Crown Company Monitoring Advisory Unit (CCMAU)
Executive Summary
During 2008/09, CCMAU maintained its role in the ownership monitoring of the wide range of SOEs, Crown companies and entities in its portfolio. The performance of these companies and entities, which form a significant part of the Crown's balance sheet, is critical to the performance of the wider economy.
We have been involved in assessing and advising shareholding Ministers on a wide range of matters this year. Many of these matters have involved important ownership and performance monitoring issues.
CCMAU was closely involved in advising Ministers on the actions they could take to enhance SOE performance. This led to SOEs being expected to produce much more informative Statements of Corporate Intent (SCIs) with more demanding financial targets, higher and more predictable dividend yield and more transparent commercial valuations.
CCMAU's Science and Innovation Team evaluated the business case that resulted in the merger of Crop & Food Research and HortResearch.
Our Appointments and Governance Team contributed actively to the significant changes that the new Government made to SOE and Crown Research Institute (CRI) boards in the second half of the year. CCMAU's relationship with Massey University's Graduate School of Business, our governance training provider, continued to evolve and, based on the feedback we have received, the suite of programmes provided is highly regarded. In March 2009, we launched our new online board and candidate management system (accessible at www.boardappointments.co.nz).
We have enjoyed a stable workforce this year which enabled us to ensure Ministers' expectations continued to be met. The skills and experience of CCMAU's staff have enabled us to respond positively to the revised expectations of our key stakeholders.
CCMAU is well placed to build on current expertise to more effectively contribute to the greater emphasis on financial analysis and disclosure of performance information sought by the Government.
What we do
Our Mission
CCMAU aims to be the New Zealand Government's ownership advisor of choice in the provision of commercial and wider ownership advice.
Our Purpose
CCMAU provides services in the following areas:
- Ownership environment management - maintaining a strategic perspective over the ownership environment and assisting Ministers to improve the clarity and awareness of the owner's expectations with a focus on performance.
- Performance monitoring - increasing the evaluation of performance against agreed targets and external measures and, where necessary, advising Ministers on actions they can take (or are being taken by the companies and entities themselves) to address performance that is below expectations.
- Issues management - assisting Ministers to respond to correspondence, parliamentary questions and Official Information Act requests, and ensuring the companies and entities take responsibility for managing issues that could impact on their performance.
- Governance - identifying and screening potential directors, managing the board appointment process and director fee-setting in the context of desired ownership outcomes and taking a leading role in ensuring best practice corporate governance of SOEs, CRIs and Crown companies and entities is achieved.
Relationship with the Treasury
The Executive Director of CCMAU is directly accountable to the Secretary to the Treasury for the Crown's investment in CCMAU, and for CCMAU's performance in providing the output classes Ministers seek.
The Year in Review
CCMAU has contributed to a wide range of activities and initiatives this year. The key achievements in each sector were:
| Proposed Activity | Progress |
|---|---|
| Develop and manage clear ownership objective statements for the companies in the science and innovation sector. | Provided advice to Ministers on the production of a 2009 Outline of Shareholder Expectations for CRIs and individual outlook letters (letters of expectation) for each CRI and the New Zealand Vesture Investment Fund (NZVIF). |
| Administration of CRI Capability Fund. | This is an ongoing activity which includes annual collection and validation of CRI data and consultation with MoRST on reporting requirements for the CRIs. |
| Provide advice on significant ownership issues. |
Provided advice on the proposed merger between Crop & Food Research and HortResearch, which took effect on 1 December 2008. CCMAU also provided advice to Ministers on a request for equity from Research and Education Advanced Network New Zealand (REANNZ). |
| Strengthen feedback loops so that boards are in no doubt about whether current performance really meets the owner's expectations and aspirations. | Provided advice to Ministers on communication to boards and posted performance summaries on the CCMAU website. This was in addition to regular contact and performance discussions between CCMAU officials and boards and management. |
| Proposed Activity | Progress |
|---|---|
| Develop and manage clear ownership objective statements for the companies in the energy, land and environment sector and communications, services and infrastructure sector. |
Provided advice to Ministers on actions they could take to enhance SOE performance and key shareholder messages to give to a meeting of SOE Chairs. CCMAU drafted expectations letters for Ministers to send each SOE Board. |
| Provide advice on significant ownership issues. |
Managed the windup of Timberlands and the transfer of Timberlands' assets to the Crown. Provided advice to Ministers on Public Trust's financial difficulties and future options. Provided advice on Hawke's Bay Airport's corporatisation process. Provided advice on Radio New Zealand's (RNZ) and KiwiRail's future organisational form. Continued to manage the ongoing Terralink liquidation and legal claim against the Crown. |
| Strengthen feedback loops so that boards are in no doubt about whether current performance really meets the owner's expectations and aspirations. |
Provided advice to Ministers on a disclosure regime that is similar to what publicly-listed companies have through theNew Zealand Exchange (NZX). Provided advice on a preference for SOEs to hold a physical annual general meeting instead of providing a written shareholders' resolution in lieu of holding a meeting. Posted performance summaries on its website. |
| Use valuation techniques to provide a wider perspective on company and entity performance. |
Provided advice on the Government's response to the Commerce Select Committee's report on “Inquiry into Valuation Methodology and Practice for Valuing State-owned Enterprises”. Provided advice on options for SOE valuations. |
| Proposed Activity | Progress |
|---|---|
| Manage the appointments process in the context of more transparent board performance measures. | Individual appointments and reappointments for SOEs, CRIs and other entities completed. |
| Continue to develop pool of director candidates to ensure that shareholding Ministers are able to make the best possible appointment decisions. | In partnership with our governance training provider, Massey University's Graduate School of Business, CCMAU ran three core programmes for aspiring and recently-appointed directors. We also held two series of professional development updates for serving Crown directors focused on board evaluation and governance in an economic downturn. |
| Commission new board succession management system. | New system commissioned in March 2009. |
