Accounting Business Reporting for Decision Making

CHAPTER 6 Statement of profit or loss and statement of changes in equity 263

Note

2013

$’000

2012

$’000

Profit after income tax expense attributable to equity holders of

the parent entity

23 95 184 101 103

Other comprehensive income

Gains on cash flow hedges

Transfer of realised gains on hedges to profit and loss

Income tax on items of other comprehensive income

3 512

(1 418

(628

)

)

1 713

(1 621

(28

)

)

Total other comprehensive income/(loss) for the

period, net of tax

1 466 64

Total comprehensive income attributable to equity holders of

the parent entity for the period

96 650 101 167

Earnings per share for profit attributable to the equity

holders of the parent entity

Basic earnings per share (cents per share)

Diluted earnings per share (cents per share)

7

7

18.0

18.0

19.4

19.4

Source: David Jones Ltd 2013, annual report, p. 70. Copyright David Jones Limited. Reproduced with permission.

Required

Using the above information, answer the following questions.

a. Give an example of an expense that would be included in each of the David Jones Ltd expense

categories.

b. Calculate EBITDA for David Jones Ltd.

c. Explain the purpose of EBIT and EBITDA.

d. What are the items of other comprehensive income?

6.48 Investors assessing the recent reporting season of publicly listed companies will base their opinions

of corporate performance largely on a handful of key numbers, all expressed in dollar terms and

all dealing with the most recent financial year. This fixation with the bottom line and the profit and

loss statement has existed for 100 years or so and, at its most extreme, has produced a short-term

focus for investors that’s been blamed for many failings, from poor corporate governance to the

massaging of accounts to please the market and drive the share price — and, with that, executive

remuneration.

In recent times, more progressive elements within the accountancy profession have championed

the concept of widening reporting criteria. In the past decade the Global Reporting Initiative (GRI)

promoted sustainability reporting and introduced the idea of the triple bottom line, now adopted by

about 4000 organisations around the world.

GRI as principles of sustainability combined with traditional financial reporting to deliver a

holistic vision of corporate performance, which goes behind publishing the sustainability report

and the financial accounts in the same document. A significant milestone in this evolution was

reached in April with the release of the Consultation Draft of the International Integrated Reporting

Framework.

Source: Colquhoun, L 2013, ‘Capital ideas: bringing all the strands of corporate reporting together will help reduce the

risk of short-termism’, InTheBlack, 14 June.

Required

Prepare a memorandum for a board of directors that: defines integrated reporting; discusses the

various capitals and describes the pilot program on integrated reporting.

6.49 The ASX convened the ASX Corporate Governance Council (ASXCGC) in August 2002. It

was prompted by suggestions from ASIC and government that ASX take a leadership role in

formulating a non-legislative response to the corporate governance issues arising following