04 Appendices, Glossary & Abbreviations APPENDIX D

CEFC ANNUAL REPORT / 2014–15

Appendix D

SUMMARY OF OPERATING COSTS AND EXPENSES, AND BENCHMARK

Under the CEFC Act, the Corporation must include in its annual report:

- The Corporation’s operating costs and expenses for the financial year;

- a benchmark of the Corporation’s operating costs and expenses for the financial year against the operating costs and expenses of other comparable entities for that financial year.

The Corporation’s operating costs and expenses for the financial year are reported in the Financial Statements and Notes, but are also reproduced below for convenience.

ABOUT THE CEFC’S STRUCTURE

The CEFC is a corporate Commonwealth entity with an independent Board that makes investment decisions to invest in renewable and low carbon technology sector according to ministerial directions supplied by an Investment Mandate. The CEFC’s investment focus is on debt and equity that is solely or mainly Australian based. It cannot invest in property and does not have a large cash investment function. It has a headcount of 60 employees (57 FTE) based in Sydney (HQ), Brisbane and Melbourne. The CEFC has drawing rights against the Clean Energy Finance Corporation Special Account held by the Department of the Treasury.

NOTE ON COMPARISONS

Direct comparisons of the CEFC with other entities is difficult because:

a. there are very few government-owned public purpose entities that perform the type of function the CEFC does at a similar scale

b. current financial year data on other entities may not necessarily be readily available; and

c. data is not always reported using the same expense categories across the different entities.

ENTITIES CHOSEN FOR THE PURPOSES OF COMPARISON

In order to provide some comparison as required under Section 74 of the CEFC Act, the Corporation has compared its 2014–15 operating costs and expenses against the latest publicly available information for the Future Fund Board of Guardians as supported by the Future Fund Management Agency (Future Fund), the Export Finance & Insurance Corporation (EFIC) and the UK Green Investment Bank (GIB) (all government-owned entities formed for public purpose with a commercial mode of operation). More information about these entities is provided below.

Future Fund Management Agency (Future Fund) – Structure

The Future Fund was established under Division 2 of Part 5 of the Future Fund Act 2006 and is governed by an independent Board, which makes investment decisions to invest according to ministerial directions supplied by an Investment Mandate. It is not sector-limited to renewable and low carbon technology in the same way the CEFC is, and pursues a broad sectoral spread in a range of investments – primarily equities (45 per cent,) property and infrastructure (13 per cent), alternative assets (13 per cent), debt (10 per cent) and cash (19 per cent) at 30 June 2015. It had circa AUD$117 billion funds under management invested in Australia and overseas as of 30 June 2015.

Export Finance and Insurance Corporation (EFIC) – Structure

Like the CEFC, EFIC is a corporate Commonwealth entity governed by an independent Board. EFIC operates on a commercial basis and partners but does not compete with banks. EFIC has four key functions under its enabling legislation:

  • to facilitate and encourage Australian export trade by providing insurance and financial services and products to persons involved directly or indirectly in such trade

  • to encourage banks and other financial institutions in Australia to finance or assist in financing exports

  • to manage the Australian Government’s aid supported mixed credit program (a facility which has now been discontinued, although loans are still outstanding under it)

  • to provide information and advice regarding insurance and financial arrangements to support Australian exports.

EFIC’s investment function is primarily related to the issuing of insurance and security guarantees, working capital guarantees and longer-term finance guarantees within these functions. EFIC is headquartered in Sydney, provided facilities on the Commercial Account totalling $577 million during 2013/14 and had some $2.7 billion under management at 30 June 2014 (made up of circa $1.87 billion on the Commercial Account and $0.87 billion on the National Interest Account). 

Green Investment Bank (GIB) (UK) – Structure

Formed as a public company owned by the UK Government in May 2012 and became fully operational in October 2012 when it was granted State Aid approval by the European Commission to make investments on commercial terms. The GIB has a mission similar to the CEFC – which the GIB states as ‘to accelerate the UK’s transition to a greener, stronger economy…’. However, the GIB has a broader ‘Green Impact’ mandate that goes beyond renewable and low carbon energy and emissions reduction into areas such as recycling and reduction of landfill.

The GIB backs infrastructure projects which are green and profitable and wants to become a long-term enduring institution. Like the CEFC, the GIB can invest in projects in the form of equity, debt and guarantees. Also like the CEFC, it is still a relatively young business and during the year ended 31 March 2015 committed circa £723 million (~$1.5 billion) to 22 new projects bringing its cumulative investment commitment at the end of its financial year (March 2015) to circa £1.9 billion (~$3.9 billion), with circa £0.6 billion ($1.2 billion) of the investments funded at the end of its financial year (March 2015).

 

 

CEFC
2014–15 

Future Fund 2013–14 (c)

EFIC 2013–14 (c), (d)

GIB 2014–15 (e)

   $’000

%

$’000

%

$’000

%

$’000

%

Staff Employment Related Expenses

Wages & Salaries

11,029

 

26,879

 

15,700

 

22,906

 

Superannuation

757

 

1,441

 

1,600

 

1,967

 

Leave & Other Entitlements

304

 

450

 

300

     

Incentive Compensation

2,005

         

4,133

 

Recruitment Costs

587

           

 

 

Other Expenses

193

         

2,705

 

Total Staff Employment Related Expenses

14,875

63%

28,770

5%

17,600

10%

31,711

55%

Board Expenses

Wages & Salaries

411

 

788

         

Superannuation

39

 

73

         

Other Expenses

40

           

 

Total Board Expenses

490

2%

861

0%

-

0%

667

1%

Other Costs

Interest Expense

6

     

140,800

78%

   

Provision for impairment and irrevocable loan commitments

2,537

11%

   

9,600

5%

   

Concessional Loan Discount (b)

1,392

6%

           

Consultants Fees and Expenses

822

3%

           

Professional Fees

245

1%

469,499

86%

1,300

1%

5,007

9%

Other investment portfolio expenses

0%

31,920

6%

400

0%

8,581

15%

Travel & Incidentals

474

2%

   

1,200

1%

   

Office Facility Costs

908

4%

   

1,400

1%

2,522

5%

Marketing & Communications

496

2%

   

1,600

1%

   

Depreciation & Amortisation

455

2%

1,379

0%

3,400

2%

1,387

2%

Auditors’ remuneration

145

1%

2,467

0%

240

0%

367

1%

Administrative & Other Expenses

777

3%

15,993

3%

2,360

1%

7,042

12%

Total Expenses

23,622

100%

550,889

100%

179,900

100%

57,284

100%

 

 

CEFC
2014–15 (Actual)

Future Fund
2014–15 (Estimate) (f)

 

$’000

$’000

%

Employee benefits   

14,544

61%

32,423

 5%

Supplier Costs   

4,694

20%

679,297

95%

Depreciation & Amortisation    

455

2%

1,435

0%

Concessional Loan Discount (b) 

1,392

6%

   

Allowance for impairment of assets and irrevocable loan commitments

2,537

11%

   

Total Expenses

23,622

100% 

713,155

100% 

 

Notes:

(a) Like for like comparisons are not strictly possible since different entities group and report costs differently. 

(b) Non-cash charge that reverses over the life of the underlying loans 

(c) From 2013-14 Annual Report since 2014–15 Information is not available at the time of finalising this report for publication. 

(d) Costs are shown gross before National Interest Account allocation

(e) Green Investment Bank Group for twelve months ended 31 March 2015. Amounts converted at 30-6-15 average exchange rate of 1 GBP = 2.0388 AUD

(f) From 2015-16 Portfolio Budget Statements (Departmental + Administered) 

(g) EFIC does not appear in the 2015-16 Portfolio Budget Statements and its 2014–15 Corporate Plan does not provide this level of detail.