ALEXIUM INTERNATIONAL GROUP LIMITED
ANNUAL REPORT
For the Year Ended 30 June 2023
ABN 91 064 820 408
PRESENTED IN US DOLLARS
TABLE OF CONTENTS
Company Directory
Letter from the Chair and CEO
Directors’ Report
Declaration of Independence
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
1
2
3
16
17
18
19
20
21
42
43
47
ALEXIUM INTERNATIONAL GROUP LIMITED
COMPANY DIRECTORY
DIRECTORS
COMPANY SECRETARY
REGISTERED OFFICE
AUDITORS
SHARE REGISTRY
BANKERS
SOLICITORS
ABN
Mrs Rosheen Garnon
Brigadier General Stephen Cheney, USMC (Ret)
Mr Simon Moore
Dr Paul Stenson
Dr Robert Brookins
Mr Carl Dennis
Mr William Blackburn
Mark Licciardo
Acclime Corporate Services Australia Pty Ltd
Level 7, 330 Collins Street
Melbourne VIC 3000
Telephone: +61 8 9384 3160
Grant Thornton Audit Pty Ltd
Level 17
383 Kent Street
Sydney NSW 2000
Automic Registry Services
Level 5, 126 Phillip St
Sydney NSW 2000
Telephone: 1300 288 664
Macquarie Bank
Level 23, 235 St Georges Terrace
Perth WA 6000
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street
Perth WA 6000
91 064 820 408
DOMICILE AND COUNTRY OF INCORPORATION
Australia
LEGAL FORM OF ENTITY
SECURITY EXCHANGE
Listed Public Company
Australian Securities Exchange Limited
Home Exchange: Sydney
ASX Code: AJX
ALEXIUM INTERNATIONAL GROUP LIMITED
1
LETTER FROM THE CHAIR AND CEO
Dear Shareholders,
The Company closed FY23 with strong momentum after a year of significant transition. At the start of FY23, Alexium sales were highly concentrated
in the bedding markets with PCM making up the largest share of the revenue. That concentration paired with a slow US bedding market, resulted in
a miss on forecasted revenue in FY23. Soft consumer confidence drove low retail sales in the bedding market. This was a continuation from H2 of
FY22.
The company went through a transition to restructure the executive team to add a commercially oriented CEO, a revised strategy, and the launch of
additional technologies to diversify and grow our revenue. That said, Alexium was successful in retaining key customers and expects increased sales
volumes to return, commensurate with a bedding market recovery. Those key customer relationships will also form the foundational basis from which
the forthcoming growth from additional product lines and new markets outside of bedding can be realised. Management maintained gross margin
at 39% while improving inventory management, making just-in-time purchases and production runs to extend cash reserves.
Key milestones for FY23 performance and activities that position the Company well for FY24 and beyond:
Closed a convertible note with Colinton Capital Partners. This paired with the Alterna lending closed in FY22 allows for a healthy cash
position going forward.
With the addition of Mr Blackburn as Chief Executive Officer, the company underwent a management team restructuring which shifted
the company’s focus from developing technology to commercialising existing technologies for growth. The technical team refocused its
efforts from R&D to product adoption with customers.
Continued market penetration of BioCool® products in the bedding market, growing sales of an environmentally sustainable cooling
technology.
Improvements to Alexium’s PCM chemistry created new opportunities for foam applications, which will both diversify and grow revenue.
Improved the Eclipsys® technology to better position it for successful adoption in the tactical gear (body armour) market.
Commercialised the new DelCool™ heat index reduction technology, which went live with a new pillow placement in retail stores in Q4
FY23. DelCool™ production improvements are underway, which will open new opportunities for higher volume placements due to its
exceptional cost-to-benefit ratio.
Further improved the FR NyCo fabric to drive an increased chance of full-scale adoption within US military branches. Bolstered the FR
NyCo supply chain by adding proven collaborative manufacturers within the US Military space to ready the business for commercialising
military supply. Quoted three FR NyCo fabric options for the US Marine Corps, which is still pending feedback. Development and testing
efforts continue with the US Army.
With the business pipeline full of qualified growth opportunities, the company now shifts focus to bolstering the supply chain and
readying for increased production.
These milestones are indicative of the change in approach at Alexium. The team consists of a well-aligned group of highly capable contributors
focused on meaningful results for all Alexium stakeholders. The transitions underwent in FY23 paved the way for a year of execution in FY24. Alexium
has a well-articulated strategy and plan to execute to position the business for success for years to come.
Thank you to all our shareholders for your support throughout the year. We look forward to seeing you at our AGM.
Sincerely,
Mrs Rosheen Garnon
Chair of the Board
Mr William Blackburn
Chief Executive Officer
ALEXIUM INTERNATIONAL GROUP LIMITED
2
DIRECTORS’ REPORT
The Directors present their report on Alexium International Group Limited and its subsidiaries (‘Company’ or ‘Group’) for the period ended 30 June
2023.
DIRECTORS
The Directors of the Company in office during the period and until the date of this report are set out below. Directors were in office for the entire
period unless otherwise stated.
Mrs Rosheen Garnon
Brigadier General Stephen Cheney, USMC (Ret)
Dr Robert Brookins
Mr Simon Moore
Dr Paul Stenson
Mr Carl Dennis
Mr William Blackburn (appointed 01 Sep 2022)
RESULTS AND REVIEW OF OPERATIONS
PRINCIPAL ACTIVITIES
The principal activity of the Company during the financial year was the development of high-performance materials where there is a market
opportunity for commercialisation. During the period, activities included:
Research and development in consultation with end customers;
Obtaining patents in relation to new products developed; and
Manufacturing, sales, and distribution of the products.
DIVIDENDS
No dividend was paid during the period and the Board has not recommended the payment of a dividend (2022: Nil).
SHARE CAPITAL
The following were on issue:
Type
Ordinary shares
Outstanding warrants
Share appreciation rights
Performance rights
30-Jun-23
651,389,760
-
67,274,436
-
30-Jun-22
645,256,590
3,829,787
32,910,779
270,482
OPERATING AND FINANCIAL REVIEW
Operations and Technology Review
The Company’s corporate and operating activities are performed from our single facility located in Greer, South Carolina, USA. The Company utilises
contract manufacturers to produce finished goods; this creates a variable cost model for manufacturing and allows the Company to focus its efforts
on product development and commercialisation of high-performance products. The main product families are phase change material (“PCM”) and
cooling products for bedding, flame-retardant (“FR”) technologies for markets such as bedding, military, and workwear and thermal management
materials (using heat dissipation and/or moisture management products) for bedding, and body armour.
Billy Blackburn was appointed CEO & Managing Director of Alexium, effective 1 September 2022. In this transition, Dr. Bob Brookins was appointed
Chief Technology Officer (CTO) and remains an executive director on the Board. The Board is pleased with the impact these appointments have had
on the Company’s sales pipeline. Specific highlights include:
The company successfully commercialised the new DelCool™ technology with a customer adopting it in a pillow sold at a large retail
department store. The initial successful launch of DelCool™ in pillows led to current product evaluations by online and television shopping
channels, and large low-cost retailers.
Advancements in Alexium’s PCM technology opened opportunities for foam mattress and pillow applications. This led to new
commitments from foam customers for adoption and new sales in FY24.
Though delayed, the large bedding brand adoption of Eclipsys® in mattresses continues to move forward. Plans for that process and
timeline were developed in H2 of FY23 with sales to commence in H2 of FY24.
ALEXIUM INTERNATIONAL GROUP LIMITED
3
DIRECTORS’ REPORT
Testing and development efforts for a bedding technology platform commenced in H2 of FY23. This was formerly referenced as “Total
Mattress Cooling System” (TCMS), which is a combination of Alexium’s PCM, DelCool™ and Eclipsys® technologies as a platform for best-
in-class cooling and comfort in mattress builds. There are now two active customer product development initiatives underway. Both could
lead to meaningful new revenues in late FY24, early FY25.
Based on operating activities, the company was cash positive for Q4 FY23.
During Q3, we rolled out the revised strategy with key focus areas for both business and product development. A recap of that focus is below:
Alexicool®: Phase Change Material (PCM) cooling products for textile and foam applications. This product line is the Company’s original PCM, and
still serves as a work horse product in many bedding applications. Its cooling performance is best in class, reliable, and easily applied to customers’
end products. Most importantly, Alexicool® creates significant value for customers through differentiation allowing for higher pricing.
BioCool®: Proprietary biobased PCM used as a cooling product for textile and foam applications. It is a sustainable product line with a USDA
BioPreferred Certification. Throughout FY23, BioCool® continued seeing strong adoption by customers and surpassed Alexicool® as the Company’s
best-selling PCM.
Eclipsys®: Perpetual cooling technology for textile and foam-based products. This IP protected technology is a lightweight product that has benefits
of being adaptive/responsive, cooling, non-flammable, and environmentally friendly. In contrast to PCM technology, which works by absorbing heat,
this technology counteracts the insulative effects of foam and textiles, constantly moving heat away from the body.
Eclipsys® for bedding - adoption by a major bedding brand is on track to commercialise in early FY24. The Company expects initial production rates
in Q2 FY24 with launch in Q3.
Eclipsys® for tactical gear – the initial launch in 2022 has led to product improvements and renewed interest and testing from multiple target
customers. In Q4 FY23, one customer began production of vests with Eclipsys® with the initial sales volumes of the vests for retail customers, mostly
in e-commerce. We are currently working with that customer on large-scale international military and federal police tactical vest placements.
DelCool™ - Alexium’s newest commercial technology is positioned for significant growth in the Company’s core focus area of bedding. The technology
is based on a proprietary composite fabric that is sold either as a rolled good or as a cut-and-sewn product. This product offers best-in-class cooling
from heat index reduction via microclimate regulation. The Company had its first full-rate production run and sales in Q4 FY23. Alexium is currently
working on four active product development projects with four major bedding brands. The projects are for three mattress brand builds and an
additional pillow placement for a large national retail chain.
Alexiflam® for Military Uniforms: Application of this product to military uniforms helps to protect a broader number of military personnel not just
those in high-risk scenarios. The Company has recently been working directly with the US Army and the US Marines to provide rolls of treated fabric
for evaluation and limited use trials. Both branches have shown strong interest in a cost-effective FR treated nylon-cotton blended fabric that is both
breathable and tear-resistant. The company submitted three fabric samples with accompanying pricing to a US Marine Corps request for quote in
Q4 FY23.
Financing: In FY22, the Company entered an asset-based line of credit with Alterna Capital Solutions to provide working capital funding to support
the Company’s growth. The facility is a three-year $3.0M asset-based line of credit which can be increased to $5.0M with the approval of Alterna
ALEXIUM INTERNATIONAL GROUP LIMITED
4
DIRECTORS’ REPORT
Capital Solutions as needed. This line will support the Company’s growth initiatives for commercialisation of thermal management and flame-
retardant products in new end-product markets. The interest rate is adjustable with a fixed base of 5.0% plus the US prime lending rate published
in the Wall Street Journal which at the end of July 2023 was 8.5% for a total annual rate of 13.5%. The borrowing base of the line of credit consists
of 90% of eligible accounts receivable plus a calculated portion of inventory which, among other factors, will not exceed 50% of eligible inventory.
The Company further strengthened its cash position by amending its existing convertible note with an existing shareholder in December 2022. The
original note was due to expire on 24 December 2023 and carried a face value of $3.5M (A$5.1M). In conjunction with this amendment, the
shareholder agreed to provide an additional $1.0M (A$1.5M) to support the business through the next phase of its growth and development. The
restated note has a face value of $4.8M (A$7.0M), a three-year term and a base annual interest rate of 10%. See additional details in the Notes to
the Consolidated Financial Statements.
Skilled Labour: US unemployment remained very low throughout the year. The skills needed for positions within the Company are typically related
to the sciences and administrative functions. The company did not have any issues filling vacancies throughout the year.
Environmental, Social and Governance (ESG)
Alexium is committed to providing innovative, sustainable, and environmentally friendly solutions to our customers and end consumers. We take
responsibility for our impact on the environment and human welfare seriously and are dedicated to exceeding industry standards for safety and
environmental sustainability. The board recognises the importance of formally integrating Environmental, Social and Governance (ESG) principles
into our daily operations and as such, is committed to implementing a transparent, data driven program to help identify opportunities to align our
business activities with these values. Both the Australian Treasury and AASB have proposed mandatory climate-related disclosures that will affect
all companies that are required to prepare annual reporting under the Corporations Act 2001. While the requirements have not yet been
implemented, the adoption is highly probable. Alexium will continue to follow the development of these regulations and the impact on the Company.
As we move forward, we will issue policy statements and establish comprehensive reporting to ensure compliance with ESG standards and reporting
disclosures.
Another important component of Alexium’s ESG strategy is to help our customers meet their own ESG goals. Our Biocool® mPCM product meets the
USDA’s criteria for biobased products and is registered in the USDA BioPreferred program with 94% biobased content.
Financial Result Overview
The Company’s net loss attributable to members of the Company for the financial year was $2,950,943 (2022: $3,360,271). This represents a 12.2%
decrease in net loss over the prior period. If the prior year net loss was adjusted for the intangible impairment of $1,026,377, the normalised net
loss would have been $2,333,894 resulting in a year over year increase in net loss of $617,049 which is due primarily to a year-over-year decrease in
sales offset in part by a reduction in operating expenses.
Revenues from ordinary operating activities decreased 11.8% from the prior year at $7,210,574 (2022: $8,174,937). Revenue continues to be
impacted by a decline in the US retail market conditions which have negatively impacted the bedding market sales as consumer confidence weakened
amid ongoing inflation concerns.
Gross profit decreased 15.3% year over year at $2,821,601 (2022: $3,329,715) while the gross margin percentage decreased by 1.6 percentage points
to 39.1% (2022: 40.7%). This decrease is attributable to unfavourable customer/product mix as well as customer delays in launch of new products.
Operating expenses decreased 24.0% at $5,019,684 (2022: $6,604,186). The net change of $1,584,502 was mainly due to a prior-year impairment of
$1,026,377 for two intangible assets related to the flame-retardant product line. The Company continues to remain positive with respect to the
business potential of the flame-retardant product line based on customers’ engagement and market analysis. Refer to Note 12 of the financial
statements for further details. Without the impairment expense in the prior year, normalised Operating Expenses would have been $5,577,810
resulting in a decrease in the current year of $558,126 or 10.0% driven principally by cost-cutting measures including reduction in personnel and
consultancy spend.
Interest expense at $983,155 (2022: $776,042) reflects an increase of $207,113 or 26.7% due to the rise in interest rates as well as an increased level
of debt from the amendment of the convertible note. There was a gain on the embedded derivative related to the convertible note of $794,098
(2022: $688,060) primarily due to revaluation. Refer to Note 16 of the financial statements for further details. There was also a loss on debt
extinguishment related to the amendment and restatement of the convertible notes in the amount of $576,374 (2022: nil).
As at the reporting date, the cash position was $513,277 (2022: $1,027,095). Cash changes were primarily from normal operating and investing
activities along with a cash inflow of $1.0M as part of the amendment and restatement of the convertible note.
Material Business Risks
The Company has identified below the specific risks which could impact upon its prospects:
Maintaining strong intellectual property position: Product innovation is key to the Company's business model. Thus, maintaining a strong intellectual
property position is critical. To ensure this, the Company is attentive to developing next-generation products that are not only well-differentiated in
the market but are also inventive and market responsive. The Company recognises that it must not only develop these products but protect the
technology underlying them through a sophisticated patent registration program. The management team predominantly focuses on patent
protection to safeguard the Company’s intellectual property. Therefore, patent applications are filed for each technology platform covering the key
parts of the composition as well as product applications. To ensure adequate protection provided by these, market analyses are performed to ensure
ALEXIUM INTERNATIONAL GROUP LIMITED
5
DIRECTORS’ REPORT
protection is afforded in the relevant regions for the applicable markets.
Competition in key markets: The Company has worked diligently on its products to ensure that market competition is well understood, and that the
Company’s product portfolio adequately responds to these competitors. This response includes:
Effective pricing strategies with regular pricing meetings to review costs and margins;
Product innovation;
Analytical tools and methods that objectively demonstrate the value of the Company’s products versus those of competitors; and
Identification of market gaps where current commercial technologies are not effective.
Sufficient capital for achieving profitability: On a monthly basis, Management monitors and creates various forecast scenarios to ensure there is
sufficient capital to achieve profitability and communicates these results to the board. The board is confident that the Company’s revenue forecasts,
commercial pipeline, and funding options will provide the Company with sufficient working capital for the upcoming twelve months. However, in
the unlikely event that sales do not materialise as projected, the Company is evaluating strategies to obtain the required additional funding for future
operations. These strategies may include, but are not limited to, obtaining equity financing, issuing debt, or entering other financing arrangements,
and restructuring of operations to grow revenues and decrease expenses.
Commercial risks due to market dynamics: Beyond threats from competitors, the Company identifies changes in the markets themselves as potential
risks and works to mitigate these risks through diversification of its product portfolio, customer-driven product innovation, and the expansion of its
customer base.
Rising Interest Rates: The US Federal Reserve raised interest rates seven times in FY23 for a total change of 350 basis points. The Company is
impacted by these types of rate hikes on the interest it pays for the line of credit agreement. Based on forecasted cash flow models this will not
create a significant impact to the company in the foreseeable future. The Company also closely monitors receivables to ensure expected payments
are being made timely to minimise the need to borrow funds.
Inflation: US inflation was at its highest level since 1981 at the end of FY22 and through the first half of FY23. This could cause consumer spending
to decrease on discretionary spending for items such as mattresses. Conversely, we see resilience in the top-of-bed segment of the bedding market
due to the lower price points of these products versus mattresses. Inflation rates decreased in the second half of FY23, but consumer confidence
has not yet rebounded.
Likely Developments
The Company is committed to:
Continued market expansion of the USDA BioPreferred certified BioCool® product line;
Continued market expansion of the DelCool™ technology in bedding, especially focused on lower-priced, higher-volume product placements;
Continued work with the US Army and US Marines to qualify FR NyCo technology for military uniforms. The Company is currently awaiting a
decision by the US Marines in response to a Request for Quote (RFQ) submitted June 2023 for sales which would commence in FY25; and
Commercialisation of the Eclipsys® product line in bedding and body armour.
The Company’s business strategies to achieve the above goals include:
Leveraging market position and Company resources for greater market penetration,
Strengthening and maintaining key relationships supporting the Company’s initiatives, and
Maintaining a disciplined and conservative approach to managing resource allocations and expenditures relative to sales growth.
Ensuring a financially strong and stable business through detailed planning, responsible management and transparency of strategy and
outcomes.
Events since the end of the financial period
There has not arisen any item, transaction, or event of a material and unusual nature, which in the opinion of the Directors of the Company, is likely
to significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.
Environmental Reporting
The Company’s operations are currently located solely in the United States, and as such are not regulated by any significant environmental regulation
under a law of the Commonwealth or of a State or Territory in Australia.
US Laws concerning the environment that affect or could affect our operations include, among others, the Clean Water Act, the Resource
Conservation and Recovery Act, the Occupational Safety and Health Act, the National Environmental Policy Act, the Toxic Substances Control Act,
regulations promogulated under these Acts, and other federal, state, and local laws or regulations governing environmental matters. We believe
that the Company complies with these laws and that future compliance will not materially affect our earnings or competitive position.
The BioCool® product line has a USDA BioPreferred Certification based on its biobased content which has a positive impact to the environmental
standing of our customers whenever they choose to use the Company’s products as part of their ultimate products. Additionally, the Company’s
vendors are selected in part based on their adherence to established environmental standards as well as compliance with manufacturing standards
such as ISO 9001.
ALEXIUM INTERNATIONAL GROUP LIMITED
6
DIRECTORS’ REPORT
For the reporting period, the board is not aware of any breach of applicable environmental regulations by the Company.
Corporate Governance Statement
The documents that govern the Company’s corporate governance framework, including its Constitution, charters and polices are available in the
Corporate Governance section on the Company’s website - www.alexiuminternational.com/about/#corpGov
Information on Directors
The names of the Directors holding office during the period are set out below, together with details of their experience, qualifications, special
responsibilities, and other company directorships during the past three financial years.
Mrs Rosheen Garnon
BEc (Accounting major), LLB, FCA, CTA, GAICD. Appointed as an independent Non-Executive Director from September 2018; Chair from March 2019.
Skills and Experience: Mrs Garnon is a non-executive director with experience in infrastructure and transport, financial services, and material
sciences. She has had a distinguished career in the accounting profession as a chartered accountant and taxation advisor. She was a senior partner
with KPMG and held senior executive leadership roles with the firm in Australia and at a global level. She has extensive experience working with
Boards and C Suite executives.
Current External Appointments:
Non-Executive Director of Australian Rail Track Corporation since November 2018, Non-Executive Director for Resolution Life Australia since
November 2019, Non-Executive Director for Retirement Benefit Fund Pty Limited from November 2021, and Chair of the Board of Taxation, an
independent advisory board that advises the Federal Treasurer and the Assistant Treasurer on Australia’s taxation system since March 2020. Mrs
Garnon’s not for profit and volunteer roles include Non-Executive Director for The Smith Family since February 2019, Deputy Chair of the Australia
Council for the Arts from August 2021, Non-Executive Director for Venues NSW since March 2021, and Non-Executive Director for Women Corporate
Directors since 2012.
Brigadier General Stephen Cheney
BS, MS. Appointed as an independent Non-Executive Director of the Company since April 2015. BG Cheney is a member of the Audit, Nomination
and Remuneration, and Risk Committees.
Skills and Experience: BG Cheney is the former Inspector General of the Marine Corps and Commanding General of Parris Island Marine Base. He is
also the former Deputy Executive Secretary to US Defence Secretary Dick Cheney under President George H.W. Bush. General Cheney was a member
of Secretary of State John Kerry’s Foreign Affairs Policy Board and is the President Emeritus of the Washington D.C. based 501(c)(3) policy group
American Security Project as well as President of their 501(c)(4) company The American Security Action Fund.
Current External Appointments: Appointed President Emeritus of the American Security Project in April 2022 and remains a board member there.
Appointed member of the Advisory Board of Workstorm, LLC in June 2022.
Mr Simon Moore
BCom, LLB. Appointed as an independent Non-Executive Director January 2020 and is currently Chair of the Audit Committee and a member of the
Nomination and Remuneration and Risk Committees.
Skills and Experience: Mr Moore is the Senior Partner of the investment firm, Colinton Capital Partners. Prior to establishing Colinton Capital Partners
in 2017, Mr Moore was a Global Partner of The Carlyle Group having established their operation in Australia in 2005. In his time at The Carlyle Group,
he oversaw the Firm’s investments in and served on the Boards of Directors of Coates Hire, Healthscope and Qube.
Current External Appointments: Deputy Chair for AMA Group since November 2018 and Non-Executive Director of Palla Pharma Limited from July
2016 to December 2021.
Dr Paul H. Stenson
BSc, PhD. Appointed as an independent Non-Executive Director June 2020. Dr Stenson is the chair of the Risk Committee and a member of the Audit
Committee.
Skills and Experience: Dr Stenson has a distinguished career with the research, development, manufacture, and commercialisation of new materials
in the fields of coatings, adhesives, nonwovens, and pharmaceuticals.
Dr Stenson has been President and CEO of StanChem Inc. since January 2018. StanChem Inc. comprises two companies – StanChem Polymers which
is a manufacturer of water-based polymers for the coatings and adhesives industries, and Albi Protective Coatings which focuses on the specialty
sector of fire protective intumescent paints and specialty high performance industrial coatings.
Prior to joining StanChem in 2017, Dr Stenson worked as a global technology director at Axalta Coating Systems. Between 2011 and 2016, Dr Stenson
was the executive vice president of technology and product development at Ahlstrom for nonwoven and specialty high performance paper products.
Prior to joining Ahlstrom, Dr Stenson was the vice president of technology for industrial and packaging coatings at Valspar based in Minneapolis and
Zurich, Switzerland from 1993 until 2011. Dr Stenson is also the chairman of TopChem Pharmaceuticals (Ireland) which is a manufacturer of active
pharmaceutical ingredients.
ALEXIUM INTERNATIONAL GROUP LIMITED
7
DIRECTORS’ REPORT
Current External Appointments: Director for TopChem Pharmaceuticals (Ireland) Limited since January 2005, and a Director for Deltech (StanChem)
Holdings, LLC since July 2017.
Mr Carl Dennis
BCom. Appointed as an independent Non-Executive Director from September 2021 and is currently Chair of the Nomination and Remuneration
Committee.
Skills and Experience: Mr Dennis is an operational management professional with over 25 years of experience with expertise in Consumer and
Pharmaceutical Goods. As a former CEO and commercial director, Mr Dennis has deep skills in new product development, sales and marketing,
international brand management and operational execution. Mr Dennis was the CEO and co-owner of Vital Merchandising Services Pty Ltd for 11
years which was acquired by Imperial Logistics Limited in 2007 and he went on to hold both operational and business development C-suite roles
with Imperial Logistics as part of the DP World Group. Throughout his career, his clients have included Blue Chip FMCG organisations with globally
recognised brands. Over the past seven years Mr Dennis has focused on creating new markets for international Australian consumer brands across
Asia, the Middle East, and Africa.
Current External Appointments: None.
Mr William Blackburn
Appointed as Chief Executive Officer and Managing Director in September 2022.
Skills and Experience: Mr Blackburn has over 25-years of experience in general management, with a track record of driving commercial growth. He
has enjoyed success as both an entrepreneur and as an executive in larger organisations. He founded Emes, LLC, a technology-based specialty
chemical business. Emes had a unique business model focused on high-purity chemical production paired with recycling in the pharmaceutical and
consumer healthcare markets. Mr. Blackburn sold the business to Nova Molecular. He joined their executive team to lead further commercial growth
of the merged organisations. More recently, Mr. Blackburn has been the Vice President of Giant Cement Holdings Inc., and executive manager of its
subsidiary, Giant Resource Recovery (GRR), where he led a significant turn-around of the business resulting in 70% EBITDA growth over two-years.
He also raised significant capital for the GRR business to modernise its plants for sustained profitable growth.
Since joining Alexium, Mr. Blackburn has been leading the company’s efforts to commercialise its significant intellectual property. He is very active
in daily sales management, marketing and in building a robust supply chain to support significant sales growth. Mr. Blackburn is a team builder
focused on retaining and acquiring talent, and ensuring people are in the right position to support the company’s strategic growth plans.
Current External Appointments: None.
Dr Robert Brookins
PhD, M.A.E. BA, BSc. Served as Chief Executive Officer and Managing Director from July 2018 to August 2022 and currently serves as Chief Technology
Officer.
Skills and Experience: Dr Brookins has more than 15 years of experience in organic synthesis and materials chemistry. He received his PhD from the
University of Florida in the areas of synthesis and characterisation of conjugated polyelectrolytes and polymers with an emphasis on developing new
polymerisation methods. Upon completion of his PhD, he worked at the US Air Force Research Laboratory at Tyndall AFB, FL where he developed
decontamination methods for chemical and biological threats and developed novel synthetic routes for reactive and functional surfaces. In 2010, Dr
Brookins joined Alexium where he and his team pioneered new classes of flame-retardants for key textile markets. Additionally, his research focuses
on phase change materials, particularly novel application methods and analytical tools.
Dr Brookins has been instrumental in the research and development of the Company’s innovative technologies. Dr Brookins led the development
and commercialisation of Alexium’s phase change material (PCM) platform technologies and the Alexicool® product line, which is the foundation of
the Company’s success in the bedding and top-of-bed markets.
Dr Brookins has, during his time with the Company, been involved in multiple facets of the business, including working with customers on product
design and marketing, analysing markets to assess opportunities, and planning for logistics and supply-chain management. In addition, Dr Brookins
co-invented Alexium’s flame-retardant (FR) technologies for military uniforms and formaldehyde-free, flame-retardant products for cotton-based
materials.
Current External Appointments: None.
Company Secretary
Mr Mark Licciardo founded Mertons Corporate Services in 2007. Mertons is now part of Acclime Australia where Mark is responsible for Acclime
Australia’s Listed Services Division. Mr Licciardo was appointed as Company Secretary effective 01 March 2020. Mr Licciardo is an ASX-experienced
director and chair of public and private companies, with expertise in the listed investment, infrastructure, biotechnology, and digital sectors. He
currently serves as a director on several Australian company boards as well as foreign-controlled entities and private companies.
ALEXIUM INTERNATIONAL GROUP LIMITED
8
DIRECTORS’ REPORT
Meetings of Directors
Directors’ attendance at scheduled board and committee meetings during the reporting period:
Directors
Mrs Garnon
Mr Cheney
Mr Moore
Dr Stenson
Mr Dennis
Dr Brookins
Mr Blackburn
Board
13/15
14/15
15/15
13/15
12/15
13/15
12/12
Audit
-
4/4
4/4
2/4
2/2
-
-
Risk
4/4
3/4
4/4
4/4
-
-
-
Remuneration &
Nomination
6/6
5/6
6/6
-
6/6
-
-
In addition to the above, the board and committees meet regularly on an informal basis.
ALEXIUM INTERNATIONAL GROUP LIMITED
9
DIRECTORS’ REPORT – REMUNERATION REPORT - AUDITED
The information provided in this Remuneration Report has been audited as required under section 308(3C) of the Corporations Act (Cth).
A. Key Management Personnel (‘KMP’)
For the purposes of this report, personnel deemed KMP at any time during the reporting period are:
Name
Position
Appointed
Resigned
Mrs Rosheen Garnon
BG Stephen Cheney
Mr Simon Moore
Dr Paul Stenson
Mr Carl Dennis
Mr William Blackburn
Dr Robert Brookins
Mr Jason Lewis
B. Remuneration Policy
Non-Executive Chair
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive Officer
Chief Technology Officer
Chief Financial Officer
-
-
-
-
-
September 2022
-
-
-
-
-
-
-
-
-
-
The objective of the Company’s remuneration framework is to ensure reward for performance is competitive, appropriate for the stage of
development of the Company, results are delivered and to attract and retain suitably qualified and experienced candidates. The Remuneration and
Nomination Committee continuously monitors the remuneration framework with a goal of ensuring that remuneration is aligned with performance
and the shareholder value creation. The Company’s remuneration framework aims to ensure that:
Rewards reflect the competitive global market in which the Company operates;
Incentive remuneration is linked to KPI’s, which are designed to encourage behaviours that are short, medium and long term in nature;
Rewards to executives are linked to shareholder value creation;
Executives are rewarded for both financial and non-financial performance; and
Remuneration arrangements ensure equity between executives and facilitate the deployment of human resources.
The Board utilises published market data and independent consultation as needed in developing and updating its remuneration policies and
practices. In accordance with best practice corporate governance, the structure of Non-Executive and Executive remuneration is separate and
distinct. Remuneration Committee responsibilities are carried out by Mr Dennis (Chair), Brigadier General Cheney, Mr Moore, and Mrs Garnon.
Non-Executive Director Remuneration Policy
Fees and payments to the Non-Executive Directors reflect the demands and the responsibilities of the Directors. Fees and payments are reviewed
by the Remuneration Committee to ensure they are appropriate and in line with the market. Non-Executive Directors receive a fixed fee for service.
Individual director’s fees are determined within an aggregate directors’ fee pool limit, which is periodically recommended for approval by
shareholders. The maximum aggregate annual fees are $375,000 as approved at the 2016 AGM. No retirement benefits are provided other than
compulsory where applicable.
Executive Remuneration Policy
The Company’s Managing Director’s and Executives’ remuneration packages contain the following key elements:
Primary benefits – base salary, short-term incentives, post-employment contributions and medical benefit plan for US based executives.
Long term incentives – Share appreciation rights under the Company’s Share Appreciation Rights Share Plan.
External remuneration information provides benchmark information to ensure remuneration is set to reflect the market for a comparable role. Base
fees are reviewed annually to ensure the level is competitive with the market. There is no guaranteed salary increase included.
C. Consequence on Shareholder Wealth
In considering the performance of the Company and the benefits for shareholder wealth, the Remuneration Committee has considered a range of
indicators in respect to senior executive remuneration and has linked these to the previously described short- and long-term incentives.
The following table presents these indicators over the past five financial years:
2023
(2,950,943)
Nil
0.013
(0.46)
Net profit/ (loss)
Dividends declared
Share price as at 30 June (A$)
EPS (cents)
2022
(3,360,271)
Nil
0.024
(0.52)
2021
(1,445,319)
Nil
0.049
(0.23)
2020
(6,125,476)
Nil
0.060
(1.26)
2019
(6,939,521)
Nil
0.155
(2.01)
ALEXIUM INTERNATIONAL GROUP LIMITED
10
DIRECTORS’ REPORT – REMUNERATION REPORT - AUDITED
D. Details of Remuneration
Short-term benefits
Share-based payments
Other
Benefits
Salary and
fees
Non-
monetary
benefits
Short-term
incentives(1)
Performance
rights(2)
Share
appreciation
rights(3)
Shares in
lieu of
salary(4)
Post-
employment
benefits
2023
Non-Executive Directors
Mrs Garnon
BGen Cheney
Mr Moore
Dr Stenson
Mr Dennis
Total Non-Executive Directors
Executive Directors
Mr Blackburn - CEO & MD(5)
Dr Brookins - CTO
Total Executive Directors
Executive
Mr Lewis - CFO
Total Executive
-
60,000
-
65,000
61,750
186,750
-
-
-
-
-
-
270,625
315,000
585,625
23,526
15,692
39,218
-
-
-
-
-
-
-
-
-
265,000
265,000
15,716
15,716
30,000
30,000
Total
1,037,375
54,934
30,000
-
-
-
-
-
-
89,500
-
70,000
-
2,250
161,750
10,500
-
-
-
-
10,500
Performance
based % of
Total
-
-
-
-
-
Total
100,000
60,000
70,000
65,000
64,000
359,000
20,293
68,433
88,726
57,571
57,571
-
-
-
-
-
8,900
2,688
11,588
323,344
401,813
725,157
6.3%
17.0%
11,862
11,862
380,149
380,149
23.0%
146,297
161,750
33,950
1,464,306
-
-
-
-
-
-
-
-
-
-
-
-
(1) Short-term incentive plan (“STI”) is paid in cash for the achievement of a range of financial and non-financial performance criteria based on corporate objectives:
Financial – revenue growth, gross margin and EBITDA;
Non-Financial – numerous and distinct key performance goals approved by the board each having its own weight of the total bonus targets
FY 23 STIs forfeited due to not meeting performance criteria are:
a. Mr Blackburn – 100%
b.
c. Mr Lewis – 100% (Mr Lewis received a $30,000 retention bonus within the fiscal year)
Dr Brookins – 100%
provide an incentive and to reward, retain and motivate participants
recognise the abilities, efforts, and contributions of participants to the performance and success of the Group; and
provide participants with the opportunity to acquire or increase their ownership interest in the Group
(2) Long term incentive plans (“LTI”) are provided with the objectives to:
(3) See F. Share Based Compensation section for detail on long-term incentives. Issuance of shares will occur only when all vesting conditions are met.
(4) Shares in lieu of salary to directors were approved by shareholders at the 2022 AGM. There are no performance conditions related to these shares.
(5) Represents remuneration from 1 September 2022 to 30 June 2023
Short-term benefits
Share-based payments
Other
Benefits
Salary and
fees
Non-
monetary
benefits
Short-term
incentives(1)
Performance
rights (2)
Share
appreciation
rights(3)
Shares in
lieu of
salary (4)
Post-
employment
benefits
2022
Non-Executive Directors
Mrs Garnon
BGen Cheney
Mr Moore
Dr Stenson
Mr Dennis
Total Non-Executive Directors
Executive Directors
Dr Brookins - CTO & ED
Total Executive Directors
Executives
Mr Lewis - CFO
Total Executives
90,951
65,000
70,024
70,000
33,750
329,725
-
-
-
-
-
-
315,000
315,000
13,666
13,666
265,000
265,000
13,666
13,666
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,250
11,250
4,682
4,682
128,625
128,625
3,151
3,151
108,208
108,208
-
-
-
-
9,088
-
-
-
-
9,088
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Performance
based % of
Total
-
-
-
-
-
28.9%
28.6%
Total
100,039
65,000
70,024
70,000
45,000
350,063
461,973
461,973
390,025
390,025
Total
909,725
27,332
7,833
236,833
11,250
9,088
1,202,061
(1) Short-term incentive plan (“STI”) is paid in cash for the achievement of a range of financial and non-financial performance criteria based on corporate objectives:
Financial – revenue growth and EBITDA;
Non-Financial – numerous and distinct key performance goals approved by the board each having its own weight of the total bonus targets.
FY 22 STIs forfeited due to not meeting performance criteria are:
Dr Brookins – 100%
d.
e. Mr Lewis – 100%
provide an incentive and to reward, retain and motivate participants.
recognise the abilities, efforts, and contributions of participants to the performance and success of the Group; and
provide participants with the opportunity to acquire or increase their ownership interest in the Group.
(2) Long term incentive plans (“LTI”) are provided with the objectives to:
(3) See F. Share Based Compensation section for detail on long-term incentives. Issuance of shares will occur only when all vesting conditions are met.
(4) Shares in lieu of salary to directors were approved by shareholder at the 2021 AGM. There are no performance conditions related to these shares. In addition to the expense amounts
shown above in the amount of $11,250, there is a prepayment of $2,250 for shares issued in advance and held in escrow for Mr. Dennis.
ALEXIUM INTERNATIONAL GROUP LIMITED
11
DIRECTORS’ REPORT – REMUNERATION REPORT - AUDITED
E. Service Agreements
On appointment, the Non-Executive Directors enter into an agreement with the Company in the form of a letter of appointment. The letter outlines
the Board’s policies and terms, including remuneration relevant to the office of director. Non-Executive directors are compensated for their
contributions to the board and any committees they lead or serve. These agreements can be terminated without cause by either party at any time.
The Company has entered into service agreements with executives, which contain standard terms and conditions for agreements of this nature,
including confidentiality, restraint on competition and intellectual property provisions. These agreements may be terminated with 90 days’ notice
by either party, or earlier in the event of certain terms and conditions breaches. The Company may at its sole discretion terminate the employment
without cause by giving 90 days’ written notice or making a payment of 90 days’ salary in lieu of notice. Remuneration is reviewed annually and
approved by the Board of Directors and includes potential short-term and long-term incentive opportunities as well as salary and other benefits.
F. Share-based Compensation
Performance Rights
The performance rights plan was replaced with the share appreciation rights plan in FY21. The final vesting of performance rights occurred in
FY22, and the related shares were issued in FY23.
The valuation of performance rights granted and vested to KMP is detailed below:
2023
2022
Granted ($)
Vested ($)
Forfeited ($)
Granted ($)
Vested ($)
Forfeited ($)
Executive Director
Dr Brookins - CTO
Executive
Mr Lewis - CFO
Total
-
-
-
-
-
-
-
-
-
-
-
-
4,682
3,151
7,833
The number of performance rights held during the reporting periods to KMP including their personally related parties is set out below:
Balance at
start of year
Granted
Vested &
issued
Forfeited
Balance at end
of year
Vested - not
issued
2023
Executive Director
Dr Brookins - CTO
Executive
Mr Lewis - CFO
Total
2022
Executive Director
Dr Brookins - CTO
Executive
Mr Lewis - CFO
Total
139,552
93,919
233,471
610,763
367,115
977,878
-
-
-
-
-
-
(139,552)
(93,919)
(233,471)
(471,211)
(273,196)
(744,407)
-
-
-
-
-
-
-
-
-
139,552
139,552
93,919
233,471
93,919
233,471
-
-
-
-
-
-
Share Appreciation Rights
The number of share appreciation rights held during the reporting periods by KMPs, including their personally related parties, is set out below:
2023
Executive Directors
Mr Blackburn - CEO & MD
Dr Brookins - CTO
Total Executive Directors
Executive
Mr Lewis - CFO
Total
2022
Executive Directors
Dr Brookins - CTO
Executive
Mr Lewis - CFO
Total
ALEXIUM INTERNATIONAL GROUP LIMITED
Balance at
start of year
Granted
Balance at
end of year
Vested - not issue
22,843,648 22,843,648
-
13,377,148
6,505,703 19,882,851
13,377,148 29,349,351 42,726,499
1,613,141
-
1,613,141
11,253,792
5,473,052 16,726,844
24,630,940 34,822,403 59,453,343
-
1,613,141
6,505,703
6,871,445 13,377,148
5,473,052
5,780,740 11,253,792
11,978,755 12,652,185 24,630,940
-
-
-
12
DIRECTORS’ REPORT – REMUNERATION REPORT - AUDITED
Share appreciation rights granted and current year expense by plan year:
Mr Blackburn, CEO & MD
2023
Joining Award
Total
Dr Brookins, CTO and Director
2023
2022
2021
Total
Mr Lewis, CFO
2023
2022
2021
Total
Total
Grant
date
Vesting
date
Expiry
date
Opening
price
FV at
grant date
Total
grants
Current
year exp
Fully
vested
target
price
16-Nov-22
16-Nov-22
23-Sep-25
Various1
23-Sep-27
23-Sep-27
A$0.030
A$0.030
A$0.171 A$0.0046
6,712,233
A$0.150 A$0.0056 16,131,415
22,843,648
5,178
15,114
20,293
16-Nov-22
23-Sep-21
23-Sep-20
23-Sep-25
23-Sep-24
23-Sep-23
23-Sep-27
23-Sep-26
23-Sep-25
A$0.030
A$0.076
A$0.071
A$0.171 A$0.0046
A$0.148 A$0.0380
A$0.139 A$0.0320
16-Nov-22
23-Sep-21
23-Sep-20
23-Sep-25
23-Sep-24
23-Sep-23
23-Sep-27
23-Sep-26
23-Sep-25
A$0.030
A$0.076
A$0.071
A$0.171 A$0.0046
A$0.148 A$0.0380
A$0.139 A$0.0320
6,505,703
6,871,445
6,505,703
19,882,851
5,473,052
5,780,740
5,473,052
16,726,844
5,019
56,375
7,039
68,433
4,222
47,427
5,922
57,571
59,453,343
146,297
1 Of the total SARs granted as part of the Joining Award, 75% vest based on the CAGR as set by the Board (see section (a) below) while 25% vest over time with full vesting by September 2025.
The expense is recognised over the vesting period based on the originally calculated Monte Carlo option fair value.
Vested Rights:
(a)
(b)
Participants are entitled to the amount by which the closing share price exceeds the opening share price.
Shares will be issued in the amount equal to the closing share price less opening share price divided by closing share price then multiplied by the vested and exercised SARs. Closing
price is defined as the 20-day volume weighted average price (“VWAP”) as at the vesting date of the relevant SAR.
Vesting Conditions:
(a)
The Board sets the Fully Vested Target Price by applying a compounded annual growth rate (“CAGR”) on the opening share price for the term of the relevant SAR. The opening price is
the 20-day VWAP from the issuance date of the annual report or as set by the Board. Partial vesting will begin at the approved minimum CAGR at an approved percentage of the total
SAR grants. Vesting from the minimum CAGR to the fully vested CAGR (i.e. Fully Vested Target Price) will occur on a linear scale between the minimum percentage of the total SAR
grants and 100% of the total SAR grants.
Continued employment through the vesting date.
(b)
Options:
No options were granted or outstanding to KMPs during the reportable period.
Shares:
The value of shares issued or agreed to be issued in lieu of salary during the year was $161,750 (2022: $13,500). The calculation of these
shares was presented and approved at the 2022 AGM.
ALEXIUM INTERNATIONAL GROUP LIMITED
13
DIRECTORS’ REPORT – REMUNERATION REPORT - AUDITED
The number of shares in the Company held during the financial year by each director and other key management personnel, including their
personally related parties, is set out below:
2023
Non-Executive Directors
Mrs Garnon
BGen Cheney
Mr Moore
Mr Dennis
Total Non-Executive Directors
Executive Directors
Mr Blackburn - CEO & MD
Dr Brookins - CTO
Total Executive Directors
Executive
Mr Lewis - CFO
Total
2022
Non-Executive Directors
Mrs Garnon
BGen Cheney
Mr Moore
Mr Dennis
Total Non-Executive Directors
Executive Directors
Dr Brookins - CTO
Executive
Mr Lewis - CFO
Total
Balance at
start of year
Granted &
issued shares
in lieu of salary
Conversion of
performance
rights
Other
changes(1)
Balance at end
of year
Granted &
to be issued
shares in lieu
of salary
Balance at end
of year
including
shares to be
issued
3,326,397
848,914
79,151,331
364,536
83,691,178
3,289,721
-
2,572,967
-
5,862,688
-
-
-
-
-
-
-
-
55,964
55,964
6,616,118
848,914
81,724,298
420,500
89,609,830
3,853,479
-
3,013,893
-
6,867,372
10,469,597
848,914
84,738,191
420,500
96,477,202
-
5,123,086
5,123,086
725,671
-
-
-
-
-
139,552
139,552
93,919
-
-
-
-
-
5,262,638
5,262,638
819,590
-
-
-
-
-
5,262,638
5,262,638
819,590
89,539,935
5,862,688
233,471
55,964
95,692,058
6,867,372
102,559,430
2,783,458
863,929
76,145,234
-
79,792,621
5,190,875
452,475
270,212
175,638
-
364,536
810,386
-
-
-
-
-
-
-
272,727
(190,653)
3,006,097
-
3,088,171
3,326,397
848,914
79,151,331
364,536
83,691,178
471,211
(539,000)
5,123,086
273,196
-
725,671
85,435,971
810,386
744,407
2,549,171
89,539,935
-
-
-
-
-
-
-
-
3,326,397
848,914
79,151,331
364,536
83,691,178
5,123,086
725,671
89,539,935
(1) Other changes include, amongst other movements, open market transactions.
G. Additional Disclosures Relating to KMP
The interests of the Directors and other KMP of the Company in shares and rights (including shares to be issued) are set out below:
Non-Executive Directors
Mrs Garnon
BGen Cheney
Mr Moore
Mr Dennis
Total Non-Executive Directors
Executive Directors
Mr Blackburn - CEO & MD
Dr Brookins - CTO
Total Executive Directors
Executive
Mr Lewis - CFO
Total
H. Loans to KMP
No. of ordinary
shares
No. of share
appreciation
rights
10,469,597
848,914
84,738,191
420,500
96,477,202
-
-
-
-
-
-
5,262,638
5,262,638
22,843,648
19,882,851
42,726,499
819,590
16,726,844
102,559,430
59,453,343
There are no loans currently provided to KMP of the Company.
ALEXIUM INTERNATIONAL GROUP LIMITED
14
THIS IS THE END OF THE AUDITED REMUNERATION REPORT
DIRECTORS’ REPORT
SHARES UNDER OPTION/WARRANT
As at the date of this report there were NIL unlisted options and warrants (2022: 3,829,787).
No option/warrant holder has any right under the options/warrants to participate in any other share issue of the Company or any other entity. The
options/warrants are exercisable at any time after vesting and on or before the expiry date. Refer to Note 17(f) for details of the movements of the
options during the year and ASX announcements for options exercised after the year end and to the date of this report.
INSURANCE OF OFFICERS
During the reporting period, the Company paid a premium in respect to a contract insuring the Directors and Officers of the Company against
potential liabilities incurred as a director or officer to the extent permitted by the Corporations Act 2001 (Cth). Due to a confidentiality clause in the
policy, the amount of the premium has not been disclosed.
The potential liabilities insured against are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against
the officers in their capacity as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with
such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the
officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company. It is not possible
to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 (Cth) for leave to bring proceedings on behalf of the economic
entity, or to intervene in any proceedings to which the entity is a party, for the purpose of taking responsibility on behalf of the entity for all or part
of those proceedings. No proceedings have been brought or intervened in or on behalf of the entity with leave of the Court under section 237 of the
Corporations Act 2001 (Cth).
ROUNDING OF AMOUNTS
Amounts in the financial statements and Directors’ report are presented in US dollars and all values are rounded to the nearest dollar, unless
otherwise stated.
INDEMNITY OF AUDITORS
The Company has agreed to indemnify their auditors, Grant Thornton Audit Pty Ltd, to the extent permitted by law, against any claim by a third party
arising from the Company’s breach of their agreement. The indemnity stipulates that Alexium will meet the full amount of any such liabilities
including a reasonable amount of legal costs.
NON-AUDIT SERVICES
There were no non-audit services provided by the Company’s auditor, Grant Thornton Audit Pty Ltd in the current financial year.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 (Cth) is attached.
This report is made in accordance with a resolution of the Directors.
Rosheen Garnon
Chair
Dated 25 August 2023
ALEXIUM INTERNATIONAL GROUP LIMITED
15
DECLARATION OF INDEPENDENCE
ALEXIUM INTERNATIONAL GROUP LIMITED
16
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2023
Revenue
Cost of sales
Gross Profit
Administrative expenses
Sales and marketing expenses
Research and development costs
Impairment of intangibles
Other expenses
Operating expenses
Loss before finance costs
Interest expense
Gain/(Loss) on embedded derivative
Gain/(Loss) on debt extinguishment
Interest earned
Total finance costs
Loss before tax
Tax expense
Loss for the year after tax
Other comprehensive income - Exchange differences on translation of foreign operations
which may subsequently be reclassified to profit or loss
Total comprehensive loss for the year
Loss for the year attributable to members of the group
Total comprehensive loss for the year attributable to members of the group
Note
3
4
5
12
25
16
15
3
7
2023
US$
7,210,574
(4,388,973)
2,821,601
(3,607,981)
(524,222)
(630,584)
-
(256,897)
(5,019,684)
2022
US$
8,174,937
(4,845,222)
3,329,715
(3,365,866)
(846,727)
(1,177,513)
(1,026,377)
(187,703)
(6,604,186)
(2,198,083)
(3,274,471)
(983,155)
794,098
(576,374)
12,571
(752,860)
(2,950,943)
-
(776,042)
688,060
-
2,182
(85,800)
(3,360,271)
-
(2,950,943)
(3,360,271)
118,208
(2,832,735)
276,138
(3,084,133)
(2,950,943)
(2,832,735)
(3,360,271)
(3,084,133)
Basic and diluted loss per share (cents)
8
(0.46)
(0.52)
This consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes to
the financial statements.
ALEXIUM INTERNATIONAL GROUP LIMITED
17
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2023
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total Current Assets
Non-Current Assets
Other financial assets
Property, plant and equipment
Intangible assets
Right-of-use asset
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Lease liabilities
Borrowings
Total Current Liabilities
Non-Current Liabilities
Borrowings
Derivative liability
Lease liabilities
Total Non-Current Liabilities
Total Liabilities
Net (Liabilities)/Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
Note
19
9
10
11
12
11
13
14
15
15
16
14
17
2023
US$
513,277
1,046,950
824,981
87,199
2,472,407
17,871
730,530
1,695,365
465,157
2,908,923
5,381,330
990,296
136,498
161,345
1,288,139
3,787,189
688,364
600,774
5,076,327
6,364,466
(983,136)
2022
US$
1,027,095
579,052
1,599,220
90,504
3,295,871
16,672
967,589
1,569,167
574,606
3,128,034
6,423,905
816,423
118,253
178,626
1,113,302
2,815,195
182,452
737,273
3,734,920
4,848,222
1,575,683
66,610,771
(974,429)
(66,619,478)
(983,136)
66,523,851
(1,195,699)
(63,752,468)
1,575,683
This consolidated statement of financial position should be read in conjunction with the accompanying notes to the financial statements.
ALEXIUM INTERNATIONAL GROUP LIMITED
18
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2023
Contributed
Equity
US$
66,523,851
Shares to
be Issued
Reserve
US$
-
Options &
Warrants
Reserve
US$
83,934
Performance
Rights
Reserve
US$
444,750
Foreign
Currency
Translation
Reserve
US$
(1,724,383)
Consolidated
Accumulated
Losses
US$
(63,752,468)
Total
US$
1,575,684
-
-
-
-
(1,763)
(1,763)
-
-
-
-
-
-
-
119,971
119,971
(2,950,943)
(1)
(2,950,944)
(2,950,943)
118,207
(2,832,736)
-
(1,906)
-
9,076
-
-
-
-
(83,934)
-
-
-
-
-
116,322
(9,076)
-
-
-
-
83,934
-
-
-
-
(1,906)
116,322
-
Balance at 1 July 2022
Loss for the period
Foreign currency translation
Total comprehensive income / (loss)
Transactions with owners in their
capacity as owners:
Expiration of outstanding options
Capital raising costs
Share appreciation rights expense
Performance rights exercised
Share-based payment in lieu of salary
Balance at 30 June 2023
79,750
66,610,771
79,750
77,987
-
-
-
551,996
-
(1,604,412)
-
(66,619,478)
159,500
(983,136)
Balance at 1 July 2021
66,265,398
Loss for the period
Foreign currency translation
Total comprehensive income / (loss)
Transactions with owners in their
capacity as owners:
Capital raising costs
Share appreciation rights expense
Performance rights expense
Performance rights exercised
-
-
-
(4,284)
-
-
79,907
Share-based payments in lieu of salary
Share-based payments for services
Balance at 30 June 2022
38,250
144,580
66,523,851
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
83,934
221,783
(2,000,521)
(60,392,197)
-
-
-
-
276,138
276,138
(3,360,271)
-
(3,360,271)
4,178,397
-
(3,360,271)
276,138
(3,084,133)
-
293,798
9,076
(79,907)
-
-
-
-
-
-
-
-
(4,284)
293,798
9,076
-
-
-
83,934
-
-
444,750
-
-
(1,724,383)
-
-
(63,752,468)
38,250
144,580
1,575,683
This consolidated statement of changes in equity should be read in conjunction with the accompanying notes to the financial statements.
ALEXIUM INTERNATIONAL GROUP LIMITED
19
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED
30 JUNE 2023
Cash flow from operating activities
Receipts from customers and other income
Payments to suppliers and employees
Interest received
Interest and other costs of finance paid
Goods & services tax received
Net cash flows (used in) operating activities
Cash flows from investing activities
Purchase of property, plant, and equipment
Payments for development costs
Net cash flows (used in) investing activities
Cash flows provided by financing activities
Proceeds from borrowings
Proceeds on substantial modification of convertible note
Transaction costs related to issues of shares
Transaction costs related to loans and borrowings
Repayment of lease liabilities
Repayment of borrowings
Net cash flows (used in) financing activities
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year
Note
2023
US$
2022
US$
6,635,226
(7,655,906)
12,566
(128,997)
33,513
(1,103,598)
8,924,204
(10,246,599)
2,167
(275,535)
24,185
(1,571,578)
19(b)
(18,761)
(367,781)
(386,542)
(52,380)
(302,437)
(354,817)
5,771,451
1,022,460
(937)
-
(118,253)
(5,678,961)
995,760
(494,380)
1,027,095
(19,438)
513,277
251,074
-
(4,285)
(57,768)
(94,258)
(20,450)
74,314
(1,852,082)
2,932,673
(53,496)
1,027,095
14
19(a)
This consolidated statement of cash flows should be read in conjunction with the accompanying notes to the financial statements.
ALEXIUM INTERNATIONAL GROUP LIMITED
20
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
1. CORPORATE INFORMATION
The consolidated financial statements of Alexium International Group Limited and its subsidiaries (collectively the “Company” or “Group”) for the
year ended 30 June 2023 were authorised for issue in accordance with a resolution of the directors on 25 August 2023. Alexium International Group
Limited (‘Parent’) is a company limited by shares incorporated and domiciled in Australia, whose shares are publicly traded on the Australian
Securities Exchange under the ticker AJX. These financial statements include the consolidated financial statements and notes of Alexium International
Group Limited and its controlled entities. This financial report, the comparative period within, and all future financial reports, are presented in US
Dollars. This presentation aligns the Company’s financial reporting with the nature of the business operations which primarily occur in the United
States. The nature of the operations and principal activities of the Company are described in the Directors’ Report.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards, Australian Accounting
Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001 (Cth).
The Company is a for-profit entity for the purpose of preparing the financial statements. Australian Accounting Standards set out accounting policies
that the AASB has concluded would result in financial statements containing relevant and reliable information about transactions, events, and
conditions to which they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with
International Financial Reporting Standards as issued by the International Accounting Standards Board. Material accounting policies adopted in the
preparation of the financial statements are presented below. They have been consistently applied unless otherwise stated. The financial statements
have been prepared on an accrual basis and are based on historical costs, modified where applicable by the measurement at fair value.
(b) New and amended standards adopted by the Company in this financial report
There were no new or revised Standards and Interpretations issued by the AASB that were adopted by the Company that are relevant to its
operations and effective for the reporting period.
(c) Impact of standards issued but not yet applied by the Company
Several new standards are effective for annual periods beginning after 1 July 2023 and earlier application is permitted; however, the Company has
not early adopted the new or amended standards in preparing these consolidated financial statements. For future reporting purposes, the Company
has reviewed the new and amended standards and they are either not applicable to the Company or are not expected to have a significant impact
on the Company’s consolidated financial statements.
(d) Company Accounting Policies
Fair Value of Assets and Liabilities
The Company measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of
the applicable Australian Accounting Standard. Fair value is the price the Company would receive to sell an asset or would have to pay to transfer a
liability in an orderly (i.e. unforced) transaction between independent, knowledgeable, and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments
to market values may be made with regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not
traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible,
the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the market with the greatest
volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at
the end of the reporting period (i.e. the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer
the liability, after taking into account transaction costs and transport costs). For non-financial assets, the fair value measurement also considers a
market participant’s ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest
and best use.
The fair value of liabilities and the entity's own equity instruments (excluding those related to share-based payment arrangements) may be valued,
where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information
where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant,
are detailed in the respective note to the financial statements.
Valuation techniques
In the absence of an active market for an identical asset or liability, the Company selects and uses one or more valuation techniques to measure the
fair value of the asset or liability. The Company selects a valuation technique that is appropriate in the circumstances and for which sufficient data
is available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or
liability being measured. The valuation techniques selected by the Company are consistent with one or more of the following valuation approaches:
Market approach uses prices and other relevant information generated by market transactions for identical or similar assets or liabilities.
Income approach converts estimated future cash flows or income and expenses into a single discounted present value.
Cost approach reflects the current replacement cost of an asset at its current service capacity.
ALEXIUM INTERNATIONAL GROUP LIMITED
21
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset or liability, including
assumptions about risks. When selecting a valuation technique, the Company gives priority to those techniques that maximise the use of observable
inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available information on actual
transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable,
whereas inputs for which market data is not available and therefore are developed using the best information available about such assumptions are
considered unobservable.
Fair value hierarchy
AASB 13: Fair value measurement requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value
measurements into one of three possible levels based on the lowest level that an input that is significant to the measurement can be categorised
into as follows:
Level 1: Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date.
Level 2: Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or
indirectly.
Level 3: Measurements based on unobservable inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation
techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required to measure fair value are observable,
the asset or liability is included in Level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included
in Level 3.
The Company will change the categorisation within the fair value hierarchy only in the following circumstances:
if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa; or
if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa.
When a change in the categorisation occurs, the Company recognises transfers between levels of the fair value hierarchy (i.e., transfers into and out
of each level of the fair value hierarchy) on the date the event or change in circumstances occurred.
(e) Principles of Consolidation
The consolidated financial statements incorporate all assets, liabilities, and results of the Company. Subsidiaries are entities the parent controls. The
parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and can affect those returns
through its power over the entity. A list of the subsidiaries is provided in Note 21.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Company from the date on which control
is obtained by the Company. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances
and unrealised gains or losses on transactions between Company entities are fully eliminated on consolidation. Accounting policies of subsidiaries
have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Company.
Equity interests in a subsidiary not attributable, directly, or indirectly, to the Company are presented as “non-controlling interests". The Company
initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a proportionate share of the
subsidiary's net assets on liquidation at either fair value or at the non-controlling interests' proportionate share of the subsidiary's net assets. After
initial recognition, non-controlling interests are attributed their share of profit or loss and each component of other comprehensive income. Non-
controlling interests are shown separately within the equity section of the statement of financial position and statement of comprehensive income.
(f) Foreign currency translation
The consolidated financial statements are presented in United States Dollars ($). The functional currency of the Parent is Australian Dollar (A$) and
the functional currency of the subsidiary is the US Dollar ($).
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 reporting date and exchange
differences are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates 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. All resulting exchange differences are recognised in other comprehensive income.
As at the reporting date the assets and liabilities of these subsidiaries are translated into the presentation currency at the rate of exchange ruling at
the reporting date and the statement of comprehensive income is translated at the weighted average exchange rates for the year. All resulting
exchange differences are recognised in other comprehensive income.
On disposal of a foreign entity, the cumulative exchange differences are reclassified to profit or loss as part of the gain or loss on sale.
ALEXIUM INTERNATIONAL GROUP LIMITED
22
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
(g) Property, plant, and equipment
Owned assets
Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses. Where parts of an item
of property, plant and equipment have different useful lives, they are accounted for as separate items.
Leased assets
The Company recognises all lease liabilities and corresponding right of use assets, except for short-term (12 months or less) and low value leases, on
the balance sheet. The assets and liabilities are initially measured at the present value of future lease payments using the Company’s incremental
borrowing rate unless the interest rate implicit in the lease can be readily determined. The Company recognises depreciation of leased assets and
interest on lease liabilities over the term of the lease.
Subsequent costs
The Company recognises in the carrying amount of an item of property, plant, and equipment the cost of replacing part of such an item when that
cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the consolidated entity and the cost of the
item can be measured reliably. All other costs are recognised in profit or loss as an expense as incurred.
Depreciation
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each asset.
The estimated useful lives in the current and comparative years are as follows:
Asset Type
Computer equipment
Machinery and equipment
Furniture, fixtures, and office equipment
Leased plant and equipment
Years
3 years
3 to 15 years
3 to 10 years
Shorter of the lease term or the useful life
The residual value, the useful life and the depreciation method applied to an asset are reassessed at least annually.
(h) Intangible assets
Acquired intangible assets
Intangible assets acquired separately are capitalised at cost. Following initial recognition, the cost model is applied to the class of intangible assets
whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives, which is considered five years, as these assets are
considered finite. Other intangible assets that are acquired by the Company are stated at cost less accumulated amortisation and impairment losses.
Internally Generated Intangible Assets
Expenditures on internally generated goodwill and brands are recognised in the statement of comprehensive income as an expense as incurred.
Expenditures on the research phase of projects to develop new specialty chemicals are recognised as an expense as incurred. Costs that are directly
attributable to a project’s development phase are recognised as intangible assets, provided they meet the following recognition requirements:
Development costs can be measured reliably;
Project is technically and commercially feasible;
The Company intends to and has sufficient resources to complete the project;
The Company has the ability to use or sell the asset; and
The asset will generate probable future economic benefits.
Costs directly attributable to capitalised development include employee expenses incurred on technology development, external testing fees, and
product trial costs. Costs not meeting these criteria are expensed as incurred. The ultimate recoupment of costs carried forward for capitalised
development is dependent on the successful development and commercialisation of the Company’s technology. Any internally generated asset that
is not yet complete or not fully amortised is subject to impairment testing.
Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific
asset to which it relates. All other expenditures are expensed as incurred.
Amortisation
Goodwill and intangible assets with an indefinite life are systematically tested for impairment at each annual reporting date. Capitalised development
costs, patents, and trademarks with a finite life are amortised based on estimated future economic life. The useful life of ready for use development
assets is estimated at five years. Amortisation charges are included as an expense in the consolidated statement of profit or loss and other
comprehensive income.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognised as profit or loss. Intangible assets’ useful lives are assessed as either finite or indefinite. Amortisation is
charged on assets with finite lives with the expense taken into profit or loss. Intangible assets are tested for impairment where an indicator of
impairment exists. Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted accordingly.
ALEXIUM INTERNATIONAL GROUP LIMITED
23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
(i) 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 the recoverable amount or fully impairs the asset to Nil based on conservatism and an assessment
of market value on the assumption no changes are made to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the
asset is considered impaired and is written down to its recoverable amount to profit or loss.
Recoverable amount is the greater of fair value less costs to sell and value in use. The recoverable amount is determined for an individual asset,
unless the asset’s value in use cannot be estimated to be close to its fair value less cost to sell and it does not generate cash inflows that are largely
independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to
which the asset belongs.
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.
(j) Trade and other receivables
Trade receivables are recognised and carried at original invoice amount less any expected credit losses (ECL) determined under the simplified
approach to accounting for trade and other receivables as detailed in AASB 9. These are the expected shortfalls in contractual cash flows, considering
the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external
indicators, and forward-looking information to calculate the expected credit losses. The Group assesses impairment of trade receivables on a
collective basis as they possess shared credit risk characteristics. They have been grouped based on the days past due.
(k) Determination and presentation of operating segments
For management purposes, the Company is organised into one main operating segment which involves the development and commercialisation of
its proprietary flame-retardant and phase change material technologies and selling its specialised chemistry to customers. All Company activities are
interrelated, and discrete financial information is reported to the Chief Executive Officer as a single segment. Accordingly, all significant operating
decisions are based upon analysis of the Company as one segment. The Company applies AASB 8 Operating Segments that requires a ‘management
approach’ of reporting segment information on the same basis as that used for internal reporting purposes.
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses,
including revenues and expenses that relate to transactions with any of the Company’s other components. An operating segment’s results are
reviewed regularly by the Board to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete
financial information is available. The Board considers the business from both a product and a geographical perspective and takes the view that the
Company operates under a single operating segment.
(l) Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash on hand and short-term deposits. For the purposes of the Statement of Cash Flows,
cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
(m) Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled, or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance
with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:
• amortised cost
• fair value through profit or loss (FVTPL)
• fair value through other comprehensive income (FVOCI).
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other
financial items, except for impairment of trade receivables which is presented within other expenses.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):
• they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows
• their contractual terms give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of
discounting is immaterial. The Company’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.
ALEXIUM INTERNATIONAL GROUP LIMITED
24
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair value
through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal
and interest, all financial assets in the periods presented are accounted for at FVTPL. All derivative financial instruments fall into this category, except
for those designated and effective as hedging instruments, for which the hedge accounting requirements apply (see below).
Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category
are determined by reference to active market transactions or using a valuation technique where no active market exists.
Financial assets at fair value through other comprehensive income (FVOCI)
The Company accounts for financial assets at FVOCI if the assets meet the following conditions:
they are held under a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets
their contractual terms give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding
Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition of the asset. In the periods presented, the
Company does not have any financial assets categorised as FVOCI.
Impairment of financial assets
In accordance with AASB 9, impairment requirements use more forward-looking information to recognise expected credit losses – the expected
credit loss (ECL) model. Instruments within the scope of the ECL model included loans and other debt-type financial assets measured at amortised
cost and FVOCI, trade receivables, contract assets recognised and measured under AASB 15 and loan commitments and some financial guarantee
contracts (for the issuer) that are not measured at fair value through profit or loss.
Recognition of credit losses is not dependent on the Company first identifying a credit loss event. Instead, the Company considers a broader range
of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and
supportable forecasts that affect the expected collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
Financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’)
Financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’).
Financial instruments that have objective evidence of impairment at the reporting date (‘Stage 3’)
‘12-month expected credit losses’ are recognised for the first category (i.e. Stage 1) while ‘lifetime expected credit losses’ are recognised for the
second category (i.e. Stage 2).
Measurement of the expected credit losses measurement is determined by a probability-weighted estimate of credit losses over the expected life
of the instrument.
Trade and other receivables and contract assets
The Company makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss
allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any
point during the life of the financial instrument. In calculating, the Company uses its historical experience, external indicators, and forward-looking
information to calculate the expected credit losses using a provision matrix. The Company assesses impairment of trade receivables on a collective
basis as they possess shared credit risk characteristics and they have been grouped based on the days past due.
Classification and measurement of financial liabilities
The Company’s financial liabilities include borrowings, trade and other payables and derivative financial instruments. Financial liabilities are initially
measured at fair value, and, where applicable, adjusted for transaction costs unless the Company designated a financial liability at fair value through
profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and
financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than
derivative financial instruments that are designated and effective as hedging instruments). All interest-related charges and, if applicable, changes in
an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income.
(n) Embedded derivative
The Company has issued liability classified embedded derivatives in connection with its convertible debt. An embedded derivative is a component
of a hybrid instrument that also includes a non-derivative host contract with the effect that some of the cash flows of the combined instrument vary
in a way like a stand-alone derivative. The embedded derivative is separated from the host contract and accounted for as a derivative if the economic
characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract. The
embedded derivative is measured at fair value with changes in value being recorded in profit or loss.
(o) Trade and other payables
Trade and other payables are carried at amortised cost. They 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. The amounts are unsecured and are usually paid within 60 days of recognition.
ALEXIUM INTERNATIONAL GROUP LIMITED
25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
(p) Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) because 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. Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement
is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the
statement of comprehensive income, net of any reimbursement. Provisions are measured at the estimated expenditure required to settle the
present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the
present obligation. Where there are several similar obligations, the likelihood that an outflow will be required in settlement is determined by
considering the class of obligations. Provisions are discounted to their present values, where the time value of money is material.
(q) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
(r) Revenue recognition
In accordance with the standard, revenue is recognised and measured when the entity satisfies a performance obligation by transferring a promised
good or service (i.e., an asset) to a customer. The transfer is complete when the “FOB Shipping Point” terms are satisfied at the time of shipment
which in turn completes the performance obligation.
Sale of goods
Revenue is recognised at a specific point in time and measured when the entity satisfies a performance obligation by transferring a promised good
or service (i.e., an asset) to a customer. AASB 15 - Revenue from Contracts with Customers outlines the accounting requirements for when and how
revenue is recognised using one core principle: “Recognise revenue to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. “This is accomplished by using a 5-
step recognition process consisting of the following:
1.)
2.)
Identify the contract - The Company utilises a set of criteria to clearly identify the existence of contracts with customers, which includes contract
approval by both parties, identification of each party’s rights and commitments, determination of payment terms, presence of commercial
substance and a probability that the consideration will be collected.
Identify the performance obligations - The Company has identified the sole performance obligation of customer contracts to be the complete
transfer of the goods to the customer. In accordance with AASB 15, there are no additional goods or services, warranties, repurchase
agreements, or public return policies, or other limitations of the seller that would not allow the Company to consider its performance completed
at this time of transfer. The Company considers the transfer complete in line with “FOB Shipping Point” terms and recognises the completion
of this performance obligation when products are shipped.
3.) Determine the transaction price - The Company considers the transaction price to be the amount of consideration to which it expects to be
entitled in exchange for transferring promised goods or services to a customer. As and when a performance obligation is satisfied the Company
recognises revenue to the extent of the transaction price allocated to that performance obligation considering the impact of constraints arising
from variable consideration.
4.) Allocate the transaction price to separate performance obligations - Given that there is a single performance obligation to each contract, and
the price is clearly identified in the contract, the Company allocates the full contract price to the transfer of goods discussed in Step 2, except
for combined contracts noted as having variable consideration.
5.) Recognise revenue when each obligation is satisfied - at contract inception the Company has determined that the sole performance obligation
is the complete transfer of goods to the customer. The Company must then determine the specific point in time at which it is appropriate to
recognise revenue for the contract. AASB 15 states that an entity shall consider indicators of the transfer of control, which include, but are not
limited to, the following:
Company has a present right to payment for the asset;
Customer has legal title to the asset;
Company has transferred physical possession of the asset;
Customer has the significant risks and rewards of ownership of the asset; and
Customer has accepted the asset
Management recognises that the application of the control criteria requires judgment and there are various factors to consider, as described above.
Accordingly, management believes that control is transferred in accordance with the shipping terms, as this is the point in time that the customer
obtains legal title, when customer obtains the risk and rewards of ownership, and when the customer has an obligation to pay for the asset. The
standard discusses that an entity should consider whether there is any agreement to repurchase the asset transferred to the customer, or a
component. This topic is not applicable to the Company as it is not the practice nor discussed in any contracts. Management recognises that contracts
and arrangements could change as the Company enters new markets and expands its customer base. Management will continue to monitor any
changes to ensure the accounting is in line with the context of AASB 15.
Interest and dividends
Interest income is recorded when earned based on cash balances. Interest expenses are reported on an accrual basis using the effective interest
method. Dividends are recognised at the time the right to receive payment is established.
ALEXIUM INTERNATIONAL GROUP LIMITED
26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
(s) Income and other taxes
Deferred income tax is provided on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities
and their carrying amounts for the 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
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 and the 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:
Except where the deferred income tax asset relating to the deductible temporary differences 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
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax
assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit
will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each statement of financial position 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. Deferred income tax
assets and liabilities are measured at the tax rates that are expected to apply in 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 statement of financial position date. Income taxes relating to
items recognised directly in equity are recognised in equity and not in the statement of comprehensive income.
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 Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing
and financing activities, which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. Commitments and
contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(t) Earnings per share
Basic earnings per share (‘EPS’) is calculated by dividing the net profit attributable to members of the parent entity for the reporting year, after
excluding any costs of servicing equity (other than ordinary shares and converting preference shares classified as ordinary shares of EPS calculation
purposes), by weighted average number of ordinary shares of the Company.
(u) Employee benefits
Termination benefits
Termination benefits are recognised as an expense when the Company is committed demonstrably, without realistic possibility of withdrawal, to a
formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits because of an offer
made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense if the Company has made
an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits
are payable more than 12 months after the reporting date, then they are discounted to their present value.
Long-Term Employee Benefits
The Company’s liabilities for annual leave are included in other current liabilities. Any adjustments and changes in assumptions are recognised in
profit or loss in the periods in which the changes occur. The Company presents employee benefit obligations as current liabilities in the statement
of financial position if the Company does not have an unconditional right to defer settlement for at least twelve months after the reporting period,
irrespective of when the actual settlement is expected to take place.
Short-term employee benefits
Short-term employee benefits are benefits, other than termination benefits, that are expected to be settled wholly within twelve (12) months after
the end of the period in which the employees render the related service. Examples of such benefits include wages and salaries, non-monetary
benefits and accumulated sick leave. Short-term employee benefits are measured at the undiscounted amounts expected to be paid when the
liabilities are settled. There are no employee-benefit expenses recognised within cost of sales.
Share-based payment transactions
The grant-date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase
in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to
ALEXIUM INTERNATIONAL GROUP LIMITED
27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount
ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the
vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to
reflect such conditions and there is no true-up for differences between expected and actual outcomes.
(v) Inventories
Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition are
accounted for, as follows:
Raw materials: average cost; and
Finished goods and work in progress: cost of direct materials and manufacturing charges from contract manufacturer.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs
necessary to make the sale.
(w) Significant accounting judgements, estimates and assumptions
The preparation of the Company’s consolidated financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent
liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount
of assets or liabilities affected in future periods. The key assumptions concerning the future and other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year, are described below. The Company based its assumptions and estimates on parameters available when the consolidated financial statements
were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances
arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Share-based payments
The Company initially measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at
the date at which they are granted. Estimating fair value for share-based payment transactions requires determination of the most appropriate
valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate
inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The
assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 17.
Fair value of financial instruments
When the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be measured based on quoted
prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow (DCF), Black-Scholes option pricing
models and Monte Carlo option valuation model. The inputs to these models are taken from observable markets where possible, but where this is
not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit
risk and volatility. The assessed fair values of the embedded derivatives were determined using a Black-Scholes option pricing model which
approximates the results that would have been achieved by using a binomial lattice. The model considers the expected price, volatility of the
underlying instrument, expected dividend yield and the risk-free interest rate. Changes in assumptions in relation to these factors could affect the
reported fair value of financial instruments. See Note 23(f) for further disclosures.
Intangible assets
The Company assesses at initial recognition whether an internally developed asset has met the recognition requirements established in AASB 138
and measures the direct and indirect costs of development using several estimates and assumptions. After capitalisation, management monitors
whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired. For assets
not yet ready for use, management estimate the fair value less costs of disposal (FVLCD). To estimate the FVLCD, management applies the cost
replacement model whereby an estimate is made of all costs required in current market conditions to produce a similar product. With respect to
ready for use assets, management assesses whether impairment indicators exist in accordance with AASB 136. In the instance where indicators of
impairment exist, management estimates the recoverable amount of each asset or cash-generating unit based on expected future cash flows and
uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results, the determination of a suitable
discount rate, and the appropriate classification of cash generating units. See Note 12 for further disclosures.
(x) Going Concern
These financial statements have been prepared based on the going concern basis of accounting which contemplates the continuity of normal
business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.
The Group incurred a loss after tax attributable to members of $2,950,943 (2022: $3,360,271). The Group incurred negative cash flows from
operations and investing activities of $1,490,140 for the year ended 30 June 2023 (2022: ($1,926,395)). Furthermore, this is the first year in which
the Group has reported negative net assets of $983,136 (2022: positive net assets of 1,575,683).
The Group has current assets of $2,472,407 (2022: $3,295,871) which exceed current liabilities of $1,288,138 (2022: $1,113,301).
The Directors believe that it is reasonably foreseeable that the Group will continue as a going concern and be able to pay its debts as and when they
fall due after consideration of the following mitigating matters:
•
the Group has performed a cash flow forecast and determined that it has or will have access to adequate cash resources to fund its operations
for at least 12 months from the date of approval of these financial statements;
the Group expects to have continued access to working capital facilities to support cash needs and expected growth in revenues;
ALEXIUM INTERNATIONAL GROUP LIMITED
28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
•
•
the Group, if required, has the ability to raise additional funds on a timely basis pursuant to the Corporations Act 2001 and ASX Listing Rules
and the Directors believe the Group would be able to continue to source equity or alternative funding if required; and
the Group expects to successfully convert current commercialisation efforts to future revenue and cash receipts to support the fixed base of
expenditures.
Should the above not eventuate or are not able to be resolved in the Group’s favour, then there will be a material uncertainty regarding the ability
of the Group to continue as a going concern and pay its debts and obligations as and when they become due and payable. Therefore, the Company
is evaluating strategies to obtain the required additional funding for future operations in the event the projected revenue do not materialise. These
strategies may include, but are not limited to, obtaining equity financing, issuing debt or entering into other financing arrangements, and
restructuring of operations to grow revenues and decrease expenses.
If the Group is unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the normal
course of business at amounts different from those stated in the financial report. These financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets or to the amounts and classifications of liabilities that might be necessary should the Group
not continue as a going concern.
3. REVENUE & OTHER INCOME
Sale of goods - point in time
Interest earned
All revenue from the sale of goods is derived from the Company’s operations in the US.
4. ADMINISTRATIVE EXPENSES
Employee benefits expense
Post-employment benefits - defined contribution
Professional fees
Other administrative expenses
Occupancy
Depreciation
Insurance expenses
Total
5. RESEARCH AND DEVELOPMENT COSTS
Research and development costs
Amortisation
Total
6. AUDITOR’S REMUNERATION
Amount received or due and receivable by Grant Thornton Australia for:
(a) an audit or review of the financial report of the Company
Total auditor's remuneration
2023
2022
7,210,574
8,174,937
12,571
2,182
2023
2,311,965
79,809
375,429
149,218
90,065
363,172
238,323
3,607,981
2023
329,519
301,065
630,584
2022
1,988,709
12,515
533,356
160,286
87,722
370,226
213,052
3,365,866
2022
501,156
676,357
1,177,513
2023
2022
109,732
109,732
114,588
114,588
ALEXIUM INTERNATIONAL GROUP LIMITED
29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
7. TAXATION
(a) Income tax recognised in profit and loss
Profit /(loss) before tax
Prima facie tax on operating loss before income tax at 30.0%
Temporary differences not recognised
Tax effect of permanent differences:
Other
Interest
Fair value movement
Differences in jurisdictional tax rates
Difference in foreign exchange rates
Tax losses not brought to account
Income tax benefit attributable to reversal of deferred tax liability on intangible assets
(b) Deferred tax assets
Deferred tax assets at 30 June brought to account:
Accrued and prepaid expenses
Expenses deducted over 5 years
Fixed assets
263A costs
Other
Income tax losses
Total
(c) Deferred tax liability
Unrealised FX
Basis difference on fixed assets
Total
(d) Net deferred tax position
Deferred tax assets
Deferred tax liabilities
Net deferred tax position
(e) Deferred tax assets not recognised
Unrealised FX
Accrued and prepaid expenses
Expenses deducted over 5 years
Borrowing Costs
Income tax losses
Net deferred tax position
(f) Net deferred tax position by region
Deferred tax assets
Deferred tax liabilities
Net deferred tax position
2023
2022
(2,950,943)
(3,360,271)
(885,283)
(27,931)
153,977
249,914
(238,841)
134,623
78,301
535,240
-
69,067
3,618
36,701
588
76,174
393,451
579,599
382,493
197,106
579,599
579,599
579,599
-
-
-
-
-
12,833,625
12,833,625
(1,008,082)
382,712
(81,821)
199,594
(214,946)
225,956
-
496,587
-
43,584
-
15,921
2,383
90,433
159,880
312,201
-
312,201
312,201
312,201
312,201
-
127,950
20,764
5,178
245
12,767,528
12,921,665
Total
312,201
312,201
-
AUS
382,493
382,493
-
2023
US
197,106
197,106
-
Total
579,599
579,599
-
AUS
-
-
-
2022
US
312,201
312,201
-
Income tax losses not recognised
13,009,676
62,269,787
75,279,463
12,953,490
60,389,091
73,342,581
No income tax is payable by the Company. The Directors have considered it prudent not to bring to account the future income tax benefit of
income tax losses until it is probable of deriving assessable income of a nature and amount to enable such benefit to be realised. The Company
has estimated unrecouped income tax losses of $75,279,463 (2022: $73,342,581) which may be available to offset against taxable income in future
years. The benefit of these losses and timing differences will only be obtained if there is sufficient probability that taxable profits will be generated
by the Company in future periods. Deferred tax assets and liabilities which relate to income taxes levied by the same taxation authority are offset
where the Company intends to settle those tax assets and liabilities on a net basis.
ALEXIUM INTERNATIONAL GROUP LIMITED
30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
8. EARNINGS PER SHARE
Classification of securities as ordinary shares
The Company has only one category of ordinary shares included in basic earnings per share.
Classification of securities as potential ordinary shares
There are currently no securities to be classified as dilutive potential ordinary shares on issue.
Weighted average number of ordinary shares
Basic loss ($)
Basic / Diluted loss per share (cents)
9. TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Total
2023
2022
646,905,991
(2,950,943)
(0.46)
642,892,460
(3,360,271)
(0.52)
2023
1,032,870
14,080
1,046,950
2022
567,940
11,112
579,052
All amounts are short-term. The company does not recognise any expected credit losses based on an assessment of historic recoveries and trend.
The net carrying value of trade receivables is considered a reasonable approximation of fair value. The receivables are secured as collateral in the
Alterna Capital Solutions line of credit (see Note 15 - Borrowings).
10. INVENTORIES
Raw materials - at cost
Finished goods - at cost
Provision for obsolescence
Total
2023
452,873
425,172
(53,064)
824,981
2022
762,977
957,956
(121,713)
1,599,220
During the current year, inventories of $4,388,973 (2022: $4,845,222) were recognised as an expense and included in Cost of Sales. The inventory is
secured as collateral in the Alterna Capital Solutions line of credit (see Note 15 - Borrowings).
11. PROPERTY, PLANT AND EQUIPMENT
Cost
Balance at 30 June 2021
Additions
Disposals
Transfers(1)
Balance at 30 June 2022
Additions
Disposals
Balance at 30 June 2023
Depreciation and impairment
Balance at 30 June 2021
Depreciation
Disposals
Transfers(1)
Balance at 30 June 2022
Depreciation
Disposals
Balance at 30 June 2023
Net book value
at 30 June 2021
at 30 June 2022
at 30 June 2023
Furniture and
equipment
Right-of-use
equipment
Right-of-use
building
2,323,667
11,851
(30,296)
319,677
2,624,899
17,503
(28,905)
2,613,497
1,267,887
219,253
(28,980)
199,150
1,657,310
253,723
(28,066)
1,882,967
1,055,780
967,589
730,530
319,677
-
-
(319,677)
-
-
-
-
157,625
41,525
-
(199,150)
-
-
-
162,052
-
-
902,952
-
-
-
902,952
-
-
902,952
218,898
109,448
-
-
328,346
109,449
-
437,795
684,054
574,606
465,157
Total
3,546,296
11,851
(30,296)
-
3,527,851
17,503
(28,905)
3,516,449
1,644,410
370,226
(28,980)
-
1,985,656
363,172
(28,066)
2,320,762
1,901,886
1,542,195
1,195,687
(1) Transfers consist of leased assets for which the underlying lease was paid in full. The assets and related Accumulated Depreciation were transferred out of the Right of Use category into
owned assets (Furniture and equipment).
ALEXIUM INTERNATIONAL GROUP LIMITED
31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
12. INTANGIBLE ASSETS
Cost
Balance at 30 June 2021
Additions
Balance at 30 June 2022
Additions
Balance at 30 June 2023
Amortisation and impairment
Balance at 30 June 2021
Amortisation
Impairment
Balance at 30 June 2022
Amortisation
Balance at 30 June 2023
Net book value
at 30 June 2021
at 30 June 2022
at 30 June 2023
Capitalised
development
costs
3,558,588
310,490
3,869,078
428,129
4,297,207
597,177
676,357
1,026,377
2,299,911
301,931
2,601,842
2,961,411
1,569,167
1,695,365
Impairment testing for intangible assets
Assets not ready for use
Intangible assets not ready for use are tested for impairment annually. An asset is impaired when the carrying amount exceeds the recoverable
amount. When this occurs, an impairment loss is recognised for the amount by which the carrying amount of an asset exceeds its recoverable
amount. To determine recoverable amount, management has used a fair value less costs of disposal approach. The fair value has been calculated
using a replacement costs approach.
No impairment loss has been recognised for the current reporting period. In the previous reporting period, an impairment loss of $1,026,377 was
recognised against two product lines after the Company identified indicators of impairment and performed a recoverable value assessment based
on a Relief from Royalty Method (RRM model).
Assets ready for use
For assets ready for use and being amortised, management has assessed for indicators of impairment, which include considerations of external and
internal sources of information. Based on our assessment, no indicators of impairment were identified.
ALEXIUM INTERNATIONAL GROUP LIMITED
32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
13. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Interest payable
Total
2023
573,623
408,291
8,382
990,296
2022
407,530
402,496
6,395
816,423
All amounts are short-term. The carrying values of trade payables and short-term bank overdrafts are a reasonable approximation of fair
value.
14. LEASE LIABILITIES
Lease payments during the period:
Principal payments
Interest
Variable lease payments not included in measurement of lease liability
Total
Minimum future rental payments under non-cancellable leases:
Current
Non-current
Total
Present value of future minimum rental payments under leases:
Lease liability - current
Present value of lease liability - non-current
Total
2023
2022
118,253
77,820
35,432
231,505
201,843
704,487
906,330
136,498
600,774
737,272
94,258
90,107
34,124
218,489
195,815
906,330
1,102,145
118,253
737,273
855,526
The Company leases its corporate office which includes laboratories and a warehouse under one agreement. This facility is used for administration,
research and operational activities and has a remaining lease term of 4.25 years. Where a right to control an asset specified in a lease agreement
exists, the Company recognises a right-of-use asset, representing its right to use the underlying leased asset, and a lease liability representing its
obligation to make lease payments. Lease liabilities are recognised similarly to financial liabilities with cash repayments recorded into a principal
portion and an interest portion and presents them as such in the statement of cash flows. Assets and liabilities arising from a lease are initially
measured on a present value basis. The measurement includes non-variable lease payments expected to be incurred for the term of the lease. The
term of the lease is determined by reference to non-cancellable periods and those periods subject to exercise of an option, where that option is
considered reasonably certain to be exercised.
ALEXIUM INTERNATIONAL GROUP LIMITED
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
15. BORROWINGS
Current Borrowings:
Line of credit
Total
Non-current borrowings:
Convertible note carrying value
Accrued interest
Total
2023
2022
161,345
161,345
178,626
178,626
3,505,070
282,119
3,787,189
2,715,620
99,575
2,815,195
(a) Convertible note
On 28 December 2022, the Company amended and restated its existing convertible note with an existing shareholder. The proceeds from the
amended funding were first used to pay down the original loan facility which was due to expire on 24 December 2023 and carried a face value of
$3.5M (A$5.1M) plus accrued interest of $0.2M (A$0.4M). In conjunction with this amendment, the shareholder agreed to provide an additional
$1.0M (A$1.5M) to support the business through the next phase of its growth and development. The restated note has a face value of $4.8M
(A$7.0M), a three-year term and a 10.0% annual interest rate with coupon interest payments due quarterly. The Company may elect to defer
interest payments in exchange for an additional 2% in interest payable to the lender. The note is convertible into ordinary shares at the holder’s
discretion and with shareholder approval at a conversion price of A$0.03/share.
The previously and newly issued convertible notes are considered hybrid instruments with host and derivative liability components. When initially
recorded, the derivative is measured at fair value and separated from the host liability (also refer to Note 16).
The change in terms of the amended and restated debt was considered significant and, as such, the Company treated the transaction as a substantial
modification of an existing arrangement and thus the previously issued convertible note (along with the derivative liability component) was
considered extinguished and derecognised from the financial statements. The newly issued convertible note was measured initially at fair value and
then subsequently at amortised cost in accordance with AASB 9. The difference in values of the extinguished debt and newly issued convertible note
has been recognised as a loss through profit or loss.
(Loss) on debt extinguishment
2023
(576,374)
2022
-
The convertible notes have been measured at amortised cost in accordance with AASB 9. The Company allocates interest payments over the term
of the borrowings at a constant rate on the carrying value. The carrying balance over the remaining life of the facility will increase to the principal
balance.
Convertible note carrying value
Remaining amortisation of effective interest
Foreign currency exchange rate impact
Principal balance outstanding
2023
3,505,070
1,223,661
(87,731)
4,641,000
2022
2,715,620
895,946
(62,562)
3,549,004
(b) Line of Credit
The Company entered into a three-year line of credit agreement on 05 Apr 2022 with Alterna Capital Solutions to provide working capital funding.
The facility is a three-year $3.0M asset-based facility which can be increased to $5.0M with the approval of the lender. The borrowing base of the
line of credit consists of 90% of eligible accounts receivable plus a calculated portion of inventory which, among other factors, will not exceed 50%
of eligible inventory.
The fund usage interest rate at execution of the agreement was 8.25% and adjusts with upward changes in the Wall Street Journal Prime Rate. The
applicable interest rate at 30 June 2023 was 13.25%.
Costs incurred to obtain financing are deferred and amortised on a straight-line basis over the term of the financing facility. The unamortised
deferred financing costs are shown as a reduction of the carrying value of the related debt. The amortisation expense was $19,256 (2022: $4,814)
and is included in interest expense.
Line of credit liability
Unamortised deferred financing costs
Net carrying value of line of credit
2023
195,043
(33,698)
161,345
2022
231,580
(52,954)
178,626
ALEXIUM INTERNATIONAL GROUP LIMITED
34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
16. DERIVATIVE LIABILITY
The current and previous convertible notes are considered hybrid instruments with host and derivative liability components. When initially recorded,
the derivative is measured at fair value and separated from the host liability. Subsequently, changes in value are recorded in profit or loss upon
revaluation.
Derivative liability
2023
688,364
2022
182,452
On extinguishment of the previously issued convertible note (see Note 15), the derivative liability component was also derecognised. Therefore, the
gain on embedded derivative in profit and loss included both the gain on revaluation of the derivative liability during the period and the gain on the
derecognition of the derivative related to the old convertible note.
Gain on embedded derivative due to changes in fair valuation
Gain on embedded derivative due to derecognition of convertible note
Total Gain/(Loss) on embedded derivative
2023
753,995
40,102
794,097
2022
688,060
-
688,060
The fair value of the derivative liability has been valued using a Black-Scholes option pricing model which approximates a Monte Carlo binomial
lattice simulation. Pricing model inputs of the current derivative include spot price (A$0.013), risk-free rate (4.14%), remaining term (3 years) and
volatility (89.07%).
17. CONTRIBUTED EQUITY
(a) Issued capital
Ordinary shares fully paid
(b) Movement in share capital
Balance at 01 July
Costs of capital raising
Performance rights exercised
Shares issued in lieu of directors' fees
Shares issued in lieu of professional services
Balance at 30 June
(c) Movements in performance rights
Balance at 01 July
Exercised
Vested - not Issued at 01 July
Forfeited
Balance at 30 June
(d) Share appreciation rights (“SAR”)
2023
Shares
2022
Shares
2023
$
2022
$
651,389,760
645,256,590
66,610,771
66,523,851
645,256,590
-
270,482
5,862,688
-
651,389,760
640,197,246
-
915,625
810,386
3,333,333
645,256,590
66,523,851
(1,906)
9,076
79,750
-
66,610,771
270,482
(270,482)
-
-
-
915,625
(915,625)
310,451
(39,969)
270,482
9,076
(9,076)
-
-
-
66,265,398
(4,284)
79,907
38,250
144,580
66,523,851
79,907
(79,907)
10,417
(1,341)
9,076
Grant
Date
Vesting
Date
Expiry
Date
23-Sep-22
16-Nov-22
16-Nov-22
23-Sep-25
23-Sep-27
23-Sep-25
23-Sep-27
Various
23-Sep-27
23-Sep-21
23-Sep-20
23-Sep-24
23-Sep-23
23-Sep-26
23-Sep-25
FY23
FY23-ELT
CEO Award
FY22
FY21
Total
Fully
Vested
Target
Price
(AUD)
0.171
0.171
0.150
0.148
0.139
Opening
Price
(AUD)
0.020
0.030
0.030
0.076
0.071
Open
Balance
FV at
Grant
(AUD)
0.0048
0.0046
0.0056
0.0380 18,300,511
0.0320 14,610,268
Granted
-
5,160,838
- 18,690,988
- 16,131,415
-
-
32,910,779 39,983,241
Forfeited
(872,564)
-
-
(3,046,795)
(1,700,225)
(5,619,584)
Outstanding
4,288,274
18,690,988
16,131,415
15,253,716
12,910,043
67,274,436
At the discretion of the Board, the Company may make offers and issue share appreciation rights (SARs) to eligible individuals under the Plan.
Unless the Board determines otherwise, the award is calculated by multiplying a defined percentage by the fixed component of compensation.
The objective of the plan is to:
(a) provide an incentive and to reward, retain and motivate participants;
(b) recognise the abilities, efforts, and contributions of participants to the performance and success of the Group; and
(c) provide participants with the opportunity to acquire or increase their ownership interest in the Group.
ALEXIUM INTERNATIONAL GROUP LIMITED
35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
Vested Rights:
(a) Participants are entitled to the amount by which the closing share price exceeds the opening share price.
(b) Shares will be issued in the amount equal to the closing share price less opening share price divided by closing share price then multiplied by
the vested and exercised SARs. Closing price is defined as the 20-day volume weighted average price (“VWAP”) as at the vesting date of the
relevant SAR.
Vesting Conditions:
The Board sets the vesting conditions for each SAR plan year using the following as general guidelines.
(a) The Board sets the Fully Vested Target Price by applying a compounded annual growth rate (“CAGR”) on the opening share price for the term
of the relevant SAR. The opening price is the 20-day VWAP from the issuance date of the annual report or as set by the Board. Partial vesting
will begin at the approved minimum CAGR at an approved percentage of the total SAR grants. Vesting from the minimum CAGR to the fully
vested CAGR (i.e., Fully Vested Target Price) will occur on a linear scale between the minimum percentage of the total SAR grants and 100%
of the total SAR grants.
(b) Continued employment through the vesting date.
(e) Movements in share options
Grant
date
Exercise
price
Expiry
date
Balance at
start of year
Granted
Exercised
Expired
Balance at
end of year
Warrants
2023
2022
31-Dec-19
31-Dec-19
$0.06 29-Mar-23
$0.06 29-Mar-23
3,829,787
3,829,787
-
-
-
-
(3,829,787)
-
-
3,829,787
(f) Details of share options
Outstanding at 01 July
Expired
Outstanding at 30 June
1Weighted average exercise price
2Weighted average remaining contractual life
Number
3,829,787
(3,829,787)
-
2023
WAEP1
0.06
(0.06)
-
WARCL2
0.75
(0.75)
Number
3,829,787
-
-
3,829,787
2022
WAEP
0.06
-
0.06
WARCL
0.75
-
1.75
Number
2023
Average fair
value per
option
$
Number
2022
Average fair
value per
option
$
Warrants
-
-
-
3,829,787
0.001
4,093
(g) Terms and conditions of contributed equity
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders’
meetings. In the event of winding up of the Company, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to
any proceeds of liquidation.
(h) Capital management
The Company’s objectives in managing capital are to safeguard the Company’s ability to continue as a going concern, so that it can continue to
provide returns to shareholders and benefits for the stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
18. SHARE-BASED PAYMENTS
The following is the summary of movements in share-based payments along with the amounts expensed during the year:
Shares in lieu of salary(1)
Shares to be issued in lieu of salary
Performance rights issued
Performance rights vested but not issued
Professional services(2)
Total
2023
2022
Number
5,862,688
6,867,372
270,482
-
-
13,000,542
$
82,000
79,750
-
-
48,193
209,943
Number
$
11,250
810,386
-
-
-
-
9,076
270,482
3,333,333
96,387
4,414,201 116,713
(1) The total value of the FY22 share-based payments of 810,386 shares is $38,250, of which $11,250 was expensed in FY22 and $24,750 was expensed in FY21 for 445,850 shares that were
in the ‘shares to be issued’ status as of the previous reporting period. The remaining $2,250 was included in prepayments as of the end of FY22 and expensed in FY23 as it was earned.
(2) Of the 3,333,333 shares issued in FY22 with a total value of $144,580, $96,387 was expensed in FY22 with the remaining balance of $48,193 remaining in prepayments as at the prior
reporting date. This balance of $48,193 has been expensed in FY23.
In addition to the above table, share appreciation rights expensed during the year were $116,322 (2022: $293,799). See Note 17 for plan details.
ALEXIUM INTERNATIONAL GROUP LIMITED
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
19. NOTES TO THE STATEMENT OF CASH FLOWS
(a) Cash and cash equivalents
Cash on hand
2023
513,277
2022
1,027,095
(b) Reconciliation of operating loss after income tax to net cash used in operating activities
Operating loss after income tax
(2,950,944)
(3,360,271)
Non-cash items:
Depreciation, amortisation and impairment of non-current assets
Share-based payment
Amortisation on borrowings
(Gain) on fair value movement- embedded derivative
Loss on debt extinguishment
Loss on disposal of assets
Interest Expense Accrued Not Paid
Changes in assets and liabilities net of effect of purchase of subsidiaries:
(Increase) / Decrease in trade and other receivables
(Increase) / Decrease in inventories on hand
(Increase) / Decrease in other current assets
Increase / (Decrease) in trade and other payables
Increase / (Decrease) in other current liabilities
Net cash (used in) operating activities
20. RELATED PARTY TRANSACTIONS AND BALANCES
664,237
326,266
401,901
(794,098)
576,374
839
184,531
(467,898)
774,239
3,305
159,405
18,245
(1,103,598)
2,072,960
406,008
432,888
(688,060)
-
1,316
67,207
788,540
(375,130)
(15,661)
(938,408)
37,033
(1,571,578)
The Company’s related parties include key management personnel and Colinton Capital Partners, a related party of Simon Moore, Non-Executive
Director with whom the Company has an outstanding convertible note.
Transactions and outstanding balances with Colinton Capital Partners in conjunction with the convertible note:
Interest expense on convertible note
Convertible note carrying value(1)
Accrued interest
(1) See Note 15 for more details
2023
430,876
2022
240,875
3,505,070
282,119
2,715,620
99,575
Key management personnel remuneration (see additional details in the Remuneration Report) includes the following expenses:
Short-term employee benefits:
Salaries
Non-monetary benefits
Short-term incentives
Post-employment benefits - defined contribution retirement plans
Share-based compensation
Total remuneration
2023
2022
1,037,375
54,934
30,000
1,122,309
33,950
308,047
1,464,306
909,725
27,332
-
937,057
9,088
255,916
1,202,061
ALEXIUM INTERNATIONAL GROUP LIMITED
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
21. SEGMENT REPORTING
The financial results from this segment are equivalent to the financial statements of the Company as a whole. Geographic information of revenue
and non-current assets excluding financial instruments are as follows:
2023
Revenue
Interest earned
Depreciation, amortisation and impairment expenses
Interest expense
Property, plant and equipment
Right of use asset
Intangible assets
2022
Revenue
Interest earned
Depreciation, amortisation and impairment expenses
Interest expense
Property, plant and equipment
Right of use asset
Intangible assets
22. INVESTMENTS IN CONTROLLED ENTITIES
Parent Entity
Alexium International Group Limited
Subsidiaries of Alexium International Group Limited
Alexium Inc.
Australia
US
-
8,157
-
832,777
-
-
-
7,210,574
4,414
664,237
150,379
730,530
465,157
1,695,365
Australia
US
-
1,924
-
673,763
-
-
-
8,174,937
258
2,072,960
102,279
967,589
574,606
1,569,167
Total
7,210,574
12,571
664,237
983,155
730,530
465,157
1,695,365
Total
8,174,937
2,182
2,072,960
776,042
967,589
574,606
1,569,167
Country of
Incorporation
Percentage Owned
(ordinary shares)
2023
2022
Australia
-
-
USA
100
100
The parent entity has an interest free intercompany receivable from Alexium Inc. amounting to $43,361,535 (2022: $42,986,745).
Alexium Limited, a Cyprus entity, was formed to hold intellectual property rights. The Company decided that it was not cost effective to maintain
this entity and voluntarily started the dissolution process and recorded all entries regarding the closing in the prior annual report. The company was
officially dissolved 11 June 2022.
ALEXIUM INTERNATIONAL GROUP LIMITED
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
23. FINANCIAL INSTRUMENTS
(a) Interest rate risk exposures
The Company is exposed to interest rate risk through primary financial assets and liabilities. The carrying amounts of financial assets and financial
liabilities held at balance date approximate their estimated net fair values and are given below. The net fair value of a financial asset or a financial
liability is the amount at which the asset could be exchanged, or liability settled in a current transaction between willing parties after allowing for
transaction costs.
The Company’s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities:
Weighted average
Variable
Fixed Maturity Dates
effective interest
rate
%
interest
rate
$
< 1 Year
$
1-5 Years
$
5+ years
$
Non-
interest
bearing
$
Total
$
2023
Financial Assets
Cash and cash equivalents
Trade and other receivables/other
financial assets
Total Financial Assets
Financial Liabilities
Trade and other payables
Line of Credit
Lease liabilities
Convertible note
Derivative liability
Total Financial Liabilities
2022
Financial Assets
Cash and cash equivalents
Trade and other receivables/other
financial assets
Total Financial Assets
Financial Liabilities
Trade and other payables
Line of Credit
Lease liabilities
Convertible note
Derivative liability
Total Financial Liabilities
3.14
513,277
-
-
-
513,277
-
-
-
-
-
-
-
12.30
9.66
10.63
-
-
-
-
-
-
-
-
-
161,345
201,844
-
-
363,189
-
-
704,487
4,771,480
688,364
6,164,331
0.48
1,027,095
-
-
-
1,027,095
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
513,277
1,046,950
1,046,950
1,046,950
1,560,227
990,296
-
-
-
-
990,296
990,296
161,345
906,331
4,771,480
688,364
7,517,816
-
1,027,095
579,052
579,052
579,052
1,606,147
-
9.20
9.66
6.34
-
-
-
-
-
-
-
-
-
178,626
195,815
-
-
374,441
-
-
849,800
3,549,004
182,452
4,581,256
-
-
56,530
-
-
56,530
816,422
-
-
-
-
816,422
816,422
178,626
1,102,145
3,549,004
182,452
5,828,649
(b) Interest rate risk
At the reporting period end date, if interest rates had increased by 1% from the year end variable rates with all other variables held constant, after-
tax profit and equity for the Company would have decreased by $5,133 (2022: $10,271) based on cash and cash equivalents. The 1% sensitivity is
based on reasonable possible changes using an observed range of historical interest rate movements.
(c) Foreign currency risk
A large proportion of the Company’s revenues, cash inflows, other expenses, capital expenditure and commitments are denominated in US dollars
with smaller, less frequent transactions in Australian dollars. Exposure to foreign exchange risk may result in the fair value of future cash flows of a
financial instrument fluctuating due to movement in foreign exchange rates of currencies in which the Company holds financial instruments which
are other than the US dollar reporting currency. With instruments being held by overseas operations, fluctuations in the Australian dollar may impact
the Company’s financial results.
(d) Credit risk
Credit risk arises from the Company’s financial assets which is comprised of trade receivables. The Company's exposure to credit risk arises from
potential default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. The Company does not hold
any credit derivatives to offset its credit exposure. The Company’s exposure to credit risk is minimal. However, to the extent the Company has
borrowed against the receivables in conjunction with its line of credit agreement with Alterna Capital, the lender provides credit insurance against
the eligible collateral which provides some additional mitigation of credit risk. Total bad debt expense for the year was Nil (2022 Nil). The Company
does not currently have any significant debtors, lending, stock levels or any other credit risk, and, therefore, a formal credit risk management policy
is not maintained.
ALEXIUM INTERNATIONAL GROUP LIMITED
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
(e) Liquidity risk
The Company manages liquidity risk by continuously monitoring scheduled debt servicing payments for long-term financial liabilities as well as
forecasted cash inflows and outflows due in day-to-day business. Liquidity needs are monitored in various time bands, on a day-to-day basis, as well
as based on a rolling 30-day projection. Long-term liquidity needs for a 180-day and 360-day period are identified monthly. Net cash requirements
are compared to available borrowing facilities to determine headroom or shortfalls.
The Company’s non-derivative financial liabilities have contractual maturities as summarised below:
2023
Trade and other payables
Lease liabilities
Borrowings
Statement of financial position exposure
2022
Trade and other payables
Lease liabilities
Borrowings
Statement of financial position exposure
Current
1-5 Years
5+ years
990,296
201,844
161,345
1,353,485
-
704,487
4,923,119
5,627,606
-
-
-
-
816,422
195,815
178,626
1,190,863
-
849,800
3,648,579
4,498,379
-
56,530
-
56,530
(f) Fair values of financial assets and liabilities
Cash and cash equivalents
The carrying amount approximates fair value because of their short-term to maturity.
Trade receivables and trade creditors
The carrying amount approximates fair value.
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value
hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: unobservable inputs for the asset or liability.
There were no other financial assets and liabilities other than cash, trade receivables and payables, leases, and borrowings at the close of the
reporting periods.
Measurement of fair value of financial instruments
The Company’s finance team performs valuations of financial items for financial reporting purposes, including Level 3 fair values, in consultation
with third party valuation specialists for complex valuations. Valuation techniques are selected based on the characteristics of each instrument, with
the overall objective of maximising the use of market-based information. Valuation processes and fair value changes are discussed among the audit
committee and the valuation team at least every year.
Embedded derivatives (Level 3)
The assessed fair values of the derivatives were determined using a Black-Scholes option pricing model. The model considers the expected price,
volatility of the underlying instrument, expected dividend yield and the risk-free interest rate. The three-year share price history has been used to
determine the expected price volatility. Pricing model inputs of the current derivative include spot price (A$0.013), risk-free rate (4.14%), remaining
term (3 years) and volatility (89.07%). The embedded derivative liability is classified as non-current based on a convertible note maturity of three
years. The following shows the levels within the hierarchy of financial assets and liabilities measured at fair value on a recurring basis:
2023
Derivative liability
Statement of financial position exposure
2022
Derivative liability
Statement of financial position exposure
Level 1
Level 2
Level 3
Total
-
-
-
-
-
-
-
-
688,364
688,364
688,364
688,364
182,452
182,452
182,452
182,452
ALEXIUM INTERNATIONAL GROUP LIMITED
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2023
The following table provides information about the sensitivity of the fair value measurement to changes in the most significant inputs:
Description
Significant
unobservable input
Estimate
of the input
Sensitivity of the fair value measurement to input
Derivative Liability
Volatility
An increase to 99% (or decrease to 79%) would increase (or decrease) fair
value by $125K
89%
There were no Level 1 or Level 2 transfers in the current and prior reporting periods.
24. PARENT ENTITY INFORMATION
The following details information related to the parent entity, Alexium International Group Limited. The information presented here has been
prepared using consistent accounting policies as presented in Note 2.
Current assets
Non-current assets
Total Assets
Current liabilities
Long term liabilities
Total liabilities
Total equity
Income (Loss) for the year
25. INTEREST EXPENSE
Interest expense recognised for the reporting periods consisted of the following:
Interest expense for borrowings at amortised cost:
Convertible note coupon interest
Convertible note effective interest amortisation
Subtotal
Interest Expense-Line of Credit
Interest Expense-Capital Lease
Interest Expense Other
Total Interest Expense
2023
449,243
3,170,941
3,620,184
127,766
4,475,553
4,603,319
2022
410,959
4,292,745
4,703,704
130,374
2,997,647
3,128,021
(983,135)
1,575,683
7,475,761
(5,358,733)
2023
2022
430,876
401,900
832,776
70,197
77,820
2,362
983,155
240,875
432,888
673,763
11,254
85,693
5,332
776,042
26. COMMITMENTS AND CONTINGENCIES
The Company does not have any commitments or contingencies beyond those disclosed in the financial statements or the notes above.
27. DIVIDENDS
No dividend has been declared or paid during the current financial year or the prior financial year. The Company does not have any franking
credits available for current or future years as it is not in a tax paying position.
28. SUBSEQUENT EVENTS
There has not arisen any item, transaction, or event of a material and unusual nature, which in the opinion of the Directors of the Company, is likely
to significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company, in future financial years.
ALEXIUM INTERNATIONAL GROUP LIMITED
41
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1. The financial statements, comprising the consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and accompanying
notes, are in accordance with the Corporations Act 2001 and:
a.
comply with Accounting Standards and the Corporations Regulations 2001, other mandatory professional reporting requirements
b. give a true and fair view of the Company’s financial position as at 30 June 2023 and of its performance for the year ended
on that date; and
c.
comply with International Financial Reporting Standards as disclosed in Note 2 of the financial statements.
2. The remuneration disclosures included in the Directors’ Report (as part of the audited Remuneration Report) for the year ended 30 June
2023, comply with section 300A of the Corporations Act 2001 (Cth).
3.
In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
4. The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A
of the Corporations Act 2001 (Cth).
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by:
Rosheen Garnon
Chair
Dated: 25 August 2023
ALEXIUM INTERNATIONAL GROUP LIMITED
42
INDEPENDENT AUDITOR’S REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
43
INDEPENDENT AUDITOR’S REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
44
INDEPENDENT AUDITOR’S REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
45
INDEPENDENT AUDITOR’S REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
46
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as of 3 August 2023.
Quoted equity securities
651,389,760 fully paid ordinary shares are held by 4,229 shareholders.
Shareholder distribution
The number of shareholders, by size of holding, are:
Holding Range Units
Holders
Total Units
1
1,001
5,001
10,001
100,001
-
-
-
-
-
1,000
5,000
10,000
100,000
999,999,999
466
792
658
1,712
601
4,229
173,304
2,293,511
5,305,846
63,573,425
580,043,674
651,389,760
% Issued
Share Capital
0.03%
0.35%
0.81%
9.76%
89.05%
100.00%
Unmarketable parcels
Minimum parcel A$500 at $0.013 per unit
3,016
30,802,720
4.73%
Holding Range Units
Holders
Total Units
% Issued Share Capital
Substantial holders
Rank
1
2
3
COLINTON CAPITAL PARTNERS PTY LTD
SANDHURST TRUSTEES LTD
Name
DR STUART LLOYD PHILLIPS & MRS FIONA JANE PHILLIPS
Total Units
79,151,331
55,188,743
43,725,000
% Issued Share Capital
12.15%
8.47%
6.71%
Voting rights
The voting rights attaching to each class of equity securities are set out below:
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.
Options: No voting rights.
Warrants: No voting rights.
Stock exchange listing
Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of the Australian Stock Exchange Ltd.
Equity Security Holders
Twenty largest holders of quoted equity securities:
Rank
1
2
3
4
5
6
7
7
8
9
10
11
COLINTON CAPITAL PARTNERS PTY LTD
SANDHURST TRUSTEES LTD
Name
DR STUART LLOYD PHILLIPS & MRS FIONA JANE PHILLIPS
DR STUART LLOYD PHILLIPS & MRS FIONA JANE PHILLIPS
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
DR ELYSE JANE PHILLIPS
N & G TD PROPRIETARY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
DUCKY'S LIFELINE PTY LTD
BNP PARIBAS NOMS PTY LTD
LUCKY POM PTY LIMITED
CITICORP NOMINEES PTY LIMITED
12 MABETH PTY LTD
13 MR IAN MORTON & MRS DEBORAH MORTON
14 MR MARTIN KEITH THOMAS & MRS HELEN PATRICIA THOMAS
15
16
17
18
LOMAND SERVICES LIMITED
D & M MOWBRAY HOLDINGS PTY LTD
ROSHEEN GARNON
CANNOW PTY LTD
19 MS FRANCES ELIZABETH PHILLIPS & MR STUART LLOYD PHILLIPS
20
RADELL PTY LIMITED
Total Units
79,151,331
55,188,743
43,725,000
30,800,000
24,767,436
10,475,000
10,000,000
10,000,000
8,320,552
8,314,657
8,000,000
6,644,867
6,000,000
5,673,285
5,431,500
5,081,500
5,000,000
4,676,724
4,400,000
3,903,000
3,500,000
% Issued
Share Capital
12.15%
8.47%
6.71%
4.73%
3.80%
1.61%
1.54%
1.54%
1.28%
1.28%
1.23%
1.02%
0.92%
0.87%
0.83%
0.78%
0.77%
0.72%
0.68%
0.60%
0.54%
ALEXIUM INTERNATIONAL GROUP LIMITED
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