ANNUAL
REPORT 2016
ABN 18 152 098 854
www.genexpower.com.au
1
CONTENTS
1.
2.
3.
4.
5.
6.
7.
8.
9.
Chairman’s Letter .................................................................................................................................................. 3
Managing Directors’ Review of Operations ........................................................................................................... 5
Directors Report and Remuneration Report ......................................................................................................... 7
Auditors Independence Declaration .................................................................................................................... 19
Financial Statements ........................................................................................................................................... 20
Directors’ Declaration……………………………………………………………… ........................................................................ 50
Independent Auditor’s Report ............................................................................................................................. 51
Corporate Governance Statement……………………………………………. ....................................................................... 53
Additional Securities Exchange Information........................................................................................................ 62
10.
Corporate Directory ............................................................................................................................................. 65
2
1.
CHAIRMAN’S LETTER
Dear Shareholder,
I have great pleasure in bringing you this second annual report of Genex Power Limited
(Genex or Company).
On 8 July 2016 Genex celebrated its first anniversary as a listed company. This milestone not
only represented a year since listing on the ASX but also a year in which Genex made
significant progress towards delivering a bankable feasibility study for its flagship Kidston
Pumped Storage Hydro Project (PSHP or Hydro Project) as well as the identification and
advancement of a second project at Kidston, a 50MW PV solar farm.
Pumped Storage Hydro:
I am pleased to report that the feasibility study for the company’s Hydro Project is advancing
rapidly. Genex has taken a two-pronged approach to the feasibility study. The existing
infrastructure which includes the two large mining pits now filled with water plus large
tailings dumps which have been substantially rehabilitated has enabled Genex to consider
a number of possible configurations for the PSHP. As reported recently, as well as looking at utilising the two pits which
are at different elevations, we have also considered the construction of a ‘turkey’s nest’ for the upper pond. Using this
approach, the PSHP can provide up to 2,250MWh of continuous cycle generation capacity.
In parallel with this ‘civil’ design work Genex has engaged EY (Ernst & Young) to carry out market facing studies to inform
Genex regarding the most appropriate sizing of the PSHP, taking into account the various generator/pump capacity
configurations and also the location of the PSHP in the Queensland high voltage network and its interaction with the
National Electricity Market. While the final design and capacity of the PSHP has not yet been determined, our work to
this time indicates that the Hydro Project will have a comparatively low cost per MW of installed capacity due to the
utilisation of existing infrastructure. Genex and its team of highly experienced project consultants are now engaged in
the detailed design phase of the feasibility study. Minimising operational and environmental risks are also key points of
focus for our PSHP.
Throughout the year, Genex continued to welcome meaningful support from the Queensland State Government, with
its declaration of Kidston as a “State Prescribed Project”. The Company is also receiving ongoing support from the Federal
Government for its Hydro Project through the Australian Renewable Energy Agency (ARENA) under the funding
agreement of up to $4m announced to the market in December last year. In the first half of the 2016 calendar year
Genex received a total of more than $2m in ARENA funding which has been applied towards the development of the
Company’s Feasibility Study for the PSHP.
The Feasibility Study is progressing well and remains on track for completion in Q3 with funding discussions also
progressing well to be concluded thereafter.
50MW PV Solar Project:
During the course of the year, the Genex team identified a second project at Kidston, a 50MW Solar PV Project (Solar
Project). Rapid progress has been realised on the Solar Project since the Feasibility Study was commenced in October
last year, with a number of the major milestones achieved outlined in the Managing Director’s Report in section 2.
Some of those milestones are also beneficial to the success of the Hydro Project, such as the granting of ownership of
the Kidston Project Site and the declaration of Kidston as a Prescribed Project by the Queensland State Government.
Corporate:
At a corporate level, the Company welcomed the appointment of Mr Yongqing Yu as a non-executive director. Mr Yu is
a representative of the Company’s largest shareholder, Zhefu Hydropower. The Company also made two key executive
appointments with Arran McGhie as Chief Operations Officer and James Harding as Executive General Manager.
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Estrella Resources Limited
In June the Company completed a significantly oversubscribed capital raising of $3.5m to fund continuing work in relation
to the Solar Project, with the funds to be applied to project financing costs, project design, early capital works and
working capital costs.
On behalf of the Board, I would like to thank all shareholders for their support across the year and to those new
shareholders who have joined us recently. Your Company is in a strong position with two outstanding projects and I look
forward to another exciting year ahead.
Yours faithfully,
Dr Ralph Craven
Non-Executive Chairman
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Estrella Resources Limited
2. MANAGING DIRECTOR’S REVIEW OF OPERATIONS
Company Overview
Genex Power is an ASX-listed power generation development company based in
Australia. The Company is currently focussed on the development of innovative clean
energy generation and storage solutions which deliver attractive commercial returns for
shareholders. Genex is currently pursuing two unique development opportunities at its
Kidston Energy Hub in North Queensland, its flagship large-scale Pumped Storage Hydro
Project (PSHP) and a co-located large-scale solar PV project.
Kidston Pumped Storage Hydro Project
During the year Genex rapidly advanced the development of its PSHP, with the PSHP Feasibility Study on track for
completion in Q3 2016. Recent feasibility activities include a design optimisation process, which resulted in the selection
of an improved design configuration utilising a “turkey nest” upper reservoir. The revised configuration gives Genex the
potential to increase generation capacity and system efficiencies, whilst minimising construction costs per MW of
installed capacity. Turkey nest dams are commonly constructed around the world and utilise readily available and
accepted construction techniques.
The turkey nest design offers a number of other key advantages, including:
A reduction in water level variance during the generation cycle;
An increase in the average and maximum water head available for generation, facilitating an increase in overall
generation capacity;
The elimination of water seepage issues from the upper reservoir; and
The ability to utilise the Wises Pit for excess water storage and water balancing during both the construction and
operational phases of the scheme.
Genex is currently advancing PSHP funding discussions with a number of parties. These discussions include innovative
funding arrangements in respect of the power transmission line. The Company has clear visibility of available debt, equity
and other funding alternatives and potential financing structures.
Kidston Large-Scale Solar PV Project
The first 50MW phase of Genex’s large-scale solar PV project at Kidston (Solar Project) announced to the market in
October 2015 is now well underway. The Solar Project has already received all necessary environmental and regulatory
approvals and the Company awaits the outcome of its application under the Australian Renewable Energy Agency
(ARENA) large-scale solar funding program, which is expected in September 2016. Phase 1 of the Solar Project is
scheduled to reach financial close in Q4 this calendar year, with commencement of construction expected shortly
thereafter.
State and Federal Government Support
Genex continues to receive ongoing support for its PSHP from ARENA under a $4m funding agreement. This was
announced to the market in December 2015. To date the Company has drawn down approximately $2.2m under the
facility.
Genex also continues to receive meaningful support from the Queensland State Government, following the declaration
of the Kidston Energy Hub as a “State Prescribed Project”.
The 2016 Financial Year
Genex has meaningfully advanced its energy projects during the 2016 financial year. The Company continues to “tick the
boxes” as its progresses through the planning, feasibility, approval and funding processes towards project construction.
The identification of the Company’s large-scale solar PV project is indicative of the Genex team’s ability to identify new
projects and fulfil its vision of becoming a mainstream diversified supplier of renewable energy to the Australian energy
market.
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Estrella Resources Limited
The executive team has been ably assisted throughout the year with the appointment of Chief Operations Officer, Arran
McGhie, and Executive General Manager, James Harding. Arran was appointed in August 2015 and James, after having
made a significant contribution to Genex as a consultant for several months was formally appointed on 1 July 2016. Arran
and James continue to work productively as part of the Company’s executive team to achieve corporate positive cash-
flows in the soonest possible time.
Highlights
Through to the final round of the ARENA large-scale solar PV funding program - currently awaiting the outcome of
its submission, due in September 2016;
Freehold ownership granted over the Kidston project site;
Development Approval received for the Kidston Solar Project;
Environmental Approval received for the Kidston Solar Project;
Kidston declared a Prescribed Project by the Queensland State Government;
Signing of a Connection Agreement with Ergon Energy;
Execution of a Debt Funding Mandate with Societe Generale;
The appointment of AECOM as Owner’s Engineer for the Kidston Solar Project;
Appointment of UGL as preferred contractor for the Engineering, Procurement and Design (EPC) and Operation
and Maintenance (O&M); and
Significant progress including an optimised “turkey nest” design for the PSHP.
Financial and Corporate
For the year ended 30 June 2016, Genex Power incurred an after tax loss of $7.1 million. The majority of expenditure
was incurred on the development of the Kidston Solar Project and the Kidston PSHP feasibility study. The Company did
not generate any material income during the year.
In December 2015, Genex executed a funding agreement with ARENA to co-fund the Kidston PSHP feasibility study.
Under the agreement, ARENA committed to contributing up to $4.0 million towards feasibility costs. As at the date of
the report, approximately $2.2 million of funding had been drawn down under the facility. In June 2016, Genex raised
an amount of $3.5 million via a placement undertaken through Morgans Stockbroking. The funds received were applied
principally towards the development of Genex’s Kidston Solar Project.
Company Outlook
Genex is committed to delivering shareholder value through the development of its Kidston Energy Hub. To this end, the
Company is aiming to deliver early cash-flows from its Kidston Solar Project by 1Q 2018. Genex is also focussed on
delivering a strong feasibility study for the PSHP in Q3 2016, prior to moving onto project financing activities.
Genex believes that the Kidston Energy Hub will play a key role in securing Queensland’s renewable energy future. The
Company has, to date, received strong support for its projects from both the community and various levels of
government.
Genex continues to look at energy development and storage opportunities across the Country, and 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
6
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 2016.
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:
Ralph Craven (Chairman)
Michael Addison (Managing Director)
Alan du Mée (Non-Executive Director)
Simon Kidston (Executive Director)
Ben Guo (Finance Director)
Yongqing Yu (Non-Executive Director)
Principal activities
(appointed 8 February 2016)
The consolidated entity’s principal activities comprise the development of the Kidston Energy Hub in far north
Queensland as well as mine remediation work associated with the site.
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 the development of the
Kidston Energy Hub located in far north Queensland comprising:
1. The undertaking of a feasibility study in relation to the technical and economic viability of developing a pumped
storage hydroelectric power project; and
2. development of the first 50MW phase of Genex’s Kidston Solar Project.
During the course of the financial year, on July 8 2015, Genex listed on the ASX under the code ‘GNX’ after raising $8m
via an Initial Public Offering (IPO) assisted by Morgans Stockbroking as Lead Manager and Underwriter. The IPO funds
were principally applied towards the development of the Kidston Energy Hub and associated working capital costs.
Entura was appointed to manage the feasibility process for the Kidston Pumped Storage Project and AECOM was
appointed as owner’s consultant to assist with the Solar Project’s development process.
On 18 December 2015, Genex entered into a convertible note funding agreement with ARENA for up to $4 million to
fund the feasibility study of the hydro project.
As at 30 June 2016, $2,135,854 has been drawn down. The convertible note is deemed to be hybrid security with a debt
component and an equity component, based on the underlying terms of the notes as assessed.
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Estrella Resources Limited
Convertible Note (See Note 17)
Convertible note reserve (See Note 19)
Accrued interest benefit
Key terms of the Funding Agreement:
30 June
2016
$
30 June
2015
$
1,065,067
630,077
440,710
2,135,854
-
-
-
-
Unsecured unlisted convertible redeemable notes (the Notes) of up to $4 million, to be issued in tranches based
on payments received by Genex from ARENA:
- with payments to Genex to be made upon completion of agreed milestones, based on pre-approved
feasibility study expenditure;
Notes are convertible at a conversion price of $0.20 per share into Genex ordinary shares at the election of
ARENA;
If ARENA chooses to convert, Genex retains the right to either issue ordinary shares at $0.20 each or to repay
ARENA the face value of the Notes as if they had been converted, at the then volume weighted average price
of Genex shares traded on the ASX;
Voluntary escrow will apply to any shares issued to ARENA upon conversion until the earlier of Financial Close
for the Project funding or 30 June 2017 (other than in the event that funding is not fully drawn and ARENA’s
shareholding is less than 10%, or in the event of a takeover or scheme of arrangement);
Genex has the right to redeem the Notes at face value at any time from the date of issue for a period of 5 years
in respect of amounts drawn down but not converted (ARENA may convert during the redemption notice
period);
Genex must redeem the Notes at face value upon the completion of a bankable feasibility study in respect of
the Project and the execution of all agreements required for the funding of the construction of the Project;
ARENA has the right to require redemption of the Notes should certain default events occur;
The Notes lapse and are not repayable by Genex after a period of 5 years if not previously redeemed or
converted; and
The Notes carry a zero coupon;
The Notes carry standard terms consistent with convertible note arrangements and require Genex to provide
key feasibility progress study reports and findings to ARENA and other stakeholders.
The zero coupon attached to each Note, represents an interest benefit available to the company, arising over the period
of the outstanding notes. The interest benefit is determined upon issue of each Note based on an implied discount rate
of 5%. The interest benefit is released over the period of the Note.
In January 2016, Genex secured freehold title over the Kidston site from the Queensland Department of Natural
Resources and Mining. In February 2016, Genex received Development Approval for the Kidston Solar Project from
Etheridge Shire Council. In February 2016, Mr Yongqing Yu was appointed as a Non-Executive Director of Genex. Mr Yu
is the Vice-Chairman of Zhefu Hydropower, the Company’s largest shareholder.
In March 2016, the Kidston Energy Hub Project was declared a Prescribed Project by the Queensland State Government.
This milestone recognises the Kidston Project as a critical infrastructure project for Queensland and paves a pathway for
the fast-tracking of approvals processes.
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Estrella Resources Limited
In May 2016, the Kidston Solar Project received Environmental Approval from the Department of Environment and
Heritage Protection. In the same month, Genex also executed a Connection Agreement with Ergon Energy to enable the
export of electricity generated at the Kidston Project to the grid. As part of the Connection Agreement, Genex paid an
amount of $2,581,643 to Ergon as the initial payment on the capital works program is required to upgrade the Kidston
substation as part of the construction of the Kidston Solar Project. The substation upgrade will be completed in parallel
with the construction of the Kidston Solar Project and subsequent payments will be made periodically upon the
achievement of construction milestones. The final cost of the substation upgrade is yet to be determined.
Prior to the end of the current year, Genex finalised the project delivery team for the Kidston Solar Project. The key
appointments include:
Preferred Contractor – UGL
Debt Arranger – Societe Generale
Owner’s Engineer – AECOM
Owner’s Counsel – Bakers & McKenzie
Tax Adviser - PwC
In June 2016, Genex raised an amount of $3.5 million through the issue of 21,875,000 new fully paid ordinary shares in
the Company at an issue price of $0.16 per share with the assistance of Morgans Stockbroking. These funds were applied
principally towards the capital works program undertaken by Ergon Energy on the Kidston substation.
Matters subsequent to the end of the year
Aside from the above, there have been no other material events or circumstances which have arisen since 30 June 2016
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.
On 1 July 2016 the Company engaged a new employee, Mr James Harding, in the role of Executive General Manager.
Subject to satisfactory completion of a probationary period expiring 1 September 2016, the Company will be issuing and
allotting to Mr Harding a total of 2,400,000 unlisted options to acquire ordinary shares in the Company at a price of $0.25
each. The options will carry a number of vesting conditions and milestones for achievement.
Likely developments and expected results of operations
The consolidated entity intends to commence construction of the Kidston Solar Project in early 2017 as well as continue
the development of the Kidston Pumped Storage Project.
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:
Air
Water
Noise and Vibration
Regulated dams
Land and Rehabilitation
Other related activities
There have been no material or non-remedied breaches of the Environmental Authority of which the Company is aware.
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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:
Experience and expertise
Dr Craven has served on the boards of listed and unlisted companies for over 10 years. He has deep governance and
related experience. Dr Craven’s professional experience spans energy, resources and infrastructure. His background
encompasses electricity and gas businesses, mining, commodities trading, and the management of large scale system
operations at the national level and the delivery of major infrastructure projects.
Dr Craven is currently non-executive Chairman of Stanwell Corporation and a non-executive director of AusNet Services
Limited (ASX:AST) and Senex Energy Limited (ASX:SXY). Other recent directorships include Windlab Limited, Chairman of
Invion Limited and Director and Chairman of the Audit Committee of Mitchell Services Limited.
Dr Craven was formerly Chairman of Ergon Energy Corporation Limited, Tully Sugar Limited and Deputy Chairman of
Arrow Energy Ltd. At the end of 2015 he completed a six-year term as Director of the International Electrotechnology
Commission (IEC) and Chairman of the IEC National Committee of Australia. Dr Craven was CEO of Transpower New
Zealand Limited and also held senior executive positions in Shell Coal Pty Ltd and NRG Asia Pacific Limited.
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 Limited (between May 2010 to January 2014) and Stratum
Metals Limited (May 2011 to December 2013).
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Estrella Resources Limited
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 formerly 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
Queensland, the Starfish Hill windfarm in South Australia and the sale of a 50% interest in the Tarong North power station
to a Japanese consortium. Alan 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 (April 1991
and November 1996). He 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 was instrumental in the establishment of
3 ASX listed companies, Endocoal Limited, Carabella Resources Limited (between May 2010 to January 2014) and Estrella
Resources Limited (June 2011 to April 2014).
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
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.
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Estrella Resources Limited
Name: Yongqing Yu
Title: Non-Executive Director
Experience and expertise:
Mr. Yongqing Yu is the Vice Chairman of Shenzhen listed Zhefu Hydropower, one of the largest hydroelectric electrical
and mechanical equipment manufacturers in China and Genex’s largest shareholder. Mr. Yu has been a key member of
Zhefu since the company’s inception. He is a senior engineer and has extensive hydro experience. Mr Yu has been
involved in many significant projects including the Shuangling Hydropower Project in Liaoning Province, the Wanmipo
Hydropower Project in Hunan province and the Changzhou Hydropower Project in the Guangxi Zhuang Autonomous
Region of China. Mr Yu’s technical expertise and experience in working with large scale international projects significantly
strengthens the Genex Board’s level of technical, industry and corporate experience.
Name: Justin Clyne
Title: Company Secretary
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.
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') and its Committees held during the year
ended 30 June 2016, and the number of meetings attended by each director was:
Name
Board
Audit
Remuneration
Dr Ralph Craven
Michael Addison
Simon Kidston
Ben Guo
Alan du Mee
Yongqing Yu
Held*
11
11
11
11
11
3
Attended
11
11
10
11
10
0
Held*
3
3
-
-
3
-
Attended
3
3
-
-
3
-
Held*
2
-
2
-
2
-
Attended
2
-
2
-
2
-
* Held represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
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
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Estrella Resources Limited
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 Managing Director 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 Remuneration Committee which will assist the Board in
making appropriate decisions regarding remuneration.
The Company’s 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 determines 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 short-term
and long-term compensation paid to the Managing Director and Senior Executives. The Company also looks at comparative
data from other companies and the duties and responsibilities of its executives in determining its remuneration policy.
During the year while the Company’s focus was on the development of the Kidston Energy Hub, remuneration was weighted
towards long term rewards with the granting of options to Arran McGhie (COO).
This Remuneration Report outlines the arrangements which were in place during the year ended 30 June, 2016 for the
Directors and key management personnel.
Short-term benefits
Cash salary and fees
$
Post employee benefits
Superannuation benefits
$
Share-based
payments
$
2016
Executive Directors
M Addison
S Kidston
B Guo
Non-Executive Directors
R Craven
A du Mee
Yongqing Yu
Sub-Total
Company Secretary
J Clyne
Chief Operating Officer
Arran McGhie
Sub-Total
Total
217,762
208,333
190,000
91,667
61,667
-
769,429
60,980
297,230
358,210
1,127,639
35,000
19,792
18,050
8,708
5,858
-
87,408
-
-
-
-
-
-
Total
$
252,762
228,125
208,050
100,375
67,525
-
856,837
-
-
60,980
28,236
385,000
710,466
28,236
115,644
771,446
385,000
385,000 1,628,283
13
Short-term benefits
Cash Salary and Fees
$
Post employee benefits
Superannuation benefits
$
Share-based
payments
$
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
295,242
270,000
245,175
67,650
45,100
923,167
60,000
60,000
983,167
Total
$
328,500
295,650
273,750
74,107
49,405
-
-
-
30
20
50 1,021,412
33,258
25,650
28,575
6,427
4,285
98,195
-
5
60,005
-
98,195
5
60,005
55 1,081,417
Period of Service
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mée
Yongqing Yu
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
8 February 2016 to current
Director’s Interests in the Company
The shares and options held by the individual directors as at 30 June 2016 and at the date of this report are as follows:
Shares
Personnel
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
Yongqing Yu
Personnel
Michael
Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
Yongqing Yu
Balance as
at 1 July
2015
27,000,000
20,700,000
2,000,000
200,000
200,000
Nil
Granted as
remuneration
Received on
exercise
Purchases
Balance as at 30
June 2016
-
-
-
-
-
-
-
-
-
-
-
-
500,000
20,000
40,000
50,000
-
-
27,500,000
20,720,000
2,040,000
250,000
200,000
Nil
Balance as at 1
July 2014
Granted as
remuneration
Received on
exercise
Purchases
Balance as at 30
June 2015
27,000,000
20,700,000
2,000,000
-
-
Nil
-
-
-
-
-
-
-
-
-
-
-
-
-
27,000,000
-
-
200,000*
200,000*
-
20,700,000
2,000,000
200,000
200,000
Nil
14
Estrella Resources Limited
*The non-executive directors purchased shares as part of the seed capital round on 19 July 2014 on equal terms with other investors
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 2016 the executive and non-executive officers
holding shares in the Company are disclosed above.
Options
Personnel
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
Personnel
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
Balance as
at 1 July
2015
1,000,000
1,000,000
1,000,000
3,000,000
2,000,000
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
Fair value per
option at grant
date
-
-
-
-
-
Fair value per
option at grant
date
0.00001
0.00001
0.00001
0.00001
0.00001
Balance as
at 30 June
2016
1,000,000
1,000,000
1,000,000
3,000,000
2,000,000
Balance as
at 30 June
2015
1,000,000
1,000,000
1,000,000
3,000,000
2,000,000
Options issued to Directors during the 2015 and 2016 financial years are not linked to ongoing remuneration packages.
All 8,000,000 options held by directors at 30 June 2016 are exercisable at $0.25 each and expiring 7 February 2019. There
are no milestones for achievement or vesting associated with the options.
Options granted to Directors and key management personnel take into account that the Company’s funds are best
utilised in advancing the development of the Kidston Energy Hub and that long term rewards will be derived by
preserving cash and incentivising Directors and Management with Options with a strike price 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. The principal terms of Mr Addison’s agreement are as follows:
(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)
overall responsibility for the day to day management of the business of the Company;
assisting with 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.
(c)
(d)
(e)
15
Estrella Resources Limited
(Remuneration) Michael Addison will receive a gross salary and may be granted, subject to any necessary shareholder
approval, incentives to provide ongoing service and commitment to the Company. Mr Addison’s current
remuneration is $350,000 (excluding superannuation) per annum.
(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 Agreements with each of Ben Guo and Simon Kidston in
their capacities as executive directors of the Company. Pursuant to their respective agreements, both Mr Kidston and
Mr Guo each receive a gross salary of $300,000 (excluding superannuation) per annum. The Executive Services
Agreements with Mr Guo and Mr 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.
The Remuneration policy is structured to reflect the Company’s performance. As Genex is currently in the advanced
development phase of renewable project, it is still in a pre-earnings stage. The Company’s performance is best measured
by progress made for the Kidston Projects. The successful development of the Projects at Kidston will deliver significant
value to shareholders.
End of Remuneration Report
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 are subject to various vesting conditions as announced to the ASX on 10 August 2015.
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
17,300,000
Out of 20,000,000 Loyalty Options originally issued at the IPO, 17,300,000 vested on 25 February 2016.
No person entitled to exercise any 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.
16
Estrella Resources Limited
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 2016
was $7,082,594. This was principally due to costs associated with an increase in activity by the Company in developing
its projects at the Kidston site.
The principal activities of the consolidated entity during the course of the year consisted of development activities
associated with the Kidston Solar Project and feasibility work associated the Kidston PSH Project.
The Company did not receive any revenue during the period other than interest earned from its bank accounts as well
as a research and development rebate from the ATO totalling 669,763.
Loss per Share
The loss per share for Genex Power Limited for the period was 4.45 cents per share.
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
There have been no non-audit services provided by the Company’s auditors William Buck during the financial year.
17
Estrella Resources Limited
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
31 August 2016
Sydney
18
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 2016
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
31 August 2016
19
CHARTERED ACCOUNTANTS & ADVISORSSydney Ofice Level 29, 66 Goulburn Street Sydney NSW 2000Telephone: +61 2 8263 4000Parramatta Ofice Level 7, 3 Horwood Place Parramatta NSW 2150PO Box 19 Parramatta NSW 2124Telephone: +61 2 8836 1500williambuck.comWilliam Buck is an association of independent firms, each trading under the name of William Buck across Australia and New Zealand with affiliated offices worldwide. Liability limited by a scheme approved under Professional Standards Legislation other than for acts or omissions of financial services licensees.
5.
FINANCIAL STATEMENTS
Contents
Statement of profit or loss and other comprehensive income ........................................................................................ 21
Statement of financial position ........................................................................................................................................ 22
Statement of changes in equity ........................................................................................................................................ 23
Statement of cash flows ................................................................................................................................................... 24
Notes to the financial statements .................................................................................................................................... 25
Directors' declaration ....................................................................................................................................................... 50
Independent auditor's report to the members of Genex Power Limited ......................................................................... 51
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 9
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 24 August 2016. The
directors have the power to amend and reissue the financial statements.
20
Estrella Resources Limited
Genex Power Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2016
Revenue
Expenses
Project costs
Salary expenses
Administrative expenses
Compliance cost and regulatory fees
Consulting costs
Legal fees
Travel and marketing
IPO costs
Finance expenses
Other expenses
Total Expenses
Notes
Consolidated
30 June
2016
$
30 June
2015
$
4
790,387
83,309
(4,742,219)
(678,224)
(1,640,652)
(1,046,611)
(595,714)
(57,919)
(357,844)
(179,265)
(159,587)
-
5
(148,757)
8,976
(308,509)
(111,733)
(301,421)
(38,945)
(104,494)
(538,698)
(4,500)
(3,449)
(7,872,981)
(3,136,583)
Loss before income tax expense
(7,082,594)
(3,053,274)
Income tax expense
Loss after income tax expense attributable to the owners of Genex Power
Limited
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
attributable to the owners of Genex Power Limited
Basic earnings per share
Diluted earnings per share
-
-
(7,082,594)
(3,053,274)
-
-
(7,082,594)
(3,053,274)
Cents
(4.45)
(4.45)
Cents
(3.26)
(3.26)
21
Estrella Resources Limited
Genex Power Limited
Statement of financial position
As at 30 June 2016
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Non-Current Assets
Term Deposit/Bank Guarantee
Environmental bond receivable
Goodwill
Property, plant and equipment
Other Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Convertible Note
Short term interest accrued
Loans
Provisions
Environmental bond payable
Rehabilitation and restoration provision
Non-Current Liabilities
Rehabilitation and restoration provision
Long term accrued interest
Total Liabilities
Net Assets
Equity
Share capital
Equity Reserve
Option reserves
Accumulated losses
Total Equity
Notes
Consolidated
30 June
2016
$
30 June
2015
$
7
8
9
10
10
11
12
10
13
17
17
14
15
13
15
16
17
18
19
20
4,179,614
418,836
2,684,163
7,282,613
3,804,312
-
3,804,312
605,474
18,270
8,232,368
15,514,981
389,337
1,065,068
63,111
2,249,730
47,368
-
234,000
4,048,614
3,570,311
377,599
3,947,910
7,996,524
7,518,457
15,800,028
630,077
1,578,785
(10,490,433)
7,518,457
10,669,145
80,075
58,123
10,807,342
-
3,804,311
3,804,312
-
18,270
7,626,893
18,434,235
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)
10,262,974
22
Estrella Resources Limited
Genex Power Limited
Statement of changes in equity
For the year ended 30 June 2016
Consolidated
Capital
Reserves
Reserves
Losses
Notes
Issued
Convertible
Note
Option Accumulated
Balance at 1 July 2014
Loss after income tax
$
717,350
-
Shares issued during the year net issue costs
Share options issued during the year
Balance at 30 June 2015
18
20
11,759,678
-
12,477,028
Balance at 1 July 2015
Loss after income tax
Shares issued during the year net issue costs
Equity value of ARENA Convertible Note
Share options issued during the year
Options lapsed
18
19
20
20
12,477,028
-
3,323,000
-
-
$
-
-
-
-
-
-
-
-
630,077
Total
Equity
$
$
$
30
(540,866)
176,514
-
(3,053,274)
(3,053,274)
-
1,380,055
-
-
11,759,678
1,380,055
1,380,085
(3,594,140)
10,262,974
1,380,085
(3,594,140)
10,262,974
-
(7,082,594)
(7,082,594)
-
-
-
385,000
-
-
3,323,000
630,077
385,000
(186,300)
186,300
-
Balance at 30 June 2016
15,800,028
630,077
1,578,785
(10,490,433)
7,518,457
23
Estrella Resources Limited
Genex Power Limited
Statement of cash flows
For the year ended 30 June 2016
Cashflow from Operating Activities
Receipts from non-ordinary activities
Payments to suppliers and employees (inclusive of GST)
Interest income
Interest expense
Notes
Consolidated
30 June
2016
$
30 June
2015
$
672,650
11,880
(10,507,340)
(2,202,874)
96,090
-
22,472
(4,500)
Net cash utilised by operating activities
28
(9,738,600)
(2,173,022)
Cashflow from Investing Activities
Capital work in progress
Payment for purchase of land
Term Deposit/Environmental Bond
Net cash used in investing activities
Cashflow from Financing Activities
Gross proceeds from issue of shares
Capital raising costs
Net proceeds from issue of shares
Net proceeds from issue of options
Net R&D loan movement
Net Convertible Note loan movement
Net loan movement
Net cash from financing activities
(430,474)
(175,000)
(3,804,312)
(4,409,786)
3,500,000
(177,000)
3,323,000
-
2,200,000
2,135,854
4,335,854
7,658,854
-
-
-
13,788,600
(1,187,619)
12,600,981
-
-
-
2,279
12,603,260
Net increase in cash and cash equivalents
(6,489,532)
10,430,238
Cash and Cash equivalent at the beginning of the financial year
10,669,145
238,907
Cash and Cash equivalents at the end of the financial year
7
4,179,613
10,669,145
24
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
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 26.
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 2016 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.
25
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
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:
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
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.
26
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
Trade and other receivables
Trade receivables are initially recognised at 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.
Interest
Interest income and expenses are reported on an accrual basis using the effective interest method.
Plant, Property and Equipment
Land
Land assets are recorded at cost on the date of acquisition.
Work in Progress Capital Assets
Work in Progress Capital Assets represent project development costs incurred prior to commencement of construction
for projects. Work in Progress Capital assets are not amortised, but are transferred to fixed assets and depreciated from
the time the asset is held ready for use on a commercial basis.
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
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired.
Other non-financial assets reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairments recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount.
Recoverable amount the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset
or cash-generating unit to which the asset belong. Assets that do not have independent cash flows are grouped together
to form a cash-generating unit.
27
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
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.
Rehabilitation and restoration 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.
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.
28
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
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.
Convertible notes
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the
statement of financial position, net of transaction costs.
On the issue of the convertible notes, in accordance with accounting practice, the fair value of the liability component is
determined using a market rate for an equivalent non-convertible bond and this amount is carried as a current liability
on the amortised cost basis until extinguished on conversion or redemption. The increase in the liability due to the
passage of time is recognised as a finance cost. The remainder of the proceeds are allocated to the conversion option
that is recognised and included in shareholders’ equity as a convertible note reserve, net of transaction costs. The
carrying amount of the conversion option is not remeasured in the subsequent years. The corresponding interest on
convertible notes is expensed to profit or loss.
In the financial statements, the fair value of convertible notes comprises the fair value of the liability and the equity
residual value. The Company has recorded convertible notes based on the present value of the deemed future
repayments under the terms of the agreement. This is because, given the nature and size of the Company, the face
value of the unsecured debt under the convertible note is the most reliable estimate of the fair value of the unsecured
debt (i.e. there exists no market for debt of this nature to facilitate a fair value estimate).
Fair value measurements
The Company measures and recognises the following liabilities at fair value on a recurring basis after initial recognition:
Convertible Note
(i) Fair value hierarchy
AASB 13: Fair Value Measurement requires the disclosure of fair value information by level of the fair value hierarchy,
which categorises fair value measurements into one of three possible levels based on the lowest level that an input that
is significant to the measurement can be categorised into as follows:
Level 1
Level 2
Level 3
(unadjusted)
Measurements based on quoted
in active
prices
markets for identical assets or
liabilities that the entity can access
at the measurement date
Measurements based on inputs
other than quoted prices included
in Level 1 that are observable for
the asset or liability, either directly
or indirectly
Measurements
on
unobservable inputs for the asset
or liability
based
29
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
The fair values of assets and liabilities that are not traded in an active market are determined using one or more
valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data.
If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or
more significant inputs are not based on observable market data, the asset or liability is included in Level 3.
(ii) Valuation techniques
The Company selects a valuation technique that is appropriate in the circumstances and for which sufficient data is
available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific
characteristics of the asset or liability being measured. The valuation technique selected by the Company is:
A Black Scholes valuation techniques that use listed prices and other relevant information, including strike price, volatility
and risk free interest inputs.
When selecting a valuation technique, the Company gives priority to those techniques that maximise the use of
observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as
publicly available information on actual transactions) and reflect the assumptions that buyers and sellers would generally
use when pricing the asset or liability are considered observable, whereas inputs for which market data is not available
and therefore are developed using the best information available about such assumptions are considered unobservable.
The following table provides the fair values of the Company’s assets and liabilities measured and recognised on a
reoccurring basis after initial recognition and their categorisation within the fair value hierarchy:
No Convertible Notes had been issued in 2015
30 June 2016
Note
Level 1
Level 2
Level 3
Recurring fair value measurements
Convertible Note
Earnings per share
$
-
$
-
$
Total
$
1,065,067
1,065,067
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.
Research and Development Tax Incentive
Research and development tax credits are recognised as R&D revenue on a receipt basis.
Issued capital
Ordinary shares are classified as equity.
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
30
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
allocated at a reporting date are finalized as soon as the relevant information is available, within a period 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 profit or loss and other comprehensive
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 profit or loss and other comprehensive
income.
Acquisition related costs are expensed in the period in which they are incurred and the services are received
Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes party to the contractual provisions to
the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase
or sale of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value. . Subsequent measurement of financial assets and financial
liabilities are described below.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective interest method, or
cost.
The effective interest method is used to allocate interest income or interest expense over the relevant period and is
equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and
other premiums or discounts) over the expected life (or when this cannot be reliably predicted, the contractual term) of
the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected
future net cash flows will necessitate an adjustment to the carrying amount with a consequential recognition of an
income or expense item in profit or loss.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through
the amortisation process and when the financial asset is derecognised.
Financial liabilities
Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost. Gains
or losses are recognised in profit or loss through the amortisation process and when the financial liability is derecognised.
Impairment
A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events (a “loss event”) having occurred, which has an impact on the estimated
future cash flows of the financial asset(s).
31
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
Derecognition
Financial assets are derecognised when the contractual rights to the cash flows from financial assets expire, or when the
financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expired.
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:
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 periods 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:
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 won 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
Management is in the process of assessing the impact of the new standard
32
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
AASB 15 Revenue from Contracts with Customers, AASB 2014-5 Amendments to Australian Accounting Standards
arising from AASB 15, AASB 2015-8 Effective Date of AASB 15 and AASB 2016-3 Clarifications to AASB 15 (applicable
for annual reporting periods commencing on or after 1 January 2018)
AASB 15 establishes a single, comprehensive framework for revenue recognition, and replaces the previous revenue
Standards AASB 118 Revenue and AASB 111 Construction Contracts, and the related Interpretations on revenue
recognition Interpretation 13 Customer Loyalty Programmes, Interpretation 15 Agreements for the Construction of
Real Estate, Interpretation 18 Transfers of Assets from Customers and Interpretation 131 Revenue—Barter
Transactions Involving Advertising Services.
AASB 15 introduces a five step process for revenue recognition with the core principle of the new Standard being
for entities to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the
consideration (that is, payment) to which the entity expects to be entitled in exchange for those goods or services.
AASB 15 will also result in enhanced disclosures about revenue, provide guidance for transactions that were not
previously addressed comprehensively (for example, service revenue and contract modifications) and improve
guidance for multiple-element arrangements.
Management is in the process of assessing the impact of the new standard.
AASB 16 Leases (applicable for annual reporting periods commencing on or after 1 January 2019)
AASB 16 introduces a single lessee accounting model that requires all leases to be accounted for on balance sheet.
A lessee will be required to recognise an asset representing the right to use the underlying asset during the lease
term (ie right-of-use asset) and a liability to make lease payments (ie lease liability). Two exemptions are available
for leases with a term less than 12 months or if the underlying asset is of low value.
The lessor accounting requirements are substantially the same as in AASB 117. Lessors will therefore continue to
classify leases as either operating or finance leases.
AASB 16 will replace AASB 117 Leases, Interpretation 4 Determining Whether an Arrangement contains a Lease,
Interpretation 115 Operating Leases – Incentives and interpretation 127 Evaluating the substance of Transactions
Involving the Legal Form of a Lease.
The company has not yet assessed the impact of this standard
The Company does not anticipate early adoption of any of the above Australian Accounting Standards or
Interpretations.
33
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
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 has 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.
Fair value measurement hierarchy
The Consolidated entity is required to classify all assets and liabilities measured at fair value, using a three level hierarchy,
based on the lowest input that is significant to the entire fair value measurement, being Level 1: Quoted prices
(unadjusted) in active markets for identical assets that the entity can access at the measurement date. Level 2: Inputs
other than quoted pries included within Level 1 that are observable for the liability, either directly or indirectly, and Level
3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine significant to fair value
and therefore which category the asset or liability is place in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include
discount cash flow analysis making use of observable inputs that require significant adjustments based on unobservable
inputs.
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;
Developments in technology;
Regulatory requirements and environmental management strategies;
Movements in factors affecting the discount rate applied.
Changes in the estimated extent and costs of anticipated activities; and
34
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
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.
Note 4: Revenues
R&D tax credits
Fuel tax credits
Interest revenue
Interest benefit from Convertible Note
Note 5. Expenses
Profit before income tax includes the following specific expenses:
Finance costs
Bank fees
Interest expense arising from Convertible Note
Interest and finance charges paid/payable
Superannuation expense
Defined contribution superannuation expense
Salary expenses including
Share-based payments expense
Note 6: Income tax expense
Consolidated
30 June 2016
$
30 June 2015
$
669,763
2,887
96,091
21,646
790,387
60,837
22,472
83,309
Consolidated
30 June 2016
$
30 June 2015
$
127,111
21,646
148,757
4,500
4,500
117,901
88,611
385,000
55
30 June
2016
$
30 June
2015
$
Numerical reconciliation of income tax benefit and tax at the statutory rate
(Loss) before income tax benefit
(7,082,594)
(3,053,274)
Tax at the statutory tax rate of 30%
(2,124,778)
(915,982)
35
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
Tax loss not recognised
Income tax expense
(2,124,778)
(915,982)
-
-
The group has estimated revenue losses for which no deferred tax asset is recognised in the statement of financial
position of $7,082,594, (2015 - $3,053,274) which are available indefinitely for off-set against future taxable income
subject to meeting the relevant statutory tests.
Note 7. Cash and cash equivalents
Cash at bank
Cash and cash equivalents
Note 8. Trade and other receivables
GST receivable
Rental bond
Sundry debtors
Trade and other receivables
Note 9. Prepayments
Ergon substation deposit
Insurance
Environmental Authority and Land Rent
Prepayments
30 June
2016
$
30 June
2015
$
4,179,614
10,669,145
4,179,614
10,669,145
30 June
2016
$
393,197
21,256
4,382
30 June
2015
$
80,075
-
-
418,836
80,075
30 June
2016
$
2,581,643
63,223
39,297
30 June
2015
$
-
33,761
24,362
2,684,163
58,123
The Ergon substation deposit is the initial payment on the capital works program Ergon is required to undertake to
upgrade the Kidston substation as part of the construction of the Kidston Solar Project. The substation upgrade will be
36
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
completed in parallel with the construction of the Kidston Solar Project and payment will be made periodically upon
milestones. The final cost of the substation upgrade is yet to be finalised.
Note 10. Other assets - Non-Current
Electricity Bond receivable
Term Deposit/Bank Guarantee for Environmental Bond
Environmental bond
30 June
2016
$
18,270
3,804,312
-
3,822,582
30 June
2015
$
18,270
-
3,804,311
3,822,582
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% freehold owner of the Kidston site.
The environmental bond will be released upon satisfactory restoration and rehabilitation of the mine site.
The bond is subject to an annual review by the Department of Environment and Hermitage Protection, most recently
conducted on 29 April 2016, confirming that the bond guarantee held by the Queensland government is sufficient to
meet the Environmental Protection Act’s requirements
Note 11. Goodwill
Cost
Net carrying amount
30 June
2016
$
3,804,312
30 June
2015
$
3,804,312
3,804,312
3,804,312
Kidston Gold Mines Limited (“KGM”) was acquired as a non-operational mine site for the strategic placement and
development of a pump-storage hydroelectric power station. The goodwill of $3,804,312 arose upon the acquisition of
KGM and the associated environmental liabilities of the site. The value of goodwill represents management’s view of its
business plan and a pre-feasibility study, which describes and supports the Board of Director’s view that the Hydro
Project is technically and economically viable.
The Kidston Hydro Project is one of two projects within the consolidated entity. As such, a large part of 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 Hydro Project. To date, the Company has raised over $17 million in funding
in order to advance the projects.
It is management’s view that the recoverable amount of the CGU implied from the future development of the Kidston
Hydro 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 over a 40-year period prepared by the Board of Directors. This is in the context of long life
37
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
hydroelectric power station which often has operating life well in excess of 40 years. An independent feasibility study
currently being undertaken by Entura has assessed the project to have a nominal operating life of 60 years. 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:
Generation capacity of 330MW
Total capex of $282m
Continuous generation capacity of 1,650MWh
Operating and maintenance cost of $5/MWh
Electricity price forecasts from Energetics
Discount rate of 8-12%
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 feasibility work done to date (and the range of options being
assessed between 250MW and 450MW) suggests that the Kidston Hydro 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 Hydro 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 capital expenditure. Modelling of the project has been done by independent experts and consultants
external to the company.
Note 12. Property, Plant and Equipment
On 18 January 2016, the term lease over the Kidston Project site was converted to freehold title and was acquired by
Kidston Gold Mines Limited from the Queensland State government for $175,000. Work in Progress Capital assets include
development costs incurred for the Kidston Solar Project.
Land
Work in Progress Capital assets
Property plant and equipment
Balance at the beginning of the year
Additions:
Land
Work in Progress Capital assets
Disposals
Depreciation
Balance at the end of the year
-
175,000
430,474
-
-
605,474
30 June
2015
$
-
30 June
2016
$
175,000
430,474
605,474
38
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
Note 13. Trade and other payables
Current
Trade creditors and accruals
PAYG withholdings
Bond release payable
30 June
2016
$
333,461
55,876
-
30 June
2015
$
316,334
174,827
3,804,311
389,337
4,266,476
The Bank Guarantee over the Kidston Project site previously held by Barrick (Australia) was replaced by Genex Power
Limited
Note 14. Loans
R&D Facility
Loan payable
30 June
2016
$
2,200,000
49,730
2,249,730
30 June
2015
$
-
46,284
46,284
The R&D Facility is a short term debt facility entered into between Genex Power and the Commonwealth Bank. The
facility has the following terms:
Principal - $2,200,000
Maturity - 6 months
Interest - BBSY + 3.25%
The R&D facility is based on 90% of the anticipated R&D refund for FY 2016. There is a fixed and floating charge over the
non-PPSA assets of Genex Power.
Refer to note 21 for further information on financial instruments.
Note 15. Current liabilities - provisions
Provision for annual leave
Rehabilitation and restoration provision
30 June
2016
$
30 June
2015
$
47,368
234,000
25,194
234,000
The current rehabilitation and restoration provision represents the annual costs required to maintain the existing
environmental conditions at the Kidston Project site and to ensure that KGM complies with the conditions set out in the
Environmental Authority. The costs consist of environmental reporting to the Department of Environment and Heritage
Protection (DEHP), site manager costs, sampling and laboratory and monitoring services.
39
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
Note 16. Non-current liabilities - provisions
Rehabilitation and restoration provision
30 June
2016
$
30 June
2015
$
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 Project site following the mining activities which have taken place. As the
site will now be developed into a renewable energy hub, 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 17. ARENA Convertible Note
On 18 December 2015, Genex entered into a convertible note funding agreement with ARENA for up to $4 million to
fund the feasibility study for the hydro project. As at 30 June 2016, $2,135,854 had been drawn down. The convertible
note is deemed to be hybrid security with a debt component and an equity component.
Convertible Note (See Note 21)
Convertible note reserve (See Note 19)
Interest benefit accrued
Key terms of the Funding Agreement:
30 June
2016
$
30 June
2015
$
1,065,067
630,077
440,710
2,135,854
-
-
-
-
Unsecured unlisted convertible redeemable notes (the Notes) of up to $4 million, to be issued in tranches based
on payments received by Genex from ARENA:
- with payments to Genex to be made upon completion of agreed milestones, based on pre-approved
feasibility study expenditure;
Notes are convertible at a conversion price of $0.20 per share into Genex ordinary shares at the election of
ARENA;
If ARENA chooses to convert, Genex retains the right to either issue ordinary shares at $0.20 each or to repay
ARENA the face value of the Notes as if they had been converted, at the then volume weighted average price
of Genex shares traded on the ASX;
Voluntary escrow will apply to any shares issued to ARENA upon conversion until the earlier of Financial Close
for the Project funding or 30 June 2017 (other than in the event that funding is not fully drawn and ARENA’s
shareholding is less than 10%, or in the event of a takeover or scheme of arrangement);
Genex has the right to redeem the Notes at face value at any time from the date of issue for a period of 5 years
in respect of amounts drawn down but not converted (ARENA may convert during the redemption notice
period);
40
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
Genex must redeem the Notes at face value upon the completion of a bankable feasibility study in respect of
the Project and the execution of all agreements required for the funding of the construction of the Project;
ARENA has the right to require redemption of the Notes should certain default events occur;
The Notes lapse and are not repayable by Genex after a period of 5 years if not previously redeemed or
converted; and
The Notes carry a zero coupon;
The Notes carry standard terms consistent with convertible note arrangements and require Genex to provide
key feasibility progress study reports and findings to ARENA and other stakeholders.
The zero coupon attached to each Note, represents an interest benefit available to the company, arising over the
period of the outstanding notes. The interest benefit is determined upon issue of each Note based on an implied
discount rate of 5%. The interest benefit is released to the statement of profit or loss and other comprehensive
income over the period of the Note.
The Convertible Note from ARENA is a zero coupon note and as such there are no periodic interest charges
associated with the instrument
Note 18. Equity - issued capital
30 June
2016
Shares
30 June
2015
Shares
30 June
2016
$
30 June
2015
$
Ordinary shares - fully paid
180,268,750
158,393,750
15,800,028
12,477,028
Movements in ordinary share capital
Details
Balance
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
Issue of shares
Share issue costs, net of tax
Movement for the year
Balance
Date
No of shares
Issue price
$
1 July 2014
18 July 2014
27 July 2014
30 June 2015
30 June 2015
30 June 2015
30 June 2015
17 June 2016
30 June 2016
74,715,000
19,309,000
691,000
23,678,750
40,000,000
-
-
83,678,750
158,393,750
21,875,000
-
21,875,500
180,268,750
$0.10
$0.10
$0.16
$0.20
-
-
$0.16
-
717,350
1,930,900
69,100
3,788,600
8,000,000
(1,380,000)
(648,867)
11,759,678
12,477,028
3,500,000
(177,000)
3,323,000
15,800,028
41
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
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.
As a development company, Genex seeks new capital to fund its development activities across its projects, such capital
has been sourced from the issue or shares, convertible notes, and R&D financing.
In order to maintain or adjust the capital structure, the consolidated entity may return capital to shareholders, issue new
shares or sell assets to reduce debt.
Note 19. Convertible Note Reserve
Equity Component of ARENA Convertible Note
Refer to Note 17 for further details
Note 20. Equity - option reserves
Option reserves
Option reserve
30 June
2016
$
630,077
630,007
30 June
2015
$
-
-
30 June
2016
$
30 June
2015
$
1,578,785
1,380,085
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:
the board of directors authorised the issue of 5,000,000 million share options in the consolidated entity to Arran
McGhie (COO)
2,700,000 of the loyalty options issued on IPO were forfeited on 25 February 2016 by non-qualifying option holders,
as determined on that date.
42
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
Options at the start of the period (1/7/2015)
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 period
(30/6/2016)
Options at the start of the period (1/7/2014)
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 period
(30/6/2015)
28,500,000
5,000,000
2,700,000
-
-
30,800,000
25,800,000
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
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
17,300,000
$0.069
1 ordinary share in the parent entity
$0.20
Vested on 25 February 2016
30 June 2015
25 February 2018
43
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
Option exercise period
At any time from date of vesting to date of expiry
Chief Operating Officer Options
Number
Value per option
Subscription price per option
Each option is convertible into
Exercise price per option
Vesting condition
Issue date
Expiry date
Option exercise period
Other conditions
5,000,000
$0.077
$Nil
1 ordinary share in the parent entity
$0.25
The options will vest in 5 separate tranches upon
the achievement of various milestones. If a
milestone is not achieved, then the options for
that milestone will lapse unvested.
6 August 2015
6 August 2020
At any time from date of vesting
None
On 6 August 2015, 5,000,000 options were issued to Mr. Arran McGhie (Chief Operating Officer). 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. The total value of these options at grant date was $385,000.
The value of the Chief Operating Officer’s options granted during the year ended 30 June 2016 was calculated to be
$0.077 using Black Scholes Model. 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 profiles. Features
incorporated into the measurement of fair value of the options include:
Underlying share price
Exercise price
Expected volatility
Option life
Expected dividends
Risk free interest rate
$0.175
$0.25
60%
5 years
Nil
2.5%
Note 21. Financial instruments
Financial risk management objectives
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 meet
its contractual obligations. The consolidated entity’s trade and other receivables consist of an amount receivable from
44
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
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 2016
$
30 June 2015
$
4,179,614
418,836
4,598,450
10,669,145
80,075
10,749,220
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.
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.
Weighted
average
interest rate
1 year or less
Between
1 and 2 years
Between
2 and 5 years
%
$
5.00% *
5.25%
8.15%
436,706
1,065,068
2,200,000
49,730
3,751,504
$
-
-
-
-
$
-
-
-
-
Consolidated –
30 June 2016
Non-derivatives
Non-interest bearing
Trade and other payables
Convertible Note payables
Interest-bearing – fixed rate
R&D Facility
Loan payable
Total non-derivatives
*Implied interest rate
Total
$
436,706
1,065,068
2,200,000
49,730
3,751,504
45
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
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
%
$
$
$
Total
$
6.50%
4,320,666
8.15%
46,284
4,366,950
-
-
-
-
4,320,666
-
-
46,284
4,366,950
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Aside from security held by the R&D Funding Facility, there have been no amounts pledged as collateral.
The market rate of interest will affect the interest rate payable on the R&D facility. The interest rate on the R&D facility
is BBSY + 3.25%. To the extent, the market rate changes, so will the interest payable on the facility. The current BBSY is
approximately 2%.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 22. 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
Post-employment benefits
Long-term benefits
Share-based payments
30 June
2016
$
30 June
2015
$
1,127,639
115,644
-
385,000
1,628,283
982,750
112,528
-
55
1,095,333
Short-term employee benefits include salaries and other short-term remuneration payments. Post-employment benefits
include superannuation payments made by Genex. Share-based payments refers to employee options paid to key
personnel.
46
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
Note 23. Remuneration of auditors
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 24. Commitments and contingent liabilities
30 June
2016
$
49,315
-
49,315
30 June
2015
$
25,000
21,000
46,000
Subsequent to the end of the year, Genex has committed to a head office lease until the 31 May 2017. The lease cost
per month is $6,050.
Note 25. Related party transactions
Controlled entities
A list of controlled entities is provided in Note 27 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 22 to these financial statements.
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
20 above.
Note 26. 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
Parent
30 June
2016
$
30 June
2015
$
2,444,924
2,377,088
2,444,924
2,377,088
47
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Equity Reserve
Option reserves
Accumulated losses
Total equity
30 June
2016
$
30 June
2015
$
4,659,788
10,669,045
20,855,857
15,226,027
6,553,859
482,564
7,996,525
4,286,876
15,800,028
630,077
1,578,785
(5,149,558)
12,477,028
1,380,085
(2,917,962)
12,859,332
10,939,151
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2016 and 30 June 2015.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in Note 1.
Note 27. 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
Genex (Kidston) Pty Limited
*Kidston Gold Mines Limited
*Genex (Solar) Pty Limited
Principal place of business /
Country of incorporation
Australia
Australia
Australia
30 June
2016
%
30 June
2015
%
100.00%
100.00%
100.00%
100.00%
100.00%
-
*These companies are 100% owned by Genex (Kidston) Pty Limited. Genex (Solar) Pty Limited was incorporated on 1
July, 2015. Subsequent to year-end the Company commenced the setting up of a specific ownership structure which
comprises several new subsidiary entities to facilitate the strategic and financial ownership objectives of the Genex Solar
sub-group. None of the entities have commenced trading or undertaken any other activity other than incorporation.
48
Genex Power Limited
Notes to the financial statements
For the year ended 30 June 2016
strella Resources Limited
Note 28. Reconciliation of profit after income tax to net cash from operating activities
Loss after income tax expense for the year
(7,082,594)
(3,053,274))
30 June
2016
$
30 June
2015
$
Adjustments
Share based payments
Share issue costs expensed
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in prepayments
(Increase)/Decrease in trade and other payables
Net cash from operating activities
Note 29. Events after the reporting year
385,000
-
-
538,698
(338,762)
(2,626,040)
(76,204)
(48,957)
(170)
390,681
(9,738,600)
(2,173,022)
There have been no other material events or circumstances which have arisen since 30 June 2016 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.
On 1 July 2016 the Company engaged a new employee, Mr James Harding, in the role of Executive General Manager.
Subject to satisfactory completion of a probationary period expiring 1 September 2016, the Company will be issuing and
allotting to Mr Harding a total of 2,400,000 unlisted options to acquire ordinary shares in the Company at a price of $0.25
each. The options will carry a number of vesting conditions and milestones for achievement.
Note 30. Earnings Per Share
30 June
2016
$
30 June
2015
$
Total comprehensive loss for the year
Weighted average number of ordinary shares used in calculating basic and diluted
earnings per share
7,082,594
3,053,274
159,172,860
93,711,660
Basic and diluted earnings per share
Cents
(4.45)
Cents
(3.26)
49
strella Resources Limited
6. DIRECTOR’S DECLARATION
In the directors' opinion:
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 2016 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the consolidated entity 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
31 August 2016
Sydney
50
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 20 to 50, which comprises the statement of financial position as at 30 June 2016, 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.
51
CHARTERED ACCOUNTANTS & ADVISORSSydney Ofice Level 29, 66 Goulburn Street Sydney NSW 2000Telephone: +61 2 8263 4000Parramatta Ofice Level 7, 3 Horwood Place Parramatta NSW 2150PO Box 19 Parramatta NSW 2124Telephone: +61 2 8836 1500williambuck.comWilliam Buck is an association of independent firms, each trading under the name of William Buck across Australia and New Zealand with affiliated offices worldwide. Liability limited by a scheme approved under Professional Standards Legislation other than for acts or omissions of financial services licensees.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GENEX POWER LIMITED AND
CONTROLLED ENTITIES (CONT)
Auditor’s Opinion
In our opinion:
a)
the financial report of Genex Power Limited on pages 20 to 50 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 2016 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
ii.
b)
the financial report also complies with International Financial Reporting Standards as disclosed
in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 12 to 16 of the directors’ report for the
year ended 30 June 2016. 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 2016,
complies with section 300A of the Corporations Act 2001.
William Buck
Chartered Accountants
ABN 16 021 300 521
L.E. Tutt
Partner
31 August 2016
52
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 second 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 24 August
2016 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 checks before appointing
a person, or putting forward to security holders
a candidate for election, as a director; and
(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 Chairman,
Individual Directors and the Managing Director is
outlined in the following paragraphs of the Company’s
Board Charter:
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
separately
responsible for the ongoing management of the
Company in accordance with the strategy, policies and
in
programs approved by the Board as outlined
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:
is
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.
53
strella Resources Limited
All of the Company’s current directors have undergone
bankruptcy and police checks prior to the Company’s
IPO and appropriate checks will also be
recent
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:
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
director 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
54
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
strella Resources Limited
positions and across the whole organisation
(including how the entity has defined “senior
executive” for these purposes); or
(b) A copy of the Company’s Diversity Policy is available
on the Company’s website and a summary is included in
this Corporate Governance Statement.
(2) if the entity is a “relevant employer” under
the Workplace Gender Equality Act, the
entity’s most
recent “Gender Equality
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
the
with
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
The Company’s Corporate Governance
required.
Statement each year will contain an update on the
Company’s
ASX’s
recommendations and the Company’s Diversity Policy.
Which is contained in (i) below.
(i) The Company currently only has 5 employees who
are all male and these comprise the 3 executive
directors and the Chief Operations Officer and the
Executive General Manager. 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 each review of the Board’s skills and
in accordance with the Company’s
requirements
Diversity Policy.
(ii) The entity is not a “relevant employer”.
(a) The Chairman is responsible for the:
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 the process for evaluating
the performance of the Board, its Committees and
individual directors.
The Board (other than the Chairman) is responsible for
the:
evaluation and review of the performance of
the Chairman; and
review of the effectiveness and programme of
Board meetings.
The process for the performance evaluation of the
Board, its Committees and Directors generally involves
an internal review. 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) An informal review of the Board was carried out
prior to
listing on the ASX however, no formal
evaluation of the Board has yet taken place noting the
early stage of the Company’s operations. A full
evaluation of the Board will be carried out in the next
twelve months.
55
strella Resources Limited
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
in
undertaken
accordance with that process.
reporting period
the
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 its duties and
responsibilities effectively.
(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
individual performance against
which assesses
predetermined objectives.
(b) An evaluation of the performance of the Chief
Operations Officer was conducted at the end of his
probation period in late 2015. With respect to the only
other senior executive, this will take place in the next
twelve months.
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
in consultation with the Chief
Managing Director
Operations Officer for recommendation to the Board.
As the Company grows in size it is planned that the
implement a separate Nomination
Company will
separate Nomination
Committee with
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 may
be made in the future as required noting that there was
one appointment during the year, Mr Yongqing Yu. The
Board shall ensure that, collectively,
it has the
appropriate range of skills and expertise to properly
fulfil its responsibilities, including:
accounting;
finance;
business;
the Company’s industry;
Managing Director-level experience; and
relevant technical expertise.
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.
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
in accordance with the
Company’s Constitution and having regard to the ability
individual to contribute to the ongoing
of the
incumbents
56
strella Resources Limited
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:
accounting;
finance;
business;
the Company’s industry;
Managing Director-level experience; and
relevant technical expertise.
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.
The mix of skills of the current Board is set out on the
Company’s website.
(a) Currently only 2 of the 6 directors are considered to
be independent given that Michael Addison is the
Managing Director, Simon Kidston is an Executive
Director, Ben Guo is the Finance Director and Yongqing
Yu is the representative of the Company’s largest
shareholder. 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
Mr Yongqing Yu – 8 February 2016
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
to gain a better
Executives
understanding of:
implement an appropriate
to enable
them
the Company’s financial, strategic, operational
and risk management position;
the rights, duties and responsibilities of the
directors;
57
strella Resources Limited
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 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.
Board Charter;
Audit & Risk Management Committee
Charter;
Code of Conduct - Obligations to
Stakeholders;
Code of Conduct - Directors and Key Officers;
Continuous Disclosure;
Remuneration Committee Charter;
Diversity.
Securities Trading; and
(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 met 3 times in the financial year with
all members present at each of the 3 meetings.
(b) Not applicable.
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 verify and safeguard the integrity
the
of
processes for the appointment and removal of
the external auditor and the rotation of the audit
engagement partner.
its corporate
reporting,
including
4.2
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
records of the entity have been properly maintained
and that the financial statements comply with the
appropriate accounting standards and give a true
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 and received such
declarations in the financial year.
58
strella Resources Limited
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.
4.3
5.1
6.1
Principle 6 Recommendations:
A listed entity should provide information about
itself and its governance to investors via its website.
6.2
6.3
6.4
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.
7.1
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
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.
(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
“Corporate Governance Policy – Continuous 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.
to
59
strella Resources Limited
(b) if
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 the processes it employs for overseeing
the entity’s risk management framework.
7.2
The board or a committee of the board should:
(a) review the entity’s risk management framework
at least annually to satisfy itself that it continues
to be sound; and
(b) disclose, in relation to each reporting period,
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
function is structured and what role it performs;
OR
(b) if it does not have an internal audit function, that
fact and the processes it employs for evaluating
and continually improving the effectiveness of
its risk management and
internal control
processes.
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:
(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
management and
is
internal control effectiveness
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 of the Company’s risk management
framework occurs at every Board meeting with the
Board reviewing and prioritising the top risks faced by
the Company as advised by the COO in conjunction with
the Audit & Risk Management Committee.
(a) The Company’s internal audit function is exercised
by the Financial Director, Mr Ben Guo 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:
60
strella Resources Limited
(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
executives and ensuring that such remuneration
is appropriate and not excessive.
directors
and
for
8.2
A listed entity should separately disclose its policies
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.
(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 met twice in the financial year with
all 3 members being present at both meetings of the
Committee. (b) Not applicable.
from
remuneration
The Committee distinguishes the structure of non-
that of
executive directors'
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
is
under any equity based remuneration scheme
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…”
61
9. ADDITIONAL SECURITIES EXCHANGE INFORMATION
The following information is provided pursuant to ASX Listing Rule 4.10 and is current as at 10 August 2016:
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
681
227
%
17.573
15.255
9.819
7.178
49.824
100.00
Total Units
31,678,750
27,500,000
17,700,000
12,940,000
89,818,750
180,268,750
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 2016
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
5
52
95
359
170
681
181
208,979
837,244
16,311,314
162,911,032
180,268,750
0.00
0.116
0.464
9.048
90.371
100.00
Top 20 Shareholders
Total Units
Percentage %
ZHEFU HYDROPOWER INTERNATIONAL ENGINEERING CORPORATION LTD
31,678,750
17.573
62
strella Resources Limited
RIVONIA PTY LIMITED
27,500,000
15.255
KFT CAPITAL PTY LIMITED
17,700,000
DOWNING DOMAIN INVESTMENTS PTY LTD
12,940,000
AUSTRALIAN GO FUTURES PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
PANCHO (NSW) PTY LIMITED
KFS PTY LIMITED
DAVID NOLAN
MOORE PARK CAPITAL PTY LIMITED
CITICORP NOMINEES PTY LIMITED
JOHN NOLAN
LONGMUIR RESOURCES PTY LTD
WOLSELEY ROAD #1 PTY LIMITED
STONECOT PTY LIMITED
JF MOFFATT & GN MOFFATT
J F MOFFATT & G N MOFFATT
JAMES WILLIAM HERMISTON
MR GEOFFREY LEVY
STEVEN SEQUIRA PTY LTD
Top 20 Shareholders
Total Issued Capital
7,000,000
5,361,154
3,300,000
3,000,000
2,225,000
2,040,000
1,750,000
1,560,000
1,400,000
1,300,000
1,200,000
1,000,000
1,000,000
970,000
950,000
950,000
124,824,904
180,268,750
9.819
7.178
3.883
2.974
1.831
1.664
1.234
1.131
0.971
0.865
0.777
0.721
0.666
0.555
0.555
0.538
0.527
0.527
69.24
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
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
63
strella Resources Limited
Optionholders with more than 20% of the Class of Option:
ESCR INVESTMENTS PTY LTD
ALAN MYLES ROGER DE CHASTEIGNER DU MEE
3,000,000
2,000,000
35.294
23.529
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
50
33
117
20
2
0
250,000
271,250
4,204,250
12,574,500
17,300,000
0.00
1.445
1.568
24.302
72.685
100.00
28.006
23.121
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
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 no shares or options subject to voluntary escrow.
There is no current on-market buy-back.
64
10. CORPORATE DIRECTORY
DIRECTORS
Dr Ralph Craven
Mr Michael Addison
Mr Simon Kidston
Mr Ben Guo
Mr Alan du Mée
Mr Yongqing Yu
Non-Executive Chairman
Managing Director
Executive Director
Finance Director
Non-Executive Director
Non-Executive Director
COMPANY SECRETARY
Mr Justin Clyne
REGISTERED OFFICE & PRINCIPAL PLACE IF BUSINESS
Level 9, 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
Commonwealth Bank of Australia
65