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2023 Report2023 annual report connecting the future Built on a bedrock of three generations of accumulated family expertise, today the GenusPlus Group is a leading ASX-listed provider of critical infrastructure services to a blue-chip client base. We provide an integrated service delivered through key complementary businesses to our clients in the resources, power, utilities, and telecommunications sectors across Australia. Contents About GenusPlus Group Highlights Our Capabilities Chairman’s Review Managing Director’s Report Sustainability People Financial Report Corporate Directory 2 4 6 10 12 14 18 20 101 1 GENUSPLUS GROUP LTD Annual Report 2023 1 1 Annual Report 2023 About Genus connecting the future GenusPlus Group (ASX:GNP) is an end to end service provider for essential power and communications infrastructure. We provide an integrated service delivered through key complementary businesses to our clients in the resources, power, utilities, and telecommunications sectors across Australia. Built on a bedrock of three generations of accumulated family expertise, today the GenusPlus Group is a leading ASX-listed provider of critical infrastructure services to a blue-chip client base. We enable customers to integrate new generation technology into traditional networks and support emerging networking solutions, meeting the demands of a carbon neutral economy; and helping to lead the transition to Australia’s clean future through delivering complex, nationally-significant projects. Powering Up Australia. Our Services We cover the full project life-cycle, from design and engineering to commissioning and decommissioning of power infrastructure assets. Our expertise crosses multiple sectors and our teams are experienced operators in both brownfield and greenfield sites across Australia. design & engineering construction feasibility study testing & commissioning decommissioning shutdowns & maintenance connecting the future through innovative power solutions 2 GenusPlus Group Ltd 3 Annual Report 2023 2023 highlights we're a team of dedicated industry professionals $444 million $36.8 million Revenue of $444 million Normalised EBITDA of $36.8 million $46.7 million $15.7 million Cash balance of $46.7 million Up 67% on PCP NPAT-A of $15.7 million Up 7.6% on PCP $392 million Orderbook of $392 million and strong tendered pipeline of $1.86 billion 4 4 GENUSPLUS GROUP LTD 5 GenusPlus Group LtdAnnual Report 2023 Genus & our capabilities power infrastructure capabilities from the generating source to connection, we tick every box. Our team optimises every stage of an asset’s lifecycle, ensuring certainty with the lowest risk and whole- of-life cost. We draw on experience to continually develop advanced solutions which position projects to transition as technology develops. Our clients include Australia’s largest electricity utilities, infrastructure developers, telecommunications networks and major mining companies. We have delivered projects throughout Australia and across metropolitan, regional & remote areas. 1 2 3 4 5 6 Generating Source Terminal Substations Transmission Infrastructure Zone Substations Distribution Infrastructure Primary Customer Connection Power Station/ E&I Construction Solar Wind Battery Storage/ Hybrid Solutions Terminal Substations Overhead Transmission Infrastructure Underground Transmission Infrastructure Zone Substations Overhead Distribution Infrastructure Underground Distribution Infrastructure Primary Customer Connection 6 6 GENUSPLUS GROUP LTD 7 GenusPlus Group LtdAnnual Report 2023 Genus & our capabilities communications infrastructure capabilities end-to-end communications capability. Our turnkey communications solutions span the full asset lifecycle from feasibility, engineering design, site acquisition, logistics, procurement, construction and integration through to operations and maintenance. We focus on improving asset performance and reducing the risk associated with disruption to operations. Networks: From Concept To Construction Civil & Infrastructure Construction Mobile & Wireless Infrastructure Digital Solutions • • • • Complete network designs Line route selection & optimisation Experienced field delivery capability Field services from planning & design through to construction & maintenance • • • • • • Direct ploughing & optic fibre installation Directional drilling Trenching Cable hauling & cable jointing Pit & pipe installation Asset installation • • Field services covering site acquisition, engineering & and design (SAED), construction & install Extending mobile construction capability to grow into mobile blackspots, 5G and beyond • • • • Dedicated Workforce Operations Centre and field management platform (WFM) Data analytics toolsets Virtual assessment, technician mobility apps Proprietary app connecting to customers 8 8 GENUSPLUS GROUP LTD 9 GenusPlus Group LtdAnnual Report 2023 chairman's review A strong result as industry tailwinds increase Genus produced a strong financial result this year, in the face of some enforced project delays and both inflationary & skilled labour-related challenges. Our diversification and growth strategy remains firmly on track, and our record order book and tender pipeline provide a solid base for future organic growth. Revenue for the year stood at $444 million while normalised EBITDA increased by 4.8% to $36.8 million, which was above market guidance and a record for the Company to date. This result reflects solid performances across all our business segments, given market conditions. Pleasingly we continued to grow our market presence on the East Coast with operations in the region now representing 34% of group revenue at a time of increasingly rapid infrastructure development. This expansion marks the achievement of a number of key strategic goals – with strong growth expected in the medium term leveraging a large pipeline of renewables and transmission projects to drive long term growth in the business. Strategic acquisitions A key enabler of our ability to build a truly national offering across our three segments has been a carefully executed combination of pursuing organic growth whilst also acquiring and integrating strategically positioned companies, which were brought into the Group because they complement our operating model and fit the Genus way of doing business. This year has shown our ability to maximise the capabilities of previously stand-alone operations in target markets which showed value and scalability. The restructuring of our Industrial Services business in FY2022 saw improved results from this segment. Industrial Services is well placed to capitalise on future opportunities, particularly in the renewable energy sector. Restructuring of the Communications acquisition in the first half of FY2023 has seen a measurable improvement to operational and financial results in the second half of FY2023. Overall, this approach combined with cementing our existing relationships with key clients, has elevated Genus’ capacity to deliver while allowing us to pursue far bigger contracts. Australia’s networks are evolving. We’re ready. Positioned for strong growth We have continued to secure key contract wins in line with our strategy across our three segments of Infrastructure, Industrial Services and Communications. As we announced in March, we are progressing contract negotiations to begin work on a Joint Venture partnership on the HumeLink transmission project. This is a new 500kV transmission line in Southern NSW which will connect Snowy Hydro's 2.0 expansion to the network; as part of a $10 billion transmission upgrade helping to drive the National Energy Market’s renewables transition. While this has taken longer than anticipated, what this clearly demonstrates is the market recognising Genus’ ability to consistently provide the skills and expertise required to complete complex energy projects at a time when our clients and the country need it the most. Other key contract wins through the year include a $30 million award to deliver nbn Co’s N2P Evolution Module as part of a 3-year Master Module Agreement; a contract to develop transmission infrastructure for Fortescue’s Project Energy Connect; and a $30 million award to complete infrastructure work for Rio Tinto’s Western Range Project. During the year we completed Stage One of the Kwinana Battery Energy Storage System (KBESS1) for Synergy, which positions us well for more utility-scale battery opportunities across the nation. Think Safe. Work Safe. Home Safe. Our focus on safety and the conducting of safety-awareness initiatives throughout the year have continued to strengthen our safety culture and deliver improvements in our performance. This is demonstrated by our Total Recordable Injury Frequency Rate (“TRIFR”) per million man-hours worked of 2.4 at 30 June 2023 – surpassing our internal target of 3.5. The Group’s Lost Time Injury Frequency Rate (“LTIFR”) was again zero, which is a direct result of the tireless effort displayed by our outstanding operational teams. Our expanding workforce continues to be built on experienced professional staff, highly skilled trades people, a network of trades-based workshops and specialised subcontractors. Today the Group directly employs nearly 900 people including 87 apprentices/ trainees. We believe that our commitment to employing our own people plays a large part in maintaining the proactive culture of Genus, which is one of our key strategic pillars. We ended the year in a strong financial position with a cash balance of $46.7 million and net cash of $22.4 million, with the Group’s cash position increasing 67% compared to the previous year. The continued strength of our balance sheet positions us for organic and strategic acquisition opportunities focused on increasing our existing scale and geographic reach, and further developing our east coast presence. Continuing to deliver for shareholders The Board has declared a fully franked final dividend of 2.0 cents per share (cps), up from 1.8 cps last year As was the case in the previous financial year, we remain focused on maintaining a strong balance sheet to support growth both organically and by strategic acquisition where we see good value. Looking to the future With an extremely strong tender pipeline of $1.86 billion; an order book standing at $392 million; budget and opportunity leads in excess of $3 billion; and a workforce approaching 900, our growing and diversified company is well placed to reach new heights in the years to come. We are confident that our growth strategy positions us well to play an active and major role in the expanding pipeline of infrastructure opportunities across Australia, as the country continues its crucial energy transition. Our talented people and their commitment and dedication always have and always will form the bedrock of our business. To each and every one – thank you. Finally, I again would like to thank you, our shareholders, for continuing to be an integral part of our growth ambitions - and I trust you will continue to share in our future success. Simon High Chairman As Australia’s energy networks continue to evolve, we have developed a strong platform for growth - ensuring we are well positioned to be an active participant in the renewables transition; and the rewiring of the nation. 10 10 GENUSPLUS GROUP LTD 11 GenusPlus Group LtdAnnual Report 2023 managing director's report The diversification we have built into the business has helped maintain strong profitability throughout the Group; this platform means that we can consistently provide the expertise required to complete complex projects at a time when our clients and the country need it the most. A Strong Growth Platform FY2023 was a strong year for Genus, considering a healthy forward-looking focus on the integration of acquisitions and consolidation of internal management systems, procedures and organisational structures; this creates a solid platform for future strong growth, with significant progress made to position the Group to be an active and major participant in the transition to renewable energy. The diversification that we continue to build into the business has helped us maintain strong profitability. East coast revenue has grown to 34% during 2023 (2022: 22%) and the Group delivered EBITDA margin improvement in FY2023 to 8.3%, up from 7.8% in FY2022. The Group’s focus on both acquisitive and organic growth along with diversification of recurring revenue streams underpin the benefits we can deliver to clients and our shareholders, predominantly through increased capacity, financial strength and security. This expansion in capability and access to a greater forward pipeline has driven a strong order book, which is again supplemented by the traditionally robust recurring revenue base that we generate across the business. A performance underpinned by strong operational success As the Chairman notes, this past year saw Genus shortlisted to tender for delivery of part of the $3.3 billion Transgrid’s HumeLink 500kV Transmission Project in NSW while other major project activity included completion of Stage 1 of Synergy’s Kwinana Battery Energy Storage System (KBESS) Project - in the process delivering WA’s first utility- scale BESS - along with key electrical infrastructure package awards from Rio Tinto and for Fortescue’s milestone Pilbara Generation Project. Anticipated recurring works for major utilities across Australia will continue to provide ongoing revenue in the years ahead. Against this backdrop, the Group was able to deliver a year of robust growth despite the prevailing environment. From Revenue of $444 million, normalised EBITDA was up 4.8% to $36.8 million. Net assets increased by $11.6 million which reflects earnings in the year net of dividend payments. Our Communications team was awarded a 3-year Master Module Agreement with nbn under which Genus will deliver the N2P Evolution Module to deploy additional fibre infrastructure; including the provision of specialist planning, design and construction of nbn broadband infrastructure. This is a key opportunity alongside our ongoing contract with Telstra to grow the Communications business. The foundations of the division are in place to enable Genus to take advantage of significant forecast spend in the communications industry. The Group has a strong cash position increasing Cash at bank to $46.7 million at 30 June 2023, up from $27.9 million in FY2022. Net cash is up to $22.4 million compared to $6.8 million in 2022. Revenue EBITDA1 Non-recurring transactions2 Normalised EBITDA3 Depreciation & Amortisation4 Normalised EBIT-A5 Amortisation of acquisition intangibles EBIT Profit for the year NPAT-A6 FY2023 $ FY2022 $ 444,178,894 450,936,669 Change % (1.5%) 33,666,128 32,994,800 3,124,369 2,114,658 36,790,497 35,109,458 (11,875,275) (10,363,641) 24,915,222 24,745,816 (3,337,917) (1,538,290) 18,452,936 21,089,128 13,405,524 13,556,474 4.8% 0.7% 15,742,065 14,633,277 7.6% Note The table contains non-IFRS measures that are unaudited but derived from auditor reviewed FY23 Financial Statements. These measures are presented to provide further insight into the Group’s performance. EBITDA is earnings before interest, tax, depreciation and amortisation. Non-recurring transactions relate to Acquisition costs, ECM Claim costs and Restructuring costs. Normalised EBITDA is EBITDA plus Non-recurring transactions Depreciation & amortisation excludes amortisation of acquisition intangibles. Normalised EBIT-A is Normalised EBITDA less depreciation and amortisation (excluding amortisation of acquisition intangibles). NPAT-A is Profit for the year plus amortisation of acquisition intangibles adjusted for tax effect at 30 June. 1 2. 3. 4. 5. 6. Our people Powering Up Australia As ever, our success is dependent on the effort, capability and commitment of our people. Their dedication and support enables us to continue to deliver smart, innovative solutions across our diverse sectors, which forms a significant part of Genus’ competitive advantage. Investing in the next generation of employees is integral to the continued success of our business and the wider industry. Our successful apprenticeship program has expanded as we continue to invest in the growth, development, education and training for young graduates, apprentices and trainees. We currently support the career ambitions of 87 apprentices and trainees, which is building a strong foundation of future skilled tradespeople. Formalising our commitment to reconciliation This year we were very proud to finalise and publish GenusPlus Group’s first Reflect Reconciliation Action Plan (RAP). Through this Plan, we reaffirm our commitment to actively work toward reconciliation with Aboriginal and Torres Strait Islander peoples. We are committed to measuring and understanding the impact of our activities. This includes ensuring that we remain focused on creating positive and tangible outcomes for our Aboriginal and Torres Strait Islander colleagues, partners and communities. Our RAP includes practical actions that will drive Genus’ contribution to reconciliation both internally and in the communities in which we operate. With industry tailwinds gaining momentum, Genus expects to capitalise on this underlying momentum to deliver high single to low double-digit growth in EBITDA in FY2024. We expect to return to strong growth in the medium term with a large pipeline of renewables and transmission projects to drive the business. We expect to see continued growth from our east coast operations and a related increase in services revenue in FY2024. The increased focus on the power network around Australia should see significant opportunities present during the coming 10- 20 years as the system goes through a substantial transition from traditional energy sources to generation from new and renewable technologies. Whilst we continue to derive the majority of earnings from the core business in Western Australia, we continue to make substantial progress in expanding the business into the much larger east coast markets. David Riches Managing Director 12 12 GENUSPLUS GROUP LTD 13 GenusPlus Group LtdAnnual Report 2023 Sustainability innovative people, delivering results through expertise and hard work 14 14 GENUSPLUS GROUP LTD 15 GenusPlus Group LtdAnnual Report 2023 Sustainability We will continue to implement health and safety initiatives which provide the foundation for a sustainable safety culture. SHEQ With nearly 900 people working across Australia, it is essential for Genus to have a robust approach to health, safety and environment. Our goal is to ensure that those influenced by our work (including employees, subcontractors, and the general public) go home safely, every day. This approach to health and safety is embodied in the Group’s “Think Safe. Work Safe. Home Safe.” message. We have established and implemented an integrated safety, health, environment, and quality (SHEQ) management system that provides the framework for how these areas are managed. In the years ahead we will continue to maintain our triple- ISO Management System certification (45001, 14001 & 9001) and further streamline our Group-wide SHEQ management system. We will also continue to implement health and safety initiatives that will provide the foundation for sustainable safety performance across Genus. Our main scope of work is predominantly high risk. To mitigate the structural challenges of rapid growth, our SHEQ team is focused on identifying our critical risks based on our Safety Non-Negotiables. These Safety Non-Negotiables were established to increase awareness and understanding of critical risks and control measures; provide a clear set of standards that are easily understood by all; and ultimately create an awareness to help prevent serious workplace injury and fatality. These safety non-negotiables are communicated at inductions, and regularly referred to during toolboxes, health and safety communications and during incident investigations. Milestones achieved during FY23 include: 0 LTIFR at 30 June 2023 2.4 TRIFR at 30 June 2023 (exceeding our internal target of less than 3.5) connecting the future.together. powering up Australia Our dedication goes beyond local sourcing, reflecting our commitment to nurturing the growth and well-being of the communities we serve. Community We are dedicated to supporting the progress of the communities in which we operate by extending aid through contributions, grants, and sponsorships to organisations that play a pivotal role in their development. Our dedication goes beyond local sourcing, reflecting our commitment to nurturing the growth and well-being of the communities we serve. Through our financial contributions, we actively participate in initiatives that make a meaningful difference in these communities' development and prosperity. Some of the organisations we’ve been proud to support include: • • • • • • • • • • • • Warwick Senators Under-14 Girls' basketball team Darkness Into Light Perth walk Under 10 team at Oran Park Rovers FC in NSW Pannawonica Primary School, WA Ronald McDonald House – Up All Night Lions Cancer Institute inc ‘Special Children’s’ Christmas Big Day Out’ Cancer Council Victoria Australasian Institute of Policing Rockingham Lakes Primary School Sporting Team Royal Flying Doctors’ Service WA NSW Rural Fire Service Multiple Sclerosis Research Australia We foster employee engagement in local community endeavours by encouraging participation in volunteer activities and endorsing attendance at community events. Over the past year, our employees have actively engaged in a range of community initiatives, including: • • Collaborating with the Starlight Children’s Foundation Australia: Our team had the privilege of visiting the remarkable Starlight Experience Room at Perth Children's Hospital. This organization tirelessly operates life-changing programs, offering support, connection, empathy, and positive distractions to seriously ill children and their families. We take pride in supporting these dedicated individuals who uphold the Foundation's mission of brightening the lives of young patients, recognizing that childhood experiences have lasting impacts. Engaging with the Early Learning Centre in Parkhurst, Queensland: During Community Helpers Week, the children at the center had an immersive experience as honorary members of the GNIQ team. They donned Genus helmets and line gloves and explored a truck, learning about its mechanics and safety features. The children were fascinated by the lights and stabilizers, and we left them a piece of conductor as a memento. The visit was a resounding success, with the centre's staff expressing delight and anticipation for future engagements, including a planned visit with a Crane Borer! Our commitment to these community involvements reflects our dedication to making a positive impact in the places we operate and supports our ethos of enriching lives and fostering connections. 16 16 GENUSPLUS GROUP LTD 17 GenusPlus Group LtdAnnual Report 2023 connecting the future through end-to-end infrastructure solutions Sustainability Employing our own people and trades improves safety, quality and productivity and enables us to deliver smart, innovative solutions across our diverse sectors. People The foundation of our success is the effort, capability and commitment of our people. Our unique culture underpinned by core values of safety, integrity, collaboration and mateship is a crucial piece of the Group’s competitive advantage. Genus’ business is built on the efforts and capability of its employees and we firmly believe that support and development of our workforce remain a priority in delivering our critical services. Investing in the future generation of employees is integral to our continued success. Genus believes in realising and developing talent with a structured and supported Apprenticeship Program. We currently support the career ambitions of 87 apprentices and trainees across the business who will form the foundation of our future skilled tradespeople. The attraction of high calibre employees is an ongoing challenge and there continues to be a very competitive employment market for skilled professionals. Combined with a continued focus on people-related productivity improvements, Genus will continue to invest in the development and retention of key capability and talent to enable the Company to successfully achieve its vision and to maintain this vital competitive advantage. We remain committed to investing in our employees through generating opportunities to grow on personal and professional levels, through varied learning and development programmes for apprentices, trades, operational, professional and managerial employees. This creates a significant pipeline of talent throughout the Company. Our diversity policies promote respect and fair treatment for all employees, and we seek to create an all-inclusive workplace where our people are encouraged regardless of age, gender, ethnicity, disability, sexual orientation or religion. Our commitment to building a diverse workforce is evident in all aspects of employee engagement including recruitment, professional development, promotion and remuneration. 18 18 GENUSPLUS GROUP LTD 19 GenusPlus Group LtdAnnual Report 2023 contents Directors’ Report Auditor’s Independence Declaration Corporate Governance Statement Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Directors Declaration Independent Auditor’s Report 22 35 36 37 38 39 40 41 95 96 financial report 2023 connecting the future. Powering up Australia - from inspiration to operation 20 20 GENUSPLUS GROUP LTD 21 GenusPlus Group LtdAnnual Report 2023 Directors’ Report The directors present their report together with the financial statements on the consolidated entity, consisting of GenusPlus Group Ltd and its controlled entities (the Company or Group) for the year ended 30 June 2023. Directors’ details The names and details of the Company’s directors in office during the financial year and until the date of this report are set out below. Directors of the Company were in office for the entire period unless otherwise stated. Mr David Riches David Riches is the Managing Director and CEO of the Group. David is the founder of Powerlines Plus Pty Ltd and is a third- generation recognised industry expert. David has led the business growth with a successful year on year track record. During the past three years he has not served as a director of any other listed companies. Mr Paul Gavazzi Paul Gavazzi is a Non-Executive Director and the Chair of the Audit and Risk Committee, and a member of the Remuneration and Nominations Committees. Paul has over 40 years’ experience as a practising lawyer in commercial law, specialising in construction, projects and infrastructure. Paul was formerly senior partner of a large national law firm, and founder of the firm’s Construction, Projects and Infrastructure Group. He is also the founder & Managing Director of Solve Global Pty Limited, a company that plans, manages, predicts and solves high-stakes commercial disputes using data-based analytics and strategic problem solving. Paul is an associate of the Chartered Institute of Arbitrators (UK), member of the Society of Construction Lawyers and member of the Australian Institute of Company Directors. During the past three years he has not served as a director of any other listed companies. Mr Simon High Simon High is the Non-Executive Chairman of the Group. Simon is a qualified Civil Engineer, Fellow of the Institute of Engineers Australia and Fellow of the Australian Institute of Company Directors. Simon has over 45 years’ experience globally in the Oil & Gas, Mining and Industrial Infrastructure industries. Simon held Senior Executive roles with Kvaerner Oil & Gas, United Construction, Clough Ltd, Southern Cross Electrical Engineers and Ausgroup Ltd. During the past three years he has not served as a director of any other listed companies. Mr José Martins José Martins is a Non-Executive Director and a member of the Audit and Risk Committee and Chair of the Remuneration and Nominations Committee. He brings over 25 years’ experience in the financial management of public and private companies. Jose is a former CFO of ASX listed Ausdrill Ltd, Macmahon Holdings Ltd and Alliance Mining Commodities. During the past three years he has also served as a director of the following listed companies: Atlas Pearls Ltd (ASX: ATP). Company Secretaries Damian Wright is the Chief Financial Officer and Joint Company Secretary of GenusPlus Group Ltd. Damian has held senior finance positions including CFO and Company Secretary for private and ASX listed entities. Damian holds a Degree in Commerce, and is a fellow of CPA Australia and a fellow of the Governance Institute of Australia. Strati Gregoriadis (BA, LLB, MBA) is the General Counsel and Joint Company Secretary of GenusPlus Group Ltd since commencing with the Group in January 2023. Strati has previously, for a number of years, held General Counsel & Company Secretary roles with ASX listed entities. Interests in the shares and options of the Company and related bodies corporate As at the date of this report, the interests of the directors in the shares and options of GenusPlus Group Ltd were: Director David Riches Simon High José Martins Paul Gavazzi Number of ordinary shares Interest in options 92,583,947 304,167 100,000 204,167 - - - - Directors’ Report Principal activities The principal activities of the Group during the financial year were the installation, construction and maintenance of power and communication systems. There have been no significant changes in the nature of these activities during the year. Review of operations and financial results A review of the operations of the Group during the financial year and the results of those operations saw a decrease in contract revenue from $450,936,669 to $444,178,894. The profit of the Group for the financial year after providing for income tax amounted to $13,405,524 (FY2022: $13,556,475). The Group reported a normalised EBITDA of $36.8 million for FY2023 ($35.1 million in FY2022), a strong year despite a year focused on the integration of acquisitions, consolidation of internal management systems, procedures and organisational structures in order to create a solid platform for future strong growth with significant progress made to position the Group to be an active participant in the transition to renewable energy. The Group successfully managed delays in project awards on a number of key projects, significant cost inflation and skilled labour pressures to deliver the strong results. Despite these challenges, the diversification that is being built into the business has helped maintain strong profitability of the Group. East coast revenue has grown to 34% during 2023 (2022: 22%) and the Group delivered EBITDA margin improvement in FY2023 to 8.3%, up from 7.8% in FY2022. The Group has a strong cash position increasing Cash at bank to $46.7 million at 30 June 2023, up from $27.9 million in FY2022. Net cash is up to $22.4 million compared to $6.8 million in 2022. The Group’s net assets increased by $11,553,060 which reflects earnings in the year net of dividend payments. The acquisitions which occurred during the year are in line with the Group’s strategy to strengthen its geographical position to take advantage of significant infrastructure investment in new markets. Refer to Note 37. A comparison of the Group’s performance from continuing operations is set out below: Revenue EBITDA1 Non-recurring transactions2 Normalised EBITDA3 Depreciation & Amortisation4 Normalised EBIT-A5 Amortisation of acquisition intangibles EBIT Profit for the year NPAT-A6 FY2023 $ FY2022 $ 444,178,894 450,936,669 Change % (1.5%) 33,666,128 32,994,800 3,124,369 2,114,658 36,790,497 35,109,458 (11,875,275) (10,363,641) 24,915,222 24,745,816 (3,337,917) (1,538,290) 18,452,936 21,089,128 13,405,524 13,556,474 4.8% 0.7% 15,742,065 14,633,277 7.6% Note: The table contains non-IFRS measures that are unaudited but derived from auditor reviewed FY23 Financial Statements. These measures are presented to provide further insight into the Group’s performance. 1 2 3 4 5 6 EBITDA is earnings before interest, tax, depreciation and amortisation. Non-recurring transactions relate to Acquisition costs, ECM Claim costs and Restructuring costs. Normalised EBITDA is EBITDA plus Non-recurring transactions Depreciation & amortisation excludes amortisation of acquisition intangibles. Normalised EBIT-A is Normalised EBITDA less depreciation and amortisation (excluding amortisation of acquisition intangibles). NPAT-A is Profit for the year plus amortisation of acquisition intangibles adjusted for tax effect at 30%. 22 22 GENUSPLUS GROUP LTD 23 GenusPlus Group LtdAnnual Report 2023 Directors’ Report Pipeline The Group continues to achieve significant growth in its business underpinned by existing contracted work, recurring revenue from regular clients, and anticipated revenue from its existing tender pipeline of works. Revenue from recurring works including long term customer/panel revenue and revenue from long term supply & maintenance contracts has grown to a forecast of $200 million in FY 2024 with a project orderbook of $192 million revenue. The Group has a current $1.863 billion tender pipeline providing a strong platform for continued growth. In addition to the tendered pipeline there are further significant budgets and opportunities in progress in excess of $3 billion. Work on initial budgets for clients, which are not yet at formal tender stage, is common in our industry. Genus is seeing the pipeline for the transition of the Australian transmission network grow substantially. In addition to the major investment in the transmission network and battery storage around Australia, Genus is well positioned to construct connections to the new transmission network from new energy power sources and renewable energy zones. Outlook With industry tailwinds gaining momentum FY2024, Genus expects to capitalise on this underlying momentum to deliver high single to low double-digit growth in EBITDA. Genus expects to return to strong growth in the medium term with a large pipeline of renewables and transmission projects to drive medium to long term growth in the business. The Group expects to see continued growth from its east coast operations and increase in services revenue in FY2024. The increase focus on the power network around Australia should see significant opportunities present during the coming 10-20 years as the network goes through a substantial transition from traditional energy source of coal to generation from new and renewable energy. Growth Strategy Significant investment has been put into growing the east coast presence of Genus to be positioned for the substantial investment required to the power network over the next 10-20 years. Whilst the Group continues to derive the majority of earnings from the core business in Western Australia, substantial progress has been made expanding the business into the much larger east coast markets, which now represents 34% of revenue of the business. During the year the company acquired the assets of ETS Tasmania and L&M Powerlines in Queensland expanding the Genus infrastructure services in the east coast. Genus Communications was awarded a 3-year Master Module Agreement with NBN pursuant to which NBN has awarded the N2P Evolution Module to deploy additional fibre infrastructure for nbn which includes the provision of specialist planning, design and construction of nbn broadband infrastructure. This is a key opportunity alongside our contract with Telstra to grow the Communications business. The foundations of the business are in place to enable the Genus to take advantage of the large ongoing spend in the communications industry. The Group is focused on replicating its Western Australian business model into the larger east coast market which is dependent on the Group’s ability to continue to grow the new operations or execute and integrate further strategic bolt-on acquisitions. Significant changes in the state of affairs During the year, the following changes occurred within the Group: Capital structure Issued shares In accordance with the acquisition agreement for Blue Tongue Energy Pty Ltd (Blue Tongue), deferred consideration that was due and payable to the previous owners of Blue Tongue was settled by way of equity allotment on 15 December 2022. 972,528 shares were transferred to the previous owners at a market value of $923,902 on that date. Dividends The Board has resolved to declare a dividend in respect of the year ended 30 June 2023 of 2.0 cents per share fully franked for a total of $3,554,499. (30 June 2022: $3,181,544). The ex-Dividend Date for this dividend will be 3 October 2023, the Record Date is 4 October 2023 and the Payment Date will be 3 November 2023. Directors’ Report Events arising since the end of the reporting period On 31 July 2023, GenusPlus Group completed the acquisition of 100% of BlueTongue Energy Pty Ltd by acquiring the remaining 50% stake of the business for total consideration of $500,000. The acquisition will enable GenusPlus to expand its capability to fully service the Australian renewable energy market through BlueTongue’s hybrid energy solutions particularly in the Battery Energy Storage (BESS) market. On 21 August 2023, the Directors declared a final fully franked dividend of 2.0 cents per share with a record date of 4 October 2023 and a payment date of 3 November 2023. The total dividend payable is an aggregate of $3,554,499. Other than the matter mentioned above, no matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. Likely developments The Group will continue to seek opportunities to provide its services in installation, construction and maintenance of power and communication systems across Australia. The Group’s strategy includes: • • • • • • • • • Continuing to replicate its successful business model to penetrate the large east coast markets, including growing its strategic acquisitions in Tasmania, NSW and QLD; Pursue substation and battery energy system projects, utilising the ability to be more selective on projects given the strength of the Genus brand; Taking advantage of the expected growth in electrical network infrastructure spending by public and private utility companies in Australia; Taking advantage of the expected growth in resources sector activity and related electrical network infrastructure construction; Continuing to grow the Communications business in the large telecommunications sector; Continuing to maintain and develop new customer relationships; Continuing to maintain Genus’ culture and significant investment into staff training; Continuing to maintain its diversification between the Government utilities and the private sectors; and Continuing to maintain and grow its recurring works including long term customer/panel revenue and revenue from long term supply & maintenance contracts to provide a stable base line of year on year revenue. Risk Management In managing risk, Genus has adopted a proactive approach aligned with ISO31000 and the Corporate Governance Principles and Recommendations 4th Edition of the ASX Corporate Governance Council. Genus endeavours to strike the correct balance between managing risks and making effective risk-reward decisions. Given the breadth, scale and geographies of Genus’ operations, Genus is exposed to a wide range of factors which have the potential to impact it. It has controls in place to attempt to manage and mitigate risks where it is practicable and efficient to do so, although there is no guarantee that these efforts will be successful. Below is an overview of: (i) some key material risks Genus is exposed to which could potentially have a material adverse impact on the financial condition and results of Genus’ operations; and (ii) how it manages those risks. These risks are not set out in any particular order and are not intended as an exhaustive list of all the uncertainties and risks Genus is or may be exposed to. Winning New Work Genus’ performance is impacted by its ability to win and complete new contracts. Any failure by Genus to continue to win new contracts will impact its financial performance and position. Genus endeavours to secure and sustain high-quality projects supported by strong financial and commercial practices. Nevertheless, there exists inherent unpredictability in pricing projects due to the risks prevalent in our operating environment. 24 24 GENUSPLUS GROUP LTD 25 GenusPlus Group LtdAnnual Report 2023 Directors’ Report Financial Directors’ Report Contract Pricing Risk Maintaining financial stability is crucial for Genus’ long-term success, and a failure by Genus to maintain this financial stability could adversely impact its operations and financial performance. If relevant internal processes are not complied with or if Genus materially underestimates the cost of providing services, equipment, or plant, there is a risk of a negative impact on its financial performance. Genus actively monitors and manages financial risks through prudent financial planning, budgeting, and risk assessment processes. Genus continuously evaluates market conditions, manages currency risks, and maintain robust financial controls and reporting mechanisms. By adhering to these procedures, Genus aims to safeguard its financial performance and ensure the sustainable growth of its business. Liquidity Risk This refers to the potential inability of Genus to meet its financial obligations when they become due. This risk can arise from factors such as counterparty risk, underperforming projects, and challenges in efficiently managing cash. Genus manages this risk by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows due in day-to-day business, and with a comprehensive insurance program providing protection against key risks and losses. Further information can be found in Note 39 of this Annual Financial Report. Financing Risk Genus has financing facilities with external financiers. A default under any of these facilities could result in withdrawal of financial support or an increase in the cost of financing. Genus manages this risk by monitoring banking covenants regularly and reporting to the financiers quarterly. Regular meetings are held with the financiers to keep them abreast of the Group performance where existing and new facility requirements are discussed. Bank Guarantee and Insurance Bond Facilities Genus’ customers often require Genus to provide security in the form of bank guarantees or insurance bonds. As Genus wins more and larger contracts, its bank guarantee and insurance bond facilities are reduced and this could constrain or inhibit Genus in taking on new work. Genus manages this risk through early engagement and negotiation with the providers of its facilities, seeking new or additional facilities as required, and actively managing the return of outstanding guarantees and bonds. Project Delivery, Margins and Operations Execution and delivery of projects involves judgement regarding the planning, development and operation of complex operating facilities and equipment. Genus’ operations, cash flows and liquidity could be affected if the resources or time needed to complete a project are miscalculated, if it fails to meet contractual obligations, or if it encounters delays or unspecified conditions. Cost overruns, unfavourable contract outcomes, serious or continued operational failure, adverse industrial relations outcomes, disruption at key facilities, disruptions to information and communication systems or a safety incident have the potential to have an adverse financial impact. Genus is also exposed to input costs through its operations, such as the cost of fuel and energy sources, equipment and personnel. To the extent that these costs cannot be passed on to customers in a timely manner, or at all, Genus’ financial performance could be adversely affected. Genus employs project management methodologies to ensure timely and efficient completion of projects while maintaining high- quality standards. It continuously evaluates project risks, employs project risk mitigation strategies, and monitors project progress closely. By implementing effective project controls and optimising operational efficiencies, Genus aims to deliver projects within budget and protect its margins. Labour Cost and Availability Genus’ growth and profitability may be limited by loss of key operating personnel, inability to recruit and retain skilled and experienced employees or by increases in compensation costs. The growth of activity in the power sector has increased demand for quality resources, creating a tightening market and upward pressures to secure skilled leaders, professionals and personnel. The Group mitigates these risks by taking a proactive and adaptable approach. The Group regularly plans workforce requirements, utilising human resource management software to streamline processes to track workforce data, and through contingency planning, and training and internal promotion. Genus has strong internal tendering and commercial review processes aimed at ensuring relevant costs and commercial risks are identified and priced into its bids. Health and Safety Genus may experience incidents, including life-changing events which have the potential to cause physical or psychological harm. This could result in the loss of a contract, have an adverse impact to Genus’ reputation, and potentially difficulty in winning new work. Genus is committed to providing a systematic process to manage risks around health and safety. Health and Safety is the first item discussed at Board and other internal meetings, regular safety audits are undertaken, and it has ongoing employee engagement initiatives to promote a strong safety culture. Genus has established a Health, Safety, Environment and Quality (SHEQ) management system aligned with the Australian standards [insert ISO accreditations]. The systems encompass various key aspects: • • • • • Integration of psychosocial hazards into operational risk management practices, ensuring comprehensive identification and mitigation of potential risks. Provision of appropriate training, supervision, and resources to promote a safe working environment. Implementation of High-Risk Standards and verification processes to establish a framework for managing high-risk incidents that could lead to severe injuries or fatalities. Regular review and audit of SHEQ processes and controls to ensure ongoing effectiveness and compliance. Monitoring of periodic SHEQ reporting and SHEQ bulletins at the Group level to identify trends, areas for improvement, and to take prompt action when necessary. Cyber Security The potential for cyber security attacks, misuse and release of sensitive information are ongoing and real risks to Genus. Genus has been reviewing and in the process of implementing and upgrading a number of cybersecurity measures to protect its IT infrastructure, networks, and sensitive data. These measures include investing in systems and infrastructure, firewalls, encryption protocols, regular vulnerability assessments, and employee training on data security best practices, and implementing: • • • • Information security management systems to ensure comprehensive protection and management of information assets. Utilisation of anti-malware and endpoint detection and response software to detect and prevent malicious activities on our systems. Implementation of multi-factor authentication to add an extra layer of security by requiring multiple forms of identification for access. Developing business resilience plans that specifically address cyber-related scenarios to ensure continuity of operations in the event of an incident. Climate Change and Carbon Emissions The regulation and focus in these areas has increased significantly, with growing pressure on companies to disclose their measures for identifying and managing climate related risks. Genus will seek continual improvements in energy efficiency across its business to understand and reduce the carbon intensity of operations, and is reviewing and gathering data required for reporting. 26 26 GENUSPLUS GROUP LTD 27 GenusPlus Group LtdAnnual Report 2023 Directors’ Report The Nomination and Remuneration Committee assess the appropriateness of the nature and amount of remuneration on a periodic basis by reference to recent employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and Executive Team. The payment of bonuses, share options and other incentive payments are reviewed by the Nomination and Remuneration Committee annually as part of the review of executive remuneration and a recommendation is put to the Board for approval. All bonuses, options and incentives must be linked to pre-determined performance criteria. Short Term Incentive (STI) GenusPlus Group Ltd performance measures involve the use of annual performance objectives, metrics, performance appraisals and continuing emphasis on living the Company values. The performance measures are set annually after consultation with the Directors and executives and are specifically tailored to the areas where each executive has a level of control. The measures target areas the Board believes hold the greatest potential for expansion and profit and cover financial and non-financial measures. The Key Performance Indicators (KPIs) for the Executive Team are summarised as follows: Performance areas • • financial: operating profit and earnings per share; and non-financial: strategic goals set by each individual business unit based on job descriptions The STI Program incorporates only cash components for the Executive Team and other employees. The Board may, at its discretion, award bonuses for exceptional performance in relation to each person’s pre-agreed KPIs. Voting and comments made at the Company’s last Annual General Meeting GenusPlus Group Ltd held its Annual General meeting held on 28 November 2022. There were no adverse comments from the vote on the Remuneration Report for the financial year ending 30 June 2022. Consequences of performance on shareholder wealth In considering the Group’s performance and benefits for shareholder wealth, the Board have regard to the following indices in respect of the current financial year and the previous two financial years: Item EPS (cents) Dividends (cents per share) Net profit ($’000) Share price ($) 2023 7.6 2.0 13,405 1.12 2022 8.4 1.8 13,556 1.27 2021 8.6 1.8 13,349 0.94 Directors’ Report Directors’ meetings The number of meetings of Directors (including meetings of Committees of Directors) held during the year and the number of meetings attended by each Director is as follows: Board Meetings Audit and Risk Committee Remuneration and Nominations Committee A 17 17 17 17 B 17 17 16 16 A n/a 3 3 3 B n/a 3 3 3 A 2 n/a 2 2 B 2 n/a 2 2 Board Member David Riches Simon High Paul Gavazzi José Martins Where: Column A: is the number of meetings the Director was entitled to attend Column B: is the number of meetings the Director attended Options No options over issued shares or interests in the Group were granted during or since the end of the financial year and there were no options outstanding at the date of this report. Remuneration Report (audited) The Directors of GenusPlus Group Ltd (the Group) present the Remuneration Report for Non-Executive Directors, Executive Directors and other Key Management Personnel, prepared in accordance with the Corporations Act 2001 and the Corporations Regulations 2001. The Remuneration Report is set out under the following main headings: a b c d e f a Principles used to determine the nature and amount of remuneration Details of remuneration Share-based remuneration; and Bonuses included in remuneration Shares held by key management Other transactions with key management personnel and their related parties Principles used to determine the nature and amount of remuneration The principles of the Group’s executive strategy and supporting incentive programs and frameworks are: • • • to align rewards to business outcomes that deliver value to shareholders to drive a high performance culture by setting challenging objectives and rewarding high performing individuals; and to ensure remuneration is competitive in the relevant employment market place to support the attraction, motivation and retention of executive talent GenusPlus Group Ltd has structured a remuneration framework that is market competitive and complementary to the reward strategy of the Group. The Board has established a Nomination and Remuneration Committee which operates in accordance with its charter as approved by the Board and is responsible for determining and reviewing compensation arrangements for the Directors and the Executive Team. The Committee has engaged independent remuneration consultants to provide any necessary information to assist in the discharge of its responsibilities (refer to the disclosures below). The remuneration structure that has been adopted by the Group consists of the following components: • • fixed remuneration being annual salary; and short term incentives, being employee share schemes and bonuses 28 28 GENUSPLUS GROUP LTD 29 GenusPlus Group LtdAnnual Report 2023 Directors’ Report f o % d e s a b e c n a m r o f r e P : l l w o e b e b a t e h t n i n w o h s e r a d t L p u o r G s u P s u n e G f o ) P M K ( l l e n n o s r e P t n e m e g a n a M y e K h c a e f o n o i t a r e n u m e r e h t l f o t n e m e e h c a e f o t n u o m a d n a e r u t a n e h t f o s l i a t e D ) d e u n i t n o c ( ) d e t i d u a ( t r o p e R n o i t a r e n u m e R n o i t a r e n u m e r f o s l i a t e D b d e s a b - e r a h S n o i t a n m r e T i i e c v r e s g n o L y r a t e n o m - n o N h s a C l y r a a s h s a C s t fi e n e b m r e t - g n o L l t n e m y o p m e - t s o P m r e t - t r o h S s t fi e n e b s t fi e n e b e e y o p m e l l e n n o s r e P t n e m e g a n a M y e K r e h t o d n a r o t c e r i D n o i t a r e n u m e r l a t o T s t n e m y a p s t fi e n e b e v a e l n o i t a u n n a r e p u S s t fi e n e b s u n o b s e e f d n a r a e Y e e y o p m E l - - - - - - - - - - $ 0 5 9 , 1 7 3 4 9 4 9 4 3 , 3 6 2 3 1 1 , 0 5 7 2 1 1 , 5 2 8 , 1 7 0 0 5 , 1 7 1 0 1 , 2 7 0 0 5 , 1 7 9 3 1 , 9 2 6 , 4 4 2 5 0 6 $ - - - - - - - - - - $ - - - - - - - - - - $ 0 5 7 0 1 , ) 0 8 3 9 ( , - - - - - - 0 5 7 0 1 , ) 0 8 3 9 ( , $ 2 9 2 5 2 , 8 6 5 3 2 , 3 6 7 0 1 , 0 5 2 0 1 , 5 2 8 6 , 0 0 5 6 , 1 5 8 6 , 0 0 5 6 , 1 3 7 9 4 , 8 1 8 6 4 , $ - - - - - - - - - - $ - - - - - - - - - - $ 8 0 9 5 3 3 , 6 0 3 5 3 3 , 0 0 5 2 0 1 , 0 0 5 2 0 1 , 0 0 0 5 6 , 0 0 0 5 6 , 0 5 2 5 6 , 0 0 0 5 6 , , 8 5 6 8 6 5 6 0 8 7 6 5 , 3 2 0 2 2 2 0 2 3 2 0 2 2 2 0 2 3 2 0 2 2 2 0 2 3 2 0 2 2 2 0 2 3 2 0 2 2 2 0 2 s r o t c e r i D e v i t u c e x e - n o N r o t c e r i D g n g a n a M i d n a O E C s n i t r a M é s o J t n e d n e p e d n I i z z a v a G l u a P t n e d n e p e d n I n a m r i a h C l a t o T 3 2 0 2 l a t o T 2 2 0 2 i h g H n o m S i i s e h c R d v a D i s r o t c e r i D e v i t u c e x E Directors’ Report f o % d e s a b e c n a m r o f r e P d e s a b - e r a h S n o i t a n m r e T i i e c v r e s g n o L y r a t e n o m - n o N h s a C l y r a a s h s a C s t fi e n e b m r e t - g n o L l t n e m y o p m e - t s o P m r e t - t r o h S s t fi e n e b s t fi e n e b e e y o p m e l l e n n o s r e P t n e m e g a n a M y e K r e h t o d n a r o t c e r i D n o i t a r e n u m e r l a t o T s t n e m y a p s t fi e n e b e v a e l n o i t a u n n a r e p u S s t fi e n e b s u n o b s e e f d n a r a e Y e e y o p m E l ) d e u n i t n o c ( ) d e t i d u a ( t r o p e R n o i t a r e n u m e R ) d e u n i t n o c ( n o i t a r e n u m e r f o s l i a t e D b % 4 4 2 . % 9 7 1 . % 3 4 2 . % 4 8 1 . % 5 4 2 . % 3 6 1 . - - % 9 4 2 . % 8 4 1 . % 5 2 2 . % 7 6 1 . $ , 2 0 3 6 0 4 , 1 6 8 4 3 3 3 0 8 0 9 3 , , 7 5 9 6 2 3 5 0 6 7 3 4 , , 1 6 3 8 6 3 - 0 0 3 , 1 5 1 6 4 8 9 5 4 , , 0 3 0 6 0 4 , 6 5 8 5 4 8 , 1 , 9 0 2 6 3 4 , 1 $ - - - - - - - - - - - - $ - - - - - - - - - - - - $ 5 3 8 8 , 1 0 3 4 , 1 4 1 , 1 1 6 3 2 8 , 6 7 9 7 , 5 9 7 4 , - - - - 2 5 9 7 2 , 2 3 3 7 1 , $ 2 9 2 5 2 , 6 9 3 3 2 , 0 8 2 5 2 , 6 4 0 3 2 , 2 9 2 5 2 , 8 6 5 3 2 , - 6 4 6 2 1 , 2 9 2 5 2 , 0 3 0 6 2 , 2 0 8 3 1 1 , 0 4 0 6 9 , $ - - - - - - - - - - - - . $ $ l e n n o s r e P t n e m e g a n a M y e K r e h t O 4 5 2 9 9 , , 1 2 9 2 7 2 0 0 0 0 6 , 4 6 1 , 7 4 2 0 0 8 4 9 , 2 8 5 9 5 2 , 0 0 0 0 6 , , 5 7 6 5 3 2 3 9 1 , 7 0 1 4 4 1 , 7 9 2 0 0 0 0 6 , 8 9 9 9 7 2 , - - - 4 5 6 8 3 1 , 4 5 5 4 1 1 , 0 0 0 0 2 3 , 0 0 0 0 6 , 0 0 0 0 2 3 , 1 0 8 5 1 4 , , 1 0 3 8 8 2 , 1 0 0 0 0 4 2 , , 7 3 8 2 8 0 , 1 3 2 0 2 2 2 0 2 3 2 0 2 2 2 0 2 3 2 0 2 2 2 0 2 3 2 0 2 2 2 0 2 3 2 0 2 2 2 0 2 3 2 0 2 2 2 0 2 y n a p m o C t n o J & O F C i y r a t e r c e S i s e c v r e S e t a r o p r o C M G E n e e r G l e a h c M i s s e n s u B i l a n o i t a N M G E , l d y o L e g r o e G t n e m p o e v e D l i t n o J & l e s n u o C l a r e n e G y r a t e r c e S y n a p m o C 1 i s d a i r o g e r G i t a r t S l i a c r e m m o C M G E d a r u M n a s a H l a t o T 3 2 0 2 l a t o T 2 2 0 2 t h g i r W n a m a D i 3 2 0 2 y r a u n a J 9 1 n o y n a p m o C e h t o t d e t n o p p a s a w s d a i r o g e r G i i i t a r t S 1 30 30 GENUSPLUS GROUP LTD 31 GenusPlus Group LtdAnnual Report 2023 Directors’ Report Directors’ Report Remuneration Report (audited) (continued) b Details of remuneration (continued) Remuneration Report (audited) (continued) e Shares held by key management personnel The relative proportions of remuneration that are linked to performance and those that are fixed are as follows: The number of ordinary shares in the Company during the 2022 reporting period held by each of the Group’s key management personnel, including their related parties, is set out below: Employee Executive Directors David Riches Other Key Management Personnel Damian Wright Michael Green George Lloyd Strati Gregoriadis Hasan Murad Fixed remuneration At risk: Short Term Incentives (STI) At risk: options 43 61 61 61 72 61 57% 39 39 39 28 39 - - - - - - Remuneration and other terms of employment for the Executive Directors and other Key Management Personnel are formalised in a Service Agreement. The major provisions of the agreements relating to remuneration are set out below: Employee Year ended 30 June 2023 David Riches Simon High José Martins Paul Gavazzi Damian Wright Michael Green George Lloyd Strati Gregoriadis Hasan Murad Balance at start of year Granted as remuneration Other changes Held at the end of reporting period 92,583,947 304,167 100,000 204,167 72,917 130,208 1,626,042 - 72,917 - - - - - - - - - 1,000,000 93,583,947 - - - - - - - - 304,167 100,000 204,167 72,917 130,208 1,626,042 - 72,917 Term of agreement Notice period Loans to key management personnel None of the shares included in the table above are held nominally by key management personnel. Employee David Riches Damian Wright Michael Green George Lloyd Strati Gregoriadis Hasan Murad Base salary (incl super) 361,200 298,214 284,863 322,436 350,000 345,292 Unspecified Six months Unspecified Three months Unspecified Three months Unspecified Six months Unspecified Three months Unspecified Three months c Share-based remuneration No member of the Key Management Personnel has an entitlement to be paid in shares. d Bonuses included in remuneration Details of the short-term incentive cash bonuses awarded as remuneration to each key management personnel, the percentage of the available bonus that was paid in the financial year, and the percentage that was forfeited because the person did not meet the service and performance criteria is set out below. No part of the bonus is payable in future years. Employee Executive Directors David Riches1 Other Key Management Personnel Damian Wright Michael Green George Lloyd Strati Gregoriadis2 Hasan Murad Included in remuneration ($) Percentage vested during the year Percentage forfeited during the year - - - 99,254 94,800 107,193 - 114,554 55.95 56.18 55.50 - 55.07 44.05% 43.82% 44.50% - 44.93% 1 2 David Riches has elected not to receive a performance-based incentive in relation to the year ended 30 June 2023. Strati Gregoriadis was appointed to the Company on 19 January 2023. The Group allows its employees to take up limited short-term loans to fund merchandise and other purchases through the Group’s business contacts. This facility is also available to the Group’s key management personnel. No member of the key management personnel received a loan during the reporting period. The Group does not have an allowance account for receivables relating to outstanding loans and has not recognised any expense for impaired receivables during reporting period. There were no individuals with loans above $100,000 during the financial year. f Other transactions with key management personnel and their related parties Details and terms and conditions of other transactions with KMP and their related parties: Purchases Property leases During 2023, the Group rented various properties from David Riches and his related parties as part of normal business operations. The amount for which each property was leased was negotiated on commercial terms in accordance with lease agreements verified by the board. During 2023 $680,012 was recognised in the operating result for the year in relation to these properties. NIL was un-paid as of the reporting date. Engineering services During 2023, the Group utilised the engineering services of Partum Engineering Pty Ltd, of which David Riches is also a Director, for design and other work. $9,893,117 was recognised as an expense in relation to these services. $994,898 was un-paid as of the reporting date. Transportation and logistical services During 2023, Pastoral Plus, of which David Riches is a Director, provided transportation and logistical services to the Group in circumstances where independent commercial transport services were unavailable to meet the business’ requirements. $565,626 was recognised as an expense for these services, of which $49,161 was unpaid as of the reporting date. Injury management During 2023, Edge People Management Pty Ltd, in which David Riches holds an interest, provided injury management services to the Group. $108,833 was recognised as an expense in relation to these services. $15,623 was un-paid as of the reporting date. End of audited Remuneration Report. 32 32 GENUSPLUS GROUP LTD 33 GenusPlus Group LtdAnnual Report 2023 Directors’ Report Auditor’s Independence Declaration Environmental regulations The Group’s operations are subject to the environmental regulations that apply to our clients. There have been no significant breaches during the period covered by this report. Indemnities given to, and insurance premiums paid for, auditors and officers Insurance of officers During the year, GenusPlus Group Ltd paid a premium to insure officers of the Group. The officers of the Group covered by the insurance policy include all Directors. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Group. Details of the amount of the premium paid in respect of insurance policies are not disclosed as such disclosure is prohibited under the terms of the contract. The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify any current or former officer of the Group against a liability incurred as such by an officer. Indemnity of auditors The Group has agreed to indemnify its auditors, Grant Thornton Audit Pty Ltd, to the extent permitted by law, against any claim by a third party arising from the Group’s breach of its agreement. The indemnity requires the Group to meet the full amount of any such liabilities including a reasonable amount of legal costs. Non-audit services During the year, Grant Thornton, the Company’s auditors, performed certain other services in addition to their statutory audit duties. The Board has considered the non-audit services provided during the year by the auditor and, in accordance with written advice provided by resolution of the Audit and Risk Committee, is satisfied that the provision of those non-audit services during the year is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons: • • all non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Audit and Risk Committee to ensure they do not impact upon the impartiality and objectivity of the auditor the non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants (including Independence Standards), as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards Details of the amounts paid to the auditors of the Company, Grant Thornton, and its related practices for audit and non-audit services provided during the year are set out in Note 34 to the financial statements. Proceedings on behalf of Group No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings. The Group was not a party to any such proceedings during the year. Auditor’s Independence Declaration A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 35 and forms part of this Directors’ Report. Signed in accordance with a resolution of the Board of Directors. David Riches Director, XX August 2023 34 34 GENUSPLUS GROUP LTD Auditor’s Independence Declaration Grant Thornton Audit Pty Ltd Level 43 Central Park 152-158 St Georges Terrace Perth WA 6000 PO Box 7757 Grant Thornton Audit Pty Ltd Cloisters Square Level 43 Central Park Perth WA 6850 152-158 St Georges Terrace Perth WA 6000 T +61 8 9480 2000 PO Box 7757 Cloisters Square Perth WA 6850 T +61 8 9480 2000 To the Directors of GenusPlus Group Ltd Auditor’s Independence Declaration In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of GenusPlus Group Ltd for the year ended 30 June 2023, I declare that, to the best of my knowledge and belief, To the Directors of GenusPlus Group Ltd there have been: In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to of GenusPlus Group Ltd for the year ended 30 June 2023, I declare that, to the best of my knowledge and belief, there have been: the audit; and b no contraventions of any applicable code of professional conduct in relation to the audit. 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. GRANT THORNTON AUDIT PTY LTD Chartered Accountants GRANT THORNTON AUDIT PTY LTD Chartered Accountants L A Stella Partner – Audit & Assurance Perth, 22 August 2023 L A Stella Partner – Audit & Assurance Perth, 22 August 2023 www.grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. www.grantthornton.com.au ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL). ACN-130 913 594 GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or 556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL). Legislation. GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. w w 35 GenusPlus Group LtdAnnual Report 2023 Corporate Governance Statement Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2023 The Corporate Governance Statement is available on GenusPlus Group’s website at www.genus.com.au/who-we-are/corporate- governance. Corporate Governance Principles And Recommendations The ASX Corporate Governance Council sets out best practice corporate governance recommendations, including practices and suggested disclosures. Listing Rule 4.10.3 requires disclosure for companies on the extent to which they comply with these recommendations, and if not, to give reasons for not following them. Unless otherwise indicated, the best practice recommendations of the ASX Corporate Governance Council, including corporate governance practices and suggested disclosures, have been adopted by Genus for the year ended 30 June 2023. Corporate Governance Genus is committed to a governance culture that aims to protect shareholder rights, effectively manage risk, enhance disclosure and transparency (both within the company and to external stakeholders) and facilitate the effective functioning of the board. We believe that by operating with a strong focus on corporate governance, we will enhance Genus’ sustainable long-term performance and value creation for all stakeholders. The Board of Directors is responsible for Genus’ corporate governance framework, which ensures that the Company’s obligations and responsibilities to its various stakeholders are fulfilled. The Company’s 2023 Corporate Governance Statement, to be released to shareholders towards the end of September 2023, will report on Genus’ governance practices. Genus has in place charters, policies, and procedures (published on our website) which are reviewed and revised as appropriate to reflect changes in law and developments in corporate governance. The Board’s Risk & Audit Committee is responsible for monitoring the effectiveness of the Group’s risk management framework. Revenue Other income Employee expenses Raw materials and consumables expenses Contractors and labour hire expenses Motor vehicle expenses Depreciation expense Other expenses Operating profit Share of results of joint ventures Share of results of associates Finance income Other gains and losses Finance costs Profit before income tax Income tax expense Profit for the year Other comprehensive income for the year Items that may be reclassified subsequently to profit or loss: Exchange differences on monetary items denominated in foreign currency (net of tax) Total comprehensive income for the year Profit for the year attributable to Owners of the company Earnings per share Basic earnings per share (cents) Diluted earnings per share (cents) This statement should be read in conjunction with the notes to the financial statements. Notes 6 7 2023 $ 2022 $ 444,178,894 450,936,669 3,690,452 1,962,423 28 (140,657,388) (137,197,766) (125,597,200) (139,298,892) (119,167,019) (114,602,305) (13,969,192) (16,037,478) (15,213,191) (11,901,931) (14,812,420) (12,771,590) 18,452,935 21,089,130 (212,093) (401,442) 63,346 401,393 186,990 215,401 8,550 (461,000) (1,548,058) (1,077,105) 16,693,733 20,024,314 (3,288,210) (6,467,839) 13,405,524 13,556,475 22 10 8 9 12 11 12 13 (146,908) 160,117 13,258,616 13,716,592 13,258,616 13,716,592 14 14 7.56 7.56 8.36 8.36 36 36 GENUSPLUS GROUP LTD 37 GenusPlus Group LtdAnnual Report 2023 Consolidated Statement of Financial Position As at 30 June 2023 Consolidated Statement of Changes in Equity For the year ended 30 June 2023 Current assets Cash and cash equivalents Trade and other receivables Contract assets Inventories Financial assets Current tax asset Other assets Total current assets Non-current assets Financial assets Interests in joint ventures Investment in associates Property, plant and equipment Right-of-use assets Intangible assets Total non-current assets Total assets Current liabilities Trade and other payables Contract liabilities Financial liabilities Lease liabilities Current tax liabilities Employee benefits Provisions Total current liabilities Non-current liabilities Financial liabilities Lease liabilities Deferred tax liabilities Employee benefits Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Retained earnings Total equity Notes 2023 $ 2022 $ 15 16 17 19 20 13 21 46,737,238 27,882,473 56,948,784 68,872,911 37,595,573 45,734,278 3,796,472 3,728,803 326,741 - 5,439,866 - 4,569,537 1,582,879 150,844,674 152,370,881 20,18 1,130,376 993,833 8 9 22 23 24 25 26 27 23 13 28 29 27 23 13 28 30 31 2,874,206 3,086,299 - 401,442 18,247,524 17,675,106 23,258,391 23,283,092 31,063,401 34,173,243 76,573,898 79,613,015 227,418,572 231,983,896 50,993,122 72,608,068 16,876,882 12,752,963 1,580,000 6,869,953 9,007,690 6,725,475 7,765,884 - 8,607,305 6,487,235 50,000 1,221,721 93,840,474 107,705,824 4,280,000 3,924,000 12,861,963 14,232,018 10,550,113 10,148,438 909,889 2,550,543 28,601,965 30,854,999 122,442,439 138,560,823 104,976,133 93,423,073 55,265,025 53,789,037 (490,350) (343,442) 50,201,458 39,977,478 104,976,133 93,423,073 Share capital $ Retained earnings $ Notes Corporate Restructure Reserve $ Foreign currency translation reserve $ Total $ 28,925,754 29,288,015 (511,834) 8,275 57,710,210 Balance at 1 July 2021 Profit for the year Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners: - - - 13,556,475 - 13,556,475 - - - proceeds from capital raising 30 20,000,000 share issues pursuant to a business combination 30,37 6,023,589 cost of share issues dividend paid 30 32 Changes in ownership interests: disposal of Burton Training & Consultancy Pty Ltd (1,160,306) - (2,800,619) 24,863,283 (2,800,619) - (66,393) Sub-total 24,863,283 10,689,463 Balance at 1 July 2022 Profit for the year Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners: - - - 13,405,524 - 13,405,524 share issues pursuant to a business combination 30,37 923,902 deferred tax adjustments in Equity 558,074 - - dividend paid share issue costs Sub-total 32 - (3,181,544) (5,988) - 1,475,988 (3,181,544) 1,475,988 10,223,980 - - - - - - - - - - - 13,556,475 160,117 160,117 160,117 13,716,592 - - - - - - 20,000,000 6,023,589 (1,160,306) (2,800,619) 22,062,664 (66,393) 160,117 35,712,863 - - - - - - - - - - 13,405,524 (146,908) (146,908) (146,908) 13,258,616 - - - - - 923,902 558,074 (3,181,544) (5,988) (1,705,556) (146,908) 11,553,060 Balance at 30 June 2022 53,789,037 39,977,478 (511,834) 168,392 93,423,073 53,789,037 39,977,478 (511,834) 168,392 93,423,073 Balance at 30 June 2023 55,265,025 50,201,458 (511,834) 21,484 104,976,133 This statement should be read in conjunction with the notes to the financial statements. This statement should be read in conjunction with the notes to the financial statements. 38 38 GENUSPLUS GROUP LTD 39 GenusPlus Group LtdAnnual Report 2023 Consolidated Statement of Cash Flows For the year ended 30 June 2023 Operating activities Receipts from customers Payments to suppliers and employees Income tax refund / (paid) Notes 2023 $ 2022 $ 507,229,739 465,134,004 (477,044,403) (451,425,418) 8,966,552 (2,243,853) Net cash provided by operating activities 33 39,151,888 11,464,733 Investing activities Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment Net loans paid by / (loans to) associated and joint venture entities Proceeds from disposal of investments Acquisition of investment in associate Acquisition of subsidiaries (net of cash) Net cash used in investing activities Financing activities Proceeds from borrowings Repayments of borrowings Receipts of sub-lease instalments Payment of lease liabilities principal Proceeds from issue of share capital Transaction costs for issued share capital Dividends paid Interest received Finance costs Net cash provided by / (used in) financing activities Net change in cash and cash equivalents held Cash and cash equivalents at beginning of financial year Effect of exchange rate fluctuations on cash held 2,712,638 1,386,650 (5,697,192) (4,870,466) (195,165) - - 28,168 170,000 (1,000,000) 37 (4,132,995) (19,963,360) (7,312,714) (24,249,008) 2,900,000 - (2,210,000) (1,670,000) 289,335 - (9,274,224) (6,975,397) 30 30 - - 20,000,000 (1,160,306) (3,181,544) (2,800,619) 186,990 8,550 (1,548,058) (1,077,105) (12,837,501) 6,325,123 19,001,673 (6,459,152) 27,882,473 34,181,508 (146,908) 160,117 Cash and cash equivalents at end of financial year 15 46,737,238 27,882,473 This statement should be read in conjunction with the notes to the financial statements. 1. Nature of operations GenusPlus Group Ltd and its subsidiaries’ (the Group) principal activities include the construction and maintenance of transmission and distribution power lines and substations servicing the Western Australian, Queensland, New South Wales and Tasmanian power networks as well as providing specialist engineering, testing and commissioning services to the electrical and communications industries. 2. Basis of preparation The consolidated general purpose financial statements of the Group have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards (“AASBs”) and other authoritative pronouncements of the Australian Accounting Standards Board (AASB). Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). GenusPlus Group Ltd is a for-profit entity for the purpose of preparing the financial statements. GenusPlus Group Ltd is the Group’s Ultimate Parent Company. GenusPlus Group Ltd is an ASX listed Public Company (ASX Code: GNP) incorporated and domiciled in Australia. The address of its registered office and its principal place of business is Level 1, 63 – 69 Abernethy Road, Belmont, Australia. The consolidated financial statements for the year ended 30 June 2023 were approved and authorised for issue by the Board of Directors on 21 August 2023. Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive income, investment properties, certain classes of property, plant and equipment and derivative financial instruments. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 4. 3. Changes in accounting policies 3.1 New standards adopted as at 1 July 2022 The Group has adopted all the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to its operations and effective for an accounting period that begins on or after 1 July 2022. AASB 2020-3 Amendments to Australian Accounting Standards - Annual Improvements 2018–2020 and Other Amendments Annual Improvements The application of the amendments did not have a material impact on the Group's consolidated financial statements, as the amendments either do not affect the Group’s existing accounting policies, or apply to situations, transactions and events that the Group does not undertake. Amendments to AASB 3 Business Combinations The amendments are effective for business combinations for which the date of acquisition is on or after the beginning of the first annual period beginning on or after 1 January 2022. The application of the amendments in the current period have not impacted the accounting for business combinations which have occurred during the current period. Onerous Contracts – Cost of Fulfilling a Contract The application of the amendments did not have a material impact on the Group’s consolidated financial statements. Certain new accounting standards and interpretations have been published that are mandatory for 30 June 2023 reporting periods and have not been adopted by the Group. The Group's assessment of the impact of these new standards do not have a material impact on the entity in the current reporting periods. 40 40 GENUSPLUS GROUP LTD 41 Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 3.1 New standards adopted as at 1 July 2022 (continued) 4. Statement of accounting policies AASB 2021-7 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections The editorial corrections in AASB 2021-7 are effective for either annual periods beginning on or after 1 January 2023 (those in respect of AASB 17 Insurance Contracts) or 1 January 2022. The application of the amendments did not have a material impact on the Group's consolidated financial statements. 3.2 Standards, amendments and interpretations to existing Standards that are not yet effective and have not been adopted early by the Group The following new accounting standards and interpretations have been published that are not mandatory for 30 June 2023 reporting periods, have not been early adopted by the Group, and are as follows: i) Amendments to AASB 101: Classification of Liabilities as Current or Non-current The amendment 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 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 The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and must be applied retrospectively. The Group's assessment of the impact of the new standard is not expected to have a material impact on the entity in future reporting periods. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in Note 42. Basis of consolidation The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June 2023. The parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests. Business combination The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired. The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss. On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date. Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss. Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer. Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value. 42 42 GENUSPLUS GROUP LTD 43 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 4. Statement of accounting policies (continued) 4. Statement of accounting policies (continued) Foreign currency translation Functional and presentation currency The consolidated financial statements are presented in Australian Dollars ($AUD), which is also the functional currency of the Parent Company. Foreign currency transactions and balances Foreign currency transactions are translated into the functional currency of the respective Group Entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items at year end exchange rates are recognised in profit or loss. Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the date of the transaction), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined. Segment reporting Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance. Revenue from contracts with customers The Group recognises revenue when a customer obtains control of the goods or services, in accordance with AASB 15 Revenue from contracts with customers. Revenue is measured at the fair value of the consideration received or receivable. Determining the timing of the transfer of control: either at a point in time or over time requires judgement. Revenue is recognised over time if one of the following is met: • • • The customer simultaneously receives and consumes the benefits as the Group performs; The customer controls the asset as the Group creates or enhances it; or The Group’s performance does not create an asset for which the Group has an alternative use and there is a right to payment for the performance to date. To determine whether to recognise revenue, the Group follows the 5-step revenue recognition model introduced by AASB 15 Revenue from contracts with customers: 1. 2. Identifying the contract(s) with a customer Identifying the performance obligations in the contract 3. Determining the transaction price 4. Allocating the transaction price to the performance obligations in the contract 5. Recognising revenue when/as performance obligation(s) are satisfied. The Group often enters into transactions involving a range of the Group’s products and services. In all cases, the total transaction price for a contract is allocated amongst the various performance obligations based on their relative stand-alone selling prices. The transaction price for a contract excludes any amounts collected on behalf of third parties. The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as contract liabilities in the statement of financial position (see Note 26). Similarly, if the Group satisfies a performance obligation before it receives the consideration, the Group recognises either a contract asset or a receivable in its statement of financial position, depending on whether something other than the passage of time is required before the consideration is due. Revenue from contracts with customers (continued) Construction Contracts Revenue from construction contracts is recognised when the benefits transfer to the customer as the work is performed and as such revenue is recognised over the duration of the project according to the percentage of costs completed, or input method. Under this method revenue is calculated based on the proportion of the contract costs incurred for work performed to date relative to the estimated total contract costs. Revenue recognised under this method is derived from projects containing one performance obligation. Services revenue Revenue from the provision of services is recognised as the service is provided. Typically, under the performance obligations of a service contract, the customer consumes and receives the benefit of the service as it is provided. As such, service revenue is recognised over time as the services are provided, with each service deemed a separate performance obligation. The transaction price is allocated to each obligation based on standalone selling prices. Work order revenue generated in the Communications division is recognised at a point in time as the customer receives the benefit once the work has been completed. The transaction price is calculated based on a schedule of rates which define the price of the ticket of work. Transaction price and contract modifications The transaction price is the amount of consideration to which the company expects to be entitled to under the customer contract and which is used to value total revenue and is allocated to each performance obligation. The determination of this amount includes “fixed remuneration”, (for example lump sum) and “variable consideration”. The main variable consideration elements are claims (contract modifications) and consideration for optional works and provisional sums each of which needs to be assessed. Contract modifications are changes to the contract approved by the parties to the contract. The Group applies the guidance given in AASB 15 in relation to variable consideration. The estimate of variable consideration can only be recognised to the extent that it is highly probable that there will not be a significant reversal of revenue in the future. The measurement of additional consideration arising from claims is subject to a high level of uncertainty, both in terms of the amount that customers will pay and the collection times, which usually depend on the outcome of negotiations between the parties or decisions taken by judicial/arbitration bodies. The Group considers all relevant aspects in circumstances such as the contract terms, business in negotiating practices of the sector, the Group’s historical experiences with similar contracts and consideration of those factors that affect the variable consideration that are out of control of the Group or other supporting evidence when making the above decision. Loss making contracts A provision is made for the difference between expected cost of fulfilling a contract and expected on and portion of the transaction price whether forecast costs are greater than forecast revenue. The provision is recognised in full in a period in which the loss-making contract is identified under AASB 137 Provisions, Contingent Liabilities and Contingent Assets. Under AASB 137, the assessment of whether a provision needs to be recognised takes place at the contract level and there are no segmentation criteria to apply. In addition, when two or more contracts entered into at or near the same time are required to be combined for accounting purposes, AASB 15 requires the Group to perform the assessment of whether the contract is onerous at the level of the combined contracts. The Group also notes that the amount of loss accrued in respect of a loss contract under AASB 137 takes into account an appropriate allocation of construction overheads. Interest and dividend income Interest income and expenses are reported on an accrual basis using the effective interest method. Dividend income, other than those from investments in associates, are recognised at the time the right to receive payment is established. Operating Expenses Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin. Borrowing costs Other borrowing costs are expensed in the period in which they are incurred and reported in ‘finance costs’ (see Note 12). 44 44 GENUSPLUS GROUP LTD 45 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 4. Statement of accounting policies (continued) 4. Statement of accounting policies (continued) Goodwill Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. See Business Combinations (above) for information on how goodwill is initially determined. Goodwill is carried at cost less accumulated impairment losses. Refer to impairment testing Note 24 for a description of impairment testing procedures. Property, plant and equipment Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the statement of financial position at cost, less any recognised impairment loss. Properties held for production, supply or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Freehold land is not depreciated. Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The depreciation rates used for each class of depreciable assets are: Class of fixed asset Buildings: Leasehold improvements: Plant and equipment: Furniture, fixtures and fittings: Tools and low value assets Software and technology Motor vehicles Depreciation rate 10% 10% - 33% 10% - 33% 10% - 33% 18.8% - 33% 33% 10% - 25% Depreciation rates and methods shall be reviewed at least annually and, where changed, shall be accounted for as a change in accounting estimate. Where depreciation rates or methods are changed, the net written down value of the asset is depreciated from the date of the change in accordance with the new depreciation rate or method. Depreciation recognised in prior financial years shall not be changed, that is, the change in depreciation rate or method shall be accounted for on a ‘prospective’ basis. Assets held under leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss. Leased assets The Group as lessee For any new contracts entered into, the Group considers whether a contract is or contains a lease. A lease is defined as a ‘contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’. To apply this definition the Group assesses whether the contract meets three key evaluations which are whether: • • • the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract the Group has the right to direct the use of the identified asset throughout the period of use. The Group assess whether it has the right to direct ‘how and for what purpose’ the asset is used throughout the period of use. Measurement and recognition of leases as a lessee In respect of leased assets, at lease commencement date the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received). All other leased assets are recorded under property, plant and equipment according to the category of asset. The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist. At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised. The right-of-use assets are presented as a separate line in the consolidated statement of financial position. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero. The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term. The lease liability is presented as a separate line in the consolidated statement of financial position. 46 46 GENUSPLUS GROUP LTD 47 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 4. Statement of accounting policies (continued) 4. Statement of accounting policies (continued) Impairment testing of goodwill, other intangible assets and property, plant and equipment For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash- generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management monitors goodwill. Cash-generating units to which goodwill has been allocated (determined by the Group’s management as equivalent to its operating segments) are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect management’s assessment of respective risk profiles, such as market and asset-specific risks factors. Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount. Financial instruments Recognition and derecognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expires. Classification and initial measurement Financial assets are initially measured at fair value adjusted for transaction costs (where applicable). Financial assets are classified into the following categories: • • • amortised cost fair value through profit or loss (FVTPL) fair value through other comprehensive income (FVOCI) In the periods presented, the Group does not have any financial assets categorized as FVOCI. The classification is determined by both: • • the entity’s business model for managing the financial asset the contractual cash flow characteristics of the financial asset. All income and expenses relating to financial assets that are recognized in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. Financial instruments (continued) Subsequent measurement of financial assets Financial assets at amortised cost Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL): • • they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. Financial assets at fair value through profit or loss (FVTPL) Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. The category also contains an equity investment. The Group accounts for the investment at FVTPL and did not make the irrevocable election to account for the investment in Volt Power Pty Ltd at fair value through other comprehensive income (FVOCI). The fair value was determined in line with the requirements of AASB 9, which does not allow for measurement at cost. Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists. Impairment of financial assets AASB 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the ‘expected credit loss (ECL) model’. Instruments within scope included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under AASB 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss. The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument. In applying this forward-looking approach, a distinction is made between: • • • financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’) and financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’). ‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date. ‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category. Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument. 48 48 GENUSPLUS GROUP LTD 49 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 4. Statement of accounting policies (continued) 4. Statement of accounting policies (continued) Investments in associates and joint ventures An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The results and assets and liabilities of associates or joint ventures are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with ‘AASB 5 - Non-current assets held for sale and discontinued operations’. Under the equity method, an investment in an associate or a joint venture is recognised initially in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture. When the Group’s share of losses of an associate or a joint venture exceeds the Group’s interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate or joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired. The requirements of AASB 136 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with AASB 136 as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised is not allocated to any asset, including goodwill that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with AASB 136 to the extent that the recoverable amount of the investment subsequently increases. The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture. When the Group retains an interest in the former associate or a joint venture and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with AASB 9. The difference between the carrying amount of the associate or a joint venture at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate or a joint venture is included in the determination of the gain or loss on disposal of the associate or joint venture. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the associate or joint venture is disposed of. When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities. When a Group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or joint venture are recognised in the Group’s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group. The Group applies AASB 9, including the impairment requirements, to long-term interests in an associate or joint venture to which the equity method is not applied and which form part of the net investment in the investee. Furthermore, in applying AASB 9 to long-term interests, the Group does not take into account adjustments to their carrying amount required by ‘AASB 128 – Investments in associates and joint ventures’ (i.e. adjustments to the carrying amount of long-term interests arising from the allocation of losses of the investee or assessment of impairment in accordance with AASB 128). Investments in associates and joint ventures (continued) Trade and other receivables and contract assets and liabilities Contract assets A contract asset is initially recognised for revenue earned from construction and maintenance services when the receipt of consideration is conditional on client acceptance of the successful completion or installation of the underlying contractual obligation. Upon such notification, the amount recognised as contract assets is reclassified as trade receivables. Trade receivables A receivable is recognised if an amount of consideration that is unconditional is due from the customer (i.e. only the passage of time is required before payment of the consideration is due). Contract liabilities A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognised as revenue when the Group performs under the contract (i.e. transfers control of the related goods or services to the customer.) Impairment of contract assets and liabilities and trade receivables The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix. The Group assess impairment of trade receivables on a collective basis as they possess shared credit risk characteristics they have been grouped based on the days past due. Refer to Note 39 for a detailed analysis of how the impairment requirements of AASB 9 are applied. Classification and measurement of financial liabilities The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments). All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income. Inventories Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a first-in-first-out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. 50 50 GENUSPLUS GROUP LTD 51 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 4. Statement of accounting policies (continued) 4. Statement of accounting policies (continued) Taxation Tax consolidation The Company and its wholly-owned Australian resident entities are members of a tax-consolidated group under Australian tax law. The Company is the head entity within the tax-consolidated group. In addition to its own current and deferred tax amounts, the Company also recognises the current tax liabilities and assets and deferred tax assets arising from unused tax losses and relevant tax credits of the members of the tax-consolidated group. Amounts payable or receivable under the tax-funding arrangement between the Company and the entities in the tax consolidated group are determined using a ‘separate taxpayer within group’ approach to determine the tax contribution amounts payable or receivable by each member of the tax-consolidated group. This approach results in the tax effect of transactions being recognised in the legal entity where that transaction occurred, and does not tax effect transactions that have no tax consequences to the group. The same basis is used for tax allocation within the tax-consolidated group. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Adjustments are made for transactions and events occurring within the tax-consolidated group that do not give rise to a tax consequence for the Company or that have a different tax consequence at the level of the entity. Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Adjustments are made for transactions and events occurring within the tax- consolidated group that do not give rise to a tax consequence for the Company or that have a different tax consequence at the level of the entity. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the year Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination. Management has applied a risk weighted measurement to the tax treatments used in the Group and has determined that there is no change required under IFRIC 23 Uncertainty over Income Tax Treatments. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. Equity, reserves and dividend payments Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from share capital, net of any related income tax benefits. Other components of equity include the following: • • Corporate restructure reserve: comprises amounts recognised upon the introduction of a new ultimate parent entity. Foreign currency translation reserve: comprises amounts recognised upon translation of amounts denominated in foreign currencies ($USD) into the presentation currency ($AUD) Retained earnings include all current and prior period retained profits. Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been declared by the Board prior to the reporting date. All transactions with owners of the parent are recorded separately within equity. Employee benefits Short-term and long-term employee benefits Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Liabilities recognised in respect of long-term employee benefits are measured as the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date. Share-based payment transactions The Group provides remuneration to certain employees, including Directors, of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’). The cost of these equity-settled transactions is measured by reference to the fair value at the date at which they are vested. The fair value is measured using a variation of the binomial option pricing model that takes into account the terms and conditions on which the instruments were granted and the current likelihood of achieving the specified target. Further, the cost of equity- settled transactions is recognised, on the date on which they become fully entitled to the award (‘vesting date’). Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Onerous contracts Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. 52 52 GENUSPLUS GROUP LTD 53 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 4. Statement of accounting policies (continued) 4. Statement of accounting policies (continued) Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except: • • Where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense, or For receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified within operating cash flows. Government grants Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable. Government assistance which does not have conditions attached specifically relating to the operating activities of the Group is recognised in accordance with the accounting policies above. Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of GenusPlus Group Ltd, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Dividends Dividends are recognised when declared during the financial year and no longer at the discretion of the company. Contract liabilities Contract liabilities represent the consolidated entity's obligation to transfer goods or services to a customer and are recognised when a customer pays consideration, or when the consolidated entity recognises a receivable to reflect its unconditional right to consideration (whichever is earlier) before the consolidated entity has transferred the goods or services to the customer. Significant management judgement in applying accounting policies and estimation uncertainty When preparing the Group’s consolidated financial statements, management makes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, revenue and expenses. Critical 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 financial year are discussed below. Construction contract revenue Recognised amounts of construction contract revenues and related receivables reflect management’s best estimate of each contract’s outcome and stage of completion. For more complex contracts in particular, costs to complete and contract profitability are subject to significant estimation uncertainty. Impairment of non-financial assets and goodwill In assessing impairment, management estimates the recoverable amount of each asset or cash generating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate. Calculation of loss allowance When measuring ECL the Group uses reasonable and supportable forward looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, taking into account cash flows from collateral and integral credit enhancements. Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions. The Group maintains insurance against Domestic Trade Credit defaults and therefore considers the risk of loss to be minimal. Useful lives of property, plant and equipment Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Fair value measurements and valuation processes Some of the Group's assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available. Business combinations Management uses valuation techniques in determining the fair values of the various elements of a business combination. Particularly, the fair value of contingent consideration is dependent on the outcome of many variables that affect future profitability. Leases – estimating the incremental borrowing rate The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right of use asset in a similar economic environment. The IBR therefore reflects what the Group ‘would have to pay’, which requires estimation when no observable rates are available. The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates. Recognition of Deferred tax assets The extent to which deferred tax assets can be recognised is based on an assessment of the probability that future taxable income will be available against which the deductible temporary differences and tax loss carry-forwards can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions. 54 54 GENUSPLUS GROUP LTD 55 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 $ l a t o T - , 4 9 8 8 7 1 , 4 4 4 , 4 9 8 8 7 1 , 4 4 4 , ) 7 9 7 4 0 9 0 3 1 ( , , ) 3 9 0 5 1 3 5 2 1 ( , , ) 6 9 6 0 6 4 5 1 ( , , ) 8 0 6 7 6 3 5 1 ( , , ) 7 0 5 6 2 3 0 2 ( , 9 2 3 , 1 9 4 7 1 , , 5 1 0 3 9 9 7 9 1 , 9 8 0 , 1 1 2 3 2 1 , $ l a t o T , 9 6 6 6 3 9 0 5 4 , t a t u o d e i r r a c e r a s r e f s n a r t t n e m g e s - r e t n i l l A . s e c r u o s e r r e h t o d n a s e h c a o r p p a g n i t e k r a m , i l s e g o o n h c e t i t n e r e ff d s e r i u q e r h c a e s a y e t a r a p e s d e g a n a m s l i s t n e m g e s g n i t a r e p o e s e h t f o h c a E . s t l u s e r g n i t a r e p o t n e m g e s d e t s u d a g n s u j i . i s e c v r e s d n a s d o o g l a c i t n e d i l f o s e a s e n o a - d n a t s n l i l s r e m o t s u c d e t a e r n u o t d e g r a h c s e c i r p n o d e s a b s e c i r p h t g n e l ’ s m r a . s u c o f l a n o i t a r e p o d n a y g e t a r t s ’ i s s e n s u b e h t h t i w e n i l n i r a e y r o i r p e h t m o r f d e n g i l a - e r e r e w s t n e m g e s g n i t a r e p o , 3 2 0 2 e n u J 0 3 d e d n e r a e y e h t g n i r u D 3 2 0 2 e n u J 0 3 o t r a e Y : s w o l l o f s a d e s i r a m m u s e r a s e i t i l i b a i l d n a s t e s s a t n e m g e s d n a s t n e m g e s g n i t a r e p o s p u o r G e h t ’ f o h c a e y b d e t a r e n e g t fi o r p d n a s e u n e v e r e h T d e r o t i n o m s i e c n a m r o f r e p t n e m g e S . m e h t o t s e c r u o s e r f o n o i t a c o l l a e h t n o g n d c e d s a i i l l e w s a s t n e m g e s g n i t a r e p o e s e h t f o e c n a m r o f r e p e h t s r o t i n o m o h w , e v i t u c e x e f e h c s t i i s i ) M D O C ( i i r e k a M n o s c e D g n i t a r e p O f e h C s p u o r G e h T i ’ . l a i r t s u d n i d n a , i s n o i t a c n u m m o c , e r u t c u r t s a r f n i : s t n e m g e s g n i t a r e p o s t i s a s e n i l ’ i s s e n s u b e e r h t s p u o r G e h t s e fi i t n e d i y l t n e r r u c t n e m e g a n a M g n i t r o p e R t n e m g e S . 5 , ) 4 6 8 2 1 3 9 1 1 ( , , 6 0 4 8 0 7 6 1 , - - , ) 6 0 4 8 0 7 6 1 ( , , ) 6 0 4 8 0 7 6 1 ( , - - - - , ) 3 3 0 4 2 5 , 1 1 ( , ) 5 8 8 0 8 2 3 ( , - $ / r e h t O s n o i t a n m i i l E $ l a t o T s t n e m g e S , 4 9 8 8 7 1 , 4 4 4 , 6 0 4 8 0 7 6 1 , , 0 0 3 7 8 8 0 6 4 , , ) 7 9 7 4 0 9 0 3 1 ( , , ) 3 9 0 5 1 3 5 2 1 ( , ) 0 7 2 , 1 2 0 6 3 1 ( , , ) 6 9 6 0 6 4 5 1 ( , , ) 8 0 6 7 6 3 5 1 ( , $ l a i r t s u d n I , 1 1 0 5 9 1 , 1 7 7 0 1 , 1 6 4 7 , 8 1 1 , 6 5 6 8 7 , , ) 8 6 6 6 9 1 , 9 2 ( ) 0 2 1 , 1 0 1 , 5 2 ( ) 2 2 9 , 1 0 1 , 8 1 ( ) 4 5 6 9 8 7 ( , ) 2 5 2 8 7 4 ( , , ) 7 0 5 6 2 3 0 2 ( , , ) 0 6 2 4 9 2 3 ( , 9 2 3 , 1 9 4 7 1 , , 2 4 2 4 9 6 , 1 ) 4 2 1 , 6 2 9 3 ( , , 1 1 2 3 2 7 9 1 , , 8 4 0 7 1 5 9 0 2 , 4 7 9 , 1 9 4 6 2 1 , , 6 3 2 7 6 7 9 , , 2 7 4 4 1 5 6 1 , , 0 4 3 5 3 2 3 8 1 , , 9 9 2 9 4 4 0 1 , , 2 7 5 8 3 6 5 1 , 3 0 1 , 4 0 4 0 0 1 , ) 0 9 8 5 8 5 ( , , ) 8 6 7 0 3 9 , 1 ( , ) 6 3 0 8 0 0 2 ( , ) 2 5 1 , 5 8 0 4 1 ( , , ) 8 8 5 8 5 9 2 1 ( , , ) 1 1 2 4 2 0 5 1 ( , s e s n e p x e n o i t a s i t r o m a d n a n o i t a c e r p e D i x a T e m o c n I e r o f e b t fi o r P t n e m g e S s e s n e p x e r e h t O s t e s s A s e i t i l i b a L i l s e s n e p x e e c h e v r o t o M i i n o i t a c n u m m o C e r u t c u r t s a r f n I $ , 0 1 5 2 1 2 2 6 , 4 7 1 , 8 4 , 4 8 6 0 6 2 2 6 , , ) 1 3 7 6 0 6 6 ( , , ) 8 4 4 2 6 5 4 1 ( , , ) 5 3 9 2 9 4 0 4 ( , $ 5 2 1 , 9 9 1 , 9 3 7 3 , 1 7 7 0 1 3 , , 8 9 4 0 7 9 9 1 3 , s e u n e v e r t n e m g e S t n e m g e s - r e t n I s e u n e v e R , ) 1 8 6 5 4 1 , 7 8 ( s e s n e p x e t n e m y o p m E l , ) 2 4 2 7 0 6 3 9 ( , , ) 3 1 4 6 2 4 7 7 ( , s e s n e p x e e r i h r u o b a l d n a s r o t c a r t n o C l d e s u s a i r e t a m d n a s e b a m u s n o C l - , ) 8 8 7 5 4 3 0 3 ( , , 8 8 7 5 4 3 0 3 , , 8 7 3 4 1 6 5 1 , - , 9 6 6 6 3 9 0 5 4 , ) 8 4 9 , 1 7 6 0 3 ( , , 7 1 6 8 0 6 , 1 8 4 , 2 4 0 9 2 4 6 7 , , 7 5 6 6 1 8 5 5 , $ / r e h t O s n o i t a n m i i l E $ l a t o T s t n e m g e S ) 0 6 1 , 6 2 3 ( , 9 2 8 2 6 2 , 1 5 4 , 4 6 6 4 1 8 0 6 , , 7 5 6 6 1 8 5 5 , $ l a i r t s u d n I $ $ i n o i t a c n u m m o C e r u t c u r t s a r f n I 0 1 4 , 1 3 7 4 1 , 8 0 5 , 1 3 6 4 3 3 , , 8 1 9 2 6 3 9 4 3 , s e u n e v e r t n e m g e S t n e m g e s - r e t n I s e u n e v e R , ) 6 3 4 8 5 7 , 1 8 ( s e s n e p x e t n e m y o p m E l , ) 6 7 3 5 1 0 9 2 1 ( , , ) 0 6 5 2 5 0 5 4 1 ( , - - , ) 6 7 3 5 1 0 9 2 1 ( , , ) 9 8 5 2 8 3 9 2 ( , , ) 1 5 3 4 7 8 7 1 ( , , ) 0 6 5 2 5 0 5 4 1 ( , , ) 1 7 6 4 7 1 , 0 3 ( ) 4 4 1 , 5 4 5 4 ( , , ) 5 4 7 2 3 3 0 1 1 ( , l d e s u s a i r e t a m d n a s e b a m u s n o C l , ) 5 3 5 8 6 0 5 1 1 ( , , 8 8 7 5 4 3 0 3 , , ) 3 2 3 4 1 4 5 4 1 ( , , ) 0 5 3 8 9 0 5 1 ( , ) 4 5 8 , 1 9 8 3 3 ( , ) 9 1 1 , 4 2 4 6 9 ( , s e s n e p x e e r i h r u o b a l d n a s r o t c a r t n o C ) 5 1 2 , 1 8 3 , 1 1 ( , ) 5 5 5 7 2 6 9 ( , , ) 8 4 0 8 1 1 , 9 1 ( , 0 8 3 3 7 6 , 1 2 , 4 8 3 7 5 0 4 0 2 , - - - ) 0 6 1 , 6 2 3 ( ) 5 1 2 , 1 8 3 , 1 1 ( , ) 5 5 5 7 2 6 9 ( , , ) 8 4 0 8 1 1 , 9 1 ( , 0 4 5 9 9 9 , 1 2 , ) 5 1 8 3 4 4 ( , ) 1 9 2 9 2 6 ( ) 4 6 5 7 7 5 ( , ) 6 9 2 5 7 7 ( , , ) 0 2 3 0 0 2 2 ( , , ) 4 3 7 2 6 2 2 ( , , ) 4 9 9 9 9 4 , 1 ( , ) 6 8 2 0 1 1 , 4 ( , ) 1 9 4 6 2 0 3 1 ( , , 5 7 8 3 8 0 7 1 2 , , 7 7 0 0 4 7 7 1 , , 9 9 3 2 1 8 4 1 , , ) 6 3 8 9 5 3 0 1 ( , , ) 8 6 9 2 2 2 8 ( , , ) 4 9 9 4 5 6 4 1 ( , , 0 2 8 9 0 6 7 2 , 9 9 3 , 1 3 5 4 8 1 , , 1 4 9 3 1 2 8 4 1 , , ) 3 4 3 3 8 7 4 ( , , 4 8 2 7 9 9 2 5 1 , , 3 1 4 6 0 8 9 1 , 6 9 1 , 7 9 3 0 1 , , 5 7 6 3 9 7 2 2 1 , s e s n e p x e n o i t a s i t r o m a d n a n o i t a c e r p e D i x a T e m o c n I e r o f e b t fi o r P t n e m g e S s e s n e p x e r e h t O s t e s s A s e i t i l i b a L i l s e s n e p x e e c h e v r o t o M i 2 2 0 2 e n u J 0 3 o t r a e Y ) d e u n i t n o c ( g n i t r o p e R t n e m g e S . 5 56 56 GENUSPLUS GROUP LTD 57 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 5. Segment Reporting (continued) The totals presented for the Group’s operating segments reconcile to the key financial figures as presented in its consolidated financial statements as follows: 6. Revenue The Group’s revenue disaggregated by type is as follows: Revenues Total reportable segment revenues Other segment revenues Elimination of intersegment revenues Group Revenues Profit or loss Note 2023 $ 2022 $ 444,178,894 450,936,669 21,509,363 16,573,612 (17,818,911) (13,589,277) 447,869,346 453,921,004 Total reportable segment operating profit 17,491,329 21,673,380 Other segment profit Employment expenses Consumables and materials used Contractors and labour hire expenses Motor vehicle expenses Depreciation and amortisation expenses Other expenses Elimination of intersegment profits Group operating profit Share of profit of associates Share of profit of joint ventures Finance costs Other gains / (losses) Finance income Group profit before tax Assets Total reportable segment assets Other segment assets Elimination of intersegment assets Group assets Liabilities Total reportable segment liabilities Other segment liabilities Elimination of intersegment liabilities Group liabilities (8,395,026) (6,807,627) (121,680) (155,278) (728) (65,425) (30,215) (87,805) (2,277,344) (2,260,574) (9,691,926) (7,888,861) 21,513,735 16,646,110 18,452,935 21,089,130 (401,442) (212,093) 63,346 401,393 (1,548,058) (1,077,105) 215,401 186,990 (461,000) 8,550 16,693,733 20,024,314 197,993,015 204,057,384 61,379,305 42,254,823 (31,953,748) (14,328,311) 227,418,572 231,983,896 123,211,089 148,213,941 10,397,753 14,466,983 (11,166,403) (24,120,101) 122,442,439 138,560,823 Construction Services Note 2023 $ 2022 $ 305,341,500 331,450,121 138,837,394 119,486,548 444,178,894 450,936,669 The Group’s revenue disaggregated by pattern of revenue recognition is as follows: Construction Note 2023 $ 2022 $ 2023 $ Services 2022 $ Products and services Transferred over time 305,341,500 331,450,121 97,795,450 74,416,276 Transferred at a point in time - - 41,041,944 45,070,272 305,341,500 331,450,121 138,837,394 119,486,548 Contract balances Trade receivables Contract assets Note 16 17 2023 $ 2022 $ 54,623,086 67,729,376 37,595,573 45,734,278 92,218,659 113,463,654 Trade receivables are non-interest bearing and are generally on 30 to 90 day terms. In 2023 ($38,069) (2022: $91,983) was recognised as provision for expected credit losses on trade receivables. The decrease in trade receivables and contract assets for 2023 is representative of lower operational activity in June compared to the prior year on significant projects. Contract assets and revenue includes contract modifications recognised in accordance with the Group’s accounting policy for which amounts are not yet finalised with customers. The following amounts are included in revenue from contracts for the year ended 30 June 2023. Revenue recognised as a contract liability in prior period 11,467,739 12,454,989 The amounts recognised as revenue from contract liabilities represents work undertaken on significant transmission projects for which advance claims were made for materials or services or which payments were made on a milestone basis. Note 2023 $ 2022 $ Unsatisfied performance obligations Transaction price expected to be recognised in future years for unsatisfied performance obligations at 30 June 2023. Construction revenue Services revenue Note 2023 $ 2022 $ 165,800,000 188,800,000 4,500,000 2,000,000 170,300,000 190,800,000 58 58 GENUSPLUS GROUP LTD 59 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 7. Other income 8. Joint ventures (continued) Net gain on disposal of property, plant and equipment Insurance claims and recoveries Apprenticeship training subsidies Scrap metal sales Equipment hire Disposal proceeds - Connect Infrastructure Design Pty Ltd Other income 8. Joint ventures Details of material joint ventures Note 2023 $ 1,343,236 280,732 889,898 182,695 215,260 300,000 478,631 2022 $ 279,015 161,363 851,412 211,742 - - 458,891 No dividends were received from Blue Tongue Energy Pty Ltd during the year ended 30 June 2023. Summarised Financial Information Opening carrying value of investment in Associate 3,086,299 - Note 30 Jun 2023 $ 30 Jun 2022 $ Initial investment in associate (a) Investment in associate recognised during the reporting period (b) Share of profit using the equity method - - 1,000,000 2,022,953 (212,093) 63,346 2,874,206 3,086,299 3,690,452 1,962,423 (a) The initial investment in Blue Tongue Energy Pty Ltd was paid in cash on 2 February 2022. (b) The additional investment in Blue Tongue Energy Pty Ltd represents contingent consideration paid to the previous owners upon achievement of earn-out targets as notified in the ASX release dated 20 December 2021. This was settled in cash (14 November 2022 - $1.1m) and equity (15 December 2022 - $0.9m). On 31 July 2023, GenusPlus acquired the remaining 50% ownership interest in Blue Tongue Energy for cash consideration of $500,000. Details of each of the Group’s material joint ventures at the end of the reporting period are as follows: 9. Associates Name of joint venture Principal activity Place of incorporation Proportion of ownership interest held by the Group 30 June 2023 30 June 2022 Blue Tongue Energy Pty Ltd Design and construction of Perth, WA 50% 50% hybrid power technology and micro-grid energy markets Blue Tongue Energy contributed a loss of ($212,093) (2022 - $63,000 profit) before tax to the Group for the period. The Group’s interest in Blue Tongue is accounted for using the equity method in the consolidated financial statements. The following table illustrates the summarised financial information of the Group’s investment in Blue Tongue. Current assets Non current assets Current liabilities Non-current liabilities Equity Group’s share in equity – 50% (2022: 50%) Goodwill Group’s carrying amount of the investment Note 30 Jun 2023 $ 30 Jun 2022 $ 1,480,933 929,882 577,229 2,091,329 (1,605,594) (1,706,362) (553,962) (1,138,872) (101,394) (50,697) 175,977 87,989 2,924,903 2,998,310 2,874,206 3,086,299 The Group has a 39% interest in Maali Group JV Pty Ltd (Maali), a joint venture involved in the supply of labour hire services to a broad range of customers in the Mining, Energy and Construction sectors. The Group’s interest in Maali is accounted for using the equity method in the consolidated financial statements. Summarised financial information of the joint venture, based on its IFRS financial statements, and a reconciliation with the carrying amount of the investment in the consolidated financial statements are set out below: Summarised statement of financial position of Maali Note 30 Jun 2023 $ 30 Jun 2022 $ Current assets Non current assets Current liabilities Non-current liabilities Equity Group’s share in equity – 39% (2022: 39%) Share of losses not recognised Group’s carrying amount of the investment Summarised statement of profit or loss of Maali Revenue from contracts with customers Cost of sales Administrative expenses, including depreciation Finance costs including interest expense (Loss) / profit before tax Income tax benefit / (expense) at 25% (Loss) / profit for the year (continuing operations) Total comprehensive income for the year (continuing operations) Group’s share of (loss) / profit for the year at 39% 11,623,070 8,594,370 1,132,690 823,237 (12,931,974) (8,388,268) (423,454) - (599,668) 1,029,339 (233,871) 233,871 401,442 - - 401,442 Note 30 Jun 2023 $ 30 Jun 2022 $ 40,134,620 24,786,151 (36,487,259) (22,215,897) (5,292,908) (1,166,455) (526,187) (31,515) (2,171,734) 1,372,284 542,934 (343,071) (1,628,800) (1,628,800) (401,442) 1,029,213 1,029,213 401,393 60 60 GENUSPLUS GROUP LTD 61 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 9. Associates (continued) Movement in carry value Summarised Financial Information Opening carrying value of joint venture Share of (loss) / profit using the equity method Note 30 Jun 2023 $ 30 Jun 2022 $ 401,442 (401,442) - 49 401,393 401,442 Associates are accounted for using the equity method in these consolidated financial statements as set out in the Group’s accounting policies. No dividends were received from Maali Group Pty Ltd during the year ended 30 June 2023. During the year ended 30 June 2023, Maali Group Pty Ltd reported operating losses of ($1,628,800). In accordance with AASB 128, the entity has discontinued recognising its share of losses in excess of the carrying amount of the interest in the associate. 10. Other expenses Other expenses recognised during the period Insurance Consultancy, legal and other professional fees Computer, and other ICT expenses Occupancy costs Stamp duty – acquisition of Pole Foundations Travel, accommodation and entertainment Corporate communications and sponsorships Other expenses Total other expenses 11. Other gains and losses Other gains and losses recognised during the period Net gain arising on financial liabilities designated as at FVTPL Net (loss) arising on financial assets mandatorily measured as at FVTPL Net foreign exchange gain Other gains and (losses) Total other gains and losses Note 2023 $ 2022 $ 6,131,787 5,022,260 1,413,511 2,291,264 1,267,210 1,800,257 1,247,017 879,336 948,370 794,591 314,665 - 313,202 279,869 2,695,269 2,185,402 14,812,420 12,771,590 Note 2023 $ 2022 $ 601,000 - (461,000) (461,000) 115,664 (40,263) 215,401 - - (461,000) 12. Finance costs and finance income Finance income for the reporting periods consist of the following: Interest income from cash and cash equivalents Interest on leases Finance costs for the reporting periods consist of the following: Interest expenses for borrowings at amortised cost: Bank loans Lease liabilities Total interest expense Other finance costs Bank fees and charges Borrowing costs Total other finance costs Total finance costs 13. Income tax expense Note Note 23 2023 $ 138,575 48,415 186,990 2023 $ 279,088 957,051 1,236,139 2022 $ 8,550 - 8,550 2022 $ 142,053 703,456 845,509 298,283 231,596 13,636 311,919 1,548,058 - 231,596 1,077,105 The major components of tax expense and the reconciliation of the expected tax expense based on the domestic effective tax rate of GenusPlus Group Ltd at 30% (2022: 30%) and the reported tax expense in profit or loss are as follows: Reconciliation between tax expense and pre-tax accounting profit Note Profit before tax Domestic tax rate for GenusPlus Group Ltd Expected tax expense Adjustment for tax-exempt income: Adjustment for non-deductible expenses: Adjustments in the current year in relation to the current tax of prior years Actual tax expense Tax expense comprises: Income tax payable Origination and reversal of temporary differences Income tax expense reported in the income statement The applicable effective tax rates are: 2023 $ 2022 $ 16,693,733 20,024,314 30% 30% 5,008,120 6,007,294 (180,300) 227,110 (1,766,720) - 202,251 258,294 3,288,210 6,467,839 7,660,030 72,003 (4,371,820) 6,395,836 3,288,210 6,467,839 19.7% 32.3% 62 62 GENUSPLUS GROUP LTD 63 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 13. Income tax expense (continued) 14. Earnings per share (a) Recognised deferred tax assets and liabilities Deferred income tax balances relate to the following: Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of the parent company (GenusPlus Group Ltd) as the numerator, i.e. no adjustments to profits were necessary during the year ended 30 June 2023 and 30 June 2022. 1 July 2021 $ Business Combination $ Recognised in profit and loss $ 1 July 2022 $ Recognised in profit and loss $ 30 June 2023 $ Profit for the period Note 2023 $ 2022 $ 13,405,524 13,556,475 Deferred tax liabilities Trade and other receivables - Contract assets (6,105,349) Financial assets Property, plant and equipment (339,625) (13,879) Prepayments - Right-of-use assets (1,288,252) - - - - - - (108,811) (108,811) 92,591 (16,220) (7,712,398) (13,817,747) 2,539,075 (11,278,672) (1,122) (340,747) 322,361 (18,386) (768,048) (781,927) (323,167) (1,105,094) (454,926) (454,926) 405,052 (49,874) (5,696,676) (6,984,928) 7,411 (6,977,517) Customer relationships Other current assets - - (2,557,504) - - - (2,557,504) 974,547 (1,582,957) - (361,466) (361,466) (7,747,105) (2,557,504) (14,741,981) (25,046,590) 3,656,404 (21,390,186) Deferred tax assets Trade and other receivables Other current assets Accrued expenses Contract liabilities Lease liabilities Statutory liabilities Employee benefits 34,015 - - 1,567,606 1,589,881 444,228 2,243,017 Blackhole expenditure 594,290 Capital losses – Australia Transferred tax losses Borrowing costs 61,178 - 17,792 6,552,007 - - - - - - - - - - - - (22,640) 11,375 27,641 39,016 108,812 108,812 (108,812) 150,000 150,000 (150,000) 2,512,084 4,079,690 (4,079,690) - - - 5,009,490 6,599,371 (38,475) 6,560,896 252,201 696,429 45,593 742,022 468,316 2,711,333 231,634 2,942,967 (174,285) 420,005 108,166 528,171 (61,178) - - - 110,235 110,235 (6,890) 10,902 (88,079) (6,057) 22,156 4,845 8,346,145 14,898,152 (4,058,079) 10,840,073 (1,195,098) (2,557,504) (6,395,836) (10,148,438) (401,675) (10,550,113) All deferred tax assets (including tax losses and other tax credits) have been recognised in the statement of financial position. (b) Current Income tax Income tax (payable) / receivable Note 2023 $ 2022 $ (6,725,475) 4,569,537 The weighted average number of shares for the purpose of calculation of diluted earnings per share can be reconciled to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows: Weighted average number of shares used in basic earnings per share 177,277,319 162,218,759 Shares deemed to be issued for no consideration - - Weighted average number of shares used in diluted earnings per share 177,277,319 162,218,759 Note 2023 No. 2022 No. Earnings per share (basic) Earnings per share (diluted) 15. Cash and cash equivalents Cash at bank and in hand Australian Dollar ($AUD) – unrestricted Australian Dollar ($AUD) – held as guarantee1 American Dollar ($USD) Total cash and cash equivalents 7.56 7.56 8.36 8.36 Note 2022 $ 2021 $ 46,452,195 25,804,868 285,043 738,882 - 1,338,723 46,737,238 27,882,473 1 In accordance with certain contractual arrangements, agreed amounts of cash at bank are held in guarantee to meet ongoing performance obligations. 64 64 GENUSPLUS GROUP LTD 65 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 16. Trade and other receivables 17. Contract assets Current Trade receivables, gross Allowance for expected credit losses Trade receivables Other receivables Total trade and other receivables Note 2023 $ 2022 $ 54,753,138 67,821,359 (130,052) (91,983) 54,623,086 67,729,376 2,325,698 1,143,535 56,948,784 68,872,911 Trade receivables are non-interest bearing and are generally on 30 to 90 day terms. The Group has a policy of only dealing with credit worthy customers. The expected credit losses on trade receivables are estimated by reference to past default experience of the debtors and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date. When the Group is reasonably certain that no recovery of the amount owing is possible, the amount is considered irrecoverable and written off against the financial asset directly. Once an item is considered uncollectable, all other amounts relating to the same customer are then also assessed for recoverability. The Group will continue to strongly pursue all debts provided for. Due to their short-term nature, the net carrying value of trade receivables is considered a reasonable approximation of fair value. Current Contract assets Total contract assets Note 2023 $ 2022 $ 37,595,573 45,734,278 37,595,573 45,734,278 Contract assets represents the unbilled amounts expected to be collected from customers for contract work performed to date. The contract assets are transferred to trade receivables when the rights have become unconditional. This usually occurs when the Group issues an invoice in accordance with contractual terms to the customer. The decrease from 2022 is representative of the timing of commencement and progress achieved on significant projects undertaken by the Group. Remaining performance obligations As of 30 June 2023, the aggregate amount of the transaction price allocated to the remaining performance obligations is $165.8 million (2022: $190.8 million). The Group will recognise this revenue when the performance obligations are satisfied. Approximately 96% of remaining performance obligations are expected to occur within the next 12 months. The remaining performance obligations balances for both 30 June 2023 and 30 June 2022 presented above relate to the revenue expected to be recognised from ongoing construction type contracts which were not wholly performed at each of those dates. Allowance for expected credit losses The consolidated entity has recognised a loss of Nil (2022: NIL) in profit or loss in respect of the expected credit losses for the year ended 30 June 2023. 18. Financial assets and liabilities Categories of financial assets and liabilities Expected credit loss rate Carrying amount Allowance for expected credit losses Note 2023 % 2022 % 2023 % 2022 % 2023 % 2022 % Consolidated Not overdue 0 to 3 months overdue 3 to 6 months overdue Nil Nil Nil Nil Nil Nil 45,750,383 57,849,322 4,387,410 5,903,255 932,080 2,426,855 - - - - - - Over 6 months overdue 3.5% 5.6% 3,683,265 1,641,927 (130,052) (91,983) 54,753,138 67,821,359 (130,052) (91,983) The majority of customers of the Group consist of tier 1 miners and industrial services business and government trading entities. Accordingly, the calculation of expected credit losses is maintained at a relatively low level due to the infrequent nature of default by any of these customers. The movement in the allowance for expected credit losses in respect of Trade receivables during the year was as follows: Movement in provision for expected credit losses Balance at start of year Impairment losses recognised Debts written off during the year Balance at 30 June Note 2023 $ 2022 $ (91,983) (38,069) - (130,052) (147,530) - 55,547 (91,983) Note 4 provides a description of each category of financial assets and financial liabilities and the related accounting policies. The carrying amounts of financial assets and financial liabilities in each category are as follows: 30 June 2023 Financial assets Cash and cash equivalents Trade and other receivables Current finance lease receivable Listed equity securities (a) Non-current finance lease receivable (a) Non-current other financial assets (a) Total financial assets Amortised cost $ Note FVTPL $ Total $ 15 16 20 20 46,737,238 56,948,784 326,741 - - - - 461,000 402,379 266,997 - - 46,737,238 56,948,784 326,741 461,000 402,379 266,997 104,682,139 461,000 105,143,139 (a) Non-current financial assets comprises loans to associates, listed equity securities and non-current finance lease receivables valued at $1,130,376. 30 June 2023 Financial liabilities Bank borrowings Leases Trade and other payables Non-current - bank borrowings Non-current - leases Total financial liabilities Other liabilities amortised cost $ Other liabilities FVTPL $ Note 27 23 25 27 23 1,580,000 9,007,690 50,993,122 4,280,000 12,861,963 78,722,775 - - - - - - Total $ 1,580,000 9,007,690 50,993,122 4,280,000 12,861,963 78,722,775 66 66 GENUSPLUS GROUP LTD 67 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 18. Financial assets and liabilities (continued) 18. Financial assets and liabilities (continued) Amortised cost $ Note FVTPL $ Total $ Other financial instruments The carrying amount of the following financial assets and liabilities is considered a reasonable approximation of fair value: (b) Other financial assets includes loans to joint ventures and listed equity securities valued at $993,833. 30 June 2022 Financial assets Cash and cash equivalents Trade and other receivables Other financial assets Listed equity securities Total financial assets 30 June 2022 Financial liabilities Bank borrowings Leases Contingent consideration Trade and other payables Non-current - bank borrowings Non-current - leases Non-current contingent consideration Total financial liabilities 15 16 (b) (b) 27,882,473 68,872,911 71,833 - 96,827,217 - - - 922,000 922,000 27,882,473 68,872,911 71,833 922,000 97,749,217 Other liabilities amortised cost $ Other liabilities FVTPL $ Note 1,920,000 7,765,884 - - - 4,949,953 72,608,068 3,250,000 14,232,018 - - - 27 23 27 25 27 23 27 Total $ 1,920,000 7,765,884 4,949,953 72,608,068 3,250,000 14,232,018 - 674,000 674,000 99,775,970 5,623,953 105,399,923 Amounts receivable under finance leases A description of the Group’s financial instrument risks, including risk management objectives and policies is given in Note 39. The methods used to measure financial assets and liabilities reported at fair value are described in Note 40. Financial assets at fair value through profit or loss (FVTPL). Financial assets at FVTPL include the equity investment in Volt Power Ltd (VPR). The Group accounts for the investment at FVTPL and did not make the irrevocable election to account for it at FVOCI. Listed investment in Volt Power Ltd (VPR) Borrowings Borrowings include the following financial liabilities: At amortised cost Bank borrowings Total borrowings Note 2023 $ 461,000 461,000 2022 $ 922,000 922,000 2023 $ Current 2022 $ 2023 $ Non-current 2022 $ 1,580,000 1,920,000 4,280,000 3,250,000 1,580,000 1,920,000 4,280,000 3,250,000 Bank borrowings are secured by a floating charge over the assets of the Group (see Note 27). Current interest rates are variable and average 4.40% (2022: 1.58%). The carrying amount of the other bank borrowings is considered to be a reasonable approximation of the fair value. Year 1 Year 2 Year 3 Undiscounted lease payments Less: unearned finance income Present value of lease payments receivable Net investment in the lease Net investment in the lease analysed as: Current Non-current • • • trade and other receivables cash and cash equivalents trade and other payables. 19. Inventories Current At cost: Raw materials and stores Total inventories Note 2023 $ 2022 $ 3,796,472 3,796,472 3,728,803 3,728,803 In 2023, a total of $125,597,200 of materials was included in profit and loss as an expense (2022: $139,298,892). This includes an amount of NIL resulting from write down of inventories (2022: NIL). 20. Lease receivables Note 2023 $ 2022 $ 343,000 343,000 117,167 803,167 (74,047) 729,120 729,120 2023 $ 326,741 402,379 - - - - - - - 2022 $ - - Note 68 68 GENUSPLUS GROUP LTD 69 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 20. Lease receivables (continued) The Group entered into finance leasing arrangements as a lessor for certain commercial properties previously held as right-of- use assets. The average term of finance leases entered into is 2.3 years. These lease contracts do not include extension or early termination options. The Group is not exposed to foreign currency risk as a result, as all leases are denominated in AUD. The Group’s finance lease arrangements do not include variable payments. The average effective interest rate contracted approximates 5.6 per cent (2022: N/A per cent) per annum. The directors of the Group estimate the loss allowance on finance lease receivables at the end of the reporting period at an amount equal to lifetime ECL. None of the finance lease receivables at the end of the reporting period is past due, the directors of the Group consider that no finance lease receivable is impaired. This is the first period in which finance lease receivables have been reported by the Group. The loss allowance for finance lease receivables will be assessed on an annual basis giving regard to any impairment that may be required due to defaults or changes in market conditions. 21. Other assets Current Prepayments Security deposits Total other assets Note 2023 $ 2022 $ 5,279,570 160,296 1,516,419 66,460 5,439,866 1,582,879 On an annual basis, the Group undertakes a risk assessment and re-insurance against material risks identified and for assets held by the Group. This assessment is generally completed prior to the conclusion of the financial reporting period, with new policies in place at the reporting date which cover the following year. This assessment was not completed at 30 June 2022, so only interim policies were held at that date. Pre-paid insurance at 30 June 2023, covers the period to April 2024. $ l a t o T , 0 3 4 5 7 6 4 4 , $ s t e s s a l e u a v w o l d n a g n i l o o T 6 4 0 3 0 7 , ) 5 7 0 4 5 1 ( , , 0 0 0 6 2 8 2 , , 6 2 8 2 2 3 2 , , ) 6 4 0 4 2 8 3 ( , , 5 2 4 0 0 0 9 4 , - - - ) 6 3 6 3 ( , 3 6 7 , 1 3 7 , 0 9 2 4 5 1 , 3 3 5 3 2 3 , , 7 4 6 8 7 3 , e r u t i n r u F $ $ l y g o o n h c e t s g n i t t fi d n a e r a w t f o S d n a s e r u t x fi $ d n a t n a P l t n e m p u q e i r o t o M l d o h e s a e L d n a d n a L i t n e m p u q e d n a t n a l p , y t r e p o r P . 2 2 l s e c h e v i s t n e m e v o r p m i s g n d i l i u b $ $ $ 3 2 0 2 e n u J 0 3 d e d n e r a e y e h t r o F ) 4 9 3 9 3 ( , ) 0 0 7 2 ( , , ) 9 2 3 0 9 4 , 1 ( , 0 7 6 5 2 1 , 3 5 3 8 9 8 5 , , 4 9 0 3 7 9 3 2 , , ) 7 8 9 7 8 2 2 ( , - - 7 5 9 3 , , 0 6 4 2 8 7 2 , ) 7 5 9 3 ( , , ) 2 7 0 5 7 2 , 1 ( , 7 9 9 0 2 1 , 1 - , 1 9 0 0 2 2 , 5 3 5 8 6 6 , 1 - 8 2 9 3 7 5 , 4 6 5 2 2 , 0 0 0 , 1 1 4 , 0 0 0 5 1 4 2 , 2 6 1 , 0 6 0 , 1 , 4 6 7 8 0 6 , 1 8 0 2 7 3 , , 2 4 2 7 4 0 5 2 , , 0 3 2 9 9 1 , 4 1 , 4 0 4 8 0 6 - - - - - - 0 2 1 , 1 6 7 2 9 5 4 1 , i i s n o i t a n b m o c s s e n s u b h g u o r h t n o i t i s u q c A i 1 i n o i t a c fi s s a c - e R l i t n u o m a g n y r r a c s s o r G 2 2 0 2 y u J 1 l t a e c n a a B l s n o i t i d d A - 0 0 2 4 3 4 , s t e s s a e s u f o t h g i r m o r f n o i t a c fi s s a c - e R l i l s a s o p s D i , ) 4 2 3 0 0 0 7 2 ( , , ) 7 4 2 8 2 5 ( , ) 2 3 9 4 4 0 , 1 ( , ) 9 2 9 8 5 3 ( , ) 1 0 3 3 9 7 5 1 ( , - , ) 1 8 4 3 7 2 , 1 ( - - - - , 6 8 4 6 6 7 2 , 6 3 6 3 , 2 2 8 8 1 , - - 2 7 7 8 5 2 9 3 , ) 8 5 2 9 3 ( , ) 1 9 6 5 2 1 ( , ) 2 3 9 , 1 8 9 ( , 1 7 7 8 7 2 , 1 , 5 8 4 4 6 4 , 1 - - - , 9 3 5 4 2 7 8 1 , , ) 4 5 2 9 3 9 8 ( , , 2 1 6 5 4 6 , 2 1 9 9 0 2 , 1 3 2 0 2 e n u J 0 3 t a e c n a a B l t n e m r i a p m i d n a n o i t a c e r p e D i ) 7 0 2 2 8 1 ( , ) 4 5 4 3 5 1 ( , 2 2 0 2 y u J 1 l t a e c n a a B l - - ) 8 5 8 5 6 1 ( , ) 4 0 9 4 1 1 ( , s t e s s a e s u f o t h g i r m o r f n o i t a c fi s s a c - e R l i i n o i t a c e r p e D i n o i t a c fi s s a c - e R l l s a s o p s D i , ) 2 8 5 5 4 2 5 ( , , ) 1 0 9 2 5 7 0 3 ( , , 4 2 5 7 4 2 8 1 , ) 0 8 5 7 1 1 ( , ) 1 9 1 , 2 4 6 ( 2 7 5 9 8 , l a u t c e l l e t n i f o s m e t i r e h t O . i i l l s e c h e v r o t o m s a d e fi s s a c - e r n e e b e v a h t n e m p u q e d n a t n a p s a d e d r o c e r y s u o v e r p e r e w l l i i t a h t 2 2 0 2 n i i i n o i t a n b m o c s s e n s u b s n o i t a d n u o F e o P e h t l f o t r a p s a d e r i u q c a s t e s s A 1 ) 4 2 e t o N ( i l s e b g n a t n i i l s a d e fi s s a c - e r n e e b e v a h a i l l a r t s u A s n o i t a d n u o F e o P m o r f d e r i u q c a y t r e p o r p 6 1 7 , 1 0 3 , 1 6 0 2 2 4 1 , 0 7 1 , 5 7 6 6 , , 8 1 5 3 7 8 8 , 6 4 6 9 8 3 , 6 9 6 5 7 7 , 3 2 0 2 e n u J 0 3 t n u o m a g n y r r a C i ) 4 4 8 7 9 7 ( , ) 2 7 4 9 8 ( , , ) 4 5 9 3 2 8 , 1 ( ) 9 2 6 7 4 4 ( , , ) 1 6 9 6 9 6 2 ( , , ) 2 6 0 5 5 3 , 1 ( ) 9 5 7 3 7 ( , , ) 4 2 9 7 9 2 7 1 ( , ) 1 2 0 , 1 5 8 9 ( , , ) 6 6 9 5 5 2 ( , ) 6 1 2 4 3 4 ( 3 2 0 2 e n u J 0 3 t a e c n a a B l 70 70 GENUSPLUS GROUP LTD 71 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 $ l a t o T $ s t e s s a l e u a v w o l d n a g n i l o o T , e r u t i n r u F $ $ l y g o o n h c e t s g n i t t fi d n a e r a w t f o S d n a s e r u t x fi $ d n a t n a P l t n e m p u q e i r o t o M l d o h e s a e L d n a d n a L ) d e u n i t n o c ( t n e m p u q e d n a t n a l p i , y t r e p o r P . 2 2 l s e c h e v i s t n e m e v o r p m i s g n d i l i u b $ $ $ 2 2 0 2 e n u J 0 3 d e d n e r a e y e h t r o F , 2 1 8 2 8 5 9 3 , , 2 5 3 4 1 7 5 , - , 8 7 2 4 8 2 2 , 0 4 1 , 0 0 6 8 7 4 3 4 , - 8 2 5 , 1 6 ) 5 2 6 4 1 ( , - ) 7 8 3 , 1 9 8 2 ( , ) 0 0 1 , 2 ( , 0 3 4 5 7 6 4 4 , 6 4 0 3 0 7 , - - , 2 6 6 3 4 8 , 0 0 0 0 0 8 2 5 0 3 3 , , 0 6 4 2 8 7 2 , 3 0 9 9 6 , 0 0 0 0 4 , 4 5 4 3 1 , ) 5 0 3 , 1 ( ) 5 2 6 4 1 ( , 8 2 9 3 7 5 , , 2 8 4 4 9 0 4 , , 0 1 6 2 5 4 7 6 7 4 9 , , 8 7 2 4 4 4 , 1 - 7 3 1 , 2 7 1 ) 1 7 1 , 0 8 2 ( - - - - - ) 3 7 1 , 7 5 9 ( ) 7 8 1 , 1 3 4 , 1 ( ) 2 2 6 9 9 4 ( , , 6 4 7 5 0 1 , 1 , 1 0 5 6 6 4 , 8 1 5 3 9 2 0 2 , , 8 7 9 7 5 4 5 1 , , 9 5 2 3 1 0 , 1 - - - - , 0 7 6 5 4 6 0 5 4 5 1 1 , i i s n o i t a n b m o c s s e n s u b h g u o r h t n o i t i s u q c A i i n o i t a c fi s s a c - e R l l s a s o p s D i i t n u o m a g n y r r a c s s o r G 1 2 0 2 y u J 1 l t a e c n a a B l s n o i t i d d A l i i a s o p s d s s e n s u b f o t r a p s a s a s o p s D l i , ) 0 8 3 5 1 8 3 2 ( , , ) 5 6 7 3 4 3 ( , ) 8 2 9 4 0 4 ( ) 9 2 7 5 1 2 ( , , ) 8 5 4 0 4 7 3 1 ( , , 2 4 2 7 4 0 5 2 , , 0 3 2 9 9 1 , 4 1 , 4 0 4 8 0 6 0 2 1 , 1 6 7 2 2 0 2 e n u J 0 3 t a e c n a a B l , ) 4 0 2 2 2 8 8 ( , ) 3 6 4 8 9 1 ( , ) 3 3 8 9 8 ( , 1 2 0 2 y u J 1 l t a e c n a a B l t n e m r i a p m i d n a n o i t a c e r p e D i , 6 4 7 8 9 7 , 1 8 7 8 - 1 7 2 1 1 1 , 6 5 7 - ) 0 1 3 0 2 ( , ) 1 3 1 , 9 4 ( ) 5 7 4 3 2 ( , ) 8 9 3 7 2 3 ( , , 3 7 6 5 9 8 , 4 1 3 0 2 4 - 3 1 8 5 4 1 , - - i n o i t a c fi s s a c - e R l l s a s o p s D i , ) 0 9 6 3 8 9 4 ( , ) 0 5 0 5 6 1 ( , , ) 3 7 8 0 9 5 ( ) 6 9 9 9 1 1 ( , ) 6 5 5 , 1 8 4 2 ( , , ) 7 3 0 3 3 4 , 1 ( ) 7 5 5 9 2 1 ( , ) 1 2 6 3 6 ( , i n o i t a c e r p e D 22. Property, plant and equipment (continued) All depreciation and impairment charges are included within depreciation, amortisation and impairment of non-financial assets. Total depreciation and amortisation recognised during the reporting period: Depreciation Buildings Leasehold improvements Motor vehicles Plant and equipment Furniture, fixtures and fittings Software and technology Tooling and low value assets Note 2023 $ 2022 $ 114,904 73,759 1,355,062 2,696,961 89,472 797,844 117,580 63,621 129,557 1,433,037 2,481,556 119,996 590,873 165,050 Total depreciation expense for the year 5,245,582 4,983,690 Depreciation – right of use assets 23 6,629,692 5,340,060 Amortisation – intellectual property and customer contracts Total depreciation and amortisation 3,337,917 15,213,191 1,578,181 11,901,931 The net assets of the Group have been pledged as security for the Group’s other bank borrowings (see Note 27). 23. Leases Lease liabilities are presented in the statement of financial position as follows: Current Non-current Total leases Group as a lessee Note 2023 $ 2022 $ 9,007,690 7,765,884 12,861,963 14,232,018 21,869,653 21,997,902 The Group has lease contracts for land and buildings and for various items of plant and equipment and motor vehicles used in its operations. Leases of plant and equipment and motor vehicles generally have lease terms between 3 and 5 years after which ownership of the underlying asset passes to the Group. Leases over land and buildings have lease terms of between 1 and 10 years. The Groups obligations under its leases are secured by the lessor title to the leased assets. Generally, the Group is restricted from assigning and subleasing the leased assets. , ) 4 2 3 0 0 0 7 2 ( , , ) 7 4 2 8 2 5 ( , ) 2 3 9 4 4 0 , 1 ( , ) 9 2 9 8 5 3 ( , ) 1 0 3 3 9 7 5 1 ( , , ) 4 5 2 9 3 9 8 ( , 6 0 1 , 5 7 6 7 1 , 9 9 7 4 7 1 , , 8 2 5 7 3 7 , 1 9 9 9 4 1 2 , , 1 4 9 3 5 2 9 , , 6 7 9 9 5 2 5 , ) 7 0 2 2 8 1 ( , ) 4 5 4 3 5 1 ( , 2 2 0 2 e n u J 0 3 t a e c n a a B l 7 9 1 , 6 2 4 6 6 6 7 0 6 , 2 2 0 2 e n u J 0 3 t n u o m a g n y r r a C i 72 72 GENUSPLUS GROUP LTD 73 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 23. Leases (continued) Group as a lessee (continued) The Group also has certain leases of office equipment with low value. The Group applies the ‘short-term lease’ and ‘lease of low- value assets’ recognition exemptions for these leases. Set out below are the carrying amounts of right-of-use assets and the movement during the period: Note 2023 $ 2022 $ Right-of-use assets – Land and Buildings As at 1 July Additions Adjustments related to changes in lease conditions 1 Re-classified to property, plant and equipment (land and buildings) 2 Depreciation expense De-recognised during the period 3 As at 30 June Right-of-use assets – Plant and Equipment As at 1 July Additions Disposal Re-classification to property, plant & equipment 2 Depreciation expense As at 30 June Right-of-use asset – Motor Vehicles As at 1 July Additions Disposals Re-classification to property, plant & equipment 2 Depreciation expense As at 30 June 6,188,709 962,547 213,868 (268,342) 4,666,285 3,929,446 91,773 - (2,120,562) (2,227,853) (2,351,382) (270,942) 2,624,838 6,188,709 7,624,232 3,435,302 (149,638) (94,399) 4,236,234 5,139,079 (47,199) - (2,363,923) (1,703,882) 8,451,574 7,624,232 9,470,151 5,705,842 (162,204) (686,603) 4,648,338 6,234,706 (4,568) - (2,145,207) (1,408,325) 12,181,979 9,470,151 Total Right-Of-Use Assets 23,258,391 23,283,092 1 2 3 Increase resulting from a change in the monthly lease payable to the owner. Re-classification relating to the payout of the applicable finance lease agreement. Leases surrendered during the period or re-classified as finance lease receivable from a sub-lease arrangement. The following are the amounts recognised in profit or loss: Depreciation of right-of-use assets Interest expense on right-of-use asset lease liabilities Expense relating to short-term leases Note 2023 $ 2022 $ 6,629,692 5,340,060 957,051 2,591,077 703,456 11,496,147 10,177,820 17,539,663 The group had total cash outflows for leases of $9,274,224 in 2023 (2022: $6,975,397). The Group also had non-cash additions and other adjustments to right-of-use assets and lease liabilities of $10,317,559 in 2023 (2022: $15,516,763). The Group does not face a significant liquidity risk with regards to its lease liabilities. Lease liabilities are monitored within the Group treasury function. 74 74 GENUSPLUS GROUP LTD 24. Intangible assets The movements in the net carrying amount of intangible assets is as follows: Goodwill Balance 1 July Note 2023 $ 2022 $ 19,540,788 5,505,688 Acquired through business combinations 37 74,000 14,035,100 Balance 30 June Accumulated impairment losses Accumulated amortisation Carrying amount at 30 June Customer contracts Balance 1 July 19,614,788 19,540,788 - - - - 19,614,788 19,540,788 9,043,890 39,890 Acquired through business combinations 37 - 9,004,000 Disposals Balance 30 June Accumulated amortisation Carrying amount at 30 June Other intellectual property Balance 1 July (39,890) - 9,004,000 9,043,890 (2,404,434) (518,879) 6,599,566 8,525,011 7,166,476 - Acquired through business combinations 37 - 7,165,746 Re-classified from property, plant and equipment Balance 30 June Accumulated amortisation Carrying amount at 30 June Total intangible assets 154,075 - 7,320,821 7,166,746 (2,471,774) (1,059,302) 4,849,047 6,107,444 31,063,401 34,173,243 No adjustments to Goodwill were recognised during the reporting period. Customer contracts and other intellectual property are amortised over their estimated useful lives, which is on average 11 years (customer contracts) and 9 years (intellectual property). Impairment testing For the purpose of annual impairment testing, goodwill is allocated to the following cash-generating units, which are the units expected to benefit from the synergies of the business combinations in which the goodwill arises. Genus Infrastructure (Qld) Pty Ltd Proton Power Pty Ltd KEC Power Pty Ltd Connect Engineering Pty Ltd Genus PFA Pty Ltd L & M Powerlines Australia Pty Ltd Goodwill allocation at 30 June Note 2023 $ 1,179,147 305,395 129,372 2022 $ 1,179,147 305,395 129,372 3,891,774 3,891,774 14,035,100 14,035,100 74,000 - 19,614,788 19,540,788 The recoverable amounts of the cash-generating units were determined based on value-in-use calculations, covering a five- year forecast, followed by an extrapolation of expected cash flows for the units’ remaining useful lives using the growth rates determined by management. The present value of the expected cash flows of each segment is determined by applying a suitable discount rate. 75 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 24. Intangible assets (continued) 26. Contract liabilities Short-term advances for materials Short-term advances for construction services Note 2023 $ - 2022 $ 885,057 16,876,882 11,867,906 16,876,882 12,752,963 Advances received for construction contract work represent customer payments received in advance of performance (contract liabilities) that are expected to be recognised as revenue in the next financial year. The amounts recognised in respect of construction contracts will generally be utilised within the next reporting period. The balance relating to advances for materials decreased during the period as the related aspects of the contracts were performed. Advances in relation to construction services increased during the period due to the increase in the Group’s customer base, and the recognition of milestone payments where revenue recognised to date has been exceeded under the cost to complete basis. 27. Other financial liabilities Secured borrowings – at amortised cost Bank loan – secured Current Non-current Contingent consideration Current Non-current Note 2023 $ 2022 $ 1,580,000 1,920,000 4,280,000 3,250,000 5,860,000 5,170,000 Note 2023 $ 2022 $ - - - 4,949,953 674,000 5,623,953 Genus Infrastructure (Qld) Pty Ltd Proton Power Pty Ltd KEC Power Pty Ltd Connect Engineering Pty Ltd Genus PFA Pty Ltd Growth rates Growth rates Discount rates 2023 2022 2023 2022 3% 3% 3% 3% 5% 5% 5% 5% 5% 5% 12% 12% 12% 12% 12% 13% 13% 13% 13% 13% The growth rates reflect the long-term average growth rates for the business of the segments and the markets they operate in. Sensitivity As disclosed in Note 4, the directors have made judgements and estimates in respect of impairment testing of goodwill. Should these judgements and estimates not occur the resulting goodwill carrying amount may decrease. The impairment assessment is sensitive to movements in key assumptions including the discount rate applied and EBITDA margin. Management has performance sensitivity analysis for these variables to determine if reasonable changes in the assumptions would cause the carrying amount of the above CGUs to exceed their recoverable amount. Under the existing assumptions, the Genus PFA Pty Ltd CGU will break even if the EBITDA margin decreased from 27.5% to 25%. The Connect Engineering Pty Ltd GCU will break even if the EBITDA margin decreased from 7% to 5.8%. Under the existing assumptions, the Genus PFA Pty Ltd CGU will break even if the post tax nominal discount rate increased to 13.9%. The Connect Engineering Pty Ltd GCU will break even will break even if the post tax nominal discount rate increased to 13.9%. Discount rates The discount rates reflect appropriate adjustments relating to market risk and specific risk factors of each unit. Cash flow assumptions Genus Infrastructure (Qld) Pty Ltd, Proton Power Pty Ltd, KEC Power Pty Ltd, Connect Engineering Pty Ltd & Genus PFA Pty Ltd Management’s key assumptions include stable profit margins, based on past experience in this market. The Group’s management believes that this is the best available input for forecasting this mature market. Cash flow projections reflect stable profit margins achieved immediately before the budget period. No expected efficiency improvements have been taken into account and prices and wages reflect publicly available forecasts of inflation for the industry. 25. Trade and other payables Unsecured liabilities: Trade payables Goods and services tax payable Unpaid wages Sundry payables and accrued expenses Total trade and other payables Note 2023 $ 2022 $ 25,966,393 33,646,539 1,962,464 2,934,745 2,810,173 4,413,962 20,129,520 31,737,394 50,993,122 72,608,068 All amounts are short-term. The carrying values of trade payables and other payables are considered to be a reasonable approximation of fair value. 76 76 GENUSPLUS GROUP LTD 77 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 27. Other financial liabilities (continued) 28. Employee benefits The bank debt facility comprises term loans with quarterly principal repayments with maturity dates between two and five years. The group has an overdraft/trade finance facility with a limit of $10,000,000 with $10,000,000 available at 30 June 2023. The group has an equipment finance facility with Commonwealth Bank of Australia Pty Ltd (CBA) with a limit of $7,000,000 (FY22 - $7,000,000) with $3,574,000 available at 30 June 2023 (FY22 - $3,198,984). The group has an equipment finance facility with Mercedes Benz finance with a limit of $2,000,000 (FY22 - $2,000,000) with $2,000,000 available at 30 June 2023 (FY22 - $1,981,358). The group has an equipment finance facility with Toyota Asset Finance with a limit of $12,000,000 (FY22 - $12,000,000) with $2,760,000 available at 30 June 2023 (FY22 - $5,809,252). The group has an equipment finance facility with Australia and New Zealand Banking Group Limited (ANZ) with a limit of $4,000,000 (FY22 - $4,000,000) with $2,000,000 available at 30 June 2023 (FY22 - $708,365). The group has an equipment finance facility with Westpac Banking Corporation (WBC) with a limit of $2,000,000 (FY22 – $2,000,000) with $745,000 available at 30 June 2023 (FY22 - $1,507,969) The bank debt is secured by a General Security Agreement of the group. Under the agreement, the Group is required to satisfy financial metrics that demonstrate its ongoing financial health and viability. These covenants relate to the Group’s ability to meet debt service cover, gross leverage and liquidity ratios and tangible net worth thresholds. The Group was not in breach of any loan agreements permitting the lender to demand accelerated repayments at year end, nor did any breach occur during the year. The Group was not in default of any loans payable recognised at year end during the year. Contingent consideration As part of the agreement to purchase 50% of Blue Tongue Energy Pty Ltd (Blue Tongue) contingent consideration of $2,022,953 was settled in cash (14 November 2022 - $1.1m) and equity (15 December 2022 - $0.9m). As part of the purchase agreement with the previous owners of Pole Foundations Australia (Pole Foundations) contingent consideration of $3.0M was paid in November 2022 for performance conditions that were satisfied. Conditions related to the remainder of the contingent consideration were not satisfied with a fair value gain of $601,000 recognised in profit for the year. Employee benefits expense Expenses recognised for employee benefits are analysed below: Salaries and wages Superannuation Amounts provided for employee entitlements Short term incentives Other allowances and expenses Employee benefits expense Employee benefits The liabilities recognised for employee benefits consist of the following amounts: Current Annual leave Long service leave Other short term employee benefits Non-current Long service leave Note 2023 $ 2022 $ 115,216,595 114,594,683 9,347,134 9,053,499 6,497,396 1,574,974 6,181,826 617,884 8,021,289 6,749,874 140,657,388 137,197,766 Note 2023 $ 2022 $ 6,012,936 5,578,530 640,388 1,953,981 357,056 551,649 8,607,305 6,487,235 909,889 2,550,543 Total employee benefits 9,517,194 9,037,778 The current portion of these liabilities represents the groups obligations to which the employee has a current legal entitlement. These liabilities arise mainly from accrued annual leave entitlement at reporting date and for employees who have satisfied the service eligibility for long service leave – usually 10 years. 29. Provisions Current Amounts recognised in respected of expected losses or write-downs Total provisions Note 2023 $ 50,000 50,000 2022 $ 1,221,721 1,221,721 78 78 GENUSPLUS GROUP LTD 79 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 30. Share capital 32. Dividends on equity instruments The share capital of the Group consists only of fully paid ordinary shares; the shares do not have a par value. Ordinary shares participate in dividends and the proceeds on winding up of the Group in proportion to the number of shares held. Fully paid ordinary shares 2023 Shares 2022 Shares 2023 $ 2022 $ Beginning of the year 176,752,420 155,589,964 53,789,037 28,925,754 Shares issued as part of a capital raising1 - 16,528,926 - 20,000,000 Shares issued as part of a business combination2,3 972,528 4,633,530 Deferred tax adjustments Share issue costs - - - - 923,902 558,074 6,023,589 - (5,988) (1,160,306) Total contributed equity at 30 June 177,724,948 176,752,420 55,265,025 53,789,037 Recognised amounts Fully paid ordinary shares Final dividend Year ended 30 June 2023 Year ended 30 June 2022 Cents per share Total $ Cents per share Total $ 2.0 3,554,499 1.8 3,181,544 On 30 November 2022, a dividend of 1.8c per share was paid to the holders of fully paid ordinary shares in respect of the financial year ended 30 June 2022. On 21 August 2023, the directors declared a fully franked dividend of 2.0 cents per share to the holders of fully paid ordinary shares in respect of the financial year ended 30 June 2023. At the time of reporting, the dividend of $3,554,499 was unpaid. The record date is 4 October 2023 and the payment date is 3 November 2023. 16,528,926 shares were issued as part of a capital raising to fund the acquisition of Pole Foundations Australia as announced to the market 17 February 2022. The share placement was completed on 28 February 2022. Distributions made and proposed 1. 2. 3. 4,633,530 shares were issued as part consideration for the acquisition of Pole Foundations Australia on 29 April 2022. 972,528 shares were issued as part consideration for the acquisition of BlueTongue Energy Pty Ltd on 15 December 2022. Franking credit balance The amount of franking credits available for the subsequent financial year are: Franking account balances as at the end of the financial year at 30% (2022: 30%) 11,082,528 16,836,429 2023 $ 2022 $ Each share has the same right to receive dividend and the repayment of capital and represents one vote at the Shareholders’ Meeting of GenusPlus Group Ltd. 31. Reserves Balance at 1 July 2021 Movements in asset values measured in foreign currencies that will subsequently be re-classified to profit or loss Notes Foreign Currency Translation reserve 8,275 160,117 Corporate Restructure reserve $ Total $ (511,834) (503,559) - 160,117 Balance at 30 June 2022 168,392 (511,834) (343,442) Balance at 1 July 2022 Movements in asset values measured in foreign currencies that will subsequently be re-classified to profit or loss 168,392 (146,908) (511,834) (343,442) - (146,908) 33. Reconciliation of cash flows Reconciliation of cash flows from operating activities Cash flows from operating activities Profit after income tax Non-cash flows in profit: gain on disposal of plant and equipment gain on disposal of subsidiary depreciation and amortisation decrease in value of investments reported at FVTPL Balance at 30 June 2023 21,484 (511,834) (490,350) share of losses / (profits) of associates and joint ventures Corporate restructure reserve The corporate reconstruction reserve recorded the transaction on the introduction of a new ultimate parent entity. Foreign currency translation reserve The foreign currency translation reserve records the un-recognised gains / (losses) incurred on translation of monetary items held in US Dollars ($USD), Euros (EUR) and Chinese Renminbi (CNY). The balance will be subsequently reported in profit and loss when the underlying value of the monetary item (accounts payable) is settled. net finance costs other fair value gains Changes in assets and liabilities: decrease/(increase) in trade and other receivables decrease / (increase) in other assets (increase) / decrease in inventories (decrease)/increase in trade and other payables Net cash provided by operating activities 2023 $ 2022 $ 13,405,524 13,556,475 (1,345,062) - (279,015) (70,000) 15,213,191 11,901,931 461,000 613,536 461,000 (464,739) 1,361,068 1,068,555 (594,681) - 20,062,832 (34,801,667) (3,856,987) 1,867,047 (67,669) (1,537,509) (6,100,864) 19,762,655 39,151,888 11,464,733 80 80 GENUSPLUS GROUP LTD 81 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 34. Auditor remuneration During the financial year the following fees were paid or payable for services provided by Grant Thornton, the auditor of the company, its network firms and unrelated firms: 35. Related party transactions (continued) Transactions with related parties (continued) Auditing services – Grant Thornton Audit or review of the financial statements Other services – Grant Thornton Tax services Other non-assurance services Total auditor’s remuneration 35. Related party transactions Note 2023 $ 2022 $ 235,000 235,000 112,025 9,845 356,870 7,400 25,500 267,900 The Group’s related parties include its key management personnel, related parties of its key management personnel, and others as described below. Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or received. Outstanding balances are usually settled in cash. Transactions with related parties As part of normal business operations, the Group undertakes construction work through associated entities, as well as leasing rental properties. A summary of these transactions is included below. Services provided by related parties Pastoral Plus (Director D Riches) Testing Plus WA (Director D Riches) Partum Engineering (Director D Riches) Sparke Helmore Lawyers (Director P. Gavazzi) Matt Riches and Dave Riches (Director D Riches) Dave Riches (Director D Riches) Edge People Management (Director D Riches) Maali Group Pty Ltd Services provided to related parties Pastoral Plus (Director D Riches) Blue Tongue Energy Pty Ltd (Associate) Maali Group Pty Ltd All services were contracted at arms’ length basis. 2023 $ 2022 $ 565,626 - 646,489 1,229 9,893,117 7,396,206 - 623,177 56,834 108,833 2,011,379 9,339 559,244 520,900 41,889 3,655,260 2023 $ 2022 $ 1,100 68,098 227,068 22,757 498,558 1,019,667 Amounts due to related parties at reporting date Pastoral Plus (Director D Riches) Partum Engineering (Director D Riches) Matt Riches Pty Ltd & Dave Riches Pty Ltd (Director D Riches) Dave Riches Pty Ltd (Director D Riches) Edge People Management (Director D Riches) Maali Group Pty Ltd Amounts due from related parties at reporting date Pastoral Plus (Director D. Riches) Blue Tongue Energy Pty Ltd Maali Group Pty Ltd 2023 $ 2022 $ 49,161 994,898 - - 15,623 56,143 87,002 775,051 21,116 9,832 8,760 134,439 2023 $ 2022 $ - 566,656 146,876 18,445 498,558 112,389 All amounts outstanding at reporting date were included in accounts payable or accounts receivable, and settled in accordance with commercial terms. Transactions with key management personnel Key management of the Group are the Non-Executive members of the Group’s Board of Directors, the Group’s Chief Executive Officer and the other members of the Executive team reporting to the Managing Director. Key management personnel remuneration includes the following expenses: Salaries including bonuses Long service leave Superannuation Total remuneration 2023 $ 2022 $ 2,272,760 1,890,643 38,702 163,535 7,952 142,858 2,474,997 2,041,453 The Group has previously used the legal services of one Company Director (Mr Paul Gavazzi) a firm over which he exercises significant influence. The amounts billed related to this legal service amounted to NIL in the current reporting period (2022: $9,339), based on normal market rates. 82 82 GENUSPLUS GROUP LTD 83 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 36. Contingent assets and contingent liabilities The Group has no contingent assets. 37. Acquisitions and disposals (continued) Businesses disposed There were no material warranty or legal claims brought against the Group during the year. Unless recognised as a provision, management considers these claims to be unjustified and the probability that they will require settlement at the Group’s expense to be remote. The Group disposed of its interest in Connect Infrastructure Design Pty Ltd during the year ended 30 June 2023 to a related party Partum Engineering for consideration of $300,000. The disposal is in line with the Group’s strategy to utilise external contractors for the purposes of design work. 2023 $ 2022 $ Businesses acquired - For the year ended 30 June 2023 Estimates of the potential financial effect of contingent liabilities that may become payable: Secured guarantee to company's bankers supported by a floating charge over the Group assets Surety bonds secured by the Group assets The CBA guarantee facility has a limit of $60,000,000 (2022 - $60,000,000). The Surety bond facilities have a limit of $60,000,000 (2022 - $40,000,000). 37. Acquisitions and disposals Acquisition of key Tandem Corp assets and contracts 30,151,730 26,601,326 30,924,322 26,264,012 61,076,052 52,865,338 On 4 January 2023 Genus Infrastructure (QLD) Pty Ltd (GNIQ) acquired the assets of L&M Powerline Constructions Pty Ltd (L&M) including 2 contracts, fixed assets and staff. Total consideration for the acquisition was $3,000,000 in cash, less an allowance by the Seller in favour of the buyers of $100,000 in respect of working capital. The acquisition was funded using the Buyer’s existing CBA Bank Facility. No contingent consideration was payable to the seller. This transaction was accounted for as a business combination. Consideration transferred / transferrable Cash Total Assets acquired and liabilities assumed at the date of acquisition Plant and equipment Inventory Goodwill Employee entitlements Total Net cash outflow on acquisition of businesses Consideration paid in cash Less: cash and cash equivalent balances acquired Total L&M Powerlines $ ETS $ 2,914,443 2,914,443 968,000 968,000 2,826,000 1,033,980 14,443 74,000 - 2,914,443 - - (65,980) 968,000 2,914,443 968,000 - - 2,914,443 968,000 Amounts payable for the acquisition of L&M Powerlines and ETS were funded via the Group’s existing funding facilities. L&M contributed revenue of $1,707,000 and $395,000 net income to the consolidated group for the period following the acquisition. Contingent consideration Payments during the reporting period to acquire subsidiaries consisted of contingent consideration of $4,132,995 settled in cash. If L&M had been a part of the consolidated group for the entire year the consolidated position would have been $445,900,000 group revenue and $13,500,000 group net income. Contingent consideration payable under the terms of the Groups acquisition of 50% of Blue Tongue Energy Pty Ltd was settled in cash and shares during the reporting period. Acquisition of Tasmanian assets of ETS Infrastructure Management Pty Ltd On 5 July 2022 Genus Infrastructure (NSW) Pty Ltd (GNIN) executed an agreement to acquire the net assets of ETS (Tasmania) including the fixed assets, staff and TasNetworks contracts (x2) from ETS Infrastructure Management Pty Ltd. In total, $1,132,995 cash and shares valued at $889,958 were transferred to the former majority owners. Contingent consideration payable under the terms of the Groups acquisition of Pole Foundations Australia was settled in cash during the reporting period. Payment was made on 17 August 2022 following the satisfaction of conditions precedent. In total, $3,000,000 cash was transferred to the former owners. GNI (NSW) acquired the assets of ETS for $968,000 payable fully in cash. This transaction was accounted for as a business combination. ETS contributed revenue of $3,410,000 and $204,000 net income to the consolidated group for the period following the acquisition. If ETS had been a part of the consolidated group for the entire year the consolidated position would have been $444,400,000 group revenue and $13,400,000 group net income. 84 84 GENUSPLUS GROUP LTD 85 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 Notes to the Consolidated Financial Statements For the year ended 30 June 2023 38. Interests in subsidiaries Composition of the Group Set out below details of the subsidiaries held directly by the Group: Parent Entity: GenusPlus Group Ltd (a) Subsidiaries: Genus Infrastructure Pty Ltd(b) Diamond Underground Services Pty Ltd(b) Proton Power Pty Ltd(b) Complete Cabling and Construction Pty Ltd(b) Proton Technical Services Pty Ltd(b) GPL Enterprises (WA) Pty Ltd (b)(l) Genus Infrastructure (Qld) Pty Ltd(c) Genus Fleet Management Pty Ltd KEC Power Pty Ltd(d) Genus Infrastructure (NSW) Pty Ltd(e) ECM Consultancy Pty Ltd(f) Genus Renewables Pty Ltd(g) Connect Engineering Pty Ltd(h) Connect Infrastructure Pty Ltd(h) Connect Infrastructure Construction Pty Ltd(h) Connect Infrastructure Design Pty Ltd(h,j) Connect Design South Coast (NSW) Pty Ltd(h)(k) Genus PFA Pty Ltd(j) (a) GenusPlus Group Ltd was incorporated on 6 July 2017. Country of Incorporation Percentage Ownership 2023 2022 Aust Aust Aust Aust Aust Aust Aust Aust Aust Aust Aust Aust Aust Aust Aust Aust Aust Aust Aust 100% 100% 100% 100% 100% - 100% 100% 100% 100% 100% 100% 100% 100% 100% - - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% (b) Powerlines Plus Pty Ltd was acquired on 17 May 2018. Powerlines Plus Pty Ltd was the 100% shareholder of Diamond Underground Services Pty Ltd, Proton Power Pty Ltd, Complete Cabling and Construction Pty Ltd, Proton Technical Services Pty Ltd, Proton E&I Pty Ltd and GPL Enterprises (WA) Pty Ltd. Powerlines Plus changed its name to Genus Infrastructure Pty Ltd on 14 September 2022. (c) Powerlines Plus (Qld) Pty Ltd was re-registered as Genus Infrastructure (Qld) Pty Ltd on 27 June 2023. (d) KEC Power Pty Ltd was incorporated on 4 February 2019. (e) Powerlines Plus (NSW) Pty Ltd was incorporated on 26 November 2019 changed its name to Genus Infrastructure (NSW) Pty Ltd on 15 July 2022. (f) ECM Consultancy Pty Ltd was incorporated on 12 December 2019. (g) Genus Renewables Pty Ltd was incorporated on 3 July 2020. (h) Connect Engineering Pty Ltd and its subsidiaries were acquired on 1 June 2021. (i) Genus PFA Pty Ltd was incorporated 11 February 2022 and acquired Pole Foundations Australia acquired on 29 April 2022. (j) Connect Infrastructure Design Pty Ltd was disposed of on 1 February 2023. (k) Connect Design South Coast was deregistered on 11 January 2023. (l) GPL Enterprises (WA) Pty Ltd was deregistered on 11 January 2023. Notes to the Consolidated Financial Statements For the year ended 30 June 2023 39. Financial risk management Risk management objectives and policies The Group is exposed to various risks in relation to financial instruments. The Group’s financial assets and liabilities by category are summarised in Note 18. The main types of risks are market risk, credit risk and liquidity risk. The Group’s risk management is coordinated at its headquarters, in close cooperation with the Board of Directors, and focuses on actively securing the Group’s short to medium-term cash flows by minimising the exposure to financial markets. Long-term financial investments are managed to generate lasting returns. The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed are described below. Market risk analysis The Group is exposed to market risk through its use of financial instruments and specifically to currency risk, interest rate risk and certain other price risks, which result from both its operating and investing activities. Foreign currency sensitivity Most of the Group’s transactions are carried out in Australian Dollars (AUD). Exposures to currency exchange rates arise from the Group’s sales and purchases denominated in US-Dollars (USD). The Group holds a bank account in USD for this purpose. To mitigate the Group’s exposure to foreign currency risk, non-AUD cash flows are monitored in accordance with the Group’s risk management policies. Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no hedging activity is undertaken. Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are those reported to key management translated into AUD at the closing rate: Financial assets Financial liabilities Total exposure 2023 Short term exposure USD $ 2023 Long term exposure USD $ - - - - - - 2022 Short term exposure USD $ 922,967 - 922,967 2022 Long term exposure USD $ - - - 86 86 GENUSPLUS GROUP LTD 87 GenusPlus Group LtdAnnual Report 2023 39. Financial risk management (continued) 39. Financial risk management (continued) Foreign currency sensitivity (continued) Other price risk sensitivity The following table illustrates the sensitivity of profit and equity in respect of the Group’s financial assets and financial liabilities and the AUD/USD exchange rate ‘all other things being equal’. It assumes a +/- 5% change of the AUD/USD exchange rate for the year ended 30 June 2023 (2022: 10%). The percentage has been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Group’s foreign currency financial instruments held at each reporting date. In any respect, the Group would elect not to realise the underlying value of the financial asset were it to result in a loss to the Group. Financial assets subject to currency sensitivity were received on 30 June 2020, and valued at the exchange rate applicable on that date. If the Australian Dollar (AUD) had strengthened against the US-Dollar (USD) by 5% (2022: 10%) then this would have had the following impact: 30 June 2023 30 June 2022 Profit for the year AUD $ - - If the AUD had weakened against the USD by 5% (2022: 10%) then this would have had the following impact: 30 June 2023 30 June 2022 Profit for the year AUD $ - - Equity AUD $ - (121,702) Equity AUD $ - 121,702 The Group is exposed to other price risk in respect of the investment in Volt Power Limited (ASX: VPR). For the listed investment in Volt Power Limited, an average volatility of 50% has been observed during 2023 (2022: 33%). Volatility at the lower end of this scale is considered a suitable basis for estimating how profit or loss and equity would have been affected by changes in market risk that were reasonably possible at the reporting date due to the relatively low volumes traded. If the quoted stock price for VPR increased or decreased by that amount, profit or loss and equity would have changed by $230,500 (2022: $304,260). The investment in VPR is considered a long-term, strategic investment. In accordance with the Group’s policies, no specific hedging activities are undertaken in relation to this investment. The investment is continuously monitored and voting rights arising from the equity instrument are utilised in the Group’s favour. Credit risk analysis Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to credit risk from financial assets including cash and cash equivalents held at banks, trade and other receivables and contract assets. The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as summarised below: Classes of financial assets Carrying amounts: cash and cash equivalents trade and other receivables Credit risk management 2023 $ 2022 $ 46,737,238 27,882,473 56,948,784 68,872,911 103,686,022 96,755,384 Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group’s exposure to currency risk. The credit risk is managed on a group basis based on the Group’s credit risk management policies and procedures. Interest rate sensitivity The Group’s policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are therefore usually at fixed rates. At 30 June 2023, the Group is exposed to changes in market interest rates through bank borrowings at variable interest rates. Other borrowings are at fixed interest rates. The exposure to interest rates for the Group’s money market funds is considered low as the Group currently holds more funds on deposit in interest bearing accounts than is owed in bank borrowings. The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of +/- 2.00% (2022: +/- 1%). These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant. 30 June 2023 30 June 2022 Profit for the year $ +2% / +1% 225,090 (103,400) $ -2% / -1% (225,090) 103,400 $ +2% / +1% 225,090 (103,400) Equity $ -2% / -1% (225,090) 103,400 Cash and cash equivalents The Group’s cash and cash equivalents are held with major reputable financial institutions. Trade receivables The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risk of the industry and country in which the customers operate, has less of an influence on credit risk. Geographically, the concentration of credit risk is within Australia and, by industry, the concentration is within the commercial infrastructure and resources industries. The Group continuously monitors defaults of customers and other counterparties, identified either by individual or group and incorporates this information into its credit risk controls. The Group’s policy is to deal only with creditworthy counterparties. The ongoing credit risk is managed through regular review of ageing analysis, together with credit limits per customer. The Group does not require collateral in respect of trade receivables and contract assets. To mitigate the impact of any single credit default, the Group maintains a policy of Trade Credit Insurance that provides protection in the event of default. The Group’s management considers that all the above financial assets that are not impaired or past due for each of the reporting dates under review are of good credit quality. 88 88 GENUSPLUS GROUP LTD 89 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 39. Financial risk management (continued) 39. Financial risk management (continued) Credit risk analysis (continued) Impairment losses The ageing of the Group’s trade and other receivables at the reporting date was: Other receivables – not past due Trade receivables: Current Less than 90 days Greater than 91 days Gross 2023 $ 2,325,698 Note 16 45,750,383 4,387,410 4,615,345 16 54,753,138 Allowance for Impairment 2023 $ - - - (130,052) (130,052) Gross 2022 $ 1,143,535 57,849,322 5,903,255 4,068,782 67,821,359 57,078,836 (130,052) 68,964,894 Allowance for Impairment 2022 $ - - - (91,983) (91,983) (91,983) The provision of $130,052 relates to expected credit losses of a small number of debtors based on the past default experience of the debtors combined with analysis of the debtor’s current financial position. The Group continues to strongly pursue all debts provided for. The majority of un-impaired debtors exceeding one year relate to retention claims that are not due. The debtor aging is relative to the date of the original invoice claim against which the retention is held. The Group has established an allowance for impairment that represents their expected credit losses in respect of trade receivables and contract assets. The Group recognises a provision for impairment related to expected credit losses (“ECLs”) for trade receivables, and other debt financial assets 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. For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group uses a provision matrix to calculate the ECLs. The provision matrix is established based on the Group’s historically observed default rates. The Group calibrates the matrix to adjust historical credit loss experience with forward looking factors specific to debtors and the economic environment where appropriate. At every reporting date, historical default rates are updated and changes in the forward-looking estimates are analysed. The assessment of the correlation between historical observed default rates, forecast of economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecasts in economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. The Group considers a financial asset’s potential for default when contractual payments are more than 120 days past due, factoring in other qualitative indicators where appropriate. Exception shall apply to financial assets that relate to entities under common controls or covered by letter of credit or credit insurance. 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. Liquidity risk analysis Liquidity risk is the risk that the Group might be unable to meet its obligations. The Group manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows due in day-to-day business. The data used for analysing these cash flows is consistent with that used in the contractual maturity analysis below. Liquidity needs are monitored in various time bands, on a week-to-week basis, as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a 180 to 360 day lookout period are identified monthly. Net cash requirements are compared to available borrowing facilities in order to determine headroom or any shortfalls. This analysis shows that available borrowing facilities are expected to be sufficient over the lookout period. The Group’s objective is to maintain cash and marketable securities to meet its liquidity requirements for 30-day periods at a minimum. This objective was met for the reporting periods. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities and the ability to sell long-term financial assets. The Group considers expected cash flows from financial assets in assessing and managing liquidity risk, in particular its cash resources and trade receivables. The Group’s existing cash resources and trade receivables (see Note 16) significantly exceed the current cash outflow requirements. Cash flows from trade and other receivables are all contractually due within three months. As at 30 June 2023, the Group’s non-derivative financial liabilities have contractual maturities as summarised below: Current Non-current Within 6 months $ 6-12 months $ 1-5 years $ 5+ years $ 30 June 2023 Secured borrowings Leases Trade and other payables Contingent consideration payable 790,000 790,000 4,635,762 4,371,928 4,280,000 12,861,963 50,993,122 - - - - - Total 56,418,884 5,161,928 17,141,963 This compares to the maturity of the Group’s non-derivative financial liabilities in the previous reporting periods as follows: - - - - - 30 June 2022 Secured borrowings Leases Trade and other payables Contingent consideration payable Total Current Non-current Within 6 months $ 6-12 months $ 1-5 years $ 5+ years $ 960,000 960,000 3,250,000 3,925,439 3,840,445 14,232,018 72,608,068 4,949,953 - - - 674,000 82,443,460 4,800,445 18,156,018 - - - - - The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the liabilities at the reporting date. 90 90 GENUSPLUS GROUP LTD 91 Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 40. Fair value measurement Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows: • • • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Unobservable inputs for the asset or liability The following table shows the levels within the hierarchy of financial assets and liabilities measured at fair value on a recurring basis at 30 June 2023 and 30 June 2022: 40. Fair value measurement (continued) Measurement of fair value of financial instruments The Group’s finance team performs valuations of financial items for financial reporting purposes, including Level 3 fair values, in consultation with third party valuation specialists for complex valuations. Valuation techniques are selected based on the characteristics of each instrument, with the overall objective of maximising the use of market-based information. The finance team reports to the Audit Committee. Valuation processes and fair value changes are discussed among the Audit Committee and the valuation team at least every year, in line with the Group’s reporting dates. The valuation techniques used for instruments categorised in Levels 2 are described below. There were no instruments categorised as Level 3. Level 1 $ Level 2 $ Level 3 $ Total $ Level 3 fair value measurements Contingent consideration (Level 3) 30 June 2023 Financial assets Listed securities Lease receivable Other financial assets Total assets Financial liabilities Contingent consideration Total liabilities Net fair value 30 June 2022 Financial assets Listed securities Other financial assets Total assets Financial liabilities Contingent consideration Total liabilities Net fair value 461,000 - - 461,000 - - - 729,120 266,997 996,117 - - 461,000 996,117 - - - - - - - 461,000 729,120 266,997 1,457,117 - - 1,457,117 Level 1 $ Level 2 $ Level 3 $ Total $ - 71,833 71,833 - - - 922,000 71,833 993,833 922,000 - 922,000 - - The fair value of contingent consideration related to the acquisition of Blue Tongue Energy Pty Ltd and Pole Foundations Australia (see Note 37) has been determined through analysis of past profitability against targets agreed in the purchase agreement and estimated future cash-flows. Due to the short time frame associated with assessing achievement of the targets related to the contingent consideration, the impact of discounting of future cash flows was not material in the assessment and the values stated are consistent with fair value. 41. Capital management policies and procedures The Group’s capital management objectives are: • • to ensure the Group’s ability to continue as a going concern to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk. The Group monitors capital on the basis of the carrying amount of equity plus its bank loans and other financial liabilities, less cash and cash equivalents as presented on the face of the statement of financial position. The Group’s goal in capital management is to ensure compliance with the Group’s covenants relating to its commercial financing arrangements. These covenants measure the Group’s Debt Service Cover, Gross Leverage and Liquidity Ratios, as well as requiring maintenance of a minimum Tangible Net Worth. The Group has met all its covenant obligations, since the commercial loan was taken out. Management assesses the Group’s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. The amounts managed as capital by the Group for the reporting periods under review are summarised as follows: - - (5,623,953) (5,623,953) (5,623,953) (5,623,953) Total equity Financial liabilities 922,000 71,883 (5,623,953) (4,630,070) Cash and cash equivalents There were no transfers between Level 1 and Level 2 in 2023 or 2022. Capital Total equity Borrowings Overall financing Capital-to-overall financing ratio 2023 $ 2022 $ 104,976,133 93,423,073 21,836,048 21,110,359 (46,737,238) (27,882,473) 80,074,943 86,650,959 104,976,133 93,423,073 21,836,048 21,110,359 126,812,181 114,533,432 0.63 0.76 92 92 GENUSPLUS GROUP LTD 93 The ratio decrease during 2023 is primarily a result of additional cash at bank held at year end compared to the previous reporting period. Notes to the Consolidated Financial Statements For the year ended 30 June 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 Directors’ Declaration In accordance with a resolution of the directors of GenusPlus Group Limited, I state that: In the opinion of the directors: (a) the financial statements and notes of GenusPlus Group Limited for the financial year ended 30 June 2023 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 2023 and of its performance for the year ended on that date; and (ii) complying with Accounting Standards and the Corporations Regulations 2001; (b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2; 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. This declaration has been made after receiving the declarations required to be made to the directors by the chief executive officer and chief financial officer in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2023. On behalf of the board David Riches Director Dated the 22nd day of August 2023 42. Parent entity information Information relating to GenusPlus Group Ltd (the Parent Entity): Statement of financial position Current assets Total assets Current liabilities Total liabilities Net assets Issued capital Retained earnings Total equity Statement of profit or loss and other comprehensive income (Loss) for the year Total comprehensive income The Parent Entity had no capital commitments at year end (2022:$Nil). 43. Events after the reporting date 2023 $ 2022 $ 8,572,332 2,902,789 38,407,717 40,761,752 9,361,840 (1,455,015) (14,765,133) (11,006,876) 53,172,849 51,768,629 55,265,025 53,789,037 (2,092,176) (2,020,409) 53,172,849 51,768,628 (2,390,224) (2,560,158) (2,390,224) (2,560,158) On 21 August 2023, the Directors declared a final fully franked dividend of 2.0 cents per share with a record date of 4 October 2023 and a payment date of 3 November 2023. The total dividend payable is an aggregate of $3,554,499. On 31 July 2023, GenusPlus Group completed the acquisition of the remaining 50% of BlueTongue Energy Pty Ltd for cash consideration of $500,000. Other than those mentioned above, no matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. 44. Group details The registered office and principal place of business of the Group is: GenusPlus Group Ltd Level 1, 63 – 69 Abernethy Road Belmont WA 6104 94 94 GENUSPLUS GROUP LTD 95 Notes to the Consolidated Financial Statements For the year ended 30 June 2023GenusPlus Group LtdAnnual Report 2023 Independent Auditor’s Report For the year ended 30 June 2023 Independent Auditor’s Report For the year ended 30 June 2023 Grant Thornton Audit Pty Ltd Level 43 Central Park 152-158 St Georges Terrace Perth WA 6000 PO Box 7757 Cloisters Square Perth WA 6850 T +61 8 9480 2000 Independent Auditor’s Report To the Members of GenusPlus Group Ltd Report on the audit of the financial report Opinion We have audited the financial report of GenusPlus Group Ltd (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, and the Directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its 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. www.grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. w Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How our audit addressed the key audit matter Revenue recognition of long-term contracts – Notes 4 & 6 The Group’s revenues from fixed price construction contracts ($305.3 million) are recognised over time, with the amount determined by the percentage of costs completed. Revenue is recognised in accordance with AASB 15 Revenue from Contracts with Customer based on: • The determination of the completion and measurement of performance obligations under each contract; Our procedures included, amongst others: • Understanding and documenting the design of internal controls over project costings and estimating costs to complete construction projects; • Testing the operating effectiveness of project cost controls designed for determining the revenue recognised over time utilising the percentage of completion method; • Reviewing significant contracts, including agreeing • The estimation for construction contract inputs (costs) including costs remaining and the expected margins earned on the contracts; and key terms and conditions to contracts along with any variations or contingencies requiring to be recognised; • The determination of contingency and variation estimates, including the probability of approval for changes in price and scope This area is a key audit matter due to the high level of estimation and management judgement required to determine the revenue recognised from each contract that includes contract variations and claims. Testing a sample of costs to ensure appropriate allocation to projects;; • Reviewing management assumptions in determining the stage of completion, total contract price, costs incurred and estimated costs to complete to supporting documentation; • Recalculating the stage of completion based on costs to date proportionate to forecasted costs including testing a sample of progress billings and contract costs to ensure the allocation to revenue, contract assets and liabilities was appropriate and consistent with the requirements of AASB 15; • Assessing estimated costs to complete through discussion with project managers and challenging the key assumptions connected to the stage of completion method, including potential disputes and claims relating to variations to the original contract terms and agreeing to underlying support; • Assessing variations to historical recoveries and supporting documentation for claims made for price and scope changes; and • Assessing the adequacy of the Group’s presentation and disclosures in the financial statements. Grant Thornton Audit Pty Ltd 96 96 GENUSPLUS GROUP LTD 97 GenusPlus Group LtdAnnual Report 2023 Independent Auditor’s Report For the year ended 30 June 2023 Independent Auditor’s Report For the year ended 30 June 2023 Goodwill – Note 24 As disclosed in Note 22, the Group recognised goodwill totalling $19.6 million at 30 June 2023 across six cash-generating units (CGUs). Goodwill is required to be assessed for impairment annually by management as prescribed in AASB 136 Impairment of Assets. Management performs annual impairment testing per AASB 136 to ensure the CGUs’ recoverable amount is greater than its carrying value, utilising either the greater of fair value less costs to sell or its value in use. The Group uses a discounted cash flow model for the value-in-use approach to determine the recoverable amount. In doing so, management considers the following key inputs; • • forecasted budgeted financial performance; estimated growth rates; • working capital adjustments; • • • estimated capital expenditure; discount rate; and terminal value. This area is a key audit matter due to the significant balance carried by the Group that management has assessed using estimates and judgement Our procedures included, amongst others: • • • • Understanding and documenting management’s process and controls related to the assessment of impairment, including management’s identification of CGUs and the calculation of the recoverable amount for each CGU; Evaluating the value-in-use models against the requirements of AASB 136, including consultation with our auditor’s valuation expert; Challenging the appropriateness of management’s revenue and cost forecasts by comparing the forecasted cash flows to actual growth rates achieved historically; Reviewing management’s value-in-use calculations by: − Testing the mathematical accuracy of the calculations; − Evaluating the forecast cash inflows and outflows to be derived by the CGUs assets for reasonableness; − Comparing estimates and judgements for growth rates to available market and industry data; − Assessing the discount rates applied to forecast future cash flows for reasonableness with assistance from internal valuation specialists; − Performing sensitivity analysis on the significant inputs and assumptions made by management in preparing its calculation; and • Assessing the adequacy of financial report disclosures. 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 Group’s annual report for the year ended 30 June 2023 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 we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the financial report The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related 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. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1_2020.pdf.This description forms part of our auditor’s report. Report on the remuneration report Opinion on the remuneration report We have audited the Remuneration Report included in pages 28 to 33 of the Directors’ report for the year ended 30 June 2023. In our opinion, the Remuneration Report of GenusPlus Group Ltd, for the year ended 30 June 2023 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. GRANT THORNTON AUDIT PTY LTD Chartered Accountants L A Stella Partner – Audit & Assurance Perth, 22 August 2023 Grant Thornton Audit Pty Ltd Grant Thornton Audit Pty Ltd 98 98 GENUSPLUS GROUP LTD 99 GenusPlus Group LtdAnnual Report 2023 ASX Additional Information As at 18 August 2023 Distribution of equity security holders Category 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total Twenty largest shareholders MR DAVID WILLIAM RICHES HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED MATTHEW STEVEN RICHES & DAVID WILLIAM RICHES NATIONAL NOMINEES LIMITED CARJAY INVESTMENTS PTY LTD ARROCHAR PTY LTD CITICORP NOMINEES PTY LIMITED MR NEIL DOUGLAS RAE & MRS MELANIE MICHELLE RAE & MR SIMEON DAVID RAE MR KEMPER SHAW CC RANKINE PTY LTD BJ FRASER PTY LTD CEDARFIELD HOLDINGS PTY LTD WILLIAM TAYLOR NOMINEES PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED DAVE RICHES PTY LTD PATRICK LLOYD PTY LTD GEORGE LLOYD PTY LTD MR KENNETH JOSEPH HALL PRECISION OPPORTUNITIES FUND LTD MR WILLIAM JAMES BEAMENT Substantial shareholders Ordinary Shares 117,353 772,728 1,258,697 9,732,520 165,843,650 177,724,948 Number of ordinary shares held Percentage of capital held 78,922,947 17,834,233 12,800,000 7,416,045 4,000,000 3,850,000 3,410,332 2,392,344 2,376,947 2,316,765 2,316,765 2,281,134 2,148,684 1,963,614 1,861,000 1,600,000 1,600,000 1,550,000 1,266,357 1,196,172 44.41% 10.03% 7.20% 4.17% 2.25% 2.17% 1.92% 1.35% 1.34% 1.30% 1.30% 1.28% 1.21% 1.10% 1.05% 0.90% 0.90% 0.87% 0.71% 0.67% 150,545,882 86.15% Number The number of shares held by substantial shareholders and their associates are set out below: David William Riches & Matthew Steven Riches & David William Riches Dave Riches & Matt Riches Unit 93,583,947 Corporate Directory Directors Simon High Chairman Independent Non-Executive Director David Riches CEO and Managing Director José Martins Independent Non-Executive Director Paul Gavazzi Independent Non-Executive Director Company Secretary Damian Wright Strati Gregoriadis Auditors Grant Thornton Audit Pty Ltd Central Park Level 43, 152-158 St Georges Terrace Perth WA 6000 Share Registry Link Market Services Ltd Level 12, QV1 Building 250 St Georges Terrace Perth WA 6000 T: +61 8 9211 6670 Registered Office GenusPlus Group Ltd Level 1, 63-69 Abernethy Road Belmont WA 6104 ASX Code: GNP 100 100 GENUSPLUS GROUP LTD Annual Report 2023 101 GenusPlus Group Ltd powering up Australia. connecting the future, together. I i n s g h t C o m m u n c a t i o n & D e s g n i i
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