HI5020 - Corporate Finance: Analyzing Cash Flow at Citadel Group

This report provides an analysis of The Citadel Group Limited's cash flow statement, comprehensive income statement, and income tax expenses, utilizing data from their annual reports. It examines changes in cash flow from operating, investing, and financing activities between 2015 and 2017, noting an increase in operating cash inflow and a decrease in financing activities. The report also discusses the differences between the company's accounting profit and recorded tax amount, attributing the variance to dividends, R&D credits, and other provisions. Furthermore, it evaluates the company's deferred tax assets and liabilities, concluding that The Citadel Group Limited adheres to AASB 112 rules for financial reporting. The analysis indicates an overall improvement in the company's financial performance compared to the previous year.

Corporate Finance
Student Name

Introduction
In this presentation, following points would be
discussed:
Cash flow statement analysis
Changes into the cash flow statement
Comprehensive income statement
Income tax expenses
Difference among the tax expenses
Income tax in income statement and cash flow
statement
Deferred tax assets and liabilities

Comapny overview
The Citadel group limited has been taken into
the concern to measure and understand
various financial factors of an organization.
The main operations of the company are to
develop and deliver the various solutions
about the management to the government of
the country.
The speciality of the company is to manage
the complex functions and offer the services
to government to resolve the issues.

Cash flow statement analysis
Cash flow statement of the Citadel group
limited has been identified in the annual report
of the company and it has been measured that
how is the cash position of the company.
Annual report (2017) of the company explains
that the cash flow statement of the company
has been prepared according to AASB rules.
The cash flow from the non cash items of the
company has been higher from 2016 due to
revenue changes in the company.

THE CITADEL GROUP LTD (CGL) Statement of CASH FLOW
Fiscal year ends in June. AUD. 2017-06 2016-06
Other non-cash items 2,49,34,000 1,03,78,000
Investments in property, plant, and
equipment
-18,91,000 -29,18,000
Acquisitions, net -2,31,96,000 -14,95,000
Net cash used for investing activities -2,50,87,000 -27,75,000
Debt repayment -21,07,000 -53,93,000
Dividend paid -76,91,000 -49,49,000
Net change in cash 2,46,000 -18,54,000

Further, the PPE investment has been lowered by the
company and the acquisition investment has been
higher.
In addition, the debt repayment of the company has also
been lower (Annual report, 2017). However, it still leads
to the company towards higher cash outflow.
The dividend paid amount has been higher due to
higher dividend payout ratio of the company and it
leads to the higher financial activities cash outflow to
the company.
In addition, it has been recognized that the net changes
in the cash flow are negative in the year of 2017.

Changes into cash flow statement:
The cash flow from operating activities of the
company explains about the increment in the
cash flow of the company (Annual report, 2017).
The current operating cash inflow of the
company is $ 2,49,34,000. Further, the investing
activities of the company have also been higher.
However, it has been found that the financing
activities cash flow of the company has been
lower in 2017 from 2015 and 2016.
It leads to a conclusion that the free cash flow of
the company is highest in 2017 in last 3 years.

THE CITADEL GROUP LTD (CGL) Statement of CASH FLOW
Fiscal year ends in June.
AUD.
2015-06 2016-06 2017-06
Cash Flows From Operating
Activities
1,02,07,000 1,03,78,000 2,49,34,000
Net cash used for investing
activities
-1,07,38,000 -27,75,000 -2,50,87,000
Net cash provided by (used
for) financing activities
2,13,82,000 -94,57,000 3,99,000
Net change in cash 1,06,44,000 -1,22,32,000 -2,46,88,000
Free cash flow 52,41,000 59,64,000 2,30,43,000

Comprehensive Income statement:
Comprehensive income statement of the company
explains that the operating revenue items have not
been added by the company in the annual report
and has been shown as comprehensive income in
the annual report of the company.
The various items of financial statement such as
provisions for the doubtful debts, taxation
provisions etc are the items which are not
reported in the cash flow statement of the
company but these are shown in the income
statement of the company to measure the
performance

Income tax expenses:
Tax expenses describe about the company’s
liability towards the government of the
country.
Tax amount is charged by the government as
a fixed policy on the net profit of the
company.
The evaluation on the annual report of the
company briefs that the total tax expenses of
the company is $ 7101 million in current year
which has been enhanced from 2016.

Difference among the tax expenses
Annual report (2017) of the citadel group limited
explains that the total accounting profit of the
company is $ 2,13,12,000. So, the tax amount of the
company should be $ 63,94,000 (21,312,000*30% =
6394000).
However, recorded tax amount of the company is $
59,06,000.
The dividends, research and development credit,
imputation credit, provisions of the company etc are
the main reasons due to which the tax amount of the
company has been lowered than the estimated tax
amount of the company.

Income tax in income statement and
balance sheet
the income statement and the cash flow
statement of the company has been evaluated
to identify the total taxable expenses of the
company and the total amount which has
been paid by the company as tax amount in
the year of 2017.

On the basis of the evaluation, it has been
found that the cash outflow of the company
because of tax is $ 54,21,000 and the taxable
expenses of the company was $ 54,21,000.
It briefs that the entire tax amount has been
paid by the company (Annual report, 2017).

Deferred tax assets and liabilities
The deferred tax liabilities of the company
have been improved by $ 15,22,000 whereas
he deferred tax assets of the company have
also been improved by $ 61,000.
The deferred tax liabilities explain about the
higher accounting tax of the company than
the actual tax of the company.

Conclusion
To conclude, the Citadel group limited is
following the AASB 112 rules to manage and
present the data of the taxation and other
financial figures in the annual report of the
company.
The performance of the company has been
improved from last year.

Evidence
I hereby, says that the presentation has been
prepared by me only.

References:
Annual report. 2016. The Citadel group limited. Available at:
http://investors.citadelgroup.com.au/investors/?page=Annual
-Reports (accessed 22/5/18).
Annual report. 2017. The Citadel group limited. Available at:
http://member.afraccess.com/media?id=CMN://2A1029784&
filename=20170817/TTS_01884645.pdf
(accessed 22/5/18).
Bloomberg. 2018. The Citadel group limited. Available at:
https://www.bloomberg.com/research/stocks/private/snapsho
t.asp?privcapId=39927862
(accessed 22/5/18).
Morningstar. 2018. The Citadel group limited. Available at:
http://financials.morningstar.com/cash-flow/cf.html?t=CGL&r
egion=aus&culture=en-US
(accessed 22/5/18).