2020
Annual Report
2 Annual Report 2020
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 large scale energy storage creating
“Renewable Energy On Tap”. The Company is also currently developing the 50MW Jemalong Solar Project
(JSP), located near Forbes in NSW and a 50MW/75MWh large scale battery in Queensland.
3 Annual Report 2019/20
CONTENTS
1. Chairman’s Letter
2. Chief Executive Officer’s Review of Operations
3. Directors Report and Remuneration Report
4. Auditors Independence Declaration
5. Financial Statements
6. Directors’ Declaration
7. Independent Auditor’s Report
8. Corporate Governance Statement
9. Additional Securities Exchange Information
10. Corporate Directory
Jemalong Solar Project, Forbes NSW
04
04
06
10
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22
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76
90
94
4 Annual Report 2020
1. CHAIRMAN’S LETTER
Dear Shareholder,
On behalf of the Board of Directors of Genex Power Limited it is with great pleasure
that I present to you the Annual Report for the 2020 Financial Year, a year in which
Genex continued to grow and execute on our strategy to build a diversified
renewable energy and storage company.
2020 – A year of delivery and further development
As with previous years, FY20 was a busy and successful year.
The Company made significant progress on advancing our flagship Kidston Pumped
Storage Hydro Project. Debt financing for the project was secured via a conditional
approval for A$610m of concessional debt from the Northern Australia Infrastructure
Facility. A long term energy offtake agreement was finalised in March this year via a
signed Binding Energy Storage Services Agreement with EnergyAustralia Pty Ltd. We
continue our extensive engagement with all project stakeholders to finalise
arrangements for financing and the project is currently in a position to reach
financial close in Q4 2020.
As part of Genex’s growth strategy, we announced the successful acquisition of the 50MW Jemalong Solar Project. The
project, located near Forbes, is well located in the NSW grid network. Construction activities at Jemalong are progressing
on budget and on time and the project is on track to be operational in Q4 of this calendar year. The Jemalong Solar
Project is an exciting project for Genex with the potential to deliver a step change in revenue.
The Company’s first completed project, the 50MW Kidston Solar Project has performed well across FY20, generating
clean renewable energy into the National Electricity Market. In December 2019, Genex successfully refinanced the
existing debt facility associated with the 50 MW Kidston Solar Project via a funding package which included the largest
Certified Green Loan by an Australian renewable energy group, highlighting our environmental credentials.
Recently Genex announced it is undertaking initial investigations for a Battery Energy Storage System in Queensland.
This project draws on our extensive understanding of the Queensland network and operating characteristics. Storing
energy generated at low spot prices during daylight hours for release at higher priced periods using a large battery
storage system will diversify Genex’s footprint as a focussed renewable energy company. Our development and
construction timetable for this project anticipates first revenues in Q4 of CY21.
Ongoing support from our key Stakeholders
I would like to acknowledge the ongoing strong support that Genex has received from a number of Federal and State
Government entities. The Australian Renewable Energy Agency continues to support the funding of the development
costs associated with our Kidston Pumped Storage Hydro Project. It is also very pleasing to acknowledge the significant
support from the Northern Australia Infrastructure Facility as a result of their investment decision to offer long term
concessional finance to this project which, when commissioned, will not only deliver very flexible energy storage but
also provide much needed system strengthening to the entire North Queensland power network. I would also like to
recognise the Queensland State Government for their long term commitment to our 50MW Kidston Solar Project in the
form of a 20-year Revenue Support Deed and for designating the Kidston Clean Energy Hub as ‘Critical Infrastructure’
to the State.
5 Annual Report 2020
Our People
On behalf of the Board I would like to thank all our employees, and contractor workforces, for their tremendous efforts
during what has been an incredibly challenging year. It is a testament to the team and the protocols that the Company
has put in place that we were able to remain fully operational during the COVID-19 pandemic.
Outlook for FY21
Genex’s immediate focus remains reaching financial close for our Kidston Pumped Storage Hydro project and the
completion of construction of our Jemalong Solar Project this Calendar Year. The delivery of these projects will position
Genex as a leader in the Australian renewables and energy storage market.
On behalf of the Board, I would like to thank all shareholders for their support over the past year and extend a warm
welcome to all new shareholders that have joined us on our journey.
Yours faithfully,
Dr Ralph Craven
Independent Non-Executive Chairman
6 Annual Report 2020
2. CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS
Company Overview:
I am pleased to present this Review of Operations during my second year in the role
as Chief Executive Officer.
Throughout the 2020 Financial Year (FY20), the Genex executive and management
team has continued to deliver on the Company’s strategy of building a diversified
renewable energy and storage company.
With an operating solar fam in Queensland, a solar project under construction in New
South Wales, development of Australia’s first pumped storage hydro project in over
30 years in Queensland, and an emerging large scale battery project, the Company is
well on track to fulfill that strategy. By 2024, the Company’s renewable energy
portfolio is targeted to be in a position to offset over 1.9 million tonnes of CO2
emissions, and produce enough renewable energy to power over 356,000 homes.
The key achievements delivered by Genex over the year are detailed below, and I
would like to extend my heartfelt thanks to all of our staff for their efforts in what was a very busy, challenging but
ultimately successful year for our Company.
Date
Key Announcement
11 July
26 July
04 September
13 November
22 November
18 December
30 March
12 March
NAIF Approves $610M Concessional Funding for Kidston Hydro
Completion of Share Purchase Plan
Qld Govt Funding Package for Kidston Hydro Transmission Line
NAIF Board Approves Extension of Kidston Hydro Funding Offer
Genex Executes New MOU with J-POWER for Kidston Hydro
Financial Close for Jemalong and Kidston Solar 1 Refinancing
Genex Signs Binding Energy Storage Services Agreement with Energy Australia for
Kidston Hydro Project
Stage 1 - 50MW Kidston Solar Project (KS1):
KS1 has performed well across the year, continuing to generate clean renewable energy into the grid. While the operation
of the plant was affected by a software issue in October 2019, causing a temporary plant outage (refer to ASX
Announcement dated 30 January 2020), and a serial defect was identified in the inverters which has since been rectified,
the project generated in excess of A$10m in revenue for FY20. In addition, we were successful in refinancing the KS1
debt facility with JSP to take advantage of the lower interest rate environment at the time.
Stage 2 - 250MW Kidston Pumped Storage Hydro Project (K2-Hydro):
During the year, despite an early setback Genex made significant progress in moving the project towards financial close.
In November 2019, the Company received notice from EnergyAustralia that they would not be able to reach a positive
investment decision on the basis of the long term energy agreement structure outlined in the original term sheet (refer
to ASX Announcement dated 1 November 2019). Following the November announcement, Genex continued to engage
with EnergyAustralia to restructure the energy offtake arrangements. That constructive ongoing dialogue resulted in the
Company announcing the signing of a binding Energy Storage Services Agreement (ESSA) with EnergyAustralia for K2-
Hydro on 30 March 2020 (refer to ASX Announcement).
7 Annual Report 2020
The ESSA covers an overall period of up to 30 years, with an initial term of 10 years and two options to extend for a
further 10 years each. The ESSA, will see Genex provide EnergyAustralia with full operational dispatch rights for the
project in exchange for a fixed annual rental payment, escalating over the agreement term. Following expiry of the full
30-year term (and therefore conditional on the exercise of the extension options), EnergyAustralia will have the right to
acquire Genex’s shareholding in the Project for a fixed cash payment.
Following the ESSA announcement, the Company has been extensively engaged with the construction contractors to
update terms and pricing for the Project. That exercise is now complete, with the finalisation of contractual terms and
pricing with the following core contractors:
•
Engineering Procurement and Construction (EPC) contractor – Joint Venture of McConnell Dowell
Constructors (Aust) Pty Ltd and John Holland Pty Ltd;
Electromechanical Equipment nominated subcontractor to EPC – ANDRITZ Hydro GmbH;
•
• Connection Assets Infrastructure contractor – Beon Energy Solutions Pty Ltd;
• Construction Camp Operator – ISS Facility Services Australia Ltd; and
• Owner’s Engineer – Hydro-electric Corporation (Hydro Tasmania) (trading as Entura).
In addition, Genex has concluded contract terms with ANDRITZ Hydro GmbH to act as the Operations and Maintenance
provider to the Project under a long-term O&M Contract.
The Company continued to progress the debt funding package for K2-Hydro. Debt financing for the project was secured
via a conditional approval for A$610m of concessional debt from the Northern Australia Infrastructure Facility. The Offer
of Funding has been extended to 30 September 2020 (refer to ASX Announcement dated 1 July 2020), to match
anticipated financial close for the project. The NAIF concessional debt facility will be used to fund the debt required for
the project.
In June 2020, the Company received a revised Offer to Connect from Powerlink (refer to ASX Announcement dated 1 July
2020). The Offer to Connect includes the construction of the Transmission Line (to connect K2-Hydro to the Queensland
grid network at Mount Fox) and contains updated pricing with validity to 30 September 2020. In addition, Genex has
secured the extension of its Generator Performance Standards approval by AEMO (refer to ASX Announcement dated 14
June 2019) to 30 September 2020, to align with the validity of the Offer to Connect.
To further support the development of K2-Hydro, Genex signed a Share Subscription Agreement (SSA) with Electric
Power Development Co Ltd trading as J-POWER post the end of the financial year (refer to ASX Announcement dated 3
August 2020). J-POWER is a leading Japanese public utility company listed on the Tokyo Stock Exchange with a market
capitalisation of approximately A$3.8 billion. J-POWER has a significant portfolio of hydroelectric (including pumped
hydro), coal-fired power and wind power generation assets and will bring considerable technical expertise to the project.
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 18 September 2020. As a further term of the SSA, J-POWER has agreed to provide
engineering support and other professional services under a Technical Services Agreement to Genex in relation to the
development and operations phase of K2-Hydro.
Genex has in the meantime been actively engaged with a selection of potential strategic investors to take up to a 50%
interest in K2-Hydro project alongside Genex. The process is well progressed, and we hope to provide an update in
relation to the selection of a preferred equity partner shortly.
Genex continues its discussions with the Queensland Government for the co-funding of the Transmission Line (refer to
ASX Announcement dated 4 September 2019) which remains the main condition precedent to achieving financing close.
8 Annual Report 2020
50MW Jemalong Solar Project (JSP):
During the course of the 2019 financial year, Genex announced that it had successfully secured its first expansion project
outside Queensland with the acquisition of the JSP (refer to ASX Announcement dated 12 March 2019). JSP, which is
located near Forbes in western New South Wales, is well located in relation to the electricity network. In December 2019,
the Company executed an EPC and O&M contract with Beon Energy Solutions and reached financial close of the project
(refer to ASX Announcement dated 18 December 2019).
To date, construction activities remain largely unaffected by the COVID-19 pandemic and construction is now well
advanced with approximately 75% of the tasks from the construction schedule ongoing or complete. When operational,
JSP will produce up to 129,450MWh per annum, providing enough electricity to power more than 23,000 Australian
homes and offsetting approximately 106,500t of CO2. JSP is expected to be operational in late Q4 CY20, with energy
being sold directly into the NEM, allowing Genex to collect the spot-price for electricity and additional revenue from the
sale of Large-scale Generation Certificates. The project has the potential to contract revenues in due course, and
discussions with potential counterparties are progressing.
The JSP project financing was undertaken in conjunction with a refinancing of our KS1 asset. The total debt funding
package of A$192m includes a senior loan facility and a structurally subordinated loan facility. The senior facility was
independently verified as the first Green Loan globally to be Certified under the latest internationally recognised Climate
Bonds Standard V3.0. The 100MW portfolio financing includes the largest Certified Green Loan by an Australian
renewable energy group.
50MW/75MWh Como Battery Project (CBP):
Post the end of the financial year, we announced our intention to explore the development of the Como Battery Project
(CBP). Genex has developed a deep understanding of the business case for energy storage in Queensland, through our
activities at KS1 and K2-Hydro. As such, we been working closely with Powerlink Queensland, prospective offtakers and
system suppliers in relation to a large scale battery energy storage system project to be located near Rockhampton in
Central Queensland.
The CBP is entirely consistent with Genex’s strategy of building a diversified renewable energy and storage company.
Kidston Stage 2 – 165MW Solar Farm (K2-Solar)
The K2-Solar project will complement the K2-Hydro project, as the 165MW the solar farm is sized to be able to feed one
of the two pumps of K2-Hydro with clean energy and very low electrical losses. The project is well progressed, with land
secured and development and environmental approvals largely completed. Focus will return to the development of K2-
Solar once we have reached financial completion of K2-Hydro.
Kidston Stage 3 - 150MW Wind Project (K3-Wind)
The K3-Wind project is in advanced feasibility stage and represents an important part of Genex’s pipeline of
opportunities. We are currently completing the feasibility assessment and expect to progress the development in parallel
with the K2-Solar project once K2-Hydro reaches financial close.
COVID-19
In March 2020, the Company implemented a number of measures to ensure the safety of our employees and continuity
of our business operations. These measures include a mandatory work from home policy with the office premises only
available to employees on a one by one basis with my prior permission. Weekly management meetings, daily’ toolbox’
and other ad hoc sessions are held regularly by telephone or videoconference to ensure that management and staff
remain fully operational. The Company also implemented a policy to restrict visitors to our operating and
accommodation facilities at Kidston such that only essential personnel approved by the COO are permitted. At the
9 Annual Report 2020
Jemalong Solar Project, our EPC Contractor Beon has implemented a strict COVID-19 protocol, and through careful
supply chain management they have managed to complete the procurement of equipment and materials without any
project delays.
We will continue to monitor that the COVID-19 situation so that we can respond quickly and decisively, and in a manner
which is consistent with State and Federal Government directions as well as best business practice.
Summary and Outlook
In summary, FY20 has been an exciting year for Genex as we seek to further develop our strategy as a diverse renewable
energy and storage company. I would like to acknowledge the support from the Federal Government, through the
Australian Renewable Energy Agency, the Northern Australian Infrastructure Facility and the Clean Energy Finance
Corporation. I would also like to recognise the Queensland State Government for providing a 20-year revenue support
deed for KS1, for designating Kidston hub as a critical infrastructure project, and for supporting the K2-Hydro project
through its proposed co-funding of the new 275kV transmission line from Kidston to Mt Fox.
I would like to express my thanks to the Genex Board which has provided valuable guidance to the management team
as we execute our growth strategy. I would also like to thank all our shareholders for their continued support, as I look
forward with confidence to Genex delivering another successful year in FY21.
Yours faithfully,
James Harding
Chief Executive Officer
10 Annual Report 2020
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 2020 (referred to hereafter as the
‘consolidated entity’ or the ‘Group’).
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
Teresa Dyson
Ben Guo
Simon Kidston
Principal activities
The consolidated entity’s principal activities during the period comprised the development of the Kidston Clean Energy
Hub in Far North Queensland (FNQ), the operation of KS1, the development of the Jemalong Solar Project (JSP) in New
South Wales and early development associated with the Como Battery Project.
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 Clean Energy Hub located in FNQ, the operation of KS1 and the project financing and construction of the JSP in
New South Wales.
For the year ended 30 June 2020, the consolidated entity incurred an after-tax loss of $10.5 million. The majority of
increase on cost was due to share-based payment and depreciation that included amortisation for right of use asset
under AASB16 Leases.
During the 2020 financial year Genex received an aggregate amount of $21.5 million before costs from a placement and
Share Purchase Plan in July 2019.
During the year, Genex refinanced KS1 and project financed JSP via a new senior debt agreement for $175 million.
Additionally, $17m was drawn from a Mezzanine facility provided by Clean Energy Finance Corporation. As at 30 June
2020, the total loan outstanding was $165 million. During the year, KS1 earned $10.3 million in revenue.
Matters subsequent to the end of the year
In August 2020 Genex executed a Share Subscription Agreement with Electric Power Development Co Ltd trading as J-
Power, a large Japanese utility to subscribe for up to $25 million of new shares in Genex Power with the funds to be
principally applied towards Genex’s Kidston Pumped Storage Hydro project (K2-Hydro). The share subscription is subject
11 Annual Report 2020
to a number of conditions precedent including the approval of Genex’s shareholders at an Extraordinary General meeting
in September 2020 and K2-Hydro reaching financial close.
In August 2020 Genex undertook a capital raising via a Share Placement (Placement) and Share Purchase Plan (SPP).
The total amount raised in the Placement was $21.3 million before costs associated with the Placement. The SPP seeks
to raise up to a maximum of $7 million. The new shares under the Placement were issued to existing and new
sophisticated and institutional shareholders and the shares under the SPP will be issued to existing eligible shareholders.
The Company received a revised Offer to Connect from Powerlink. The Offer is to Connect includes the construction of
the Transmission Line (to connect K2-Hydro to the Queensland grid network at Mount Fox) and contains updated pricing
with validity to 30 September 2020. In addition, Genex has secured the extension of its Generator Performance Standards
approval by AEMO to 30 September 2020, to align with the validity of the Offer to Connect.
Apart from the matters outlined above, there have been no other material events or circumstances which have arisen
since 30 June 2020 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 is currently focussed on rapidly progressing the development of the Como Battery Project,
completion and first revenue generation from the JSP and financial close of K2-Hydro.
Environmental regulation
The Kidston Clean 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 with the Queensland 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.
12 Annual Report 2020
Information on directors
Name: Dr Ralph Craven
Title: Independent Non-Executive Chairman
Qualifications: BE PhD, FIEAust, FIPENZ, FAICD
Special Responsibilities: Member, Audit & Risk Management Committee and Chair, Remuneration
Committee
Other Current Directorships:
Senex Energy Limited (from 2011)
AusNet Services Limited (from 2014)
Former Directorships (last 3 years): None
Experience and expertise:
Dr. Craven has respected credentials in energy, resources, infrastructure development, transmission and power
generation. Dr. Craven has a number of public company roles including non-executive director of Senex Energy Limited
(September 2011 to present) and AusNet Services Limited (January 2014 to present). Dr. Craven has held senior executive
positions with energy and resource 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, Chairman of Stanwell Corporation Limited
and Chairman of Tully Sugar Limited. Dr. Craven was also 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)
Special Responsibilities: Member, Audit & Risk Management Committee
Other Current Directorships: Cobre Limited (from 25/11/2019)
Former Directorships (last 3 years):
Frontier Diamonds Limited (resigned 4/6/18)
Intra Energy Corporation Limited (resigned 28/9/17)
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, and has an Oxford University postgraduate degree in Management Studies. Michael
is a founding director and shareholder of Genex.
13 Annual Report 2020
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
Other Current Directorships:
Seven West Media Limited (from 2017)
Shine Justice Limited (from 2020)
Former Directorships (last 3 years):
Consolidated Tin Mines Limited (2019-2020)
Teresa is a director and Audit & Risk Committee Chair of ASX-listed Seven West Media Ltd (2017 – Present) and a non-
executive director of Shine Justice Ltd (ASX: SJL) from February 2020 - present. Teresa is also a director of Energy Qld
Ltd, Energy Super, Power & Water Corporation, National Housing Finance & Investment Corporation and 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.
Name: Simon Kidston
Title: Executive Director
Qualifications: BCom, GradDipAppFin, MAICD
Special Responsibilities: Member, Remuneration Committee
Other Current Directorships: None
Former Directorships (last 3 years): None
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
Other Current Directorships: None
Former Directorships (last 3 years): None
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.
14 Annual Report 2020
Name: Yongqing Yu
Title: Non-Executive Director
Special Responsibilities: Nil
Other Current Directorships: None
Former Directorships (last 3 years): None
Experience and expertise:
Mr. Yongqing Yu is the Vice Chairman of Shenzhen listed Zhefu Holding Group (Zhefu). Zhefu is the 100% shareholder
of Asia Ecoernergy Development Limited (AED is Zhefu''s Hongkong subsidiary ) and the largest private hydroelectric
electrical and mechanical equipment manufacturers in China. 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: Justin Clyne
Title: Company secretary
Qualifications: LLM (UNSW) ACIS, AGIA, MAICD
Experience and expertise:
Justin Clyne was admitted as a Solicitor of the Supreme Court of New South Wales and High Court
of Australia in 1996 before gaining admission as a Barrister in 1998. He 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 2020, 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
Held
16
16
16
16
16
16
Attended
16
16
13
16
16
-
Held
4
4
-
-
4
-
Attended
4
4
-
4
4
-
Held
2
-
2
-
2
-
Attended
2
-
2
-
2
-
15 Annual Report 2020
‘Held’ represents the number of meetings held during the time the director was in office or was a member of the relevant
committee. While Mr Yu did not attend any Board meetings, a representative from Zhefu Holding Group was invited to
each 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 executive remuneration, the Board takes into consideration
the Company’s financial and operational performance along with industry and market conditions.
Remuneration packages for the Company’s CEO and senior executives include a mix of fixed remuneration and
performance-based remuneration. The fixed component consists of base remuneration, allowances and superannuation.
The Constitution provides that the non-executive Directors may be paid for their services as Directors, however the sum
payable must not exceed a fixed sum per annum as determined by shareholders at an annual general meeting, to be
divided as agreed amongst the non-executive Directors and in default of agreement then in equal shares. The current
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 determines where a Director
renders or is called upon to perform extra services or to make any special exertions in connection with the affairs of the
Company. A Director may also be reimbursed for any disbursements or any other out of pocket expenses properly incurred
as a result of their directorship or any special duties.
The Company’s remuneration policy aims to align the corporate goals and objectives of the Company with the
remuneration paid to Senior Executives and considers both short term and long-term compensation. The Company seeks
to compensate its executives fairly and undertakes an annual review and benchmarking of remuneration arrangements.
The Company also recognises that much is required of our small team of executives to accomplish the goals the Company
has set for itself.
This Remuneration Report outlines the arrangements which were in place during the year ended 30 June 2020 for the
Directors and key management personnel. The salary for all directors includes a one-off exertion payment. The share-
based payments relate to the valuation of options issued to directors during the year. The employee benefits relate to
leave entitlements.
Short-term
benefits
Cash Salary and
Fees
Superannuation
benefits
$
$
Other
employment
benefits
$
Share-based
payments
$
$
Total
398,825
398,825
157,500
112,6881
79,500
-
1,147,338
17,275
17,275
14,963
9,215
7,553
-
66,281
28,598
54,060
450,000
450,000
894,698
920,160
-
-
-
-
82,658
600,000
450,000
225,000
-
2,175,000
772,463
571,903
312,053
-
3,471,277
2020
Executive Directors
S Kidston
B Guo
Non-Executive
Directors
R Craven
M Addison
Teresa Dyson
Yongqing Yu
Sub-Total
1 The fee paid to Mr Addison in the 2020 financial year comprised a director’s fee of $72,000, consulting fees and a one-off special exertion payment of $25,000.
374,471
22,467
15,006
95,073
507,017
382,763
757,234
1,904,572
22,387
44,854
111,135
5,272
20,278
102,936
-
95,073
2,270,073
410,422
917,439
4,388,716
Short-term benefits
Cash Salary and
Fees
$
Superannuation
benefits
$
Other
employment
benefits
$
Share-
based
payments
$
Total
$
380,000
380,000
140,000
296,7642
27,590
72,000
-
36,100
36,100
13,300
30,840
2,621
6,840
-
19,094
28,684
-
-
-
-
-
-
-
-
-
-
-
-
-
435,194
444,784
153,300
327,604
30,211
78,840
-
1,469,933
320,000
330,000
650,000
1,946,354
30,400
31,006
137,774
519,180
31,350
1,691
23,047
386,088
61,750
187,551
32,697
80,475
160,821
160,821
905,268
2,375,201
Sub-Total
1,296,354
125,801
47,778
16 Annual Report 2020
Chief Executive Officer
James Harding
Chief Operating Officer
A McGhie
Sub-Total
Total
2019
Executive Directors
S Kidston
B Guo
Non-Executive
Directors
R Craven
M Addison
A du Mée
Teresa Dyson
Yongqing Yu
Chief Executive Officer
James Harding
Chief Operating Officer
A McGhie
Sub-Total
Total
Period of Service
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mée
Teresa Dyson
Yongqing Yu
15 July 2011 to current
1 August 2013 to current
25 October 2013 to current
1 July 2014 to 26 March 2015 and 29 May 2015 to current
1 July 2014 to 26 March 2015 and 29 May 2015 to 5 November 2018
7 May 2018 to current
8 February 2016 to current
Key Management Personnel (KMP)’s Interests in the Company
The shares and options held by the KMPs as at 30 June 2020 and at the date of this report are as follows:
2 The fee paid to Mr Addison in the 2019 financial year comprised a director’s fee of $72,000 and consulting fees.
17 Annual Report 2020
Shares
Balance as
at 1 July
2019
28,500,000
20,881,931
2,108,181
340,909
68,862
Nil
Personnel
Michael
Addison
Simon
Kidston
Ben Guo
Ralph
Craven
Teresa
Dyson
Yongqing
Yu
Received
on
exercise
Granted as
remuneration
-
-
-
-
-
-
Purchases
Shares
Sold
Balance as at 30 June
2020
-
4,000,000
24,500,000
62,500
2,500,000
18,444,431
62,500
62,500
62,500
-
-
-
-
-
2,170,681
403,409
131,362
Nil
-
-
-
-
-
-
Personnel
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Teresa Dyson
Yongqing Yu
Options
Personnel
Michael
Addison
Simon Kidston
Ben Guo
Ralph Craven
Teresa Dyson
Yongqing Yu
Arran McGhie*
James Harding*
Personnel
Michael Addison
Simon Kidston
Ben Guo
Ralph Craven
Alan du Mée
Balance as at
1 July 2018
Granted as
remuneration
Received on
exercise
Purchases
Balance as at 30
June 2019
28,500,000
20,881,931
2,108,181
340,909
Nil
Nil
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
68,862
-
28,500,000
20,881,931
2,108,181
340,909
68,862
Nil
Granted
as
remuner
ation
Balance
as at 1
July 2019
4,000,000 3,000,000 10/09/2019
Date of
Grant
during
period
4,000,000 3,000,000 10/09/2019
4,000,000 3,000,000 10/09/2019
2,000,000 4,000,000 10/09/2019
- 1,500,000 10/09/2019
-
-
-
-
-
5,000,000
-
-
5,000,000
Fair value per
option at
grant date
Exercise price
Balance as at 30
June 2020
0.15
0.15
0.15
0.15
0.15
-
-
-
0.34
0.34
0.34
0.34
0.34
-
-
-
7,000,000
7,000,000
7,000,000
6,000,000
1,500,000
-
5,000,000
5,000,000
Balance as at 1
July 2018
Expired
Balance as at 30 June 2019
5,000,000
5,000,000
5,000,000
5,000,000
2,000,000
1,000,000
1,000,000
1,000,000
3,000,000
2,000,000
4,000,000
4,000,000
4,000,000
2,000,000
-
18 Annual Report 2020
Teresa Dyson
Arran McGhie*
James Harding*
-
5,000,000
5,000,000
-
-
-
-
5,000,000
5,000,000
*Options issued to James Harding have various vesting conditions based exclusively on milestones, irrespective of when
these milestones are achieved (see note 25)
There were 14,500,000 new Options issued to Directors during the 2020 financial year as approved by shareholders at
the Company’s Extraordinary General Meeting held on 10 September 2019.
The 5,000,000 options held by the Company’s COO as at 30 June 2020 (and exercisable at $0.25 each, lapsed unexercised
subsequent to the end of the year on 06/08/2020.)
Executive Services Agreement (James Harding)
On 23 June 2016, the Company entered into an Executive Services Agreement (Agreement) with James Harding in his
capacity as Executive General Manager. On 7 May 2018, that Agreement was varied with respect to the remuneration
and duties to be performed (Variation) following Mr Harding’s appointment as Chief Executive Officer (CEO). The key
terms and conditions of the Agreement and Variation are summarised below.
•
•
•
•
(Term) The appointment as CEO commenced on 7 May 2018 and is ongoing subject to the termination provisions.
(Services) James Harding will provide the duties and responsibilities associated with the role of CEO and report to
the Board regarding the overall responsibility for the day to day management of the business of the Company and
with responsibility for overall reporting requirements and regularly reporting to the Board concerning the business
and financial position of the Company.
(Remuneration) James Harding will receive a gross salary of $320,000 (excluding superannuation) per annum. In
addition, James Harding may be granted, subject to any necessary shareholder approval, incentives to provide
ongoing service and commitment to the Company.
(Entitlements) James Harding is entitled to 5 weeks of annual leave per annum in addition to other employee
entitlements that are customary to an agreement of this nature.
• (Termination) Both James Harding and the Company may terminate the agreement at any time and for any reason
by giving 3 months’ written notice to the other party. James Harding’s employment may otherwise be terminated at
any time for cause by notice to James Harding from the Company.
In April 2020, James Harding received $42,500 exertion payment for financial close on Jemalong Solar Project.
In FY20, $11,971 super was also redirected to salary and wages subject to Board’s approval.
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. On 06 August
2020, 128,333 options held by Arran McGhie expired.
In April 2020, Arran McGhie received $40,000 exertion payment for financial close on Jemalong Solar Project.
In FY20, $12,763 super was also redirected to salary and wages subject to Board’s approval.
19 Annual Report 2020
Executive Services Agreements (Ben Guo and Simon Kidston)
From July 2017, Both Simon Kidston and Ben Guo received an increase in salary to $340,000 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.
In April 2020, both Simon Kidston and Ben Guo received $40,000 exertion payment for financial close on Jemalong Solar
Project.
In FY20, $18,825 super was also redirected to salary and wages subject to Board’s approval.
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.
In April 2020, Michael Addison received $25,000 exertion payment for financial close on Jemalong Solar Project.
Shares under option
Unissued ordinary shares of Genex Power Limited under option at the date of this report are as follows:
Grant date
2 September 2016
17 January 2017
7 July 2017
23 February 2018
10 September 2019
Total
End of Remuneration Report
Expiry date
2 September 2021
17 January 2022
17 January 2022
13 February 2023
10 September 2024
Exercise price
$0.25
$0.34
$0.34
$0.40
$0.34
Number of options
2,400,000
14,000,000
1,500,000
4,850,000
14,500,000
42,250,000
Loss per Share
The loss per share for Genex Power Limited for the year was 2.63 cents per share (FY19 1.78 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 2020 was $10,534,250. The Directors of Genex have resolved not to recommend a dividend for the financial year
ended 30 June 2020.
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.
20 Annual Report 2020
During the year, the Company paid a premium in respect of a contract to insure the directors and executives of the
Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or
any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Non-audit services
The following non-audit services were provided by the entity's auditor, Ernst & Young Australia. The directors are
satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that
auditor independence was not compromised.
Ernst & Young Australia received or are due to receive the following amounts for the provision of non-audit services:
Tax Compliance
Transactional Tax Services
Model Review Services for Debt Re-financing
Auditor's independence declaration
A copy of the auditor's independence declaration is set out on the following page.
$
40,000
127,900
72,100
240,000
On behalf of the directors
________________________________
Ben Guo
Director
27 August 2020
Sydney
Ernst & Young Services Pty Limited
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 2020, 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
27 August 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
21
22 Annual Report 2019/20
5. FINANCIAL STATEMENTS
Contents
Consolidated statement of profit or loss and other comprehensive income .................................................................. 23
Consolidated statement of financial position ............................................................................................................................... 24
Consolidated statement of changes in equity .............................................................................................................................. 25
Consolidated statement of cash flows............................................................................................................................................. 26
Notes to the consolidated financial statements .......................................................................................................................... 27
Directors' declaration ............................................................................................................................................................................. 71
Independent auditor's report to the members of Genex Power Limited .......................................................................... 72
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 is:
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 is 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 26 August 2020.
The directors have the power to amend and reissue the financial statements.
23 Annual Report 2019/20
Genex Power Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2020
Revenue
Sale of electricity and environmental products and lease income
Other income
Expenses
Project site costs
Salary expenses
Share-based Payment
Administrative expenses
Compliance cost and regulatory fees
Project consulting costs
Legal fees
Travel and marketing
Depreciation
Net gain 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
Notes
30 June
2020
30 June
2019
$
$
10,253,756
2,004,255
12,258,011
11,154,792
4,800,053
15,954,845
(3,841,189)
(3,062,687)
(2,270,073)
(1,301,982)
(239,831)
(674,646)
(80,053)
(199,845)
(8,006,499)
1,177,822
(18,498,983)
(4,012,073)
(2,590,800)
(391,840)
(1,363,547)
(145,494)
(2,779,110)
(50,149)
(262,738)
(6,369,366)
1,229,163
(16,735,954)
(6,240,972)
(781,109)
(4,428,506)
135,228
(10,534,250)
(4,922,282)
225,460
(5,477,931)
-
-
(10,534,250)
(5,477,931)
5
6
6
14
20
6
7
8
18
(9,443,907)
(3,691,838)
(19,978,157)
(9,169,769)
36
36
Cents
(2.63)
(2.63)
Cents
(1.78)
(1.78)
24 Annual Report 2019/20
Genex Power Limited
Consolidated statement of financial position
As at 30 June 2020
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
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
Convertible notes
Government grant
Provisions
Other current financial liabilities
Current lease liabilities
Non-Current Liabilities
Long term interest accrued
Interest-bearing loans and borrowings
Convertible notes
Government Grant
Other non-current financial liabilities
Non-current lease 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 2020
30 June 2019
$
$
9
10
11
12
13
14
15
16
19
17
23
29
22
19
17
20
29
23
24
24
18
65,487,915
3,480,647
414,340
69,382,902
4,717,388
-
179,807,006
184,524,394
253,907,296
22,373,670
1,007,835
5,056,400
1,536,446
442,500
370,404
127,098
207,640
31,121,993
604,545
177,240,388
4,203,137
7,301,856
15,220,504
2,953,924
3,820,200
59,510
211,404,064
242,526,057
11,381,239
62,542,338
4,448,542
(14,802,708)
(40,806,933)
11,381,239
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
25 Annual Report 2019/20
Genex Power Limited
Consolidated statement of changes in equity
For the year ended 30 June 2020
Notes
Issued
Capital
$
Options
Reserves
$
Cash flow hedge
reserve
$
Accumulated
Losses
$
Total Equity
$
Balance at 1
July 2019
Loss after
income tax
Cash flow
hedge reserve
Total
comprehensive
loss for period
Shares issued
during the
period
Transaction cost
Share-based
payments
Balance at 30
June 2020
18
26
41,899,049
2,178,469
(5,358,801)
(30,272,683)
8,446,034
-
-
-
-
-
(10,534,250)
(10,534,250)
(9,443,907)
-
(9,443,907)
41,899,049
2,178,469
(14,802,708)
(40,806,933)
(11,532,123)
21,458,390
(815,101)
-
-
-
2,270,073
-
-
-
-
-
-
21,458,390
(815,101)
2,270,073
62,542,338
4,448,542
(14,802,708)
(40,806,933)
11,381,239
Genex Power Limited
Consolidated statement of changes in equity
For the year ended 30 June 2019
$
$
$
$
$
Note
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
26 Annual Report 2020
Genex Power Limited
Consolidated statement of cash flows
For the year ended 30 June 2020
Cashflow from Operating Activities
Receipt from customers
Payments to suppliers
Payments to employees
Interest received
Interest paid
Notes
30 June 20
30 June 19
$
$
9,826,749
(7,509,788)
(3,068,635)
135,228
(3,487,158)
16,293,241
(9,137,168)
(2,373,916)
225,460
(4,486,058)
Net cash utilised by operating activities
33
(4,103,604)
521,559
Cashflow from Investing Activities
Purchase of Property, Plant and Equipment
Purchase of intangible assets
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 notes
Transaction costs on issue of shares
Transaction costs on borrowings
Proceeds from borrowings
Repayment of borrowings
Lease repayment
Net cash from financing activities
(37,883,308)
-
(108,710)
(37,992,018)
(6,437,332)
(5,795,377)
(109,882)
(12,342,591)
21,458,390
1,066,565
(815,101)
(3,072,222)
88,655,183
(3,118,384)
(53,700)
104,120,731
2,125,000
3,117,150
(181,250)
-
422,614
(1,194,025)
-
4,289,489
Net increase in cash and cash equivalents
62,025,109
(7,531,543)
Cash and Cash equivalent at the beginning of the financial year
3,462,806
10,994,349
Cash and Cash equivalents at the end of the financial year
9
65,487,915
3,462,806
27 Annual Report 2020
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. Please
refer to new and amended standards and interpretations section below.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial
performance or position of the consolidated entity.
New accounting standards not yet applicable
Effective 1 July 2020:
Conceptual Framework for Financial Reporting and related amendments
The revised Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria
for assets and liabilities. The framework clarifies some important concepts, including objectives of financial reporting,
qualitative characteristics of financial information, measurement, presentation and disclosures.
The changes to the Conceptual Framework may affect the application of AASB in situations where no standard applies
to a particular transaction or event. This is unlikely to have a material impact on the consolidated entity.
AASB 2018-7 Amendments to Australian Accounting Standards - Definition of Material
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 amendment is unlikely to have an impact on the consolidated entity.
Definition of a Business - Amendments to AASB 3 Business Combinations
The standard amends the definition of a business in AASB 3 Business Combinations (AASB 3). 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. As the amendments
apply prospectively to transactions or other events that occur on or after the date of first application, there is no impact
to the consolidated entity on
transition.
Interest Rate Benchmark Reform - Amendments to AASB 9, AASB 139 and AASB 7
These amendments were issued in response to the effects of Interbank Offered Rates reform on financial reporting and
provide mandatory temporary reliefs which enable hedge accounting to continue during the period of uncertainty before
the replacement of an existing interest rate benchmark with an alternative nearly risk-free interest rate.
This amendment is unlikely to have an impact on the consolidated entity.
Effective 1 July 2023
Classification of Liabilities as Current or Non-Current - Amendments to AASB 101 Presentation of Financial Statements
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying
liabilities as current or non-current.
The amendments clarify:
• What is meant by a right to defer settlement;
•
•
That a right to defer must exist at the end of the reporting period;
That classification is unaffected by the likelihood that an entity will exercise its deferral right; and
28 Annual Report 2020
•
That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a
liability not impact its classification. Although the consolidated entity has not fully assessed the impact of the
amendments, it is unlikely to have a material impact on the consolidated entity.
Going concern
The consolidated financial statements have been prepared on a going concern basis, which assumes that the
consolidated entity 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 August 2020, Genex undertook a capital raising via a share placement and Share Purchase Plan (SPP), the
total amount raised in the placement was $21.3 million with up to another $7 million to be raised under the SPP.
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.
The consolidated financial statements present reclassified comparative information where required for consistency with
the current year’s presentation.
Compliance with International Financial Reporting Standards (IFRS)
The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.
Parent entity information
These financial statements present the results of the consolidated entity only. Supplementary information about the
parent entity is disclosed in note 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 2020 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' or the ‘Group’.
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
29 Annual Report 2020
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.
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:
Expected to be realised or intended to be sold or consumed in the normal operating cycle
•
• Held primarily for the purpose of trading
•
Expected to be realised within twelve months after the reporting period
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.
A liability is current when:
•
•
•
•
Or
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
There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period
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
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 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:
•
In the principal market for the asset or liability
Or
•
In the absence of a principal market, in the most advantageous market for the asset or liability
30 Annual Report 2020
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.
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.
31 Annual Report 2020
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.
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 (Applicable for comparative information)
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.
32 Annual Report 2020
Consolidated entity as a lessor
Leases in which the consolidated entity does not transfer substantially all the risks and rewards of ownership of an asset
are classified as operating leases. 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.
Accounting policies for the current year as a result of implementation of AASB 16, leases are noted in the section below.
Interest
Interest income and expenses are reported on an accrual basis using the effective interest method.
Borrowing Cost
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
borrowing costs are capitalized in the period in which they occur.
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:
Kidston Solar Project 20 to 30 years
Right of Use Asset Amortised over the lease term
Furniture and fitting Less than 5 years
Motor Vehicle 12 years
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or
when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of
the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is
included in the statement of profit or loss when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each
financial year end and adjusted prospectively, if appropriate.
Work in Progress Capital Assets
Work in Progress Capital Assets represent project development costs incurred prior to commencement of projects
operation. Work in Progress Capital assets are not amortised, but are transferred to Plant, Property and Equipment and
depreciated from the time the asset is held ready for use on a commercial basis.
33 Annual Report 2020
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.
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
34 Annual Report 2020
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. The fair
value of the share options is estimated at the grant date using a binomial option pricing model taking into account the
terms and conditions on which the share options were granted. Non-Market Performance condition are only
considered in determining the number of instruments that will ultimately vest. Market performance conditions are
accounted for as part of the award of the fair value of the option at grant date.
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
35 Annual Report 2020
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.
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. 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 do
not contain a significant financing component.
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.
36 Annual Report 2020
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 fair value through OCI with recycling of cumulative gains and losses (debt instruments)
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
Financial assets at fair value through profit or loss
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 and cash and cash equivalents.
Financial assets at fair value through OCI (debt instruments)
The Group measures debt instruments at fair value through OCI if both of the following conditions are met:
•
•
The financial asset is held within a business model with the objective of both holding to collect contractual cash
flows and selling; 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.
For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or
reversals are recognised in the statement of profit or loss and computed in the same manner as for financial assets
measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative
fair value change recognised in OCI is recycled to profit or loss.
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments
designated at fair value through OCI when they meet the definition of equity under IAS 32 Financial Instruments:
Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income
in the statement of profit or loss when the right of payment has been established, except when the Group benefits from
such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI.
Equity instruments designated at fair value through OCI are not subject to impairment assessment.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated
upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at
fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing
in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless
37 Annual Report 2020
they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of
principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model.
Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as
described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing
so eliminates, or significantly reduces, an accounting mismatch.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net
changes in fair value recognised in the statement of profit or loss.
A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and
accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a
separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the
hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value
with changes in fair value recognised in profit or loss. Reassessment only occurs if there is either a change in the terms
of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a
financial asset out of the fair value through profit or loss category.
A derivative embedded within a hybrid contract containing a financial asset host is not accounted for separately. The
financial asset host together with the embedded derivative is required to be classified in its entirety as a financial asset
at fair value through profit or loss.
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:
•
•
The rights to receive cash flows from the asset have expired; or
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
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.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the
next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit
38 Annual Report 2020
risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure,
irrespective of the timing of the default (a lifetime ECL).
For trade receivables and contract assets, 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.
For debt instruments at fair value through OCI, the Group applies the low credit risk simplification. At every reporting
date, the Group evaluates whether the debt instrument is considered to have low credit risk using all reasonable and
supportable information that is available without undue cost or effort. In making that evaluation, the Group reassesses
the internal credit rating of the debt instrument. In addition, the Group considers that there has been a significant
increase in credit risk when contractual payments are more than 30 days past due.
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 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.
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.
39 Annual Report 2020
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.
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; and
• Hedges of a net investment in a foreign operation.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which
it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The
documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk
being hedged and how the entity will assess the effectiveness of changes in the hedging instrument’s fair value in
offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such
hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed
40 Annual Report 2020
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. 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.
New and amended standards and interpretations
The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those
followed in the preparation of the consolidated entity’s annual consolidated financial statements for the year ended 30
June 2019, except for the adoption of new standards effective as of 1 July 2019. The Group has not early adopted any
other standard, interpretation or amendment that has been issued but is not yet effective.
AASB16 Adoption of Leases
AASB 16 Leases became effective for the consolidated entity on 1 July 2019 and requires lessees to account for all
leases under a single on-balance sheet model. The consolidated entity’s operating lease portfolio is predominantly
comprised of commercial offices and land leases.
Transition
The consolidated entity adopted AASB 16 using the modified retrospective approach. Under this approach, the
cumulative effect of adopting the new standard was recognised as an adjustment to the opening balance of retained
earnings on 1 July 2019. No restatement of comparative information is required. Consolidated Entity has taken
advantage of recognition exemptions for leases that are less than 12 months and leases for which the underlying asset
is of low value.
41 Annual Report 2020
The lease liabilities recognised on transition were measured at the present value of the remaining lease
payments, discounted using Consolidated Entity's incremental borrowing rate at 1 July 2019. The associated right-of-
use (ROU) assets for major commercial offices and land leases were measured at an amount equal to the lease liability.
The consolidated entity has applied the following practical expedients on transition to AASB 16:
Use of a single discount rate for a portfolio of leases with reasonably similar characteristics;
Consolidated Entity has elected to not reassess whether a contract is or contains a lease at 1 July 2019. Instead,
Consolidated Entity applied the standard only to contracts that were previously identified as leases applying IAS 17 and
IFRIC 4 at the date of initial application.
Exclusion of leases with a remaining lease term of less than 12 months from 1 July 2019; and Use of hindsight when
determining the lease term for contracts containing optional periods.
The impact on the consolidated entity’s financial statements at 1 July 2019 is summarised below:
As at 1 July 2019
Right-of-use assets
Lease liabilities
Debit / (credit)
3,107,409
(3,107,409)
There is no impact on the transition to AASB 16 Leases on retained earnings at 1 July 2019 and the Consolidated Entity
will no longer be recognizing operating rent expenses, instead, interest expense on unwinding of lease liability and
amortisation of right of use asset will be recognized in the statement of comprehensive income. The net impact on
statement of comprehensive income, as a result of application of AASB16, is a net decrease in profits by $154,860 for
the year ended 30 June 2020.
Incremental borrowing rate applied on 1 July 2019 was 5%.
Accounting policies applicable for the year ended 30 June 2020 are noted below.
Right-of-use assets
The consolidated entity recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses and adjusted for any remeasurement of lease liabilities.
The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease
payments made at or before the commencement date less any lease incentives received. Unless Group is reasonably
certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are
depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.
Right-of-use assets are subject to impairment.
Lease Liabilities
At the commencement date of the lease, Group recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed
payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The variable lease payments that do not depend on an index or a
rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.
42 Annual Report 2020
In calculating the present value of lease payments, Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date,
the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a
change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease
term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease
of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below
$5,000). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-
line basis over the lease term.
Significant judgement in determining the lease term of contracts with renewal options
Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate
the lease, if it is reasonably certain not to be exercised.
Group has the option, under some of its leases to lease the assets for additional terms of three to five years. Group
applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all
relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, Group
reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects
its ability to exercise (or not to exercise) the option to renew (e.g., a change in business strategy).
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 consolidated entity is required to evaluate the assessment of impairment indicators (internal and external) and made
judgements in assessing the factors that are required to be evaluated as part of the impairment indicators assessment.
That included reviewing significant changes with an adverse effect on the consolidated entity. Performance of non-
current assets impacts of environmental, technological, market, economic or legal environment changes in which the
consolidated entity operates. This included the assessments of the impact of COVID-19 on the consolidated entity.
Fair value measurement of financial instruments
When the fair values of financial liabilities recorded in the statement of financial position cannot be measured based on
quoted prices in active markets, their fair value is measured using valuation techniques including the binomial tree lattice
methodology. The inputs to these models are taken from observable markets where possible, but where this is not
feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such
43 Annual Report 2020
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.
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 August 2020 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.
Interest-bearing loans and borrowings - current
Interest-bearing loans and borrowings – non-current
Convertible note
Short-term interest accrued
Long-term interest accrued
Trade and other payables
Less: cash and short-term deposits
Net debt
Equity
Total capital
Capital and net debt
Gearing ratio
Consolidated
30 June 2020
$
30 June 2019
$
5,056,400
177,240,388
5,739,583
1,007,835
604,545
22,373,670
(65,487,915)
146,534,506
4,570,770
94,353,392
4,755,577
247,542
674,374
2,212,352
(3,462,806)
103,351,202
11,381,239
11,381,239
8,446,033
8,446,033
157,915,745
92.8%
111,797,235
92%
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.
44 Annual Report 2020
Note 5. Revenue
Lease Revenue
Electricity Sales prior to Solar Support Deed
LGC Sales prior to Solar Support Deed
Sales of electricity and environmental products and lease income
Government Grant
R&D Refund
Others
Avoided TUOS
Liquidated Damages
Fuel Tax Credit
Other income
Total revenue
Consolidated
Note
30 June 2020
$
30 June 2019
$
17
10,253,756
-
-
10,253,756
443,712
1,234,815
209,983
99,138
-
16,607
2,004,255
10,277,974
196,076
680,742
11,154,792
442,500
1,904,227
30,885
45,471
2,360,000
16,970
4,800,053
12,258,011
15,954,845
Lease revenue related 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. $2.36m was received from UGL during the financial year ended 30 June 2019.
45 Annual Report 2020
Note 6. Expenses
Loss before income tax includes the following specific expenses:
Finance costs
Commitment Fee - CEFC
Interest on Senior bank loan
Finance charges
Hedge ineffectiveness (due to overhedging)
*Hedge ineffectiveness at novation date
Interest on convertible notes and lease
Project site costs
Research and development expenditure
for Kidston Pumped Hydro Project
Employee benefits
Defined contribution superannuation expense
Share-based payments expense
Wages and salaries
JobKeeper subsidy**
Payroll tax
Workers’ Compensation
Fringe Benefit Tax
Employee entitlements
Consolidated
Note 30 June 2020
$
30 June 2019
$
18
25
47,374
3,691,644
86,012
14,437
14,620
574,419
4,428,506
-
4,532,835
72,866
-
-
316,582
4,922,283
3,841,189
4,012,073
190,732
2,270,073
2,785,720
(120,000)
79,477
6,522
11,624
108,612
5,332,760
198,554
391,840
2,187,634
-
58,778
7,833
11,624
126,377
2,982,640
*This represents the amortisation of the hedge ineffectiveness resulted from new hedge arrangement at novation date (17
December 2019). Please refer to note 18 for further details.
**Government JobKeeper subsidy received over the period April – June 2020
Note 7: Finance income
Interest revenue
Consolidated
30 June 2020 30 June 2019
$
$
135,228
135,228
225,460
225,460
46 Annual Report 2020
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
June 2020
$
June 2019
$
(10,534,250)
(5,477,931)
(2,896,919)
-
2,896,919
(1,506,431)
(444,566)
1,950,997
-
-
The accumulated tax loss (tax effected) that arose in Australia as at 30 June 2020 is $12,473,117 (30 June 2019:
$9,576,198). These are available indefinitely for offsetting against future taxable profits of the companies in which the
loss arose. Additionally, there are $39,249,668 (30 June 2020: $39,249,668) of transferred tax losses (tax effected) as of
30 June 2020 that can be utilised subject to the available fraction.
No tax losses have been recognised as at 30 June 2020.
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.
(ii) Tax effect accounting by members of the tax consolidated group
Measurement method adopted under AASB Interpretation 1052 Tax Consolidation Accounting
The head entity and the controlled entities in the tax consolidated group continue to account for their own current and
deferred tax amounts. The Group has applied the group allocation approach in determining the appropriate amount of
current taxes and deferred taxes to allocate to members of the tax consolidated group. The current and deferred tax
amounts are measured in a systematic manner that is consistent with the broad principles in AASB 112 Income Taxes.
The nature of the tax funding agreement is discussed further below.
Nature of the tax funding agreement
Members of the tax consolidated group have entered into a tax funding agreement. Under the funding agreement, the
funding of tax within the consolidated entity is based on taxable income, which is an acceptable method of allocation
under AASB Interpretation 1052. The tax funding agreement requires payments to/from the head entity to be recognised
via an inter-entity receivable (payable) which is at call. To the extent that there is a difference between the amount
charged under the tax funding agreement and the allocation under AASB Interpretation 1052, the head entity accounts
for these as equity transactions with the subsidiaries.
The amounts receivable or payable under the tax funding agreement are due upon receipt of the funding advice from
the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also
require payment of interim funding amounts to assist with its obligations to pay tax instalments.
47 Annual Report 2020
Note 9. Cash and cash equivalents
Cash at bank
Cash and cash equivalents
Cash at banks earn interest at floating rates based on daily bank deposit rates.
Note 10. Trade and other receivables
Trade debtors
Government subsidies receivable
Trade and other receivables
30 June
2020
$
30 June
2019
$
65,487,915
3,462,806
65,487,915
3,462,806
30 June
2020
$
30 June
2019
$
3,360,647
120,000
1,954,803
-
3,480,647 1,954,803
Trade receivables are generally due for settlement within 30 days. As at 30 June 2020 and 30 June 2019, trade receivables
are neither past due nor impaired
Note 11. Prepayments
Insurance and prepayments
Environmental Authority, ML Fees and Land Rent
Subscriptions
Consulting
Note 12. Bond, Deposits and Bank Guarantee
Ergon Bond (Removal and Security Defects)
Construction Camp Bond
K2 Wind Project Land Bond
Electricity Bond
Ergon Connection Bond
Sydney Office Bond
AEMO Bond
Sydney Office Deposit
Speedcast Bond
Site Accommodation Bond
Brisbane Office Bond
Environmental Bond
30 June
2020 30 June 2019
$
$
343,746
54,213
16,381
-
414,340
142,640
34,088
12,208
10,500
199,436
30 June
2020 30 June 2019
$
$
231,818
83,034
12,000
6,011
42,000
112,246
10,000
18,469
5,200
117,000
4,200
4,075,410
4,717,388
231,818
82,500
12,000
18,270
42,000
112,246
10,000
18,469
5,200
117,000
4,200
3,954,976
4,608,679
48 Annual Report 2020
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 13: Intangible Assets
Cost
At 30 June 2019
Transfer to Jemalong PP&E
At 30 June 2020
Amortisation
At 30 June 2019
Additions
At 30 June 2020
Net book value
At 30 June 2019
At 30 June 2020
Development Approval
$
5,795,377
(5,795,377)
-
-
-
-
5,795,377
-
The intangible assets have been transferred to Plant, Property and Equipment because it was expenditure on Jemalong
project.
Note 14. Property, Plant and Equipment
Land and Site Office
Motor Vehicle
Kidston Solar Project
Kidston Hydro Project
Jemalong Solar Project
Pre-development assets
Right Of Use Asset
Furniture and Fittings
30 June 2020 30 June 2019
$
$
380,935
23,210
103,262,272
4,753,000
64,445,487
3,918,777
3,006,701
16,624
380,935
-
112,283,832
1,891,556
-
3,918,777
-
23,879
179,807,006 118,498,979
49 Annual Report 2020
Cost
At 30 June 2018
Additions:
Disposals
At 30 June 2019
Additions:
Refunds
previously
cost*s:
Transfers from intangibles
At 30 June 2020
against
capitalised
or
Depreciation
impairment
At 30 June 2018
Depreciation charge for
the year
At 30 June 2019
Depreciation charge for
the year
At 30 June 2020-
Net book value 30 June
2020
Net book value 30 June
2019
Land and Site
Office
Motor Vehicle
Kidston Hydro
Project
Kidston
Solar
Project
Jemalong Solar
Project
Pre-
development
Asset
ROU
Furniture and
fitting
Total
175,000
205,935
-
380,935
-
-
-
-
-
-
25,320
-
-
1,891,556
-
1,891,556
2,861,444
-
117,313,010
4,338,085
-
121,651,095
-
(1,301,820)
380,935
25,320
4,753,000
120,349,275
-
-
-
-
58,650,110
-
5,795,377
64,445,487
3,918,777
-
-
3,918,777
-
-
-
-
-
-
3,279,688
-
43,234
1,756
-
44,990
4,407
-
121,450,021
6,437,332
-
127,887,353
64,820,969
(1,301,820)
3,918,777
3,279,688
49,398
5,795,377
197,201,879
-
-
-
-
-
-
-
-
(2,110)
(2,110)
-
-
-
-
-
(3,008,276)
(6,358,987)
(9,367,263)
(7,719,740)
(17,087,003)
-
-
-
-
-
-
-
-
-
-
-
(10,732)
(10,379)
(3,019,008)
(6,369,366)
-
(272,987)
(21,110)
(11,663)
(9,388,373)
(8,006,500)
(272,987)
(32,774)
(17,394,873)
380,935
23,210
4,753,000
103,262,272
64,445,487
3,918,777
3,006,701
16,624
179,807,006
380,935
-
1,891,556
112,283,832
-
3,918,777
-
23,880
118,498,980
Capitalised borrowing costs
The carrying amount of the Kidston Solar Farm at 30 June 2020 was $103,262,272 (30 June 2019: $112,283,832). The Kidston Solar Farm and Jemalong Solar Project are financed by a $175 million
senior debt facility with third party banks. Interest on the Jemalong construction loan facility is to be capitalised until the construction of the Jemalong project is completed. The amount of interest
costs capitalised during the year ended 30 June 2020 was $161,530 using a borrowing rate of 1.75% (30 June 2019: $0).
*During the year the Group has received refund from vendor for being overcharged for the previously capitalised cost and recognised as an adjustment to carrying amounts.
50 Annual Report 2020
Note 15. Trade and other payables
Current
Trade creditors and accruals
30 June 2020 30 June 2019
$
$
22,373,670
2,250,602
22,373,670
2,250,602
The major increase represents EPC payment for Jemalong Solar Project which has been capitalized in PPE.
Note 16. Interest-bearing loans and borrowings
100m Senior Bank Debt
175m Senior Bank Debt
30 June
2020
$
-
5,056,400
5,056,400
30 June
2019
$
4,570,770
-
4,570,770
The Senior Bank Debt represents the portion of the $175m Senior Bank Loan which must be repaid within 12 months.
At 30 June 2020, the Group had available $6,969,169 (30 June 2019: $0) of undrawn committed borrowing facilities.
Note 17. Government Grant
ARENA Grant (Current)
ARENA Grant (Non-Current)
30 June
2020
$
30 June
2019
$
442,500
7,301,856
7,744,356
442,500
7,745,568
8,188,068
Genex received an ARENA (Australian Renewable Energy Agency) grant of $8.85 million in FY17 towards the funding of
KS1. The Grant is recognised as revenue over the life of the project (20 years) on a straight line basis
51 Annual Report 2020
Note 18. Cash flow hedge
At 30 June 2020, the Group had a number of interest rate swap agreements in place with a total notional amount of $168m (2019: $52m). The fixed rate the Group and the
floating rate the Group pays is shown in the table below receives an average fixed rate of interest of 8.25% and pays interest at a variable rate equal to 3 months BBSW + 0.05%
on the notional amount.
The swap is being used to hedge the exposure to changes in the fair value of its fixed rate senior loan facility. The senior loan is to refinance the previous loan for KS1 as well as
to fund the construction of JSF. The senior loan facility is amortised over a notional period of approximately 20 years. Interest rate exposure under the senior loan facility is 100%
hedged under the interest rate swap agreement for the first 10 years.
There is an economic relationship between the hedged item and the hedging instrument as the terms of the interest rate swap match the terms of the fixed rate loan (i.e.,
notional amount, maturity, payment and reset dates). The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the interest rate
swap is identical to the hedged risk component. To test the hedge effectiveness, the Group uses the hypothetical derivative method and compares the changes in the fair value
of the hedging instrument against the changes in fair value of the hedged item attributable to the hedged risk.
The hedge ineffectiveness can arise from:
• Different interest rate curve applied to discount the hedged item and hedging instrument
• Differences in timing of cash flows of the hedged item and hedging instrument
•
The counterparties’ credit risk differently impacting the fair value movements of the hedging instrument and hedged item
The table below represents the key terms and conditions of the three swaps as at 30 June 2020 and one swap as at 30 June 2019
Effective date
Maturity date
Notional
CCY
Leg
Frequency Day Count
Counter
party
Rate (in
%)
Margin
(in bps)
Cash flow
derivative
liability
As at 30 June 2020
Tranche A – Term
IRS
Tranche A –
Novation IRS
Tranche B –
Construction IRS
NOR,
DZB and
WBC
NOR and
DZB
AUD
$48,505,765
17 Dec 2019
17 Jan 2030
AUD
$51,197,443
1 Oct 2019
1 Jan 2027
WBC
AUD
$2,796,368
17 Jan 2020
17 Mar 2021
Receive
Float
Pay fix
Receive
Float
Pay fix
Receive
Float
Pay fix
1.5525
5
Quarterly
Act / 365 Fixed
(6,659,093)
3.2350
5
Quarterly
Act / 365 Fixed
(7,869,868)
0.72
Quarterly
Act / 365 Fixed
(288,184)
(14,817,145)
52 Annual Report 2020
As at 30 June 2019
Novation Swap
SGCIB
AUD
$52,390,804
1 Mar 2017
17 December
2019
Receive
Float
Pay fix
3.065
5
Quarterly
Act / 365 Fixed
5,358,801
5,358,801
On December 17, 2019 GNX has novated the interest rate swap with Societe Generale designated as the hedging instrument in the old hedging relationship, into two interest
rate swaps with Nord Bank and DZ Bank. No cash payment was involved as part of this transaction. The $6.6m MTM on the old swap as at novation date was embedded in the
fixed leg of the new interest rate swaps as a financing element. The novation is considered as termination of the SGCIB thus the discontinuation of the old hedging relationship.
As there was no cash settlement involved in the termination of the swap as at 17 December 2019 with SGCIB, which at this date had an out of the money balance of $6.6m. As
explained in previous sections, this amount was embedded in the fixed leg of the 2 interest rate swaps with Nord and DZ Bank (replacing the old swap with SG). Therefore, there
is no impact in balance sheet and profit and loss as at novation date on 17 December 2019. The new arrangement resulted in ineffective hedge of $14,620 in the current period.
The effect of the cash flow hedge in the statement of profit and loss and other comprehensive income is
Total hedging gain/loss
recognized in OCI
Ineffectiveness recognized in
profit and loss
Line item in the statement of
profit and loss
Amount reclassified from OCI to
profit or loss
Tranche A – Term IRS
Tranche A – Novation IRS
$7,869,868
$6,659,093
Tranche B – Construction IRS
$288,184
$5,636
$8,801
Nil
Finance cost
Finance cost
Finance cost
$14,817,145
$(14,437)
$5,636
$8,801
$(14,437)
The ineffectiveness recognised in the statement of profit or loss was $14,437 and is to due mismatch in timing of the hedge profile and the actual drawdown profile for the
senior loan in relation to the construction of JSF. The Value of the Cash Flow Hedge Reserve will be equal to the total hedging gain or loss recognised in OCI, adjusted for
ineffectiveness recognised in the profit and loss. At 30 June 2020, this is $14,802,708.
For FY19, there is no hedge ineffectiveness recognized in the statement of profit and loss.
53 Annual Report 2020
Note 19. ARENA Convertible Note
Convertible note – Current
Convertible note – Non-current
30 June
2020 30 June 2019
$
-
4,755,578
4,755,578
$
1,536,446
4,203,137
5,739,583
On 18 December 2015, Genex entered into a convertible note funding agreement with ARENA for up to $4,000,000 to
fund the feasibility study of K2-Hydro. As at 30 June 2020, $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 $4,500,000 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 2020, $4,058,459 has been drawn down.
The Convertible note is treated as a host financial liability with two embedded derivatives. The first Embedded Derivative
is for conversion feature and the second is for the early redemption feature. Please refer Note 20 and 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;
o $0.20 per share (December 2015 Agreement); and
o Higher of A$0.2865 and 20day VWAP at Stage 2 financial close (November 2017 Agreement);
•
If ARENA chooses to convert, Genex retains the right to either issue ordinary shares at the Conversion Price or
to repay ARENA the face value of the Notes as if they had been converted, at the then 20 day volume weighted
average price of Genex shares traded on the ASX;
• Genex has the right to redeem the Notes at face value at any time from the date of issue for a period of 5 years
in respect of amounts drawn down but not converted (ARENA may convert during the redemption notice
period);
• Genex must redeem the Notes at face value upon the completion of a bankable feasibility study in respect of
the Project and the execution of all agreements required for the funding of the construction of the Project, i.e.
once the project reaches financial close, the Note must be redeemed if not converted;
• ARENA has the right to require redemption of the Notes should certain default events occur; and
•
In the fifth year, if the Notes are not converted into shares or early redeemed, Genex will have to repay the notes
December 2015 Agreement
Maturity dates of the convertible notes are as follows:
1
2
3
4
Maturity date
4 March 2021
16 March 2021
1 April 2021
3 May 2021
$
Amount
731,243
537,928
386,193
207,902
54 Annual Report 2020
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
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
November 2017 Agreement
Maturity dates of the convertible notes are as follows:
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
31 July 2024
28 August 2024
30 October 2024
2 December 2024
6 December 2024
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
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
356,194
393,783
63,534
163,053
90,001
4,058,459
55 Annual Report 2020
Note 20: Financial assets and financial liabilities
Financial assets
Financial assets at amortised cost
Trade and other receivables
Cash and cash equivalents
Total financial assets
Total current
Bank guarantee/Bonds
Total non-current
30 June 2020
$
30 June 2019
$
3,480,647
65,487,915
68,968,562
68,968,562
4,717,388
4,717,388
1,954,803
3,462,806
5,417,609
5,417,609
4,608,679
4,608,679
Financial liabilities: interest-bearing loans and borrowings
Weighted
average
interest rate
%
Effective
interest rate
%
Maturity
$
30 June 2020
$
30 June 2019
$
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing – fixed rate
$175m Senior Bank Loan
N/A
N/A
22,373,670
2,250,602
2.03%
2.24%
$17m CEFC Corporate Loan
7.07%
7.47%
Convertible notes
0%
6.26%
Total non-derivatives
29 February 2023
17 December
2025
*30 September
2020
165,139,533
98,924,162
17,157,256
-
5,739,583
4,755,578
210,410,042
105,930,342
*Maturity date is conditional on the financial close of K2-Hydro which is expected to be on 30 September 2020
There have been no amounts pledged as collateral.
Other financial liabilities
Derivatives not designated as hedging instruments
Embedded derivatives – convertible note*
Derivatives designated as hedging instruments
Interest rate swaps
30 June 2020
$
30 June 2019
$
530,457
1,625,719
14,817,145
5,358,801
56 Annual Report 2020
Other financial liabilities at amortised cost, other than interest-
bearing loans and borrowings
Trade and other payables
Total financial liabilities
Total current
22,373,670
2,250,602
37,721,272
9,235,122
22,500,768
2,250,602
Derivatives designated as hedging instruments include the change in fair value of interest rate swaps entered into during
2019
Embedded derivatives for convertible notes represent conversion rights which are accounted for as a derivative with
changes in value recognised through profit and loss. During the year net gain of $1,177,822 (2019: 1,229,163) was
recognised based on fair value change.
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
30 June 2020
$
30 June 2019
$
65,487,915
3,480,647
4,717,388
73,685,950
3,462,806
1,954,803
4,608,679
10,026,288
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.
57 Annual Report 2020
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:
Year ended 30 June 2020
On
demand
Less than 3
months
$
3 to 12
months
$
1 to 5 years
>5 years
Total
$
$
$
Senior Bank Debt including
establishment fee
CEFC Loan
Convertible Notes
Interest
Interest Rate SWAP
Trade and other payables
917,867
3,621,579
170,007,436
174,546,882
800,969
1,536,446
3,748,605*
22,373,670
3,118,046
4,203,137
16,585,017
15,452,814
7,778,212
14,817,145
18,570,860
5,739,583
28,912,803
14,817,145
22,373,670
24,092,506
13,109,767 189,710,499 38,048,171 264,960,943
*Includes interest of $1,102,967 on convertible notes.
Year ended 30 June
2019
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
1,235,243
3,335,527
1,184,445
3,451,428
94,353,392
4,755,578
17,633,379
2,250,602
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
Note 21. Fair value measurement
The following table provides the fair value measurement hierarchy of the consolidated entity’s assets and liabilities
Fair value measurement hierarchy for liabilities as at 30 June 2020:
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
58 Annual Report 2020
Interest rate swaps
Embedded
derivatives
30 June 2020
30 June 2020
14,817,145
530,457
-
-
14,817,145
530,457
-
-
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
-
-
The consolidated entity enters into derivative financial instruments with various counterparties, principally financial
institutions with investment grade credit ratings. Interest rate swaps 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 2020,
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 22. Interest-bearing loans and borrowings (non-current)
Senior bank debt
CEFC Corporate Loan
30 June
2020 30 June 2019
$
$
160,083,132
17,157,256
177,240,388
94,353,392
-
94,353,392
Genex Power has a senior bank facility of $175 million with Westpac, DZ Bank AG, Nord and $17m with the Clean Energy
Finance Corporation (CEFC).
Key terms of the senior bank debt:
•
•
•
•
Interest rate for Tranche A – base rate (BBSY) + 1.75%
Interest rate for Tranche B – base rate (BBSY) + 1.65%
Tranche A and Tranche B will be repaid by 17 December 2024
Interest rate for CEFC – 6 Year ask yield +6% and will be repaid by 17 December 2025
59 Annual Report 2020
Note 23. Rehabilitation and restoration provisions/Provisions
Other Provisions
Rehabilitation and provisions
FBT Provision
Fuel Tax Credit
PAYG Provision
Annual Leave Provision
30 June
2020 30 June 2019
$
$
15,889
3,804,311
3,820,200
15,889
3,804,311
3,820,200
2,906
(4,490)
79,452
292,536
370,404
2,906
-
-
200,567
203,473
The rehabilitation and restoration provisions represent the deposit the consolidated entity contributed to the
Department of Environment and Heritage Protection, QLD Government. This deposit will only be released when QLD
Government relieve the consolidated entity of this obligation and the bank guarantee securing this bond is returned to
the consolidated entity.
Note 24. Equity
30 June 2020
Shares
30 June 2019
Shares
30 June
2020
$
30 June
2019
$
Ordinary shares issued and fully paid
401,841,355
312,431,514
62,542,338 41,899,049
Movements in ordinary share capital
Details
Balance
Equity Raising
Equity Raising Fee
Equity Raising Fee
Movement for the year
Balance
Equity Raising
Equity Raising
Equity Raising Fee
Date
No of shares
30 June 2018
2 February 2019
13 February 2019
28 June 2019
30 June 2019
3 July 2019
26 July 2019
2 July 2019
303,931,514
8,500,000
-
-
8,500,000
312,431,514
67,482,878
21,926,963
30 June 2020
401,841,355
Issue
price
$0.25
-
-
$0.24
$0.24
$
39,955,299
2,125,000
(106,250)
(75,000)
1,943,750
41,899,049
16,195,891
5,262,500
(815,101)
62,542,339
60 Annual Report 2020
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a show of hands every member present at a
meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. The shares have no
par value.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so
that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Share Option Reserve
Refer to Note 24 for further details.
As 30 June 2018
Share-based payments expense during the year
As 30 June 2019
Share-based payments expense during the year
As 30 June 2020
Nature and purpose of reserves
Share-based
payments
$
1,786,629
391,840
2,178,469
2,270,073
4,448,542
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 (01/07/2019)
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 (30/06/2020)
27,750,000
14,500,000
-
-
-
42,250,000
18,583,166
Options at the start of the period (01/07/2018)
36,250,000
61 Annual Report 2020
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)
-
-
-
(8,500,000)
27,750,000
17,966,666
These share options are the only outstanding share options of the consolidated entity. The terms attached to the options
are outlined below:
Executive General Manager 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
Director Options
Number
Value per option
Subscription price per option
Each option is convertible into
Exercise price per option
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.
If a milestone is not achieved, then the options for that
milestone will lapse unvested. As at 30 June 2020, 800,000
options have been vested.
2 September 2016
2 September 2021
At any time from date of vesting
None
14,000,000
$0.0851
$Nil
1 ordinary share in the parent entity
$0.34
62 Annual Report 2020
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
Directors 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
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. As at 30 June
2020, 1,616,500 options have been vested.
23 February 2018
13 February 2023
At any time from date of vesting
None
14,500,000
$0.15
$Nil
1 ordinary share in the parent entity
$0.34
Vesting on issue date
10 September 2019
10 September 2024
At any time from date of vesting
None
63 Annual Report 2020
Note 25. Share-based payments
The expense recognised for employee services received during the year is shown in the following table:
30 June
2020
$
30 June 2019
$
Expense arising from equity-settled share-based payment transactions
Total expense arising from share-based payment transactions
2,270,073
2,270,073
391,840
391,840
There were no cancellations or modifications to the share-based payment awards for the year ended 30 June 2020 and
30 June 2019.
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
2020
Number
27,750,000
14,500,000
-
42,250,000
18,583,166
2020
WAEP
0.33
0.34
-
0.33
0.33
2019 Number
36,250,000
-
(8,500,000)
27,750,000
17,966,666
2019
WAEP
0.31
-
0.25
0.33
0.33
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. $95,073 has been recognized as expenses in FY20 for this grant.
On 17 January 2017, the board of directors authorised (following the approval of shareholders), the issue of 14,000,000
share options in the consolidated entity to four of the Company’s directors, $1,191,857 has been recognised as expenses
in FY17 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.
On 10 September 2019, the board of directors authorised (following the approval of shareholders), the issue of
14,500,000 share options in the consolidated entity to five of the Company’s directors, $2,175,000 has been recognised
as expenses in FY20 for this grant. The details are as below:
Weighted average fair value at the measurement date
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of share option/SARs (years)
Weighted average share price ($)
Model used
0.34
Nil
40
0.84
5
0.25
Black-Scholes
64 Annual Report 2020
Note 26. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated
entity is set out below:
Short-term employee benefits
Superannuation
Other employment benefits
Share-based payments
30 June 2020 30 June 2019
$
$
1,946,354
1,904,572
187,551
111,135
80,475
102,936
160,821
2,270,073
2,375,201
4,388,716
Short-term employee benefits include salaries, bonuses and other short-term remuneration payments. Post-
employment benefits include superannuation payments made by Genex. Share-based payments refers to employee
options paid to key personnel.
Note 27. Auditors’ remuneration
During the year the following fees were paid for services provided by Ernst & Young, the auditor of Genex Power Limited
30 June
2019
$
Fees to Ernst & Young (Australia)
30 June 2020
$
Fees for auditing the statutory financial report of the parent covering the group and
auditing the statutory financial reports of any controlled entities.
Fees for assurance services that are required by legislation to be provided by the
auditor
Fees for other assurance and agreed-upon-procedures services under other legislation
or contractual arrangements where there is discretion as to whether the service is
provided by the auditor or another firm
Fees for other services:
Tax compliance
-
Model Review Services for debt refinancing
-
-
Transactional Tax Services
Total auditor’s remuneration
194,318 194,670
-
-
-
-
40,000 47,500
72,100 61,200
127,900 71,000
434,318 374,370
Note 28. Commitments and contingencies
Capital commitments
At 30 June 2020, the consolidated entity has committed capital of $59,442,116. This is related to Jemalong Solar Project
and it will be completed by April 2021.
65 Annual Report 2020
Note 29. Lease Liability
Reconciliation between the rental obligation on 1 July 2019 and operating lease commitments presented under AASB
16 as of 30 June 2019
Operating lease commitments as at 30 June 2019
Weighted average incremental borrowing rate as at 1 July
2019
Discounted operating
extension option as at 1 July 2019
lease commitments
including
962,595
5%
797,575
Lease payments relating to newly identified leases based
on AASB16 as at 1 July 2019
Lease obligation as of 1 Jul 2019
2,309,834
3,107,409
Movement
Opening balances on AASB 16 adoption
Interest
Repayment
Lease modification
Carrying value at 30 June 2020
Current lease liability
Non-current lease liability
At 30 June 2020
3,107,409
128,487
(246,614)
172,282
3,161,564
207,640
2,953,924
3,161,564
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
considered key management personnel. Disclosures relating to key management personnel remuneration are set out in
the Remuneration Report and Note 26 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 Notes
25 and 26 above.
66 Annual Report 2020
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
2020
$
30 June 2019
$
20,676,544
23,237,476
20,676,544
23,237,476
30 June
2020
$
30 June 2019
$
286,098
1,362,109
92,564,488
56,832,309
38,860,993
1,969,961
50,160,998
48,965,307
62,542,338
41,899,049
4,448,542
(24,587,389)
2,178,468
(36,210,515)
42,403,491
7,867,002
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2020 and 30 June 2019.
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
67 Annual Report 2020
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
Genex (Storage) Pty Ltd
Como Energy (Yabulu) Pty Ltd
Como Energy (Bouldercombe) Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
30 June
2020
%
30 June
2019
%
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%
100.00%
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%
100.00%
* 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:
Depreciation and impairment of property, plant and equipment
Share-based payment expense
Movements in provisions, pensions
Net loss on financial instruments at fair value through profit or loss
Finance income
Finance costs
Working capital adjustments:
Decrease/(Increase) in trade and other receivables inventories and prepayments
Increase/(Decrease) in trade and other payables
Interest received
Interest paid
(10,534,250)
(5,477,931)
8,006,499
2,270,073
183,574
(1,177,822)
(135,228)
4,428,506
6,369,366
391,841
(313,216)
(1,229,163)
(225,460)
4,922,282
(1,525,844)
(2,267,182)
(751,674)
(430,966)
775,404
4,782,157
135,228
(3,487,158)
(4,103,604)
225,460
(4,486,058)
521,559
68 Annual Report 2020
Note 34. Changes in liabilities arising from financing activities
1 July 2019 Non-Cash
Loan
extinguishm
ent
Proceeds
from
borrowing
Repayment on
borrowing
Establishment
Fee
Reclassification
of Loan
Non-cash adjustment due
to Effective Interest Rate
30 June 2020
4,570,770
(1,905,503)
(2,665,267)
-
3,852,362
(453,118)
1,140,202
516,954
5,056,400
16,883,246
(399,849)
651,124
17,134,521
94,353,392
(94,353,392)
-
94,353,392
69,825,078
(2,625,000)
(1,140,202)
(307,401)
160,105,867
98,924,162
-
88,655,183
(3,118,385)
(3,024,849)
-
860,677
182,296,788
Current
100m Senior
Bank Loan
175m Senior
Bank Loan
Non-current
CEFC
Corporate
Loan
100m Senior
Bank Loan
175m Senior
Bank Loan
69 Annual Report 2020
Note 35. Events after the reporting year
In August 2020 Genex undertook a capital raising via a share placement and Share Purchase Plan (SPP), the total amount
raised was $28.276 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.
Subsequent to 30 June 2020, the Group signed a share subscription agreement with Electric Power Development Co Ltd
(J-Power) for the development of the K2-Hydro project. This will be presented for shareholders’ approval in the extra
ordinary general meeting in September 2020.
The Company received a revised Offer to Connect from Powerlink. The Offer is to Connect includes the construction of
the Transmission Line (to connect K2-Hydro to the Queensland grid network at Mount Fox) and contains updated pricing
with validity to 30 September 2020. In addition, Genex has secured the extension of its Generator Performance Standards
approval by AEMO to 30 September 2020, to align with the validity of the Offer to Connect.
Apart of the matters outlined above, there have been no other material events or circumstances which have arisen since
30 June 2020 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 36. Earnings per share
30 June
2020
30 June
2019
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
$10,534,250
400,214,697
$5,477,931
307,121,925
-
-
400,214,697
307,121,925
Basic earnings per share
Diluted earnings per share
Cents
(2.63)
(2.63)
Cents
(1.78)
(1.78)
* The weighted average number of shares takes into account the weighted average effect of right issue during the prior
year.
$5,739,583 ARENA convertible notes and 18,583,166 share options have not been taken into account of in the diluted
earnings per share calculation since they are 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.
70 Annual Report 2020
Note 37. Impact of COVID-19
COVID-19 has had a dramatic impact on Australian society. In the electricity sector there has been a significant decline
in consumer demand as well as changed the pattern of electricity usage throughout the day. This has generally translated
into lower wholesale electricity prices across all the states.
Notwithstanding this, Genex’s operations has remained relatively resilient to COVID-19. The consolidated entity’s sole
production asset KS1 has been operating largely unaffected since the start of the pandemic. Whilst the reduced demand
and electricity prices have caused some constraints on KS1’s generation and impacted the revenue received from the
market, a large portion of the revenue for KS1 is underpinned by a long-term offtake contract which offers protection
against market price fluctuation. Strict protection measures are also in place on site at KS1 to prevent the spread of
COVID-19.
In relation to construction of JSF, Genex has also been working closely with its stakeholders such as contractors, suppliers
and financiers to ensure the project is being delivered on time whilst also mitigating the risk of COVID-19 spread on site.
Key equipment from suppliers are continuing to arrive on site in a timely manner and where deliveries are delayed, they
have thus far not caused a material delay to the delivery schedule. JSF remains fully funded and on track to reach
completion in late Q4 2020.
Finally, COVID-19 has also had minimal impact on the development of K2H. Genex continues to rapidly progress final
negotiations on the key contracts needed to reach financial close. These negotiations have not been slowed down due
to COVID-19.
The board and management have scrutinised the impact of COVID-19 on the consolidated entity. The Company has
reviewed the assumptions adopted in asset valuation processes in the context of the potential impact of COVID-19.
Currently, it is not expected that COVID-19 will have a material, adverse impact on Genex’s operations or the carrying
value of its various assets. This is largely due to the long-life natures of these assets and the various contracts
underpinning them.
71 Annual Report 2020
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 2020 are in
accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its
performance for the year ended on that date; and
complying with Accounting Standards and the Corporations Regulations 2001;
ii.
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in
Note 1; and
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
2. This declaration has been made after receiving the declarations required to be made to the directors by the managing
director and the finance director in accordance with section 295A of the Corporations Act 2001 for the financial year
ended 30 June 2020.
On behalf of the board
________________________________
Ben Guo
Director
27 August 2020
Sydney
Ernst & Young Services Pty Limited
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
2020, the consolidated statement of comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020
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
(including Independence Standards) (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.
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.
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Liability limited by a scheme approved under Professional Standards Legislation
72
Carrying Value of Property, Plant and Equipment
Why significant
How our audit addressed the key audit matter
At 30 June 2020, the Group recognised
Property, Plant and Equipment of $179.8m.
The recognition and recoverability of the Group’s
Property, Plant and Equipment 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 Property, Plant and Equipment
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 2020 Annual Report, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
73
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
•
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
74
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, actions taken to eliminate
threats or safeguards applied.
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 15 to 19 of the directors' report for the year
ended 30 June 2020.
In our opinion, the Remuneration Report of Genex Power Limited for the year ended 30 June 2020,
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
27 August 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
75
76 Annual Report 2020
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’ 4th Edition (the Recommendations) including the 8 principles
and 35 specific recommendations included therein. This is the first time the Company has reported against the 4th Edition
of the Recommendations. The Board has resolved to adopt and 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 26 August 2020 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:
Lay Solid Foundations for Management and
Oversight
1.1
Recommendations
A listed entity should have and disclose a board
charter setting out:
(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.
A
listed entity should clearly delineate the
respective roles and responsibilities of its board and
management
their
performance.
regularly
review
and
The Company complies with this Recommendation.
(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,
Individual
the Company’s Chairman,
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, purpose, values, 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
77 Annual Report 2020
1.2
A listed entity should:
(a) undertake appropriate checks before appointing
a director or senior executive, or putting
someone forward for election as a director; and
securityholders with all material
information in its possession relevant to a
decision on whether or not to elect or re-elect a
director.
(b) provide
strategy, purpose, values, policies and programs
approved by the Board as outlined in paragraph 8.3.
The Company complies with this Recommendation.
(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
commitments of
the
prospective candidate (including the potential
for any actual or perceived conflicts of interest
at the time of the candidate’s appointment or
in the foreseeable future) and an indication of
the time involved; and
an acknowledgement that the prospective
candidate will have sufficient time to meet the
requirements of non-executive directors of the
Company.
•
All of the Company’s current directors have undergone
bankruptcy and police checks and appropriate checks
will also be undertaken prior to the appointment of any
new directors to the Board or any new candidates for
election.
(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;
• whether the Board considers the person to be
independent;
• other directorships held;
• particulars of other positions which involve
•
•
the
significant time commitments;
the term of office currently served by any
director subject to re-election;
for new candidates, confirmation that the
Company has conducted appropriate checks
into
and
experience and whether those checks have
revealed any information of concern that might
affect the person’s ability to perform the role or
a shareholder’s decision on how to vote on a
resolution
that
candidate;
candidate’s background
the appointment of
for
78 Annual Report 2020
1.3
A listed entity should have a written agreement with
each director and senior executive setting out the
terms of their appointment.
1.4
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.
1.5
A listed entity should:
(a) have and disclose a diversity policy;
(b) Through its board or a committee of the
for
board, set measurable objectives
achieving gender diversity
the
composition of its board, senior executives
and workforce generally; and
in
in relation to each reporting
(c) disclose
period:
(1) the measurable objectives set for that
period to achieve gender diversity;
(2) the entity’s progress towards achieving
those objectives; and
(3) either:
(A) the respective proportions of men
and women on the board, in
senior executive positions and
the whole workforce
across
(including how the entity has
defined “senior executive”
for
these purposes); or
the entity
“relevant
employer” under the Workplace
Gender Equality Act, the entity’s
recent “Gender Equality
most
Indicators”, as defined
in and
published under that Act.
(B) if
is a
•
•
a statement as to whether the Board supports
the election or re-election of the candidate and
the reasons why; and
any other particulars required by law.
The Company complies with this Recommendation.
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. All directors
provide their services as directors to the entity in an
individual capacity but may provide any additional
services through a service entity which occurs in the
case of one director.
The Company complies with this Recommendation.
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
in
Secretary’s role of responsibilities
paragraph 8.4 of the Board Charter.
The Company complies with this Recommendation.
(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 is sought in all areas
of the Company’s business. Decisions relating to
promotion, leadership development and flexible work
arrangements are based on merit and reinforce the
importance of equality in the workplace. Ongoing
is
monitoring of company policies and culture
undertaken to make sure they do not hold any group
back in their professional development.
run efficiently and effectively, and
is outlined
(b) While the Company has not yet set measurable
objectives for achieving gender diversity with respect to
the composition of its board, senior executives or
workforce generally, the Company aims to achieve
gender diversity in all areas of its business noting that
the most recent appointment to the board and the most
recent senior executive appointment were both women.
(c)(1) As stated in (b) above, the Company has not yet
set measurable objectives in terms of a specific quota
or ratio but adopts an approach of aiming to achieve
79 Annual Report 2020
gender diversity in every new appointment to the
board, at senior executive level or in the workforce
generally.
(c) (2) The Company is making progress towards gender
diversity with the most recent board and senior
executive appointments both being women. The
Company will continue to strive for gender diversity and
will establish measurable objectives for achieving
gender diversity when it has grown to a point where it
is appropriate to do so. The Board regularly reviews its
policy and practical approach in achieving gender
diversity to determine
for current
circumstances and make appropriate recommendations
where required. The Company’s Corporate Governance
Statement each year contains an update on the
Company’s
ASX’s
recommendations and the Company’s Diversity Policy.
its adequacy
compliance
with
the
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 for each reporting period, whether a
performance evaluation has been undertaken in
accordance with that process during or in
respect of that period.
(c)(3)(A) The Company currently has 15 employees and
7 consultants. 6 of the employees and 2 of the
consultants are women. The Company has 3 women in
Senior Executive positions with the definition of a
“senior executive” according to generally well known
market practice and definitions. The Company has 1
female director. This will continue to be reviewed in
accordance with each review of the Board’s skills and
requirements
in accordance with the Company’s
Diversity Policy.
(c)(3)(B) The entity is not a “relevant employer”.
The Company complies with this Recommendation.
(a) The Chairman is responsible for overseeing 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
80 Annual Report 2020
commission an external review of the Board, and its
composition.
following
the appointment of
(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). It is the Board’s current intention
that the next formal review of the Board will be
undertaken
the
nominated director from J-Power, which is subject to
the approval of shareholders at an Extraordinary
General Meeting scheduled for 18 September 2020 and
following financial close of the Company’s Kidston
Pumped Storage Hydro Project.
The Company complies with this Recommendation.
(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
Executive Officer, Chief Operations Officer and other
senior executives will take place at the same time as a
formal Board evaluation scheduled to occur in late 2020
following financial close of the Company’s Kidston
Pumped Storage Hydro Project.
The Board of a listed entity should be of an
appropriate size and collectively have the skills,
commitment and knowledge of the entity and the
industry in which it operates, to enable it to
discharge its duties effectively, and to add value.
this
comply with
The Company does not
Recommendation.
(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 Board’s two executive directors
and 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.
1.7
A listed entity should:
(a) have and disclose a process for evaluating the
performance of its senior executives at least
once every reporting period; and
(b) disclose for each reporting period, whether a
performance evaluation has been undertaken in
accordance with that process during or in
respect of that period.
Principle 2:
Structure the Board to be effective and add
value
2.1
Recommendations
The board of a listed entity should:
(a) have a nomination committee which:
(1) has at least three members, a majority of
whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the
number of
the committee met
throughout the period and the individual
times
81 Annual Report 2020
attendances of the members at those
meetings; OR
(b) if it does not have a nomination committee,
disclose that fact and the processes it employs
to address board succession issues and to
ensure that the board has the appropriate
balance of skills, knowledge, experience,
independence and diversity to enable it to
discharge
responsibilities
effectively.
its duties and
(b) While the Board does not currently comply with this
recommendation, given the stage of the Company’s
operations and relatively small number of employees,
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 Board shall ensure that, collectively, it has the
appropriate range of skills and expertise to properly
fulfil its responsibilities, including:
accounting;
finance;
•
•
• business;
•
•
• Managing Director/CEO-level experience; and
•
legal, regulatory and compliance;
the renewable energy industry;
relevant technical expertise.
2.2
A listed entity should have and disclose a board
skills matrix setting out the mix of skills that the
board currently has or is looking to achieve in its
membership.
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 Company complies with this Recommendation.
The Board will determine the procedure for the
selection and appointment of new Directors and the re-
election of
in accordance with the
Company’s Constitution, the ASX Listing Rules and
having regard to the ability and independence 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
the
development of the strategic direction, purpose and
values of the Company.
The Board shall ensure that, collectively, it has the
appropriate range of skills and expertise to properly
fulfil its responsibilities, including:
role effectively and
to contribute
to
accounting;
finance;
•
•
• business;
•
•
• Managing Director-level experience; and
•
legal, regulatory and compliance
the renewable energy industry;
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 or
relationship of the type described in Box 2.3 but
the board is of the opinion that it does not
The mix of skills of the current Board is set out on the
Company’s website.
The Company complies with this Recommendation.
(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
82 Annual Report 2020
compromise the independence of the director,
the nature of
interest, position or
relationship in question and an explanation of
why the board is of that opinion; and
(c) the length of service of each director.
the
Yongqing Yu is the representative of the Company’s
second largest shareholder. The independent directors
are Dr Ralph Craven, the Company’s Non-Executive
Chairman, and Ms Teresa Dyson, both Non-Executive
Directors
(b) Not applicable. While each of the directors have
received grants of options approved by shareholders in
the past, these have not had any specific performance
hurdles or vesting milestones attached other than an
exercise price well above the share price as at the date
of the grant. Additionally, while the independent
directors do receive payments for services rendered
over and above their duties as
non-executive
independent directors, these are not performance
based payments but payments for services provided on
an arm’s length basis and not of sufficient duration for
the
to be
compromised. For example, services of this nature have
been provided by the independent directors to assist
Genex’s small management team during periods of
significant workload and where additional expertise has
been required in relation to the Company’s Jemalong
and Kidston Pumped Storage Hydro Projects. The
services are not of an ongoing nature.
independence of
these directors
this
comply with
(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
Recommendation.
The Company does not currently have a majority of
independent directors. However, the Board is of the
view that notwithstanding that it does not currently
comply with this recommendation, it nonetheless has
the appropriate mix of skills and experience for the
Company’s present stage of operations. The Company
does however have a majority of Non-Executive
directors comprising 4 of the 6 directors.
The Company complies with this Recommendation.
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.
The Company complies with this Recommendation.
Pursuant to the Company’s Board Charter the Board
induction and
must
implement an appropriate
2.4
A majority of the board of a listed entity should be
independent directors.
2.5
2.6
The chair of the board of a listed entity should be
an independent director and, in particular, should
not be the same person as the CEO of the entity.
A listed entity should have a program for inducting
new directors and
for periodically reviewing
whether there is a need for existing directors to
83 Annual Report 2020
undertake professional development to maintain
the skills and knowledge needed to perform their
role as directors effectively.
education process for new Board appointees and Senior
Executives
to gain a better
understanding of:
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
Existing directors are required to participate
in
development initiatives from time to time including in
relation to health and safety.
Upon appointment to the Board, each new director
receives a copy of the Company’s Constitution,
corporate governance policies, corporate insurances
and any other documents requested by the director to
assist in their induction.
A listed entity should instil and continually reinforce
a culture across the organisation of acting lawfully,
ethically and responsibly.
The Company complies with this Recommendation.
The Company’s statement of values is displayed on the
Company’s website as follows:
“Genex Power is committed to the development and
delivery of clean renewable energy to as many Australian
households as possible.
Genex strives to conduct its business in the most ethical,
socially responsible, sustainable and transparent manner
possible, at all times acting with integrity and respect for
all of its stakeholders.
Genex’s core values
local
include
communities and regions which surround Genex’s
projects by providing jobs, investment and economic
stimulation”.
The Company complies with this Recommendation.
(a) The Company has a “Code of Conduct for Directors
and Key Officers” which includes senior executives and
employees; and
(b) Any material breaches of this policy are brought
directly before the Board.
The Company complies with this Recommendation.
looking after
(a) The Company has a whistleblower policy; and
(b) Any material breaches of this policy are
brought directly before the Board.
Principle 3:
Instil a culture of acting lawfully, ethically and
responsibly
Recommendations
A listed entity should articulate and disclose its
values.
3.1
3.2
3.3
A listed entity should:
(a) have and disclose a code of conduct for its
directors, senior executives and employees; and
(b)ensure that the board or a committee of the
board is informed of any material breaches of that
code.
A listed entity should:
(a) Have and disclose a whistleblower policy;
and
(b) Ensure that the board or a committee of the
board is informed of any material incidents
reported under that policy.
3.4
A listed entity should:
The Company complies with this Recommendation.
(a) Have and disclose an anti-bribery and
corruption policy; and
(a) The Company has a policy titled “Code of
Conduct – the Company’s obligations to
the
Stakeholders” which
operates
as
84 Annual Report 2020
(b) Ensure that the board or a committee of the
board is informed of any material breaches
of that policy.
Company’s anti-bribery and corruption policy;
and
(b) Any material breaches of this policy are
brought directly before the Board.
Principle 4:
Safeguard the integrity of corporate reports
Recommendations
The board of a listed entity should:
(a) have an audit committee which:
4.1
(1) has at least three members, all of whom are
non-executive directors and a majority of
whom are independent directors; and
(2) is chaired by an independent director, who is
not the chair of the board,
and disclose:
(3) the charter of the committee;
(4) the relevant qualifications and experience of
the members of the committee; and
times
(5) in relation to each reporting period, the
number of
the committee met
throughout the period and the individual
attendances of the members at those
meetings; OR
(b) if it does not have an audit committee, disclose
that fact and the processes it employs that
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
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
is
management and
operating effectively.
A listed entity should disclose its process to verify
the integrity of any periodic corporate report it
releases to the market that is not audited or
reviewed by an external auditor.
internal control which
A listed entity should have appropriate processes to
verify the integrity of its corporate reports.
The Company complies with this Recommendation.
(a) The Company has 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.
(4) The relevant qualifications and experience of the
Committee members is available on the Company’s
website.
(5) The Committee met 4 times in the financial year with
all members present at the meeting.
(b) Not applicable.
The Company complies with this Recommendation.
The Board ensures, and has received on each occasion
that it approves the Company’s statutory accounts, 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 complies with this Recommendation.
that a copy of every
The Company ensures
announcement to the market is sent to every Board
member and senior executive for review and comment
prior to release to the ASX which includes the
Company’s Appendix 4C and associated commentary
every quarter. The Board is of the view that having each
announcement reviewed includes an appropriate and
85 Annual Report 2020
Principle 5:
Make Timely and Balanced Disclosure
5.1
Recommendations:
A listed entity should have and disclose a written
its continuous
policy
disclosure obligations under listing rule 3.1.
for complying with
5.2
A listed entity should ensure that its board receives
copies of all material market announcements
promptly after they have been made.
5.3
A listed entity that gives a new and substantive
investor or analyst presentation should release a
copy of the presentation materials on the ASX
Market Announcements Platform ahead of the
presentation.
Principle 6:
Respect the Rights of Security Holders
6.1
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 have an investor relations
program
two-way
communication with investors.
facilitates
effective
that
A listed entity should disclose how it facilitates and
encourages participation at meetings of security
holders.
necessary level of oversight of all statements made to
the market.
A listed entity should make timely and balanced
disclosure of all matters concerning it that a
reasonable person would expect to have a material
effect on the price or value of its securities.
has
The Company complies with this Recommendation.
The Company
continuous disclosure
a
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.
The Company complies with this Recommendation.
The Company Secretary ensures that a copy of all
market announcements is provided to the Board either
immediately before or immediately after release to the
ASX. This practice has been adopted by the Company
since its IPO in 2015.
The Company complies with this Recommendation.
As stated in the responses to 4.3 and 5.2, the Company
ensures that a copy of every announcement to the
market is sent to every Board member and senior
executive for review and comment prior to release to
the ASX which includes any new and substantive
investor presentation. The Company Secretary also
ensures that a copy of the investor presentation is
provided to the Board either immediately before or
immediately after release to the ASX.
A listed entity should provide its security holders
with appropriate information and facilities to allow
them to exercise their rights as security holders
effectively.
The Company complies with this Recommendation.
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 complies with this Recommendation.
The Company’s Corporate Governance Plan includes a
shareholder communications strategy which is outlined
in 6.1.
The Company complies with this Recommendation.
The Company’s Corporate Governance Plan includes a
shareholder communications strategy which is outlined
in 6.1. The Company also encourages shareholders to
86 Annual Report 2020
6.4
6.5
A listed entity should ensure that all substantive
resolutions at a meeting of security holders are
decided by a poll rather than by a show of hands.
A listed entity should give security holders the
option to receive communications from, and send
communications to, the entity and its security
registry electronically.
Principle 7:
Recognise and Manage Risk
7.1
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
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 that the entity is operating with
due regard to the risk appetite set by the board;
and
(b) disclose, in relation to each reporting period,
whether such a review has taken place.
attend the Company’s AGM either in person or virtually
during the current COVID-19 pandemic, and to ask
questions of the Board and the Auditor and/or to
submit questions in writing in advance.
The Company complies with this Recommendation.
The Company has implemented a policy of ensuring
that all resolutions at an AGM or EGM are decided by a
poll.
The Company complies with this Recommendation.
The Company has such a practice already in place for all
shareholders.
A listed entity should establish a sound risk
management framework and periodically review
the effectiveness of that framework
The Company complies with this Recommendation.
(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 4 times during the reporting
period with all members as constituted at the time in
attendance.
(b) Not applicable.
The Company complies with this Recommendation.
(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
87 Annual Report 2020
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
governance, risk management and
internal
control processes.
7.4
A listed entity should disclose whether it has any
material exposure to environmental or social risks
and, if it does, how it manages or intends to manage
those risks.
Principle 8:
Remunerate Fairly and Responsibly
the process for managing risks is integrated within
business planning and management activities. Reports
on risk management are to be provided to the Board by
the Audit and Risk Management Committee at the first
Board meeting subsequent
to each Committee
meeting.
(b) A formal review of the Company’s risk management
framework occurs at every Board meeting with the
Board reviewing and prioritising the top risks faced by
the Company as advised by the COO in conjunction
with the Audit & Risk Management Committee. A
formal review and planning session analysing and
assessing the Company’s risk register occurred a
number of times through the reporting period between
the Audit & Risk Management Committee and the
executive team.
The Company complies with this Recommendation.
(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.
in
already disclosed
(b) Not applicable.
The Company complies with this Recommendation.
The Company is not aware of any potential material
exposure to economic and environmental risks not
otherwise
its previous
announcements and periodic reports to the ASX and
also emphasises the summary of non-exclusive risks
outlined in the Company’s Replacement Prospectus
lodged with ASIC on 10 June 2015. In relation to any
potential, but as yet unknown, environmental risk, the
Company has an environmental assurance bond with
the Queensland Government for $3,804,311 and is
undertaking an Environmental Evaluation Process in
conjunction with the Queensland Department of
Environment and Science in relation to amending the
terms of its current Environmental Authority over the
Kidston site in Queensland. These risks are managed
through a regular risk session involving key members of
management, the Audit & Risk Committee and the
Board.
A listed entity should pay director remuneration
sufficient to attract and retain high quality directors
and design its executive remuneration to attract,
retain and motivate high quality senior executives
and to align their interests with the creation of value
88 Annual Report 2020
8.1
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
level and composition of
for setting the
remuneration for directors and senior executives
and ensuring
is
appropriate and not excessive.
remuneration
that such
8.2
A listed entity should separately disclose its policies
and practices regarding the remuneration of non-
executive directors and the remuneration of
executive directors and other senior executives.
8.3
listed entity which has an equity-based
A
remuneration scheme should:
(a) have a policy on whether participants are
permitted to enter into transactions (whether
through the use of derivatives or otherwise)
which limit the economic risk of participating in
the scheme; and
(b) disclose that policy or a summary of it.
for security holders and with the entity’s values and
risk appetite.
The Company complies with this Recommendation.
(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 Company complies with this Recommendation.
The Committee distinguishes the structure of non-
executive directors'
that of
executive directors and senior executives. The
Company’s Constitution and the Corporations Act also
provides that the remuneration of non-executive
Directors will be not be more than the aggregate fixed
sum determined by a general meeting. The Board is
responsible for determining the remuneration of the
executive directors (without the participation of the
affected director).
The Company complies with this Recommendation.
(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
89 Annual Report 2020
9.1
Principle 9:
Recommendations:
A listed entity with a director who does not speak
the language in which board or security holder
meetings are held or key corporate documents are
written should disclose the process it has in place to
ensure the director understands and can contribute
to
those meetings and
understands and can discharge their obligations in
relation to those documents.
the discussions at
schemes should be timed to coincide with any trading
windows under
trading
policy…”
the Company’s securities
The Company complies with this Recommendation.
Mr Yongqing Yu, a non-executive director based in
China and the representative of the Company’s second
largest shareholder, Asia Ecoenergy Development
Limited, does not speak English. Mr Yu has an
appointed representative who is a senior executive of
that entity, who is able to interpret communications
including relevant Board material with Mr Yu.
9. ADDITIONAL SECURITIES EXCHANGE INFORMATION
The following information is provided pursuant to Listing Rule 4.10 and is current as at 17 August, 2020 (unless otherwise
stated):
Voting Rights
Shareholder voting rights are specified in clause 10.14 of the Company's Constitution lodged with the ASX on 6 July
2015. Option holders do not have the right to vote at a general meeting of shareholders until such time as the options
have been converted into ordinary shares in the Company.
Total number of Shareholders
Total number of Option holders
4,296
11
The Names of substantial shareholders and the number of
shares to which each substantial shareholder and their
associates have a relevant interest, as disclosed in substantial
shareholder notices given to the Company is as follows.
Substantial Shareholders
Total Units
Date of Notice
Mitsubishi UFJ Financial Group, Inc
First Sentier Investor Holdings Pty Limited
Commonwealth Bank of Australia
Zhefu Holding Group
31,536,942
31,536,942
31,536,942
35,678,750
30.04.20
28.04.20
27.04.20
29.07.19
There are 402 shareholders with an unmarketable parcel of shares being a holding of less than 2,273 shares each for a
combined total of 559,472 shares. This is based on a closing price of $0.225 per share as at 14 August, 2020 and
represents 0.13932% of the shares on issue on that day.
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
109
1,029
526
2,073
559
4,296
10,847
3,258,190
4,265,623
86,093,670
404,925,577
0.00
0.65
0.86
17.27
81.22
498,553,907
100.00
91 Annual Report 2020
Top 20 Shareholders
CITICORP NOMINEES PTY LIMITED
ASIA ECOENERGY DEVELOPMENT LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CS THIRD NOMINEES PTY LIMITED
KFT CAPITAL PTY LIMITED
DOWNING DOMAIN INVESTMENTS PTY LTD
DANAWA (INV) PTY LTD
AUSTRALIAN GO FUTURES PTY LTD
WASHINGTON H SOUL PATTINSON & CO LTD
BNP PARIBAS NOMS PTY LTD
NATIONAL NOMINEES LIMITED
KFS PTY LIMITED
HILLMORTON CUSTODIANS PTY LTD
KRUMPET NO 10 PTY LTD
MRS JILLIAN MARIA NOEL TAYLOR
UBS NOMINEES PTY LTD
BRAIDWOOD FARM PTY LTD
Total Units
Percentage %
57,641,041
11.562%
35,678,750
25,669,154
23,407,296
15,200,000
14,834,631
14,500,000
13,112,476
10,000,000
6,647,000
5,000,003
4,545,455
3,876,784
3,488,162
3,224,431
2,626,727
2,500,000
2,415,609
2,361,999
2,297,500
7.156%
5.149%
4.695%
3.049%
2.976%
2.908%
2.630%
2.006%
1.333%
1.003%
0.912%
0.778%
0.700%
0.647%
0.527%
0.501%
0.485%
0.474%
0.461%
49.950
100.00
Top 20 Shareholders
Total Issued Capital
249,027,018
498,553,907
Distribution of Option holders – Exercisable at $0.25 expiring 2 September 2021
Holdings Ranges
Holders
Total Units
Percentage %
1-1,000
1,001-5,000
5,001-10,000
0
0
0
0
0
0
0.00
0.00
0.00
92 Annual Report 2020
10,001-100,000
100,001 and over
Total
0
1
1
0
2,400,000
2,400,000
0.00
100.00
100.00
Option holders with more than 20% of the Class of Option:
JAMES WILLIAM HARDING
2,400,000
100.00
Distribution of Option holders – Exercisable at $0.34 expiring 17 January 2022
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total
Option holders with more than 20% of the Class of Option:
RIVONIA PTY LIMITED
KFT CAPITAL PTY LIMITED
LIGUO CAPITAL PTY LIMITED
Holders
Total Units
Percentage %
0
0
0
0
5
5
0
0
0
0
15,500,000
15,500,000
4,000,000
4,000,000
4,000,000
0.00
0.00
0.00
0.00
100.00
100.00
25.806
25.806
25.806
Distribution of Option holders – 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
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
Option holders with more than 20% of the Class of Option:
JAMES WILLIAM HARDING
2,600,000
53.608
93 Annual Report 2020
CRAIG ARTHUR FRANCIS
2,000,000
41.237
Distribution of Option holders – Exercisable at $0.34 expiring 10 September 2024
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total
Option holders with more than 20% of the Class of Option:
ESCR INVESTMENTS PTY LTD
LIGUO CAPITAL PTY LIMITED
DANAWA (INV) PTY LTD
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
6
6
0
0
0
0
14,500,000
14,500,000
0.00
0.00
0.00
0.00
100.00
100.00
4,000,000
3,000,000
3,000,000
27.586%
20.690%
20.690%
94 Annual Report 2020
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
95 Annual Report 2020