INFIGEN ENERGY
ANNUAL REPORT 2017
Infigen Energy
Level 17, 56 Pitt Street
Sydney NSW 2000
Australia
+61 2 8031 9900
www.infigenenergy.com
CONTENTS
About
Infigen Energy
2017 Highlights
Chairman and Managing Director’s Report
Management
Corporate Structure
Directors’ Report
Directors
Operating and Financial Review
Remuneration Report
Other Disclosures
Auditor’s Independence Declaration
Financial Report
Directors’ Declaration
Auditor’s Report
Governance
Additional Information
Investor Information
Glossary
Corporate Directory
3
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5
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10
12
13
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135
2
INFIGEN ENERGY 2017 ANNUAL REPORT
ABOUT
INFIGEN ENERGY
Infigen Energy (Infigen) is an active participant in the Australian
energy market. It is a developer, owner and operator of generation
assets delivering energy solutions to Australian businesses and large
retailers.
Infigen has 557 MW of installed generation capacity across New South
Wales, South Australia and Western Australia with a further 113 MW
under construction in New South Wales. It sells the electricity and
Large-scale Generation Certificates through a combination of medium
and long-term contracts and through the spot market.
Infigen is looking to diversify and expand its customer base and will
grow its generation portfolio in response to strong price and
investment signals. In the short term it is targeting expansion in New
South Wales and entry into the Victorian and Queensland regions of
the National Electricity Market.
“Infigen is transitioning to a business that seeks to deliver a range of
products and solutions to different customers and balance risk, price and
tenor. Delivery of this strategy will be supported by a portfolio of supply
options that includes existing and new generation, long-term offtake
agreements with third parties, and acquiring physical and financial firming
products. Risk adjustment in Infigen’s portfolio will occur over time and in
response to the changing requirements of customers.”
3
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Infigen Energy
2017 Highlights
Chairman and Managing Director’s Report
Management
New South Wales
Capital wind farm, 140.7 MW
Woodlawn wind farm, 48.3 MW
Wind development projects, ~230 MW
Solar development projects, ~60 MW
Queensland
Wind development project, 70 MW (Infigen has a 50% equity interest)
Solar development projects, 165 MW1
Victoria
Wind development project, ~55 MW
Northern Territory
Solar development projects, ~22 MW
1
Western Australia
Alinta wind farm, 89.1 MW
Wind development projects, ~350 MW (Infigen has a 32% equity interest)
Solar development projects, ~45 MW (Infigen has a 32% equity interest)
South Australia
Lake Bonney 1 wind farm, 80.5 MW
Lake Bonney 2 wind farm, 159.0 MW
Lake Bonney 3 wind farm, 39 MW
Wind development projects, ~450 MW
Operating asset
Development project
Development approval granted unless otherwise indicated.
1 Development approval in progress.
4
INFIGEN ENERGY 2017 ANNUAL REPORT
2017 HIGHLIGHTS
PRODUCTION
INCREASED 1%
TO 1,487
GIGAWATT
HOURS
REVENUE
INCREASED
14% TO
$196.7 MILLION
NET OPERATING
CASH FLOW
INCREASED 73%
TO $98.7 MILLION
UNDERLYING
EBITDA
INCREASED
16% TO
$139.3 MILLION
REPAID $88.5
MILLION OF
BORROWINGS
NET PROFIT
AFTER TAX
INCREASED $27.8
MILLION TO
$32.3 MILLION
5
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Infigen Energy
2017 Highlights
Chairman and Managing Director’s Report
Management
REVISED BUSINESS
STRATEGY AND
IMPLEMENTATION PLAN
DEVELOPED INCLUDING
DETERMINING THE CAPITAL
STRUCTURE THAT BEST
SUPPORTS THAT BUSINESS
STRATEGY
STEPS UNDERPINNING
STRATEGY
IMPLEMENTATION
MULTI-CHANNEL ROUTE
TO MARKET
NEW REGIONS AND
EXPANSION
CAPITAL STRUCTURE
FINANCIAL CLOSE OF
113 MW BODANGORA WIND
FARM PROJECT
INSTALLED GENERATION
WILL INCREASE BY 20%
EXPECTED ANNUAL
PRODUCTION WILL
INCREASE BY 24%
SUCCESSFUL $151 MILLION
EQUITY CAPITAL RAISING
WELL SUPPORTED BY
INFIGEN’S INSTITUTIONAL
AND RETAIL SECURITY
HOLDERS
OPERATIONS AND
MAINTENANCE COST
STABILITY AND
GUARANTEED MINIMUM
TURBINE AVAILABILITY -
LONG-TERM SERVICE AND
MAINTENANCE
AGREEMENTS ACROSS THE
CURRENT FLEET OF
OPERATING ASSETS
ENHANCED MANAGEMENT
CAPABILITY AND CAPACITY
TO DELIVER ON THE
BUSINESS STRATEGY AND
PRESERVE AND CREATE
SECURITY HOLDER VALUE
6
INFIGEN ENERGY 2017 ANNUAL REPORT
CHAIRMAN AND MANAGING DIRECTOR’S REPORT
Operational Performance in FY17
In FY17 Infigen’s earnings increased significantly
over prior years. Several factors have helped drive
higher prices for both energy and Large-scale
Generation Certificates (“LGCs”) including:
the reduced supply of energy as a result of the
end-of-life closure of 2,120 MW of outdated coal-
fired generation, without sufficient mitigating
investment in new generation, produced a
supply/demand imbalance,
high gas prices limited the commercial capacity
of gas generators to respond, and
the 2013-2015 uncertainty around energy policy
generally, and the RET in particular, created an
expected shortfall of LGCs.
This set of conditions has driven historically high
merchant prices for both energy and LGCs and
Infigen has benefitted
its
uncontracted output.
to date
through
The resultant strong financial result in FY17 includes:
Underlying EBITDA of $139.3 million, up
the
the highest
$19.1 million;
Australian fleet since its inception,
NPAT of $32.3 million, up $27.8 million,
Net Operating Cash Flow of $98.7 million, up
level
from
$41.8 million, and
a reduction in our debt of $88.5 million leaving a
net debt position of $402.1 million at the end of
FY17.
During the year Infigen finalised incentive-based
fleet-wide service agreements with Vestas to cover
our six operating wind farms. As a result we have
continuing certainty over long term turbine operations
and maintenance costs and balance of plant costs.
Business Strategy
The changing energy market has led us to adjust our
business strategy
respond prudently and
opportunistically to the new challenges.
to
Infigen is responding to changing market dynamics.
Central to the revised strategy is a recognition that
long-term “run of plant” off-take contracts to retailers
no longer preserve or create value of themselves.
Dear Security holder,
We are pleased to present the full year results for
Infigen for the 2017 financial year (FY17).
Safety continues to be our first priority. We are
currently especially focussed on both the safety of
our people on our operating assets as well as the
construction risks of the Bodangora wind farm
project. We will continue to strive to improve our
safety systems and culture in pursuit of our goal of
zero harm. During the year we had one lost time
injury during a tower rescue simulation, and that
resulted in both a lost time injury frequency rate and
total recordable injury frequency rate of 4.7 for the
year.
FY17 has been a year of substantial change within
the Australian energy market generally and for
Infigen's business specifically. We have responded
to the challenges and opportunities that accompany
the transformation to a lower emissions future.
The implications of this transformation were not fully
anticipated by governments, regulators, or industry
participants. A range of unforeseen challenges
emerged in FY17 for the key industry stakeholders.
They include:
customers facing upward pressure on prices due
to under investment in new generation to
compensate for thermal plant retirements and to
meet the Renewable Energy Target (“RET”),
investors and lenders have had to address risks
associated with deploying capital where future
cash flows are vulnerable to political policy
uncertainty over a multi-decade life span,
governments have had to respond to community
expectations that energy will be reliable and
affordable as well as being concerned to ensure
that the cost of doing business is internationally
competitive. At the same time the community is
increasingly mindful of the risks that carbon
pollution presents to future generations, and
regulators have had
challenges
technologies
prepared for the scale of their deployment.
the
respond
integrating newer energy
that was not
in
into a system
to
to
These factors have influenced Infigen's financial
performance in FY17 as well as the design of our
business strategy for the future.
7
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Infigen Energy
2017 Highlights
Chairman and Managing Director’s Report
Management
At the same time there has been an emerging
readiness of larger scale customers to meet their
energy needs and LGC obligations under medium
tenor contracts directly with generators. This is an
important new channel to market for Infigen. It
provides us with an opportunity to reduce the future
volatility in the long-term cash flows that would be
expected from uncontracted output and on terms that
share value directly between ourselves and our
customers.
Sustainable value can thus be secured through the
production and supply of energy to end-customers.
Infigen is now positioning itself to service the
commercial/industrial market as well as other parts of
the wholesale market. We have an existing installed
capacity of 557 MW. We have also reached financial
the
close, and commenced construction, on
Bodangora wind farm. This will deliver an additional
113 MW on completion, which is due in August 2018.
We can thus draw upon a material portfolio of assets
to meet customer requirements and manage the
associated risks.
We have a retail licence and the systems to deliver
this service. Over the course of the second half of
FY17 we invested further in human resources and
systems to support the strategy. We are currently
engaged with a range of potential customers in
relation to direct supply arrangements.
As our customer base grows, we will introduce a
range of energy firming strategies to supplement our
existing portfolio capacity in serving customers.
The Policy Environment
FY17 began with the appointment of the Hon Josh
Frydenberg MP as the Energy Minister. Infigen, like
other participants in the energy market were pleased
to hear his early reassurances that the re-elected
to
Coalition Government
ensuring policy stability in relation to the RET, which
had been settled by the Abbott government some
12 months earlier.
remained committed
Subsequently, in South Australia, a massive storm
event led to a substantial loss of power supply. This
led to governments re-opening the debates on
energy policy.
These developments shed light on several key
challenges in the national transition towards a low
emissions future. In particular:
the clear need to better plan for the retirement of
the ageing fleet of coal-fired generators,
gas prices will need to reduce if gas generation
is to play a future significant role in energy
supply,
the system will need to change to harness the
full potential of intermittent generation with
appropriate stability, and
capital markets require policy stability to ensure
that investor confidence will support the required
levels of investment.
report presented
the government by
The
Australia's Chief Scientist, Dr Alan Finkel AO FAA
FTSE, provides a sound basis for a robust policy
framework to address these.
to
We trust that political leaders and government
agencies at both the state and federal levels will now
work effectively to implement policy based on the
Finkel report, while noting the need to work closely
with the industry and energy users to refine the
detailed policy design, including:
the mechanics of the process by which the
current RET co-exists or merges with the Clean
Energy Target (“CET”), and
measures to safeguard synchronous generation
alongside increasing levels of renewables.
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INFIGEN ENERGY ANNUAL REPORT 2017
New Dynamics within the Australian Energy
Market
The dynamics that have characterised the national
energy policy environment have been accompanied
by substantial change in the market generally and for
renewable generation in particular.
Continued reductions in the costs of renewable
the evolution of storage
technologies and
technologies point to a more important role for
storage solutions in the energy market of the future.
Lower costs, together with the entry of investors with
low costs of capital, have seen a significant drop in
the long-term off-take prices.
The market has responded enthusiastically to the
challenge to invest in new supply to meet the RET.
There are now expected to be sufficient projects
committed Australia-wide within FY18 to meet the
2020 target.
Infigen has positioned itself to respond.
First, in March this year we reached financial close
on the 113 MW Bodangora wind farm located in
central western NSW. This is our first new wind farm
since 2011. It is project financed and is supported by
a 13-year power purchase agreement with
EnergyAustralia for 60% of the output. The balance
of the output will be managed and sold within the
portfolio.
that we are prioritising
Secondly, we have three other development pipeline
projects
for potential
investment decision in FY18. These projects have
been selected primarily on the expected value of the
energy they will produce in their regions of the NEM,
and will be carefully assessed in terms of their
capacity to create future value for our security
holders.
Thirdly, Infigen is repositioning its capital structure to
support the strategy.
Capital Strategy
The new business model for Infigen requires a capital
structure that supports the business' needs. These
needs include:
capital to invest in new sources of energy
supply,
meeting prudential requirements, and
a clear path towards the prudent resumption of
distributions to security holders.
9
In FY17 we commenced the process of re-shaping
our capital structure. We raised $151 million with the
support of security holders. We have developed a
five year business plan. It provides a basis upon
which we are exploring with the debt markets the
optimal time to refinance debt associated with the
existing operating assets. This will be a strong focus
for the company in FY18. Importantly the company is
in a position where the current corporate debt facility
does not expire until 2022. In these circumstances
the company will only consider an early refinancing if
by doing so it creates value for security holders.
A New Team
Following the retirement of Mr Miles George as the
long-serving CEO, Infigen has put in place a program
of management renewal to develop and implement
the new strategic direction. This process commenced
with
the appointment of Mr Ross Rolfe AO,
previously a Non-Executive Director, as CEO. We
have subsequently recruited several new key
executives with deep background and expertise in
finance, energy markets, project delivery and
operations. This included the appointment of Ms
Sylvia Wiggins, previously a Non-Executive Director,
as Executive Director
the
appointments of Mr Owen Sela as Executive General
Manager, Energy Markets, and Mr Tony Clark as
Executive General Manager, Operations and
Projects. The skill sets that these individuals bring
complement and extend the capabilities already
within the company.
- Finance, and
Concurrent with the reform in the management team
has been a process of measured renewal at Board
level to strengthen its skills base and rebalance its
independence. As a result, Mr Leonard Gill was
appointed as an independent Non-Executive Director
on 5 June 2017. It is expected that some further
appointments will be made during FY18.
Sincerely,
Michael Hutchinson
Chairman
Ross Rolfe AO
Chief Executive Officer / Managing Director
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Infigen Energy
2017 Highlights
Chairman and Managing Director’s Report
Management
MANAGEMENT
Ross Rolfe AO
Sylvia Wiggins
Chief Executive Officer / Managing Director
Before his appointment as Chief executive Officer /
Managing Director of Infigen Energy in November
2016, Ross was an Independent Non-Executive
Director of Infigen Energy from September 2011.
Ross has broad experience in the Australian energy
and infrastructure sectors in senior management,
government and strategic roles. In August 2008
Ross was appointed to the position of Chief
Executive Officer of Alinta Energy. Ross completed
a capital restructuring of the business and stepped
down from the CEO and Managing Director role in
April 2011.
Prior to that appointment, Ross held the position of
Director General of a
range of Queensland
Government Departments, including Premier and
Cabinet, State Development, and Environment and
Heritage, as well as the position of Co-ordinator
General. Ross was also the Chief Executive Officer
of Stanwell Corporation, one of Queensland’s largest
energy generation companies from 2001 until 2005.
Ross was previously Chairman of WDS Limited and
CS Energy, and a non-executive director of CMI
Limited and Thiess Pty Ltd. Ross is currently
Chairman of the North Queensland Airport Group.
Executive Director - Finance
Sylvia is responsible for business services functions
including Finance, Accounting and Statutory
Reporting, Strategy and Legal.
Sylvia has over 20 years’ experience as a legally
qualified chief executive officer, executive and senior
range of
investment banker across a broad
businesses and countries, most recently working in
the energy, infrastructure, defence and structured
finance areas.
Sylvia has originated, structured and advised upon
transactions including capital and debt issuance,
IPOs, asset acquisitions and divestments, mergers
and acquisitions, and trade sales. Sylvia has also
provided corporate advice covering strategic
capital
negotiations,
planning,
management and corporate governance.
Prior to her executive appointment, Sylvia managed
her own advisory firm, which she established in 2014
having previously worked with a number of
international investment and advisory firms. From
2009 to 2011 Sylvia worked at the Alinta Energy
Group. Prior to that Sylvia was the inaugural Chief
Executive Officer of Global Investments Limited,
which is listed on the Singapore Stock Exchange.
commercial
10
INFIGEN ENERGY ANNUAL REPORT 2017
Owen Sela
Tony Clark
Executive General Manager - Energy Markets
Owen was appointed to the role of Executive General
Manager - Energy Markets effective 8 May 2017.
Owen is responsible for leading the Energy Markets
team to position Infigen’s portfolio to more actively
and effectively participate in the regional markets in
which we operate, including the retailing of energy to
large customers.
Owen has over 16 years of experience in the energy
industry. In his most recent role, Owen held the
position of Executive General Manager Strategy and
Commercial at CS Energy and was responsible for
setting CS Energy’s strategic direction, helping
position
future success. He
previously held
the role of General Manager
Contracts with Alinta Energy, after working in key
management
in strategy, planning and
commercial development through an intense period
of growth and change for the company.
Prior to joining Alinta Energy, he consulted to
Babcock and Brown Power, and held positions with
Sun Retail and its predecessor, Energex Retail in
Trading and Portfolio Management functions. Owen
previously headed up the front office functionality at
MIM Holdings, overseeing the risk management of
major commodity, foreign exchange and interest rate
exposure for the company.
the company
roles
for
power
Executive General Manager - Operations &
Projects
Tony is the Executive General Manager - Operations
& Projects and is responsible for the operation of
Infigen's wind farms and delivery of development
projects.
Tony joined Infigen in February 2017.
Tony has over 20 years’ experience working in the
power sector having acted as an owner-developer
with ERM Power and Stanwell Corporation, as a
consultant to owners and financiers with Worley
Parsons, and as a contractor with direct hands-on
responsibility for the detailed design and construction
of
projects with ABB Engineering
Construction.
In addition to Infigen’s generation portfolio, Tony has
been involved in the operations or construction of a
number of Australia’s power stations
including
Braemar 2, Neerabup, Uranquinty, Collie, Stanwell
and Kareeya power stations.
Early in his career, Tony worked as a researcher at
the Energy Research Centre of the Australian
National University with a specific focus on the
commercialisation of solar thermal technologies.
Tony holds Master degrees in Commercial Law from
Melbourne University, Business Administration from
Deakin University, and Engineering
the
Queensland University of Technology.
from
11
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Corporate Structure
Directors
Operating and Financial Review
Remuneration Report
Other Disclosures
CORPORATE STRUCTURE
The Infigen Energy Group (“Infigen”) consists of the following entities:
Infigen Energy Limited (“IEL”), a public company incorporated in Australia;
Infigen Energy Trust (“IET”), a managed investment scheme registered in Australia;
Infigen Energy (Bermuda) Limited (“IEBL”), a company incorporated in Bermuda; and
the subsidiary entities of IEL and IET.
One share in each of IEL and IEBL and one unit in IET have been stapled together to form a single stapled security
(“IFN security”).
Infigen Energy RE Limited (“IERL”) is the Responsible Entity of IET.
The current stapled structure of the Infigen Energy Group was established immediately prior to listing on the
Australian Securities Exchange in 2005. No change is expected while the Group’s corporate debt facility (Global
Facility) remains on foot. IEBL was established and included in the Group’s stapled structure in 2005 to provide
flexibility regarding potential investment ownership structures. IEBL has not been utilised for that purpose since it
was established and the Group aims to wind-up this entity when it is feasible to do so.
The following diagram represents the structure of the Infigen Energy Group.
12
INFIGEN ENERGY ANNUAL REPORT 2017
DIRECTORS’ REPORT
DIRECTORS
The Directors of Infigen Energy Limited and the Directors of Infigen Energy RE Limited, the Responsible Entity of
Infigen Energy Trust, present their report together with the Financial Report of the Group and the Trust (refer below)
for the year ended 30 June 2017.
The Financial Report of IEL comprises the consolidated Financial Report of IEL and its controlled entities, IET and
its controlled entities and Infigen Energy (Bermuda) Limited, (the “Infigen Energy Group” or “Group”).
The Financial Report of IET comprises the consolidated Financial Report of IET and its controlled entities (the
“Infigen Energy Trust Group” or “Trust”).
The following people were Directors of IEL, IEBL and IERL during the whole of the financial year and/or up to the
date of this report (unless otherwise indicated):
Non-executive Directors
Michael Hutchinson (Chairman)
Philip Green
Fiona Harris
Leonard Gill (appointed a Director on 5 June 2017)
Executive Directors
Ross Rolfe AO (appointed Chief Executive Officer / Managing Director on 17 November 2016)
Sylvia Wiggins (appointed Executive Director, Finance on 8 May 2017)
Miles George (retired as Managing Director and Chief Executive Officer on 17 November 2016)
Further Information on Directors
The particulars of the Directors of IEL, IERL and IEBL at or since the end of the financial year and up to the date
of the Directors’ Report are set out on pages 14 to 15 of this report.
13
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Corporate Structure
Directors
Operating and Financial Review
Remuneration Report
Other Disclosures
Michael Hutchinson
Fiona Harris
Philip Green
Chairman
Non-Executive Chairman of IEL,
IEBL and IERL
Appointed to IEL, IEBL and IERL on
18 June 2009
Chairman of the Nomination &
Remuneration Committee
Michael was appointed an Independent
Non-Executive Director of
Infigen
Energy in June 2009 and subsequently
elected
on
11 November 2010.
He is also Chairman of the Nomination
& Remuneration Committee and a
member of
the Audit, Risk &
Compliance Committee.
Michael was formerly an international
transport engineering consultant, a
senior Federal Government official and
a corporate advisory consultant; and
has extensive experience
the
transport and communications sectors.
Michael has previously been a non-
executive director of the Australian
Infrastructure Fund Ltd, Leighton
Holdings Ltd, Epic Energy Holdings Ltd,
Hastings Funds Management Ltd,
Westpac Funds Management Ltd,
Pacific Hydro Ltd, OTC Ltd, HiTech
Group Australia Ltd, the Australian
Postal Corporation and the Australian
Graduate School of Management Ltd.
Michael holds a first class honours
degree in Civil Engineering from the
University of Newcastle upon Tyne,
United Kingdom, and graduated from
the Harvard
Business School
Advanced Management Program
(AMP110). He is a member of the
Engineers,
of Civil
Institution
the
and
Australia,
Engineers
Australian
Institute of Company
Directors.
in
Non-Executive Director of IEL, IEBL
and IERL
Appointed to IEL, IEBL and IERL on
21 June 2011
Chairman of the Audit, Risk &
Compliance Committee
Non-Executive Director of IEL,
IEBL and IERL
Appointed to IEL, IEBL and IERL on
18 November 2010
Member of the Audit, Risk &
Compliance Committee
Member of the Nomination &
Remuneration Committee
Philip was appointed a Non-
Executive Director of Infigen Energy
in November 2010.
Philip is also a member of both the
Audit, Risk & Compliance Committee
& Nomination and Remuneration
Committee.
Philip is a Partner of TCI Advisory
Services LLP (“TCI”), an advisor to a
substantial security holder of Infigen
Energy. Philip joined TCI in 2007 and
his
include TCI’s
global utility, renewable energy and
infrastructure investments.
Prior
led
European Utilities equity research at
Goldman Sachs, Merrill Lynch and
Lehman Brothers over a 12-year
period. Philip is a UK Chartered
(ACA) and has a
Accountant
Bachelor of Science
in
Geotechnical Engineering.
joining TCI, Philip
responsibilities
(Hons)
to
Member of the Nomination &
Remuneration Committee
Fiona was appointed as an Independent
Infigen
Non-Executive Director of
Energy
the
is
in June 2011 and
the Audit, Risk &
Chairman of
Compliance Committee. Fiona is also a
member
the Nomination &
of
Remuneration Committee.
Fiona has been a professional non-
executive director for the past 22 years,
holding positions across a variety of
industry and geographical sectors,
financial services,
including utilities,
resources and
energy and natural
property in Australia, USA, Finland, and
West Africa. She has also been involved
in a range of corporate transactions.
Fiona is currently a director of Oil
Search Limited, BWP Trust and Perron
Group Limited. She is a member of
Executive Women. Fiona’s
Chief
previous
listed
companies in the past three years were
Aurora Oil and Gas Limited, Sundance
Resources Limited and Toro Energy
Limited.
Fiona holds a Bachelor of Commerce
degree and is a Fellow of Chartered
Accountants Australia and New Zealand
and the Australian Institute of Company
Directors. She is a past State President
and National Board Director of AICD,
and a recipient of their Gold Medal for
Western Australia.
Fiona was previously a Sydney-based
partner with KPMG, working with the
in Perth, San Francisco and
firm
Sydney.
directorships
of
14
INFIGEN ENERGY ANNUAL REPORT 2017
Leonard Gill
Ross Rolfe AO
Sylvia Wiggins
and
defence
executive
Executive Director of IEL, IEBL
and IERL
Appointed as Non-Executive
Director to IEL, IEBL and IERL on
18 April 2016 and Executive
Director on 8 May 2017
Sylvia is responsible for business
services functions including Finance,
Accounting & Statutory Reporting,
Strategy and Legal.
Sylvia has over 20 years’ experience
as a legally qualified chief executive
senior
officer,
investment banker across a broad
range of businesses and countries,
most recently working in the energy,
and
infrastructure,
structured finance areas.
Sylvia has originated, structured and
advised upon transactions including
capital and debt issuance, IPOs,
asset acquisitions and divestments,
mergers and acquisitions, and trade
sales. Sylvia has also provided
corporate advice covering strategic
planning, commercial negotiations,
capital management and corporate
governance.
Prior to her executive appointment,
Sylvia managed her own advisory
firm, which she established in 2014
having previously worked with a
number of international investment
and advisory firms. From 2009 to
2011 Sylvia worked at the Alinta
Energy Group. Prior to that Sylvia
was the inaugural Chief Executive
Investments
Officer of Global
Limited, which
the
Singapore Stock Exchange.
listed on
is
in
was
appointed
Non-Executive Director of IEL,
IEBL and IERL
Appointed to IEL, IEBL and IERL on
5 June 2017
Leonard
an
Independent Non-Executive Director of
Infigen Energy in June 2017.
is a professional non-
Leonard
executive director with a 35-plus year
the electricity, gas and
career
infrastructure
industries. He also
provides energy and management
consultancy services.
Leonard is currently Chair of Family
Life, a community support services
charity, and a Non-Executive Director
of Ecogen Energy Pty Ltd and Ampetus
Energy Pty Ltd. His previous roles
include Chairman of Alinta Energy,
Chairman of Metgasco, Non-Executive
Director of WDS Limited, Non-
Executive Director of Verve Energy,
Managing Director and CEO of TXU
Australia and Chairman of South East
Australian Gas Pty Ltd.
of
Leonard
Engineering (Civil) from the University
of Melbourne and is a Member of the
Australian
Institute of Company
Directors.
a Bachelor
holds
Managing Director of IEL, IEBL
and IERL
Appointed as Non-Executive
Director to IEL, IEBL and IERL on
9 September 2011 and Executive
Director on 17 November 2016
Before his appointment as Chief
/ Managing
Executive Officer
Director of
in
November 2016, Ross was an
Independent Non-Executive Director
of Infigen Energy from September
2011.
Infigen Energy
Ross has broad experience in the
Australian energy and infrastructure
in senior management,
sectors
government and strategic roles. In
August 2008 Ross was appointed to
the position of Chief Executive
Officer of Alinta Energy. Ross
completed a capital restructuring of
the business and stepped down from
the CEO and Managing Director role
in April 2011.
Prior to that appointment, Ross held
the position of Director General of a
range of Queensland Government
Departments, including Premier and
Cabinet, State Development, and
Environment and Heritage, as well
as
the position of Co-ordinator
General. Ross was also the Chief
Executive Officer of Stanwell
Corporation, one of Queensland’s
generation
largest
companies from 2001 until 2005.
Ross was previously Chairman of
WDS Limited and CS Energy, and a
non-executive director of CMI
Limited and Thiess Pty Ltd. Ross is
currently Chairman of the North
Queensland Airport Group.
energy
15
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FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Corporate Structure
Directors
Operating and Financial Review
Remuneration Report
Other Disclosures
Directors’ Interests in IFN Stapled Securities
One share in each of IEL and IEBL and one unit in IET have been stapled together to form a single stapled security,
tradable on the Australian Securities Exchange under the “IFN” code. IERL is the Responsible Entity of IET. The
table below lists the Directors of IEL, IEBL and IERL during the financial year and shows the relevant interests of
those Directors in IFN stapled securities during the financial year.
Directors
Role
M Hutchinson
Independent Chairman
F Harris
P Green2
L Gill
R Rolfe
S Wiggins
M George3
Independent Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Executive Director
Executive Director
Executive Director
IFN stapled securities held
Balance
1 July 2016
Acquired
during
the year
Sold
during
the year
235,500
100,000
81,021
21,739
-
-
-
-
57,500
-
73,369
12,173
-
-
-
-
-
-
Balance
30 June
2017
316,521
121,739
-
-
130,869
12,173
3,793,501
3,605,833
1,975,000
N/A
Directors’ Meetings
The number of Board meetings and meetings of standing Committees established by the respective Boards held
during the year ended 30 June 2017, and the number of meetings attended by each Director, are set out below.
A = Number of meetings attended as a Board/Committee member.
B = Number of meetings held during the period that the person held office during the year.
Directors
IEL
IERL
IEBL
Audit, Risk &
Compliance
IEL Nomination
& Remuneration
Board meetings
Committee meetings
M Hutchinson
F Harris
P Green
L Gill4
R Rolfe
S Wiggins
M George 2
A
19
19
19
1
18
19
6
B
19
19
19
1
19
19
6
A
19
19
19
1
18
19
6
B
19
19
19
1
19
19
6
A
18
18
18
1
18
18
6
B
18
18
18
1
18
18
6
A
1
4
3
-
1
3
-
B
1
4
3
-
1
3
-
A
6
6
1
-
2
2
-
B
6
6
2
-
2
2
-
Additional meetings of committees of Directors were held during the year, but these are not included in the above
table (for example, where the Boards delegated authority to a committee of Directors to oversee or approve specific
matters or otherwise approve documentation on behalf of the Boards.
2 P Green is a Partner of TCI Advisory Services LLP, which is an advisor to a substantial security holder of IFN. Mr Green has
advised Infigen that he does not have a relevant interest in those IFN securities.
3 M George retired as Managing Director and Chief Executive Officer of Infigen on 17 November 2016. Movements in IFN
stapled securities and meetings relate to the period from 1 July 2016 to 17 November 2016.
4 L Gill was appointed an Independent Non-Executive Director on 5 June 2017.
16
INFIGEN ENERGY ANNUAL REPORT 2017
Company Secretary
David Richardson was appointed Company Secretary of IEL, IERL and IEBL on 26 October 2005. David is the
General Manager Corporate Governance & Company Secretary of Infigen Energy and is responsible for the
company secretarial, insurance, corporate compliance and internal audit functions.
David was previously a Company Secretary within the AMP Group, including AMP Capital Investors, Financial
Services and Insurance divisions, as well as holding prior financial services sector and regulatory positions.
David holds a Diploma of Law, Bachelor of Economics, Graduate Diploma in Company Secretarial Practice and is
a Graduate of the AICD Company Directors Course. David is a Member of the Governance Institute of Australia
and the Australian Institute of Company Directors.
Distributions
No distribution for the year ended 30 June 2017 has been declared.
Infigen is not permitted to pay distributions to security holders from the cash flows of its Alinta, Capital and Lake
Bonney wind farm operating assets owned by IEL while the Global Facility remains on foot. The final maturity date
of the Global Facility is 31 December 2022. Further details regarding distributions are set out in Note 22 to the
Financial Statements.
Principal Activities
The principal activities of the Infigen Energy Group and Infigen Energy Trust are set out in the Operating and
Financial Review on page 18 of this report.
17
ABOUT
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ADDITIONAL INFORMATION
Corporate Structure
Directors
Operating and Financial Review
Remuneration Report
Other Disclosures
OPERATING AND FINANCIAL REVIEW
This Operating and Financial Review for the year ended 30 June 2017 forms part of the Directors’ Report.
1. Operations and Strategy
1.1. Principal Activities
Infigen Energy Group
Infigen is a business actively participating in the Australian energy market. It is a developer, owner and operator of
generation assets delivering energy solutions to Australian businesses and large retailers.
Infigen has 557 MW of installed generation capacity across New South Wales, South Australia and Western
Australia with a further 113 MW under construction in New South Wales. It sells the electricity and Large-scale
Generation Certificates (“LGCs”) through a combination of medium and long term contracts and through the spot
market.
Infigen is looking to diversify and expand its customer base and will grow its generation portfolio in response to
strong price and investment signals. In the short term it is targeting expansion in New South Wales and entry into
the Victorian and Queensland regions of the National Electricity Market (“NEM”). Infigen will seek to do this through
sales of electricity and LGCs and construction of assets within its development pipeline in those regions.
Asset
Alinta wind farm
Bodangora wind farm (under construction)
Capital wind farm
Capital East solar farm
Lake Bonney 1 wind farm
Lake Bonney 2 wind farm
Lake Bonney 3 wind farm
Woodlawn wind farm
Total assets
Under construction
Operating assets
Nameplate capacity
(MW)
State
Commercial operation date
WA
NSW
NSW
NSW
SA
SA
SA
NSW
Jul 2006
Aug 20185
Jan 2010
Sep 2013
Mar 2005
Sep 2008
Jul 2010
Oct 2011
89.1
113.2
140.7
0.1
80.5
159.0
39.0
48.3
669.9
113.2
556.7
Infigen Energy Trust Group
During the reporting period, IET held interests in financial investments.
In 2005, the units issued in IET were stapled to the shares issued by IEL and IEBL to form “stapled securities”.
Since 2005, IET has raised the majority of the equity capital for the Group as part of the issue and listing of stapled
securities on the Australian Securities Exchange (“ASX”). IET has also been the stapled entity through which
distributions are paid to security holders.
5 Scheduled for completion in August 2018.
18
The Multi-Channel Route to Market
Infigen is continuing to seek a balance between risk,
tenor and price for revenue received from the sale of
electricity and LGCs through multiple routes to
market including:
long-term offtake agreements with electricity
retailers or other counterparties
medium-term “run of plant” or fixed volume
contracts
contracting with large C&I customers
short to long-term wholesale market contracts
spot market electricity sales
Australian Energy Market Operator (“AEMO”)
through
the
for
fuel source
Infigen’s generation
The
is
intermittent. In order to manage the risk associated
with delivering firm contracted load to customers,
Infigen is considering use of both physical and
financial “firming” products available in the market.
Having the capacity to sell firm contract loads will
allow Infigen to expand its sales channels to C&I
customers and provide greater certainty over
revenue.
Infigen is pursuing a regionally based electricity sales
strategy reflecting the distinctive regional attributes
within the “national” electricity market. A national
LGC sales strategy is being pursued given there are
no regional differences.
INFIGEN ENERGY ANNUAL REPORT 2017
1.2. Strategy and Prospects
Infigen is transitioning from a business that owned
and operated assets and largely sought to sell its
output of both electricity and LGCs to long-term
offtakers, to a business that seeks to deliver a range
of products and solutions to different customers
through multiple routes to market – the Multi-Channel
Route to Market Strategy. The long-term growth of
the business necessitates growing customer
numbers and volumes at sustainable profit margins.
Delivery of this solution is supported by a portfolio of
supply options that includes existing and new
generation, long-term offtake agreements with third
parties, and physical and financial firming products.
Infigen is transitioning to more proactively service the
Commercial and Industrial (“C&I”) markets and
become an active energy markets participant.
The business is transitioning as a result of a number
of factors including:
changing and
conditions,
favourable energy market
an
increasing and substantial portion of
Infigen’s generation capacity ceasing to be
contracted in the medium term, and
the long-term contract market as a sole source
of revenue having ceased to provide attractive
rates of return commensurate with Infigen’s
cost of capital and security holder expectations.
Since the equity capital raising in April 2017, Infigen
has been developing its implementation plan for the
business strategy. A 5 Year Business Plan underpins
the implementation of the business strategy, which
has three primary work streams:
the Multi-Channel Route to Market,
1.
2. expanding the regions in which Infigen operates
and/or owns generation capacity in response to
market signals, and
3. creating a capital structure to support Infigen’s
business strategy.
Managing Risk
The high current spot market prices for electricity and
LGCs are in part a product of historical Renewable
Energy Target (“RET”) uncertainty and ongoing
regulatory (energy policy) uncertainty. High LGC
prices reflect current supply constraints that are
expected to be resolved in the short term. Regardless
of the route to market for LGCs, Infigen is exposed to
an uncertain long-term LGC price curve as supply is
delivered to meet the target and then in due course
the end of the scheme is reached. Similarly, the
recent high forward electricity prices were driven by
supply-side shocks as large generators exited the
market. These prices have recently retreated but still
remain above the long-run prices that are required to
incentivise new generation.
19
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Market and/or Generation Capacity Expansion
Infigen has undertaken a detailed review of the NEM
regions and assessed these against its pipeline of
development assets. The entry into new regions, or
expansion into existing regions, may occur in
advance of construction of new generation by
Infigen. In some instances such entry or expansion
may occur without further generation being funded
on balance sheet – that is Infigen may pursue a
“capital lite” strategy in which it will purchase some or
all of the output from a clean energy generator
through a power purchase agreement (“PPA”).
Infigen’s expansion will be in response to market
price signals. This requires a disciplined approach to
expansion and the commitment of capital to growth
projects.
coal-fired
Having regard to a number of factors in the NEM
including without limitation: demand, gas availability,
retirements,
expected
customers, market liquidity, and state based policies
that incentivise new renewable generation, Infigen
has now identified two new regions and three wind
farm developments that it expects to enter/progress
in the short to medium term.
generation
Infigen has identified that entry into Victoria and
Queensland and further expansion in New South
Wales would likely be accretive to its business and
security holders. With this in mind Infigen has
accelerated development of the Cherry Tree (VIC);
Flyers Creek (NSW); and Forsayth (QLD) wind farm
projects with the aim of enabling Infigen to determine
whether or not to proceed to the first development by
the end of calendar year 2017. The other two would
be considered for Final Investment Decision (“FID”)
thereafter. As the development process can be
complicated, a decision on which wind farm would be
first through FID has not been made, but all are being
progressed allowing a decision to be made on the
best overall prospects later this year.
Creating a Capital Structure to Support Infigen’s
Business Strategy
Infigen is seeking to refinance the debt associated
with the existing operating assets to fund the
business operations and also to provide construction
finance to allow new developments to proceed to
construction. Alternatively, a separate construction
finance facility may be sought. Infigen is actively
engaged with the financial markets to determine on
what terms and conditions such refinancing and
access to debt capital can be obtained. There is a risk
that a refinancing is not achievable or desirable in the
short term. Infigen will proceed with a refinancing if it
delivers a better capital structure to Infigen. Without
limitation, factors that will influence the decision to
refinance (or not) include:
capacity to use a substantial portion of free
cash flow from operations after debt service for
growth and to allow consideration of the
resumption of distributions when appropriate
potential meaningful reduction in interest rates
to reduce debt service costs
the ability to operate Infigen’s generation assets
as a portfolio to enable Infigen to better execute
its business strategy
Infigen is targeting closing by 31 December 2017
subject to a value accretive refinancing being
achievable. Infigen retains flexibility in relation to
timing given such refinancing is not required by the
terms of the existing debt documents.
The Regulatory and Political Environment
Infigen believes that energy market fundamentals
continue to evolve to its potential advantage, and that
while policy often changes, and sentiment is regularly
debated, the reality is that Australia is transitioning to
a lower emissions electricity future. That will be likely
as a result of coal-fired generation retirements and a
diminishing accessible coal
fuel resource and
policies
that reflect a wide-spread community
requirement for lower emissions. Infigen aims to be
an important part of that future.
Infigen is actively engaged with policy makers,
Government and stakeholders, including energy
users, to articulate the important role that clean
energy can play in the transition. There is of course
a risk that regulation or law can be adverse to
Infigen’s interests and in that instance Infigen would
be ready to respond thoughtfully to any such change.
The Finkel Review6 proposed the introduction of a
well-constructed Clean Energy Target (“CET”). While
the CET has not been endorsed by the Federal
Government there remains a possibility that this
policy will ultimately be adopted. Should this occur
then, subject to the detailed design of the policy
settings, it is likely to enhance Infigen’s future
prospects. Critical to that will be the way in which the
RET interacts with the CET and the extent to which
the requirement to introduce synchronous capacity to
introduction of new entrant
accompany
renewables is implemented.
the
A key challenge for Infigen is to work to ensure that
going forward there is a policy that supports the
transition of the generation sector to one that delivers
a greater penetration of renewable generation.
6 Source: “Blueprint for the Future: Independent Review into the Future Security of the National Electricity Market”, 9 June 2017,
Commonwealth of Australia 2017.
20
INFIGEN ENERGY ANNUAL REPORT 2017
2. FY17 Results Overview
The prior corresponding period (“pcp”) comparisons are reported on a continuing operations basis. Further details
of Infigen’s financial performance are provided in the FY17 Financial Statements appended to this Directors’ Report.
All references to $ are a reference to Australian dollars unless specifically stated otherwise. Individual items and
totals reconcile with the Financial Statements, however, may not add across the column due to rounding of
individual components. Period on period changes on a percentage basis are presented as favourable (positive) or
adverse (negative). Period on period changes to items measured on a percentage basis are presented as
percentage point changes (“ppts”). Period on period changes that are not meaningful are marked as “n.m.”.
“Cf” is an abbreviation of “compared with”.
2.1. Financial Highlights
Year ended 30 June
($M unless otherwise indicated)
Profitability
Revenue
Underlying EBITDA
Net profit after tax
Financial position
Debt
Cash
Equity
Book gearing7
Security holder value and cash flow
Earnings per security (cps)
Net operating cash flow per security8 (cps)
2.2. Business Highlights
2017
2016
F/(A)%
196.7
139.3
32.3
653.9
251.8
479.4
45.5%
4.0
12.0
173.2
120.2
4.5
742.5
147.6
280.6
14
16
618
12
71
71
68.0%
22.5 ppts
1.0
7.4
300
62
Financial close of Bodangora wind farm development project:
Scheduled for completion in August 2018
Adds 20% to Infigen’s installed capacity and 24% to expected annual production
$151 million equity capital raising:
Fully underwritten accelerated non-renounceable rights issue
Supports the implementation of Infigen’s business strategy
Completed with 97% and 74% of institutional and retail entitlements respectively being taken up
Long-term service and maintenance agreements executed with Vestas:
Covers all Infigen’s existing operating wind farms
Vestas provides energy yield based turbine availability guarantees – and liquidated damages for failure to
deliver
Seeks to align Infigen’s wind farm costs and revenues
Management restructure:
Enhanced capabilities
Positioned to grow the business and deliver the business strategy
7 Calculated as net debt divided by sum of net debt and net assets.
8 Calculated using weighted average number of securities on issue (including performance rights) during the year.
21
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3. Financial Overview
3.1. Summary of Financial Performance
Year ended 30 June
($M unless otherwise indicated)
Revenue
Operating costs9
Operating EBITDA
Corporate and transition costs
Development costs
Underlying EBITDA
Fair value gain on asset under construction
Other income and gain on sale of development asset
EBITDA
Depreciation and amortisation
EBIT
Net borrowing costs
Net FX and revaluation of derivatives
Profit before tax
Tax expense
Loss from discontinued operations
Net profit after tax
2017
196.7
(40.2)
156.4
(15.7)
(1.4)
139.3
5.8
4.6
149.7
(51.8)
97.9
(49.1)
(1.8)
47.1
(14.8)
-
32.3
2016
173.2
(37.4)
135.8
(14.0)
(1.7)
120.2
-
-
120.2
(52.0)
68.2
(53.6)
(4.0)
10.6
(3.6)
(2.5)
4.5
F/(A)
F/(A) %
23.5
(2.8)
20.6
(1.7)
0.3
19.1
-
-
29.5
0.2
29.7
4.5
2.2
36.5
(11.2)
2.5
27.8
14
(7)
15
(12)
18
16
n.m.
n.m.
25
-
44
8
55
344
311
100
618
Revenue increased to $196.7 million, up $23.5 million (+14%) on the pcp due to higher electricity prices
(+$14.7 million), higher LGC prices (+$10.3 million), and higher compensated revenue (+$0.3 million), partially
offset by lower production sold due to less favourable marginal loss factors (-$1.8 million).
Underlying Earnings Before Interest, Tax, Depreciation and Amortisation (Underlying EBITDA) increased to
$139.3 million, up $19.1 million (+16%) on the pcp due to higher revenue (+$23.5 million) and lower development
costs (+$0.3 million), partially offset by higher operating costs (-$2.8 million) and by higher corporate and transition
costs (-$1.7 million).
EBITDA increased to $149.7 million, up $29.5 million (+25%) on the pcp due to higher Underlying EBITDA, non-
cash income from a fair value revaluation following the acquisition of the 50% interest in the Bodangora wind farm
development project which Infigen did not own ($5.8 million) and other income ($4.6 million) that included a
$4.3 million gain on sale of the Manildra solar development project.
Depreciation and amortisation expense of $51.8 million was broadly in line with the pcp.
Income tax expense increased to $14.8 million, up $11.2 million (+311%) on the pcp due to a stronger operating
result.
Net profit after tax increased to $32.3 million, up $27.8 million (+618%) on the pcp, and included a $2.5 million loss
from discontinued operations in the pcp.
9 Includes wind farm costs (scheduled and unscheduled turbine operations and maintenance (O&M) and balance of plant
(BOP) costs, asset management costs, and other direct costs such as insurance, land lease payments and connection and
network fees) and Energy Markets costs.
22
INFIGEN ENERGY ANNUAL REPORT 2017
4. Review of Operations
4.1. Safety10
Year ended 30 June
Lost time injury (LTI)
Lost time injury frequency rate (LTIFR)
Total recordable injury frequency rate (TRIFR)
2017
1
4.7
4.7
2016
-
-
4.8
F/(A) %
n.m.
n.m.
2
One LTI was recorded following a tower rescue simulation in FY17 compared with zero in the pcp. This resulted in
both an LTIFR and TRIFR of 4.7 for the year.
During the period an emergency response plan (including a tower rescue simulation) was tested to identify
improvements in the areas of staff readiness and emergency rescue equipment.
In FY18 Infigen will remain focussed on achieving its safety “zero harm” goal and will be rolling out its health, safety
and environment (HSE) Improvement Action Plan to further achieving that goal.
Our goal is to achieve “zero harm” through:
high performing leadership; all level leadership – everyone has a leadership role in HSE
a strong HSE culture; lead with an unqualified message of “zero harm”, unify HSE across office, operational
and development teams
established HSE systems and processes; with plans to advance efficiency and accessibility of HSE systems
and information with smart technology
Infigen is currently actively managing the work, health and safety risks that arise during the construction phase of
the Bodangora wind farm project.
10 Infigen’s safety performance is measured on a rolling 12-month basis in accordance with standards of Safe Work Australia,
where total recordable injury frequency rate is calculated as the sum of recordable lost time injuries and medical treatment
incidents multiplied by 1,000,000 divided by total hours worked. Lost time injury frequency rate is calculated as lost time
injuries multiplied by 1,000,000 divided by total hours worked.
23
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4.2. Summary of Operational Performance
Year ended 30 June
Production (GWh)
Production sold (GWh)
Capacity factor11
Turbine availability12
Site availability13
Operating costs14 ($/MWh)
4.3. Production
2017
1,487
1,399
30.5%
97.1%
96.4%
27.0
2016
1,469
1,406
29.9%
97.7%
97.1%
25.5
F/(A) %
1
-
0.6 ppts
(0.6) ppts
(0.7) ppts
(6)
Year ended 30 June
2017
2016 F/(A)%
2017
2016
F/(A)%
2017
2016
F/(A)%
Production (GWh)
Marginal loss factors
Production sold (GWh)
Alinta wind farm15
Capital wind farm
Lake Bonney 1 wind farm
Lake Bonney 2 wind farm
Lake Bonney 3 wind farm
Woodlawn wind farm
Compensated16
338
345
181
381
95
143
5
300
360
182
380
92
147
8
Total
1,487
1,469
13
(4)
(1)
-
3
(3)
(38)
1
0.9519
0.9384
0.9931
0.9748
0.8768
0.9352
0.8768
0.9352
0.8768
0.9352
0.9931
0.9748
1
2
(6)
(6)
(6)
2
338
343
159
334
83
142
300
351
171
355
86
143
1,399
1,406
13
(2)
(7)
(6)
(3)
(1)
-
Production increased to 1,487 GWh, up 18 GWh (+1%) on the pcp primarily due to improved wind conditions at the
Alinta wind farm (+39 GWh) and Lake Bonney wind farms (+5 GWh). This was partially offset by:
reduced balance of plant and turbine availability at Woodlawn and Capital wind farms primarily due to a plant
outage while there was a fire in the vicinity of the Capital and Woodlawn wind farms (-11 GWh)
increased maintenance work and adverse wind conditions at Capital wind farm (-5 GWh)
component replacement works at Alinta wind farm (-4 GWh)
lower compensated production (-3 GWh)
line outages in Western Australia (-2 GWh)
Marginal loss factors as determined by AEMO reduced production sold (-25 GWh) compared to the pcp.
11 Calculated by production generated over 12 months divided by the amount of electricity that would have been produced if all
wind turbines had been running at full capacity for the full twelve months.
12 Indicates the percentage of time wind turbines have been available to generate electricity.
13 Indicates the percentage of time wind turbines and balance of plant have been available to generate electricity.
14 Calculated by dividing operating costs with production.
15 Marginal loss factor is not relevant to electricity sold.
16 Compensated production relates to business interruption and liquidated damages under service and maintenance
agreements.
24
INFIGEN ENERGY ANNUAL REPORT 2017
4.3.1. Electricity Spot Market
Electricity spot price17 ($/MWh)
Electricity dispatch price ($/MWh)
Dispatch price discount
FY17
FY16 F/(A)%
SA
NSW
108.66
61.67
81.22
51.60
76
57
10 year
average
58.37
46.64
FY17
FY16
F/(A)%
FY17
FY16
F/(A)%
81.58
74.54
50.97
51.86
60
44
25%
8%
17%
(8) ppts
-1%
(9) ppts
Source: AEMO
Average spot prices in the NEM vary between each state and can be very volatile. Electricity spot prices can vary
between the market price floor of -$1,000/MWh and the market price cap of $14,000/MWh18 in FY17. A summary
of market factors and outcomes for FY17 in the key regions in which Infigen is currently operating is outlined below.
South Australia
There were 410 half-hourly trading intervals above $300/MWh (cf 185 in the pcp).
There were 300 negative price trading intervals (cf 289 in the pcp).
Time weighted average (TWA) spot electricity prices increased to $108.66/MWh, up $46.99/MWh (+76%)
on the pcp due to increased weather driven demand, higher gas prices and the flow-on effects of the
Hazelwood coal-fired power plant closure on market dynamics.
Dispatch weighted average electricity price19 from Lake Bonney 1-3 wind farms increased to $81.58/MWh,
up $30.61/MWh (+60%) on the pcp.
TWA price in SA is higher than the DWA price of wind generation. Infigen’s DWA price discount in SA
increased to 25%, up 8 ppts on the pcp.
New South Wales
There were 185 half-hourly trading intervals above $300/MWh (cf 10 in pcp).
There were no negative price trading intervals (cf 1 in pcp).
TWA spot electricity prices increased to $81.22/MWh, up $29.62/MWh (+57%) on the pcp due to increased
weather driven demand, higher gas prices and the flow-on effects of the Hazelwood coal-fired power plant
closure on market dynamics.
Dispatch weighted average electricity price from Woodlawn wind farm increased to $74.54/MWh, up
$22.86/MWh (+44%) on the pcp.
In NSW the wind profile is more correlated to regional demand and therefore prices. Woodlawn wind farm’s
DWA price discount increased to 8%, up 9 ppts on the pcp.
4.3.2. LGC Inventory and Spot Market Sales
Daily closing market price ($/LGC)
F/(A) %
2016
2017
At 30 June
Financial year average
Source: GFI Broker Report
79.10
85.24
84.20
71.34
(6)
20
As at 30 June
LGC volume
LGC inventory ($M)
LGC inventory
2017
2016
F/(A) %
374,300
328,000
27.0
20.6
14
31
At 30 June 2017 Infigen held LGC inventory, including that required to meet contracted sales with delivery dates
after 30 June 2017.
Infigen’s inventory of LGCs increased to approximately 374,300 LGCs as at 30 June 2017, up 46,300 (14%) on the
pcp due to higher contracted sales volumes. As Infigen increases its contracting activity through its Multi-Channel
Route to Market strategy, higher inventory levels may be maintained at the interim and full financial year balance
dates.
Closing LGC inventory comprised uncontracted LGCs valued at the 30 June 2017 closing price and contracted
commitments valued at their contract price.
17 Time weighted average of spot electricity prices.
18 The market price cap will increase to $14,200/MWh from 1 July 2017 to 30 June 2018. Source: “Schedule of reliability”,
14 February 2017, Australian Energy Market Commission.
19 Calculated as merchant electricity revenue divided by production excluding short-term hedges.
25
ABOUT
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ADDITIONAL INFORMATION
Corporate Structure
Directors
Operating and Financial Review
Remuneration Report
Other Disclosures
4.4. Operating Costs
Year ended 30 June
($M)
Asset management
FCAS net costs20
Turbine O&M
Balance of plant
Other direct costs
Wind farm costs
Energy Markets
Operating costs
2017
(6.4)
(2.1)
(20.8)
(1.1)
(7.1)
(37.5)
(2.7)
(40.2)
2016
(6.7)
(2.0)
(18.9)
(0.9)
(7.0)
(35.6)
(1.8)
(37.4)
F/(A)
F/(A) %
0.3
(0.1)
(1.9)
(0.2)
(0.1)
(1.9)
(0.9)
(2.8)
4
(5)
(10)
(22)
(1)
(5)
(50)
(7)
Operating costs increased to $40.2 million, up $2.8m (+7%).
Turbine O&M expenses were higher due to a full year of post-warranty costs at the Woodlawn wind farm
(+$0.7 million), non-recurrence of savings at Lake Bonney wind farms in the pcp (+$0.5 million) and higher
payments at the Alinta wind farm (+$0.7 million) incurred because of increased production.
Energy Markets costs were up $0.9 million (+50%) due to increased personnel costs as further capability was added
to the Energy Markets function in transitioning it to being at the core of Infigen’s business strategy.
4.5. Service and Maintenance Agreements
During the year Infigen executed fleet-wide service agreements for its existing operating assets with Vestas –
Australian Wind Technology Pty Ltd (Vestas). The agreements cover 556.6 MW of installed capacity comprising
256 turbines across six wind farms. Under the agreements Vestas will provide turbine maintenance services and
replacement components for the turbines from 1 January 2018 for a period of between seven and 15 years,
depending on the wind farm.
Wind farm
Alinta
Capital
Lake Bonney 1
Lake Bonney 2
Lake Bonney 3
Woodlawn
Contract start date
Contract end date
1 Jan 2018
1 Jan 2018
1 Jan 2018
1 Jan 2018
1 Jan 2018
1 Jan 2018
31 Dec 2025
31 Dec 2030
31 Dec 2024
31 Dec 2027
31 Dec 2029
31 Dec 2032
Vestas will also provide scheduled maintenance services for the balance of plant at those wind farms. Infigen will
otherwise be responsible for maintenance of the balance of plant. Key features of the new agreements include:
Vestas being responsible for turbine reliability and maintenance, including the cost of component replacement
during the term (subject to agreed liability caps and transitional arrangements at Capital and Woodlawn wind
farms)
Vestas providing turbine availability guarantees backed by liquidated damages provisions
Vestas’ service fees being calculated on the basis of actual production (MWh), subject to a minimum annual
payment
Vestas being entitled to certain performance payments if turbine availability exceeds prescribed levels
Across all six sites the turbine availability guarantees provided under the agreements are based on energy yield
rather than time-based availability. These incentivise Vestas to perform scheduled turbine maintenance activities
during low wind periods and, based on Infigen’s experience with production-linked variable turbine O&M fees since
2012, result in a better alignment of Infigen’s wind farm costs with its revenues. As a result of these agreements
Infigen has greater certainty over its long term turbine O&M costs. The agreements have been structured with a
modestly escalating price profile to broadly reflect the expected costs that will be incurred as the fleet ages.
20 Frequency control ancillary services (FCAS) charges relate to services that maintain key technical characteristics of the power
system. Reflects gross FCAS costs net of hedge payout.
26
INFIGEN ENERGY ANNUAL REPORT 2017
4.6. Corporate and Development Costs
Year ended 30 June
($M)
Corporate and transition costs
Development costs
Corporate, transition and development costs
2017
(15.7)
(1.4)
(17.1)
2016
(14.0)
(1.7)
(15.7)
F/(A)
(1.7)
0.3
(1.4)
F/(A) %
(12)
18
(9)
Corporate and transition costs included costs associated with restructuring and transitioning the business to ensure
Infigen had the necessary capability to execute its business strategy, costs associated with the CEO transition and
management restructure ($3.1 million), a payroll tax expense ($0.7 million), and costs associated with undertaking
and responding to corporate strategic activities ($0.9 million).
Development costs expensed during the year decreased to $1.4 million, down $0.3 million (-18%) on the pcp due
to higher professional fees incurred in the pcp.
4.7. Financing Costs
Year ended 30 June
($M)
Interest expense
Bank fees and amortisation of loan costs
Amortisation of decommissioning costs
Total borrowing costs
Interest income
Net borrowing costs
Net FX and revaluation of derivatives
Net financing costs
2017
(47.6)
(2.9)
(0.1)
(50.7)
1.6
(49.1)
(1.8)
(50.9)
2016
(52.0)
(2.3)
(0.1)
(54.3)
0.8
(53.6)
(4.0)
(57.6)
F/(A)
4.4
(0.6)
-
3.6
0.8
4.5
2.2
6.7
F/(A) %
8
(26)
-
7
100
8
55
12
Net borrowing costs decreased to $49.1 million, down $4.5 million (-8%) on the pcp due to lower interest expense
resulting primarily from a lower debt balance and higher interest income due to a higher average cash balance,
partially offset by fees associated with the project financing of Bodangora wind farm.
Net FX and revaluation of derivatives resulted in a $1.8 million expense due to fair value losses on non-hedge
accounted financial instruments, $2.2 million lower than in the pcp (-55%).
4.8. Net Operating Cash Flow
Year ended 30 June
($M)
Operating EBITDA
Corporate, transition and development costs
Movement in LGC inventory
Movement in working capital
Proceeds from the sale of development asset
Non-cash items
Financing costs paid
Net operating cash flow
2017
156.4
(17.1)
(6.3)
9.6
5.1
(0.1)
(48.9)
98.7
2016
135.8
(15.7)
(7.9)
(3.4)
-
(0.5)
(51.9)
56.9
F/A
20.6
(1.4)
1.6
13.0
5.1
0.4
3.0
41.8
F/(A) %
15
(9)
20
382
n.m.
80
6
73
Net operating cash flow increased to $98.7 million, up $41.8 million (+73%) primarily due to higher operating
EBITDA and favourable working capital movements.
A $13.0 million favourable movement in working capital was primarily due to a reduction in receivables from lower
production sold in FY17 and a lower amount due under an annually settled “take or pay” contract. The balance of
the increase in net operating cash flow included proceeds from the sale of the Manildra solar development project,
a smaller increase in LGC inventory relative to the pcp21 and lower financing costs paid, partially offset by higher
corporate, transition and development costs.
21 Refer to section 4.3.2.
27
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Corporate Structure
Directors
Operating and Financial Review
Remuneration Report
Other Disclosures
5. Funding
5.1. Summary of Financial Position22
Position at 30 June
($M unless stated otherwise)
Cash
Debt
Net debt
Security holders’ equity
Book gearing23
EBITDA / (net debt + equity)24
Net debt / EBITDA
EBITDA / interest
Net assets per security ($)
Net tangible assets per security ($)
5.2. Cash
2017
251.8
653.9
402.1
479.4
45.5%
15.8%
2.9
2.9
0.50
0.38
2016
147.6
742.5
594.9
280.6
68.0%
13.7%
5.0
2.3
0.36
0.20
F/(A)
104.2
88.6
192.8
198.8
-
-
2.1
0.6
0.14
0.18
F/(A) %
71
12
32
71
22.5 ppts
2.1 ppts
42
26
39
90
Cash balance increased to $251.8 million at 30 June 2017, up $104.2 million (+71%) from 30 June 2016 due to:
$144.4 million net proceeds from the issue of equity securities
$98.7 million net operating cash flow
$1.8 million proceeds from the Bodangora construction facility
$3.5 million unfavourable FX effect on cash held in USD
$48.7 million of capital expenditure
$88.5 million of debt repayments
5.3. Debt
Total debt decreased to $653.9 million (including capitalised loan costs25) at 30 June 2017, down $88.6 million
(-12%) from 30 June 2016.
In FY17 Infigen repaid $82.6 million of Global Facility borrowings and $5.9 million of Woodlawn facility borrowings,
and drew $1.8 million of the Bodangora construction facility. The total debt comprised:
$621.5 million of Global Facility borrowings (US$70.6 million and AUD $529.7 million)
$34.0 million of Woodlawn facility borrowings
$1.8 million of Bodangora construction facility borrowings 26
Infigen manages its USD borrowings through prioritising repayments of USD borrowings and through a
US$30 million foreign exchange hedge.
Infigen’s book gearing as at 30 June 2017 was 45.5% compared to 68.0% at 30 June 2016.
22 Calculated with the underlying EBITDA.
23 Calculated as net debt divided by the sum of net debt and net assets.
24 Calculated on a 12-month lookback basis.
25 Capitalised loan costs were $3.5 million as at 30 June 2017 and $5.1 million as at 30 June 2016.
26 $163 million construction facility.
28
INFIGEN ENERGY ANNUAL REPORT 2017
5.4. Security Holders’ Equity
Security holders’ equity increased to $479.4 million, up $198.8 million (+71%) from 30 June 2016. The increase
was due to:
$144.4 million net proceeds from the issue of equity securities
$32.3 million net profit
$14.9 million increase in reserves
$7.3 million increase from the issue of vested performance rights under the Infigen Energy Equity Plan
The number of securities on issue increased by 177,790,410 to 950,259,556 (+23%) during FY17. Approximately
170 million new stapled securities were issued under the equity capital raise and approximately 8 million securities
were issued under the Infigen Energy Equity Plan.
6. Capital Expenditure
Capital expenditure increased to $48.7 million, up $45.0 million on the pcp due to increased growth activities,
including the Bodangora wind farm development project (+$44.1 million) and other development projects
(+$2.0 million). Expenditure on wind farm property, plant and equipment reduced $1.1 million due to higher
expenditure on IT in the pcp.
29
ABOUT
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FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Corporate Structure
Directors
Operating and Financial Review
Remuneration Report
Other Disclosures
7. Business Risks and Mitigants
Material business risks that could affect Infigen’s
operating and financial performance are described
below. These risks are not the only risks that may
affect Infigen. Additional risks and uncertainties not
that
presently
management currently believe not to be material may
also affect Infigen.
to management
known
or
levels and activities
implemented an Enterprise Risk
Infigen has
framework covering all
(“ERM”)
Management
the entire
functions,
organisation. The ERM
framework has been
developed in accordance with leading industry risk
management standards,
International
Standard ISO 31000 (based on AS/NZS 4360:2004).
including
for
Operations and Safety
Infigen’s operational activities
involve work
performed in remote locations, at heights, with high
voltage electricity generation and
transmission
equipment, in confined spaces, utilising industrial
compounds and lubricants and involving travel to and
from sites. Infigen’s Health, Safety and Environment
Management System includes policies, procedures
and plans to manage these risks and integrate safety
with everyday tasks in the workplace and at home.
These policies are aligned to OHSAS 18001 (OHS)
and ISO 14001 (Environment) Standards. Safety
performance is also captured under Infigen’s key
performance
the
remuneration of each employee.
indicators, and
linked
to
is
Demand for Electricity and LGCs
changes
demand. Adverse
The price of electricity and LGCs that Infigen sells is
dependent on numerous factors including supply,
demand, and in the case of electricity retailers, their
customers’
in
uncontracted (merchant) prices could adversely
financial
affect
revenue and
performance.
its business
strategy to reduce potential earnings volatility by
expanding its customer base with the objective of
reducing its exposure to fluctuations in merchant
prices and obtaining more attractive returns than are
available in the long-term contract market.
is pursuing
Infigen’s
Infigen
future
Volume Risks
future
Infigen’s
Variation in wind resource will result in changes to
Infigen’s electricity production level (quantum) and
generation profile (time). Fluctuations may adversely
affect
financial
revenue and
performance. Whilst variation in wind resource will
remain an inherent risk to the business, Infigen’s 24/7
Operations Control Centre
(“OCC”) monitors
available wind resource, Infigen’s operating assets,
instructions, market
operator’s
the market
participants’
and
prices,
behaviour, NEM
meteorological data. The OCC supports Infigen’s
asset management and energy markets functions to
optimise production output, implement the electricity
dispatch bidding strategy, and optimise outcomes for
Infigen.
Sovereign and Energy Policy
Infigen’s business performance may be directly
affected by changes in the design and rules of the
existing energy market. The debate in relation to the
energy markets’ future design and rules can create
uncertainty that adversely affects market sentiment.
These changes may result from orderly rule change
processes or in response to the political imperatives
of the government or agencies of government.
As Infigen executes its Multi-Channel Route to
Market strategy it will develop and obtain derivative
and “firming” products available in the market to
manage volume risk.
relevant stakeholders
Infigen is actively engaged with policy makers and
other
the
important role that clean energy can play in the
transition to a lower emissions electricity future.
to articulate
There is a risk that changes to regulation or law can
be adverse to Infigen’s interests and in that instance
Infigen would be ready to respond thoughtfully to any
proposed change.
30
INFIGEN ENERGY ANNUAL REPORT 2017
Operating Costs
Community
Infigen’s assets predominantly exist on rural lease
holdings and the relationship with landholders and
the local community in which Infigen operates is
important to business success. Failure to engage
satisfactorily with these stakeholders could lead to a
loss in confidence in Infigen’s ability to operate
effectively within the area, and jeopardise future
development projects. Infigen uses a “community
engagement spectrum” framework established by
the International Association for Public Participation
to address the social impacts that Infigen has as part
of developing and operating
in each
community. Infigen’s Complaints Handling Policy
details how stakeholders can provide feedback on
Infigen’s practices or development projects and how
complaints are managed.
facilities
Information Systems and Technology
of
Infigen is reliant on its information systems and
technology (“IT”) to support its operations. This
exposes Infigen to a number of IT operational risks
including system corruption or failure, technology
breakdown and cyber attacks. An IT system incident
to disruption of critical business
lead
could
processes,
sensitive
commercially
theft
information, loss of cash or other assets or a breach
of privacy. Infigen has in place an IT Security and
Usage Policy to monitor systems, educate staff and
provide relevant training. Infigen also has business
continuity and disaster recovery plans in place that
deal with cyber security and are consistent with good
industry practice. Where appropriate Infigen
is
working to align to ISO:27001:2013 in conjunction
with ASIC Report 429 Cyber Resilience: Health
Check.
Changes in regulatory settings and associated costs
including, for example, the cost of FCAS, government
policy, operation of the market, and changes in the
interpretation and enforcement of policy could
adversely
financial
Infigen’s
performance. Infigen has in place an ERM framework
to monitor and mitigate risks associated with
operating in energy markets, and it participates in
industry and energy market forums to monitor
changes to the operating regime.
future
affect
There is a risk that Infigen’s assets may suffer from
equipment or key component failure resulting in
sustained unplanned outages or significant damage.
Failure of Infigen’s assets to operate as intended for
any reason, failure of a third party to perform as
expected or financial failure of a material supplier
could adversely affect the ability of Infigen to conduct
its business or the production and sale of electricity
or LGCs.
To mitigate the risk of key component failure and
variability in operating costs, Infigen has entered into
service and maintenance agreements whereby
service providers are paid to carry the risk of
component failure subject to certain limits, and
maximise generation output and minimise turbine
failure
scheduled and unscheduled
maintenance.
through
Project Delivery and Economics Risks
The expected economics of any project are based
upon a number of interrelated assumptions including
capital and operating costs, long-term energy and
capital markets assumptions. These assumptions
may be affected by regulatory change, actual
production,
technology displacement, competing
projects, and changes in market conditions. There is
a risk that these assumptions are not realised which
could affect the actual return achieved from investing
in the project. Infigen applies a disciplined approach
to expansion and the commitment of capital to growth
projects.
Refinancing
Infigen is seeking to refinance the debt associated
with its existing operating assets. There is no
assurance that refinancing will occur or the terms
upon which it could occur, as this will depend upon a
range of factors including market conditions. The
pricing, terms and size of any new facilities may be
significantly different to the existing facilities. A delay
in refinancing of the Global Facility in the near term
may result in Infigen pursuing its business strategy in
a manner slightly different to that contemplated.
31
ABOUT
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FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Corporate Structure
Directors
Operating and Financial Review
Remuneration Report
Other Disclosures
People and Culture
Regulatory, Legal and Accounting
There is a limited availability of suitably qualified
people with the energy market expertise required to
operate Infigen’s business and deliver on its growth
strategy. Infigen may be reliant on small groups of
individuals with specialist knowledge to operate and
maintain its assets and to develop its development
projects. The ability to attract and retain such suitably
qualified staff may limit or delay Infigen’s ability to
undertake its activities efficiently and effectively.
Through the Personal Development Program, setting
Diversity Targets and supporting Human Resources
policy framework Infigen aims to maintain a diverse,
capable, agile and motivated team.
Liquidity, Capital Markets and Credit Risks
Infigen relies on access to debt and equity capital to
operate its business and execute its business
strategy.
To manage interest rate exposure on borrowings
Infigen fixes a portion of any floating rate borrowings
by entering into interest rate swaps, in which it agrees
to exchange the difference between fixed and
floating rate interest amounts (calculated on agreed
notional principal amounts) and interest rate caps (in
which Infigen protects itself from rates increasing
above a cap whilst still benefitting from lower interest
rates under a cap). In undertaking this strategy
Infigen is willing to forgo a percentage of the potential
economic benefit that would arise in a falling interest
rate environment in order to partially protect against
downside risks of increasing interest rates, and to
secure a greater level of predictability for cash flows.
As an energy markets participant Infigen must retain
sufficient liquidity to meet its prudential obligations to
the market, including any ASX positions or other
positions that it has taken, and its Australian
Financial Services Licence conditions. Furthermore,
Infigen has credit exposure to contract counterparties
and expects to continue to have such exposure to
existing and new counterparties.
Infigen has potential exposure to litigation and claims
arising from its operations or activities, including, for
example, contractual or industrial disputes, property
damage claims, environmental or health and safety
claims, tax disputes and objections to its project
development activities. Where insurable, Infigen
maintains insurance to address relevant exposures.
Changes to Australian tax law could increase
Infigen’s ultimate
its
accumulated tax losses. The effect of changes can
include the timing and quantum of tax payable by
Infigen in the future.
liability or decrease
tax
Regulatory, legal and accounting risks are captured
through Infigen’s ERM framework and managed
through Infigen’s policies and procedures, as well as
through external audit and external legal advice as
appropriate.
Financial Climate-Related Considerations
As a renewable energy business, Infigen is a part of
the solution and a participant in the drive to a lower
emissions economy based on reducing carbon
emissions and reducing the impacts of climate
change. As noted above Infigen is actively engaged
with policy makers and other relevant stakeholders to
articulate the important role that clean energy can
play in the transition to a lower emissions electricity
future, but can both benefit from and be adversely
impacted by policy changes.
The medium term financial implication from weather-
related risks, such as changes to long-term wind
patterns and extreme weather events, are
considered as part of Infigen’s strategic planning
(e.g. production, revenue and cost forecasting).
Infigen undertakes analyses using data from its
operating assets and external consultancies to better
financial
understand
implications.
the magnitude of
these
in Note 18
Infigen’s financial risk management strategy to
address liquidity, capital markets and credit risks is
outlined
the FY17 Consolidated
Financial Statements available with this Directors’
Report. Infigen also tests its regular short, medium
and long-term forecasts to assess any implications
on future liquidity and profitability.
in
32
INFIGEN ENERGY ANNUAL REPORT 2017
REMUNERATION REPORT
Dear security holder,
We are pleased to present the 2017 Remuneration Report.
The change of the Managing Director & Chief Executive Officer from Mr Miles George to Mr Ross Rolfe AO occurred
on 17 November 2016 following the 2016 Annual General Meeting (“AGM”).
Since then there has been a keen focus and a heavy workload in the development and adoption of an
implementation plan for the business strategy. The Board welcomes the addition of Ms Sylvia Wiggins, Mr Owen
Sela and Mr Tony Clark to the executive leadership team.
This year the Board’s approach to remuneration reflects the need to attract and retain executives with the skills and
experience necessary to preserve and create value for security holders by transitioning the business and realising
the growth opportunities available to Infigen that are available within the Australian energy market.
Where in the past it was appropriate to motivate and reward the Executive Key Management Personnel (“KMP”) to
focus on delivering stable and predictable financial performance to reduce debt, looking ahead, short term incentive
(“STI”) arrangements will be structured to reward both the delivery of stable and predictable financial performance
and the execution of strategic initiatives that preserve, create and deliver long term security holder value.
The FY18 ‘at risk’ remuneration framework, comprising STI and long term incentive (“LTI”), is being reviewed to
ensure it motivates and rewards the delivery of long term security holder value. Any change to the ‘at risk’
remuneration framework will be disclosed as appropriate in the 2017 Notice of AGM or to the ASX if required.
Statutory obligations determine the way remuneration is reported. Infigen’s remuneration disclosures for FY17 and
FY18 will contain legacy data. On the following pages we have included a summary report that explains the changes
that have occurred this year and how we intend to report in future years. We hope you will find this helpful.
Significant matters to note for director and KMP remuneration in FY17 are:
Mr Ross Rolfe was appointed and CEO / Managing Director on 17 November 2016;
Ms Sylvia Wiggins was appointed Executive Director - Finance on 8 May 2017;
The Board appointed Mr Leonard Gill to the Boards of Infigen Energy on 5 June 2017;
Directors’ fees again remained unchanged throughout the year;
As disclosed in the 2016 remuneration report Board committee fees increased on 1 July 2016;
Following the release of the FY16 results, Infigen issued 8,108,219 securities to satisfy the vesting obligations
for the FY13 & FY14 LTI and the FY15 deferred STI grants;
Following the release of the FY17 results, Infigen will issue 3,800,619 securities to satisfy the vesting
obligations for the FY15 LTI and FY16 deferred STI grant;
There was no requirement to apply the clawback mechanism for any vested deferred STI or LTI payments
made to employees in FY17;
The vesting scale for the relative TSR performance condition of the FY17 LTI grant was an interim condition.
TSR-linked LTI grants made from FY18 onwards will revert to market practice with vesting only commencing
at the 50th percentile; and
Termination payments did not exceed the amount permitted by Part 2D.2.2 of the Corporations Act 2001 (Cth).
Yours faithfully,
Michael Hutchinson
Chairman
Nomination & Remuneration Committee
33
KMP SUMMARY REPORT FOR FINANCIAL PERIOD ENDING 30 JUNE 2017
Changes to the KMP
The KMP have changed
the
retirement of Mr Miles George as MD/CEO
on 17 November 2016.
following
During the year Mr Ross Rolfe and Ms Sylvia
Wiggins have transitioned from being Non-
Executive Directors to CEO / Managing
Director and Executive Director - Finance
respectively, with further changes made to
the structure and composition of the KMP.
Statutory remuneration disclosures in FY17
and FY18 will include both current and former
KMP.
This summary report is intended to provide a
guide to the substantive changes that have
statutory
occurred,
disclosures contained
the detailed
remuneration report.
separate
the
to
in
KMP transitional disclosures
Executive
R Rolfe
S Wiggins
O Sela
T Clark
M George
C Baveystock
B Hopwood
S Wright
Position
FY17
FY18
CEO / MD
Executive Director - Finance
EGM Energy Markets
EGM Operations & Projects
MD / CEO
CFO
EGM Commercial & Corp
Finance
General Counsel
From 17 Nov 16
From 8 May 17
From 8 May 17
From 8 May 17
To 17 Nov 16
To 8 May 17
To 8 May 17
To 8 May 17
Yes
Yes
Yes
Yes
No
No
No
No
Diversity
Workforce Composition ♂ ♀
Remuneration Framework
The remuneration framework is designed to strike the right balance
between performance and rewards for preserving, creating and delivering
long term security holder value. The key features are:
Male
Female
58%
69%
30 June 2017
30 June 2011
The Board adopted the Infigen Energy Diversity and
Inclusion Policy in June 2011. Infigen sets and monitors
progress against annual diversity objectives, which include
gender diversity targets. Infigen’s ESG Report provides
more detailed information relating its diversity and inclusion
initiatives.
42%
31%
Fixed Remuneration
Short Term Incentive paid in cash and deferred equity
Long Term Incentive with market based and operational performance
conditions
Clawback mechanisms embedded within the deferred STI and LTI
grants
Tailored incentives designed to attract and retain talent such as
relocation allowances, project incentives and diminishing deferred
payments.
Diminishing Deferred Payment
Ross Rolfe
Sylvia Wiggins
Commencement
Date
17 Nov 16
8 May 17
Payment
Date
18 Nov 19
18 Nov 19
Value
($m)
$3.0
$2.0
Annual Cap
($m)
$1.0
$0.81
Terms
Payable on the Payment Date regardless of whether the executive
remains employed by Infigen, except if the employment is terminated
for cause, or where the employment is terminated for any reason and
Infigen subsequently discovers the employment could have been
terminated for cause or the executive resigns (but not including where
they resign due to a material adverse change) in all cases before the
Payment Date.
The Deferred Payment is reduced by the fixed remuneration, STI
payments or awards, vested LTI payments, payment in lieu of notice
or severance/redundancy payments received by the executive prior
to the Payment Date (subject to the Annual Cap).
The Annual Cap is the maximum amount by which the Deferred
Payment may be reduced for each year (or part thereof) between the
Commencement Date and Payment Date.
The Board retains discretion to reduce the Deferred Payment in
certain circumstances related to the executive’s conduct.
Assuming the executive’s employment continues until 17 November 2019 and they have received aggregate payments and
awards of equivalent value to the Deferred Payment subject to the Annual Cap, then the executive would not receive any Deferred
Payment on the Payment Date.
1 Pro-rated for any part thereof.
34
INFIGEN ENERGY ANNUAL REPORT 2017
RELATIONSHIP BETWEEN PERFORMANCE AND INCENTIVE PAYMENTS
FY17 KPIs
FY17 STI Assessment
Safety: Ensure that the company fulfils its duties and responsibilities
so that Infigen’s operations result in no harm to Infigen’s employees,
contractors and stakeholders.
Infigen has focused on embedding a strong safety culture throughout all sites and has
prioritised safety in entering into new long-term fleet-wide service agreements. Infigen
has also focused on introducing structured assessments of safety incidents and
designing effective responses to mitigate or eliminate workplace health and safety risks
wherever possible.
Financial Performance: With reference to the annual budget
management KPIs will focus on:
Infigen:
Strengthening and stabilising earnings from the existing asset
portfolio within an agreed risk framework;
Reducing corporate debt levels; and
Ensuring that the company has access to the necessary skills
and sources of advice to effectively deliver the business strategy
and achieve best value for money outcomes for security holders
while managing costs.
Achieved substantial over budget performance on cash generation and EBITDA;
Reduced total borrowings by $88.6 million;
Maintained stringent control over routine costs in the business;
Invested in management to support transition of the business strategy;
Executed fleet-wide service agreements to stabilise long term operating costs.
Creating Value: Implement strategies to preserve, create and
deliver security holder value by achieving appropriate value for
existing assets and creating a capital structure to invest in new
sources of energy supply.
Infigen:
Reached Financial Close on Bodangora (113 MW of new capacity);
Raised new equity capital ($151 million) to support its growth strategy;
Developed an implementation plan for the revised business strategy to position
Infigen to respond to challenges in the market and capture opportunities that may
arise;
Positioned itself to refinance its existing Global Facility at the optimal time; and
Engaged with policy makers and stakeholders in relation to Australia’s energy
policy.
Gateway hurdles used for determining the events which automatically trigger Board consideration to rerate downwards the STI pool included non-achievement of
a budgeted cash generation target, a breach of a major debt facility, a lost time injury or medical treatment injury that had the potential to be a catastrophic or
major incident and other catastrophic or major non-safety related incidents.
FY15 LTI grant performance
TSR 293%
EBITDA/Capital base 111.7%
of Target
Performance
Period
1 July 2016 to
30 June 2019
One year Retest
to 30 June 2020
FY17 LTI Terms and Conditions
Performance Conditions
Vesting Scale
50%
IFN TSR performance
compared to ASX 200 peer
group excluding financial
services and materials /
resources sectors
25th to 75th Percentile of peer
group
50%
EBITDA to Capital base
90% ≤ 110% of the
cumulative target
35
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Other Disclosures
Remuneration received by KMP during the 2017 Financial Year
KMP
Fixed
remune-
ration
Maximum
STI
opportu-
nity
FY17 Awarded STI
Cash
Deferred
FY17
Vested
equity
deferred
STI9
Vested
LTI9
Other
pay-
ments
Total
Perfor-
mance
related
FY16
Total
Perfor-
mance
related
$
$
$
$
$
$
$
$
R Rolfe1
S Wiggins2,3
T Clark3,4
O Sela3,5
M George6
C Baveystock7
B Hopwood7,8
S Wright7
510,768
107,071
133,157
190,486
324,250
369,500
324,643
369,500
282,100
127,500
127,500
52,500
50,000
2,500
43,050
43,050
-
61,485
50,000
5,337
-
-
-
-
-
-
-
-
125,000
890,768
-
-
159,571
176,207
25,000
270,823
266,750
266,750
-
427,227
3,004,084
908,260
4,930,571
162,000
52,650
52,650
148,841
855,418
-
1,479,059
-
-
-
324,705
770,606
509,331
1,929,285
157,000
70,650
70,650
338,879
474,626
-
1,324,305
%
29%
33%
24%
20%
75%
71%
57%
67%
$
-
-
-
-
1,839,608
752,728
719,980
686,815
%
0%
0%
0%
0%
65%
52%
50%
47%
2,329,375
1,024,885
660,600
258,637
1,239,652
5,104,734
1,567,591
11,160,589
3,999,131
1 KMP from 17 November 2016. Other Payments is a one-off Relocation Allowance. See section 4.2 for Non-Executive Director Fees paid up to 17 November
2016.
2 See sec 4.2 for Non-Executive Director Fees paid up to 8 May 2017 and related party payments paid to Pipionem Partners that were previously disclosed
to the market.
3 KMP from 8 May 2017.
4 Commenced employment on 30 January 2017.
5 Commenced employment on 16 January 2017. Other Payments represents one-off payment received in recognition of foregone benefits.
6 Ceased to be a KMP on 17 November 2016. Other Payments includes statutory annual and long service leave and contractual entitlements paid upon
retirement and six months post-employment consultancy fees.
7 Ceased to be a KMP on 8 May 2017.
8 Other Payments include statutory annual and long service leave and contractual entitlements paid on termination of employment.
9 The performance conditions of Tranche 1 of the FY13 LTI, Tranches 1 and 2 of the FY14 LTI and FY15 Deferred STI were achieved resulting in these
grants vesting on 12 September 2016. The value of the vested award is calculated based on the taxable security price at vesting multiplied by the number
of securities that vest.
36
INFIGEN ENERGY ANNUAL REPORT 2017
STATUTORY REMUNERATION REPORT
1. Remuneration of KMP
The remuneration framework for KMP comprises three components:
fixed pay;
STI, which is a variable payment linked to achieving specified performance measures over a 12 month
period; and
LTI, which is a payment linked to meeting specified performance hurdles over a 3 year period (1 year
retest for FY16 and FY17 LTI grants).
Remuneration is benchmarked against industry peers within utilities, electricity generation and infrastructure having
regard to the advice of external advisers, Guerdon Associates.
1.1. Fixed Pay
Fixed pay comprises a cash salary and superannuation. Infigen does not offer remuneration packaging other than
superannuation salary sacrifice.
1.2. Short Term Incentives
STI is an at-risk performance-related component of remuneration. STIs are subject to performance against key
individual objectives and
performance
accountabilities. KPIs are set annually and reviewed during the year and where appropriate changed to maintain
alignment with the business strategy.
indicators (“KPIs”) aligned with strategy, annual budgets, and
The Nomination & Remuneration Committee (“NRC”) determines the KPIs for the KMP and reviews the KPI
achievement. The NRC determines the CEO’s STI payment, reviews and approves payments made to KMP and
the aggregate amount of STI payments.
Infigen is transitioning from a business that owned and operated assets and largely sought to sell its output of both
electricity and LGCs to long-term offtakers, to a business that seeks to deliver a range of products and solutions to
different customers through multiple routes to market – the Multi-Channel Route to Market Strategy.
Since the equity capital raising in April 2017, Infigen has been developing its implementation plan for the business
strategy. A 5 Year Business Plan underpins the implementation of the business strategy, which has three primary
work streams:
1)
the Multi-Channel Route to Market;
2) expanding the regions in which Infigen operates and/or owns generation capacity in response to market
signals; and
3)
creating a capital structure to support Infigen’s business strategy.
The shift in business strategy together with the stabilisation of the Infigen capital structure has meant that it is
appropriate to adjust the STI arrangements for the senior team. Hence while maximising operating cash flows and
debt reduction remains an important ongoing objective, so too is the creation of value through removing the volatility
of earnings over the medium term, reducing reliance on a small number of customers in a highly competitive
marketplace, stabilising operating costs, delivering value through the commercialisation of Infigen’s development
pipeline and positioning the company to achieve a long term capital structure that supports the business model and
strategy to grow.
It is the combination of these factors that the Board has taken into account in settling the STI payments for the KMP
in FY17 as set out in the KMP summary report tables on page 36. In summary the potential STI pool for KMP was
set at $1,024,885. The aggregate amount of actual STI payments awarded to KMP was $919,237 or 90%. Individual
STI payments awarded to KMP were between 65% and 100% of the maximum STI opportunity. In determining
individual STI payments, the NRC had regard to the specific KPIs established at the beginning of the year,
achievement against those targets that remained relevant, and the achievements of management in developing an
implementation plan for the revised business strategy, reaching financial close on the Bodangora wind farm, raising
$151 million in new equity capital to support growth and other achievements that will maintain momentum
throughout FY18.
37
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The Board also determined that the ‘gateway hurdles’ had been passed. Gateway hurdles are used for determining
the events which automatically trigger Board consideration to rerate downwards the STI pool. The gateway hurdles
are:
1) Non-achievement of the budgeted cash generation from activities target; or
2) A material non-compliance (breach) of a major debt facility; or
3) A lost time injury rated “moderate” and above or a medical treatment injury that is or had the potential to
be a “major” or “catastrophic” incident; or
4) Occurrence of a “catastrophic”, “major” or multiple “moderate” non-safety related incidents as defined in
Infigen’s Risk Management Policy.
1.2.1. Short Term Incentive Deferral
STIs include a 12 month deferral condition that applies to 50% of the STI awarded where the amount is over
$100,000, and where the amount is less than $100,000 the full amount of STI awarded above $50,000 is deferred.
Deferred STIs are awarded in the form of performance rights grants under the Infigen Energy Equity Plan. Each
vested performance right will entitle the holder to receive one security or a cash amount equivalent to the market
price of a security on the vesting date, with settlement in cash or securities determined by the Board in its absolute
discretion.
The deferred STI will vest at the end of the deferral period provided the employee has not resigned or had their
employment terminated for cause prior to vesting. The deferred payment may be reduced or forfeited if the STI
payment was associated with a materially adverse financial misstatement, or if the achievement of a personal KPI
proves in hindsight to have been materially overstated.
The deferral condition includes a clawback mechanism that complements the LTI clawback provision. These
provisions enable forfeiture of some or all unvested STI and/or LTI related performance rights if a previously vested
LTI grant was associated with a materially adverse financial misstatement.
FY16 deferred STIs to the value of $923,754 were awarded in the form of 882,717 performance rights at a security
price of $1.0465. 595,491 securities are expected to be issued by Infigen following the release of the FY17 financial
results to satisfy vesting obligations in relation to these deferred STI amounts. The 287,225 performance rights
awarded to Mr Miles George related to his FY16 deferred STI will be cash settled based on the prevailing security
price upon vesting. It is not presently intended to clawback any STI deferred securities. Recipients of such securities
will incur a taxation liability and therefore may sell some securities to fund the tax liability. Any sales are subject to
Infigen's Securities Trading Policy and applicable law, including insider trading laws.
1.3. Long Term Incentives
LTIs are awarded as future rights to acquire IFN securities. The rights may vest after 3 years (or 4 years if a retest
is required), subject to performance hurdles being met. Each vested performance right will entitle the participant to
receive one security, or a cash amount equivalent to the market price of a security, on the vesting date. Settlement
in cash or securities is determined by the Board in its absolute discretion.
Grants made to the CEO / Managing Director and Executive Director - Finance are subject to security holder
approval.
The number of rights granted is based on the LTI amount divided by the reference price for Infigen securities, being
the volume weighted average ASX market price in the last five trading days of the prior financial year. For rights
granted for FY17 the reference price was $1.0465.
LTI grants comprise two equal tranches, each subject to a different performance condition. Vesting of each tranche
is contingent on achieving the relevant performance hurdle.
The two performance conditions for the FY16 and FY17 LTI grants are (a) Relative Total Shareholder Return (TSR)
and (b) an operational performance condition. The operational performance condition is a test of the cumulative
growth in the ratio of earnings before interest, taxes, depreciation and amortisation (EBITDA) to capital base.
Performance Condition
Tranche 1
Tranche 2
Relative TSR
EBITDA/Capital
Both hurdles are measured initially over a 3 year period. The 3 year performance period of the FY17 Grant is 1 July
2016 to 30 June 2019. In the event that no performance rights vest after the initial 3 year performance period then
the FY17 LTI grant will be subject to a single re-test on 30 June 2020, after which all unvested rights will lapse.
38
INFIGEN ENERGY ANNUAL REPORT 2017
1.3.1. TSR Performance Condition
TSR measures the change in value of a security plus cash distributions notionally reinvested in that security. In
order for any portion of the Tranche 1 performance rights to vest, the TSR of IFN securities must outperform that of
the median company in the S&P/ASX 200 index (excluding financial services, REITs and the materials/resources
sector).
The FY16 TSR vesting scale, which requires a high level of outperformance for full vesting to occur compared to
normal market practice, was introduced in FY12 recognising then that Infigen’s security price did not reflect the
inherent value of the business, and to acknowledge that corporate strategies to reduce Global Facility debt would
result in a significant rerating of the security price once completed.
Following the rerating of the IFN security price in FY16, the Board amended the vesting scale of the TSR
performance condition for the FY17 Tranche 1 performance rights so that vesting would occur progressively from
25% to 75% of the relevant peer group performance. It was the Board’s intention that the FY17 vesting scale would
apply to the FY17 grant only.
Table 1: Tranche 1 TSR Performance Rights Vest Progressively as Follows
Percentile ranking
Below the
25th
percentile
Equal to
the 25th
percentile
Between the
25th and 50th
percentile
Equal to
the 50th
percentile
Between the
50th and 75th
percentile
Between the
76th and 95th
percentile
Above
the 95th
percentile
FY15
g
n
i
t
s
e
v
&
FY16
0% vesting
0% vesting
0% vesting
s
d
r
a
w
A
f
o
e
g
a
t
n
e
c
r
e
P
FY17
0% vesting
25%
vesting
An additional
1% of awards
vest for each
percentile
increase
FY18
0% vesting
0% vesting
0% vesting
25%
vesting
50%
vesting
50%
vesting
An additional 2%
of awards vest
for each
percentile
increase
An additional 2%
of awards vest
for each
percentile
increase
An additional 2%
of awards vest
for each
percentile
increase
An additional
1.25% of awards
vest for each
percentile
increase
100%
vesting
100% vesting
100% vesting
39
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1.3.2. Operational Performance Condition
The annual target used in respect of all LTI grants up to and including FY17 is a specified ratio of EBITDA to capital
base over the year. The capital base will be measured as equity (net assets) plus net debt. Both the EBITDA and
capital base are measured on a proportionately consolidated basis to reflect Infigen’s economic interest in all
investments.
The annual target for FY17 was set to reflect the performance expectations of Infigen’s business and prevailing
market conditions. The annual target for each subsequent financial year will be established by the Board based on
stretch targets no later than the time of the release of Infigen’s annual financial results for the preceding financial
year.
The targets are set with reference to Infigen’s annual budgets. They are confidential to Infigen. However, each
year's target and the performance against that target are disclosed retrospectively.
The EBITDA performance condition rewards management for sustaining and delivering capital efficiency
performance over an extended period.
Relevant metrics for the last four financial years and current period are provided in the table below.
Table 2: Five Year Financial Performance
30 June 2013 30 June 2014 30 June 2015 30 June 2016
30 June 2017
0.73
143,4121
Closing security price
($)
0.25
0.24
0.32
1.00
EBITDA
Capital Base
(AUD’000)
160,445
176,682
186,583
120,196
(AUD’000)
1,591,793
1,733,099
1,639,635
1,021,051
1,019,834
EBITDA to capital base
Target
(%)
(%)
10.08
9.40
10.19
10.03
11.38
10.83
11.77
10.00
14.06
12.49
1 Underlying EBITDA adjusted for inclusion of profit on sale of the Manildra solar development project.
Table 3: Tranche 2 EBITDA Performance Rights in FY15, FY16 and FY17 Vest Progressively as Follows
Infigen’s EBITDA performance
FY15, FY16 & FY17 Grant
Percentage of Tranche 2 Performance Rights that vest
0% - 90%
Nil
90% ≤ 110% of the cumulative target
For every 1% increase between 90% and 110% of EBITDA target, 5% of the
Tranche 2 performance rights will vest
1.3.3. Long Term Incentive Performance
The initial three year performance period for the FY15 LTI grant ended on 30 June 2017. Orient Capital provided
the TSR Calculation and Ranking Report for the period 1 July 2014 to 30 June 2017. Infigen’s TSR performance
for the 3 year measurement period was 293%, placing Infigen at 97.7% of the comparator group. This will result in
100% of the Tranche 1 performance rights vesting. The Tranche 2 operational performance condition of the FY15
LTI grant also passed the performance test as at 30 June 2017 resulting in 100% of the Tranche 2 performance
rights vesting. Vesting of both tranches will occur when the first IFN employee trading window opens after
1 July 2017. A total of 3,205,128 securities in relation to the FY15 LTI are expected to be issued by Infigen prior to
the trading window opening following the release of the FY17 financial results.
1.4.
Infigen Energy Equity Plan Rules
Performance rights and options are governed by the rules of the Infigen Energy Equity Plan approved by security
holders in 2009 and 2011. The Infigen Energy Equity Plan includes provisions under which the Board may exercise
discretion to accelerate the vesting of any performance rights or options in the event of a change in control of
Infigen. In exercising its discretion the Board would intend to have regard to the performance, duration of the
performance period and the nature of the relevant transaction.
1.5. Separation Benefits
The Board intends to continue to limit any future separation benefits to a maximum of 12 months fixed remuneration.
40
INFIGEN ENERGY ANNUAL REPORT 2017
2. Infigen Energy – KMP Statutory remuneration details
2.1. Statutory Remuneration Data for the Year Ended 30 June 2017
The Statutory Remuneration Data table below shows the accounting expense amounts that reflect a portion of
possible future remuneration arising from prior and current year LTI grants.
Table 4: Statutory Remuneration Data for KMP
Executive
Year
Short-term employee benefits
Post
employ-
ment
benefits
Other
long-term
employee
benefits
Share-
based
payments
Total
STI
payable
in
current
period
$
Salary
$
Other
pay-
ments
Termination
payments
Total of
short-term
employee
benefits
Super-
annuation
LSL
accrual
Equity
settled9
$
$
$
$
$
$
$
R Rolfe1,3
FY17
497,691
127,500
125,000
FY16
-
-
S Wiggins2,3
FY17
103,802
50,000
FY16
-
-
T Clark4
FY17
124,717
43,050
FY16
-
-
-
-
-
-
O Sela5
FY17
180,678
50,000
25,000
FY16
-
-
-
-
-
-
-
-
-
-
-
750,191
13,077
1,216
-
-
-
153,802
3,269
1,034
-
-
167,767
8,440
-
-
255,678
9,808
-
M George6
FY17
314,442
266,750
62,500
845,760
1,489,452
FY16
616,692
300,580
C Baveystock7
FY17
349,884
52,650
FY16
342,693
120,525
B Hopwood8
FY17
305,027
-
FY16
342,693
124,845
S Wright7
FY17
349,884
70,650
FY16
342,693
129,110
-
-
-
-
-
-
-
-
-
-
917,272
402,534
463,218
509,331
814,358
-
-
-
467,538
420,534
471,803
-
9,808
19,308
19,616
19,308
19,616
19,308
19,616
19,308
-
-
-
-
-
-
764,483
-
158,106
-
176,748
-
5,568
271,657
-
-
1,004,735
2,503,995
-
541
-
603
-
-
17,308
12,161
570,288
1,524,176
179,069
613,380
9,189
153,481
645,196
-
(128,901)
705,073
8,264
220,191
715,301
11,350
12,457
108,921
560,421
179,763
683,331
Total
remuneration
FY17
2,226,125
660,600
212,500
1,355,091
4,454,316
103,250
26,905
1,169,392
5,753,863
FY16
1,644,771
675,060
-
-
2,319,831
77,232
47,218
1,123,723
3,568,004
1 KMP from 17 November 2016. Other Payments includes a one off Relocation Allowance.
2 KMP from 8 May 2017.
3 Refer to section 4.2 for remuneration received as a Non-Executive Director.
4 Commenced employment on 30 January 2017. KMP from 8 May 2017.
5 Commenced employment on 16 January 2017. KMP from 8 May 2017. Other Payments represents one-off payment received in
recognition of foregone benefits.
6 Ceased to be a KMP on 17 November 2016. Other Payments are six months post-employment consulting fees. Termination
Payments include accrued annual leave, long service leave and contractual entitlements paid upon retirement. In accordance
with Accounting Standards all future equity liabilities are expensed in FY17.
7 Ceased to be a KMP on 8 May 2017.
8 Ceased to be a KMP on 8 May 2017. Termination Payments include accrued annual leave, long service leave and contractual
entitlements paid upon termination of employment. In accordance with Accounting Standards all future equity liabilities are
expensed in FY17.
9 Includes deferred STI granted in the period.
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2.2. Value of Remuneration that May Vest in Future Years
Remuneration amounts provided in the table below refer to the maximum value of performance rights relating to
IFN securities. These amounts have been determined at grant date by using a pricing model and amortised in
accordance with AASB 2 ‘Share Based Payments’. The minimum value of remuneration that may vest is nil.
Table 5: Remuneration that May Vest in Future Years
Executive
Grant
M George1
C Baveystock
B Hopwood1
S Wright
O Sela
FY15
FY16
FY172
FY172,3
Total
FY15
FY16
FY17
FY173
Total
FY173
Total
FY15
FY16
FY17
FY173
Total
FY17
Total
Maximum value of remuneration which is subject to vesting in accordance with
AASB 2 'Share Based Payments'
FY15
$
93,815
93,815
27,751
FY16
$
155,368
120,082
275,450
45,958
27,319
27,751
73,277
-
17,187
-
28,464
16,838
17,187
45,302
-
-
FY17
$
154,943
381,131
258,987
209,674
1,004,735
45,833
37,346
23,461
72,429
179,069
55,305
55,305
28,387
23,018
14,482
43,034
108,921
5,568
5,568
FY18
$
FY19
$
-
-
37,346
30,259
19,707
87,312
30,259
30,259
-
-
23,018
18,679
11,709
53,406
20,531
20,531
18,679
18,679
20,531
20,531
1 In accordance with Accounting standards all future equity liabilities are expensed in FY17.
2 Can only be cash settled upon vesting. Value is calculated based on the IFN security price on 30 June 2017.
3 FY16 deferred STI.
42
INFIGEN ENERGY ANNUAL REPORT 2017
2.3. Unvested Performance Rights
The table below provides details of outstanding performance rights relating to IFN securities that have been granted
to KMP (FY15, FY16 and FY17 grants). The performance rights are valued as at the grant date even though the
grant was based on the volume weighted average price of the five trading days up to 30 June in the year prior to
the grant.
Table 6: Unvested Performance Rights
Executive
Grant
Granted
number
Grant date
Value per
performance
right at grant
date
Value of
performance
rights granted
at grant date
M George
C Baveystock
B Hopwood
S Wright
O Sela
FY15
FY16
FY172
FY171,2
FY15
FY16
FY17
FY171
FY171
FY15
FY16
FY17
FY171
FY17
2,167,080
21 Nov 14
1,780,504
13 Nov 15
523,173
12 Oct 16
287,225
12 Oct 16
641,026
21 Nov 14
527,188
7 Oct 15
154,802
20 Sep 16
115,170
20 Sep 16
69,131
20 Sep 16
397,022
21 Nov 14
324,934
7 Oct 15
95,557
20 Sep 16
20 Sep 16
68,429
68,082
$
0.1865
0.2815
0.4950
0.7300
0.1865
0.1935
0.5425
0.8000
0.8000
0.1865
0.1935
0.5425
0.8000
Potential Vesting Dates
LTI
Tranche 1
LTI
Tranche 2
Deferred
STI
30 Jun 17
30 Jun 17
30 Jun 18
30 Jun 18
30 Jun 19
30 Jun 19
-
-
-
-
15 Sep 17
30 Jun 17
30 Jun 17
30 Jun 18
30 Jun 18
30 Jun 19
30 Jun 19
-
-
-
-
-
-
-
15 Sep 17
15 Sep 17
30 Jun 17
30 Jun 17
30 Jun 18
30 Jun 18
30 Jun 19
30 Jun 19
-
-
-
-
-
15 Sep 17
30 Jun 19
30 Jun 19
-
$
404,127
501,212
258,987
209,674
119,541
102,011
83,979
92,136
55,305
74,038
62,875
51,840
54,743
46,630
23 Mar 17
0.6849
1 Relates to the STI Deferred from FY16.
2 Can only be cash settled upon vesting. In accordance with Accounting standards the value is calculated based on the IFN security
price on 30 June 2017.
Table 7: Change in Number of Performance Rights Held by KMP throughout the Year.
Set out below is the change in the number of performance rights held by KMP over the period 1 July 2016 to
30 June 2017.
Balance at
30 June 2016
Granted
Vested
Other changes1
Balance at
30 June 2017
R Rolfe
S Wiggins
T Clark
O Sela
M George
C Baveystock
B Hopwood2
S Wright
-
-
-
-
7,656,974
2,289,807
2,419,671
1,634,978
-
-
-
68,082
810,398
269,972
223,933
163,986
-
-
-
-
-
-
-
-
3,605,833
1,090,961
1,220,825
894,050
(103,557)
(30,632)
(1,353,648)
(18,972)
-
-
-
68,082
4,757,982
1,438,186
69,131
885,942
1 Represents forfeitures due to vesting conditions not met.
2 Other Changes includes forfeiture due to expiry on termination of employment.
43
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Corporate Structure
Directors
Operating and Financial Review
Remuneration Report
Other Disclosures
3. KMP Employment Contracts
Following the retirement of Mr Miles George the Board took the opportunity to secure the services of key executives
whom it judged could best define and execute the necessary changes in strategy and lead the next transition of
Infigen from an energy infrastructure focus to a wider energy market focus, and to guide and realise the growth
aspirations of the Board. This has resulted in remuneration arrangements that reflect the difficulty of this challenge
and that adequately compensate individuals for pre-existing external remuneration arrangements that they have
surrendered to accept employment with Infigen. This covers both remuneration quantum and certainty. To some
extent, these arrangements also reflect the scale and scope to which Infigen aspires in the next few years.
The base salaries (excluding superannuation guarantee payments) for KMP as at 30 June 2017 are as follows:
R Rolfe
S Wiggins
O Sela
T Clark
As at 30 June 2017
$800,384
$680,384
$390,384
$350,000
Employment contracts relating to the KMP contain the following conditions:
Duration of
contract
Open-ended
Notice period
for either party
to terminate
the contract
R Rolfe 12 months’ written notice by Infigen or 6 months’ by R Rolfe
S Wiggins 12 months’ written notice by Infigen or 6 months’ by S Wiggins
O Sela 6 months’ written notice by either party
T Clark 3 months’ written notice by either party
Termination
payments
provided under
the contract
Upon termination, any accrued but untaken annual and long-service (but not sickness or personal) leave
entitlements, in accordance with applicable legislation, are payable. In the event of redundancy, a severance
payment is payable under the Infigen Group Redundancy Policy equivalent to 4 weeks base salary for each year
of service (or part thereof), up to a maximum of 36 weeks.
Termination for
Material
Adverse
Change
Both R Rolfe and S Wiggins may terminate their employment immediately where a material adverse change to
the powers, duties, responsibilities, authority and/or status of the executive’s role has occurred without the
executive’s consent, provided the executive has notified Infigen in writing of such change within one month (with
their reasons for such change), and Infigen has failed to remedy this within one month of receiving notice from
the executive of such change.
In the event that Infigen does not remedy the material adverse change, the executive will be entitled to a
severance payment of 12 months’ Fixed Remuneration or the maximum amount permitted by Part 2D.2.2 of the
Corporations Act 2001 (Cth) if this is a lower amount.
The executive will not be a “Bad Leaver” under the Infigen Energy Equity Plan and is not entitled to notice of
termination or severance payments under the Infigen Energy Group Redundancy policy.
Termination benefits are subject to the condition that they will not exceed the amount permitted by Part 2D.2.2
of the Corporations Act 2001 (Cth) without security holder approval.
44
INFIGEN ENERGY ANNUAL REPORT 2017
Diminishing
Deferred
Payment
Both R Rolfe and S Wiggins are entitled to a one off diminishing deferred payment, payable on 18 November
2019.
The maximum value of the diminishing deferred payment as at the executive’s commencement date was:
- R Rolfe
- S Wiggins
$3,000,000
$2,000,000
Payable on the Payment Date regardless of whether the executive remains employed by Infigen or not, except
if the employment is terminated for cause or where the employment is terminated for any reason and Infigen
subsequently discovers that the employment could have been terminated for cause or the executive resigns (but
not including where they resign due to a material adverse change) in all cases before the Payment Date.
No deferred payment will be made at the Payment Date if the executive has received aggregate remuneration
(including awards) equal to the value of the diminishing deferred payment from their employment with Infigen
(subject to the Annual Cap) prior to the Payment Date.
The Annual Cap is the maximum amount by which the Deferred Payment may be reduced for each year (or part
thereof) between the Commencement Date and Payment Date. The Annual Cap is:
- R Rolfe
- S Wiggins
$1,000,000 pa
$800,000 pa (Pro-rated in the final year)
The Board also has discretion to reduce the amount of the deferred payment for material underperformance or
other conduct of the executive which would make it unreasonable for the executive to receive the deferred
payment.
4. Remuneration of Non-Executive Directors
Non-Executive director fees are determined by the Infigen Boards within the aggregate amount approved by security
holders. The approved aggregate fee pool for IEL and IEBL is $1,000,000.
The fee paid to directors varies with individual Board and committee responsibilities. Director fees were not adjusted
during the year and no change is proposed for FY18. Based on market data received from the Board appointed
independent remuneration advisor, Guerdon Associates, Committee fees were increased in FY17.
Non-executive directors receive a cash fee for service inclusive of statutory superannuation. Non-executive
directors do not receive any performance-based remuneration or retirement benefits other than statutory
superannuation contributions.
4.1. Board/Committee Fees
Aggregate annual fees payable to non-executive directors during the year ended 30 June 2017 are set out below.
Board / Committee
Infigen Boards
Infigen Audit, Risk & Compliance Committees
IEL Nomination & Remuneration Committee
Role
Chairman
Non-Executive Director
Chairman
Member
Chairman1
Member
Annual Fee
$250,000
$125,000
$24,000
$12,000
$20,000
$10,000
1 The committee Chairman at present is also the Chairman of the Board and does not receive this fee.
45
ABOUT
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FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Corporate Structure
Directors
Operating and Financial Review
Remuneration Report
Other Disclosures
4.2. Remuneration of Non-Executive Directors for the Year Ended 30 June 2017
The nature and amount of each element of fee payments to each Non-Executive Director of Infigen for the years
ended 30 June 2016 and 30 June 2017 are set out in the table below.
Non-Executive
Directors
Year
IERL
$
M Hutchinson
P Green1
F Harris2
R Rolfe3
S Wiggins4,5
L Gill6
Total remuneration
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
103,581
101,505
-
-
68,388
19,162
23,039
58,453
67,074
12,749
4,391
-
266,473
191,869
Fees
IEL & IEBL
Super-
annuation
Related party
payment
Total
$
126,803
129,188
-
-
95,362
27,565
33,902
84,355
93,727
16,763
4,391
-
354,185
257,871
$
$
19,616
19,307
-
-
-
-
-
-
-
-
450,000
-
-
-
$
250,000
250,000
-
-
179,000
51,166
62,351
156,375
625,107
32,316
9,616
-
450,000
-
1,126,074
489,857
-
-
15,250
4,439
5,410
13,567
14,306
2,804
834
-
55,416
40,117
1 P Green was appointed as a Non-Executive Director of Infigen Energy Limited (IEL), Infigen Energy (Bermuda) Limited (IEBL) and
Infigen Energy RE Limited (IERL) on 18 November 2010. Mr Green is a partner of TCI Advisory Services LLP which is a substantial
shareholder of the Infigen group. Since being appointed, Mr Green has elected to receive no Director fees.
2 F Harris received a special Committee fee of $20,000 for membership of the Capital Raising Due Diligence Committee.
3 Non-Executive Director fees are for the period 1 July 2016 to 17 November 2016.
4 Non-Executive Director fees are for the period 1 July 2016 to 7 May 2017. Ms Wiggins received a special Committee fee of $50,000 for
her participation in additional Board Committees during the period.
5 As previously announced before Ms Wiggins became an Executive Director, Infigen entered into an agreement with Pipionem Partners
(an entity associated with Ms Wiggins) for consultancy services rendered by Pipionem Partners in respect of advising on capital structure
initiatives. These services were provided to Infigen prior to Ms Wiggins commencing full time employment with Infigen.
6 L Gill was appointed as a Non-Executive Director of Infigen Energy Limited (IEL), Infigen Energy (Bermuda) Limited (IEBL) and Infigen
Energy RE Limited (IERL) on 5 June 2017.
46
INFIGEN ENERGY ANNUAL REPORT 2017
5. Guideline for Minimum Security Holdings for Non-Executive Directors
In February 2014 the Board established a guideline where Non-Executive Directors who receive payment of Director
Fees from Infigen are encouraged to acquire IFN stapled securities equivalent to the after-tax value of one year’s
Director base fee. The acquisition of the relevant amount of IFN stapled securities should be completed within three
years from the adoption of the guideline for existing Non-Executive Directors, or three years following appointment
for subsequently elected Non-Executive Directors. The acquisition of IFN stapled securities under this guideline is
subject to Infigen’s Securities Trading Policy and sufficient trading windows being open during the relevant period.
Table 8: IFN Security Holdings of Non-Executive Directors and KMP
IFN security holdings of Non-Executive Directors and KMP, including held by their personally related parties, over
the period 1 July 2016 to 30 June 2017 are set out in the table below.
Balance at
30 June 2016
Acquired during
FY171
Sold during the
year
Balance at
30 June 2017
M Hutchinson
P Green
F Harris
L Gill
R Rolfe AO
S Wiggins
O Sela
T Clark
M George2
C Baveystock3
B Hopwood3
S Wright3
232,500
-
100,000
-
57,500
-
-
-
3,793,501
450,000
49,500
-
84,021
-
21,739
-
73,369
12,173
-
60,869
3,605,833
1,308,352
1,220,825
932,093
-
-
-
-
-
-
-
-
1,975,000
990,961
999,560
932,093
316,521
-
121,739
-
130,869
12,173
-
60,869
N/A
N/A
N/A
N/A
1 Where relevant includes amounts taken up under the non-renounceable rights offer.
2 Ceased to be a KMP on 17 November 2016; movements in IFN stapled securities relate to the period up to that date.
3 Ceased to be a KMP on 8 May 2017; movements in IFN stapled securities relate to the period up to that date.
6. Remuneration Adviser
The NRC engaged the services of Guerdon Associates during FY17 to:
a) provide market data in relation to KMP remuneration against ASX listed industry peers within utilities,
infrastructure and generation;
b) provide market data in relation to Non-Executive Director remuneration against ASX listed industry peers
within utilities, infrastructure and generation; and
c) provide analyses in relation to LTI relative TSR peers and TSR gateways.
Guerdon Associates provided no other services to Infigen during this period.
No advice was provided that falls within the definition of a remuneration recommendation of the Corporations Act
2001, Chapter 1, Part 1.2, Division 1, section 9B (1)(a) and (b).
To ensure the NRC is provided with advice and, as required, remuneration recommendations, free from undue
influence by members of the KMP to whom the recommendations may relate, the engagement of Guerdon
Associates is based on an agreed set of protocols to be followed by Guerdon Associates, members of the NRC and
members of KMP.
The Board was satisfied that the advice received was free from the undue influence of the KMP to whom the advice
related because:
Guerdon Associates was appointed by independent directors;
Guerdon Associates did not provide services to management;
Reports with recommendations were only received by non-executive directors; and
The agreed protocols were followed.
47
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Corporate Structure
Directors
Operating and Financial Review
Remuneration Report
Other Disclosures
OTHER DISCLOSURES
Changes in State of Affairs
In the opinion of the Directors there were no significant changes in the state of affairs of Infigen that occurred during
the financial year other than those included in this Directors’ Report.
Subsequent Events
Since the end of the financial year, in the opinion of the Directors, there have not been any transactions or events
of a material or unusual nature likely to affect significantly the operations or affairs of IEL and IET in future financial
periods.
Environmental Regulations
To the best of the Directors’ knowledge, Infigen has complied with all significant environmental regulations
applicable to its operations.
Indemnification and Insurance of Officers
Infigen has agreed to indemnify all Directors and Officers against losses incurred in their role as Director, Alternate
Director, Secretary, Executive or other employee of Infigen or its subsidiaries, subject to certain exclusions,
including to the extent that such indemnity is prohibited by the Corporations Act 2001 or any other applicable law.
Infigen will meet the full amount of any such liabilities, costs and expenses (including legal fees). Infigen has not
been advised of any claims under any of the above indemnities.
During the financial year, Infigen paid insurance premiums for a Directors’ and Officers’ liability insurance contract
which provides cover for the current and former Directors, Alternate Directors, Secretaries and Executive Officers
of Infigen and its subsidiaries. The Directors have not included details of the nature of the liabilities covered in this
contract or the amount of the premium paid, as disclosure is prohibited under the terms of the contract.
Proceedings on Behalf of Infigen
No person has applied for leave of the Court to bring proceedings on behalf of Infigen, or to intervene in any
proceedings to which Infigen is a party, for the purpose of taking responsibility on behalf of Infigen for all or part of
those proceedings. Infigen was not a party to any such proceedings during the year.
Former Partners of the Audit Firm
No current Directors or Officers of Infigen have been Partners of PricewaterhouseCoopers at a time when that firm
has been the auditor of Infigen.
Non-Audit Services
Infigen may decide to engage the auditor (PricewaterhouseCoopers) for provision of services additional to their
statutory audit duties where the auditor’s expertise and experience with Infigen are important and cost effective.
The auditors received the amount in the table below for the provision of these services during the financial year.
The nature of the non-audit services provided by the auditor include due diligence services and tax advice relating
to the equity capital raising transaction and the financing of the Bodangora wind farm, general tax compliance
services, and international tax consulting.
Taxation compliance and advisory services
Transaction and advisory services
Total
For the year ended 30 June 2017
$73,435
$372,193
$445,628
The Board has considered the Audit Risk and Compliance Committee’s advice and the non-audit services provided
by the auditor and is satisfied that the provision of these services by the auditor is compatible with, and did not
compromise the general standard of auditor independence imposed by the Corporations Act 2001. The non-audit
services provided do not undermine the general principles relating to auditor independence as set out in the APES
110 Code of Ethics for Professional Accountants as they did not involve reviewing or auditing the auditor’s own
work or acting in a management or decision making capacity for Infigen.
48
INFIGEN ENERGY ANNUAL REPORT 2017
Auditor’s Independence Declaration
Infigen’s auditor has provided a written declaration under section 307C of the Corporations Act 2001 that to the
best of its knowledge and belief, there have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
the applicable Australian code of professional conduct in relation to the audit.
The auditor’s independence declaration is attached to this Directors’ Report.
Rounding
Pursuant to ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, amounts in the
Directors’ Report and the Financial Report are rounded to the nearest thousand dollars, unless otherwise indicated.
Approval of Directors’ Report
Pursuant to section 298(2) of the Corporations Act 2001, this report is made in accordance with resolutions of the
Directors of Infigen Energy Limited and the Directors of Infigen Energy RE Limited, the responsible entity of the
Infigen Energy Trust.
On behalf of the Directors of Infigen Energy Limited and Infigen Energy RE Limited:
Michael Hutchinson
Chairman
Ross Rolfe AO
Chief Executive Officer / Managing Director
49
AUDITOR’S INDEPENDENCE
DECLARATION
50
INFIGEN ENERGY ANNUAL REPORT 2017
FINANCIAL REPORT
Consolidated statements of comprehensive income
Consolidated statements of financial position
Consolidated statements of changes in equity
Consolidated statements of cash flows
About this report
Critical accounting estimates and judgements
Basis of consolidation
Foreign currency
Other accounting policies
Performance for the year
1. Segment information
2. Revenue
3. Other income
4. Expenses
5.
6. Earnings per share / unit
Operating assets and liabilities
Income taxes and deferred taxes
Inventory
7. Trade and other receivables
8.
9. Property, plant and equipment
10. Intangible assets
11. Valuation of non-financial assets
12. Trade and other payables
13. Provisions
Capital management
14. Cash and cash equivalents
15. Borrowings
16. Other financial assets and liabilities
17. Fair value hierarchy
18. Financial risk management
Equity
19. Contributed equity
20. Reserves
21. Retained earnings
22. Distributions
Group structure
23. Investment in associates and joint ventures
24. Discontinued operations
25. Business combination
26. Subsidiaries
27. Deed of cross guarantee
28. Parent disclosures
29. Commitments
30. Contingent liabilities
Others
31. Events occurring after balance date
32. Related party transactions
33. Share-based payments
34. Key management personnel disclosures
35. Remuneration of auditors
36. New and amended accounting standards
51
52
53
54
56
58
59
59
60
60
61
61
62
63
63
64
68
70
70
71
71
73
75
76
76
78
78
79
83
83
85
98
98
99
100
100
101
101
102
103
104
106
108
109
110
110
110
110
111
114
115
116
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Infigen Energy
Group
2017
$’000
2016
$’000
196,664
173,229
Infigen Energy Trust
Group
2017
$’000
-
2016
$’000
-
12,610
790
31,905
29,326
(40,240)
(37,401)
(15,710)
(13,997)
(1,429)
(1,667)
-
(20)
-
-
(20)
-
-
-
(665)
(678)
(51,763)
(51,950)
(47,644)
(51,963)
(5,430)
(6,417)
(8)
25
-
-
-
-
-
-
-
-
Note
2
3
4
4
4
47,050
(14,786)
32,264
10,649
(3,616)
7,033
-
(2,547)
5
24
31,220
-
31,220
-
28,628
-
28,628
-
32,264
4,486
31,220
28,628
Revenue from continuing operations
Other income
Operating expenses
Corporate costs
Development costs
Responsible entity expenses
Depreciation and amortisation expense
Interest expense
Other finance costs
Share of net profit / (loss) of associates and joint
ventures accounted for using the equity method
Profit before income tax expense
Income tax expense
Profit from continuing operations
Loss from discontinued operations
Net profit for the year
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign
operations
Items that will not be reclassified to profit or loss
Changes in the fair value of cash flow hedges, net of tax
20(a)
Other comprehensive income for the year, net of tax
Total comprehensive income for the year, net of tax
Net profit for the year is attributable to stapled
security holders as:
Equity holders of the parent
Equity holders of the other stapled entities (non-
controlling interests)
Total comprehensive income for the year is
attributable to stapled security holders as:
Equity holders of the parent
Equity holders of the other stapled entities (non-
controlling interests)
Earnings per security of the parent based on
income from continuing operations attributable to
the equity holders of the parent
Basic (cents per security/unit)
Diluted (cents per security/unit)
Earnings per security of the parent based on loss
from discontinued operations attributable to the
equity holders of the parent
Basic (cents per security/unit)
Diluted (cents per security/unit)
-
6,774
20,248
20,248
52,512
7,617
14,391
18,877
-
-
-
-
-
-
31,220
28,628
32,365
5,565
-
-
(101)
(1,079)
31,220
28,628
32,264
4,486
31,220
28,628
52,613
19,956
-
-
(101)
(1,079)
31,220
28,628
52,512
18,877
31,220
28,628
6
6
6
6
4.0
4.0
1.1
1.0
-
-
(0.3)
(0.3)
3.9
3.9
-
-
3.7
3.7
-
-
The above consolidated statements of comprehensive income should be read in conjunction with the accompanying notes.
52
INFIGEN ENERGY ANNUAL REPORT 2017
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Current assets
Cash and cash equivalents
Trade and other receivables
Inventory
Derivative instruments
Total current assets
Non-current assets
Receivables
Derivative instruments
Investment in associates
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Derivative instruments
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Derivative instruments
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity holders of the parent
Contributed equity
Reserves
Retained earnings
Equity holders of the other stapled
entities (non-controlling interests)
Contributed equity
Retained earnings
Infigen Energy Group
Infigen Energy Trust
Group
Note
2017
$’000
2016
$’000
2017
$’000
2016
$’000
14
7
8
16
7
16
23
9
5
10
12
15
16
13
15
16
13
19
20
21
251,786
147,602
5,515
405
12,416
26,951
1,551
20,369
20,620
355
24
-
-
-
-
-
292,704
188,946
5,539
405
3,475
2
1,209
3,769
132
1,258
799,937
783,819
20,315
51,937
118,279
122,671
746,432
568,446
-
-
-
-
-
-
-
-
-
-
943,217
963,586
746,432
568,446
1,235,921
1,152,532
751,971
568,851
19,786
83,252
28,118
2,146
17,356
73,601
25,681
2,900
5,109
4,858
-
-
-
-
-
-
133,302
119,538
5,109
4,858
570,600
668,889
44,264
8,381
75,119
8,421
623,245
752,429
-
-
-
-
-
-
-
-
756,547
871,967
5,109
4,858
479,374
280,565
746,862
563,993
2,305
2,305
907,397
755,748
(91,555)
(106,451)
-
-
(320,760)
(353,125)
(160,535)
(191,755)
(410,010)
(457,271)
746,862
563,993
19
21
913,658
762,009
(24,274)
(24,173)
889,384
737,836
-
-
-
-
-
-
Total equity
479,374
280,565
746,862
563,993
The above consolidated statements of financial position should be read in conjunction with the accompanying notes.
53
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to Equity Holders of the Parent
Contributed
equity
$’000
Reserves
$’000
Retained
earnings
$’000
Note
Total
equity of
the parent
$’000
Non-
controlling
interests
$’000
Total
equity
$’000
Total equity at 1 July 2015
2,305
(120,481)
(358,690)
(476,866)
737,770
260,904
Net profit for the year
Changes in the fair value of
cash flow hedges, net of tax
20(a)
Exchange differences on
translation of foreign operations
and movement in fair value
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Issue of securities for deferred
remuneration
Recognition of share-based
payments
Total equity at 30 June 2016
19
20(c)
-
-
-
-
-
-
-
5,565
5,565
(1,079)
4,486
7,617
6,774
-
-
7,617
6,774
-
-
7,617
6,774
14,391
5,565
19,956
(1,079)
18,877
-
(361)
-
-
-
1,145
1,145
(361)
-
(361)
2,305
(106,451)
(353,125)
(457,271)
737,836
280,565
Total equity at 1 July 2016
2,305
(106,451)
(353,125)
(457,271)
737,836
280,565
Net profit for the year
Changes in the fair value of
cash flow hedges, net of tax
20(a)
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Issue of securities for deferred
remuneration
Recognition of share-based
payments
Issue of securities to raise
capital, net of transaction costs
19
20(c)
19
-
-
-
-
-
-
-
32,365
32,365
(101)
32,264
20,248
-
20,248
-
20,248
20,248
32,365
52,613
(101)
52,512
-
(5,352)
-
-
-
-
-
7,297
7,297
(5,352)
-
(5,352)
-
144,352
144,352
Total equity at 30 June 2017
2,305
(91,555)
(320,760)
(410,010)
889,384
479,374
The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.
54
INFIGEN ENERGY ANNUAL REPORT 2017
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(CONTINUED)
Total equity at 1 July 2015
Net profit for the year
Total comprehensive income for the year
Infigen Energy Trust Group
Note
Contributed
equity
$’000
754,603
-
-
Retained
earnings
$’000
(220,383)
28,628
28,628
Total
equity
$’000
534,220
28,628
28,628
Transactions with owners in their capacity as owners:
Issue of securities for deferred remuneration
19
1,145
-
1,145
Total equity at 30 June 2016
755,748
(191,755)
563,993
Total equity at 1 July 2016
Net profit for the year
Total comprehensive income for the year
755,748
(191,755)
563,993
-
-
31,220
31,220
31,220
31,220
Transactions with owners in their capacity as owners:
Issue of securities for deferred remuneration
Issue of securities to raise capital, net of transaction costs
Total equity at 30 June 2017
19
19
7,297
144,352
907,397
-
-
(160,535)
7,297
144,352
746,862
The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.
55
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities
Profit for the year
Adjustments for:
Loss for the year from discontinued operations
Depreciation and amortisation of non-current assets
Fair value gain on acquisition of controlled entity
Unrealised foreign exchange loss / (gain)
Amortisation of share based payments expense
Amortisation of borrowing costs capitalised
Share of (profits) / losses from associates
Accretion of decommission and restoration provisions
Income tax expense
(Increase) / decrease in deferred tax assets
Changes in operating assets and liabilities, net of effects on disposal
of controlled entities:
(Increase) / decrease in assets:
Current receivables and other current assets
Increase / (decrease) in liabilities:
Current payables
Non-current payables
Net cash flow from operating activities (continuing operations)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for assets under construction
Payments for intangibles
Payments for investments in associates and joint ventures
Payments for acquisition of controlled entity
Proceeds transferred from discontinued operations from the sale of
the US business
Infigen Energy Group
2017
$’000
2016
$’000
Note
32,264
4,486
24
33
-
51,763
(5,765)
(346)
1,078
1,505
8
121
14,786
-
2,547
51,950
-
5,396
536
1,523
(25)
119
3,616
(2,636)
1,622
(10,425)
1,674
(40)
98,670
(858)
(38,379)
(3,656)
(47)
(5,765)
(376)
192
56,903
(1,987)
-
(1,693)
(781)
-
-
102,030
Net cash flow from investing activities (continuing operations)
(48,705)
97,569
Net cash flow from investing activities (discontinued operations)
-
300,532
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from equity capital raise, net of transaction costs
Net cash flow from financing activities (continuing operations)
15
1,825
(88,499)
144,352
57,678
-
(56,462)
-
(56,462)
Net cash flow from financing activities (discontinued operations)
-
(300,532)
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on the balance of cash held in
foreign currencies
Cash and cash equivalents at the end of the financial year
14
107,643
147,602
(3,459)
251,786
98,010
45,182
4,410
147,602
The above consolidated cash flow statements should be read in conjunction with the accompanying notes.
56
INFIGEN ENERGY ANNUAL REPORT 2017
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
Infigen Energy Trust Group
Note
2017
$’000
2016
$’000
31,220
28,628
(30,919)
(29,321)
Cash flows from operating activities
Profit for the year
Adjustments for:
Unwind of discount on related party loan receivables
Foreign exchange loss unrealised
Changes in operating assets and liabilities, net of effects on disposal
of controlled entities:
(Increase) / decrease in assets:
Current receivables
Increase / (decrease) in liabilities:
Current payables
Net cash flow from operating activities
Cash flows from investing activities
Investment in a controlled entity
Net cash flow from investing activities
Cash flows from financing activities
Proceeds from equity capital raise, net of transaction costs
Proceeds from issue of equity securities for deferred remuneration
Repayment of loan by a related party
Loans to related parties
Net cash flow from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on the balance of cash held in
foreign currencies
Cash and cash equivalents at the end of the financial year
14
843
(24)
(251)
869
(45,000)
(45,000)
144,352
7,297
105,789
(208,297)
49,141
5,010
405
100
5,515
-
-
678
(15)
-
-
-
1,146
-
(1,125)
21
6
399
-
405
The above consolidated cash flow statements should be read in conjunction with the accompanying notes.
57
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
ABOUT THIS REPORT
As permitted by Australian Securities and Investments Commission (‘ASIC’) Corporations (Amendment and Repeal)
Instruments 2015/843, this consolidated general purpose financial report for the year ended 30 June 2017 consists
of consolidated financial statements and accompanying notes of both:
Infigen Energy Group (the Group), being Infigen Energy Limited (IEL) (parent entity), Infigen Energy Trust (IET),
Infigen Energy (Bermuda) Limited (IEBL) and the controlled entities of IEL and IET; and
Infigen Energy Trust Group (the Trust), being Infigen Energy Trust (IET) and its controlled entities.
The Group and the Trust are for-profit entities for the purpose of preparing the financial statements. The Group and
the Trust are incorporated / established and domiciled in Australia, and IEBL is incorporated in Bermuda.
Stapled security
The shares of IEL and IEBL and the units of IET are combined and issued as stapled securities in Infigen Energy
Group. The shares of IEL and IEBL and the units of IET cannot be traded separately and can only be traded as
stapled securities.
Trust information
IET was established in Australia on 16 June 2003. On 26 September 2005, IET became a Registered Scheme and
Infigen Energy RE Limited (IERL) became the Responsible Entity of IET. The relationship of the Responsible Entity
with the Scheme is governed by the terms and conditions specified in the Constitution of IET.
Basis of preparation
This financial report of the Group and the Trust is a general purpose financial report that:
treats Infigen Energy Limited as the ‘parent’ of the stapled entity for the purposes of preparing consolidated
financial statements, with the other stapled entities being presented as non-controlling interests in accordance
with the relief available to stapled entities in ASIC Class Order 13/1050 which enables stapled entities to
present consolidated or combined financial statements;
has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting
Standards and other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board
(IASB);
has been prepared under the historical cost convention, except for the following:
o
o
o
financial assets and liabilities (including derivative instruments) measured at fair value;
certain classes of assets modified by reductions in carrying value from impairment expenses;
certain classes of assets and liabilities measured at amortised cost;
has been prepared on the basis of the legislative and regulatory regime that existed as at 30 June 2017 and at
the date of this report. Changes to the regulatory regime could affect the carrying values of assets and future
development projects;
is presented in Australian Dollars with all values rounded off to the nearest thousand dollars, unless otherwise
stated, in accordance with the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191; and
adopts all new and amended Accounting Standards and Interpretations issued by AASB that are relevant to
the operations of the Group and/or the Trust and effective for the reporting periods beginning on or after
1 July 2016.
58
INFIGEN ENERGY ANNUAL REPORT 2017
Critical accounting estimates and judgements
The Group or the Trust makes estimates and assumptions concerning the future having regard to historical
experience and other relevant considerations. This includes expectations of future events that may have a financial
effect on the Group or the Trust and that are believed to be reasonable under the circumstances. The resulting
accounting estimates will, by definition, seldom equal the related actual results. Estimates and judgements that are
material to the financial report are found in the following notes:
Note 5
Note 7
Note 9
Note 10
Note 11
Note 13
Note 17
Income taxes and deferred taxes
Trade and other receivables
Property, plant and equipment
Intangible assets
Valuation of non-financial assets
Provisions
Fair value hierarchy
Basis of consolidation
Stapling – effect on presentation and equity
For the purpose of UIG 1013 Pre-date of Transition Stapling Arrangements and AASB Interpretation 1002 Post-
date of Transition Stapling Arrangements:
IEL was identified as the parent entity of the Group in relation to the pre-date of transition stapling with IET and
the post-date of transition stapling with IEBL; and
the results and equity of IEL and of IET have been combined in the financial statements of the Group.
However, since IEL had entered into both pre and post-date of transition stapling arrangements, the equity of both
IET and IEBL is treated and disclosed as non-controlling interests in the financial statements of the Group under
the principles established in AASB Interpretation 1002.
Consolidated entities
The consolidated financial statements comprise the financial statements of all controlled entities (subsidiaries) of
the Group and the Trust at year ended 30 June 2017. A list of the subsidiaries at year end is contained in Note 26.
The financial statements of all subsidiaries are prepared for the same reporting period as the parent company and
apply consistent accounting policies to all the years presented, unless otherwise stated.
Intra-group transactions
In preparing the consolidated financial statements, all intercompany transactions, balances, income and expenses
and profits and losses resulting from intra-group transactions have been eliminated. Unrealised gains and/or losses
are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group or the Trust. They are
de-consolidated from the date that control ceases. The purchase method of accounting is used to account for the
acquisition of subsidiaries by the Group or the Trust.
59
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Transactions with entities in which the Group or the Trust has a non-controlling interest
The Group applies a policy of treating transactions with an entity in which IEL has a non-controlling interest as
transactions with a shareholder external to the Group. Purchases from non-controlling interests result in an
acquisition reserve being the difference between any consideration paid and the relevant share acquired of the
carrying value of identifiable net assets of the subsidiary. Non-controlling interests in the results and equity of
subsidiaries are shown separately in the consolidated statements of comprehensive income and consolidated
statements of financial position respectively.
Foreign currency
Transactions and balances
Foreign currency transactions are translated into Australian dollars, using the exchange rates prevailing at the date
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in the income statement. Any such gains or losses are deferred in equity if they relate to qualifying cash
flow hedges.
Foreign exchange gains and losses are presented in the income statement on a net basis within other income or
finance costs.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value
are reported as part of the fair value gain or loss.
Other accounting policies
Significant and other accounting policies that summarise the measurement basis used and are relevant to an
understanding of the financial statements are provided throughout the notes to the financial statements.
A number of new or amended standards became applicable for the current reporting period, however, the Group or
the Trust did not have to change its accounting policies or make retrospective adjustments as a result of adopting
these standards. Details of new standards and amended accounting standards are outlined in Note 36.
60
INFIGEN ENERGY ANNUAL REPORT 2017
PERFORMANCE FOR THE YEAR
1. Segment information
Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief
operating decision-maker. The Board of Directors:
considers the business primarily from a geographic perspective and has identified one reportable segment
being the Australian business;
assesses the performance of the operating segment based on a measure of EBITDA (Segment EBITDA);
where applicable, reviews segment revenues on a proportional basis, reflective of the economic ownership
held by the Group.
The segment information provided to the Board of Directors for the operating segments together with a reconciliation
of Segment EBITDA to operating profit/(loss) before income tax for the year ended 30 June 2017 is below.
Infigen Energy Group
Year ended 30 June 2017
Segment revenue
Operating costs
Segment EBITDA
Corporate costs
Development costs
Share of net profit of associates
Other income
Underlying EBITDA
Gains from development transactions
EBITDA
Depreciation and amortisation
EBIT
Net finance costs
Profit / (loss) before income tax
Tax expense
Net profit / (loss) after tax
Year ended 30 June 2016
Segment revenue
Operating costs
Segment EBITDA
Corporate costs
Development costs
Share of net profit of associates
Other income
EBITDA
Depreciation and amortisation
EBIT
Net finance costs
Profit / (loss) before income tax
Tax expense
Loss from discontinued operations
Net profit / (loss) after tax
61
Total
$’000
196,664
(40,240)
156,424
(15,710)
(1,429)
(8)
13
139,290
10,390
149,680
(51,763)
97,917
(50,867)
47,050
(14,786)
32,264
173,229
(37,401)
135,828
(13,997)
(1,667)
25
7
120,196
(51,950)
68,246
(57,597)
10,649
(3,616)
(2,547)
4,486
Australia
$’000
196,664
(40,240)
156,424
-
(1,429)
(8)
13
155,000
10,390
165,390
(51,763)
113,627
(50,867)
62,760
(14,786)
47,974
173,229
(37,401)
135,828
-
(1,667)
25
7
134,193
(51,950)
82,243
(57,597)
24,646
(3,616)
-
21,030
US
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,547)
(2,547)
Unallocated
$’000
-
-
-
(15,710)
-
-
-
(15,710)
-
(15,710)
-
(15,710)
-
(15,710)
-
(15,710)
-
-
-
(13,997)
-
-
-
(13,997)
-
(13,997)
-
(13,997)
-
-
(13,997)
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
1. Segment information (continued)
A summary of assets and liabilities by operating segment is provided as follows:
Total segment assets
Total assets include:
Investment in associates and joint ventures
Additions to non-current assets (other than financial assets and
deferred tax)
Total segment liabilities
2. Revenue
Infigen Energy Group
Australia
2017
$’000
2016
$’000
1,235,921
1,152,532
1,209
63,901
1,258
3,680
756,547
871,967
Infigen Energy Group
2017
$’000
2016
$’000
Sale of energy and environmental products – uncontracted
122,624
100,916
Sale of energy and environmental products – contracted (lease income
from plant and equipment)
Compensated revenue
73,204
836
196,664
71,574
739
173,229
Recognition and measurement
Revenue is measured at the fair value of the consideration received or receivable. Revenue is recognised if it meets
the criteria outlined below.
Sale of energy and environmental products
Sale of energy and environmental products are revenues from the:
sale of electricity generated from the Group’s assets; and
sale of Large-scale Generation Certificates (LGCs) generated. These are recognised at fair value when they
are generated and in the same period as the costs are incurred.
The Group recognises revenue when the amount of revenue can be reliably measured, when the significant risks
and rewards of ownership of the products have passed to the buyer and the Group has the right to be compensated.
Revenues are recognised on an accruals basis net of the amount of associated GST unless the GST incurred is
not recoverable from the taxation authority.
Sale of energy and environmental products – contracted (lease of plant and equipment)
In accordance with UIG 4 Determining whether an Asset Contains a Lease, revenue that is generated under certain
power purchase agreements (PPAs), where the Group sells substantially all of the related electricity to one
customer, is classified as lease income.
62
INFIGEN ENERGY ANNUAL REPORT 2017
3. Other income
Other income
Interest income
Unwind of discount on related party loan receivables
Foreign exchange gains
Gain on sale of development assets
Fair value gain on acquisition of controlled entity
Other
4. Expenses
Depreciation and amortisation expense
Depreciation of property, plant and equipment
Amortisation of intangible assets
Interest expense
Interest expense on borrowings
Interest expense on derivative instruments
Other finance costs
Bank fees and loan amortisation costs
Foreign exchange losses
Fair value losses on financial instruments
Recognition and unwinding of discount on decommission
provisions
Recognition and measurement
Interest expense
2017
$’000
1,633
-
574
4,625
5,765
13
Infigen Energy Group
Infigen Energy Trust
Group
2017
$’000
2016
$’000
2016
$’000
783
107
5
-
-
-
-
7
30,919
29,321
879
-
-
-
-
-
-
-
12,610
790
31,905
29,326
Infigen Energy Group
2017
$’000
2016
$’000
Infigen Energy Trust
Group
2017
$’000
2016
$’000
46,516
5,247
51,763
46,524
5,426
51,950
23,049
24,595
47,644
25,413
26,550
51,963
2,917
-
2,392
121
5,430
2,251
4,002
45
119
6,417
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Interest expense is recognised in the period it occurs in connection with the borrowing of funds or derivative
instruments.
63
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
5.
Income taxes and deferred taxes
a) Reconciliation of accounting profit to tax expense and to income tax paid / payable
1
Profit before income tax
Total profit before income tax
Statutory company tax rate
Prima facie income tax expense
Increase / (decrease) in tax expense due to:
Non-deductible expenses of IET, IEBL and intercompany interest
Unrealised foreign exchange movement
Sundry items
Income tax expense
Accounting effective company tax rate
2
Tax paid / payable
b)
Identification of material temporary and non-temporary differences
1
Permanent differences
Non-deductible expenses of IET, IEBL and intercompany interest
Temporary differences
Accelerated depreciation (current year tax benefit)
LGC revenue recognised but not sold (current year tax benefit)
c)
Income tax expense
Current tax
Deferred tax
Income tax expense
Aggregate income tax benefit is attributable to:
Expense from continuing operations
Expense from discontinued operations (Note 24)
Aggregate income tax expense
Deferred income tax expense included in income tax benefit comprises:
Increase / (decrease) in deferred tax assets
Increase / (decrease) in deferred tax liabilities
Infigen Energy Group
2017
$’000
47,050
47,050
30%
14,115
638
8
25
14,786
31%
-
2016
$’000
10,649
10,649
30%
3,195
127
91
203
3,616
34%
-
Infigen Energy Group
2017
$’000
638
(4,785)
(6,331)
2016
$’000
127
(782)
(7,925)
Infigen Energy Group
2017
$’000
10,648
4,138
14,786
14,786
-
14,786
(5,249)
9,387
4,138
2016
$’000
3,504
112
3,616
3,616
3,349
6,965
4,738
(4,626)
112
1 Includes disclosures to comply with Part A of the Voluntary Tax Transparency Code.
2 The tax consolidated group utilises previous period tax losses to offset current period tax payable amounts from current period
profits. The Group has satisfied the tax rules to use these previous period losses.
64
INFIGEN ENERGY ANNUAL REPORT 2017
d) Amounts recognised directly in equity
Deferred tax asset
Deferred tax liabilities
Net deferred tax
e) Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at 30%
f) Current tax liabilities
Income tax payable attributable to discontinued operations
Infigen Energy Group
2017
$’000
-
(11,274)
(11,274)
2016
$’000
6,252
-
6,252
Infigen Energy Group
2017
$’000
237,703
71,311
2016
$’000
237,703
71,311
Infigen Energy Group
2017
$’000
1,138
2016
$’000
6,925
g) Deferred tax
Year ended 30 June 2017
Gross deferred tax assets
Unused revenue tax losses
Effect of hedge movements
Unrealised foreign exchange
losses
Gross deferred tax liabilities
Depreciation
Other
Net deferred tax assets
Infigen Energy Group
Opening
balance
$’000
Charged to
income
$’000
Charged to
equity
$’000
Acquisitions/
disposals
$’000
Closing
balance
$’000
83,810
30,025
481
(11,272)
2,242
3,009
-
(11,274)
-
114,316
(6,021)
(11,274)
(59,913)
(2,466)
(62,379)
51,937
(4,786)
(4,601)
(9,387)
-
-
-
(15,408)
(11,274)
-
-
-
-
-
(4,940)
(4,940)
(4,940)
72,538
20,993
3,490
97,021
(64,699)
(12,007)
(76,706)
20,315
65
ABOUT
DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Year ended 30 June 2016
Gross deferred tax assets
Unused revenue tax losses
Effect of hedge movements
Unrealised foreign exchange
losses
Gross deferred tax liabilities
Depreciation
Unrealised foreign exchange gains
Other
Net deferred tax assets
Infigen Energy Group
Opening
balance
$’000
Charged to
Income
$’000
Charged to
Equity
$’000
Acquisitions/
disposals
$’000
87,314
25,005
3,987
116,306
(59,131)
(4,066)
(3,808)
(67,005)
49,301
(3,504)
(1,232)
(3,506)
(8,242)
(782)
4,066
1,342
4,626
-
6,252
-
6,252
-
-
-
-
(3,616)
6,252
Closing
balance
$’000
83,810
30,025
481
114,316
(59,913)
-
(2,466)
(62,379)
51,937
2016
$’000
-
51,937
51,937
-
-
-
-
-
-
-
-
-
2017
$’000
-
20,315
20,315
Deferred tax assets to be recovered within 12 months
Deferred tax assets to be recovered after more than 12 months
Net deferred tax assets
Recognition and measurement
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations.
Under current legislation, IET is not subject to income tax as unit holders are presently entitled to the income of
IET.
Tax consolidation
IEL and its wholly-owned Australian resident entities have formed an Australian tax consolidated group with effect
from 1 July 2003 and are therefore taxed as a single entity from that date. The head entity within the tax consolidated
group is IEL. Entities within the tax consolidated group have entered into a tax funding arrangement and a tax
sharing agreement with IEL. The members of the tax consolidated group are identified in Note 26. IEL and its
controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts.
Current tax
Current tax expense or credit is calculated by reference to the amount of income taxes payable or recoverable in
respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been
enacted or substantively enacted by the balance date. Current tax for current and prior periods is recognised as a
liability (or asset) to the extent that it is unpaid (or refundable).
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INFIGEN ENERGY ANNUAL REPORT 2017
Deferred Tax
Deferred tax expense is accounted for using the comprehensive balance sheet liability method in respect of
temporary differences arising from differences between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax base of those items.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for
deductible temporary differences, carried forward unused tax assets and unused tax losses, to the extent it is
probable that future taxable amounts will be available to utilise them.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the
asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively
enacted by the balance date.
Deferred tax is recognised for taxable temporary differences at balance date between accounting carrying amounts
and tax bases of assets and liabilities except for the following:
Where they arise from the initial recognition of assets and liabilities (other than as a result of a business
combination) and at the time of the transaction, affects neither taxable profit or loss nor accounting profit;
Where they relate to investments in subsidiaries, associates and joint ventures:
- Deferred tax liabilities are not recognised if the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
- Deferred tax assets are not recognised if it is not probable that the temporary differences will not reverse
in the foreseeable future and there will be insufficient taxable profits against which to realise the benefit.
A deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.
Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to
items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity.
Offsetting deferred tax balances
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority
and the Group, or the individual entity, intends to settle its current tax assets and liabilities on a net basis.
Key estimate: deferred tax assets
The Group currently has significant tax losses in Australia. Tax losses have been recognised as a deferred tax asset
on the basis that it is expected the business will generate sufficient taxable earnings to fully utilise those losses.
The Group is required to make significant judgements and assessments in relation to the future recoverability of tax
losses that have been recognised as deferred tax assets. The assessment of future taxable income to support
utilisation of tax losses is based on the long-term forecasts used for assessing asset impairment (refer to Note 11 for
key assumptions) and consideration of many future events and outcomes that are uncertain.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of
deferred tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to utilise them. Only Australian tax losses have been brought to account as
deferred tax assets. No deferred tax asset has currently been recorded for the Australian tax losses attributable to
Infigen Energy US Partnership for the financing losses incurred prior to the US sale.
67
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DIRECTORS’ REPORT
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GOVERNANCE
ADDITIONAL INFORMATION
6. Earnings per share / unit
Infigen Energy Group
2017
Cents per
security
2016
Cents per
security
Infigen Energy Trust
Group
2017
Cents per
unit
2016
Cents per
unit
a) Basic earnings per share:
Parent entity share
From continuing operations
From discontinued operations
Total basic earnings per share attributable
to the parent entity shareholders
Stapled security
From continuing operations
From discontinued operations
Total basic earnings per security
attributable to the stapled security holders
4.0
-
4.0
4.0
-
4.0
1.1
(0.3)
0.8
0.9
(0.3)
0.6
Infigen Energy Group
Infigen Energy Group
2017
Cents per
security
2016
Cents per
security
-
-
-
3.9
-
3.9
-
-
-
3.7
-
3.7
Infigen Energy Trust
Group
2017
Cents per
unit
2016
Cents per
unit
b) Diluted earnings per share:
Parent entity share
From continuing operations
From discontinued operations
Total diluted earnings per share
attributable to the parent entity
shareholders
Stapled security
From continuing operations
From discontinued operations
Total diluted earnings per security
attributable to the stapled security holders
4.0
-
4.0
4.0
-
4.0
1.0
(0.3)
0.7
0.9
(0.3)
0.6
-
-
-
3.9
-
3.9
-
-
-
3.7
-
3.7
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INFIGEN ENERGY ANNUAL REPORT 2017
6. Earnings per share / unit (continued)
c) Reconciliation of earnings used in calculating earnings per share / unit
The earnings and weighted average number of shares / units used in the calculation of basic and diluted earnings
per share / unit are as follows:
Earnings attributable to the parent entity
shareholders
From continuing operations
From discontinued operations
Total earnings attributable to the parent
entity shareholders
Earnings attributable to the stapled security
holders
From continuing operations
From discontinued operations
Total earnings attributable to the stapled
security holders
Infigen Energy Group
2017
$’000
2016
$’000
Infigen Energy Trust
Group
2017
$’000
2016
$’000
32,365
-
8,112
(2,547)
32,365
5,565
-
-
-
-
-
-
32,264
-
7,033
(2,547)
31,220
28,628
-
-
32,264
4,486
31,220
28,628
d) Weighted average number of securities used as the denominator
Weighted average number of shares / units
for the purposes of basic earnings per share /
unit
Weighted average number of shares / units
for the purposes of diluted earnings per share
/ unit
Calculation of earnings per share
Infigen Energy Group
2017
No.’000
2016
No.’000
Infigen Energy Trust
Group
2017
No.’000
2016
No.’000
804,644
771,643
804,644
771,643
811,375
776,225
811,375
776,225
Basic earnings per share / unit is calculated by dividing the profit attributable to equity holders of the Group or the
Trust by the weighted average number of ordinary shares / units outstanding during the financial year, adjusted for
bonus elements in ordinary shares / units issued during the year.
Diluted earnings per share / unit adjusts the figures used in the determination of basic earnings per share / unit to
take into account the weighted average number of performance rights / units outstanding during the year.
69
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DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
OPERATING ASSETS AND LIABILITIES
7.
Trade and other receivables
Infigen Energy Group
2017
$’000
5,813
4,154
2,449
12,416
1,019
2,456
3,475
2016
$’000
15,740
4,377
252
20,369
1,019
2,750
3,769
Infigen Energy Trust
Group
2017
$’000
2016
$’000
-
-
24
24
-
-
-
-
746,432
568,446
-
-
746,432
568,446
Current
Trade receivables
Prepayments
Other receivables
Non-current
Amounts due from related parties (Note 32)
Prepayments
a)
Impairment of trade and other receivables
Group
There were no receivables in the Group that were past due or impaired as at 30 June 2017 and 30 June 2016.
Trust
For the year ended 30 June 2017, the Trust recognised $30.9 million (FY16: $29.3 million) for the unwinding of the
discount on the loan receivable from related parties. As part of the long-term funding arrangements within the
stapled structure, IET has loans due from other Group entities totalling $891.5 million (2016: $745.8 million). While
IET is expected to receive the full $891.5 million contractual face value of the loans, the term of the repayment of
these loans has resulted in them being discounted to the net present value. The forecast undiscounted cash flows
of the operating assets of the Group support the carrying value of the loans as they exceed $891.5 million.
b) Other receivables
These amounts generally arise from transactions outside the usual operating activities of the Group or the Trust.
c) Foreign exchange and interest rate risk
Information about the Group’s or the Trust’s exposure to foreign currency risk and interest rate risk in relation to
trade and other receivables is provided in Note 18.
d) Fair value and credit risk
The maximum exposure to credit risk at the balance date is the carrying amount of each class of receivables
mentioned above. Refer to Note 18 for more information on the risk management policy of the Group and the Trust
and the credit quality of the Group’s trade receivables.
70
INFIGEN ENERGY ANNUAL REPORT 2017
8.
Inventory
Environmental certificates
Recognition and measurement
Infigen Energy Group
2017
$’000
26,951
2016
$’000
20,620
Environmental certificates or Large-scale Generation Certificates (LGCs)
LGCs held in inventory are valued at the lower of cost and net realisable value. Upon sale, the difference between
the sale price and the book value of inventory is recorded as a component of revenue.
9. Property, plant and equipment
Infigen Energy Group
Assets under
construction
$’000
Plant &
Equipment
$’000
Total
$’000
-
-
-
-
-
-
-
-
-
-
-
-
42,953
8,236
8,236
-
-
2,489
61,914
61,914
-
61,914
1,159,258
(329,091)
830,167
1,159,258
(329,091)
830,167
830,167
1,987
(46,524)
(1,811)
783,819
830,167
1,987
(46,524)
(1,811)
783,819
1,159,434
(375,615)
783,819
1,159,434
(375,615)
783,819
783,819
858
-
-
(38)
(46,516)
(100)
738,023
783,819
43,811
8,236
8,236
(38)
(46,516)
2,389
799,937
1,160,154
(422,131)
738,023
1,222,068
(422,131)
799,937
At 30 June 2015
Cost
Accumulated depreciation
Net book value
Year ended 30 June 2016
Opening net book value
Additions
Depreciation expense
Transfers to intangible assets
Closing net book value
At 30 June 2016
Cost
Accumulated depreciation
Net book value
Year ended 30 June 2017
Opening net book value
Additions
Acquisition of assets under construction
Revaluation of assets under construction
Disposals
Depreciation expense
Transfers (to)/from intangible assets
Closing net book value
At 30 June 2017
Cost
Accumulated depreciation
Net book value
71
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GOVERNANCE
ADDITIONAL INFORMATION
9. Property, plant and equipment (continued)
Recognition and measurement
Property, plant and equipment
The value of property, plant and equipment such as wind turbines and associated plant is measured as the cost of
the asset less accumulated depreciation and impairment. The cost of the asset includes expenditure that is directly
attributable to the acquisition of the item and may also include transfers from equity of any gains/losses on qualifying
cash flow hedges of foreign currency purchases of property, plant and equipment. In the event that settlement of
all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the
future to their present value as at the date of acquisition.
Subsequent costs, including replacement parts are included in the asset’s carrying amount or recognised as a
separate asset as appropriate only when it is probable that future economic benefits associated with the item will
flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is
recognised as a separate asset.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Assets under construction
Costs arising directly from the construction of plant and equipment are recognised as an asset. The costs are
transferred to plant and equipment from the time the asset is held ready for use on a commercial basis. Assets
under construction are not depreciated.
Decommission
Future costs relating to the decommissioning of wind turbines and associated plant are provided for if the amounts
are expected to result in an outflow of economic benefits. The cost of decommissioning wind turbines and
associated plant is reviewed at the end of each annual reporting period.
Derecognition
An item of property, plant and equipment is derecognised when it is replaced, sold or otherwise disposed of. Gains
and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from
the disposal with the carrying amount of property, plant and equipment and are included in the income statement.
All other repairs and maintenance are charged to the income statement during the reporting period in which they
are incurred.
Depreciation
Depreciation on property, plant and equipment is calculated on a straight line basis over their estimated useful lives
outlined below to allocate their cost or revalued amounts, net of their residual values, over their estimated useful
lives. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual
reporting period.
Key estimate: useful lives of assets
Wind turbines and associated plant
Solar panels and associated plant
Fixtures and fittings
Computer equipment
25 years1
30 years
10-20 years
3-5 years
1 It is possible that these assets will have total useful economic lives in excess of 25 years in which case additional revenues
will be received without a matching depreciation charge.
72
INFIGEN ENERGY ANNUAL REPORT 2017
10.
Intangible assets
Infigen Energy Group
Goodwill
$’000
Development
assets
$’000
Project-
related
agreements
and licences
$’000
Total
$’000
112,500
(31,065)
81,435
159,786
(32,963)
126,823
81,435
-
2,831
1,811
(5,426)
126,823
1,693
-
1,811
(5,426)
-
(2,230)
80,651
122,671
-
(5,247)
117,434
(36,783)
80,651
80,651
21
100
-
159,454
(36,783)
122,671
122,671
3,656
(2,389)
(5,247)
(412)
75,525
118,279
117,554
(42,029)
75,525
160,308
(42,029)
118,279
32,150
(1,898)
30,252
30,252
1,693
(2,831)
-
-
(2,230)
26,884
26,884
-
26,884
26,884
3,635
(2,489)
(412)
27,618
27,618
-
27,618
At 30 June 2015
Cost
Accumulated amortisation and impairment
Net book value
Year ended 30 June 2016
Opening net book value
Additions
Transfers
Transfers from property, plant and equipment
Amortisation expense
Disposal of development assets from share
sale
Closing net book value
At 30 June 2016
Cost
Accumulated amortisation and impairment
Net book value
Year ended 30 June 2017
Opening net book value
Additions
Transfers (to)/from property, plant and
equipment
Amortisation expense
Disposal of development assets from share
sale
Closing net book value
At 30 June 2017
Cost
Accumulated amortisation and impairment
Net book value
Recognition and measurement
Goodwill
15,136
-
15,136
15,136
-
-
-
-
-
15,136
15,136
-
15,136
15,136
-
-
-
-
15,136
15,136
-
15,136
Goodwill represents the excess of the cost of acquisition over the fair value of the Group’s share of the net
identifiable assets, liabilities and contingent liabilities acquired at the date of acquisition. Goodwill acquired in
business combinations is not amortised but tested for impairment annually and whenever there is an indication that
the goodwill may be impaired. Any impairment is recognised immediately in the income statement and is not
subsequently reversed. Goodwill on acquisitions of subsidiaries is included in intangible assets.
Goodwill is allocated to the cash-generating unit (CGU), being the Australian business, for the purpose of
impairment testing.
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GOVERNANCE
ADDITIONAL INFORMATION
10.
Intangible assets (continued)
Project-related agreements and licences
Project-related agreements and licences include the following items:
licences, permits and approvals to develop and operate an energy project, including governmental
authorisations; land rights and environmental consents;
connection rights; and
power purchase agreements.
Project-related agreements and licences are carried at cost less accumulated amortisation and impairment
expenses. Amortisation is calculated using the straight-line method to allocate the cost of licences over their
estimated useful lives, which are based on the useful life of the related wind farm.
Development assets
Development assets represent development costs incurred prior to commencement of construction of wind and
solar assets. Development assets are not amortised, but are transferred to plant and equipment and depreciated
from the time the asset is held ready for use on a commercial basis.
Key estimate: recoverable amounts of the development assets
The Group holds energy development assets in Australia. The recoverable amount of the development assets
is dependent upon internal valuations, which reference recent transactions the Group has completed and
considers the current or expected future market demand for these assets.
Key estimate: useful economic lives of intangible assets
The Group amortises project-related agreements and licences over the lesser of the agreement term or 25 years
which is the estimated minimum useful economic life of these assets. It is possible that some of these assets
will have total useful economic lives in excess of 25 years in which case additional revenues will be received
without a matching amortisation charge.
11. Valuation of non-financial assets
Testing for impairment of intangible assets
At each balance date, the Group reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that the carrying values are impaired.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of
the impairment (if any). Where the asset does not generate cash flows that are independent from other assets, the
Group has estimated the recoverable amount of the CGU to which the asset belongs.
The Group determines the recoverable amount of the CGU based on value-in-use calculations. In assessing value
in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the estimates
of future cash flows have not been adjusted.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount
of the asset (or CGU) is reduced to its recoverable amount. Such impairment loss is recognised in the income
statement immediately.
74
INFIGEN ENERGY ANNUAL REPORT 2017
11.
Valuation of non-financial assets (continued)
Impairment tests for cash-generating units containing goodwill
For the purposes of impairment testing, goodwill is allocated to the cash-generating unit (CGU), being the Australian
business, which represents the lowest level within the Group at which goodwill is monitored for internal management
purposes.
Australia
Total goodwill
Infigen Energy Group
2017
$’000
15,136
15,136
2016
$’000
15,136
15,136
Key assumptions for value-in-use calculations
The Group determines the recoverable amount of the CGU based on value-in-use calculations. The calculations
use cash flow projections covering the estimated useful economic life of the wind farms, which is greater than
or equal to 25 years.
The Group makes assumptions around expected wind resource, availability, prices, operating expenses and
discount rates in calculating the value-in-use of its CGU. Variations in the estimates and assumptions may have
a significant risk of causing a material variation to the calculated recoverable amount of assets or the calculated
liabilities.
The Group uses production estimates from previous operating life, independent technical consultants’
assessments and other relevant factors when available.
The Group utilises market observable forward prices where they are available and third party assessments of
merchant electricity and LGC forward pricing for the longer term. The Group uses these inputs combined with
its in-house expertise to form the base of the calculated assumptions.
In performing value-in-use calculations, the Group has applied post-tax discount rates to discount the forecast
future attributable post-tax cash flows. The equivalent pre-tax discount rates are disclosed below.
Pre-tax discount rates
2017
11.6%
2016
10.6%
For wind farms with power purchase agreements, future revenue growth forecasts are based on the contractual
provisions.
Sensitivity to changes in assumptions
The recoverable amount of the CGU is greater than the carrying value as at 30 June 2017. Variations to the key
assumptions used to determine the recoverable amount would result in a change in the assessed recoverable
amount. If the variation in assumptions had a negative impact on recoverable amount it could indicate a requirement
for an impairment expense.
The recoverable amount of the CGU was tested for sensitivity using reasonably possible changes in key
assumptions. These changes include increases and decreases in the discount rates of up to 1% with all other
assumptions remaining constant.
Separate sensitivity tests are also conducted to measure the impact of varying future cash flows for increases and
decreases of up to 10% in market prices, 5% in production, and 10% in operating costs, respectively.
None of these tests resulted in the carrying amount of the Australian CGU exceeding its recoverable amount.
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ADDITIONAL INFORMATION
12. Trade and other payables
Current
Trade payables and accruals
Goods and services and other taxes payable
Amount due to related parties
Other
Recognition and measurement
Trade payables are:
Infigen Energy Group
2017
$’000
17,797
334
-
1,655
19,786
2016
$’000
5,780
9,977
-
1,599
17,356
Infigen Energy Trust
Group
2017
$’000
2016
$’000
8
-
5,101
-
5,109
-
-
4,858
-
4,858
recognised when the Group or the Trust becomes obliged to make future payments resulting from the purchase
of goods and services. The amounts are unsecured and are usually paid within 30 days of recognition; and
stated exclusive of the amount of GST payable unless the GST incurred is not recoverable from the taxation
authority which in this case would be recognised as part of the cost of acquisition of the asset. The net amount
of GST payable to the taxation authority is included in goods and services and other taxes payable.
Other payables include annual leave expected to be settled within 12 months of the balance date in which
employees render the related service.
13. Provisions
Current
Employee benefits
Non-current
Employee benefits
Decommission and restoration
Infigen Energy Group
2017
$’000
2,146
2,146
504
7,877
8,381
10,527
2016
$’000
2,900
2,900
665
7,756
8,421
11,321
76
INFIGEN ENERGY ANNUAL REPORT 2017
13. Provisions (continued)
A reconciliation of the carrying amounts of provisions is set out below:
Infigen Energy Group
Decommission
and restoration
$’000
Employee
benefits
$’000
7,637
-
119
7,756
7,756
-
-
-
121
7,877
2,180
1,385
-
3,565
3,565
1,385
(2,139)
(161)
-
2,650
Total
$’000
9,817
1,385
119
11,321
11,321
1,385
(2,139)
(161)
121
10,527
Year ended 30 June 2016
Carrying amount at start of the year
Additional provisions recognised during the year
Recognition and unwinding of discount
Carrying amount at the end of the year
Year ended 30 June 2017
Carrying amount at start of the year
Additional provisions recognised during the year
Amounts used during the year
Unused amounts reversed
Recognition and unwinding of discount
Carrying amount at the end of the year
Recognition and measurement
Provisions are recognised when:
the Group or the Trust has a present legal or constructive obligation as a result of past events; and
it is probable an outflow of resources will be required to settle the obligation; and
the amount of the provision can be measured reliably.
Provisions are not recognised for future operating losses.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third
party, the receivable is recognised as an asset if it is probable that recovery will be received and the amount of the
receivable can be measured reliably.
Key estimate: discounting
Provisions are measured at the present value of the expenditure required to settle the obligation at balance
date, taking into account the risks and uncertainties surrounding the obligation. The discount rate has been
determined having regard to both the specific risk to the liability and current market assessment of the time
value of money.
Decommission and restoration
The decommission and restoration provision represents estimates of future expenditure relating to dismantling and
removing of wind turbines and associated plant, and restoration of wind farm sites.
Employee benefits
Provision for employee benefits represents provision for short term incentives, long service leave and termination
benefits. For long service leave it covers all unconditional entitlements where employees have completed the
required period of service and also those where employees are entitled to pro-rata payments in certain
circumstances.
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ADDITIONAL INFORMATION
13. Provisions (continued)
Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured as the present
value of expected future payments to be made in respect of services provided by employees up to the balance date.
Consideration is given to expected future wage and salary levels, experience of employee departures and periods
of service. Expected future payments are discounted using current market assessments of the time value of money
at the balance date.
The obligations are presented as current liabilities in the consolidated statements of financial position if the Group
does not have an unconditional right to defer settlement for at least 12 months after the balance date, regardless
of when the actual settlement is expected to occur.
Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an
employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits
when it is demonstrably committed to either terminating the employment of current employees according to a
detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made
to encourage voluntary redundancy.
Short term incentive plans
The Group recognises a liability and an expense for short term incentives and takes into consideration the
performance of the Group for the corresponding period. The Group recognises a provision where contractually
obliged or where there is a past practice that has created a constructive obligation.
CAPITAL MANAGEMENT
14. Cash and cash equivalents
Cash and cash equivalents at the end of the financial year as shown in the cash flow statement is reconciled to the
related items in the consolidated statements of financial position as follows:
Infigen Energy Group
2017
$’000
2016
$’000
251,786
147,602
Infigen Energy Trust
group
2017
$’000
5,515
2016
$’000
405
Cash and cash equivalents
Recognition and measurement
Cash and cash equivalents comprise cash on hand and term deposits held at call with financial institutions.
Restricted cash balances
As at 30 June 2017, $40.5 million (2016: $10.6 million) of cash was held by the Group in accordance with the
minimum cash requirements for Australian Financial Services Licence (AFSL) compliance, the Woodlawn project
finance facility debt service reserve account and in the Bodangora project finance facility construction account.
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INFIGEN ENERGY ANNUAL REPORT 2017
15. Borrowings
Current
Secured
Global Facility
Project Finance Debt – Woodlawn
Non-current
Secured
Global Facility
Project Finance Debt – Woodlawn
Project Finance Debt – Bodangora
Capitalised loan costs
Total borrowings
a) Reconciliation of borrowings
Opening balance
Debt repayments – Global Facility
Debt repayments – Woodlawn
Debt drawdown – Bodangora
Net loan costs expensed
Net foreign currency exchange differences
Total borrowings
b) Borrowings by currency
Infigen Energy Group
2017
$’000
78,500
4,752
83,252
543,028
29,253
1,825
(3,506)
570,600
653,852
2016
$’000
69,506
4,095
73,601
638,148
35,803
-
(5,062)
668,889
742,490
Infigen Energy Group
2017
$’000
742,490
(82,606)
(5,893)
1,825
1,556
(3,520)
653,852
2016
$’000
786,883
(50,958)
(5,504)
-
1,438
10,631
742,490
The total value of funds that have been drawn down by currency, converted to Australian dollars (AUD) at the year-
end exchange rate, is presented in the following table:
As at 30 June 2017
Australian dollars (AUD) – Global Facility
Australian dollars (AUD) – Woodlawn
Australian dollars (AUD) – Bodangora
US dollars (USD) – Global Facility
Gross borrowings
Less capitalised loan costs
Total borrowings
As at 30 June 2016
Australian dollars (AUD) – Global Facility
Australian dollars (AUD) – Woodlawn
Euro (EUR) – Global Facility
US dollars (USD) – Global Facility
Gross borrowings
Less capitalised loan costs
Total borrowings
79
Infigen Energy Group
Total
Borrowings
(Local Curr)
$‘000
Total
Borrowings
(AUD)
$’000
529,709
34,005
1,825
70,600
529,709
34,005
1,825
91,819
657,358
(3,506)
653,852
Infigen Energy Group
Total
Borrowings
(Local Curr)
$‘000
Total
Borrowings
(AUD)
’000
531,027
39,898
14,009
116,175
531,027
39,898
20,834
155,793
747,552
(5,062)
742,490
ABOUT
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ADDITIONAL INFORMATION
15. Borrowings (continued)
Recognition and measurement
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in the income statement over the period of the borrowings using the effective interest method.
Borrowings are removed from the consolidated statements of financial position when the obligation specified in the
contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that
has been extinguished or transferred to another party and the consideration paid, including any non-cash assets
transferred or liabilities held, is recognised in other income or other expenses.
Borrowings are classified as current liabilities unless the Group or the Trust has an unconditional right to defer
settlement of the liability for at least 12 months after the balance date.
Borrowing costs
Borrowing costs incurred for the construction of any qualifying assets are capitalised during the period of time that
is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.
Global Facility
The Group’s corporate debt facility (the Global Facility)
is a multi-currency facility that matures on
31 December 2022. The Global Facility is a syndicated facility among a group of Australian and international
lenders.
The Global Facility delineates between those Infigen group entities that comprise the Global Facility borrower group
(Borrower Group) and those Infigen group entities that are not within the Borrower Group. The latter are generally
referred to as “Excluded Companies”.
In broad terms, the Borrower Group comprises IEL and substantially all of its subsidiaries, with the exception that
none of the following fall within the Borrower Group:
IET;
IEBL; and
Infigen Energy Holdings Pty Limited and its subsidiaries, which primarily include Woodlawn Wind Pty Limited,
Bodangora Wind Farm Pty Limited, and the Group’s development asset project entities.
Excluded Companies
Excluded Companies:
are not entitled to borrow under the Global Facility;
must deal with companies within the Global Facility Borrower Group on arm’s length terms; and for full market
value; and
are not subject to, or the subject of, the representations, covenants or events of default applicable to the
Borrower Group.
Amounts outstanding under the Global Facility
Amounts outstanding under the Global Facility are in United States dollars and Australian dollars. The base
currency of the Global Facility is the Euro.
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INFIGEN ENERGY ANNUAL REPORT 2017
15. Borrowings (continued)
Principal repayments under the Global Facility
Subsequent to 30 June 2010 until the Global Facility is repaid in full (maturing 31 December 2022), all surplus cash
flows of the Borrower Group, after taking account of working capital requirements, are required to be used to make
repayments under the Global Facility on a semi-annual basis (Cash Sweep). The net disposal proceeds of any
disposals by Borrower Group entities must also be applied to debt repayments under the Global Facility.
During the year ended 30 June 2017 repayments of $82,606,000 were made. This represented surplus operating
cash flow of the Borrower Group.
Interest payments
The Group pays interest each six months based on the BBSY (Australian dollar) or LIBOR (United States dollar)
rate, plus a margin. It is the Group’s policy and a requirement of the Global Facility to use financial instruments to
fix the interest rate for a portion of the borrowings (refer Note 18).
Financial covenant
During the period of the Cash Sweep a leverage ratio covenant applies. The leverage ratio is determined by taking
the quotient of Net Debt and EBITDA of entities that are within the Borrower Group. EBITDA represents the
consolidated earnings of the Borrower Group entities before finance charges, unrealised gains or losses on financial
instruments and material items of an unusual or non-recurring nature.
This leverage ratio covenant is based on the results of each twelve month period ending 30 June and 31 December
and is:
not more than 6.0 times, July 2016 to June 2019; and
not more than 3.0 times, July 2019 to December 2022.
Review events
A review event would occur if the shares of IEL were removed from the official list of the Australian Securities
Exchange or were unstapled from units of IET and shares of IEBL. In this circumstance an assessment of the effect
of the event on the Global Facility would be required and, if necessary, agreement of an action plan.
Security
The Global Facility does not provide asset level security to the lenders. Each borrower is a guarantor of the facilities.
In addition, lenders have first ranking security over the issued share capital of, or other ownership interest in:
the borrowers (other than Infigen Energy Limited); and
the direct subsidiaries of the borrowers, which are holding entities of each operating wind farm in the Group’s
portfolio (other than Woodlawn Wind Farm and the Bodangora Wind Farm currently under construction).
Global Facility lenders have no security over Excluded Companies.
81
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ADDITIONAL INFORMATION
15. Borrowings (continued)
Project Finance Facility – WWCS Finance Pty Ltd (Woodlawn Wind Farm)
WWCS Finance Pty Ltd (WDL Borrower), the immediate parent company of Woodlawn Wind Pty Ltd (which in turn
owns Woodlawn Wind Farm), is the borrower under a $51.7 million syndicated term facility. The lenders are
Westpac Banking Corporation (Tranche A) and Clean Energy Finance Corporation (Tranche B) (WDL Lenders).
The Tranche A and Tranche B loans are of equal amounts, with maturity in September 2018 and September 2023
respectively.
Principal repayments
The WDL Borrower must make fixed repayments each quarter in accordance with an agreed repayment schedule
for both Tranche A and B loans. During the year ended 30 June 2017 net repayments of $5,893,000
(2016: $5,504,311) were made.
Interest payments
Interest is payable quarterly in arrears.
Tranche A interest is calculated on the BBSY (Australian dollar) rate plus a margin and such interest has been
hedged with interest rate caps of 3.9790% (September 2014 to September 2018) and 5.7850% (September
2018 to March 2023).
Tranche B interest is fixed for 10 years at 3.7575% plus a margin.
Security
The WDL Lenders have security over the shares in, and assets and undertaking of, WWCS Finance Pty Ltd and
Woodlawn Wind Pty Ltd (i.e. parent of the owner and owner of the Woodlawn Wind Farm respectively).
Project Finance Facility – BWF Finance Pty Ltd (Bodangora Wind Farm construction)
BWF Finance Pty Ltd (BOD Borrower), a wholly-owned subsidiary of Bodangora Wind Farm Pty Limited (which in
turn owns the Bodangora Wind Farm project currently under construction), is the borrower under a $162.8 million
syndicated facility. The lenders are Norddeutsche Landesbank Girozentrale Singapore Branch and Dekabank
Deutsche Girozentrale (Tranche A) and Clean Energy Finance Corporation (Tranche B) (BOD Lenders). Tranche A
and B are of equal amounts. The construction facility converts to a term facility upon completion of the construction
phase, which is currently expected to occur in August 2018. The term facility matures in September 2034.
Principal repayments
No principal is repayable on the Tranche A and B loans of the facility during the anticipated construction period,
with the first scheduled principal repayment due on 31 December 2018.
During the term phase the BOD Borrower must make semi-annual fixed repayments in accordance with an agreed
repayment schedule.
Drawdowns
During the year ended 30 June 2017 net drawdowns of $1,825,000 (2016: nil) were made.
Interest payments
During the construction phase interest is capitalised. During the term phase interest is payable semi-annually.
During the construction phase, Tranche A interest is re-priced monthly using the monthly BBSY (Australian
dollar) rate plus a margin. The Tranche A loan has been hedged at 100% of face value with interest rate swaps
at 1.94% during this period.
During the term phase, Tranche A interest is re-priced semi-annually using the six month BBSY (Australian
dollar) rate plus a margin. The Tranche A loan has been hedged at 85% of face value at 3.484% for the term
period of the loan.
Tranche B interest is fixed at 3.0225% plus a margin for both the construction and term facility.
Security
The BOD Lenders hold security over the shares in, and assets and undertaking of, Bodangora Wind Farm Pty
Limited and BWF Finance Pty Ltd (i.e. the owner of the Bodangora Wind Farm project and the BOD Borrower).
82
INFIGEN ENERGY ANNUAL REPORT 2017
16. Other financial assets and liabilities
Current assets
At fair value: Electricity derivatives
At fair value: Electricity derivatives margin
Non-current assets
At fair value: Electricity derivatives
At fair value: Interest rate caps
Current liabilities
At fair value: Electricity derivatives
At fair value: Interest rate swaps
At fair value: Foreign currency swaps
Non-current liabilities
At fair value: Electricity derivatives
At fair value: Interest rate swaps
Recognition and measurement
Infigen Energy Group
2017
$’000
150
1,401
1,551
-
2
2
2,105
25,504
509
28,118
888
43,376
44,264
2016
$’000
275
80
355
124
8
132
23
25,429
229
25,681
124
74,995
75,119
Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign
exchange rate risk, including forward foreign exchange contracts, interest rate caps, interest rate swaps, and cross
currency swaps. Derivative financial instruments are also used to manage exposure to electricity and environmental
commodity price and production risks.
Derivatives are initially recognised at fair value. Gains or losses are recognised in the statement of other
comprehensive income for derivatives that are designated in effective hedge relationships. Gains or losses for
derivatives that are not designated in effective hedge relationships are recognised in the income statement.
The Group’s risk management strategies and hedge documentation are aligned with the requirements of AASB 9
Financial Instruments which was early adopted by the Group and the Trust commencing 1 July 2015. The derivative
contracts are thus treated as continuing hedges.
17. Fair value hierarchy
The Group measures and recognises the following assets and liabilities at fair value on a recurring basis:
Derivative financial instruments
Investment in financial assets
To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified
its financial instruments into the following three levels prescribed under the accounting standards:
Level 1: the fair value of financial instruments traded in active markets is based on quoted market prices
(unadjusted) at end of the reporting period. The Group does not hold level 1 financial instruments.
83
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17. Fair value hierarchy (continued)
Level 2: the fair value of financial instruments that are not traded in active markets is determined using valuation
techniques which maximize the use of observable market data and rely as little as possible on entity-specific
estimates. All significant inputs required to fair value an instrument are observable. This is the case for the Group’s
derivative financial instruments.
Level 3: one or more of the significant inputs to determine the fair value of financial instruments are not based on
observable market data (unobservable inputs).
The following tables present the Group’s financial assets and financial liabilities measured and recognised at fair
value.
As at 30 June 2017
Recurring fair value measurements
Assets
Derivative financial instruments
Interest rate caps – Woodlawn
Electricity derivatives
Electricity derivatives margin
Total assets
Liabilities
Derivative financial instruments
Interest rate swaps – Global Facility
Interest rate swaps – Bodangora
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
-
-
2
150
1,401
1,553
-
-
-
-
2
150
1,401
1,553
-
66,743
-
66,743
-
2,137
-
2,137
Foreign currency swap - Global Facility
-
509
-
509
Electricity derivatives
Total liabilities
-
-
2,993
72,382
-
-
2,993
72,382
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
As at 30 June 2016
Recurring fair value measurements
Assets
Derivative financial instruments
Interest rate caps – Woodlawn
Electricity derivative margins
Electricity options
Total assets
Liabilities
Derivative financial instruments
Interest rate swaps – Global Facility
Total liabilities
-
-
-
-
-
-
8
80
399
487
100,800
100,800
-
-
-
-
-
-
8
80
399
487
100,800
100,800
There were no transfers between levels 1 and 2, and between levels 2 and 3 financial instruments for recurring fair
value measurements during the year. The Group did not measure any financial assets or financial liabilities at fair
value on a non-recurring basis as at 30 June 2017.
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels at the end of the
reporting period.
84
INFIGEN ENERGY ANNUAL REPORT 2017
17. Fair value hierarchy (continued)
Valuation techniques used to determine Level 2 fair values
Specific valuation techniques used to value financial instruments include:
The use of quoted market prices or dealer quotes for similar instruments;
The fair value of interest rate swaps calculated as the present value of the estimated future cash flows based
on observable yield curves; and
Using Black-Scholes valuation models in conjunction with quoted market prices or dealer quotes for similar
instruments.
Where such information is not available, the Group considers information from a variety of sources including:
Discounted cash flow projections based on reliable estimates of future cash flows; and/or
Capitalisation rate derived from an analysis of market evidence.
18. Financial risk management
The Group or the Trust are exposed to the following key financial risks.
Risk
Risk monitoring
Management
1) Commodity price risks:
Sensitivity analysis
a) Electricity price
b)
Ineffective electricity
hedging
c) LGC price
d) LGC forward sales
2) Liquidity, capital markets
and credit risks:
a) Access to capital
b) Liquidity
c) Debt facilities
d) Foreign exchange
e)
Interest rate
f) Counterparty credit
Cash flow forecasting
Sensitivity analysis
Debt covenant ratio forecasting
and sensitivity analysis
Credit ratings
Ageing analysis
Monitoring actual and forecast
cash flows
Matching maturity profiles of
financial assets and liabilities
Power purchase agreements and
contracted environmental
certificate agreements
Electricity derivatives (ASX
futures, options)
Multi-channel routes to market for
the sale of electricity and LGCs
Maintaining adequate reserves,
banking and borrowing facilities
Interest rate derivatives
Foreign exchange derivatives
Foreign currency prepayments of
foreign denominated debts
Letters of credit; diversification of
the customer portfolio which
comprises contracted and non-
contracted electricity; liquid funds
held with large financial institutions
with high credit ratings, credit
monitoring
85
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18. Financial risk management (continued)
Key estimate: fair value
The fair value of the financial assets and financial liabilities must be estimated for recognition and measurement
or for disclosure purposes.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques. The Group or the Trust uses a variety of methods and
makes assumptions that are based on market conditions existing at each balance date. The fair value of
interest rate swaps is calculated as the market present value rate of the estimated future cash flows. The fair
value of forward exchange contracts is determined using forward exchange market rates at the balance sheet
date. These instruments are classified in the level 2 fair value hierarchy (refer to Note 17 (a)).
The carrying amounts of trade receivables and payables are assessed to approximate their fair values due to
their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting
the future contractual cash flows at the current market interest rate that is available to the Group or the Trust
for similar financial instruments.
The Group’s energy risk management is carried out by the Energy Markets function (EM). The EM team:
operates under the Energy Risk Management policy approved by the Board which provides a framework for
managing and mitigating the overall energy markets risks of the Group;
identifies, evaluates and hedges certain energy markets risks in close co-operation with the Group’s
operating units; and
focuses on the unpredictability of energy markets and seeks to manage potential adverse effects on the
financial performance of the Group.
The Group’s treasury risk management is carried out by a central treasury function (corporate treasury). The
Group’s corporate treasury:
operates under the treasury policies approved by the Board which provide a framework for managing and
mitigating the overall financial risks of the Group;
identifies, evaluates and hedges certain financial risks in close co-operation with the EM team and the
operating units; and
focuses on the unpredictability of financial markets and seeks to manage potential adverse effects on the
financial performance of the Group.
The Group’s treasury policy and energy risk management policy specifically prohibit any form of speculative trading.
Derivatives are exclusively used for risk management or hedging purposes, not as trading or other speculative
instruments.
1. Commodity Price Risks
a) Electricity price
The Group produces electricity which it sells into the Australian electricity markets under various commercial
terms and arrangements. The price of electricity can be volatile as it is primarily driven by supply and demand
factors. These include:
weather influencing demand and generation availability (in the short term);
operational shut-downs and closures (planned and unplanned);
86
INFIGEN ENERGY ANNUAL REPORT 2017
18. Financial risk management (continued)
operational closures across energy intensive industries;
economic conditions affecting demand;
consumer perception of energy affordability;
technological advancement;
use of distributed electricity generation such as solar PV systems and installation of storage systems;
mandatory energy efficiency schemes;
competitive behaviours of retailers and generators;
the tenor and expiry of contracts for fuel and sale of electricity;
network constraints;
actions of the market operator, interpretation of rules by the market operator and changes to those rules;
and
actions of the regulator, including regulatory changes that impact market design and operation.
Movements in electricity price that are not mitigated through effective contracting and hedging, could adversely
or positively affect the Group’s revenue and future financial performance.
b)
Ineffective electricity hedging
The Group seeks to manage revenue risk associated with variable price and variable production through
hedging. When hedging instruments are utilised and where variable production is not sufficient to meet
committed quantities, high dollar value exposures may arise. These could adversely affect the Group’s revenue
and future financial performance.
c) LGC price
The Group creates LGCs from its generation. Under the RET Scheme obligated parties are required to
surrender LGCs to the Clean Energy Regulator. The price of LGCs is predominantly determined on short term
and long term supply and demand but may be also impacted by the actions of market participants.
The RET scheme is periodically the subject of political debate about possible variation. If the RET Scheme is
amended or if there is reduced confidence in the stability of the scheme, then this may affect the price and
timing at which the Group can sell LGCs.
Any of these actions or reduced confidence in the RET scheme could adversely affect the Group’s revenue
and future financial performance.
d) LGC forward sales
There is a risk that the Group may not generate sufficient LGCs to meet its forward sales commitments. Any
shortfall in LGCs produced could adversely affect the Group’s revenue and future financial performance to the
extent that the market price for LGCs at the time of delivery is higher than the contract price.
87
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ADDITIONAL INFORMATION
18. Financial risk management (continued)
Price risk management
To mitigate the financial risks of falling electricity and environmental certificate prices, the Group has and
continues to seek to understand its risk exposures and will seek a balance between risk, tenor and price for
revenue received from the sale of electricity and LGCs through the Multi-Channel Route to Market:
Long term offtake agreements with electricity retailers or other counterparties
Medium-term “run of plant” or fixed volume contracts
Contracts with large Commercial and Industrial (“C&I”) customers
Wholesale market contracts of varying size and tenor; and
Spot market sales to Australian Energy Market Operator (“AEMO”) for electricity.
Sensitivity
The following table details the Group’s pre-tax sensitivity to a 10% change in the electricity and environmental
certificate price, with all other variables held constant as at the balance date, for its exposure to the electricity
and environmental certificates markets.
A sensitivity of 10% has been selected given the current level of electricity and environmental certificate prices
and the volatility observed on an historic basis and market expectations for future movement.
Consolidated
AUD $’000
2017
Merchant revenue
Electricity derivatives
Income statement
2016
Merchant revenue
Income statement
Electricity and LGC price
+10%
Electricity and LGC price
-10%
9,255
(2,415)
6,840
8,550
8,550
(9,255)
2,415
(6,840)
(8,550)
(8,550)
2. Liquidity, Capital Markets and Credit Risks
a) Access to capital
The Group relies on access to debt and equity capital to operate its business and execute its business strategy.
The ability to secure financing, or financing on acceptable terms, may be materially adversely affected by
volatility in the financial markets, globally or affecting a particular geographic region, industry or economic
sector. For these or other reasons, financing may be unavailable or the cost of financing may be significantly
increased. An inability to obtain, or an increase in the costs of obtaining financing could materially and adversely
affect the Group’s operations and/or future financial performance.
Capital risk management
The Group’s objectives when managing capital are to generate value for security holders and to maintain an
appropriate capital structure to minimize the cost of capital and support growth.
Through the year to 30 June 2017, the Group has had to maintain the following financial covenant ratios in
respect of different sub-sets of the Group, to ensure compliance with its debt facilities:
Global Facility – Leverage ratio, Net Debt / EBITDA1
Woodlawn project finance facility – Debt service coverage ratio (DSCR)
Bodangora project finance facility – No ratio in FY17 during the construction phase
The Group has complied with these financial covenants in FY17 and FY16.
1 Refer to Note 15 – Borrowings.
88
INFIGEN ENERGY ANNUAL REPORT 2017
18. Financial risk management (continued)
b) Liquidity
The Group requires adequate reserves and banking facilities to conduct its business. The Group is a participant
in the energy markets and must retain sufficient liquidity to meet its prudential obligations to the market
including any ASX positions or other positions which it has taken and its AFSL conditions. Failure to obtain or
maintain sufficient liquidity could negatively impact the Group’s operations and/or future financial performance.
Liquidity risk management
The Group and the Trust manage liquidity risks by maintaining adequate cash reserves and by considering
liquidity requirements based on history, current contracting positions, market volatility, and credit quality of
counterparties.
Exposure
The tables below set out the Group’s and the Trust’s financial assets and financial liabilities at the balance
sheet date and places them into applicable maturity groupings based on the remaining period at the balance
sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted
cash flows.
The tables include the Group’s forecast contractual repayments under the Global Facility, and the Woodlawn
and Bodangora Project Finance facilities.
For interest rate swaps and interest rate caps, the cash flows have been estimated using forward interest rates
applicable at the balance date.
Infigen Energy Group
Up to 12
months
1 to 5 years
After 5
years
$’000
$’000
$’000
Total
contractual
cash flows
$’000
96,814
6,691
92
21,910
393,888
27,140
835
43,460
188,385
7,178
2,766
1,373
65
3,959
(1,887)
2,105
19,786
87,928
6,514
25,429
-
17,356
888
-
231,922
28,365
67,026
6
-
-
-
406,792
15,259
7,970
2
-
679,087
41,009
3,693
66,743
2,137
2,993
19,786
726,642
50,138
100,425
8
17,356
Infigen Energy Trust Group
1 to 5 years
Over 5 years
Up to 12
months
$’000
$’000
$’000
Total
contractual
cash flows
$’000
5,101
4,858
-
-
-
-
5,101
4,858
2017
Global Facility debt and interest
Woodlawn facility debt and interest
Bodangora facility debt and interest
Interest rate swaps payable - Global Facility
Interest rate swap payable/(receivable) -
Bodangora
Electricity derivatives payable
Trade and other payables (Note 12)
2016
Global Facility debt and interest
Woodlawn facility debt and interest
Interest rate swaps payable – Global Facility
Interest rate cap receivable
Trade and other payables (Note 12)
Consolidated
2017
Amounts due to related parties
2016
Amounts due to related parties
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18. Financial risk management (continued)
c) Debt facilities
The Group has three debt facilities.
The Group must satisfy the relevant covenants in its Global Facility (Net Debt/EBITDA leverage ratio), the
Woodlawn Project Finance Facility (debt service coverage ratio (DSCR)) and the Bodangora Project Finance
Facility (DSCR). Failure to meet the covenants or other requirements of the facilities, or to remedy such failure
within any allowable grace period, would provide the respective lenders with rights to take remedial actions
under the facilities including the right to accelerate repayment of the debt if an event of default occurs. Remedial
action could reduce the Group’s revenues and adversely affect the Group’s future financial performance, and
may have flow-on effects to other commercial arrangements.
d) Foreign exchange
The Group has some residual USD borrowings and no longer has any USD operating assets or revenues.
A decline in the value of the AUD versus the USD would increase the AUD value of the Group’s USD
denominated debt, to the extent that the exposure is unhedged.
The Group may also be exposed to foreign exchange risk when entering into contracts related to the future
development of operational assets.
USD debt foreign exchange risk
A decline in value of the AUD versus the USD would increase the AUD equivalent value of the Group’s USD
debt. The Group has residual USD debt of USD70.6 million (2016 USD116.1 million) which is no longer offset
by earnings from any operational USD assets following the sale of the US business in FY16. Where practicable,
the Group aims to reduce this foreign currency debt exposure with accelerated USD debt repayments, the
holding of USD cash and by utilising hedging instruments such as foreign currency forward contracts and
options.
Foreign exchange risk management and exposure
The table below splits out the profit and loss, and equity movements of the foreign currency exposure:
2017
Global Facility Debt
Foreign currency hedge
Cash
2016
Global Facility Debt
Foreign currency hedge
Cash
USD
exposure
Foreign
exchange gain /
(loss) movement
USD$’000
AUD$’000
(70,600)
30,000
1,612
(38,988)
(116,175)
30,000
79,976
(6,199)
2,857
(509)
(65)
2,283
(4,955)
(229)
3,497
(1,687)
The Group’s balance sheet exposure to foreign currency risk at the balance date is shown below. This
represents the USD assets and liabilities the Group holds translated to the AUD functional currency.
90
INFIGEN ENERGY ANNUAL REPORT 2017
18. Financial risk management (continued)
Foreign currency (AUD$’000)
Cash
Foreign currency hedge
Borrowings
Total exposure
2017
USD
2,114
39,137
(91,819)
(50,568)
2016
USD
107,250
40,231
(155,793)
(8,312)
Sensitivity
The following table details the Group’s pre-tax sensitivity to a 10 percent change in the AUD against the USD,
with all other variables held constant, as at the balance date, for its unhedged foreign exchange exposure.
A sensitivity of 10 percent has been selected as this is determined to be a reasonable measure for assessing
the effect of exchange rate movements.
AUD$’000
2017
Income statement
2016
Income statement
e)
Interest rate
AUD/USD
+ 10%
AUD/USD
- 10%
(8,971)
8,971
(4,854)
4,854
Interest rate risk management
To manage interest rate exposure, the Group fixes a portion of its floating rate borrowings by entering into
interest rate swaps in which the Group agrees to exchange the difference between fixed and floating rate
interest amounts calculated on agreed notional principal amounts, and interest rate caps in which the Group
protects itself from rates increasing above a cap whilst still benefitting from lower interest rates under a cap. In
undertaking this strategy the Group is willing to forgo a percentage of the potential economic benefit that would
arise in a falling interest rate environment, in order to partially protect against downside risks of increasing
interest rates and to secure a greater level of predictability for cash flows.
91
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18. Financial risk management (continued)
The profit and loss effect on the Group’s net result due to a change in interest rates is largely due to the Group’s
exposure to interest rates on its non-hedged variable rate borrowings less cash held. The effect on hedge
reserve is due to the effective portion of the change in fair value of derivatives that are designated as cash flow
hedges.
At balance date the Group has large cash balances. These cash balances are invested in the short term money
market to achieve the best possible interest rate. A high percentage of the face value of debt in each of the
relevant currencies is hedged using interest rate derivatives. The table below shows a breakdown of the
Group’s notional principal amounts.
Exposure
As at balance date, the Group had the following financial assets and liabilities, with exposure to interest rate
risk. There was no ineffectiveness to be recorded from the cash flow hedges.
Outstanding pay fixed / receive floating interest rate hedging
AUD$’000
Average contracted
fixed interest rate
Notional principal
amount
Fair value
Fixed swap – AUD – Global Facility
Fixed swap/cap – AUD – Woodlawn
Fixed swap – AUD – Bodangora
Fixed swap – USD – Global Facility
2017
%
6.41
3.85
1.94
5.34
2016
%
6.82
3.98
-
2017
$’000
2016
$’000
2017
$’000
2016
$’000
367,375
394,912
(46,759)
(67,353)
13,161
14,804
2
913
-
(2,137)
8
-
5.36
147,807
179,045
(19,951)
(33,071)
529,256
588,761
(68,845)
(100,416)
Bank debt
Global Facility debt is denominated in AUD and USD and the floating rate debt is re-priced every six months.
AUD debt is priced using the six-month BBSY rate plus the defined facility margin. 69% of AUD debt is
hedged with interest rate swaps.
USD debt is priced using the six-month LIBOR rate plus the defined facility margin. 100% of USD debt is
hedged with interest rate swaps.
Woodlawn debt is denominated in AUD and the floating rate debt is re-priced every 3 months:
50% of the Woodlawn Project Finance debt is re-priced quarterly using the three-month BBSY (AUD) rate
plus the defined facility margin. 85% of this debt is hedged with an interest rate option; and
50% of the Woodlawn Project Finance debt is fixed for ten years at 3.7575% plus the defined facility
margin.
The Bodangora Project Finance debt is evenly split between Tranche A and B. During the construction phase
interest is capitalised. During the term phase interest is payable semi-annually.
During the construction phase, Tranche A interest is re-priced monthly using the monthly BBSY (AUD) rate
plus the defined facility margin. The Tranche A loan has been hedged at 100% of face value with interest
rate swaps during this period.
During the term phase, Tranche A interest is re-priced semi-annually using the six month BBSY (AUD)
rate plus the defined facility margin. The Tranche A loan has been hedged at 85% of face value for the
term period of the loan.
Tranche B interest is fixed at 3.0225% plus the defined facility margin for both the construction and term
facility.
The current debt rates detailed in the tables below are not inclusive of the facility margins.
92
INFIGEN ENERGY ANNUAL REPORT 2017
18. Financial risk management (continued)
Floating rate debt
Average floating
interest rate
2017
%
2016
%
2.10
1.77
-
-
2.53
2.37
(0.04)
0.83
Debt principal
amount
2017
$’000
2016
$’000
162,334
136,115
2,721
-
-
4,659
20,834
16,980
165,055
178,588
AUD debt – Global Facility
AUD debt – Woodlawn
EUR debt – Global Facility
USD debt – Global Facility
Fixed rate debt
Average fixed
interest rate
2017
%
2016
%
Debt principal
amount
2017
$’000
2016
$’000
% of debt hedged
2017
%
2016
%
AUD debt – Global Facility
AUD debt – Woodlawn
AUD debt – Bodangora
USD debt – Global Facility
6.41
3.85
2.48
5.34
6.82
3.85
367,375
394,912
31,284
35,239
-
1,825
-
5.36
91,819
138,814
492,303
568,965
69
92
100
100
74
88
-
100
Total debt
657,358
747,553
77
81
The current average interest rate (floating rate debt and fixed rate debt), pre-margin across all facilities is 5.04%
(2016: 5.27%). The current average margin across all facilities is 123 basis points (2016: 126 basis points).
Sensitivity
The Group’s sensitivity to interest rate movement has been determined based on the exposure to interest rates
at the balance date. A sensitivity of 100 basis points has been selected across the two currencies to which the
Group is exposed to floating rate debt: AUD and USD. The 100 basis points sensitivity is determined to be
reasonable as it is assessed to be flat across the yield curve.
93
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ADDITIONAL INFORMATION
18. Financial risk management (continued)
2017
AUD $’000
Infigen Energy Group
AUD
+100 bps
AUD
-100 bps
USD
+100 bps
USD
-100 bps
Effect on income statement
Cash
Global Facility
Woodlawn
Bodangora
Derivatives – interest rate
swaps
Derivatives – interest rate
caps
Total income statement
Effect on hedge reserve
AUD
USD
AUD
USD
AUD
AUD
AUD
USD
244,060
1,612
245,672
529,709
91,819
34,005
1,825
657,358
48,896
19,951
68,847
AUD
2
2,441
(2,441)
-
-
(1,623)
1,623
-
(27)
-
-
27
-
489
(489)
-
-
-
-
-
16
-
(918)
-
-
-
-
(16)
-
918
-
-
-
200
(200)
-
Derivatives – interest rate
swaps
AUD
USD
368,288
147,807
Total hedge reserve
Total effect on equity
1,280
(1,280)
(702)
3,683
(3,683)
-
3,683
4,963
-
(3,683)
(4,963)
-
1,478
1,478
776
-
702
-
(1,478)
(1,478)
(776)
94
INFIGEN ENERGY ANNUAL REPORT 2017
18. Financial risk management (continued)
2016
AUD
$’000
AUD
+100
bps
AUD
-100 bps
EUR
+100
bps
EUR
-100
bps
USD
+100
bps
USD
-100
bps
Effect on income statement
Cash
AUD
USD
EUR
21,880
107,250
18,472
147,602
219
(219)
-
-
-
-
-
-
1,073
(1,073)
-
-
-
-
Global Facility
AUD
531,027
(1,361)
1,361
EUR
USD
AUD
AUD
USD
20,834
155,793
39,898
747,552
67,353
33,071
100,424
AUD
8
-
-
(47)
-
-
47
674
(674)
-
-
-
-
-
-
(208)
-
-
-
-
-
-
185
(185)
-
(9)
-
-
-
-
-
-
-
(170)
-
-
-
-
142
-
-
331
(331)
-
-
(515)
515
865
(1,082)
346
(374)
AUD
USD
394,912
3,949
(3,949)
179,045
-
3,949
3,434
-
(3,949)
(3,434)
-
-
-
-
-
-
-
-
1,790
(1,790)
1,790
(1,790)
865
(1,082)
2,136
(2,164)
Woodlawn
Derivatives – interest rate
swaps
Derivatives – interest rate
caps
Total income statement
Effect on hedge reserve
Derivatives – interest rate
swaps
Total hedge reserve
Total effect on equity
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ADDITIONAL INFORMATION
18. Financial risk management (continued)
2017
Impact on income statement
Cash
2016
Impact on income statement
Cash
f) Counterparty credit
Infigen Energy Trust Group
AUD
$’000
AUD
+100 bps
AUD
-100 bps
5,515
405
55
4
(55)
(4)
The Group has credit exposure to contract counterparties and expects to continue to have such exposure to
existing and new counterparties. Failure of these parties to fulfil their obligations as and when due, or in full,
could reduce the Group’s revenues and adversely affect the Group’s future financial performance.
Credit risk management
The Group’s counterparty exposure is regularly monitored and the aggregate value of transactions is spread
among creditworthy counterparties. The Group’s credit risk on liquid funds and derivative financial instruments
is limited because the counterparties are:
banks with high credit ratings assigned by international credit-rating agencies at above investment grade;
utilities with appropriately sized trading limits determined having regard to international credit ratings and
performance security and the length of the exposure; or
other non-rated entities who transact in energy markets which are assigned appropriately enforced and
sized trading limits.
Exposure
The Trust has credit risk exposure to other members of the Group.
At balance date, the Group does not have any significant credit risk exposure to any single counterparty or any
group of counterparties.
The carrying amount of financial assets, recorded in the financial statements, represents the Group’s maximum
exposure to credit risk.
The Trust’s carrying amount of financial assets recorded in the financial statements, net of any allowances for
losses, represents its maximum exposure to credit risk.
96
INFIGEN ENERGY ANNUAL REPORT 2017
18. Financial risk management (continued)
Consolidated
2017
Bank deposits
Trade receivables
Amounts due from related parties
(associates)
2016
Bank deposits
Trade receivables
Other current receivables
Amounts due from related parties
(associates)
Infigen Energy Group
Within
credit
terms
$’000
Past due
but not
impaired
$’000
Impaired
$’000
Description
251,786
5,813
1,019
147,602
15,740
252
1,019
-
-
-
-
-
-
-
- Credit rating investment grade
-
Small number of Australian off take
counterparties
- Loan to associated entities
- Credit rating investment grade
-
Small number of Australian off take
counterparties
- Sale settlement period
- Loan to associated entities
Consolidated
2017
Bank deposits
Loans to related parties
2016
Bank deposits
Loans to related parties
Infigen Energy Trust Group
Within
credit
terms
$’000
Past due
but not
impaired
$’000
Description
Impaired
$’000
5,515
148,192
153,707
405
-
405
-
-
-
-
-
-
- Credit rating investment grade
Amount receivable at the discount rate
after the unwinding of discount
598,2401
598,240
- Credit rating investment grade
Amount receivable at the discount rate
after the unwinding of discount
567,3211
567,321
1 Refer to Note 32 for the contractual amount due from Group members other than IET.
97
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ADDITIONAL INFORMATION
EQUITY
19. Contributed equity
Fully paid stapled securities/units
Opening balance
Issue of securities to employees
Issue of securities to raise capital
Less: transaction costs arising on issue of
securities to raise capital
Closing balance
Infigen Energy Group
2017
No. ’000
2017
$’000
2016
No. ’000
772,469
8,108
169,682
-
764,314
7,297
151,017
(6,665)
767,888
4,581
-
-
2016
$’000
763,169
1,145
-
-
950,259
915,963
772,469
764,314
Attributable to:
Equity holders of the parent
Equity holders of the other stapled securities (non-controlling interests)
2017
$’000
2,305
913,658
915,963
Fully paid stapled securities/units
Opening balance
Issue of securities to employees
Issue of securities to raise capital
Less: transaction costs arising on issue of
securities to raise capital
Closing balance
2016
$’000
2,305
762,009
764,314
2016
$’000
754,603
1,145
-
Infigen Energy Trust Group
2017
No. ’000
772,469
8,108
169,682
2017
$’000
2016
No. ’000
755,748
7,297
151,017
767,888
4,581
-
-
(6,665)
-
-
950,259
907,397
772,469
755,748
98
INFIGEN ENERGY ANNUAL REPORT 2017
20. Reserves
Hedging
Acquisition
Share-based payment
Attributable to:
Equity holders of the parent
Equity holders of the other stapled securities (non-controlling interests)
a) Hedging reserve
Balance at beginning of financial year
Movement increasing / (decreasing) recognised:
Interest rate swaps
Foreign exchange contracts
Electricity derivatives
Deferred tax arising on hedges
Balance at end of financial year
Infigen Energy Group
2017
$’000
(42,374)
(47,675)
(1,506)
(91,555)
(91,555)
-
(91,555)
2016
$’000
(62,622)
(47,675)
3,846
(106,451)
(106,451)
-
(106,451)
Infigen Energy Group
2017
$’000
(62,622)
34,866
(508)
(2,836)
(11,274)
20,248
(42,374)
2016
$’000
(70,239)
1,451
(86)
-
6,252
7,617
(62,622)
The hedging reserve is used to record movements on a hedging instrument in a cash flow hedge that is recognised
directly in equity. The gain or loss from re-measuring the hedging instruments at fair value is deferred in equity in
the hedging reserve, to the extent that the hedge is effective, and reclassified into profit and loss when the hedged
interest expense is recognised. The ineffective portion is recognised in the income statement immediately.
b) Acquisition reserve
Balance at the beginning and end of the financial year
Infigen Energy Group
2017
$’000
(47,675)
2016
$’000
(47,675)
The acquisition reserve relates to the acquisition of non-controlling interests in entities over which the Group already
exerted control. Therefore, the acquisition of these non-controlling interests did not result in a change of control but
was an acquisition of the interests held by minority shareholders.
These transactions are treated as transactions between owners of the Group. The difference between the purchase
consideration and the amount by which the non-controlling interest is adjusted, has been recognised in the
acquisition reserve.
99
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ADDITIONAL INFORMATION
20. Reserves (continued)
c) Share-based payment reserve
Balance at beginning of financial year
Share-based payments expense
Issue of shares / bonus provision transfer
Balance at end of financial year
Infigen Energy Group
2017
$’000
3,846
1,076
(6,428)
(1,506)
2016
$’000
4,207
536
(897)
3,846
The share-based payments reserve is used to recognise the fair value of performance rights/units issued to
employees but not vested. Refer Note 33 for further detail.
21. Retained earnings
Balance at beginning of financial year
Net profit attributable to stapled security holders
Infigen Energy Group
2017
$’000
(377,298)
32,264
2016
$’000
(381,784)
4,486
Infigen Energy Trust
Group
2017
$’000
(191,755)
2016
$’000
(220,383)
31,220
28,628
Balance at end of financial year
(345,034)
(377,298)
(160,535)
(191,755)
Attributable to:
Equity holders of the parent
Equity holders of the other stapled securities (non-
controlling interests)
(320,760)
(353,125)
(160,535)
(191,755)
(24,274)
(24,173)
-
-
(345,034)
(377,298)
(160,535)
(191,755)
22. Distributions
Ordinary stapled securities
There were no distributions in respect of the years ended 30 June 2016 and 30 June 2017.
Franking credits
The parent entity has franking credits of $6,228,093 as at 30 June 2017 (2016: $6,228,093).
100
INFIGEN ENERGY ANNUAL REPORT 2017
GROUP STRUCTURE
23.
Investment in associates and joint ventures
a) Movements in carrying amounts
Carrying amount at the beginning of the year
Additions
Transfers out1
Share of profits / (losses) after income tax
Carrying amount at the end of the year
Infigen Energy Group
2017
$’000
1,258
48
(89)
(8)
1,209
2016
$’000
452
781
-
25
1,258
1 On 24 March 2017 Bodangora Wind Farm Pty Ltd ceased to be a joint venture entity accounted under the equity method following
the Group’s acquisition of the 50% equity interest that it did not own in the investment. Bodangora Wind Farm Pty Ltd is a 100%
owned subsidiary and recognised as part of the consolidated Group. Refer to Note 25 Business Combination for details of this
transaction. A list of the subsidiaries is contained in Note 26.
Place of business /
country of
incorporation
Ownership interest2 %
30 June 2017
30 June 2016
Nature of
relationship
Measurement
method
30 June 2017
Associate
venture entities
and
joint
Australia
32%-50%
32%-50%
Associates
and joint
ventures
Equity method
2 Share capital consists solely of ordinary shares, which are held directly by the Group.
The associate and joint venture entities hold interests in energy development projects.
All associates and joint ventures are private entities and therefore no quoted security prices are available.
b) Contingent liabilities in respect of associates and joint ventures
There are no contingent liabilities in respect of associates and joint ventures as at 30 June 2017
(30 June 2016: nil).
Recognition and measurement
The Group’s investment in associates and joint ventures is accounted for in the consolidated financial statements
using the equity method. Under this method, the investment in associates and joint ventures is carried in the
consolidated statements of financial position at cost.
101
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ADDITIONAL INFORMATION
23.
Investment in associates and joint ventures (continued)
c) Summarised financial information of associates and joint ventures
The Group’s share of the results of its associates and joint ventures are as follows:
Group’s share of:
Net assets
$’000
Revenues
$’000
Share of profit
/ (loss)
$’000
1,209
1,258
1,258
-
-
-
-
(8)
25
25
Year ended 30 June 2017
Associate and joint venture entities
Year ended 30 June 2016
Associate and joint venture entities
24. Discontinued operations
The sale of all US solar development assets and the US wind business was completed during the year ended 30
June 2016. Financial information relating to the discontinued operations is set out below.
Financial performance
Other gains
Profit before income tax from discontinued operations
Income tax expense
Loss from discontinued operations
Other comprehensive income – movements through equity
Exchange differences on translation of foreign operations
Other comprehensive income for the year net of tax arising from
discontinued operations
Total comprehensive income for the year net of tax arising from
discontinued operations
Infigen Energy Group
2017
$’000
-
-
-
-
-
-
-
2016
$’000
802
802
(3,349)
(2,547)
6,774
6,774
4,227
102
INFIGEN ENERGY ANNUAL REPORT 2017
25. Business combination
On 24 March 2017, the Group acquired the 50% equity interest that it did not own in Bodangora Wind Farm Pty Ltd.
As 100% owner of the subsidiary, the Group will construct a 113.2 MW wind farm near Wellington in New South
Wales. It will operate the windfarm once construction has completed.
Details of the purchase consideration and the assets recognised as a result of the acquisition are as follows:
Purchase consideration
Shareholder loan repayment
Consideration paid
Total purchase consideration
The assets recognised as a result of the acquisition are as follows:
Assets under construction
Deferred tax liability
Net assets acquired
24 March 2017
$’000
1,235
5,765
7,000
Fair value
$’000
8,236
(2,471)
5,765
103
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ADDITIONAL INFORMATION
26. Subsidiaries
Subsidiaries are all those entities over which the Group or the Trust has the power to govern the financial and
operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence
and effect of potential voting rights that are currently exercisable or convertible are considered when assessing
whether the Group or the Trust controls another entity.
Country of
incorporation
Ownership interest
2017
2016
Name of entity
Parent entity
*#
Infigen Energy Limited
Other stapled entities
Infigen Energy (Bermuda) Limited
Infigen Energy Trust
Subsidiaries of the parent and other stapled entities
BBWP Holdings (Bermuda) Limited
*
*
*
*
*
*
Bluff Solar Farm Pty Limited
Bodangora Wind Farm Pty Ltd
Bogan River Solar Farm Pty Ltd
Bowen Solar Farm Pty Limited
BWF Finance Pty Limited
BWF Holdings Pty Limited
* Capital East Solar Pty Limited
* Capital Solar Farm Pty Limited
* Capital Wind Farm (BB) Trust
* Capital Wind Farm 2 Pty Limited
*# Capital Wind Farm Holdings Pty Limited
* Cherry Tree Wind Farm Pty Ltd
* CREP Land Holdings Pty Limited
* CS CWF Trust
*
Flyers Creek Wind Farm Pty Ltd
Infigen Energy (Malta) Limited
Infigen Energy (US) Pty Limited
Infigen Energy (US) 2 Pty Limited
Infigen Energy Custodian Services Pty Limited
Infigen Energy Development Holdings Pty Limited
Infigen Energy Development Pty Ltd
Infigen Energy Europe Pty Limited
Infigen Energy Europe 2 Pty Limited
Infigen Energy Europe 3 Pty Limited
Infigen Energy Europe 4 Pty Limited
Infigen Energy Europe 5 Pty Limited
Infigen Energy Finance (Australia) Pty Limited
Infigen Energy Finance (Germany) Pty Limited
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
Australia
Bermuda
Australia
Bermuda
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Malta
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Infigen Energy Finance (Lux) SARL
Luxembourg
Infigen Energy Germany Holdings Pty Limited
Infigen Energy Germany Holdings 2 Pty Limited
Infigen Energy Germany Holdings 3 Pty Limited
Infigen Energy Holdings Pty Limited
Infigen Energy Holdings SARL
Australia
Australia
Australia
Australia
Luxembourg
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%
100%
100%
100%
-
50%A
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%
104
INFIGEN ENERGY ANNUAL REPORT 2017
26. Subsidiaries (continued)
Name of entity
*
*
*
*
*
*
*
Infigen Energy Investments Pty Limited
Infigen Energy Markets Pty Limited
Infigen Energy Niederrhein Pty Limited
Infigen Energy RE Limited
Infigen Energy Services Holdings Pty Limited
Infigen Energy Services Pty Limited
Infigen Energy T Services Pty Limited
Infigen Energy US Corporation
Infigen Energy US Holdings LLC
Infigen Energy US Development Corporation
*
Infigen Energy US Holdings Pty Limited
Infigen Energy US Partnership
*# Lake Bonney Holdings Pty Limited
*
*
*
*
Lake Bonney 2 Holdings Pty Limited
Lake Bonney Wind Power Pty Limited
Lake Bonney Wind Power 2 Pty Limited
Lake Bonney Wind Power 3 Pty Limited
* Manildra Solar Farm Pty Limited
* NPP LB2 LLC
* NPP Projects I LLC
* NPP Projects V LLC
* NPP Walkaway Pty Limited
* NPP Walkaway Trust
* Renewable Energy Constructions Pty Limited
*# Renewable Power Ventures Pty Ltd
* RPV Investment Trust
* Walkaway (BB) Pty Limited
* Walkaway (CS) Pty Limited
*# Walkaway Wind Power Pty Limited
* Woakwine Wind Farm Pty Ltd
* Woodlawn Wind Pty Ltd
* WWCS Finance Pty Limited
* WWCS Holdings Pty Limited
*# WWP Holdings Pty Limited
Subsidiaries of the Trust
CS Walkaway Trust
Walkaway (BB) Trust
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
USA
Australia
USA
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ownership interest
2017
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%
2016
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%
100%
Australia
Australia
100%
100%
100%
100%
* Denotes a member of the IEL tax consolidated group
# Entered into ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 allowing a Deed of Cross Guarantee with
Infigen Energy Limited removing the requirement for the preparation of separate financial statements where preparation of a
separate financial statement is required (refer Note 27)
A 50% equity accounted investment
105
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ADDITIONAL INFORMATION
27. Deed of cross guarantee
Set out below are the consolidated statements of comprehensive income and consolidated statements of financial
position, comprising Infigen Energy Limited and its controlled entities which are parties to the Deed of Cross
Guarantee (refer Note 26), after eliminating all transactions between parties to the Deed.
The Deed of Cross Guarantee was executed on 18 June 2012.
a) Consolidated statements of comprehensive income
Revenue from continuing operations
Operating expenses
Depreciation and amortisation expense
Interest expense
Other finance costs
Net profit before income tax
Income tax expense
Net profit / (loss) for the year
Infigen Energy Group
2017
$’000
76,296
(15,399)
(23,146)
(18,160)
(282)
19,309
(7,141)
12,168
2016
$’000
71,896
(15,091)
(23,127)
(19,970)
(4,845)
8,863
(10,435)
(1,572)
Other comprehensive income – movements through equity
Changes in the fair value of cash flow hedges, net of tax
Total comprehensive income / (loss) for the year, net of tax
-
12,168
-
(1,572)
106
2017
$’000
-
16,280
7,106
23,386
810,229
73,559
332,937
45,774
55,150
1,317,649
1,341,035
563
509
1,072
2016
$’000
9
16,489
9,794
26,292
923,076
30,318
353,779
48,544
57,382
1,413,099
1,439,391
1,052
-
1,052
1,558,543
1,666,880
3,999
1,562,542
1,563,614
(222,579)
2,305
(23,513)
(201,371)
(222,579)
3,938
1,670,818
1,671,870
(232,479)
2,305
(21,245)
(213,539)
(232,479)
INFIGEN ENERGY ANNUAL REPORT 2017
27. Deed of cross guarantee (continued)
b) Consolidated statements of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventory
Total current assets
Non-current assets
Receivables
Shares in controlled entities
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Derivative financial instruments
Total current liabilities
Non-current liabilities
Payables
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
107
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ADDITIONAL INFORMATION
28. Parent disclosures
a) Summary financial information
Assets and liabilities
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Reserves
Retained earnings
Profit/(loss) for the year
Total comprehensive profit/(loss)
Infigen Energy Limited
2017
$’000
2016
$’000
-
728,716
728,716
-
1,003,627
1,003,627
-
670,524
670,524
-
945,403
945,403
2,305
(356)
2,305
-
(276,860)
(277,184)
(274,911)
(274,879)
324
324
(5,330)
(5,330)
Due to the stapled structure of IEL, IET and IEBL, the summary financial information of the parent entity shows a
net liability as at 30 June 2017. When combined with the other stapled entities, the parent has positive net current
assets and net total assets. Non-current liabilities of IEL are principally $659.9 million (2016: $594.9 million) of long-
term funding provided by IET.
b) Deed of Cross Guarantee
IEL has entered into a Deed of Cross Guarantee with the effect that the company guarantees debts in respect of
certain of its subsidiaries. Further details of the Deed of Cross Guarantee and the subsidiaries subject to the deed,
are disclosed in Notes 26 and 27.
Parent entity financial information
The financial information for the parent entity has been prepared on the same basis as the consolidated financial
statements.
108
INFIGEN ENERGY ANNUAL REPORT 2017
29. Commitments
a) Capital expenditure commitments
Capital expenditure commitments
Infigen Energy Group
2017
$’000
148,738
2016
$’000
574
Capital expenditure commitments include commitment arrangements relating to the construction of Bodangora wind
farm, spare parts, IT projects, and solar energy projects.
b) Other expenditure commitments
Repairs and maintenance
Infigen Energy Group
2017
$’000
113,458
2016
$’000
23,457
Other expenditure commitments relate to contractual obligations for future repairs and maintenance of the wind
plant and equipment which have not been recognised as a liability.
c) Operating lease commitments
The Group leases land for its wind farms under non-cancellable operating leases expiring between 20 to 55 years.
The leases have varying terms, escalation clauses and renewal rights.
Commitments for minimum lease payments in relation to non-
cancellable operating leases are payable as follows:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
Infigen Energy Group
2017
$’000
11,758
30,811
72,615
115,184
2016
$’000
5,869
20,572
48,257
74,698
Operating lease payments are recognised as an expense on a straight line basis over the lease term.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a
liability. The aggregate benefits of incentives are recognised as a reduction of rental expense on a straight line
basis.
109
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GOVERNANCE
ADDITIONAL INFORMATION
30. Contingent liabilities
Infigen Energy Group
Letters of credit
Infigen Energy Limited
2017
$’000
7,964
2016
$’000
1,964
Letters of credit relate to Australian Electricity Market requirements, transmission requirements and rental bonds.
No liability was recognised by the parent entity of the Group in relation to these letters of credit, as their combined
fair value is immaterial.
Deed of Cross Guarantee
Under the terms of ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 certain wholly-owned
controlled entities are granted relief from the requirement to prepare audited financial reports. Infigen Energy Limited
has entered into an approved deed of indemnity for the cross-guarantee of liabilities with those controlled entities
identified as being a party to the deed in Note 26.
Infigen Energy Trust Group
There are no contingent liabilities for the Trust as at 30 June 2017 (2016: nil).
Key estimate
The Group or the Trust has made estimates and assumptions in relation to its contingent liabilities. By their nature,
the exact value of these contingent liabilities is uncertain and the Group has made estimates of their value based
on the facts and circumstances known at the balance date.
OTHERS
31. Events occurring after balance date
Since the end of the financial year, in the opinion of the directors of IEL and IERL as Responsible Entity of IET,
there have not been any transactions or events of a material or unusual nature likely to affect significantly the
operations or affairs of IEL and IET in future financial periods.
32. Related party transactions
Infigen Energy Group
Related party loan
As at 30 June 2017 and 30 June 2016, the Group was owed an amount of $1,019,156 from an associate, RPV
Developments Pty Ltd.
Transactions with key management personnel
Ms S Wiggins, Executive Director Finance is the managing director of Pipionem Partners. Pipionem Partners has
provided financial advisory services to the Group on normal commercial terms and conditions. The aggregate
amount of the services provided by Pipionem Partners for the year ended 30 June 2017 was $450,000.
110
INFIGEN ENERGY ANNUAL REPORT 2017
32. Related party transactions (continued)
Mr M George, former Managing Director is the director of Hillview Court Enterprises. The Group entered into a
contract with Hillview Court Enterprises during the year for the provision of consultancy services. The contract was
based on normal commercial terms and conditions. The aggregate amount of the services provided by Hillview
Court Enterprises for the year ended 30 June 2017 was $62,500.
Infigen Energy Trust Group
For the year ended 30 June 2017, the Trust recognised $30.9 million (FY16: $29.3 million) for the unwinding of the
discount on the loan receivable from related parties. As part of the long-term funding arrangements within the
stapled structure, IET has loans due from other Group entities totalling $891.5 million (2016: $745.8 million). While
IET is expected to receive the full $891.5 million contractual face value of the loans, the term of the repayment of
these loans has resulted in them being discounted to the net present value. The forecast undiscounted cash flows
of the operating assets of the Group support the carrying value of the loans as they exceed $891.5 million.
The Responsible Entity (“RE”) charges a management fee to the Trust for managerial and administrative expenses.
During the year ended 30 June 2017, the Trust incurred fees of $665,109 (2016: $678,326) from the RE.
The Trust owed the following amounts to other members of the Infigen Energy Group:
Infigen Energy RE Limited
2017
$’000
5,101
2016
$’000
4,857
The Infigen Energy Trust Group was owed the following amounts by other members of the Infigen Energy Group:
Infigen Energy Limited
Infigen Energy (Bermuda) Limited
Infigen Energy Holdings Pty Limited
Infigen Energy (US) 2 Pty Limited
Total receivables from related parties
2017
$’000
659,791
691
201,000
30,009
891,491
2016
$’000
607,935
691
105,790
30,009
744,425
Receivables from related parties are disclosed in Note 7. Payables to related parties are disclosed in Note 12.
Substantial shareholders
Mr P Green, a non-executive director of the Group, is a partner of TCI Advisory Services LLP (“TCI”), an advisor to
an entity which has a substantial shareholding of Infigen stapled securities. Mr P Green has advised the Group that
he does not have a relevant interest in those Infigen stapled securities.
33. Share-based payments
The Group provides share-based compensation benefits to certain executives of the Group via the Infigen Energy
Equity Plan (“Equity Plan”).
Recognition and measurement
The fair value of performance rights/units granted under the Equity Plan is measured at grant date and is recognised
as an employee benefit expense over the period during which the executives become unconditionally entitled to the
performance rights/units, with a corresponding increase in equity.
111
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FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
33. Share-based payments (continued)
Share-based payment expense
Expenses arising from share-based payment transactions recognised during the period as part of employee benefit
expense were as follows:
LTI Performance rights expense in the current year
Deferred STI expense in the current year (deferred in performance rights)
Write-back prior years long-term share-based incentive expense allocation
Additional information on award schemes
Long Term Incentive (LTI) - Employee equity plan
LTI Equity Plan arrangements
Infigen Energy Group
2017
$’000
827
455
(204)
1,078
2016
$’000
571
365
(400)
536
Senior Managers have received long-term incentive grants under the Equity Plan for FY15, FY16 and FY17.
Performance conditions of LTI awards granted under the Equity Plan
In each of FY15, FY16 and FY17, plan participants received performance rights or units in two tranches of
equal value (Tranche 1 and Tranche 2).
The measures used to determine performance and the subsequent vesting of performance rights/units were Total
Shareholder Return (TSR) and an operational performance (EBITDA) test. The vesting of Tranche 1 of the
performance rights/units is subject to the TSR condition, while the vesting of Tranche 2 of the performance
rights/units is subject to the Operational Performance condition. The Operational Performance condition is
determined by an earnings before interest, taxes, depreciation and amortisation (EBITDA) test.
Performance rights
Performance units
Period
2015
2016
2017
Tranche 1
TSR condition
TSR condition
1 July 2014 - 30 June 2017
Tranche 2
Operational Performance
condition
Operational Performance
condition
1 July 2014 - 30 June 2017
Tranche 1
TSR condition
TSR condition
1 July 2015 - 30 June 2018
Tranche 2
Operational Performance
condition
Operational Performance
condition
1 July 2015 - 30 June 2018
Tranche 1
TSR condition
TSR condition
1 July 2016 - 30 June 2019
Tranche 2
Operational Performance
condition
Operational Performance
condition
1 July 2016 - 30 June 2019
TSR condition (applicable to Tranche 1 performance rights / units): TSR measures the growth in the price of
securities plus cash distributions notionally reinvested in securities. In order for the Tranche 1 performance rights
to vest, the TSR of Infigen will be compared to companies in the S&P/ASX 200 (excluding financial services and
the materials/resources sectors). For the purpose of calculating the TSR measurement, the security prices of each
company in the S&P/ASX 200 (as modified above) and of Infigen will be averaged over the 30 trading days
preceding the start and end date of the performance period.
112
INFIGEN ENERGY ANNUAL REPORT 2017
33. Share-based payments (continued)
The percentage of the Tranche 1 performance rights that vest under the LTI plans are as follows:
Below the
25th
percentile
Equal to
the 25th
percentile
Between the
25th and 50th
percentile
Equal to
the 50th
percentile
Between the
50th and 75th
percentile
Between the
76th and 95th
percentile
Above the
95th
percentile
Percentile ranking
g
n
i
t
s
e
v
s
d
r
a
w
A
f
o
e
g
a
t
n
e
c
r
e
P
FY15
0%
vesting
0%
vesting
0% vesting
25%
vesting
FY16
0%
vesting
0%
vesting
0% vesting
25%
vesting
FY17
0%
vesting
25%
vesting
An additional
1% of awards
vest for each
percentile
increase
50%
vesting
An additional 2%
of awards vest for
each percentile
increase
An additional 2%
of awards vest for
each percentile
increase
An additional 2%
of awards vest for
each percentile
increase
An additional
1.25% of
awards vest for
each percentile
increase
An additional
1.25% of
awards vest for
each percentile
increase
100%
vesting
100%
vesting
100% vesting
Operational Performance condition (applicable to Tranche 2 performance rights / units): the vesting of the
Tranche 2 performance rights or units is subject to an Operational Performance condition.
The Operational Performance condition will test the multiple of EBITDA to Capital Base, with the annual target being
a specified percentage increase in the multiple over the year. The Capital Base will be measured as equity (net
assets) plus net debt. Both the EBITDA and Capital Base are measured on a proportionately consolidated basis to
reflect Infigen’s economic interest in all investments.
The percentage of the Tranche 2 performance rights that vest under the LTI plans are as follows:
Infigen’s EBITDA performance
FY15, FY16 & FY17 Grant
Percentage of Tranche 2 Performance Rights that vest
0% < 90% of the cumulative target
Nil
90% ≤ 110% of the cumulative target
5% to 100% (i.e. for every 1% increase between 90 and 110% of target an
additional 5% of the Tranche 2 Performance Rights will vest).
Set out below are summaries of performance rights that have been granted and are on issue under the Equity Plan:
Deemed grant date
Balance at
start of the
year
Granted
during the
year
Vested
during the
year
Cash settled
during the
year
Lapsed
during the
year
Balance at
end of the
year
Number
Number
Number
Number
Number
Number
FY13 LTI Grant
2,805,266
FY14 LTI Grant
3,675,889
FY15 LTI Grant
3,846,154
FY15 Deferred
STI Grant
1,810,857
FY16 LTI Grant
3,159,814
-
-
-
-
-
FY16 Deferred
STI Grant
FY17 LTI Grant
-
-
882,717
996,416
(2,805,266)
(3,492,096)
-
(1,810,857)
-
-
-
Total
15,297,980
1,879,133
(8,108,219)
-
-
-
-
-
-
-
-
-
(183,793)
-
-
(641,026)
3,205,128
-
-
(527,188)
2,632,626
-
882,717
(154,802)
841,614
(1,506,809)
7,562,085
113
ABOUT
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FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
33. Share-based payments (continued)
Fair value of performance rights granted under the LTI plan
Grant date
Fair value of performance rights per share ($)
2015
2016
2017
Tranche 1
Tranche 2
Tranche 1
Tranche 2
Tranche 1
Tranche 2
21 November 2014
21 November 2014
13 November 2015
13 November 2015
20 September 2016
20 September 2016
0.098
0.275
0.128
0.358
0.285
0.800
The fair values of performance rights/units at grant date are determined using market prices and a model that takes
into account the exercise price, the term of the performance right/unit and the security price at grant date.
The model inputs for performance rights/units granted include:
Performance rights/units are granted for no consideration and vest in accordance with the TSR condition and
the Operational Performance condition outlined above for Tranche 1 and Tranche 2, respectively. Performance
rights/units have a nil exercise price and vest automatically as stapled securities for rights and as cash for units.
Grant dates: 21 November 2014 (FY15 plan); 13 November 2015 (FY16 plan); 20 September 2016 (FY17 plan)
Security price at grant date: $0.275 (FY15 plan), $0.36 (FY16 plan), $0.80 (FY17 Plan)
Where performance rights/units are issued to employees of subsidiaries within the Group, the expense in relation
to these performance rights/units is recognised by the relevant entity with the corresponding increase in stapled
securities.
Deferred short term incentive granted as performance rights (Deferred STI)
The Deferred STI has a forfeiture condition relating to continued employment.
The Deferred STI is recognised as a Share Based Payment expense over the two financial periods.
1,810,857 securities were issued to satisfy the FY15 Deferred STI obligation that vested on 12 September
2016.
The grant date for the FY16 Deferred STI was 20 September 2016.
The number of units issued under the FY16 Deferred STI was 882,717.
The weighted average security price at the grant date for the FY16 Deferred STI was $1.0465.
34. Key management personnel disclosures
Key management personnel remuneration
Detailed remuneration disclosures are provided in the Remuneration Report of this annual report designated as
audited and forming part of the Directors’ Report.
Key Management Personnel (KMP) are not remunerated by the Trust. Payments made by the Trust to the
responsible entity do not include any amounts attributable to the remuneration of KMPs. Non-Executive directors
of IERL are remunerated by IERL. Other KMP of the Group are remunerated by the Group.
114
INFIGEN ENERGY ANNUAL REPORT 2017
34. Key management personnel disclosures (continued)
The aggregate remuneration of KMP of the Group and the Trust is set out below:
Short-term employee benefits1
Post-employment benefits (superannuation)
Other long-term benefits and equity-based incentive expense allocation2
Write-back prior year’s long-term share-based incentive expense allocation
Total
1 Includes short-term incentives accrued in respect of the current period.
2017
$
5,074,974
158,666
1,325,198
(203,904)
6,354,934
2016
$
3,109,964
127,250
1,170,941
(400,000)
4,008,155
2 Share-based incentive expense allocations are subject to performance rights and units vesting in the future. FY16 equity settled
incentive expense is adjusted for FY15 deferred STI granted in the period.
a) Loans to key personnel and their personally related entities
No loans have been made by the Group or the Trust to KMP or their personally related parties during the years
ended 30 June 2017 and 30 June 2016.
35. Remuneration of auditors
During the year the following fees were paid or are payable for services provided by the auditor of the Group and
the Trust for their related practices and non-related audit firms:
Audit services by:
PricewaterhouseCoopers
Audit and other assurance services
Audit and review of the financial statements
Audit and review of subsidiaries’ financial statements
Other assurance services
Taxation services by:
PricewaterhouseCoopers
Taxation compliance and advisory services
Other services by:
PricewaterhouseCoopers
Transaction and advisory services
Total remuneration of auditors
Non-audit services
Infigen Energy Group
2017
$
2016
$
Infigen Energy Trust
Group
2017
$
2016
$
196,000
162,000
32,000
390,000
201,000
158,000
31,000
390,000
20,000
-
-
20,000
20,000
-
-
20,000
73,435
73,435
61,065
61,065
-
-
-
-
372,193
835,628
164,228
615,293
229,393
249.393
-
20,000
The Group may decide to engage the auditor (PricewaterhouseCoopers) for provision of services additional to their
statutory audit duties where the auditor’s expertise and experience with the Group are important and cost effective.
The auditors received $445,628 for the provision of these services during the financial year. The nature of the non-
audit services provided by the auditor include due diligence services and tax advice relating to the equity capital
raising transaction and the financing of the Bodangora Wind Farm, general tax compliance services, and
international tax consulting.
The Board has considered the Audit Risk and Compliance Committee’s advice and the non-audit services provided
by the auditor and is satisfied that the provision of these services by the auditor is compatible with, and did not
compromise the general standard of auditor independence imposed by the Corporations Act 2001. The non-audit
services provided also do not undermine the general principles relating to auditor independence as set out in the
APES 110 Code of Ethics for Professional Accountants as they did not involve reviewing or auditing the auditor’s
own work or acting in a management or decision making capacity for the Group.
115
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DIRECTORS’ REPORT
FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
36. New and amended accounting standards
a) New and amended standards adopted by the Group or the Trust
There are no new or amended standards that are effective from 1 July 2016 that are mandatory for adoption by the
Group or the Trust.
b) New standards and interpretations not yet adopted by the Group or the Trust
Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June
2017 reporting period and have not been early adopted by the Group and the Trust. The Group and the Trust’s
assessment of the impact of these new standards and interpretations is set out below:
(i)
AASB 15 Revenue from Contracts with Customers:
is mandatory for adoption for financial years commencing on or after 1 January 2018;
replaces AASB 118 Contracts for Goods and Services and AASB 111 Construction Contracts;
is based on the principle that revenue is recognised when control of a good or service transfers to a
customer; and
permits either a full retrospective or a modified retrospective approach for the adoption.
The Group has identified that the new standard will affect the way revenue from LGCs and PPAs are
described and disclosed in the financial statements. However, as at the balance date, it is assessed that
no change is expected with respect to the recognition and measurement of these revenue streams. The
Group and the Trust must adopt the new standard from 1 July 2018.
(ii)
AASB 16 Leases is mandatory for adoption for financial years commencing on or after 1 January 2019.
On adoption of this new standard:
the Group’s operating lease commitments relating to land leases, option fees and office leases will be
recognised in the consolidated statements of financial position; and
operating leases will be recognised as an asset (the right to use the leased item) and a financial
liability (lease payment obligation).
The Group’s maintenance and capital expenditure commitments and connection fees will not be classified
as leases under AASB 16. An optional exemption also exists for short-term and low-value leases such as
rental of office equipment.
There are no other standards that are not yet effective and that are expected to have a material impact on the Group
or Trust in the current or future reporting periods and on foreseeable future transactions.
116
INFIGEN ENERGY ANNUAL REPORT 2017
DIRECTORS’ DECLARATION
In the opinion of the Directors of Infigen Energy Limited (“IEL”) and the Directors of the Responsible Entity of Infigen
Energy Trust (“IET”), Infigen Energy RE Limited (“IERL”) (collectively referred to as “the Directors”):
a)
the financial statements and notes of Infigen Energy Group and the Infigen Energy Trust Group set out
on pages 51 to 116 are in accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
giving a true and fair view of Infigen Energy Group’s and Infigen Energy Trust Group’s financial
position as at 30 June 2017 and of their performance for the financial year ended on that date;
b)
c)
there are reasonable grounds to believe that both Infigen Energy Group and Infigen Energy Trust Group
will be able to pay their debts as and when they become due and payable; and
the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and the Chief Financial Officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors pursuant to section 295(5) of the
Corporations Act 2001.
On behalf of the Directors of IEL and IERL:
Michael Hutchinson
Chairman
Ross Rolfe AO
Chief Executive Officer / Managing Director
Sydney, 24 August 2017
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AUDITOR’S REPORT
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INFIGEN ENERGY ANNUAL REPORT 2017
119
120
INFIGEN ENERGY ANNUAL REPORT 2017
121
122
INFIGEN ENERGY ANNUAL REPORT 2017
123
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INFIGEN ENERGY 2017 ANNUAL REPORT
GOVERNANCE
Corporate Governance Summary
Infigen’s Corporate Governance Statement (“CGS”) sets out the corporate governance framework at Infigen and
the extent to which Infigen followed the Principles and Recommendations of the ASX Corporate Governance
Council guideline (Third edition). Infigen’s CGS for the financial year ended 30 June 2017 was approved by the
Board.
Infigen’s 2017 Corporate Governance Statement is available at infigenenergy.com/CGS
Approach to Corporate Governance
Infigen’s corporate governance is underpinned by commitments to our stakeholders:
Security holders – generate value for our security holders by producing and trading clean energy in the
Australian market.
Customers – understand and meet their needs by providing affordable and reliable energy products and
services that respond to their requirements and provide value for money
Community – foster respectful, responsive and enduring relationships
Employees – provide a safe, enjoyable, rewarding and inclusive work environment
Further information
Infigen’s policy framework underpinning its
corporate governance includes:
Code of Conduct
Board Charters
Continuous Disclosure Policy
Risk Management Policy
Securities Trading Policy
Diversity & Inclusion Policy
Communications Policy
Community Engagement Policy
Privacy Policy
Complaints Handling Policy
Whistleblower Policy
Information about the above policies is
available at: infigenenergy.com/about-
us/corporate-governance
The Boards of Infigen recognise the importance of observing
high standards of corporate practice and business conduct,
and have adopted a formal Code of Conduct, which requires
directors and employees to maintain high ethical standards in
all of their business activities.
One of the objectives of the Code of Conduct is to ensure that
all persons dealing with Infigen, including employees,
security holders, suppliers, customers, competitors and the
community in general, can be assured that Infigen will
conduct its affairs in accordance with ethical values and
practices.
Ethical and Responsible Decision-Making
Infigen’s Code of Conduct sets out processes for employees
and directors regarding safety, workplace bullying, equal
employment opportunity, sexual harassment, confidentiality,
IT security, conflicts of interest, and securities trading. Infigen
encourages ethical behaviour and, in accordance with
Infigen’s Whistleblower Policy, provides protection for those
who report any actual or potential breach of
legal
requirements, the Code of Conduct or other Infigen policies.
Infigen’s Securities Trading Policy regulates the manner in which directors and employees can trade in IFN stapled
securities and other financial products relating to the performance of IFN stapled securities, and to ensure that their
investment activity is conducted in a manner that is lawful and avoids conflicts of interests between their personal
interests and the interests of Infigen.
Continuous Disclosure
Infigen is committed to providing equal and timely access to material information concerning Infigen to all investors.
The Continuous Disclosure Policy is designed to ensure that material price sensitive information arising from any
part of the business is notified to the ASX in a complete, balanced and timely manner.
125
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ADDITIONAL INFORMATION
Board Oversight
Infigen’s Boards operate in accordance with their respective Constitutions and Bye-Laws. The Boards have adopted
formal Board Charters which detail the Boards’ functions and responsibilities. The Charters set out clear
expectations of Directors and the Boards to act honestly, fairly and diligently in all respects in accordance with
applicable laws, as well as acting in the best interests of Infigen.
Infigen recognises that independent directors have an important role in assuring security holders that the Boards
act in the best interests of Infigen and independently of management.
A Director will be considered independent if they are not a member of management and if they are free of any
interests or relationships that could materially interfere with their ability to constructively challenge and
independently contribute to the work of the Board.
Board Committees
The Boards have established the following standing committees: an Audit, Risk & Compliance Committee (for each
of IEL, IERL and IEBL) and a Nomination & Remuneration Committee. The Audit, Risk & Compliance Committees
oversee the implementation and ongoing management of systems of internal control and risk management at
Infigen, ensuring that management has processes in place to identify, assess and properly manage risks. In addition
to its nomination, succession and general human resource responsibilities, the Nomination & Remuneration
Committee is responsible for monitoring and recommending the level of remuneration for Directors, as well as
providing advice in relation to the level of remuneration for other Key Management Personnel. The Committee
Charters detail the responsibilities of each Committee and how they exercise their authority.
Board Renewal and Performance
The Boards, with the assistance of the Nomination & Remuneration Committee, regularly assess the skills required
to competently discharge the Boards’ obligations to consider the strategic direction of Infigen, review potential
candidates for appointment to the Boards, provide confirmation of the Directors to retire annually by rotation, and
have oversight of the Boards’ regular performance evaluation process.
Responsibilities of Management
The Board has reserved certain matters for approval as set out in the Board Charters. In addition to delegating
specific responsibilities to Board Committees, the Boards also determine delegations to management, approve
relevant limits and review business developments for consistency with the Enterprise Risk Management framework
for the Infigen Group. That framework is consistent with International Standard ISO 31000 and is monitored by the
Audit, Risk & Compliance Committee.
The CEO has been granted authority for those matters not reserved for the Boards or a Board Committee. Infigen’s
management committees assist in the exercise of the CEO’s delegated authority. The CEO and other senior
management report to the Boards at each Board meeting. In addition to regular reporting from management, the
Boards have access to management as well as external advisors when required.
Approach to ESG Risks
Infigen’s material ESG risks are a sub-set of the broad risks that Infigen manages. ESG risks may arise as a
consequence of Infigen’s operations and actions, and include key areas of interests of Infigen’s stakeholders.
Material ESG risks inherent to Infigen’s business and relevant
to Infigen’s stakeholders are included in the Business Risks and
Mitigants section on pages 30-32. These risks relate to:
Operations and safety
People and culture
Community
Information systems and technology
Financial climate-related considerations
Stakeholders'
key interests
ESG
risks
Impacts from
operations
The Boards delegate authority for day-to-day business decisions to management, who seek to manage ESG risks,
which, if not considered and managed, could result in significant environmental and social impacts.
126
INFIGEN ENERGY 2017 ANNUAL REPORT
ESG Stakeholders
Investor community – security holders, potential investors and financiers, analysts and brokers
Employees – full-time and part-time
Customers – electricity retailers, commercial and industrial, wholesale and spot electricity and LGC market
participants
Community and non-government organisations – landowners and neighbours, traditional owners, social
and environmental interest groups, local businesses and schools, social media followers
Suppliers – original equipment manufacturers, maintenance and transmission network service providers,
surveyors and contractors, emergency services, industry and corporate service providers
Government and regulators – market operators, planning, energy and environment authorities, departments,
financial services industry regulators
Sustainability Targets
Infigen aims to create positive and sustainable outcomes for its stakeholders across all aspects of its business.
Infigen has a goal of “zero harm” to people, the environment and communities.
Infigen’s sustainability targets are set for each financial year and progress reported to the Board periodically in
relevant reports. Infigen acts on feedback because we recognise that the long-term sustainability of Infigen is closely
linked with the actions of our stakeholders and their continuing support for our operations and future developments.
Long-term sustainability is therefore an important part of our risk management framework.
ESG highlights
During the year ended 30 June 2017, Infigen:
Supported initiatives to promote diversity and inclusion through the Career Trackers indigenous
scholarship program (one student), the UNSW Women in Engineering scholarships program (two
students), Macquarie Graduate School of Management Women in MBA scholarship (one employee), and
the UNSW Women in Engineering camp.
Continued to hold community consultation meetings (17), wind farm site visits (68) and hosted Run with
the Wind open day at the Woodlawn wind farm.
Contributed over $140,000 directly to local community sponsorships.
Supported four renewable energy advocacy groups.
Infigen’s 2017 ESG Report details our objectives and performance in FY17 and will be available at
infigenenergy.com/ESG from 31 October 2017
Diversity
Infigen has implemented a Diversity and Inclusion Policy as part of its corporate governance framework in
accordance with the ASX Corporate Governance Principles and Recommendations.
The Diversity and Inclusion Policy can be viewed at infigenenergy.com/diversity
Gender Composition of Workforce
Infigen’s workforce increased from 63 to 65 employees and directors in FY17. The table below outlines the
proportion of females employed at Infigen for each of the prior three years. The proportion of females in the
workforce increased from 38% to 42% over the year to 30 June 2017.
Occupational category as at 30 June
Support
Field operations
Professional
Middle management
Senior management (Leadership)
Directors (Board)
Female employees and directors
127
2017
67%
-
54%
42%
10%
33%
42%
2016
60%
-
50%
40%
-
40%
38%
2015
60%
-
52%
46%
13%
25%
38%
ABOUT
DIRECTORS’ REPORT FINANCIAL REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Diversity Objectives
The Nomination & Remuneration Committee is responsible for setting measureable diversity objectives each two
years, and monitoring progress and continued appropriateness of those objectives. Infigen has reported on the
outcomes of these targets since September 2014. The Nomination & Remuneration Committee endorsed the
current three diversity objectives and corresponding targets for the period of 1 July 2015 to 30 June 2017. The
objectives and the respective outcomes against these targets are set out below.
Two-year diversity objectives to 30 June 2017
Outcomes
1.
Increase workforce participation of
females and persons from minority
backgrounds by 20% compared to
1 July 2015.
The target was to increase the workforce
composition by at least five female or
Indigenous or Torres Strait island people with
a corresponding reduction in the number of
men on a like for like basis.
Workforce participation of females increased by
12%
Sponsored two Indigenous scholarships with
Career Trackers
Sponsored two Women in Engineering
Scholarships with UNSW
Voluntary employee turnover was 15%
(40% females, 60% males)
Internal recruitment resulted in 10 promotions (70%
females, 30% males)
2.
Increase participation of females and
persons from minority backgrounds
within management occupational
categories by 25% on a merit basis.
The target was to employ or promote at least
three female, Indigenous or Torres Strait
island people into the top three occupational
groups (middle management, leadership, or
non-executive directors).
11 employees left this group (four females, seven
males) due to:
voluntary turnover (two females, two males)
parental leave (two females)
involuntary turnover (four males)
retirement (one male)
10 new hires were appointed in equal proportion of
females to males.
3. Achieve pay equity within each
occupational category.
The target was to measure and track
progress on equity in remuneration to ensure
that gender is not a contributing factor for
determining remuneration outcomes.
This is the third year that Infigen has measured pay
equity between females and males. As at 30 June
2017 there was pay equity across 62% of the total
workforce. The pay differential for the remaining
employees is due to the diversity of roles, experience
and number of employees.
Pay ratios can be highly sensitive to slight changes to
the workforce composition. For example, in previous
years there has been no female comparators in the
senior management occupational category, and this
year the pay gap ratio is now in favour of females.
Infigen will continue to monitor remuneration within
each occupational category to ensure that we know
when a pay differential occurs and why.
Further detail on diversity and equal opportunity, education and training will be available in Infigen’s 2017
ESG Report at infigenenergy.com/ESG from 31 October 2017
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INFIGEN ENERGY 2017 ANNUAL REPORT
ADDITIONAL INFORMATION
INVESTOR INFORMATION
Five-year financial and operating summary (Australian business unless otherwise stated)
Year ended 30 June
Safety
Total recordable injury frequency rate
Lost time injury frequency rate27
Profitability
Revenue
Operating costs
Other costs and income28
Underlying EBITDA
Profit/(Loss)
EBITDA margin
Financial position
Debt
Cash
Net debt
Equity
Securities on issue at the end of year
Book gearing
Net assets per security
Net tangible assets per security
EBITDA / (net debt + equity)
Security holder value and cash flow
Earnings per security
Net operating cash flow per security
Assets and operations
Installed capacity
Under construction
Production
Alinta wind farm
Capital wind farm
Lake Bonney 1 wind farm
Lake Bonney 2 wind farm
Lake Bonney 3 wind farm
Woodlawn wind farm
Compensated
Total production (generated)
Electricity spot prices
Unit
2017
2016
2015
2014
2013
4.7
4.7
196.7
(40.2)
(17.1)
139.3
32.3
70.8
4.8
-
173.2
(37.4)
(15.7)
120.2
9.7
-
133.8
(34.7)
(15.6)
83.5
4.5
(303.6)29
69.4
62.4
14.4
4.8
145.4
(36.1)
(16.7)
92.6
(8.9)
63.7
13.2
-
144.9
(36.2)
(16.9)
91.8
(17.7)
63.3
$ million
$ million
$ million
$ million
$ million
%
$ million
(653.9)
(742.5)
(786.9)
(1,075.1)30
(1,058.6)30
$ million
251.8
147.6
45.2
80.730
121.030
$ million
(402.1)
(594.9)
(741.7)
(994.4)30
(937.4) 30
$ million
# million
%
$
$
%
cps
cps
MW
MW
GWh
GWh
GWh
GWh
GWh
GWh
GWh
GWh
479.4
280.6
260.9
492.130
484.030
950
45.5
0.50
0.38
15.8
4.0
12.0
557
113
338
345
181
381
95
143
5
772
68.0
0.36
0.20
13.7
1.1
7.4
557
-
300
360
182
380
92
147
8
768
74.0
0.34
0.17
8.3
(2.3)
4.3
557
-
323
320
192
392
93
125
14
765
66.930
0.6430
0.3130
6.230
(5.9) 30
2.630
557
-
328
372
206
412
99
155
-
762
65.930
0.6330
0.2730
6.530
(10.5) 30
11.730
557
-
320
345
191
377
95
145
43
1,487
1,469
1,459
1,572
1,516
Discount to time weighted average price in SA
Discount to time weighted average price in NSW
Dispatch weighted average price in SA
Dispatch weighted average price in NSW
%
%
$/MWh
$/MWh
25
8
81.58
74.54
17
-1
50.97
51.86
23
2
30.28
34.64
11
-1
55.17
52.91
16
1
58.93
54.55
27 There were no lost time injuries in 2013, 2015 and 2016.
28 Includes corporate costs and development costs.
29 Includes the loss on sale of the US business.
30 Includes the US business.
129
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ADDITIONAL INFORMATION
Investor Information
Glossary
Corporate Directory
Bermuda Law Issues
Incorporation: Infigen Energy (Bermuda) Limited (“IEBL”) is incorporated in Bermuda.
Takeovers: Unlike IEL and IET, IEBL is not subject to the sections in Chapter 6 of the Corporations Act dealing with
the acquisition of shares (including substantial holdings and takeovers).
Bermuda company law does not have a takeover code, which effectively means that as an ASX listed entity with
IEL and IET, a takeover of IEBL will be regulated under Australian takeover law. However, Section 102 of the
Bermuda Companies Act provides that where an offer is made for shares of a company and, within four months of
the offer the holders of not less than 90% of the shares that are the subject of such offer accept, the offeror may by
notice require the non-tendering shareholders to transfer their shares on the terms of the offer. Dissenting
shareholders may apply to the court within one month of the notice, objecting to the transfer. The test is one of
fairness to the body of the shareholders and not to individuals, and the burden is on the dissentient shareholder to
prove unfairness, not merely that the scheme is open to criticism.
An alternative mechanism for the compulsory acquisition of shares arises in Section 103 of the Bermuda Companies
Act. Under that section, the holder of not less than 95% of the shares may compulsorily acquire the remainder from
the remaining shareholders. The offeror must give notice to all remaining shareholders of its intention to acquire all,
and not some, of the shares on the terms set out in the notice. Dissenting shareholders can only apply to the court
within one month of the notice for a valuation of their shares. Within one month of the valuation, the offeror may
either acquire the shares at the valuation price fixed by the court or cancel the transaction.
Number of Stapled Securities and Holders
One share in each of IEL and IEBL, and one unit in IET, have been stapled together to form a single IFN stapled
security.
Each stapled security is made up of one IEL share, one IET unit and one IEBL share which, under each of the
Constitutions and Bye-Laws respectively, are stapled together and cannot be traded or dealt with separately. In
accordance with its requirements in respect of listed stapled securities, ASX reserves the right to remove any or all
of IEL, IEBL and IET from the Official List if, while the stapling arrangements apply, the securities in one of these
entities cease to be stapled to the securities in the other entities or one of these entities issues securities that are
not then stapled to the relevant securities in the other entities.
The following additional investor information is current as at 28 August 2017.
The total number of IFN stapled securities on issue is 954,060,175 and the number of holders of these stapled
securities is 18,523.
Substantial Security Holders
The names of substantial security holders who have notified Infigen in accordance with section 671B of the
Corporations Act 2001 are set out below.
Substantial security holder
Date of initial
notice
Date of most recent notice
Number of IFN stapled
securities advised in most
recent notice
The Childrens Investment Fund31
26 September 2008
1 July 2015
Mr Vijay V Sethu31
Morgan Stanley
9 September 2013
22 August 2014
3 August 2017
8 August 2017
249,603,481
47,000,000
54,443,427
31 Security holder acquired additional securities as part of Infigen’s $151 million equity capital raising in April 2017 but the
number was such that the security holder did not need to notify Infigen of a change in their substantial holding.
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INFIGEN ENERGY 2017 ANNUAL REPORT
Voting Rights
It is generally expected that General Meetings of shareholders of IEL, shareholders of IEBL and unitholders of IET
will be held concurrently where proposed resolutions relate to all three Infigen entities. At these General Meetings
of IEL, IEBL and IET, the voting rights outlined below will apply.
Voting rights in relation to General Meetings of IEL and IEBL:
on a show of hands, each shareholder of IEL and IEBL, who is present in person and each other person who
is present as a proxy, attorney or duly appointed corporate representative of a shareholder, has one vote; and
on a poll, each shareholder of IEL and IEBL, who is present in person, has one vote for each share they hold.
Also each person present as a proxy, attorney or duly appointed corporate representative of a shareholder has
one vote for each share held by the shareholder that the person represents.
Voting rights in relation to General Meetings of IET:
on a show of hands, each unitholder who is present in person and each other person who is present as a proxy,
attorney or duly appointed corporate representative of a unitholder has one vote; and
on a poll, each unitholder who is present in person has one vote for each one dollar of the value of the units in
IET held by the unitholder. Also, each person present as proxy, attorney or duly appointed corporate
representative of a unitholder has one vote for each one dollar of the value of the units in IET held by the
unitholder that the person represents.
Stapled Securities that Are Restricted or Subject to Voluntary Escrow
There are currently no IFN stapled securities that are restricted or subject to voluntary escrow.
On-Market Security Buy-Back
There is no current on-market buy-back of IFN stapled securities.
Distribution of IFN Stapled Securities as at 28 August 2017
The distribution of IFN stapled securities amongst IFN security holders is set out below.
Category
100,001 and over
10,001-100,000
5,001-10,000
1,001-5,000
1-1,000
Total
Securities
Security holders
878,772,643
42,896,373
10,192,570
18,574,846
3,623,743
954,060,175
205
1,621
1,409
7,303
7,985
18,523
The number of security holders holding less than a marketable parcel of IFN stapled securities was 5,861.
131
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GOVERNANCE
ADDITIONAL INFORMATION
Investor Information
Glossary
Corporate Directory
Top Infigen Security Holders
The largest Infigen security holders as at 28 August 2017 are set out below.
Rank
Security holder
IFN stapled securities held
Number
Percentage
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
19
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
NATIONAL NOMINEES LIMITED
NATIONAL NOMINEES LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
AMP LIFE LIMITED
PACIFIC CUSTODIANS PTY LIMITED
CS THIRD NOMINEES PTY LIMITED
KOLLEY PTY LTD
EASYTONE COMMUNICATIONS PTY LTD
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
TAPPET HOLDINGS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MR TREVOR YUEN
CITICORP NOMINEES PTY LIMITED
OWEN INVESTMENT CO PTY LIMITED
HUW INVESTMENT CO PTY LIMITED
BRYN INVESTMENT CO PTY LIMITED
CAMBROSE PTY LIMITED
456,656,217
129,663,867
95,614,806
39,726,596
22,414,389
16,000,000
12,819,918
8,470,226
5,980,283
4,869,702
4,844,559
3,247,015
3,192,903
2,900,000
2,816,521
2,539,450
2,451,992
2,369,997
2,166,251
2,166,251
2,166,251
2,000,000
47.86
13.59
10.02
4.16
2.35
1.68
1.34
0.89
0.63
0.51
0.51
0.34
0.33
0.30
0.30
0.27
0.26
0.25
0.23
0.23
0.23
0.21
Total top security holders
Total of other security holders
Total IFN stapled securities
825,077,194
128,982,981
954,060,175
86.48
13.52
100.00
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INFIGEN ENERGY 2017 ANNUAL REPORT
Key ASX Announcements
The key announcements lodged with the ASX and released to the market throughout FY17 are listed below.
2016
29 July
29 August
29 August
2 September
29 September
29 September
13 October
14 October
31 October
17 November
17 November
17 November
9 December
2017
31 January
22 February
28 February
31 March
3 April
3 April
5 April
7 April
7 April
28 April
2 May
9 May
17 May
5 June
23 June
29 June
Fourth Quarter FY16 Production and Revenue
FY16 Full Year Results Presentation
FY16 Annual Financial Report
S&P Dow Jones Indices Announces September Quarterly Rebalance
Annual Report 2016
Key to Disclosures, Corporate Governance Council Principles and Recommendations
Managing Director and Chief Executive Officer Succession
Infigen Energy 2016 AGM Notice of Meeting
First Quarter FY17 Production and Revenue
Ceasing to be a Substantial Holding – Ausbil Investment Management Limited
Annual General Meeting 2016, Presentation and Results
Director Resignation
S&P Dow Jones Indices Announces December Quarterly Rebalance
Second Quarter FY17 Production and Revenue
FY17 Interim Financial Report
Power Purchase Agreement for Bodangora Wind Farm
Infigen Proceeding with Construction of Bodangora Wind Farm
Trading Halt
Infigen launches $151 million Accelerated Non-renounceable Entitlement Offer
Institutional Entitlement Offer completion
Retail Entitlement Offer
Global Facility – Status of Infigen Energy Trust
Third Quarter FY17 Production and Revenue
Retail Entitlement Offer Completion
Infigen Restructures Management Team
Investor Presentation
Infigen Appoints New Independent Director
Downgrade to FY17 EBITDA Guidance
Infigen Executes Fleet-Wide Services Agreements with Vestas
A comprehensive
www.infigenenergy.com, and the ASX website: www.asx.com.au.
full details of all publications can be
list and
found on
the
Infigen website:
133
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Investor Information
Glossary
Company Directory
GLOSSARY
ARCC
ASX
Audit, Risk & Compliance Committees of Infigen Energy Limited (IEL), Infigen Energy RE
Limited (IERL) and Infigen Energy (Bermuda) Limited (IEBL).
Australian Securities Exchange Limited (ABN 98 008 624 691) or Australian Securities
Exchange as the context requires.
BOARD or BOARDS
Unless otherwise stated, the Boards of IEL, IERL and IEBL.
CAPACITY
CAPACITY
FACTOR
DEVELOPMENT
PIPELINE
The maximum power that a wind turbine generator was designed to produce.
A measure of the productivity of a wind turbine, calculated by the amount of power that a
wind turbine produces over a set time period, divided by the amount of power that would
have been produced if the turbine had been running at full capacity during that same time
period.
Infigen’s prospective renewable energy projects that are in various stages of development
prior to commencing construction. Stages of development include: landowner negotiations;
wind and solar monitoring, project feasibility and investment evaluation; community
consultation, cultural heritage assessment, environmental assessment; design, supplier
negotiations and connection.
DWA
EBITDA
Dispatch weighted average (electricity prices).
Earnings before interest, taxes, depreciation and amortisation.
FINANCIAL YEAR
A period of 12 months starting on 1 July and ending on 30 June in the next calendar year.
GRID
The network of power lines and associated equipment required to deliver electricity from
generators to consumers.
GROUP
Infigen Group being IEL (parent entity), IET, IEBL and the controlled entities of IEL and IET.
GW
IEBL
IEL
IERL
IET
IFN
Gigawatt. One billion watts of electricity.
Infigen Energy (Bermuda) Limited (ARBN 116 360 715).
Infigen Energy Limited (ABN 39 105 051 616).
Infigen Energy RE Limited (ACN 113 813 997) (AFSL 290 710), the responsible entity of IET.
Infigen Energy Trust (ARSN 116 244 118).
The code for the trading of listed IFN stapled securities on the ASX.
INFIGEN
Infigen Energy, comprising IEL, IEBL, IET and their respective subsidiary entities from time to
time.
LGC
MW
NRC
OCC
Large-scale Generation Certificate. The certificates are created by large-scale renewable
energy generators and each certificate represents 1 MWh of generation from renewable
resources.
Megawatt. One million watts of electricity.
Nomination & Remuneration Committee.
Operations Control Centre. A centrally located business function within Infigen that monitors
and directs the operations of Infigen’s wind and solar farms.
OPERATING EBITDA Operating EBITDA excludes corporate costs, non-operating costs and non-operating income.
TWA
Time weighted average (electricity prices).
134
CORPORATE DIRECTORY
Registry
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Australia
+61 1800 226 671 (toll free within Australia)
registrars@linkmarketservices.com.au
www.linkmarketservices.com.au
Disclaimer
This publication is issued by Infigen Energy Limited
(IEL), Infigen Energy (Bermuda) Limited (IEBL) and
Infigen Energy RE Limited as responsible entity for
Infigen Energy Trust (collectively Infigen). To the
maximum extent permitted by law, Infigen and its
respective related entities, Directors, officers and
employees (collectively Infigen Entities) do not accept,
and expressly disclaim, any
liability whatsoever
(including for negligence) for any loss howsoever
arising from any use of this publication or its contents.
This publication is not intended to constitute legal, tax
or accounting advice or opinion. No representation,
warranty or other assurance is made or given by or on
behalf of the Infigen Entities that any projection,
forward-looking statement or estimate
forecast,
contained in this publication should or will be achieved.
None of the Infigen Entities or any member of the Infigen
Energy Group guarantees the performance of Infigen,
the repayment of capital or a particular rate of return on
Infigen stapled securities.
is
IEL and IEBL are not licensed to provide financial
product advice. This publication
for general
information only and does not constitute financial
product advice, including personal financial product
advice, or an offer, invitation or recommendation in
respect of securities, by IEL, IEBL or any other Infigen
Entities. Note that, in providing this publication, the
Infigen Entities have not considered the objectives,
financial position or needs of the recipient. The recipient
should obtain and rely on its own professional advice
from its tax, legal, accounting and other professional
advisers in respect of the recipient’s objectives, financial
position or needs. All amounts expressed in dollars ($)
in this Annual Report are Australian dollars, unless
otherwise specified.
Infigen Energy
Level 17, 56 Pitt Street
Sydney NSW 2000
Australia
+61 2 8031 9900
www.infigenenergy.com
Directors
Michael Hutchinson (Non-Executive Chairman)
Philip Green (Non-Executive Director)
Fiona Harris (Non-Executive Director)
Leonard Gill (Non-Executive Director)
Ross Rolfe AO (Chief Executive Officer / Managing
Director)
Sylvia Wiggins (Executive Director - Finance)
Company Secretary
David Richardson
Annual General Meeting
Infigen Energy’s 2017 Annual General Meeting will be
held on 22 November 2017.
IFN Stapled Securities
Each stapled security in Infigen, tradable on the
Australian Securities Exchange under the “IFN” code,
comprises:
one share issued by Infigen Energy Limited, an
Australian public company;
one share issued by Infigen Energy (Bermuda)
Limited, a company incorporated in Bermuda; and
one unit in Infigen Energy Trust, an Australian
registered managed investment scheme.
Responsible Entity for Infigen Energy Trust
Infigen Energy RE Limited
Level 17, 56 Pitt Street
Sydney NSW 2000
Australia
+61 2 8031 9900
Auditor
PricewaterhouseCoopers
One International Towers Sydney
Watermans Quay
Barangaroo NSW 2000
Australia