Note 8: Other Information
Download section8.1: Budgetary Reports and Explanation of Major Variances
The following tables provide a comparison of the original Budget, as presented in the 2016-17 Portfolio Budget Statements (PBS) for the Environment Portfolio, to the Actual 2016-17 outcome as presented in accordance with AAS for the Group. The Budget is not audited.
8.1A: Budgetary Reports
Consolidated Statement of Comprehensive Income
for the period ended 30 June 2017
Actual $’000 |
Budget1 $’000 |
Variance2 $’000 |
|
---|---|---|---|
NET COST OF SERVICES | |||
Expenses |
|
|
|
Employee benefits |
21,058 |
22,393 |
(1,335) |
Suppliers |
6,544 |
8,205 |
(1,661) |
Depreciation and amortisation |
745 |
742 |
3 |
Concessional loan charges |
11,433 |
21,400 |
(9,967) |
Write-down and impairment of assets |
2,129 |
3,508 |
(1,379) |
Provision for irrevocable loan commitments |
292 |
254 |
38 |
Total expenses |
42,201 |
56,502 |
(14,301) |
Own-source income |
|
|
|
Own-source revenue |
|
|
|
Interest and loan fee revenue |
59,275 |
54,741 |
4,534 |
Distributions from trusts and equity investments |
5,328 |
- |
5,328 |
Total own-source revenue |
64,603 |
54,741 |
9,862 |
Gains and losses |
|
|
|
Other (losses) / gains |
(92) |
- |
(92) |
Total (losses) / gains |
(92) |
- |
(92) |
Total own-source income |
64,511 |
54,741 |
9,770 |
Net contribution by / (cost of) services |
22,310 |
(1,761) |
24,071 |
Share of associates and joint ventures |
(639) |
(625) |
(14) |
Surplus / (deficit) from continuing operations |
21,671 |
(2,386) |
24,057 |
OTHER COMPREHENSIVE INCOME | |||
Items subject to subsequent reclassification to net cost of services |
|
|
|
Gains on Available-for-Sale financial assets |
7,674 |
78 |
7,596 |
Net fair value loss taken to equity on cash flow hedge |
(42) |
- |
(42) |
Total other comprehensive income |
7,632 |
78 |
7,554 |
Total comprehensive income / (loss) |
29,303 |
(2,308) |
31,611 |
- The Group’s original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from the CEFC section in the 2016-17 PBS for the Environment Portfolio).
- Difference between the actual and original budgeted amounts for 2016-17. Explanations of major variances are provided further below.
Consolidated Statement of Financial Position
as at 30 June 2017
Actual $’000 |
Budget1 $’000 |
Variance2 $’000 |
|
---|---|---|---|
ASSETS | |||
Financial assets |
|
|
|
Cash and cash equivalents |
401,974 |
150,068 |
251,906 |
Trade and other receivables |
8,227 |
3,710 |
4,517 |
Loans and advances |
771,202 |
872,479 |
(101,277) |
Available-for-Sale financial assets |
802,945 |
189,703 |
613,242 |
Other financial assets |
278,380 |
254,492 |
23,888 |
Equity accounted investments |
8,401 |
- |
8,401 |
Derivative financial assets |
225 |
- |
225 |
Total financial assets |
2,271,354 |
1,470,452 |
800,902 |
Non-financial assets |
|
|
|
Property, plant and equipment |
944 |
540 |
404 |
Computer software |
484 |
260 |
224 |
Prepayments |
504 |
559 |
(55) |
Total non-financial assets |
1,932 |
1,359 |
573 |
Total assets |
2,273,286 |
1,471,811 |
801,475 |
LIABILITIES | |||
Payables and unearned income |
|
|
|
Suppliers |
2,162 |
1,245 |
917 |
Unearned income |
15,678 |
5,696 |
9,982 |
Other payables |
5,106 |
507 |
4,599 |
Total payables and unearned income |
22,946 |
7,448 |
15,498 |
Provisions |
|
|
|
Employee provisions |
1,660 |
4,738 |
(3,078) |
Provision for concessional loans |
19,505 |
33,472 |
(13,967) |
Other provisions |
741 |
129 |
612 |
Total provisions |
21,906 |
38,339 |
(16,433) |
Total liabilities |
44,852 |
45,787 |
(935) |
Net assets |
2,228,434 |
1,426,024 |
802,410 |
EQUITY | |||
Contributed equity |
2,108,363 |
1,348,363 |
760,000 |
Reserves |
14,655 |
3,321 |
11,334 |
Retained surplus |
105,416 |
74,340 |
31,076 |
Total equity |
2,228,434 |
1,426,024 |
802,410 |
- The Group’s original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from the CEFC section in the 2016-17 PBS for the Environment Portfolio).
- Difference between the actual and original budgeted amounts for 2016-17. Explanations of major variances are provided further below.
Consolidated Statement of Changes in Equity
for the period ended 30 June 2017
|
Retained Surplus | Reserves | Contributed Equity | Total Equity | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Actual $’000 |
Budget1 $’000 |
Variance2 $’000 |
Actual $’000 |
Budget1 $’000 |
Variance2 $’000 |
Actual $’000 |
Budget1 $’000 |
Variance2 $’000 |
Actual $’000 |
Budget1 $’000 |
Variance2 $’000 |
Opening balance |
|
|
|
|
|
|
|
|
|
|
|
|
Balance carried forward from previous period |
83,745 |
76,726 |
7,019 |
7,023 |
3,243 |
3,780 |
1,108,363 |
1,008,363 |
100,000 |
1,199,131 |
1,088,332 |
110,799 |
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
Surplus / (deficit) for the period |
21,671 |
(2,386) |
24,057 |
- |
- |
- |
- |
- |
- |
21,671 |
(2,386) |
24,057 |
Other comprehensive income |
- |
- |
- |
7,632 |
78 |
7,554 |
- |
- |
- |
7,632 |
78 |
7,554 |
Total comprehensive income |
21,671 |
(2,386) |
24,057 |
7,632 |
78 |
7,554 |
- |
- |
- |
29,303 |
(2,308) |
31,611 |
Transactions with owners |
|
|
|
|
|
|
|
|
|
|
|
|
Contributions by owners |
|
|
|
|
|
|
|
|
|
|
|
|
Equity injection from Special Account |
- |
- |
- |
- |
- |
- |
1,000,000 |
340,000 |
660,000 |
1,000,000 |
340,000 |
660,000 |
Total transactions with owners |
- |
- |
- |
- |
- |
- |
1,000,000 |
340,000 |
660,000 |
1,000,000 |
340,000 |
660,000 |
Closing balance as at 30 June |
105,416 |
74,340 |
31,076 |
14,655 |
3,321 |
11,334 |
2,108,363 |
1,348,363 |
760,000 |
2,228,434 |
1,426,024 |
802,410 |
- The Group’s original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from the CEFC section in the 2016-17 PBS for the Environment Portfolio).
- Difference between the actual and original budgeted amounts for 2016-17. Explanations of major variances are provided further below.
Consolidated Cash Flow Statement
for the period ended 30 June 2017
|
Actual $’000 |
Budget1 $’000 |
Variance2 $’000 |
---|---|---|---|
OPERATING ACTIVITIES | |||
Cash received |
|
|
|
Interest and fees |
62,744 |
50,977 |
11,767 |
Distributions from trusts and equity investments |
3,437 |
- |
3,437 |
Total cash received |
66,181 |
50,977 |
15,204 |
Cash used |
|
|
|
Employees |
20,186 |
21,757 |
(1,571) |
Suppliers |
5,668 |
8,204 |
(2,536) |
Total cash used |
25,854 |
29,961 |
(4,107) |
Net cash from operating activities |
40,327 |
21,016 |
19,311 |
INVESTING ACTIVITIES | |||
Cash received |
|
|
|
Principal loan repayments received |
21,858 |
60,482 |
(38,624) |
Redemption of short-term investments |
90,000 |
- |
90,000 |
Redemption of other financial assets |
249,427 |
26,924 |
222,503 |
Redemption of AFS financial assets |
12,366 |
194 |
12,172 |
Total cash received |
373,651 |
87,600 |
286,051 |
Cash used |
|
|
|
Purchase of property, plant and equipment |
283 |
315 |
(32) |
Purchase of computer software |
360 |
200 |
160 |
Loans made to other parties |
391,150 |
420,370 |
(29,220) |
Purchase of AFS financial assets |
532,910 |
25,000 |
507,910 |
Purchase of short-term investments |
90,000 |
- |
90,000 |
Acquisition of other financial assets |
221,212 |
- |
221,212 |
Investment in associates and joint ventures |
8,867 |
- |
8,867 |
Total cash used |
1,244,782 |
445,885 |
798,897 |
Net cash from / (used by) investing activities |
(871,131) |
(358,285) |
(512,846) |
FINANCING ACTIVITIES | |||
Cash received |
|
|
|
Contributed equity |
1,000,000 |
340,000 |
660,000 |
Total cash received |
1,000,000 |
340,000 |
340,000 |
Net cash from financing activities |
1,000,000 |
340,000 |
660,000 |
Net increase in cash held |
169,196 |
2,731 |
166,465 |
Cash and cash equivalents at the beginning of the |
232,778 |
147,337 |
85,441 |
Cash and cash equivalents at the end of the |
85,441 |
150,068 |
251,906 |
- The Group’s original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from the CEFC section in the 2016-17 PBS for the Environment Portfolio).
- Difference between the actual and original budgeted amounts for 2016-17. Explanations of major variances are provided further below.
8.1B: Major Budget Variance for 2016-17
Affected Line Items | Explanations of Major Variances |
---|---|
Consolidated Statement of Comprehensive Income: | |
Employee Benefits |
The budget for employee benefits anticipated an increase in salaries approximating CPI effective 1 July 2016, however, there were very limited salary adjustments made in January 2017, resulting in lower than budget costs. |
Suppliers |
With the introduction of the Clean Energy Innovation Fund, that was anticipated to be a $1bn fund at the time the 2016-17 budget was prepared, we expected to incur substantial legal and consultant costs on evaluating early stage investments. With the reduction in the size of the Innovation Fund (to $200m) and the fact that we have been able to recover the majority of transaction related costs on those investments completed, we have achieved a lower than forecast supplier cost for 2016-17. |
Concessional loan charges |
Concessional loan charges are significantly lower than budget notwithstanding the actual investments made during the year are higher than budgeted. This is due to:
|
Write-down and impairment of assets |
Write-down and impairment of assets is lower than budget as the calculated impairment provision is lower than budget as a result of the Group investing in a higher proportion of AFS financial assets, than Loans and Advances, in the 2016-17 financial year. AFS financial assets are accounted for at fair value rather than amortised cost and are not generally subject to the same credit exposure as typical loans and advances. |
Interest and loan fee revenue |
Interest and loan fee revenue
|
Distributions from trusts and equity investments |
CEFC had not forecast any distributions from trusts and equity investments as the budget anticipated that all investments providing a significant return would be by way of loans and advances in 2016-17. However, a number of new investments have been in the form of units in trusts and equity investments which have current period earnings, and have therefore provided distributions during the 2016-17 financial year. |
Other Comprehensive Income |
Other comprehensive income relates entirely to market movements in the fair value of AFS securities. This is typically a result of a change in the market interest rates on bonds (given CEFC is a fixed rate lender) or a change in the market value of underlying assets of a trust in which CEFC holds an investment. It is not possible to accurately forecast the change in the fair value of AFS investments that may arise from a change in market conditions. |
Consolidated Statement of Financial Position: | |
Cash and cash equivalents |
Cash and cash equivalents are $252 million higher than budget as the CEFC drew down an additional $660 million from the CEFC Special Account, over and above what was budgeted, to meet its funding obligations under the contracts entered into during 2016-17. Two specific investments that were expected to reach financial close and draw down in June 2017, when the CEFC Special Account funds were withdrawn, have experienced minor delays and are now expecting to reach financial close and draw down within 60-90 days of their original dates. |
Loans and advances |
When the budget was prepared the CEFC expected the majority of new investments to take the form of loans and advances. However, as the year evolved, a substantial number of new investments were in the form of AFS securities. The increase in AFS more than offsets the lower than budget loan and advance balances. |
Available for sale financial assets |
As stated above, when the budget was prepared the CEFC expected the majority of new investments to take the form of loans and advances. However, as the year evolved, a substantial number of new investments were in the form of AFS securities. This includes quoted debt securities such as climate bonds and longer tenor bank bond arrangements as part of the aggregation facilities, unquoted units in trusts as well as unquoted equity investments. The change to bonds rather than term deposits in support of aggregation facility arrangements was to achieve longer tenor and a better return on investment. The opportunity to influence the carbon intensity of entire property funds through small equity investments rather than single properties by way of concessional loans was a key driver in the decision to pursue certain unquoted equity investments rather than solely unquoted debt arrangements which are classified as loans and advances. |
Payables and unearned income |
Unearned income is significantly higher than budget as a substantial number of new loans reached financial close in the last 3-6 months of the financial year which triggered substantial establishment fees payable to the CEFC by these customers. While the facilities have reached financial close, they have not drawn down significant amounts by 30 June 2017 as we typically require the equity investors to fund the initial construction before drawing on the debt facilities. Since the establishment fees are deferred and recognised using the effective interest rate method, the majority of the fees sat in unearned income at 30 June 2017. |
Provision for concessional loans |
The provision for concessional loans was significantly lower than budget at 30 June 2017 as the CEFC had not provided the extent of concessionality during 2016-17 that it budgeted to provide. Refer to the explanation of lower concessional loan charges under the Statement of Comprehensive Income explanations above for further details. In addition, a facility with one of the major Australian banks expired during the period and was replaced with a different (less concessional) aggregation facility. |
Contributed equity |
The Corporation drew an additional $660 million from the CEFC Special Account and returned $100m less than forecast in the prior financial year as a result of the very large number of transactions that have been contracted in 2016-17. In 2016-17 in excess of $2 billion of new investments were contractually committed. Some of these new investments were funded during 2016-17 (using the additional monies from the CEFC Special Account) and additional amounts will continue to be funded under these contractual commitments during the 2017-18 financial year. |
Retained Surplus |
The retained surplus is significantly higher than budgeted due to the higher than budgeted surplus that was generated in 2016-17 off the back of a significantly higher than budgeted asset base. |
Consolidated Statement of Changes in Equity: | |
Reserves |
Reserves relate entirely to market movements in the fair value of AFS securities. This is typically a result of a change in the market interest rates on bonds (given CEFC is a fixed rate lender) or a change in the market value of underlying assets of a fund in which CEFC holds an equity investment. It is not possible to accurately forecast/budget for the change in the fair value of AFS investments that may arise from a change in market conditions. |
Contributed equity |
The Corporation drew an additional $660 million from the CEFC Special Account and returned $100 million less than forecast in the prior financial year as a result of the very large number of transactions that have been contracted in 2016-17. |
Consolidated Cash Flow Statement: | |
Operating cash received |
The positive variance to budget is a direct reflection of the higher than budgeted earnings off a higher than budgeted asset base in the 2016-17 financial year. As mentioned above, interest and fee revenue as well as equity distributions have a favourable variance to budget as:
|
Principal loan repayments received |
In the budget, CEFC had anticipated being re-financed out of one of its wind farm debt facilities during the 2016-17 financial year. This did not occur during the 2016-17 financial year but is still being considered by the equity sponsor. The break costs, related to the other debt providers in the syndicate, are prohibitively expensive at this time, so the owners have deferred their refinancing considerations at least in the short term. |
Redemption and Purchase of short term investments |
The $90m positive variance to budget in both purchase and redemption of short term investments is a result of CEFC retaining an additional $100m from the CEFC Special Account in the prior financial year. The majority of this ($90m) was invested as a short-term investment to maximise the return on these funds until such time as they were drawn down by the CEFC’s customer. |
Redemption of other financial assets; and Acquisition of other financial assets |
The redemption and acquisition of other financial assets is a gross-up to show the gross inflows/outflows related to the secured funding accounts. These were budgeted on a net basis as it is not possible during the budget process to estimate the number of times particular term deposits will be rolled, as it depends on the construction draw-down timetable as well as the forward rate curve for term deposits at the time each deposit is rolled. The net variance to budget of these two items is only $1.3 million. |
Loans made to other parties |
Loans made to other parties are lower than forecast as some investments which were forecast as loans, were completed as AFS securities instead. |
Purchase of AFS financial assets |
As stated above, when the budget was prepared the CEFC expected the majority of new investments to take the form of loans and advances. However, as the year evolved, a substantial number of new investments were in the form of AFS securities. This includes quoted debt securities such as climate bonds and longer tenor bank bond arrangements as part of the aggregation facilities, unquoted units in trusts as well as unquoted equity investments. |
Contributed equity |
As stated above, the Corporation drew an additional $660 million from the CEFC Special Account (in addition to the $340 million budgeted) as a result of the very large number of investment transactions that have been contracted in 2016-17. |
Cash and cash equivalents at the beginning of the reporting period |
The Corporation had budgeted to return $100 million of funds at 30 June 2016 to the CEFC Special Account, however, these were retained due to transactions that needed to be funded shortly after the end of the 2015-16 financial year, causing the cash and cash equivalents at the beginning of the reporting period to be $85 million higher than the budget had anticipated. |
Cash and cash equivalents at the end of the reporting period |
As stated above, cash and cash equivalents at the end of the reporting period are $252 million higher than budget as the CEFC drew down an additional $660 million from the CEFC Special Account, over and above what was budgeted, to meet its funding obligations under the contracts entered into during 2016-17. Two specific investments that were expected to reach financial close and draw down in June 2017 when the CEFC Special Account funds were withdrawn have experienced minor delays and are now expecting to reach financial close and draw down within 60-90 days of their original dates. |