Annual
Report
For the year ended
30 June 2022
Archer Materials Limited
(ABN 64 123 993 233)
Table of
Contents
Chairmans Letter
Operating and Financial Review
Strategy
Summary of Financial Performance
Changes in Equity
Factors and Risks Affecting Future Performance
Quantum Technology
Biotechnology
Directors’ Report
Remuneration Report (audited)
Auditor’s Independence Declaration
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Information
Corporate directory
The laboratory plant and equipment shown in the photos
and images in this report are not assets of the Company.
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Chairman’s
Letter
Greg English
Executive Chairman
The 2021/22 financial year was genuinely
transformative for Archer as we completed our
transition from a mineral exploration company
to a semiconductor company with a focus on
quantum computing.
When we signed the licence agreement with the University of Sydney for the 12CQ quantum
chip technology, we viewed the opportunity as complementary to potential graphite mining
operations on South Australia’s Eyre Peninsula. However, it soon became apparent that with
the quantum computer chip, we have the potential to change the world and create something
that is truly unique. Therefore, the decision was made to sell the mineral exploration tenements
to focus on our technology development.
When transitioning from mineral exploration, we believed that we could derive greater value
from our tenement portfolio if the tenements were sold to different companies rather than
a sale to one company. Our magnesite project was sold to a Canadian company (Volatus
Capital Corp), the graphite and kaolin to a newly listed ASX company (iTech Minerals), and the
manganese and kaolin to another ASX company (ChemX Materials).
Shareholders invest in Archer for different reasons and a decision
was made to distribute to Archer shareholders iTech Minerals
shares received from the sale of the graphite and other projects.
The in-specie distribution of shares allowed Archer shareholders to maintain exposure to
the mineral tenements while also benefitting from the 12CQ Project through their underlying
Archer shareholding.
With the 12CQ Project, we plan to design and build a quantum computer chip that can
be onboarded to devices like iPhones, laptops, cars etc. We are not looking to compete
against organisations like Google, Microsoft, IBM and Intel and others who are racing to
build quantum computers that will be standalone and are not designed to be integrated into
standard devices. Just like there is a market for different types of computers (e.g. laptops,
desktops and supercomputers), there will be different markets and needs for different types
of quantum computers.
Therefore, just because someone built a quantum computer before Archer does not mean
that we have “lost the race” as we are all targeting different segments of what is expected to
become a vast market.
Quantum computers have the potential to revolutionise computation by making certain types
of classically intractable problems solvable. We believe that every industry will be affected by
quantum computing.
3 | Archer Materials Limited 2022 Annual Report
Chairman’s
Letter
They will alter how business is done, from the security
systems in place which protect data, how we battle illnesses
and create new materials and to how we tackle health and
climate challenges.
Although our key focus is the 12CQ chip technology, we are
also developing a biochip, a lab-on-a-chip technology to
enable the complex detection of some of the world’s most
deadly communicable diseases.
Organisations and governments around the world are
pouring billions of dollars into quantum research and
development, and we are often asked “how can we
compete against such organisations?”. We know that
quantum computing is not driven by a single development,
a single person, or by a single company.
Our success with the 12CQ chip technology is based on
our ability to access world class facilities in Australia and
abroad, and to attract talented and clever scientists and
technicians.
The semiconductor facilities and infrastructure we utilise
allow us to undertake complex research and development
activities using plant and equipment that is some of the
highest of hi-tech. We work with, and share laboratories,
with large multinational and government organisations that
are developing quantum computers and devices.
One of our major achievements over the past few years
has been our ability to attract world class scientists and
technicians to Archer. Our CEO, Dr Mohammad Choucair,
has done an excellent job building a strong team of experts
who will drive the development of the 12CQ quantum
computer chip.
Despite the drastic effects of COVID
over the past two years and challenges
of accessing talent, Dr Choucair has
managed to grow his team and continue
the development of the 12CQ Project.
An outstanding achievement by
Mohammad and his team.
Since ASX listing in 2007, we have always maintained a
diversified portfolio of projects, allowing us to spread risk
across different projects. This strategy has worked well for
the company and Archer shareholders.
4
We are currently focused on micro- and
nano-fabrication of the biochip device
components, which is a significant
technological challenge to potentially
commercialising lab-on-a-chip devices.
The biochip and the quantum computer chip are advanced
semiconductor devices that share many of the same
laboratory facilities and people. The biochip development
complements the 12CQ Project work while allowing the
Company to diversify risk. We own 100% of the biochip
intellectual property rights, which will maximise our
commercialisation opportunities in the future.
During the year, one of our founding directors, Dr Alice
McCleary, retired as a non-executive director of the
company. Dr McCleary oversaw the initial public offering
and ASX listing of Archer and its transition to a technology
company.
We conducted an extensive search to find a new non-
executive director with tech experience, and in October
2021 were fortunate to appoint Bernadette Harkin as a
non-executive director.
Bernadette has over 20 years of experience working as
a business technologist across strategy, sales, marketing,
operations, and delivery for multinational Information
Technology companies. Bernadette’s international expertise
will be instrumental as we commence our overseas
expansion.
The recent volatility in world economic and share markets
has seen a sell-down of technology companies and other
high risk growth sectors. As a result, the Archer share price
has reduced in line with the share prices of many well-known
technology companies across the globe.
We appreciate that the current Archer share price is lower
than the issue price for new shares under last year’s share
placement and share placement plan.
However, we have the building blocks in place to grow the
share price as the broader technology sector recovers, and
as we develop our quantum and biochip technologies.
Something that sets Archer apart from some of our peers
is the continuous engagement and relationship with our
shareholders. In addition to our ASX releases, during
the year Dr Choucair and his team regularly released
newsletters and social media updates for shareholders
and investors.
With the lifting of COVID restrictions, we were able to
commence our interstate shareholder briefings, allowing
management to interact with shareholders.
We look forward to continuing these events regularly
throughout the next year.
We could not have achieved what we
did last year without our shareholders’
support, particularly those shareholders
who participated in the share purchase
plan and approved the sale of our mineral
exploration business to iTech Minerals.
Dr Choucair and his team have done a fantastic job
developing the different projects in a COVID constrained
world. On behalf of the Board, I would like to thank them for
their enthusiasm, hard work and dedication.
The next year is exciting for the Company as we commence
our overseas expansion and move to the next stage of the
quantum computer chip and biochip development. We will
also look for other value accretive opportunities to grow our
business and diversity risk.
Greg English
Executive Chairman
Adelaide
Dated this 21st day of September 2022
5 | Archer Materials Limited 2022 Annual Report
Operating
and financial
review
6
Strategy
Archer is a technology company that operates
within the semiconductor industry.
The Company aims to develop and commercialise advanced semiconductor devices,
including chips relevant to quantum computing and medical diagnostics.
In 2021/22 the Company:
> Successfully, and for the first time, detected quantum information in the 12CQ qubit
material on-chip and at room temperature using mobile phone compatible technology.
> Progressed international patent applications with patents granted in relation to the 12CQ
chip technology in the US, China, Australia, South Korea, and Europe.
> Gained commercial access to world class semiconductor research and prototyping
infrastructure and facilities, and technical experts in Australia and internationally to develop
Archer’s technology.
> Participated and contributed to informing the development of Australia’s National Quantum
Strategy led by Australia’s Chief Scientist.
> Developed its first biochemical reactions for the detection and quantification of nucleic
acid sequences, for use in its biochip technology, in parallel to its significant nanofabrication
progress.
> Completed the sale of the Company’s mineral exploration business and all remaining
mineral tenements.
> Changed its company GICS code to “Semiconductors”, and was added to the S&P/ASX
All Technology Index and the All Ordinaries Index.
In 2022/23, Archer’s growth involves:
> Progressing its world-first technology development, including its 12CQ quantum computing
chip and graphene-based lab-on-a-chip biochip.
> Establishing and strengthening strategic commercial partnerships advancing the Company’s
technology.
> Utilising world-class technology development infrastructure and facilities, R&D, people,
and IP, to support pre-market development.
> Protecting intellectual property (e.g., patents and international patent applications) with
global competitive advantages underpinning the Company’s technology.
> Hiring new staff to expedite the development and commercialisation of the Company’s
technology.
7 | Archer Materials Limited 2022 Annual Report
Operating and Financial Review
Summary
of financial
performance
The net loss of the Group for the year ended 30 June 2022 was $14,115,728 (2021:
$6,593,262) and includes:
> Share based payments expense of $9,945,024 representing the fair value of unlisted
share options issued during the year ended 30 June 2022 (2021: $404,250).
> Unrealised loss associated with the fair value adjustment of Archer’s share investments in:
- Volatus Capital Corp as at 30 June 2022 of $695,939 (2021: $1,796,488); and
- ChemX Materials Limited as at 30 June 2022 of $752,123.
> Net loss for the year ended 30 June 2022 from discontinued operations of $67,223
(2021: $3,786,351). Refer Note 18.
The above expense items are offset by:
> A $464,224 gain associated with the prior period sale of exploration assets to ChemX
Materials Ltd (‘ChemX’). During the year ended 30 June 2022 Archer received a further
2,321,119 shares in ChemX as payment of the purchase price, according to the terms of the
sale agreement. The transaction was completed on 18 June 2021. Refer Note 20.
> A gain on the sale of plant and equipment ($45,000) and service fee income associated
with the provision of technical assistance to third parties ($30,000).
> A $973,000 other income item being the estimated research and development tax
incentive receivable based on associated expenditure for the year ended 30 June 2022.
During the year ended 30 June 2022 the Group’s net cash position increased by $20,224,588
from $6,239,099 (1 July 2021) to $26,463,687 (30 June 2022) and the Group has no
corporate debt.
This net increase in cash was predominantly influenced by the following cash inflows:
> a share placement to professional and sophisticated investors ($15,000,000) before costs;
> a share purchase plan to eligible Archer shareholders ($10,000,000) before costs;
> the exercise of unlisted share options ($620,352);
> receipt of a research and development tax incentive ($464,051);
> receipt of an innovation grant ($25,000); and
> proceeds from the sale of plant and equipment, interest income and service fee income
($87,915).
These inflows were offset by outflows associated with:
> direct expenditure on advanced materials and technology activities ($2,259,068),
> intellectual property assets and plant and equipment ($120,709), and
> corporate, administration and wages (net of allocations to advance materials &
technology activities) expenditure ($2,438,381); and
> outflows from discontinued operations ($135,111). Refer Note 18.
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Changes in
equity
Shares
The number of Archer ordinary shares on issue increased from 227,506,546 (1 July 2021)
to 248,467,207 (30 June 2022) during the year as a result of the following events:
> Share placement to professional and sophisticated investors (10,344,828 shares).
> Share purchase plan to eligible Archer shareholders (6,897,556 shares).
> The exercise of unlisted share options (3,718,277 shares).
The Company’s share capital was reduced following a capital reduction effected by way
of in-specie distribution of 50,000,000 shares in iTech Minerals Ltd (‘iTech’) to Archer
shareholders on 15 October 2021 with a fair value of $10,000,000. The 50,000,000 shares
in iTech were issued as consideration for the sale of the Company’s remaining mineral
exploration business to iTech. Refer to Note 18.
Unlisted options
The number of share options on issue increased from 14,518,277 (1 July 2021) to 34,850,000
(30 June 2022) during the year as a result of the following events:
> 24,050,000 unlisted share options were issued to directors and employees following
shareholder approval at the Company’s Annual General Meeting held on 24 November
2021. The share options are exercisable at $1.79 each and expire on 31 May 2025.
Reduced by:
> 1,400,000 share options (exercise price of $0.1929 and expiry date of 31 March 2023)
were exercised into Shares.
> 2,318,277 share options (exercise price of $0.1511 and expiry date of 31 March 2023)
were exercised into Shares.
Performance rights
There were no performance rights issued during the year or on issue as at the date of this
report.
Dividends
There were no dividends paid, recommended or declared during the current or previous
reporting period, or as at the date of this report.
As detailed above, the Company did undertake a $10,000,000 capital return reflecting the
in-specie distribution of iTech shares.
9 | Archer Materials Limited 2022 Annual Report
Operating and Financial Review
Factors and risks affecting
future performance
The following describes some of the external factors and business risks
that could have a material impact on the Company’s ability to deliver its strategy:
Access to funding
The Company does not receive any income from its operating business and the Company
is reliant on capital raisings, grant funding, research and development incentives and the sale
of non-core assets to fund its future operations.
Therefore, the Company’s ability to continue to develop its technology is contingent upon
the Company’s ability to source timely access to additional funding as it is required.
Key agreements
Development and potential commercialisation of the 12CQ quantum computing qubit processor
chip intellectual property and associated patents and patent applications are dependent on
the Licence Agreement with the University of Sydney remaining in-place.
Termination of the Licence Agreement would mean that Archer would be unable to access
the intellectual property required to commercialise the associated quantum technology.
As at the date of this document, the Company is not aware of any grounds that the University
of Sydney may have to terminate the Licence Agreement.
Intellectual property
Commercially exploiting and legally protecting the intellectual property underlying the
Company’s technology, including its graphene-based lab-on-a-chip biochip technology
development, is dependent on the Company progressing its associated patent applications.
The protection of intellectual property, including patents and patent applications, has
the potential for third-party claims against the Company’s owned or licensed intellectual
property.
There is also a risk that all reasonable efforts by the Company to protect proprietary rights
may not be sufficient or effective, including risks that intellectual property may not have
adequate patent or copyright protection for certain innovations, that the scope of available
protections is insufficient, or that an issued patent may be deemed invalid or unenforceable
in certain jurisdictions.
As at the date of this document, the Company is not aware of third-party claims against
the Company’s owned or licensed intellectual property or any patent or patent application
lapsing, being refused, or expiring.
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The following describes some of the external factors and business risks
that could have a material impact on the Company’s ability to deliver its strategy:
COVID-19
The development of the Company’s technologies requires
access to institutional scale infrastructure and facilities
which if shutdown due to COVID-19 would restrict Company
access during the periods of closure.
The Company currently has access to facilities and
collaborators in numerous locations in Australia, Germany,
Switzerland, and the USA to help limit the impact of any
closures. Border closures and restrictions on international
and domestic travel may limit the Company’s ability to
hire personnel and perform development work in facilities
interstate and abroad.
Key personnel
The Company’s technology is unique, with very few people
available globally with the required knowledge, skills,
relationships, and experience to develop the technologies
towards future commercialisation.
The Company’s projects may be delayed if key personnel
are not available to work on the projects.
Development and commercialisation
Archer has not completed the development of any of its
technologies and does not currently have any commercial
agreements to distribute devices or consumables.
The Company’s ability to generate revenues in the future
will be subject to a number of factors, including but not
limited to the technologies performing to a level sufficient
to warrant commercialisation.
The development, testing and manufacture of novel
technologies is a high risk industry and there is no
guarantee that the Company will be able to successfully
commercialise the technologies (including in a profitable
sense).
Technology and
commercialisation risks
Archer’s business depends on technology and is subject
to technological change. The Company, if not in a position
to respond to such technological changes may be unable
to compete effectively.
Given the increasing level of competition within the
semiconductor industry, the failure or delay in developing
or adopting new technology competitively may result in a
reduction in customer demand and in turn reduced
financial and operation growth. The technological
changes within the semiconductor industry may require
the Company to devote additional resources to adapt or
improve its products.
There is the risk that such resource allocation and
investment in new initiatives may be unsuccessful or
result in significant losses.
11 | Archer Materials Limited 2022 Annual Report
Operating and Financial Review
QUANTUM TECHNOLOGY
The
Company’s
Operations
Archer is a technology company that operates within the
semiconductor industry.
The Company is developing and working towards commercialising advanced
semiconductor devices, including chips relevant to quantum computing and medical
diagnostics. The Company is progressing the development of its 12CQ quantum
computing qubit processor chip and graphene-based ‘lab-on-a-chip’ technology.
12
12
12CQ Chip
Archer’s 12CQ is a world-first qubit processor
technology that could allow for mobile
quantum computing powered devices.
During the year, the Company made significant progress in the development of its 12CQ chip.
Progress spanned technological and commercial development, and international intellectual
property prosecution.
Archer made significant technology development progress towards on-chip qubit control,
reporting the first indication of on-chip qubit control in microscopic-scale qubit material. For
the first time, Archer recorded the Continuous Wave Electron Spin Resonance (“cw-ESR”)
signals arising from a specially fabricated superconducting on-chip resonator semiconductor
device integrating microscopic quantities of qubits. Initial results indicated the obtained
on-chip cw-ESR signal signature was characteristic of the qubit material.
Importantly, the on-chip cw-ESR signal signature was found to be in excellent agreement
with the well-studied, repeatable, and scientifically published signal obtained from room-
temperature measurements performed on macroscopic (‘bulk’) quantity qubits using cw-ESR
instruments.
A
B
Measuring quantum information residing on qubit materials using chip devices.
A - An example of a specially fabricated superconducting on-chip resonator semiconductor device.
Arrow points to a dark spot indicative of a microscopic qubit cluster quantity (magnified in B) ten
times smaller than the width of a human hair. The superconducting operating temperatures of the
device are unrelated to Archer’s qubits’ potential to operate at room temperature.
B - The ultraprecise placement of a microscopic cluster of qubit material on a cw-ESR signal
detection area. Individual qubits are not visible at the image magnification.
13 | Archer Materials Limited 2022 Annual Report
Operating and Financial Review
QUANTUM TECHNOLOGY
12CQ Chip
With the early indication of on-chip qubit control the
Company’s 12CQ quantum computing chip technology
development continued and is on track towards achieving
‘qubit control’ under various qubit environments, including
few and single qubits.
Device fabrication and characterisation measurements are
being performed by Archer staff at various lab facilities.
During the year, the Company for the first
time validated that the qubits’ quantum
coherence properties are preserved
under an inert atmosphere.
Archer also found that the quantum properties of the bulk
qubit material could be recovered even after the qubit
material experienced shelf-lives exceeding years, and when
placed under extreme exposure to high temperatures for
at least several weeks (i.e. the qubit material withstood
exceptional degradation conditions that are possible in
chip-based environments).
Electron spin resonance setup to validate qubit robustness.
Quantum coherence is the fundamental requirement for
quantum logic operations that are the basis of any qubit
processor hardware.
For potential integration and use of qubit materials in
practical chip devices, it is significant to demonstrate and
validate qubit robustness at room temperature and under
atmospheric environments other than that of air or vacuum.
The Company then for the first time detected quantum
information in the 12CQ qubit material on-chip and at room
temperature using mobile phone compatible technology.
Archer and teams from the world-class institute EPFL
(École Polytechnique Fédérale de Lausanne), located in
Switzerland, used a single-chip integrated ESR detector
based on a high electron mobility transistor (“HEMT”)
technology to detect and characterise the as-prepared
12CQ qubit material in a controlled atmosphere at room
temperature.
The signal characteristics obtained agreed with the well-
studied, repeatable, and scientifically published results
obtained from room temperature measurements performed
on macroscopic (‘bulk’) quantities of the qubit material using
continuous wave ESR instruments.
14
12CQ Chip
A
B
A - The integrated single chip ESR detector based on HEMT.
B - A microscope image of a region in A (arrow points to
area inside the black square in the centre of the chip) of
approximately 0.5mm x 0.5mm showing the miniaturised
on-chip ESR componentry used to detect the quantum spin
states in Archer’s 12CQ qubit material at room temperature.
The unoptimised ESR chip devices were of sufficient
sensitivity to detect the electron spin in a few picolitres
(picolitre is a trillionth of a litre) of qubit material at room
temperature.
The quantum information in the qubit material is in the form
of an electron’s ‘spin’ states. The quantum states were
found to be sufficiently well preserved when operating in an
on-chip environment.
The single-chip resonator was developed at EPFL, and
manufactured by semiconductor company OMMIC using
existing foundry processes and facilities, near Paris, France.
HEMT devices are widely used in integrated circuits, for
example in mobile phones, and are well-known in the
semiconductor industry due to their low power consumption
(the HEMT based ESR detector chip device consumed
approximately 90 μW of power at room temperature
operation).
The HEMT technology was initially utilised for the ESR chip
in part to confirm the advantages of low power consumption
offered by a HEMT for the qubit measurements, and the
chip having simplified integrated electronics to a single
transistor.
The coherent control of quantum information in qubit
materials is the fundamental requirement for quantum logic
operations that are the basis of any quantum computing
qubit processor hardware.
For potential development and use of Archer’s qubit
materials in practical quantum processor chip devices, it is
significant to demonstrate the room temperature detection
of quantum information using mobile-compatible device
technology.
By demonstrating the detection of electron spin quantum
states using a single chip ESR detector based on HEMT,
the technology paves the way for the implementation of the
complex qubit control characteristics required in quantum
circuits.
15 | Archer Materials Limited 2022 Annual Report
Operating and Financial Review
QUANTUM TECHNOLOGY
12CQ Chip
An example of typical electronic nanodevices fabricated
towars qubit readout. The complex features, that appear as
a lighter shade, are of various sizes and proximity, purpose
developed for initial quantum measurements on cluster,
few, and single qubits.
Archer then successfully fabricated nanodevices that will
allow probing of quantum behaviour in its qubit material that
is of fundamental importance to the 12CQ chip technology
operation.
Significant innovation is required to produce the
nanodevices. The nanodevice fabrication is the first step
towards the readout of quantum states from few and single
qubits used in Archer’s 12CQ technology.
Nanofabrication was performed using state-of-the-art
lithography and specialised software, to obtain feature sizes
compatible with a few to single qubits.
The fabrication process is repeatable and reproducible at
scale, solving challenges related to complex nanodevice
proximity effectsand the on-chip integration of micron and
nanometre size features.
16
12CQ Chip
During the year, Archer had patents
related to the 12CQ chip granted in South
Korea, China, Australia, and reached its
most significant early-stage commercial
milestone with the granting of the US
patent.
A European patent grant provided protection in a further 12
countries including Belgium, Switzerland & Liechtenstein,
Germany, Spain, France, the United Kingdom, Italy, Turkey,
the Netherlands, Sweden, and Ireland.
Patent protection in these countries is required for any future
commercial operations in the respective countries, and the
Company these countries as critical strategic jurisdictions
to protect and commercialise its IP. Archer will need patent
protection in the world’s largest global economies if the
Company is to participate in the semiconductor industry.
The US Patent (Patent No. 11126925) protection provides
Archer with access to the world’s largest economy to
exploit IP rights related to the 12CQ chip and is a significant
step in the Company’s efforts to participate in the US
technology economy. The US leads the world in digital
legal frameworks and incentivises long-term investments in
research, innovation, and invention.
The US has announced that quantum technology and the
semiconductor industry are key priorities of investment
in the US for its global technology leadership plans. The
US recently entered into a trilateral security partnership
with Australia and the UK called ‘AUKUS’, with a focus
that includes quantum technologies. The US has also
passed into law the National Quantum Initiatives Act, and
introduced the Innovation and Competition Act (“ICA”).
The Chinese Patent (Patent No. 4606612) protection gives
Archer access to the world’s second largest economy to
exploit IP rights related to the 12CQ chip. China has the
world’s largest population and market size, with over half a
billion people using mobile devices in an economy that is
transitioning from a low-cost manufacturer to a consumer
of technology incorporating AI, autonomous systems, and
blockchain.
In the commercialisation of Archer’s 12CQ chip, the Company
will look to use existing chip manufacturing facilities to build
the 12CQ chip.
Most of the world’s chip manufacturing takes place in Asia.
Archer must have patent protection in the relevant countries
if the Company wants to utilise these chip manufacturing
plants in the future.
For example, the South Korean Patent (No. 10-2288974)
protection is significant, as South Korea is a major global
manufacturer and exporter of semiconductor chip devices,
with its conglomerates, Samsung Electronics and SK Hynix,
among the top producers of semiconductors in the world.
Advanced materials, AI, and quantum technologies are
all listed and identified as critical technologies of national
interest by the Australian Government. During the year,
the Company signed a non-binding memorandum of
understanding (“MOU”) with The University of Adelaide.
By signing the MOU the Company has entered into a
strategic relationship with the Australian Institute for Machine
Learning (“AIML”) that will focus on advanced materials
development, device fabrication and characterisation,
and the development of quantum semiconductors relevant
to Archer’s 12CQ chip technology. Cooperation between
Archer and AIML is intended to last 5 years.
During the year Archer and Artificial Intelligence and
Machine Learning consulting firm, Max Kelsen, continued
to work on developing quantum algorithms towards a use-
case with verifiable quantum advantage.
This first collaborative project between Archer and
Max Kelsen is focused on advancements in the area of
quantum neural networks. The project is on track and near
completion, and during the year, jointly developed code
was implemented using IBM’s Qiskit quantum programming
language and submitted to IBM for integration into the
globally available Qiskit repository.
During the year the Company concluded its participation
in the IBM Startup Program. Archer has moved beyond the
Startup Program however, the Company will continue to
access IBM’s quantum computing expertise and resources
and open-source Qiskit software and developer tools, and
continues discussions with IBM about participation in other
programs.
17 | Archer Materials Limited 2022 Annual Report
Operating and Financial Review
QUANTUM TECHNOLOGY
12CQ Chip
Description or Archer's
technology patents and
patent applications
Filing date
Technology summary
3 Dec 2015
A quantum electronic device.
Quantum electronic devices for processing qubits represented by an
electron spin on a new type of carbon nanomaterial and methods for
using this material in quantum computing.
Stage & Coverage
Patent/Application Number
Granted
Japan
South Korea
China
United States of America
Europe
Australia
Pending
Hong Kong
6809670
10-2288974
4606612
11126925
3383792
2016363118
18115770.4
15 Feb 2019
Graphene complexes and compositions thereof.
Complexes comprising graphene compositions, methods of synthesising
these complexes and compositions, and the use of these complexes
and compositions in biomolecular sensing.
Stage & Coverage
Patent/Application Number
Pending
Australia
United States of America
2020220236
17429442
1 Dec 2021
Detection and quantification of nucleic acids.
Stage & Coverage
Provisional patent
Australia
Patent/Application Number
2021903898
31 Mar 2022
Fabrication and processing of graphene electronic devices on silicon
with a SiO2 passivation layer.
Stage & Coverage
Provisional patent
Australia
Patent Family
12CQ chip Biochip
Patent/Application Number
2022900845
18
12CQ Chip
During the year, the Company continued its focus on scaling
up its domestic and international capabilities in advanced
semiconductor design, fabrication, and prototyping. This
included access to infrastructure and facilities, and also the
recruitment of talent in the quantum computing industry to
grow the Archer team.
The Company has proceeded to gain access to the
Australian Nanofabrication Facility UNSW Sydney node.
This infrastructure and facilities provides Archer access
to multi-million dollar instruments such as the specialised
RAITH150 Two Electron-beam Writer which is designed to
help with Archer’s transition from single-device-oriented
R&D towards small-batch high-resolution fabrication of
nanodevice prototyping. This access expands on Archer’s
operation within the Research and Prototyping Foundry in
Sydney.
Archer continued its recruitment drive into 2022. Archer
has been approved by the Australian Department of
Home Affairs as a standard business sponsor, which now
broadens the scope of potential talent the Company could
pursue by allowing the Company to sponsor international
workers.
During the year, Archer staff attended the Quantum
Australia conference in Sydney, in February 2022, which
included over 800 participants and 100+ quantum experts,
including the Chief Scientist of Australia, and Archer’s
collaborators from IBM and the global IBM Quantum
Network.
Archer staff attended the Quantum.Tech Conference in
Boston, US, and the Q2B Conference in Silicon Valley.
Archer enrolled in the American Chamber of Commerce
Global Leadership Academy.
The Company maintains recent and ongoing participation
and contributions in informing the development of
Australia’s National Quantum Strategy. The strategy
development, and such roundtables, are led by Australia’s
Chief Scientist Dr Cathy Foley.
Archer staff also participated as panelists in the South
Australian Forum on the Industrial Application of Quantum,
led by Australia’s Chief Scientist, and South Australia’s Chief
Scientist.
Further information on
Archer's global competitive
advantage and tech
differentiation.
Quantum computing technology is a
new way of computing that is distinct
from current computing technologies
(e.g., silicon-based transistor and
memory chips including CPUs.
GPUs. Flash/DRAM, 'neuromorphic'
processors etc.).
A qubit processor ("Quantum Chip") is the most
crucial hardware component of a quantum
computer. Quantum Chips come in a variety of
forms depending on the qubit type and materials
used (in contrast to the modern computing industry
dominated by silicon/semiconductors).
Many quantum computing proposals currently use
Quantum Chips that require materials and qubits
which operate at low temperatures and/or are
difficult to integrate in modern electronics, which
limits ownership and use of practical quantum
devices.
The scientific breakthrough made in 2016 to realise
Archer's 12CQ qubit material is available online
in the peer-reviewed scientific journal Nature
Communications', which reports the advantages,
technological trade-offs, and the technological
barriers that have been overcome towards realising
practical quantum computing, over several other
qubit proposals (e.g. nitrogen-vacancy centre
nanodiamonds, isotopically enriched fullerenes,
quantum dots, molecular magnets, phosphorous in
silicon, fullerenes, nanomagnets, superconductors,
etc.).
Some of the advantages of Archer's 12CQ chip qubit
material include the combination of the potential
use for room temperature quantum computing and
integration with electronic devices.
Archer's technology development advances
continue to provide direct evidence to support this
exciting possibility.
19 | Archer Materials Limited 2022 Annual Report
Operating and Financial Review
BIOTECHNOLOGY
Archer's
Biochip
Archer’s biochip is a unique graphene-based
biotechnology that the Company is building to
enable the complex detection of some of the
world’s most deadly communicable diseases.
The Company is currently focused on micro- and nano-fabrication of the biochip device
components and combining these components with biologically relevant chemical reactions
to detect diseases.
Archer’s biochip design principles include the micro- and nano-fabrication of integrated
sensing devices in regions of a chip that work alongside other fabricated functional regions
on the same chip to process, detect and analyse biological specimens.
Archer owns 100% of the biochip technology intellectual property. During the year the
Company filed two Australian provisional patent applications (No. 2022900845 and
2021903898) related to its biochip technology. The Company’s existing patent applications
progressed to the National Phase of the patent granting procedure and were filed in the US
(No. 17429442) and Australia (2020220236).
The biochip requires the advanced fabrication of features like hair-thin microfluidic channels
that allow sample processing such as mixing, chemical or physical reactions. These channels
also allow the transportation of samples to smaller built-in sensors for analysing biochemical
targets, for example, of viruses or bacteria.
During the year, the Company successfully fabricated microfluidic channels required for
the biochip and integrated sensor components and other features within them on a silicon
wafer, demonstrating for first time the fabrication, miniaturisation, and integration of critical
biochip components. This significant early-stage development at the micro- and nano-scale
demonstrates the potential for increased compatibility with functions required for lab-on-a-
chip biosensing, including for Archer’s biochip.
The Company, in parallel to its nanofabrication progress, also successfully developed its
first biochemical reactions for the detection and quantification of nucleic acid sequences
(both DNA and RNA), for potential use and application at room temperature in its biochip
technology. The nucleic acid sequences of interest could potentially be of viral, bacterial, or
other microbial origin, which would allow for the development of Archer’s biochip towards
tailored on-chip pathogen detection.
Nucleic acid markers are useful for monitoring various states of health and disease; for the
identification of pathogens and their strains; and the diagnosis of many diseases. Commonly
known techniques to analyse biological samples for known nucleic acids include polymerase
chain reaction (PCR). The techniques developed by Archer could potentially apply in
conjunction with, or without, the use of PCR.
20
Archer's
Biochip
A
B
C
D
E
Early-stage biochip assembly.
A and B are images of two different fabricated patterns of on-chip microfluidic channels
shown in the darker shaded regions on the purple background. The microfluidic channels
are approx. 3 times thinner than a human hair.
Additionally, features of B which are magnified and shown as the tight continuous curves
in D and the magnified region of A showing small nanometre square arrays of pillars
(approx. 500 nanometres in height) present above the white square region magnified in
C, would allow for mixing of sample.
The white squares and rectangle areas in A and B are pre- and post-sensing mixing
stations and storage wells for chemical reactions. The pattern assemblies shown in A and
B integrate electrode routing for 96 biosensing areas and are an unoptimised proof of
concept.
The image in E shows a highly magnified area of the nanosized biosensing electrodes
(approx. 100 nanometres in size) that can be seen in C and D as a 4 x 4 electrode array,
which would allow for biosensing and are nanofabricated using various metals.
Archer’s biochip development involves designing the sensing components in E to
incorporate graphene materials.
21 | Archer Materials Limited 2021 Annual Report
Operating and Financial Review
BIOTECHNOLOGY
Archer's
Biochip
During the year, Archer addressed
key nanotech challenges in its biochip
development by successfully integrating
single atom-thick graphene on a silicon
wafer and then measuring and confirming
the electronic transport properties in the
resulting integrated devices.
A
B
A - Magnified view of an isolated graphene device
undergoing direct measurement of electron transport.
B - Graphene devices are fabricated and tested by Archer
staff using highly specialised chip instrumentation in a
semiconductor prototyping foundry.
22
The biochip requires graphene materials in electronic
circuits (i.e. the micro- and nanofabrication of graphene-
based transistors), that would form miniaturised devices that
act as ultrasensitive sensors for detecting and analysing
biochemical targets, for example, to identify viruses or
bacteria.
The work represents a significant technical achievement as
the advanced, post-integration semiconductor fabrication
processes are complex, requiring the precision engineering
of atomically thin graphene and devices to confirm the
advantageous materials’ properties, which are fundamental
to the scalability, functionality, and operation of Archer’s
biochip.
The outcomes of the electronic transport measurements
provided the necessary data and component level
validation of the electronic parameters required to build
graphene-based transistors integrated with silicon
electronics.
Subsequent to the reporting period, Archer successfully
fabricated sub-10 nm features reproducibly and reliably
in a major technology breakthrough for the Company,
by developing and implementing several advanced
lithographic processes. Archer has achieved miniaturisation
from 200 nm down to sub-10 nm by developing several
advanced lithography processes.
The work is a significant technical achievement as the
advanced lithography semiconductor fabrication processes
are complex, requiring precision engineering to reach
lateral control over a feature size of sub-10 nm.
Miniaturisation of device components is an incremental
process with each reduction in feature size requiring
new and optimised lithography processes of increasing
complexity. The extreme miniaturisation would give
Archer greater flexibility and higher integration density
in its lithographic processes for the design and fabrication
of its technology.
Advanced lithography processes performed in a
semiconductor foundry are required to fabricate and
integrate various features as part of a nanoelectronic
device and the work done by Archer to fabricate nanoscale
biochip features is an important step in the potential future
operation of Archer’s biochip.
Archer's
Biochip
During the year, Archer researchers gained access to
additional advanced instrumentation for bioanalysis at
Westmead Institute of Medical Research and are preparing
for automated testing across other genomic analysis
facilities in Sydney as part of the biochip development.
Automated testing will provide the Company with efficiency
in its ‘big data’ collection, and complements the Company’s
access to the Protein Production Facilities in Sydney.
Archer also joined the NSW Health Cicada MedTech
commercialisation program.
Microscopy image of feature sizes fabricated by Archer staff on a silicon substrate ranging from 200 nm to 15 nm in width using
advanced lithography. Sub-10 nm fabrication was achieved after the end of the reporting period.
200
150
100
80
50
40
30
20
15 nm
April 2021
Current state
Continued
innovation to
sub- 10nm
Mineral Exploration
At the start of the 2021/22 financial
year Archer held 19 mineral exploration
tenements, one exploration licence
application, two miscellaneous purposes
licenses and a mining lease.
The tenements were prospective for different
commodities including graphite, base metals, copper
and gold. The mineral tenements and associated
information, plant and equipment comprised the
Company’s Mineral Exploration Business.
On 12 April 2021 the Company announced that it
had sold the Mineral Exploration Business to iTech
Minerals Ltd for 50 million shares in the capital of iTech.
Completion of the sale and purchase was conditional
on the satisfaction or waiver of certain conditions
precedent, including Archer shareholder approval to
the transaction and the in-specie distribution of the
50 million iTech shares and iTech completing an initial
public offering and listing on the ASX.
At a general meeting held on 30 August 2021, Archer
shareholders approved the sale of the Mineral Exploration
Business to iTech and the pro-rata in-specie distribution
of the 50 million iTech shares. iTech completed the initial
public offering and was admitted to the ASX Official List
of entities on 19 October 2021.
The Company did not undertake any mineral exploration
activities during the year and does not hold any mineral
tenements.
23 | Archer Materials Limited 2022 Annual Report
Directors'
Report
24
The Operating and Financial Review (which includes the
Chairman’s Letter) of this Annual Report is incorporated by
reference into, and can be found on pages 3 to 23 of this
Annual Report.
Your Directors present this report on Archer Materials Limited and its consolidated entities
(‘Company’, ‘Group’ or ‘Archer’), for the year ended 30 June 2022.
Directors
The following Directors were in office at any time during or since the end of the financial year:
Greg English (Executive Chairman)
Kenneth Williams (Independent Non-Executive Director)
Bernadette Harkin (Independent Non-Executive Director) - appointed 6 October 2021
Alice McCleary (Independent Non-Executive Director) – resigned 24 November 2021
Chief Executive Officer
Dr Mohammad Choucair held the position of Chief Executive Officer during the financial year
and as at the date of this report.
Company Secretary
Damien Connor held the position of Company Secretary during the financial year and as at
the date of this report.
25 | Archer Materials Limited 2022 Annual Report
Directors' Report
Information
on continuing
Directors
Greg English
Executive Chairman
LLB, BE (Mining)
Kenneth Williams
Non-Executive Director
B.Econ(HONS), MAppFin, FAICD
Greg English is the co-founder and Executive Chairman of
Archer. He has been Chairman of the board since 2008 and
has overseen Archer’s transition from a South Australian
focused minerals exploration company to a technology
company that operates within the semiconductor industry.
He has more than 25 years of engineering and legal
experience and has held senior roles for Australian and
multinational companies. Greg has received recognition
for his work as a lawyer having been regularly recognised
in The Best Lawyers® in Australia, Adelaide in the area of
Commercial Law.
Greg is an experienced company director and has also
served on the boards of other ASX listed companies. He
holds a bachelor’s degree in engineering and a law degree
(LLB).
Directorships of other ASX Listed entities in the last 3 years:
Core Lithium Limited (ASX: CXO) (current), Neurizer Ltd
(ASX: NRZ) [formerly Leigh Creek Energy Limited (ASX: LCK)]
(resigned 22 June 2021).
Interest in Shares and Options:
8,997,618 ordinary shares. 5,000,000 unlisted options,
exercisable at $0.1511 and expiring on 31 March 2023.
5,000,000 unlisted options, exercisable at $1.79 and
expiring on 31 May 2025.
Special Responsibilities:
Executive Chairman.
Member, Audit & Risk Management Committee
Ken was appointed as a Director of the Company on 28
September 2020. Ken has over 30 years’ experience in
corporate finance and has held senior executive, director,
and Chair positions with leading ASX companies.
His extensive experience in corporate finance includes
diverse experience in mergers, acquisitions, divestments
and corporate reconstructions. Ken was the Independent
Chairman of Statewide Superannuation Trust (Statewide
Super), a South Australian based industry super fund with
over $12 billion in funds under management.
He was a member of Statewide Super’s Investment
Committee, and Remuneration & Nomination Committee.
In April 2022 Statewide Super merged with Hostplus. Ken
is also a Director of Lifetime Support Authority of South
Australia.
Prior roles include Chair of AWE Limited, Chair of Havilah
Resources Limited, and Senior Finance Executive roles with
Newmont Corporation, Normandy Mining, and Qantas.
Directorships of other ASX Listed entities in the last 3 years:
Barton Gold Holdings Limited (ASX: BGD), Havilah
Resources Limited (ASX: HAV) (resigned 3 January 2019),
Lanyon Investment Company Limited (ASX: LAN) [formerly
8IP Emerging Companies Limited (ASX: 8EC)] (resigned 10
May 2022).
Interest in Shares and Options:
Nil Shares. 1,500,000 unlisted options, exercisable at
$0.7277 and expiring on 31 March 2024.
1,500,000 unlisted options, exercisable at $1.79 and expiring
on 31 May 2025.
Special Responsibilities:
Chairman, Audit & Risk Management Committee.
26
Bernadette Harkin
Non-Executive Director
MBA, GAICD
Bernadette was appointed as a Director of the Company
on 6 October 2021. Bernadette has over 20 years of
experience working as a business technologist across
strategy, sales, marketing, operations, and delivery for
multinational Information Technology companies including
IBM, Avanade, and CGI. This includes 3 years at IBM where
Bernadette served as a board member for IBM Philippines.
Bernadette’s experience covers technology areas of Cloud,
Analytics, Mobility, AI and Security. Bernadette’s international
experience spans leadership within large corporate
governance structures and the start-up of new businesses.
Bernadette has led and held senior advisory roles involving
business transformations for businesses in the US, Europe,
and Asia, including those within the STEM sector, which
have been underpinned by corporate growth strategies
leveraging innovative technologies.
Directorships of other ASX Listed entities in the last 3 years:
Nil.
Interest in Shares and Options:
Nil Shares. 1,500,000 unlisted options, exercisable at $1.79
and expiring on 31 May 2025.
Special Responsibilities:
Member, Audit & Risk Management Committee.
Meetings of Directors
The number of meetings of the Company’s Board of
Directors and each Board committee held during the
year ended 30 June 2022, and the numbers of meetings
attended by each Director were as follows:
Director
Board of
Directors
Audit & Risk
Management
Committee
Gregory English
Kenneth Williams
Bernadette Harkin 1
Alice McCleary 2
A
12
12
7
7
B
12
12
7
7
A
3
3
1
2
B
3
3
1
2
1 Appointed on 6 October 2021
2 Resigned on 24 November 2021
Where:
Column A is the number of meetings the Director was
entitled to attend
Column B is the number of meetings the Director attended
As at the date of this report, the Group has not formed
separate Remuneration or Governance Committees, as
these matters are handled by the Board as a whole. The
Board considers this appropriate given the size and nature
of the Company at this time.
27 | Archer Materials Limited 2022 Annual Report
Directors' Report
Information
on continuing
Management
Damien Connor
Chief Financial Officer / Company Secretary
CA GAICD AGIA B.Com
Damien Connor was appointed Company Secretary and
Chief Financial Officer on 1 August 2014.
Damien is an experienced Company Secretary and CFO,
with over 20 years finance and accounting experience
including over 15 years in the mining and mineral exploration
industry. Damien has been providing Company Secretary
and CFO services to a number of ASX listed and unlisted
entities since 2011.
Damien is a member of the Chartered Accountants of
Australia and New Zealand (Chartered Accountant), an
associate member of the Governance Institute of Australia
(Chartered Secretary) and a Graduate of the Australian
Institute of Company Directors.
Dr Mohammad Choucair
Chief Executive Officer
FRSN FRACI GAICD BSc Nanotechnology (Hon. 1),
PhD (Chemistry)
Dr Mohammad Choucair was appointed CEO of Archer in
December 2017 and is leading the company to develop
disruptive deep tech that address complex global challenges.
Mohammad served a 2-year mandate at the World Economic
Forum on the Global Council for Advanced Materials
and is internationally recognised for his forward-thinking
breakthroughs in Nanotechnology.
He received the Royal Australian Chemical Institute Cornforth
Medal for the most outstanding Chemistry PhD in Australia
and is the inventor of the 12CQ quantum computing
technology.
Mohammad is a Fellow of The Royal Society of New South
Wales and The Royal Australian Chemical Institute, Alumni
of the World Economic Forum, Alumni of the Australian
Graduate School of Management, Graduate of the Australian
Institute of Company Directors, and is an Honorary Fellow of
the University of Sydney. He received his PhD in Chemistry
and BSc in Nanotechnology with Honours Class 1 from
UNSW Sydney.
28
Principal
activites
Archer is a technology company with
a focus on developing innovative deep
tech in the semiconductor industry.
The Company is developing and working towards
commercialising semiconductor devices including
processor chips and sensors that are relevant to quantum
computing and lab-on-a-chip medical diagnostics.
During the year, the principal activities of the Group were:
> Technology research and development of a quantum
computing qubit processor chip (“12CQ chip”) and
graphene-based lab-on-a-chip biosensing chip
(“biochip”).
> Utilising semiconductor development infrastructure and
facilities, research and development, people and
intellectual property, to support pre-market technology
development.
> Internationally protecting and prosecuting intellectual
property (e.g. patents and patent applications).
> Collaborating and partnering with organisations
in computing, deep tech, and technology research
and development, as part of global networks in the
semiconductor industry.
> Sale of the Company’s mineral exploration tenements.
Significant changes to the state of
affairs.
Sale of subsidiaries to iTech Minerals Ltd
During the year ended 30 June 2022, the Company
completed the sale of its remaining mineral exploration
business to iTech (refer Note 18).
Following completion of the sale to iTech, the Company no
longer owns any mineral exploration tenements and has
changed its GICS code from ‘Materials - Diversified Metals
& Mining’ to ‘Information Technology - Semiconductors’.
The Company was added to the S&P/ASX All Technology
Index effective before the opening of trading on 20
December 2021.
The Directors are not aware of any further significant
changes in the state of affairs of the Group occurring during
the year ended 30 June 2022, other than as disclosed in
this report.
Events arising since the end of the
reporting period.
> The Company acquired 2,892,780 quoted options in
CMX (“ChemX Options”), being the Company’s full
entitlement pursuant to the CMX Entitlement Issue
Prospectus dated 30 May 2022 (Loyalty Options Offer).
ChemX Options are exercisable at $0.30 each and
expire on 11 July 2025.
ChemX Options were issued to the Company on 11 July
2022. The Company paid $0.005 each for the ChemX
Options during the reporting period. Accordingly, an
amount of $14,464 has been included as a prepayment
within the Statement of Financial Position as at 30 June
2022.
> On 29 August 2022, 1,500,000 Options were issued to
an employee of the Company. The Options were issued
for nil consideration and are exercisable at $1.79 each on
or before 31 May 2025.
50% of the Options vest on 31 May 2023 and 50% on 31
May 2024 (provided that the recipient is an employee of
the Company at the date of vesting) and are governed by
the terms and conditions of the Company’s Performance
Rights and Share Option Plan. The fair value of the
options at the date of grant was $421,047.
> On 13 September 2022, 1,050,000 Options, exercisable
at $1.79 each and expiring on 31 May 2025, lapsed
unexercised, in accordance with the terms on which they
were issued.
29 | Archer Materials Limited 2022 Annual Report
Directors’ Report
Remuneration Report
(audited)
The Directors of Archer Materials
Limited (the Group) present the
Remuneration Report for Non-
Executive Directors, Executive
Directors and other Key Management
Personnel, prepared in accordance
with the Corporations Act 2001 and
the Corporations Regulations 2001.
30
The names and roles of the Company’s key management
personnel during the year are:
> Greg English - Executive Chairman
> Kenneth Williams - Non-Executive Director
> Bernadette Harkin - Non-Executive Director
(appointed 6 October 2021)
> Alice McCleary - Non-Executive Director
(resigned 24 November 2021)
> Dr Mohammad Choucair - Chief Executive Officer
> Damien Connor - Chief Financial Officer & Company
Secretary
The Remuneration Report is set out under the following
main headings:
A. Principles used to determine the nature and amounts
of remuneration
B. Details of remuneration
C. Employment Contracts of Directors and other Key
Management Personnel
D. Share based remuneration
E. Bonuses included in remuneration
F. Other information
A. Principles used to determine the nature and amounts of remuneration
Use of remuneration consultants
The Company has not engaged the services of a
remuneration consultant during the year.
Voting and comments made at the
Company’s 2021 Annual General
Meeting
The Company received 96% ‘for’ votes on its Remuneration
Report for the financial year ending 30 June 2021.
The Company received no specific feedback on its
Remuneration Report at the 2021 Annual General Meeting.
Consequences of performance on
shareholder wealth
In considering the Group’s performance and benefits for
shareholder wealth, the Board has regard to the company’s
share price in respect of the current financial year and the
previous four (4) financial years:
Item
30 June
2022
30 June
2021
30 June
2020
30 June
2019
30 June
2018
Share
price
$0.55
$0.95
$0.60
$0.11
$0.11
The Board acts as the remuneration committee as a
consequence of the size of the Board and the Company.
The Board believes that individual salary negotiation is
more appropriate than formal remuneration policies and
external advice and market comparisons are sought
where necessary. The Company discloses the fees and
remuneration paid to all Directors as required by the
Corporations Act 2001. The Board recognises that the
attraction of high calibre executives is critical to generating
shareholder value.
The directors and executives receive a superannuation
guarantee contribution required by the government of 10%
per annum (10.5 % from 1 July 2022) and do not receive any
other retirement benefits. Some individuals, however, may
choose to sacrifice part of their salary to increase payments
towards superannuation and/or elected to increase
superannuation contributions a part of their salary package.
All remuneration paid to Directors and executives is valued
at the cost to the Company. The Company has established
a Performance Rights Plan and Share Option Plan (“Plan”)
for the benefit of Directors, officers, senior executives and
consultants.
The Board’s policy is to remunerate non-executive
directors at the market rates for time, commitment and
responsibilities. The Board determines payments to non-
directors and reviews their remuneration annually, based
on market price, duties and accountability. Independent
external advice is sought when required.
The maximum aggregate amount of fees that can be paid to
non-executive directors is $500,000 per annum which has
not changed since Archer listed on the ASX in August 2007.
These amounts are not linked to the financial performance
of the consolidated Company. However, to align director’s
interests with shareholder interests, the directors are
encouraged to hold shares in Archer.
Each member of the executive team has signed a formal
contract at the time of their appointment covering a range
of matters including their duties, rights, responsibilities and
any entitlements on terminations. The standard contract
sets out the specific formal job description.
31 | Archer Materials Limited 2022 Annual Report
Directors’ Report
B. Details of Remuneration
Details of the nature and amount of each element of the remuneration of each Key Management Personnel (KMP) of the
Group are shown in the table below:
DIRECTORS AND OTHER KEY MANAGEMENT PERSONNEL
Short-term
Employee Benefits
Post
employment
Benefits
Termination
Benefits
Share
Based
Payments
Cash
Salary &
Fees
$
Cash
Bonus
$
Super-
annuation
$
Termination
Benefits
$
Unlisted
Options 1
$
Performance
based
%
Total
$
Employee
Year
Executive Directors
Mr English 2,3
2022
304,110
50,685 4
35,732
Executive Chairman
Not independent
Non-Executive Directors
2021
337,900
50,685 4
37,169
Mr Williams
2022
63,636
Independent
2021
48,929
Ms Harkin 5
2022
46,993
Independent
2021
-
Ms McCleary 6
2022
25,551
Independent
2021
63,927
Mr Rix 7
2022
-
Independent
2021
21,309
Other Key Management Personnel
-
-
-
-
-
-
-
-
Dr Choucair
2022
230,000
46,000 8
Chief Executive Officer
2021
230,000
57,239 8
Mr Connor 9
2022
174,243
Company Secretary
& CFO
2021
142,387
-
-
6,364
4,648
4,699
-
2,555
6,073
-
2,024
27,830
27,574
-
-
2022 Total
2021 Total
2022
844,533
96,685
77,180
2021
844,452
107,924
77,488
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,067,573
2,458,100
2.3%
-
425,754
13.1%
620,272
690,272
404,250
457,827
620,272
671,964
-
-
-
-
-
-
28,106
70,000
-
23,333
2,481,087
2,784,917
-
314,813
620,272
794,515
-
142,387
6,409,476
7,427,874
404,250
1,434,114
-%
-%
-%
-%
-%
-%
-%
-%
1.8%
19.9%
-%
-%
1 In accordance with Accounting Standards, remuneration includes a portion of the value of the options granted during the year. The value of options
are determined as at the issue date and is progressively allocated over the vesting period. The amount included as remuneration is not indicative of
the benefit (if any) that the employee may ultimately realise should the option vest and become exercisable. The value of the options as at the grant
date has been determined in accordance with the accounting policy detailed at Note 1 and calculation details in Note 17.
2 Mr English agreed to temporarily reduce his salary by 40% for the period from 1 April 2022 to 31 August 2022 while attending to other commitments.
3 In addition to cash salary, Piper Alderman Lawyers were paid $32,725 (2021: $53,099) during the year for services rendered to the Group.
Mr English is a Consultant at Piper Alderman lawyers. The fees were at normal commercial rates.
4 Short-term cash bonus, approved by the non-executive directors, related to KPI achievement, pursuant to Mr English’s employment contract.
5 Ms Harkin was appointed as a non-executive director on 6 October 2021.
6 Ms McCleary resigned as a non-executive director on 24 November 2021.
7 Mr Paul Rix resigned as a non-executive director on 20 October 2020.
8 Short-term cash bonus, approved by the Board, related to KPI achievement, pursuant to Dr Choucair’s employment contract.
9 Contract payments are made to Damien Connor Consulting Pty Ltd – an entity associated with Damien Connor.
32
C. Employment Contracts of Directors and Other Key Management Personnel
Remuneration and other terms of employment for the Directors and other Key Management Personnel are formalised in
either contracts of employment or service agreements. The main provisions of the agreements relating to remuneration are
set out below:
Name
Remuneration
Unit of
Measure
Term of
agreement
Notice Period 1
Permanent
employee, no
fixed term.
Calculated based
on reasons for
termination from
4 weeks plus
leave entitlements
up to 12 months’
salary plus leave
entitlements.
Permanent
employee, no
fixed term.
Either party
may terminate
by providing 6
months’ notice.
Greg English
(Executive
Chairman)
Dr Mohammad
Choucair
(Chief
Executive
Officer)
Base remuneration:
$337,900 per annum plus superannuation. 1, 2
Salaried
employee
Short-term incentive bonus:
Discretionary up to 15% of salary each year, is
determined with reference to KPIs as set by
the Board annually.
Long-term incentive bonus:
Entitled to receive Options or Performance
Rights equal to the maximum number of
Options or Performance Rights granted to a
director of the Company in the same financial
year, subject to shareholder approval and
KPIs including the Company’s share price
compared with the ASX Small Ordinaries
Resources Index
Base remuneration:
$230,000 per annum plus superannuation 2.
Salaried
employee
Effective 1 July 2022 3
$300,000 per annum plus superannuation.
Short-term incentive bonus:
Discretionary up to 25% of salary each year,
is determined with reference to KPIs as set by
the Board annually.
Long-term incentive bonus:
Entitled to receive Options or Performance
Rights equal to the maximum number of
Options or Performance Rights granted to a
director of the Company in the same financial
year, subject to shareholder approval and
KPIs including the Company’s share Price
compared with the ASX Small Ordinaries
Resources Index
Damien Connor
(Company
Secretary /CFO)
Variable
Services as required
Hourly rate
contract
No fixed term.
Either party
may terminate
by providing 3
months’ notice.
1 Mr English agreed to temporarily reduce his salary by 40% for the period from 1 April 2022 to 31 August 2022 while attending to other commitments.
2 Superannuation rate appliable to the year ended 30 June 2022 was 10% per annum. The superannuation rate will increase to 10.5% per annum from
1 July 2022.
3 The Board agreed to award Dr Choucair an increase in his annual salary, effective 1 July 2022, following a review of his remuneration with reference
to his performance, responsibilities and strategic direction of the Company.
33 | Archer Materials Limited 2022 Annual Report
Directors’ Report
D. Share-based Remuneration
UNLISTED OPTIONS (OPTIONS)
All Options refer to Options over ordinary shares of the Company, which are exercisable on a one-for-one basis under the
terms of the agreements.
The Group has established a Performance Rights and Share Option Plan for the benefit of Directors, officers, senior
executives and consultants. Under the Performance Rights and Share Option Plan, the Company, through the Board, may
offer Options to eligible persons on such terms that the Board considers appropriate, including any performance or other
vesting hurdles that may apply.
Options granted to KMP during the reporting period
Details of Options convertible to ordinary shares in the Company that were granted as remuneration to each KMP during
the year are set out below:
2022
Options
Granted to
Number
Granted
Grant
Date
Exercise
Price
Fair Value at
Grant Date 1
Vesting
Criteria 3
Expiry
Date
$/option
Full value ($) 2
Mr English
5,000,000
24/11/2021
$1.79
$0.7604
$3,802,018
Mr Williams
1,500,000
24/11/2021
$1.79
$0.7604
$1,140,605
Ms Harkin
1,500,000
24/11/2021
$1.79
$0.7604
$1,140,605
Dr Choucair
6,000,000
24/11/2021
$1.79
$0.7604
$4,562,421
Mr Connor
1,500,000
24/11/2021
$1.79
$0.7604
$1,140,605
Vest over 2 years
commencing
31 May 2022.
Vest over 2 years
commencing
31 May 2022.
Vest over 2 years
commencing
31 May 2022.
Vest over 2 years
commencing
31 May 2022.
Vest over 2 years
commencing
31 May 2022.
31/05/2025
31/05/2025
31/05/2025
31/05/2025
31/05/2025
15,500,000
$11,786,254
1 The fair value of Options at grant date is determined using a Black Scholes option pricing model as disclosed in the notes to the financial statements.
2 The fair value of the Options at the date of grant was $11,786,254 and is being expensed to the Statement of Profit or Loss and Other Comprehensive
Income over the vesting periods applicable to the Options. Accordingly, an amount of $6,409,476 has been expensed to the Statement of Profit or Loss
and Other Comprehensive Income under share based payments expense for the year ended 30 June 2022.
3 Options vest 1/3rd on 31 May 2022, 1/3rd on 31 May 2023, 1/3rd on 31 May 2024, provided that the recipient is an employee of the Company at the relevant
vesting date (service condition only).
The above 15,500,000 Options were issued following shareholder approval at the Company’s Annual General Meeting
held on 24 November 2021.
34
Details of Options convertible to ordinary shares in the Company that were granted as remuneration to each KMP during
the prior year ended 30 June 2021 are set out below:
2021
Options
Granted to
Number
Granted
Grant
Date
Exercise
Price
Fair Value at
Grant Date 1
Vesting
Criteria
Expiry
Date
$/option
Full value ($)
Mr Williams
1,500,000
30/11/2020
$0.7695
$0.2695
$404,250
Vest on issue date
31/03/2024
1,500,000
$404,250
1 The fair value of Options at grant date is determined using a Black Scholes option pricing model as disclosed in the notes to the financial statements.
The Options issued to Mr Williams were approved by shareholders at the Company’s Annual General Meeting held on 30
November 2020.
Options to KMP exercised during the reporting period
During the reporting period 100,000 Options exercisable at $0.1511 each and expiring on 31 March 2023, were exercised
by KMP.
Options to KMP forfeited, cancelled or lapsed during the reporting period
No Options granted to KMP were forfeited, cancelled or lapsed during the reporting period.
PERFORMANCE RIGHTS (RIGHTS)
The Company’s Performance Rights and Share Option Plan provides for the issue of Rights to Directors, employees and
contractors of the Company and its associated body corporates.
All Rights issued under the Plan refer to Rights over ordinary shares of the Company, which are exercisable on a one-
for-one basis under the terms of the agreements. Vesting of Rights is generally subject to the achievement particular
performance conditions as determined by the Board.
There were no Rights issued during the reporting period and none are on issue at the reporting date.
SHARES
There were no shares issued as remuneration during year ended 30 June 2022 (30 June 2021: Nil).
35 | Archer Materials Limited 2022 Annual Report
Directors’ Report
E. Bonuses included in Remuneration
Details of the short-term incentive cash bonuses awarded as remuneration to each key management personnel, the
percentage of the available bonus that was paid in the financial year, and the percentage that was forfeited because the
person did not meet the performance criteria is set out below.
Employee
Included in remuneration ($)
Percentage vested
during the year
Percentage forfeited
during the year
Greg English 1
Executive Chairman
$56,007
(inclusive of Superannuation)
Dr Mohammad Choucair 2
Chief Executive Officer
$50,830
(inclusive of Superannuation)
100%
80%
0%
20%
1 Mr English’s contract of employment provides for a discretionary cash bonus of up to 15% of his salary each year, determined with reference to KPIs set by
the Board annually. The KPI’s subject of the bonus payable for the financial year were determined with reference to satisfaction of performance targets
relating to corporate strategy objectives, funding and stakeholder management.
2 Dr Choucair’s contract of employment provides for a discretionary cash bonus of up to 25% of his salary each year, determined with reference to KPIs set
by the Board annually. The KPI’s subject of the bonus payable for the financial year were determined with reference to satisfaction of performance targets
relating to key technical and corporate strategy objectives.
No other key management personnel were awarded short-term incentive cash bonuses as remuneration during the year
ended 30 June 2022.
F. Other Information
Option Holdings of Key Management Personnel as at 30 June
The number of Options over ordinary shares in the Company held, directly, indirectly, or beneficially, by each specified
Director and key management personnel, including their personally related entities as at reporting date, is as follows:
Held at
1 July 2021
Granted as
Remuneration 1
Exercised
Forfeited/
Lapsed/
Cancelled
Held at
30 June 2022
Vested and
Exercisable at
30 June 2022
2022
Key Management
Personnel
Mr English
Mr Williams
Ms Harkin 2
Ms McCleary 3
5,000,000
5,000,000
1,500,000
1,500,000
-
-
1,500,000
-
-
-
-
-
Dr Choucair
3,400,000
6,000,000
(100,000)
Mr Connor
1,000,000
1,500,000
-
Total
10,900,000
15,500,000
(100,000)
-
-
-
-
-
-
10,000,000
6,666,667
3,000,000
2,000,000
1,500,000
500,000
-
-
9,300,000
5,300,000
2,500,000
1,500,000
26,300,000
15,966,667
1 15,500,000 Options were granted to KMP following shareholder approval at the Company’s Annual General Meeting held on 24 November 2021.
Options were issued for nil consideration on 2 December 2021 and are exercisable at $1.79 each on or before 31 May 2025. The Options vest 1/3rd on
31 May 2022, 1/3rd on 31 May 2023, and 1/3rd on 31 May 2024 (provided that the recipient is an employee of the Company at the date of vesting) and are
governed by the terms and conditions of the Company’s Performance Rights and Share Option Plan. The fair value of the Options at the date of grant
was $11,786,254 and is being expensed to the Statement of Profit or Loss and Other Comprehensive Income over the vesting periods applicable to the
Options. Accordingly, an amount of $6,409,476 has been expensed to the Statement of Profit or Loss and Other Comprehensive Income under share
based payments expense for the year ended 30 June 2022.
2 Ms Harkin was appointed on 6 October 2021.
3 Ms McCleary resigned on 24 November 2021.
36
Performance Rights Holdings of Key Management Personnel as at 30 June
There were no Rights to acquire shares in the Company held by KMP during the current or prior reporting periods.
Share Holdings of Key Management Personnel as at 30 June
The number of ordinary shares of Archer Materials Limited held, directly, indirectly, or beneficially, by each Director and key
management personnel, including their personally related entities as at reporting date:
2022
Key Management
Personnel
Mr English
Mr Williams
Ms Harkin
Ms McCleary 1
Dr Choucair 2
Mr Connor
Total
Held at
1 July 2021
Granted as
Compensation
Options
Exercised
Other
Changes
Held at
30 June 2022
8,997,618
-
-
3,870,761
2,600,000
467,500
15,935,879
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,870,761)
8,997,618
-
-
-
100,000
(100,000)
2,600,000
-
-
467,500
100,000
(3,970,761)
12,065,118
1 Ms McCleary resigned on 24 November 2021 and shares at that time have been noted in the above table as ‘other changes’.
2 Dr Choucair sold 100,000 shares during the year on market.
Transactions with Key Management Personnel
Transactions with key management personnel and related parties as disclosed below are made on normal commercial
terms and conditions and at market rates. Outstanding balances are unsecured and are repayable in cash.
Amounts paid or payable to key management personnel and related parties/entities:
Related Party
Relationship to Key Management
Personnel/Director
Services Provided
2022
$
2021
$
Piper Alderman
Lawyers
A business of which Greg English
is a Consultant.
Legal advice
$32,725
$53,099
Damien Connor
Consulting Pty Ltd
A business of which Damien
Connor is a Director
Finance/Co. Secretary
consulting fees
$174,243
$142,387
END OF AUDITED REMUNERATION REPORT
37 | Archer Materials Limited 2022 Annual Report
Directors’ Report
Unissued Shares Under Option
Unissued ordinary shares of Archer Materials Limited under option at the date of this report are:
Issue Date
Grant Date
Number of
Options Granted
Option
Exercise Price
12/11/2019
30/10/2019
5,000,000
12/11/2019
25/01/2021
3,300,000
Company Secretary 1
12/11/2019
12/11/2019
1,000,000
30/11/2020
30/11/2020
1,500,000
$0.7277 2
31/03/2024
Issued to
Directors 1
CEO 1
Director 1
Directors 1
CEO 1
$0.1511 2
$0.1511 2
$0.1511 2
Expiry Date
31/03/2023
31/03/2023
31/03/2023
$1.79
$1.79
$1.79
$1.79
$1.79
31/05/2025
31/05/2025
31/05/2025
31/05/2025
31/05/2025
2/12/2021
24/11/2021
8,000,000
2/12/2021
24/11/2021
6,000,000
Company Secretary 1
2/12/2021
24/11/2021
1,500,000
Other Employees
2/12/2021
24/11/2021
7,500,000
Other Employee
29/8/2022
17/8/2022
1,500,000
35,300,000
1 Previously issued to members of key management personnel as remuneration.
2 Following the return of capital by way of pro-rata in-specie distribution of 50,000,000 iTech shares (refer Note 18), on 15 October 2021 the exercise price
of outstanding Options at that time were adjusted in accordance with the ASX Listing rules. Options previously exercisable at $0.1929 were adjusted to
be exercisable at $0.1511 each, and Options previously exercisable at $0.7695 were adjusted to be exercisable at $0.7277 each.
All unlisted Options are unlisted and exercisable into fully paid ordinary shares in the Company on a one for one basis.
These Options do not entitle the holders to participate in any share issue of the Company.
Refer Note 17 for details of movement in Options during the reporting period. No Options over ordinary shares have been
issued, forfeited, cancelled or lapsed since the end of the financial year.
Performance Rights (Rights)
There were no Rights on issue during the reporting period or as at the date of this report.
Environmental Issues
The Group’s operations are subject to significant environmental regulations under the laws of the Commonwealth and/
or State. No notice of any breach has been received and to the best of the Directors’ knowledge no breach of any
environmental regulations has occurred during the financial year or up to the date of this Annual Report.
Indemnity and insurance of officers
The Company’s Constitution provides that the Company indemnifies, on a full indemnity basis and to the full extent
permitted by law, officers of the Company for all losses or liabilities incurred by the person as an officer of the Company or
a related body corporate. In conformity with the Constitution, the Company is party to Deeds of Indemnity in favour of each
of the Directors referred to in this report who held office during the year.
The Company has paid premiums to insure each of the Directors, Officers and Consultants against liabilities for costs and
expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of
Director or Executive of the company, other than conduct involving wilful breach of duty or a lack of good faith in relation
to the company. The policy does not specify the individual premium for each officer covered and the amount paid is
confidential. Since the end of the year the Company has paid, or agreed to pay, premiums in respect of such contracts for
the year ending 30 June 2022.
38
Indemnity and insurance of auditor
The company has not, during or since the end of the financial period, indemnified or agreed to indemnify the auditor of the
company or any related entity against a liability incurred by the auditor.
During the financial period, the company has not paid a premium in respect of a contract to insure the auditor of the
company or any related entity.
Non-audit services
Details of the amounts paid or payable to the auditor for services provided during the financial year by the auditor are
outlined in Note 6 to the financial statements. No non audit services were provided during the year.
Proceedings on behalf of the company
As far as the Directors’ are aware, no person has applied to the Court for leave to bring proceedings on behalf of the
Company or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on
behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings
during the year.
Corporate Governance
The Board has adopted the ASX Corporate Governance Council’s “Corporate Governance Principles and
Recommendations – 4th Edition” (ASX Recommendations). The Board continually monitors and reviews its existing and
required policies, charters and procedures with a view to ensuring its compliance with the ASX Recommendations to
the extent deemed appropriate for the size of the Company and the status of its projects and activities. Good corporate
governance practices are also supported by the ongoing activities of the Audit & Risk Management Committee.
The Company’s Corporate Governance Statement for the financial year ending 30 June 2022 is dated as at 30 June 2022
and was approved by the Board on 21st September 2022.
The Corporate Governance Statement provides a summary of the Company’s ongoing corporate governance practices in
accordance with the ASX Recommendations. The Corporate Governance Statement is supported by a number of policies,
procedures, code of conduct and formal charters, all of which are located in the Corporate Governance section of the
Company’s website: www.archerx.com.au.
Auditor’s Declaration
The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 38 and forms part of the director’s report for the financial year ended 30 June 2022.
This report is signed in accordance with a resolution of the Board of Directors.
Gregory English
Chairman
Adelaide
Dated this 21st day of September 2022
39 | Archer Materials Limited 2022 Annual Report
Auditor’s
Independence
Declaration
40
41 | Archer Materials Limited 2022 Annual Report
Grant Thornton Audit Pty Ltd Grant Thornton House Level 3 170 Frome Street Adelaide SA 5000 GPO Box 1270 Adelaide SA 5001 T +61 8 8372 6666 #8095179v2w www.grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. Auditor’s Independence Declaration To the Directors of Archer Materials Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Archer Materials Limited for the year ended 30 June 2022, I declare that, to the best of my knowledge and belief, there have been: a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b no contraventions of any applicable code of professional conduct in relation to the audit GRANT THORNTON AUDIT PTY LTD Chartered Accountants J L Humphrey Partner – Audit & Assurance Adelaide, 21 September 2022 Financial
Information
42
43 | Archer Materials Limited 2022 Annual Report
Financial Information
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE
REVENUE
Revenue from ordinary activities
Research and development tax concession
Other income
EXPENSES
Depreciation expense
Amortisation of intangibles
Advanced materials research expenses
Employee benefits expense
Share based payments expense
Fair value loss on financial assets
Corporate consultants/public relations expense
ASX listing and share registry expense
Other expenses
CONSOLIDATED GROUP
2022
$
2021
$
Notes
3
11
17
9
-
973,000
650,472
1,623,472
(37,829)
(12,577)
(2,259,068)
(1,081,234)
(9,945,024)
-
467,662
1,720,159
2,187,821
(26,244)
(6,054)
(974,024)
(1,170,093)
(404,250)
(1,448,062)
(1,796,488)
(131,026)
(345,000)
(412,157)
(86,409)
(174,099)
(357,071)
LOSS BEFORE INCOME TAX EXPENSE
(14,048,505)
(2,806,911)
Income tax expense
-
-
LOSS FOR THE PERIOD FROM CONTINUING OPERATIONS
(14,048,505)
(2,806,911)
DISCONTINUED OPERATIONS
Loss after income tax for the period from discontinued operations
18
(67,223)
(3,786,351)
LOSS ATTRIBUTED TO MEMBERS OF THE PARENT ENTITY
(14,115,728)
(6,593,262)
Other comprehensive income
-
-
TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO MEMBERS
OF THE PARENT ENTITY
(14,115,728)
(6,593,262)
Loss per share
Basic and diluted loss for the year per share
Loss per share for continuing operations
Basic and diluted loss for the year per share
15
15
The accompanying notes form part of the financial statements.
Cents
(5.84)
Cents
(2.93)
(5.81)
(1.25)
44
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other financial assets
Other current assets - prepayments
Assets of disposal groups classified as held for sale
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Intangible assets
Property, plant and equipment
Right of use asset – office lease
TOTAL NON- CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease liability
Employee entitlements
Liabilities of disposal groups classified as held for sale
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Lease liability
Employee entitlements
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
CONSOLIDATED GROUP
2022
$
2021
$
Notes
7
8
9
18
11
12
13
18
13
14
16
26,463,687
1,094,018
1,708,806
583,713
29,850,224
-
6,239,099
497,738
2,692,644
18,986
9,448,467
10,018,006
29,850,224
19,466,473
248,340
47,220
19,750
315,310
140,208
55,589
30,090
225,887
30,165,534
19,692,360
348,759
10,652
336,403
695,814
-
695,814
9,097
41,322
50,419
249,471
10,341
296,024
555,836
85,894
641,730
19,749
71,228
90,977
746,233
732,707
29,419,301
18,959,653
47,723,569
10,893,334
33,093,217
1,388,813
(29,197,602)
(15,522,377)
29,419,301
18,959,653
The accompanying notes form part of the financial statements.
45 | Archer Materials Limited 2022 Annual Report
Financial Information
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE
Issued
Capital
$
Retained
Earnings
$
Share Based
Payments
Reserve
$
Acquisition
Reserve
$
Total
$
BALANCE AT 1 JULY 2020
32,485,250
(9,181,552)
997,000
240,000
24,540,698
Expense associated with unlisted
option vesting during the period
Shares issued during the year
(net of costs)
Transfer of share- based payments
reserve to retained earnings
-
607,967
-
-
404,250
-
-
252,437
(252,437)
-
-
-
404,250
607,967
-
Transactions with owners
33,093,217
(8,929,115)
1,148,813
240,000
25,552,915
Total loss for the year
Other comprehensive income
-
-
(6,593,262)
-
-
-
-
-
(6,593,262)
-
BALANCE AT 30 JUNE 2021
33,093,217
(15,522,377)
1,148,813
240,000
18,959,653
Issued
Capital
$
Retained
Earnings
$
Share Based
Payments
Reserve
$
Acquisition
Reserve
$
Total
$
BALANCE AT 1 JULY 2021
33,093,217
(15,522,377)
1,148,813
240,000
18,959,653
Expense associated with unlisted
option vesting during the period
(refer Note 17)
Shares issued during the year -
net of costs (refer Note 14)
Return of capital
- by way of a pro-rata in-specie
distribution of iTech shares to
Archer shareholders
(refer Note 18)
Transfer of share- based payments
reserve to retained earnings
-
24,630,352
(10,000,000)
-
-
-
9,945,024
-
-
-
200,503
(200,503)
-
-
-
-
9,945,024
24,630,352
(10,000,000)
-
Transactions with owners
47,723,569
(15,321,874)
10,893,334
240,000
43,535,029
Transfer of acquisition reserve from
prior periods to retained earnings
Total loss for the year
Other comprehensive income
-
-
-
240,000
(14,115,728)
-
-
-
-
BALANCE AT 30 JUNE 2022
47,723,569
(29,197,602)
10,893,334
(240,000)
-
-
-
-
(14,115,728)
-
29,419,301
The accompanying notes form part of the financial statements.
46
Financial Information
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE
CASH FLOW FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Payments for advanced materials research
Interest received
Research and development tax concession received
Innovation grant received
Services Income
Commonwealth Government COVID Stimulus
CONSOLIDATED GROUP
Notes
2022
$
2021
$
(2,438,381)
(1,569,847)
(2,259,068)
(974,024)
12,915
10,225
464,051
238,859
25,000
30,000
47,129
-
-
50,000
NET CASH USED IN OPERATING ACTIVITIES
19
(4,165,483)
(2,197,658)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for intellectual property
Payments for property, plant and equipment
Proceeds from the sale of property, plant and equipment
Payment received from the sale of non-current assets
(120,709)
(56,275)
(19,120)
(40,801)
45,000
-
-
150,000
NET CASH PROVIDED (USED IN) / BY IN INVESTING ACTIVITIES
(94,829)
52,924
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Payments for costs of capital raised
Payment of lease liability
14
14
25,620,352
607,967
(990,000)
-
(10,341)
(1,750)
NET CASH PROVIDED BY FINANCING ACTIVITIES
24,620,011
606,217
CASH FLOWS USED IN DISCONTINUED OPERATIONS
18
(135,111)
(337,066)
Net increase / (decrease) in cash held
Cash at the beginning of the year
20,224,588
(1,875,583)
6,239,099
8,114,682
CASH AT THE END OF THE FINANCIAL YEAR
7
26,463,687
6,239,099
The accompanying notes form part of the financial statements.
47 | Archer Materials Limited 2022 Annual Report
Notes to the Financial Statements for the year ended 30 June 2022
NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial report is a general purpose financial
report that has 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.
Archer Materials Limited is a for profit entity for the
purposes of preparing the financial statements. The
financial report has been presented in Australian dollars.
Australian Accounting Standards set out accounting
policies that the AASB has concluded would result
in a financial report 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. Material accounting policies adopted in the
preparation of this financial report are presented below.
They have been consistently applied unless otherwise
stated.
The financial report has been prepared on an accruals
basis and is based on historical costs modified, where
applicable, by the measurement at fair value of selected
non-current assets, financial assets and financial
liabilities.
The principal accounting policies adopted in the
preparation of the financial statements are set out below.
Principles of Consolidation
The parent entity controls a subsidiary if it is exposed,
or has rights, to variable returns from its involvement
with the subsidiary and has the ability to affect those
returns through its power over the subsidiary. A list of
controlled entities is contained in Note 10 to the financial
statements.
As at reporting date, the assets and liabilities of all
controlled entities have been incorporated into the
consolidated financial statements as well as their results
for the year then ended. Where controlled entities have
entered (left) the consolidated group during the year, their
operating results have been included/(excluded) from the
date control was obtained/(ceased).
All inter-group balances and transactions between
entities in the consolidated group, including any
recognised profits or losses, have been eliminated on
consolidation. Accounting policies of subsidiaries have
been changed, where necessary, to ensure consistency
with those adopted by the parent entity.
48
Non-current assets held for sale and discontinued
operations
The Group classifies non-current assets and disposal
groups as held for sale if their carrying amounts will be
recovered principally through a sale transaction rather
than through continuing use. Non-current assets and
disposal groups classified as held for are measured at the
lower of their carrying amount and fair value less costs
to sell. Costs to sell are the incremental costs directly
attributable to the disposal of an asset (disposal group),
excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as
met only when the sale is highly probable and the asset
or disposal group is available for immediate sale in its
present condition. Actions required to complete the sale
should indicate that it is unlikely that significant changes
to the sale will be made or that the decision to sell will be
withdrawn. Management must be committed to the plan
to sell the asset and the sale expected to be completed
within one year from the date of the classification.
Property, plant and equipment and intangible assets are
not depreciated or amortised once classified as held for
sale.
Assets and liabilities classified as held for sale are
presented separately as current items in the statement of
financial position.
A disposal group qualifies as discontinued operation if it
is a component of an entity that either has been disposed
of, or is classified as held for sale, and:
> Represents a separate major line of business or
geographical area of operations;
> Is part of a single co-ordinated plan to dispose of a
separate major line of business or geographical area of
operations; or
> Is a subsidiary acquired exclusively with a view to
resale.
Discontinued operations are excluded from the results
of continuing operations and are presented as a single
amount as profit or loss after tax from discontinued
operations in the statement of profit or loss.
Additional disclosures are provided in Note 18 and
Note 20. All other notes to the financial statements
include amounts for continuing operations, unless
indicated otherwise.
Current and non-current classification
Depreciation
Assets and liabilities are presented in the statement
of financial position based on current and non-current
classification.
An asset is classified as current when: it is either
expected to be realised or intended to be sold or
consumed in the consolidated entity’s normal operating
cycle; it is held primarily for the purpose of trading; it
is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent
unless restricted from being exchanged or used to settle
a liability for at least 12 months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when: it is either
expected to be settled in the consolidated entity’s normal
operating cycle; it is held primarily for the purpose of
trading; it is due to be settled within 12 months after the
reporting period; or there is no unconditional right to
defer the settlement of the liability for at least 12 months
after the reporting period. All other liabilities are classified
as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other
short-term, highly liquid investments that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value. For the
statement of cash flows presentation purposes, cash and
cash equivalents also includes bank overdrafts, which
if applicable, will be shown within borrowings in current
liabilities on the Statement of Financial Position.
Property, plant and equipment
Property, plant and equipment is carried at cost less
where applicable, any accumulated depreciation and
impairment losses.
The carrying amount of property, plant and equipment
is reviewed annually by Directors to ensure it is not in
excess of the recoverable amount from these assets.
The recoverable amount is assessed on the basis of
the expected net cash flows that will be received from
the assets employment and subsequent disposal. The
expected net cash flows have been discounted to their
present values in determining recoverable amounts.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Group
and the cost of the item can be measured reliably.
All other repairs and maintenance are charged to the
Statement of Profit or Loss during the financial period in
which are they are incurred.
The depreciable amount of all fixed assets is depreciated
on a straight-line basis over their useful lives to the
consolidated entity commencing from the time the
asset is held ready for use. Leasehold improvements
are depreciated over the shorter of either the unexpired
period of the lease or the estimated useful lives of the
improvements.
The depreciation rates used for each class of depreciable
assets are:
Class of
Non-Current Asset
Depreciation
Rate
Basis of
Depreciation
Plant and
Equipment
10 – 33%
Straight Line
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at each reporting date. An
asset’s carrying amount is written down immediately to
its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by
comparing proceeds with the carrying amount. These
gains and losses are included in the Statement of Profit or
Loss.
Intangible assets
Intangible assets acquired separately are measured on
initial recognition at cost. The cost of intangible assets
acquired in a business combination is their fair value
at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated
amortisation and accumulated impairment losses.
Internally generated intangibles, excluding capitalised
development costs, are not capitalised and the related
expenditure is reflected in profit or loss in the period in
which the expenditure is incurred.
The useful lives of intangible assets are assessed as
either finite or indefinite.
Intangible assets with finite lives are amortised over
the useful economic life and assessed for impairment
whenever there is an indication that the intangible
asset may be impaired. The amortisation period and
the amortisation method for an intangible asset with a
finite useful life are reviewed at least at the end of each
reporting period. Changes in the expected useful life or
the expected pattern of consumption of future economic
benefits embodied in the asset are considered to modify
the amortisation period or method, as appropriate, and
are treated as changes in accounting estimates. The
amortisation expense on intangible assets with finite
lives is recognised in the statement of profit or loss in the
expense category that is consistent with the function of
the intangible assets.
49 | Archer Materials Limited 2022 Annual Report
Notes to the Financial Statements for the year ended 30 June 2022
Intangible assets with finite useful lives are not amortised,
but are tested for impairment annually, either individually
or at the cash-generating unit level. The assessment of
indefinite life is reviewed annually to determine whether
the indefinite life continues to be supportable. If not, the
change in useful life from indefinite to finite is made on a
prospective basis.
Patents have a life of up to 20 years and are assessed on
a case by case basis. Licences for the use of intellectual
property are granted for periods ranging between three
and five years depending on the specific licences. The
licences require an annual fee to be paid to continue
to access the licenses. As a result, those licences are
assessed as having an indefinite useful life.
An intangible asset is derecognised upon disposal (i.e.,
at the date the recipient obtains control) or when no
future economic benefits are expected from its use or
disposal. Any gain or loss arising upon derecognition of
the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset)
is included in the statement of profit or loss.
Research and development costs
Research costs are expensed as incurred and included
in the statement of profit or loss as research and
development costs. Development expenditures on an
individual project are recognised as an intangible asset
when the Group can demonstrate:
> The technical feasibility of completing the intangible
asset so that the asset will be available for use or sale
> Its intention to complete and its ability and intention to
use or sell the asset
> How the asset will generate future economic benefits
> The availability of resources to complete the asset
> The ability to measure reliably the expenditure during
development
Following initial recognition of the development
expenditure as an asset, the asset is carried at cost
less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins
when development is complete and the asset is available
for use. It is amortised over the period of expected
future benefit. Amortisation is recorded in cost of sales.
During the period of development, the asset is tested for
impairment annually.
Patents and licences
The Group has made payments in respect of patents and
licences and also pays for on-going patent prosecution
costs. The Licences have been granted for patents which
are undergoing prosecution by the relevant government
agencies and the Company also owns a patent
undergoing prosecution.
50
A summary of the policies applied to the Group’s
intangible assets is, as follows:
Licences
Patents
Useful lives
Finite (5 years)
Finite (20 years)
Amortisation
method used
Internally
generated or
acquired
Amortised on
a straight-line
basis over the
period of the
licence
Amortised on
a straight-line
basis over the
period of the
patent
Acquired
Acquired
Trade and other payables
These amounts represent liabilities for goods and
services provided to the consolidated entity prior to the
end of the financial year/period and which are unpaid.
Due to their short-term nature they are measured at
amortised cost and are not discounted. The amounts
are unsecured and are usually paid within 30 days of
recognition.
Provisions
Provisions are recognised when the Group has a legal
or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits
will result and that outflow can be reliably measured.
Employee Benefits
Provision is made for the Company’s liability for employee
benefits arising from services rendered by employees to
reporting date. Employee benefits that are expected to
be settled wholly within one year have been measured
at the amounts expected to be paid when the liability is
settled, plus related on-costs. Employee benefits payable
later than one year have been measured at the present
value of the estimated future cash outflows to be made
for these benefits. Those cashflows are discounted
using market yields on high quality corporation bonds
with terms to maturity that match the expected timing of
cashflows.
Share-based Payments
Equity-settled transactions
The Company provides benefits to employees
(including directors) in the form of share-based payment
transactions, whereby employees render services in
exchange for shares or rights over shares (‘equity-settled
transactions’).
The Company currently provides benefits under a
Performance Rights and Share Option Plan.
The cost of these equity-settled transactions with
employees and directors is measured by reference to the
fair value at the date at which they are granted.
In valuing equity-settled transactions, no account is taken
of any performance conditions, other than conditions
linked to the price of the shares of the Company (‘market
conditions’). The cost of equity-settled transactions is
recognised, together with a corresponding increase
in equity, over the period in which the performance
conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award
(‘vesting date’).
The cumulative expense recognised for equity-settled
transactions at each reporting date until vesting date
reflects:
i)
the extent to which the vesting period has expired;
and
ii) the number of awards that, in the opinion of the
directors, will ultimately vest. This opinion is formed
based on the best available information at reporting
date. No adjustment is made for the likelihood
of market performance conditions being met as
the effect of these conditions is included in the
determination of fair value at grant date.
No expense is recognised for awards that do not
ultimately vest, except for awards where vesting is
conditional upon a market condition.
Where the terms of an equity-settled award are modified,
as a minimum an expense is recognised as if the
terms had not been modified. In addition, an expense
is recognised for any increase in the value of the
transaction as a result of the modification, as measured at
the date of modification. Where an equity-settled award
is cancelled, it is treated as if it had vested on the date
of cancellation, and any expense not yet recognised
for the award is recognised immediately. However, if a
new award is substituted for the cancelled award, and
designated as a replacement award on the date that
it is granted, the cancelled and new award are treated
as if they were a modification of the original award, as
described in the previous paragraph.
The dilutive effect, if any, of outstanding Options and
Rights is reflected as additional share dilution in the
computation of earnings per share.
Issued capital
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.
Leases
The Group assesses at contract inception whether a
contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset
for a period of time in exchange for consideration
Group as a lessee
The Group applies a single recognition and measurement
approach for all leases, except for short-term leases and
leases of low-value assets. The Group recognises lease
liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
i) Right-of-use assets
The Group recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-
of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease
payments made at or before the commencement date
less any lease incentives received. Right-of-use assets
are depreciated on a straight-line basis over the shorter
of the lease term and the estimated useful lives of the
asset
ii) Lease Liabilities
At the commencement date of the lease, the Group
recognises lease liabilities measured at the present
value of lease payments to be made over the lease term.
The lease payments include fixed payments (including
in-substance fixed payments) less any lease incentives
receivable.
In calculating the present value of lease payments,
the Group uses its incremental borrowing rate at the
lease commencement date because the interest rate
implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced
for the lease payments made.
51 | Archer Materials Limited 2022 Annual Report
Notes to the Financial Statements for the year ended 30 June 2022
In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the
lease term, a change in the lease payments (e.g., changes
to future payments resulting from a change in an index
or rate used to determine such lease payments) or a
change in the assessment of an option to purchase the
underlying asset.
Financial Instruments - initial recognition and
subsequent measurement
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.
i) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as
subsequently measured at amortised cost, fair value
through other comprehensive income (OCI), and fair value
through profit or loss.
The classification of financial assets at initial recognition
depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for
managing them. With the exception of trade receivables
that do not contain a significant financing component or
for which the Group has applied the practical expedient,
the Group initially measures a financial asset at its fair
value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs. Trade receivables
that do not contain a significant financing component or
for which the Group has applied the practical expedient
are measured at the transaction price determined under
AASB 15.
In order for a financial asset to be classified and
measured at amortised cost or fair value through OCI, it
needs to give rise to cash flows that are ‘solely payments
of principal and interest (SPPI)’ on the principal amount
outstanding. This assessment is referred to as the SPPI
test and is performed at an instrument level.
The Group’s business model for managing financial
assets refers to how it manages its financial assets
in order to generate cash flows. The business model
determines whether cash flows will result from collecting
contractual cash flows, selling the financial assets, or
both.
Purchases or sales of financial assets that require delivery
of assets within a time frame established by regulation or
convention in the market place (regular way trades) are
recognised on the trade date, i.e., the date that the Group
commits to purchase or sell the asset.
52
Subsequent measurement
For purposes of subsequent measurement, financial
assets are classified in four categories:
> Financial assets at amortised cost (debt instruments)
> Financial assets at fair value through OCI with
recycling of cumulative gains and losses (debt
instruments)
> Financial assets designated at fair value through OCI
with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
> Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The
Group measures financial assets at amortised cost if both
of the following conditions are met:
> The financial asset is held within a business model
with the objective to hold financial assets in order to
collect contractual cash flows; and
> The contractual terms of the financial asset give
rise on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding
Financial assets at amortised cost are subsequently
measured using the effective interest (EIR) method
and are subject to impairment. Gains and losses
are recognised in profit or loss when the asset is
derecognised, modified or impaired.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
primarily derecognised (i.e., removed from the Group’s
consolidated statement of financial position) when:
> The rights to receive cash flows from the asset have
expired; or
> The Group has transferred its rights to receive cash
flows from the asset or has assumed an obligation
to pay the received cash flows in full without
material delay to a third party under a ‘pass-through’
arrangement; and either (a) the Group has transferred
substantially all the risks and rewards of the asset,
or (b) the Group has neither transferred nor retained
substantially all the risks and rewards of the asset, but
has transferred control of the asset.
When the Group has transferred its rights to receive cash
flows from an asset or has entered into a pass-through
arrangement, it evaluates if, and to what extent, it has
retained the risks and rewards of ownership. When it
has neither transferred nor retained substantially all
of the risks and rewards of the asset, nor transferred
control of the asset, the Group continues to recognise
the transferred asset to the extent of its continuing
involvement. In that case, the Group also recognises
an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects
the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at the
lower of the original carrying amount of the asset and the
maximum amount of consideration that the Group could
be required to repay.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are
carried in the statement of financial position at fair value
with net changes in fair value recognised in the statement
of profit or loss.
This category includes listed equity investments which
the Group had not irrevocably elected to classify at
fair value through OCI. Dividends on listed equity
investments are recognised as other income in the
statement of profit or loss when the right of payment has
been established.
Impairment of financial assets
The Group recognises an allowance for expected credit
losses (ECLs) for all debt instruments not held at fair value
through profit or loss. ECLs are based on the difference
between the contractual cash flows due in accordance
with the contract and all the cash flows that the Group
expects to receive, discounted at an approximation of
the original effective interest rate. The expected cash
flows will include cash flows from the sale of collateral
held or other credit enhancements that are integral to the
contractual terms.
ECLs are recognised in two stages. For credit exposures
for which there has not been a significant increase in
credit risk since initial recognition, ECLs are provided
for credit losses that result from default events that are
possible within the next 12-months (a 12-month ECL).
For those credit exposures for which there has been a
significant increase in credit risk since initial recognition,
a loss allowance is required for credit losses expected
over the remaining life of the exposure, irrespective of the
timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Group
applies a simplified approach in calculating ECLs.
Therefore, the Group does not track changes in credit
risk, but instead recognises a loss allowance based
on lifetime ECLs at each reporting date. The Group
has established a provision matrix that is based on its
historical credit loss experience, adjusted for forward-
looking factors specific to the debtors and the economic
environment.
The Group considers a financial asset in default when
contractual payments are 90 days past due. However,
in certain cases, the Group may also consider a
financial asset to be in default when internal or external
information indicates that the Group is unlikely to receive
the outstanding contractual amounts in full before
taking into account any credit enhancements held by
the Group. A financial asset is written off when there is
no reasonable expectation of recovering the contractual
cash flows.
ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, payables, or as derivatives designated
as hedging instruments in an effective hedge, as
appropriate.
All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs.
The Group’s financial liabilities include trade and
other payables, loans and borrowings including bank
overdrafts, and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
Derecognition
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the
derecognition of the original liability and the recognition
of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit or loss.
53 | Archer Materials Limited 2022 Annual Report
Notes to the Financial Statements for the year ended 30 June 2022
Deferred tax assets relating to temporary differences and
unused tax losses are recognised only to the extent that
it is probable that future taxable profit will be available
against which the benefits of the deferred tax asset can
be utilised.
Where temporary differences exist in relation to
investments in subsidiaries, branches, associates, and
joint ventures, deferred tax assets and liabilities are
not recognised where the timing of the reversal of the
temporary difference can be controlled and it is not
probable that the reversal will occur in the foreseeable
future.
Current tax assets and liabilities are offset where a legally
enforceable right of set-off exists and it is intended
that net settlement or simultaneous realisation and
settlement of the respective asset and liability will occur.
Deferred tax assets and liabilities are offset where a
legally enforceable right of set-off exists, the deferred
tax assets and liabilities relate to income taxes levied by
the same taxation authority on either the same taxable
entity or different taxable entities where it is intended
that net settlement or simultaneous realisation and
settlement of the respective asset and liability will occur
in future periods in which significant amounts of deferred
tax assets or liabilities are expected to be recovered or
settled.
Tax Consolidation
Archer Materials Limited and its wholly-owned Australian
subsidiaries have formed an income tax consolidated
group under tax consolidation legislation. The Group
notified the Australian Tax Office that it had formed an
income tax consolidated group to apply from 1 July 2007.
Research and Development Tax Concession
To the extent that research and development costs are
eligible activities under the “Research and development
tax incentive” programme, a refundable tax offset is
available for companies with annual turnover of less than
$20 million. The Group recognises refundable tax offsets
received in the financial year as R&D tax concession
income in statement of profit or loss, resulting from
the monetisation of available tax losses that otherwise
would have been carried forward. These amounts are
recognised at their fair value only to the extent that where
there is reasonable assurance that the incentive will be
received.
Impairment of non-financial assets
At each reporting date, the Group reviews the carrying
values of its tangible and intangible assets to determine
whether there is any indication that those assets
have been impaired. If such an indication exists, the
recoverable amount of the asset, being the higher of
the asset’s fair value less costs to sell and value in use,
is compared to the asset’s carrying value. Any excess of
the asset’s carrying value over its recoverable amount is
expensed to the Statement of Profit or Loss.
Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which
the asset belongs.
Income Tax
The income tax expense/(revenue) for the year comprises
current income tax expense/(income) and deferred tax
expense/(income).
Current income tax expense charged to the profit or loss
is the tax payable on taxable income calculated using
applicable income tax rates enacted, or substantially
enacted, as at reporting date. Current tax liabilities/
(assets) are therefore measured at the amounts expected
to be paid to/(recovered from) the relevant taxation
authority.
Deferred income tax expense reflects movements in
deferred tax asset and deferred tax liability balances
during the year as well as unused tax losses. Current
and deferred income tax expense/(income) is charged
or credited directly to equity instead of the profit or loss
when the tax relates to items that are credited or charged
directly to equity.
Deferred tax assets and liabilities are ascertained based
on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in
the financial statements. Deferred tax assets also result
where amounts have been fully expensed but future tax
deductions are available. No deferred income tax will
be recognised from the initial recognition of an asset or
liability, excluding a business combination, where there is
no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax
rates that are expected to apply to the period when the
asset recognised or the liability is settled, based on tax
rates enacted or substantively enacted at reporting date.
Their measurement also reflects the manner in which
management expects to recover or settle the carrying
amount of the related asset or liability.
54
(ii) Research and development (R&D) tax concession
The Group is entitled to claim R&D tax incentives in
Australia. The R&D tax incentive is calculated using the
estimated expenditures multiplied by a 43.5% non-
refundable tax offset. It has been established that the
conditions of the R&D incentive have been met and that
the expected amount of the incentive can be reliably
measured. Estimated amounts receivable are recognised
as income.
Comparative Figures
When required by accounting standards, comparative
figures have been adjusted to conform to changes in
presentation of the current financial year.
Adoption of New and Revised Accounting Standards
At the date of authorisation of these financial statements,
several new Standards and amendments to existing
Standards, and Interpretations have been published by
the AASB.
Management have adopted all relevant pronouncements,
as applicable, for the first period beginning on or after
the effective date of the pronouncement. New Standards,
amendments and Interpretations not adopted in the
current year have not been disclosed as they are not
expected to have a material impact on the Group’s
financial statements.
The financial report was authorised for issue on
21st September 2022 by the Board of Directors.
Revenue
Interest revenue is recognised on a proportional basis
taking into account the interest rates applicable to the
financial assets.
Revenue from the rendering of a service is recognised
upon the delivery of the service to the customers.
All revenue is stated net of the amount of goods and
services tax (GST).
Goods and Services Tax (‘GST’) and other similar taxes
Revenues, expenses and assets are recognised net of
the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office.
In these circumstances, the GST is recognised as part of
the cost of acquisition of the asset or as part of an item of
the expense. Receivables and payables in the statement
of financial position are shown inclusive of GST. The
net amount of GST recoverable from, or payable to, the
Australian Tax Office is included in other receivables or
other payables in the statement of financial position.
Cash flows are presented in the Statement of Cash
Flows on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as
operating cash flows.
Commitments and contingencies are disclosed net of
the amount of GST recoverable from, or payable to, the
Australian Tax Office.
Critical Accounting Estimates and Judgements
The Directors evaluate estimates and judgments
incorporated into the financial report based on historical
knowledge and best available current information.
Estimates assume a reasonable expectation of future
events and are based on current trends and economic
data obtained both externally and within the Group.
Key estimates
(i) Impairment
The Company assesses impairment at the end of each
reporting period by evaluating conditions and events
specific to the Company that may be indicative of
impairment triggers. Recoverable amounts of relevant
assets are reassessed using fair value less cost of
disposal calculations which incorporate various key
assumptions.
55 | Archer Materials Limited 2022 Annual Report
Notes to the Financial Statements for the year ended 30 June 2022
NOTE 2 – OPERATING SEGMENTS
The Directors have considered the requirements of AASB 8 - Operating segments and the internal reports that are reviewed
by the chief operating decision maker (the Board) in allocating resources have concluded at this time there are no separately
identifiable segments. The Group operates in one segment being materials technology research and development. As
detailed elsewhere in this report, during the year ended 30 June 2022, the Company completed the sale of its mineral
exploration business to iTech Minerals Ltd and undertook a pro-rata in-specie distribution of 50,000,000 iTech shares to
Archer shareholders (being distribution of the consideration shares received by Archer for the sale to iTech) (refer Note 18).
NOTE 3 – OTHER INCOME
Interest income
Gain on sale of plant and equipment
Consulting services income
CONSOLIDATED GROUP
30 JUNE
2022
$
86,248
45,000
30,000
30 JUNE
2021
$
11,293
-
-
Gain on sale of non-current assets – sale to ChemX Materials Ltd (refer Note 20)
464,224
1,661,737
Commonwealth innovation grant
Total income
NOTE 4 – INCOME TAX BENEFIT / (LOSS)
25,000
47,129
650,472
1,720,159
30 JUNE
2022
$
30 JUNE
2021
$
a) The components of income tax benefit comprise:
Current tax
-
-
b) The prima facie tax on loss from before income tax is reconciled
to the income tax as follows:
25% (2021: 26%):
Net loss from continuing operations
Net loss from discontinued operations
Total loss from continued and discontinued operations
Income tax rate
Prima facie tax benefit on loss before income tax
Non-deductible expenses / (non-assessable income)
Tax effect of temporary differences not brought to account as they
do not meet the recognition criteria
(14,048,505)
(2,806,911)
(67,223)
(3,786,351)
(14,115,728)
(6,593,262)
25%
26%
(3,528,932)
(1,714,248)
2,486,256
(140,298)
1,042,676
1,854,546
Income tax attributable to loss from continued and discontinued operations
-
-
c) Unused tax losses where no deferred tax asset has been recognised at 25% (2021: 26%)
5,524,165
7,793,904
d) Timing difference for which no deferred tax asset has been recognised
68,071
-
56
NOTE 5 – KEY MANAGEMENT PERSONNEL COMPENSATION
a) Names and positions held of consolidated entity key management personnel in office at any time during the
financial year are:
Mr Greg English
Chairman – Executive
Mr Kenneth Williams
Director – Non-executive
Ms Bernadette Harkin
Director – Non-executive
(appointed 6 October 2021)
Ms Alice McCleary
Director – Non-executive
(resigned 24 November 2021)
Dr Mohammad Choucair
Chief Executive Officer
Mr Damien Connor
Chief Financial Officer & Company Secretary
Other than the directors and officers of the company listed above, there are no additional key management personnel.
b) Key Management Personnel Compensation
Refer to the Remuneration Report for details of the remuneration paid or payable to each member of the Group’s Key
Management Personnel (KMP).
The aggregate remuneration of KMP of the Group during the year is as follows:
Short term benefits
Post-employment benefit
Share - based payments
30 JUNE
2022
$
941,218
77,180
6,409,476
7,427,874
30 JUNE
2021
$
952,376
77,488
404,250
1,434,114
NOTE 6 – AUDITOR REMUNERATION
Total fees paid or payable for services provided by Grant Thornton Audit Pty Ltd
and its related practices were as follows:
30 JUNE
2022
$
30 JUNE
2021
$
Audit Services
Audit and review of Financial Reports
No non audit services were provided.
NOTE 7 – CASH AND CASH EQUIVALENTS
Short term deposits
Cash at bank and on hand
Short term bank deposits are at call within 30 days’ notice.
The Group’s exposure to interest rate risk is summarised at Note 23.
53,000
43,850
30 JUNE
2022
$
30 JUNE
2021
$
25,045,145
1,081,618
1,418,542
5,157,481
26,463,687
6,239,099
57 | Archer Materials Limited 2022 Annual Report
Notes to the Financial Statements for the year ended 30 June 2022
NOTE 8 – TRADE AND OTHER RECEIVABLES
Research and development tax receivable
Accrued interest
Other receivables
NOTE 9 – OTHER FINANCIAL ASSETS
Financial assets at fair value through profit or loss
- Listed Investment in Volatus Capital Corp (“Volatus”)
- Listed Investment in ChemX Materials Ltd (“ChemX”)
Reconciliation
Reconciliation of the fair values at the beginning and end of the current and
previous financial year are set out below:
Opening fair value
Additions – consideration received Volatus
Additions – consideration received ChemX 1, 2
Change in fair value
Closing fair value
30 JUNE
2022
$
973,000
80,906
40,112
1,094,018
30 JUNE
2021
$
467,662
7,573
22,503
497,738
30 JUNE
2022
$
30 JUNE
2021
$
146,705
842,644
1,562,101
1,850,000
1,708,806
2,692,644
2,692,644
-
464,224
-
2,639,132
1,850,000
(1,448,062)
(1,796,488)
1,708,806
2,692,644
1
Archer was issued 2,321,119 shares in ChemX on 31 December 2021 as additional consideration equal to 5% of the enterprise value of ChemX at the time
of ASX listing (unable to be quantified at the date of sale), pursuant to the sale agreement between the Company and ChemX for the sale of the mineral
exploration licences EL 5815 (Waddikee) and EL 5920 (Carappee Hill). As at 30 June 2022, Archer holds a total of 11,571,119 shares in ChemX, which are
being held in escrow until 18 January 2024, being 24 months from the date of commencement of Official Quotation of ChemX shares on ASX.
2
ChemX Materials Limited commenced ASX quotation on 18 January 2022. The issue price of ChemX shares under the replacement prospectus dated
26 November 2021 was $0.20 per share.
All financial assets designated at fair value through profit or loss utilise level 1.
Fair value hierarchy
AASB 13 requires disclosure of fair value measurements by level of the fair value hierarchy, 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 (i.e., as prices) or indirectly (i.e., derived from prices)
> Level 3: inputs for the asset or liability that is not based on observable market data (unobservable inputs)
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as
financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where
they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii)
designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss.
The fair value of listed investments (publicly traded equity securities) are based on quoted market prices at the end of the
reporting period (Level 1). The fair value of unlisted investments has been valued with reference to unobservable market
data (Level 3).
58
NOTE 10 – INVESTMENT IN CONTROLLED ENTITIES
Country of
Incorporation
PERCENTAGE OWNED
30 JUNE
2022
%
30 JUNE
2021
%
Parent Entity
- Archer Materials Limited
Subsidiaries of Archer Materials Limited:
- Carbon Allotropes Pty Limited
- Archer Energy and Resources Pty Ltd
- Archer Metals Pty Ltd
- Archer IOCG Pty Ltd
- Pirie Resources Pty Ltd 1
- Archer Pastoral Company Pty Ltd 1
- SA Exploration Pty Ltd 1
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
-
-
-
100
100
100
100
100
100
100
1
During the reporting period, the Company completed the sale of its mineral exploration business to iTech Minerals Ltd (“iTech”). Under the sale
agreement with iTech (the “Transaction”), Archer agreed to sell its mineral exploration business (being the sale of Pirie Resources Pty Ltd, Archer
Pastoral Company Pty Ltd and SA Exploration Pty Ltd) to iTech, in return for 50 million iTech shares (“iTech Shares”). Archer distributed the iTech Shares
in-specie to Archer shareholders (the “In-Specie Distribution”). The Transaction and In-Specie Distribution were both approved by Archer shareholders
at a general meeting held on 30 August 2021. Refer Note 18 for further details regarding the sale to iTech.
NOTE 11 – INTANGIBLE ASSETS
Patents, licences and trademarks - at cost
Accumulated amortisation
Movements in carrying amounts:
Balance at the beginning of the period
Additions
Amortisation
Balance at the end of the period
NOTE 12 – TRADE AND OTHER PAYABLES
Trade payables
Other creditors and accruals
NOTE 13 – EMPLOYEE ENTITLEMENTS
Current – leave entitlements and bonus provisions
Non-current - long service leave
30 JUNE
2022
$
273,275
(24,935)
248,340
140,208
120,709
(12,577)
248,340
30 JUNE
2022
$
104,894
243,865
348,759
30 JUNE
2022
$
336,403
41,322
377,725
30 JUNE
2021
$
152,567
(12,359)
140,208
89,987
56,275
(6,054)
140,208
30 JUNE
2021
$
84,023
165,448
249,471
30 JUNE
2021
$
296,024
71,228
367,252
59 | Archer Materials Limited 2022 Annual Report
Notes to the Financial Statements for the year ended 30 June 2022
NOTE 14 – ISSUED CAPITAL
CONSOLIDATED GROUP
30 JUNE
2022
$
30 JUNE
2021
$
248,467,207 (2021: 227,506,546) fully paid ordinary shares
47,723,569
33,093,217
a) Shares on issue
30 June 2022
Movements in fully paid shares
Balance as at 1 July 2021
Shares issued - exercise of Options (16 July 2021)
Number
$
227,506,546
33,093,217
200,000
38,580
Shares issued - placement (net of costs) (8 October 2021)
10,344,828
15,000,000
Shares issued - exercise of Options (8 October 2021)
1,200,000
231,480
Return of Capital - in-specie distribution 1
N/A
(10,000,000)
Shares issued - share purchase plan (27 October 2021)
6,897,556
10,000,000
Shares issued - exercise of Options (2 November 2021) 2
Shares issued - exercise of Options (29 November 2021) 2
Shares issued - exercise of Options (20 April 2022) 2
Shares issued - exercise of Options (27 May 2022) 2
Transaction costs of shares issued
Balance as at 30 June 2022
1,318,277
100,000
300,000
600,000
199,192
15,110
45,330
90,660
N/A
(990,000)
248,467,207
47,723,569
The value of the capital reduction effected by way of in-specie distribution of 50,000,000 shares in iTech Minerals Ltd (‘iTech’) to Archer shareholders
on 15 October 2021. The 50,000,000 shares in iTech were issued at $0.20 per share as consideration for the sale of the Company’s remaining mineral
exploration business to iTech. Refer to Note 18 for further details regarding the sale to iTech and pro-rata in-specie distribution of iTech shares to Archer
shareholders.
Following the return of capital by way of pro-rata in-specie distribution of 50,000,000 iTech shares (refer Note 18), on 15 October 2021 the exercise
price of outstanding Options were adjusted in accordance with the ASX Listing rules. Options previously exercisable at $0.1929 were adjusted to be
exercisable at $0.1511 each, and Options previously exercisable at $0.7695 were adjusted to be exercisable at $0.7277 each.
Shares on issue
30 June 2021
Movements in fully paid shares
Balance as at 1 July 2020
Shares issued - exercise of Options (18 September 2020)
Shares issued - exercise of Options (16 October 2020)
Shares issued - exercise of Options (11 December 2020)
Shares issued - exercise of Options (29 January 2021)
Shares issued - exercise of Options (19 February 2021)
Shares issued - exercise of Options (19 March 2021)
Shares issued - exercise of Options (17 June 2021)
Balance as at 30 June 2021
Number
$
224,354,823
32,485,250
300,000
181,723
300,000
500,000
300,000
100,000
57,870
35,054
57,870
96,450
57,870
19,290
1,470,000
283,563
227,506,546
33,093,217
1
2
60
NOTE 14 – ISSUED CAPITAL (CONTINUED)
(b) Options on issue
All options on issue are unlisted options (Options). Details of the Options outstanding as at the end of the year are set out
below:
Issued to
Issue Date Grant Date
Number
of Options
Granted
Option
Exercise
Price
Expiry Date
Balance at
30 June
2022
Balance at
30 June
2021
Directors & CEO
12/11/2019
30/10/2019
11,500,000
$0.1511 1
31/03/2023
8,300,000
9,000,000
Other Employees
12/11/2019
12/11/2019
6,000,000
$0.1511 1
31/03/2023
1,000,000
4,018,277
Director
30/11/2020
30/11/2020
1,500,000
$0.7277 1
31/03/2024
1,500,000
1,500,000
Directors, CEO &
Other Employees
2/12/2021
24/11/2021 24,050,000
$1.7900
31/05/2025 24,050,000
-
43,050,000
34,850,000
14,518,277
1 Following the return of capital by way of pro-rata in-specie distribution of 50,000,000 iTech shares (refer Note 18), on 15 October 2021 the exercise price
of outstanding Options at that time were adjusted in accordance with the ASX Listing rules. Options previously exercisable at $0.1929 were adjusted to
be exercisable at $0.1511 each, and Options previously exercisable at $0.7695 were adjusted to be exercisable at $0.7277 each.
All Options are unlisted and are exercisable into fully paid ordinary shares in the Company on a one for one basis.
Options granted during the year
On 2 December 2021, a further 24,050,000 Options were issued to Directors and employees of Archer following
shareholder approval at the Company’s Annual General Meeting held on 24 November 2021 (2021 AGM). Options were
granted at no cost to the recipients and vest immediately upon issue.
Options exercised during the year
During the reporting period 3,718,277 Options were exercised into fully paid ordinary shares.
Options forfeited during the year
No Options were lapsed or forfeited during the year.
See Note 17 for further details regarding movements in Options during the current and prior reporting periods.
c) Performance Rights (Rights) on issue
There were no Rights on issue during the reporting period or as at the date of this report.
d) Capital Management
Management effectively manages the Group’s capital and capital structure by assessing the Group’s financial risks through
regular monitoring of budgets and forecast cashflows. The Board’s policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain future development of the business, including through
the issue of shares. The Group’s capital is shown as issued capital in the statement of financial position. The Group is not
subject to any external capital restrictions.
61 | Archer Materials Limited 2022 Annual Report
Notes to the Financial Statements for the year ended 30 June 2022
NOTE 15 – LOSS PER SHARE
Reconciliation of earnings to Statement of Profit or Loss and other
Comprehensive Income
Loss for year used to calculate basic EPS
a) Weighted average number of shares outstanding during the year used in
calculation of basic EPS
b) In accordance with AASB 133 “Earnings per Share” as potential ordinary
shares may only result in a situation where their conversion results in a
decrease on profit per share or increase in loss per share, no dilutive effect
has been taken into account.
NOTE 16 – RESERVES
a) Share-based payments reserve
Share based payment reserve
Movement associated with Options during the year:
Opening Balance
Options issued
Options exercised
Closing Balance
30 JUNE
2022
$
30 JUNE
2021
$
(14,115,728)
(6,593,262)
Number
Number
241,767, 819
225,278,694
30 JUNE
2022
$
30 JUNE
2021
$
10,893,334
1,148,813
1,148,813
9,945,024
997,000
404,250
(200,503)
(252,437)
10,893,334
1,148,813
The share-based payments reserve records items recognised as an expense on the valuation of Options or performance
rights. Refer Note 17 for further details regarding the movement in Options during the reporting period.
b) Acquisition reserve
Acquisition reserve
30 JUNE
2022
$
30 JUNE
2021
$
-
240,000
The acquisition reserve represented the fair value of consideration paid (in performance rights) for the Company’s prior
periods acquisition of Carbon Allotropes Pty Limited. An amount of $240,000 was transferred to retained losses for the
year ended 30 June 2022.
62
NOTE 17 – SHARE BASED PAYMENTS
UNLISTED OPTIONS
30 JUNE 2022
The number of Options and weighted average exercise prices are as follows for the reporting period presented:
Number of
Options
Weighted Average
Exercise Price Per Option
$
$
Opening Balance (1 July 2021)
14,518,277
1,148,813
Granted
Exercised
24,050,000
9,945,024
(3,718,277)
(200,503)
Closing Balance (30 June 2022)
34,850,000
10,893,334
$0.25
$1.79
$0.16
$1.30
Weighted average remaining contractual life of Options at 30 June 2022 is 2.29 years.
An amount of $200,503 was transferred to retained losses during the reporting period, relating to prior period share-based
payments associated with the options that were exercised into shares during the current reporting period (2021: $252,437).
Options granted during the year ended 30 June 2022
On 2 December 2021, 24,050,000 unlisted Options were issued to Archer’s directors and employees following
shareholder approval at the Company’s Annual General Meeting held on 24 November 2021 (“2021 AGM”). The Options
were granted at no cost to the recipient and vest 1/3rd on 31 May 2022, 1/3rd on 31 May 2023, and 1/3rd on 31 May 2024
provided that the recipient is an employee of the Company at the date of vesting (service condition only). The Options
have an exercise price of $1.79 each and expiry date of 31 May 2025.
The total fair value at the grant date for the 24,050,000 Options was $18,287,706, and this amount is being expensed to
the Statement of Profit or Loss and Other Comprehensive Income under ‘share based payments expense’ over the vesting
periods applicable to the Options. Accordingly, an amount of $9,945,024 has been included in the Statement of Profit or
Loss and Other Comprehensive Income under ‘share based payments expense’ for the year ended 30 June 2022 (2021:
$404,250).
The Options were granted pursuant to the Company’s Performance Rights and Share Option Plan, which was approved by
shareholders at the Annual General Meeting held on 30 October 2019.
Details of the Options granted during the reporting period are set out below:
Issued to
Grant
Date
Issue
Date
Number of
Options
Granted
Option
Exercise
Price
1st
Vesting
Date
2nd
Vesting
Date
3rd
Vesting
Date
Expiry
Date
Directors &
Employees
24 Nov 21
02 Dec 21
24,050,000
$1.79
31 May 22
31 May 23
31 May 24
31 May 25
All options are unlisted and are exercisable into fully paid ordinary shares in the Company on a one for one basis.
63 | Archer Materials Limited 2022 Annual Report
Notes to the Financial Statements for the year ended 30 June 2022
NOTE 17 – SHARE BASED PAYMENTS (CONTINUED)
The fair value of the Options issued was calculated by using a Black-Scholes option pricing model and was estimated on
the date of the grant using the following assumptions:
Share price at date of grant ($)
Historic volatility (%)
Risk free interest rate (%)
Expected life of Options (days)
Fair value at grant date ($)
Director and Employee Options
1.39
88.5
0.99
1284
0.766
Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is
indicative of future tender, which may not eventuate.
The life of the Options is based on the historical exercise patterns, which may not eventuate in the future.
Options exercised during the year ended 30 June 2022
During the reporting period a total of 3,718,277 Options with an expiry date of 31 March 2023, were exercised into
shares, comprising 1,400,000 options (exercise price of $0.1929) and 2,318,277 (exercise price of $0.1511).
An amount of $200,503 was transferred to retained losses during the reporting period, relating to prior period
share-based payments associated with the Options that were exercised into shares during the current reporting
period (2021: $252,437).
Options forfeited during the year ended 30 June 2022
No options were lapsed or forfeited during the reporting period.
PERFORMANCE RIGHTS
There were no Rights on issue during the current or prior reporting periods.
64
NOTE 18 – DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS
SALE OF SUBSIDIARIES TO ITECH MINERALS LTD
On 12 April 2021, the Company announced that it had signed a legally binding share sale agreement with iTech Minerals
Pty Ltd (“iTech”) for the sale of all of the three subsidiary companies that held Archer’s remaining mineral tenements (the
“Transaction”).
At the Company’s General Meeting held on 30 August 2021, Archer shareholders approved the sale of the Company’s
remaining mineral exploration projects to iTech in return for 50 million iTech shares (Resolution 1) and the reduction of
capital by way of pro-rata in-specie distribution of the 50 million iTech shares to eligible Archer shareholders (Resolution 2).
The Transaction completed on 14 October 2021, with the Company receiving received 50 million iTech shares (with a value
of $0.20 per iTech share), which were disbursed to Archer shareholders by way of a pro-rata in-specie distribution on 15
October 2021. The Company did not hold any iTech shares following completion of the Transaction.
The following table represents the carrying amounts of net assets over which control was lost at the date of completion.
Carrying amounts of net assets over which control was lost
Assets
Non-current exploration assets held for sale
Liabilities
Net assets disposed
Consideration received:
Fair value of equity received in iTech Minerals Ltd – 50,000,000 shares
Total consideration received
Gain / (loss) on disposal group classified as held for sale assets
Equity
Total $
10,000,000
10,000,000
-
10,000,000
10,000,000
10,000,000
-
Return of capital by way of pro-rata in-specie distribution of iTech shares
(10,000,000)
65 | Archer Materials Limited 2022 Annual Report
Notes to the Financial Statements for the year ended 30 June 2022
NOTE 18 – DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS (CONTINUED)
The combined net operating loss of the three companies sold to iTech namely SA Exploration Pty Ltd, Pirie Resources Pty
Ltd and Archer Pastoral Company Pty Ltd are shown below:
Interest income
Impairment of exploration assets
Exploration expenditure expensed
Depreciation
Other expenses
30 JUNE
2022
$
30 JUNE
2021
$
89
734
-
(4,948,249)
(56,799)
(9,682)
(831)
(67,747)
(10,563)
(4,825)
Loss for year from discontinued operations before tax
(67,223)
(5,030,650)
The combined assets and liabilities of SA Exploration Pty Ltd, Pirie Resources Pty Ltd and Archer Pastoral Company Pty Ltd
are shown below:
Statement of financial position
Other current assets
Non-current plant and equipment
Non-current exploration assets
Assets of the disposal group held for sale
Current trade payables
Liabilities included in disposal group held for sale
30 JUNE
2022
$
-
-
-
-
-
-
30 JUNE
2021
$
8,324
9,682
10,000,000
10,018,006
85,894
85,894
Cash flows generated by SA Exploration Pty Ltd, Pirie Resources Pty Ltd and Archer Pastoral Company Pty Ltd are shown
below:
Operating activities
Investing activities
30 JUNE
2022
$
(135,111)
-
30 JUNE
2021
$
(21,895)
(315,172)
Net cash used in discontinued operations
(135,111)
(337,067)
66
NOTE 19 – CASH FLOW INFORMATION
CONTINUING OPERATIONS
a) Reconciliation of cash flows from continuing operations
with loss after income tax
Loss after income tax
Depreciation (net of capitalised depreciation)
Amortisation of intangibles
Fair value loss on financial assets (Note 9)
Share based payments
30 JUNE
2022
$
30 JUNE
2021
$
(14,048,505)
(2,806,911)
37,829
12,577
26,244
6,054
1,448,062
1,796,488
9,945,024
404,250
Gain on sale of non-current assets – sale to ChemX (Note 20)
(464,224)
(1,661,737)
Gain on sale non-current assets - plant and equipment
(45,000)
-
Changes in assets and liabilities:
- Increase in trade and other receivables
- Increase in trade and other payables
- Increase in employee entitlements
(1,161,007)
(180,034)
99,288
10,473
110,336
107,652
Net cash used in operating activities from continuing operations
(4,165,483)
(2,197,658)
b) Non-Cash Financing and Investing Activities
During the reporting period Archer was issued 2,321,119 shares in ChemX Materials Limited (‘ChemX’) as additional
consideration equal to 5% of the enterprise value of ChemX at the time of ASX listing, in accordance with the sale
agreement between the Company and ChemX for the sale of the mineral exploration licences EL 5815 (Waddikee) and
EL 5920 (Carappee Hill).
ChemX Materials Limited commenced ASX quotation on 18 January 2022. The issue price of ChemX shares under
the replacement prospectus dated 26 November 2021 was $0.20 per share. The fair value at the date of receiving
the additional 2,321,119 shares held in ChemX was $464,224. An amount of $464,224 was recorded as income on the
Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2022. Refer Note 9 for further
details regarding shares held by the company as financial assets on the Statement of Financial Position as at 30 June 2022.
There were no further non-cash investing activities undertaken during reporting period.
There were no non-cash financing activities undertaken during reporting period.
67 | Archer Materials Limited 2022 Annual Report
Notes to the Financial Statements for the year ended 30 June 2022
NOTE 19– CASH FLOW INFORMATION (CONTINUED)
DISCONTINUED OPERATIONS
a) Reconciliation of cash flows from
discontinued operations
Loss after income tax
Depreciation
Impairment of exploration assets
Gain on sale of disposal group held for sale -Leigh Creek Magnesia Project
Changes in liabilities:
- Decrease in trade and other receivables
- Decrease in trade and other payables
Net cash used in discontinued operating activities (Note 18)
Net cash (used) / from discontinued investing activities (Note 18)
Total cash used in discontinued operations
30 JUNE
2022
$
30 JUNE
2021
$
(67,223)
(3,786,351)
9,682
10,563
-
-
5,015,996
(1,244,299)
8,324
(85,894)
(135,111)
-
(17,804)
(21,895)
-
(315,172)
(135,111)
(337,067)
NOTE 20 – SALE OF NON-CURRENT ASSETS
During the prior year ended 30 June 2021 the Company signed a legally binding sale agreement (“Agreement”) with
ChemX Materials Limited (“ChemX”) (“Buyer”) for the sale of the mineral exploration licences EL 5815 (Waddikee) and EL
5920 (Carappee Hill) located on the Eyre Peninsula in South Australia (“Sale Tenements”) (ASX Ann. 22 Dec 2020).
On 18 June 2021, the Company announced that it had completed the sale and purchase of the Sale Tenements to ChemX.
At completion, the Company received 9.25 million ChemX shares at an issue price of $0.20 per share for a total value of
$1.85 million.
The terms of the sale ChemX sale agreement were detailed in two ASX announcements (ASX ann. 22 Dec 2020 and 15
Mar 2021). In summary, the purchase price payable by ChemX for the purchase of the Sale Tenements is:
> payment of $2.0 million. Archer has previously received $150,000 cash and, at completion, received the remaining
$1.85 million paid in ChemX shares; plus
> bonus payment equal to 5% of the enterprise value of ChemX at the time of ASX listing, paid in cash or shares at the
election of ChemX; plus
> a 2% Net Smelter Return royalty (“Royalty”) on the value of all minerals (excluding graphite) extracted from the Sale
Tenements.
During the reporting period Archer was issued 2,321,119 shares in ChemX Materials Limited (‘ChemX’) as additional
consideration equal to 5% of the enterprise value of ChemX at the time of ASX listing, in accordance with the Agreement
between the Company and ChemX.
ChemX commenced ASX quotation on 18 January 2022. The issue price of ChemX shares under the replacement
prospectus dated 26 November 2021 was $0.20 per share. The fair value at the date of receiving the additional 2,321,119
shares held in ChemX was $464,224. An amount of $464,224 was recorded as income on the Statement of Profit or Loss
and Other Comprehensive Income for the year ended 30 June 2022. Refer Note 9 for further details regarding shares held
by the company as financial assets on the Statement of Financial Position as at 30 June 2022.
68
NOTE 20 – SALE OF NON-CURRENT ASSETS (CONTINUED)
Carrying amounts of non-current assets sold
Assets
Carrying value of non-current assets sold
Consideration received:
Cash received
Fair value of equity received in ChemX Materials Limited 1
Total consideration received
Legal costs
Gain on sale of non-current assets
30 JUNE
2022
$
30 JUNE
2021
$
-
-
-
320,459
320,459
150,000
464,224
1,850,000
464,224
2,000,000
-
(17,804)
464,224
1,661,737
1
Fair value reported above was determined at the date of receiving ChemX shares. Adjustments to the fair value of the ChemX shares held at 30 June
2022, have been included in the Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2022. Refer Note 9 for further
details regarding fair value adjustment to ChemX shares held at 30 June 2022.
NOTE 21 – CONTINGENT ASSETS, LIABILITIES & COMMITMENTS
Sugarloaf Land Option
In November 2018 Archer announced the sale of its Sugarloaf farmland for $1.35 million. The transaction settled on 1 July
2019 with Archer receiving the $1.35 million sale proceeds in July 2019. The purchaser of the farm land has granted Archer
an option to buy back approximately 30% of the Sugarloaf farm land, which may be required for the construction of the
Sugarloaf Graphite Processing Facility (“Land Option”). The Land Option may be exercised by Archer any time before 31
December 2023. The Land Option was not assigned to iTech Minerals Ltd.
ChemX Materials Limited – royalty
In June 2021 Archer announced the completion of the sale of tenements to ChemX Materials Limited. In addition to the
consideration already received, Archer is also entitled to a 2% Net Smelter Return royalty on the value of all minerals
(excluding graphite) extracted from the tenements sold to ChemX.
Leigh Creek Project bonus payment
In August 2020, the Company sold the Leigh Creek Magnesite Project (“Project”) to Magmetal Tech Pty and Witchimag
Pty Ltd (“Witchimag”). Under the terms of the Project sale agreement, Archer is entitled to a bonus payment if Witchimag
lists on a stock exchange after completion. The bonus payment is equal to 5% of the value of the consideration paid to the
owners of Witchimag under the listing (“bonus payment”). In May 2022, Canadian Stock Exchange listed Crest Resources
Inc (“Crest”) announced that it had entered into a Letter of Intent to acquire a 69.5% interest in Witchimag. If Crests
acquisition of Witchimag proceeds, then the Company may become entitled to the bonus payment.
Native Title Claim
Archer Metals Pty Ltd is one of a number of respondents to a native title claim proceeding in the Federal Court of Australia.
The tenement subject of the claim proceedings as they relate to Archer Metals Pty Ltd is E53-1926 in Western Australia.
The tenement, which had a total area of 6km2 was granted to the Company on 24 July 2018 and was surrendered on 11
March 2021, having only undertaken low impact ground geophysics on the tenement in March 2020. The Company is in
the process of seeking removal from the claim proceedings. As at the date of this report the Company the proceedings
remain ongoing and the Company is unable to determine whether any compensation will be payable (if at all) by Archer
Metals Pty Ltd.
The Group did not have any further contingent assets or liabilities or commitments as at 30 June 2022.
69 | Archer Materials Limited 2022 Annual Report
Notes to the Financial Statements for the year ended 30 June 2022
NOTE 22 – RELATED PARTY TRANSACTIONS
a) Subsidiaries
Interests in subsidiaries are disclosed in Note 10.
b) Key Management Personnel
Disclosures relating to Key Management personnel are set out in Note 5 and the Remuneration Report contained within
the Directors’ Report.
c) Other transactions with related parties
Piper Alderman lawyers were paid a total of $32,725 (2021: $53,099) for legal services rendered to the Company.
Mr English is a Consultant at Piper Alderman lawyers. The fees were at normal commercial rates.
Dr Choucair is a co-inventor of the 12CQ intellectual property licenced to Archer under a Licence Agreement with The
University of Sydney. During the period Dr Choucair was paid a total of $4,710 (2021: nil) by The University of Sydney.
NOTE 23 – FINANCIAL INSTRUMENTS
a) Financial Risk Management Policies
The Group’s financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and
payables.
b) Interest Rate Risk
Interest rate risk is managed with a mixture of fixed and floating rate cash deposits. It is the policy of the group to keep
surplus cash in high yielding deposits.
i) Treasury Risk Management
The Board meets on a regular basis to analyse financial risk exposure and to evaluate treasury management strategies in
the context of the most recent economic conditions and forecasts.
The Board’s overall risk management strategy seeks to assist the Group in meeting its financial targets, whilst minimizing
potential adverse effects on financial performance.
ii) Financial Risk Exposure and Management
The main risk the group is exposed to through its financial instruments is interest rate risk.
c) Sensitivity Analysis
Interest Rate and Price Risk
The Group has performed a sensitivity analysis relating to its exposure to interest rate risk and price risk at reporting date.
This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in
these risks.
70
NOTE 23 – FINANCIAL INSTRUMENTS (CONTINUED)
Interest Rate Sensitivity Analysis
At 30 June 2022, the effect on loss and equity as a result of changes in the interest rate, with all other variables remaining
constant would be as follows:
Change in loss
- Increase in interest rates by 2%
- Decrease in interest rates by 2%
Change in equity
- Increase in interest rates by 2%
- Decrease in interest rates by 2%
2022
$
2021
$
500,903
21,632
(500,903)
(21,632)
500,903
21,632
(500,903)
(21,632)
d) Net Fair Value of Financial Assets and Liabilities
The net fair value of cash and cash equivalent and noninterest bearing monetary financial assets and financial liabilities of
the consolidated entity approximate their carrying value.
The net fair value of other monetary financial assets and financial liabilities is based on discounting future cash flows by the
current interest rates for assets and liabilities with similar risk profiles. The balances are not materially different from those
disclosed in the balance sheet of the consolidated entity.
e) Credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at reporting date to recognised
financial assets, is the carrying amount, net of any provisions for doubtful debts of those assets, as disclosed in the balance
sheet and notes to the financial statements.
The consolidated entity does not have any material credit risk exposure to any single debtor or group of debtors under
financial instruments entered into by the consolidated entity.
f) Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents)
to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast
cash flows and matching the maturity profiles of financial assets and liabilities.
Trade payables are generally payable on 30-day terms.
71 | Archer Materials Limited 2022 Annual Report
Notes to the Financial Statements for the year ended 30 June 2022
NOTE 23 – FINANCIAL INSTRUMENTS (CONTINUED)
Remaining contractual maturities
The following tables detail the Group’s remaining contractual maturity for its financial instrument liabilities. The tables
have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Weighted
average
interest rate
1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Consolidated - 30 June 2022
%
$
$
-
9,097
9,097
$
-
-
-
$
-
-
-
348,759
10,652
359,411
Non-interest bearing
Trade and other payables
Interest-bearing - variable
Lease liability
Total
4.1%
Weighted
average
interest rate
1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Consolidated - 30 June 2021
%
$
Non-interest bearing
Trade and other payables
Interest-bearing - variable
Lease liability
Total
249,471
10,341
259,812
4.1%
$
-
$
-
10,652
10,652
9,097
9,097
$
-
-
-
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
g) Market risk
Foreign currency risk
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in
a currency that is not the Company’s functional currency. The Company operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily with respect to the United States Dollar (USD).
Price risk
The Group is not exposed to any significant price risk.
72
NOTE 24 – ARCHER MATERIALS LIMITED PARENT COMPANY INFORMATION
PARENT ENTITY
ASSETS
Current assets
Other financial assets
Investments in subsidiaries
Other Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
Loans to subsidiaries
TOTAL LIABILITIES
EQUITY
Issued capital
Share based payment reserve
Acquisition reserve
Accumulated losses
TOTAL EQUITY
FINANCIAL PERFORMANCE
(Loss) / Profit for the year
Other comprehensive income
TOTAL (LOSS) / PROFIT
30 JUNE
2022
$
30 JUNE
2021
$
28,138,988
6,697,744
1,708,806
2,692,644
2,430
315,310
266,525
225,389
30,165,534
9,882,302
695,186
550,879
50,419
-
90,977
25,269
745,605
667,125
47,723,569
33,093,217
10,893,334
1,148,813
-
240,000
(29,197,602)
(25,266,853)
29,419,301
9,215,177
(4,396,521)
154,131
-
-
(4,396,521)
154,131
Guarantees in relation to relation to the debts of subsidiaries
Archer Materials Limited has not entered into a deed of cross guarantee with its wholly-owned subsidiaries Archer Energy
& Resources Pty Ltd, Carbon Allotropes Pty Limited, Archer IOCG Pty Ltd and Archer Metals Pty Ltd.
Contingent assets, liabilities and commitments
In June 2021 Archer announced the completion of the sale of tenements to ChemX Materials Limited (Note 20). In addition
to the consideration already received, Archer is entitled to a 2% Net Smelter Return royalty on the value of all minerals
(excluding graphite) extracted from the tenements sold to ChemX.
Refer Note 21 for details of contingent assets, liabilities and commitments as at 30 June 2022.
73 | Archer Materials Limited 2022 Annual Report
Notes to the Financial Statements for the year ended 30 June 2022
NOTE 25 – EVENTS SUBSEQUENT TO REPORTING DATE
> The Company acquired 2,892,780 quoted options in CMX (“ChemX Options”), being the Company’s full entitlement
pursuant to the CMX Entitlement Issue Prospectus dated 30 May 2022 (Loyalty Options Offer). ChemX Options are
exercisable at $0.30 each and expire on 11 July 2025. ChemX Options were issued to the Company on 11 July 2022. The
Company paid $0.005 each for the ChemX Options during the reporting period. Accordingly, an amount of $14,464 has
been included as a prepayment within the Statement of Financial Position as at 30 June 2022.
> On 29 August 2022, 1,500,000 Options were granted to an employee of the Company. The Options were issued for
nil consideration and are exercisable at $1.79 each on or before 31 May 2025. 50% of the Options vest on 31 May 2023
and 50% on 31 May 2024 (provided that the recipient is an employee of the Company at the date of vesting) and are
governed by the terms and conditions of the Company’s Performance Rights and Share Option Plan. The fair value of
the Options at the date of grant was $421,047.
> On 13 September 2022, 1,050,000 Options, exercisable at $1.79 each and expiring on 31 May 2025, lapsed
unexercised, in accordance with the terms on which they were issued.
74
75 | Archer Materials Limited 2022 Annual Report
Directors
Declaration
7676
The Directors of the Company declare that:
1. the Financial Statements and Notes as set out on pages 44 to 74 are in accordance
with the Corporations Act 2001 and:
a) comply with Australian Accounting Standards and International Financial Reporting
Standards as disclosed in Note 1; and
b) give a true and fair view of the financial position as at 30 June 2022 and of the
performance for the period ended on that date.
2. the Executive Chairman and the Chief Financial Officer have each declared that:
a) the financial records of the Company for the year ended have been properly
maintained in accordance with section 286 of the Corporations Act 2001
b) the financial statements and notes for the financial year comply with the Accounting
Standards; and
c) the financial statements and notes give a true and fair view;
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.
This declaration is made in accordance with a resolution of the Board of Directors.
Greg English
Executive Chairman
Adelaide
Dated this 21st day of September 2022
Independent Auditor’s Report
77 | Archer Materials Limited 2022 Annual Report
Grant Thornton Audit Pty Ltd Grant Thornton House Level 3 170 Frome Street Adelaide SA 5000 GPO Box 1270 Adelaide SA 5001 T +61 8 8372 6666 #8095178v4w www.grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report To the Members of Archer Materials Limited Report on the audit of the financial report Opinion We have audited the financial report of Archer Materials Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, and the Directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its performance for the year ended on that date; and b complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independent Auditor’s Report
78
#8095178v4 Grant Thornton Australia Limited(cid:3)2 Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How our audit addressed the key audit matter Sale of Subsidiaries holding Mineral Tenements to iTech Minerals Ltd – Note 18 During prior year, the Group entered into an agreement to sell three subsidiaries holding Archer Materials Limited’s remaining mineral tenements to iTech Minerals Limited. The consideration for this transaction was to be settled with 50 million shares in iTech Minerals Limited valued at $0.20 each at the time of a successful iTech Minerals IPO. The transaction was completed during the year ended 30 June 2022. Following receipt of consideration shares, the Group made a return of capital by way of a pro-rata in-specie distribution of iTech Minerals Limited’s shares received to its shareholders. The area is considered to be a Key Audit Matter due to the nature and size of the transaction as well as the accounting judgements required. Our procedures included, amongst others: • reviewing the share sale and purchase agreement to understand key terms and conditions; • reviewing the financial positions of disposed subsidiaries at the transaction date; • tracing consideration received to supporting documentation; • reviewing the calculation of gain or loss resulting from disposal; • reviewing the in-specie distribution of iTech shares for appropriateness; and • reviewing the adequacy of relevant financial statement disclosures. Recognition of research and development tax incentive – Notes 1 & 8 The Group receives a research and development (R&D) refundable tax offset from the Australian government, which represents Corporate tax rate plus 18.5 (43.5) cents in each dollar of eligible annual R&D expenditure if its turnover is less than $20 million per annum. Registration of R&D Activities Application is filed with AusIndustry in the following financial year and, based on this filing, the Group receives the incentive in cash. Management reviewed the Group’s total R&D expenditure to estimate the refundable tax offset receivable under the R&D tax incentive legislation. This area is a key audit matter due to the size of the accrual and the degree of judgment and interpretation of the R&D tax legislation required by management to assess the eligibility of the R&D expenditure under the scheme. Our procedures included, amongst others: • obtaining through discussions with management an understanding of the process to estimate the claim; • utilising an internal R&D tax specialist to; − review the expenditure methodology employed by management for consistency with the R&D tax offset rules; and − consider the nature of the expenses against the eligibility criteria of the R&D tax incentive scheme to form a view about whether the expenses included in the estimate were likely to meet the eligibility criteria; • comparing the nature of the R&D expenditure included in the current year estimate to the prior year’s claim; • testing a sample of R&D expenditure and agreeing to supporting documentation to ensure appropriate classification, the validity of the claimed amount and eligibility against the R&D tax incentive scheme criteria; and • assessing the appropriateness of the financial statement disclosures. 79 | Archer Materials Limited 2022 Annual Report
#8095178v4 Grant Thornton Australia Limited(cid:3)3 Information other than the financial report and auditor’s report thereon The Directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2022, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors’ for the financial report The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1_2020.pdf.This description forms part of our auditor’s report. Report on the remuneration report (cid:3) Opinion on the remuneration report We have audited the Remuneration Report included in the Directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Archer Materials Limited, for the year ended 30 June 2022 complies with section 300A of the Corporations Act 2001. Independent Auditor’s Report
80
#8095178v4 Grant Thornton Australia Limited(cid:3)4 Responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. GRANT THORNTON AUDIT PTY LTD Chartered Accountants J L Humphrey Partner – Audit & Assurance Adelaide, 21 September 2022 Additional
information
Compiled as at 8 September 2022
Additional information required by the ASX Listing Rules and not disclosed elsewhere in
this report is set out below.
Shareholder information
Substantial Shareholders
There are no substantial shareholders in the Company with 5% or greater relevant interest in
securities of the Company.
Distribution of equity securities
Number of security holders by size of holding:
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Ordinary Shares
Unlisted Options
2,875
4,497
1,885
2,600
365
12,222
-
-
-
-
12
12
Unmarketable
Parcels
Minimum
parcel size
Holders
Ordinary
Shares
Minimum $500.00
parcel at $0.78
per share
642 shares
1,585
606,425
Voting Rights
The voting rights attaching to each class of equity securities is set out below:
(a) Ordinary Shares: On a show of hands, every person present who is a member or proxy,
attorney or representative of a member has one vote and upon a poll each share shall
have one vote.
(b) Unlisted Options: No voting rights.
81 | Archer Materials Limited 2022 Annual Report
Additional
information
Twenty largest holders of each class of quoted equity security
Rank Name
Shares
% Issued capital
1
BNP PARIBAS NOMS PTY LTD
GDE EXPLORATION (SA) PTY LTD
CITICORP NOMINEES PTY LIMITED
INVERTON PTY LTD
MR ROGER EDWARD KOCH
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
DR MOHAMMAD CHOUCAIR
MR FORBES VALE SPRAWSON + MRS MARGARET MARY SPRAWSON
2,300,000
MR BASIL CATSIPORDAS
10
KOOYAP PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD
1,858,487
DR MARTIN FUECHSLE
NETWEALTH INVESTMENTS LIMITED
MR ALISTAIR CHARLES JACKSON
MRS DEBORAH ANNETTE ROSSITER
GDE EXPLORATION (SA) PTY LTD
MR STEPHEN MAHNKEN + MS DIOR MAHNKEN
WADE BOLLENHAGEN
20
MR JARROD DRISCOLL
7,945,462
7,534,798
5,191,765
3,791,072
2,800,000
2,656,573
2,600,000
2,000,000
1,896,534
1,865,318
1,755,106
1,548,953
1,547,347
1,463,679
1,462,820
1,428,571
1,318,300
1,132,957
3.20
3.03
2.09
1.53
1.13
1.07
1.05
0.93
0.80
0.76
0.75
0.75
0.71
0.62
0.62
0.59
0.59
0.57
0.53
0.46
2
3
4
5
6
7
8
9
11
12
13
14
15
16
17
18
19
Total
54,097,742
21.77
Corporate Governance Statement
For the Year Ended 30 June 2022
The Corporate Governance Statement for the Group has been released as a separate document and is located in the
Corporate Governance section of the Company’s website at: www.archerx.com.au
82
Corporate
directory
Directors
Greg English
Executive Chairman
Kenneth Williams
Non-Executive Director
Bernadette Harkin
Non-Executive Director
Chief Executive Officer
Dr Mohammad Choucair
Company Secretary
Damien Connor
Registered Office
Lot Fourteen, Frome Road
ADELAIDE SA 5000
Telephone: +61 8 8272 3288
Email: hello@archerx.com.au
Share Registry
Computershare Investor Services Pty Ltd
Level 5, 115 Grenfell Street
ADELAIDE SA 5000
Auditors
Grant Thornton Audit Pty Ltd
Level 3, 170 Frome Street
ADELAIDE SA 5000
Solicitor
Piper Alderman
Level 16, 70 Franklin Street
ADELAIDE SA 5000
Bankers
National Australia Bank
Level 11, 22 King William Street
ADELAIDE SA 5000
Australian Securities Exchange
The Company is listed on the Australian Securities
Exchange
ASX CODE: AXE
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83 | Archer Materials Limited 2022 Annual Report
Archer Materials Limited
(ABN 64 123 993 233)
Lot Fourteen,
Frome Road
ADELAIDE SA 5000
P: +61 8 8272 3288
E: hello@archerx.com.au
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