ReNu Energy Limited Annual Report 2016

FY2016 Annual Report · ReNu Energy Limited

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Annual Report
2015-2016

Geodynamics Limited is a publicly listed company, incorporated and domiciled in Australia.
Geodynamics listed on the Australian Securities Exchange (ASX) in September 2002.

We are a clean energy products and services company with strong commercial and technical
capability in the clean energy and associated utility and infrastructure sectors.

In 2015 Geodynamics acquired biogas company Quantum Power Limited. Quantum Power
is a developer of renewable biogas energy systems for the Australian agribusiness and food
manufacturing industries. Geodynamics has broadened Quantum’s offering to include solar
PV, battery and hybrid systems.

Geodynamics is actively engaged in the analysis of a number of transformational
opportunities that will build on the Quantum Power business and deliver shareholder value.

In October 2016 we announced that the Company will be re-branded to ReNu Energy
(Geodynamics Limited trading as ReNu Energy) and subject to shareholder approval will
change its name from Geodynamics Limited to ReNu Energy Limited.

Our Vision is to generate change.About GDYOur Mission is to deliver innovative clean energy products and services to our customers, creating sustainable value for our shareholders. Table of contents

Strategic Objectives for 2017/2018

Chairman’s Letter

Managing Director’s Letter

Operations Review

2016 HSE and Community

Financial Report 2016

Corporate Directory

BOARD OF DIRECTORS
Mr Keith Spence
(Non-executive Chairman)

Mr Christopher Murray
(Managing Director and CEO)

Dr Jack Hamilton
(Non-executive Director)

Mr George Miltenyi
(Non-executive Director)

Mr Richard Brimblecombe
(Non-executive Director)

COMPANY SECRETARY
Mr Tim Pritchard CPA CSA (CERT)

PRINCIPAL AND REGISTERED OFFICE
Level 1, 9 Gardner Close, MILTON QLD 4064
Telephone: +61 7 3721 7500
Facsimile: +61 7 3721 7599

POSTAL ADDRESS
PO Box 2046, MILTON QLD 4064

INTERNET
www.geodynamics.com.au

EMAIL
info@geodynamics.com.au

ABN
55 095 006 090

BANKER
Westpac Banking Corporation

AUDITOR
Ernst & Young

SOLICITOR
Thomson Geer

SHARE REGISTRY
Link Market Services Limited
Phone: +61 1300 554 474
Fax: 02 9287 0303
Postal address: Locked Bag A14,
Sydney South NSW 1235
Website: www.linkmarketservices.com.au
Email: registrars@linkmarketservices.com.au

SECURITIES EXCHANGE LISTING
Geodynamics Limited shares are listed on the
Australian Securities Exchange. Ticker: GDY

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 1

Strategic Objectives for 2017/2018

The company will create shareholder
value through delivery of the following
strategic objectives:

STRENGTHEN THE COMPANY’S POSITION AS A DIVERSIFIED CLEAN ENERGY COMPANY
• Re-brand the Company to ReNu Energy and subject to shareholder approval rename

Geodynamics Limited to ReNu Energy Limited

• Develop additional clean energy products and services

2 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

ESTABLISH QUANTUM POWER AS THE BRAND OF CHOICE FOR ENERGY
GENERATION IN THE AGRICULTURAL SECTOR
• Strengthen the Company’s position as a provider of biogas energy generation by

securing additional projects

• Broaden the offering to include solar PV, battery storage and hybrid energy solutions

SECURE AND STRENGTHEN THE BALANCE SHEET
• Surrender Geothermal Retention Licences in the Cooper Basin
• Secure debt facilities for a portion of future project capex

SECURE A TRANSFORMATIONAL OPPORTUNITY
• Secure transformational opportunities that will build on the Quantum Power

business and deliver shareholder value

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 3

CHAIRMAN & MD

Chairman’s Letter

We are encouraged by the
opportunities in front of us, and
remain positive in our ability to
deliver innovative clean energy
products and services to our
customers, creating sustainable
value for shareholders.

Keith Spence (left), Christopher Murray (right).

Dear Shareholders,

Board changes

The Company has in the last 12 months successfully completed its transition
to a clean energy products and services company and has announced its new
brand, ReNu Energy.

The transition was first announced in our 2014 annual general meeting and
has not been without its challenges for the Company and its shareholders
– the financial results of the Quantum Power acquisition have been
disappointing to date. This has in part been due to the ongoing work to close
out the projects underway at the time of the acquisition, and Government
policy uncertainty. Despite these initial challenges, your Board believes that
the opportunities provided by the Quantum Power acquisition and by the
growth in renewables will benefit shareholders.

The completion of the majority of the remediation activities in the Cooper
Basin has significantly de-risked our balance sheet and re-positioned
the Company.

Our focus remains on the creation of shareholder value. To that end, your
Board and the management team have been working hard to identify
investment and diversification opportunities. We are encouraged by the
opportunities in front of us, and remain positive in our ability to deliver
innovative clean energy products and services to our customers, creating
sustainable value for shareholders.

Appointment of Managing Director

In January 2016, the Board appointed Mr Christopher Murray as Managing
Director and Chief Executive Officer. Chris is an experienced business leader
and brings over 25 years’ experience in the power industry, particularly in the
development of renewable and remote power projects.

I would like to take this opportunity to again thank the previous Managing
Director and Chief Executive Officer, Mr Geoff Ward, for his contribution.
Under his leadership we successfully completed the drilling of Habanero 4
and commissioned and operated the 1 MWe Habanero Pilot Plant, a significant
milestone for enhanced geothermal systems technology globally. Geoff
initiated the Company’s transformation to a clean energy products and
services company through the acquisition of Quantum Power.

4 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

Having seen through the transition to a diversified clean energy company,
I intend to step down from the Board at the upcoming Annual General
Meeting of the Company in November. Jack Hamilton who has been appointed
Chairman Elect will at that time become Chairman. Jack is an experienced
energy industry executive and non-executive director – he will provide
outstanding leadership and Board continuity during the next phase as the
Company builds its clean energy products and services business. At this
stage the Board will not appoint another director. However, as the Company
continues to pursue diversification opportunities the Board’s composition will
continue to be reviewed.

Looking back at 10 years with the Company, six of these as your Chairman,
I am proud of our geothermal achievements in the Cooper Basin although
disappointed that the project was not commercially viable and resulted in
loss of shareholder value. It has been my pleasure to be part of this Company
and see its transformation from a leading geothermal exploration company
to a diversified clean energy company. I am confident that there is a positive
future for the Company, and look forward to seeing it succeed on its new path.

Looking forward

The Company is well positioned to capitalise on the growing demand for
renewable energy. The management team, under the leadership of Christopher
Murray, has the right skill set and experience to take the Company to its next
phase and deliver value for our shareholders.

On behalf of your Board, I would like to express our thanks for the dedication
and diligence our management team and staff have shown over this period.
It is a testament to their belief in the Company and our shared desire to
generate change for a sustainable clean energy future. We also wish to thank
our stakeholders and especially you, our shareholders, for your support.

Keith Spence,
Chairman

Managing Director’s Letter

It has been a pleasure to take on the role of Managing Director and Chief
Executive Officer at a pivotal point in the Company’s history as an innovative
diversified clean energy products and services company. My initial months with
the Company have not been without some challenges which have resulted
in unfavourable outcomes for shareholders, however I am fortunate to have
stepped into a Company with a good safety and environmental culture, strong
management team and significant opportunities in a growing sector.

During the reporting period, the Company acquired Quantum Power which
provided a platform for growth and entry into the agribusiness sector. At
the same time, geothermal activities in the Pacific Islands were finalised and
remediation activities in the Cooper Basin have been substantially completed.
This has significantly reduced our liabilities enabling us to confidently seek
opportunities.

The transition to a less carbon intensive economy is underway and we believe
that it will accelerate and provide opportunities for those companies that
can provide innovative and commercially viable solutions to their customers.
The Company is well positioned to capitalise on this opportunity. Our recent
announcement regarding re-branding to ReNu Energy symbolises the transition
of the Company to a diversified provider of clean energy products and services.

Financial results

The Company reported a closing cash balance of $14.41 million for the year
ending 30 June 2016. A large proportion of the cash outlay for the financial
year was attributable to the remediation activities in the Cooper Basin and
the rectification and performance improvement works to Quantum Power’s
Engineering Procurement and Construction (EPC) projects. These have now
largely been addressed and the finalisation of outstanding activities during FY17
will see a significant reduction in these remediation and rectification expenses.

The Company will submit an R&D tax incentive claim with respect to the
FY16 Cooper Basin expenditure. It is anticipated the claim will be in excess of
$3 million and be received by the end of the calendar year.

The Company reported a loss of $10.56 million for the year, down from a loss of
$14.45 million the previous year. The loss includes a $4.69 million non-recurring
impairment charge to the Quantum Power goodwill and to the assets held for sale.

Clearly the early results and financial performance of the Quantum Power
business have been disappointing. Notwithstanding these setbacks, the
management team will continue to work with our customers and government
stakeholders to bring biogas projects that meet our return hurdles to fruition.

Quantum Power

Since acquiring Quantum Power the focus has been on the completion of
the EPC projects at hand and the progression of the Mindarra and Goulburn
Bioenergy Projects. Recently, post the period in review, we announced the
suspension of the Mindarra and Goulburn projects as a result of the uncertainty
surrounding grant funding options. While technically strong projects, our
desired investment return hurdles for these specific projects would not be met
without the assistance of some grant funding. Quantum Power will continue
to work with the owners of the facilities and the government on options for
renewable energy supply.

The agribusiness sector in Australia is in a strong position. Demand for high
quality produce domestically, and from our near neighbours is increasing, with
the sector expanding to meet this increased demand. This is encouraging news

for us, as we believe that biogas energy solutions can play an important role
in developing a competitive, sustainable and low carbon agribusiness sector
in Australia.

Businesses in the sector - in particular intensive farming, abattoirs and
rendering plants - are high users of energy and are exposed to rising electricity
and gas costs. These businesses represent not only an opportunity for biogas
energy solutions but are also ideal candidates for the installation of solar PV,
battery storage and hybrid energy solutions.

To capitalise on this opportunity, we recently announced the broadening of
our offering in the agribusiness sector to include solar PV, battery storage and
hybrid energy solutions. This offering will complement biogas energy generation
allowing us to better serve existing customers and to increase the size of our
addressable market.

The future

Looking to the year ahead we have set ourselves several strategic objectives
which are focussed on delivering shareholder value.

We are encouraged by the momentum that is building in the renewable sector
in Australia. The Renewable Energy Target (RET) of 33,000 gigawatt hours
of additional renewable electricity generation by 2020 is a key driver of this
momentum – it will require more than 5,000 megawatt of renewable generation
to be installed.

The cost of renewable technology such as solar PV and battery storage is
continuing to fall while prices for Large Scale Generation Certificates (LGC’s)
increase. This environment is creating more opportunities to compete with
incumbent generation in both distributed and utility scale projects. Distributed
and behind the meter generation will play an increasingly important role as both
an enabler of small to medium scale renewable generation and as a support to
the electricity networks.

The continued positive shift in the economic fundamentals of renewable
power technology is setting the scene for the Company’s strategy and we will
continue to identify and evaluate further transformational opportunities for the
Company focussed on renewable energy generation, clean energy products and
associated services.

We recently announced the re-branding of the Company to ReNu Energy. Subject
to shareholder approval, we intend to build on the re-brand by renaming
Geodynamics Limited to ReNu Energy Limited which will better reflect the
Company’s business as a provider of clean energy products and services.

Thank you

I would like to take this opportunity to thank our employees for their diligent
and sustained efforts in what has been a challenging period, and our customers
and broader stakeholders.

Finally I acknowledge and thank you, our shareholders, who have stayed with us
during this journey. Since starting with the Company I have had the opportunity
meet and talk to a number of you and I seek your ongoing support in 2017.

Christopher Murray,
Managing Director

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 5

Quantum Power sought grant funding for these early stage biogas projects.
Post the period in review, proposed legislative changes to key Federal
Government grant programs, has meant that the availability of grant
funding became increasingly uncertain. Without assistance through grant
funding these two projects will not meet the targeted investment returns.

In August 2016, Quantum Power met with the customers, and a decision to
suspend all work on the Mindarra and Goulburn Biogas projects was reached.
At the time of writing the final outcome of the grant funding was not known.
We will continue to engage with the Federal Government and our customers
to discuss other options to supply them with renewable energy, reducing
their operating costs and creating more sustainable businesses.

A review of projects in development at the time of the Quantum Power
acquisition, and rate of conversion of projects in the business development
pipeline to active projects, resulted in a decision to record a pre tax non-cash
impairment charge of $3.10 million to goodwill, in the 2015/16 Financial Results.

Quantum Power continues to pursue biogas projects in addition to its
broader offering of solar PV, battery and hybrid energy solutions to the
agribusiness sector.

Remediation of the Cooper Basin

The completion of the remediation activities in the Cooper Basin was a key
priority for the Company, both from a cost management perspective to reduce our
liabilities, and our duty to the environment, landholders and traditional owners.

With initial remediation commencing in FY14/15, activities continued this
reporting period with majority of activities completed by 30 June this year.
As at the end of this reporting period Celsius 1, Jolokia 1, Savina 1, Habanero
1 and Habanero 2 were all plugged and abandoned with surface remediation
completed. Habanero 3 and Habanero 4 are undergoing monitoring after
having the cement plugs set, with the final well barrier, surface plug and
well cap still outstanding.

OPERATIONS

Operations Review

Geodynamics has successfully transitioned
to a clean energy products and services
company. Over the year in review, the
Company has ended all geothermal energy
development projects and materially
completed the plug and abandonment
of wells and remediation activities in
the Cooper Basin, resulting in significant
de-risking of the balance sheet.

Quantum Power Acquisition

In September 2015 Geodynamics completed the acquisition of Quantum Power
Limited, a Queensland based biogas company. Quantum Power specialises in
the supply of anaerobic digestion-based biogas powered electricity generation
projects to the agribusiness and food manufacturing sector in Australia.

Australia is a major exporter of agricultural produce and services. More than
two thirds of agricultural commodities produced on farms are exported each
year. Over the past twenty years, the demand for high protein food sources
such as, pork, beef and eggs, has driven an increase in production. More
recently the export of beef, and dairy products has increased significantly in
response to growing overseas demand.

The Quantum Power acquisition has provided a platform for growth for
the Company and an entry into the agribusiness sector, opening up further
opportunities as an energy service provider in the industry. Our ongoing
engagement with the agribusiness community and our business development
activities, indicate that there is strong interest and opportunities to develop
biogas to energy projects, and to expand this offering to include solar PV,
battery and hybrid renewable energy solutions.

During the year Quantum Power has focussed on the completion of EPC
projects which were in progress at the time of the acquisition. This work is
now largely complete with the exception of some minor outstanding items.
The progression of planning, approvals and tendering for the Goulburn and
Mindarra Biogas Projects were also key priorities during the period.

The tendering conducted for the Goulburn Biogas project early in 2016
indicated that the project costs were higher than originally estimated. The
Mindarra Biogas project also experienced cost increases, with the most
significant of these being the high connection costs, for the connection of
the project to the main grid, enabling the export of excess electricity. This
network connection is essential for the project as approximately 50% of the
generated power was designated for export.

Above right: Post the period in review Geodynamics announced the
broadening of its offering to include solar PV, battery and hybrid energy
solutions for the agribusiness sector.

Right: Quantum Power, Covered Anaerobic Lagoon (CAL) and power
generation facility in Queensland.

6 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

The company will submit an R&D tax incentive claim
with respect to the FY16 Cooper Basin expenditure. It is
anticipated that claim will be in excess of $3 million and
be received by the end of the calendar year.

The remaining liability for the Cooper Basin Remediation
work is estimated to be $0.8 million out of a total
program of approximately $10 million. Net of Origin
Energy contribution and R&D tax, Geodynamics
outstanding contribution is approximately $0.3 million.

Upon completion of our remediation activities, and signoff
from the Department of State Development, Geodynamics
will apply to have the Geothermal Retention Licences
(GRL) converted to Geothermal Exploration Licences (GEL).

Pacific Islands

SAVO GEOTHERMAL PROJECT - SOLOMON ISLANDS
Geodynamics and its joint venture partner KGL Resources have jointly
decided on the termination of the joint venture agreement for the Savo
Island Geothermal Power Project. This has been effected by the transfer of
KGL Resources participating interest for a nominal sum. Geodynamics has
commenced steps to hand back the Prospecting Licence to the Solomon
Islands Department of Mines.

The Surface Access Agreement which was in place parallel to the
Prospecting Licence has been honoured with the Savo House of Chiefs
overseeing the implementation of the community projects during the past
year. The surrendering of the Prospecting Licence will end any activities and
commitments that the Company has in the Solomon Islands.

TAKARA GEOTHERMAL PROJECT - VANUATU
Over the course of the year, Geodynamics explored opportunities and
expressions of interest from the Vanuatu Government, Ni Vanuatu
companies as well as NGOs to take on the Takara Geothermal Power Project.
However, with low oil prices and residential and commercial solar projects
gaining popularity minimal interest has been received. Thus, Geodynamics
on behalf of its entity KUTh Energy Vanuatu has elected not to extend its
registration with the Vanuatu Investment Promotion Authority and has
advised our local entity management firm that the company is exiting its
interest in Vanuatu.

Year Ahead

The Company is actively engaged in the analysis of a number of
transformational acquisitions and complementary investment opportunities
that will support its objective of delivering innovative clean energy products
and services to its customers, creating sustainable value for shareholders.
Through our Quantum Power Business, we are expanding our offerings to
the agribusiness sector, and continue to work on the conversion of biogas
opportunities in our business development pipeline to firm projects.

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 7

HSE + COMMUNITY

2016 HSE and Community

Health and Safety

Environment

The health and safety of our employees, partners, contractors and visitors to
our sites and workplace is top priority for Geodynamics. To ensure ongoing
commitment to health and safety a full review of our Health and Safety
framework and reporting systems was conducted following the Quantum
Power acquisition.

The new H&S framework established for the businesses recognised that
the Company is no longer operating in remote and isolated environments
like the Cooper Basin, and addresses risk and safety concerns relevant to
the agribusiness sector we are now operating in. Requirements specific
to legislative regulations for the oil & gas industry (which includes biogas),
relating to operating gas plants have also been incorporated. A revised Safety
Management System has been established and implemented, with individual
Safety Management Plans also created for individual project sites.

The Company is continually striving to improve its safety performance
through risk management processes that identify systems, processes
and procedures that need strengthening. We will continue to place strong
emphasis on hazard identification, risk assessment and risk management
across all our activities to prevent injuries and minimise impact on the
environment as “Nothing is so important, it cannot be done safely”.

The sustainable development of our operations has been and continues to
be at the heart of what we do. The effective environmental management of
our activities in the Cooper Basin has enabled us to successfully remediate
our well sites enabling the areas to return to their natural state.

Over the period in review we have remediated in line with our Statement of
Environmental Objectives, all well sites with the exception of Habanero 3
and Habanero 4. The remaining surface remediation of the Cooper Basin site,
removal of power lines is expected to be completed this calendar year.

We have renewed our commitment to the environment for our biogas
projects, with the implementation of our updated Environmental
Management Policy and supporting plan.

We are committed to minimising the impact of our activities on the
natural landscape, waterways, flora and fauna in a manner consistent with
environmental best practice standards.

Our Community

Geodynamics is conscious of the impact of its activities on the communities
in which we operate. The Company aims to conduct its operations within
regulatory requirements, standards and codes of practice, and in line with
current community expectations.

Rehabilitation earthworks with the edges being scalloped and blended into the
surrounding landscape.

8 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

Geodynamics Limited
Financial Report 2016

TABLE OF CONTENTS

Directors’ Report

Auditor’s Independence Declaration to the Directors of Geodynamics Limited

Corporate Governance Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Cash Flow Statement

Consolidated Statement of Changes in Equity

Notes to the Financial Statement

Independent Auditor’s Report to the Members of Geodynamics Limited

Shareholder Information

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 9

Directors’ Report

Director Profiles

Your Directors submit their report for the period ended 30 June 2016. The names and details of the Directors of Geodynamics Limited in office during the
financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

NAME & QUALIFICATIONS

EXPERIENCE

Keith Spence

B.Sc (Hons), FAIM

Non-executive Chairman

Christopher Murray

B.E (Hons), MEAust, GAICD, AMP

Managing Director & CEO
(Appointed 11 January 2016)

Jack Hamilton

B.Eng. (Chem), Ph.D, FAICD

Non-executive Director

George Miltenyi

LLB, BSW, FAICD

Non-executive Director

Mr Spence has over 30 years experience in the oil and gas industry, including 18 years with Shell and has
a broad knowledge of the resources sector. He retired from Woodside in 2008 after a 14 year tenure in top
executive positions in that company. Mr Spence held many roles during his period with Woodside, including
Chief Operating Officer and Acting Chief Executive Officer.

Mr Spence is a Non-executive Director of Oil Search, Murray and Roberts Holdings Ltd and Independence
Group. He is Chairman of Base Resources Limited, the National Offshore Petroleum Safety and
Environmental Management Authority Board and the Industry Advisory Board of the Australian Centre for
Energy and Process Training.

Mr Christopher Murray was appointed Chief Executive Officer and Managing Director of the Company in
December 2015 and officially commenced in the role on 11 January 2016. Most recently he was the Chief
Executive Officer of Solar Systems Pty Ltd, a renewable energy technology developer. Prior to Solar Systems
Mr Murray spent eleven years as a senior executive with Energy Developments Limited in roles including
Executive General Manager Australia, Executive General Manager Remote Energy, Project Director West
Kimberley Power Project and Group General Manager Technical Services.

With over 30 years experience, Mr Murray’s expertise includes strategy, business development, research,
finance and operations. He holds an honours degree in Mechanical Engineering from the University of New
South Wales, is a graduate member of the Australian Institute of Company Directors, a graduate of the
Harvard Business School, a member of Engineers Australia and a member of the Board of the Leukaemia
Foundation of Queensland.

Dr Hamilton was until February 2012, Chief Executive Officer of Exergen Pty Ltd, a low emission coal resource
development company and formerly, Director of NWS Ventures with Woodside Energy. Dr Hamilton is also a
Non-executive Director of DUET Group Ltd. and Calix Ltd. Dr Hamilton graduated from Melbourne University
with a Bachelor of Chemical Engineering and Doctorate of Philosophy in 1981.

He has over 28 years’ experience both locally and internationally in operations management, in refining,
petrochemicals and gas production, marketing, strategy and LNG project management.

Mr Miltenyi has been owner, investor and director in a wide range of commercial ventures including
companies engaged in organisational development, marketing, immigration, education, life insurance, water
distillation technology, recruitment and geothermal energy. Since 1989, Mr Miltenyi has been the Managing
Director of an organisation development and strategy company, EMD Workforce Development which consults
to some of Australia’s largest corporations.

Mr Miltenyi was instrumental in building one of Australia’s largest English language educational companies
(ACL). Recently, he was a director of Australian Life Insurance Pty Ltd, a unique company specialising in
the provision of life and home contents insurance through mortgage brokers. Mr Miltenyi was involved in
floating a recruitment firm (Rubicor), which aggregated 19 separate recruitment companies.

He founded and managed such business as Multicultural Marketing and Management, Immigration Australia
and Clean Water Technology. Mr Miltenyi has a passion for commercialising renewable energy and low
carbon emission power ventures. He was a founding director of Kuth Energy, he served on the Board till the
sale to Geodynamics. Mr Miltenyi holds a Bachelor of Law and Bachelor of Social Work from the University of
New South Wales and is a fellow of the Australian Institute of Company Directors.

10 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT NAME & QUALIFICATIONS

EXPERIENCE

Richard Brimblecombe

MBA & MAICD

Non-executive Director

(Appointed 1 September 2015)

Geoff Ward

B.E (Chem) (Hons) MBA

Managing Director & CEO

(Resigned 31 January 2016)

Andrew Stock

B.Eng. (Chem) (Hons), FIE Aust

Non-executive Director

(Resigned 31 August 2015)

Robert Davies

CMA (Canada)

Non-executive Director

(Resigned 31 August 2015)

Mr Brimblecombe is an experienced executive in the agri-business and finance sectors, with a deep industry
knowledge of agribusiness, renewable energy and financial services. Mr Brimblecombe has experience in
operation of agri-business gained through senior leadership roles at Namoi Cotton, Australia’s leading cotton
processing and marketing organisation, and as General Manager for Qld / NT for Landmark Services, a leading
rural services business.

Mr Brimblecombe has also served in senior executive roles in the finance industry, specialising in lending
to the rural sector, including as Head of Specialised Agribusiness Solutions (Qld/NT) for Commonwealth
Bank of Australia and currently as Chief Executive Officer of StockCo (Australia) Pty Ltd, Australia’s and New
Zealand’s largest specialist livestock financier.

Mr Brimblecombe’s experience in the renewable energy sectors has been developed through roles as
Managing Director and subsequently Executive Chairman of Quantum Power Limited. Mr Brimblecombe holds
an Executive MBA from Bond University and is a Member of the Australian Institute of Company Directors.

Mr Ward was appointed Managing Director and Chief Executive Officer of Geodynamics in January 2011. Prior
to his appointment he held the role of Director at Azure Capital, a Perth-based independent advisory firm,
offering corporate advisory services to leading firms in the resources and engineering industries where he
had worked since 2007.

Mr Ward has over 20 years experience in the energy and finance industries in senior roles covering business
development, mergers and acquisitions, operations, oil and product trading, strategic and organisational
development, planning and economics, investor relations and new project development.

Mr Ward holds an honours degree in Chemical Engineering from the University of Melbourne and a Masters
of Business Administration from the University of Western Australia Business School, receiving the Director’s
Letter of Commendation.

Mr Andrew Stock was formerly Director, Executive Projects for Origin Energy and in previous roles, he was
responsible for Origin’s major capital investments in upstream petroleum, power generation, and low
emissions technology businesses.

With over 35 years of experience, he previously held senior management positions in energy industries in
Australia and overseas. He is a Board Member of the Clean Energy Finance Corporation and Non-executive
Director of the listed Company Horizon Oil Limited (since February 2011). A Climate Councillor with the
Climate Council, Chair of Advisory Boards for The University of Melbourne’s Energy Institute, The University
of Adelaide’s Institute for Minerals and Energy Resources, and member of Advisory Boards for the University
of Adelaide’s Centre Faculty of Engineering, Computer and Mathematical Sciences, and Centre for Energy
Technology. Board member of the SA Museum Foundation.

Mr Robert Davies is a Chartered Professional Accountant (Canada) and has extensive senior finance
experience with global mining and resource companies. He was formerly the Chief Executive Officer and a
Director of Australian Energy Company Limited, an unlisted public company. Prior to that he was Executive
Vice President and Chief Financial Officer for Inco Ltd, the western world’s largest nickel producer. Prior
to that, he was Chief Financial Officer for Alumina Ltd, and General Manager Treasury Tax and Investor
Relations for WMC Ltd. He has previously held senior finance positions with BHP in Canada, the US, Chile
and Australia, acquiring significant operational and corporate finance experience. He was also previously a
director of PT Inco and Alcoa of Australia.

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 11

Directors’ Report (continued)

NAME & QUALIFICATIONS

EXPERIENCE

Michel Marier

BBA (Int’l Mgt), M.Sc. (Finance), CFA, FRM

Non-executive Director

(Resigned 31 August 2015)

Mr Michel Marier joined The Sentient Group in 2009 and he is based at their office in Sydney. Before
joining the Sentient Group, Mr Marier worked 8 years at the Private Equity division of la Caisse de dépôt
et placement du Québec (CDPQ). While at CDPQ, his responsibilities ranged from currency hedging, risk
and return analysis to investments. In 2006, he participated in the establishment of a new sector in the
Private Equity division – distressed debt. In less than two years, the portfolio grew to billions through
co-investments and private equity funds. After this accomplishment, Mr Marier concentrated his efforts on
restoring the natural resources sector within the Private Equity division.

Michel Marier holds a Master’s degree in finance from HEC Montreal. He is a CFA charter holder. He is a
former Director of Natural Resources USA Corp, a Director of Samco Gold, a company listed on the TSX.V
exchange, and a Director of Toro Energy Limited.

COMPANY SECRETARY

Tim Pritchard

B.Bus, MCom, MIT, CPA, GIA (Cert)

Mr Tim Pritchard joined Geodynamics in 2010 as Financial Controller and became Chief Financial Officer in May 2011 responsible for managing all financial
activities of the Company as well as leading the information technology team. He was appointed Company Secretary in March 2012.

Mr Pritchard has over 20 years management experience in finance, accounting, consulting, project management and information technology. In addition to
extensive accounting experience, he has led a number of successful business transformation and system implementation assignments that have resulted in
significantly improved financial processes and business systems.

Before joining Geodynamics, Mr Pritchard was most recently engaged by leading institutional investment company, QIC as Head of Management Information.

CORPORATE STRUCTURE

Geodynamics Limited is a company limited by shares, incorporated and domiciled in Australia. It listed on the Australian Securities Exchange on September
2002 under code GDY. Its registered office and principal place of business is Level 1, 9 Gardner Close, Milton QLD 4064.

PRINCIPAL ACTIVITIES

The principal activities of Geodynamics Limited during the year were focussed on progressing the bioenergy opportunities brought to the business through
the acquisition of Quantum Power in September 2015 while also accelerating our search for profitable growth investments in the clean technology sectors
which are complementary to the Quantum business.

While actively seeking diversification opportunities we have continued to progress activities required for the remediation of our geothermal tenements in the
Cooper Basin in accordance with the relevant state regulations and environmental requirements.

REVIEW AND RESULTS OF OPERATIONS

The Company realised a loss before tax for the financial period as set out below:

Loss before income tax expense

Net loss attributable to members of Geodynamics Limited

Earnings per Share

Basic and diluted loss per share

2016
$

(10,843,606)

(10,559,086)

(cents)

(1.98)

2015
$

(14,445,416)

(cents)

(3.31)

12 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT REVIEW AND RESULTS OF
OPERATIONS (continued)

Geodynamics has positioned itself for growth
in the clean energy sector. In the 12 months
to 30 June 2016 the Company has ceased
development of geothermal energy projects,
materially completed the remediation and plug
and abandonment activities in the Cooper Basin,
de-risked the balance sheet and completed the
acquisition of Quantum Power.

OPERATIONS
•

The remediation and plug and abandonment
activities in the Cooper Basin are materially
complete.

•

As 30 June 2016 Celsius 1, Jolokia 1, Savina 1,
Habanero 1 and Habanero 2 were all plugged
and abandoned with surface remediation
completed. Habanero 3 and Habanero 4
are undergoing monitoring after having
the cement plugs set. Plans for the final
well barrier, surface plug and well cap for
Habanero 3 and 4 are in place and will be
executed once the monitoring period is
successfully completed.

The remaining surface remediation of the
power plant site and power lines as well as
the transfer of various operating assets to
third parties is expected to be completed
this calendar year.

Implemented the exit of all interests in
the Pacific Islands geothermal projects.
There are no material financial liabilities
associated with these projects.

QUANTUM POWER
•

Completed the acquisition of Quantum
Power on 1 September 2015.

•

Completed the Quantum Power EPC projects
which were in progress at the time of the
acquisition with the exception of minor
outstanding items.

Progressed planning, approvals and tendering
for projects that were on foot at the time
of the acquisition. Determined that in the
absence of grant funding these early stage
projects are not likely to meet our return
hurdles, in their current project format.

Continued the business development
activities for the build own operate and
maintain biogas to energy projects in the
agribusiness sector. Whilst it is clear the
agribusiness sector represents a growing
market opportunity, the projects have a long

gestation period and project rollout will be
slower than originally anticipated.

•

Confirmed that there is strong interest and
opportunities to develop biogas to energy
projects, and to expand this offering to
include solar and hybrid renewable energy
generation.

OTHER
•

Appointment of a new Managing Director
and Chief Executive Officer (CEO), Mr Chris
Murray.

•

Assessing further investment opportunities
to broaden and diversify the Company’s
activities in the clean energy sector.

DIVIDEND

The Directors do not propose to recommend the
payment of a dividend in respect of the period
ended 30 June 2016.

DIRECTORS’ INTERESTS IN
THE SHARES AND OPTIONS OF
THE COMPANY

As at the date of this report, the interests of
the Directors in the shares of Geodynamics
Limited were:

FULLY PAID
ORDINARY
SHARES

OPTIONS
OVER
ORDINARY
SHARES

DIRECTOR

K. Spence

C. Murray

J. Hamilton

G. Miltenyi

212,413

856,708

2,648,152

R. Brimblecombe

23,494,149

SIGNIFICANT CHANGES IN THE STATE
OF AFFAIRS
Significant changes in the state of affairs of
the Company during the financial period were
as follows:

•

Definite end to geothermal energy business
as witnessed by activities taken to exit the
Cooper Basin and Pacific Islands projects.

The acquisition of Quantum Power Limited,
completed on 1 September 2015.

The review of the projects on foot at the
time of the Quantum Power acquisition and
the likely role out of new projects resulted
in a pre tax impairment charge of $3.096
million to goodwill.

There were no other significant changes in
the state of affairs of the Company during the
financial period.

SIGNIFICANT EVENTS AFTER THE
BALANCE DATE

There has not arisen between 30 June 2016 and
the date of this report any item, transaction or
event of a relevant and unusual nature likely,
in the opinion of the Directors of the Company,
to affect significantly the operations of the
Company, the results of those operations, or the
state of affairs of the Company.

LIKELY DEVELOPMENTS AND
EXPECTED RESULTS

Following the Quantum Power Acquisition the
Group is well positioned for growth into further
clean energy opportunities. The momentum
of change in the energy sector continues
to increase, the cost of renewable energy
generation and battery storage continues to
fall, distributed generation is gaining increased
penetration, electric vehicles are receiving wide
spread recognition, and consumers are becoming
more energy conscious and empowered.

With a strong capability in a range of clean
energy technologies and the associated utility
and infrastructure sectors, Geodynamics will
continue to assess and review acquisition
opportunities within the clean energy sector that
will complement the Quantum Power business.
It remains the Company’s priority to complete
a further acquisition or transaction and deliver
on our mission to deliver sustainable value
for shareholders and customers by delivering
innovative clean energy products and services.

ENVIRONMENTAL REGULATIONS
AND PERFORMANCE

Geodynamics Limited’s presence within the
Cooper Basin has reduced significantly over the
last year as site remediation has progressed.
Geodynamics has completed most of the
remediation activities in the Cooper Basin.

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 13

Directors’ Report (continued)

ENVIRONMENTAL REGULATIONS
AND PERFORMANCE (continued)

for the area. Remediation activity will be linked
to the completion of agreed observation periods
following the plug and abandonment of wells.

The need for monitoring has greatly reduced
but will be continued until the remaining wells
Habanero 3 and Habanero 4 have been capped.
Geodynamics maintains a strong commitment to
the effective environmental management within
our tenements. Our Environmental Policy and
Environment Management System (EMS) provide
the framework to support and guide activities,
both in our offices and on our sites, in relation to
environmental performance.

A summary of the Company’s compliance with
environmental regulatory requirement with
regards to environmental performance over the
year is as follows:

•

No serious environmental incidents occurred.

Notices of Entry have been submitted to all
relevant stakeholders prior to commencement
of activities, including traditional owners and
pastoralists, with no complaints received.
Activity Notifications and Work Programs
submitted to Department of Statement
Development (DSD) for each activity as part of
this process.

Submission of Quarterly and Annual Reports
to the DSD as required for our existing
tenements.

Geodynamics will continue to plan and manage
plug, abandonment and rehabilitation activity
in the Cooper Basin in line with the Statement
of Environmental Objectives (SEO) requirements

INDEMNIFICATION AND
INSURANCE OF DIRECTORS AND
OFFICERS

During the financial year, the entity paid
premiums in respect of contracts insuring
directors, secretaries, and executive officers of
the Group and related entities against liabilities
incurred as director, secretary or executive officer
to the extent permitted by the Corporations Act
2001, subject to the terms, conditions, limitations
and exclusions of the policy. Under the terms of
the policy, the Group is precluded from disclosing
details of premiums paid.

ROUNDING

The amounts contained in this report and in
the financial report have been rounded to the
nearest $1,000 (unless otherwise stated) under
the option available to the Company under ASIC
Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191. The Company is
an entity to which the Class Order applies.

SHARE OPTIONS

Unissued shares – employee options
As at the date of this report, there were no
unissued ordinary shares under employee
options (2015 – NIL).

Shares issued as a result of the exercise of
employee options
There were no employee options exercised during
the financial year (2015 – Nil) or since the end of
the financial year.

Unissued shares – shareholder options
As at the date of this report, there were no
unissued ordinary shares under shareholder
options (2015 – Nil).

Shares issued as a result of the exercise of
shareholder options
There were no shareholder options exercised
during the financial year (2015 – Nil) or since the
end of the financial year.

DIRECTORS’ MEETINGS
During the period there were thirteen directors’
meetings held of which nine were by telephone
conference.

The Company had two committees during the
year with the following membership:

Audit & Risk Management Committee –
Membership comprises three Non-executive
Directors being Messrs Hamilton (Chair), Miltenyi
and Brimblecombe.

Remuneration & Nominations Committee –
Membership comprises three Non-executive
Directors being Messrs Spence (Chair), Miltenyi
and Hamilton.

The number of directors’ meetings and the number of meetings attended by each of the Directors of the Company during the financial period are as follows:

DIRECTORS’ MEETINGS

AUDIT & RISK MANAGEMENT
COMMITTEE MEETINGS

REMUNERATION & NOMINATIONS
COMMITTEE MEETINGS

Number held
whilst in office

Number
Attended

Number held
whilst in office

Number Attended

Number held
whilst in office

Number Attended

K. Spence

G. Ward

C. Murray

B. Davies

J. Hamilton

M. Marier

A. Stock

G. Miltenyi

R. Brimblecombe

14 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

The Directors received a declaration from the auditor of Geodynamics
Limited which is listed immediately after this report and forms part of this
Directors’ report.

1. INTRODUCTION
The remuneration report details the remuneration arrangements for key
management personnel (KMP) who are defined as those persons having
authority and responsibility for planning, directing and controlling the major
activities of the Company directly or indirectly including any Director.

During the 2016 financial year, $4,600 of non-audit services were provided
by the entity’s auditor, Ernst & Young relating to due diligence activities for
prospective acquisitions (2015: $nil). The Directors are satisfied that the
provision of non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001.

Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify
its auditors, Ernst & Young, as part of the terms of its audit engagement
against claims by third parties arising from the audit (for an unspecified
amount). No payment has been made to indemnify Ernst & Young during
or since the financial year.

CORPORATE GOVERNANCE

The Directors recognise the need for the highest standards of corporate
behaviour and accountability and therefore support and have adhered to the
principles of Corporate Governance. The Company’s Corporate Governance
Statement is printed immediately following this Directors’ Report.

REMUNERATION REPORT (Audited)

This remuneration report for the year ended 30 June 2016 outlines
the remuneration arrangements in place for Directors and Executives
of Geodynamics Limited in accordance with the requirements of the
Corporations Act 2001 and its Regulations. This information has been
audited as required by section 308(3C) of the Act.

The remuneration report is presented under the following sections:

Introduction

2. Remuneration governance

3. Executive remuneration arrangements

A. Remuneration principles and strategy

B. Approach to setting remuneration

C. Detail of Incentive Plans

4. Executive remuneration outcomes for 2015/16 (including link to

performance)

5. Executive contracts

6. Non-executive Director remuneration (including statutory remuneration

disclosures)

7. Additional statutory disclosures

For the purposes of this report, the term ‘executive’ encompasses the
Managing Director and the executive management team of the Company.

Non-executive Directors (NEDs)

K. Spence

J. Hamilton

G. Miltenyi

R. Brimblecombe

Chairman

Director

R. Davies (resigned 31 August 2015)

Director

M. Marier (resigned 31 August 2015)

Director

A. Stock (resigned 31 August 2015)

Director

Executive Directors

C. Murray (appointed 11 January 2016) Managing Director and CEO

G. Ward (resigned 31 January 2016)

Managing Director and CEO

Other Executives

T. Pritchard

A. Mills
(ceased employment 5 August 2016)

2. REMUNERATION GOVERNANCE

Chief Financial Officer & Company
Secretary

Project Engineering Team Leader

Remuneration Committee
The Remuneration & Nominations Committee comprises three Non-
executive Directors. The Remuneration and Nominations Committee has
the primary objective of assisting the Board in developing and assessing the
remuneration policy and practices of the Directors, Chief Executive Officer
and Senior Executives who report directly to the CEO.

Specifically, the Board approves the remuneration arrangements of the CEO,
the aggregate annual fixed remuneration salary review, the level of the
short-term incentive (STI) pool and the methodology for awards made under
the long-term incentive (LTI) plan, following recommendations from the
Remuneration & Nominations Committee. The Board also sets the aggregate
remuneration of NEDs, which is then subject to shareholder approval, and
NED fee levels.

Committee assessments incorporate the development of remuneration
policies and practices which will enable the Company to attract and retain
executives who will create value for shareholders. Executives will be fairly
and responsibly rewarded having regard to the performance of the Company,
the performance of the executive and the general market environment. The
Committee also assists the Board in its own self evaluation by annually
reviewing the process for self evaluation. This considers attributes such as
the qualitative and quantitative nature of the review, and the mix between
total Board review and individual Director review.

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 15

Directors’ Report (continued)

REMUNERATION REPORT
(Audited) (continued)

REMUNERATION GOVERNANCE (continued)
The Remuneration & Nominations Committee
meets regularly through the year. The CEO
attends remuneration committee meetings by
invitation, where management input is required.
The CEO is not present during any discussions
related to his own remuneration arrangements.

Further information on the Remuneration &
Nomination Committee’s role, responsibilities and
membership can be found on the Company’s web
site at www.geodynamics.com.au.

Use of Remuneration Consultants

The company did not appoint remuneration
consultants for remuneration recommendations
during the financial year.

Remuneration Report approval at FY14/15 AGM

The FY14/15 remuneration report received
positive shareholder support at the FY14/15 AGM
with a vote of 78.3% in favour.

3. EXECUTIVE REMUNERATION

ARRANGEMENTS

3A. Remuneration principles and strategy
Geodynamics’ executive remuneration strategy
is designed to attract, motivate and retain highly
skilled executives and align the interests of
executives and shareholders.

To this end, the company embodies the following
principles in its remuneration framework:

•

Provide competitive salaries to attract high
calibre executives;

Link executive performance rewards to
medium and longer term shareholder value
creation through the KPI linked Short Term
Incentive plan, and;

Establish appropriate share price
performance hurdles under its long term
incentive plan to align executive reward with
shareholder value creation, the achievement
of which will depend on the Company
achieving key corporate milestones that
are integral to the Company’s successful
completion of its business plan.

The Company aims to reward its Executives with
a level and mix of remuneration commensurate
with their position and responsibilities within the
Company and so as to:

•

Reward Executives for company, business
division and individual performance against
targets set by reference to appropriate
benchmarks;

Link reward with the strategic goals and
performance of the Company; and

Ensure total remuneration is competitive by
market standards.

3B. Approach to setting remuneration
The Managing Director’s and key executives’
emoluments are structured to retain and
motivate Executives by offering a competitive
base salary, a short term annual cash-based
performance related component together with
longer term performance incentives through the
Geodynamics Limited Share Appreciation Rights
Plan which allow executives to align with the
success of Geodynamics Limited.

Remuneration consists of the following
key elements:

•

Fixed Remuneration – Base salary and
superannuation;

Variable Remuneration under the
Geodynamics Short Term Incentive Plan
(STIP) – payable in cash at the end of the
financial year;

Variable Remuneration under the
Geodynamics Limited Share Appreciation
Rights Plan payable in Shares subject to
performance conditions in accordance with
the Plan.

The level of fixed remuneration is set so as to
provide a base level of remuneration which
is both appropriate to the position and is
competitive in the market. Fixed remuneration
of the Managing Director is reviewed annually by
the Remuneration and Nominations Committee
and approved by the Board. Factors considered
include Company and individual performance,
relevant comparative remuneration in the market
and internal and, where appropriate, external
advice. The Remuneration and Nominations
Committee has access to external advice
independent of management.

Senior Executives receive their fixed (primary)
remuneration in cash. The fixed remuneration
component of KMP is detailed in Table 1 of
this report.

3C. Details of Incentive Plans
Short Term Incentive Plan (STIP)

The objectives of the Geodynamics STIP are to:

•

Reward employees for their contribution in
ensuring that Geodynamics achieves the
corporate key deliverables;

Encourage team work;

Enhance Geodynamics attracting and
retaining high calibre and high performing
employees; and

Link remuneration directly to the
achievement of key annual organisational
objectives.

The Company has in place an annual STIP that
establishes a pool of funds up to a maximum of
30% of annualised fixed remuneration, adjusted
in size according to the achievement of key
Company Business Plan milestones in a year.

The distribution of the pool is to be determined
by team achievement in delivering the team
business plan milestones. Specifically, base
targets are outlined that if achieved would
result in an award of 20% of annualised fixed
remuneration. First stretch targets are outlined
that if achieved would result in an award of up
to 25% of fixed annual remuneration and second
stretch targets are outlined that if achieved
would result in an award of up to the maximum
of 30% of fixed annual remuneration.

To participate in the Plan, eligible staff must
be employed for at least six months for the
financial year in question meaning that for the
FY15/16 year, eligible staff must have started by
1 January 2015.

On an annual basis, after consideration of
performance against KPIs, the board, in line with
their responsibilities, determine the amount, if
any, of the short-term incentive to be paid from
the pool of funds.

For the current financial year, as for the previous 2
years, the Board has exercised its discretion not to
pay any short term incentive under the plan.

Geodynamics Share Appreciation Rights Plan

The Geodynamics Share Appreciation Rights
(SARs) Plan was approved by the Board in October
2013. The first issue of SARs under the approved
plan rules was approved by shareholders at the
November 2013 AGM.

16 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT A Share Appreciation Right is a right to receive
shares in the Company or an equivalent cash
payment based on the increase in the GDY
share price over a specified period, subject
to satisfying certain conditions (including a
performance condition).

The objective of the Geodynamics SARs Plan is to:

•

Align the interests of eligible employees
with those of shareholders;

Provide incentives to attract, retain and/or
motivate eligible employees in the interests
of the company; and

Provide eligible employees with the
opportunity to acquire Share Appreciation
Rights, and ultimately Shares, in accordance
with the plan rules.

The Board may, at its discretion, grant to an
eligible employee or may invite an eligible
employee to apply for a grant of SARs. The

vesting of SARs is subject to conditions
determined at the time of each issue.

Hedging of shares and options risk

Currently no Director or officer uses hedging
instruments to limit their exposure to risk on
either shares or options in the Company. The
Company’s policy is that the use of such hedging
instruments is prohibited.

4. EXECUTIVE REMUNERATION OUTCOMES

FOR FY15/16

Company performance and its link to
short-term incentives

Due to the focus during the year on accelerating
our search for profitable growth investments
in the clean technology sectors outside of
geothermal developments, management and the
Board deemed it to be inappropriate to establish
milestones under the short term incentive plan.

Geodynamics Limited Share Price 2011 - 2016

The Board and management will re-establish
milestones under the short-term incentive plan
after the completion of merger and acquisition
activities which will drive the strategic future
direction of Geodynamics.

Company performance and its link to
long-term incentives

The graph below shows the performance of the
Company as measured by its share price and
therefore by definition its Total Shareholder
Return. The loss per share from continuing
operations for the last five years was as follows:
2011/12 - $0.031, 2012/13 - $0.26, 2013/14 -
$0.03, 2014/15 - $0.03, 2015/16 - $0.02.

$0.4

$0.3

$0.2

$0.1

$0.0

Jun-11

Oct-11

Feb-12

Jun-12

Oct-12

Feb-13

Jun-13

Oct-13

Feb-14

Jun-14

Oct-14

Feb-15

Jun-15

Oct-15

Feb-16

Jun-16

Table 1 – Remuneration of KMP of the Company for the year ended 30 June 2016

Salary

233,970

144,507

259,115

252,442

890,034

G. Ward 1

C. Murray 2

T. Pritchard

A. Mills

Totals

SHORT-TERM

Cash Bonus – Short
Term Incentive

POST
EMPLOYMENT

Superannuation

SHARE BASED PAYMENT

TOTAL

PERFORMANCE
RELATED

Shares3
(amortised cost)

SARs 3
(amortised cost)

17,500

13,728

24,605

23,982

79,815

251,470

158,235

283,720

276,424

969,849

1 G. Ward ceased employment on 31 January 2016 and forfeited all SARs. Share based payment expenses of $131,825, previously recognised under AASB 2, have been reversed.

2 C. Murray was appointed on 11 January 2016.

3 The share and SARs amortised cost relate to those shares and SARs issued to the CEO as approved by shareholders at the November 2011 Annual General Meeting.

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 17

Directors’ Report (continued)

REMUNERATION REPORT (Audited) (continued)

Table 2 – Remuneration of KMP of the Company for the year ended 30 June 2015

G. Ward 1

T. Pritchard

A. Mills

Totals

Salary

407,500

259,115

277,678

944,293

SHORT-TERM

POST
EMPLOYMENT

SHARE BASED PAYMENT

TOTAL

PERFORMANCE
RELATED

Cash Bonus–
Short Term Incentive

Superannuation

Shares2
(amortised cost)

SARs2
(amortised cost)

29,942

22,255

19,271

71,468

17,857

2,373

4,744

24,974

131,805

587,104

283,743

301,693

131,805

1,172,540

25.49%

0.84%

1.57%

1 G. Ward ceased employment on 31 January 2016 and forfeited all SARs. Share based payment expenses of $131,825, previously recognised under AASB 2, have been reversed.

2 The share and SARs amortised cost relate to those shares and SARs issued to the CEO as approved by shareholders at the November 2011 Annual General Meeting.

5. SUMMARY OF EXECUTIVE CONTRACTUAL ARRANGEMENTS
Remuneration arrangements for KMP are formalised in employment agreements. Details of these contracts are provided below.

The contracts below include arrangements entered into prior to the amendments to the Corporations Act 2001 regarding termination payments which came
into effect on 24 November 2009. No contracts of the Company however exceed the revised limits on termination payments.

Managing Director and Chief Executive Officer

Mr Christopher Murray was appointed Managing Director on 11 January 2016. Mr Murray’s remuneration package is formalised in an open ended executive service
agreement, the details of which were disclosed to the ASX in an announcement on 11 January 2016. The key terms of Mr Murray’s contract are as follows:

•

He currently receives a base remuneration including superannuation of $335,000 per annum;

Short Term Incentive – Up to $67,000 per annum which is only payable on the achievement of certain performance milestones.

Long term incentive (Share Appreciation Rights) – subject to shareholder approval, the Company will grant the Executive a total of 20 million Share
Appreciation Rights (SARs). The performance condition is based on growth in the Geodynamics share price. All SARs granted under this LTI will have
a performance condition threshold of Geodynamics Limited achieving a minimum share price of $0.05 / share. No SARs will vest if the growth in the
Geodynamics share price is below threshold. The SARs will be initially tested against the performance condition on the earliest vesting date applicable.

The CEO’s termination provisions are as follows:

NOTICE PERIOD

PAYMENT IN
LIEU OF NOTICE

TREATMENT OF STI
ON TERMINATION

TREATMENT OF LTI
ON TERMINATION

Resignation

Termination for cause

Termination in cases of long term
illness, disablement, or notice
without cause

6 months

14 days

6 months

None

6 months

Unvested awards forfeited

Maybe prorated for time and
performance subject to Board
discretion

Change of control

14 days

6 months

Prorated for time and performance

18 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT Other KMP

All other KMP have rolling contracts.

Other standard KMP provisions are as follows:

NOTICE PERIOD

PAYMENT IN
LIEU OF NOTICE

TREATMENT OF STI
ON TERMINATION

TREATMENT OF LTI
ON TERMINATION

Resignation

Termination for cause

Termination in cases of long
term illness, disablement, or
notice without cause

3 months

None

3 months

None

3 months

Change of control

1 month

Unvested awards forfeited

Maybe prorated for time and
performance subject to board
discretion

Prorated for time and
performance

Prorated for time and performance

6. NON-EXECUTIVE DIRECTOR REMUNERATION ARRANGEMENTS
Remuneration Policy

Table 3 – Non-executive Directors’ Remuneration for the year
ended 30 June 2016

The Board seeks to set aggregate remuneration at a level which provides
the Company with the ability to attract and retain directors of the highest
calibre, whilst incurring a cost which is acceptable to shareholders.

The amount of aggregate remuneration sought to be approved by
shareholders and the manner in which it is apportioned amongst Directors is
reviewed annually. The Board considers advice from external consultants as
well as the fees paid to Non-executive Directors of comparable companies
when undertaking the annual review process. The amounts are set at a
level that compensates the Directors for their significant time commitment
in overseeing the progression of the Company’s business plan.

The Constitution of Geodynamics and the ASX Listing Rules specify that the
aggregate remuneration of Non-executive Directors shall be determined
from time to time by a general meeting. An amount not exceeding the
amount determined is then divided between the directors as agreed.
The latest determination was at the Annual General Meeting held on 28
November 2007 when shareholders approved an aggregate remuneration of
$700,000 per year.

Directors fees Superannuation

K. Spence

R. Davies 1

J. Hamilton

M. Marier 1

A. Stock 1

G. Miltenyi

R. Brimblecombe 2

59,302

6,719

47,552

5,375

6,719

43,427

42,941

5,634

638

511

638

4,126

2,530

Total

64,936

7,357

47,552

5,886

7,357

47,553

45,471

Totals

212,035

14,077

226,112

1 Resigned 31 August 2015

2 Appointed 1 September 2015

Table 4 – Non-Executive Directors’ Remuneration for the year
ended 30 June 2015

The Board will not seek any increase for the NED pool at the 2016 AGM.

Directors fees Superannuation

Structure

Each Non-executive Director receives a fee for being a Director of the
Company. The current fee structure is to pay Non-executive Directors
a gross annual remuneration of $50,000 p.a. with the Chairman paid
$65,000 p.a. There are no additional fees paid for committee memberships.
There are no retirement benefits offered to Non-executive Directors. In
accordance with good corporate governance practice, the Non-executive
Directors do not participate in share and share option based remuneration
plans of the Company.

The Company notes that, due to his previous role as Managing Director of
Quantum Power, Mr Richard Brimblecombe is not considered by the ASX
Corporate Governance Principles to be independent.

The remuneration of Non-executive Directors for the year ending 30 June
2016 is detailed in Table 3 of this report and the remuneration for the
comparative year ending 30 June 2015 is detailed in Table 4 of this report.

K. Spence

R. Davies 1

J. Hamilton

M. Marier 1

A. Stock 1

G. Miltenyi

Totals

1 Resigned 31 August 2015

78,833

53,750

51,499

43,000

53,750

43,000

7,489

5,106

4,085

5,106

4,085

Total

86,322

58,856

51,499

47,085

58,856

47,085

323,832

25,871

349,703

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 19

Directors’ Report (continued)

REMUNERATION REPORT (Audited) (continued)

7. ADDITIONAL STATUTORY DISCLOSURES
During the financial year, no shares were granted under the Long Term Incentive Plan to executives as the plan was terminated in the prior financial year.

No shares vested to executives for the year ended 30 June 2016.

Table 5- Shareholdings of Key Management Personnel

BALANCE AT
BEGINNING OF
PERIOD

01/07/15

856,708

212,413

2,648,152

284,685

301,136

4,303,094

FY2016

Directors

C. Murray

J. Hamilton

K. Spence

G. Miltenyi

R. Brimblecombe

Executives

T. Pritchard

A. Mills

Total

APPOINTMENTS/
BECAME KEY
MANAGEMENT
PERSONNEL

BALANCE AT
END OF PERIOD

30/06/16

23,494,149

856,708

212,413

2,648,152

23,494,149

284,685

301,136

23,494,149

27,797,243

Signed in accordance with a resolution of the Directors.

K. Spence

Chairman

Brisbane, 29 August 2016

20 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT Auditor’s Independence Declaration
to the Directors of Geodynamics Limited

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF GEODYNAMICS LIMITED

In relation to our audit of the financial report of Geodynamics Limited for the financial year ended 30 June 2016,
to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements
of the Corporations Act 2001 or any applicable code of professional conduct.

Ernst & Young

Andrew Carrick

Partner

Brisbane

29 August 2016

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 21

Corporate Governance Statement

The Board of Directors of Geodynamics Limited
is responsible for the corporate governance of
the Company and is committed to achieving
and demonstrating the highest standards of
corporate governance.

The Geodynamics Limited Corporate Governance
Statement is structured with reference to
the Australian Securities Exchange Corporate
Governance Council’s “Corporate Governance
Principles and Recommendations 3rd Edition the
Principles of which are as follows:

Principle 1. Lay solid foundations for

management and oversight

Principle 2. Structure the Board to add value

Principle 3. Promote ethical and responsible

decision making

Principle 4. Safeguard integrity in financial

reporting

Principle 5. Make timely and balanced

disclosure

Principle 6. Respect the rights of shareholders

Principle 7. Recognise and manage risk

Principle 8. Remunerate fairly and responsibly

This Corporate Governance Statement contains
certain specific information and discloses the
extent to which the Company has followed
the guidelines during the period. Where a
recommendation has not been followed, that
fact is disclosed, together with the reasons for
the departure.

Geodynamics Limited’s corporate governance
practices were in place throughout the year
ended 30 June 2016 and were fully compliant
with the Council’s recommendations except for
the following:

Recommendation 3.3 - Companies should disclose
in each annual report the measurable objectives
for achieving gender diversity set by the Board
in accordance with the diversity policy and
progress towards achieving them. The Company
has adopted a Diversity Policy that encourages
the participation and provision of opportunity to
all interested in working at Geodynamics. As the
Company has a relatively small work-force with
many requiring specific skills that may not be
widely available, the Company has not deemed
it appropriate to set specific numeric targets as
these could be inappropriately skewed by the
small sample size.

Geodynamics currently has participation from a
diverse workforce, with gender diversity being in
advance of industry averages for our sector.

Recommendation 3.4 - Companies should
disclose in each annual report the proportion
of women employees in the whole organisation,
women in senior executive positions and women
on the Board. The Company has adopted a
Diversity Policy that encourages the participation
and provision of opportunity to all interested in
working at Geodynamics. As the Company has a
relatively small work-force with many requiring
specific skills that may not be widely available,
the Company has not deemed it appropriate to
publish specific employment numbers as the
Company does not believe this information adds
any meaningful value due to its small workforce.

For further information on corporate policies
adopted by Geodynamics Limited, please refer to
“Governance” under the Our Company Tab on our
website located at www.geodynamics.com.au.

For 2016, the Company’s reporting against the
Principles is as follows:

1. LAY SOLID FOUNDATIONS FOR
MANAGEMENT AND OVERSIGHT

Companies should establish and disclose the
respective roles and responsibilities of Board and
management.

The Board operates in accordance with the
following principles and guidelines:

•

The Board does comprise a majority of Non-
executive Directors.

The Chairperson is an independent Director.

The Board does comprise Directors with
an appropriate range of qualifications and
expertise.

The terms and conditions of the appointment
of Non-executive Directors are set out in
a letter of appointment. The appointment
letter covers the following matters:

• the level of remuneration;

• the tenure of appointment;

• the expectation of the Board in relation to
attendance and preparation for all Board
meetings;

• the Directors code of conduct;

• the procedures dealing with conflicts of

interest; and

• the availability of independent advice -
The Board has agreed a procedure for
Directors to take independent professional

•

advice at the expense of the Company.
Prior approval of the Chairman is required,
but this will not be unreasonably withheld.

The Board meets as often as required to
attend to the affairs of the Company and
follow meeting guidelines set down to
ensure all Directors are made aware of,
and have available to them all necessary
information enabling them to participate in
an informed discussion of all agenda items.

•

The Chairman of the Board meets regularly
with the Managing Director.

The Board is responsible for the direction and
supervision of the Company’s business on behalf
of the shareholders, by whom they are elected
and to whom they are accountable. This includes
ensuring that internal controls and reporting
procedures are adequate and effective. The
Directors recognise the need to maintain the
highest standards of behaviour, ethics and
accountability. The primary functions of the
Board include responsibility for:

•

Approving objectives, goals and strategic
direction for management;

• Monitoring financial performance including
adopting annual budgets and approving the
Company’s financial statements;

•

Ensuring that adequate systems of
internal control exist and are appropriately
monitored for compliance;

Selecting, appointing and reviewing the
performance of the Managing Director
and Chief Executive Officer and reviewing
the performance of senior operational
management;

Ensuring significant business risks are
identified and appropriately managed; and

Reporting to shareholders on performance.

The Company’s Managing Director’s performance
and remuneration is reviewed annually by the
Non-executive Directors. The performance
criteria against which executives are assessed
is aligned with the financial and non-financial
objectives of Geodynamics Limited. Further
details of the process for evaluating performance
are set out in the Remuneration Report.

The Board may determine from time to time to
establish specific purpose sub-committees to
deal with specific issues. All matters determined
by committees are submitted to the full Board as
recommendations for Board decision. Minutes of
committee meetings are tabled at the immediate
subsequent Board meeting.

22 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT 2. STRUCTURE THE BOARD TO ADD VALUE
Companies should have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties.

Skills, Experience and Expertise of Directors
The Directors in office at the date of this statement are:

NAME

POSITION

INDEPENDENT

TERM IN OFFICE

EXPERTISE

Keith Spence

Non-executive Chairman

Christopher Murray

Managing Director

Jack Hamilton

Non-executive Director

George Miltenyi

Non-executive Director

Richard Brimblecombe

Non-executive Director

Yes

8.1 years

0.6 years

9.9 years

2.5 years

1 year

Energy, Engineering and Management

Energy, Renewables, Risk Management and Project Delivery

Energy, Engineering and Management

Energy, Management and Employment

Agribusiness, Renewables and Management

Independent Directors
Directors of Geodynamics Limited are considered
to be independent when they are independent of
management and free from any business or other
relationship that could materially interfere with,
or could reasonably be perceived to materially
interfere with the exercise of their unfettered
and independent judgement.

Non-executive Directors
The four Non-executive Directors periodically
meet for a period of time, without the presence
of management, to discuss the operation of the
Board and a range of other matters including
those relating to Remuneration and Directors’
Nominations. Relevant matters arising from
these meetings are shared with the full Board.

In the context of director independence,
‘materiality’ is considered from both the
Company and individual director perspective.
The determination of materiality requires
consideration of both quantitative and
qualitative elements. Qualitative factors
considered include whether a relationship
is strategically important, the competitive
landscape, the nature of the relationship and
the contractual or other arrangements governing
it and other factors which point to the actual
ability of the Director in question to shape the
direction of the Company’s loyalty.

In accordance with the definition of
independence above, and the materiality
thresholds set, the Directors as marked in the
previous table are considered to be independent.
Therefore there are six Non-executive Directors,
five of whom are deemed independent, and one
Executive Director. One Non-executive Director
who is not deemed independent is an Officer of
one of the Company’s three largest shareholders.

Further details of the members of the Board
including their experience and expertise are set
out in the Directors’ Report.

Term Of Office
The Company’s constitution specifies that all
Directors (with the exception of the Managing
Director) must retire from office no later than
the third annual general meeting (AGM) following
their last election. Where eligible, a Director may
stand for re-election.

Nominations
The Company has established a combined
Remuneration and Nominations Committee.
Membership and composition of this Committee
is discussed at the end of this Corporate
Governance Statement. With regard to the
Nominations charter of the Committee, the main
functions of the Committee are to:

•

Devise criteria (necessary and desirable
competencies) for Board membership for
approval by the full Board.

•

Identify specific individuals for nomination.

• Make recommendations to the Board
for new Directors and membership of
committees being always mindful that any
recommendation should ensure there is a
complementary mix of necessary skills.

•

Annually, assist the Chairman of the
Company in advising Directors about their
performance and tenure.

Oversee management succession plans,
including the Managing Director and Chief
Executive Officer and first line managers;

Review of the Board succession plan.

Critically examine the Committee’s
performance and recommend any changes to
the responsibilities to the Board.

In devising criteria for Board membership,
the Company uses a Board skills matrix to
identify any gaps in the skills and experience
of the Directors on the Board. In addition, the
Company uses a combination of professional
intermediaries to identify and assess candidates
as well as the network of contacts within the
Board itself.

Performance
In order to ensure that the Board continues to
discharge its responsibilities in an appropriate
manner, the practice of the Board is as follows:

•

The performance of all Non-executive
Directors is reviewed periodically by the
Chairman;

All Directors periodically complete a
structured self evaluation questionnaire
that aims to evaluate the performance of
the Board as a whole. These responses are
collated and subsequently discussed by the
Board to improve the functional operations
of the Board;

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 23

Corporate Governance Statement (continued)

2. STRUCTURE THE BOARD TO ADD VALUE

(continued)

4. SAFEGUARD INTEGRITY OF
FINANCIAL REPORTING

The members of the Audit & Risk Committee
during the year were:

Performance (continued)
•

The Chairman meets privately with each
Director as appropriate to discuss their
individual performance;

•

The Chairman’s performance is reviewed by
the Board.

3. PROMOTE ETHICAL AND RESPONSIBLE

DECISION-MAKING

Companies should actively promote ethical and
responsible decision-making.

The Company supports and has adopted the
Code of Conduct published by The Australian
Institute of Company Directors in 2005. This code
recognises the need for Directors and employees
to observe the highest standards of behaviour and
business ethics and its commitment to ensuring
compliance with the insider trading laws.

The Company has established a policy regarding
Diversity that is underpinned by four key principles:

•

Fairness: Every person will have the
opportunity to work and succeed at
Geodynamics - regardless of their gender,
nationality, background, age, physical ability
or sexual orientation.

Support: The Company will support the
varying needs of its diverse workforce by
providing flexible working conditions and
ensuring programs are in place to enable
every Geodynamics employee to reach their
career potential.

Respect: Every Geodynamics employee
will be treated with dignity and respect,
recognising that success depends upon the
commitment, capabilities and diversity of
the Company’s employees.

Leadership: The Board and senior leaders
will be ultimately responsible for instilling a
culture that embraces and values diversity
amongst the workforce.

At least once every 12 months, the Remuneration
and Nominations Committee will review the
Diversity Policy including a review of the
diversity objectives and initiatives to ensure they
remain current and appropriate and a review
of progress on the achievement of diversity
objectives over the preceding year.

Companies should have a structure to
independently verify and safeguard the integrity
of their financial reporting.

The Board has adopted an Audit & Risk
Committee Charter to ensure the truthful and
factual presentation of the Company’s financial
position and to review and advise on the
company’s risk management processes. Audit &
Risk Committee meetings will be held periodically
throughout the year. It is the policy of the Board
that the members of the committee shall be a
minimum of three Non-executive Directors. The
Audit & Risk Committee will be chaired by a
Non-executive Director other than the Chairman
of the Board.

The Chief Executive Officer and Chief Financial
Officer may attend the committee meetings
by invitation.

The main functions of the committee will be to:

•

Assess the appropriateness of accounting
policies, practices and disclosures and
whether the quality of financial reporting
is adequate;

Review the scope and results of internal,
external and compliance audits;

• Maintain open lines of communication

between the Board and external auditors
and the Company’s compliance officers;

•

Review and report to the Board on the
annual report, the half-year financial report
and all other financial information published
by the Company or released to the market;

Assess the adequacy of the Company’s
internal controls and make informed
decisions regarding compliance policies,
practices and disclosures;

Ensure effective deployment of risk
management processes;

Nominate the external auditors and review
the terms of their engagement, the scope
and quality of the audit and the auditor’s
independence;

Review the level of non-audit services
provided by the external auditors and ensure
that it does not adversely impact on auditor
independence.

The Chairman of the Audit & Risk Management
Committee reviews the performance of the
Committee with members and reports annually
to the Board.

Robert Davies
(Chairman until resignation on 31 August 2015)

Michel Marier
(until resignation on 31 August 2015)

Jack Hamilton
(Chairman from 1 September 2015)

George Miltenyi
(from 1 September 2015)

Richard Brimblecombe
(from 1 September 2015)

For details on the qualifications of the audit
& risk committee members, the number of
meetings of the Audit Committee held during the
year and the attendees at those meetings, refer
to the Directors’ Report.

5. MAKE TIMELY AND BALANCED DISCLOSURE
Companies should promote timely and balanced
disclosure of all material matters concerning
the company.

The Board has adopted a Listing Rule 3.1
Compliance Policy, which has been designed
to ensure compliance with the ASX Listing
Rule disclosure requirements and to ensure
accountability at a senior management level for
that compliance.

The Company Secretary has been nominated
as the person responsible for communications
with the Australian Securities Exchange (ASX).
This role includes responsibility for ensuring
compliance with the continuous disclosure
requirements in the ASX listing rules and
overseeing and co-ordinating information
disclosure to the ASX, analysts, brokers,
shareholders, the media and the public.

The Company rigorously polices its continuous
disclosure responsibilities to ensure a fully
informed market at all times. The Company’s
Continuous Disclosure Policy is available on the
Company’s website.

6. RESPECT THE RIGHTS OF

SHAREHOLDERS

Companies should respect the rights of
shareholders and facilitate the effective exercise
of those rights.

24 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT The Board of Directors aims to ensure that the
shareholders, on behalf of whom they act, are
provided with all information necessary to assess
the performance of the Company. Information is
communicated to the shareholders through:

•

The Annual Report, which will be distributed
to all shareholders (unless shareholders
specifically indicate otherwise);

The Annual General Meeting, and other
meetings called to obtain approval for Board
action as appropriate; and

The Company’s Corporate Internet site at
www.geodynamics.com.au. This web site
is actively maintained and includes all
market announcements, research reports
from analysts, briefings to shareholders, full
texts of notices of meeting and explanatory
material and compliance reports such as the
quarterly cash flow report and annual report.

Shareholders are actively encouraged to
become ‘online shareholders’ by registering
electronically with the Company to receive an
email notification of announcements as they
are made. The Company endeavours to respond
to all shareholder queries on a prompt and
courteous basis.

All information disclosed to the ASX is posted on
the Company’s website as soon as it is disclosed
to the ASX.

7. RECOGNISE AND MANAGE RISK
Companies should establish a sound system of
risk oversight, management and internal control.

The Company is committed to having a culture
of risk management and has established a risk
management system that supports a pro-active
approach to managing risk and to exploiting
opportunity at all levels.

A risk review process is conducted for each
component phase of the Company’s business
plan and these will continue to be conducted
for subsequent stages to highlight major risk
areas and plan the treatment to manage those
risks. In addition, a formal risk management
plan is included as part of every major capital
acquisition or procurement decision and key risk/
opportunity areas and their drivers are included
in the Management/Board reporting system.

Management, through the Managing Director
and Chief Executive Officer, is responsible for
designing, implementing and reporting on the
adequacy of the Company’s risk management and
internal control system.

Management reports to the Audit and Risk
Committee and the full Board on the Company’s
key risks and the extent to which it believes
these risks are being managed. This is performed
on a six monthly basis or more frequently as
required by the Board or Committee.

The Board is responsible for satisfying itself
annually, or more frequently as required, that
management has developed and implemented a
sound system of risk management and internal
control. It reviews strategic, operational and
technical risks in conjunction with, and as a key
input to an annual corporate strategy workshop
attended by the Board and senior management.
This workshop reviews the Company’s strategic
direction in detail and includes specific focus
on the identification of business risks which
could prevent the Company from achieving
its objectives. Management are required to
ensure that appropriate controls and mitigation
strategies are in place to effectively manage those
risks. Compliance and reporting risks are reviewed
on an ongoing basis and independently audited
from time to time. The Audit and Risk Committee
oversees the adequacy and comprehensiveness of
risk reporting from management.

The Board receives a written assurance from
the Chief Executive Officer and the Chief
Financial Officer that to the best of their
knowledge and belief, the declaration provided
by them in accordance with section 295A of the
Corporations Act is founded on a sound system
of risk management and internal control and that
the system is operating effectively in relation to
financial reporting risks. The Board notes that
due to its nature, internal control assurance from
the Chief Executive Officer and Chief Financial
Officer can only be reasonable rather than
absolute. This is due to such factors as the need
for judgement, the use of testing on a sample
basis, the inherent limitations in internal control
and because much of the evidence available is
persuasive rather than conclusive and therefore
is not and cannot be designed to detect all
weaknesses in control procedures.

8. REMUNERATE FAIRLY AND RESPONSIBLY
Companies should ensure that the level and
composition of remuneration is sufficient
and reasonable and that its relationship to
performance is clear.

Remuneration
It is the Company’s objective to provide
maximum stakeholder benefit from the retention
of a high quality Board and executive team by
remunerating Directors and key executives fairly
and appropriately with reference to relevant
employment market conditions. The Managing
Director’s and key executives’ emoluments are
structured to retain and motivate executives
by offering a competitive base salary together
with short and long term performance incentives
through cash, shares and options which
allow executives to share in the success of
Geodynamics Limited. The Board will assess the
appropriateness of the nature and amount of
emoluments of such officers on a periodic basis
by reference to relevant employment market
conditions with the overall objective of ensuring
maximum stakeholder benefit.

The Company currently has four Non-executive
Directors and a Managing Director. The
Company’s Managing Director does not receive
Directors’ fees and his remuneration package
is formalised in a service agreement. The
Non-executive Directors’ maximum aggregate
remuneration as approved by shareholders is
currently $700,000 and is set at a level that
compensates the directors for their significant
time commitment in overseeing the progression
of the Company’s business plan.

There are no retirement benefits offered to
Non-executive Directors other than statutory
superannuation. For a full discussion of the
Company’s remuneration philosophy and
framework and the remuneration received by
Directors and Executives in the current period,
please refer to the Remuneration Report which is
contained within the Directors’ Report.

Remuneration And Nominations Committee
The Remuneration and Nominations Committee
operates under a charter approved by the Board.
Remuneration and Nomination Committee
meetings are held at least semi-annually and
otherwise as required throughout the year. It
is the policy of the Board that the members
of the Committee shall be a minimum of three
Non-executive Directors and a majority of
independent directors. The Remuneration and
Nominations Committee will be chaired by a Non-
executive Director.

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 25

Corporate Governance Statement (continued)

8. REMUNERATE FAIRLY AND RESPONSIBLY (continued)

Remuneration And Nominations Committee (continued)
With regard to the Remuneration charter of the Committee, the main functions of the Committee are to:

•

Set the terms and conditions of employment for the Chief Executive Officer.

Set policies for Senior Executive remuneration including the Chief Executive Officer and other Executive Directors (if any) and review from time
to time as appropriate.

Set policies for Non-executive Director remuneration and review and recommend the level of remuneration with the assistance of external
consultants as appropriate.

• Make recommendations to the Board on remuneration for the Chief Executive Officer and Executive Director(s).

•

Review and approve the recommendations of the Chief Executive Officer on the remuneration of Senior Executives.

Review all equity based plans and make recommendations to the Board for approval.

Review and approve the design of Executive Incentive Plans ensuring appropriate performance hurdles are in place.

Review transactions between the group and the Directors, or any interest associated with the Directors, to ensure the structure and the terms
of the transaction are in compliance with the Corporations Act 2001 and are appropriately disclosed.

Review and approve the annual Remuneration Report contained within the Directors’ Report.

The members of the Remuneration and Nominations Committee during the year were:

Andrew Stock
(Chairman until resignation on 31 August 2015)

Keith Spence
(Chairman from 1 September 2015)

Robert Davies
(until resignation on 31 August 2015)

Jack Hamilton
(from 1 September 2015)

George Miltenyi
(from 1 September 2015)

For details on the number of meetings of the Remuneration and Nominations Committee held during the year and the attendees at those meetings,
refer to the Directors’ Report.

26 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT Consolidated Statement
of Comprehensive Income

FINANCIAL YEAR ENDED 30 JUNE 2016

Continuing Operations

Note

Interest Income

Site Income

Equipment Sales

Total Revenue

Other Income

Impairment of Property, Plant & Equipment

Impairment of Deferred Exploration & Evaluation Costs

Impairment of Assets Held for Sale

Impairment of Goodwill

Personnel Expenses

Exploration and Evaluation Expense

General & Administrative Expenses

Other Operating Expenses

Corporate Expenses Recovered

Share of loss in associate

Total Expenses

Income/(Loss) before Income Tax Expense

Income Tax Benefit/(Expense)

Income/(Loss) after Income Tax Expense

Other Comprehensive Income

Items that may be reclassified subsequently to profit and loss

Exchange differences on translation of foreign operations

Other Comprehensive Income for the period

Total Comprehensive Income/(Loss) for the period

Attributable to:

Equity holders of the Parent

Basic and Diluted Earnings/(Loss) per share (cents per share)

Basic and Diluted Earnings/(Loss) per share attributable to the equity holders of the
entity (cents per share)

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

2016

$’000

646

165

188

999

3,751

(1,594)

(3,096)

(3,191)

(2,803)

(4,644)

(266)

(11,843)

(10,844)

282

(10,562)

2015

$’000

986

256

(2,550)

(8,044)

(2,561)

(2,559)

(15,431)

(14,445)

(10,559)

(14,418)

(10,559)

(1.98)

(14,418)

(3.31)

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 27

Consolidated Statement of Financial Position

AS AT 30 JUNE 2016

Current Assets

Cash Assets

Inventories

Receivables

Assets Held for Sale

Total Current Assets

Non Current Assets

Property, Plant and Equipment

Intangible Assets

Total Non Current Assets

Total Assets

Current Liabilities

Payables

Provisions

Total Current Liabilities

Non Current Liabilities

Provisions

Total Non Current Liabilities

Total Liabilities

Net Assets

Equity

Issued Capital

Other Reserves

Accumulated Losses

Total Equity

Note

21(A)

2016

$’000

14,406

1,229

5,048

250

20,933

1,000

1,028

21,961

3,016

1,516

4,532

291

4,823

17,138

351,908

(334,778)

17,138

2015

$’000

28,000

950

2,375

31,325

1,364

32,689

616

7,477

8,093

337

8,430

24,259

348,338

11,235

(335,314)

24,259

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

28 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT Consolidated Cash Flow Statement

FINANCIAL YEAR ENDED 30 JUNE 2016

Cash Flows from/(used in) Operating Activities

Customer Receipts

Net Goods and Services Tax received

Payments to suppliers and employees

Net Interest Received

Net cash flows from/(used in) Operating Activities

Cash Flows from/(used in) Investing Activities

Proceeds from Government Grants

Proceeds from R&D Tax Incentive

Purchase of Property, Plant & Equipment

Payments for Exploration, Evaluation and Rehabilitation expenditure

Payments for Quantum projects and rectification costs

Payments for Quantum acquisition (including working capital)

Proceeds from sale of property, plant & equipment

Cash acquired from business acquisition

Net cash flow (used in) investing activities

Cash Flows from Financing Activities

Net cash flow provided by financing activities

Net increase / (decrease) in cash held

Add: Opening cash carried forward

Closing cash carried forward

Note

21(B)

21(A)

2016

$’000

454

889

(4,816)

664

(2,809)

350

2,381

(735)

(7,724)

(4,148)

(1,527)

211

407

(10,785)

(13,594)

28,000

14,406

2015

$’000

850

(6,549)

1,254

(4,445)

3,488

(56)

(6,392)

1,590

(1,370)

(5,815)

33,815

28,000

The above Consolidated Cash Flow Statement should be read in conjunction with the accompanying notes.

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 29

Consolidated Statement of Changes in Equity

FINANCIAL YEAR ENDED
30 JUNE 2016

At 1 July 2015

Recognition of foreign
exchange hedge reserve

Total expense for period recognised
directly in equity

Loss for the period

Other comprehensive income

Total loss for the period

Equity Transactions:

Share issued in consideration of
Quantum Power acquisition

Cost of share-based payment - reversal
of SARs expense

Employee Equity Benefits Reserve
transferred to Retained Earnings *

ISSUED CAPITAL

EMPLOYEE EQUITY
BENEFITS RESERVE

$’000

348,338

$’000

11,230

3,570

(132)

(11,098)

At 30 June 2016

351,908

* Refer to Note 12 for details of transfer

FOREIGN
CURRENCY
TRANSLATION
RESERVE

$’000

ACCUMULATED
LOSSES

TOTAL EQUITY

$’000

(335,314)

(10,562)

11,098

$’000

24,259

(10,562)

(10,559)

3,570

(132)

(334,778)

17,138

FINANCIAL YEAR ENDED
30 JUNE 2015

At 1 July 2014

Recognition of foreign
exchange hedge reserve

Total expense for period
recognised directly in equity

Loss for the period

Other comprehensive income

Total loss for the period

Equity Transactions:

Share based payment on
Employee Share Plan

348,338

10,969

(22)

(320,869)

38,416

129

132

(14,445)

(14,418)

129

132

(335,314)

24,259

Cost of share-based payment -
recognition of share option expense

348,338

At 30 June 2015

348,338

11,230

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

30 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT Notes to the Financial Statement

NOTE 1 – CORPORATE
INFORMATION

The financial report of Geodynamics Limited (the
Company) for the year ended 30 June 2016 was
authorised in accordance with a resolution of the
Directors on 25 August 2016.

Geodynamics Limited is a for profit Company
limited by shares, incorporated and domiciled in
Australia whose shares are publicly traded on
the Australian Securities Exchange. The nature
of the operations and principal activities of the
Company are described in the Directors’ Report.

NOTE 2 – SUMMARY OF
SIGNIFICANT ACCOUNTING
POLICIES

(A) Basis of Preparation

The financial report is a general purpose financial
report which has been prepared in accordance
with the requirements of the Corporations Act
2001, Australian Accounting Standards and other
authoritative pronouncements of the Australian
Accounting Standards Board. The financial report
has also been prepared on a historical cost basis.
The financial report is presented in Australian
dollars and all values are rounded to the nearest
thousand dollars ($000) unless otherwise stated.
The Directors have adopted the going concern
assumption in preparing the financial report.

(B) Compliance with IFRS

The financial report complies with Australian
Accounting Standards and International Financial
Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.

interpretations

Certain Australian Accounting Standards and
interpretations have recently been issued or
amended but are not yet effective and have not
been adopted by the Company for the annual
reporting period ended 30 June 2016.

The new standards and amendments to
standards that are mandatory for the first time
for the financial year beginning 1 July 2015 are:

•

AASB 2015-3 Amendments to Australian
Accounting Standards arising from the
withdrawal of AASB 1031 Materiality
(effective 1 July 2015);

None of these amendments to standards
affected any of the amounts recognised in the
current period or any prior period and are not
likely to affect future periods.

Certain new accounting standards and
interpretations have been published that are
not mandatory for the 30 June 2016 reporting
period. The following new accounting standards
and interpretations are not likely to affect
future periods:

•

AASB 2014-3 Amendments to Australian
Accounting Standards – Accounting for
Acquisitions of Interests in Joint Operations
(effective 1 July 2016);

AASB 2014-4 Clarification of Acceptable
Methods of Depreciation and Amortisation
(effective 1 July 2016);

AASB 1057 Application of Australian
Accounting Standards (effective 1 July 2016);

AASB 2014-9 Amendments to Australian
Accounting Standards – Equity Method in
Separate Financial Statements (effective 1
July 2016);

AASB 2014-10 Amendments to Australian
Accounting Standards – Sale or Contribution
of Assets between an Investor and its
Associate or Joint Venture (effective
1 July 2016);

AASB 2015-1 Amendments to Australian
Accounting Standards – Annual
Improvements to Australian Accounting
Standards (effective 1 July 2016);

AASB 2015-2 Amendments to Australian
Accounting Standards – Disclosure Initiative:
Amendments to AASB 101 (effective 1 July
2016) and;

AASB 2015-9 Amendments to Australian
Accounting Standards – Scope and
Application Paragraphs (effective 1 July 2016).

The following are yet to be assessed:

•

AASB 9 Financial Instruments (effective 1
July 2018);

AASB 15 Revenue from Contracts with
Customers (effective 1 July 2018);

AASB 16 Leases (effective 1 July 2019);

AASB 2016-1 Amendments to Australian
Accounting Standards – Recognition of
Deferred Tax Assets for Unrealised Losses
(effective 1 July 2017);

•

AASB 2016-2 Amendments to Australian
Accounting Standards – Disclosure Initiative
(effective 1 July 2017) and;

IFRS 2 (Amendments) Classification and
Measurement of Share-based Payment
Transactions (effective 1 July 2018).

(D) Basis of Consolidation

The consolidated financial statements
incorporate the assets and liabilities of all
subsidiaries of the Company as at 30 June 2016
and the results of all subsidiaries for the year
then ended. Subsidiaries are all entities which
the Group controls. Control is achieved when
the Group is exposed, or has rights, to variable
returns from its involvement with the investee
and has the ability to affect those returns
through its power over the investee. Specifically,
the Group controls an investee if and only if the
Group has:

•

Power over the investee (i.e. existing rights
that give it the current ability to direct the
relevant activities of the investee).

Exposure, or rights, to variable returns from
its involvement with the investee.

The ability to use its power over the investee
to affect its returns.

Generally, there is a presumption that a majority
of voting rights results in control. To support this
presumption, and when the Group has less than
a majority of the voting or similar rights of an
investee, the Group considers all relevant facts
and circumstances in assessing whether it has
power over an investee, including:

•

The contractual arrangement(s) with the
other vote holders of the investee.

Rights arising from other contractual
arrangements.

The Group’s voting rights and potential
voting rights.

The Group reassesses whether or not it controls
an investee if facts and circumstances indicate
that there are changes to one or more of the
three elements of control. Consolidation of a
subsidiary begins when the Group obtains control
over the subsidiary and ceases when the Group
loses control of the subsidiary. Assets, liabilities,
income and expenses of a subsidiary acquired or
disposed of during the year are included in the
consolidated financial statements from the date
the Group gains control until the date the Group
ceases to control the subsidiary.

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 31

Notes to the Financial Statement (continued)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(D) Basis of Consolidation (continued)

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-
controlling interests, even if this results in the non- controlling interests having a deficit balance. When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity,
income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a
subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain
or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

Controlled entity/subsidiaries
The consolidated financial statements include the financial statements of the ultimate parent company, Geodynamics Limited, and its controlled entities
listed in the following table:

Name

Parent Entity

Geodynamics Limited

Directly controlled by Geodynamics Limited

Geodynamics NT Pty Ltd 1

Geodynamics (Savo Island) Pty Ltd

Geodynamics Share Plans Pty Ltd

KUTh Energy Limited

Quantum Power Limited

GDY Solar Pty Ltd

Directly Controlled by KUTh Energy Limited

KUTh Exploration Pty Ltd

Mineral Ventures Pty Ltd 1

KUTh Pacific Ltd

Directly Controlled by KUTh Pacific Ltd

KUTh Exploration (Fiji) Limited

KUTh Energy (PNG) Ltd 2

KUTh Energy (Vanuatu) Ltd

Directly Controlled by Quantum Power Limited

BioEnergy Projects

Quantum Gas Energy

Quantum Investment Holdings

Quantum Engine Power

Quantum Power (Africa)

1 Deregistered on 1 February 2016.

Country of Incorporation

2016

2015

EQUITY INTEREST %

Australia

Fiji

PNG

Vanuatu

Australia

South Africa

100

50.2

100

50.2

100

2 At 30 June 2016 KUTh Energy (PNG) Ltd is substantially dormant. Ongoing administrative costs are incurred by Geodynamics Limited (ultimate parent entity). At 30 June 2016
the non-controlling interest amount is $nil (2015 - $nil).

32 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT (E) Significant Accounting Judgements,

Estimates and Assumptions

The carrying amounts of certain assets and
liabilities are often determined based on
judgement, estimates and assumptions of future
events. The key estimates and assumptions
that have a significant risk of causing a material
adjustment to the carrying amounts of certain
assets and liabilities within the next annual
reporting period are:

Provision for site rehabilitation
The Company reviews rehabilitation
requirements for its geothermal exploration
tenements on a six-monthly basis by undertaking
an in-house analysis of the costs to rehabilitate
the sites including the plugging and abandoning
of wells as appropriate.

Business combinations and goodwill
Business combinations are accounted for
using the acquisition method. The cost of
an acquisition is measured as the aggregate
of the consideration transferred, which is
measured at acquisition date fair value, and
the amount of any non-controlling interests in
the acquiree. For each business combination,
the Group elects whether to measure the non-
controlling interests in the acquiree at fair value
or at the proportionate share of the acquiree’s
identifiable net assets. Acquisition-related
costs are expensed as incurred and included
in administrative expenses. When the Group
acquires a business, it assesses the financial
assets and liabilities assumed for appropriate
classification and designation in accordance with
the contractual terms, economic circumstances
and pertinent conditions as at the acquisition
date. This includes the separation of embedded
derivatives in host contracts by the acquiree.

Goodwill is initially measured at cost (being the
excess of the aggregate of the consideration
transferred and the amount recognised for non-
controlling interests) and any previous interest
held over the net identifiable assets acquired and
liabilities assumed.

After initial recognition, goodwill is measured at
cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill
acquired in a business combination is, from
the acquisition date, allocated to each of the
Group’s cash-generating units that are expected
to benefit from the combination, irrespective of
whether other assets or liabilities of the acquiree
are assigned to those units.

Non-current assets held for sale
The Group classifies non-current assets as
held for sale if their carrying amounts will be
recovered principally through sale rather than
through continuing use. Such non-current assets
are measured at the lower of their carrying
amount and fair value less costs to sell.

The criteria for held for sale classification is
regarded as met only when the sale is highly
probable and the asset is available for immediate
sale in its present condition.

Property, plant and equipment and intangible
assets are not depreciated or amortised once
classified as held for sale.

Assets classified as held for sale are presented
separately as current items in the statement of
financial position.

At 30 June 2016 the assets held for sale
represent certain surplus geothermal assets.
The assets are held at the Group’s best estimate
of their fair value less cost to sell.

(F) Foreign Currency Translation

Both the functional and presentation currency
of Geodynamics is Australian dollars ($A).
Transactions in foreign currencies are initially
recorded in the functional currency at the
exchange rates ruling at the date of the
transaction. Monetary assets and liabilities
denominated in foreign currencies are
retranslated at the rate of exchange ruling at the
balance date.

All exchange differences in the financial report
are taken to profit or loss. Non-monetary
items that are measured in terms of historical
cost in a foreign currency are translated using
the exchange rate as at the date of the initial
transaction. Non-monetary items measured at
fair value in a foreign currency are translated
using the exchange rates at the date when the
fair value was determined.

Exchange differences arising from the translation
of financial statements of foreign subsidiaries
are taken to the foreign currency translation
reserve at the balance date.

(G) Property, Plant & Equipment

Property, plant and equipment is stated
at cost less accumulated depreciation and
any impairment in value. The costs include
obligations relating to reclamation, plant
closure and other costs associated with the
rehabilitation of the site. Depreciation is
provided on a straight line basis on all property,
plant and equipment. All classes are depreciated
over periods ranging from 3 to 15 years
(comparable to prior year). The assets’ residual
values, useful lives and amortisation methods
are reviewed, and adjusted if appropriate, at each
financial year end.

Impairment
The carrying values of property, plant and
equipment are reviewed for impairment at each
reporting date, with the recoverable amount
being estimated when events or changes in
circumstances indicate the carrying value may
be impaired.

For an asset that does not generate largely
independent cash inflows, the recoverable
amount is determined for the cash-generating
unit to which the asset belongs. An impairment
exists when the carrying value exceeds its
estimated recoverable amount. The asset or
cash-generating unit is then written down to its
recoverable amount.

The recoverable amount of plant and equipment
is the greater of fair value less costs to sell
and value in use. In assessing value in use, the
estimated future cash flows are discounted to
their present value using a pre-tax discount rate
that reflects current market assessments of the
time value of money and the risks specific to the
asset. Impairment losses are recognised in the
statement of comprehensive income in the year
the loss is recognised.

Derecognition and disposal
An item of property, plant and equipment is
derecognised upon disposal or when no further
future economic benefits are expected from
its use or disposal. Any gain or loss arising on
derecognition of the asset (calculated as the
difference between the net disposal proceeds and
the carrying amount of the asset) is included in
profit or loss in the year the asset is derecognised.

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 33

Notes to the Financial Statement (continued)

NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)

(H) Exploration, Evaluation, Development

and Rehabilitation costs

Costs carried forward
Costs arising from exploration and evaluation
activities are carried forward provided such costs
are expected to be recouped through successful
development, or by sale, or where exploration
and evaluation activities have not, at balance
date, reached a stage to allow a reasonable
assessment regarding the existence of
economically recoverable reserves. Costs carried
forward in respect of an area of interest that is
abandoned are written off in the year in which
the decision to abandon is made.

As reported at 30 June 2014, the Company
finalised the technical appraisal of its Cooper
Basin project and associated resource. In the
absence of a small scale commercial project or
other plan to commercialise the project in the
medium term, the Company impaired the carrying
amount of its deferred exploration, evaluation
and development costs in respect of the Cooper
Basin Project to $nil.

Commensurate with the ongoing appraisal and
review of the Cooper Basin project additional
evaluation costs have been incurred since
1 July 2014. As it is not possible to reliably
demonstrate the additional costs in respect
of the Cooper Basin project will be recouped
through successful development or sale, the
Company has recorded these costs in the
Statement of Comprehensive Income for the year
ended 30 June 2016.

Impairment
The carrying values of exploration, evaluation,
development and rehabilitation costs are
reviewed for impairment in accordance with
AASB 6 Exploration and Evaluation of Mineral
Resources when facts and circumstances suggest
that the carrying amount of such an asset may
exceed its recoverable amount. Any impairment
loss identified is recognised as an expense in
accordance with AASB 136 Impairment of Assets.

Amortisation
Costs on productive areas will be amortised over
the life of the area of interest to which such
costs relate on the production output basis.

Rehabilitation costs
Rehabilitation costs that are expected to be
incurred are provided for as part of the cost
of the exploration, evaluation, development,
construction or production phases that give rise
to the need for rehabilitation. Accordingly, these
costs will be recognised gradually over the life
of the facility as these phases occur. The costs
include obligations relating to reclamation, plant
closure and other costs associated with the
rehabilitation of the site.

(I)

Intangibles

The useful lives of intangible assets are assessed
to be either finite or indefinite. Intangible assets
with finite lives are amortised over the useful
life and assessed for impairment whenever
there is an indication that the intangible asset
may be impaired. The amortisation period
and the amortisation method for an intangible
asset with a finite useful life is reviewed at
least at each financial year-end. Changes in the
expected useful life or the expected pattern
of consumption of future economic benefits
embodied in the asset are accounted for by
changing the amortisation period or method,
as appropriate, which is a change in accounting
estimate. The amortisation expense on intangible
assets with finite lives is recognised in profit or
loss in the expense category consistent with the
function of the intangible asset.

At 30 June 2016 all finite life intangibles are fully
amortised.

(J) Impairment of Assets

At each reporting date, the Company assesses
whether there is any indication that an asset may
be impaired. Where an indicator of impairment
exists, the Company makes a formal estimate of
recoverable amount. Where the carrying amount
of an asset exceeds its recoverable amount the
asset is considered impaired and is written down
to its recoverable amount.

Recoverable amount is the greater of fair
value less costs to sell and value in use. It is
determined for a cash-generating unit (CGU). In
assessing value in use, the estimated future cash
flows are discounted to their present value using
a pre-tax discount rate that reflects current
market assessments of the time value of money
and the risks specific to the CGU.

(K) Cash and Cash Equivalents

Cash assets on the statement of financial
position comprise cash at bank and on hand and

short-term deposits with an original maturity of
three months or less that are readily convertible
to known amounts of cash and which are subject
to an insignificant risk of change in value.

For the purposes of the Cash Flow Statement, cash
includes cash on hand and in banks and short term
deposits with an original maturity of three months
or less, net of outstanding bank overdrafts.

(L) Inventories

Inventories include spare parts and consumable
items used in operations and are valued at the
lower of cost and net realisable value.

(M) Contributed Equity

Ordinary shares are classified as equity. Any
transaction costs arising on the issue of ordinary
shares are recognised directly in equity as a
reduction of the share proceeds received.

(N) Trade and Other Payables

Trade payables and other payables are carried
at cost and represent liabilities for goods and
services provided to the Company prior to the
end of the financial year that are unpaid and
arise when the Company becomes obliged to
make future payments in respect of the purchase
of these goods and services.

(O) Provisions

Provisions are recognised when the Company
has a present obligation (legal or constructive)
as a result of a past event, it is probable that
an outflow of resources embodying economic
benefits will be required to settle the obligation
and a reliable estimate can be made of the
amount of the obligation.

If the effect of the time value of money
is material, provisions are determined by
discounting the expected future cash flows
at a pre-tax rate that reflects current market
assessments of the time value of money and,
where appropriate, the risks specific to the
liability. Where discounting is used, the increase
in the provision due to the passage of time is
recognised as a finance cost.

(P) Employee Benefits

(i) Wages, salaries, annual leave and
sick leave
Liabilities for wages and salaries, including non-
monetary benefits and annual leave expected
to be settled within 12 months of the reporting
date are recognised in other payables in respect

34 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT of employees’ services up to the reporting date.
They are measured at the amounts expected
to be paid when the liabilities are settled.
Liabilities for sick leave are recognised when the
leave is taken and are measured at the rates paid
or payable.

transactions for which vesting is conditional
upon a market or non-vesting condition. These
are treated as vesting irrespective of whether
or not the market or non-vesting condition is
satisfied, provided that all other performance
and/or service conditions are satisfied.

(ii) 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
reporting date using the projected unit credit
method. Consideration is given to expected
future wage and salary levels, experience of
employee departures, and periods of service.
Expected future payments are discounted using
market yields at the reporting date on national
government bonds with terms to maturity and
currencies that match, as closely as possible, the
estimated future cash outflows.

(Q) Share-based Payment Transactions

The Company provides benefits to employees
(including executive directors) in the form of
share-based payment transactions, whereby
employees render services in exchange for rights
over shares (‘equity-settled transactions’). The
current plan in place to provide these benefits
is the Geodynamics Limited Share Appreciation
Rights Plan which both provides benefits to
executive directors and senior employees.

The cost of equity-settled transactions is
determined by the fair value at the date when
the grant is made using an appropriate valuation
model. That cost is recognised, together with
a corresponding increase in other capital
reserves in equity, over the period in which
the performance and/or service conditions are
fulfilled in employee benefits expense. The
cumulative expense recognised for equity-settled
transactions at each reporting date until the
vesting date reflects the extent to which the
vesting period has expired and the Group’s best
estimate of the number of equity instruments
that will ultimately vest.

The statement of profit or loss expense or
credit for a period represents the movement
in cumulative expense recognised as at the
beginning and end of that period and is
recognised in employee benefits expense.

No expense is recognised for awards that do
not ultimately vest, except for equity-settled

When the terms of an equity-settled award are
modified, the minimum expense recognised
is the expense had the terms had not been
modified, if the original terms of the award are
met. An additional expense is recognised for
any modification that increases the total fair
value of the share-based payment transaction,
or is otherwise beneficial to the employee as
measured at the date of modification.

(R) Revenue Recognition

Revenue is recognised to the extent that it is
probable that the economic benefits will flow
to the Group and the revenue can be reliably
measured, regardless of when the payment is
received. Revenue is measured at the fair value
of the consideration received or receivable,
taking into account contractually defined terms
of payment and excluding taxes or duty. The
specific recognition criteria described below must
also be met before revenue is recognised.

Interest Income
Interest income is recorded as the interest
accrues, using the effective interest rate (EIR).
The EIR is the rate that exactly discounts the
estimated future cash receipts over the expected
life of the financial instrument or a shorter
period, where appropriate, to the net carrying
amount of the financial asset.

Site Income
Site income relates to electricity sales and
renewable energy credits from the government.
Revenue from the sale of electricity is recognised
on delivery of the product. Renewable energy
credits income is recognised when earned.

Equipment Sales
Equipment sales relate to income earned for
the construction and delivery of biogas energy
systems to customers. Revenue is recognised by
reference to the stage of completion of a contract
or contracts in progress at reporting date or at
the time of completion of the contract and billing
to the customer. Stage of completion is measured
by reference to project costs incurred to date as
a percentage of total estimated costs for each
contract which is determined by a set quotation
with the customer.

(S) Government Grants

Government Grants (including R&D tax incentives)
are recognised at their fair value where there
is reasonable assurance that the grant will be
received and all attaching conditions will be
complied with. Government grants relating to
expensed exploration and evaluation costs are
recorded as an offset against those expenses. To
the extent the government grant is greater than
the associated expenditure the residual amount
is recorded as other income.

When the grant relates to an expense item, it is
recognised as income over the periods necessary
to match the grant on a systematic basis to the
costs that it is intended to compensate. Where
the grant relates to an asset, the fair value is
credited to a deferred income account until such
time as all conditions associated with the grant
are met. Once these conditions are achieved
the credit is allocated to the relevant asset.
The amount of the grant is then released to net
income over the expected useful life (by way
of reduced depreciation or amortisation) of the
relevant asset.

(T) Earnings per Share

Basic earnings per share is determined by
dividing the profit/(loss) after tax by the
weighted average number of ordinary shares
outstanding during the financial period. Diluted
earnings per share is determined by dividing
the profit/(loss) after tax adjusted for the effect
of earnings on potential ordinary shares, by the
weighted average number of ordinary shares
(both issued and potentially dilutive) outstanding
during the financial period.

(U) Income Tax

Deferred income tax is provided on all temporary
differences at the balance date between the tax
bases of assets and liabilities and their carrying
amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for
all taxable temporary differences:

•

except where the deferred income tax
liability arises from the initial recognition
of an asset or liability in a transaction that
is not a business combination and, at the
time of the transaction affects neither the
accounting profit nor taxable profit or loss;
and

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 35

Notes to the Financial Statement (continued)

NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)

(U)

Income Tax (continued)

•

in respect of taxable temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures,
except where 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 income tax assets are recognised for all
deductible temporary differences, carry-forward
of unused tax assets and unused tax losses, to
the extent that it is probable that taxable profit
will be available against which the deductible
temporary differences, and the carry-forward
of unused tax assets and unused tax losses can
be utilised. The carrying amount of deferred
income 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 allow all or part of the deferred
income tax asset to be utilised.

For Geodynamics Limited, no deferred income
tax asset is being recognised in the accounts
as the benefit is not considered to be probable
of being realised at this stage of the Company’s
development. Unrecognised deferred income tax
assets are reassessed at each balance date and
are recognised to the extent that it has become
probable that future taxable profit will allow the
deferred income tax asset to be recovered.

Deferred income 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 at the balance date. Income taxes
relating to items recognised directly in equity are
recognised in equity and not in net income.

Deferred income tax assets and deferred tax
liabilities are offset only if a legally enforceable
right exists to set off current tax assets against
current tax liabilities and the deferred income
tax assets and liabilities relate to the same
taxable entity and the same taxation authority.

(V) Other Taxes

Revenues, expenses and assets are recognised
net of the amount of GST except:

• where the GST incurred on a purchase of

goods and services is not recoverable from

the taxation authority, in which case the
GST is recognised as part of the cost of
acquisition of the asset or as part of the
expense item as applicable; and

•

receivables and payables are stated with the
amount of GST included.

The net amount of GST recoverable from, or
payable to, the taxation authority is included as
part of receivables or payables in the statement of
financial position. Cash flows are included in the
Cash Flow Statement on a net basis and the GST
component arising from investing and financing
activities, which is recoverable from, or payable to,
the taxation authority are classified as operating
cash flows. Commitments and contingencies are
disclosed net of the amount of GST recoverable
from, or payable to, the taxation authority.

(W) Segment Reporting

A business segment is a distinguishable
component of the entity that is engaged in
providing products or services that are subject
to risks and returns that are different to those of
other business segments. Operating segments
are identified on the basis of internal reports
that are regularly reviewed and used by the
Board of Directors in order to allocate resources
to the segment and assess its performance.

(X) Joint Arrangements

The Company is a party to a joint operation
with Kentor Energy Pty Ltd (Kentor). The joint
operation assets comprise the Savo Island
prospecting license and all property plant and
equipment for use on Savo Island. The joint
operation is named the Savo Island Geothermal
Joint Venture.

Under the terms of the agreement, Geodynamics
(Savo Island) Pty Ltd is entitled to earn an initial
25% interest in the Savo Island Geothermal
Power Project following the completion of initial
geophysical studies to determine target locations
for a drilling program. The Company has the
right to earn an additional 45% interest through
exploration drilling and the completion of a
feasibility study for the Project. At 30 June 2016
Geodynamics had met all requirements for the
initial 25% interest.

In prior years the Company was a party to two
joint operations named the Innamincka ‘Deeps’
Joint Venture and the Innamincka ‘Shallows’
Joint Venture. Although named ‘Joint Venture’
the arrangements are accounted for as Joint
Operations. The joint operations with Origin
Energy Limited were formed to explore and

36 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

evaluate enhanced geothermal systems in the
Cooper/Eromanga basin in South Australia. The
joint operations comprised South Australian
geothermal tenements and all property plant and
equipment for use in the Cooper/Eromanga basin.
At 30 June 2013, Origin Energy Limited withdrew
from the joint operations. Coincident with the
withdrawal, the Company became the 100%
participant in the arrangement and obtained
control of its geothermal tenements and all
property plant and equipment.

Under the Joint Venture agreement, Origin Energy
remain liable for their share of rehabilitation
expenditure for a period of five years from the
date of withdrawal.

(Y) Parent Entity Financial Information

The financial information for the parent entity,
Geodynamics, included in Note 26, has been
prepared on the same basis as the consolidated
financial statements.

(Z) Going Concern

A major focus of the Board and management is
on ongoing cash flow management to ensure
that the Company always has sufficient funds
to cover its planned activities and any ongoing
obligations. At 30 June 2016, the Directors
are satisfied the Company has sufficient cash
resources to cover its near term planned
expenditure, including cash outflows associated
with the operation of Quantum Power Limited.
As such the going concern basis of financial
statement preparation has been adopted.

Geodynamics continues to actively monitor
developments in clean energy markets and
technologies to assess opportunities to acquire
interests in projects or technologies where it is
able to utilise its skills and capacity to develop
further clean energy projects that provide an
acceptable return for shareholders.

(AA) Comparative Figures

When required by Accounting Standards,
comparative figures are adjusted to conform to
changes in presentation for the current financial
year. Certain comparative financial information
presented in the Statement of Comprehensive
Income has been reclassified in this financial
report to improve the presentation of
information given the acquisition of the Quantum
Power Limited business (refer Note 17) during the
current financial year. The reclassification results
in no net change to loss or cash flows for the
comparative period.

FINANCIAL REPORT NOTE 3A – PERSONNEL EXPENSES

Loss before income tax has been determined after charging/(crediting) the following specific items:

Share Plan Expense

SARs Expense

Employee Expenses

NOTE 3B – EXPLORATION AND EVALUATION COSTS
Loss before income tax has been determined after charging/(crediting) the following specific items:

Expenditure for the period

Origin cost reimbursement

Change in Rehabilitation

Proceeds from Government Grants

R&D Tax Incentive

2016
$’000

(132)

3,323

3,191

4,567

(3,207)

226

(350)

(1,236)

2015
$’000

129

132

2,300

2,561

4,211

(2,250)

(2,041)

* Total R&D incentives received or receivable are $4,949,000 for the year ended 30 June 2016 (2015 $2,293,000). R&D expenditure is recognised as a contra to exploration and
evaluation costs to the extent it reduces the expenditure to $nil. To the extent the R&D incentive received or receivable exceeds exploration and evaluation costs for the year, the
residual amount is classified as other income in the statement of comprehensive income. For the year ended 30 June 2016 the amount of R&D incentive included in other income is
$3,713,000 (2015 $252,000).

NOTE 3C – OTHER EXPENSES AND LOSSES/(GAINS)
General and administrative expenses have been determined after charging/(crediting) the following
specific items:

Depreciation of plant and equipment

Interest expense

Loss on disposal of plant & equipment

Operating lease rentals paid

Foreign exchange loss/(gain)

NOTE 3D – OTHER OPERATING EXPENSES
Loss before income tax has been determined after charging/(crediting) the following specific items:

Amortisation of Intangibles

Depreciation

Project Rectification Costs

Other Project Costs

151

1,000

462

2,194

988

4,644

715

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 37

Notes to the Financial Statement (continued)

NOTE 4 – INCOME TAX

Income tax expense

The prima facie tax benefit on loss of 30% (2015 - 30%) differs from the income tax provided in the
financial statements as follows:

Prima facie tax benefit on loss

Tax effect of amounts which are not deductible (taxable) in calculating taxable income:

R&D Tax Incentive Receivable

Change in R&D Incentive for the prior year

Impairment of Goodwill

Other income/(expenses)

Income tax benefit/(expense)

Deferred tax assets for tax losses and other temporary differences recognised/(not recognised)

Income tax benefit attributable to operating loss 1

2016
$’000

2015
$’000

3,253

(3,471)

(1,478)

(929)

(2,587)

2,305

282

4,334

(893)

(1,400)

(79)

1,962

(1,962)

1 The Group’s net income tax benefit for the year ended 30 June 2016 represents the income tax effect of the reversal of deferred tax liabilities recognised as part of the business

combination accounting for Quantum Power (refer Note 17).

Deferred income tax
Deferred income tax at 30 June relates to the following:

STATEMENT OF
FINANCIAL POSITION

STATEMENT OF
COMPREHENSIVE INCOME

Deferred tax liabilities

Deferred exploration phase expenditure

Deferred evaluation phase expenditure

Other deferred tax liability

Deferred tax assets

Losses available for offset against future
taxable income

Company2

Subsidiary3

Other deferred tax asset

Net deferred tax assets

Deferred tax asset for tax losses not recognised1

Gross deferred income tax assets

Deferred tax income/(expense)

2016
$’000

(70)

73,744

1,631

566

75,871

(75,871)

2015
$’000

(93)

77,765

1,142

2,346

81,160

(81,160)

2016
$’000

2015
$’000

1 Deferred tax assets arising from tax losses and temporary differences are only brought to account to the extent that it offsets the Group’s deferred tax liabilities arising from

temporary differences. As the Group does not have a history of taxable profits and is not revenue generating, the deferred tax assets associated with tax losses and temporary
differences, in excess of the Group’s deferred tax liabilities arising from temporary differences, is not yet regarded as probable of recovery at 30 June 2016.

2 The Company’s tax losses for the 2015 financial year (reported above) have been adjusted to reflect the income tax return lodged during the 2016 financial year.

3 The subsidiary tax losses were acquired as part of the acquisition of KUTh Energy Limited and Quantum Power Limited. No fair value was allocated to the tax losses as part of
the business combination accounting as the tax losses are not considered probable of recovery. Given the change in ownership of KUTh Energy Limited and Quantum Power
Limited and their controlled entities, the recovery of the tax losses is likely to be subject to the same business test.

38 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT NOTE 5 – RECEIVABLES (CURRENT)

GST Receivable

Interest Receivable

R&D Tax Incentive Receivable

Other Receivables

2016
$’000

375

3,471

1,155

5,048

2015
$’000

893

1,316

2,375

Accounts receivable, GST receivable, interest receivable and sundry receivables are non-interest bearing.

Allowance for Impairment loss
No allowance has been made for impairment loss. A provision for impairment loss is only recognised when there is objective evidence that an individual
receivable is impaired. None of the balances within receivables contain impaired assets.

NOTE 6 – PROPERTY, PLANT & EQUIPMENT

Plant and Equipment at cost

Less: accumulated depreciation and impairment

Total Property, Plant and Equipment

Reconciliation of Plant & Equipment

Carrying amount at beginning

Additions

Acquisitions *

Disposals

Impairment

Reclassification to Assets Held for Sale

Depreciation/Amortisation Expense

Depreciation written back on disposal of assets

Carrying amount at the end

NOTE 7 – INTANGIBLES

Intangibles (including goodwill) at cost

Less: accumulated amortisation and impairment

Total Intangibles

Reconciliation of Intangibles (including goodwill)

Acquisitions – Customer Contracts *

Acquisitions – Goodwill *

Impairment

Amortisation of Customer Contracts

Carrying amount at the end

2016
$’000

23,053

(23,025)

1,364

483

(342)

(1,082)

(489)

2016
$’000

5,096

4,096

1,000

4,096

(3,096)

(1,000)

1,000

2015
$’000

23,587

(22,223)

1,364

4,127

(1,810)

(2,550)

(79)

1,651

1,364

2015
$’000

* These assets were acquired as part of the purchase of Quantum Power during the year (refer to Note 17).

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 39

Notes to the Financial Statement (continued)

At 30 June 2016, carrying amount of intangibles reflects only goodwill acquired as part of the Quantum Power business combination (refer note 17). All other
intangibles acquired as part of the business combination have been fully amortised.

The goodwill is allocated to the Group’s Biogas Energy CGU. At 30 June 2016 delays in the conversion and execution of the Biogas Energy CGU’s pipeline of
projects (due in large part to reassessment of project economics) has resulted in impairment indicators. The recoverable amount for the Biogas Energy CGU at
30 June 2016 was determined to be $1.0 million, being the Group’s best estimate of its fair value less cost of disposal (“FVLCD”) at that time. FVLCD has been
used to measure recoverable amount because generating cash flows requires significant expansionary capital to generate sustainable revenues and profit.

The Group has measured FVLCD using a discounted cash flow model and the calculated recoverable amount of $1.0 million results in the recognition of an
impairment charge of $3,096,000 at 30 June 2016. The recoverable amount is classified as a level 3 fair value measurement under the fair value hierarchy.

The cash flows used by the Group to estimate FVLCD are based on seven (7) year period with a terminal value calculation (based on EBITDA multiples in the
seventh year). The cash flows assume the Biogas Energy CGU develops a portfolio of Build, Own, Operate and Maintain (“BOOM”) projects during the seven
year period. The forecast cash flows are discounted using a post-tax, equity rate of return of 20%.

The forecast cash flows include a number of key, judgmental assumptions including:

•

Capital cost of the BOOM facilities;

Availability of debt and/or equity finance to fund the expansionary capital;

Power Purchase Agreement revenues;

Timing and number of BOOM projects identified and executed by the Group;

EBITDA multiple in year seven; and

Discount rate.

The calculated FVLCD is sensitive to the above assumptions. Should the Group not achieve the forecast expansion timetable (including the number of
projects), not be able to access debt or equity funding or experience cost and capital overruns additional impairment would result. To illustrate the level of
this sensitivity, a 2% increase in the discount rate sees the recoverable amount of the CGU reduce to $nil.

NOTE 8 – ACCOUNTS PAYABLE

Current

Trade Creditors

Accrued Liabilities

Trade creditors and accruals

Terms and conditions

2016
$’000

2,285

731

3,016

2015
$’000

252

364

616

Accounts payable and accrued liabilities are non-interest bearing. Liabilities are recognised for amounts to be paid in the future for goods and services
received, whether or not billed to the Company. All amounts are normally settled within 30 days, and discounts for early payment are normally taken where
it is considered advantageous for the Company to do so. Due to the short term nature of these payables, their carrying value is assumed to approximate their
fair value.

40 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT NOTE 9 – PROVISIONS

EMPLOYEE
ENTITLEMENTS

REHABILITATION
PROVISION

RECTIFICATION
PROVISION

OTHER
PROVISIONS

TOTAL
PROVISIONS

At 1 July 2015

Arising during the year

Utilised

At 30 June 2016

Current 2016

Non current 2016

Current 2015

Non current 2015

At 30 June 2015

$’000

248

184

(170)

262

171

262

111

137

248

$’000

7,566

510

(7,306)

770

570

200

770

7,366

200

7,566

$’000

2,194

(1,539)

655

$’000

120

$’000

7,814

3,008

(9,015)

1,807

1,516

291

1,807

7,477

337

7,814

The rehabilitation provision relates to the remaining rehabilitation of the Cooper Basin site including the wells and surface rehabilitation.

The rectification provision relates to the remaining rectification of the Quantum Power projects.

Bank guarantees totalling $240,000 are held to cover South Australian and NSW governments tenement rehabilitation obligations.

The components of the provision for employee entitlements is detailed in note 14.

NOTE 10 – FINANCIAL INSTRUMENTS

The Group’s principal financial instruments comprise of cash and cash equivalents, receivables and payables.

All financial assets are recognised initially at fair value plus transaction costs, and financial liabilities are recognised initially at fair value. Subsequent
measurement of financial assets and liabilities depends on their classification, summarised in the table below.

Financial Assets

Cash and Cash Equivalents

Receivables

Financial Liabilities

Payables

2016
$’000

2015
$’000

Amortised Cost

14,406

5,049

19,455

3,016

28,000

2,375

30,375

616

Financial assets and liabilities carried at amortised cost are measured by taking into account any discount or premium on acquisition, and fees or costs
associated with the asset or liability. Due to the short-term nature of these assets and liabilities, their carrying value is assumed to approximate their fair value.

AASB7 Financial Instruments: Disclosures requires disclosures of fair value measurements by level of the following fair value measurement hierarchy:

Level 1 – the fair value if calculated using quoted market prices in active markets.

Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly

(as prices) or indirectly (derived from prices).

Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.

The Group does not have any level 1, level 2 or level 3 financial instruments as at 30 June 2016 or 30 June 2015.

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 41

Notes to the Financial Statement (continued)

NOTE 11 – ISSUED CAPITAL

Authorised Shares

2016
$’000

2015
$’000

563,368,990 (2015 – 435,880,130) fully paid ordinary shares

351,908

348,338

MOVEMENT IN ORDINARY SHARE CAPITAL:

30/06/15

Balance end of financial year

24/09/15

Shares issued in consideration of the Quantum Power acquisition

30/06/16 Balance end of financial year

NUMBER OF
SHARES

435,880,130

127,488,860

563,368,990

ISSUE PRICE
$ PER SHARE

0.028

$’000

348,338

3,570

351,908

Terms and Conditions of contributed equity
Ordinary Shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company. Effective 1 July 1998, the Corporations legislation
abolished the concepts of authorised capital and par value shares. Accordingly the Company does not have authorised capital nor par value in respect of its
issued capital.

Capital Management
When managing capital, management’s objective is to ensure the entity continues as a going concern and to maintain a structure that ensures the lowest
cost of capital available to the entity. As the entity is not in position to be debt funded until it advances its projects to a completed feasibility phase which
has the support of financiers, it must rely totally on shareholders and government grants for its funding requirements.

Unissued Shares – Shareholder Options
At 30 June 2016, there were no unissued ordinary shares under shareholder options (2015 – Nil). Option holders do not have any right, by virtue of the option,
to participate in any share issue of the Company or any related body corporate. There were no shareholder options granted during the financial year ended
30 June 2016 (2015 – Nil).

NOTE 12 – RESERVES

Deferred Employee Share Plan Reserve

Employee Share Option Reserve

Employee SARs Reserve

Foreign Currency Translation Reserve

Reconciliation of Reserves

Carrying amount at beginning

Recognition of Share Plan Expense

Recognition of SARs Expense

Recognition of Foreign Currency Translation Reserve

Transfer of Reserves to Retained Earnings

Nature and purpose of reserves

Deferred employee share plan reserve

2016
$’000

11,235

(132)

(11,098)

2015
$’000

3,591

7,507

132

11,235

10,947

129

132

11,235

The employee share plan reserve is used to record the value of fully paid ordinary shares granted to employees, including key management personnel, as
part of their remuneration. As the LTIP has now been terminated, the carrying value of the Deferred Employee Share Plan Reserve has been transferred to
retained earnings at 30 June 2016. Refer to Note 14 for further details.

42 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT NOTE 12 - RESERVES (continued)

Employee share option reserve
The employee share option reserve is used to record the value of share options granted to employees, including key management personnel, as part of their
remuneration. As the LTIP has now been terminated, the carrying value of the Employee Share Option Reserve has been transferred to retained earnings at
30 June 2016. Refer to Note 14 for further details.

Employee SARs reserve
The employee SARs reserve is used to record the value of share appreciation rights granted to employees, including key management personnel, as part of
their remuneration. Refer to Note 14 for further details.

Foreign currency translation reserve
This reserve records the differences arising as a result of translating the financial statements of subsidiaries recorded in foreign currencies to the
presentational currency.

NOTE 13 – EXPENDITURE COMMITMENTS

Geothermal Systems (EGS) Tenement Commitments
In order to maintain current rights of its EGS tenements, the Company is required to outlay annual rentals and to meet certain expenditure requirements of
State Mines Departments. These obligations are subject to renegotiation upon expiry of the tenements. The obligations are not provided for in the financial
report and are payable as follows:

Payable not later than one year

Operating Leases (non-cancellable)

Payable not later than one year

Later than one year but not later than five years

2016
$’000

127

2015
$’000

259

Other Commitments (Open Purchase Orders)

456

443

Included in the other commitments are open purchase orders in relation to the Deeps Joint Venture – refer to Note 25 for details.

The Company has no capital commitments at 30 June 2016.

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 43

Notes to the Financial Statement (continued)

NOTE 14 - EMPLOYEE BENEFITS AND SUPERANNUATION COMMITMENTS

2016
$’000

2015
$’000

Employee Benefits

The aggregate employee benefit liability is comprised of:

Provision for Annual Leave (current)

Provision for Long Service Leave (non-current)

171

262

111

137

248

Superannuation Commitments
The Company contributes to external accumulation funds for its employees which provide benefits for employees and their dependants on retirement,
disability or death. These funds provide benefits on a defined contribution basis. Contributions are enforceable to the extent of the contribution required by
the Superannuation Guarantee Levy.

Employer contributions paid or payable to the plans

311

258

Share Appreciation Rights (SARs) Plan
The Geodynamics Share Appreciation Rights (SARs) Plan was approved by the Board in October 2013.

A Share Appreciation Right is a right to receive shares in the Company or an equivalent cash payment based on the increase in the GDY share price over a
specified period, subject to satisfying certain conditions (including a performance condition).

The objective of the Geodynamics SARs is to:

•

Align the interests of eligible employees with those of shareholders;

Provide incentives to attract, retain and/or motivate eligible employees in the interests of the company; and

Provide eligible employees with the opportunity to acquire Share Appreciation Rights, and ultimately Shares, in accordance with the plan rules.

The Board may, at its discretion, grant to an eligible employee or may invite an eligible employee to apply for a grant of SARs. The vesting of SARs is subject
to conditions determined at the time of each issue. The 4,862,222 share appreciation rights granted to Mr Ward during the previous financial year were
forfeited at the time of his resignation on 31 January 2016.

Subject to shareholder approval, the Company will grant Mr Murray a total of 20 million Share Appreciation Rights after the Annual General Meeting.
Performance conditions for the vesting of the SARs at the testing dates are based on growth in the GDY share price.

NOTE 15 - EARNINGS PER SHARE

Basic and diluted earnings/(loss) per share attributable to the equity holders (cents per share)

The following reflects the income and share data used in the calculations of basic and diluted
earnings per share:

2016
$’000

(1.98)

2015
$’000

(3.31)

Net loss attributable to equity shareholders ($’000)

(10,559)

(14,445)

Weighted average number of ordinary shares used in calculation of basic earnings per share

534,606,783

435,880,130

44 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT NOTE 16 - SEGMENT INFORMATION

The Company operates in two segments, being geothermal energy exploration and evaluation and biogas energy.

Operating segments are identified on the basis of internal reports that are regularly reviewed and used by the Board of Directors (chief operating decision
maker) in order to allocate resources to the segment and assess its performance. The financial information presented in the Statements of Comprehensive
Income and Financial Position is the same as that presented to the chief operating decision maker.

Unless otherwise stated, all amounts reported to the Board of Directors as the chief operating decision maker are in accordance with the entity’s
accounting policies.

For the year ended 30 June 2015 Geodynamics operated as a single segment. With the acquisition of Quantum Power Limited in September 2015 the company
now has 2 operating segments identified on the basis of internal reports that are regularly reviewed and used by the Board of Directors and key operating
decision makers for the purpose of making decisions about resource allocation and performance assessment.

No operating segments have been aggregated to form the reportable segments below.

Inter-segment revenues are eliminated upon consolidation and reflected in the ‘adjustments and eliminations’ column.

Segment Information
The following table represents revenue and profit information for the Group’s operating segments for the year ended 30 June 2016.

YEAR ENDED
30 JUNE 2016

Results

Segment Profit/(Loss)

Assets

Liabilities

GEOTHERMAL BIOGAS ENERGY

CORPORATE
OVERHEADS

ADJUSTMENTS
AND
ELIMINATIONS

CONSOLIDATED

$’000

1,372

5,115

2,919

(9,829)

8,169

7,160

2,105

14,517

583

(5,885)

(10,562)

21,916

4,777

NOTE 17 – BUSINESS COMBINATION ACCOUNTING FOR THE ACQUISITION OF QUANTUM POWER LIMITED

On 1 September 2015, the Company announced its off-market offer to acquire 100% of the voting shares in Quantum Power Limited (“Quantum”) was free of
defeating conditions. On declaring the offer unconditional, the Company assessed it had obtained control of Quantum Power and as such has accounted for
the acquisition at that time. The Company acquired Quantum Power Limited to gain access to the biogas energy industry.

As the consideration for the acquisition was partly shares in the Company and partly the cash acquisition of existing preference shares, the cost of the
acquisition was measured with reference to the Geodynamics share price at the close of business on the day the offer was declared unconditional, being
2.8 cents per share.

In this way the purchase consideration was measured as $3,570,000 (127,488,860 shares at 2.8 cents per share) plus $527,000 for the preference shares
totalling $4,097,000. In addition Geodynamics provided a working capital loan of $1,000,000 as part of the purchase consideration; therefore the total
consideration was assessed to be $5,097,000.

The goodwill of $4,096,000 comprises the value of synergies and customer relationships which are not separately recognised. Goodwill is allocated entirely
to the Bioenergy segment. The customer relationships (as distinct from customer contracts) are not separable and therefore do not meet the criteria for
recognition as an intangible asset under IAS 38. None of the goodwill recognised is expected to be deductible for income tax purposes.

From the date of acquisition, Quantum Power Limited and its subsidiaries contributed $391,000 of revenue and $5,540,000 to the loss before tax from
continuing operations of the Group. If the combination had taken place at the beginning of the year, revenue from continuing operations would have been
$1,045,000 and loss before tax from continuing operations for the Group would have been $10,105,000.

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 45

Notes to the Financial Statement (continued)

NOTE 17 – BUSINESS COMBINATION ACCOUNTING FOR THE ACQUISITION OF QUANTUM POWER LIMITED
(continued)

Assets acquired and Liabilities assumed
The business combination accounting has been finalised and has resulted in the following fair values being allocated to the identifiable assets and liabilities
of Quantum Power at the acquisition date.

1 September
2015
$’000

403

116

244

763

4,096

1,000

483

5,595

6,358

522

458

980

281

1,261

5,097

3,570

1,000

527

5,097

ASSETS

Current Assets

Cash and Cash Equivalents

Inventories

Trade and Other Receivables

Total Current Assets

Non Current Assets

Goodwill 1

Customer Contracts 2

Property, Plant and Equipment 3

Other Non Current Assets

Total Non Current Assets

Total Assets

LIABILITIES

Current Liabilities

Trade and Other Payables

Provisions

Total Current Liabilities

Non Current Liabilities

Deferred Tax Liability

Total Non Current Liabilities

Total Liabilities

Total Identifiable Net Assets At Fair Value

Purchase Consideration

127,488,860 shares at 2.8 cents per share

Working capital contribution

Cash paid in consideration for preference shares

Total Purchase Consideration

1 Subsequently impaired (refer Note 7)

2 Amortised to nil as at 30 June 2016 (refer Note 7)

3 Depreciated to nil as at 30 June 2016

46 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT
NOTE 18 – REMUNERATION OF AUDITORS

Amounts received or due and receivable by Ernst & Young Australia for:

An audit or review of the financial report of the entity

Other assurance services

NOTE 19 – KEY MANAGEMENT PERSONNEL

Compensation of Key Management Personnel

Short-term employee benefits

Post-employment benefits

Share based payment

2016
$’000

112,450

4,600

117,050

2016
$’000

1,102,069

93,892

1,195,961

2015
$’000

69,000

2015
$’000

1,665,673

114,313

173,240

1,953,226

Further information on remuneration of Key Management Personnel is shown in the Remuneration Report contained within the Directors’ Report.

NOTE 20 – RELATED PARTY DISCLOSURES

Quantum RCM
As part of the Quantum Power Limited business acquisition the Group acquired a 50% interest in Quantum RCM (a 50/50 incorporated joint venture). At
30 June 2016 the carrying amount of the investment in Quantum RCM is $nil and the loss for the period is $266k which represents the Group’s funding of
the incorporated joint venture.

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 47

Notes to the Financial Statement (continued)

NOTE 21 - NOTES TO THE CASH FLOW STATEMENT

Reconciliation of Cash

Cash is defined in Note 2K to this financial report. Cash balance comprises:

2016
$’000

2015
$’000

Cash on Hand

Cash at Bank

Bank Bills and Term Deposits 1

Total Cash

Reconciliation of the operating loss after tax with the net cash flows used in operations

Loss after income tax

Depreciation and amortisation

Net (profit)/loss on disposal of property, plant & equipment

Shares issued under Deferred Employee Share Plan

SARs issued

Exploration and Evaluation Cost treated as an investing activity

Impairment of Property Plant & Equipment

Impairment of Goodwill

Impairment of Exploration & Evaluation Costs

Impairment of Assets Held for Sale

Share of Loss in Associate

Changes in Assets & Liabilities

(Increase)/decrease in receivables and prepayments

Increase/(decrease) in other creditors and accruals

(Increase)/decrease in inventories

Increase/(decrease) in general provisions

Net Cash Flow used in Operating Activities

600

13,806

14,406

(10,562)

1,479

(132)

7,921

3,096

1,594

266

(2,674)

2,400

(278)

(6,007)

(2,809)

466

27,534

28,000

(14,445)

220

129

132

1,998

2,550

8,044

1,063

(2,919)

(57)

(1,239)

(4,445)

1. The Group has pledged $278k of its short term deposits to fulfil bank guarantee requirements. This amount has been excluded from the calculation of cash and cash equivalent
balance at 30 June 2016 shown on the balance sheet and statement of cash flows.

NOTE 22 – CONTINGENT LIABILITIES

Geodynamics Limited has been advised that the South Australian Geothermal Exploration Licences No. 211 (GEL) and Geothermal Retention Licences (GRL)
No. 3 through to 12 and 20 to 24 have been granted by the Department of Primary Industries and Resources South Australia on the basis that the grant of a
GEL or GRL is not an act which creates a ‘right to mine’ and therefore ‘the right to negotiate’ process in the relevant native title legislation does not apply and
the grant of the GELs and GRLs are valid for native title purposes. The Company’s legal advice is that this is a sustainable position although it would be open
to a Court to reach a different conclusion. Any substantiated claim may have a financial ramification for the Company.

The Company has also been advised that none of the New South Wales tenements are invalid for native title purposes or attract the relevant right to
negotiate provisions in the applicable native title legislation.

Bank guarantees totalling $240,000 are held to cover South Australian and New South Wales governments’ tenement rehabilitation obligations. A bank
guarantee totalling $37,597 is held by the landlord for the lease of the Brisbane office premises.

48 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT NOTE 23 – SUBSEQUENT EVENTS

There has not arisen between 30 June 2016 and the date of this report any other item, transaction or event of a relevant and unusual nature likely, in the opinion
of the Directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company.

NOTE 24 – FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s principal financial instruments comprise cash and short-term deposits. The main purpose of these financial instruments is to manage the
finances for the Company’s operations. The Company has various other financial assets and liabilities such as trade receivables and trade payables, which
arise directly from its operations. It is, and has been throughout the period under review, the Company’s policy that no trading in financial instruments shall
be undertaken. The main risks arising from the Company’s financial instruments are cash flow interest rate risk and foreign currency risk.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which
income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2 to the
financial statements.

Primary responsibility for identification and control of financial risks rests with the board of directors, however the day-to-day management of these
risks is under the control of the Managing Director and Chief Financial Officer. The Board agrees the strategy for managing future cash flow requirements
and projections.

(A) Credit Risk

The Company’s maximum exposures to credit risk at balance date in relation to financial assets, is the carrying amount of those assets as recognised on the
statement of financial position. There are no derivative financial instruments currently being used by the Company to offset its credit exposure.

The Company trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Company’s policy to securitise its
trade and other receivables. It is noted that the company’s significant receivable balances at 30 June 2016 relate to the R&D tax incentive and the amount
receivable from Origin Energy for the reimbursement of costs related to remediation activity in the Cooper Basin.

(B) Liquidity Risk

The Company’s objective is to maintain sufficient funds to finance its current operations with additional funds to ensure its long-term survival in the event
of a business downturn. The Company’s policy is that it is dependent on shareholder funds until such time as it commences generating revenue from
operations. It has no finance facilities in place and no borrowings. The contractual maturity of the Company’s financial liabilities are

6 months or less

NOTE 25 – INTEREST IN JOINT OPERATIONS

2016
$’000

3,016

2015
$’000

716

In November 2012, Geodynamics Limited entered into a two stage earn-in and joint operating agreement with Kentor Energy Pty Ltd (“Kentor”), a subsidiary of
Kentor Gold Ltd (ASX: KGL), to acquire up to 70% interest in a conventional geothermal power supply project in the Solomon Islands.

The joint operation assets comprise the Savo Island prospecting license and all property plant and equipment for use on Savo Island. The joint operation is
named the Savo Island Geothermal Joint Venture. Although named ‘Joint Venture’ the arrangement is accounted for as a Joint Operation.

Under the terms of the agreement, Geodynamics (Savo Island) Pty Ltd is entitled to earn an initial 25% interest in the Savo Island Geothermal Power Project
following the completion of initial geophysical studies to determine target locations for a drilling program. The Company has the right to earn an additional
45% interest through exploration drilling and the completion of a feasibility study for the Project. At 30 June 2016 Geodynamics had met all requirements for
the initial 25% interest.

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 49

Notes to the Financial Statement (continued)

NOTE 26 – INFORMATION RELATING TO GEODYNAMICS LIMITED (THE PARENT)

Current Assets

Total Assets

Current Liabilities

Total Liabilities

Contributed Equity

Accumulated Losses

Other Reserves

Profit or loss of the Parent entity

Total comprehensive income of the Parent entity

The Parent has not issued guarantees in relation to the debts of its subsidiaries.

The Parent has no contingent liabilities nor any contractual obligations on behalf of its subsidiaries at 30 June 2016.

2016
$’000

20,765

20,781

3,351

3,642

351,908

(334,777)

17,139

(11,214)

2015
$’000

32,559

32,680

8,085

8,423

348,338

(335,312)

11,231

24,257

(14,604)

DIRECTORS’ DECLARATION

In accordance with a resolution of the Directors of Geodynamics Limited, I state that:

In the opinion of the Directors:

(a.) the financial statements, notes and additional disclosures included in the Directors’ Report designated as audited of the Company are in accordance

with the Corporations Act 2001, including:

(b.) giving a true and fair view of the Company’s financial position as at 30 June 2016 and of their performance for the period ended on that date; and

(c.) complying with Accounting Standards and Corporations Regulations 2001; and

(d.) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2; and

(e.) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

2. This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations

Act 2001 for the financial period ending 30 June 2016.

On behalf of the Board

K. Spence

Chairman

Brisbane, 29 August 2016

50 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

FINANCIAL REPORT Independent Auditor’s Report
to the Members of Geodynamics Limited

Independent auditor’s report to the members
of Geodynamics Limited

Report on the financial report
We have audited the accompanying financial report of Geodynamics
Limited, which comprises the consolidated statement of financial position
as at 30 June 2016, the consolidated statement of comprehensive income,
the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes comprising a
summary of significant accounting policies and other explanatory
information, and the directors’ declaration of the consolidated entity
comprising the company and the entities it controlled at the year’s
end or from time to time during the financial year.

Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the
financial report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001 and for such internal
controls as the directors determine are necessary to enable the preparation
of the financial report that is free from material misstatement, whether
due to fraud or error. In Note 2B, the directors also state, in accordance
with Accounting Standard AASB 101 Presentation of Financial Statements,
that the financial statements comply with International Financial
Reporting Standards.

Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on
our audit. We conducted our audit in accordance with Australian Auditing
Standards. Those standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit
to obtain reasonable assurance about whether the financial report is free
from material misstatement. An audit involves performing procedures to
obtain audit evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor’s judgment, including
the assessment of the risks of material misstatement of the financial report,
whether due to fraud or error. In making those risk assessments, the auditor
considers internal controls relevant to the entity’s preparation and fair
presentation of the financial report in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal controls. An audit
also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.

Independence
In conducting our audit we have complied with the independence
requirements of the Corporations Act 2001. We have given to the directors
of the company a written Auditor’s Independence Declaration, a copy of
which is included in the directors’ report.

Opinion
In our opinion:

a. the financial report of Geodynamics Limited is in accordance with the

Corporations Act 2001, including:

giving a true and fair view of the consolidated entity’s financial
position as at 30 June 2016 and of its performance for the year
ended on that date; and

complying with Australian Accounting Standards and the
Corporations Regulations 2001; and

b. the financial report also complies with International Financial
Reporting Standards as disclosed in Note 2B.

Report on the remuneration report
We have audited the Remuneration Report included in the directors’
report for the year ended 30 June 2016. The directors of the company are
responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based
on our audit conducted in accordance with Australian Auditing Standards.

Opinion
In our opinion, the Remuneration Report of Geodynamics Limited for the
year ended 30 June 2016, complies with section 300A of the Corporations
Act 2001.

Ernst & Young

Andrew Carrick

Partner
Brisbane
29 August 2016

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional
Standards Legislation

GEODYNAMICS LIMITED | ANNUAL REPORT 2016 51

Shareholder Information

Distribution of Fully Paid Ordinary Shares

Analysis of number of equity security holders by size and holding as at 30 September 2016

Range

100,001 and Over

50,001 to 100,000

10,001 to 50,000

5,001 to 10,000

1,001 to 5,000

1 to 1,000

Total

Unmarketable Parcels

Twenty Largest Holders - Ordinary Fully Paid Shares

HSBC Custody Nominees (Australia) Limited

National Nominees Limited

Tata Power International Pte Limited

Stockton Capital Management Pty Ltd

Origin Energy Limited

Indevco Group Holdings Pty Limited

North Western Surveys Pty Ltd

Hirlgrove Pty Ltd

Awesome Holdings Pty Ltd

10 Johan A Le Roux

J P Morgan Nominees Australia Limited

12 Mrs Ellanor Ann Brimblecombe

Lavalle Investments (Aust) Pty Ltd

Jetosea Pty Ltd

Pacific Custodians Pty Ltd

16 CFO Outsourced Solutions Pty Ltd

17 Hirlgrove Pty Ltd

18 Explorer Corporation Pty Ltd

19 Derrick Lynn Jones & Kristine Julie Kerr

20 Ms Judith Shirley Johnsson

TOTAL

Substantial Shareholders

Securities

No. of Holders

422,730,649

42,829,006

69,037,994

15,521,268

11,868,830

1,381,243

563,368,990

71,543,879

31,247,706

30,850,255

29,400,000

16,516,520

15,454,119

12,137,791

11,757,388

11,554,654

11,476,816

10,376,311

9,039,525

6,977,629

5,994,792

5,740,335

4,208,715

4,178,313

4,095,805

3,563,949

3,562,290

3,483,319

590

584

3,022

2,048

4,216

2,329

12,789

10,965

5.55%

5.48%

5.22%

2.93%

2.74%

2.15%

2.09%

2.05%

2.04%

1.84%

1.60%

1.24%

1.06%

1.02%

0.75%

0.74%

0.73%

0.63%

0.62%

231,616,232

41.11%

The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2011 are:

The Tata Power Company

Sentient Executive

Sunsuper Pty Ltd

*Represents holding percentage at the time of notificationoting rights

52 GEODYNAMICS LIMITED | ANNUAL REPORT 2016

ORDINARY SHARES

Number Held

Percentage of
Issued Shares*

29,400,000

30,284,592

29,999,999

5.22%

5.38%

5.33%

FINANCIAL REPORT Voting Rights
The voting rights attaching to each class of equity securities are set out below:

(a)

Ordinary shares:

On a show of hands every member present at a meeting in person or
by proxy shall have one vote and upon a poll each share shall have
one vote.

(b)

Options:

No voting rights.

Notice of Meeting and Proxy Voting
The Company offers online voting and shareholders may elect to receive
the Company’s notice of meeting and proxy form via email. The Company
encourages this form of electronic communication. Voting can be
undertaken online, by loging in to the Link website using the holding details
as shown on the proxy form. Shareholders who do not register for online
access will continue to receive these documents by post. Shareholder who
would like to opt in to receive these documents by email should register
their communication preferences at the share registry’s web portal at
www.linkmarketservices.com.au

Securities Exchange Listing
The shares of the Company are listed under the symbol GDY on the
Australian Securities Exchange Limited. The Company’s home branch is
Brisbane.

Consolidation of Multiple Shareholdings
If you have multiple shareholding accounts that you wish to consolidate
into a single account, please advise the Share Registry in writing. If your
holdings are broker sponsored, please contact the sponsoring broker directly.

Register for Email Alerts
Please note, that as a shareholder you can register through the ‘Email
Alerts’ section of our web site to receive electronic communications from
the Company. To do so, you should select the ‘Shareholder Information’ tab
on our web site at www.geodynamics.com.au. Registration will provide you
with an email advice with a link to www.geodynamics.com.au each time a
relevant announcement is made by the company and posted on this site.

At www.geodynamics.com.au shareholders can view:

•

Annual and half-year Reports

Securities Exchange Announcements

Geodynamics Share Price Information

General Shareholder Information

Shareholder Enquiries
Shareholders with queries about their shareholdings should contact the
Company’s Share Registry as follows:

Link Market Services
Locked Bag A14
Sydney South NSW 1235

Telephone Australia: 1300 554 474
Telephone International: +61 1300 554 474
Fax:

+61 2 9287 0303

Email:

registrars@linkmarketservices.com.au

Change of Address
Issuer sponsored shareholders should notify the share registry immediately
upon any change in their address quoting their Securityholder Reference
Number (SRN). This can be done by phoning the share registry, by writing
to them, or through their web portal at www.linkmarketservices.com.au.
Changes in addresses for broker sponsored holders should be directed to the
sponsoring brokers with the appropriate Holder Identification Number (HIN).

Annual Report
The Company’s Annual Report is posted on its web site immediately upon
release to ASX. Shareholders will not be mailed a copy of the Annual Report
unless they have specifically opted in to request one.

PRINCIPAL and REGISTERED OFFICE Level 1, 9 Gardner Close, MILTON QLD 4064 Telephone: +61 7 3721 7500 Facsimile: +61 7 3721 7599
POSTAL ADDRESS PO Box 2046, MILTON QLD 4064 Internet www.geodynamics.com.au Email info@geodynamics.com.au