1 Annual Report 2017/18
Genex Power Limited
2018 ANNUAL REPORT
ABN 18 152 198 854
www.genexpower.com.au
2 Annual Report 2017/18
Genex Power
creating renewable
energy on tap
3 Annual Report 2018
CONTENTS
1. Chairman’s Letter
2. Chief Executive Officer’s Review of Operations
3. Directors Report and Remuneration Report
4. Auditors Independence Declaration
5. Financial Statements
6. Directors’ Declaration
7. Independent Auditor’s Report
8. Corporate Governance Statement
9. Additional Securities Exchange Information
10. Corporate Directory
04
06
09
20
21
65
66
71
81
85
1. Chairman’s Letter
2. Chief Executive Officer’s Review of Operations
3. Directors Report and Remuneration Report
4. Auditors Independence Declaration
5. Financial Statements
6. Directors’ Declaration
7. Independent Auditor’s Report
8. Corporate Governance Statement
9. Independent Auditor’s Report
10. Corporate Governance Statement
11. Additional Securities Exchange Information
12. Corporate Directory
01
02
03
04
05
01
02
03
04
05
01
02
4 Annual Report 2018
1. CHAIRMAN’S LETTER
Dear Shareholder,
On behalf of the Board of Directors of Genex Power Limited (Genex or Company) it
is with great pleasure that I present to you this annual report for 2018, a year in which
the Company achieved a great number of milestones.
Building on the success of previous years, 2018 proved to be a significant period for
the development and transformation of Genex. This was epitomised by the Company
achieving its first project revenue following the successful energisation of the 50MW
Kidston Solar project (KS1), built on-time and on-budget. KS1 has been generating
electricity for sale into the National Electricity Market (NEM) since December 2017
and the Company has been receiving revenue since that time.
In addition, the Company has made significant progress on the development of its
Stage 2 projects comprising the 250MW Pumped Storage Hydro Project (K2H) and
the multi-staged solar farm of up to 270MW (K2S), which are both targeted for
financial close in late 2018. The Company also announced the commencement of a
feasibility study into the development of a wind farm of up to 150MW at Kidston and
continues to look at developing new innovative projects that expand and
complement the Company’s portfolio.
A summary of the progress of each of the Company’s projects is outlined in the CEO’s Review of Operations. I would like
to acknowledge the strong support Genex has received from a number of bodies including the Federal Government
through the Australian Renewable Energy Agency (ARENA), which provided $8.9 million in funding to support the
construction of KS1, in addition to their support of up to $9 million in funding to support the development of the Stage
2 projects. The Federal Government, through the Northern Australia Infrastructure Facility (NAIF), has also expressed its
support for the development of the financing structure for Stage 2 through the provision of an indicative term sheet for
a long-term concessional debt facility of up to $516m. The concessional funding from NAIF would provide the backbone
of the project financing fundamentals for Stage 2. The concessional funding is subject to a number of conditions
including project offtake.
Genex would also like to acknowledge the support of the Queensland State Government through providing a 20-year
revenue support deed for KS1 and designating the Kidston Renewable Energy Hub as ‘Critical Infrastructure’ to the State.
On the corporate front, the Company received a financial boost from the exercise of the Loyalty Options issued in
conjunction with the Company’s IPO in 2015 with a total of just over $3.2m raised with the majority of those funds
coming in the 2018 Financial Year (FY). At the end of the FY, the Company had a healthy cash position of $10,994,349.
With Genex’s transition from early stage development to implementation and delivery of the Kidston Renewable Energy
Hub and focus on expanding its project pipeline, the Board took the opportunity to undertake a Board renewal and CEO
succession strategy. The Board was pleased to welcome the appointment of Mr James Harding as CEO and Ms Teresa
Dyson as a non-executive director. James was previously Genex’s Executive General Manager since mid-2016 and has
been responsible for delivering projects across the world and was instrumental in the successful delivery of KS1. Teresa
also brings a wealth of long standing Government, electricity and business relationships and experience to the Company.
As part of the renewal process, Michael Addison, the former Managing Director, transitioned to the role of non-executive
director and remains very much active in the strategic direction of Genex with a commensurate consulting role as a
strategic adviser consulting on project delivery and the project pipeline.
Looking ahead, the Company has set a firm target for achieving financial close for Stage 2 by the end of this calendar
year and the Board and management are actively working on the key work streams associated with this. We will continue
5 Annual Report 2018
to look for new opportunities without losing focus on Stage 2 which will be transformative for Genex. We remain diligent
when selecting potential projects for inclusion in our development pipeline. We are very enthusiastic about the
development of a wind farm at Kidston, which can potentially not only provide Genex with significant additional
generation capacity for dispatch into the NEM, but in combination with KS1 and our Stage 2 projects, provide inversely
correlated generation which could enable the dispatch of firm clean renewable electricity 24 hours a day, 7 days a week.
Genex is a small company with large aspirations. I am grateful for the focus and effort of the entire management team
throughout the year. I wish to also thank my fellow directors for their support and diligence in overseeing the activities
of Genex over the last 12 months. It has been a period of intense activity. On behalf of the Board, I thank all shareholders
for their support over the last year and extend a warm welcome to all new shareholders that have joined us on our
journey.
Yours faithfully,
Dr Ralph Craven
Non-Executive Chairman
6 Annual Report 2018
2. CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS
Company Overview:
I am pleased to present this Review of Operations for the first time in my new role
as Chief Executive Officer (CEO).
Throughout the 2018 Financial Year (FY), the Genex executive and management
team continued to work in a diligent and focused manner on its key objectives of
developing the capability to deliver the generation and storage of renewable
energy from our Kidston renewable energy hub in North Queensland by
integrating large-scale solar and wind with pumped storage hydro.
The Genex Kidston Renewable Energy Hub is a world first, innovative integration
of intermittent renewable energy with low-cost energy storage, creating
“Renewable Energy On Tap”.
Genex has achieved a number of significant milestones across the FY summarised
in the following snapshot of key announcements released to the ASX.
Date
H2 2017:
12 July
18 August
29 August
20 October
23 October
17 November
24 November
4 December
12 December
H1 2018:
12 February
3 April
5 April
7 May
20 June
Key Announcement
GNX Welcomes NAIF Approval to Proceed to Full DD Phase
Genex Signs Binding Heads of Agreement with Powerlink
Genex Secures Generation Authority for Kidston Solar Phase 1
Pumped Storage Hydro Update – Feasibility Optimisation
McConnell Dowell/Downer JV – preferred Hydro EPC Contractor1
Genex Secures up to $5.0 million Funding from ARENA
Genex Achieves Energisation for Kidston Solar Stage 1
Genex Achieves First Revenue for Kidston Solar Stage 1
UGL Appointed as Preferred EPC Contractor for Stage 2 Solar
Kidston Renewable Energy Hub Project Updates
Secures DA for Stage 2 Solar – Moves Towards Financial Close
Exclusive Option to Develop New Wind Project at Kidston
GNX Implements Board Renewal & CEO Succession Strategy
NAIF Approves Indicative Term Sheet for up to $516m Funding
Stage 1 - 50MW Kidston Solar Project (KS1):
Following financial close in February 2017, Genex successfully delivered its first project, the 50MW solar farm (KS1),
which was constructed on the tailings storage facility at the old Kidston mine. The project was completed on-time and
on-budget, having achieved first energisation in November 2017 and subsequently achieving first revenues in December
2017.
Since energisation on the electricity network, KS1 has progressed through the necessary commissioning steps, resulting
in a progressive ramp-up in generation capacity. Full commercial operation (Practical Completion) is scheduled for 1
November 2018. On 31 July 2018 the 20-year Revenue Support Deed with the Queensland State Government
commenced in accordance with the terms announced to the ASX on 8 September 2016. Prior to 31 July, Genex received
revenue from the sale of electricity into the spot-market in addition to the spot sales of Large-Scale Generation
Certificates (LGC’s). Revenues earnt in FY18 from these two sources totalled $8.27m.
1 The JV was restructured in January 2018 with John Holland Pty Ltd replacing Downer EDI as JV partner alongside McConnell Dowell.
7 Annual Report 2018
Stage 2 - 250MW Kidston Pumped Storage Hydro Project (K2H) & the Kidston Solar Project (K2S):
During 2018, Genex was able to successfully complete a number of significant milestones for the Kidston Stage 2 project
(K2) which comprises the K2H and K2S projects.
Of greatest significance in the development of K2 was the execution of a conditional term sheet with the Northern
Australia Infrastructure Facility (NAIF) for up to $516M in concessional debt financing (refer ASX Announcement of 20
June 2018). The concessionality is measured in the long-tenure, low interest and subordinated nature of the loan, which
are key benefits that NAIF can provide in order to promote infrastructure development in the Northern Australian region.
Locking in the concessional debt financing is a very positive step forward as it provides the necessary framework to
finalise offtake arrangements, secure the remaining debt and equity financing requirements and complete the
outstanding project development components in order to reach financial close within calendar year 2018.
In addition to executing the NAIF term sheet, the Commonwealth Government continued to provide further support for
Genex, with ARENA providing up to $5M in grant funding towards the development of the K2 projects. To date, ARENA
have provided $8.9M in grant funding for KS1 and, with this latest ARENA funding, up to $9M towards the development
of K2.
During the FY, Genex was able to complete a number of other significant developments for K2. Following the
commencement of an Early Contractor Involvement (ECI) process, the Company is now working with a Joint Venture
(JV) comprising McConnell Dowell and John Holland as preferred Engineering Procurement and Construction (EPC)
Contractor for K2H and with UGL as preferred EPC Contractor for K2S as a consequence of UGL’s successful build of KS1.
Subsequent to the selection of the K2H preferred contractor, global technology leader ANDRITZ was selected by the JV
as the hydro-electric turbine equipment suppliers.
Overall, the Company has set a firm target for achieving financial close in calendar year 2018.
Stage 3 - 150MW Kidston Wind Project (K3W)
In anticipation of the timely completion of project financing for K2, the Company has expanded its future project pipeline
through the execution of an exclusive land option in Kidston to develop a large-scale wind project up to 150MW in
capacity.
Pre-feasibility studies and resource monitoring activities have been initiated and over the coming months, the Company
will look to determine whether the wind resource and capacity profile is viable from an economic perspective and
proceed with pre-development works.
K3W represents the first in a series of long-term projects which Genex will look to engage in following the completion
of K2, as part of the Company’s portfolio expansion.
Company Outlook:
With KS1 substantially completed and generating revenue, the Company now has an active cash flow that will underpin
further corporate development. Over the coming months, the Company expects to meet its most significant milestone
to date which will be financial close for K2. The K2 projects are the flagship projects of the Company with K2H being the
keystone project upon which the Company was founded. With the indicative approval from NAIF for up to $516M in
concessional debt funding, Genex is now in a very strong position to finalise the remaining debt, equity and offtake
components for the K2 projects.
Further, we are looking to expand our development portfolio in order to diversify across projects, forms of technology
and locations as we transition from a small, pre-development company to a mature, proven leader in renewables and
energy storage.
8 Annual Report 2018
Yours faithfully,
James Harding
Chief Executive Officer
9 Annual Report 2018
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 2018 (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:
Dr Ralph Craven
Michael Addison
Yongqing Yu
Alan du Mée
Teresa Dyson (appointed 7 May 2018)
Ben Guo
Simon Kidston
Principal activities
The consolidated entity’s principal activity during the period was the development of the Kidston Renewable Energy
Hub in Far North Queensland (FNQ).
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 Renewable Energy Hub located in FNQ comprising:
the Stage 1 50MW Kidston Solar Project (KS1); and
the Stage 2 projects (K2) incorporating the 250MW pumped storage hydroelectric project (K2H) and the multi-
stage solar project up to 270MW (K2S).
1.
2.
3. Start of Assessment of (K3W) 150MW of wind power at Kidston.
For the year ended 30 June 2018, the consolidated entity incurred an after-tax loss of $7.46 million. The majority of
expenditure was incurred on the development of KS1 and the K2 Projects.
During the 2018 financial year Genex received an aggregate amount of $3,224,750 through the exercise of Loyalty
Options issued to shareholders who received shares during the Company’s IPO in 2015. All Loyalty Options have now
been exercised or expired.
During the year, Genex continued to draw down on the senior project loan as it progressed with the construction of KS1.
As at the 30 June 2018, Genex has drawn down $99.7m from the senior project loan. Construction of KS1 was completed
in November 2017, with the project energised and commissioned in November 2017 and achieving first revenues shortly
thereafter in December 2017 via the sale of electricity into the National Electricity Market (NEM) and Large-Scale
Generation Certificates (LGCs). As at 30 June 2018, Genex has recorded $8.27m in revenue from KS1.
10 Annual Report 2018
Matters subsequent to the end of the year
There have been no other material events or circumstances which have arisen since 30 June 2018 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 rapidly progress the development of the K2 projects with a view to reaching financial
close by the end of 2018.
Environmental regulation
The Kidston Energy Hub Site is covered by a Mining Lease (ML) No. 3347 and Environmental Authority (EA) No.
EPML000817013, which were originally granted to Kidston Gold Mines Limited (KGML) under the Environmental
Protection Act (1994) (QLD), at a time when KGML was a subsidiary of Barrick Gold Corporation and the site was operated
as a gold mine. The EA has operative provisions relating to:
General;
Air;
Water;
Noise and Vibration;
Regulated dams; and
Land and Rehabilitation.
Some of the provisions of the EA are inconsistent with Genex’ current use of the site as an operator and developer of
diverse renewable energy. Genex is currently in discussions with the Department of Environment and Science (DES)
about amending certain provisions of the EA which it cannot strictly comply with given the current site use.
11 Annual Report 2018
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: Non-Executive Director (Managing Director until 7 May 2018)
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, Frontier Diamonds Limited (6 September 2017 to 4 June 2018) and Intra Energy
Corporation (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: Member (and former 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
Starfish Hill windfarm in South Australia and the sale of a 50% of the Tarong North power station to a Japanese
12 Annual Report 2018
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: Teresa Dyson (appointed 7 May 2018)
Title: Non-Executive Director
Qualifications: (LLB (Hons), BA, MTax, MAppFin, GAICD)
Special Responsibilities: Chair, Audit & Risk Management Committee
Teresa is a director and Audit & Risk Committee Chair of ASX-listed Seven West Media Ltd (2017 –
Present). Teresa is also a director of Energy Qld Ltd, Energy Super, Power & Water Corporation, UN
Women National Committee Australia and Opera QLD and Deputy Chair of the Gold Coast Hospital & Health Board.
She is a member of the Foreign Investment Review Board and the Takeovers Panel.
Teresa has a broad legal practice across infrastructure, financial structuring, social infrastructure and taxation law, and is
currently a Consultant at McCullough Robertson. Teresa has previously been Chair of the Board of Taxation and a Partner
of Ashurst and Deloitte and was named Woman Lawyer of the Year in 2011 by the Women Lawyers Association of
Queensland.
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 & 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
13 Annual Report 2018
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.
Name: Justin Clyne
Title: Company secretary
Qualifications: LLM (UNSW) ACIS, AGIA, MAICD
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 2018, 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
Teresa Dyson
Yong Qing Yu
Held
12
12
12
12
12
1
12
Attended
12
12
10
12
11
1
-
Held
3
3
-
-
3
-
-
Attended
3
3
-
3
3
-
-
Held
2
-
2
-
2
-
-
Attended
2
2
2
2
2
-
-
‘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 1 Board
meeting 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 CEO 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
14 Annual Report 2018
divided among the non-executive Directors and in default of agreement then in equal shares. The sum fixed by the
Company as the aggregate limit for the payment of non-executive Directors is $400,000 per annum.
A Director may be paid additional fees or other amounts as the Remuneration Committee determine where a Director
renders or is called upon to perform extra services or to make any special exertions in connection with the affairs of the
Company. A Director may also be reimbursed for any disbursements or any other out of pocket expenses properly incurred
as a result of their directorship or any special duties.
The Company’s remuneration policy aims to align the corporate goals and objectives of the Company with the
remuneration paid to the Chief Executive Officer or equivalent 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 the Company’s Chief Executive Officer (former
Executive General Manager) and 2 other senior executives.
This Remuneration Report outlines the arrangements which were in place during the year ended 30 June 2018 for the
Directors and key management personnel.
2018
Executive Directors
M Addison
S Kidston
B Guo
Non-Executive Directors
R Craven
A du Mee
Teresa Dyson
Yongqing Yu
Short-term benefits
Cash Salary and
Fees
$
Post employee benefits
Superannuation benefits
$
Share-based
payments
$
353,155
300,000
300,000
115,000
80,000
10,956
-
29,231
28,500
28,500
10,925
7,600
1,040
-
-
-
-
-
-
-
-
Total
$
382,386
328,500
328,500
125,925
87,600
11,996
-
Sub-Total
1,159,111
105,796
- 1,264,907
Chief Operating Officer
A McGhie
Chief Executive Officer
James Harding
Sub-Total
Total
330,000
303,043
633,043
1,792,154
2017
Executive Directors
M Addison
S Kidston
B Guo
Short-term benefits
Cash Salary and
Fees
$
350,000
300,000
300,000
31,350
122,361
483,711
28,789
133,977
465,809
60,139
165,935
949,520
256,338
256,338 2,214,427
Post employee benefits
Superannuation benefits
$
Share-based
payments
$
Total
$
33,250
28,500
28,500
340,530
340,530
340,530
723,780
669,030
669,030
15 Annual Report 2018
Non-Executive Directors
R Craven
A du Mee
Yongqing Yu
110,000
80,000
-
10,450
7,600
-
170,265
-
-
290,715
87,600
-
Sub-Total
1,140,000
108,300
1,191,855 2,440,155
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
Chief Operating Officer
A McGhie
Executive General Manager
James Harding
Sub-Total
Total
Period of Service
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mée
Teresa Dyson
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
7 May 2018 to current
8 February 2016 to current
Key Management Personnel (KMP)’s Interests in the Company
The shares and options held by the KMPs as at 30 June 2018 and at the date of this report are as follows:
Shares
Personnel
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
Teresa Dyson
Yongqing Yu
Balance as at
1 July 2017
28,500,000
20,881,931
2,108,181
340,909
238,637
Nil
Nil
Granted as
remuneration
-
-
-
-
-
-
-
Received on
exercise
-
-
-
-
-
-
-
Purchases
-
-
-
-
-
-
-
Balance as at 30
June 2018
28,500,000
20,881,931
2,108,181
340,909
238,637
Nil
Nil
Personnel
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
Yongqing Yu
Balance as at
1 July 2016
27,500,000
20,720,000
2,040,000
250,000
200,000
Nil
Granted as
remuneration
-
-
-
-
-
-
Received on
exercise
-
-
-
-
-
-
Purchases
1,000,000
161,931
68,181
90,909
38,637
-
Balance as at 30
June 2017
28,500,000
20,881,931
2,108,181
340,909
238,637
Nil
16 Annual Report 2018
Options
Personnel
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
Teresa Dyson
Arran McGhie*
James Harding*
Personnel
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
Arran McGhie*
James Harding*
Balance as
at 1 July
2017
5,000,000
5,000,000
5,000,000
5,000,000
2,000,000
-
5,000,000
2,400,000
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
-
-
-
-
-
-
-
2,600,000
-
-
-
-
-
-
-
23/02/2018
Fair value per
option at grant
date
-
-
-
-
-
-
-
0.1296
Balance as at 30 June
2018
5,000,000
5,000,000
5,000,000
5,000,000
2,000,000
-
5,000,000
5,000,000
Granted as
remuneration
4,000,000
4,000,000
4,000,000
2,000,000
-
-
2,400,000
Date of
Grant during
period
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
*Options issued to Arran McGhie and James Harding have various vesting conditions based exclusively on milestones if the
milestones are achieved before the options are expired (see note 24)
Options granted to CEO in FY18
Number
Value per option
Subscription price per option
Each option is convertible into
Exercise price per option
Vesting condition
Issue date
Expiry date
Option exercise period
Other conditions
2,400,000
$0.1296
$Nil
1 ordinary share in the parent entity
$0.40
The options will vest in 2 separate tranches upon the
achievement of the following 2 milestones:
Financial close of the Kidston Stage 2 Projects
Successful completion of a bankable feasibility
study for another project of not less than 30MW.
If a milestone is not achieved, then the options for
that milestone will lapse unvested. As at 30 June
2018, none of the options have vested.
23 February 2018
13 February 2023
At any time from date of vesting
None
There were no options issued to Directors during the 2018 financial year.
The 8,000,000 options held by Directors 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.
17 Annual Report 2018
The 5,000,000 options issued to the COO on 6 August 2015 are exercisable at $0.25 each and expire on 6 August 2020.
The 2,400,000 options issued to the CEO on 2 September 2016 are exercisable at $0.25 each and expire on 2 September
2021. 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.
If a milestone is not achieved, then the options for that milestone will lapse unvested. As at 30 June 2018, 2,466,667
options have been vested.
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 at a significant premium
to the share price at the time of grant.
Executive Services Agreement (James Harding)
On 23 June 2016, the Company entered into an Executive Services Agreement (Agreement) with James Harding in his
capacity as Executive General Manager. On 7 May 2018, that Agreement was varied with respect to the remuneration
and duties to be performed (Variation) following Mr Harding’s appointment as Chief Executive Officer (CEO). The key
terms and conditions of the Agreement and Variation are summarised below.
(Term) The appointment as CEO commenced on 7 May 2018 and is ongoing subject to the termination provisions.
(Services) James Harding will provide the duties and responsibilities associated with the role of CEO and report to
the Board regarding the overall responsibility for the day to day management of the business of the Company and
with responsibility for overall reporting requirements and regularly reporting to the Board concerning the business
and financial position of the Company.
(Remuneration) James Harding will receive a gross salary of $320,000 (excluding superannuation) per annum. In
addition, James Harding may be granted, subject to any necessary shareholder approval, incentives to provide
ongoing service and commitment to the Company.
(Entitlements) James Harding is entitled to 5 weeks of annual leave per annum in addition to other employee
entitlements that are customary to an agreement of this nature.
(Termination) Both James Harding and the Company may terminate the agreement at any time and for any reason
by giving 3 months’ written notice to the other party. James Harding’s employment may otherwise be terminated at
any time for cause by notice to James Harding from the Company.
Executive Services Agreement (Arran McGhie)
On 16 July 2015, the Company entered into an Executive Services Agreement with Arran McGhie in his capacity as Chief
Operating Officer. Pursuant to his agreement, Arran McGhie receives a gross salary of $330,000 (excluding
superannuation) per annum. The Executive Services Agreement is substantially on the same terms and conditions as the
Executive Services Agreement with James Harding, the material provisions of which are summarised above.
Executive Services Agreements (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 are substantially on the same terms and conditions as the Executive Services Agreement
with James Harding, the material provisions of which are summarised above with only non-material differences.
18 Annual Report 2018
Consultancy Agreement (Michael Addison)
On 7 May 2018, the Company entered into a Services Consultancy Contract with Michael Addison on an arm's length
basis to provide consulting services as a strategic adviser consulting on project delivery and the Company's project
pipeline in addition to his role as a Non-Executive Director. The Contract provides for an hourly rate of $250 plus GST
and a monthly cap of $20,900 plus GST. There is no fixed term and either party may terminate the Contract on 4 months'
notice or payment in lieu.
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
6 August 2015
2 September 2016
17 January 2017
1 July 2017
23 February 2018
23 February 2018
23 February 2018
End of Remuneration Report
Expiry date
7 February 2019
7 February 2019
6 August 2020
2 September 2021
17 January 2022
17 January 2022
13 February 2023
13 February 2023
13 February 2023
Exercise price
$0.25
$0.25
$0.25
$0.25
$0.34
$0.34
$0.40
$0.40
$0.40
Number of options
3,000,000
5,500,000
5,000,000
2,400,000
14,000,000
1,500,000
2,600,000
2,000,000
250,000
Among the vested Loyalty Options issued pursuant to the IPO, 16,523,750 options were exercised to date (capital
received of $3,224,750), 776,250 options were expired on 25 February 2018.
Loss per Share
The loss per share for Genex Power Limited for the year was 2.54 cents per share (FY17 2.98 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 2018 was $7,461,082. The Directors of Genex have resolved not to recommend a dividend for the financial year
ended 30 June 2018.
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.
19 Annual Report 2018
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:
Income Tax Returns
Energy Market Studies
Auditor's independence declaration
A copy of the auditor's independence declaration is set out on the following page.
On behalf of the directors
$
28,400
58,000
86,400
Dr. Ralph Craven
Teresa Dyson
(Non-Executive Chairman)
Non-Executive Director (Chair - Audit & Risk
23 August 2018
Committee)
23 August 2018
Ernst & Young
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
20
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 2018, 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
23 August 2018
21 Annual Report 2017/18
5. FINANCIAL STATEMENTS
Contents
Consolidated statement of profit or loss and other comprehensive income .................................................................. 22
Consolidated statement of financial position ............................................................................................................................... 23
Consolidated statement of changes in equity .............................................................................................................................. 24
Consolidated statement of cash flows............................................................................................................................................. 25
Notes to the consolidated financial statements .......................................................................................................................... 26
Directors' declaration ............................................................................................................................................................................. 65
Independent auditor's report to the members of Genex Power Limited .......................................................................... 66
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 23 August 2018. The
directors have the power to amend and reissue the financial statements.
22 Annual Report 2017/18
Genex Power Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2018
Revenue
Sale of electricity and environmental products
Other income
Expenses
Project site costs
Employee benefits
Administrative expenses
Compliance cost and regulatory fees
Project consulting costs
Legal fees
Travel and marketing
Depreciation
Net gain/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 gain / (loss) on cash flow hedges
Total comprehensive loss for the year
attributable to the owners of Genex Power Limited
Notes
30 June
2018
$
30 June
2017
Restated*
$
5
6
6
6
7
8
8,273,070
1,666,573
9,939,643
-
2,477,700
2,477,700
(5,126,860)
(2,751,178)
(2,272,128)
(182,694)
(1,192,486)
(43,289)
(224,114)
(3,017,338)
(1,563,917)
(3,418,623)
(1,252,366)
(688,556)
(671,680)
(1,138,152)
(264,982)
-
130,721
(600,168)
(14,679,366)
(9,598,444)
(4,739,723)
(7,120,744)
(2,970,877)
249,518
(7,461,082)
(176,403)
359,097
(6,938,050)
-
-
(7,461,082)
(6,938,050)
1,531
(1,668,494)
(7,459,551)
(8,606,544)
Basic earnings per share
Diluted earnings per share
* Certain amounts shown here do not correspond to the June 2017 financial statements and reflect adjustments made, refer to
Note 1.
34
34
Cents
(2.54)
(2.54)
Cents
(2.98)
(2.98)
23 Annual Report 2017/18
Genex Power Limited
Consolidated statement of financial position
As at 30 June 2018
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventory
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
Non-Current Liabilities
Long term interest accrued
Interest-bearing loans and borrowings
Convertible notes
Government Grant
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
Notes
30 June 2018
30 June 2017
Restated*
9
10
11
12
13
14
15
16
17
18
19
22
19
17
20
23
24
24
20
10,994,349
861,524
692,417
169,333
12,717,623
4,498,796
118,431,013
-
122,929,809
135,647,432
1,475,197
127,901
2,429,268
442,500
117,057
-
4,591,923
340,451
97,266,305
2,412,840
8,188,068
3,747,433
3,820,200
115,775,297
120,367,220
15,280,212
39,955,299
1,786,628
(1,666,963)
(24,794,752)
15,280,212
11,088,539
1,024,415
-
272,648
12,385,602
4,229,443
47,441,554
18,270
51,689,267
64,074,869
10,783,224
48,065
70,713
219,432
83,929
139,122
11,344,485
168,217
16,043,532
1,614,600
8,630,568
3,290,567
3,820,200
33,567,684
44,912,169
19,162,700
35,493,073
2,730,184
(1,668,494)
(17,392,063)
19,162,700
* Certain amounts shown here do not correspond to the June 2017 financial statements and reflect adjustments made, refer to
Note 1.
24 Annual Report 2017/18
Genex Power Limited
Consolidated statement of changes in equity
For the year ended 30 June 2018
Notes
Issued
Capital
Options
Reserves
Cash flow
hedge reserve
Accumulated
Losses
Total Equity
Balance at 1 July 2017
35,493,073
2,730,184
(1,668,494)
(17,392,063)
19,162,700
Loss after income tax
Cash flow hedge reserve
Total comprehensive
loss for period
Shares issued during the
period
Loyalty option
converted
Loyalty options expired
Share-based payment
expenses
Balance at 30 June
2018
-
-
-
-
-
(7,461,082)
(7,461,082)
1,531
-
1,531
35,493,073
2,730,184
(1,666,963)
(24,853,145)
11,703,149
3,224,750
-
1,237,476
(1,237,476)
(58,393)
-
352,313
-
-
-
-
3,224,750
58,393
-
-
-
352,313
39,955,299
1,786,628
(1,666,963)
(24,794,752)
15,280,212
Genex Power Limited
Consolidated statement of changes in equity (continued)
For the year ended 30 June 2017 (restated*)
Notes
Issued
Capital
Options
Reserves
Balance at 1 July 2016
15,878,724
1,397,521
Cash flow
hedge
reserve
Accumulated
Losses
Total Equity
-
-
(10,454,012)
6,822,233
(6,938,051)
(6,938,051)
(1,668,494)
-
(1,668,494)
-
-
-
-
15,878,724
1,397,521
(1,668,494)
(17,392,063)
(1,784,312)
20,624,743
(1,010,394)
-
-
-
1,332,663
-
-
-
-
-
-
20,624,743
(1,010,394)
1,332,663
35,493,073
2,730,184
(1,668,494)
(17,392,063)
19,162,700
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
* Certain amounts shown here do not correspond to the June 2017 financial statements and reflect adjustments made, refer to
Note 1.
25 Annual Report 2018
Genex Power Limited
Consolidated statement of cash flows
For the year ended 30 June 2018
Cashflow from Operating Activities
Receipt from customers
Payments to suppliers
Payments to employees
Interest received
Interest paid
Notes
30-Jun-18
30-Jun-17
$
$
7,005,270
(7,039,996)
(2,185,755)
249,518
(4,131,807)
20,632
(6,335,896)
(2,016,322)
359,097
(388,574)
Net cash utilised by operating activities
32
(6,102,770)
(8,361,063)
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
(82,959,922)
898,073
(269,353)
(82,331,202)
(30,267,071)
11,307,068
-
(18,960,003)
3,224,750
1,748,236
-
87,466,796
(4,100,000)
20,624,743
486,865
(1,010,394)
16,328,777
(2,200,000)
88,339,782
34,229,991
Net increase in cash and cash equivalents
(94,190)
6,908,925
Cash and Cash equivalent at the beginning of the financial year
11,088,539
4,179,614
Cash and Cash equivalents at the end of the financial year
9
10,994,349
11,088,539
26 Annual Report 2018
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:
The consolidated entity has a net current asset position of $8.13m.
The consolidated entity has a closing cash and cash equivalent balance of $11m at balance date;
The 50 MW Kidston Solar Project (KS1) has been operating since November 2017, is performing well and has
resulted in revenue and cash flows in accordance with Company budgeted expectations. From 31 July 2018, 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) (refer ASX announcement of 8 September 2016).
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 KS2’s financial close in 2018 with construction to
commence soon thereafter, with an estimated 22 month build for K2S and 36- 42 month build for K2H.
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 derivative financial instruments 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 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
27 Annual Report 2018
when there is a retrospective application of an accounting policy, a retrospective restatement, or a reclassification of
items in financial statements.
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 30.
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 2018 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
The consolidated entity classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
28 Annual Report 2018
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured, regardless of when the payment is received. Revenue is measured at the fair value of the
consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or
duty. The Group has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in
all the revenue arrangements, has pricing latitude, and is also exposed to inventory and credit risks.
The specific recognition criteria described below must also be met before revenue is recognised.
Sale of electricity and environmental products
Revenue from the sale of electricity and environmental products is recognised when the significant risks and rewards of
ownership of the products have passed to the buyer and the consolidated entity has the right to be compensated.
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.
29 Annual Report 2018
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.
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.
30 Annual Report 2018
Trade and other receivables
Trade receivables are initially recognised on fair value and subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is
objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms
of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or
financial reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators
that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset's
carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
Inventory
Recognition and measurement
Large-scale Generation Certificates (LGCs) held in inventory are valued at the lower of cost and net realisable value. Upon
sale, the difference between the sale price and the book value of inventory is recorded as a component of revenue.
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.
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
31 Annual Report 2018
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 23) for
further information about the recognised decommissioning provision.
Depreciation is calculated on a diminishing value or straight-line basis over the estimated useful lives of the assets, as
follows:
Plant, machinery and equipment
Leasehold improvements Less of 5 years or lease term
20 to 30 years
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.
Pre-development Asset
Pre-development Assets represent value of existing assets associated with acquisition of the Kidston Goldmine site. Pre-
development 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
32 Annual Report 2018
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.
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
33 Annual Report 2018
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
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.
34 Annual Report 2018
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 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
35 Annual Report 2018
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.
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 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
Impact on the consolidated entity’s
Financial Report
The classification and measurement of
all financial assets (Trade and other
receivables) 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. AASB139 will still be applied
for the existing hedging relationship.
Further information will be provided in
future financial reports as management
finalises its assessment.
36 Annual Report 2018
AASB 15, and
relevant
amending
standards
Revenue from
Contracts with
Customers
Application date
of standard: 1
January 2018
Application date
for the
consolidated
entity: 1 July
2018
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 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.
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
and LGCs sale. Performance obligations
are 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 and LGC 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.
AASB 16
Leases
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’
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.
37 Annual Report 2018
Application date
of standard: 1
January 2019
Application date
for Group: 1 July
2019
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.
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 28. The consolidated
entity currently has no finance leases.
The consolidated entity will account
KS1’s Revenue Support Deed with the
Queensland State Government (PPA) in
accordance with IFRIC 4 Determining
Whether an Arrangement Contains a
Lease which means the consolidated
entity will be in the lessor position for
the PPA. Given the Lessor accounting is
substantially unchanged from today’s
accounting under AASB 117, the
adoption of the AASB 16 won’t have
significant impact on this regard.
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 plans to adopt
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.
The adoption of the amendments will
not have any material impact on the
financial report.
AASB 2016-5 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
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 consolidated entity is currently
evaluating the impact of the new
accounting standard.
38 Annual Report 2018
AASB
Interpretation
23, and
relevant
amending
standards
Uncertainty
over Income
Tax Treatments
Application date
of standard: 1
January 2019
Application date
for consolidated
entity: 1 July
2019
The Interpretation clarifies the application of
the recognition and measurement criteria in
AASB 112 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
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’ error
The error has been corrected by restating each of the affected financial statement line items for the prior periods, as
follows:
Government Grants
In the current and prior year, management has recognised cash receipts from R&D tax credits as deferred revenue on
the balance sheet. 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 in the profit or
loss if the related costs for which the government grant are intended to compensate are also recognised in profit or loss.
As a consequence, revenue has been understated by $2.46m in FY17 (understated by $731k in FY16 and FY15) as the
R&D scheme rebate does not relate to capitalised costs with respect to KS2 for which no costs have yet been capitalised.
Impact on equity (increase/(decrease) in equity)
Government grant
Total liabilities
Net impact on equity
Impact on statement of profit or loss (increase/(decrease) in profit)
Other income
Net impact on profit for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
30 June 2017
3,187,668
3,187,668
1 July 2016
730,600
730,600
3,187,668
730,600
30 June 2017
2,457,068
2,457,068
2,457,068
-
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 2017
0.0105
0.0105
39 Annual Report 2018
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 21 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.
KS1 Work in Progress Capital Assets transfer to Property Plant and Equipment (PPE)
Management assessed construction and operations of the KS1 assets and considered the KS1 asset operated in the
manner intended by management by 31 December 2017. As such the Work in Progress Capital Assets was transferred
to PPE on 1 January 2018, and the Group commenced depreciation of the KS1 assets and recognition of revenue in profit
or loss from that date.
40 Annual Report 2018
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.
Note 4 Capital management
For the purpose of the consolidated entity’s capital management, capital includes issued capital, 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 90%. The consolidated entity includes within net debt, interest bearing loans
and borrowings, convertible notes, 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 2018
$
30 June 2017
$
2,429,268
97,266,305
2,412,840
127,901
340,451
1,475,197
(10,994,349)
93,057,613
70,713
16,043,532
1,614,600
48,065
168,217
10,783,224
(11,088,539)
17,639,812
15,280,212
15,280,212
19,162,700
19,162,700
108,337,825
86%
36,802,512
48%
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 2018 and 2017.
41 Annual Report 2018
Note 5. Revenue
Electricity Sale
LGC Sale
Sales of electricity and environmental products
Government Grant
Convertible Note Cost reimbursed
R&D tax credit
Others
Fuel Tax Credit
Other income
Consolidated
30 June 2018
$
3,916,985
4,356,085
8,273,070
30 June 2017
$
-
-
-
219,432
500,000
898,074
26,680
22,387
1,666,573
-
-
2,457,068
-
20,632
2,477,700
Total revenue
2,477,700
The R&D tax credit relates to Research & Development rebate received for direct and indirect R&D costs expensed by
the Company.
9,939,643
Note 6. Expenses
Consolidated
30 June 2018
$
30 June 2017
$
Loss before income tax includes the following specific expenses:
Finance costs
Interest and finance charges paid/payable
2,970,877
176,403
Research and development expenditure for Kidston Pumped Hydro Project
5,126,860
1,563,917
Employee benefits
Defined contribution superannuation expense
Share-based payments expense
Wages and salaries
Payroll tax
Workers’ Compensation
Fringe Benefit Tax
Employee entitlements
Note 7: Finance income
Interest revenue
191,532
352,314
2,062,235
78,713
6,606
26,650
33,128
2,751,178
171,609
1,332,663
1,806,413
70,336
-
-
37,602
3,418,623
Consolidated
30 June 2018 30 June 2017
$
$
249,518
249,518
359,097
359,097
42 Annual Report 2018
Note 8: 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
2018
$
2017
$
(7,461,082)
(6,938,050)
(2,051,798)
195,757
1,856,041
(1,907,964)
-
1,907,964
-
-
The accumulated tax losses that arose in Australia as at 30 June 2018 is $7,625,201 (30 June 2017: $5,769,160) that are
available indefinitely for offsetting against future taxable profits of the companies in which the losses arose. On top of
the above-mentioned tax losses, $39,249,668 as of 30 June 2018 are transferred losses and can be utilised subject to the
available fraction.
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.
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. Genex Solar Holding Pty
Limited (99.99% owned by Genex Power Limited) and Genex (Solar) Pty Limited formed a separate a tax consolidated
group in 2017.
(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. 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.
43 Annual Report 2018
Note 9. Cash and cash equivalents
Cash at bank
Cash and cash equivalents
Note 10. Trade and other receivables
Trade debtors
GST receivable
Rental bond
Trade and other receivables
As at 30 June, the ageing analysis of trade receivables is, as follows:
30 June
2018
$
30 June
2017
$
10,994,349
11,088,539
10,994,349 11,088,539
30 June
2018
$
30 June
2017
$
861,524
-
-
-
997,586
26,829
861,524 1,024,415
Total
$
Neither
past due
nor
impaired
$
2018
2017
861,524
1,024,415
861,524
1,024,415
Note 11. Inventory
Environmental Certificates
< 30 days
30-60 days
Past due but not impaired
61-90 days
91-120
days
>120 days
$
-
-
$
-
-
$
-
-
$
-
-
$
-
-
Consolidated
30 June 2018
$
692,417
692,417
30 June 2017
$
-
-
Environmental Certificates held at year-end are Large-scale Generation Certificates (LGCs) generated in June 2018.
44 Annual Report 2018
Note 12. Prepayments
Insurance and Office Rent
Oaks Rush Rent
Blue House Deposit
Environmental Authority, ML Fees and Land Rent
Note 13. Bank Guarantee - Non-Current
Ergon Bond (Removal and Security Defects)
Construction Camp Bond
K2 Wind Project Land Bond
Electricity Bond
Ergon Connection Bond
Office Bond
Bond
Sydney Office Deposit
Speedcast Bond
Site Accommodation Bond
Term Deposit/Bank Guarantee for Environmental Bond
30 June
2018
$
85,073
25,000
20,000
39,260
30 June
2017
$
233,351
-
-
39,297
169,333
272,648
30 June
2018
$
30 June
2017
$
231,818
82,500
12,000
18,270
42,000
110,813
10,000
18,470
4,000
117,000
3,851,925
4,498,796
231,818
82,500
-
-
-
110,813
-
-
-
-
3,804,312
4,229,443
The environmental bond is held by the State of Queensland (the State) for security for compliance with the requirements
of Mineral Resources Act 1989 and the Environmental Protection Act 1994. The environmental bond is held in the name
of Kidston Gold Mines Limited, a wholly owned subsidiary of Genex and the 100% freehold owner of the Kidston site.
The environmental bond will be released upon satisfactory restoration and rehabilitation of the mine site.
Note 14. Property, Plant and Equipment
Land
Work in Progress Capital assets
Kidston Solar Project
Pre-development assets
Leasehold Improvements
30 June
2018
$
30 June
2017
$
175,000
-
114,304,734
3,918,777
32,502
118,431,013
175,000
43,306,214
-
3,918,777
41,563
47,441,554
45 Annual Report 2018
Working in progress capital assets were for the KS1 assets which is now operating. 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
Kidston
Solar
Project
Pre-
development
Asset
Leasehold
Improvement
s
Total
175,000
-
-
175,000
-
-
-
-
175,000
-
430,474
-
42,875,740
-
-
-
43,306,214
-
74,006,796
-
-
-
(117,313,010)
-
117,313,010
- 117,313,010
3,918,777
-
-
3,918,777
-
-
-
-
3,918,777
43,244
-
43,244
-
-
-
-
4,524,251
42,918,984
-
47,443,235
74,006,796
-
-
-
43,244 121,450,031
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,008,276)
(3,008,276)
-
-
-
-
-
-
(1,681)
-
(1,681)
(1,681)
(9,061)
(1,681)
(3,017,337)
(10,732)
(3,019,018)
175,000
- 114,304,734
3,918,777
32,501 118,431,013
175,000
43,306,214
-
3,918,777
41,563
47,441,554
Cost
At 30 June 2016
Additions:
Disposals
At 30 June 2017
Additions:
Disposals
Transfer out
Transfer in
At 30 June 2018
or
charge
charge
Depreciation
impairment
At 30 June 2016
Depreciation
for the year
At 30 June 2017
Depreciation
for the year
At 30 June 2018
Net book value 30 June
2018
Net book value 30 June
2017
Capitalised borrowing costs
The Kidston solar project (Phase One 50MW) was completed in the current financial year. The carrying amount of the
Kidston solar project at 30 June 2018 was $114,304,734 (30 June 2017: $43,306,214). The Kidston solar project is financed
by a $100.1 million senior debt facility with third party banks. Interest on the facility has been capitalised until the
construction of the project is completed. The amount of interest costs capitalised during the year ended 30 June 2018
was $1.4m (30 June 2017: $2.9m).
Properties associated with the Kidston Solar Farm with a carrying amount of $114,304,734 (2017: $43,306,214) are subject
to a first charge security to the Group’s Senior Bank Loan.
Note 15. Trade and other payables
Current
Trade creditors and accruals
PAYG withholdings
Superannuation payable
1,475,197
The large change in Trade creditors and accruals is due to the completion of the Kidston Solar Project.
30 June
2018
$
30 June
2017
$
1,415,177
60,020
-
10,694,271
59,820
29,133
10,783,224
46 Annual Report 2018
Note 16. Interest-bearing loans and borrowings
Senior Bank Debt
Hunter Premium facility
30 June
2018
$
2,429,268
-
2,429,268
30 June
2017
$
-
70,713
70,713
The Senior Bank Debt represents the portion of the 100.1m Senior Bank Loan which must be repaid within 12 months.
Note 17. Government Grant
ARENA Grant (Current)
ARENA Grant (Non-Current)
30 June
2018
$
30 June
2017
$
442,500
8,188,068
8,630,568
219,432
8,630,568
8,850,000
Genex received an ARENA grant of $8.85 million in FY17 towards the funding of KS1. The Grant is recognised as revenue
over the life of the project on a straight line basis.
Note 18. 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.
Foreign currency forward contracts designated as hedging instruments
Fair value
30 June
2018
$
Liabilities
30 June
2017
$
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. All
remaining tranches of the foreign currency forward contract was settled in the current year.
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.
47 Annual Report 2018
Interest rate swaps designated as hedging instruments
Fair value
30 June
2018
$
Liabilities
30 June
2017
$
Liabilities
1,666,963
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
(2017: $100.1m) 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 $1.67m out-of-money position as at
30 June 2018.
Note 19. ARENA Convertible Note
Long term interest accrued
Convertible note
30 June
2018
$
30 June
2017
$
340,452
2,412,840
2,753,292
168,217
1,614,600
1,782,817
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 K2H. As at 30 June 2018, $3,524,899 has been drawn down.
On 16 November 2017, Genex entered into a further convertible note funding agreement with ARENA for up to a further
$5 million to fund pre-financial close costs associated with the Kidston Stage Two Projects. The Convertible Note
Agreement has the same terms as the one in December 2015 with the exception of the conversion price. As at 30 June
2018, $346,056 has been drawn down.
The convertible note is deemed to be a financial instrument with 2 embedded derivatives, i.e. conversion right and early
redemption option. Please refer Note 20 for further details.
Key terms of the convertible notes funding agreement:
Unsecured unlisted convertible redeemable notes (the Notes), 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;
Notes are convertible at a conversion price into Genex ordinary shares;
o $0.20 per share (December 2015 Agreement); and
o Higher of A$0.2865 and 20day VWAP at Stage 2 financial close (November 2017 Agreement);
If ARENA chooses to convert, Genex retains the right to either issue ordinary shares at the Conversion Price 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;
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 if not converted;
ARENA has the right to require redemption of the Notes should certain default events occur;
48 Annual Report 2018
The Notes lapse and are not repayable by Genex after a period of 5 years if not previously redeemed or
converted; and
The Notes carry standard terms consistent with other standard convertible note arrangements in the market
and require Genex to provide key feasibility progress study reports and findings to ARENA and other
stakeholders.
December 2015 Agreement
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
23 October 2022
31 October 2022
6 December 2022
19 February 2023
19 February 2023
20 March 2023
20 March 2023
19 April 2023
16 May 2023
14 June 2023
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Amount
731,243
537,928
386,193
207,902
198,582
74,006
123,453
186,782
142,800
33,830
226,644
139,596
44,770
52,603
4,119
5,000
52,252
121,276
239,367
16,553
3,524,899
November 2017 Agreement
Maturity dates of the convertible notes are as follows:
Maturity date
Amount
1
2
3
20 April 2023
24 May 2023
14 June 2023
26,503
139,880
179,673
346,056
49 Annual Report 2018
Note 20: Financial assets and financial liabilities
Financial assets
Financial assets at amortised cost
Trade and other receivables
Bank guarantee/Bonds
Total financial assets
Total current
Total non-current
30 June 2018
$
30 June 2017
$
861,524
4,498,796
5,360,320
861,524
4,498,796
1,024,415
4,229,443
5,253,858
1,024,415
4,229,443
Financial liabilities: interest-bearing loans and borrowings
Weighted
average
interest rate
%
Maturity
30 June 2018
30 June 2017
$
$
$
Non-derivatives
Non-interest bearing
Trade and other payables
N/A
N/A
1,475,197
10,783,224
Interest-bearing – fixed rate
$100,118,187 Senior Bank Loan
4.815%
Hunter premium facility
5.75%
Total non-derivatives
29 February 2023
Monthly instalment
withe last payment
due on 31 Dec
2017
99,695,573
16,043,532
-
70,713
101,170,770
26,897,469
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.
Other financial liabilities
Derivatives not designated as hedging instruments
Embedded derivatives
Derivatives designated as hedging instruments
Foreign exchange forward contracts
Interest rate swaps
30 June 2018
$
30 June 2017
$
2,080,470
1,761,195
-
1,666,963
139,122
1,529,372
50 Annual Report 2018
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
1,475,197
10,783,224
5,222,630
14,212,913
1,475,197
3,747,433
10,922,346
3,290,567
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 meet
its 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 2018
$
30 June 2017
$
10,994,349
861,524
4,498,796
16,354,669
11,088,539
1,024,415
4,229,443
16,342,397
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.
Remaining contractual maturities
Note 21 details 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.
51 Annual Report 2018
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted
payments:
Year ended 30
June 2018
Senior Bank Debt
Convertible Notes
Interest
Interest Rate SWAP
Trade and other
payables
Year ended 30
June 2017
Senior Bank Debt
Convertible Notes
Interest
Foreign exchange
forward contract
Interest Rate SWAP
Trade and other
payables
Hunter Premium
funding
On demand
Less than 3
months
3 to 12
months
2,429,268
385,580
3,535,796
1,475,197
1 to 5 years
>5 years
Total
97,266,305
2,080,470
18,110,953
28,319,820
1,666,963
99,695,573
2,080,470
50,352,149
1,666,963
1,475,197
1,860,777
5,965,064 117,457,728
29,986,783
155,270,352
On demand
Less than 3
months
3 to 12
months
1 to 5 years
>5 years
Total
2,160,651
139,122
70,713
10,783,224
16,043,532
1,761,195
17,084,689
33,267,460
1,529,372
16,043,532
1,761,195
52,512,800
139,122
1,529,372
10,783,224
70,713
10,783,224
2,370,486
34,889,416
34,796,832
82,839,958
Note 21. 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 2018:
Date of
valuation
Total
Quoted price in
active markets
(Level 1)
Fair value measurement using
Significant
observable
inputs (Level 2)
Significant
unobservable
inputs (Level 3)
Liabilities measured at fair value
Derivative financial liabilities
Interest rate swaps
Foreign
forward contracts
Embedded
derivatives
30 June 2018
30 June 2018
30 June 2018
exchange
1,666,963
-
2,080,470
-
-
-
1,666,963
-
2,080,470
-
-
-
52 Annual Report 2018
Fair value measurement hierarchy for liabilities as at 30 June 2017:
Date
valuation
of
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
forward contracts
Embedded
derivatives
30 June 2017
30 June 2017
30 June 2017
exchange
1,529,372
139,122
1,761,195
-
-
-
1,529,372
139,122
1,761,195
-
-
-
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 2018, 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.
Note 22. Interest-bearing loans and borrowings (non-current)
Senior bank debt
30 June
2018
$
30 June
2017
$
97,266,305
97,266,305
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 are used to pay for the construction cost of the
Phase 1 Kidston Solar Farm. As at 30 June 2018, the amount drawn down from the facility is $99,695,573.
Key terms of the senior bank debt:
Interest rate – base rate (BBSY) + 1.75%
Tenor – Construction plus 5 years
53 Annual Report 2018
Note 23. Rehabilitation and restoration provisions
Make good provision on office lease
Rehabilitation and provisions
30 June
2018
$
15,889
3,804,311
3,820,200
30 June
2017
$
15,889
3,804,311
3,820,200
The rehabilitation and restoration provisions represent the deposit the consolidated entity contributed to the
Department of Environment and Heritage Protection, QLD Government. This deposit will only be released when QLD
Government relieve the consolidated entity of this obligation and the bank guarantee securing this bond is returned to
the consolidated entity.
Note 24. Equity
30 June
2018
Shares
30 June
2017
Shares
30 June
2018
$
30 June
2017
$
Ordinary shares issued and fully paid
303,931,514
287,807,764
39,955,299
35,493,073
Movements in ordinary share capital
Details
Balance
Date
No of shares
Issue price
$
1 July 2016
180,268,750
15,878,724
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
50,000
45,067,187
23 January 2017
9 February 2017
11,640,770
31,250,000
9 February 2017
1 March 2017
6 March 2017
26 April 2017
250,000
19,181,057
50,000
50,000
107,539,014
$0.20
$0.22
$0.22
$0.16
$0.20
$0.16
$0.20
$0.20
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
Balance
30 June 2017
287,807,764
35,493,073
54 Annual Report 2018
Details
Balance
Exercise of loyalty options
Exercise of loyalty options
Exercise of loyalty options
Exercise of loyalty options
Exercise of loyalty options
Exercise of loyalty options
Exercise of loyalty options
Exercise of loyalty options
Exercise of loyalty options
Exercise of loyalty options
Exercise of loyalty options
Exercise of loyalty options
Exercise of loyalty options
Exercise of loyalty options
Exercise of loyalty options
Share issue costs reversed
Movement for the year
Date
No of shares
Issue price
$
30 June 2017
287,807,764
35,493,073
21 July 2017
23 August 2017
6 October 2017
1 November 2017
17 November 2017
6 December 2017
21 December 2017
12 January 2018
29 January 2018
5 February 2018
9 February 2018
19 February 2018
23 February 2018
1 March 2018
9 March 2018
-
-
66,250
105,000
75,000
1,037,500
255,200
61,250
60,000
303,100
127,350
690,700
690,000
487,500
1,182,500
10,932,400
50,000
-
16,123,750
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
-
13,250
21,000
15,000
207,500
51,040
12,250
12,000
60,620
25,470
138,140
138,000
97,500
236,500
2,186,480
10,000
1,237,476
4,462,226
Balance
30 June 2018
303,931,514
39,955,299
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 Reserve
Refer to Note 25 for further details.
55 Annual Report 2018
At 1 July 2016
Share-based payments expense during the year
At 30 June 2017
Share-based payments expense during the year
Loyalty Options Converted
Loyalty Options Expired
As 30 June 2018
Nature and purpose of reserves
Share-based
payments
$
1,397,521
1,332,663
2,730,184
352,313
(1,237,476)
(58,393)
1,786,628
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.
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 1,500,000 share options in the consolidated entity to Justin Clyne
(Company Secretary)
the board of directors authorised the issue of 4,850,000 share options in the consolidated entity to the Senior
Management team
Options at the start of the period (01/07/2017)
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
(30/06/2018)
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)
46,800,000
6,350,000
-
(16,123,750)
(776,250)
36,250,000
24,966,667
30,800,000
16,400,000
-
400,000
-
46,800,000
41,866,667
These share options are the only outstanding share options of the consolidated entity. The terms attached to the options
are outlined below:
56 Annual Report 2018
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
2018, 1,666,667 options have been vested.
6 August 2015
6 August 2020
At any time from date of vesting
None
57 Annual Report 2018
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 2018, 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
Expiry date
Option exercise period
Other conditions
14,000,000
$0.0851
$Nil
1 ordinary share in the parent entity
$0.34
Vesting on issue date
17 January 2017
17 January 2022
At any time from date of issue to date of expiry
None
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.
58 Annual Report 2018
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:
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%
Company Secretary Options
Number
Value per option
Subscription price per option
Each option is convertible into
Exercise price per option
Vesting condition
Issue date
Expiry date
Option exercise period
Other conditions
Management Options
Number
Value per option
Subscription price per option
Each option is convertible into
Exercise price per option
Vesting condition
Issue date
Expiry date
Option exercise period
Other conditions
1,500,000
$0.1002
$Nil
1 ordinary share in the parent entity
$0.34
The options will vest on 1 January 2019 if Justin Clyne
remains as the Company Secretary of Genex until 1
January 2019. As at 30 June 2018, none of the
options have vested.
7 July 2017
17 January 2022
At any time from date of vesting
None
4,850,000
$0.1296
$Nil
1 ordinary share in the parent entity
$0.40
The options will vest in 2 separate tranches upon the
achievement of the following 2 milestones:
Financial close of the Kidston Stage 2 Projects
Successful completion of a bankable feasibility
study for another project of not less than 30MW.
If a milestone is not achieved, then the options for
that milestone will lapse unvested. As at 30 June
2018, none of the options have vested.
23 February 2018
13 February 2023
At any time from date of vesting
None
On 7 July 2017, 1,500,000 options were issued to the Company Secretary of Genex. The options have an exercise price
of $0.34 and expire on 17 January 2022. The options will be vested on 1 January 2019.
The value of the Company Secretary’s options granted during the year ended 30 June 2018 was calculated to be $0.1002
using Binomial Option Pricing Tree. 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:
59 Annual Report 2018
Underlying share price
Exercise price
Expected volatility
Option life
Expected dividends
Risk free interest rate
$0.24
$0.34
60.6%
4.5 years
Nil
0%
On 23 February 2018, 4,850,000 options were issued to the Senior Management Team. The options have an exercise
price of $0.40, expire on 13 February 2023 and are subject to various vesting conditions.
The value of the Senior Management Options granted during the year ended 30 June 2018 was calculated to be $0.1296
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
$0.29
$0.40
60%
5 years
Nil
0%
Note 25. 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
30 June
2018
$
30 June
2017
$
352,313
352,313
1,332,663
1,332,663
There were no cancellations or modifications to the share-based payment awards in FY18 or FY17.
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
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 30 June
Exercisable at 30 June
2018
Number
29,900,000
6,350,000
-
-
-
36,250,000
24,966,667
2018
WAEP
0.29
0.39
-
-
-
0.31
0.30
2017
Number
13,500,000
16,400,000
-
-
-
29,900,000
24,966,667
2017
WAEP
0.25
0.33
-
-
-
0.29
0.30
60 Annual Report 2018
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), $21,344 has been recognised as expenses in FY18 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 (former Executive General Manager and current CEO), $11,938 has been recognised as expenses in
FY18 for this grant.
On 1 July 2017, the board of directors authorised the issue of 1,500,000 share options in the consolidated entity to Justin
Clyne (Company Secretary), $99,186 has been recognised as expenses in FY18 for this grant.
On 23 February 2018, the board of directors authorised the issue of 4,850,000 share options in the consolidated entity
to the senior management team, $64,901 has been recognised as expenses in FY18 for this grant.
Note 26. 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
2018
$
30 June
2017
$
1,792,154
165,935
-
256,338
2,214,427
1,764,308
167,609
-
1,332,663
3,264,580
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 27. Auditors’ remuneration
During the year the following fees were paid for services provided by Ernst & Young, the auditor of Genex Power Limited
Audit of the financial statements
Non-audit service: advisory service on related energy market studies (Ernst & Young)
Tax services
30 June
2018
$
135,000
58,000
28,400
221,400
30 June
2017
$
100,000
94,000
24,800
218,800
61 Annual Report 2018
Note 28. 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 2018 are, as follows:
Within one year
After one year but not more than five years
More than five years
30 June
2018
$
185,021
176,444
-
361,465
30 June
2017
$
176,369
390,620
-
566,989
Capital commitments
At 30 June 2018, the consolidated entity had capital commitments of $2,884,047 (2017: $74,696,295) relating to the
completion of the Kidston Solar Project.
Note 29. Related party transactions
Controlled entities
A list of controlled entities is provided in Note 31 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 27 to these financial statements.
On 7 May 2018, the Company entered into a Services Consultancy Contract with Michael Addison on an arm's length
basis to provide consulting services as a strategic adviser consulting on project delivery and the Company's project
pipeline in addition to his role as a Non-Executive Director. The Contract provides for an hourly rate of $250 plus GST
and a monthly cap of $20,900 plus GST. There is no fixed term and either party may terminate the Contract on 4 months'
notice or payment in lieu.
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
26 above.
62 Annual Report 2018
Note 30. 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
Equity Reserve
Option reserves
Accumulated losses
Total equity
30 June
2018
$
30 June
2017
$
4,666,372
15,156,913
4,666,372
15,156,913
30 June
2018
$
30 June
2017
$
2,529,160
1,916,828
37,401,326
25,588,173
1,215,952
4,407,551
9,869,915
7,967,453
38,717,823
35,493,073
1,786,628
(12,973,040)
2,730,184
(20,602,535)
27,531,411
17,620,722
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2018 and 30 June 2017.
Note 31. 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
63 Annual Report 2018
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
2018
%
30 June
2017
%
100.00%
100.00%
99.99%
99.99%
99.99%
99.99%
99.99%
100.00%
100.00%
99.99%
99.99%
99.99%
99.99%
99.99%
*These companies are 99.99% owned by Genex (Kidston) Pty Limited, the remaining 0.01% is held by Michael Addison.
Note 32. 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:
Convertible notes cost reimbursed
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 inventories and prepayments
Increase/(Decrease) in trade and other payables
Interest received
Interest paid
(7,461,082)
(6,938,050)
(500,000)
3,017,338
352,314
33,128
130,721
(249,518)
2,970,877
71,520
1,332,663
36,561
600,168
(359,097)
176,403
(407,941)
(106,317)
(2,220,480)
(3,343,589)
91,835
(8,331,586)
249,518
(4,131,808)
(6,102,770)
359,097
(388,574)
(8,361,063)
Note 33. Events after the reporting year
Since 30 June 2018 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.
64 Annual Report 2018
Note 34. Earnings per share
30 June
2018
30 June 2017
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
$7,461,082
$6,938,050
293,927,385
233,105,428
-
-
293,927,385
233,105,428
Basic earnings per share
Diluted earnings per share
* The weighted average number of shares takes into account the weighted average effect of right issue during the prior
year.
$2,412,840 ARENA convertible notes and 24,966,667 share options have not been taken into account of the diluted
earnings per share calculation since they’re anti-dilutive.
Cents
(2.54)
(2.54)
Cents
(2.98)
(2.98)
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.
65 Annual Report 2017/18
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 2018 are in
accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2018 and of its
performance for the year ended on that date; and
complying with Accounting Standards and the Corporations Regulations 2001;
ii.
(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 2018.
On behalf of the board
Dr. Ralph Craven
Teresa Dyson
(Non-Executive Chairman)
Non-Executive Director (Chair - Audit & Risk
23 August 2018
Committee)
23 August 2018
Ernst & Young
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
66
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
2018, the consolidated statement of profit or loss and other 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 2018
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.
67
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. Revenue recognition
Refer to Note 5 – Sale of electricity and environmental products
Why significant
How our audit addressed the key audit matter
Revenues are derived from the sale of electricity
generated from the Group’s 50 MW Kidston Solar
Project (KS1) and the sale of environmental
products (large-scale generation certificates
(LGCs)).
The accuracy of the recorded electricity revenue
within the Group and its presentation on the
Consolidated Statement of Profit or Loss and
Other Comprehensive Income is dependent on
the volume supplied, including an estimate of the
value of electricity supplied between the date of
that has not been invoiced and the year end.
This matter was considered to be a Key Audit
Matter due to the level of judgement required to
determine when the KS1 is ready for its intended
use, which is point from which sales of electricity
can recognised as revenue and due to estimates
required to determine the value of unbilled
revenue at year-end.
The Group’s disclosures are included in Note 5 of
the consolidated financial report.
Our audit procedures included the following:
We assessed whether revenue recognised met the
requirements of Australian Accounting
Standards.
We selected a sample of revenue transactions and
agreed the revenue recognised to invoices issued
by Australian Energy Market Operator (AEMO)
and cash received.
We tested the accuracy of unbilled revenue by
assessing the appropriateness of the estimated
balance compared to the AEMO invoices issued
after year-end and cash receipts.
We evaluated the adequacy of the related
disclosures in the financial report including those
made with respect to judgements and estimates.
68
2. Carrying value of KS1 Assets
Refer to Note 15 Property, Plant and Equipment
Why significant
How our audit addressed the key audit matter
The recognition and recoverability of the Group’s
KS1 assets was considered a Key Audit Matter
due to the value of the asset relative to total
assets, and the significant judgements and
assumptions involved in the Group’s assessment
of whether any indicators of impairment were
present, as required by Australian Accounting
Standards.
Our audit procedures included the following:
We selected a sample of construction costs
capitalised to the KS1 assets and agreed these
to project contracts, supporting supplier
invoices and cash payments and assessed
whether the costs were appropriately capitalised
in accordance with Australian Accounting
Standards.
We assessed whether the methodology used by
the Group to identify indicators of impairment
met the requirements of Australian Accounting
Standards.
We evaluated the adequacy of the related
disclosures in the financial report including
those made with respect to judgements and
estimates.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2018 Annual Report, but does not include the financial report and our
auditor’s report thereon.
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.
69
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.
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.
70
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 13 to 18 of the directors' report for the year
ended 30 June 2018.
In our opinion, the Remuneration Report of Genex Power Limited for the year ended 30 June 2018,
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
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
Lynn Morrison
Partner
Sydney
23 August 2018
71 Annual Report 2017/18
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 fourth 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 23 August
2018 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.
Principle 1 Recommendations:
1.1
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
Lay Solid Foundations for Management and
Oversight
(a) The Company’s Corporate Governance Plan includes
a Board Charter, which discloses
the specific
responsibilities and functions of the Board and provides
that the Board shall delegate responsibility for the day-
to-day operations and administration of the Company
to the Managing Director (MD) or equivalent which is
currently the Chief Executive Officer (CEO). The Board
Charter also specifically outlines the role of the Board,
the Company’s Chairman, Individual Directors and the
MD/CEO. 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 MD/CEO 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 MD/CEO – 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 MD/CEO is separately responsible for the
ongoing management of the Company in accordance
with the strategy, policies and programs approved by
the Board as outlined in paragraph 8.3.
(a) Prior to the nomination of prospective non-
executive directors for election or re-election, the Board
must obtain from the prospective candidate:
details of other
the
prospective candidate and an indication of the
time involved; and
commitments of
72 Annual Report 2018
decision on whether or not to elect or re-elect a
director.
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, including Teresa
Dyson who was appointed 7 May 2018 have undergone
bankruptcy and police checks and appropriate checks
will also be undertaken prior to the appointment of any
new directors to the Board.
(b) When a candidate is placed before shareholders for
election or re-election as a director, the names of
candidates submitted is accompanied by the following
information to enable shareholders to make an
informed decision in relation to that vote:
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
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
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, CEO 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
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
run efficiently and effectively and
is outlined
73 Annual Report 2018
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
(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,
evaluation was
in
whether
undertaken
in
accordance with that process.
a performance
the
reporting period
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.
(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.
(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 7
employees which includes 1 female. The
Company does not have any women in
Senior Executive positions at present but
this will be reviewed in accordance with
each review of the Board’s skills and
requirements
the
Company’s Diversity Policy. The Company
has 1 female director.
in accordance with
(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);
for
its
The Chairman should disclose
evaluating
the performance of
Committees and individual directors.
The Board (other than the Chairman) is responsible for
the:
the process
the Board,
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
74 Annual Report 2018
1.7
A listed entity should:
(a) have and disclose a process for periodically
its senior
the performance of
evaluating
executives; and
(b) disclose, in relation to each reporting period,
evaluation was
in
whether
undertaken
in
accordance with that process.
a performance
the
reporting period
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
the committee met
number of
throughout the period and the individual
attendances of the members at those
meetings; OR
times
(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
skills, knowledge, experience,
balance of
independence and diversity to enable it to
discharge
responsibilities
effectively.
its duties and
commission an external review of the Board, and its
composition.
(b) A formal review of the Board was carried out in April
2018 leading to a restructure of the Board with the
former Managing Director, Michael Addison, moving to
a Non-Executive Director role, the appointment of
Teresa Dyson as a Non-Executive Director and the
appointment of James Harding to the role of CEO
(previously Executive General Manager).
(a) The Board will monitor the performance of senior
management, including measuring actual performance
against planned performance. The Board Charter sets
out the process to be followed in evaluating the
performance of senior executives. Each senior executive
is required to participate in a formal review process
which assesses
individual performance against
predetermined objectives.
(b) An evaluation of the performance of the Company’s
senior executives occurred in April 2018 in accordance
with the Company’s processes.
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 CEO in
consultation with the Chief Operations Officer for
recommendation to the Board. As the Company grows
in size it is planned that the Company will implement a
separate Nomination Committee with its own separate
Nomination Committee charter.
(b) While the Board does not currently comply with this
recommendation, given
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.
the early stage of
The Board shall ensure that, collectively, it has the
appropriate range of skills and expertise to properly
fulfil its responsibilities, including:
accounting;
finance;
business;
Managing Director/CEO-level experience; and
relevant technical expertise.
the Company’s industry;
The Board shall review the range of expertise of its
members on a regular basis and ensure that it has
75 Annual Report 2018
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.
incumbents
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
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;
Managing Director-level experience; and
relevant technical expertise.
the Company’s industry;
2.3
A listed entity should disclose:
(a) the names of the directors considered by the
board to be independent directors;
(b) if a director has an interest, position, association
or relationship of the type described in Box 2.3
but the board is of the opinion that it does not
compromise the independence of the director,
the nature of the interest, position, association
or relationship in question and an explanation of
why the board is of that opinion; and
(c) the length of service of each director.
2.4
A majority of the board of a listed entity should be
independent directors.
The mix of skills of the current Board is set out on the
Company’s website.
(a) Currently only 3 of the 7 directors are considered to
be independent given that Michael Addison was
formerly 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,
Mr Alan du Mee and Ms Teresa Dyson, both Non-
Executive Directors
(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
Ms Teresa Dyson – 7 May 2018
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
does however have a majority of Non-Executive
directors comprising 5 of the 7 directors.
76 Annual Report 2018
2.5
2.6
The chair of the board of a listed entity should be
an independent director and, in particular, should
not be the same person as the CEO of the entity.
A listed entity should have a program for inducting
new directors and provide appropriate professional
development opportunities for directors to develop
and maintain the skills and knowledge needed to
perform their role as directors effectively.
3.1
Principle 3 Recommendations:
A listed entity should:
(a) have a code of conduct for its directors, senior
executives and employees; and
(b) disclose that code or a summary of it.
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
times
(5) in relation to each reporting period, the
number of
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
The Company’s current Chairman is Dr Ralph Craven
who is an independent director and is not engaged in
any executive role within the Company either as CEO,
Managing Director or equivalent.
Pursuant to the Company’s Board Charter the Board
must
induction and
education process for new Board appointees and Senior
to gain a better
Executives
understanding of:
implement an appropriate
to enable
them
the Company’s financial, strategic, operational
and risk management position;
the rights, duties and responsibilities of the
directors;
the
Executives; and
the role of Board committees.
responsibilities of Senior
roles and
Act Ethically and Responsibly
(a) The Company’s Corporate Governance Plan includes
the following policies and charters which provide a
framework for decisions and actions in relation to
ethical conduct in employment.
Board Charter;
Audit & Risk Management Committee Charter;
Code of Conduct - Obligations to Stakeholders;
Code of Conduct - Directors and Key Officers;
Continuous Disclosure;
Remuneration Committee Charter;
Diversity.
Securities Trading; and
(b) A copy of each policy including the codes of conduct
relating to Directors, Senior Executives and employees
is available on the Company’s website.
Safeguard Integrity in Corporate Reporting
(a) The Company has established an Audit and Risk
Management Committee which:
(1) has 4 members being Ms Teresa Dyson, Mr Alan du
Mee, Dr Ralph Craven and Mr Michael Addison. All of
the committee members are non-executive directors
and a majority of the committee being Ms Teresa
Dyson, Mr Alan du Mee and Dr Ralph Craven are
independent.
(2) is chaired by an independent director being Ms
Teresa Dyson 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.
77 Annual Report 2018
its corporate
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.
reporting,
including
4.2
4.3
5.1
fair view of the
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
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
is
operating effectively.
A listed entity that has an AGM should ensure that
its external auditor attends its AGM and is available
to answer questions from security holders relevant
to the audit.
Principle 5 Recommendations:
A listed entity should:
(a) have a written policy for complying with its
continuous disclosure obligations under the
Listing Rules; and
internal control which
(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
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.
6.4
A listed entity should give security holders the
option to receive communications from, and send
(5) The Committee met 3 times 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.
Make Timely and Balanced Disclosure
(a) The Company has a continuous disclosure
program/policy in place designed to ensure compliance
with the ASX Listing Rules on continuous disclosure and
to ensure accountability at a senior executive level for
compliance and factual presentation of the Company’s
financial position.
(b) The continuous disclosure policy of the Company is
available on the Company’s website.
Respect the Rights of Security Holders
The Company’s Corporate Governance Plan includes a
shareholder communications strategy which aims to
ensure that shareholders are informed of all major
developments affecting the Company’s state of affairs.
This is contained within the Company’s policies titled
“Code of Conduct – Obligations to Stakeholders” and
“Corporate Governance Policy – Continuous Disclosure”.
The policies are available on the Company’s website.
The Company’s Corporate Governance Plan includes a
shareholder communications strategy which is outlined
in 6.1.
The Company’s Corporate Governance Plan includes a
shareholder communications strategy which is outlined
in 6.1. The Company also encourages shareholders to
attend the Company’s AGM and to ask questions of the
Board and the Auditor and/or to submit questions in
writing in advance.
Shareholders may elect
receive electronic
notifications when the Annual Report is available on the
Company’s website and may electronically lodge proxy
to
78 Annual Report 2018
7.1
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
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.
times
(b) if
for
items to be considered at the
instructions
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 4 members being Ms Teresa Dyson, Mr Alan du
Mee, Dr Ralph Craven and Mr Michael Addison. All of
the committee members are non-executive and a
majority of the committee being Ms Teresa Dyson, Mr
Alan du Mee and Dr Ralph Craven are independent.
(2) is chaired by an independent director being Ms
Teresa Dyson 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 Ms Teresa Dyson
(Chair), Mr Alan du Mee (Member), Dr Ralph Craven
(Member) and Mr Michael Addison (member).
(5) The Committee met 3 times during the reporting
period with all members as constituted at the time in
attendance.
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.
(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
responsibility
for undertaking and assessing risk
management and internal control effectiveness is
delegated to the Board in conjunction with the Audit
and Risk Committee. The Board and Audit and Risk
Management Committee are required to assess risk
management and associated internal compliance and
control procedures and will be responsible for ensuring
the process for managing risks is integrated within
business planning and management activities. Reports
on risk management are to be provided to the Board by
the Audit and Risk Management Committee at the first
to each Committee
Board meeting subsequent
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 occurred a
number of times through the reporting period between
79 Annual Report 2018
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
the committee met
throughout the period and the individual
attendances of the members at those
meetings; OR
times
(b) if it does not have a remuneration committee,
disclose that fact and the processes it employs
for setting the
level and composition of
remuneration for directors and senior executives
and ensuring
is
appropriate and not excessive.
remuneration
that such
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.
(4) The members of the committee are Dr Ralph Craven,
Mr Alan du Mee and Mr Simon Kidston.
(5) The Committee met twice in the financial year with
all 3 members being present at the meeting of the
Committee.
(b) Not applicable.
8.2
A listed entity should separately disclose its policies
and practices regarding the remuneration of non-
executive directors and the remuneration of
executive directors and other senior executives.
8.3
listed entity which has an equity-based
A
remuneration scheme should:
(a) have a policy on whether participants are
permitted to enter into transactions (whether
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
80 Annual Report 2018
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.
under any equity based remuneration scheme is
contained within the Remuneration Committee Charter.
(b) Paragraph 6.2 (3) of the Company’s Remuneration
Committee Charter states:
“…The Committee must ensure that, where applicable,
any payments of equity-based remuneration are made in
accordance with the Company’s constitution and any
thresholds approved by the Company’s shareholders.
Committee members must be aware at all times of the
limitations of equity-based remuneration. The terms of
such schemes should clearly prohibit entering into
transactions or arrangements which limit the economic
risk of participating in unvested entitlements under these
schemes. The exercise of any entitlements under these
schemes should be timed to coincide with any trading
windows under
trading
policy…”
the Company’s securities
81 Annual Report 2017/18
9. ADDITIONAL SECURITIES EXCHANGE INFORMATION
The following information is provided pursuant to Listing Rule 4.10 and is current as at 30 July 2018 (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 Option holders
2,586
11
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
Total Units
Date of Notice
KFT Capital Pty Limited
Zhefu Hydropower International Engineering Corporation Ltd
Danawa (Inv) Pty Ltd
20,881,931
31,678,750
28,500,000
06.03.17
03.03.17
02.03.17
There are 116 shareholders with an unmarketable parcel of shares being a holding of less than 1,639 shares each for a
combined total of 65,766 shares. This is based on a closing price of $0.305 per share as at 30 July, 2018 and represents
0.0216% 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
74
555
359
1,260
338
2,586
4,810
1,722,751
2,986,390
49,978,722
249,238,841
303,931,514
0.002
0.567
0.983
16.444
82.005
100.00
Top 20 Shareholders
Total Units
Percentage %
82 Annual Report 2018
DANAWA (INV) PTY LTD
ZHEFU HYDROPOWER INTERNATIONAL ENGINEERING
CORPORATION LTD
KFT CAPITAL PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
DOWNING DOMAIN INVESTMENTS PTY LTD
ZHEFU HYDRO POWER INTERNATIONAL ENGINEERING
CORPORATION LTD
AUSTRALIAN GO FUTURES PTY LTD
BNP PARIBAS NOMS PTY LTD
MAJI MAZURI PTY LTD & MAWINGO PTY LTD
KFS PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
LONGMUIR RESOURCES PTY LTD
PANCHO (NSW) PTY LIMITED
SACROSANCT PTY LTD
MOORE PARK CAPITAL PTY LIMITED
JBWERE (NZ) NOMINEES LIMITED <42139 A/C>
WOLSELEY ROAD #1 PTY LIMITED
MS YINGHUI LI
STONECOT PTY LIMITED
Top 20 Shareholders
Total Issued Capital
28,500,000
23,678,750
17,700,000
16,381,305
15,345,380
14,712,254
9.377%
7.791%
5.824%
5.390%
5.049%
4.841%
12,000,000
3.948%
7,000,000
4,327,388
3,228,706
3,161,931
2,952,373
2,905,000
2,800,000
2,500,000
2,000,000
1,800,000
1,754,975
1,600,348
1,500,000
165,848,410
303,931,514
2.303%
1.424%
1.062%
1.040%
0.971%
0.956%
0.921%
0.823%
0.658%
0.592%
0.577%
0.527%
0.494%
54.568
100.00
Distribution of Optionholders – Exercisable at $0.25 expiring 7 February 2019
Holdings Ranges
Holders
Total Units
Percentage %
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
0
0
0
0
6
0
0
0
0
0.00
0.00
0.00
0.00
8,500,000
100.00
83 Annual Report 2018
Total
6
8,500,000
100.00
Optionholders with more than 20% of the Class of Option:
ESCR INVESTMENTS PTY LTD
ALAN MYLES ROGER DE CHASTEIGNER DU MEE
3,000,000
2,000,000
35.294
23.529
Distribution of Optionholders – Exercisable at $0.25 expiring 6 August 2020
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total
Holders
Total Units
Percentage %
0
0
0
0
1
1
0
0
0
0
5,000,000
5,000,000
0.00
0.00
0.00
0.00
100.00
100.00
Optionholders with more than 20% of the Class of Option:
A & M McGHIE INVESTMENTS PTY LTD
5,000,000
100.00
Distribution of Optionholders – 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
Optionholders with more than 20% of the Class of Option:
JAMES WILLIAM HARDING
2,400,000
100.00
84 Annual Report 2018
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
Optionholders with more than 20% of the Class of Option:
RIVONIA PTY LIMITED
KFT CAPITAL PTY LIMITED
LIGUO CAPITAL PTY LIMITED
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
Distribution of Optionholders – Exercisable at $0.40 expiring 13 February 2023
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total
Optionholders with more than 20% of the Class of Option:
JAMES WILLIAM HARDING
CRAIG ARTHUR FRANCIS
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
3
3
0
0
0
0
4,850,000
4,850,000
0.00
0.00
0.00
0.00
100.00
100.00
2,600,000
2,000,000
53.608
41.237
85 Annual Report 2018
10. CORPORATE DIRECTORY
DIRECTORS
Dr Ralph Craven Non-Executive Chairman
Mr Simon Kidston
Mr Ben Guo
Mr Michael Addison
Ms Teresa Dyson
Mr Yongqing Yu
Mr Alan du Mée
Executive Director
Finance Director
Non-Executive Director
Non-Executive 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
ANNUAL REPORT
2018
Telephone: 02 9048 8850
info@genexpower.com.au
www.genexpower.com.au