2017 Annual Report
ABN 18 152 098 854
Estrella Resources Limited
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 .................................................................................................................... 17
Financial Statements ........................................................................................................................................... 18
Directors’ Declaration……………………………………………………………… ........................................................................ 60
Independent Auditor’s Report ............................................................................................................................. 61
Corporate Governance Statement……………………………………………. ....................................................................... 69
Additional Securities Exchange Information........................................................................................................ 78
10.
Corporate Directory ............................................................................................................................................. 82
1.
CHAIRMAN’S LETTER
Dear Shareholder,
On behalf of Genex Power Limited (Genex or Company) I am very pleased to present
the Company’s third annual report since listing on the ASX in 2015.
The 2017 Financial Year (FY) marked a defining year for the Company, with the
50MW Kidston Solar Project (KS1) successfully financed, enabling construction to
commence in mid-February. Construction continues to progress as planned,
remaining on-track and on-budget for Practical Completion in Q1 2018. Attention
has now turned to the financing of the Company’s Stage Two Projects comprising the
250MW Kidston Pumped Storage Hydro Project (KPSHP) and the integrated 270MW
Solar Project (KS2).
Phase One - 50MW Kidston Solar Project (KS1):
The most significant milestone during this reporting period was the successful
financial closure of KS1, which will soon be the Company’s first project to generate
electricity into the National Electricity Market (NEM). Genex successfully raised,
through a combination of equity, debt and grants, a total of $126M to fund the capex
required to complete the project’s construction. A key component of the KS1 capex
requirement was obtained via the Federal Government through the Australian Renewable Energy Agency (ARENA),
which provided $8.9M in grant funding. The Queensland Government support was also fundamental in the success of
KS1 as they provided a 20-year financial support deed for 100% of the energy that will be produced from KS1 via a long-
term price guarantee arrangement (akin to what is known in the industry as a Power Purchase Agreement or PPA). The
support from ARENA by way of an equity grant and the Queensland Government’s revenue support deed provided the
necessary ingredients to obtain low-cost debt funding. Debt funding was secured from the Federal Government’s Clean
Energy Finance Corporation (CEFC) and French bank Société Générale.
Phase Two – Kidston Solar/Hydro Project (KPSHP):
Following on from significant progress in 2016, this reporting year marked the finalisation of the technical feasibility
study for the KPSHP. Detailed studies and technical designs resulted in a number of potential configurations, varying in
design and output capacity, all of which are technically and commercially viable. The completion of these studies will
allow Genex to provide various strategic options to a potential energy off-taker from KPSHP.
Genex has been in detailed discussions with a number of potential energy partners, with ongoing discussions based
around securing the most financially viable option for the Company and its Shareholders. Our timeline is to reach
financial close in the middle of 2018 with construction to commence soon after financial close, with an estimated 18-
month build for KS2 and 36- 42 month build for KPSHP.
I am also pleased to reconfirm to our Shareholders the successful signing of a Heads of Agreement between Genex and
Powerlink Queensland (Powerlink). Powerlink is now undertaking studies and following necessary approval processes
to facilitate the construction of the required 275kV transmission line between Kidston and Mt. Fox. This Agreement
significantly de-risks the Phase Two Projects in terms of connecting KPSHP with the National Electricity Market. The
Queensland Government has announced its Powering North Queensland Plan which involves a feasibility study leading
to the construction of new transmission connecting many of the proposed renewable energy projects in North
Queensland to the National Grid. Our Kidston Renewable Energy Hub is in the centre of the renewable projects
proposed.
In addition to this, the Kidston Renewable Energy Hub (KS1, KS2 & KPSHP), the 275Kv transmission line easement and
the Copperfield Dam and the pipeline easement between the dam and Kidston, were all recently designated “Critical
Infrastructure” by the Queensland Government, a declaration awarded to only one other project in the State. This
recognition of significance to the State is an excellent result for Genex, emphasising the importance of Genex’s Projects
for social, economic and environmental reasons.
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Estrella Resources Limited
Discussions with potential debt providers and potential equity contributors for Phase Two are progressing well. The
Northern Australia Infrastructure Facility (NAIF) has already received first-stage board approval for potential
concessional debt funding for the integrated Projects. Genex will continue to engage with NAIF and other debt providers
going forward.
The coming year looks to be very promising for Genex Power, with first generation from KS1 expected to occur in late
2017 and anticipated financial closure for the Company’s flagship Stage Two projects later in the year.
On behalf of the Board, I would like to once again thank all Shareholders for their support over the past year, and extend
a warm welcome to all new Shareholders that have joined us for this promising journey.
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 Limited is an Australian publicly listed company (ASX Code: GNX)
which is focused on the generation and storage of renewable energy. Genex is
developing a renewable energy hub in north Queensland, where it is integrating
large scale solar with hydro pumped storage.
The Genex Kidston Renewable Energy Hub represents a unique and innovative
integration of intermittent solar energy with low cost energy storage creating
“Renewable Energy on Tap”. During the course of the 2017 financial year the
Company achieved numerous milestones including reaching financial close on its
50MW Kidston Solar Project (KS1). Other significant achievements during the
reporting period and up to the date of this report include:
Business Highlights (during the 2017 financial year)
SEP16 - Continued support from the Australian Renewable Energy Agency
(ARENA) via an $8.85M funding grant for KS1 as part of ARENA’s Large-Scale
Solar Competitive Round. The KS1 ARENA grant is further evidence of ARENA’s
support for the Company and follows on from the $4m funding provided for the Company’s hydro project in
December 2015;
OCT16 - Favourable private tax ruling from the ATO for a tax loss of approximately $39.5 million which originally
arose upon the acquisition of Kidston Gold Mines Limited by Genex in June 2014. Under the terms of the Private Tax
Ruling, and subject to appropriate valuation and the respective usage calculation under the available fraction, Genex
will be able to offset these losses against future taxable earnings achieved across the Genex tax consolidated group;
NOV16 - Completion of the technical feasibility study for the Kidston Pumped Storage Hydro Project (KPSHP);
DEC16 - Execution of the Solar 150 Financial Support Deed with the Queensland Government for 100% of the energy
that will be produced from KS1 via a long-term price guarantee (akin to what is known in the industry as a ‘Power
Purchase Agreement’ or ‘PPA’);
FEB17 - KS1 reaching financial close with approximately $100m debt finance from the Clean Energy Finance
Corporation (CEFC) and Société Générale;
FEB17 - Commencement of construction of KS1 with significant progress, with first revenue generation scheduled
for late 2017 and practical completion early in calendar year 2018;
JUN17 - Declarations of ‘Critical Infrastructure’ and ‘Prescribed Project’ by the Queensland Government for the
entire Kidston Renewable Energy Hub area as well as the existing water pipeline easement from the Copperfield
Dam to the Kidston site and the designated 180km transmission easement corridor between the Kidston site and
Mount Fox; and
The raising of an aggregate amount of $20,544,827 (before expenses), as follows:
o an amount of $9,914,781 (before expenses) on 15 December 2016 through the placement of 45,067,187
shares at an issue price of $0.22 per share;
o an amount of $2,561,077 on 23 January 2017 through the issue of 11,640,770 shares at an issue price of
$0.22 per share under a share purchase plan;
o an amount of $5,000,000 (before expenses) on 9 February 2017 through the placement of 31,250,000
shares at an issue price of $0.16 per share; and
o an amount of $3,068,969 (before expenses) on 1 March 2017 through the issue of 19,181,057 shares at an
issue price of $0.16 per share under a rights issue.
Business Highlights (post the 2017 financial year)
JUL17 - First-stage board approval from Northern Australia Infrastructure Facility (NAIF) for concessional debt
funding for Genex’s Stage Two Projects;
AUG17 - Corporate facility with CEFC agreed for $4.1 million to fund general corporate expenses comprising part of
the financial close arrangements for KS1; and
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Estrella Resources Limited
AUG17 - Execution of a binding Heads of Agreement between Genex and Powerlink Queensland to progress a range
of key activities which are critical to the connection of Genex’s Kidston Hydro-Solar Project (Project) to the
Queensland transmission network. The Agreement requires Powerlink to commence a detailed program of works,
including a targeted environmental study on the Mount Fox-Kidston transmission corridor, transmission line design
works and development of the easement acquisition process. This Agreement builds on the Queensland
Government’s Powering North Queensland Plan, which includes a $150 million reinvestment of Powerlink dividends
to develop strategic transmission infrastructure in North and North-west Queensland to support a clean energy hub;
Company Outlook:
The year ahead will mark several very important milestones for the Company, with first revenue generation scheduled
to occur from KS1 in late 2017. Given the revenue support deed for KS1 from the Queensland Government, Genex will
have guaranteed revenues for the next 20-years.
Genex is also well positioned to benefit from a number of recommendations proposed by the recently published Finkel
Review, which focussed on trilogy mix of measures designed to achieve energy security, energy reliability and reduced
emissions. Importantly for Genex, the Finkel Review proposes that broader deployment of renewable and intermittent
energy should necessarily be accompanied by energy storage, including batteries and pumped hydro.
The anticipated financial close of Genex’s Stage Two Projects in Q3 2018 will underpin the future value of the Company.
Discussions with various energy partners are progressing well, with Genex looking to finalise energy offtake
arrangements before the end of the 2017 calendar year.
Yours faithfully,
Michael Addison
Managing Director
6
3. DIRECTORS’ REPORT & REMUNERATION REPORT
The directors present their report, together with the consolidated financial statements, of Genex Power Limited
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 2017 (referred to hereafter as the
‘consolidated entity’).
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
Michael Addison
Yongqing Yu
Alan du Mée
Ben Guo
Simon Kidston
Principal activities
The consolidated entity’s principal activity is the development of the Kidston Energy Hub in far north Queensland.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Significant changes in the state of affairs
The principal activities of the consolidated entity during the course of the year consisted of the development of the
Kidston Energy Hub located in far north Queensland comprising:
1.
2.
the Stage 1 50MW Kidston Solar Project (KS1); and
the Stage 2 250MW pumped storage hydroelectric project (PSHP) and the 270MW solar project (KS2).
For the year ended 30 June 2017, the consolidated entity incurred an after-tax loss of $9.4 million. The majority of
expenditure was incurred on the development of KS1 and the PSHP.
During the 2017 financial year Genex raised an aggregate amount of $20,544,827 (before expenses) through two share
placements, a rights issue and a share purchase plan.
The Company did not generate any income during the year, other than through bank interest and fuel tax credit.
On 14 February 2017, Genex reached financial close on KS1. As part of this milestone, Genex entered into a $100 million
senior debt facility with Société Générale and the Clean Energy Finance Corporations (CEFC). Genex also funded
approximately $20 million of the total construction cost through equity funding raised from existing and new
shareholders. Genex also received $8.85 million of grant funding from ARENA to be applied to the KS1 construction costs.
Construction of KS1 is now well advanced. It is anticipated that the plant will be energised towards the end of the
calendar year 2017 with practical completion expected in February 2018.
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Matters subsequent to the end of the year
On 12 July 2017 Genex announced that it had received first-stage board approval from Northern Australia Infrastructure
Facility (NAIF) for concessional debt funding for the Genex’s Stage Two Projects.
On 4 August 2017, Genex entered into a corporate loan with CEFC for $4.1 million to fund general corporate expenses
associated with the KS1 financial close arrangements in February 2017.
On 18 August 2017 Genex announced that it had entered into a binding Heads of Agreement with Powerlink Queensland
to progress a range of key activities which are critical to the connection of Genex’s Kidston Hydro-Solar Project (Project)
to the Queensland transmission network. The agreement requires Powerlink to commence a detailed program of works,
including a targeted environmental study on the Mount Fox-Kidston transmission corridor, transmission line design
works and development of the easement acquisition process.
On 29 August 2017 Genex announced that it had secured a Generation Authority for its 50MW Kidston Solar Stage 1
project from the Queensland Department of Energy and Water Supply. The Generation Authority is a critical regulatory
requirement to enable any new power station to connect to the National Electricity Market (NEM).
Apart from the matters outlined above there have been no other material events or circumstances which have arisen
since 30 June 2017 that have significantly affected, or may significantly affect the consolidated entity's operations, the
results of those operations, or the consolidated entity's state of affairs in future financial years.
Likely developments and expected results of operations
The consolidated entity expects to complete the construction of the stage 1 Kidston Solar Project and commence first
generation in late 2017 with practical completion in 1Q 2018. The project will then generate revenue for the Company
under the Queensland Solar150 Price Support Agreement. The consolidated entity also expects to commence financing
activities for the Kidston Stage 2 Solar Project and the Kidston Pumped Storage Hydro Project during the 2018 financial
year.
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:
General
Air
Water
Noise and Vibration
Regulated dams
Land and Rehabilitation
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:
Dr. Craven has respected credentials in energy, transmission infrastructure and power generation and electricity
retailing. Dr. Craven has a number of public company roles including non- executive director of Senex Energy Limited
(September 2011 to present) and AusNet Services Limited (January 2014 to present). He is the current independent non-
executive Chair of Stanwell Corporation. Dr. Craven has held senior executive positions with energy companies in
Australia and New Zealand. He was formerly Chief Executive Officer of Transpower New Zealand Ltd, an Executive
Director of NRG Asia-Pacific and General Manager Power Marketing and Development with Shell Coal Pty Ltd.
His previous roles include Chairman of Ergon Energy Corporation Limited and Chairman of Tully Sugar Limited. Dr. Craven
was Deputy Chairman of Arrow Energy Limited (now jointly owned by Royal Dutch Shell and PetroChina). Dr. Craven was
previously a non-executive director of Invion Limited (2011 to April 2015) and Mitchell Services Limited (2011 to
November 2014).
Name: Michael Addison
Title: Managing Director
Qualifications: BSc (Eng), MPhil (Oxon), MAICD, FAIM
Special Responsibilities: Member, Audit & Risk Management Committee
Experience and expertise:
Michael is a former water engineer with experience in large dam, spillway and water reticulation systems design. He
also has considerable international corporate finance experience, having spent a number of years as an investment
banker with three globally recognised investment banks. Subsequent to transitioning into mainstream corporate
management in the early nineties, Michael has 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 was previously a director of
Carabella Resources Limited, Stratum Metals Limited and Intra Energy Corp (1 June 2017 to 28 September 2017).
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 is a Member of the Australian Institute of Company Directors. Michael is
a founding director and shareholder of Genex.
Name: Alan du Mée
Title: Non-Executive Director
Qualifications: MSc., MBA, FAICD, FAIM, MIIE
Special Responsibilities: Chair, Audit & Risk Management Committee and Member, Remuneration
Committee
Experience and expertise:
Mr. du Mée has deep operational experience in power generation operations and development. He was Chief Executive
Officer of Tarong Energy, a major Queensland power company which is now part of Stanwell Corporation Limited. While
at Tarong Energy, Mr. du Mée was responsible for the development of Tarong North power station in Queensland, the
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Estrella Resources Limited
Starfish Hill windfarm in South Australia and the sale of a 50% of the Tarong North power station to a Japanese
consortium. He also had responsibility for the 600MW Wivenhoe Pumped Storage Plant, the second largest hydro
pumped storage plant in Australia.
Mr. du Mée is a past Chairman of the Australian National Generators Forum and was a director of BHP Engineering
between April 1991 and November 1996. He is also a director of A Solid Foundation Pty Limited, and has been engaged
by Glencore Coal Assets Australia to assist it with its CCS development strategy.
Name: Simon Kidston
Title: Executive Director
Qualifications: BCom, GradDipAppFin, MAIDC
Special Responsibilities: Member, Remuneration Committee
Experience and expertise:
Simon is a founding director and shareholder of Genex. Prior to Genex, Simon successfully established
3 ASX listed companies, Endocoal Limited, Carabella Resources Limited and Estrella Resources Limited.
In addition, Simon has over 20 years’ investment banking experience in Australia and overseas with groups such as
Macquarie Bank Limited, HSBC and Helmsec Global Capital Limited. During this period, he assisted companies grow by
accessing capital, negotiating strategic relationships and acquisitions. He has a Bachelor of Commerce degree and is a
Member of the Australian Institute of Company Directors.
Name: Ben Guo
Title: Finance Director
Qualifications: BCom, Finance (Hons 1st) and Accounting
Special Responsibilities: Nil
Experience and expertise:
Ben has over 10 years’ management experience in Australia. Prior to joining Genex, he held senior financial roles at
Helmsec Global Capital Limited and Estrella Resources Limited. Ben has also worked at PwC Corporate Finance and Ernst
and Young.
Name: Yongqing Yu
Title: Non-Executive Director
Special Responsibilities: Nil
Experience and expertise:
Mr. Yongqing Yu is the Vice Chairman of Shenzhen listed Zhefu, 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. Yongqing 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 already robust level of technical, industry and corporate experience.
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Estrella Resources Limited
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 2017, 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
Yong Qing Yu
Held
14
14
14
14
14
14
Attended
14
13
13
13
12
0
Held
1
1
1
1
1
-
Attended
1
1
1
1
1
-
Held
1
-
1
-
1
-
Attended
1
-
1
-
1
-
‘Held’ represents the number of meetings held during the time the director was in office or was a member of the relevant
committee. While Mr Yu did not attend any Board meetings, a representative from Zhefu Corporation attended 4 Board
meetings throughout the period on behalf of Mr Yu as an observer only.
Remuneration Report: Audited
The Board is responsible for determining and reviewing compensation arrangements for the directors and executive
management. The Board assesses the appropriateness of the nature and amount of remuneration of key personnel on
an annual basis. In determining the amount and nature of officers’ packages, the Board takes into consideration the
Company’s financial and operational performance along with industry and market conditions.
Remuneration packages of the Company’s senior executives and the Managing Director include a mix of fixed
remuneration and performance-based remuneration. The fixed component consists of base remuneration, allowances
and superannuation.
The Constitution provides that the non-executive Directors may be paid for their services as Directors, however the sum
payable must not exceed such fixed sum per annum as determined by the Company at the annual general meeting, to be
divided among the Directors and in default of agreement then in equal shares. The sum fixed by the Company as the
aggregate limit for the payment of non-executive Directors is $400,000 per annum.
A Director may be paid additional fees or other amounts as the Remuneration Committee determine where a Director
renders or is called upon to perform extra services or to make any special exertions in connection with the affairs of the
Company. A Director may also be reimbursed for any disbursements or any other out of pocket expenses properly incurred
as a result of their directorship or any special duties.
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Estrella Resources Limited
The Company’s remuneration policy aims to align the corporate goals and objectives of the Company with the remuneration
paid to the Managing Director and Senior Executives and considers both short term and long-term compensation. The
Company also looks at comparative data from other companies and the amount of time required given the Company only
has a small management team.
During the year while the Company’s focus was on the development of the Kidston Renewable Energy Hub, remuneration
was weighted towards long term rewards with the granting of options to an Executive General Manager.
This Remuneration Report outlines the arrangements which were in place during the year ended 30 June, 2017 for the
Directors and key management personnel.
2017
Executive Directors
M Addison
S Kidston
B Guo
Non-Executive Directors
R Craven
A du Mee
Yongqing Yu
Short-term benefits
Cash Salary and Fees
$
Post employee benefits
Superannuation benefits
$
Share-based
payments
$
350,000
300,000
300,000
110,000
80,000
-
33,250
28,500
28,500
10,450
7,600
-
340,530
340,530
340,530
170,265
-
-
Total
$
723,780
669,030
669,030
290,715
87,600
-
Sub-Total
1,140,000
108,300
1,191,855 2,440,155
Chief Operating Officer
A McGhie
Executive General Manager
James Harding
Sub-Total
Total
330,000
294,308
624,308
1,764,308
31,350
77,394
438,744
27,959
63,414
385,681
59,309
167,609
140,808
824,425
1,332,663 3,264,580
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
Chief Operating Officer
A McGhie
Executive General Manager
James Harding
Sub-Total
Total
230,833
208,333
190,000
91,667
61,667
-
782,500
297,231
23,077
320,308
1,102,808
35,000
19,792
18,050
8,708
5,858
-
87,408
-
-
-
-
-
-
Total
$
265,833
228,125
208,050
100,375
67,525
-
869,908
28,237
96,132
421,600
2,192
30,429
117,837
-
25,269
96,132
446,869
96,132 1,316,777
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Estrella Resources Limited
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
Performance based remuneration is not applicable
Key Management Personnel (KMP)’s Interests in the Company
The shares and options held by the KMPs as at 30 June 2017 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 2016
Granted as
remuneration
Received on
exercise
Purchases
Balance as at 30
June 2017
27,500,000
20,720,000
2,040,000
250,000
200,000
Nil
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
28,500,000
161,931
68,181
90,909
38,637
-
20,881,931
2,108,181
340,909
238,637
Nil
Balance as at 1
July 2015
Granted as
remuneration
Received on
exercise
Purchases
Balance as at 30
June 2016
27,000,000
20,700,000
2,000,000
200,000
200,000
Nil
-
-
-
-
-
-
-
-
-
-
-
-
500,000
27,500,000
20,000
40,000
50,000
-
-
20,720,000
2,040,000
250,000
200,000
Nil
*The non-executive directors purchased shares as part of the seed capital round on 19 July 2014 on equal terms with other investors
Options
Personnel
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
Arran McGhie*
James Harding*
Balance as
at 1 July
2016
1,000,000
1,000,000
1,000,000
3,000,000
2,000,000
5,000,000
-
Granted as
remuneration
Date of Grant
during period
4,000,000
4,000,000
4,000,000
2,000,000
-
-
2,400,000
17/1/2017
17/1/2017
17/1/2017
17/1/2017
-
-
2/9/2016
Fair value per
option at grant
date
0.0851
0.0851
0.0851
0.0851
-
-
0.0602
Balance as
at 30 June
2017
5,000,000
5,000,000
5,000,000
5,000,000
2,000,000
5,000,000
2,400,000
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Estrella Resources Limited
Personnel
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
Arran McGhie*
James Harding*
Balance as
at 1 July
2015
1,000,000
1,000,000
1,000,000
3,000,000
2,000,000
-
-
Granted as
remuneration
Date of Grant
during period
-
-
-
-
-
5,000,000
-
-
-
-
-
-
6/08/2015
-
Fair value per
option at grant
date
-
-
-
-
-
0.0714
-
Balance as
at 30 June
2016
1,000,000
1,000,000
1,000,000
3,000,000
2,000,000
5,000,000
-
*Options issued to Arran McGhie and James Harding has various vesting conditions based exclusively on milestones
irrespective of these milestones are achieved (see note 23)
Options issued to Directors during the 2017 financial year are not linked to ongoing remuneration packages.
The 8,000,000 options held by directors at 30 June 2016 are exercisable at $0.25 each and expire on 7 February 2019.
The 14,000,000 options issued to Directors on 17 January 2017 are exercisable at $0.34 and expire on 17 January 2022.
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 Renewable 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.
(Term) The appointment commenced on 1 May 2014 and is ongoing subject to the termination provisions.
(Services) Michael Addison will provide the following services for the Company:
(a)
(b)
(c)
(d)
overall responsibility for the day to day management of the business of the Company;
assisting in the implementation of the corporate business plan for the Company as determined by the Board;
responsibility for the preparation of the Company’s budgets and other performance indicators (if required);
in conjunction with the Chief Financial Officer, responsibility for the preparation of the Company’s financial
statements and any other accounts for which the Company is responsible; and
responsibility for overall reporting requirements and regularly reporting to the Board concerning the business
and financial position of the Company.
(e)
(Remuneration) Michael Addison will receive a gross salary of $350,000 (excluding superannuation) per annum. In
addition, Michael Addison may be granted, subject to any necessary shareholder approval, incentives to provide
ongoing service and commitment to the Company.
(Entitlements) Michael Addison is entitled to 6 weeks of annual leave per annum in addition to other employee
entitlements that are customary to an agreement of this nature.
(Termination) Both Michael Addison and the Company may terminate the agreement at any time and for any reason
by giving 4 months’ written notice to the other party. Michael Addison’s employment may otherwise be terminated
at any time for cause by notice to Michael Addison from the Company.
Executive Services Agreement (Ben Guo and Simon Kidston)
On 1 May 2014, the Company entered into Executive Services Agreement with each of Ben Guo and Simon Kidston in
their capacities as executive directors of the Company. Pursuant to their respective agreements, Simon Kidston receives
a gross salary of $300,000 (excluding superannuation) per annum and Ben Guo receives a gross salary of $300,000
(excluding superannuation) per annum. Aside from the differences in remuneration, the Executive Services Agreements
with Ben Guo and Simon Kidston were agreed on the same terms and conditions as the Executive Services Agreement
with Michael Addison, the material provisions of which are summarised above.
14
Estrella Resources Limited
Executive Services Agreement (Arran McGhie)
On 16 July 2015, the Company entered into Executive Services Agreement with each of James Harding in his capacity as
Chief Operating Officer. Pursuant to his agreement, Arran McGhie a gross salary of $330,000 (excluding superannuation)
per annum. Aside from the differences in remuneration and termination, the Executive Services Agreements with Arran
McGhie were agreed on the same terms and conditions as the Executive Services Agreement with Michael Addison, the
material provisions of which are summarised above.
Executive Services Agreement (James Harding)
On 23 June 2016, the Company entered into Executive Services Agreement with each of James Harding in his capacity as
Executive General Manager. Pursuant to his agreement, James Harding a gross salary of $300,000 (excluding
superannuation) per annum. Aside from the differences in remuneration and termination, the Executive Services
Agreements with James Harding were agreed on the same terms and conditions as the Executive Services Agreement
with Michael Addison, the material provisions of which are summarised above.
Shares under option
Unissued ordinary shares of Genex Power Limited under option at the date of this report are as follows:
Grant date
7 February 2014
13 October 2014
30 June 2015
6 August 2015
2 September 2016
17 January 2017
1 July 2017
Expiry date
7 February 2019
7 February 2019
25 February 2018
6 August 2020
2 September 2021
17 January 2022
17 January 2022
Exercise price Number of options
3,000,000
5,500,000
16,728,750
5,000,000
2,400,000
14,000,000
1,500,000
$0.25
$0.25
$0.20
$0.25
$0.25
$0.34
$0.34
End of Remuneration Report
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
16,728,750
Out of 20,000,000 Loyalty Options originally issued at the IPO, 17,300,000 vested on 25 February 2016 and a further
571,250 exercised since that time leaving 16,728,750 still on issue.
No person entitled to exercise the options had or has any right by virtue of their option holding to participate in any
share issue of the Company or of any other body corporate. As at 30 June 2017, 400,000 Loyalty Options had been
exercised and a further 171,250 have been exercised since 1 July 2017.
Loss per Share
The loss per share for Genex Power Limited for the year was 4.03 cents per share (FY16 4.70 cents).
Results of Operations and Dividends
The consolidated entity’s net loss after taxation attributable to the members of Genex Power Limited for the year ended
30 June 2017 was $9,395,118. The Directors of Genex have resolved not to recommend a dividend for the financial year
ended 30 June 2017.
15
Estrella Resources Limited
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
The following non-audit services were provided by the entity's auditor, Ernst & Young Australia. The directors are
satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that
auditor independence was not compromised.
Ernst & Young Australia received or are due to receive the following amounts for the provision of non-audit services:
Advisory service on related energy market studies
$
94,000
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
29 September 2017
Sydney
16
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s Independence Declaration to the Directors of Genex Power
Limited
As lead auditor for the audit of Genex Power Limited for the financial year ended 30 June 2017, I declare
to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Genex Power Limited and the entities it controlled during the financial
year.
Ernst & Young
Lynn Morrison
Partner
29 September 2017
17
5.
FINANCIAL STATEMENTS
Contents
Consolidated statement of profit or loss and other comprehensive income ................................................................... 19
Consolidated statement of financial position ................................................................................................................... 20
Consolidated statement of changes in equity .................................................................................................................. 21
Consolidated statement of cash flows .............................................................................................................................. 23
Notes to the consolidated financial statements ............................................................................................................... 24
Directors' declaration ....................................................................................................................................................... 60
Independent auditor's report to the members of Genex Power Limited ......................................................................... 61
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
Suite 6.02, Level 6
28 O’Connell 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 27 September 2017.
The directors have the power to amend and reissue the financial statements.
18
Estrella Resources Limited
Genex Power Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2017
Notes
Revenue
Other operating income
Expenses
Project site costs
Salary expenses
Administrative expenses
Compliance cost and regulatory fees
Project consulting costs
Legal fees
Travel and marketing
Net loss on financial instruments at fair value through profit or loss
Total Expenses
Operating Loss
Finance costs
Finance income
Loss before tax
Income tax expense
Loss after income tax expense attributable to the owners of Genex Power
Limited
Other comprehensive income to be reclassified to profit or loss in
subsequent periods (net of tax)
Net (loss) on cash flow hedges
Total comprehensive loss for the year
attributable to the owners of Genex Power Limited
Basic earnings per share
Diluted earnings per share
5
5
5
6
7
30 June
2017
$
20,632
20,632
(1,563,917)
(3,418,623)
(1,252,366)
(688,556)
(671,680)
(1,138,152)
(264,982)
(600,168)
(9,598,444)
30 June
2016
Restated*
$
2,887
2,887
(4,742,219)
(1,351,784)
(595,714)
(57,919)
(357,844)
(179,265)
(159,587)
(143,931)
(7,588,263)
(9,577,812)
(7,585,376)
(176,403)
359,097
(9,395,118)
(154,816)
96,091
(7,644,101)
-
-
(9,395,118)
(7,644,101)
7
(1,668,494)
-
(11,063,612)
(7,644,101)
33
33
Cents
(4.03)
(4.03)
Cents
(4.70)
(4.70)
* Certain amounts shown here do not correspond to the June 2016 financial statements and reflect adjustments made,
refer to Note 1.
19
Estrella Resources Limited
Genex Power Limited
Consolidated statement of financial position
As at 30 June 2017
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Non-Current Assets
Bank Guarantee
Plant Property and Equipment
Other Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Short term interest accrued
Interest-bearing loans and borrowings
Government grant
Provisions
Other current financial liabilities
Environmental bond payable
Non-Current Liabilities
Long term interest accrued
Interest-bearing loans and borrowings
Convertible notes
Other non-current financial liabilities
Rehabilitation and restoration provision
Total Liabilities
Net Assets
Equity
Share capital
Option reserves
Cash flow hedge reserve
Accumulated losses
Total Equity
30 June 2017
30 June 2016
Restated*
1 July 2015
Restated*
11,088,539
1,256,233
272,648
12,617,420
3,997,625
47,441,554
18,270
51,457,449
64,074,869
10,783,224
48,065
70,713
12,037,668
83,929
139,122
-
23,162,721
168,217
16,043,532
1,614,600
3,290,567
3,820,200
24,937,116
48,099,837
15,975,032
4,179,614
418,836
2,684,163
7,282,613
3,804,312
4,524,251
18,270
8,346,833
15,629,446
389,337
-
2,249,730
730,600
47,368
-
-
3,417,035
27,705
-
1,449,676
839,086
3,804,311
6,120,778
9,537,813
6,091,633
10,669,145
80,075
58,122
10,807,342
3,804,311
3,918,777
18,270
7,741,358
18,548,700
491,160
-
46,285
60,837
25,195
-
3,804,311
4,427,788
-
-
-
-
3,804,311
3,804,311
8,232,099
10,316,601
35,493,073
2,730,184
(1,668,494)
(20,579,731)
15,975,032
15,878,724
1,397,521
-
(11,184,612)
6,091,633
12,352,617
1,504,496
-
(3,540,512)
10,316,601
9
10
11
12
13
14
15
16
17
18
19
18
19
22
23
23
23
* Certain amounts shown here do not correspond to the June 2016 financial statements and reflect adjustments made,
refer to Note 1.
20
Genex Power Limited
Consolidated statement of changes in equity
For the year ended 30 June 2017
Balance at 1 July 2016
Loss after income tax
Cash flow hedge reserve
Total comprehensive loss for period
Shares issued during the period
Transaction cost
Share options issued during the period
Balance at 30 June 2017
Notes
Issued
Capital
15,878,724
Options
Reserves
1,397,521
Cash flow hedge
reserve
-
Accumulated
Losses
(11,184,612)
Total Equity
6,091,633
-
-
15,878,724
20,624,743
(1,010,394)
-
35,493,073
-
-
1,397,521
-
-
1,332,663
2,730,184
-
(9,395,119)
(9,395,119)
(1,668,494)
(1,668,494)
-
-
-
-
(1,668,494)
(20,579,731)
-
-
(4,971,980)
20,624,743
(1,010,394)
-
1,332,663
(1,668,494)
(20,579,731)
15,975,032
21
Estrella Resources Limited
Genex Power Limited
Consolidated statement of changes in equity (continued)
For the year ended 30 June 2016 (restated*)
Balance at 1 July 2015
Loss after income tax
Total comprehensive loss for period
Shares issued during the period
Transaction cost
Loyalty options forfeited
Share options issued during the period
Balance at 30 June 2016
Notes
Issued
Capital
12,352,617
-
12,352,617
3,500,000
(177,000)
203,107
-
Options
Reserves
1,504,496
-
1,504,496
-
-
(203,107)
96,132
15,878,724
1,397,521
Cash flow hedge
reserve
-
-
-
-
-
-
-
-
Accumulated
Losses
(3,540,512)
Total Equity
10,316,601
(7,644,101)
(7,644,101)
(11,184,612)
-
-
-
2,672,501
3,500,000
(177,000)
-
-
96,132
(11,184,612)
6,091,633
* Certain amounts shown here do not correspond to the June 2016 financial statements and reflect adjustments made, refer to Note 1.
22
Genex Power Limited
Consolidated statement of cash flows
For the year ended 30 June 2017
Cashflow from Operating Activities
Receipts of fuel tax credits
Payments to suppliers
Payments to employees
Interest received
Interest paid
Notes
30‐Jun‐17
$
20,632
(6,335,896)
(2,016,322)
359,097
(388,574)
30‐Jun‐16
Restated*
$
2,887
(6,565,108)
(1,233,479)
96,091
(127,111)
Net cash utilised by operating activities
31
(8,361,063)
(7,826,720)
Cashflow from Investing Activities
Purchase of Property, Plant and Equipment
Receipt of government grant
Funds invested into a term deposit/bank guarantee
Net cash used in investing activities
Cashflow from Financing Activities
Proceeds from issue of shares
Proceeds from issue of convertible bonds
Transaction costs on issue of shares
Proceeds from borrowings
Repayment of borrowings
Net cash from financing activities
(30,267,071)
11,307,068
‐
(18,960,003)
(3,187,117)
669,763
(3,804,312)
(6,321,666)
20,624,743
486,865
(1,010,394)
16,328,777
(2,200,000)
34,229,991
3,500,000
2,135,855
(177,000)
2200000
‐
7,658,855
Net increase in cash and cash equivalents
6,908,925
(6,489,531)
Cash and Cash equivalent at the beginning of the financial year
4,179,614
10,669,145
Cash and Cash equivalents at the end of the financial year
7
11,088,539
4,179,614
23
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
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.
Going concern
The consolidated financial statements have been prepared on a going concern basis, which assumes that the Group will
be able to continue trading, realise its assets and discharge its liabilities in the ordinary course of business, for a period
of at least 12 months from the date that these financial statements are approved.
The directors note the following events and conditions which have been considered in assessing the appropriateness of
the going concern assumption:
Although the consolidated entity has recorded a net current deficiency of $10.5m, a significant portion of this
balance consists of Government Grants of $12.0m which is a non-cash outflow. When adjusting for this balance,
the consolidated entity has a net current asset position of $1.5m.
The consolidated entity recorded a net increase in cash and cash equivalents during the year of $6.9m which
resulted in a closing cash and cash equivalent balance of $11.0m at balance date;
The consolidated entity’s has unused banking facilities of $55.85m;
The 50 MW Kidston Solar Project (KS1) will soon be the consolidated entity’s first project to generate electricity
to the National Electricity Market (NEM). The energy produced by KS1 will be sold under a long term price
guarantee arrangement (akin to what is known in the industry as a Power Purchase Agreement or PPA). As a
result revenue and operating cash flows are expected in the next financial year;
In assessing the appropriateness of using the going concern assumption, the Directors have had regard to the following
matters:
The consolidated entity has been in detailed discussions with a number of potential energy partners, with
ongoing discussions based around securing the most financially viable option for the Company and its
Shareholders. The consolidated entity’s timeline is to reach financial close in the middle of 2018 with
construction to commence soon after financial close, with an estimated 18-month build for KS2 and 36- 42
month build for KPSHP.
Discussions with potential debt providers and potential equity contributors for Phase Two are progressing well.
The Northern Australia Infrastructure Facility (NAIF) has already received first-stage board approval for
potential concessional debt funding for the integrated Projects.
The reasonableness of the profitability and cash flow forecasts of the consolidated entity, which have been
prepared by management on the basis of completion of KS1 and the long term price guarantee.
The consolidated entity’s cash and cash equivalents, unused banking facilities and the fact that, when excluding
non-cash Government Grant liabilities, the consolidated entity is in a net current asset position.
Based on the above, the directors believe the consolidated entity will continue as a going concern and meet its debts
and commitments as and when they fall due.
Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements
of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the
Australian Accounting Standards Board.
The financial report has been prepared on a historical cost basis, except for investment properties, derivative financial
instruments, contingent consideration and non-cash distribution liability that have been measured at fair value. The
carrying values of recognised assets and liabilities that are designated as hedged items in fair value hedges that would
24
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
otherwise be carried at amortised cost are adjusted to record changes in the fair values attributable to the risks that are
being hedged in effective hedge relationships.
The consolidated financial statements provide comparative information in respect of the previous period. In addition,
the consolidated entity presents an additional statement of financial position at the beginning of the preceding period
when there is a retrospective application of an accounting policy, a retrospective restatement, or a reclassification of
items in financial statements. An additional statement of financial position as at 1 July 2015 is presented in these
consolidated financial statements due to the correction of an error retrospectively. See Note 1.
Compliance with International Financial Reporting Standards (IFRS)
The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.
Parent entity information
These financial statements present the results of the consolidated entity only. Supplementary information about the
parent entity is disclosed in note 29.
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 2017 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.
Expected to be realised or intended to be sold or consumed in the normal operating cycle
Current versus non-current classification
The consolidated entity presents assets and liabilities in the statement of financial position based on current/non-current
classification. An asset is current when it is:
Held primarily for the purpose of trading
Or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months
Expected to be realised within twelve months after the reporting period
after the reporting period
All other assets are classified as non-current.
It is expected to be settled in the normal operating cycle
It is held primarily for the purpose of trading
It is due to be settled within twelve months after the reporting period
A liability is current when:
Or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting
period
25
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
The consolidated entity classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
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.
Fair value measurement
The consolidated entity measures financial instruments such as derivatives, and non-financial assets such as investment
properties, at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that
the transaction to sell the asset or transfer the liability takes place either:
Or
In the absence of a principal market, in the most advantageous market for the asset or liability
In the principal market for the asset or liability
The principal or the most advantageous market must be accessible by the consolidated entity.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing
the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the
asset in its highest and best use.
The consolidated entity uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within
the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable
For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the consolidated
entity determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based
on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the consolidated entity has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained
above.
26
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
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
'group allocation' 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.
Trade and other receivables
Trade receivables are initially recognised on fair value and subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is
objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms
27
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
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
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at
the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement conveys a right to use the asset (or assets), even if that asset is (or
those assets are) not explicitly specified in an arrangement.
Consolidated entity as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all
the risks and rewards incidental to ownership to the consolidated entity is classified as a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property
or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance
charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are recognised in finance costs in the statement of profit or loss.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the
consolidated entity will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the
estimated useful life of the asset and the lease term.
An operating lease is a lease other than a finance lease. Operating lease payments are recognised as an operating
expense in the statement of profit or loss on a straight-line basis over the lease term.
Consolidated entity as a lessor
Leases in which the consolidated entity does not transfer substantially all the risks and rewards of ownership of an asset
are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added
to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
Contingent rents are recognised as revenue in the period in which they are earned.
Interest
Interest income and expenses are reported on an accrual basis using the effective interest method.
Plant, Property and Equipment
Construction in progress, plant and equipment are stated at cost, net of accumulated depreciation and accumulated
impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs
for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment are
required to be replaced at intervals, the consolidated entity depreciates them separately based on their specific useful
lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and
equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are
recognised in profit or loss as incurred. The present value of the expected cost for the decommissioning of an asset after
its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Refer to significant
accounting judgements, estimates and assumptions (Note 2) and Rehabilitation and restoration provisions (Note 22) for
further information about the recognised decommissioning provision.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows:
Plant, machinery and equipment
Leasehold improvements
20 to 30 years
Less of 5 years or lease term
28
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or
when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the
asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included
in the statement of profit or loss when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each
financial year end and adjusted prospectively, if appropriate.
Work in Progress Capital Assets
Work in Progress Capital Assets represent project development costs incurred prior to commencement of projects
operation. Work in Progress Capital assets are not amortised, but are transferred to Plant, Property and Equipment and
depreciated from the time the asset is held ready for use on a commercial basis.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other
borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that
an entity incurs in connection with the borrowing of funds.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted.
The amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date,
the loans or borrowings are classified as non-current.
Provisions
General
Provisions are recognised when the consolidated entity has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. When the consolidated entity expects
some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised
as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented
in the statement of profit or loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects,
when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost.
Rehabilitation and restoration liability
The Company records the present value of the estimated cost of legal and constructive obligations to rehabilitate mining
lease areas in the period in which the obligation is incurred. The nature of rehabilitation activities includes dismantling
and removing structures, rehabilitating mines, dismantling operating facilities, closure of plant and waste sites and
restoration, reclamation and revegetation of affected areas. When the liability is initially recorded, the present value of
the estimated cost is capitalised by increasing the carrying amount of the related mining assets. Over time, the
discounted liability is increased for the change in the present value based on a discount rate. Additional disturbances or
changes in rehabilitation costs will be recognised as additions or changes to the corresponding asset and rehabilitation
liability when incurred. The unwinding of the effect of discounting the provision is recorded as a finance charge in the
profit or loss. The carrying amount capitalised as a part of mining assets is depreciated/ amortised over the life of the
related asset.
29
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Long service leave and annual leave
The consolidated entity does not expect its long service leave or annual leave benefits to be settled wholly within 12
months of each reporting date. The consolidated entity recognises a liability for long service leave and annual leave
measured as the present value of expected future payments to be made in respect of services provided by employees
up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and
salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using
market yields at the reporting date on high quality corporate bonds with terms to maturity and currencies that match,
as closely as possible, the estimated future cash outflows.
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.
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
For the convertible notes with cash settlement at the option of the issuer, the whole convertible notes are treated as
financial liability, which is subsequently valued at amortised cost using effective interest rate method. The conversion
right is accounted for as a derivative at fair value, with changes in value included in profit or loss.
Earnings per share
The consolidated entity presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects
of all dilutive potential ordinary shares, which comprise share options granted to employees.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached
conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic
30
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant
relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.
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.
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, except where the instrument is classified "at fair value through
profit and loss", which are measured initially 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 or amortised cost using the effective interest method.
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).
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.
Derivative financial instruments and hedge accounting
Initial recognition and subsequent measurement
The consolidated entity uses derivative financial instruments, such as forward currency contracts and interest rate
swaps, to hedge its foreign currency risks and interest rate risks respectively. Such derivative financial instruments are
initially recognised at fair value on the date on which a derivative contract is entered into and subsequently measured
31
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the
fair value is negative.
Any gain or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the
effective portion of cash flow hedges, which is recognised in OCI and later reclassified to profit or loss when the hedge
item affects profit or loss. When the hedged item is the cost of a non-financial asset or non-financial liability, the amounts
recognised as OCI are transferred to the initial carrying amount of the non-financial asset or liability.
For the purpose of hedge accounting, hedges are classified as:
Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an
unrecognised firm commitment
Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular
risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency
risk in an unrecognised firm commitment
Hedges of a net investment in a foreign operation
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which
it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The
documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk
being hedged and how the entity will assess the effectiveness of changes in the hedging instrument’s fair value in
offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such
hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on
an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods
for which they were designated.
Cash flow hedges
The consolidated entity uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast
transactions and firm commitments, as well as interest rate swaps for its exposure to interest rate risks for. The
ineffective portion relating to both the forward currency contracts and interest rate swaps are recognised in other
operating income or expenses.
Amounts recognised as OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as
when the hedged financial income or financial expense is recognised. When the hedged item is the cost of a non-financial
asset or non-financial liability, the amounts recognised as OCI are transferred to the initial carrying amount of the non-
financial asset or liability.
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.
32
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
New Accounting Standards and Interpretations
Accounting Standards and Interpretations issued but not yet effective
Reference
Title
Summary
Financial
Instruments
AASB 9, and
relevant
amending
standards
Application date
of standard: 1
January 2018
Application date
for the
consolidated
entity: 1 July 2018
AASB 15, and
relevant
amending
standards
Revenue from
Contracts with
Customers
Application date
of standard: 1
January 2018
AASB 9 replaces AASB 139 Financial Instruments:
Recognition and Measurement.
Except for certain trade receivables, an entity
initially measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs.
Debt instruments are subsequently measured at fair
value through profit or loss (FVTPL), amortised cost,
or fair value through other comprehensive income
(FVOCI), on the basis of their contractual cash flows
and the business model under which the debt
instruments are held.
There is a fair value option (FVO) that allows
financial assets on initial recognition to be
designated as FVTPL if that eliminates or significantly
reduces an accounting mismatch.
Equity instruments are generally measured at FVTPL.
However, entities have an irrevocable option on an
instrument-by-instrument basis to present changes
in the fair value of non-trading instruments in other
comprehensive income (OCI) without subsequent
reclassification to profit or loss.
For financial liabilities designated as FVTPL using the
FVO, the amount of change in the fair value of such
financial liabilities that is attributable to changes in
credit risk must be presented in OCI. The remainder
of the change in fair value is presented in profit or
loss, unless presentation in OCI of the fair value
change in respect of the liability’s credit risk would
create or enlarge an accounting mismatch in profit
or loss.
All other AASB 139 classification and measurement
requirements for financial liabilities have been
carried forward into AASB 9, including the
embedded derivative separation rules and the
criteria for using the FVO.
The incurred credit loss model in AASB 139 has been
replaced with an expected credit loss model in AASB
9.
The requirements for hedge accounting have been
amended to more closely align hedge accounting
with risk management, establish a more principle-
based approach to hedge accounting and address
inconsistencies in the hedge accounting model in
AASB 139.
AASB 15 replaces all existing revenue requirements
in Australian Accounting Standards (AASB 111
Construction Contracts, AASB 118 Revenue, AASB
Interpretation 13 Customer Loyalty Programmes,
AASB Interpretation 15 Agreements for the
Construction of Real Estate, AASB Interpretation 18
Transfers of Assets from Customers and AASB
Interpretation 131 Revenue – Barter Transactions
Involving Advertising Services) and applies to all
revenue arising from contracts with customers,
unless the contracts are in the scope of other
Impact on the consolidated
entity’s Financial Report
The consolidated entity is
continuing to assess the
classification and measurement of
certain financial assets (classified
as ‘other current assets’ and
‘other financial assets’ on the
Consolidated Statement of
Financial Position) under AASB 9.
The classification and
measurement of all other
financial assets and financial
liabilities are not expected to
change on adoption of AASB 9.
The consolidated entity is also
continuing to assess the impact of
the new expected credit loss
impairment model on its trade
and other receivables, however
given the historic value of
receivable write-offs it is not
expected to be significantly
different.
The new hedge accounting
requirements will not have any
significant impact on the results.
Further information will be
provided in future financial
reports as management finalises
its assessment.
Based on management’s initial
assessments, the adoption of
AASB 15 is not expected to result
in a material impact on the
consolidated entity’s financial
statements.
The consolidated entity’s largest
revenue stream in the future
relates to electricity sales.
Performance obligations are
33
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Application date
for the
consolidated
entity: 1 July 2018
AASB 16
Leases
Application date
of standard: 1
January 2019
Application date
for Group: 1 July
2019
standards, such as AASB 117 (or AASB 16 Leases,
once applied).
The core principle of AASB 15 is that an entity
recognises revenue to depict the transfer of
promised goods or services to customers in an
amount that reflects the consideration to which an
entity expects to be entitled in exchange for those
goods or services. An entity recognises revenue in
accordance with the core principle by applying the
following steps:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in
the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the
performance obligations in the contract
Step 5: Recognise revenue when (or as) the
entity satisfies a performance obligation.
AASB 16 requires lessees to account for all leases
under a single on-balance sheet model in a similar
way to finance leases under AASB 117 Leases. The
standard includes two recognition exemptions for
lessees – leases of ’low-value’ assets (e.g., personal
computers) and short-term leases (i.e., leases with a
lease term of 12 months or less). At the
commencement date of a lease, a lessee will
recognise a liability to make lease payments (i.e., the
lease liability) and an asset representing the right to
use the underlying asset during the lease term (i.e.,
the right-of-use asset).
Lessees will be required to separately recognise the
interest expense on the lease liability and the
depreciation expense on the right-of-use asset.
Lessees will be required to remeasure the lease
liability upon the occurrence of certain events (e.g.,
a change in the lease term, a change in future lease
payments resulting from a change in an index or rate
used to determine those payments). The lessee will
generally recognise the amount of the
remeasurement of the lease liability as an
adjustment to the right-of-use asset.
Lessor accounting is substantially unchanged from
today’s accounting under AASB 117. Lessors will
continue to classify all leases using the same
classification principle as in AASB 117 and distinguish
between two types of leases: operating and finance
leases.
generally satisfied over a short
term, and fees charged are on a
fixed price (generally on a per
MWhs basis). Management
considers there is insignificant
uncertainty over the revenue and
cash flows relating to electricity
revenue.
The consolidated entity is
continuing to analyse the specific
requirements of AASB 15 as
applied to other less significant
revenue arrangements.
Further information will be
provided in future financial
reports as management finalises
its assessment.
The consolidated entity is
continuing to evaluate the impact
of adopting AASB 16, and expects
to provide further information in
future financial reports as
management finalises its
assessment. Disclosures of the
nature of the consolidated
entity’s existing operating leases,
as well as the aggregate of the
consolidated entity’s operating
lease commitments on a gross
basis is provided in note 27. The
consolidated entity currently has
no finance leases.
The consolidated entity is
continuing to analyse the
transition approaches under AASB
16, and expects to apply the
modified retrospective approach.
This requires the cumulative
effect of initially applying AASB 16
recognised as an adjustment to
equity at 1 July 2019.
Comparatives are not restated.
The consolidated entity is also
continuing to evaluate the
practical expedients and specific
transition requirements.
These include: relief from
reassessing whether a contract
contains a lease as defined in
AASB 16;
exemptions for low value and
short-term leases; and specific
options available under the
modified retrospective transition
approach.
34
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
AASB 2016-1
AASB 2016-2
AASB 2016-5
Interpretation
23
Amendments
Australian
Accounting
Standards –
Recognition of
Deferred Tax
Assets for
Unrealised Losses
Application date
of standard: 1
January 2017
Application date
for consolidated
entity: 1 July 2017
Amendments
Australian
Accounting
Standards –
Disclosure
Initiative:
Amendments to
AASB 107
Application date
of standard: 1
January 2017
Application date
for the
consolidated
entity: 1 July 2017
Amendments to
Australian
Accounting
Standards –
Classification and
Measurement of
Share-based
Payment
Transactions
Application date
of standard: 1
January 2018
Application date
for consolidated
entity: 1 July 2018
Uncertainty over
Income Tax
Treatments
Application date
of standard: 1
January 2019
This Standard makes amendments to AASB 112
Income Taxes to clarify the accounting for deferred
tax assets for unrealised losses on debt instruments
measured at fair value.
The adoption of this new
amendment will not have any
material impact on the financial
report.
The amendments to AASB 107 Statement of Cash
Flows are part of the IASB’s Disclosure Initiative and
help users of financial statements better understand
changes in an entity’s debt. The amendments
require entities to provide disclosures about changes
in their liabilities arising from financing activities,
including both changes arising from cash flows and
non-cash changes (such as foreign exchange gains or
losses).
The consolidated entity is
currently evaluating the impact of
the new accounting standard on
future disclosures in the financial
report.
This Standard amends AASB 2 Share-based Payment,
clarifying how to account for certain types of share-
based payment transactions. The amendments
provide requirements on the accounting for:
The effects of vesting and non-vesting
conditions on the measurement of cash-settled
share-based payments
Share-based payment transactions with a net
settlement feature for withholding tax
obligations
A modification to the terms and conditions
of a share-based payment that changes the
classification of the transaction from cash-
settled to equity-settled.
The Interpretation clarifies the application of the
recognition and measurement criteria in IAS 12
Income Taxes when there is uncertainty over income
tax treatments. The Interpretation specifically
addresses the following:
Whether an entity considers uncertain tax
treatments separately
The assumptions an entity makes about the
examination of tax treatments by taxation
authorities
The adoption of the amendments
will not have any material impact
on the financial report.
The consolidated entity is
currently evaluating the impact of
the new accounting standard.
35
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Application date
for consolidated
entity: 1 July 2019
How an entity determines taxable profit (tax
loss), tax bases, unused tax losses, unused tax
credits and tax rates
How an entity considers changes in facts and
circumstances.
Correction of prior periods’ errors
The error has been corrected by restating each of the affected financial statement line items for the prior periods, as
follows:
Acquisition of Kidston Gold Mines Ltd
On 1 May 2014, the consolidated entity acquired all of the shares in Kidston Gold Mines Ltd (KGM) from Barrick Gold
Corporation (“Barrick”). Completion of the transfer of shares in KGM under the agreement occurred on 4 June 2014 and
resulted in Genex Kidston acquiring all the shares in KGM for a consideration of $1. In return, Genex Kidston has taken
on the environmental bond of KGM of $3.8m. KGM closed down in 2001 and was in care and maintenance prior to the
acquisition by the consolidated entity.
Given KGM does not meet the criteria of “business” as set forth in AASB 3 Business Combination, therefore, this
transaction should be accounted for as asset purchase but has been accounted for as business combination. As a
consequence, net assets have been understated by $114k as the transaction costs need to be capitalised for an asset
purchase and the $3.8m originally recognised as goodwill should be reclassified as Plant Property and Equipment as well.
In FY 17, the consolidated entity conducted a detailed review of the terms and conditions of the share purchase
agreement and discovered the error.
Convertible notes
On 18 December 2015, Genex Power signed a convertible note deed with the Australian Renewable Energy Agency
(“ARENA”) which enables Genex Power to issue convertible bonds up to $4m. The convertible note was originally
accounted for as a hybrid financial instrument with financial liability and equity portion recognised respectively.
However, since the consolidated entity does have the option to settle the convertible bond either in cash or with a
certain number of its own shares when ARENA requests to convert, the conversion right is a derivative (in effect, a
written call option over the issuer's own shares) which may potentially be settled in cash, such that there is a settlement
alternative that does not result in it being an equity instrument, according to AASB 132 Financial Instruments:
Presentation. As a consequence, capital reserve has been overstated by $810k and the FY16 net profit overstated by
$181k. In FY 17, the consolidated entity conducted a detailed review of the terms and conditions of the convertible notes
deed and discovered the error.
Government Grants
In the current and prior year, management has recognised cash receipts from R&D tax credits as revenue in the P&L. In
accordance with AASB 120 Accounting for Government Grants and Disclosure of Government Assistance, cash grants
received under the current ATO refundable R&D scheme should be recognised as a Government Grant with income
recognised as income over the periods in which the entity recognises as expense the related costs for which the
government grant are intended to compensate. As a consequence, revenue has been overstated by $670k in FY16
(overstated by $61k in FY15) as the R&D scheme rebate relates to capitalised costs.
Share based payments
In FY16, Genex Power had granted 5m options to its Chief Operating Officer with vesting conditions based on the
achievement of 3 milestones of the development project. Estimate on the numbers of options expected to be vested has
been taken into account when the share-based payment was initially accounted for, however, the length of the vesting
period was not contemplated which means the fair value of the options were expensed in full when granted. As a
consequence, salary expenses have been overstated by $289k in FY16.
36
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Impact on equity (increase/(decrease) in equity)
Property Plant and Equipment
Goodwill
Total assets
Government grant
Short term interest accrued
Long term interest accrued
Convertible notes
Other non-current financial liabilities
Total liabilities
Net impact on equity
Impact on statement of profit or loss (increase/(decrease) in profit)
Other operating income
Salary expenses
Net loss on financial instruments at fair value through profit or loss
Finance costs
Net impact on profit for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
1 July 2015
3,918,777
(3,804,312)
114,465
(60,837)
(60,837)
(53,628)
30 June 2016
3,918,777
(3,804,312)
114,465
(730,600)
63,111
349,894
(384,608)
(839,086)
(1,541,289)
(1,426,824)
30 June 2016
(669,763)
288,868
(152,907)
(27,705)
(561,507)
(561,507)
-
Impact on basic and diluted earnings per share (EPS) (increase/(decrease) in EPS)
Earnings per share
Basic, profit for the year attributable to ordinary equity holders of the
parent
Diluted, profit for the year attributable to ordinary equity holders of the
parent
30 June 2016
-0.0035
-0.0035
37
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
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.
Fair value measurement of financial instruments
When the fair values of financial liabilities recorded in the statement of financial position cannot be measured based on
quoted prices in active markets, their fair value is measured using valuation techniques including the binomial tree lattice
methodology. The inputs to these models are taken from observable markets where possible, but where this is not
feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such
as credit risk, expected volatility and expected dividend yield. Changes in assumptions relating to these factors could
affect the reported fair value of financial instruments. See Note 20 for further disclosures.
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;
Changes in the estimated extent and costs of anticipated activities; and
Movements in factors affecting the discount rate applied.
Note 3. Operating Segment
Management has determined that the consolidated entity has one reportable segment; the development of Kidston
Renewable Energy hub projects in Australia. All directors, except for Mr Yongqing Yu (based in China), executive and
operating management are based in Australia.
38
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Note 4 Capital management
For the purpose of the consolidated entity’s capital management, capital includes issued capital, convertible notes, and
all other equity reserves attributable to the equity holders of the parent. The primary objective of the consolidated
entity’s capital management is to maximise the shareholder value.
The consolidated entity manages its capital structure and makes adjustments in light of changes in economic conditions
and the requirements of the financial covenants. To maintain or adjust the capital structure, the consolidated entity may
adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The consolidated entity
monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The consolidated entity’s
policy is to keep the gearing ratio under 70%. The consolidated entity includes within net debt, interest bearing loans
and borrowings, trade and other payables, less cash and short-term deposits, excluding discontinued operations.
Interest-bearing loans and borrowings - current
Interest-bearing loans and borrowings – non-current
Convertible note
Short-term interest accrued
Long-term interest accrued
Trade and other payables
Less: cash and short -term deposits
Net debt
Equity
Total capital
Capital and net debt
Gearing ratio
Consolidated
30 June 2017
$
30 June 2016
$
70,713
16,043,532
1,614,600
48,065
168,217
10,783,224
(11,088,539)
17,639,812
2,249,730
-
1,449,676
-
27,705
389,337
(4,179,614)
(63,166)
15,975,032
15,975,032
33,614,844
52%
6,091,633
6,091,633
6,028,467
0%
In order to achieve this overall objective, the consolidated entity’s capital management, amongst other things, aims to
ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital
structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans
and borrowings. There have been no breaches of the financial covenants of any interest-bearing loans and borrowing in
the current period. No changes were made in the objectives, policies or processes for managing capital during the years
ended 30 June 2017 and 2016.
39
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Note 5. Expenses
Loss before income tax includes the following specific expenses:
Finance costs
Interest and finance charges paid/payable
Project site costs
Salaries expenses
Defined contribution superannuation expense
Share‐based payments expense
Wages and salaries
Payroll tax
Annual leave accrual
Staff training
Note 6: Finance income
Interest revenue
Note 7: Income tax expense
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit
Tax at the statutory tax rate of 27.5%
Permanent differences
Tax loss not recognised
Income tax expense
Consolidated
30 June 2017
$
30 June 2016
$
176,403
154,816
1,563,917
4,742,219
171,609
1,332,663
1,806,413
70,336
36,561
1,041
3,418,623
117,901
96,132
1,090,409
24,530
22,174
638
1,351,784
Consolidated
30 June 2017
$
30 June 2016
$
359,097
359,097
96,091
96,091
Consolidated
2017
$
2016
$
(9,395,118)
(7,644,101)
(2,102,128)
(2,583,657)
112,928
‐
(2,583,657) (1,989,200)
‐
‐
The accumulated tax losses that arose in Australia as at 30 June 2017 is $52,416,446 (30 June 2016: $43,021,327) that
are available indefinitely for offsetting against future taxable profits of the companies in which the losses arose.
Deferred tax assets have not been recognised in respect of these losses as they may not be used to offset taxable profits
elsewhere in the consolidated entity in the near future.
40
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Tax consolidation
(i) Members of the tax consolidated group and the tax sharing arrangement
Genex Power Limited and its 100% owned Australian resident subsidiaries formed a tax consolidated group with effect
from 1 July 2005. Genex Power Limited is the head entity of the tax consolidated group. Members of the tax consolidated
group have entered into a tax sharing agreement that provides for the allocation of income tax liabilities between the
entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial
statements in respect of this agreement on the basis that the possibility of default is remote.
(ii) Tax effect accounting by members of the tax consolidated group
Measurement method adopted under AASB Interpretation 1052 Tax Consolidation Accounting
The head entity and the controlled entities in the tax consolidated group continue to account for their own current and
deferred tax amounts in accordance with the accounting policies outlined in Note 1. The Group has applied the group
allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members
of the tax consolidated group. The current and deferred tax amounts are measured in a systematic manner that is
consistent with the broad principles in AASB 112 Income Taxes. The nature of the tax funding agreement is discussed
further below.
Nature of the tax funding agreement
Members of the tax consolidated group have entered into a tax funding agreement. Under the funding agreement, the
funding of tax within the consolidated entity is based on taxable income, which is an acceptable method of allocation
under AASB Interpretation 1052. The tax funding agreement requires payments to/from the head entity to be recognised
via an inter-entity receivable (payable) which is at call. To the extent that there is a difference between the amount
charged under the tax funding agreement and the allocation under AASB Interpretation 1052, the head entity accounts
for these as equity transactions with the subsidiaries.
The amounts receivable or payable under the tax funding agreement are due upon receipt of the funding advice from
the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also
require payment of interim funding amounts to assist with its obligations to pay tax instalments.
Note 8: Components of OCI
Cash flow hedges:
Gains/(loss) arising during the year
Currency forward contract
Net gain during the year of matured contracts
Net gain/(loss) during the year of the not-yet matured contracts
Removed from OCI during the year and included in the carrying amount of the hedged
items as a basis adjustment
Interest rate swaps:
Net loss during the year of matured contracts
Net gain/(loss) during the year of the not-yet matured contracts
Removed from OCI during the year and included in the carrying amount of the hedged
items as a basis adjustment
Consolidated
2017
$
2016
$
453,137
(139,122)
(453,137)
(139,122)
(19,374)
(1,529,372)
19,374
(1,529,372)
(1,668,494)
-
-
-
-
-
-
-
-
41
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Note 9. Cash and cash equivalents
Cash at bank
Cash and cash equivalents
Note 10. Trade and other receivables
GST receivable
Rental bond
Project bond
Sundry debtors
30 June
2017
$
30 June
2016
$
11,088,539
4,179,614
11,088,539
4,179,614
30 June
2017
$
997,586
26,829
231,818
-
30 June
2016
$
393,197
21,256
-
4,383
Trade and other receivables
1,256,233
418,836
Note 11. Prepayments
Ergon substation deposit
Insurance
Environmental Authority and Land Rent
Prepayments
Note 12. Bank Guarantee - Non-Current
Construction Camp Bond
Office Bond
Term Deposit
30 June
2017
$
-
233,351
39,297
30 June
2016
$
2,581,643
63,223
39,297
272,648
2,684,163
30 June
2017
$
82,500
110,813
3,804,312
3,997,625
30 June
2016
$
-
-
3,804,312
3,804,312
42
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Note 13. Property, Plant and Equipment
Land
Work in Progress Capital assets
Pre-development assets
Leasehold Improvements
30 June
2017
$
175,000
43,306,214
3,918,777
41,563
47,441,554
30 June
2016
$
175,000
430,474
3,918,777
-
4,524,251
Working in progress capital assets and pre-development assets are part of the Kidston Solar Farm which is currently
under construction. All assets associated with the Kidston Solar Farm have been pledged as security to the senior lenders
as part of the $100.1 million senior debt facility.
Land
Work in
Progress
Capital assets
Pre-
development
Asset
Leasehold
Improvements
Cost
As at 1 July 2015
Additions:
Disposals
At 30 June 2016
Additions:
Disposals
At 30 June 2017
-
175,000
-
175,000
-
-
175,000
430,474
-
430,474
42,875,740
-
43,306,214
3,918,777
-
-
3,918,777
-
-
3,918,777
Depreciation or impairment
As at 1 July 2015
Depreciation charge for the year
At 30 June 2016
Depreciation charge for the year
At 30 June 2017
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43,244
-
43,244
-
-
-
(1,681)
(1,681)
Total
3,918,777
605,474
-
4,524,251
42,918,984
-
47,443,235
-
-
-
(1,681)
(1,681)
Net book value 30 June 2017
Net book value 30 June 2016
175,000
175,000
43,306,214
430,474
3,918,777
3,918,777
41,563
-
47,441,554
4,524,251
Capitalised borrowing costs
The Kidston solar project (Phase One 50MW) is currently in development and is expected to be finalised in late 2017.
The carrying amount of the Kidston solar project at 30 June 2017 was $43,306,214 (30 June 2016: $430,474). The Kidston
solar project is financed by a $100.1 million senior debt facility with third party banks. Borrowing costs on the facility
have been capitalised. The amount of borrowing costs capitalised during the year ended 30 June 2017 was $2.9m (2016:
Nil). The rate used to determine the amount of borrowing costs eligible for capitalisation was 3.37%, which is the EIR of
the specific borrowing.
43
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Note 14. Trade and other payables
Current
Trade creditors and accruals
PAYG withholdings
Superannuation payable
Note 15. Interest-bearing loans and borrowings
R&D Facility
Hunter Premium facility
The R&D Facility was repaid in December 2016.
30 June
2017
$
10,694,271
59,820
29,133
10,783,224
30 June
2016
$
333,461
55,876
-
389,337
30 June
2017
$
-
70,713
70,713
30 June
2016
$
2,200,000
49,730
2,249,730
The Hunter insurance premium funding facility is a prepayment facility for insurance expenses over a period of 12
months. The facility is repaid over 12 months in equal instalment. The interest charged on the facility is 5.75%.
Note 16. Government Grant
R&D tax credit
ARENA Grant
30 June
2017
$
3,187,668
8,850,000
12,037,668
30 June
2016
$
730,600
-
730,600
Genex received an ARENA grant of $8.85 million towards the funding of the Kidston Solar Project. The Grant is repayable
in full if the project is not finished by a commissioning sunset date.
The R&D tax credit relates to Research & Development rebate received for direct and indirect R&D costs incurred by the
Company.
Note 17. Cash flow hedge
Foreign currency risk
Foreign exchange forward contracts measured at fair value through OCI are designated as hedging instruments in cash
flow hedges of forecast purchases in USD or EUR under the Engineering, Procurement and Construction (EPC) contract.
These forecast transactions are highly probable, and they comprise about 100% of the consolidated entity’s total
expected purchases in USD and EUR.
The foreign exchange forward contract balances vary with the level of expected foreign currency purchases and changes
in foreign exchange forward rates.
44
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Foreign currency forward contracts designated as hedging instruments
Fair value
30 June
2017
$
Liabilities
30 June
2016
$
Liabilities
139,122
-
The terms of the foreign currency forward contracts match the terms of the expected highly probable forecast
transactions. As a result, there is no hedge ineffectiveness to be recognised in the statement of profit or loss. The notional
amounts of each individual tranche of the foreign currency forward contracts range from AU$ 27,012 to AU$ 8,487,710.
The foreign exchange forwards are valued at $139k out-of-money position as at 30 June 2017.
The amount removed from OCI during the year and included in the carrying amount of the hedged items as a basis
adjustment for 2017 is detailed in Note 8, totalling $453,137 (2016: Nil). The amounts retained in OCI at 30 June 2017
are expected to mature and will be moved from OCI to the carrying amount of the hedged items as a basis adjustment
in FY18 when the underlying solar project is finalised and depreciation starts.
Interest rate risk
Interest rate swaps measured at fair value through OCI are designated as hedging instruments in cash flow hedges of
forecast drawdown under the senior bank loan agreement. These forecast transactions are highly probable.
The interest rate swaps balances vary with the level of expected drawn down and changes in the floating interest rates.
Interest rate swaps designated as hedging instruments
Fair value
30 June
2017
$
Liabilities
30 June
2016
$
Liabilities
1,529,372
-
The terms of the interest rate swaps match the drawn down schedule as defined in the senior bank loan agreement. As
a result, there is no hedge ineffectiveness to be recognised in the statement of profit or loss. Notional amount is $100.1m
(2016: $Nil) whereby the consolidated entity receives a fixed rate of interest of 3.065% and pays interest at a variable
rate equal to BBSW on the notional amount. The interest rate swaps are valued at $1.53m out-of-money position as at
30 June 2017.
The amount removed from OCI during the year and included in the carrying amount of the hedged items as a basis
adjustment for 2017 is detailed in Note 8, totalling $19,374 (2016: Nil). Part of the amounts retained in OCI at 30 June
2017 are expected to mature and will be moved from OCI to the carrying amount of the hedged items as a basis
adjustment in FY18, the remaining are expected to mature and released to profit or loss in accordance with the
proportion of the depreciation of the underlying solar project.
45
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Note 18. 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 of the Kidston project. As at 30 June 2017, $2,622,719 has been drawn down. The convertible
note is deemed to be financial instrument with 2 embedded derivatives, i.e. conversion right and early redemption
option. Please refer Note 19 for further details.
Long term interest accrued
Convertible note
Key terms of the convertiable notes funding agreement:
30 June
2017
$
30 June
2016
$
168,217
1,614,600
1,782,817
27,705
1,449,676
1,477,381
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;
Zero coupon;
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 20 day 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, i.e.
once the project reaches financial close, the Note must be redeemed;
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
Maturity dates of the convertible notes are as follows:
Maturity date
4 March 2021
16 March 2021
1 April 2021
3 May 2021
23 May 2021
27 June 2021
22 August 2021
2 November 2021
21 December 2021
26 April 2022
1
2
3
4
5
6
7
8
9
10
Amount
731,243
537,928
386,193
207,902
198,582
74,006
123,453
186,782
142,800
33,830
2,622,719
46
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Note 19: Financial assets and financial liabilities
Financial assets
Financial assets at amortised cost
Trade and other receivables
Bank guarantee
Total financial assets
Total current
Total non-current
30 June 2017
$
30 June 2016
$
1,256,233
3,997,625
5,253,858
1,256,233
3,997,625
418,836
3,804,312
4,223,148
418,836
3,804,312
Financial liabilities: interest-bearing loans and borrowings
Weighted
average
interest rate
%
Maturity
$
30 June 2017
$
30 June 2016
$
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing – fixed rate
$100,118,187 Senior Bank Loan
Hunter premium facility
R&D Facility
Total non-derivatives
N/A
N/A
10,783,224
389,337
4.815%
29 February 2023
16,328,777
-
Monthly
instalment with the
last payment due
on 31 Dec 2017
N/A
5.75%
5.25%
70,713
-
49,730
2,200,000
27,182,714
2,639,067
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
There have been no amounts pledged as collateral.
The market rate of interest will affect the interest payable on the R&D facility. The interest rate on the 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%.
Other financial liabilities
Derivatives not designated as hedging instruments
Embedded derivatives
30 June 2017
$
30 June 2016
$
1,761,195
839,086
47
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Derivatives designated as hedging instruments
Foreign exchange forward contracts
Interest rate swaps
Other financial liabilities at amortised cost, other than interest-bearing
loans and borrowings
Trade and other payables
Total financial liabilities
Total current
Total non-current
30 June 2017
30 June 2016
139,122
1,529,372
-
-
10,783,224
389,337
14,212,913
1,228,423
10,922,346
3,290,567
389,337
839,086
Derivatives designated as hedging instruments reflect the change in fair value of foreign exchange forward contracts,
designated as cash flow hedges to hedge highly probable future purchases in USD and EUR. Derivatives designated as
hedging instruments also include the change in fair value of interest rate swaps entered into during 2017.
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.
Credit risk
Credit risk is the risk of financial loss to the consolidated entity if a counterparty to a financial instrument fails to meets
it contractual obligations. The consolidated entity’s trade and other receivables consist of an amount receivable from
the Australian tax authority. The consolidated entity’s cash and cash equivalents consist of cash in bank accounts lodged
with reputable banks in Australia. Accordingly, the consolidated entity views credit risk as minimal.
The maximum exposure to credit risk is as follows:
Cash and cash equivalents
Trade and other receivables
Bank guarantee
30 June 2017
$
30 June 2016
$
11,088,539
1,256,233
3,997,625
16,342,397
4,179,614
418,836
3,804,312
8,402,762
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 and debt facilities or by facilitating
additional capital raising and continuously monitoring actual and forecast cash flows and matching the maturity profiles
of financial assets and liabilities.
48
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Remaining contractual maturities
Note 19 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.
Note 20. Fair value measurement
The following table provides the fair value measurement hierarchy of the consolidated entity’s assets and liabilities
Fair value measurement hierarchy for liabilities as at 30 June 2017:
Date of valuation Total
Fair value measurement using
Quoted price in
active markets
(Level 1)
Significant
observable
inputs (Level 2)
Significant
unobservable
inputs (Level 3)
Liabilities measured at fair value
Derivative financial liabilities
Interest rate swaps
Foreign exchange
forward contracts
Embedded
derivatives
30 June 2017
30 June 2017
30 June 2017
1,529,372
139,122
1,761,195
-
-
-
1,529,372
139,122
1,761,195
Fair value measurement hierarchy for liabilities as at 30 June 2016:
Date of valuation Total
Fair value measurement using
Quoted price in
active markets
(Level 1)
Significant
observable
inputs (Level 2)
Significant
unobservable
inputs (Level 3)
Liabilities measured at fair value
Derivative financial liabilities
Embedded
derivatives
30 June 2016
839,086
-
839,086
-
-
-
-
The consolidated entity enters into derivative financial instruments with various counterparties, principally financial
institutions with investment grade credit ratings. Interest rate swaps and foreign exchange forward contracts are valued
using valuation techniques, which employ the use of market observable inputs. The most frequently applied valuation
techniques include forward pricing and swap models using present value calculations. The models incorporate various
inputs including the credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the
respective currencies, currency basis spreads between the respective currencies and the interest rate curves. All
derivative contracts are fully cash collateralised, thereby eliminating both counterparty risk and the consolidated entity’s
own non-performance risk. As at 30 June 2017, the marked-to-market value of derivative positions is net of a credit
valuation adjustment attributable to derivative counterparty default risk. The changes in counterparty credit risk had no
material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other
financial instruments recognised at fair value.
The conversion right and early redemption option embedded in the convertible notes are measured using binomial tree
lattice methodology with the spot price of the consolidated entity’s own share, expected volatility and expected dividend
yield of the share, risk free interest rate and asset default threshold as the key inputs.
49
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Note 21. Interest-bearing loans and borrowings (non-current)
Senior bank debt
30 June
2017
$
30 June
2016
$
16,043,532
16,043,532
-
-
Genex Power has a senior bank facility of $100.1 million with Société Générale - Hong Kong Branch, DZ Bank AG and the
Clean Energy Finance Corporation (CEFC). The proceeds from the facility is used to pay for the construction cost of the
Phase 1 Kidston Solar Farm. As at 30 June 2017, the amount drawn down from the facility as at 30 June 2017 is
$16,043,532
Key terms of the senior bank debt:
Interest rate – base rate (BBSY) + 1.75%
Tenor – Construction plus 5 years
Under the terms of the Kidston Solar Project Subscription Agreement the consolidated entity is required to maintain a
specific debt service cover ratio (DSCR). Measurement of the DSCR commences following the date of practical
completion. There have been no breaches of the financial covenants of any interest-bearing loans in the current period.
Note 22. Rehabilitation and restoration provisions
The rehabilitation and restoration provisions represent the rehabilitation required on the Kidston mine site at 30 June
2017.
Make good provision on office lease
Rehabilitation and provisions
Note 23. Equity
30 June
2017
$
30 June
2016
$
15,889
3,804,311
3,820,200
-
3,804,311
3,804,311
Ordinary shares issued and fully paid
287,807,764
180,268,750
35,493,073
15,878,724
30 June
2017
Shares
30 June
2016
Shares
30 June
2017
$
30 June
2016
$
50
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Movements in ordinary share capital
Details
Balance
Issue of shares
Share issue costs
Loyalty options forfeit
Movement for the year
Date
No of shares
Issue price
$
1 July 2015
158,393,750
12,352,617
17 June 2016
21,875,000
-
-
21,875,500
$0.16
-
-
$0.20
$0.22
$0.22
$0.16
$0.20
$0.16
$0.20
$0.20
3,500,000
(177,000)
203,107
3,526,107
15,878,724
10,000
9,914,697
(560,739)
2,561,077
5,000,000
(449,655)
50,000
3,068,969
10,000
10,000
19,614,349
35,493,073
Balance
30 June 2016
180,268,750
Exercise of loyalty options
Issue of shares (Placement)
Share issue costs
Issue of shares (Share Purchase Plan)
Issue of shares (Placement)
Share issue costs
Exercise of options
Issue of shares (Rights Issue)
Exercise of options
Exercise of options
Movement for the year
8 December 2016
15 December 2016
23 January 2017
9 February 2017
9 February 2017
1 March 2017
6 March 2017
26 April 2017
50,000
45,067,187
11,640,770
31,250,000
250,000
19,181,057
50,000
50,000
107,539,014
Balance
30 June 2017
287,807,764
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a show of hands every member present at a
meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. The shares have no
par value.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so
that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Share option schemes
The consolidated entity has two share option schemes under which options to subscribe for Genex Power’s shares have
been granted to certain senior executives and certain other employees. Refer to Note 24 for further details.
As at 1 July 2015
Share-based payments expense during the year
Loyalty Options forfeited
At 30 June 2016
Share-based payments expense during the year
At 30 June 2017
Share-based
payments
$
1,504,496
96,132
(203,107)
1,397,521
1,332,663
2,730,184
51
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Nature and purpose of reserves
Share-based payments
The share-based payments reserve is used to recognise the value of equity-settled share-based payments provided to
key management personnel, as part of their remuneration. Refer following for further details of these plans.
The reserve is used to record the value loyalty options issued by the Company as part of its initial public offering.
Number
Value per option
Each option is convertible into
Exercise price per option
Vesting condition
Issue date
Expiry date
Option exercise period
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
At any time from date of vesting to date of expiry
All other reserves are as stated in the consolidated statement of changes in equity.
During the year:
the board of directors authorised the issue of 2,400,000 share options in the consolidated entity to James Harding
(Executive General Manager)
the board of directors authorised the issue of 4,000,000 share options in the consolidated entity to Michael Addison
(Managing Director) which were approved by shareholders on 17 January 2017.
the board of directors authorised the issue of 4,000,000 share options in the consolidated entity to Simon Kidston
Executive Director) which were approved by shareholders on 17 January 2017.
the board of directors authorised the issue of 4,000,000 share options in the consolidated entity to Ben Guo (Finance
Director) which were approved by shareholders on 17 January 2017.
the board of directors authorised the issue of 2,000,000 share options in the consolidated entity to Ralph Craven
(Chairman) which were approved by shareholders on 17 January 2017.
Options at the start of the period (01/07/2016)
Granted during the year
Forfeited during the year
Exercised during the year (Loyalty Options)
Expired during the year
Outstanding at the end of the year
Vested and exercisable at the end of the year
(30/06/2017)
Options at the start of the period (01/07/2015)
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 year
(30/06/2016)
30,800,000
16,400,000
-
400,000
-
46,800,000
41,866,667
28,500,000
5,000,000
2,700,000
-
30,800,000
25,800,000
52
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
These share 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
Chief Operating Officer Options
Number
Value per option
Subscription price per option
Each option is convertible into
Exercise price per option
Vesting condition
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
5,000,000
$0.0714
$Nil
1 ordinary share in the parent entity
$0.25
The options will vest in 3 separate tranches upon the
achievement of the following 3 milestones:
Financial close of the Kidston Solar Phase One
50MW project;
Financial close of the Kidston Pumped Storage
Hydro project;
Successful completion of a feasibility study for
another project.
Issue date
Expiry date
Option exercise period
Other conditions
If a milestone is not achieved, then the options for that
milestone will lapse unvested. As at 30 June 2017,
1,666,667 options have been vested.
6 August 2015
6 August 2020
At any time from date of vesting
None
53
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Executive General Manager Options
Number
Value per option
Subscription price per option
Each option is convertible into
Exercise price per option
Vesting condition
2,400,000
$0.0602
$Nil
1 ordinary share in the parent entity
$0.25
The options will vest in 3 separate tranches upon the
achievement of the following 3 milestones:
Financial close of the Kidston Solar Phase One
50MW project;
Financial close of the Kidston Pumped Storage
Hydro project;
Successful completion of a feasibility study for
another project.
Issue date
Expiry date
Option exercise period
Other conditions
If a milestone is not achieved, then the options for that
milestone will lapse unvested. As at 30 June 2017,
800,000 options have been vested.
2 September 2016
2 September 2021
At any time from date of vesting
None
On 2 September 2016, 2,400,000 options were issued to Mr. James Harding (Executive General Manager). The options
have an exercise price of $0.25, expire on the 2 September 2021 and are subject to various vesting conditions.
The value of the Executive General Manager Options granted during the year ended 30 June 2017 was calculated to be
$0.0602 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
$0.15832
$0.25
57.16%
5 years
Nil
1.68%
Director Options
Number
Value per option
Subscription price per option
Each option is convertible into
Exercise price per option
Vesting condition
Issue date
14,000,000
$0.0851
$Nil
1 ordinary share in the parent entity
$0.34
Vesting on issue date
17 January 2017
On 17 January 2017, 14,000,000 options were issued to the executive directors and the chairman of the Company. The
options have an exercise price of $0.34, expire on the 17 January 2022. The options are vested on issue.
The value of the Director Options granted during the year ended 30 June 2017 was calculated to be $0.0851 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:
54
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Underlying share price
Exercise price
Expected volatility
Option life
Expected dividends
Risk free interest rate
$0.21768
$0.34
57.16%
5 years
Nil
2.30%
Note 24. Share-based payments
The expense recognised for employee services received during the year is shown in the following table:
Expense arising from equity-settled share-based payment transactions
Total expense arising from share-based payment transactions
There were no cancellations or modifications to the awards in FY17 or FY16
30 June
2017
$
1,332,663
1,332,663
30 June
2016
$
96,132
96,132
Movements during the year
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share
options during the year:
Outstanding at 1 July 2017
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 30 June 2017
Exercisable at 30 June 2017
2017
Number
13,500,000
16,400,000
-
-
-
29,900,000
24,966,667
2017
WAEP
0.25
0.33
-
-
-
2016
Number
8,500,000
5,000,000
-
-
-
0.29 13,500,000
8,500,000
0.30
2016
WAEP
0.25
0.25
-
-
-
0.25
0.25
On 6 August 2015, the board of directors authorised the issue of 5,000,000 share options in the consolidated entity to
Arran McGhie (Chief Operating Officer), $77,394 has been recognised as expenses in FY17 for this grant.
On 2 September 2016, the board of directors authorised the issue of 2,400,000 share options in the consolidated entity
to James Harding (Executive General Manager), $63,414 has been recognised as expenses in FY17 for this grant.
On 17 January 2017, the board of directors authorised the issue of 4,000,000 share options in the consolidated entity to
Michael Addison (Managing Director), $340,530 has been recognised as expenses in FY17 for this grant.
On 17 January 2017, the board of directors authorised the issue of 4,000,000 share options in the consolidated entity to
Simon Kidston Executive Director), $340,530 has been recognised as expenses in FY17 for this grant
On 17 January 2017, the board of directors authorised the issue of 4,000,000 share options in the consolidated entity to
Ben Guo (Finance Director), $340,530 has been recognised as expenses in FY17 for this grant
On 17 January 2017, the board of directors authorised the issue of 2,000,000 share options in the consolidated entity to
Ralph Craven (Chairman), $170,265 has been recognised as expenses in FY17 for this grant.
55
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Note 25. 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
2017
$
30 June
2016
$
1,764,308
167,609
-
1,332,663
3,264,580
1,102,808
117,837
-
96,132
1,316777
Short-term employee benefits include salaries, bonuses 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.
Note 26. Auditors’ remuneration
During the year the following fees were paid for services provided by Ernst & Young, the auditor of Genex Power Limited
(the comparative amount presented here is the audit fees paid to the predecessor auditor, William Buck):
Audit of the financial statements (Ernst & Young)
Non-audit service: advisory service on related energy market studies (Ernst & Young)
Audit of the financial statements (William Buck)
30 June
2017
$
67,550
94,000
27,232
188,782
30 June
2016
$
-
49,315
49,315
Note 27. Commitments and contingencies
Operating lease commitments – the consolidated entity as lessee
The consolidated entity has entered into operating lease on the office at O'Connell Street where its head office resides.
Future minimum rentals payable under non-cancellable operating leases as at 30 June 2017 are, as follows:
Within one year
After one year but not more than five years
More than five years
30 June
2017
$
30 June
2016
$
176,369
390,620
-
566,989
-
-
-
-
Capital commitments
At 30 June 2017, the consolidated entity had capital commitments of $74,696,295 (2016: $Nil) relating to the completion
of the Kidston Solar Project.
56
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Note 28. Related party transactions
Controlled entities
A list of controlled entities is provided in Note 30 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
the Remuneration Report and Note 25 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
25 above.
Note 29. Information relating to Genex Power Limited (the Parent)
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 loss
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Option reserves
Accumulated losses
Total equity
30 June
2017
$
30 June
2016
$
17,613,981
10,900,423
17,613,981
10,900,423
30 June
2017
$
30 June
2016
$
1,916,828
4,659,788
25,588,173
13,970,322
7,595,219
5,922,280
11,155,121
9,870,299
35,493,073
2,730,184
(23,790,203)
15,878,724
1,397,521
(13,176,222)
14,433,054
4,100,023
57
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2017 and 30 June 2016.
Note 30. 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:
Parent
Name
Principal place of business /
Country of incorporation
Genex Power Limited
Australia
Subsidiaries
Name
Principal place of business /
Country of incorporation
Genex (Kidston) Pty Limited
Kidston Gold Mines Limited
Genex (Solar) Pty Limited
Genex Solar Holding Co Pty Limited
Kidston Solar Holding Co Pty Limited
Kidston Solar Co Pty Limited
Kidston Solar Finance Co Pty Limited
Australia
Australia
Australia
Australia
Australia
Australia
Australia
30 June
2017
%
30 June
2016
%
100.00%
100.00%
99.99%
99.99%
99.99%
99.99%
99.99%
100.00%
100.00%
100.00%
-
-
-
-
*These companies are 99.99% owned by Genex (Kidston) Pty Limited, the remaining 0.01% is held by Michael Addison.
Note 31. Reconciliation of profit after income tax to net cash from operating activities
Loss before tax
Adjustments to reconcile profit before tax to net cash flows:
Depreciation and impairment of property, plant and equipment
Share-based payment expense
Movements in provisions, pensions
Net loss on financial instruments at fair value through profit or loss
Finance income
Finance costs
Working capital adjustments:
Decrease/(Increase) in trade and other receivables and prepayments
Increase/(Decrease) in trade and other payables
Interest received
Interest paid
30 June
2017
(9,395,119)
30 June
2016
(7,644,100)
71,520
1,332,663
36,561
600,168
(359,097)
176,403
-
96,132
22,173
152,907
(96,091)
154,816
(886,520)
91,835
(8,331,586)
(383,159)
(98,378)
(7,795,700)
359,097
(388,574)
(8,361,063)
96,091
(127,111)
(7,826,720)
58
Genex Power Limited
Notes to the consolidated financial statements
For the year ended 30 June 2017
strella Resources Limited
Note 32. Events after the reporting year
Subsequent to 30 June 2017 the following events took place:
In July 2017, Genex received first-stage board approval from Northern Australia Infrastructure Facility (NAIF) for
concessional debt funding for Genex’s Kidston Solar Stage Two Projects.
On 4 August 2017, Genex entered into a corporate facility with CEFC for $4.1 million to fund general corporate expenses
which was a facility comprising part of the financial close arrangements for KS1 in February 2017.
In August 2017, Genex executed of a binding Heads of Agreement with Powerlink Queensland to progress a range of key
activities which are critical to the connection of Genex’s Kidston Hydro-Solar Project (Project) to the Queensland
transmission network
Apart from the matters outlined above there have been no other material events or circumstances which have arisen
since 30 June 2017 that have significantly affected, or may significantly affect the consolidated entity's operations, the
results of those operations, or the consolidated entity's state of affairs in future financial years.
Note 33. Earnings per share
30 June
2017
30 June
2016
Net loss for the year
Weighted average number of ordinary shares used in calculating basic earnings per
share
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
Weighted average number of ordinary shares used in calculating diluted earnings per
share
$9,395,118
$7,644,101
233,105,428
162,469,434
-
-
233,105,428
162,469,434
Cents
Basic earnings per share
(4.70)
(4.70)
Diluted earnings per share
* The weighted average number of shares takes into account the weighted average effect of right issue during the year.
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting
date and the date of authorisation of these financial statements.
Cents
(4.03)
(4.03)
59
strella Resources Limited
6. DIRECTOR’S DECLARATION
In accordance with a resolution of the directors of Genex Power Limited, I state that:
1. In the opinion of the directors:
(a) the financial statements and notes of Genex Power Limited for the financial year ended 30 June 2017 are in
accordance with the Corporations Act 2001, including:
i.
ii.
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2017 and of its
performance for the year ended on that date; and
complying with Accounting Standards and the Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in
Note 1; and
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
2. This declaration has been made after receiving the declarations required to be made to the directors by the managing
director and the finance director in accordance with section 295A of the Corporations Act 2001 for the financial year
ended 30 June 2017.
On behalf of the board
________________________________
Ben Guo
Director
29 September 2017
Sydney
60
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent Auditor's Report to the Members of Genex Power Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Genex Power Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2017, the consolidated statement of comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2017
and of its consolidated financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
61
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
1. Prior period error – Reclassification of Goodwill to Property, Plant and Equipment
Refer to Note 1 – Correction of prior period errors
Why significant
How our audit addressed the key audit matter
Following our appointment as the Group’s
auditors in the current year, we considered how
the prior period acquisition of KGM was
accounted for.
We reviewed contract terms and conditions in
the KGM Share Sale Agreement and assessed
whether the acquisition of KGM met the
definition of a ‘Business” in accordance with
Australian Accounting Standards.
We held discussions with responsible
representatives from the Group to understand
the nature and intent of the acquisition of KGM.
We evaluated the adequacy of the related
disclosures in the financial report including
those made with respect to restating the
comparative amounts for the prior period in
which the error occurred.
In the year ended 30 June 2014, Kidston Gold
Mines Limited (“KGM”), a non-operational mine,
was acquired by the Group for strategic
placement and development of a pump-storage
hydroelectric power station.
The acquisition of KGM was accounted for in the
prior period financial report as a business
combination, with $3.8m in goodwill recognised
and disclosed in the prior year financial
statements.
This treatment was incorrect and the acquisition
should have been treated as an asset acquisition.
This has been corrected in this financial report,
resulting in a reclassification of Goodwill to
Property, Plant and Equipment.
The reclassification of Goodwill to Property,
Plant and Equipment is considered a Key Audit
Matter due to:
The quantum of the prior period error;
The acquisition of KGM is a strategic
acquisition for the Group’s development of
a pump-storage hydroelectric power
station; and
The initial and subsequent accounting for
Goodwill differs to Property, Plant and
Equipment and therefore has a significant
impact on the presentation and disclosure
in the financial statements if not correctly
accounted for.
62
2. Recognition of Share Based Payments and associated prior period error
Refer to Note 1 – Correction of prior period errors
Why significant
How our audit addressed the key audit matter
We reviewed the Group’s Share Based Payments
terms and conditions and assessed the
appropriateness of the accounting applied by
management in accordance with Australian
Accounting Standards.
We assessed the discount rate and probability
assumptions by holding discussions with
responsible representatives and involvement
from our Valuation specialists to recalculate and
compare the assumptions used in management’s
calculations.
We evaluated the adequacy of the related
disclosures in the financial report including those
made with respect to judgements and estimates.
Equity-settled transactions are awards of shares,
or options that are provided to directors and
employees in exchange for rendering of services.
The costs of equity-settled transactions are
measured at fair value on grant date and
recognised as an expense with a corresponding
increase in equity over the vesting period.
The Group recognised Share Options Expense of
$1.24m and a Share Option Reserve of $2.7m at
30 June 2017.
A prior period error was identified in the current
year relating to the calculation of the prior
period expense. In the prior year, the Group
recorded 100% of the share options expense in
the 30 June 2016 financial statements rather
than over the vesting period.
As a result, the Group has reversed $0.28m of
Share Options expense recorded in the prior
period and recognised this in the current year.
The accounting for share based payments was a
Key Audit Matter due to the significant
judgements involved in establishing the
appropriate discount rate and probability of
vesting conditions and the size of the prior
period error.
63
3. Prior period error - recognition of convertible bonds
Refer to Note 1 – Correction of prior period errors
Why significant
How our audit addressed the key audit matter
On 18 December 2015, the Group entered into a
convertible note funding agreement with the
Australian Renewable Energy Agency (“ARENA”)
for up to $4m to fund the feasibility study of the
pump-storage hydroelectric power station.
We evaluated whether contract terms and
conditions of the ARENA Emerging Renewables
Program Funding Agreement were accounted for
in accordance with Australian Accounting
Standards.
A prior period error was identified in the current
year relating to the accounting treatment and
valuation of the convertible bond.
We agreed all funds raised from the ARENA
Emerging Renewables Program Funding
Agreement to receipt of cash in bank.
We assessed the discount rate and other key
assumptions used in the Group’s fair value
measurements, to internal and external data, with
involvement from our valuation specialists.
We evaluated the adequacy of the related
disclosures in the financial report including those
made with respect to judgements and estimates.
In the prior year, the Group recognised the
convertible bond as a hybrid instrument and
calculated the fair value of the liability
component using a market rate for an equivalent
non-convertible bond. The remainder of the
proceeds were allocated to the conversion option
that is recognised and included in shareholder’s
equity as a convertible note reserve, net of
transaction costs.
The conversion rights should have been
accounted for as a derivative instrument.
The Group has reversed the prior year
accounting treatment and correctly accounted
for the conversion right as a derivative.
The recognition and valuation of the convertible
bonds was considered a Key Audit Matter due to
the magnitude of the prior period error and the
complexity in accounting for such arrangements.
64
4. Recognition and recoverability of Work in Progress Capital Assets
Refer to Note 11 Property, Plant and Equipment
Why significant
How our audit addressed the key audit matter
The Group recognised Work in Progress Capital
Assets of $43.6m at 30 June 2017.
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 transferred to fixed assets and
depreciated from the time that the asset is held
ready for use.
The recognition and recoverability of the Group’s
Work in Progress Capital Assets was considered
a Key Audit Matter due to the magnitude of the
balance in the Consolidated Statement of
Financial Position, and the significant
judgements and assumptions involved in the
assessment of indicators of impairment.
We reviewed contract terms and conditions in the
Group’s construction contracts and assessed
whether the individual characteristics of each
contract were appropriately accounted for in
accordance with Australian Accounting
Standards.
We selected a sample of construction costs
capitalised to Work in Progress Capital Assets and
agreed these to supporting invoices and cash
payments.
For the sample selected for testing, we assessed
whether the construction costs capitalised to
Work in Progress Capital Assets were appropriate
in accordance with Australian Accounting
Standards.
We assessed the basis of the Group’s position on
the recoverable amount of Work in Progress
Capital Assets by performing the following
procedures:
- Obtained and reviewed the Group’s feasibility
studies and assessed whether the project
being constructed is commercially viable;
- We met with responsible representatives of
the Group so as to understand the status of
the construction program and whether there
are any risks of program delays; and
- Assessed the Group’s cash flow position and
their ability to satisfy construction obligations
We evaluated the adequacy of the related
disclosures in the financial report including those
made with respect to judgements and estimates.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2017 Annual Report, but does not include the financial report and our
auditor’s report thereon.
65
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors 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 preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
66
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 11 to 16 of the directors' report for the year
ended 30 June 2017.
In our opinion, the Remuneration Report of Genex Power Limited for the year ended 30 June 2017,
complies with section 300A of the Corporations Act 2001.
Responsibilities
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
67
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
Lynn Morrison
Partner
Sydney
29 September 2017
68
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 third 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 27 September 2017 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
the specific
a Board Charter, which discloses
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 of 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
programs approved by the Board as outlined
in
paragraph 8.3.
(a) Prior to the nomination of prospective non-executive
directors for election or re-election, the Board must
obtain from the prospective candidate:
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.
All of the Company’s current directors have undergone
bankruptcy and police checks and appropriate checks
69
strella Resources Limited
will also be undertaken prior to the appointment of any
new directors to the Board.
(b) When a candidate is placed before shareholders for
election or re-election as a director, the names of
candidates submitted is accompanied by the following
information to enable shareholders to make an
informed decision in relation to that vote:
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, its Chief
Operations Officer, Executive General Manager and a
Letter of Appointment with each of its non-executive
directors.
The Secretary is accountable to the Board through the
Chairman on all governance matters and on all matters
to do with the proper functioning of the Board. The
Secretary is generally responsible for carrying out the
administrative and legislative requirements of the
Board. The Secretary holds primary responsibility for
ensuring that the Board processes, procedures and
the
policies run efficiently and effectively and
Secretary’s role of responsibilities
in
paragraph 8.4 of the Board Charter.
(a) The Company has established a Diversity Policy as
part of its Corporate Governance Plan. The Policy details
the Board’s commitment to providing an inclusive
workplace and recognises the value that a workforce
made up of individuals with diverse skills, values,
backgrounds and experiences can bring to the
Company. The Company has a commitment to gender
diversity and female participation will be sought in all
areas at the appropriate time. Decisions relating to
promotion, leadership development and flexible work
arrangements will be based on merit and reinforce the
importance of equality in the workplace. Ongoing
monitoring of company policies and culture will be
undertaken to make sure they do not hold any group
back in their professional development.
is outlined
(b) A copy of the Company’s Diversity Policy is available
on the Company’s website and a summary is included in
this Corporate Governance Statement.
70
1.3
1.4
1.5
A listed entity should have a written agreement with
each director and senior executive setting out the
terms of their appointment.
The company secretary of a listed entity should be
accountable directly to the board, through the chair,
on all matters to do with the proper functioning of
the board.
A listed entity should:
(a) have a diversity policy which
includes
requirements for the board or a relevant
committee of the board to set measurable
objectives for achieving gender diversity and to
assess annually both the objectives and the
entity’s progress in achieving them;
(b) disclose that policy or a summary of it; and
(c) disclose as at the end of each reporting period
the measurable objectives for achieving gender
diversity set by the board or a relevant
committee of the board in accordance with the
entity’s diversity policy and its progress towards
achieving them and either:
(1) the respective proportions of men and
women on the board, in senior executive
positions and across the whole organisation
(including how the entity has defined “senior
executive” for these purposes); or
strella Resources Limited
(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
(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
for current circumstances and make
adequacy
recommendations to the Board for amendment where
required.
The Company’s Corporate Governance
Statement each year will contain an update on the
ASX’s
Company’s
recommendations and the Company’s Diversity Policy
which is contained in (i) below.
compliance
with
the
(i)
The Company currently only has 6
employees who are all male which
includes the 3 executive directors. 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
in
accordance with the Company’s Diversity
Policy.
requirements
skills and
(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 not carried out
during the reporting period however a full evaluation of
the Board, its committees and individual directors is
scheduled for late 2017/early 2018.
(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
71
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
strella Resources Limited
in
undertaken
accordance with that process.
the
reporting period
in
which assesses
predetermined objectives.
individual performance against
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.
(b) An evaluation of the performance of the Chief
Operations Officer and Executive General Manager will
take place at the same time as the Board evaluation in
late 2017/early 2018. The last formal evaluation of the
Chief Operations Officer was in late 2015 and the
Executive General Manager has only just completed 12
months’ of service with an
informal evaluation
occurring in late 2016 at the time of the expiry of his
initial 3 month probation period.
Structure the Board to Add Value
(a) The Board, as a whole, currently serves as the
Company’s Nomination Committee. Terms and
conditions of employees are negotiated by the
Managing Director in consultation with the Chief
Operations Officer for recommendation to the Board.
As the Company grows in size it is planned that the
implement a separate Nomination
Company will
Committee with
separate Nomination
Committee charter.
its own
(b) While the Board does not currently comply with this
recommendation, given the early stage of the
Company’s operations, the Board is of the view that it is
currently structured in such a way so as to add value and
is appropriate for the complexity of the business at this
time.
It is intended that, as considered appropriate, further
non-executive Director appointments to the Board may
be made in the future as required but there is no current
intention to do so subject to the outcome of the Board
evaluation in late 2017/early 2018. The Board shall
ensure that, collectively, it has the appropriate range of
skills and expertise to properly fulfil its responsibilities,
including:
Managing Director-level experience; and
accounting;
finance;
business;
the Company’s industry;
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, the ASX Listing Rules and
having regard to the ability of the individual to
contribute to the ongoing effectiveness of the Board, to
exercise sound business judgement, to commit the
necessary time to fulfil the requirements of the role
incumbents
72
strella Resources Limited
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.
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
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 Company’s financial, strategic, operational
and risk management position;
the rights, duties and responsibilities of the
directors;
the roles and responsibilities of Senior
Executives; and
the role of Board committees.
Principle 3 Recommendations:
Act Ethically and Responsibly
73
strella Resources Limited
3.1
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.
(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 once in the financial year with
all members present at the meeting.
(b) Not applicable.
The Board ensures that it receives the appropriate
declarations and assurances including a declaration
from the Chief Financial Officer that the Company’s
accounts have been kept in accordance with section
295A of the Corporations Act 2001 and received such
declarations in the financial year.
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.
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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
of
the
processes for the appointment and removal of
the external auditor and the rotation of the audit
engagement partner.
its corporate
reporting,
including
4.2
4.3
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
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.
strella Resources Limited
5.1
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.
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
7.1
A listed entity should design and implement an
investor relations program to facilitate effective
two-way communication with investors.
A listed entity should disclose the policies and
processes it has in place to facilitate and encourage
participation at meetings of security holders.
A listed entity should give security holders the
option to receive communications from, and send
communications to, the entity and its security
registry electronically.
Principle 7 Recommendations:
The board of a listed entity should:
(a) have a committee or committees to oversee risk,
each of which:
(1) has at least three members, a majority of
whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; OR
it does not have a risk committee or
committees that satisfy (a) above, disclose that
fact and the processes it employs for overseeing
the entity’s risk management framework.
(b) if
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.
to
(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.
(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 met once during the reporting
period with all 3 members in attendance.
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strella Resources Limited
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:
(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
(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 formal
review and planning session analysing and assessing the
Company’s risk register is scheduled for late 2017
between the Audit & Risk Management Committee and
the executive team.
(a) The Company’s internal audit function is exercised
by the Finance 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:
(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.
76
strella Resources Limited
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
remuneration
senior
for directors
executives and ensuring that such remuneration
is appropriate and not excessive.
and
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.
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.
8.2
8.3
(4) The members of the committee are Dr Ralph Craven,
Mr Alan du Mee and Mr Simon Kidston.
(5) The Committee met once in the financial year with
all 3 members being present at the meeting of the
Committee.
(b) Not applicable.
from
remuneration
The Committee distinguishes the structure of non-
executive directors'
that of
executive directors and senior executives. The
Company’s Constitution and the Corporations Act also
provides that the remuneration of non-executive
Directors will be not be more than the aggregate fixed
sum determined by a general meeting. The Board is
responsible for determining the remuneration of the
executive directors (without the participation of the
affected director).
(a) A summary of the Company’s policy on prohibiting
transactions in associated products which operate to
limit the risk of participating in unvested entitlements
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…”
77
strella Resources Limited
9. ADDITIONAL SECURITIES EXCHANGE INFORMATION
The following information is provided pursuant to Listing Rule 4.10 and is current as at 15 September, 2017
(unless otherwise stated):
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
1,615
220
The Names of substantial shareholders and the number of shares
to which each substantial shareholder and their associates have a
relevant interest, as disclosed in substantial shareholder notices
given to the Company is as follows
Substantial Shareholders
Acorn Capital Limited
KFT Capital Pty Limited
Zhefu Hydropower International Engineering Corporation Ltd
Danawa (Inv) Pty Ltd
Total Units
Date of Notice
21,721,528
20,881,931
31,678,750
28,500,000
13.09.17
06.03.17
03.03.17
02.03.17
There are 92 shareholders with an unmarketable parcel of shares being a holding of less than 2272 shares each
for a combined total of 70,747 shares. This is based on a closing price of $0.22 per share as at 18 September 2017
and represents 0.0245% 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
58
200
184
838
335
2,368
720,823
1,530,988
35,718,490
250,006,345
1,615
287,979,014
0.001
0.250
0.532
12.403
86.814
100.00
78
strella Resources Limited
Top 20 Shareholders
ZHEFU HYDROPOWER INTERNATIONAL ENGINEERING
CORPORATION LTD
DANAWA (INV) PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
KFT CAPITAL PTY LIMITED
DOWNING DOMAIN INVESTMENTS PTY LTD
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
AUSTRALIAN GO FUTURES PTY LTD
SACROSANCT PTY LTD
CITICORP NOMINEES PTY LIMITED
MAJI MAZURI PTY LTD & MAWINGO PTY LTD
LONGMUIR RESOURCES PTY LTD
PANCHO (NSW) PTY LIMITED
KFS PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MOORE PARK CAPITAL PTY LIMITED
WOLSELEY ROAD #1 PTY LIMITED
DAVID NOLAN
STONECOT PTY LIMITED
YINGHUI LI
Top 20 Shareholders
Total Issued Capital
Total Units
Percentage %
31,678,750
11.000
28,500,000
20,895,356
17,700,000
13,501,786
8,676,934
9.897
7.256
6.146
4.688
3.013
7,997,575
2.777
7,000,000
5,161,201
3,773,994
3,500,389
3,421,585
3,300,000
3,161,931
2,960,202
2,000,000
1,773,310
1,600,682
1,585,715
1,339,286
2.431
1.792
1.311
1.216
1.188
1.146
1.098
1.028
0.694
0.616
0.556
0.551
0.465
169,528,696
287,979,014
58.868
100.00
Distribution of Option holders – 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
79
strella Resources Limited
Option holders 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
51
32
106
18
207
0
245,000
261,250
3,898,000
12,324,500
16,728,750
0.000
1.465
1.562
23.301
73.673
100.00
28.962
23.911
5.231
Loyalty Option holders 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
CITICORP NOMINEES PTY LIMITED
875,000
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
80
strella Resources Limited
Option holders with more than 20% of the Class of Option:
A & M McGHIE INVESTMENTS PTY LTD
5,000,000
100.00
Distribution of Option holders – Exercisable at $0.25 expiring 2 September 2021
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
2,400,000
2,400,000
0.00
0.00
0.00
0.00
100.00
100.00
Option holders with more than 20% of the Class of Option:
JAMES WILLIAM HARDING
2,400,000
100.00
Distribution of Optionholders – Exercisable at $0.34 expiring 17 January 2022
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total
Option holders with more than 20% of the Class of Option:
RIVONIA PTY LIMITED
KFT CAPITAL PTY LIMITED
LIGUO CAPITAL PTY LIMITED
There are no shares or options subject to escrow.
There is no current on-market buy-back.
Holders
Total Units
Percentage %
0
0
0
0
5
5
0
0
0
0
15,500,000
15,500,000
4,000,000
4,000,000
4,000,000
0.00
0.00
0.00
0.00
100.00
100.00
25.806
25.806
25.806
81
10. CORPORATE DIRECTORY
DIRECTORS
Dr Ralph Craven
Mr Michael Addison
Mr Simon Kidston
Mr Ben Guo
Mr Yongqing Yu
Mr Alan du Mée
Non-Executive Chairman
Managing Director
Executive Director
Finance Director
Non-Executive Director
Non-Executive Director
COMPANY SECRETARY
Mr Justin Clyne
REGISTERED OFFICE & PRINCIPAL PLACE OF BUSINESS
Suite 6.02, Level 6
28 O’Connell Street
Sydney NSW 2000
Telephone:
Email:
+61 2 9048 8850
info@genexpower.com.au
WEBSITE
www.genexpower.com.au
ASX CODE
GNX
AUDITORS
Ernst & Young
200 George Street
Sydney NSW 2000
Telephone:
+61 2 9248 4283
Website:
www.ey.com/au/en/home
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
National Australia Bank
82