A new set of financial performance measures for state-owned enterprises unveiled by the government today are designed to improve the transparency and accountability of the sate-owned organisations.The 11 measures cover shareholder returns, profitability a
A new set of financial performance measures for state-owned enterprises unveiled by the government today are designed to improve the transparency and accountability of the sate-owned organisations.
The 11 measures cover shareholder returns, profitability and efficiency, and leverage and solvency. The measures include providing details on total shareholder return, return on capital employed and net gearing ratio.
Each of the country’s SOEs are expected to include the measures in their statements of Corporate Intent from 2010/2011.
SOE minister Simon Power said the companies represented a $25 billion investment on behalf of the taxpayer and shareholding ministers had a duty to ensure an appropriate return was delivered.
“As such, shareholding ministers asked officials to develop a suite of financial performance measures to provide more information about each SOE’s performance," he said.
“This is another step toward providing taxpayers with the tools to asses how their investment in this portfolio is performing.”
The 11 measures are:
• Total shareholder return Performance from an investor perspective – dividends and investment growth
• Dividend yield The cash return to the shareholder
• Dividend payout Proportion of an SOE's net operating cash flows less allowance for capital maintenance paid out as a dividend to the shareholder
• Return on equity How much profit a company generates with the funds the shareholder has invested in the company
• Return on equity adjusted for IFRS fair value movements and asset revaluations Return on equity after removing the impact of IFRS fair value movements and asset revaluations
• Return on capital employed The efficiency and profitability of a company’s capital from both debt and equity sources
• Operating margin The profitability of the company per dollar of revenue
• Generator efficiency The efficiency and profitability of the company’s electricity generation
• Gearing ratio (net) The ratio of debt (liabilities on which a company is required to pay interest) less cash, to debt less cash plus equity
• Interest cover The number of times that earnings can cover interest.
• Solvency Ability of the company to pay its debts as they fall due.
