BUSN104: Wesfarmers Limited Financial Performance Analysis

This report provides a comprehensive analysis of Wesfarmers Limited, a publicly listed Australian corporation, focusing on its financial performance, sustainability, and corporate social responsibility (CSR). The report examines the company's revenue, gross profit, operating expenses, and net profit for the years 2018 and 2019, drawing insights from its annual report. Key financial metrics, including current and non-current assets and liabilities, are evaluated to assess the company's financial health. Furthermore, the report delves into Wesfarmers' sustainability initiatives, analyzing carbon emissions, energy usage, and waste management data. The corporate governance statement is examined to understand the board composition and diversity. The analysis also explores the company's ethical practices, the role of auditors, and the importance of CSR in achieving sustainable development. The report concludes with an assessment of Wesfarmers Limited's overall performance, highlighting its financial success and commitment to a sustainable future.

REPORT 0
BUSINESS ACCOUNTING
APRIL 6, 2020
STUDENT DETAILS

REPORT 1
Executive summary
Wesfarmers Limited is locally owned public listed corporation. The company derives its revenue
from diversified operations of portfolio, such as workplace materials, clothing, hardware, retail
stores, gas process as well as delivery, supply of industry’s safety produces and fertiliser
business. This report evaluates financial result of Wesfarmers Limited including by analysing
annual report of company. The following parts also assess sustainability and corporate social
responsibility of company by analysing its corporate governance statement as well as
sustainability report. In below mentioned sections, the company profile, ethical practices along
with social performance of Wesfarmers Limited is discussed and critically examined.

REPORT 2
Contents
Part -1...............................................................................................................................................2
Part-2................................................................................................................................................3
Introduction..................................................................................................................................3
Company background..................................................................................................................3
Financial results...........................................................................................................................3
Sustainability................................................................................................................................4
Conclusion...................................................................................................................................4
References........................................................................................................................................5
Appendix..........................................................................................................................................6

REPORT 3
Part -1
Wesfarmers limited
Description
2019
($)
2018
($) Source
Financial
current assets 6350 8706 Balance sheet
Non-current assets 11983 28227 Balance sheet
Total assets 18333 36933 Balance sheet
current liabilities 5216 10025 Balance sheet
Non-current liabilities 3146 4154 Balance sheet
Total liabilities 8362 14179 Balance sheet
Equity 9971 22754 Balance sheet
Total revenue 27920 26763 Income statement
Cost of sales - - Income statement
Gross profit 28388 26936 Income statement
Operating expenses 25414 24592 Income statement
Net profit 5510 1197 Income statement
Non-financial (sustainability
measures)
Carbon emissions (kt CO2e) 1557.7 1435.9 Sustainability Report
Energy (Electricity) usage (kt) 45.8 49.1 Sustainability Report

REPORT 4
waste (tonnes'000) 165.6 504.9 Sustainability Report
Number of directors 10 9
Corporate governance
statement
Number of female directors 4 3
Corporate governance
statement
Percent of employee covered by
OHS 13.5% 24% Sustainability report
(Annual report, 2019)

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Part-2
Introduction
Wesfarmers Limited possesses the wide range of retail chain. It also runs mines, writes
insurance, produces and allocates industrial goods, as well as produces fertilizers. It focuses on
the needs of customers. It is also engaged in providing the liquefied petroleum gas as well as
medical or industrial gas. The principle activity of company is to improve the core offer for
ensuring that the customers are on priority of company. The company also creates customer
value to get success. Wesfarmers Limited has a mission to provide the best in convenience,
values along with qualities for the clients. In addition, the company also focuses on quality,
collaboration, inspiration along with responsibilities. The annual report of company states that
company assumes that social responsibility is about the entity getting sustainable growth not
only in financial facet but also in social facets. In the following parts, background of Wesfarmers
Limited, its sustainability as well as financial results are discussed and critically examined.
Company background
Wesfarmers Limited is Australian corporation, which is stated in Perth (Australia). It is involved
in different business, like supermarket, consumable stores; household stores, hotels, fertilizer,
and products related to safety and industry. The segments of company are Home Improvements,
departmental store, official work and industrial that involves resources, WIS as well as WesCEF.
It can see that in New Zealand and Australia, the Bunnings is homes improvement retailer. It
produces the outdoor living product. Kmart is popular retail store in New Zealand along with
Australia. It has about 210 stores in these two nations. Target runs the networking of above three
hundred stores. It also sells the great range of products for the modern families, involving

REPORT 6
clothing, home wares and general produces. In addition, the office works is the dealer as well as
retailer of office goods or solution for household, businesses, and teaching.
The interesting fact about Wesfarmers Limited is that its main aim is to encourage the culture in
which the directors would render priority to a moral pursuit of the best interest of shareholders.
Even though, the good corporate governance is depended on the competence along with honesty
of BOD and management. It is also based on processes as well as policies that meet “good
practices.” In addition, it can see that the auditor plays an important role in supporting the ethical
practices. The auditor of the company ensures the business of company is conducted in ethical as
well as transparent manner. The auditor also ensures that the management is enable in taking
ethical decisions and follow integrity to recognise probable issues. The auditor supports ethical
practices by communicating matters directly to the board of company (Reuters, 2019).
Financial results
It is evaluated from the financial statement of company that revenue was 26763 million dollars in
2018. The revenue is increased now to 27920 million dollars in 2019. It is found from the annual
report of a company that the gross profit of company was 26936 million dollars in 2018. It is
increased to 28388 million dollars in 2019, notwithstanding the increment of operating expenses
in financial year 2019. It can see that the operating expenses were $24592 million in 2018. Now
it is increased to $25414 million in 2019. Further, it is analysed that the net profit was 1197
million dollars in 2018. It is increased to 5510 million dollars in 2019 (Highlands, 2020). In
financial year 2019, the company posted earnings before interest and tax from the continuing
operations of 2974 million dollars. It can say that it was 27% increment as compared to last
corresponding period. Additionally, it is noticed that the total assets of company are decreased to
$18333 million in 2019. It was $36933 million in 2018. The company off sets the reduction of

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assets by decreasing the liabilities and increasing expenses. In this relation, it is found that the
total liabilities were $14179 million in 2018. It was decreased to $8362 million in 2019.
Further, it is analysed from the annual report of the company that the revenues momentum across
the company enhanced in 2nd half of financial year 2019. The company stated that it will carry
this sales momentum into 2020. However, the consumer’s environment remains undefined with
several customers having pressure of living cost in spite of recording lower interest rate along
with current taxation incentive. In addition, the pressure of input cost remains for retailer as well
as dealers in the similar manner. Even though, the company is uplifted by material opportunities
it has across the company for rendering values for both stakeholders and customers in 2020
(Campbell, 2017).
Sustainability
The sustainability report of company states that carbon emission was 1435.9 kt CO2e in 2018. It
was increased to 1557.7 kt CO2e in 2019. In addition, it can notice the energy usage was 49.1 kt
in 2018. It is decreased to 45.8 in 2019. It is evaluated from the sustainability report that wastage
is 504.9 thousand tonnes. It is also decreased to 165.6 thousand tonnes in 2019 (Sustainability
report, 2019). Further, it is found from the corporate governance statement of company that total
numbers of directors were 9 in 2018. However, this number is increased to 10 in 2019. On the
other hand, the female directors were three in 2018. Even though, the number of female directors
is increased to 4 in 2019. According to the sustainability report of company, the company
implements OHS policy for the safety of employees (Corporate Governance Statement, 2019).
The percentage of employees covered by OHS was 24% in 2018. However, it is decreased to
13.5% in 2019 (Biddle, 2016).

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Moreover, it can see that the organisations make investment in corporate social responsibility for
managing the risks, hiring personnel, reinforcing the brand in front of customers as well as
investors. In addition, the entities also invest in CSR for easing supply chain and saving money.
In same manner, CSR has important place for Wesfarmers Limited because it is helpful in
achieving sustainable development. Further, it is essential for the auditors to verify and give
opinion about the importance of CSR for company. The auditor should follow qualitative as well
as quantitative approach as the time of conducting review. In this way, it is helpful to ensure
integrity and reliability of financial statements (Kilroy and Schneider, 2017).
Conclusion
As per the above analysis, it can be concluded that the company is doing well according the
financial results and its suitability. It is clear that the sales of company is increased. In addition,
the company is achieving huge level of profitability. In this way, it is concluded that company is
devoted to create greener future. In 2019, the company got best result by decreasing food
wastage and use of plastic, increasing maintainable sourcing along with energy efficiency.

REPORT 9
References
Annual report (2019) Wesfarmers Limited. Available at:
https://www.wesfarmers.com.au/docs/default-source/asx-announcements/2019-annual-
report.pdf?sfvrsn=0 [Access on 05/04/2020]
Biddle, I., (2016) The Wesfarmers/Woolworths duopoly war: The Bunnings vs. Masters
battle. Busidate, 24(3), p.3.
Campbell, J., (2017) Insights from the company monitor: Wesfarmers. Equity, 31(8), p.16.
Corporate Governance Manual (2019) Wesfarmers Limited. Available at:
https://www.wesfarmers.com.au/who-we-are/corporate-governance [Access on 07/04/2020]
Highlands, S., (2020) WHAT/WHEN: NAPSA Congress 2020, 23–29 January 2020, Newcastle,
NSW.
Kilroy, D. and Schneider, M., (2017) Valuing the Current Strategy. In Customer Value,
Shareholder Wealth, Community Wellbeing, pp. 109-141
Reuters (2019) Wesfarmers Limited. Available at: https://www.reuters.com/companies/WES.AX.
[Access on 07/04/2020]
Sustainability report (2019) Wesfarmers Limited. Available at:
https://sustainability.wesfarmers.com.au/. [Access on 07/04/2020]

REPORT 10
Appendix
Financial statements 2018-2019:-
Income Statement 2018-2019

REPORT 11
Balance sheet 2018-2019