Review of Commonwealth Government Business Enterprises ...

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22 Measure Key Performance indicator Defnition Financial Total shareholder (Commercial value at end, less commercial Performance return value at start plus dividends paid less equity injected)/commercial value at start Dividend yield Dividends paid/average commercial value Dividend payout Dividends paid/net cash fow from operating ratio activities less depreciation expense EBIT Earnings before net interest and tax EBITDA Earnings before net interest, tax, depreciation, amortisation and fair value adjustments for fnancial instruments Return on equity (RoE) Net proft after tax/average equity Net proft after tax (NPAT) The bottom line of the Income Statement Underlying net proft The bottom line of the Income Statement after tax adjusted for one-off items and AASB fair value movements Business Operating margin EBITDA/operating revenue Effciency Return on capital EBIT adjusted for AASB fair value movements employed (net of tax)/average capital employed. Capital employed is defned as total assets less current liabilities Debtors age (days) (Debtors/revenue) x 365 Leverage/ Gearing Ratio Net interest bearing debt/net interest bearing Solvency debt plus equity Interest Cover EBITDA/interest paid Current ratio Current assets/current liabilities Liquidity Ratio Cash and equivalents/current liabilities Customers Customer Percentage of customers rating the GBE very and Satisfaction good or excellent as determined by survey Stakeholders Meeting Community Service obligations Staff Staff Retention and Number of staff replaced/average number of turnover rates staff for the period Staff Satisfaction Percentage of staff very/extremely satisfed as determined by survey Lost time injury frequency rates and OHS incident rate Lost time injuries per million hours worked Wages expense ratio Cost of wages and salaries/operating revenue Exposure Exposure Draft Draft d. The Shareholder Minister(s) may propose and agree other indicators that are relevant to the measuring of the performance of the GBE, to be included in the corporate plan prior to the Shareholder Minister(s) responding to the plan.
3.3 Statement of Corporate Intent (SCI) 3.3.1 A SCI is prepared in conjunction with a GBE’s corporate plan each year and tabled in the Parliament. The SCI is a forward looking document, which is designed to provide the Parliament with a high level summary of the GBE’s objectives, accountability regime and broad performance expectations for the period covered by the SCI. 3.3.2 While the SCI is necessarily prepared at a high level to prevent the disclosure of commercially sensitive information that might damage the GBE’s competitive position, the SCI plays an important role in providing the Parliament and the public with information about the GBE’s prospective activities. 3.3.3 When read alongside the GBE’s annual report, the SCI provides a more complete picture of the GBE’s objectives and achievements during the year. However, given its forward-looking nature, the SCI is not designed to be the primary document upon which the Parliament assesses GBE performance, rather the annual report fulfls this function. 3.3.4 Finance proposes that the SCI’s role could be further enhanced through two additional measures. 3.3.5 Firstly, while SCI’s are tabled in the Parliament, their accessibility to the public could be enhanced by requiring publication on GBE websites. Websites have, in recent years, become a major point through which the public accesses information (such as annual reports) on private sector and government entities. Most GBEs already publish their SCI on their website, and Finance considers it is appropriate to formalise this as a requirement in the GBE Guidelines. 28 3.3.6 Secondly, accountability to the Parliament could be enhanced through GBE annual reports including reporting of achievements against SCI expectations of performance. 3.3.7 While some level of reporting of performance against corporate plan objectives is currently required of Commonwealth authority GBEs in their Report of Operations, 29 no equivalent reporting requirements currently exist for Commonwealth companies through the director’s report required by the Corporations Act. 30 3.3.8 Reporting against SCI objectives would assist interested stakeholders in following the achievements of specifc GBE objectives from the time they are set, through to when outcomes are achieved. This change was also recommended by the OECD in its Corporate Governance Guidelines 31 and the Australian National Audit Offce in its report Agencies’ Performance Monitoring of Commonwealth Government Business Enterprises. 32 Exposure Draft 28 http://www.comu.govt.nz/resources/pdfs/oem-soe-07.pdf 29 Clause 10(1) of the Commonwealth Authorities and Companies (Report of Operations) Orders 2005. http://www.comlaw.gov.au/comlaw/Legislation/ActCompilation1.nsf/0/D01E012B7D5A01A3CA256FC3007EE1EF/$fle/CwlthAuthCompanies1997_WD02.pdf Note that these Orders do not currently apply to companies registered under the Corporations Act 2001. 30 Annual reporting by companies registered under the Corporations Act 2001, including Commonwealth companies, is covered by Part 2M.3 of the Corporations Act 2001. 31 OECD Guidelines on Corporate Governance of State-Owned Enterprises 2005, page 42 www.oecd.org/daf/corporateaffairs/soe/guidelines 32 http://www.anao.gov.au/director/publications/auditreports/2000-2001.cfm?pageNumber=4 Australian National Audit Offce, Report No. 15, 2000-2001, Agencies’ Performance Monitoring of Commonwealth Government Business Enterprises p69. 23
Page 1 and 2: Australian Government Department of
Page 3 and 4: Contents Introduction 2 Part 1 - Ov
Page 5 and 6: The key topics identifed for discus
Page 7 and 8: Part 1 - Overview 1.1 Mandate and O
Page 9 and 10: Proposed Change: (New) 3.3 2.3 a. A
Page 11 and 12: 2.3.4 These changes aim to make GBE
Page 13 and 14: . The Chair shall write to the Shar
Page 15 and 16: 2.5.4 A similar principle operates
Page 17 and 18: 2.6.4 These issues have also previo
Page 19 and 20: Part 3 - Planning and Reporting (Pr
Page 21 and 22: Table 2: Best Practice Timetable fo
Page 23: Proposed Change: (Replaces entire 2
Page 27 and 28: 3.4.7 The focus on comparing budget
Page 29 and 30: 2.11b(i) 3.14 The current disclosur
Page 31 and 32: Proposed change: (New) 3.21 Proposa
Page 33 and 34: Part 4 - Financial Governance 4.1 C
Page 35 and 36: 4.2A Weighted Average Cost of Capit
Page 37 and 38: 4.3 Managing Risks 4.3.1 The govern
Page 39 and 40: Part 5 - Other Governance Matters 5
Page 41 and 42: Appendix A: Commonwealth Government
Page 43 and 44: Part 1 - Overview Defnition 1.1 A G
Page 45 and 46: 1.9 In addition to setting a princi
Page 47 and 48: 2.6 The code of conduct may cover t
Page 49 and 50: 2.17 On an annual basis the GBE boa
Page 51 and 52: Table 2: Best Practice Timetable fo
Page 53 and 54: Measure Key Performance indicator F
Page 55 and 56: d. commentary on any emerging issue
Page 57 and 58: 3.23 GBEs should allow a reasonable
Page 59 and 60: Financial Targets for GBEs 4.7 All
Page 61 and 62: Part 5 - Other Governance Matters W
Page 63: 5.10 The above requirements relatin
Page 66 and 67: Governance Arrangements for Commonw
Page 68 and 69: Principles Part 1 - Overview 1.1 Th
Page 70 and 71: (c) earn at least a commercial rate
Page 72 and 73: (e) The plan also covers any other
Page 74 and 75:
Keeping Shareholder Ministers Infor
Page 76 and 77:
Part 4 - Financial Governance Capit
Page 78 and 79:
shareholder would expect the adopti
Page 80 and 81:
Partly Owned GBEs, Partly Owned Sub
Page 82 and 83:
Attachment A Matters for Inclusion
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