2019 Annual Report
ABN 18 152 098 854
www.genexpower.com.au
2 Annual Report 2019
Genex Power…
Renewable energy on tap…
Genex Power Limited is an Australian publicly listed company on the ASX (trading under the code ‘GNX’),
focused on generation and storage of renewable energy. Genex is developing a clean energy hub in north
Queensland, integrating large-scale solar with pumped storage hydro. The Genex ‘Kidston Clean Energy Hub’
is a world first, innovative integration of intermittent solar energy with low cost energy storage creating
“Renewable Energy On Tap”. The Company is also developing the 50MW Jemalong Solar Project (JSP), located
near Forbes in NSW.
3 Annual Report 2017/18
CONTENTS
1. Chairman’s Letter
2. Chief Executive Officer’s Review of Operations
3. Directors' Report and Remuneration Report
4. Auditor's 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
70
80
84
Genex gets $610m green power loan tick from NAIF – July
2019
J-Power snaps up Genex Power Stake – June 2019
States eyes link-up for renewable power hub – August 2019
Power play: pumped hydro eyes path through Australia’s climate wars – April 2019
Genex goes into trading halt, ahead of fund-raising for JSP – June 2019
Powering up hydro jobs for the north – July 2019
4 Annual Report 2019
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 the 2019 Financial
Year (FY19), a year in which the Company continued to grow through reaching
several new milestones.
As with previous years, FY19 was also a busy year in which Genex made further
strong progress on advancing its flagship Kidston Pumped Storage Hydro Project
(K2H). Genex was able to achieve all required approvals for the Project and is now
well progressed with project financing of K2H which includes a share subscription of
up to A$25M from Electric Power Development Co Ltd (J-Power) which is the subject
of an Extraordinary General Meeting of shareholders on 10 September and financial
close. Importantly, we recently secured final board approvals from the Northern
Australia Infrastructure Facility (NAIF) for a concessional long term loan of up to
$610m to fund construction of K2H. With this major milestone achieved,
management is looking to expedite the remaining work streams to reach financial
close this calendar year.
Genex has also been actively looking to expand its generation portfolio outside of Queensland. To this end, during the
year, Genex acquired the 50MW Jemalong Solar Farm (JSF). The project is well located in the NSW network and was well
advanced in terms of project development when Genex took control. Since the acquisition, Genex has rapidly progressed
the remaining development activities bringing the project to a shovel ready status. Project financing for JSF is being
undertaken at the same time as the refinancing of the Company’s 50MW Kidston Solar Project (KS1) and both processes
are expected to close in the current quarter, with construction to commence shortly thereafter. It is expected that JSF
will be generating into the NSW grid before the end of CY2020. JSF will initially be financed on a merchant basis. Genex
believes it is an opportunistic time to be developing merchant renewable opportunities in NSW. The combination of
higher electricity prices in NSW coupled with historically low interest rates should deliver a high return to equity.
KS1 has also been performing well across the year and generating clean renewable energy into the grid consistently
since reaching practical completion in early December last year. Whilst performance of the plant was somewhat affected
by the unseasonal cyclonic weather in early 2019, KS1 was still able to generate in excess of $10 million in revenue. As
noted above, Genex is currently finalising a refinancing process of KS1 to take advantage of the lower interest rate
environment.
A more detailed 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 ongoing strong support Genex has received from a number of bodies
including the Federal Government through the Australian Renewable Energy Agency (ARENA), which continues to
support Genex by partially funding the development cost of K2H. Following the end of FY19, Genex received final board
approval from NAIF for a concessional debt facility of up to $610 million to fund the majority of the construction cost of
K2H.
On the corporate front, in early July this year, the Company raised $21.5 million in new equity with approximately $16.2m
from a Placement and a further $5.3m under a Share Purchase Plan (SPP), before costs associated with the raising. The
Placement and SPP were both well received with the Placement attracting new and existing shareholders. As part of the
Placement, Genex was able to welcome on board a number of high profile institutional investors. The funds raised will
be used to fund part of the construction cost of JSF as well as other project development opportunities
Looking ahead, the Company’s immediate focus is to deliver on the financing of JSF and K2H and refinancing of KS1.
Once these projects are completed, Genex will be a significantly different company with access to strong and stable
5 Annual Report 2019
cashflows over the longer term. Genex will continue to look for new opportunities without losing focus on delivering on
our existing projects.
Genex’s transition from a small early stage project developer to a multi project operator is well underway. It has been a
busy 12 months and it is anticipated that next year will be much the same. 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 2019
2. CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS
Company Overview:
I am pleased to present this Review of Operations for my first full financial year in the
role as Chief Executive Officer.
Throughout the 2019 Financial Year, the Genex executive and management team
continued to pursue the Company’s key strategy of developing a range of diverse
renewable energy projects from the Kidston renewable energy hub in North
Queensland through the integration of large-scale solar and wind with pumped
storage hydro, to the acquisition of the 50MW Jemalong Solar Project in western New
South Wales.
As well as bringing these projects to financial close and proceeding with the
construction phase, Genex is looking to develop a pipeline of renewable energy and
storage projects in multiple jurisdictions, which leverages off the skills and expertise
we have developed so far.
The Company continued its record across the year of achieving significant milestones as summarised below.
Date
H2 2018:
7 September
10 September
21 September
2 October
3 December
20 December
H1 2019:
15 February
12 March
15 April
6 June
14 June
27 June
Key Announcement
Acquisition of 50MW Jemalong Solar Project in NSW
GNX Appoints Entura as Owner’s Engineer for Kidston Stage 2
Development Approval Received for Pumped Storage Project
Kidston Pumped Hydro Project Declared Coordinated Project
50MW Kidston Solar Project Reaches Practical Completion
Genex Signs Term Sheet with EnergyAustralia for Hydro Energy
Stage 2 Hydro Commencement of Early Works Programme
Completion of Jemalong 50MW Solar Project Acquisition
GNX Executes Jemalong Connection Agreement for 50MW Solar
GNX Signs A$25M Share Subscription Agreement with J-Power
AEMO GPS Approval Received for Kidston Pumped Storage Hydro
Successful Capital Raising of $16.2M for Jemalong Solar
Stage 1 - 50MW Kidston Solar Project (KS1):
As noted in the Chairman’s letter, KS1 has performed well across the year continuing to generate clean renewable energy
into the grid consistently. Notwithstanding that performance was somewhat affected by the unseasonal cyclonic weather
in north Queensland earlier this year, the project generated in excess of $10 million in revenue. Genex is currently
finalising a refinancing process of KS1 to take advantage of the lower interest rate environment, and to enable the
Jemalong Solar Farm Project (see below) to be financed on a merchant basis by sharing the cashflow security which
arises from KS1’s Queensland Government-backed long term power purchase agreement.
Stage 2 - 250MW Kidston Pumped Storage Hydro Project (K2H):
During the 2019 Financial Year, Genex achieved a number of significant milestones for the K2H project following on
from 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), culminating with final Board approval from
7 Annual Report 2019
NAIF for a concessional long term loan of up to $610m which was received just after the end of the financial year (FY).
The Commonwealth Government has also continued to provide further support for Genex, with ARENA providing up to
$5M in grant funding towards the development of the K2H project. To date, ARENA has provided $8.9M in grant funding
for KS1 and, with this latest ARENA funding, up to $9M towards the development of K2H. Discussions with ARENA are
continuing with regard to a potential allocation of further grant funding for the project implementation phase.
In addition to this strong commitment from NAIF and support from ARENA, the Company signed a Share Subscription
Agreement (SSA) with Electric Power Development Co Ltd trading as J-POWER (J-POWER) as announced to the ASX on
6 June. The agreement with J-POWER provides for a subscription of up to A$25M resulting in a minimum of 15% and a
maximum of 19.99% of the expanded capital of Genex thereafter. The investment by J-POWER under the SSA is subject
to shareholder approval at a forthcoming Extraordinary General Meeting of shareholders to be held on 10 September.
As a further condition of the SSA, J-POWER has also agreed to provide certain professional and technical advisory
services to Genex in relation to the development of K2H.
Detailed negotiations have continued with EnergyAustralia (EA) throughout the year on the basis of the Term Sheet
signed in December 2018 (refer ASX Announcement of 20 December 2018). EA are proposing to take a 50% equity
investment in the project, and to enter into a long term energy storage services agreement which will provide them with
full rights to dispatch electricity and provide ancillary services to the National Electricity Market.
K2H is a large and complex project and we are very proud of the work we have done to advance the project and attract
the support outlined above. We are excited about closing out the remaining components of the financial close process
as soon as we can this calendar year, which would see construction commence in early 2020 and commercial operation
of the pumped storage hydro facility in 2023.
50MW Jemalong Solar Farm (JSF) – New South Wales:
Genex has stated for some time now its clear intention of becoming a developer of diverse renewable energy projects
across a multiple of jurisdictions. During the course of the FY, Genex announced in September, its first expansion of the
portfolio outside Queensland with the acquisition of the JSF.
JSF is located near Forbes in western NSW and is well positioned in relation to the electricity network. We have rapidly
progressed the development of the project by signing a binding connection agreement with Essential Energy (refer ASX
announcement 15 April 2019), raising the required equity component for financing the project and advancing the debt
funding process on a merchant basis initially which is expected to result in financial close in the current quarter with
construction to commence shortly thereafter. The JSF financing is being undertaken in conjunction with a refinancing of
KS1. It is expected that JSF will be generating into the NSW grid before the end of CY2020.
Genex believes now is an opportune time to develop merchant renewable projects in NSW such as JSF due to the
combination of NSW’s higher electricity prices coupled with historically low interest rates which we believe should deliver
a high return to equity. This strategy also allows the optionality to lock in a suitable power purchase agreement during
the construction or subsequent operation phase, on more favourable terms which reflect the reduced risk and greater
certainty to the offtaker.
Stage 2 – 165MW Kidston Solar Farm (K2S)
The Stage 2 K2S project will complement the Pumped Storage Hydro project, as at 165MW the solar farm is sized to be
able to feed one of the two pumps of K2H with clean energy and very low electrical losses. The project has been well
progressed, with land secured and development and environmental approvals largely completed. Focus will return to
the development of K2S once we have reached financial completion of K2H and JSF including the refinancing of KS1.
8 Annual Report 2019
Stage 3 - 150MW Kidston Wind Project (K3W)
The Stage 3 K3W project remains in the feasibility stage and part of Genex’s pipeline of opportunities. We will be looking
to complete the feasibility assessment in early 2020, and, if appropriate, to progress the development in parallel with
the K2S project.
In summary, the proposed investment by J-Power into Genex demonstrates the confidence of a major international
power corporate in the vision and capability of Genex’s management, as we jointly seek to play a leading role in the
transition of the electricity market which is currently underway, and which requires a considered but nimble approach
to investment opportunities in renewable energy and necessary firming technologies. In this way, Genex is looking to
expand our development portfolio in order to further diversify across projects, renewable energy sources, technology
and jurisdictions, and thereby to advance to a mature, proven leader in renewables and energy storage.
Yours faithfully,
James Harding
Chief Executive Officer
9 Annual Report 2019
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 2019 (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 (retired 5 November 2018)
Teresa Dyson
Ben Guo
Simon Kidston
Principal activities
The consolidated entity’s principal activities during the period comprised the development of the Kidston Energy Hub
in Far North Queensland (FNQ), the operation of KS1 and the development of the Jemalong Solar Farm (JSF) in New
South Wales.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Significant changes in the state of affairs
The principal activities of the consolidated entity during the course of the year consisted of the development of the
Kidston Energy Hub located in FNQ, the operation of KS1 and the acquisition and project financing of the JSF in New
South Wales.
For the year ended 30 June 2019, the consolidated entity incurred an after-tax loss of $5.5 million. The majority of
expenditure was incurred on the development of the K2H project.
During the 2019 financial year Genex received an aggregate amount of $2,125,000 from a placement to institutional
shareholders in February 2019.
During the year, Genex fully drew down the senior project loan associated with KS1 and, as at 30 June 2019, the total
loan outstanding was $98.9 million. Since 31 July 2018, KS1 has been operating under the Solar 150 Price Support Deed
with the Queensland Government. During the year, KS1 earned $10.8 million in revenue.
Matters subsequent to the end of the year
In July 2019 Genex undertook a capital raising via a share placement and Share Purchase Plan (SPP), the total amount
raised was $21.458 million before costs associated with the raise. The new shares under the placement went to existing
and new sophisticated and institutional shareholders and the shares under the SPP were issued to existing shareholders.
10 Annual Report 2019
Apart of the matters outlined above, there have been no other material events or circumstances which have arisen since
30 June 2019 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 JSF and K2H projects, with a view to reaching
financial close in the second half of CY2019.
Environmental regulation
The Kidston Energy Hub Site is covered by 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’s current use of the site as an operator and developer of
diverse renewable energy. Genex, in agreement from the Department of Environment and Science (DES), has entered
into an Environmental Evaluation process with a view to amending certain provisions of the EA to be consistent with
Genex’s current site use.
11 Annual Report 2019
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).
Name: Michael Addison
Title: Non-Executive Director
Qualifications: BSc (Eng), MPhil (Oxon), FAIM
Special Responsibilities: Member, Audit & Risk Management Committee
Experience and expertise:
Michael is a former water engineer with experience in large dam, spillway and water reticulation systems design. He also
has considerable international corporate finance experience, having spent a number of years as an investment banker
with three globally recognised investment banks. Subsequent to transitioning into mainstream corporate management
in the early nineties, Michael held a number of senior executive positions on the boards of publicly listed companies on
each of the London, Johannesburg and Australian Securities Exchanges. In these roles he developed deep expertise in
the management and running of listed companies and an intimate working knowledge of the regulatory, legal and
governance environments in which listed companies operate. Michael 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 and is a
Fellow of the Australian Institute of Management. Michael is a founding director and shareholder of Genex.
Name: Teresa Dyson
Title: Non-Executive Director
Qualifications: (LLB (Hons), BA, MTax, MAppFin, GAICD)
Special Responsibilities: Chair, Audit & Risk Management Committee and Member,
Remuneration Committee
Teresa is a director and Audit & Risk Committee Chair of ASX-listed Seven West Media Ltd (2017
– Present) and a non-executive director of Consolidated Tin Mines Limited (ASX: CSD) from January 2019 - present..
Teresa is also a director of Energy Qld Ltd, Energy Super, Power & Water Corporation 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 broad legal experience across infrastructure, financial structuring, social infrastructure and taxation law. 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.
12 Annual Report 2019
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 almost 30 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 needs, 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: Group Finances
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 Asia Ecoenergy Development Limited (formerly Zhefu), one of
the largest hydroelectric electrical and mechanical equipment manufacturers in China and Genex’s largest shareholder.
Mr. Yu has been a key member of Zhefu since the company’s inception. He is a senior engineer and has extensive hydro
experience. Yongqing has been involved in many significant projects including the Shuangling Hydropower Project in
Liaoning Province, the Wanmipo Hydropower Project in Hunan province and the Changzhou Hydropower Project in the
Guangxi Zhuang Autonomous Region of China. Mr Yu’s technical expertise and experience in working with large scale
international projects significantly strengthens the Genex Board’s already robust level of technical, industry and
corporate experience.
Name: Alan du Mée
Title: Non-Executive Director (retired 5 November 2018)
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
13 Annual Report 2019
Starfish Hill windfarm in South Australia and the sale of a 50% of the Tarong North power station to a Japanese
consortium. He also had responsibility for the 600MW Wivenhoe Pumped Storage Plant, the second largest hydro
pumped storage plant in Australia.
Mr. du Mée is a past Chairman of the Australian National Generators Forum and was a director of BHP Engineering
between April 1991 and November 1996. He is also a director of A Solid Foundation Pty Limited, and has been engaged
by Glencore Coal Assets Australia to assist it with its CCS development strategy.
Name: Justin Clyne
Title: Company secretary
Qualifications: LLM (UNSW) ACIS, AGIA
Experience and expertise:
Justin Clyne was admitted as a Solicitor of the Supreme Court of New South Wales and High
Court of Australia in 1996 before gaining admission as a Barrister in 1998. He has 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 2019, and the number of meetings attended by each director was:
Name
Board
Audit
Remuneration
Dr Ralph Craven
Michael Addison
Simon Kidston
Ben Guo
Teresa Dyson
Yong Qing Yu
Alan du Mee
Held
16
16
16
16
16
16
5
Attended
15
16
14
16
16
-
5
Held
3
3
-
3
3
-
1
Attended
3
3
-
3
3
-
1
Held
2
-
2
-
2
-
-
Attended
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 Asia Ecoenergy Development Limited
(formerly Zhefu) 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.
14 Annual Report 2019
The Constitution provides that the non-executive Directors may be paid for their services as Directors, however the sum
payable must not exceed such fixed sum per annum as determined by the Company at the annual general meeting, to be
divided among the 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 director fees to 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.
This Remuneration Report outlines the arrangements which were in place during the year ended 30 June 2019 for the
Directors and key management personnel.
2019
Executive Directors
S Kidston
B Guo
Non-Executive Directors
R Craven
M Addison
A du Mee
Teresa Dyson
Yongqing Yu
Short-term benefits
Cash Salary and Fees
$
Post employee benefits
Superannuation benefits
$
Share-based
payments
$
380,000
380,000
140,000
298,6501
27,590
72,000
-
36,100
36,100
13,300
30,840
2,621
6,840
-
-
-
-
-
-
-
-
Total
$
416,100
416,100
153,300
329,490
30,211
78,840
-
Sub-Total
1,298,240
125,801
- 1,424,041
Chief Operating Officer
A McGhie
Chief Executive Officer
James Harding
Sub-Total
Total
330,000
320,000
650,000
1,948,240
31,350
23,047
384,397
30,400
137,774
488,174
61,750
187,551
160,821
872,571
160,821 2,296,612
1 The fee paid to Mr Addison in the 2019 financial year comprised a director’s fee of $48,000 and consultancy fees representing the balance.
15 Annual Report 2019
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
330,000
303,043
633,043
1,792,154
31,350
122,361
483,711
28,789
133,977
465,809
60,139
165,935
256,338
949,520
256,338 2,214,427
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 5 November 2018
7 May 2018 to current
8 February 2016 to current
Performance based remuneration is not applicable.
Key Management Personnel (KMP)’s Interests in the Company
The shares and options held by the KMPs as at 30 June 2019 and at the date of this report are as follows:
Shares
Personnel
Michael
Addison
Simon Kidston
Ben Guo
Ralph Craven
Teresa Dyson
Yongqing Yu
Balance as at 1
July 2018
28,500,000
Granted as
remuneration
-
Received on
exercise
-
20,881,931
2,108,181
340,909
Nil
Nil
-
-
-
-
-
-
-
-
-
-
Purchases
-
-
-
-
68,862
-
Balance as at 30
June 2019
28,500,000
20,881,931
2,108,181
340,909
68,862
Nil
Chief Operating Officer
A McGhie
Chief Executive Officer
James Harding
Sub-Total
Total
Period of Service
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mée
Teresa Dyson
Yongqing Yu
16 Annual Report 2019
Personnel
Michael
Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mee
Teresa Dyson
Yongqing Yu
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
Teresa Dyson
Arran McGhie*
James Harding*
Balance as at
1 July 2017
28,500,000
Granted as
remuneration
-
Received on
exercise
-
20,881,931
2,108,181
340,909
238,637
Nil
Nil
-
-
-
-
-
-
-
-
-
-
Purchases
-
-
-
-
-
-
Balance as at 30
June 2018
28,500,000
20,881,931
2,108,181
340,909
238,637
Nil
Nil
Balance
as at 1
July 2018
5,000,000
5,000,000
5,000,000
5,000,000
2,000,000
-
5,000,000
5,000,000
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
Granted as
remuneration
Date of Grant
during period
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Granted as
remuneration
Date of Grant
during period
-
-
-
-
-
-
-
2,600,000
-
-
-
-
-
-
-
23/02/2018
Fair value per
option at
grant date
-
-
-
-
-
-
-
-
Fair value per
option at
grant date
-
-
-
-
-
-
-
0.1296
Expired
Balance as at 30
June 2019
1,000,000
1,000,000
1,000,000
3,000,000
2,000,000
-
-
-
Expired
-
-
-
-
-
-
-
-
4,000,000
4,000,000
4,000,000
2,000,000
-
-
5,000,000
5,000,000
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
*Options issued to Arran McGhie and James Harding have various vesting conditions based exclusively on milestones,
irrespective of when these milestones are achieved (see note 25)
There were no new Options issued to Directors or Management during the 2019 financial year.
8,000,000 options held by Directors at 30 June 2018 and exercisable at $0.25 each, expired on 7 February 2019.
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
17 Annual Report 2019
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 Agreements 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. Both Simon Kidston and Ben Guo received an increase in salary to $340,000
from July 2017 as a result of a periodic remuneration review. 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.
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
6 August 2015
2 September 2016
17 January 2017
7 July 2017
23 February 2018
Total
End of Remuneration Report
Expiry date
6 August 2020
2 September 2021
17 January 2022
17 January 2022
13 February 2023
Exercise price
$0.25
$0.25
$0.34
$0.34
$0.40
Number of options
5,000,000
2,400,000
14,000,000
1,500,000
4,850,000
27,750,000
18 Annual Report 2019
Loss per Share
The loss per share for Genex Power Limited for the year was 1.78 cents per share (FY18 2.54 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 2019 was $5,477,931. The Directors of Genex have resolved not to recommend a dividend for the financial year
ended 30 June 2019.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the year, the Company paid a premium in respect of a contract to insure the directors and executives of the
Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or
any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Non-audit services
The following non-audit services were provided by the entity's auditor, Ernst & Young Australia. The directors are
satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that
auditor independence was not compromised.
Ernst & Young Australia received or are due to receive the following amounts for the provision of non-audit/assurance
services:
Tax Advisory
Energy Market Studies
$
47,500
61,200
108,700
19 Annual Report 2019
Auditor's independence declaration
A copy of the auditor's independence declaration is set out on the following page.
On behalf of the directors
Dr Ralph Craven
Teresa Dyson
(Non-Executive Chairman)
Non-Executive Director
29 August 2019
29 August 2019
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s Independence Declaration to the Directors of Genex Power
Limited
As lead auditor for the audit of the financial report of Genex Power Limited for the financial year ended
30 June 2019, I declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Genex Power Limited and the entities it controlled during the financial
year.
Ernst & Young
Lynn Morrison
Partner
29 August 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
20
21 Annual Report 2019
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 29 August 2019. The
directors have the power to amend and reissue the financial statements.
22 Annual Report 2019
Genex Power Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
Revenue
Sale of electricity and environmental products and lease income
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/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
Basic earnings per share
Diluted earnings per share
Note
s
30 June
2019
30 June
2018
$
$
5
5
6
6
15
6
7
8
10,818,905
4,800,053
15,618,958
8,273,070
1,666,573
9,939,643
(3,676,186)
(2,982,640)
(1,363,547)
(145,494)
(2,779,110)
(50,149)
(262,738)
(6,369,366)
1,229,163
(16,400,067)
(5,126,860)
(2,751,178)
(2,272,128)
(182,694)
(1,192,486)
(43,289)
(224,114)
(3,017,338)
130,721
(14,679,366)
(781,109)
(4,739,723)
(4,922,282)
225,460
(5,477,931)
(2,970,877)
249,518
(7,461,082)
-
-
(5,477,931)
(7,461,082)
19
(3,691,838)
1,531
(9,169,769)
(7,459,551)
35
35
Cents
(1.78)
(1.78)
Cents
(2.54)
(2.54)
23 Annual Report 2019
Genex Power Limited
Consolidated statement of financial position
As at 30 June 2019
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Prepayments
Non-Current Assets
Bond Deposits and Bank Guarantee
Intangible Asset
Plant Property and Equipment
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Short term interest accrued
Interest-bearing loans and borrowings
Government grant
Provisions
Non-Current Liabilities
Long term interest accrued
Interest-bearing loans and borrowings
Convertible notes
Government Grant
Other financial liabilities
Rehabilitation and restoration provision
Provisions
Total Liabilities
Net Assets
Equity
Share capital
Option reserves
Cash flow hedge reserve
Accumulated losses
Total Equity
Notes
30 June 2019
30 June 2018
$
$
9
10
11
12
13
14
15
16
17
18
20
23
20
18
21
24
25
25
19
3,462,806
1,954,803
-
199,436
5,617,045
4,608,679
5,795,377
118,498,979
128,903,035
134,520,080
2,250,602
247,542
4,570,770
442,500
203,473
7,714,887
657,034
94,353,392
4,755,578
7,745,568
6,984,520
3,820,200
42,867
118,359,159
126,074,046
8,446,034
41,899,049
2,178,469
(5,358,801)
(30,272,683)
8,446,034
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
24 Annual Report 2019
Genex Power Limited
Consolidated statement of changes in equity
For the year ended 30 June 2019
Notes
$
Issued
Capital
$
$
$
$
Options
Reserves
Cash flow hedge
reserve
Accumulated
Losses
Total Equity
39,955,299
1,786,628
(1,666,963)
(24,794,752)
15,280,212
-
-
-
-
-
(5,477,931)
(5,477,931)
(3,691,838)
-
(3,691,838)
39,955,299
1,786,628
(5,358,801)
(30,272,683)
6,110,443
2,125,000
(181,250)
-
-
-
391,841
-
-
-
-
-
-
2,125,000
(181,250)
391,841
41,899,049
2,178,469
(5,358,801)
(30,272,683)
8,446,034
Balance at 1 July
2018
Loss after income
tax
Cash flow hedge
reserve
Total
comprehensive
loss for period
Shares issued
during the period
Transaction cost
Share-based
payments (Note
26)
Balance at 30 June
2019
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
35,493,073
2,730,184
(1,668,494)
(17,392,063)
19,162,700
-
-
-
-
-
(7,461,082)
(7,461,082)
1,531
-
1,531
35,493,073
2,730,183
(1,666,963)
(24,853,145)
11,703,148
3,224,750
-
1,237,476
(1,237,476)
(58,393)
-
352,313
-
-
-
-
-
58,393
3,224,750
-
-
-
352,313
39,955,299
1,786,628
(1,666,963)
(24,794,752)
15,280,212
Balance at 1 July
2017
Loss after income
tax
Cash flow hedge
reserve
Total
comprehensive
loss for period
Shares issued
during the period
Transaction cost
Loyalty options
expired
Share-based
payments (Note
26)
Balance at 30 June
2018
25 Annual Report 2019
Genex Power Limited
Consolidated statement of cash flows
For the year ended 30 June 2019
Cashflow from Operating Activities
Receipt from customers
Payments to suppliers
Payments to employees
Interest received
Interest paid
Notes
30 June 2019
30 June 2018
$
$
16,293,241
(9,137,168)
(2,373,916)
225,460
(4,486,058)
7,005,270
(7,039,994)
(2,185,755)
249,518
(4,131,807)
Net cash utilised by operating activities
33
521,559
(6,102,768)
Cashflow from Investing Activities
Purchase of Property, Plant and Equipment
Purchase of intangible assets
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
(6,437,332)
(5,795,377)
-
(109,882)
(12,342,591)
(82,959,923)
-
898,073
(269,353)
(82,331,203)
2,125,000
3,117,150
(181,250)
422,614
(1,194,025)
3,224,750
1,748,236
-
87,466,796
(4,100,000)
4,289,489
88,339,782
Net decrease in cash and cash equivalents
(7,531,543)
(94,190)
Cash and Cash equivalent at the beginning of the financial year
10,994,349
11,088,539
Cash and Cash equivalents at the end of the financial year
9
3,462,806
10,994,349
26 Annual Report 2019
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:
•
In July 2019 Genex undertook a capital raising via a share placement and Share Purchase Plan (SPP), the total
amount raised was $21.458 million before costs.
In assessing the appropriateness of using the going concern assumption, the Directors have had regard to the following
matters:
•
The consolidated entity has been in detailed discussions with a number of potential energy partners, with
ongoing discussions based around securing the most financially viable option for the Company and its
Shareholders. The consolidated entity’s timeline is to reach financial close in 2019 with construction to
commence soon after financial close, with an estimated 18-month build for K2S and 36- 42 month build for
K2H.
The Northern Australia Infrastructure Facility (NAIF) has provided final board approval for a loan of up to $610m
of concessional debt to the project.
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.
•
•
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
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)
27 Annual Report 2019
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 31.
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 2019 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
after the reporting period
All other assets are classified as non-current.
Expected to be realised within twelve months after the reporting period
•
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.
Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the
customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those
28 Annual Report 2019
goods or services. 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 product is recognised at the point in time when control of the
asset is transferred to the buyer and the consolidated entity has the right to be compensated.
Fair value measurement
The consolidated entity measures financial instruments such as derivatives, and non-financial assets such as investment
properties, at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that
the transaction to sell the asset or transfer the liability takes place either:
•
Or
•
In the absence of a principal market, in the most advantageous market for the asset or liability
In the principal market for the asset or liability
The principal or the most advantageous market must be accessible by the consolidated entity.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when
pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the
asset in its highest and best use.
The consolidated entity uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within
the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:
•
•
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable
•
For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the consolidated
entity determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based
on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the consolidated entity has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained
above.
29 Annual Report 2019
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.
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.
30 Annual Report 2019
Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at
the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement conveys a right to use the asset (or assets), even if that asset is (or
those assets are) not explicitly specified in an arrangement.
Consolidated entity as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all
the risks and rewards incidental to ownership to the consolidated entity is classified as a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property
or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance
charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are recognised in finance costs in the statement of profit or loss.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the
consolidated entity will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the
estimated useful life of the asset and the lease term.
An operating lease is a lease other than a finance lease. Operating lease payments are recognised as an operating
expense in the statement of profit or loss on a straight-line basis over the lease term.
Consolidated entity as a lessor
Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified
as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included
in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term
on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Interest
Interest income and expenses are reported on an accrual basis using the effective interest method.
Plant, Property and Equipment
Construction in progress, plant and equipment are stated at cost, net of accumulated depreciation and accumulated
impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs
for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment
are required to be replaced at intervals, the consolidated entity depreciates them separately based on their specific
useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant
and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are
recognised in profit or loss as incurred. The present value of the expected cost for the decommissioning of an asset after
its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Refer to significant
accounting judgements, estimates and assumptions (Note 2) and Rehabilitation and restoration provisions (Note 24) 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
31 Annual Report 2019
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. 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.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired
in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles,
excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in
the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever
there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method
for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the
expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are
considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting
estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss
in the expense category that is consistent with the function of the intangible assets.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually
or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the
indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a
prospective basis.
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future
economic benefits are expected from its use or disposal. Any gain or loss arising upon 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.
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.
32 Annual Report 2019
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted.
The amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date,
the loans or borrowings are classified as non-current.
Provisions
General
Provisions are recognised when the consolidated entity has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. When the consolidated entity expects
some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised
as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented
in the statement of profit or loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects,
when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost.
Rehabilitation and restoration liability
The Company records the present value of the estimated cost of legal and constructive obligations to rehabilitate mining
lease areas in the period in which the obligation is incurred. The nature of rehabilitation activities includes dismantling
and removing structures, rehabilitating mines, dismantling operating facilities, closure of plant and waste sites and
restoration, reclamation and revegetation of affected areas. When the liability is initially recorded, the present value of
the estimated cost is capitalised by increasing the carrying amount of the related mining assets. Over time, the
discounted liability is increased for the change in the present value based on a discount rate. Additional disturbances or
changes in rehabilitation costs will be recognised as additions or changes to the corresponding asset and rehabilitation
liability when incurred. The unwinding of the effect of discounting the provision is recorded as a finance charge in the
profit or loss. The carrying amount capitalised as a part of mining assets is depreciated/ amortised over the life of the
related asset.
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,
33 Annual Report 2019
the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying
share, the expected dividend yield and the risk free interest rate for the term of the option, together with the non-vesting
conditions that do not determine whether the consolidated entity receives the services that entitle the employees to
receive payment. No account is taken of any other vesting conditions.
The costs of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in the profit and loss for the period is the cumulative amount calculated at each reporting date less amounts
already recognised in previous periods.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the
condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee
and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining
vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
Convertible notes
For the convertible notes with cash settlement at the option of the issuer, the whole convertible notes are treated as
financial liability, which is subsequently valued at amortised cost using effective interest rate method. The conversion
right is accounted for as a derivative at fair value, with changes in value included in profit or loss.
Earnings per share
The consolidated entity presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects
of all dilutive potential ordinary shares, which comprise share options granted to employees.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached
conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic
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
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
34 Annual Report 2019
i) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not
contain a significant financing component or for which the Group has applied the practical expedient, the Group 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. Trade receivables that do not contain a significant financing component or for which the Group has
applied the practical expedient are measured at the transaction price determined under AASB 15. Refer to the accounting
policies in this section Revenue from contracts with customers
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give
rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This
assessment is referred to as the SPPI test and is performed at an instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to
generate cash flows. The business model determines whether cash flows will result from collecting contractual cash
flows, selling the financial assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
•
Financial assets at amortised cost (debt instruments)
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the
following conditions are met:
•
The financial asset is held within a business model with the objective to hold financial assets in order to collect
contractual cash flows
And
•
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject
to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group’s financial assets at amortised cost includes trade receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily
derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:
Or
•
•
The rights to receive cash flows from the asset have expired
The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay
the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and
either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has
neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control
of the asset
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither
35 Annual Report 2019
transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the
Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group
also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that
reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum amount of consideration that the Group could be required to
repay.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value
through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the
contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective
interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements
that are integral to the contractual terms.
For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track
changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group
has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking
factors specific to the debtors and the economic environment.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain
cases, the Group may also consider a financial asset to be in default when internal or external information indicates that
the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit
enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering
the contractual cash flows.
ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and
borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and
derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
This category also includes derivative financial instruments entered into by the Group that are not designated as hedging
instruments in hedge relationships as defined by AASB 9. Separated embedded derivatives are also classified as held for
trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.
36 Annual Report 2019
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial
date of recognition, and only if the criteria in AASB 9 are satisfied. The Group has not designated any financial liability
as at fair value through profit or loss.
Loans and borrowings
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when
the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are
an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.
This category generally applies to interest-bearing loans and borrowings. For more information, refer to Note 21.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When
an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the
original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in
the statement of profit or loss.
iii) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of
financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention
to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
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. AASB139 will still be applied for the existing hedging relationship.
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
37 Annual Report 2019
hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed
on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods
for which they were designated.
Cash flow hedges
The consolidated entity uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast
transactions and firm commitments, as well as interest rate swaps for its exposure to interest rate risks for. The ineffective
portion relating to both the forward currency contracts and interest rate swaps are recognised in other operating income
or expenses.
Amounts recognised as OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as
when the hedged financial income or financial expense is recognised. When the hedged item is the cost of a non-
financial asset or non-financial liability, the amounts recognised as OCI are transferred to the initial carrying amount of
the non-financial asset or liability.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
Changes in accounting policies and disclosures
New and amended standards and interpretations
The Group applied AASB 15 and AASB 9 for the first time. The nature and effect of the changes as a result of adoption
of these new accounting standards are described below.
Several other amendments and interpretations apply for the first time in FY19, but do not have an impact on the
consolidated financial statements of the Group. The Group has not early adopted any standards, interpretations or
amendments that have been issued but are not yet effective.
AASB 15 Revenue from Contracts with Customers
AASB 15 supersedes AASB 111 Construction Contracts, AASB 118 Revenue and related Interpretations and it applies to
all revenue arising from contracts with customers, unless those contracts are in the scope of other standards. The new
standard establishes a five-step model to account for revenue arising from contracts with customers. Under AASB 15,
revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange
for transferring goods or services to a customer.
The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances
when applying each step of the model to contracts with their customers. The standard also specifies the accounting for
the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. The Group adopted
AASB 15 using the modified retrospective method of adoption. In the prior year revenue from the sale of electricity and
environmental products was recognised in accordance with AASB 118 Revenue which was when the significant risks and
rewards of ownership of the products have passed to the buyer and Genex Power has the right to be compensated. For
38 Annual Report 2019
the current period, revenue for the sale of electricity and environmental products was recognised in July 2018 in
accordance with AASB 15 Revenue from Contracts with Customers. Based on the analysis performed by the Genex Power
there was no change in the way revenue is recognised between AASB 118 and AASB 15. From July 2018 to 30 June 2019,
the 150 Support Deed was in effect. Revenue under this agreement has been treated as lease income by management
which is outside the scope of AASB 15. The application of AASB 15 did not have a material effect on the financial results
of the Group.
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement for annual periods
beginning on or after 1 July 2018 for the Group, bringing together all three aspects of the accounting for financial
instruments: classification and measurement; impairment; and hedge accounting.
With the exception of hedge accounting, which the Group applied under AASB 139, the Group has applied AASB 9
retrospectively, with the initial application date of 1 July 2018 and did not restate comparative.
AASB 9 requires the Group to record an allowance for ECLs for all loans and other debt financial assets not held at FVPL.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the
cash flows that the Group expects to receive. The shortfall is then discounted at an approximation to the asset’s original
effective interest rate.
Genex Power continues to apply hedge accounting under AASB 139 for interest rate swap entered into in 2017.
The Group assessed these financial assets as at 1 July 2018 for impairment using reasonable and supportable information
that is available without undue cost or effort in accordance with the requirements of AASB 9 to determine the credit risk
of the respective customers. The Group measures loss allowances on trade receivables using a life-time expected loss
model. The Group has applied the simplified approach to measuring expected credit losses. The Group uses judgement
in making the assumptions and selecting the inputs to the impairment calculation, based on the Group’s past history,
existing market conditions as well as forward looking estimates. The Group has determined that the allowance for
expected credit losses on trade receivables and other assets carried at amortised cost was immaterial. The other assets
carried at amortised cost include cash and bank guarantee.
In accordance with the transitional provisions in AASB 9, the adjustments arising from the new impairment rules are
recognised in the opening balance sheet on 1 July 2018. Based on the analysis performed by the Group there was no
change or adjustment recorded as at transition date or at 30 June 2019.
AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based
Payment Transactions
The AASB issued amendments to AASB 2 Share-based Payment that address three main areas: the effects of vesting
conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based
payment transaction with net settlement features for withholding tax obligations; and accounting where a modification
to the terms and conditions of a share-based payment transaction changes its classification from cash-settled to equity-
settled. On adoption, entities are required to apply the amendments without restating prior periods, but retrospective
application is permitted if elected for all three amendments and other criteria are met. The Group’s accounting policy
for cash-settled share-based payments is consistent with the approach clarified in the amendments. In addition, the
Group has no share-based payment transaction with net settlement features for withholding tax obligations and had
not made any modifications to the terms and conditions of its share-based payment transaction. Therefore, these
amendments do not have any impact on the Group’s consolidated financial statements.
a) Standards issued but not yet effective Australian Accounting Standards and Interpretations that are issued, but
are not yet effective, up to the date of issuance of the Group’s financial statements are disclosed below. The
Group intends to adopt these new standards and interpretations, if applicable, when they become effective.
39 Annual Report 2019
AASB 16 Leases
AASB 16 was issued in January 2016 and it replaces AASB 117 Leases, AASB Interpretation 4 Determining whether an
Arrangement contains a Lease, AASB Interpretation-115 Operating Leases-Incentives and AASB Interpretation 127
Evaluating the Substance of Transactions Involving the Legal Form of a Lease. AASB 16 sets out the principles for the
recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a
single on-balance sheet model similar to the accounting for finance leases under AASB 117. The standard includes two
recognition exemptions for lessees – leases of ’low-value’ assets (e.g., personal computers) and short-term leases (i.e.,
leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability
to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during
the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the
lease liability and the depreciation expense on the right-of-use asset.
Lessees will be also 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 under AASB 16 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.
AASB 16, which is effective for annual periods beginning on or after 1 January 2019, requires lessees and lessors to make
more extensive disclosures than under AASB 117.
Transition to AASB 16
Subsequent to the financial year end, on 1 July 2019, the standard has been adopted by the Group. The Group has
elected to adopt AASB 16 retrospectively with the cumulative effect of initially applying the standard recognised at the
date of initial application, and as such shall not restate comparative information. The new standard is not expected to
have a material impact on the Group’s financial statements. The Group is finalising the assessment of leases and the
recognised value may change following the finalisation of the assessment. Low value or short-term leases are not
recognised on the balance sheet as allowed under the practical expedients of AASB 16. Based on the initial assessment
the impact of AASB16 adoption is expected to be as follows:
Impact on the statement of financial position (increase/(decrease)) as at 30 June 2019:
Assets
Property, plant and equipment (right of use assets)
591,921 – 636,948
Liabilities
Lease liabilities
Net impact on equity
651,560 – 683,017
(59,639) – (46,069)
The key assumptions used to determine the RoU and the corresponding lease liability are:
The lease terms;
-
- Options to extend the original lease terms;
-
-
Discount rate used; and
Termination options
40 Annual Report 2019
Accounting Standards and Interpretations issued but not yet effective
Reference
Title
Summary
AASB 2017-6 Amendments to
Australian
Accounting
Standards –
Prepayment
Features with
Negative
Compensation
Application date
of standard: 1
January 2019
Application date
for consolidated
entity: 1 July
2019
AASB 2018-1 Australian
Amendments to
Australian
Accounting
Standards –
Annual
Improvements
2015-2017
Cycle
Application date
of standard: 1
January 2019
Application date
for consolidated
entity: 1 July
2019
Uncertainty
over Income
Tax Treatments
Application date
of standard: 1
January 2019
Application date
for consolidated
entity: 1 July
2019
AASB
Interpretation
23, and
relevant
amending
standards
This Standard amends AASB 9 Financial
Instruments to permit entities to measure at
amortised cost or fair value through other
comprehensive income particular financial
assets that would otherwise have contractual
cash flows that are solely payments of principal
and interest but do not meet that condition
only as a result of a prepayment feature. This is
subject to meeting other conditions, such as the
nature of the business model relevant to the
financial asset. Otherwise, the financial assets
would be measured at fair value through profit
or loss.
The Standard also clarifies in the Basis for
Conclusion that, under AASB 9, gains and losses
arising on modifications of financial liabilities
that do not result in derecognition should be
recognised in profit or loss.
The amendments clarify certain requirements in:
•
•
•
AASB 3 Business Combinations and
AASB 11 Joint Arrangements -
previously held interest in a joint
operation
AASB 112 Income Taxes - income tax
consequences of payments on
financial instruments classified as
equity
AASB 123 Borrowing Costs -
borrowing costs eligible for
capitalisation.
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.
Impact on the consolidated entity’s
Financial Report
The consolidated entity is currently
evaluating the impact of the new
accounting standard.
The consolidated entity is currently
evaluating the impact of the new
accounting standard.
The consolidated entity is currently
evaluating the impact of the new
accounting standard.
41 Annual Report 2019
AASB 2018-6 Amendments to
Australian
Accounting
Standards –
Definition of a
Business
Application date
of standard: 1
January 2020
Application date
for consolidated
entity: 1 July
2020
AASB 2018-7 Amendments to
Australian
Accounting
Standards –
Definition of
Material
Application date
of standard: 1
January 2020
Application date
for consolidated
entity: 1 July
2020
The Standard amends the definition of a
business in AASB 3 Business Combinations. The
amendments clarify the minimum requirements
for a business, remove the assessment of
whether market participants are capable of
replacing missing elements, add guidance to
help entities assess whether an acquired
process is substantive, narrow the definitions of
a business and of outputs, and introduce an
optional fair value concentration test.
This Standard amends AASB 101 Presentation
of Financial Statements and AAS 108
Accounting Policies, Changes in Accounting
Estimates and Errors to align the definition of
‘material’ across the standards and to clarify
certain aspects of the definition. The
amendments clarify that materiality will depend
on the nature or magnitude of information. An
entity will need to assess whether the
information, either individually or in
combination with other information, is material
in the context of the financial statements. A
misstatement of information is material if it
could reasonably be expected to influence
decisions made by the primary users.
The consolidated entity is currently
evaluating the impact of the new
accounting standard.
The consolidated entity is currently
evaluating the impact of the new
accounting standard.
Note 2. Significant 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.
Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount.
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is
the higher of its fair value less costs of disposal and its value in use. The value in use calculation is based on a DCF model.
The cash flows are derived from the budget for the remaining useful lives of the underlying assets and do not include
restructuring activities that the Group is not yet committed to or significant future investments that will enhance the
performance of the assets being tested. The recoverable amount is sensitive to the discount rate used for the DCF model
as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.
Fair value measurement of financial instruments
42 Annual Report 2019
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 22 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.
Note 3. Operating Segment
Management has determined that the consolidated entity has one reportable segment; the development and operation
of Renewable Energy 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%. Whilst this gearing ratio was temporarily breached, the capital raising
completed in July 2019 has reduced the gearing ratio to below 90% again. 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
Consolidated
30 June 2019
$
30 June 2018
$
4,570,770
94,353,392
4,755,578
247,542
674,374
2,212,352
(3,462,806)
103,351,202
8,446,033
8,446,033
2,429,268
97,266,305
2,412,840
127,901
340,452
1,475,197
(10,994,349)
93,057,614
15,280,212
15,280,212
43 Annual Report 2019
Capital and net debt
Gearing ratio
111,797,235
92%
108,337,826
86%
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 2019 and 2018.
Note 5. Revenue
Lease Revenue
Electricity Sales
LGC Sales
Sales of electricity and environmental products and lease income
Government Grant
Convertible Note Cost reimbursed
R&D Refund
Others
Avoided TUOS
Liquidated Damages
Fuel Tax Credit
Other income
Consolidated
30 June 2019
$
30 June 2018
$
9,942,088
196,076
680,742
10,818,905
442,500
-
1,904,227
30,885
45,471
2,360,000
16,970
4,800,053
-
3,916,985
4,356,085
8,273,070
219,432
500,000
898,074
26,680
-
-
22,387
1,666,573
Total revenue
15,618,958
9,939,643
Lease revenue relates to revenue earned from the KS1 under the Queensland government Solar150 Price Support Deed.
Liquidated damages refer to settlement payment received from UGL to address issues which arose during the
construction of KS1 that caused delays in construction completion and loss of generation revenue that Genex would
otherwise have received.
44 Annual Report 2019
Note 6. Expenses
Loss before income tax includes the following specific expenses:
Finance costs
Interest and finance charges paid/payable
Project Site Costs
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 income
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
30 June 2019
$
30 June 2018
$
4,922,282
2,970,877
3,676,186
5,126,860
198,554
391,840
2,187,634
58,778
7,833
11,624
126,377
2,982,640
191,533
352,314
2,062,235
78,713
6,606
26,650
33,128
2,751,179
Consolidated
30 June 2019 30 June 2018
$
$
225,460
225,460
249,518
249,518
Consolidated
2019
$
2018
$
(5,477,931)
(7,461,082)
(1,506,431)
(444,566)
1,950,997
(2,051,798)
195,757
1,856,041
-
-
The accumulated tax loss that arose in Australia as at 30 June 2019 is $9,576,198 (30 June 2018: $7,625,201) are available
indefinitely for offsetting against future taxable profits of the companies in which the loss arose. $39,249,668 of the
above-mentioned tax loss as of 30 June 2019 are transferred losses and can be utilised subject to the available fraction.
45 Annual Report 2019
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 tax consolidated
group in 2017.
Tax effect accounting by members of the tax consolidated group
(ii)
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.
Note 9. Cash and cash equivalents
Cash at bank
Cash and cash equivalents
30 June
2019
$
30 June
2018
$
3,462,806
10,994,349
3,462,806 10,994,349
Cash at banks earn interest at floating rates based on daily bank deposit rates.
At 30 June 2019, the Group had available $0 (30 June 2018: $422,614) of undrawn committed borrowing facilities.
Note 10. Trade and other receivables
Trade debtors
30 June
2019
$
30 June
2018
$
1,954,803
861,524
46 Annual Report 2019
Trade and other receivables
1,954,803
861,524
Trade receivables are generally due for settlement within 30 days.
As at 30 June, the ageing analysis of trade receivables is, as follows:
Total
$
due
Neither
past
nor
impaired
$
< 30 days
30-60 days
Past due but not impaired
61-90 days
91-120
days
>120 days
$
$
$
$
$
2019
2018
1,954,803
861,524
1,954,803
861,524
-
-
-
-
-
-
-
-
-
-
Note 11. Inventory
Environmental Certificates
Note 12. Prepayments
Insurance and Office Rent
Oaks Rush Rent
Blue House Deposit
Environmental Authority, ML Fees and Land Rent
Subscriptions
Consulting
Note 13. Bond Deposits and Bank Guarantee - Non-Current
Ergon Bond (Removal and Security Defects)
Construction Camp Bond
K2 Wind Project Land Bond
Electricity Bond
Ergon Connection Bond
Consolidated
30 June 2019
$
30 June 2018
$
-
-
692,417
692,417
30 June
2019
$
30 June
2018
$
142,640
-
-
34,088
12,208
10,500
85,073
25,000
20,000
39,260
-
-
199,436
169,333
30 June
2019
$
30 June
2018
$
231,818
82,500
12,000
18,270
42,000
231,818
82,500
12,000
18,270
42,000
47 Annual Report 2019
Office Bond
Bond
Sydney Office Deposit
Speedcast Bond
Site Accommodation Bond
Brisbane Office Bond
Term Deposit/Bank Guarantee for Environmental Bond
110,813
112,246
10,000
10,000
18,469
18,469
4,000
5,200
117,000
117,000
-
4,200
3,954,976
3,851,925
4,608,679 4,498,795
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: Intangible Assets
Cost
At 30 June 2018
Acquisition
At 30 June 2019
Amortisation
At 30 June 2018
Additions
At 30 June 2019
Net book value
At 30 June 2018
At 30 June 2019
Development
Approval
$
-
5,795,377
5,795,377
-
-
-
-
5,795,377
The intangible assets are the development approval of the Jemalong Solar Farm approved by the relevant government
agency. The approvals associated with the project was the main asset acquired by Genex as part of the JSF acquisition.
Note 15. Property, Plant and Equipment
Land and Site Office
Kidston Solar Project
Work in progress capital assets - Kidston Hydro Project
Pre-development assets
Leasehold Improvements
30 June 2019 30 June 2018
$
$
380,935
112,283,832
1,891,556
3,918,777
23,879
118,498,979
175,000
114,304,734
-
3,918,777
32,502
118,431,013
48 Annual Report 2019
Cost
At 30 June 2017
Additions:
Transfer out
Transfer in
At 30 June 2018
Additions:
Disposals
At 30 June 2019
or
Depreciation
impairment
At 30 June 2017
Depreciation charge for
the year
At 30 June 2018
Depreciation charge for
the year
At 30 June 2019
Net book value 30 June
2019
Net book value 30 June
2018
Land and
Site Office
Work in
Progress
Capital assets
Kidston
Solar
Project
Pre-
development
Asset
Leasehold and
fitting
Total
175,000
-
-
-
175,000
205,935
-
380,935
-
-
-
-
-
43,306,214
74,006,796
(117,313,010)
-
-
1,891,556
-
-
-
117,313,010
117,313,010
4,338,085
3,918,777
-
-
-
3,918,777
43,234
-
-
-
47,443,225
74,006,796
(117,313,010)
117,313,010
43,234 121,450,021
6,437,332
1,756
1,891,556
121,651,095
3,918,777
44,990 127,887,353
-
-
-
-
-
-
(3,008,276)
(3,008,276)
(6,358,987)
(9,367,263)
-
-
-
-
-
(1,669)
(9,062)
(1,669)
(3,017,338)
(10,731)
(10,379)
(3,019,007)
(6,369,366)
(21,110)
(9,388,373)
380,935
1,891,556
112,283,832
3,918,777
23,880 118,498,980
175,000
-
114,304,734
3,918,777
32,501 118,431,013
Capitalised borrowing costs
The carrying amount of the Kidston Solar Farm at 30 June 2019 was $112,283,832 (30 June 2018: $114,304,734). The
Kidston Solar Farm is financed by a $100.1 million senior debt facility with third party banks. Interest on the facility been
capitalised until the construction of the project was completed. The amount of interest costs capitalised during the year
ended 30 June 2019 was nil (30 June 2018: $1.4m).
Properties associated with the Kidston Solar Farm with a carrying amount of $112,283,832 (2018: $114,304,734) are
subject to a first charge security in the support of the Group’s Senior Bank Loan.
Note 16. Trade and other payables
Current
Trade creditors and accruals
PAYG withholdings
30 June 2019 30 June 2018
$
$
2,250,602
-
1,415,177
60,020
2,250,602
1,475,197
49 Annual Report 2019
Note 17. Interest-bearing loans and borrowings
Senior Bank Debt
30 June
2019
$
30 June
2018
$
4,570,770
4,570,770
2,429,268
2,429,268
The Senior Bank Debt represents the portion of the $98.9m Senior Bank Loan which must be repaid within 12 months.
Note 18. Government Grant
ARENA Grant (Current)
ARENA Grant (Non-Current)
30 June
2019
$
30 June
2018
$
442,500
7,745,568
8,188,068
442,500
8,188,068
8,630,568
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 19. Cash flow hedge
Interest rate risk
Interest rate swaps are designated as hedging instruments in cash flow hedges of forecast drawdown under the senior
bank loan agreement. These forecast transactions are highly probable.
The interest rate swaps balances vary with the level of expected drawn down and changes in the floating interest rates.
Interest rate swaps designated as hedging instruments
Fair value
30 June
2019
$
30 June
2018
$
Liabilities
Liabilities
5,358,801
1,666,963
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. The notional amount is
$52m (2018: $55m) 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 as a $5.36m out-of-money
position as at 30 June 2019.
50 Annual Report 2019
Note 20. ARENA Convertible Note
Long term interest accrued
Convertible note
30 June
2019
$
30 June
2018
$
340,452
657,034
4,755,578
2,412,840
5,412,612 2,753,292
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 2019, $3,996,211 has been drawn down.
On 16 November 2017, Genex entered into a further convertible note funding agreement with ARENA for an amount of
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 2019, $2,991,894 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 21 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;
$0.20 per share (December 2015 Agreement); and
o
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;
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.
51 Annual Report 2019
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
19 November 2023
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
November 2017 Agreement
Maturity dates of the convertible notes are as follows:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Maturity date
20 April 2023
24 May 2023
14 June 2023
19 November 2023
19 November 2023
19 November 2023
19 November 2023
20 June 2024
20 June 2024
20 June 2024
20 June 2024
20 June 2024
20 June 2024
20 June 2024
20 June 2024
$
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
471,312
3,996,211
Amount
26,503
139,880
179,673
169,033
202,583
214,945
457,963
185,466
155,150
139,659
253,466
224,595
288,306
264,060
90,612
2,991,894
52 Annual Report 2019
Note 21: 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 2019
$
30 June 2018
$
1,954,803
4,608,679
6,563,482
1,954,803
4,608,679
861,524
4,498,796
5,360,320
861,524
4,498,796
Financial liabilities: interest-bearing loans and borrowings
Weighted
average
interest rate
%
Maturity
$
30 June 2019
$
30 June 2018
$
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing – fixed rate
$100,118,187 Senior Bank Loan
Total non-derivatives
N/A
N/A
2,250,602
1,475,197
4.815%
29 February 2023
98,924,162
99,695,573
101,174,764
101,170,770
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
Interest rate swaps
Other financial liabilities at amortised cost, other than interest-
bearing loans and borrowings
Trade and other payables
Total financial liabilities
30 June 2019
$
30 June 2018
$
1,625,719
2,080,470
5,358,801
1,666,963
2,250,602
1,475,197
9,235,122
5,222,630
53 Annual Report 2019
Total current
Total non-current
2,250,602
6,984,520
1,475,197
3,747,433
Derivatives designated as hedging instruments 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 it
contractual obligations. The consolidated entity’s trade and other receivables consist of an amount receivable from the
Australian tax authority. The consolidated entity’s cash and cash equivalents consist of cash in bank accounts lodged
with reputable banks in Australia. Accordingly, the consolidated entity views credit risk as minimal.
The maximum exposure to credit risk is as follows:
Cash and cash equivalents
Trade and other receivables
Bank guarantee/bonds
30 June 2019
$
30 June 2018
$
3,462,806
1,954,803
4,608,679
10,026,288
10,994,349
861,524
4,498,796
16,354,669
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 22 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.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted
payments:
54 Annual Report 2019
Year ended 30 June
2019
On demand
Senior Bank Debt
Convertible Notes
Interest
Interest Rate SWAP
Trade and other
payables
Less than
3 months
$
1,235,243
-
1,184,445
-
2,250,602
3 to 12
months
$
3,335,527
-
3,451,428
-
-
1 to 5 years
>5 years
Total
$
$
$
94,353,392
4,755,578
17,633,379
-
-
-
-
26,519,962
5,358,801
-
98,924,162
4,755,578
48,789,214
5,358,801
2,250,602
4,670,290
6,786,955
116,742,349 31,878,763 160,078,357
Year ended 30 June
2018
On demand
Less than 3
months
$
3 to 12
months
$
1 to 5 years
>5 years
Total
$
$
$
Senior Bank Debt
Convertible Notes
Interest
Interest Rate SWAP
Trade and other payables
-
-
385,580
-
1,475,197
2,429,268
-
3,535,796
-
-
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
Note 22. 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 2019:
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
Embedded
derivatives
30 June 2019
30 June 2019
5,358,801
1,625,719
-
-
5,358,801
1,625,719
-
-
Fair value measurement hierarchy for liabilities as at 30 June 2018:
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 2018
30 June 2018
30 June 2018
exchange
1,666,963
-
2,080,470
-
-
-
1,666,963
-
2,080,470
-
-
-
55 Annual Report 2019
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 2019, the marked-to-market value of derivative positions is net of a debit 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 23. Interest-bearing loans and borrowings (non-current)
Senior bank debt
30 June
2019
$
30 June
2018
$
94,353,392 97,266,305
94,353,392 97,266,305
Genex Power has a senior bank facility of $98.9 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 2019, the facility is fully drawn
Key terms of the senior bank debt:
•
•
Interest rate – base rate (BBSY) + 1.75%
Tenor – Construction plus 5 years
Note 24. Rehabilitation and restoration provisions
Make good provision on office lease
Rehabilitation and provisions
30 June
2019
$
30 June
2018
$
15,889
3,804,311
3,820,200
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.
56 Annual Report 2019
Note 25. Equity
30 June
2019
Shares
30 June 2018
Shares
30 June
2019
$
30 June
2018
$
Ordinary shares issued and fully paid
312,431,514
303,931,514
41,899,049 39,955,299
Movements in ordinary share capital
Details
Balance
Date
No of shares
1 July 2017
287,807,764
Issue
price
$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
-
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
30 June 2018
303,931,514
2 February 2019
13 February 2019
28 June 2019
8,500,000
$0.25
-
-
-
-
8,500,000
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
Balance
Equity Raising
Equity Raising Fee
Equity Raising Fee
Movement for the year
$
35,493,073
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
39,955,299
2,125,000
(106,250)
(75,000)
1,943,750
41,899,049
Balance
30 June 2019
312,431,514
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
57 Annual Report 2019
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 26 for further details.
At 1 July 2017
Share-based payments expense during the year
Loyalty Options Converted
Loyalty Options Expired
As 30 June 2018
Share-based payments expense during the year
As 30 June 2019
Nature and purpose of reserves
Share-based
payments
$
2,730,184
352,313
(1,237,476)
(58,393)
1,786,628
391,840
2,178,468
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.
Options at the start of the period (01/07/2018)
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
(30/06/2019)
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
36,250,000
-
-
-
(8,500,000)
27,750,000
17,966,666
46,800,000
6,350,000
-
(16,123,750)
(776,250)
36,250,000
58 Annual Report 2019
Vested and exercisable at the end of the year
(30/06/2018)
24,966,667
These share options are the only outstanding share options of the consolidated entity. The terms attached to the options
are outlined below:
Chief Operating Officer Options
Number
Value per option
Subscription price per option
Each option is convertible into
Exercise price per option
Vesting condition
Issue date
Expiry date
Option exercise period
Other conditions
Executive General Manager Options
Number
Value per option
Subscription price per option
Each option is convertible into
Exercise price per option
Vesting condition
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.
•
•
If a milestone is not achieved, then the options for
that milestone will lapse unvested. As at 30 June
2019, 1,666,667 options have been vested.
6 August 2015
6 August 2020
At any time from date of vesting
None
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
If a milestone is not achieved, then the options for that
milestone will lapse unvested. As at 30 June 2019, 800,000
options have been vested.
2 September 2016
2 September 2021
At any time from date of vesting
59 Annual Report 2019
Other conditions
None
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
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
Note 26. Share-based payments
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
1,500,000
$0.1002
$Nil
1 ordinary share in the parent entity
$0.34
The options vested on 1 January 2019.
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 3 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
2019, none of the options have vested.
23 February 2018
13 February 2023
At any time from date of vesting
None
The expense recognised for employee services received during the year is shown in the following table:
60 Annual Report 2019
Expense arising from equity-settled share-based payment transactions
Total expense arising from share-based payment transactions
30 June
2019
$
391,840
391,840
30 June 2018
$
352,314
352,314
There were no cancellations or modifications to the share-based payment awards in FY19 or FY18.
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
Expired during the year
Outstanding at 30 June
Exercisable at 30 June
2019
Number
36,250,000
-
(8,500,000)
27,750,000
17,966,666
2019
WAEP
0.31
-
0.25
0.33
0.33
2018 Number
29,900,000
6,350,000
-
36,250,000
24,966,667
2018
WAEP
0.29
0.39
-
0.31
0.30
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), $23,047 has been recognised as expenses in FY19 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), $14,193 has been recognised as expenses in
FY19 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), $51,113 has been recognised as expenses in FY19 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, $230,526 has been recognised as expenses in FY19 for this grant.
Note 27. 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
Share-based payments
30 June 2019 30 June 2018
$
$
1,948,240
187,551
160,821
2,296,612
1,792,154
165,935
48,691
2,006,780
61 Annual Report 2019
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 28. Auditors’ remuneration
During the year the following fees were paid for services provided by Ernst & Young, the auditor of Genex Power Limited
Audit and Assurance Services
Audit of the financial statements
Other Assurance Services
Total assurance services
Non-audit services
Advisory service on related energy market studies
Taxation services
Total non-audit services
Note 29. Commitments and contingencies
30 June 2019
$
30 June 2018
$
189,000
71,000
260,000
61,200
47,500
108,700
368,700
135,000
-
135,000
58,000
28,400
86,400
221,400
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 2019 are, as follows:
30 June
2019
$
30 June
2018
$
203,236
759,359
-
962,595
185,021
176,444
-
361,465
Within one year
After one year but not more than five years
More than five years
Capital commitments
At 30 June 2019, the consolidated entity had no capital commitments
Note 30. Related party transactions
Controlled entities
A list of controlled entities is provided in Note 32 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
62 Annual Report 2019
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
27 above.
Note 31. 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
2019
$
30 June 2018
$
23,237,476
4,666,372
23,237,476
4,666,372
30 June
2019
$
30 June 2018
$
1,362,109
2,529,160
56,832,309
37,401,326
1,969,961
1,215,952
48,965,307
9,869,915
41,899,049
38,717,823
2,178,468
(36,210,515)
1,786,628
(12,973,039)
7,867,002
27,531,412
63 Annual Report 2019
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2019 and 30 June 2018.
Note 32. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned
subsidiaries in accordance with the accounting policy described in Note 1:
Parent
Name
Principal place of business /
Country of incorporation
Genex Power Limited
Australia
Subsidiaries
Name
Principal place of business /
Country of incorporation
Genex (Kidston) Pty Limited
Kidston Gold Mines Limited
*Genex (Solar) Pty Limited
*Genex Solar Holding Co Pty Limited
*Kidston Solar Holding Co Pty Limited
*Kidston Solar Co Pty Limited
*Kidston Solar Finance Co Pty Limited
Jemalong PV Holdings Pty Limited
Jemalong PV Asset Pty Ltd
Jemalong Networks Pty Limited
Genex (Kidston Hydro) Pty Limited
Kidston Hydro Hold Co Pty Limited
Kidston Hydro Project Co Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
30 June
2019
%
30 June
2018
%
100.00%
100.00%
99.99%
99.99%
99.99%
99.99%
99.99%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
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 33. 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 (gain) / loss on financial instruments at fair value through profit or loss
Finance income
Finance costs
(5,477,931)
(7,461,082)
-
6,369,366
391,841
(313,216)
(1,229,163)
(225,460)
4,922,282
(500,000)
3,017,338
352,313
33,128
130,721
(249,518)
2,970,877
64 Annual Report 2019
Working capital adjustments:
Decrease/(Increase) in trade and other receivables inventories and prepayments
Increase/(Decrease) in trade and other payables
Interest received
Interest paid
Note 34. Events after the reporting year
(430,966)
775,404
4,782,157
(1,306,012)
791,757
(2,220,478)
225,460
(4,486,058)
521,559
249,518
(4,131,808)
(6,102,768)
In July 2019 Genex undertook a capital raising via a share placement and Share Purchase Plan (SPP), the total amount
raised was $21.458 million before costs. The new shares under the placement went to existing and new sophisticated
and institutional shareholders and the shares under the SPP were issued to existing shareholders only.
Apart of the matters outlined above, there have been no other material events or circumstances which have arisen since
30 June 2019 that have significantly affected, or may significantly affect the consolidated entity's operations, the results
of those operations, or the consolidated entity's state of affairs in future financial years.
Note 35. Earnings per share
30 June
2019
30 June
2018
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
$5,477,931
307,121,925
$7,461,082
293,927,385
-
-
307,121,925
293,927,385
Basic earnings per share
Diluted earnings per share
Cents
(1.78)
(1.78)
Cents
(2.54)
(2.54)
* The weighted average number of shares takes into account the weighted average effect of right issue during the prior
year.
$4,755,578 ARENA convertible notes and 17,966,666 share options have not been taken into account of the diluted
earnings per share calculation since they’re anti-dilutive.
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 2019
6. DIRECTORS’ 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 2019 are in
accordance with the Corporations Act 2001, including:
i.
ii.
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2019 and of its
performance for the year ended on that date; and
complying with Accounting Standards and the Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in
Note 1; and
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
2. This declaration has been made after receiving the declarations required to be made to the directors by the managing
director and the finance director in accordance with section 295A of the Corporations Act 2001 for the financial year
ended 30 June 2019.
On behalf of the board
Dr Ralph Craven
Teresa Dyson
Non-Executive Chairman
Non-Executive Director
29 August 2019
29 August 2019
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent Auditor's Report to the Members of Genex Power Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Genex Power Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2019, the consolidated statement of profit and 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 consolidated 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 2019
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
66
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.
Carrying Value of non-current assets
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 the construction costs
capitalised to the KS1 assets and agreed these
to the supporting supplier invoices, cash
payments and assessed whether the cost was
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 2019 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
67
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
68
•
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.
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 17 of the directors' report for the year
ended 30 June 2019.
In our opinion, the Remuneration Report of Genex Power Limited for the year ended 30 June 2019,
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
29 August 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
69
70 Annual Report 2019
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 fifth time the Company has reported against the 3rd Edition
of the Recommendations. Commencing from next year, the Company expects that it will report against the 4th Edition
of the Recommendations even though they are not due to come into effect until Genex’s financial year ending 31 June
2021. This CGS was approved by a resolution of the Board of the Company dated 22 August 2019 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
the specific
a Board Charter, which discloses
responsibilities and functions of the Board and provides
that the Board shall delegate responsibility for the day-
to-day operations and administration of the Company
to the Managing Director (MD) or equivalent which is
currently the Chief Executive Officer (CEO), Mr James
Harding. 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
71 Annual Report 2019
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 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
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
arrangements will be based on merit and reinforce the
run efficiently and effectively and
is outlined
1.3
1.4
1.5
A listed entity should have a written agreement with
each director and senior executive setting out the
terms of their appointment.
The company secretary of a listed entity should be
accountable directly to the board, through the chair,
on all matters to do with the proper functioning of
the board.
A listed entity should:
(a) have a diversity policy which
includes
requirements for the board or a relevant
committee of the board to set measurable
objectives for achieving gender diversity and to
assess annually both the objectives and the
entity’s progress in achieving them;
(b) disclose that policy or a summary of it; and
(c) disclose as at the end of each reporting period
the measurable objectives for achieving gender
diversity set by the board or a relevant
72 Annual Report 2019
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
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
adequacy
for current circumstances and make
recommendations to the Board for amendment where
required.
The Company’s Corporate Governance
Statement each year will contain an update on the
Company’s
ASX’s
recommendations and the Company’s Diversity Policy
which is contained in (i) below.
compliance
with
the
(i)
The Company currently has 13 employees
including 2 women in Senior Executive
positions with plans to hire another female
senior executive shortly. The Company also
has 1 female director. This will continue to
be reviewed in accordance with each
and
the Board’s
review of
requirements
the
in accordance with
Company’s Diversity Policy.
skills
(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
73 Annual Report 2019
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
in
undertaken
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
balance of
skills, knowledge, experience,
independence and diversity to enable it to
discharge
responsibilities
effectively.
its duties and
commission an external review of the Board, and its
composition.
(b) An informal review of the Board was carried out in
October 2018 with the last formal review of the Board
prior to that occurring 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
individual performance against
which assesses
predetermined objectives.
(b) An evaluation of the performance of the Chief
Operations Officer and Executive General Manager will
take place at the same time as a formal Board
evaluation scheduled to occur in late 2019 following
financial close of the Company’s Jemalong Solar Project
and K2H Project.
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 MD/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;
the Company’s industry;
•
•
•
•
• Managing Director/CEO-level experience; and
74 Annual Report 2019
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.
•
relevant technical expertise.
incumbents
The Board shall review the range of expertise of its
members on a regular basis and ensure that it has
operational and technical expertise relevant to the
operation of the Company.
The Board will determine the procedure for the
selection and appointment of new Directors and the re-
in accordance with the
election of
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;
the Company’s industry;
•
•
•
•
• Managing Director-level experience; and
•
relevant technical expertise.
2.3
A listed entity should disclose:
(a) the names of the directors considered by the
board to be independent directors;
(b) if a director has an interest, position, association
or relationship of the type described in Box 2.3
but the board is of the opinion that it does not
compromise the independence of the director,
the nature of the interest, position, association
or relationship in question and an explanation of
why the board is of that opinion; and
(c) the length of service of each director.
2.4
A majority of the board of a listed entity should be
independent directors.
The mix of skills of the current Board is set out on the
Company’s website.
(a) Currently only 2 of the 6 directors are considered to
be independent given that Michael Addison was
formerly the Managing Director until 7 May 2018,
Simon Kidston is an Executive Director, Ben Guo is the
Finance Director (which is an executive role) and
Yongqing Yu is the representative of the Company’s
second largest shareholder. Mr Addison and Mr Kidston
are also substantial shareholders in the Company. The
independent directors are Dr Ralph Craven, the
Company’s Non-Executive Chairman, 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 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
75 Annual Report 2019
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
(5) in relation to each reporting period, the
number of
the committee met
throughout the period and the individual
times
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 4 of the 6 directors.
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;
Securities Trading; and
•
•
•
•
•
•
•
• Diversity.
(b) A copy of each policy including the codes of conduct
relating to Directors, Senior Executives and employees
is available on the Company’s website.
Safeguard Integrity in Corporate Reporting
(a) The Company has established an Audit and Risk
Management Committee which:
(1) has 3 members being Ms Teresa Dyson, 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 and Dr Ralph
Craven are independent.
(2) is chaired by an independent director being Ms
Teresa Dyson who is not the chair 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.
76 Annual Report 2019
attendances of the members at those
meetings; OR
(b) if it does not have an audit committee, disclose
that fact and the processes it employs that
independently verify and safeguard the integrity
of
the
processes for the appointment and removal of
the external auditor and the rotation of the audit
engagement partner.
its corporate
reporting,
including
4.2
4.3
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.
(4) The relevant qualifications and experience of the
Committee members is available on the Company’s
website.
(5) The Committee met 3 times in the financial year with
all members present at 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
77 Annual Report 2019
6.4
A listed entity should give security holders the
option to receive communications from, and send
communications to, the entity and its security
registry electronically.
7.1
Principle 7 Recommendations:
The board of a listed entity should:
(a) have a committee or committees to oversee risk,
each of which:
(1) has at least three members, a majority of
whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the
the committee met
number of
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
to
for
Board and the Auditor and/or to submit questions in
writing in advance.
Shareholders may elect
receive electronic
notifications when the Annual Report is available on the
Company’s website and may electronically lodge proxy
instructions
items to be considered at the
Company’s AGM and any relevant EGM.
Recognise and Manage Risk
(a) The Board in conjunction with the Audit and Risk
Management Committee determines the Company’s
“risk profile” and is responsible for overseeing and
approving risk management strategy and policies,
internal compliance and internal control.
(1) has 3 members being Ms Teresa Dyson, 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 and Dr Ralph Craven
are independent.
(2) is chaired by an independent director being Ms
Teresa Dyson who is not the Chair 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), 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
Board meeting subsequent
to each Committee
meeting.
(b) A formal review of the Company’s risk management
framework occurs at every Board meeting with the
Board reviewing and prioritising the top risks faced by
78 Annual Report 2019
7.3
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.
7.4
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
that such
appropriate and not excessive.
remuneration
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.
8.2
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
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 full time financial controller employed 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
the summary of non-exclusive risks
emphasises
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, Ms Teresa
Dyson and Mr Simon Kidston. A majority of the
committee also being Dr Ralph Craven and Ms Teresa
Dyson 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,
Ms Teresa Dyson 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.
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
79 Annual Report 2019
8.3
listed entity which has an equity-based
A
remuneration scheme should:
(a) have a policy on whether participants are
permitted to enter into transactions (whether
through the use of derivatives or otherwise)
which limit the economic risk of participating in
the scheme; and
(b) disclose that policy or a summary of it.
executive directors (without the participation of the
affected director).
(a) A summary of the Company’s policy on prohibiting
transactions in associated products which operate to
limit the risk of participating in unvested entitlements
under any equity based remuneration scheme is
contained within the Remuneration Committee Charter.
(b) Paragraph 6.2 (3) of the Company’s Remuneration
Committee Charter states:
“…The Committee must ensure that, where applicable,
any payments of equity-based remuneration are made in
accordance with the Company’s constitution and any
thresholds approved by the Company’s shareholders.
Committee members must be aware at all times of the
limitations of equity-based remuneration. The terms of
such schemes should clearly prohibit entering into
transactions or arrangements which limit the economic
risk of participating in unvested entitlements under these
schemes. The exercise of any entitlements under these
schemes should be timed to coincide with any trading
windows under
trading
policy…”
the Company’s securities
80 Annual Report 2019
9. ADDITIONAL SECURITIES EXCHANGE INFORMATION
The following information is provided pursuant to Listing Rule 4.10 and is current as at 8 August, 2019 (unless otherwise
stated):
Voting Rights
Shareholder voting rights are specified in clause 10.14 of the Company's Constitution lodged with the ASX on 6 July
2015. Option holders do not have the right to vote at a general meeting of shareholders until such time as the options
have been converted into ordinary shares in the Company.
Total number of Shareholders
Total number of Optionholders
3,166
10
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 - Simon Kidston
Asia Ecoenergy Development Limited (formerly Zhefu)
Danawa (Inv) Pty Ltd -
Michael Addison
20,944,431
35,678,750
29.07.19
29.07.19
28,500,000
29.07.19
There are 371 shareholders with an unmarketable parcel of shares being a holding of less than 2,174 shares each for a
combined total of 519,937 shares. This is based on a closing price of $0.23 per share as at 8 August, 2019 and represents
0.12939% 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
93
790
416
1,417
450
3,166
7,199
2,379,900
3,412,729
59,701,648
336,339,879
401,841,355
0.002
0.592
0.849
14.857
83.700
100.00
81 Annual Report 2019
Top 20 Shareholders
CITICORP NOMINEES PTY LIMITED
ASIA ECOENERGY DEVELOPMENT LIMITED
DANAWA (INV) PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
KFT CAPITAL PTY LIMITED
DOWNING DOMAIN INVESTMENTS PTY LTD
ZERO NOMINEES PTY LTD
BRISPOT NOMINEES PTY LTD
AUSTRALIAN GO FUTURES PTY LTD
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MAJI MAZURI PTY LTD & MAWINGO PTY LTD
UBS NOMINEES PTY LTD
CS THIRD NOMINEES PTY LIMITED
KFS PTY LIMITED
LONGMUIR RESOURCES PTY LTD
PANCHO (NSW) PTY LIMITED
MS YINGHUI LI
CS FOURTH NOMINEES PTY LIMITED
MOORE PARK CAPITAL PTY LIMITED
Top 20 Shareholders
Total Issued Capital
Total Units
Percentage %
41,511,377
10.330%
35,678,750
28,500,000
22,078,315
17,700,000
14,852,377
9,405,000
7,461,667
7,000,000
5,445,233
4,420,468
4,306,110
3,415,054
3,352,876
3,224,431
2,517,500
2,400,000
2,350,348
2,161,366
2,000,000
219,780,872
401,841,355
8.879%
7.092%
5.494%
4.405%
3.696%
2.340%
1.857%
1.742%
1.355%
1.100%
1.072%
0.850%
0.834%
0.802%
0.626%
0.597%
0.585%
0.538%
0.498%
54.693
100.00
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
Holders
Total Units
Percentage %
0
0
0
0
0
0
0
0
0.00
0.00
0.00
0.00
82 Annual Report 2019
100,001 and over
Total
1
1
5,000,000
5,000,000
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
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
83 Annual Report 2019
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
84 Annual Report 2019
10. CORPORATE DIRECTORY
DIRECTORS
Dr Ralph Craven
Mr Simon Kidston
Mr Ben Guo
Mr Michael Addison
Ms Teresa Dyson
Mr Yongqing Yu
Non-Executive Chairman
Executive Director
Finance 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
2019 Annual Report
ABN 18 152 198 854
www.genexpower.com.au