Comprehensive Financial Analysis of Newcrest Company's Performance

This report provides a comprehensive financial analysis of Newcrest Company, a leading global gold mining enterprise. It examines the company's financial performance through its income statement, focusing on revenue and expenses, highlighting key trends such as revenue growth and cost management. The report delves into the balance sheet, analyzing assets, liabilities, and shareholders' equity to assess the company's financial position. It also includes an overview of the independent audit report, offering insights into the company's accounting practices and financial reporting. Furthermore, the analysis incorporates relevant news articles to provide a broader understanding of the company's operational challenges and future outlook. The report concludes with a summary of the company's performance and future prospects, emphasizing its strong brand awareness, solid balance sheet, and growth opportunities.

Accounting for Business

Table of Contents
Introduction......................................................................................................................................2
Income Statement............................................................................................................................3
Revenue........................................................................................................................................3
Expense........................................................................................................................................5
Net profit......................................................................................................................................6
Balance Sheet and the Notes to the Financial Statements...........................................................7
Independent Audit Report..........................................................................................................10
News...........................................................................................................................................11
Conclusion.....................................................................................................................................13
Bibliography..................................................................................................................................13
1

Introduction
Newcrest Company is a known largest gold mining company in the world. The company safely
delivers the superior returns to the stakeholders from finding developing and operating the gold
and copper mines. The company is committed to maintaining a safe environment for the people,
operating and developing the sustainability of mines in line with the environmental standards and
developing lasting relationships with the communities in which they operate. The vision of the
company is to be Miner of Choice for the people, shareholders, partners, and suppliers
(Newcrest, 2017). The company feels proud of themselves for being agile, bold and having the
mindset of the owner. The primary gold and copper production in Australia of the company is at
Ridgeway. The company operates in two mines in Papua Guinea, hidden valley, and Lihir. In the
year 2010, the company successfully announced its merger with the Lihir Gold. This move was
expected to create world’s fifth largest gold producer, with combined production of 2.8 million
ounces of gold. The primary focus of the company was within Australia until the year 1991,
when it commenced exploration in the overseas. Newcrest Company was determined for
becoming significant and internationally recognized gold mining and Exploration Company.
The organization even established exploration around Australia and overseas were paying a
dividend and the company was capitalized for more than 2 billion dollar (Newcrest, 2018). The
company is having experience in development and commissioning at large scale (Newcrest,
2018). Company uses low cost bulk open pits and underground methods of mining for optimum
recovery of the high grade epithermal deposits (Newcrest, 2018).
The company has strong track records of discovering the deposits over Gosowong and base
metals deposits. Apart from the development projects located in the provinces where the
2

company is already having mining operations. The company at present is evaluating two main
prospects with metal endowments (Newcrest, 2018).
Income Statement
Revenue
Table 1: Revenue (Yahoo, 2018)
Revenue 30/06/2017 30/06/2016 Difference % Change
Total
revenue 3,477,000 3,295,000 182,000 5.52352
The figure of the revenue reveals that the company is marked by significant improvements in
safety performance number (Yahoo, 2018). All the main operations of the company have been
contributing towards the free cash flows which have bene applied for further decreasing the debt
amount and the strengthening the balance sheet as well as enhancing revenue for shareholders.
The continued commitments and adherence to company's transformation plan have underpinned
the improvement (Yahoo, 2018). The revenue is expected to rise in coming time because of the
low level of the planned shutdown. The main focus of the company basically remains on the
elimination of the facilities and life-changing injuries from the business while striving for
making continuous progress in decreasing the injuries and health impacts. Total sales revenue for
3

the current period 3477 million dollars and was 6 percent higher than the previous period. The
sales revenue of the company continues to be predominantly attributable to gold being 86% of
the sales revenue in the current time and 87 percent in the later period (Newcrest, 2017).
Figure 2: Sales Revenue (Newcrest, 2017)
The revenue of gold was 3001 million dollar and was 5 percent higher than the previous period
as a rest of the 8 percent increase in the realized gold price. The price of gold was offset by the
percent downfall in the sales of gold which basically resulted because of the suspension of the
activities in the last quarter of 2017 because of unusually high-level rainfall in the month of
January and February in 2017 (Newcrest, 2017). Revenue from the sale of goods was recognized
when there was a transfer of risk and reward to the customer and no further processing is needed
by the group, the quantity and quality have been recognized with the reasonable accuracy, the
price was now or can be estimated. The point at which the risk and total passes for the sales are
generally upon the receipt of the landing bill when the commodity is devoured for the shipments.
Revenue is also measured at the fair values of the consideration received or receivables.
4

Expense
Table 3: Expenses (Yahoo, 2018)
30/06/201
7 30/06/2016
Differenc
e % Change
Selling Expenses 84000 79000 5000 6.329114
Others 16000 2000 14000 700
Total Operating Expense 2709000 2685000 24000 0.893855
Operating Income 768000 610000 158000 25.90164
The treatment and realization cost was large because of high copper concentrate production and
the high average realized gold and copper prices enhancing the metal deduction payments
(Yahoo, 2018). The decrease in the expenses compared with the prior period primarily reflects
the low depreciation charges at Calia because of cessation of the mining if Ridgeway Deep in the
period before and low production from East in the current time (Newcrest, 2017). This was
mainly the partial offset by enhanced depreciation at the Lihir associated with the enhancement
in the gold production and the strengthening of the Australian dollars against the US dollar
enhancing the expenses, where it is basically an Australian dollar denominate deepness. The
5

expenses were 25 percent higher than the prior period. The included corporate costing was
adversely affected by stronger Australian dollar.
(Newcrest, 2017)
The net foreign exchange losses in the current time primarily relate to the restatement of the US
dollar denominated cash and concrete receivables in the functional currency operations and
entities. This was mainly offset by foreign exchange gains from the cash flow hedges on the US
dollar borrowings transferred to the statement of income.
Net profit
Table 4: Net Profit (Yahoo, 2018)
30/06/2017 30/06/2016 Difference % Change
Net profit 308000 332000 -24000 -7.22892
Tarnished gold miner company has gained luster by gaining a downfall in the net profit of the
company. Much of the downfall in the net profit of the company has happened because of the
prior corresponding period being dragged down by the cost of the taxes. The decrease in Gold
6

sales was offset by the high sales of copper and the benefits of the cost cutting trend slowing
with the gold production which has been low because of the lower grade ore being mined at the
coast (Letts, 2015; Iminco, 2017).
Balance Sheet and the Notes to the Financial Statements
Figure 5: Balance Sheet (Yahoo, 2017)
Period ending 30/06/2017 30/06/2016 Difference % Change
Current assets
Cash and cash equivalents 492,000 53,000 439,000 8.28302
Short-term investments 1,000 -
Net receivables 114,000 136,000 -22,000 -0.16176
Inventory 556,000 545,000 11,000 0.02018
Other current assets 30,000 -
7

Total current assets 1,249,000 803,000 446,000 0.55542
Long-term investments 64,000 -
Property plant and equipment 8,852,000 8,891,000 -39,000 -0.00439
Goodwill - -
Intangible assets 35,000 44,000 -9,000 -0.20455
Accumulated amortization - -
Other assets 1,383,000 1,453,000 -70,000 -0.04818
Deferred long-term asset charges 80,000 105,000 -25,000 -0.23810
Total assets 11,583,000 11,191,000 392,000 0.03503
Current liabilities
Accounts payable 455,000 369,000 86,000 0.23306
Short/current long-term debt 1,991,000 2,160,000 -169,000 -0.07824
Other current liabilities 101,000 74,000 27,000 0.36486
Total current liabilities 664,000 670,000 -6,000 -0.00896
Long-term debt 1,991,000 2,040,000 -49,000 -0.02402
Other liabilities 1,394,000 1,361,000 33,000 0.02425
Deferred long-term liability charges - -
Minority interest 84,000 79,000 5,000 0.06329
Negative goodwill - - - -
Total liabilities 4,049,000 4,071,000 -22,000 -0.00540
Stockholders' equity 0 -
Misc. Stock options warrants - - - -
Redeemable preferred stock - - - -
Preferred stock - - -
Common stock 11,657,000 11,666,000 -9,000 -0.00077
8

Retained earnings -4,154,000 -4,347,000 193,000 -0.04440
Treasury stock -53,000 -278,000 225,000 -0.80935
Capital surplus - - - -
Other stockholder equity -53,000 -278,000 225,000 -0.80935
Total stockholder equity 7,450,000 7,041,000 409,000 0.05809
Net tangible assets 7,415,000 6,997,000 418,000 0.05974
The analysis above is considered as trend analysis. This analysis stresses upon the trend in the
earnings and assets. Information in respect of the trends is helpful for the determination of the
areas of wide divergence. Once analyzed the areas of the business that needs attention, fine
strategies can be adopted. The table shows that there was 0.02 % increase in inventory. The
inventory value was 545000 in 2016 and it came to 556000 in 2017. As far as the receivables are
concerned the receivables have decreased which is not a good sign for the company as it reveals
that the company is not having enough funds. The figure shows that the company is losing
receivables in hand and this might be happening because of low earnings in the current year
(Archer et al., 2009).
The company includes these notes in annual report so as to make investors aware about the cash
holdings of the company, the amount of inventory they are possessing and the cash they have to
pay off their liabilities. The information is relevant for the users as they make it the balance in
between the asset and the liabilities of the company. The statements offer a clear view of debt
management by the company.
9

Independent Audit Report
Screenshot of the first page of the Independent Audit Report
Figure 6: Auditor's report (Newcrest, 2017)
Information Included
The report states some points (Newcrest, 2017):
 Till 30 the June 2017, the companies consolidated statements include plant and
machinery of 3955 million dollar and intangible assets of 35 million dollars. The
company assesses the existence of the indicators of impairments for every cash-
generating unit.
 The analysis has considered macroeconomic factors, operating performance an financial
performance/ No impairment reversals were considered
 The key assumptions like gold price, copper price, foreign exchange rate were assessed
and sensitivity analysis was undertaken (Newcrest, 2017)
10

Screenshot of Audit Remuneration
The remuneration report of the company was drafted in associating with the section 300A of the
Corporation Act 2001. The auditor's remuneration was 1602 in 2017 and 1684 in 2016
(Newcrest, 2017).
Figure 7: Auditor's remuneration (Newcrest, 2017)
News
Figure 8: News (Livewire Markets, 2017)
Article Title: NCM underlying profit misses Expectations (Livewire Markets, 2017)
11