Financial outcomes 2021–22
The CEFC takes a commercially-rigorous approach to our investment activities as well as the operation of our own business, guided by our investment policies and prudent risk management. This approach has been an enduring characteristic of CEFC throughout our first decade.
Capital deployment
The CEFC deployed $1.77 billion in capital during the 2021–22 year, including $85 million for smaller-scale projects. Lifetime deployment reached $9.15 billion to 30 June 2022.
Repayments and returns
The CEFC investment portfolio received $837 million in repayments and returns of capital during the year. Lifetime repayments were $3.32 billion at 30 June 2022, with this capital available for CEFC reinvestment.
Capital leverage
Each dollar of CEFC capital committed in 2021–22 attracted an additional $2.30 in private sector finance, with a total transaction value of $4.8 billion. With lifetime leverage of $2.42: $1.00 on CEFC capital, the transaction value related to lifetime CEFC investment commitments was $37.15 billion at 30 June 2022.
Operating performance
The CEFC returned an operating surplus of $189.5 million (normalised $261.7 million) in 2021–22, reflecting higher revenues and fair value gains from equity investments, lower concessional and loan modification charges and reduced operating costs.
Clean energy technologies
The CEFC is required to ensure that, at any time on or after 1 July 2018, at least half of CEFC funds are invested in renewable energy technologies. At 30 June 2022, investments in renewable energy technologies represented 53.3 per cent of the CEFC on-risk portfolio.
On risk investments
The CEFC portfolio of on-risk investment commitments stood at $7.15 billion at 30 June 2022.
Portfolio Benchmark Return
Across our portfolio we invest to deliver a positive return for taxpayers. The Portfolio Benchmark Return (PBR) is a medium- to long-term target set by the Australian Government in the Investment Mandate. The targeted PBR for the core portfolio, established in Investment Mandate Direction 2020, is the five-year Australian Government bond rate plus 3 to 4 per cent. The core portfolio annualised PBR target from inception to 30 June 2022, was 4.99 to 5.99 per cent, with an annualised cumulative return of 4.38 per cent from inception to 30 June 2022. Refer to Section 3 – Financial information.
Impairment provisions
As a specialist investor, the CEFC recognises the challenges faced by companies bringing new technologies and greenfield projects to market. CEFC impairment provisions were lifted to $165.8 million in 2021–22 ($125.4 million in 2020–21), reflecting the increased scale and complexity of our on-risk portfolio. This provision includes coverage for the first significant CEFC loss in 10 years, relating to the US$47 million commitment to Salt Lake Potash Limited (SO4) for the Lake Way project. SO4 was placed into voluntary administration in 2021. KordaMentha, receivers and managers, advised the Lake Way project was sold to Sev.en Global Investments Pty Ltd in September 2022, subject to certain conditions precedent. Lenders are expected to receive a modest return of capital, subject to transaction costs.