Spark Infrastructure: Cash Flow And Comprehensive Income Analysis

Overview of Spark Infrastructure

The chosen company is Spark Infrastructure that is listed under the ASX is the fund for specialist infrastructure and investing in the regulated utility infrastructure within Australia as well as in overseas is the main objective of the company. The products and services of the company includes the gas and electricity transmission and distribution, sewerage assets, regulated water that offers stable cash flows and comparatively low risks and it facilitates payment to the investors along with the  potential long-term growth. It seeks to establish the diversified portfolio with regard to regulated utility infrastructure assets and continuing to be in the lead position under the Australian infrastructure investment fund (Chen, et al., 2015). Further, the values upon which the company is maintaining its growth are fairness, honesty, maximising the value of the security holder and maintenance of the high standards for corporate governance.

Changes in each item of cash flows statement for the firm over the past year along with the reasons for the change 

The cash flow statement of Spark Infrastructure mainly consist of three sections that involves cash flow from investing activities, operating activities, financing activities and net cash as well as cash equivalents (Duff, 2016). The items that are included in the operating activities involves depreciation, adjustments to net income, liabilities changes, inventory changes, changes in accounts receivable and changes in other operating activities.  It has been seen that the total cash flow of operating activities has declined in the year 2017 to $185754 from the year 2016 and 2015.

The items that are included in the investment activities are capital expenses, investments and other cash flow from investment activities. It is evident that the total cash used for the investment activities decreased in the year 2016 to $271651 from $ -739156 in the year 2015 and then decreased to $ 81084 in the year 2017(Scripp, 2016).

In this cash flow statement of Spark Infrastructure, financing activities mainly consists of the paid dividends, net borrowings, purchase as well as sale of stocks and other cash flows from the financing activities. There has been rise in total cash used in the financing activities in the year 2017 to $-250534 from the year 2016 and 2015.  Moreover, the change in cash and cash equivalents amounts to $ 16304 in the year 2017, $82701 in the year 2016 and $-106151 in the year 2015 (Saeidi, et al., 2015). This reflects that there has been both increase in the amount in the year 2016 from the year 2015 and then decresed in the year 2017. The cash flow statement of this company has been shown below:

Cash Flow(All numbers in thousands)
Period Ending	2017	2016	2015
Net Income	88,641	81,083	88,024
Operating Activities, Cash Flows Provided By or Used In
Depreciation	129	62	71
Adjustments To Net Income	98,148	1,58,564	1,15,442
Changes In Accounts Receivables	-1,225	4,315	864
Changes In Liabilities	61	-3,374	2,949
Changes In Inventories	–	–	–
Changes In Other Operating Activities	–	–	–
Total Cash Flow From Operating Activities	1,85,754	2,40,650	2,07,350
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures	-706	-706	-31
Investments	–	–	-4,97,840
Other Cash flows from Investing Activities	81,790	2,71,651	-2,41,285
Total Cash Flows From Investing Activities	81,084	2,71,651	-7,39,156
Financing Activities, Cash Flows Provided By or Used In
Dividends Paid	–	–	–
Sale Purchase of Stock	–	–	4,05,424
Net Borrowings	–	-2,05,000	2,05,000
Other Cash Flows from Financing Activities	-1,18,917	-1,20,315	-1,15,850
Total Cash Flows From Financing Activities	-2,50,534	-4,29,600	4,25,655
Effect Of Exchange Rate Changes	–	–	–
Change In Cash and Cash Equivalents	16,304	82,701	-1,06,151

Comparative analysis of the company’s three broad categories of cash flows that is operating activities, investing activities and financing activities:

Analysis of Cash Flow Statement

Comparative analysis of three different categories of cash flow:

Particular	2017 in $m	2016 in $m	2015 in $m
Net cash flow from operating activities	1,85,754	2,40,650	2,07,350
Net cash flow from investing activities	81,084	2,71,651	-7,39,156
Net cash flow from financing activities	-2,50,534	-4,29,600	4,25,655

The table and graph shown above depicts the comparative analysis of three major categories of cash flow that involves operating activities, investment activities and financing activities (Belal, 2016). The above chart reflects that the net cash used for operating activities increased to $240650 in the year 2016 from $207350 in the year 2015 and again decreased to $185754 in the year 2017(Kohler et al., 2015).It can be said that it is more or less same. Moreover, the net cash used from investment activities increased to $271651 in the year 2016 from $-739156 in the year 2015 and again decreased to $-81084 in the year 2017. On the other hand, net cash flow from financing activities in the year 2015 amounted to $425655 which decreased to $-429600 in the year 2016 and again increased to $-250534 in the year 2017 (Schaltegger & Burritt, 2017).

The comprehensive income statement of Spark Infrastructure Australia Ltd consists of net profit which had increased to $620,752m in the year 2017 from $610,480m in the year 2015. The items that are involved in other comprehensive income statement are- foreign operations – foreign currency translation differences, net change in fair value of net investment hedges, fair value change of cash flow hedges (Higgins 2012). It also consists of net income tax on items which have been mainly transferred to the income statement.

Insightful explanation of each item of Other Comprehensive Income Statement

In the other comprehensive income statement of Spark Infrastructure the items that can be spotted are Share of associates’ actuarial gain on defined benefit plans that amounted to $ 6,776 in 2017 and $ 5,891 in 2016. There are Items that may be reclassified subsequently to profit or loss: – Share of associates’ losses on hedges that amounted to $ -31,027 in 2017 and $- 2,050 in the year 2016. There are also items of Income tax benefit/(expense) related to components of other comprehensive income that amounted to $ 6,020in 2017 and -$700 in 2016. It can be said overall analysing the other comprehensive income statement that there has been a decrease og the amount from $ 3,141 in 2016 to $- 8,231 in 2017.

Reasons for the items have not been reported in Income Statement/Profit and Loss Statement

According to Jagannath and Koller (2013) that, comprehensive income statement is mainly used for measurement of change in owner’s interest in the business. It generally incorporates income as well as expenditure which have not yet realized and is utilized for bypassing income statement. In addition to this, other comprehensive income mainly considers items that involve debt security on the unrealized profits and losses, changes in transactions of foreign currency, profit or loss obtained from the derivative instruments and any other pension profits or losses (Ryerson, et al., 2016).

Clear description of your firm’s income tax expense 

Comparative Analysis of three categories of Cash Flow

The income tax expenditure declined to -$58,581m in the year 2017 from -$26,151m in the year 2016 as given in the company’s income statement. This tax was mainly calculated by dividing income tax expenditure to profit before income tax expenses from continued as well as discontinued operations (Mowry et al., 2015).

Verification of the figure of tax being same as the company tax rate times the firm’s accounting income

The amount of income tax has been computed by using tax rates, which have been mainly ratified significantly from the statement of companies financial.  The present income tax expenditure amounted to around -$26,151m in the year 2016 and -$58,581m in the year 2017 as given in the financial statement. This shows that the income tax amount had decreased considerably in the year 2017. However, it cannot be estimated that whether the income tax expenditures figures are same as that of tax rate times this company’s accounting income.

Deferred tax that is reported in the balance sheet along with the reasons for the record

The Deferred tax is accounted by the method of balance sheet asset resulting from temporary differences between the tax bases of liabilities and assets and their carrying amount in the financial statements (Chen, et al., 2014). Recognition of deferred tax liabilities are done to the extent that the availability of taxable profit in future is probable against the temporary differences that are deductible. In current year, there has been deferred tax liabilities are $313,739 in 2017 and $261,167 in 2016.

In Spark Infrastructure the income tax expenditure declined to 4,263m in the year 2017 from -$ 241m in the year 2016. The Income tax expenses is the amount that is calculated based on the standard accounting rules and on the amount of tax that is owed by company to tax authorities. Income tax payable is the amount that the company owes in terms of tax based on tax code rules (Beekes, Brown & Zhang, 2015). Until the company makes the payment of tax, the amount of income tax payable appears on the balance sheet section as liability.

Verification of the income tax expense shown in the income statement same as the income tax paid shown in the cash flow statement

The income tax expense shown in the income statement is not same as the income tax paid shown in the cash flow statement that as there is no tax expenses pointed out in the cash flow statement. However, income left after meeting all these expenses are taxed at the rate of 30% as per the Australian tax code that amounted to -$58,581m in the year 2017 from -$26,151m in the year 2016.

Unique characteristics in the financial statements, new insights, and other information

From the Spark Infrastructure Australian Ltd annual report, it can be recognized that the total amount for income tax has been basically made based on the adjusted profits which are generally attributable for non- assessable or disallowed items (Kirklin, et al., 2014). It can be seen from the above discussion that this enterprise has followed all the basic requirements of the Australian Tax Office (ATO) while estimating different taxes that has been included in the financial statement of the company.

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