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03 Financial Statements

Note 8: Other Information

8.1: Budgetary Reports and Explanation of Major Variances

The following tables provide a comparison of the original Budget, as presented in the 2017-18 Portfolio Budget Statements (PBS) for the Environment Portfolio, to the Actual 2017-18 outcome as presented in accordance with AAS for the Group. The Budget is not audited.

8.1A: Budgetary Reports
 

CLEAN ENERGY FINANCE CORPORATION

Consolidated Statement of Comprehensive Income

for the year ended 30 June 2018

  Actual
$'000
Budget1
$'000
Variance2
$'000
NET COST OF SERVICES
Expenses      
Employee benefits 24,854 29,321 (4,467)
Suppliers 8,431 9,866 (1,435)
Depreciation and amortisation 892 776 116
Concessional loan charges 11,972 27,800 (15,828)
Write-down and impairment of assets and provision for irrevocable loan commitments 10,308 7,896 2,412
Total expenses 56,457 75,659 (19,202)
Own-source income      
Own-source revenue      
Interest and loan fee revenue 122,269 75,960 46,309
Distributions from trusts and equity investments 10,090 9,003 1,087
Total own-source revenue 132,359 84,963 47,396
Gains and losses      
Other (losses)/gains (12) (12)
Total (losses)/gains (12) (12)
Total own-source income 132,347 84,963 47,384
Net contribution by/(cost of) services 75,890 9,304 66,586
Share of associates and joint ventures (2,235) (2,235)
Surplus/(deficit) from continuing operations 73,655 9,304 64,351
OTHER COMPREHENSIVE INCOME
Items subject to subsequent reclassification to net cost of services      
Gains on available-for-sale financial assets 27,854 (626) 28,480
Net fair value gain taken to equity on cash flow hedge 282 282
Total other comprehensive income 28,136 (626) 28,762
Total comprehensive income/(loss) 101,791 8,678 93,113

  1. 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 2017-18 PBS for the Environment and Energy Portfolio).
  2. Difference between the actual and original budgeted amounts for 2017-18. Explanations of major variances are provided further below.
 
CLEAN ENERGY FINANCE CORPORATION

Consolidated Statement of Financial Position

as to 30 June 2018

  Actual
$'000
Budget1
$'000
Variance2
$'000
ASSETS
Financial assets      
Cash and cash equivalents 487,754 300,128 187,626
Trade and other receivables 12,463 2,331 10,132
Loans and advances 1,936,704 1,374,565 562,139
Available-for-sale financial assets 1,396,569 912,833 483,736
Other financial assets 163,507 190,132 (26,625)
Equity accounted investments 87,495 87,495
Total financial assets 4,084,492 2,779,989 1,304,503
Non-financial assets      
Property, plant and equipment 1,392 1,083 309
Computer software 418 424 (6)
Prepayments 500 562 (62)
Total non-financial assets 2,310 2,069 241
Total assets 4,086,802 2,782,058 1,304,744
LIABILITIES
Payables and unearned income      
Suppliers 2,974 1,534 1,440
Unearned income 32,202 14,421 17,781
Other payables 6,792 497 6,295
Derivative financial liabilities 241 241
Total payables and unearned income 42,209 16,452 25,757
Provisions      
Employee provisions 2,172 6,317 (4,145)
Other provisions 12,196 657 11,539
Total provisions 14,368 6,974 7,394
Total liabilities 56,577 23,426 33,151
Net assets 4,030,225 2,758,632 1,271,593
EQUITY
Contributed equity 3,808,363 2,658,363 1,150,000
Reserves 42,791 2,505 40,286
Retained surplus 179,071 97,764 81,307
Total equity 4,030,225 2,758,632 1,271,593

  1. 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 2017-18 PBS for the Environment and Energy Portfolio).
  2. Difference between the actual and original budgeted amounts for 2017-18. Explanations of major variances are provided further below.
     
CLEAN ENERGY FINANCE CORPORATION

Consolidated Statement of Changes in Equity

for the year ended 30 June 2018

  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 year 105,416 88,460 16,956 14,655 3,131 11,524 2,108,363 2,108,363 2,228,434 2,199,954 28,480
Comprehensive income                        
Surplus/(deficit) for the year 73,655 9,304 64,351 73,655 9,304 64,351
Other comprehensive income 28,136 (626) 28,762 28,136 (626) 28,762
Total comprehensive income 73,655 9,304 64,351 28,136 (626) 28,762 101,791 8,678 93,113
Transactions with owners                        
Contributions by owners                        
Equity injection from Special Account 1,700,000 550,000 1,150,000 1,700,000 550,000 1,150,000
Total transactions with owners 1,700,000 550,000 1,150,000 1,700,000 550,000 1,150,000
Closing balance as at 30 June 179,071 97,764 81,307 42,791 2,505 40,286 3,808,363 2,658,363 1,150,000 4,030,225 2,758,632 1,271,593

  1. 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 2017-18 PBS for the Environment and Energy Portfolio).
  2. Difference between the actual and original budgeted amounts for 2017-18. Explanations of major variances are provided further below.

CLEAN ENERGY FINANCE CORPORATION

Consolidated Cash Flow Statement

for the year ended 30 June 2018

  Actual
$'000
Budget1
$'000
Variance2
$'000
OPERATING ACTIVITIES
Cash received      
Interest and fees 113,691 75,296 38,395
Distributions from trusts and equity investments 10,144 9,003 1,141
Total cash received 123,835 84,299 39,536
Cash used      
Employees 22,896 28,406 (5,510)
Suppliers 7,102 9,866 (2,764)
Total cash used 29,998 38,272 (8,274)
Net cash from operating activities 93,837 46,027 47,810
INVESTING ACTIVITIES
Cash received      
Principal loan repayments received 184,084 179,612 4,472
Redemption of other financial assets 266,308 295,098 (28,790)
Redemption of AFS financial assets 20,247 12,622 7,625
Distributions from associates and joint ventures 506 506
Total cash received 471,145 487,332 (16,187)
Cash used      
Purchase of property, plant and equipment and computer software 1,287 1,005 282
Loans made to other parties 1,340,992 643,122 697,870
Purchase of AFS financial assets 600,538 289,837 310,701
Acquisition of other financial assets 154,550 150,000 4,550
Investment in associates and joint ventures 81,835 81,835
Total cash used 2,179,202 1,083,964 1,095,238
Net cash from/(used by) investing activities (1,708,057) (596,632) (1,111,425)
FINANCING ACTIVITIES
Cash received      
Contributed equity 1,700,000 550,000 1,150,000
Total cash received 1,700,000 550,000 1,150,000
Net cash from financing activities 1,700,000 550,000 1,150,000
Net increase/(decrease) in cash held 85,780 (605) 86,385
Cash and cash equivalents at the beginning of the reporting period 401,974 300,733 101,241
Cash and cash equivalents at the end of the reporting period 487,754 300,128 187,626

  1. 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 2017-18 PBS for the Environment and Energy Portfolio).
  2. Difference between the actual and original budgeted amounts for 2017-18. Explanations of major variances are provided further below. 

8.1B: Major Budget Variance for 2017-18

Affected Line Items Explanations of Major Variances
Consolidated Statement of Comprehensive Income:
Employee benefits The Group has spent $4.5 million less than Budget on employee benefits. This is largely a result of hiring fewer new staff than budgeted as well as new hires being made and targeted salary increases being awarded later in the year than budgeted.
Concessional loan charges Concessional loan charges are significantly lower than budget notwithstanding the actual investments made during the year are higher than budgeted. The mix of transactions undertaken this year, the compression in margins and lower overall rate environment generally have reduced the need for the CEFC to provide as much concessionality as anticipated in many instances, as we have been able to be appropriately compensated for the longer tenor or fixed rate aspects of the loans written without jeopardising the project economics of the transactions.
Interest and loan fee revenue Interest and loan fee revenue has a large favourable variance to Budget principally as a result of above-budget volume of investments made in the year and resultant increased value of interest-bearing investments. Partially offsetting this was the fact that a number of the solar farm transactions in particular were delayed in construction and drew down more slowly than anticipated, thus generating higher commitment fees but lower interest revenue for a period.
Share of associates and joint ventures This represents the Group’s equity-accounted share of the result of investments that are classified as Associates and Joint Ventures under Australian Accounting Standards. The Group did not forecast significant investments being classified as such when preparing the 2017-18 Budget. The CEFC has been required to take (at least initially) a larger equity share than was forecast in order to ensure certain transactions proceeded in an appropriate time frame.
Other Comprehensive Income The gain on available-for-sale financial assets is the result of increases in the market value of these assets. This is typically the 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 $188 million higher than Budget as two investments that were expected to reach financial close and draw down in June 2018 have experienced minor delays and are now expecting to reach financial close and draw down within 60-90 days of their original forecast dates.
Trade and other receivables Trade and other receivables are higher than Budget due to timing differences between when interest and dividends were forecast to be collected and when they were actually received as cash.
Loans and advances The Group has been successful in concluding a greater number of transactions than in prior years and envisaged in the Budget. The average loan size has also increased.
Available-for-sale financial assets Available-for-sale financial assets include 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 made by the Clean Energy Innovation Fund. The amount invested during the year exceeds Budget largely as a result of a bank aggregation partner successfully originating green loans to SME borrowers faster than originally anticipated.
Other financial assets Other financial assets comprise secured funding accounts and the variance to Budget arises as a result of a lower-than-budgeted opening balance for this account carried forward from the prior financial year.
Equity accounted investments This represents the Group’s equity-accounted share of the net assets of investments that are classified as Associates and Joint Ventures under Australian Accounting Standards. The Group did not forecast significant investments being classified as such when preparing the 2017-18 Budget.
Unearned income Unearned income is significantly higher than Budget as a greater number of new loans than was forecast reached financial close in the financial year which triggered the payment of establishment fees to the CEFC by the borrowers. Since the establishment fees are deferred and recognised using the effective interest rate method over the loan tenor which spans a number of years, the majority of the fees received remain in unearned income at 30 June 2018.
Other payables and Employee provisions Other payables are significantly above Budget and Employee provisions are significantly lower than Budget due to certain amounts being budgeted as Employee provisions but actually being classified as Other payables in the actual results.
Other provisions The provision for concessional loans was significantly lower than Budget at 30 June 2018 as the CEFC had not provided the extent of concessionality during 2017-18 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.
Contributed equity The Corporation drew $1,150 million more than was budgeted from the CEFC Special Account as a result of the very large number of transactions contracted during the 2017-18 financial year (as described in the comments above).
Retained Surplus The retained surplus at 30 June 2018 is $81 million higher than Budget with $64 million due to the higher-than-budgeted surplus generated in the year, discussed under Consolidated Statement of Financial Income above, and $17 million due to the higher-than-budgeted opening balance.
Consolidated Statement of Changes in Equity:
Total equity Total Equity at 30 June 2018 is $1,271 million higher than Budget primarily due to the contributed equity exceeding Budget by $1,150 million and the retained surplus at 30 June 2018 exceeding budget by $81 million.
Consolidated Cash Flow Statement:
Net cash from operating activities The positive variance to Budget is a direct reflection of the higher-than-budgeted earnings in the financial year.
Redemption of other financial assets This relates to the withdrawal from secured funding accounts to fund loan drawdowns or capital calls by the investments to which they relate. The variance to budget can be attributed to slower than forecast draws against the secured funding accounts due primarily to delays in construction of the underlying projects.
Loans made to other parties Cash used to fund Loans made to other parties is significantly ahead of Budget due to a combination of the increased number of loans contracted during the year and a greater than Budget proportion of corporate loans, where borrowers draw the entire commitment upon financial close as opposed to project finance loans which draw progressively over the construction period.
Purchase of AFS financial assets The amount invested in Available-for-Sale Financial Assets during the year exceeds Budget largely as a result of a bank aggregation partner successfully originating green loans to SME borrowers faster than originally anticipated.
Contributed equity As stated above, the Corporation drew an additional $1,150 million from the CEFC Special Account as a result of the very large number of transactions contracted during the 2017-18 financial year.
Cash and cash equivalents at the beginning of the reporting period Cash and cash equivalents at 1 July 2017 were $101 million higher than Budget due to investments that had been expected to fund in the 2017 financial year not being funded until the current financial year.
Cash and cash equivalents at the end of the reporting period Cash and cash equivalents at 30 June 2018 are $188 million higher than Budget as two investments that were expected to reach financial close and draw down in June 2018 have experienced minor delays and are now expected to reach financial close and draw down within 60-90 days of their original forecast dates.
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