Takeover target Genex touts growth as loss narrows

Atlassian billionaire Scott Farquhar’s takeover target Genex Power remains in a strong position to deliver on growth ambitions after trimming its losses and generating record revenue.

The Genex solar and future hydrogen pump project at Kidston. Picture: Michael Chambers

Atlassian billionaire Scott Farquhar’s takeover target Genex Power remains in a strong position to deliver on growth ambitions after trimming its losses and generating record revenue from its renewable energy assets amid high power prices.

Mr Farquhar and wife Kim Jackson’s Skip Essential Infrastructure Fund and investment firm Stonepeak Partners increased their bid for Genex Power to $346m last month, after a lower bid was rejected.

Chairman Ralph Craven reminded shareholders non-exclusive due diligence was under way on the higher 25c per share offer, but said the group was focused on its flagship Kidston pumped storage hydro project and Bouldercombe battery facility, both in Queensland.

Genex trimmed its full year loss significantly to $4.1m, a 78 per cent improvement from a $18.7m loss in 2021.

Full-year revenue from its existing Jemalong solar project in NSW and Kidston solar project of $27.2m and net operating cash flow of $4m represents record revenues and the first full year of positive operating cash flow, the company said.

Underlying earnings before interest, taxes, depreciation and amortisation came in at $13.8m, up 667 per cent versus the 2021 financial year.

Genex chief executive James Harding said the company had progressed and delivered on a number of major milestones across its diversified portfolio of renewable energy and storage projects. He said 2022 “saw the company generate record revenue from our renewable energy assets as they benefited from the increasing pricing dynamic on Australia’s eastern seaboard”.

“As we enter FY23, we will continue to focus on the safe delivery of our construction projects, look to advance our large-scale battery strategy via Bulli Creek and further our activities on our unique wind resource at Kidston, while continuing to use our prominent position in the industry to secure further growth opportunities for the portfolio,” he said.

The increasing impact of intermittent electricity generation capacity on energy prices highlights the need for large-scale storage infrastructure such as K2-Hydro and the battery development, the group said.

Genex has not agreed to exclusive negotiations while due diligence takes place, however the fact that Skip already holds 19.9 per cent of the company may deter other potentially interested parties. It is one of the last remaining listed renewable companies on the Australian Stock Exchange after Tilt Renewables was taken over by an AGL-led group last year for $2.9bn.

The company’s main draw is its Kidston renewable energy hub in Far North Queensland.

The facility, west of Townsville, signed up EnergyAustralia to a 10-year deal to buy power from the facility with two further decade-long options available including control of the plant’s operational and dispatch rights. Genex has received a $610m loan from the Northern Australia Infrastructure Facility and counts Japan’s J-Power as an investor.

 The indicative offer is an 85 per cent premium to Genex’s share price previous to the initial takeover offer and is conditional on the findings of the due diligence process.

Genex shares fell 4.2 per cent or 1c to 23c, in a lower market.