GenusPlus Group Limited (GenusPlus, the Group, ASX: GNP) is a specialist power and communications infrastructure and services provider operating across Australia. The Group designs, builds, and maintains electrical transmission and distribution networks, substations and battery systems. Applying the Group’s expertise in power networks, it also specialises in delivering integrated efficient and scalable communication networks including fixed and wireless infrastructure. GenPlus listed on the ASX on 14 December 2020 at an issue price of 96 cents per share.
Completion of CommTel Network Solutions acquisition
Under the terms of a Deed of Company Arrangement agreed to by CommTel’s former creditors, GenusPlus can now integrate the CommTel business into its expanded communications division.
CommTel Network Solutions allows GenPlus to broaden its communications offering in that CommTel specialises in providing critical communication network solutions to the mining, oil and gas, transport, power utilities, carriers and public safety sectors. These solutions include the infrastructure that provides communication systems to manage and monitor critical services such as electricity grids, train and rail transport, air traffic control, mining automation and emergency services. The CommTel acquisition comes with numerous multi-year contracts with Tier 1 customers that provide recurring revenues.
CommTel’s market-leading communications network is expected to be earnings per share accretive from FY25. This is before transaction and other one-off costs associated with the acquisition.
The upfront net consideration is $6 million, plus an earn-out of up to $7 million, based on 50 percent of pro rata FY25 EBIT above $2 million, and 50 percent of FY26 EBIT above $2.5 million.
FY25 Outlook and beyond
GenusPlus has commenced FY25 with a strong order book of $519 million, which includes expected recurring revenue of $251 million, up 12 percent on FY24 actual results of $224 million. Based on these estimates, GenusPlus is estimated to deliver at least 20 percent growth in FY25 EBITDA. The outlook beyond FY25 is one of consistently strong growth potential with a tendered pipeline of $2 billion in revenue, plus an estimated $3 billion of revenue based on opportunity leads and budget pricing.
GenusPlus is well-positioned to benefit from the large-scale power infrastructure development activity in the next two decades in response economic growth, and the electrification of homes, businesses and cars. The Australian Energy Market Operator estimates that 5,000 kilometres of new transmission lines must be built over the next decade – and half of this is already under construction. The total requirement is estimated at 10,000 kilometres.
Turning to the communications division, the NBN relationship continues to mature and GenusPlus is working closely with NBN to ensure work continuity. GenusPlus expects to be negotiating the next workstream stage in the months ahead. The Group has won two strategic programs with Telstra – the Telstra Mobile Blackspot & Regional Connectivity program, as well as the Peri-Urban Mobiles program, indicating promising future opportunities. The Group is experiencing an uplift in fibre construction activity within the mining sector with projects securing approvals to go into construction in the December quarter.
GenusPlus is leveraged to the carbon neutral economy as customers integrate renewable power and battery energy storage into new transmission infrastructure.
The Group’s net cash position of $77.3 million at 30 June 2024 and bank guarantee and surety bond facilities with a capacity of $210 million should support value accretive acquisitions in the medium term.
Significantly, GenusPlus has a large franking account balance of $22.6 million as at 30 June 2024. The FY24 final dividend was $4.4 million, which indicates that GenusPlus may consider a Special dividend or a capital management initiative that distributes the increasing surplus franking credits to income conscious shareholders.
