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OPERATIONAL BUDGET AND CAPITAL DEPLOYMENT
Operational Budget and Statement of Operations
AEC’s 2022/23 operating budget was $3.05 million. In July 2020, the Government of Alberta announced $175 million of additional investment capital for AEC. $75 million was allocated to AEC during the 2020/21 fiscal year, $50 million allocated in 2021/2022 and $50 million was transferred in 2022/23.
The Statement of Operations shows a revenue of $50 million, which is the new investment allocation from the Government of Alberta.
Over the 2022/23 fiscal year, AEC’s direct investment expenses were $285,776 not including overhead in the form of salaries, office or the Board. This is on target to our budget.
During 2022/23 AEC’s direct industry development expenses were $179,835 not including overhead in the form of salaries, office or the Board. This is on target to our budget.
For fiscal 2022/23 our operating cost was $2,056,369, 14% below the budget. The variance to the budget is due to lower salaries as a result of the new finance department joining towards the later part of the fiscal year, construction costs of the new office being capitalized and prudent management of our expenses.
During 2022/23 AEC’s Board expenses were $113,025, which is below the budget of $148,200. Half of the Board meetings are now held virtually, which resulted in lower than budgeted travel expenses.
The net investment loss of $4.9 million is due to a combination of realized investment gains and losses, and operational losses of the Limited Partnerships of which AEC is an investor. AEC records a proportionate share of any realized gains or losses of the Limited Partnerships. This
year’s net investment loss can be compared
to last year’s income of $4.7 million. The loss is mainly attributed to the general decline of the Venture Capital market amidst the backdrop of rising interest rates and record high inflation – resulting in shrinking consumer spending
and reduced investment growth. In 2022, we saw a sharp decline in Venture Capital exits as market uncertainties continued. We made six additional investments in 2022/23, resulting in higher investment operational expenses for the new funds, something which is to be expected.
The total net operating surplus for fiscal 2022/23 was $43.8 million, compared to a surplus of $52.6 million last year. Since our operating costs are self-funded, we normally expect an annual operating deficit, offset by realized gains from our investments, resulting in a total operating surplus (operations and investments). This fiscal year the operating surplus is mainly related to the new investment allocation of $50 million (2021/22 – $50 million).
2022 2023
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