2015 ANNUAL REPORT
ABN 18 152 098 854
CONTENTS
1.
2.
3.
4.
5.
6.
7.
8.
9.
Chairman’s Letter .................................................................................................................................................. 3
Managing Directors’ Review of Operations ........................................................................................................... 4
Directors Report and Remuneration Report ......................................................................................................... 6
Auditors Independence Declaration .................................................................................................................... 17
Financial Statements ........................................................................................................................................... 18
Directors’ Declaration……………………………………………………………… ........................................................................ 45
Independent Auditor’s Report ............................................................................................................................. 46
Corporate Governance Statement……………………………………………. ....................................................................... 48
Additional Securities Exchange Information........................................................................................................ 57
10.
Corporate Directory ............................................................................................................................................. 60
1.
CHAIRMAN’S LETTER
Dear Shareholder,
On behalf of the Board of Directors of Genex Power Limited (Genex or Company) it is my
pleasure to present you with Genex’s first annual report as a listed company.
2015 was an exciting year for Genex in which the Company witnessed a significant
listing on the ASX. The Board and
transformation culminating
Management achieved a number of highly strategic milestones on behalf of
its
shareholders including:
its successful
in
(cid:129)
(cid:129)
(cid:129)
The completion of a Pre-Feasibility Study (PFS) on the Company’s flagship Kidston
Pumped Storage Hydroelectric Scheme (Kidston Project) which showed the Kidston
Project to be both economically and technically viable at a conceptual level to
generate up to 330MW of rapid response, flexible peaking power for delivery into
Australia’s National Electricity Market;
Forming a strategic partnership with Zhefu Hydropower International Engineering Corporation Limited (Zhefu),
one of the largest hydroelectric electrical and mechanical equipment manufacturers in China and a 20%
shareholder in Genex;
Securing $13.79 million in funding including $8.0 million via the Company’s IPO with the funds being used primarily
to fund the completion of a Bankable Feasibility Study (BFS), as well as costs associated with obtaining licenses and
regulatory approvals required for construction and operation, site maintenance costs, listing costs, overheads and
ongoing working capital; and
(cid:129) Making significant progress on the BFS with the appointment of Arran McGhie as Chief Operations Officer and
Entura, a specialist power and water consulting firm and a wholly owned subsidiary of Hydro Tasmania.
The Company’s aim is to develop the Kidston Project into a large scale, low cost, flexible solution to Queensland’s
growing peaking power requirements and to position itself to take advantage of the combined effects of an oversupply
of baseload generation capacity and escalating peak power prices being driven by increasing gas turbine fuel costs.
The Board and Management are working diligently and remain committed to delivering a BFS for the Kidston Project in
Q3 2016.
On behalf of the Board, I would like to thank all shareholders for their support, whether it be prior to or during the
Company’s IPO, and to those new shareholders who have joined us since our listing. I look forward to an exciting and
productive 2016 financial year.
Yours faithfully,
Dr Ralph Craven
Non-Executive Chairman
Estrella Resources Limited
2. MANAGING DIRECTOR’S REVIEW OF OPERATIONS
2015 Highlights
(cid:129)
Completion of the Kidston Pumped Storage Hydro Project (Kidston Project) pre-
feasibility study (PFS);
(cid:129) Work undertaken in association with the Company’s Initial Public Offering (IPO)
(cid:129)
and the listing of Genex on the Australian Securities Exchange (ASX); and
$13.79 million of funding raised during the year (before costs) to develop the
Kidston Project.
Company Overview
Genex Power is a power generation development company based in Australia. The Company is focussed on innovative
clean energy generation and storage solutions which deliver attractive commercial returns for shareholders. Genex is
currently pursuing a number of unique development opportunities in Queensland.
The Company’s current focus is on the development of the 330MW Kidston hydro pumped storage power generation
project located in Northern Queensland. Following acquisition of the Kidston Project site in June 2014 and completion
of the associated pre-feasibility study (PFS), the Kidston Project has now transitioned to full feasibility stage.
The 2015 Financial Year
2015 marked a transformational year for Genex Power. During the year Genex achieved a number of important
milestones, placing the Company in a strong position to continue the development of its flagship Kidston Project and to
pursue other clean energy project opportunities.
The highlights for the year centred on the initiation and subsequent completion of the Kidston Project PFS and fund
raising activities, culminating in the listing of the Company on the Australian Securities Exchange (ASX) in early July
2015. The successful listing of Genex on the ASX provided the Company with sufficient capital to commence a full
feasibility study on the Kidston Project.
Review of Operations
For the year ended 30 June 2015, Genex Power incurred an after tax loss of $3.05 million. The majority of expenditure
was used for site maintenance, capital raising activities and the completion of the Kidston Project PFS. The Company
did not generate any material income during the year.
Acquisition of Kidston
Genex completed the acquisition of Kidston Gold Mines
Limited from Barrick Gold on 4 June 2014 following an
extensive due diligence process. As part of the acquisition
process, Genex was required to assume responsibility for
the environmental management of the Kidston Project
site as well as replace the existing Environmental
Assurance Bonds associated with the site.
Pre-Feasibility Study
Following acquisition of the site, Genex immediately
embarked on a PFS for the proposed 330MW pumped
storage hydroelectric project at Kidston. As part of the
PFS, Genex engaged with a number of reputable
consulting firms to assist with various components of the
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Estrella Resources Limited
study. The PFS was completed in December 2014, indicating the Kidston Project to be both technically and
economically viable at a conceptual level.
Capital Raisings
During the 2015 financial year, Genex raised a total of approximately $13.79 million in equity funding. The funding was
raised over a number of separate tranches as detailed below:
(cid:129)
(cid:129)
(cid:129)
In July 2014, Genex raised $2.0 million through the issue of 20 million shares at an issue price of $0.10 per share
with the assistance of Morgans Stockbroking. These funds allowed Genex to complete the acquisition of the
Kidston site from Barrick Gold as well as complete the Kidston Project PFS.
In April 2015, Genex executed a Convertible Note Agreement with Zhefu Hydropower International Engineering
Corporation Limited (“Zhefu”) to provide approximately $3.8 million of interim funding for the Company. Zhefu is
the largest specialist hydroelectric turbine manufacturer in China. Zhefu’s strategic investment proposes a
continued strategic relationship between Zhefu and Genex going forward.
In July 2015, Genex raised a total of $8.0 million (before expenses) through the issue of 40 million shares (and 20
million Loyalty Options) at an issue price of $0.20 per share in conjunction with the Company’s listing on the ASX.
The completion of the IPO marked a major milestone for the Company, providing the funding required to
commence a full feasibility study for the Kidston Project.
Since the time of its admission to the ASX and up until the time of this Annual Report, Genex has utilised its cash raised
under the IPO in a way that is consistent with its business objectives as outlined in the Company’s Prospectus.
Company Outlook
Moving forward, Genex is committed to delivering shareholder value through the development of the Kidston Project.
The Company is fully engaged with Entura as its feasibility study manager and is well progressed on the feasibility work
program. Genex remains committed to delivering a completed feasibility study in Q3 2016.
Concurrently, progress is being made on the Kidston
Project approvals front. Genex and its advisers are
engaging directly with key stakeholders and are
working closely with government departments to
ensure the necessary approvals required are in place in
time for the construction of the project. To date the
project has received high level indicative support from
the Queensland Government and the Etheridge Shire
Council.
In addition to the Kidston Project, the Company
continues to look at energy development and storage
opportunities across the country. Genex remains
committed to its strategy of developing a pipeline of
innovative clean energy projects which can deliver
tangible value to its shareholders.
Yours faithfully,
Michael Addison
Managing Director
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Estrella Resources Limited
3. DIRECTORS’ REPORT & REMUNERATION REPORT
The directors present their report, together with the financial statements, of Genex Power Limited (referred to
hereafter as the 'consolidated entity') consisting of Genex Power Limited (referred to hereafter as ‘Genex’, the
'Company' or 'parent entity') and the entities it controlled at the end of, or during, the twelve month period ended 30
June 2015.
Directors
The following persons were directors of Genex Power Limited during the whole of the year and up to the date of this
report, unless otherwise stated:
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven*
Alan du Mée*
* Dr Craven and Mr du Mée ceased being directors on 26 March 2015 and were reappointed on 29 May 2015.
(appointed 15 July 2011)
(appointed 1 August 2013)
(appointed 25 October 2013)
(appointed 1 July 2014)
(appointed 1 July 2014)
Principal activities
The consolidated entity’s principal activity is mine remediation and the feasibility, development and proposed
construction of pumped storage hydro power generators commencing with the company’s flagship project in Kidston
in far north Queensland.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Significant changes in the state of affairs
The principal activities of the consolidated entity during the course of the year consisted of undertaking a pre-
feasibility study (PFS) in relation to the technical and economic viability of developing a pumped storage hydroelectric
power project at Kidston in far north Queensland.
In July 2014, Genex raised an amount of $2.0 million through the issue of 20 million shares at an issue price of $0.10
per share with the assistance of Morgans Stockbroking. These funds allowed Genex to complete the acquisition of the
Kidston site from Barrick Gold Australia (Barrick Gold) as well as commence the Kidston Project pre-feasibility study. To
assist with the pre-feasibility study, which was completed in December 2014, Genex engaged a number of highly
experienced and reputable consultants. The outcome of the pre-feasibility study demonstrated that, at a conceptual
level, the Kidston Project is technically and economically viable.
On 7 May 2015, the Company’s Board varied the terms of the Kidston Share Sale Agreement with Barrick Gold, to the
extent that the Company’s obligation to replace the first and second tranches of the environmental assurance bond
associated with the Kidston site, totalling $3.0 million, was deferred until 15 August 2015. This full amount has now
been replaced.
During the year the Company’s Board approved the issue of a total of 5,500,000 unlisted options to acquire ordinary
shares in the Company. Each option is exercisable at a price of $0.25 per share on or before 7 February 2019.
On 1 July 2014 the Board appointed Dr Ralph Craven as Non-Executive Chairman and Mr Alan du Mée as a non-
executive director. Both Dr Craven and Mr du Mée resigned from the board briefly on 26 March 2015 and were re-
appointed prior to the Company lodging its prospectus with ASIC on 29 May 2015.
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Estrella Resources Limited
On 21 April 2015, Genex executed a Convertible Note Agreement with Zhefu Hydropower International Engineering
Corporation Limited (“Zhefu”) to provide interim funding for the Company. The Convertible Note was for a principal
sum of $3,788,600, with maturity on or before 30 November 2015. Under the terms of the Convertible Note
Agreement, it was agreed that Zhefu will participate in the tender process for the supply of mechanical and electrical
equipment to the Kidston Project.
Provided Zhefu does not dispose of any shares in the Company in the 24 month period following the IPO, Zhefu is
entitled to nominate one person to be appointed as a director of the Company. As a condition of the Convertible Note,
Zhefu was required to subscribe for 20% of the number of shares on offer in the IPO on terms consistent with all IPO
subscribers. Pursuant to the agreement, the Convertible Note was converted into 23,678,750 new ordinary shares at a
conversion price $0.16 per share.
In order to fund a full feasibility study of the Kidston Project, the Company pursued an IPO on the Australian Securities
Exchanges (“ASX”) to raise a total of $8.0 million before expenses. The IPO offer closed fully subscribed on 25 June
2015. On 30 June 2015, the Company issued 40 million shares (and 20 million Loyalty Options) at a price of $0.20 per
share to new investors pursuant to the IPO. Further details on the Loyalty Options can be found in Note 16 to the
financial statements. The IPO shares were restricted from trading until the listing of the Company on the ASX occurred
on 8 July 2015, subsequent to the reporting period. The Loyalty Options allotted to IPO investors remain subject to the
vesting conditions outlined in Note 16.
Matters subsequent to the end of the year
Subsequent to the end of the financial year the Company’s shares were successfully quoted on the ASX on 8 July 2015.
On 5 August 2015, Genex lodged an ANZ Bank Guarantee in the amount of $3.0 million with the Department of
Environment and Heritage Protection to partially replace the Kidston Environmental Assurance Bond under the Kidston
7
Estrella Resources Limited
Share Sale Agreement, previously lodged by Barrick Gold. The total amount of the Environmental Bond is $3,804,311.
As per its agreement with Barrick Gold, Genex will replace the remaining $804,311 of the Environmental Bond by 31
December 2015. The ANZ Bank Guarantee is secured against a $3.0 million term deposit which Genex holds with the
ANZ Bank.
The Company announced to the ASX on 10 August 2015 that it had appointed Entura (a wholly-owned subsidiary of
Hydro Tasmania) as its lead Feasibility Consultant for the Kidston Project. This followed the appointment of Mr Arran
McGhie on 29 July 2015 as the Company’s Chief Operations Officer. On 6 August 2015, 5,000,000 options were issued
to Mr. Arran McGhie (Chief Operating Officer) subsequent to the end of the reporting period. The options have an
exercise price of $0.25, expire on 6 August 2020 and are subject to various vesting conditions as announced to the ASX
on 10 August 2015.
Apart from the matters outlined above there have been no other material events or circumstances which have arisen
since 30 June 2015 that have significantly affected, or may significantly affect the consolidated entity's operations, the
results of those operations, or the consolidated entity's state of affairs in future financial years.
Likely developments and expected results of operations
The consolidated entity intends to continue the development of the Kidston Pumped Storage Project as well as pursue
other clean energy generation and storage opportunities that may arise.
Environmental regulation
The Company’s current operations are regulated under the terms of an existing Environmental Authority
(EPML00817013) under the Environmental Protection Act (1994) in the state of Queensland, Australia. The
Environmental authority consists of conditions relating to:
(cid:129) General
(cid:129) Air
(cid:129) Water
(cid:129) Noise and Vibration
(cid:129) Regulated dams
(cid:129)
Land and Rehabilitation
There has been no material or non-remedied breaches of the Environmental Authority of which the Company is aware.
8
Estrella Resources Limited
Information on directors
Name: Dr Ralph Craven
Title: Non-Executive Chairman
Qualifications: BE PhD, FIEAust, FIPENZ, FAICD
Special Responsibilities: Member, Audit & Risk Management Committee and Chair, Remuneration
Committee
Experience and expertise:
Dr. Craven is an electricity sector specialist with respected credentials in energy, transmission infrastructure and power
generation and electricity retailing. Dr. Craven has a number of public company roles including non- executive director
of Senex Energy Limited (September 2011 to present) and AusNet Services Limited (January 2014 to present). Dr.
Craven has also held senior executive positions with energy companies in Australia and New Zealand. He was formerly
Chief Executive Officer of Transpower New Zealand Ltd, Executive Director with NRG Asia-Pacific and General Manager
Power Marketing and Development with Shell Coal Pty Ltd.
His previous roles also include Chairman of Ergon Energy Corporation Limited and Chairman of Tully Sugar Limited. Dr.
Craven was also Deputy Chairman of coal seam gas company Arrow Energy Limited (now jointly owned by Royal Dutch
Shell and PetroChina). Dr. Craven was previously a non-executive director of Invion Limited (2011 to April 2015) and
Mitchell Services Limited (2011 to November 2014).
Name: Michael Addison
Title: Managing Director
Qualifications: BSc (Eng), MPhil (Oxon), MAICD, FAIM
Special Responsibilities: Member, Audit & Risk Management Committee
Experience and expertise:
Michael is a former water engineer with experience in large dam, spillway and water reticulation systems design. He
also has considerable international corporate finance experience, having spent a number of years as an investment
banker with three globally recognised investment banks. Subsequent to transitioning into mainstream corporate
management in the early nineties, Michael held a number of senior executive positions on the boards of publicly listed
companies on each of the London, Johannesburg and Australian Securities Exchanges. In these roles he developed
deep expertise in the management and running of listed companies and an intimate working knowledge of the
regulatory, legal and governance environments in which listed companies operate.
Michael is a former Rhodes Scholar, has an Oxford University postgraduate degree in Management Studies, is a Fellow
of the Australian Institute of Management and a Member of the Australian Institute of Company Directors. Michael is a
founding director and shareholder of Genex. Previously, Michael has been a director of Carabella Resources and
Stratum Metals.
Name: Alan du Mée
Title: Non-Executive Director
Qualifications: MSc., MBA, FAICD, FAIM, MIIE
Special Responsibilities: Chair, Audit & Risk Management Committee and Member,
Remuneration Committee
Experience and expertise:
Mr. du Mée has deep operational experience in power generation operations and development. He was Chief
Executive Officer of Tarong Energy, a major Queensland power company which is now part of Stanwell Corporation
Limited. While at Tarong Energy, Mr. du Mée was responsible for the development of Tarong North power station in
9
Estrella Resources Limited
Queensland, the Starfish Hill windfarm in South Australia and the sale of a 50% of the Tarong North power station to a
Japanese consortium. He also had responsibility for the 600MW Wivenhoe Pumped Storage Plant, the second largest
hydro pumped storage plant in Australia.
Alan is a past Chairman of the Australian National Generators Forum and a past director of BHP Engineering between
April 1991 and November 1996. Mr. du Mée is also a director of A Solid Foundation Pty Limited, and has been engaged
by Glencore Xstrata to assist it with its clean coal development strategy.
Name: Simon Kidston
Title: Executive Director
Qualifications: BCom, GradDipAppFin, MAIDC
Special Responsibilities: Member, Remuneration Committee
Experience and expertise:
Simon is a founding director and shareholder of Genex. Prior to Genex, Simon successfully established 3 ASX listed
companies, Endocoal Limited, Carabella Resources Limited and Estrella Resources Limited.
In addition, Simon has over 20 years investment banking experience in Australia and overseas with groups such as
Macquarie Bank Limited, HSBC and Helmsec Global Capital Limited. During this period, he assisted companies grow by
accessing capital, negotiating strategic relationships and acquisitions. He has a Bachelor of Commerce degree and is a
Member of the Australian Institute of Company Directors.
Name: Ben Guo
Title: Finance Director
Qualifications: BCom, Finance (Hons 1st) and Accounting
Special Responsibilities: Nil
Experience and expertise:
Ben has over 10 years management experience in Australia. Prior to joining Genex, he held senior financial roles at
Helmsec Global Capital Limited and Estrella Resources Limited. Ben has also worked at PwC Corporate Finance and
Ernst and Young.
Name: Justin Clyne
Title: Company secretary - appointed 1 March 2014
Qualifications: LLM (UNSW) ACIS, AGIA
Experience and expertise:
Justin Clyne was admitted as a Solicitor of the Supreme Court of New South Wales and High Court of Australia in 1996
before gaining admission as a Barrister in 1998. He had 15 years of experience in the legal profession acting for a
number of the country's largest corporations, initially in the areas of corporate and commercial law before dedicating
himself full-time to the provision of corporate advisory and company secretarial services.
Justin is a director and/or secretary of a number of public listed and unlisted companies. He has significant experience
and knowledge in international law, the Corporations Act, the ASX Listing Rules and corporate regulatory requirements
generally. Justin holds a Master of Laws in International Law from the University of New South Wales and is a qualified
Chartered Company Secretary.
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Estrella Resources Limited
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') held during the year ended 30 June 2015,
and the number of meetings attended by each director was:
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mée
Full Board
Attended
16
16
16
13
13
Held
16
16
16
13
13
Held represents the number of meetings held during the time the director held office or was a member of the relevant
committee. There were no committee meetings held during the year as the membership of the two Board committees
was established after the end of the reporting period.
Remuneration Report Audited
The Board is responsible for determining and reviewing compensation arrangements for the directors and executive
management. The Board assesses the appropriateness of the nature and amount of remuneration of key personnel on
an annual basis. In determining the amount and nature of officers’ packages, the Board takes into consideration the
Company’s financial and operational performance along with industry and market conditions.
Remuneration packages of the Company’s senior executives and the Chief Executive Officer include a mix of fixed
remuneration and performance-based remuneration. The fixed component consists of base remuneration, allowances
and superannuation. The Board has also recently formed a Remunerations Committee which will assist the Board in
making appropriate decisions regarding remuneration.
The Constitution provides that the non-executive Directors may be paid for their services as Directors, however the sum
payable must not exceed such fixed sum per annum as determined by the Company at the annual general meeting, to be
divided among the Directors and in default of agreement then in equal shares. The sum fixed by the Company as the
aggregate limit for the payment of non-executive Directors is $400,000 per annum.
A Director may be paid additional fees or other amounts as the Remuneration Committee determine where a Director
renders or is called upon to perform extra services or to make any special exertions in connection with the affairs of the
Company. A Director may also be reimbursed for any disbursements or any other out of pocket expenses properly
incurred as a result of their directorship or any special duties.
The Company’s remuneration policy aims to align the corporate goals and objectives of the Company with the
remuneration paid to the Managing Director and Senior Executives and considers both short term and long term
compensation. The Company also looks at comparative data from other companies and the amount of time required
given the Company only has a small management team.
During the year while the Company’s focus was on undertaking a successful IPO and PFS, remuneration was weighted
towards long term rewards with the granting of options to the Directors appointed during the period and to the Company
Secretary to be in line with those granted to Directors in the previous reporting period and to the COO after this reporting
period.
This Remuneration Report outlines the arrangements which were in place during the year ended 30 June, 2015 for the
Directors and key management personnel.
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Estrella Resources Limited
2015
Executive Directors
M Addison
S Kidston
B Guo
Non-Executive Directors
R Craven
A du Mee
Sub-Total
Company Secretary
J Clyne
Sub-Total
Total
2014
Directors
M Addison
S Kidston
B Guo
Sub-Total
Company Secretary
J Clyne
Sub-Total
Total
Short-term benefits
Cash Salary and Fees
$
Post employee benefits
Superannuation benefits
$
Share-based
payments
$
295,242
270,000
245,175
67,650
45,100
923,167
60,000
60,000
983,167
33,258
25,650
28,575
6,427
4,285
98,195
-
5
60,005
-
98,195
5
55
60,005
1,081,417
Total
$
328,500
295,650
273,750
30
20
74,107
49,405
50
1,021,412
Total
$
40,114
36,469
32,823
109,406
10
10
10
30
-
10,000
-
30
10,000
119,406
Short-term benefits
Cash Salary and Fees
$
Post employee benefits
Superannuation benefits
$
Share-based
payments
$
28,362*
33,334*
30,000*
91,696
10,000
10,000
101,696
11,742
3,125
2,813
17,680
-
-
17,680
*Portion of 2014 payments were conditionally deferred in 2014 and paid during the 2015 financial year
Period of Service
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mée
15 July 2011 to current
1 August 2013 to current
25 October 2013 to current
1 July 2014 to 26 March 2015 and 29 May 2015 to current
1 July 2014 to 26 March 2015 and 29 May 2015 to current
Performance based remuneration is not applicable
Director’s Interests in the Company
The shares and options held by the individual directors as at 30 June 2015 and at the date of this report are as follows:
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Estrella Resources Limited
Shares
Personnel
Balance as at 1
July 2014
Granted as
remuneration
Received on
exercise
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
27,000,000
20,700,000
2,000,000
-
-
-
-
-
-
-
-
-
-
-
-
Purchases
-
-
-
200,000*
200,000*
Balance as at 30
June 2015
27,000,000
20,700,000
2,000,000
200,000
200,000
*The non-executive directors purchased shares as part of the seed capital round on 19 July 2014 on equal terms with other investors
Personnel
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
Balance as at 1
July 2013
17,000,000
-
-
-
-
Granted as
remuneration
-
-
-
-
-
Received on
exercise
-
-
-
-
-
Purchases
10,000,000
20,700,000
2,000,000
-
-
Balance as at 30
June 2014
27,000,000
20,700,000
2,000,000
-
-
The executive officers named are those who are directly accountable and responsible for the strategic direction and
operational management of Genex Power Limited or its subsidiaries. In 2015 the executive and non-executive officers
holding shares in the Company are disclosed above. The Directors are of the opinion that only the executive officers
detailed above meet the definition of key management personnel as set out in AASB 124 Related Party Disclosures.
Options
Personnel
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
Balance as
at 1 July
2014
1,000,000
1,000,000
1,000,000
-
-
Granted as
remuneration
Date of Grant
during period
Date of
Vesting
-
-
-
3,000,000
2,000,000
-
-
-
13/10/14
13/10/14
-
-
-
13/10/14
13/10/14
Personnel
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
Balance as
at 1 July
2013
-
-
-
-
-
Granted as
remuneration
Date of Grant
during period
Date of
Vesting
1,000,000
1,000,000
1,000,000
-
-
7/02/2014
7/02/2014
7/02/2014
-
-
7/02/2014
7/02/2014
7/02/2014
-
-
Fair value per
option at grant
date
0.00001
0.00001
0.00001
0.00001
0.00001
Fair value per
option at grant
date
0.00001
0.00001
0.00001
-
-
Balance as
at 30 June
2015
1,000,000
1,000,000
1,000,000
3,000,000
2,000,000
Balance as
at 30 June
2014
1,000,000
1,000,000
1,000,000
-
-
Options issued to Directors during the 2014 and 2015 financial years are not linked to ongoing remuneration packages.
All 8,000,000 options held by directors at 30 June 2015 are exercisable at $0.25 each and expiring 7 February 2019.
There are no milestones for achievement or vesting associated with the options and the terms of the options are
outlined in section 15.2 of the Company’s Replacement Prospectus lodged with ASIC on 10 June 2015.
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Estrella Resources Limited
Options granted to Directors and key management personnel take into account that the Company’s funds are best
utilised in advancing the Company’s Bankable Feasibility Study and that long term rewards will be derived by
preserving cash and incentivising Directors and Management with Options with a strike price well in excess of the
share price at the time of grant.
Executive Services Agreement (Michael Addison)
On 1 May 2014, the Company entered into an Executive Services Agreement with Michael Addison with respect to his
engagement as Managing Director of the Company.
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(Term) The appointment commenced on 1 May 2014 and is ongoing subject to the termination provisions.
(Services) Michael Addison will provide the following services for the Company:
(a)
(b)
(c)
(d)
overall responsibility for the day to day management of the business of the Company;
assisting in the implementation of the corporate business plan for the Company as determined by the Board;
responsibility for the preparation of the Company’s budgets and other performance indicators (if required);
in conjunction with the Chief Financial Officer, responsibility for the preparation of the Company’s financial
statements and any other accounts for which the Company is responsible; and
responsibility for overall reporting requirements and regularly reporting to the Board concerning the
business and financial position of the Company.
(e)
(Remuneration) Michael Addison will receive a gross salary of $220,000 (excluding superannuation) per annum. In
addition, Michael Addison may be granted, subject to any necessary shareholder approval, incentives to provide
ongoing service and commitment to the Company.
(Entitlements) Michael Addison is entitled to 6 weeks of annual leave per annum in addition to other employee
entitlements that are customary to an agreement of this nature.
(Termination) Both Michael Addison and the Company may terminate the agreement at any time and for any reason
by giving 4 months’ written notice to the other party. Michael Addison’s employment may otherwise be terminated at
any time for cause by notice to Michael Addison from the Company.
Executive Services Agreement (Ben Guo and Simon Kidston)
On 1 May 2014, the Company entered into Executive Services Agreement with each of Ben Guo and Simon Kidston in
their capacities as executive directors of the Company. Pursuant to their respective agreements, Simon Kidston
receives a gross salary of $200,000 (excluding superannuation) per annum and Ben Guo receives a gross salary of
$180,000 (excluding superannuation) per annum. Aside from the differences in remuneration, the Executive Services
Agreements with Ben Guo and Simon Kidston were agreed on the same terms and conditions as the Executive Services
Agreement with Michael Addison, the material provisions of which are summarised above.
Shares under option
Unissued ordinary shares of Genex Power Limited under option at the date of this report are as follows:
Grant date
7 February 2014
13 October 2014
13 October 2014
13 October 2014
6 August 2015
Expiry date
7 February 2019
7 February 2019
7 February 2019
7 February 2019
6 August 2020
Exercise price Number of options
3,000.000
3,000,000
2,000,000
500,000
5,000,000
$0.25
$0.25
$0.25
$0.25
$0.25
The 5,000,000 options issued subsequent to the end of the reporting period and expiring 6 August 2020 are subject to
various vesting conditions as announced to the ASX on 10 August 2015.
End of Remuneration Report
14
Estrella Resources Limited
Loyalty Options issued pursuant to the IPO at the date of this report are as follows:
Grant date
30 June 2015
Expiry date
Exercise price
Number of options
25 February 2018
$0.20
20,000,000
Loyalty Options will vest to the option holders on 25 February 2016 if and only if they hold the same or a greater
number of shares in Genex Power at the vesting date as the number acquired under the IPO.
No person entitled to exercise the options had or has any right by virtue of their option holding to participate in any
share issue of the Company or of any other body corporate. As at the date of this report, no options have been
exercised.
Loss per Share
The loss per share for Genex Power Limited for the period was $3.26 cents per share.
Results of Operations and Dividends
The Group’s net loss after taxation attributable to the members of Genex Power Limited for the year ended 30 June
2015 was $3,053,264. The Directors of Genex have resolved not to recommend a dividend for the financial year ended
30 June 2015.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the year, the Company paid a premium in respect of a contract to insure the directors and executives of the
Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or
any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor William Buck for non-audit services provided during the financial
year by the auditor are outlined in Note 20 to the financial statements.
15
Estrella Resources Limited
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by
another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in Note 20 to the financial statements do not
compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
(cid:129)
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board,
including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for
the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.
(cid:129)
Auditor's independence declaration
A copy of the auditor's independence declaration is set out on the following page.
On behalf of the directors
________________________________
Ben Guo
Director
28 September 2015
Sydney
16
4. AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR’S
INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF GENEX POWER LIMITED AND
CONTROLLED ENTITIES
I declare that, to the best of my knowledge and belief during the year ended
30 June 2015
there have been:
— no contraventions of the auditor independence requirements as set
out in the Corporations Act 2001 in relation to the audit; and
— no contraventions of any applicable code of professional conduct in
relation to the audit.
William Buck
Chartered Accountants
ABN 16 021 300 521
L.E. Tutt
Partner
28 September 2015
5.
FINANCIAL STATEMENTS
Contents
Statement of profit or loss and other comprehensive income ........................................................................................ 19
Statement of financial position ........................................................................................................................................ 20
Statement of changes in equity ........................................................................................................................................ 21
Statement of cash flows ................................................................................................................................................... 22
Notes to the financial statements .................................................................................................................................... 23
Directors' declaration ....................................................................................................................................................... 45
Independent auditor's report to the members of Genex Power Limited ......................................................................... 46
General information
The financial statements cover Genex Power Limited as a consolidated entity consisting of Genex Power Limited and its
subsidiaries. The financial statements are presented in Australian dollars, which is Genex Power Limited's functional
and presentation currency.
Genex Power Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business are:
Registered Office
Level 11
2 Bligh Street
Sydney NSW 2000
A description of the nature of the consolidated entity's operations and its principal activities are included in the
directors' report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 28 September
2015. The directors have the power to amend and reissue the financial statements.
Estrella Resources Limited
Genex Power Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2015
Revenue
Expenses
Project site costs
Salary expenses
Administrative expenses
Compliance cost and regulatory fees
Project consulting costs
Legal fees
Travel and marketing
IPO costs
Finance expenses
Other expenses
Total Expenses
Consolidated
Notes
30 June
2015
$
30 June
2014
$
83,309
3,384
(678,224)
(1,046,611)
(308,509)
(111,733)
(301,421)
(38,945)
(104,494)
(538,698)
(4,500)
(3,449)
(54,225)
(109,375)
(36,137)
(2,481)
(106,507)
(216,915)
(17,230)
-
-
-
(3,136,583)
(542,870)
Loss before income tax expense
(3,053,274)
(539,486)
Income tax expense
Loss after income tax expense attributable to the owners of Genex Power
Limited
5
-
(1,210)
(3,053,274)
(540,696)
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
attributable to the owners of Genex Power Limited
-
-
(3,053,274)
(540,696)
Basic earnings per share
Diluted earnings per share
Cents
(3.26)
(3.26)
Cents
(1.01)
(1.01)
19
Estrella Resources Limited
Genex Power Limited
Statement of financial position
As at 30 June 2015
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Non-Current Assets
Environmental bond receivable
Goodwill
Other Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Loans
Provisions
Environmental bond payable
Rehabilitation and restoration provision
Non-Current Liabilities
Rehabilitation and restoration provision
Environmental bond payable
Total Liabilities
Net Assets
Equity
Share capital
Option reserves
Accumulated losses
Total Equity
Notes
Consolidated
30 June
2015
$
6
7
8
9
10
9
11
12
13
11
13
14
11
15
16
30 June
2014
$
238,907
31,118
57,953
327,978
3,804,311
3,804,312
-
7,608,623
10,669,145
80,075
58,123
10,807,342
3,804,311
3,804,312
18,270
7,626,893
18,434,235
7,936,601
491,160
46,285
25,195
3,804,311
234,000
4,600,951
3,570,311
-
3,570,311
8,171,262
10,262,974
12,477,028
1,380,085
(3,594,140)
107,459
44,006
-
3,000,000
234,000
3,385,465
3,570,311
804,311
4,374,622
7,760,087
176,514
717,350
30
(540,866)
10,262,974
176,514
20
Estrella Resources Limited
Genex Power Limited
Statement of changes in equity
For the year ended 30 June 2015
Consolidated
Capital
Reserves
Losses
Notes
Issued
Option Accumulated
Balance at 1 July 2013
Loss after income tax
Shares issued during the year net issue costs
Share options issued during the year
Balance at 30 June 2014
Balance at 1 July 2014
Loss after income tax
Shares issued during the year net issue costs
Share options issued during the year
15
16
15
16
Total
Equity
$
-
$
170
-
717,180
-
717,350
$
-
-
-
30
30
$
(170)
(540,696)
(540,696)
-
-
717,180
30
(540,866)
176,514
717,350
30
(540,866)
176,514
-
11,759,678
-
-
-
1,380,055
(3,053,274)
(3,053,274)
-
-
11,759,678
1,380,055
Balance at 30 June 2015
12,477,028
1,380,085
(3,594,140)
10,262,974
21
Estrella Resources Limited
Genex Power Limited
Statement of cash flows
For the year ended 30 June 2015
Cashflow from Operating Activities
Receipts from non-ordinary activities
Payments to suppliers and employees (inclusive of GST)
Interest income
Interest expense
Income tax paid
Notes
Consolidated
30 June
2015
$
11,880
(2,202,874)
22,472
(4,500)
-
30 June
2014
$
-
(524,483)
3,384
-
(1,210)
Net cash utilised by operating activities
25
(2,173,022)
(522,309)
Cashflow from Investing Activities
Payment for purchase of business, net of cash acquired
Net cash used in investing activities
Cashflow from Financing Activities
Gross proceeds from issue of shares
Capital raising and IPO related costs
Net proceeds from issue of shares
Net proceeds from issue of options
Net loan movement
Net cash from financing activities
-
-
13,788,600
(1,187,619)
12,600,981
-
2,279
12,603,260
-
-
736,350
(19,170)
717,180
30
44,006
761,216
Net increase in cash and cash equivalents
10,430,238
238,907
Cash and Cash equivalent at the beginning of the financial year
238,907
-
Cash and Cash equivalents at the end of the financial year
6
10,669,145
238,907
22
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
New, revised or amending Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting year.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial
performance or position of the consolidated entity.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board ('AASB'), as appropriate for for-profit
oriented entities. These financial statements also comply with International financial Reporting Standards as issued by
the International Accounting Standards Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant
to the financial statements are disclosed in note 2.
The financial report has been prepared on a going concern basis, which contemplates the continuity of normal
business activity and the realisation of assets and the settlement of liabilities in the normal course of business.
Parent entity information
These financial statements present the results of the consolidated entity only. Supplementary information about the
parent entity is disclosed in note 23.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Genex Power Limited
(‘Genex’, 'Company' or 'parent entity') as at 30 June 2015 and the results of all subsidiaries for the year then ended.
Genex Power Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated
entity'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an
entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from
the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting.
23
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the
revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
Interest
Interest income is recognised at a time proportion basis that takes into account the effective yield on the financial
assets.
Income tax
The income tax expense or benefit for the year is the tax payable on that year's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and the adjustment recognised for prior years, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted,
except for:
(cid:129) When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or
liability in a transaction that is not a business combination and that, at the time of the transaction, affects
neither the accounting nor taxable profits; or
(cid:129) When the taxable temporary difference is associated with interests in subsidiaries, associates or joint
ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will
not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available
for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that
it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entity's which intend to settle simultaneously.
Genex Power Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated
group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the
'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of
the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each
subsidiary in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that
the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in
neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
24
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Trade and other receivables
Trade receivables are initially recognised on fair value and subsequently measured at amortised cost using the
effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within
30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are
written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when
there is objective evidence that the consolidated entity will not be able to collect all amounts due according to the
original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation and default or delinquency in payments (more than 60 days overdue) are
considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the
difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at
the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of
discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
Leases
Operating leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are
recognised as an expense on a straight-line basis over the term of the lease.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried
at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not
subsequently reversed
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not
discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting
date, the loans or borrowings are classified as non-current.
Provisions
A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of exploration,
development, production activities undertaken, it is probable that an outflow of economic benefits will be required to
settle the obligation, and the amount of the provision can be measured reliably. The estimated future obligations
include the costs of removing facilities, abandoning sites and restoring the affected areas.
The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle
the restoration obligation at the reporting date, based on current legal requirements. Future restoration costs are
reviewed annually and any changes in the estimate are reflected in the present value of the restoration provision at
each reporting date.
25
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Employee benefits
Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be wholly
settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration
rates which are expected to be paid when the liability is settled. All other employee benefit liabilities are measured as
the present value of the estimated future cash outflow to be made in respect of services provided by employees up to
the reporting date.
Contributions made by the group to an employee superannuation fund are recognised as an expense as they become
payable.
Share based payment transactions
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares that are provided to employees in exchange
for rendering of services. The costs of equity-settled transactions are measured at fair value on grant date. Fair value is
independently determined using either the Black Scholes option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with
the non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the
employees to receive payment. No account is taken of any other vesting conditions.
The costs of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The
amount recognised in the profit and loss for the period is the cumulative amount calculated at each reporting date less
amounts already recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met provided all other
conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been
made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the
total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the
condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee
and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining
vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled
and new award is treated as if they were a modification.
Earnings per share
The consolidated entity presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects
of all dilutive potential ordinary shares, which comprise share options granted to employees. Diluted EPS are not
calculated until such a time the consolidated entity achieve a profit for the reporting period.
Issued capital
Ordinary shares are classified as equity.
26
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
Business combinations
On the acquisition of a business, the acquisition method of accounting is used, whereby the purchase consideration is
allocated to the identifiable assets and liabilities on the basis of fair value at the date of acquisition. Provisional fair
values allocated at a reporting date are finalized as soon as the relevant information is available, within a year not to
exceed twelve months from the acquisition date with retroactive restatement of the impact of adjustments to those
provisional fair values effective as at the acquisition date. Incremental costs related to acquisitions are expensed as
incurred.
When the amount of purchase consideration is contingent on future events, the initial cost of the acquisition recorded
includes an estimate of the fair value of the contingent amounts expected to be payable in the future. When the fair
value of contingent consideration as at the date of acquisition is finalised before the purchase price allocation is
finalised, the adjustment is allocated to the identifiable assets and liabilities acquired. Subsequent changes to the
estimated fair value of contingent consideration are recorded in the consolidated statement of income.
When the cost of the acquisition exceeds the fair values of the identifiable net assets acquired, the difference is
recorded as goodwill. If the fair value attributable to the Company’s share of the identifiable net assets exceeds the
cost of acquisition, the difference is recognized as a gain in the consolidated statement of income.
Acquisition related costs are expensed in the period in which they are incurred and the services are received
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
New Accounting Standards for application in future years
The AASB has issued new and amended accounting standards and interpretations that have mandatory application
dates for future reporting years and which the consolidated entity has decided not to early adopt. A discussion of
those future requirements and their impact on the consolidated entity is as follows:
(cid:129) AASB 9 Financial Instruments (December 2014) and AASB 2014-7 Amendments to Australian Accounting Standards
arising from AASB 9 (December 2014) (applicable for annual reporting years commencing on or after 1 January
2018)
AASB 9 includes requirements for the classification and measurement of financial assets, the accounting
requirements for financial liabilities, impairment testing requirements and hedge accounting requirements.
The changes made to accounting requirements by these standards include:
27
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
o
simplifying the classifications of financial assets into those carried at amortised cost and those carried at
fair value and an allowance for debt instruments to be carried at fair value through other comprehensive
income in certain circumstances,
simplifying the requirements for embedded derivatives,
o
o allowing an irrevocable election on initial recognition to present gains and losses on investments in equity
instruments that are not held for trading in other comprehensive income. Dividends in respect of these
investments that are a return on investment can be recognised in profit or loss and there is no
impairment or recycling on disposal of the instrument,
financial assets will need to be reclassified where there is a change in an entity’s business model as they
are initially classified based on (a) the objective of the entity’s business model for managing the financial
assets; and (b) the characteristics of the contractual cash flows,
o
o
o amending the rules for financial liabilities that the entity elects to measure at fair value, requiring changes
in fair value attributed to the entity’s own credit risk to be presented in other comprehensive income,
introducing new general hedge accounting requirements intended to more closely align hedge accounting
with risk management activities as well as the addition of new disclosure requirements,
requirements for impairment of financial assets.
o
The Consolidated entity has not yet assessed the impact of this standard.
(cid:129) AASB 2014-8 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) – Application
of AASB 9 (December 2009) and AASB 9 (December 2010) (applicable for annual reporting years commencing on or
after 1 January 2015)
This standard limits the application of the existing versions of AASB 9 (AASB 9 (December 2009) and AASB 9
(December 2010)) from 1 February 2015.
(cid:129) AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint
Operations (applicable for annual reporting years commencing on or after 1 January 2016)
This standard amends AASB 11 to provide guidance on the accounting for acquisitions of interests in joint
operations in which the activity constitutes a business. The amendments require the acquirer of an interest in a
joint operation in which the activity constitutes a business to apply all of the principles in AASB 3 and other
Australian Accounting Standards except for those principles that conflict with the guidance in AASB 11 in
accounting for the acquisition. AASB 2014-3 also requires disclosure of the information required by AASB 3 and
other Australian Accounting Standards for business combinations.
This standard is not expected to impact the Consolidated entity
AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting
Standards 2012–2014 Cycle [AASB 1, AASB 2, AASB 3, AASB 5, AASB 7, AASB 11, AASB 110, AASB 119, AASB 121,
AASB 133, AASB 134, AASB 137 & AASB 140] (applicable for annual reporting years commencing on or after 1
January 2016)
This Standard makes various amendments to Accounting Standards as part of the International Accounting
Standards Board (IASB) International Financial Reporting Standards (IFRSs) Annual Improvements to IFRSs 2012–
2014 Cycle including:
o
o
o
o
IFRS 5 – reclassification from held for sale to held for distribution to owners or from held for distribution
to owners to held for sale is considered to the continuation of the original plan of disposal;
IFRS 7 – adds the basis of conclusion to clarify disclosure requirements for transferred financial assets and
offsetting arrangements;
IAS 19 – confirms that high quality corporate bonds or national government bonds used to determine
discount rates must be in the same currency as the benefits paid to the employee; and
IAS 34 – clarifies information about cross references in the interim financial report.
28
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
This standard is not expected to impact the Consolidated entity.
(cid:129) AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101
(applicable for annual reporting years commencing on or after 1 January 2016)
The amendments aim at clarifying IAS 1 to address perceived impediments to preparers exercising their
judgement in presenting their financial reports.
This standard is not expected to impact the Consolidated entity.
(cid:129) AASB 2015-3Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031
Materiality (applicable for annual reporting years commencing on or after 1 July 2015)
This Standard completes the withdrawal of references to AASB 1031 in all Australian Accounting Standards and
Interpretations, allowing that Standard to effectively be withdrawn.
This standard is not expected to impact the Consolidated entity.
(cid:129) AASB 2015-5Amendments to Australian Accounting Standards – Investment Entities: Applying the Consolidation
Exception [AASB 10, AASB 12 & AASB 128] (applicable for annual reporting years commencing on or after 1 January
2016)
This Standard amends AASB 10, AASB 12 and AASB 128 to confirm that the exemption from preparing
consolidated financial statements set out in paragraph 4(a) of AASB 10 is available to a parent entity that is a
subsidiary of an investment entity, to clarify the applicability of AASB 12 to the financial statements of an
investment entity and to introduce relief in AASB 128 to permit a non-investment entity investor in an associate or
joint venture that is an investment entity to retain the fair value through profit or loss measurement applied by
the associate or joint venture to its subsidiaries.
This standard is not expected to impact the Consolidated entity.
The Company does not anticipate early adoption of any of the above Australian Accounting Standards or
Interpretations.
29
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions on historical experience and on other various factors,
including expectations of future events, management believes to be reasonable under the circumstances. The resulting
accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities (refer to the respective notes) within the next year are discussed below.
Goodwill
The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment,
whether goodwill and other indefinite life intangible assets have suffered any impairment in accordance with the
accounting policy stated in Note 1. The recoverable amounts of cash-generating units have been determined based on
value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based
on the current cost of capital and growth rates of the estimated future cash flows.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value is determined by using Black-Scholes
model taking into account the terms and conditions upon which the instruments were granted. The accounting
estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying
amounts of assets and liabilities within the next annual reporting year but may impact profit or loss and equity.
Rehabilitation and restoration provision
Management assesses its provision for environmental rehabilitation and restoration on an annual basis or when new
information becomes available.
Closure and rehabilitation provisions are measured at the expected value of future cash flows, discounted to their
present value and determined according to the probability of alternative estimates of cash flows occurring for each
operation. Significant judgements and estimates are involved in forming expectations of future activities and the
amount and timing of the associated cash flows. Those expectations are formed on existing environmental and
regulatory requirements.
Closure and rehabilitation provisions are also adjusted for changes in estimates. Factors influencing those changes
include;
(cid:129) Developments in technology;
(cid:129) Regulatory requirements and environmental management strategies;
(cid:129)
(cid:129) Movements in factors affecting the discount rate applied.
Changes in the estimated extent and costs of anticipated activities; and
Business combinations
As stated in note 1, the fair value of assets acquired, liabilities and contingent liabilities assumed are initially estimated
by the consolidated entity taking into consideration all available information at the reporting date. Fair value
adjustments on the finalisation of the business combination accounting is retrospective, where applicable, to the year
the combination occurred and may have an impact on the assets and liabilities, depreciation and amortisation
reported.
30
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Note 3. Operating Segment
Management has determined that the consolidated entity has one reportable segment; the development of clean
energy projects in Australia. All directors, executive and operating management are based in Australia.
Note 4. Expenses
Profit before income tax includes the following specific expenses:
Finance costs
Interest and finance charges paid/payable
Superannuation expense
Defined contribution superannuation expense
Share-based payments expense
Share-based payments expense
Note 5. Income tax expense
Income tax expense
Current tax
Adjustment recognised for prior years
Aggregate income tax expense
Income tax expense is attributable to profit:
Aggregate income tax expense
Consolidated
30 June 2015
$
30 June 2014
$
4,500
-
88,611
9,375
55
-
Consolidated
30 June 2015
$
30 June 2014
$
-
-
-
-
1,210
-
1,210
1,210
1,210
Numerical reconciliation of income tax expense and tax at the statutory rate
loss before income tax expense
3,053,274
539,486
Tax at the statutory tax rate of 30%
Tax loss not recognised
Other
Income tax expense
915,982
161,846
(915,982)
(161,846)
-
-
1,210
1,210
31
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Note 6. Cash and cash equivalents
Cash at bank
Cash and cash equivalents
30 June
2015
$
30 June
2014
$
10,669,145
238,907
10,669,145
238,907
The cash balance at 30 June 2015 includes the receipt of $8.0 million from the Company’s IPO via the issue of 40,000,000
shares. Whilst the settlement of the IPO occurred on the 30 June 2015, the Company was restricted from utilising this
amount until such a time it successfully listed on the Australian Securities Exchange (ASX). The Company’s shares were
quoted on the ASX on 8 July 2015 thereby freeing any restriction on the cash on that date.
Note 7. Trade and other receivables
GST receivable
Trade and other receivables
Note 8. Prepayments
Insurance
Environmental Authority and Land Rent
Prepayments
Note 9. Other assets - Non-Current
Electricity Bond
Environmental bond (note 17)
30 June
2015
$
30 June
2014
$
80,075
31,118
80,075
31,118
30 June
2015
$
33,761
24,362
30 June
2014
$
57,963
-
58,123
57,953
30 June
2015
$
30 June
2014
$
18,270
3,804,311
-
3,804,311
The environmental bond is held by the State of Queensland (the State) for security for compliance with the
requirements of Mineral Resources Act 1989 and the Environmental Protection Act 1994. The environmental bond is
held in the name of Kidston Gold Mines Limited, a wholly=owned subsidiary of Genex and the 100% leaseholder of the
Kidston site. The environmental bond will be released upon satisfactory restoration and rehabilitation of the mine site.
32
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Note 10. Goodwill
Cost
Net carrying amount
30 June
2015
$
3,804,312
30 June
2014
$
3,804,312
3,804,312
3,804,312
Refer to note 17 for details on the business combination that gave rise to the goodwill.
Kidston Gold Mines Limited (“KGM”) was acquired for the strategic placement of the non-operational mine site which
will allow for the development of a pump-storage hydroelectric power station. The goodwill of $3,804,312 arose from
the acquisition of KGM and the associated environmental liabilities of the site. The goodwill represents management’s
business plan and a pre-feasibility study, which describes and supports the Board of Director’s view that the project is
technically and economically viable.
The Kidston project is currently the only project within the consolidated entity. As such, the recoverable amount of the
consolidated entity (being identified as the cash generating unit (‘CGU’) to which goodwill is allocated) is driven by the
development potential of the project. To date, the Company has raised over $14 million in funding in order to advance
the project, and the recent IPO process resulted in a post IPO business valuation assessed as in excess of $30 million.
It is management’s view that the recoverable amount of the CGU implied from the future development of the Kidston
Project significantly exceeds the carrying value of the CGU to which goodwill is allocated.
The recoverable amount of the CGU is determined via a value in use approach using a discounted cash flow analysis
based on cash flow budgets prepared by the Board of Directors over a 40 year period. The cash flow projections were
determined based on parameters derived from the pre-feasibility study and information obtained from external
consultants. The key inputs into the discounted cash flow analysis include:
(cid:129) Generation capacity of 330MW
(cid:129)
Total capex of $282m
(cid:129)
Continuous generation capacity of 1,650MWh
(cid:129) Operating and maintenance cost of $5/MWh
(cid:129)
Electricity price forecasts from Energetics
(cid:129) Discount rate of 8-12%
(cid:129) Growth rate of 2.5% based on inflation
In determining the key inputs into the discounted cash flow analysis the Board of Directors considered past experience
and reasonable future expectations based on external sources of information, where available. The key inputs reflect
the typical “risks” for a power generation developer. The pre-feasibility work done to date suggests that the Kidston
project is technically viable and therefore based on the discounted cash flow analysis the Board of Director’s expect
that the value implied in the Kidston Project will reasonably be realised once the project has been successfully
developed.
The recoverable amount of the cash generating unit may be sensitive to future electricity prices, electricity demand
and overall project capex, however a reasonably possible change in the values of key assumptions would not result in
an impairment loss.
33
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Note 11. Trade and other payables
Current
Trade creditors and accruals
PAYG withholdings
Bond release payable (i)
Non-current
Bond release payable (i)
30 June
2015
$
30 June
2014
$
316,334
174,827
3,804,311
94,273
13,186
3,000,000
4,266,476
3,107,459
-
804,311
(i) Under the terms of the Kidston Share Sale Agreement, the consolidated entity is required to pay an amount of
$3,804,311 to procure from the vendor those financial guarantees made to the State of Queensland on behalf of
Kidston Gold Mines Limited (refer to note 17 for further details).
The Share Sale Agreement and subsequent deferrals allowed by the vendor provides for instalment payments due in
August 2015 and December 2015. As at 10 August 2015, $3.0 million of the financial guarantee has been replaced by
Genex. Refer to note 26 for part-year settlement detail and note 18 for further information on financial instruments
relating to the bond.
Note 12. Loan payable
Loan payable
Refer to note 18 for further information on financial instruments.
Note 13. Current liabilities - provisions
Provision for annual leave
Rehabilitation and restoration provision
30 June
2015
$
30 June
2014
$
46,284
44,006
30 June
2015
$
30 June
2014
$
25,194
234,000
-
234,000
The current rehabilitation and restoration provision represents the annual costs required to maintain the existing
environmental conditions at the Kidston site and to ensure that KGM complies with the conditions set out in the
Environmental Authority. See Note 14 for further details on site rehabilitation. The costs consist of environmental
reporting to the Department of Environment and Heritage Protection (DEHP), site manager costs, sampling and
laboratory and monitoring services.
34
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Note 14. Non-current liabilities - provisions
Rehabilitation and restoration provision
30 June
2015
$
30 June
2014
$
3,570,311
3,570,311
The non-current rehabilitation and restoration provision represents the total cost required to complete the long term
restoration and rehabilitation of the Kidston site following the mining activities which have taken place. As the site will
now be developed into a pumped storage hydroelectric power station, full rehabilitation activities will be deferred
until such a time that the generation development and operating activities have been completed. Management’s key
focus currently is to ensure the environmental monitoring progress continues on-site and remediation activities are
carried out to maintain the existing environmental conditions.
Note 15. Equity - issued capital
Ordinary shares - fully paid
158,393,750
74,715,000
12,477,028
717,350
30 June
2015
Shares
30 June
2014
Shares
30 June
2015
$
30 June
2014
$
Movements in ordinary share capital
Details
Balance
Date
No of shares
Issue price
1 July 2013
17,000,000
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Share issue costs, net of tax
2 September 2013
29 October 2013
14 March 2014
5 May 2014
23,000,000
20,000,000
14,700,000
15,000
-
$0.00001
$0.00001
$0.05
$0.05
-
Balance
30 June 2014
74,715,000
Issue of shares
Issue of shares
Issue of shares pursuant to Zhefu
Convertible Note
Issue of shares - IPO
Issue of Loyalty Options
Share issue costs, net of tax
Movement for the year
Balance
18 July 2014
27 July 2014
30 June 2015
30 June 2015
30 June 2015
30 June 2015
$0.10
$0.10
$0.16
$0.20
-
-
19,309,000
691,000
23,678,750
40,000,000
-
-
83,678,750
158,393,750
$
170
230
200
735,000
750
(19,000)
717,350
1,930,900
69,100
3,788,600
8,000,000
(1,380,000)
(648,867)
11,759,678
12,477,028
35
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Zhefu Convertible Note
On 21 April 2015, Genex executed a zero coupon Convertible Note Agreement with Zhefu Hydropower International
Engineering Corporation Limited (“Zhefu”). The Convertible Note was for a principal sum of A$3,788,600 with a
maturity date of 30 November 2015. Under the agreement, the Convertible Note was converted into 23,678,750
ordinary shares at a price of $0.16 per share on 30 June 2015.
Issue of shares - IPO
The allotment 40,000,000 shares pursuant to the IPO occurred on the 30 June 2015. These shares were restricted from
trading until such a time that the Company has been officially listed on the Australian Securities Exchange. The
Company was listed on the ASX on the 8 July 2015, all restriction on the 40,000,000 IPO shares were removed on this
date.
Issue of Loyalty Options
Details of vesting conditions are further described in Note 16.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a show of hands every member present at a
meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. The shares have no
par value.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so
that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Note 16. Equity - option reserves
Option reserves
Option reserve
30 June
2015
$
30 June
2014
$
1,380,085
30
The reserve is used to record the value of share and loyalty options issued by the Company on terms as outlined
below.
During the year, in addition to 3,000,000 share options previously issued and held as at 30 June 2014, the board of
directors authorised the issue of:
(cid:129)
(cid:129)
5,500,000 million share options in the consolidated entity to key management personnel; and
20,000,000 Loyalty Options in the consolidated entity pursuant to the IPO.
36
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Options at the start of the period
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
Vested and exercisable at the end of the year
3,000,000
25,500,000
-
-
-
28,500,000
8,500,000
These share options and Loyalty Options are the only outstanding share options of the consolidated entity. The terms
attached to the options are outlined below:
Share options
Number
Subscription price per option
Each option is convertible into
Exercise price per option
Vesting condition
Issue date
Expiry date
Option exercise period
Other conditions
Number
Subscription price per option
Each option is convertible into
Exercise price per option
Vesting condition
Issue date
Expiry date
Option exercise period
Other conditions
Loyalty Options
Number
Value per option
Each option is convertible into
Exercise price per option
Vesting condition
Issue date
Expiry date
Option exercise period
3,000,000
$0.00001
1 ordinary share in the parent entity
$0.25
Vesting on issue date
7 February 2014
7 February 2019
At any time from date of issue to date of expiry
None
5,500,000
$Nil
1 ordinary share in the parent entity
$0.25
Vesting on issue date
13 October 2014
7 February 2019
At any time from date of issue to date of expiry
None
20,000,000
$0.069
1 ordinary share in the parent entity
$0.20
Vesting on 25 February 2016
30 June 2015
25 February 2018
At any time from date of vesting to date of expiry
The value of the options granted during the year ended 30 June 2015 was calculated to be $0.069 using Black Scholes
Model (2014 - $0.00001). The volatility of options used in the Black Scholes valuation are based on share price volatility
of other project development companies listed on the ASX with similar valuations and risk profile. Features
incorporated into the measurement of fair value of the options include:
37
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Underlying share price
Exercise price
Expected volatility
Option life
Expected dividends
Risk free interest rate
$0.20
$0.20
60%
2 years
Nil
2.5%
Loyalty Options were issued to applicants for the IPO shares on the basis of 1 loyalty option for every 2 shares issued
under the IPO. In addition to the above, the vesting conditions for the Loyalty Options are as follows:
(cid:129)
(cid:129)
ii.
iii.
In the event of a change of control or a successful completion of a takeover offer for all securities in the
Company then all unvested Unlisted Options shall vest immediately to the Loyalty Optionholder absolutely.
Subject to the above, Loyalty Options vest if and only if on the Vesting Date:
i.
the Loyalty Options are held by a Loyalty Optionholder who was an Applicant to the IPO and who was
issued Shares under the IPO Offer; and
the Loyalty Optionholder holds as at the Vesting Date the same or a greater number of Shares as the
Number of Shares that were issued to the Loyalty Optionholder under the Prospectus. Applicants who
were issued Shares under the Prospectus are still entitled to trade those Shares between the date those
Shares were issued and the Vesting Date and the Loyalty Options held will still vest to them at the Vesting
Date provided the Shareholder holds the same or a greater number of Shares as that issued to them under
the Prospectus.
For the sake of clarity, Applicants can increase or decrease the number of Shares issued to them under the
Prospectus within the period from the date of issue of the Loyalty Options to the Vesting Date without
affecting the Vesting of the Loyalty Options as long as the number of Shares held at the Vesting Date is the
same or a greater number of Shares that were issued to the Applicant under the Prospectus. There is no
pro rata entitlement to the Vesting of the Loyalty Options. If a Shareholder holds less Shares at the Vesting
Date than was issued to them under this Prospectus then all Loyalty Options issued to them will Lapse at
the Vesting Date. If a Shareholder holds more Shares at the Vesting Date than was issued to them under
this Prospectus they will not receive any additional Loyalty Options to those previously issued.
(cid:129)
A Loyalty Option that has not vested as at 7.00pm (Sydney time) on the Vesting Date lapses with immediate
effect and is not capable of exercise, and the Company will have no liability whatever in respect of the Loyalty
Options.
Note 17. Business combinations
On 4 June 2014 Genex (Kidston) Pty Limited (“Kidston”), a subsidiary of the consolidated entity, acquired 100% of the
ordinary shares of Kidston Gold Mines Limited (“KGM”) for the total consideration of $3,804,312. KGM leases a non-
operational mine site in Northern Queensland previously known as the Kidston Gold mine. This mine closed in 2001,
and has been in remediation mode since this time. As part of the transaction, Genex assumed a liability to replace the
Environmental Assurance Bond held by Barrick Gold Australia to the amount of $3,804,311.
KGM was acquired for the strategic placement and configuration of the non-operational mine site which will allow for
the development of a pumped storage hydroelectric power generation station. Details of the purchase consideration,
the net assets (liabilities) acquired and goodwill are as follows:
Purchase consideration
Cash paid
Bond release payable (Note 11)
Total purchase consideration
AUD
$
1
3,804,311
3,804,312
38
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
The assets and liabilities recognised as a result of the acquisition are as follows:
Assets
Environmental bond (Note 9)
Liabilities
Rehabilitation provision (Note 13 and 14)
Total identifiable net assets at fair value
Add: Goodwill (Note 10)
Acquisition-date fair value of the total consideration transferred
Note 18. Financial instruments
Financial risk management objectives
Fair value
recognised on
acquisition
$
3,804,311
(3,804,311)
-
3,804,312
3,804,312
The consolidated entity's activities expose it to a variety of financial risks that arise as a result of its operating and
financing activities such as credit risk and liquidity risk. This note presents information about the consolidated entity’s
exposure to each of the above risks, the consolidated entity’s objectives, policies and processes for measuring and
managing risk.
The Board of Directors oversees management’s establishment and execution of the consolidated entity’s risk
management framework. Management has implemented and monitors compliance with risk management policies.
The consolidated entity’s risk management policies are established to identify and analyse the risks faced by the
consolidated entity, to set appropriate risk limits and controls, and to monitor risks and adherence to market
conditions and the consolidated entity’s activities.
Credit risk
Credit risk is the risk of financial loss to the consolidated entity if a counterparty to a financial instrument fails to meets
it contractual obligations. The consolidated entity’s trade and other receivables consist of an amount receivable from
the Australian tax authority. The consolidated entity’s cash and cash equivalents consist of cash in bank accounts
lodged with reputable banks in Australia. Accordingly, the consolidated entity views credit risk as minimal.
The maximum exposure to credit risk is as follows:
Cash and cash equivalents
Trade and other receivables
30 June 2015
$
30 June 2014
$
10,669,145
80,075
10,749,220
238,907
31,118
270,025
Liquidity risk
Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due.
The consolidated entity aims to maintain sufficient capital in order to meet short-term business requirements, after
taking into account cash flows from operations and the consolidated entity’s holdings of cash and cash equivalents.
The consolidated entity’s cash and cash equivalents are invested in business accounts, which are available upon
demand for the consolidated entity’s requirements.
39
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
The consolidated entity manages liquidity risk by maintaining adequate cash reserves or by facilitating additional
capital raising and continuously monitoring actual and forecast cash flows and matching the maturity profiles of
financial assets and liabilities.
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument
liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the
earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal
cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying
amount in the statement of financial position.
Consolidated –
30 June 2015
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing – fixed rate
Loan payable
Total non-derivatives
Weighted
average
interest rate
1 year or less
Between
1 and 2 years
Between
2 and 5 years
%
$
4,320,666
46,284
4,366,950
8.15%
$
-
-
-
$
-
-
-
Consolidated –
30 June 2014
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing – fixed rate
Loan payable
Total non-derivatives
Weighted
average
interest rate
1 year or less
Between
1 and 2 years
Between
2 and 5 years
%
$
$
3,107,459
804,311
8.15%
44,006
3,151,465
-
804,311
$
-
-
-
Total
$
4,320,666
46,284
4,366,950
Total
$
3,911,770
44,006
3,955,776
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
40
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Note 19. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated
entity is set out below:
Short-term employee benefits
Share-based payments
Note 20. Remuneration of auditors
30 June
2015
$
1,021,417
55
1,021,472
30 June
2014
$
109,375
30
109,405
During the year the following fees were paid or payable for services provided by William Buck, the auditor of Genex
Power Limited:
Audit of the financial statements
Other services - Investigating Accountant's Report
Note 21. Commitments and contingent liabilities
30 June
2015
$
25,000
21,000
46,000
30 June
2014
$
20,000
20,000
Subsequent to the end of the year, Genex has committed to a head office lease until the 30 June 2016. The lease cost
per month is $8,000.
The feasibility study contract was executed with Entura in August 2015 subsequent to the balance date. Under the
terms of the contract, Entura will progressively invoice Genex for work done within a year. All work to be undertaken
requires prior approval from Genex. As such, there are no contingent liabilities associated with the execution of the
Entura contract.
Note 22. Related party transactions
Controlled entities
A list of controlled entities is provided in Note 24 to these financial statements.
Key management personnel
Any person(s) having authority and responsibility for planning, directing and controlling the activities of the parent
entity and its controlled entities, directly or indirectly, including and director (whether executive or otherwise) of the
entity, is considered key management personnel. Disclosures relating to key management personnel remuneration are
set out in Note 19 to these financial statements.
41
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Transactions with other related parties
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless the terms and conditions disclosed below state otherwise. There are no related party
transactions other than the issue of share options to the directors and key management personnel as outlined in Note
16 above.
Note 23. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Option reserves
Accumulated losses
Total equity
Parent
30 June
2015
$
30 June
2014
$
2,377,088
540,696
2,377,088
540,696
30 June
2015
$
30 June
2014
$
10,669,045
327,877
15,226,027
327,978
482,564
151,464
4,286,876
151,464
12,477,028
1,380,085
(2,917,962)
717,350
30
(540,866)
10,939,151
176,514
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
As disclosed in Note 17, Genex (Kidston) Pty Limited acquired 100% of the ordinary shares of Kidston Gold Mines
Limited. Under the terms of the Kidston Share Sale Agreement, the parent entity has guaranteed to replace the
environmental assurance bond obligations of Kidston Gold Mines Limited, which were held by Barrick Gold Australia at
the time of Kidston acquisition.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2015 and 30 June 2014.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in Note 1.
42
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
Note 24. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned
subsidiaries in accordance with the accounting policy described in Note 1:
Name
Principal place of business /
Country of incorporation
Genex (Kidston) Pty Limited
*Kidston Gold Mines Limited
Australia
Australia
*Kidston Gold Mines Limited is 100% owned by Genex (Kidston) Pty Limited
Note 25. Reconciliation of profit after income tax to net cash from operating activities
30 June
2015
%
30 June
2014
%
100.00%
100.00%
100.00%
100.00%
30 June
2015
$
30 June
2014
$
Loss after income tax expense for the year
(3,053,274)
(540,696)
Adjustments
Share issue costs expensed
Change in operating assets and liabilities:
Decrease in trade and other receivables
Decrease in prepayments
Decrease in trade and other payables
Net cash from operating activities
Note 26. Events after the reporting year
538,698
-
(48,957)
(170)
390,681
(31,118)
(57,953)
107,458
(2,173,022)
(522,309)
Subsequent to the end of the year 30 June 2015 the following events took place:
The IPO was closed on 25 June 2015 and raised $8.0 million (before expenses) by way of Genex Power issuing 40
million shares and 20 million loyalty options to new investors. Whilst the settlement of the IPO occurred on 30 June
2015, the Company was restricted from utilising the IPO cash and investors were restricted from trading their IPO
shares until such a time the Company has successfully listed on the Australian Securities Exchange (ASX).
The shares of Genex Power Limited were quoted on the ASX on 8 July 2015 thereby freeing any restriction on the cash
and shares on that date.
On 5 August 2015, Genex lodged an ANZ Bank Guarantee of $3.0 million with the Department of Environment and
Heritage Protection to partially replace the Kidston Environmental Assurance Bond previous held by Barrick. The total
amount of the Environmental Assurance Bond is $3,804,311. As per the Kidston Share Sale Agreement, Genex will
replace the remaining $804,311 of the Environmental Assurance Bond by 31 December 2015. The ANZ Bank Guarantee
is secured against a $3.96 million term deposit Genex holds with the bank.
43
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2015
strella Resources Limited
On 6 August 2015, 5,000,000 options were issued Mr. Arran McGhie (Chief Operating Officer) subsequent to the end of
the reporting period. The options have an exercise price of $0.25, expire on the 6 August 2020 and are subject to
various vesting conditions as announced to the ASX on 10 August 2015.
Apart from the matters outlined above there have been no other material events or circumstances which have arisen
since 30 June 2015 that have significantly affected, or may significantly affect the consolidated entity's operations, the
results of those operations, or the consolidated entity's state of affairs in future financial years.
Note 27. Earnings Per Share
Total comprehensive loss for the year
Weighted average number of ordinary shares used in calculating basic earnings per
share
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
Weighted average number of ordinary shares used in calculating diluted earnings per
share
Basic earnings per share
Diluted earnings per share
30 June
2015
$
30 June
2014
$
3,053,274
540,696
93,711,660
53,688,877
-
-
93,711,660
53,688,877
Cents
(3.26)
(3.26)
Cents
(1.01)
(1.01)
The calculation of the EPS includes 40,000,000 shares issued in conjunction with the IPO on the 30 June 2015. These
shares were restricted from trading until such time that the Company had been officially listed on the Australian
Securities Exchange. The Company was listed on the ASX on 8 July 2015 and all restrictions on the 40,000,000 IPO
shares were removed on this date.
Note 28. Share-based payments
On 13 October 2014, 5,500,000 options were granted as remuneration to Non-Executive Directors and the Company
Secretary. The total value of these options at the grant date was $55.00 (Note 16)
44
strella Resources Limited
6. DIRECTOR’S DECLARATION
In the directors' opinion:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial
position as at 30 June 2015 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable; and
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
________________________________
Ben Guo
Director
28 September 2015
Sydney
45
strella Resources Limited
7.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GENEX POWER LIMITED AND
CONTROLLED ENTITIES
Report on the Financial Report
We have audited the accompanying financial report of Genex Power Limited (the Company) on
pages 18 to 45, which comprises the statement of financial position as at 30 June 2015, the
statement of profit or loss and other comprehensive income, the statement of changes in
equity and the statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration
of the company and the consolidated entity comprising the company and the entities it
controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error. In Note 1, the directors also state, in
accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the
financial statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. Those standards
require that we comply with relevant ethical requirements relating to audit engagements and
plan and perform the audit to obtain reasonable assurance about whether the financial report
is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the Company’s preparation of the financial report that gives a true
and fair view in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the
overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s Opinion
In our opinion:
a)
the financial report of Genex Power Limited on pages 18 to 45 is in accordance with the
Corporations Act 2001, including:
i.
giving a true and fair view of the Company and consolidated entity’s financial position
as at 30 June 2015 and of its performance for the year ended on that date; and
ii. complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
b)
the financial report also complies with International Financial Reporting Standards as
disclosed in Note 1.
46
strella Resources Limited
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 11 to 14 of the directors’ report
for the year ended 30 June 2015. The directors of the company are responsible for the
preparation and presentation of the Remuneration Report in accordance with section 300A of
the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration
Report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion, the Remuneration Report of Genex Power Limited for the year ended 30 June
2015, complies with section 300A of the Corporations Act 2001.
Matters Relating to the Electronic Presentation of the Audited Financial Report
This auditor’s report relates to the financial report of Genex Power Limited for the year ended
30 June 2015 included on Genex Power Limited’s web site. The company’s directors are
responsible for the integrity of the Genex Power Limited’s web site. We have not been
engaged to report on the integrity of the Genex Power Limited’s web site. The auditor’s report
refers only to the financial report. It does not provide an opinion on any other information
which may have been hyperlinked to/from these statements. If users of this report are
concerned with the inherent risks arising from electronic data communications they are advised
to refer to the hard copy of the audited financial report to confirm the information included in
the audited financial report presented on this web site.
William Buck
Chartered Accountants
ABN 16 021 300 521
L.E. Tutt
Partner
28 September 2015
47
strella Resources Limited
8.
CORPORATE GOVERNANCE STATEMENT
This Corporate Governance Statement (CGS) is provided by the Directors of Genex Power Limited A.C.N. 152 098 854
(GNX or the Company) pursuant to ASX Listing Rule 4.10.3 and reports against the ASX Corporate Governance Council’s
‘Corporate Governance Principles and Recommendations’ 3rd Edition (the Recommendations) including the 8 principles
and 29 specific recommendations included therein. This is the first time the Company has reported against the 3rd
Edition of the Recommendations. This CGS was approved by a resolution of the Board of the Company dated 28
September 2015 and is effective as at the same date and is in addition to and supplements the Company’s Appendix
4G which is lodged with the ASX together with this Annual Report to Shareholders.
1.1
Principle 1 Recommendations:
A listed entity should disclose:
(a) the respective roles and responsibilities of its
board and management; and
(b) those matters expressly reserved to the board
and those delegated to management.
1.2
A listed entity should:
(a) undertake
appropriate
before
appointing a person, or putting forward to
security holders a candidate for election, as a
director; and
checks
(b) provide security holders with all material
information in its possession relevant to a
decision on whether or not to elect or re-elect a
director.
Lay Solid Foundations for Management and Oversight
(a) The Company’s Corporate Governance Plan
includes a Board Charter, which discloses the specific
responsibilities and functions of the Board and
provides that the Board shall delegate responsibility
for the day-to-day operations and administration of
the Company to the Managing Director. The Board
Charter also specifically outlines the role of the Board,
the Company’s Chairman, Individual Directors and the
Managing Director. Each function and its responsibility
are outlined in the Board Charter and in various
sections of this this Corporate Governance Statement,
both of which are available on the Company’s website.
The role and responsibility the Board, the Company’s
Individual Directors and the Managing
Chairman,
Director is outlined in the following paragraphs of the
Company’s Board Charter:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
The Board – Paragraph 3.1;
The Chairman – Paragraph 8.1;
The Individual Directors – Paragraph 8.2; and
The Managing Director – Paragraph 8.3.
(b) The Board is responsible for, and has the authority
to determine, all matters relating to the strategic
direction, policies, practices, goals for management
and the operation of the Company. Without intending
to limit this general role of the Board, the specific
functions and responsibilities of the Board include
those matters particularised in paragraph 3.1 of the
Company’s Board Charter. The Managing Director is
separately responsible for the ongoing management of
the Company in accordance with the strategy, policies
and programs approved by the Board as outlined in
paragraph 8.3.
(a) Prior to the nomination of prospective non-
executive directors for election or re-election, the
Board must obtain from the prospective candidate:
(cid:129)
(cid:129)
details of other commitments of the
prospective candidate and an indication of the
time involved; and
an acknowledgement that the prospective
candidate will have sufficient time to meet
the requirements of non-executive directors
of the Company.
All of the Company’s current directors have undergone
48
strella Resources Limited
bankruptcy and police checks prior to the Company’s
recent
IPO and appropriate checks will also be
undertaken prior to the appointment of any new
directors to the Board.
(b) When a candidate is placed before shareholders for
election or re-election as a director, the names of
candidates submitted is accompanied by the following
information to enable shareholders to make an
informed decision in relation to that vote:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
biographical details, including competencies
and qualifications and information sufficient
to enable an assessment of the independence
of the candidate;
details of relationships between the candidate
and the Company, and the candidate and
directors of the company;
directorships held;
particulars of other positions which involve
significant time commitments;
the term of office currently served by any
directors subject to re-election; and
any other particulars required by law.
The Company has an Executive Services Agreement in
place with each of its executive directors and its Chief
Operations Officer and a Letter of Appointment with
each of its non-executive directors.
The Secretary is accountable to the Board through the
Chairman on all governance matters and on all matters
to do with the proper functioning of the Board. The
Secretary is generally responsible for carrying out the
administrative and
legislative requirements of the
Board. The Secretary holds primary responsibility for
ensuring that the Board processes, procedures and
the
policies run efficiently and effectively and
Secretary’s role of responsibilities
in
paragraph 8.4 of the Board Charter.
(a) The Company has established a Diversity Policy as
part of its Corporate Governance Plan. The Policy
details the Board’s commitment to providing an
inclusive workplace and recognises the value that a
workforce made up of individuals with diverse skills,
values, backgrounds and experiences can bring to the
Company. The Company has a commitment to gender
diversity and female participation will be sought in all
areas at the appropriate time. Decisions relating to
promotion, leadership development and flexible work
arrangements will be based on merit and reinforce the
importance of equality in the workplace. Ongoing
monitoring of company policies and culture will be
undertaken to make sure they do not hold any group
back in their professional development.
is outlined
(b) A copy of the Company’s Diversity Policy is available
on the Company’s website and a summary is included
49
1.3
1.4
1.5
A listed entity should have a written agreement
with each director and senior executive setting out
the terms of their appointment.
The company secretary of a listed entity should be
accountable directly to the board, through the
chair, on all matters to do with the proper
functioning of the board.
A listed entity should:
(a) have a diversity policy which
includes
requirements for the board or a relevant
committee of the board to set measurable
objectives for achieving gender diversity and to
assess annually both the objectives and the
entity’s progress in achieving them;
(b) disclose that policy or a summary of it; and
(c) disclose as at the end of each reporting period
the measurable objectives for achieving gender
diversity set by the board or a relevant
committee of the board in accordance with the
entity’s diversity policy and its progress towards
achieving them and either:
(1) the respective proportions of men and
women on the board, in senior executive
positions and across the whole organisation
(including how the entity has defined
strella Resources Limited
“senior executive” for these purposes); or
(2) if the entity is a “relevant employer” under
the Workplace Gender Equality Act, the
recent “Gender Equality
entity’s most
Indicators”, as defined in and published
under that Act.
1.6
A listed entity should:
(a) have and disclose a process for periodically
evaluating the performance of the board, its
committees and individual directors; and
(b) disclose, in relation to each reporting period,
whether a performance evaluation was
undertaken
in
in
accordance with that process.
reporting period
the
1.7
A listed entity should:
(a) have and disclose a process for periodically
its senior
evaluating the performance of
executives; and
(b) disclose, in relation to each reporting period,
whether a performance evaluation was
in
undertaken
reporting period
the
in
in this Corporate Governance Statement.
compliance
(c) The Company will establish measurable objectives
for achieving gender diversity when it has grown to a
point where it is appropriate to do so. The Board will,
at least once per year, review the policy to determine
its adequacy for current circumstances and make
recommendations to the Board for amendment where
required.
The Company’s Corporate Governance
Statement each year will contain an update on the
Company’s
ASX’s
recommendations and the Company’s Diversity Policy.
(i) The Company currently only has 4 employees who
are all male and these comprise the 3 executive
directors and the Chief Operations Officer The
Company does not have any women on the Board or in
Senior Executive positions at present but this will be
reviewed in accordance with the next review of the
Board’s skills and requirements in accordance with the
Company’s Diversity Policy.
(ii) The entity is not a “relevant employer”.
(a) The Chairman is responsible for the:
with
the
(cid:129)
(cid:129)
evaluation and review of the performance of
the Board and its committees (other than the
Chairman); and
evaluation and review of the performance of
individual directors (other than the
Chairman);
The Chairman should disclose
evaluating
the performance of
Committees and individual directors.
The Board (other than the Chairman) is responsible for
the:
the process
the Board,
for
its
(cid:129)
(cid:129)
evaluation and review of the performance of
the Chairman; and
review of the effectiveness and programme of
Board meetings.
internal review.
The process for the performance evaluation of the
Board, its Committees and Directors generally involves
an
From time to time as the
Company’s needs and circumstances require, the
Board may commission an external review of the
Board, and its composition.
(b) No formal evaluation of the Board has yet taken
place noting the early stage of the Company’s
operations however a full evaluation will be carried out
in future years.
(a) The Board will monitor the performance of senior
management, including measuring actual performance
against planned performance. The Board Charter sets
out the process to be followed in evaluating the
performance of senior executives. Each senior
executive is required to participate in a formal review
process which assesses individual performance against
50
strella Resources Limited
accordance with that process.
predetermined objectives.
2.1
Principle 2 Recommendations:
The board of a listed entity should:
(a) have a nomination committee which:
(1) has at least three members, a majority of
whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; OR
(b) if it does not have a nomination committee,
disclose that fact and the processes it employs
to address board succession issues and to
ensure that the board has the appropriate
balance of
skills, knowledge, experience,
independence and diversity to enable it to
discharge
responsibilities
effectively.
its duties and
2.2
A listed entity should have and disclose a board
skills matrix setting out the mix of skills and
diversity that the board currently has or is looking
to achieve in its membership.
(b) No formal evaluation of senior executives has yet
taken place noting the early stage of the Company’s
operations and that the Company only has one senior
executive outside of the Board. A full evaluation will be
carried out in future years.
Structure the Board to Add Value
(a) The Board, as a whole, currently serves as the
Company’s Nomination Committee. Terms and
conditions of employees are negotiated by the
Managing Director for recommendation to the Board.
As the Company grows in size it is planned that the
implement a separate Nomination
Company will
Committee with
separate Nomination
Committee charter.
its own
(b) While the Board does not currently comply with
this recommendation, given the early stage of the
Company’s operations, the Board is of the view that it
is currently structured in such a way so as to add value
and is appropriate for the complexity of the business at
this time.
It is intended that, as considered appropriate, further
non-executive Director appointments to the Board will
be made in the future as required. The Board shall
ensure that, collectively, it has the appropriate range
of
its
responsibilities, including:
skills and expertise
to properly
fulfil
accounting;
finance;
business;
the Company’s industry;
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129) Managing Director-level experience; and
(cid:129)
relevant technical expertise.
The Board shall review the range of expertise of its
members on a regular basis and ensure that it has
operational and technical expertise relevant to the
operation of the Company.
The Board will determine the procedure for the
selection and appointment of new Directors and the
re-election of incumbents in accordance with the
Company’s Constitution and having regard to the
ability of the individual to contribute to the ongoing
effectiveness of the Board, to exercise sound business
judgement, to commit the necessary time to fulfil the
requirements of the role effectively and to contribute
to the development of the strategic direction of the
Company.
The Board shall ensure that, collectively, it has the
appropriate range of skills and expertise to properly
fulfil its responsibilities, including:
(cid:129)
(cid:129)
(cid:129)
accounting;
finance;
business;
51
strella Resources Limited
2.3
A listed entity should disclose:
(a) the names of the directors considered by the
board to be independent directors;
(b) if a director has an
interest, position,
association or relationship of the type described
in Box 2.3 but the board is of the opinion that it
does not compromise the independence of the
director, the nature of the interest, position,
association or relationship in question and an
explanation of why the board is of that opinion;
and
(c) the length of service of each director.
2.4
A majority of the board of a listed entity should be
independent directors.
2.5
2.6
The chair of the board of a listed entity should be
an independent director and, in particular, should
not be the same person as the CEO of the entity.
A listed entity should have a program for inducting
new directors and provide appropriate professional
development opportunities for directors to develop
and maintain the skills and knowledge needed to
perform their role as directors effectively.
3.1
Principle 3 Recommendations:
A listed entity should:
(a) have a code of conduct for its directors, senior
executives and employees; and
(b) disclose that code or a summary of it.
the Company’s industry;
(cid:129)
(cid:129) Managing Director-level experience; and
(cid:129)
relevant technical expertise.
The mix of skills of the current Board is set out on the
Company’s website and was also contained within the
Company’s Replacement Prospectus lodged with ASIC
on 10 June 2015.
(a) Currently only 2 of the 5 directors are considered to
be independent given that Michael Addison is the
Managing Director, Simon Kidston is an Executive
Director and Ben Guo is the Finance Director. The
independent directors are Dr Ralph Craven, the
Company’s Non-Executive Chairman and Mr Alan du
Mee, a Non-Executive Director.
(b) Not applicable.
(c) The Directors were appointed to the Board as
follows:
Dr Ralph Craven – 29 May 2015
Mr Michael Addison – 15 July 2011
Mr Simon Kidston - 1 August 2013
Mr Ben Guo – 25 October 2013
Mr Alan du Mee – 29 May 2015
The Company does not currently have a majority of
independent directors however the Board is of the
view that notwithstanding that it does not currently
comply with this recommendation it nonetheless has
the appropriate mix of skills and experience for the
Company’s present stage of operations.
The Company’s current Chairman is Dr Ralph Craven
who is an independent director and is not engaged in
any executive role within the Company either as CEO,
Managing Director or equivalent.
Pursuant to the Company’s Board Charter the Board
must
induction and
education process for new Board appointees and
Senior Executives to enable them to gain a better
understanding of:
implement an appropriate
(cid:129)
(cid:129)
(cid:129)
(cid:129)
the Company’s financial, strategic, operational
and risk management position;
the rights, duties and responsibilities of the
directors;
the roles and responsibilities of Senior
Executives; and
the role of Board committees.
Act Ethically and Responsibly
(a) The Company’s Corporate Governance Plan
includes the following policies and charters which
provide a framework for decisions and actions in
relation to ethical conduct in employment.
(cid:129) Board Charter;
(cid:129) Audit & Risk Management Committee
Charter;
Code of Conduct - Obligations to
Stakeholders;
Code of Conduct - Directors and Key Officers;
(cid:129)
(cid:129)
52
strella Resources Limited
Continuous Disclosure;
(cid:129)
(cid:129) Remuneration Committee Charter;
(cid:129)
(cid:129) Diversity.
Securities Trading; and
4.1
Principle 4 Recommendations:
The board of a listed entity should:
(a) have an audit committee which:
(1) has at least three members, all of whom are
non-executive directors and a majority of
whom are independent directors; and
(2) is chaired by an independent director, who
is not the chair of the board,
and disclose:
(3) the charter of the committee;
(4) the relevant qualifications and experience of
the members of the committee; and
(5) in relation to each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; OR
(b) if it does not have an audit committee, disclose
that fact and the processes it employs that
independently
the
verify and
integrity of its corporate reporting, including
the processes for the appointment and removal
of the external auditor and the rotation of the
audit engagement partner.
safeguard
The board of a listed entity should, before it
approves the entity’s financial statements for a
financial period, receive from its CEO and CFO a
declaration that, in their opinion, the financial
the entity have been properly
records of
maintained and that the financial statements
comply with the appropriate accounting standards
and give a true and fair view of the financial
position and performance of the entity and that
the opinion has been formed on the basis of a
sound system of risk management and internal
control which is operating effectively.
A listed entity that has an AGM should ensure that
its external auditor attends its AGM and is available
to answer questions from security holders relevant
to the audit.
Principle 5 Recommendations:
A listed entity should:
(a) have a written policy for complying with its
continuous disclosure obligations under the
Listing Rules; and
(b) disclose that policy or a summary of it.
4.2
4.3
5.1
(b) A copy of each policy including the codes of
conduct relating to Directors, Senior Executives and
employees is available on the Company’s website.
Safeguard Integrity in Corporate Reporting
(a) The Company has established an Audit and Risk
Management Committee which:
(1) has 3 members being Mr Alan du Mee, Dr Ralph
Craven and Mr Michael Addison. Only 2 of the
committee members are non-executive directors being
Mr Alan du Mee and Dr Ralph Craven. A majority of the
committee also being Mr Alan du Mee and Dr Ralph
Craven are independent.
(2) is chaired by an independent director being Mr Alan
du Mee who is not the chairman of the board.
(3) A copy of the policy titled “Charter of the Audit and
Risk Management Committee of Genex Power Limited”
is available on the Company’s website.
(4) The relevant qualifications and experience of the
Committee members is available on the Company’s
website.
(5) The Committee was only constituted in accordance
with the Company’s recent IPO and, as such, did not
hold any formal meetings during the reporting period.
(b) Not applicable.
The Board ensures that it receives the appropriate
declarations and assurances including a declaration
from the Chief Financial Officer that the Company’s
accounts have been kept in accordance with section
295A of the Corporations Act 2001.
The Company ensures that the Auditor attends the
AGM each year and is available to answer any question
from shareholders either at the AGM or submitted in
writing prior to the AGM.
Make Timely and Balanced Disclosure
(a) The Company has a continuous disclosure
program/policy in place designed to ensure compliance
with the ASX Listing Rules on continuous disclosure and
to ensure accountability at a senior executive level for
compliance and factual presentation of the Company’s
financial position.
53
strella Resources Limited
6.1
6.2
6.3
6.4
7.1
7.2
Principle 6 Recommendations:
A listed entity should provide information about
itself and
its
website.
its governance to
investors via
A listed entity should design and implement an
investor relations program to facilitate effective
two-way communication with investors.
A listed entity should disclose the policies and
processes it has in place to facilitate and encourage
participation at meetings of security holders.
A listed entity should give security holders the
option to receive communications from, and send
communications to, the entity and its security
registry electronically.
Principle 7 Recommendations:
The board of a listed entity should:
(a) have a committee or committees to oversee
risk, each of which:
(1) has at least three members, a majority of
whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; OR
it does not have a risk committee or
committees that satisfy (a) above, disclose that
fact and
for
risk management
overseeing
framework.
the processes
the entity’s
it employs
(b) if
The board or a committee of the board should:
(a) review the entity’s risk management framework
it
least annually to satisfy
itself that
at
continues to be sound; and
(b) disclose, in relation to each reporting period,
–
to
Policy
(b) The continuous disclosure policy of the Company is
available on the Company’s website.
Respect the Rights of Security Holders
The Company’s Corporate Governance Plan includes a
shareholder communications strategy which aims to
ensure that shareholders are informed of all major
developments affecting the Company’s state of affairs.
This is contained within the Company’s policies titled
“Code of Conduct – Obligations to Stakeholders” and
Continuous
“Corporate Governance
Disclosure”. The policies are available on
the
Company’s website.
The Company’s Corporate Governance Plan includes a
shareholder communications strategy which is outlined
in 6.1.
The Company’s Corporate Governance Plan includes a
shareholder communications strategy which is outlined
in 6.1. The Company also encourages shareholders to
attend the Company’s AGM and to ask questions of the
Board and the Auditor and/or to submit questions in
writing in advance.
Shareholders may elect
receive electronic
notifications when the Annual Report is available on
the Company’s website and may electronically lodge
proxy instructions for items to be considered at the
Company’s AGM and any relevant EGM.
Recognise and Manage Risk
(a) The Board in conjunction with the Audit and Risk
Management Committee determines the Company’s
“risk profile” and is responsible for overseeing and
approving risk management strategy and policies,
internal compliance and internal control.
(1) has 3 members being Mr Alan du Mee, Dr Ralph
Craven and Mr Michael Addison. Only 2 of the
committee members are non-executive directors being
Mr Alan du Mee and Dr Ralph Craven. A majority of the
committee also being Mr Alan du Mee and Dr Ralph
Craven are independent.
(2) is chaired by an independent director being Mr Alan
du Mee who is not the Chairman of the Board
(3) A copy of the policy titled “Charter of the Audit and
Risk Management Committee of Genex Power Limited”
is available on the Company’s website.
(4) The members of the committee are Mr Alan du
Mee (Chair), Dr Ralph Craven (Member) and Mr
Michael Addison (member).
(5) The Committee was only constituted in accordance
with the Company’s recent IPO and, as such, did not
hold any formal meetings during the reporting period.
(b) Not applicable.
(a) The Company has established policies for the
oversight and management of material business risks.
The Audit and Risk Management Charter of the
Company is available on the Company’s website. The
for undertaking and assessing risk
responsibility
54
strella Resources Limited
whether such a review has taken place.
7.3
7.4
A listed entity should disclose:
(a) if it has an internal audit function, how the
it
is structured and what
role
function
performs; OR
(b) if it does not have an internal audit function,
that fact and the processes it employs for
evaluating and continually
the
its risk management and
effectiveness of
internal control processes.
improving
A listed entity should disclose whether it has any
material exposure to economic, environmental and
social sustainability risks and, if it does, how it
manages or intends to manage those risks.
8.1
Principle 8 Recommendations:
The board of a listed entity should:
(a) have a remuneration committee which:
(1) has at least three members, a majority of
whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; OR
(b) if it does not have a remuneration committee,
disclose that fact and the processes it employs
level and composition of
for setting the
senior
remuneration
such
executives
remuneration is appropriate and not excessive.
directors
ensuring
and
that
and
for
internal control effectiveness
management and
is
delegated to the Board in conjunction with the Audit
and Risk Committee. The Board and Audit and Risk
Management Committee are required to assess risk
management and associated internal compliance and
control procedures and will be responsible for ensuring
the process for managing risks is integrated within
business planning and management activities. Reports
on risk management are to be provided to the Board
by the Audit and Risk Management Committee at the
first Board meeting subsequent to each Committee
meeting.
(b) A formal review has not yet taken place as the
Audit & Risk Management Committee was only
recently constituted in accordance with the Company’s
IPO.
(a) The Company’s internal audit function is exercised
by the Chief Financial Officer in conjunction with a
bookkeeper who is outsourced by the Company to
ensure a level of segregation particularly in relation to
processes and procedures around such things as
payment authorisations and limits of authority.
(b) Not applicable.
The Company is not aware of any potential material
exposure to economic and environmental risks but
emphasises the summary of non-exclusive risks
outlined in the Company’s Replacement Prospectus
lodged with ASIC on 10 June 2015. In relation to any
potential, but as yet unknown, environmental risk, the
Company has an environmental assurance bond with
the Queensland Government for $3,804,311.
Remunerate Fairly and Responsibly
(a) The Board has established a separate Remuneration
Committee which:
(1) has 3 members being Dr Ralph Craven, Mr Alan du
Mee and Mr Simon Kidston. A majority of the
committee also being Dr Ralph Craven and Alan du
Mée are independent.
(2) the Committee is chaired by an independent
director being Dr Ralph Craven.
(3) A copy of the Remuneration Committee Charter is
available on the Company’s website.
(4) The members of the committee are Dr Ralph
Craven, Mr Alan du Mee and Mr Simon Kidston.
(5) The Committee was only constituted in accordance
with the Company’s recent IPO and, as such, did not
hold any formal meetings during the reporting period.
(b) Not applicable.
8.2
A listed entity should separately disclose its policies The Committee distinguishes the structure of non-
55
strella Resources Limited
and practices regarding the remuneration of non-
executive directors and the remuneration of
executive directors and other senior executives.
8.3
listed entity which has an equity-based
A
remuneration scheme should:
(a) have a policy on whether participants are
permitted to enter into transactions (whether
through the use of derivatives or otherwise)
which limit the economic risk of participating in
the scheme; and
(b) disclose that policy or a summary of it.
from
remuneration
executive directors'
that of
executive directors and senior executives. The
Company’s Constitution and the Corporations Act also
provides that the remuneration of non-executive
Directors will be not be more than the aggregate fixed
sum determined by a general meeting. The Board is
responsible for determining the remuneration of the
executive directors (without the participation of the
affected director).
(a) A summary of the Company’s policy on prohibiting
transactions in associated products which operate to
limit the risk of participating in unvested entitlements
under any equity based remuneration scheme
is
contained within
the Remuneration Committee
Charter.
(b) Paragraph 6.2 (3) of the Company’s Remuneration
Committee Charter states:
“…The Committee must ensure that, where applicable,
any payments of equity-based remuneration are made
in accordance with the Company’s constitution and any
thresholds approved by the Company’s shareholders.
Committee members must be aware at all times of the
limitations of equity-based remuneration. The terms of
such schemes should clearly prohibit entering into
transactions or arrangements which limit the economic
risk of participating in unvested entitlements under
these schemes. The exercise of any entitlements under
these schemes should be timed to coincide with any
trading windows under the Company’s securities
trading policy…”
56
9. ADDITIONAL SECURITIES EXCHANGE INFORMATION
The following information is provided pursuant to Listing Rule 4.10 and is current as at 8 September 2015:
Voting Rights
Shareholder voting rights are specified in clause 10.14 of the Company's Constitution lodged with the ASX on 6
July 2015. Option holders do not have the right to vote at a general meeting of shareholders until such time as
the options have been converted into ordinary shares in the Company.
Total number of Shareholders
Total number of Optionholders
Substantial Shareholders
Zhefu Hydropower International Engineering Corporation Ltd
Rivonia Pty Limited
KFT Capital Pty Limited
Downing Domain Investments Pty Ltd
Total Shares on Issue
461
297
%
20.000
17.046
11.175
7.380
55.601
100.00
Total Units
31,678,750
27,000,000
17,700,000
11,690,000
88,068,750
158,393,750
There are 8 shareholders with an unmarketable parcel of shares being a holding of less than 3,125 shares each
for a combined total of 17,973 shares. This is based on a closing price of $0.16 per share as at 7 September
2015 and represents 0.011% of the shares on issue.
Distribution of Shareholders
Holdings Ranges
Holders
Total Units
Percentage %
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total
1
19
74
230
137
461
100
68,824
708,320
11,658,313
145,958,193
158,393,750
0.00
0.04
0.45
7.36
92.15
100.00
Top 20 Shareholders
Total Units
Percentage %
ZHEFU HYDROPOWER INTERNATIONAL ENGINEERING CORPORATION LTD
31,678,750
RIVONIA PTY LIMITED
27,000,000
20.000
17.046
strella Resources Limited
KFT CAPITAL PTY LIMITED
17,700,000
11.175
DOWNING DOMAIN INVESTMENTS PTY LTD
11,690,000
AUSTRALIAN GO FUTURES PTY LTD
PANCHO (NSW) PTY LIMITED
KFS PTY LIMITED
MR DAVID NOLAN
MOORE PARK CAPITAL PTY LIMITED
CITICORP NOMINEES PTY LIMITED
UPPER BEACH PTY LIMITED
PISTACHIO PTY LTD
STONECOT PTY LIMITED
STEVEN SEQUEIRA PTY LTD
MR JOHN NOLAN
MAJI MAZURI PTY LTD & MAWINGO PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
GRIFFINC PTY LIMITED
MR CHRISTOPHER MACDONALD
MR GEOFFREY LEVY
Top 20 Shareholders
Total Issued Capital
7,000,000
3,300,000
3,000,000
2,000,000
2,000,000
1,750,000
1,000,000
1,000,000
1,000,000
950,000
935,000
880,000
800,000
800,000
800,000
785,000
7.38
4.42
2.08
1.89
1.26
1.26
1.11
0.63
0.63
0.63
0.60
0.59
0.56
0.51
0.51
0.51
0.50
116,068,750
158,393,750
73.28
100.00
Distribution of Optionholders – Exercisable at $0.25 expiring 7 February 2019
Holdings Ranges
Holders
Total Units
Percentage %
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total
Optionholders with more than 20% of the Class of Option:
ESCR INVESTMENTS PTY LTD
ALAN MYLES ROGER DE CHASTEIGNER DU MEE
0
0
0
0
6
6
0
0
0
0
8,500,000
8,500,000
0.00
0.00
0.00
0.00
100.00
100.00
3,000,000
2,000,000
35.294
23.529
58
strella Resources Limited
Distribution of Loyalty Optionholders – Exercisable at $0.20 expiring 25 February 2018
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total
Holders
Total Units
Percentage %
0
67
38
162
23
290
0
335,000
310,000
5,930,500
13,424,500
0.00
1.68
1.55
29.65
67.12
20,000,000
100.00
Loyalty Optionholders with more than 20% of the Class of Option:
DOWNING DOMAIN INVESTMENTS PTY LTD
4,845,000
ZHEFU HYDROPOWER INTERNATIONAL ENGINEERING CORPORATION LTD
4,000,000
24.225
20.000
Distribution of Optionholders – Exercisable at $0.25 expiring 6 August 2020
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total
Holders
Total Units
Percentage %
0
0
0
0
1
1
0
0
0
0
5,000,000
5,000,000
0.00
0.00
0.00
0.00
100.00
100.00
Optionholders with more than 20% of the Class of Option:
A & M McGHIE INVESTMENTS PTY LTD
5,000,000
100.00
There are 58,193,750 Fully Paid Ordinary Shares and 500,000 unlisted options exercisable at $0.25 each
expiring 7 February 2019 subject to voluntary escrow until 8 January 2016.
There is no current on-market buy-back.
59
10. CORPORATE DIRECTORY
DIRECTORS
Dr Ralph Craven
Mr Alan du Mée
Mr Michael Addison
Mr Simon Kidston
Mr Ben Guo
Non-Executive Chairman
Non-Executive Director
Managing Director
Executive Director
Finance Director
COMPANY SECRETARY
Mr Justin Clyne
REGISTERED OFFICE & PRINCIPAL PLACE IF BUSINESS
Level 11
2 Bligh Street
Sydney NSW 2000
Telephone:
Facsimile:
Email:
+61 2 9993 4441
+61 2 9993 4433
info@genexpower.com.au
WEBSITE
www.genexpower.com.au
ASX CODE
GNX
AUDITORS
William Buck
Level 29
66 Goulburn Street
Sydney NSW 2000
Telephone:
Facsimile:
Website:
+61 2 8263 4000
+61 2 8263 4111
www.williambuck.com
SHARE REGISTRY
Boardroom Pty Limited
Level 12
225 George Street
Sydney NSW 2000
Telephone:
Facsimile:
Website:
+61 2 9290 9600
+61 2 9279 0664
www.boardroomlimited.com.au
PRINCIPAL BANKERS
ANZ Banking Group Limited