Strategic Changes and Firm Performance – Telecom Limited Company Part 1

Firm Performance – Telecom Limited Company



Strategic Changes and Firm Performance – Telecom Limited Company Part Telecom Limited Company (TPG) is a company which focal point is on maximizing the amount of raw materials processed within a given time, reducing costs, making payments on debt and increasing the value that shareholdersinvest with the aim of being the most affordable but safest iron ore producer. Currently, the company has built four mines acrossits two operating hubs called Chichester and Solomon. This report seeks to identify, compute and analyse the strategic changes and firm performance of TPG Ltd. It will also analyse some significant items in the income statement, balance sheet, cash flow statement and other relevant factors relating to the strategic change of Telecom Limited Companyin the years 2012, 2013 and 2014 respectively.

Telecom Limited Company

2.1Income Statement Analysis

The first financial statement you will come across in a firm’s annual report is the Income statement. Without this statement, a company’s financial report will be inadequate. Income statement is very imperative since it contains vital items like earnings per share, revenue and expenses. It basically talks about how a company generates revenue and how much it spends. For the purpose of this report, three items have been chosen:

  • Operating Sales Revenue
  • Income Tax expense
  • Mining cost

Strategic Changes and Firm Performance – Telecom Limited Company Part

2.1.1 Operating Sales Revenue

FMG derives its revenue from the sale of iron ore and other third party products.

Year 2012

US$ Million


US$ Million


US$ Million

Operating Sales


6,716 8,120 11,753

Table 1

Drawing inference from table 1, there has been a consistent increase in the operating sales revenue.  One of the reasons why Fortescue’s operating sales revenue has witnessed an unprecedented growth is because the sale of iron ore in 2012 increased from US$6,489 million to US$7,889 million. Interestingly, it also increased to US$11,485 million. The changes in the sales revenue of iron ore affected the total operating sales revenue. Another reason why there was an increase in the operating sales revenue for the past three accounting periods of TPG is the sale of joint venture iron specifically. Besides these, there was an increase in other revenues received which caused a great turnaround for Fortescue.

2.1.2 Income Tax expense

Income tax expense is the tax paid on income for the accounting year. TPG mainly incur expenses from two main income taxes:

  • Current income tax
  • Deferred income tax


Year 2012

US$ Million


US$ Million


US$ Million

Current  income tax 583 136 824
Deferred income tax 121 584 349

Table 2

Judging from the table above, the current income tax as reviewed on each accounting period shows both a decrease and increase. This is as a result of the provisions that management make on the basis of amounts expected to be paid to the taxation authorities. Deferred income rises from the year 2012 to 2013 because of future deductible temporary differences and carry forward of unused tax losses. This shows a bad position of the company in terms of its income tax expense because of the instability of their income tax expenses. This may affect their sale of shares if not prevented.

2.1.3 Mining Cost

TPG deals with mining of iron ore. The more the quantity of iron ore produced, the higher the mining cost of operation also increases. The mining cost for the year ended 2012 was


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