, both listed on the Australian Stock Exchange (ASX) and operating in the retail industry. The analysis covers the debt and equity positions, cash flow statements, and comprehensive income statements of both companies for the years 2015, 2016, and 2017. It also examines deferred tax assets and liabilities, tax expenses, and effective tax rates, along with cash tax amounts and rates. The report details the dividend payouts, net profits, and total comprehensive income for both companies, highlighting key changes and potential reasons for these changes. The analysis extends to the cash flow statements, comparing receipts from customers, payments to suppliers and employees, interest paid, and taxes paid under operating activities, investing activities, and financing activities. It also includes a comparative analysis of liabilities and equity for both companies, offering a comprehensive overview of their financial performance during the specified period.

RUNNING HEAD: CORPORATE ACCOUNTING
CORPORATE ACCOUNTING

CORPORATE ACCOUNTING 1
EXECUTIVE SUMMARY
The assignment covers two listed companies of Australia named “Myer Holdings
Limited” (ASX: MYR) and “Kathmandu Holdings Limited” (ASX: KMD). Both companies
belong to Retail industry. Myer Holdings limited is one of the largest departmental store
group in Australia. It offers wide range of clothing, accessories, footwear, cosmetics,
fragrances for women, men and children, homewares, toys and travel goods etc. The
company was founded by Sidney Myer in 1900. The Kathmandu holdings limited is also a
retail chain dealing in outfits for adventure purpose, travel gears and equipment. The
Kathmandu holdings limited is founded by Jan Cameron and John Pawson in year 1987. This
report will provide the comparative analysis of debt and equity position, cash flow statement
and the comprehensive income statement of both selected companies for three years. Further
the report also discloses deferred tax assets or liabilities, tax expenses with effective tax rate
of both the companies. In addition to this, cash tax amount along with cash tax rate is also
disclosed. Thus the report ends up with the conclusion and the references used for both
companies.

CORPORATE ACCOUNTING 2
Contents
INTRODUCTION......................................................................................................................3
OWNERS EQUITY...............................................................................................................4
CASH FLOW STATEMENT................................................................................................8
OTHER COMPREHENSIVE INCOME STATEMENT.....................................................14
ACCOUNTING FOR CORPORATE INCOME TAX........................................................16
CONCLUSION........................................................................................................................20
REFERENCES.........................................................................................................................20

CORPORATE ACCOUNTING 3
INTRODUCTION
MYER HOLDINGS LIMITED
The Myer Holdings Limited was founded in the year 1900 by Sidney Myer. The Myer
is one of the largest Australian department store chain group. It is listed in Australian stock
exchange with the ticker name as ASX: MYR. It is engaged in retailing of women wear, men
wear and children wear, homewares, toys, accessories, footwear, beauty products, furniture,
video games, cosmetics, fragrance, travel goods and general merchandises (Myer, 2018). It is
operated in approximately 60 retail stores in Australia with approximately more than five
million members (Myer, 2018). There are some major brands of Myer such as Topshop Top
man, Seed, Jack and Jones, French Connection, Mimco etc. The company head office is
situated in Melbourne, Australia. The CEO of the company is John King and approximately
more than 14000 people have employed in the company and more than 1200 suppliers (Myer,
2018).
KATHMANDU HOLDINGS LIMITED
The Kathmandu Holdings limited was founded in the year 1987 by Jan Cameron and
John Pawson. The Kathmandu holdings was also a retail chain group dealing in apparels
related to travelling and adventure outdoor and related tools. It is listed in Australian stock
exchange with the ticker name as ASX: KMD (Kathmandu, 2018). The company mainly
operates from New Zealand, Australia, Germany and United Kingdom. The Australia has
approximately 115 retail stores. The company head office is situated in New Zealand.
Approximately more than 2000 people have employed in the company. Kathmandu is with
partnership with Australian Himalayan Foundation group. The key people of the company are
Xavier Simonel (CEO) and Reuben Casey (COO) (Kathmandu, 2018).

CORPORATE ACCOUNTING 4
In this assignment both Companies “Myer Holdings limited” and “Kathmandu Holdings
limited” are considered. In this report, comparative analysis of debt and equity portion, cash
flow statement of all the three categories of cash flows (operating activities, investing
activities and financing activities) for three past three years that 2017, 2016 and 2015 is
computed. In addition to this, items reported in other comprehensive income statement are
disclosed along with the comparative analysis. Moreover, accounting for income tax is
explained by disclosing tax expenses and the effective rate of income tax. Also cash tax rate
is computed with the disclosure of cash tax amount.
OWNERS EQUITY
i. Each item of equity:
Myer Holdings Limited
(Annual Report, 2017; 2016).

CORPORATE ACCOUNTING 5
 Dividend paid by the company during the year is included in the statement of
changes in equity. From the above consolidated statement of changes in
Equity, it is observed that dividend paid by the company in 2017 was $
49276000 whereas in 2016 dividend paid was $ 16426000 this means dividend
was increased by $ 32850000 in current financial year (Myer, 2017; 2016).
 Net profit for the period is included in the statement of changes in equity.
From the above consolidated statement of changes in Equity, it is observed
that in 2016 net profit was $ 60543000 whereas in 2017 net profit was only $
11939000 which means net profit was declined by 80% in 2017. This might
due to decrement in sales value in 2017 and also restructuring costs and lease
expenses of the company has increased in 2017 from 2016 (Myer, 2017;
2016).
 Total comprehensive income for the period mentioned was $ 45836000 in
2016 whereas in 2017 it was mentioned $12815000 (Myer, 2017; 2016). The
reason for such difference in both years is due to net profit was very less in
2017 in comparison to 2016.
Kathmandu Holdings Limited

CORPORATE ACCOUNTING 6
(Annual Report, 2017; 2016).
 The dividend paid was reported in the statement of changes in equity. From the above
consolidated statement of changes in Equity, it is observed that dividend paid by the
company in 2017 was $ 24179000 whereas in 2016 dividend paid was $ 16119000
this means dividend was increased by $ 8060000 in current financial year
(Kathmandu, 2017; 2016).
 From the above table, it is seen that profit after tax is reported in consolidated
statement of changes in Equity. The statement reported profit after tax in 2016 was

CORPORATE ACCOUNTING 7
$33521000 whereas in financial year 2017 the same was reported by $38039000. This
shows an increment in net profit from the past year by 13.47%. The reason might due
to increment in sales revenue in 2017 in comparison to 2016 and decrement in finance
expenses (Kathmandu, 2017; 2016).
 Total comprehensive income for the period mentioned was $ 418000 in 2017 whereas
in 2016 it was mentioned ($22275000). The reason for such difference in both years is
due losses in foreign currency translation reserve and cash flow hedge reserve
(Kathmandu, 2017; 2016).
ii. Comparative analysis:
Myer Holdings limited
Particulars
2017
($'000)
2016
($'000)
$
change
%
change
LIABILITIES
Current Liabilities
Trade and other payables 379740 400590 -20850 -5%
Provisions 87295 94228 -6933 -7%
Deferred Income 9817 10812 -995 -9%
Derivative financial instruments 7944 7127 817 11%
current tax liabilities 1627 7033 -5406 -77%
Other liabilities 591 795 -204 -26%
Total current liabilities 487014 520585 -33571 -6%
Non-current liabilities
Borrowings 143367 147273 -3906 -3%
Provisions 13821 19754 -5933 -30%
Deferred Income 75927 69702 6225 9%
Deferred tax liabilities 84574 88444 -3870 -4%
Derivative financial instruments 958 2819 -1861 -66%
Total non-current liabilities 318647 327992 -9345 -3%
Total liabilities 805661 848577 -42916 -5%
Net Assets 1072868 1107765 -34897 -3%
EQUITY
Contributed Equity 739239 739338 -99 0%
Retained Earnings 342146 379483 -37337 -10%
Reserves -8607 -11056 2449 -22%
Total Equity 1072778 1107765 -34987 -3%

CORPORATE ACCOUNTING 8
Kathmandu Holdings limited
Particulars
2017
($'000)
2016
($'000)
$
change
%
change
LIABILITIES
Current Liabilities
Trade and other payables 56735 51084 5651 11%
Derivative financial instruments 7034 7529 -495 -7%
current tax liabilities 3475 1212 2263 187%
Total current liabilities 67244 59825 7419 12%
Non-current liabilities
Derivative financial instruments 265 604 -339 -56%
Interest bearing liabilities 10431 43691 -33260 -76%
Deferred tax 34027 33247 780 2%
Total non-current liabilities 44723 77542 -32819 -42%
Total liabilities 111967 137367 -25400 -18%
Net Assets 327100 311683 15417 5%
EQUITY
Contributed Equity 200209 200191 18 0%
Reserves -23002 -24541 1539 -6%
Retained Earnings 149893 136033 13860 10%
Total Equity 327100 311683 15417 5%
CASH FLOW STATEMENT
iii. Each item of cash flow statement:
1. Cash flows from operating activities:
Myer Holdings Limited
 Receipts from customers: This means that the company has collected its
receivables from external parties. External parties mean customers, banks,
debtors etc. This item will add to the cash flows from operating activities. In
this case, receipts from customers in 2017 was $2931853000 whereas in 2016
it was $3101149000. This is slightly decreased from past year by 5.5% (Myer,
2017; 2016).

CORPORATE ACCOUNTING 9
 Payments to suppliers and employees: This means that the company has paid
to suppliers for buying of inventories, other products. Further payments are
also made for operating expenses such as salaries and wages to employees etc.
This item will reduce from the cash flows from operating activities. In this
case, payments to suppliers and employees in 2017 was $2744651000 whereas
in 2016 it was $2915467000. This is also slightly decreased from past year by
5.9% (Myer, 2017; 2016).
 Interest Paid: Interest paid are decreased from cash flow from operating
activities. In this case, company had reported $ 15894000 and $ 10165000 in
2016 and 2017 respectively. In other words, payment of interest is decreased
in current year by $ 5729000 (Myer, 2017; 2016).
 Tax paid: This item is decreased from cash flow from operating activities. In
this case, company had reported $ 20369000 and $ 27759000 in 2016 and
2017 respectively. In other words, payment of tax is increased in current year
by $ 7390000 (Myer, 2017; 2016).
Kathmandu Holdings Limited
 Receipts from customers: This means that the company has collected its
receivables from external parties. External parties mean customers, banks,
debtors etc. This item will add to the cash flows from operating activities. In
this case, receipts from customers in 2017 was $444100000 whereas in 2016 it
was $424182000. This is slightly increased from past year by 4.7%
(Kathmandu, 2017; 2016).
 Payments to suppliers and employees: This means that the company has paid
to suppliers for buying of inventories, other products. Further payments are
also made for operating expenses such as salaries and wages to employees etc.

CORPORATE ACCOUNTING 10
This item will reduce from the cash flows from operating activities. In this
case, payments to suppliers and employees in 2017 was $360122000 whereas
in 2016 it was $336968000. This is also slightly increased from past year by
6.9% (Kathmandu, 2017; 2016).
 Interest Paid: Interest paid are decreased from cash flow from operating
activities. In this case, company had reported $ 2829000 and $ 2162000 in
2016 and 2017 respectively. In other words, payment of interest is decreased
in current year by $ 667000.
 Tax paid: This item is decreased from cash flow from operating activities. In
this case, company had reported $ 16688000 and $ 14571000 in 2016 and
2017 respectively. In other words, payment of tax is decreased in current year
by $ 2117000 (Kathmandu, 2017; 2016).
2. Cash flows from investing activities:
Myer Holdings Limited
 Payments for property, plant and equipment: This means the company has
acquired the property, plant and equipment in the accounting period. Thus, in
2017, the company had reported $ 88452000 whereas in 2016 it was reported
with $ 40479000. This signifies that the company has purchased more tangible
assets in the current year in comparison to last year (Myer, 2017; 2016).
 Payments for intangible assets: This means that the company had paid $
11891000 and $ 24217000 in 2016 and 2017 respectively for the acquisition of
intangible assets such as goodwill, trademark, patent, copyrights etc.
Kathmandu Holdings Limited

CORPORATE ACCOUNTING 11
 Purchase of property, plant and equipment: This means the company has
acquired the property, plant and equipment in the accounting period. Thus, in
2017, the company had reported $ 11419000 (Kathmandu, 2017; 2016)
whereas in 2016 it was reported with $ 20729000. This signifies that the
company has purchased less property, plant and equipment in the current year
in comparison to last year.
 Purchase of intangible assets: This means that the company had paid $
2467000 and $ 1857000 in 2016 and 2017 respectively for the acquisition of
intangible assets such as goodwill, trademark, patent, copyrights etc.
(Kathmandu, 2017; 2016).
 Proceeds from sale of property, plant and equipment: This means the company
has sold property, plant and equipment in the accounting period. Thus, in
2017, the company had reported $ 1000 whereas in 2016 it was reported with
$ 5000.
3. Cash flows from financing activities:
Myer Holdings Limited
 Repayment of borrowings: This means that the company raises a capital and pay
to its investors. In this case, company repays $ 5000000 in 2017 for the
borrowings whereas it was $ 295000000 in 2016. This shows a tremendous
decrement in payment of borrowings in current year (Myer, 2017; 2016).
 Dividends paid: Any dividend paid is recognised in cash from financing activities.
In this case, $ 49276000 and $ 16426000 was reported in FY 2017 and 2016
respectively. This means that in current year dividend has increased.