XRF SCIENTIFIC LIMITED
ABN 80 107 908 314
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2021
CONTENTS
CHAIRMAN’S LETTER
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
AUDITOR’S REPORT
SHAREHOLDER INFORMATION
CORPORATE DIRECTORY
3
4
17
18
19
20
21
22
53
54
58
60
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 1
FINANCIAL RESULTS SUMMARY
Sales Revenue up 8%
Net Profit After Tax up 64%
29,021 29,081
31,293
5,130
24,248
3,121
2,138
1,024
FY18 FY19 FY20 FY21
Sales Revenue ($'000)
FY18 FY19 FY20 FY21
Net Profit After Tax ($'000)
Operating Cash Flow up 7%
Earnings Per Share up 64%
4,511
4,202
3,876
3.8
2.3
1.6
808
0.8
FY18 FY19 FY20 FY21
Operating Cash Flow ($'000)
FY18 FY19 FY20 FY21
Earnings Per Share (Cents)
2 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
CHAIRMAN’S LETTER
Dear Fellow XRF Shareholder,
Despite continuing global challenges due to the
Our Capital Equipment business delivered a strong
COVID-19 virus, XRF has delivered a record financial
bounce in product sales and a significantly higher
result with a strong contribution from all business
profit contribution after the greater impact of
operations. Total revenue showed healthy growth
COVID-19 in the prior year. While the introduction of
over the prior year and net profit after tax increased
XRF’s new product to an adjacent market sector was
significantly due to higher sales, reflecting good
delayed we were able to increase the market
customer
demand
and
increased market
penetration of our existing products due to quality,
penetration, and improved margins as a result of
reliability and service support.
good
cost
control and
increased
internal
efficiencies. XRF
is
increasingly realising the
rewards from our focus on customer service,
product quality, innovation and recent substantial
capital investment.
XRF’s strong financial performance has once again
allowed us to increase fully franked dividends paid
to our shareholders. Furthermore while XRF’s
existing businesses enjoy healthy conditions and
strong performance we continue
to monitor
Our Consumables business had an outstanding year
acquisition opportunities in adjacent sectors that
with continued volume growth, especially in the
will be value accretive. The XRF Board believes that
micro bead flux market. Our high product quality and
the company is well placed to continue to deliver
excellent customer service has enabled us to build
ongoing growth and improved shareholder returns.
market share and win new business particularly with
the current strength of the mining industry. This
business continues to focus on innovation and
product development to retain its position as a
global market leader.
Our Precious Metals fabrication business performed
extremely well showing strong growth in sales and
profit. Our plant in Melbourne continues to enhance
product quality via innovation and automation and to
build our custom manufacturing business which
supplies a growing
international client base.
Pleasingly our German operation delivered its first
annual profit and has established a strong base of
repeat customers, while continuing to successfully
build its new business pipeline.
In closing I would like to thank all of XRF’s staff, ably
led by our Managing Director, Vance Stazzonelli, and
my fellow directors for their significant contribution
and effort in delivering an outstanding financial
result in a challenging year.
Fred S Grimwade
Chairman
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 3
FINANCIAL RESULTS SUMMARY
DIRECTORS’ REPORT
Your directors present their report on the company XRF Scientific Limited and its controlled entities for the
financial year ended 30 June 2021.
DIRECTORS
The names of the directors in office at any time during or since the end of the financial year are:
Fred Grimwade
Vance Stazzonelli
David Brown
David Kiggins
Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.
PRINCIPAL ACTIVITY
The principal activity of the economic entity during the financial year was the business of manufacturing and
marketing precious metal products, specialised chemicals and instruments for the scientific, analytical and
mining industries. No significant change in the nature of these activities occurred during the year.
DIVIDENDS – XRF SCIENTIFIC LIMITED AND CONTROLLED ENTITIES
Dividends paid to members during the financial year were as follows:
Final dividend for the year
2021
$
2020
$
1,873,561
1,338,258
In addition to the above dividends, since the end of the financial year the directors have declared the payment of a
fully franked final dividend of 2.0 cents per share to be paid on 15 October 2021 out of retained earnings at 30 June
2021.
4 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
DIRECTORS’ REPORT
REVIEW OF OPERATIONS
A review of operations during the financial year and the results of those operations found that, during the year, the
economic entity continued to engage in its principal activity and the results and financial position are disclosed in
the attached financial statements.
The consolidated entity has produced a Net Profit After Tax (NPAT) of $5,130,455 for the year ended 30 June 2021,
compared with $3,121,380 for the previous year.
Details of the results for the financial year ended 30 June 2021 are as follows:
Total revenue and other income
NPAT
Basic earnings per share – (cents per share)
Diluted earnings per share – (cents per share)
OPERATING RESULTS
June 2021
June 2020
over prior year
Increase
$
$
32,154,714
29,382,299
5,130,455
3,121,380
3.8
3.8
2.3
2.3
%
9
64
64
64
XRF Scientific Ltd (“XRF” or “Company”) is pleased to report its June 2021 full-year results to shareholders. The
Company has generated a record result with revenue of $31.3m and a 64% increase in Net Profit After Tax to
$5.1m.
During the year we saw strong levels of activity in the mining industry, across both exploration and production,
which supported demand across our product range. There was robust demand in Australia, Europe, North
America, and parts of Asia.
The second half was notably stronger, with $3.6m in adjusted profit before tax being delivered, compared to $2.4m
in the first half. This was in line with economies reopening and commodity prices strengthening, driving activity in
the mining sector.
Our adjusted profit before tax was up 41% on the previous year when considering the below items:
Profit before tax
COVID-19 wages subsidies
COVID-19 other grants/subsidies
COVID-19 payroll tax refunds
Interest on early loan repayment
Redundancy and other employee payments
June 2021
June 2020
$
6,787,715
(826,629)
(29,522)
-
-
-
$
4,454,254
(212,729)
(74,776)
(82,837)
22,496
97,328
Underlying profit before tax
5,931,564
4,203,736
The Board has declared a final fully franked dividend of 2.0 cents per share which is up by 43% on last year. This
represents a payout ratio of 60% of adjusted profit after tax.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 5
DIRECTORS’ REPORT
OPERATING RESULTS continued
The systems we have put in place to protect against COVID-19 remain effective. Our international offices in Europe
and Canada are able to service customers effectively, during a time of increasing demand.
Our balance sheet is strong with $5.3m in cash and $0.8m in debt at 30 June 2021. All debt is currently short-
term and relates to the platinum factory in Melbourne, with the initial three-year term expiring in November 2021.
We expect the loan to be rolled over within a few months of the expiry date.
The Consumables division had an excellent year, delivering a record profit of $2.9m from revenue of $9.3m. The
second half was particularly busy, generating revenue of $5.1m vs the first half of $4.2m. There was strong
demand from the mining sector, both domestic and international, across production and exploration. We are
continuing to acquire new customers on a regular basis. Positive conditions are continuing into the start of FY22.
The Capital Equipment division delivered an adjusted profit before tax of $1.1m after deducting $402k (FY20: $99k)
in COVID-19 subsidies received. Sales of capital equipment products were robust, with high levels of demand
occurring in Australia, Europe, and North America. We also received a steady flow of orders from industrial
customers. New product developments are continuing at advanced stages on two machines. Beyond these two
new products we intend to continue with R&D, expanding our product portfolio into new areas. Our aim is to
continue diversification into new markets, commodities, and materials.
The Precious Metals division delivered a strong 81% increase in adjusted profit before tax to $2.1m. The adjusted
profit is after deducting $382k (FY20: $213k) in COVID-19 subsidies received. Precious metals sales have been
strong, receiving a benefit from new platinum labware being bundled with capital equipment products. We are
also seeing good levels of platinum labware remanufacturing orders, as a result of increased sample testing by
customers. In addition, high precious metals prices helped drive growth in margins.
Our office in Germany made good progress, delivering a maiden profit of $0.2m. Margin is additionally generated
for the Australian manufacturing divisions. $2.16m in revenue was recorded in 2H21 compared to $1.46m in
1H21. The increase was generated by new customers and high precious metal prices. We remain positive around
our ability to increase our market share in European platinum markets in the year ahead.
During July 2020 we acquired $0.5m of platinum metal to add to our owned position of precious metals inventory,
which reduced our operating cash flow by the corresponding amount. We typically own a proportion of platinum
to reduce our overall reliance on third party platinum lessors. In addition, we own other precious metals such as
gold, iridium and rhodium, which we are not able to lease and are required for our manufacturing pool of metal.
Our next trading update will be provided at the 2021 Annual General Meeting.
6 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
DIRECTORS’ REPORT
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
The COVID-19 pandemic is ongoing and while it had limited financial impact for the consolidated entity up to 30
June 2021, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The
situation changes regularly and is dependent on measures imposed by the Australian Government and other
countries, such as (but not limited to) social distancing requirements, quarantine, travel restrictions, lockdowns
and any economic stimulus that may be provided.
A final dividend of 2.0 cents per share fully franked (FY20: 1.4 cents per share fully franked) was declared on 23
August 2021, with a record date of 1 October 2021 and payment date of 15 October 2021.
There were no other events subsequent to the reporting date which have significantly affected or may significantly
affect the XRF Scientific Limited operations, results or state of affairs in future years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Likely results in the operations of the economic entity and the expected results of those operations in the future
financial year have not been included in this report, as the disclosure of such information may lead to commercial
prejudice to the economic entity.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
There have been no significant changes in the affairs of the Group.
ENVIRONMENTAL REGULATION
All companies within the Group continued to comply with all environmental requirements. Wherever possible,
carbon emissions have been limited, and new production techniques adopted to reduce energy use. The Directors
have considered compliance with the National Greenhouse and Energy Reporting Act 2007 which requires entities
to report greenhouse gas emissions and energy use. For the measurement period 1 July 2020 to 30 June 2021 the
directors have assessed that there are no current reporting requirements, but the Company may be required to do
so in the future. The economic entity is also subject to the environmental regulations under the laws of the
Commonwealth or of a State or Territory in which it operates. The Directors are not aware of any breaches of
these regulations.
CORPORATE GOVERNANCE DISCLOSURE
The Group’s Corporate Governance Statement for the year ended 30 June 2021 can be found at
www.xrfscientific.com/corporate-governance. The statement also summarises the extent to which the Group has
complied with the Corporate Governance Council’s recommendations.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 7
DIRECTORS’ REPORT
INFORMATION ON DIRECTORS
Fred Grimwade
Date of appointment:
Qualifications:
Chairman (Non-Executive)
1 May 2012 (9 years); Chairman since 29 October 2018 (3 years)
Bachelor of Commerce and Law, Master of Business Administration, Fellow of the
Governance Institute of Australia, Fellow of the Australian Institute of Company Directors,
and Life Member of the Financial Services Institute of Australasia
Experience:
Has held general management positions at Colonial Agricultural Company, the Colonial
Group, Western Mining Corporation and Goldman, Sachs & Co. Currently a Principal and
Director of Fawkner Capital.
Other current directorships:
Chairman of CPT Global Ltd; Non-Executive Director of Select Harvests Ltd, Australian
Former directorships in last 3 years: Private companies only
United Investment Company Ltd and other private companies
Special responsibilities:
Chairman of the Remuneration Committee, member of the Audit & Governance Committee
No. of shares:
David Brown
500,000 fully paid ordinary shares
Director (Non-Executive)
Date of appointment:
7 June 2004 (17 years)
Qualifications:
Experience:
Bachelor of Science, Bachelor of Economics
Has over four decades of experience in research and development and manufacturing of X-
Ray Flux chemicals; formerly Chief Chemist for Swan Brewery Co. Ltd and Chairman of
Scientific Industries Council of WA
Other current directorships:
Private companies only
Former directorships in last 3 years: Private companies only
Special responsibilities:
Technical consultant to XRF Chemicals Pty Ltd
No. of shares:
David Kiggins
9,600,000 fully paid ordinary shares
Director (Non-Executive)
Date of appointment:
1 May 2012 (9 years)
Qualifications:
Bachelor of Science (Hons), Fellow of the Institute of Chartered Accountants of England
Experience:
Formerly at Arthur Andersen, working in audit and business consulting; GM Business
and Wales, Fellow of the Institute of Chartered Secretaries and Administrators, and
member of Australian Institute of Company Directors
Development and Company Secretary at Automotive Holdings Group Ltd; Finance Director
and Company Secretary at Global Construction Services Ltd; Chief Financial Officer at
Heliwest and Stealth Global Holdings Ltd. Currently Chief Financial Officer of Sadleirs.
Other current directorships:
Private companies only
Former directorships in last 3 years: Private companies only
Special responsibilities:
Chairman of the Audit & Governance Committee, member of the Remuneration Committee
No. of shares:
212,900 fully paid ordinary shares
Vance Stazzonelli
Date of appointment:
Qualifications:
Experience:
Managing Director (Executive)
22 February 2018 (3 years)
Bachelor of Commerce (Professional Accounting)
Vance joined XRF Scientific as Chief Financial Officer in October 2009. He was subsequently
appointed to Chief Operating Officer in January 2011 and then Chief Executive Officer in
August 2012. On 22 February 2018, he was appointed as Managing Director.
Other current directorships:
Private companies only
Former directorships in last 3 years: Private companies only
Special responsibilities:
N/A
No. of shares:
630,000 fully paid ordinary shares
8 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
DIRECTORS’ REPORT
COMPANY SECRETARIES
Vance Stazzonelli, B.Comm, CPA – Vance has held the role of Company Secretary since June 2008.
Andrew Watson, B.Comm, CA – Andrew was appointed Joint Company Secretary in August 2013.
OTHER KEY MANAGEMENT
Andrew Watson (Chief Financial Officer – XRF Scientific Limited)
Andrew joined XRF Scientific in August 2012. He is a member of the Chartered Accountants Australia and New
Zealand and holds a Graduate Diploma of Applied Corporate Governance.
MEETINGS OF DIRECTORS
The number of meetings held by the Board of Directors including meetings of the committees of the Board and
the number of meetings attended by each of the Directors during the financial year ended 30 June 2021 were as
follows:
Fred Grimwade
David Brown
David Kiggins
Vance Stazzonelli
Full meetings of Directors
Meetings of committees -
Audit & Governance,
Remuneration
A
11
11
11
11
B
11
11
11
11
A
3
*
3
*
B
3
*
3
*
A = Meetings held during the time the director held office or was a member of the Committee during the year.
B = Meetings attended.
*
= Not a member of the relevant Committee.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 9
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited)
(a) Principles used to determine the nature and amount of remuneration.
Remuneration governance
The Remuneration Committee is a committee of the Board. Its objective is to ensure that remuneration policies and
structures are fair and competitive and aligned with the long-term interests of the company. It is primarily
responsible for making recommendations to the Board on:
the over-arching executive remuneration framework
operation of the incentive plans which apply to the executive team, including key performance indicators and
performance hurdles
remuneration levels of executive directors and other key management personnel, and
non-executive director fees
Non-executive directors
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of,
the directors. Non-executive directors’ fees and payments are reviewed periodically by the Board. The Chairman’s
fees are determined independently to the fees of non-executive directors based on comparative roles in the
external market. The Chairman is not present at any discussions relating to determination of his own
remuneration. The Chairman’s remuneration is inclusive of committee fees. Non-executive directors may receive
share options.
Managing director
No additional remuneration is paid to Mr Stazzonelli as part of his appointment as Managing Director and his
contracted terms of employment remain unchanged.
Directors’ fees
Directors’ remuneration was last reviewed in July 2021 and it was decided that fees would be increased to the
following amounts:
Chairman
Non-Executive Directors
Committee Chairman
$94,000
$59,500
$8,600
The maximum amount payable is capped at $400,000 per annum and was approved by shareholders at the Annual
General Meeting in November 2012.
Executive pay
The executive pay and reward framework has three components:
1. Base pay and benefits, including superannuation
2. Short-term performance incentives, and
3. Long-term incentives.
It is Board policy to review key management annually, and adjust such compensation taking into account the
manager’s performance, the performance of the entity which they manage, and the performance of the Group of
companies.
Where appropriate, there is a direct link between financial performance (profit or growth) to key managers’
compensation by way of bonus, which is assessed under a weighted balanced scorecard method, as set out by the
Remuneration Committee at the start of each year. This method is accepted by the Board as being an appropriate
incentive for encouraging key management personnel to reach targets that are in excess of budgeted growth.
(i) Base Pay
Executives are offered a competitive base pay that forms the fixed component of pay. Base pay for executives is
reviewed annually to ensure the executive’s pay is competitive with the market. An executive’s pay is reviewed on
promotion.
10 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited) continued
(ii) Benefits
Executives may receive benefits including car and mileage allowances.
(iii) Superannuation
Effective from 1 July 2021, retirement benefits of 10% (2020: 9.5%) of the base pay are delivered to the individual
super fund of the executive’s choice.
(iv) Short-term performance incentives
Bonuses may be paid on the performance of the individual entity based on full year performance for the financial
year. In most instances bonus payments are based on the achievement of a percentage of that year’s budget and
targets/objectives being met. A short-term incentive (STI) pool is available for executives during the annual review,
which is subject to caps that are in place. Using a profit target ensures variable reward is only available when
value has been created for shareholders and when profit is consistent with the business plan. Specific details of
key management personnel bonuses can be found under the service contracts section of this report.
(v) Long-term incentives
There are no specific long-term incentives in place, however the matter is currently being considered by the
Remuneration Committee.
(vi) Assessing performance and claw-back of remuneration
The Company’s current Executive Performance Reward Policy does not currently include any clawback provisions.
(b) Details of remuneration
(i) Non-Executive
Fred Grimwade
Chairman
David Brown
David Kiggins
Director
Director
Fixed Remuneration
(ii) Executive
Vance Stazzonelli
Managing Director
Andrew Watson
Chief Financial Officer
The level of fixed remuneration is set as to provide base level of remuneration which is both appropriate to the
position and its competitive market. Fixed remuneration is reviewed annually by the Remuneration Committee
based on market rates, as well as having regard to the Company and individual performance. The fixed
remuneration of other key management personnel is contained in information that follows.
Variable Remuneration (Short-Term Incentive)
To assist in achieving the objective of retaining a high-quality executive team, the Remuneration Committee links
the nature and amount of the executive emoluments to the Company’s financial and operating performance. For
the Managing Director, variable remuneration is calculated based on an assessment of key performance
indicators using a weighted balanced scorecard method, as set out by the Remuneration Committee at the start of
each year. The maximum amount payable to the Managing Director for 2021 is $80,000. There were five categories
of STI performance measure (plus a discretionary component) for the year ended 30 June 2021. Those measures
were chosen to provide a balance between corporate, individual, operational, strategic, financial and behavioural
aspects of performance. The weighting assigned to each of the performance measures was as follows:
Group financial performance (30%)
Leadership (10%)
Stakeholder & associated business relations (5%)
Execution of business growth strategy (30%)
Compliance and risk management (5%)
Discretionary (20%)
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 11
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited) continued
(b) Details of remuneration continued
The Remuneration Committee considered the performance of the Managing Director against the performance
measures outlined above. A range of financial, strategic and operational targets were met and internal expansion
plans are on schedule. All compliance obligations were met throughout the year with no reported issues and
relationships with internal and external stakeholders were well managed. It was decided that $50,909 (plus
superannuation of 10%) would be paid, which is 70% of the maximum amount payable. Bonus payments to other
key management personnel were 100% discretionary, based on a range of financial, strategic and operational
factors. These amounts were accrued at 30 June 2021 and paid in July 2021.
Amounts of remuneration
Details of the remuneration of directors and the key management personnel (as defined in AASB 124 Related
Party Disclosures) of XRF Scientific Limited are set out in the following:
2021
Non-executive directors
Fred Grimwade
David Brown
David Kiggins
Sub-total non-executive directors
Executive directors
Vance Stazzonelli
Sub-total executive directors
Other key management personnel
Andrew Watson
Sub-total key management personnel
2020**
Non-executive directors
Fred Grimwade
David Brown
David Kiggins
Sub-total non-executive directors
Executive directors
Vance Stazzonelli
Sub-total executive directors
Other key management personnel
Andrew Watson
Sub-total key management personnel
Short-term
employment
Long-term
Post-
Cash
Salary
$
Cash
Bonuses
$
Other
Super-
annuation
$
Long
Service
Leave
$
Termination
benefits
$
Total
$
81,836
51,735
59,260
192,831
-
-
-
-
-
*176,130
-
176,130
278,100
278,100
50,909
50,909
175,100
175,100
646,031
22,727
22,727
73,636
-
-
-
-
176,130
7,774
4,915
5,630
18,319
31,511
31,511
18,907
18,907
68,737
Post-
-
-
-
-
4,706
4,706
2,965
2,965
7,671
-
-
-
-
-
-
-
-
-
Short-term
employment
Long-term
Cash
Salary
$
Cash
Bonuses
$
Other
Super-
annuation
$
Long
Service
Leave
$
Termination
benefits
$
78,531
49,745
56,867
185,143
-
-
-
-
-
*170,993
-
170,993
270,613
270,613
31,963
31,963
170,386
170,386
626,142
9,132
9,132
41,095
170,993
-
-
-
-
7,460
4,726
5,402
17,588
28,745
28,745
17,054
17,054
63,387
-
-
-
-
5,955
5,955
3,508
3,508
9,463
-
-
-
-
-
-
-
-
-
89,610
232,780
64,890
387,280
365,226
365,226
219,699
219,699
972,205
Total
$
85,991
225,464
62,269
373,724
337,276
337,276
200,080
200,080
911,080
*
**
Technical services provided by consultancy (such as technical sales and support, analytical method development).
As a COVID-19 cost-saving measure, voluntary pay cuts were in place for period of 7 weeks (Non-Executive Directors: 30%; Other KMPs: 20%).
12 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited) continued
(b) Details of remuneration continued
Percentage of performance related compensation of total remuneration
Certain executive personnel are paid performance bonuses in addition to set remuneration amounts. The Board of
Directors have set these bonuses to encourage growth and profitability. Bonuses are paid as per the conditions
set out on pages 11 and 12. The relative proportions of remuneration that are linked to performance and those
that are fixed are as follows:
Executive personnel
Vance Stazzonelli
Andrew Watson
Fixed Remuneration
At risk - STI
At risk - LTI
2021
2020
2021
2020
2021
2020
85%
89%
90%
95%
15%
11%
10%
5%
–
–
–
–
Options issued as part of total remuneration
No options have been issued in 2020 or 2021 as part of total remuneration.
Voting and comments made at the company’s 2020 Annual General Meeting
The company received validly appointed proxies of 99% of “yes” votes on its remuneration report for the 2020
financial year. The remuneration resolution was carried on a show of hands. The company did not receive any
specific feedback at the AGM or throughout the year on its remuneration practices.
(c) Shareholder Wealth
The following is a summary of key shareholder wealth statistics for the Company over the past 5 years (listed
since 2006).
Dividends
Declared Per
Share Price
Market
Capitalisation
EBIT
$
982,440
2016/17
2017/18
1,598,268
2018/19
3,249,762
2019/20
4,602,319
2020/21
6,818,111
Earnings Per
Share
Cents
0.6
0.8
1.6
2.3
3.8
Share
Cents
0.24
0.3
1.0
1.4
2.0
Cents
$
17
16
20
24
22,750,387
22,081,257
26,765,160
32,118,193
47.5
63,916,519
(d) Bonuses
Each individual Key Management Personnel performance bonus was discussed and reviewed against the
requirements set out on page 11. It was agreed that the proposed performance bonuses met these conditions,
specifically individual performance against agreed Key Performance Indicators.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 13
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited) continued
(e) Shares held by key management personnel
Details of equity instruments (other than options and rights) held directly, indirectly or beneficially by key
management personnel and their related parties are as follows:
Name
Directors
Fred Grimwade
David Brown
David Kiggins
Vance Stazzonelli
Key Management Personnel
Andrew Watson
Securities Trading Policy
Balance at 1
On-market
Issued via
Balance at
July 2020
trades
DRP
30 June 2021
500,000
9,000,000
212,900
520,000
-
600,000
-
85,734
-
-
-
24,266
500,000
9,600,000
212,900
630,000
45,000
-
-
45,000
The Company has adopted a policy that imposes certain restrictions on Directors and employees trading in the
securities of the Company. The restrictions have been imposed to prevent trading in contravention of the insider
trading provisions of the Corporations Act.
Option holdings
There were no options over ordinary shares in the company held during the financial year by directors of XRF
Scientific Limited or other key management personnel of the Group.
Dividends received by key management personnel
Details of dividends received directly, indirectly or beneficially by key management personnel and their related
parties are as follows:
Name
Directors
Fred Grimwade
David Brown
David Kiggins
Vance Stazzonelli
Key Management Personnel
Andrew Watson
(f) Service Agreements
2021
2020
7,000
126,000
2,981
7,280
5,000
88,000
2,129
5,200
630
-
Remuneration for the Managing Director and Chief Financial Officer is set out in service agreements, which are
detailed below. No other key management personnel are currently employed under service contracts.
Vance Stazzonelli, Managing Director of XRF Scientific Limited
Terms of agreement – Ongoing employment contract effective 1 July 2012. Base salary is $292,000 per annum
(effective 1 July 2021 and ongoing), plus superannuation benefits of 10%. Payment of a termination benefit on
early termination by the Company, other than for gross misconduct, equal to six months full pay. Notice period by
the employee of six months. Payment of bonuses is based on a range of strategic, financial, operational,
personnel, and Board-related key performance indicators.
Andrew Watson, Chief Financial Officer of XRF Scientific Limited
Terms of agreement – Ongoing employment contract effective 24 July 2014. Base salary is $185,000 per annum
(effective 1 July 2021 and ongoing), plus superannuation benefits of 10%. Payment of a termination benefit on
early termination by the Company, other than for gross misconduct, equal to three months full pay. Notice period
by the employee of three months. Payment of bonuses is based on a range of strategic, financial, operational,
personnel, and Board-related key performance indicators.
14 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited) continued
(g) Share-based compensation
There was no share-based compensation to any Director or Key Management Personnel for the years ended
30 June 2021 and 2020. The Company has not adopted an employee share option scheme.
(h) Remuneration consultants
No remuneration consultants were used in the years ended 30 June 2021 and 30 June 2020.
(i) Other transactions with key management personnel
Premises were rented from a related entity of Director David Brown during the financial year. These properties
were rented on normal commercial terms and conditions, totalling $104,404 (2020: $107,997). No amounts were
outstanding at the end of the year.
(j) Loans to directors and executives
No loans were made to directors and executives during the financial years ended 30 June 2021 and 30 June 2020.
End of remuneration report (Audited).
NON-AUDIT SERVICES
Details of the non-audit services provided by the Company’s external auditor BDO Audit (WA) Pty Ltd and its
related practices during the year ended 30 June 2021 are outlined in the following table. The Directors are
satisfied that the provision of non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. The nature and the scope of each type of non-audit service
provided means that auditor independence was not compromised.
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its
related practices and non-related audit firms:
BDO - Australia
Audit and review of financial reports
Taxation services
Other services
BDO - Belgium
Audit and review of financial reports
Taxation services
BDO - Canada
Taxation services
BDO - UK
Consolidated
2021
$
2020
$
121,108
45,353
-
44,450
7,735
123,245
44,621
529
41,147
7,488
7,638
11,578
Audit and review of financial reports
Total remuneration for audit and other services
9,375
235,659
7,414
236,022
The Board is satisfied that the auditors of the Company, BDO Audit (WA) Pty Ltd remain independent.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 15
DIRECTORS’ REPORT
OPTIONS
No unissued ordinary shares of XRF Scientific Limited remain under option at the date of this report.
INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, the company paid insurance premiums to insure the directors and officers of the
company and its Australian–based controlled entities.
The liabilities insured are legal costs that may be incurred in defending civil or some criminal proceedings that
may be brought against the officers in their capacity as officers of entities in the Group, and any other payments
arising from liabilities incurred by the officers in connection with such proceedings. This does not include such
liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the
officers of their position or of information to gain advantage for themselves or someone else or to cause detriment
to the company. It is not possible to apportion the premium between amounts relating to the insurance against
legal costs and those relating to other liabilities.
PROCEEDINGS ON BEHALF OF OR INVOLVING THE ECONOMIC ENTITY
No person has applied for leave of Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the company or 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.
No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section
237 of the Corporations Act 2001.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is
set out on page 17.
AUDITOR
BDO Audit (WA) Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors and signed for and on behalf of the Board by:
Fred S Grimwade
Chairman
23 August 2021
16 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF XRF SCIENTIFIC LIMITED
As lead auditor of XRF Scientific Limited for the year ended 30 June 2021, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of XRF Scientific Limited and the entities it controlled during the period.
Jarrad Prue
Director
BDO Audit (WA) Pty Ltd
Perth, 23 August 2021
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Revenue from continuing operations
Cost of sales
Gross profit
Other income
Administration expenses
Occupancy expenses
Other expenses
Finance costs
Profit before income tax
Income tax expense
Note
Consolidated
2021
$
2020
$
5
31,294,958
29,091,508
(17,504,255)
(16,837,089)
13,790,703
12,254,419
5
859,755
290,791
(6,748,917)
(6,727,036)
(662,887)
(418,212)
(32,727)
(679,410)
(526,368)
(158,142)
6,787,715
4,454,254
7
(1,657,260)
(1,332,874)
Profit after income tax from continuing operations attributable to equity
holders of XRF Scientific Limited
5,130,455
3,121,380
Other comprehensive income
Items that will be classified to profit or loss
Foreign currency translation differences
Total comprehensive income for the year
22(a)
(7,480)
40,982
5,122,975
3,162,362
Total comprehensive income attributable to equity holders of XRF
Scientific Limited
5,122,975
3,162,362
Earnings per share for the year attributable to equity holders of
XRF Scientific Limited
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
31
31
3.8
3.8
2.3
2.3
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes.
18 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total Current Assets
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Deferred tax asset
Total Non-Current Assets
Total Assets
CURRENT LIABILITIES
Trade and other payables
Provisions
Short-term borrowings
Current lease liabilities
Other current liabilities
Current income tax liability
Total Current Liabilities
NON-CURRENT LIABILITIES
Long-term borrowings
Non-current lease liabilities
Deferred tax liability
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
EQUITY
Issued capital
Reserves
Retained profits
Total Equity
Note
Consolidated
2021
$
2020
$
8
9
10
11
12
13
14
15
16
17
18
17
18
19
20
5,256,378
3,634,171
4,478,383
3,769,954
12,516,160
11,295,835
399,689
409,613
22,650,610
19,109,573
8,752,738
9,275,484
15,914,665
15,890,844
1,055,167
891,689
25,722,570
26,058,017
48,373,180
45,167,590
2,030,700
1,709,918
4,427,317
4,847,496
824,754
383,110
210,252
561,637
111,192
436,520
236,223
455,538
8,437,770
7,796,887
-
233,099
530,613
68,785
824,754
564,520
295,411
50,547
832,497
1,735,232
9,270,267
9,532,119
39,102,913
35,635,471
21
22(a)
22(b)
18,802,517
18,584,489
1,321,623
1,329,103
18,978,773
15,721,879
39,102,913
35,635,471
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying
notes.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 19
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
30 JUNE 2021 – CONSOLIDATED
Issued Share
Capital
Share Option
Reserve
$
$
Foreign Currency
Translation
Reserve
$
Retained Profits
Total
$
$
Balance at 1 July 2020
18,584,489
759,243
569,860
15,721,879
35,635,471
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with Equity Holders in their capacity as
Equity Holders
Ordinary shares issued, net of transaction costs
Dividends paid / payable
-
-
-
218,028
-
218,028
-
-
-
-
-
-
-
(7,480)
(7,480)
5,130,455
-
5,130,455
5,130,455
(7,480)
5,122,975
-
-
-
-
(1,873,561)
(1,873,561)
218,028
(1,873,561)
(1,655,533)
Balance at 30 June 2021
18,802,517
759,243
562,380
18,978,773
39,102,913
30 JUNE 2020 – CONSOLIDATED
Issued
Share Capital
Share Option
Reserve
$
$
Foreign Currency
Translation
Reserve
$
Retained Profits
Total
$
$
Balance at 1 July 2019
18,584,489
759,243
528,878
13,938,757
33,811,367
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with Equity Holders in their capacity as
Equity Holders
Ordinary shares issued, net of transaction costs
Dividends paid / payable
-
-
-
-
-
-
-
-
-
-
-
-
-
40,982
40,982
3,121,380
-
3,121,380
3,121,380
40,982
3,162,362
-
-
-
-
(1,338,258)
(1,338,258)
-
(1,338,258)
(1,338,258)
Balance at 30 June 2020
18,584,489
759,243
569,860
15,721,879
35,635,741
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
20 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
CONSOLIDATED STATEMENT OF CASH FLOWS
AS AT 30 JUNE 2021
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Receipts from government subsidies
Finance costs
Income taxes paid
Interest received
Note
Consolidated
2021
$
2020
$
30,559,402
29,459,112
(25,396,763)
(24,198,108)
858,580
(32,727)
287,505
(158,142)
(1,479,437)
(1,198,751)
2,331
10,077
Net cash inflow (outflow) from operating activities
29
4,511,386
4,201,693
Cash flows from investing activities
Payments for property, plant and equipment
Payments for research and development
Payments for intangibles
Net cash inflow (outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment of lease liabilities
Dividends paid
Net cash inflow (outflow) from financing activities
Cash and cash equivalents at the beginning of the financial year
Net increase (decrease) in cash and cash equivalents
17
17
(413,165)
(234,463)
(4,995)
(539,004)
(214,402)
-
(652,623)
(753,406)
-
819,215
(111,192)
(2,142,195)
(472,415)
(391,175)
(1,652,949)
(1,338,258)
(2,236,556)
(3,052,413)
3,634,171
1,622,207
3,238,297
395,874
Cash and cash equivalents at the end of the financial year
8
5,256,378
3,634,171
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 21
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have
been consistently applied to all the years presented.
(a) Basis of preparation
The financial report of XRF Scientific Limited for the year ended 30 June 2021 was authorised for issue in accordance with
a resolution of the directors on 23 August 2021 and covers XRF Scientific Limited as an individual entity as well as the
consolidated entity consisting of XRF Scientific Limited and its subsidiaries.
These financial statements are presented in the Australian currency.
XRF Scientific Limited is a company limited by shares incorporated in Australia and is a for-profit entity whose shares are
publicly traded on the Australian Stock Exchange.
These general purpose financial statements have been prepared in accordance with Australian Standards, other
authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations and
the Corporations Act 2001.
Compliance with IFRS
The financial statements of XRF Scientific Limited also comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
Historical cost convention
These financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Financial statement presentation
The following significant accounting policies have been adopted in the preparation and presentation of the financial report.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of XRF Scientific Limited
(“company” or “parent company”) as at 30 June 2021 and the results of all subsidiaries for the year then ended.
XRF Scientific Limited and its subsidiaries together are referred to in this report as the Group or the consolidated entity.
The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its investment with the
entity and has the ability to affect those returns through its power to direct the activities of the entity.
All controlled entities have a 30 June financial year end.
The consolidated financial statements are prepared by combining the financial statements of all entities that comprise the
consolidated entity, being the company (the parent company) and its subsidiaries. Consistent accounting policies are
employed in the preparation and presentation of the consolidated financial statements. On acquisition, the assets,
liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of
the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. If, after
reassessment, the fair values of the identifiable net assets acquired exceed the cost of acquisition, the benefit is credited
to profit or loss in the period of acquisition.
The consolidated financial statements include the information and results of each subsidiary from the date on which the
company obtains control and until such time as the company ceases to control such entities. All intercompany balances
and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated
on consolidation.
Accounting policies of subsidiaries are consistent with the policies adopted by the Group.
22 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
(ii) Investments in associates and joint-ventures
Investment in associates is accounted for using the equity method of accounting in the consolidated financial statements.
Under the equity method, the investment in the associates is carried in the consolidated statement of financial position at
cost plus post-acquisition changes in the Group’s share of net assets of the associate.
After application of the equity method, the Group determines whether it is necessary to recognise any additional
impairment loss with respect to the Group’s net investment in the associate.
The Group's share of the associate post-acquisition profits or losses is recognised in the statement of profit or loss and
other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the
investment. When the Group's share of losses in the associate equals or exceeds its interest in the associate, including any
unsecured long-term receivables and loans, the Group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate.
The reporting dates of the associate and the Group are identical and the associate’s accounting policies conform to those
used by the Group for like transactions and events in similar circumstances.
(iii) Changes in ownership interests
When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is re-
measured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial
carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled
entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that
entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that
amounts previously recognised in other comprehensive income are reclassified to profit or loss.
If the ownership interest in a jointly-controlled entity or an associate is reduced but joint control or significant influence is
retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified
to profit or loss where appropriate.
(c) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Managing Director.
(d) Foreign currency translation
Functional and presentation currency
The functional currency of each Group entity is measured using the currency of the primary economic environment in
which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent
entity’s functional and presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the year-end exchange rate.
Exchange differences arising on the translation of monetary items are recognised in the Statement of Profit or Loss and
Other Comprehensive Income, except where deferred in equity as a qualifying cash flow or net investment hedge. The
differences taken to equity are recognised in profit or loss on disposal of the net investment.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rate as at the date of the initial transaction and are recognised in the profit or loss.
Group Companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary currency
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows.
Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that
statement of financial position. Income and expenses for each profit or loss item are translated at average exchange rates.
All resulting exchange differences are recognised in other comprehensive income.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
(e) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of
returns, trade allowances and amounts collected on behalf of third parties. Revenue is recognised as follows:
(i) Revenue from contracts with customers
Group revenue is derived from the manufacture and sale of chemicals, equipment and accessories to production mines,
construction material companies and commercial analytical laboratories, in Australia and overseas. These finished goods
are primarily used in the preparation of samples for analysis. The Group also derives service revenue from the installation,
maintenance and repair of goods sold to customers.
The group considers whether there are other promises in the contract that are separate performance obligations to which
a portion of the transaction price should be allocated (e.g. warranties). In determining the transaction price to be used in
the recognition of revenue for the sale of goods, the group considers the effects of variable consideration, the existence of
significant financing components, non-cash consideration and consideration payable to the customer (if any)
Sale of finished goods - Revenue is recognised at a point in time when control of the product has transferred to the
customer, being when products are delivered. Delivery occurs when the products have been shipped to the specific
location, the risks of obsolescence and loss have been transferred to the customer and the customer has accepted the
product in accordance with the agreed terms. Sales of goods are standalone transactions and do not involve ongoing
contracts, nor the supply of additional goods and services.
Service revenue - When finished goods are bundled with installation services, they are listed separately on the sales
invoice and there is a clear valuation assigned to each individual component. Installation is an optional service and could
be performed by the customer or a third party, so it is considered to be a separate performance obligation. The
performance of the service usually coincides with the delivery and installation of the goods, so both components can be
recognised on the same date. Where there is a delay between the delivery of goods and the performance of services, the
service components are allocated to the balance sheet as liabilities. This revenue will be recognised on the date that the
service has been performed.
Maintenance and repair services fall into two main categories:
Single services to be performed on a specified date in the future – If invoiced in advance, the revenue for these
transactions remains on the balance sheet as a liability until the service is performed.
Contracts to provide multiple services over a period of time – The revenue for these transactions is initially
allocated to the balance sheet and then recognised on a monthly basis over the term of the contract (either 1 or
2 years), as the customer receives the benefit of the service on a simultaneous basis.
(ii) Contract balances
Contract assets - A contract asset is the right to consideration in exchange for goods or services transferred to the
customer. If the group performs by transferring goods or services to a customer before the customer pays consideration
or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Trade receivables - Trade receivables represent the group’s right to an amount of consideration that is unconditional (i.e.
only the passage of time is required before payment of the consideration is due).
Contract liabilities - A contract liability is the obligation to transfer goods or services to a customer for which the group has
received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before
the group transfers goods or services to the customer, a contract liability is recognised when payment is made or is due
(whichever is earlier). Contract liabilities are recognised as revenue when the group performs under the contract.
(iii) Interest income
Interest revenue is recognised on a proportional basis, considering the interest rates applicable to the financial assets.
(f)
Income tax
The income tax expense or revenue for the period is the tax payable on the current years taxable income based on the
national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements.
24 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the
assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantially enacted for each
jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences
to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the
initial recognition of an asset or a liability.
No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction,
other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable
profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of
investments in controlled entities where the parent is able to control the timing of the reversal of the temporary differences
and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in
equity.
XRF Scientific Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation. The head entity, XRF Scientific Limited, and the controlled entities in the tax consolidated group account for
their own deferred tax amounts. Current tax is accounted for by each subsidiary entity, which is then consolidated up into
the tax consolidated group, as per the tax sharing agreement. In addition to its own share of current and deferred tax
amounts, XRF Scientific Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising
from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. Assets or
liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable
from or payable to other entities in the Group. Income tax is allocated under the separate taxpayer within group approach.
Details about the tax funding agreement are disclosed in note 7.
(g) Leases
The group leases various offices, warehouses and factories. Rental contracts are typically made for fixed periods of 1 to 5
years but may have extension options as described below. Lease terms are negotiated on an individual basis and contain a
wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may
not be used as security for borrowing purposes.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is
available for use by the group. Each lease payment is allocated between the liability and finance cost. The finance cost is
charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and
the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net
present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payments that are based on an index or a rate;
amounts expected to be payable by the lessee under residual value guarantees;
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the
lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date less any lease incentives received;
any initial direct costs; and
restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise
IT equipment and small items of office furniture.
(h) Business combinations
The acquisition method of accounting is used to account for all business combinations, including business combinations
involving entities or businesses under common control, regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets
transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also
includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in
the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values
at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the
acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable
assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net
identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable
assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised
directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate
at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are
subsequently re-measured to fair value with changes in fair value recognised in profit or loss. All purchase consideration
is recorded at fair value at the acquisition date. Contingent payments classified as debt are subsequently re-measured
through profit or loss. Acquisition-related costs are expensed as incurred.
Non-controlling interests in an acquiree are recognised either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net identifiable assets. This decision is made on an acquisition-by-acquisition basis.
If the Group recognises previous acquired deferred tax assets after the initial acquisition accounting is completed there
will no longer be any adjustment to goodwill. As a consequence, the recognition of the deferred tax asset will increase the
Group’s net profit after tax.
26 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
(i)
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment or more frequently if events or changes in circumstances indicate that they might be impaired.
Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash flows from other assets or groups of assets (cash-
generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of
the impairment at each reporting date.
(j)
Cash and cash equivalents
For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call
with financial institutions, other short-term, highly liquid instruments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and
bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the Statement of Financial Position.
(k) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest rate method, less provision for expected credit losses
Trade receivables are due for settlement no more than 90 days from the date of recognition. Collectability of trade
receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off to the Statement of
Profit or Loss and Other Comprehensive Income. A provision for impairment of receivables is established based on the
expected credit loss approach. For trade receivables the Group applies the simplified approach permitted by AASB 9,
which requires expected lifetime losses to be recognised from initial recognition of the receivables. Another indicator that
determines the trade receivable is impaired is if the party is deemed to be bankrupt.
The amount of the provision is the difference between the present value of cash flows due under the contract and the
present value of the future cash flows an entity expects to receive, discounted at the original effective interest rate. Cash
flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The movement in the
provision is recognised in the Statement of Profit or Loss and Other Comprehensive Income.
(l)
Inventories
Raw materials, spare parts, work in progress and finished goods
Raw materials, spare parts, work in progress and finished goods are stated at the lower of cost and net realisable value.
Cost comprises of direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure,
the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on
the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
(m)
Investments and other financial assets
(i) Classification
The Group classifies its financial assets in the following measurement categories:
Those to be measured subsequently at fair value (either through other comprehensive income, or through profit
or loss); and
Those to be measured at amortised cost.
The classification depends on the Group's business model for managing financial assets and the contractual terms of the
cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income. For investments in trade and other financial assets, this will depend on the business model in
which the investment is held. For investments in equity instruments that are not held for trading, this will depend on
whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment
at fair value through other comprehensive income.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
(ii) Initial Measurement
At initial recognition, the Group 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 that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Measurement of cash and cash equivalents and trade and other receivables remains at amortised cost consistent with the
comparative period.
(iii) Subsequent Measurement
Subsequent measurement of financial assets depends on the Group's business model for managing the asset and the
cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its
financial assets:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at amortised cost. A gain or loss on trade and other
financial assets that is subsequently measured at amortised cost is recognised in profit or loss when the asset is
derecognised or impaired. Interest income from these financial assets is included in finance income using the
effective interest rate method.
Fair value through other comprehensive income (FVOCI): Assets that are held for collecting contractual cash
flows and through sale on specified dates. A gain or loss on a financial asset that is subsequently measured at
FVOCI is recognised in other comprehensive income.
Fair value through profit or loss (FVPL): Assets that do not meet the criteria for amortised cost or FVOCI are
measured at FVPL. All equity investments are measured at FVPL unless the Group makes an irrevocable
election to classify as FVOCI.
(iv) Impairment
The Group assesses, on a forward-looking basis, the expected credit losses associated with its trade and other financial
assets carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a
significant increase in credit risk.
(n) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
The carrying amount less impairment provision of trade receivables and payables are assumed to approximate their fair
values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash
flows at the current market interest rate that is available to the Company for similar financial instruments.
(o) Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items. 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 Company and the cost of the item can be measured reliably. All other repairs and maintenance are
charged to profit or loss during the financial period in which they are incurred.
Depreciation is calculated using a mixture of the straight line and diminishing value methods to allocate their cost, net of
their residual values, over their estimated useful lives, as follows:
Plant and Equipment
Property Improvements
Motor Vehicles
Office Equipment
2%-40%
4%-25%
15%-25%
5%-66.67%
28 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
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 (note 1(i)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the
profit or loss.
(p)
Intangible assets
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the net
identifiable assets of the acquired subsidiary/associate/business at the date of acquisition. Goodwill on acquisitions of
subsidiaries and businesses is included in intangible assets. Goodwill on acquisitions of associates is included in
investments in associates. Goodwill is not amortised. Instead, goodwill is tested for impairment annually or more
frequently if events or changes in circumstances indicate that it might be impaired and carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the
entity sold.
For the purpose of impairment testing, goodwill is allocated to the consolidated entity’s cash generating units identified
according to business and geographical segments (note 13(a)).
(ii) Patents, trademarks and licences
Patents, trademarks and licences have a finite useful life and are carried at cost less accumulated amortisation and
impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of patents, trademarks
and licences over their estimated useful lives, which vary from 3 to 20 years.
(iii) Research and development
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the
design and testing of new or improved products) are recognised as intangible assets when it is probable that the project
will be a success considering its commercial and technical feasibility and its costs can be measured reliably.
The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, direct labour
and an appropriate proportion of overheads. Other development expenditures that do not meet these criteria are
recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an
asset in a subsequent period. Capitalised development costs are recorded as intangible assets and amortised from the
point at which the asset is ready for use on a straight-line basis over its useful life, which varies from 1 to 8 years.
(iv) Customer lists
The customer lists were acquired as part of a business combination. They are recognised at their fair value at the date of
acquisition and subsequently amortised on a straight-line basis over the estimated useful lives, between 3 to 8 years.
(q) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year
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 60 days of recognition.
(r) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured
at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is
recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the
establishment of loan facilities, which are not incremental costs relating to the actual draw-down of the facility, are
recognised as prepayments and amortised on a straight-line basis over the term of the facility.
Borrowings are removed from the Statement of Financial Position when the obligation specified in the contract is
discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or
liabilities assumed, is recognised in other income or other expenses.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
(s) Borrowing costs
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is
required to complete and prepare the asset for its intended use or sale. All other borrowing costs are recognised as an
expense in profit or loss in the period in which they are incurred.
(t) Provisions
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the
present obligation at the reporting date. The discount rate used to determine the present value reflects current market
assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the
passage of time is recognised as an interest expense.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined
by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with
respect to any one item included in the same class of obligations may be small.
Provisions for legal claims, service warranties and make good obligations are recognised when the Group has a present
legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to
settle the obligation and the amount has been reliably estimated.
(u) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled wholly within
12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date
and are measured at the amounts expected to be paid when the liabilities are settled.
(ii) Other long-term employee benefit obligations
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value
of expected future payments to be made in respect of services provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to expected future wage and salary levels, experiences of employee
departures and periods of service. There amounts are not expected to be settled wholly within 12 months of the reporting
date.
Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to
maturity and currency that match, as closely as possible, the estimated future cash outflows.
(iii) Retirement benefit obligations
The amount charged to profit or loss in respect of superannuation represents the contributions made by the Group to
superannuation funds as nominated by the individual employee. Contributions made by the Company to employee
superannuation funds are charged as expenses when incurred.
(iv) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an
employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it
is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan
without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary
redundancy. Benefits falling due more than 12 months after reporting date are discounted to present value.
(v) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the
proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are
not included in the cost of acquisition as part of the purchase consideration.
If the entity reacquires its own equity instruments, e.g. as the result of a share buy-back, those instruments are deducted
from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the
consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in
equity.
30 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
(w) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion
of the entity, on or before the end of the financial year but not distributed at reporting date.
(x) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of associated goods and services tax (GST), unless the
GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of
the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to, the taxation authority, are presented as operating cash flows.
(y) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
(z) New accounting standards and interpretations
The accounting standards and interpretations relevant to the operations of the Group are consistent with those of the
previous financial year. There were some amendments and interpretations effective for the first time from 1 July 2020, but
they did not have any impact on the current year or any prior year and are not likely to affect future years.
A number of new standards, amendments to standards and interpretations issued by AASB which are not yet mandatorily
applicable to the Group have not been applied in preparing these consolidated financial statements and none are expected
to be relevant to the Group. The Group does not plan to adopt these standards early.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 2: FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks; market risk (including foreign exchange risk, price risk, cash flow
risk, fair value risk and interest rate risk); credit risk; and liquidity risk. The Group’s overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the
Group.
Risk management is carried out by management under policies approved by the Board of Directors. Management identifies,
evaluates and hedges financial risks in close co-operation with the Company’s operating units. The Board provides guidance for
overall risk management and other specific areas, such as mitigating foreign exchange, interest rate and credit risks, use of
financial instruments and investing excess liquidity.
(a) Market risk
(i) Foreign exchange risk
The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency
other than the Australian Dollar. The currencies giving rise to this risk are predominantly Euros, the US Dollar, and the
Canadian Dollar.
Foreign currency risk arises where settlement of a trade receivable, payable or borrowings is denominated in a currency
that is not the entity’s functional currency, which may result in a foreign currency gain or loss. The Group seeks to mitigate
this risk by engaging in a majority of commercial transactions that are generally in AUD. The Group’s exposure to foreign
currency risk at the reporting date was as follows:
Trade receivables
Trade payables
Group sensitivity
30 June 2021
30 June 2020
CAD
EUR
USD
CAD
EUR
USD
155,901
545,521
462,460
87,765
615,921
394,101
2,365
99,800
88,045
3,732
95,586
26,035
Based on the financial instruments held at 30 June 2021, had the Australian dollar strengthened / weakened by 10%
(based on historical reasonableness movements) against the exchange rates in the above tables, with all other variables
held constant, the Group’s post-tax profit for the year would have been $124,123 lower / $151,706 higher (2020: $134,000
lower / $163,778 higher), mainly as a result of foreign currency exchange gains/losses on translation of foreign currency
denominated financial instruments as detailed in the table above.
(ii) Price risk
As the Group does not have any investments in equities or commodities, its exposure to equities price risk and commodity
price risk is minimal. The majority of precious metals held in stock (Note 10) are hedged against customer orders,
therefore no price risk exists.
While the Group uses commodities in its operations, customer commitments to market rates purchased result in the
Group’s exposure to commodities price risk being immaterial.
32 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 2: FINANCIAL RISK MANAGEMENT continued
(iii) Cash flow, fair value and interest rate risk
As at 30 June 2021 the Group had no variable interest rate debt, therefore consider fair value interest rate risk minimal.
Group sensitivity
At 30 June 2021, if interest rates had changed by -/+ 100 basis points (based upon forward treasury rates) from the year-
end rates with all other variables held constant, post-tax profit for the year would have been $2,249 higher / lower (2020:
$10,735 higher / lower), mainly as a result of higher/lower interest income from cash and cash equivalents. Cash and cash
equivalent balances at 30 June 2021 would have been higher/lower by the same amount.
(b) Credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit risk arises from
cash and cash equivalents, trade receivables and other receivables. For banks and financial institutions, only independently rated
parties with a minimum rating of ‘A’ are accepted. The Group trades only with recognised, creditworthy third parties. In addition,
receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
Counterparties without external credit ratings are in majority existing customers (<6months) with no history of defaults (Group 2).
With respect to credit risk arising from the other financial assets of the Group, which comprise of cash and cash
equivalents, and trade and other receivables, the Group’s exposure to credit risk arises from the default of the counter party, with
a maximum exposure equal to the carrying amount of these financial assets.
There are no significant concentrations of credit risk within the Group at the reporting date.
The following table represents the Group’s exposure to credit risk:
Cash and cash equivalents (A+ rated)
Trade receivables, net of impairment provision (note 9) (Group 2)
Other receivables (external parties)
Consolidated
2021
$
2020
$
5,256,378
4,467,344
11,039
3,634,171
3,743,516
26,439
9,734,761
7,404,126
Credit risk exposure is not significantly different for any of the segments of the Group.
Details of impaired trade receivables, and trade receivables overdue but not impaired can be found at note 9. An analysis of
the Group’s consolidated trade receivables is as follows:
Current
Over 30
Over 60
Over 90
days
days
Days
Total
2021
3,548,615
537,980
247,977
132,772
4,467,344
2020
2,875,797
535,778
141,789
190,152.
3,743,516.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 2: FINANCIAL RISK MANAGEMENT continued
(c) Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank
overdrafts, bank loans, debentures, finance leases and hire purchase contracts. The below analyses the Group’s financial
liabilities into relevant maturity groupings based on the remaining period at the reporting date. The amounts disclosed in
the table are the contractual undiscounted cash flows. There have been no breaches or defaults on the repayment of debt.
Contractual maturities
of financial liabilities
Less than
6 months
6 – 12
months
Between 1
and 2
years
Between 2
and 5
years
Over 5
years
Total
contractual
cash flows
As at 30 June 2021
$
$
$
$
$
$
Carrying
Amount
(assets)/
liabilities
$
Non-derivatives
Trade and other payables
Property loan
Total non-derivatives
1,380,865
828,938
2,209,803
-
-
-
-
-
-
As at 30 June 2020
Non-derivatives
Trade and other payables
Property loan
Total non-derivatives
1,169,807
61,650
1,231,457
-
61,277
61,277
-
829,204
829,204
-
-
-
-
-
-
-
-
-
-
-
-
1,380,865
828,938
1,380,865
824,754
2,209,803
2,205,619
1,169,807
952,131
1,169,807
935,946
2,121,938
2,105,753
The Group had access to the following undrawn borrowing facilities at the end of the reporting period:
Bank overdraft facility
Bank guarantee facility (AUD denominated)
Import facility
Consolidated
2021
$
2020
$
500,000
69,963
1,500,000
2,069,963
500,000
66,544
1,500,000
2,066,544
(d) Fair value estimation
The fair value bases of financial assets and financial liabilities are outlined in note 1(n).
All financial assets and liabilities have carrying values that are reasonable approximates of their fair values, for the
Consolidated Entity.
The fair values of current and non-current borrowings are based on discounted cash flows using a current borrowing rate.
They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own
credit risk.
Carrying value
Fair value
$824,754
$828,938
34 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 3: CRITICAL ACCOUNTING ESTIMATES AND SIGNIFICANT JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the
circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(a) Estimated recoverable amount of goodwill – The Group tests whether goodwill has suffered any impairment, by
comparing the carrying value to the recoverable amount, in accordance with the accounting policy stated in note 1(p).
Please refer to note 13 for the details on impairment tests performed on goodwill.
(b) Capitalisation of development expenditures – The Group capitalises development costs where management considers
it probable that the related projects will be commercially and technically feasible and successful, in accordance with the
accounting policy stated in note 1(p)(iii).
(c) Tax – The determination of the Group's provision for income tax as well as deferred tax assets and liabilities involves
significant judgements and estimates on certain matters and transactions, for which the ultimate outcome may be
uncertain. If the final outcome differs from the Group's estimates, such differences will impact the current and deferred
income tax assets and liabilities in the period in which such determination is made. The Group has recognised a deferred
tax asset relating to the start-up losses incurred during FY17 and FY18 by the new German division. A portion of these tax
losses were recovered after the German division recorded a profit in FY21 and the Group concludes that the remaining
losses will be recovered in future periods, based on approved business plans and budgets.
(d) Allowance for expected credit losses – The allowance for expected credit losses assessment requires a degree of
estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes
assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales
experience and historical collection rates.
(d) Determining lease terms – Management considers all facts and circumstances that create an economic incentive to
exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options)
are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is
reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is
within the control of the lessee.
NOTE 4: SEGMENT INFORMATION
Operating Segments – AASB 8 requires a management approach under which segment information is presented on the same
basis as that used for internal reporting purposes. This is consistent to the approach used in previous periods.
Operating segments are reported in a uniform manner to which is internally provided to the chief operating decision maker. The
chief operating decision maker has been identified as the Managing Director.
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and
incur expenses, including those that relate to transactions with any of the Group’s other components. Each operating segment’s
results are reviewed regularly by the Managing Director to make decisions about resources to be allocated to the segment and
assess its performance, and for which discrete financial information is available.
The Managing Director monitors segment performance based on profit before income tax expense. Segment results that are
reported to the Managing Director include results directly attributable to a segment as well as those allocated on a reasonable
basis. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment and
intangible assets other than goodwill.
The consolidated entity has determined that strategic decision making is facilitated by evaluation of operations on the customer
segments of Capital Equipment, Precious Metals and Consumables. For each of the strategic operating segments, the Managing
Director reviews internal management reports on a monthly basis.
(a) Description of segments
The following summary describes the operations in each of the Group’s reportable segments:
Capital Equipment - Design, manufacture and service organisation, specialising in automated fusion equipment, high
temperature test and production furnaces, as well as general laboratory equipment.
Precious Metals - Manufactures products for the laboratory, industrial and platinum alloy markets.
Consumables - Produces and distributes consumables, chemicals and other supplies for analytical laboratories.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 4: SEGMENT INFORMATION continued
(b) Primary reporting format – business segments
Segment information provided to the Managing Director for the full-year ended 30 June 2021 is as follows:
Capital Equipment
Precious Metals
Consumables
Full-year ended 30 June 2021
$
Total segment revenue
Inter segment sales
Revenue from external customers
9,639,025
(649,383)
8,989,642
$
14,362,548
(1,404,196)
12,958,352
$
9,344,633
-
9,344,633
Total
$
33,346,206
(2,053,579)
31,292,627
Profit before income tax expense
1,510,983
2,507,149
2,896,347
6,914,479
Full-year ended 30 June 2020
Total segment revenue
Inter segment sales
Revenue from external customers
8,030,572
(581,481)
7,449,091
13,216,969
(477,974)
12,738,995
8,893,345
-
8,893,345
30,140,886
(1,059,455)
29,081,431
Profit before income tax expense
582,868
1,387,126
2,546,355
4,516,349
Segment assets
At 30 June 2021
At 30 June 2020
Segment liabilities
At 30 June 2021
At 30 June 2020
Depreciation & amortisation expense
For the year ended 30 June 2021
For the year ended 30 June 2020
Capital expenditure
For the year ended 30 June 2021
For the year ended 30 June 2020
7,929,471
7,828,509
1,429,538
1,170,355
423,515
463,055
44,376
104,937
Revenue from external customers – segments
Unallocated revenue
Revenue from external customers – total
Profit before income tax expense – segments
Loss incurred by parent entity
Profit before income tax expense from continuing operations
Total segment assets
Cash and cash equivalents
Deferred tax asset
Other corporate assets & eliminations
Total assets
Segment non-current assets by geographical region
Australia
Canada
Europe
Total segment non-current assets
Total segment liabilities
Deferred tax liability
Income tax provision
Trade & other payables
Other corporate liabilities
Total liabilities
19,233,247
18,634,724
16,073,271
15,829,116
43,235,989
42,292,349
5,688,302
6,183,081
403,321
406,387
250,107
404,927
482,589
456.494
323,723
205,311
107,322
20,860
7,600,429
7,809,930
1,150,559
1,074,753
401,805
530,724
2021 ($)
2020 ($)
31,292,627
29,081,431
2,331
10,077
31,294,958
29,091,508
6,914,479
(126,764)
6,787,715
43,235,989
4,362,667
1,055,167
(280,643)
48,373,180
21,866,064
1,920,986
732,051
24,519,101
7,600,429
530,613
561,637
675,490
(97,902)
9,270,267
4,516,349
(62,095)
4,454,254
42,292,349
1,810,085
891,689
173,467
45,167,590
22,265,970
1,962,199
785,820
25,013,989
7,809,930
295,411
376,187
688,021
362,570
9,532,119
36 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 5: REVENUE AND OTHER INCOME
Revenue from continuing operations
Revenue from external customers
Sale of goods
Service revenue (recognised at point in time)
Service revenue (recognised over time)
Total revenue from external customers
Interest income
Total revenue from continuing operations
Consolidated
2021
$
2020
$
30,675,625
28,471,709
413,511
203,491
395,697
214,025
31,292,627
29,081,431
2,331
10,077
31,294,958
29,091,508
The Group derives revenue from external customers from the transfer of goods and services at a point in time and over time in the
following major product lines and geographical regions (based on the location of the Group entity preparing the invoice):
Capital Equipment
Precious Metals
Consumables
$
5,743,383
362,171
2,884,088
8,989,642
5,134,874
328,438
1,985,779
7,449,091
Full-year ended 30 June 2021
Australia
Canada
Europe
Revenue from external customers (note 4)
Full-year ended 30 June 2020
Australia
Canada
Europe
Revenue from external customers (note 4)
Other income includes the following amounts:
COVID-19 wages subsidies and other grants
Miscellaneous
NOTE 6: EXPENSES
$
6,080,963
2,416,362
4,461,027
$
Total
$
7,600,670
19,425,016
792,944
951,019
3,571,477
8,296,134
12,958,352
9,344,633
31,292,627
4,546,599
3,888,794
4,303,602
7,428,525
17,109,998
709,671
755,149
4,926,903
7,044,530
12,738,995
8,893,345
29,081,431
Consolidated
2021
$
856,151
3,604
859,755
2020
$
287,505
3,286
290,791
Consolidated
2021
$
2020
$
208,852
336,687
468,094
1,013,633
70,097
150,691
220,788
238,589
344,334
411,158
994,081
71,602
179,389
250,991
Profit/(loss) before income tax includes the following specific expenses:
Depreciation
Depreciation (included in administration expenses)
Depreciation (included in cost of goods sold)
Amortisation of right to use assets (included in occupancy expenses)
Total depreciation
Amortisation
Patents, trademarks and acquired customer lists (included in administration expenses)
Research and development (included in administration expenses)
Total amortisation
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 6: EXPENSES continued
Other specific expenses
Employee benefits expenses (included in administration expenses)
Rental expense relating to operating leases (included in occupancy expenses)
5,016,528
4,908,099
95,003
150,425
Consolidated
2021
$
2020
$
NOTE 7: INCOME TAX EXPENSE
(a)
Income tax expense
Current tax
Deferred tax
Adjustments for current tax of prior periods
Income tax expense is attributed to:
Profit from continuing operations
Deferred income tax expense included in income tax expense comprises:
Decrease (increase) in deferred tax assets (note 14)
(Decrease) increase in deferred tax liabilities (note 19)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit/(loss) from continuing operations before income tax expense
Consolidated
2021
$
2020
$
1,709,816
1,253,700
71,724
(124,280)
97,834
(18,660)
1,657,260
1,332,874
1,657,260
1,332,874
(163,478)
235,202
71,724
32,846
64,988
97,834
6,787,715
6,787,715
4,454,254
4,454,254
Tax at the Australian rate of 26% (2020: 27.5%)
1,764,806
1,224,920
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Research and development expenditure
Foreign tax losses not claimed in current year
Sundry items
Adjustments for current tax of prior periods
Income tax expense
(c) Tax consolidation legislation
(50,452)
-
67,186
(19,442)
63,225
82,831
1,781,540
1,351,534
(124,280)
(18,660)
1,657,260
1,332,874
XRF Scientific Limited and its wholly owned Australian controlled entities elected to enter into the tax consolidation regime from
1 July 2005. The accounting policy in relation to this legislation is set out in note 1(f). The entities have entered into a tax funding
agreement under which the wholly-owned entities fully compensate XRF Scientific Limited for any current tax payable assumed
and are compensated by XRF Scientific Limited for any current tax receivable and deferred tax assets relating to unused tax
losses or unused tax credits that are transferred to XRF Scientific Limited under the tax consolidation legislation. The funding
amounts are determined by reference to the amounts recognised in the wholly owned entities’ financial statements. The
amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity,
which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim
funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as current
intercompany receivables or payables.
38 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 8: CURRENT ASSETS – CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Deposits at call
Reconciliation to cash at the end of the year
Balances as above
Balance per statements of cash flows
(a) Cash at bank and on hand
Consolidated
2021
$
2020
$
5,223,220
3,601,013
33,158
33,158
5,256,378
3,634,171
5,256,378
5,256,378
3,634,171
3,634,171
Cash at bank earns interest at floating rates based on daily bank deposit rates of between 0% to 0.05% pa (2020: 0.01% to
0.05% pa). Cash available for use is as reported above, with no restrictions applicable.
(b) Deposits at call
Short-term deposits are made for varying periods of between no set term and 4 months, depending on the immediate cash
requirements of the company, and earn interest at the respective short-term deposit rates. Deposits at call are subject to an
interest rate of 0.08% pa (2020: 0.44% pa).
(c) Risk exposure
The Group’s exposure to interest rate risk is discussed in note 2. The maximum exposure to credit risk at the reporting date is
the carrying amount of each class of cash and cash equivalents mentioned above.
NOTE 9: CURRENT ASSETS – TRADE AND OTHER RECEIVABLES
Trade receivables
Allowance for impairment of receivables
Other receivables – From external parties
Total trade and other receivables
Past due but not impaired
Up to 3 months
Up to 6 months
Allowance for impairment of receivables
Balance at 1 July
(Increase)/Decrease in allowance during the year
Balance at 30 June
(a)
Impaired trade receivables
Consolidated
2021
$
2020
$
4,467,344
3,743,516
-
-
11,039
26,438
4,478,383
3,769,954
785,957
132,772
918,729
677,567
190,152
867,719
-
-
-
-
-
-
During the 2021 financial year, the allowance for impaired receivables remained unchanged (2020: allowance was nil).
(b) Past due but not impaired
As at 30 June 2021, trade receivables of the Group of $918,729 (2020: $867,719) were past due but not impaired. These relate to a
number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables
is in note 2. The other classes within trade and other receivables do not contain impaired assets and are not past due. Based on
the credit history of these classes, it is expected that these amounts will be received when due. The Group does not hold any
collateral in relation to these receivables.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 9: CURRENT ASSETS – TRADE AND OTHER RECEIVABLES continued
(c) Other receivables
These amounts generally arise from transactions outside the usual operating activities of the Group. All other receivables are
subject to the same terms as trade receivables. Those terms have been described in note 1(k).
(d) Effective interest rates and credit risk
Information concerning the effective interest rate and credit risk of both current and non-current receivables is set out in note 2.
(e) Non-current receivables
There are no non-current receivables in the current year (2020: Nil).
NOTE 10: CURRENT ASSETS – INVENTORIES
Raw materials and spare parts
Finished goods
Precious metals (general)
Platinum on loan (refer to note 16)
Consolidated
2021
$
2020
$
4,197,445
3,528,024
1,977,479
2,089,351
2,552,765
1,433,709
3,788,471
4,244,751
12,516,160
11,295,835
Stock was valued at lower of cost and net realisable value on 30 June 2021 and 30 June 2020.
Inventory expense
Inventories recognised as expense during the year ended 30 June 2021 amounted to $11,534,641 (2020: 10,976,353). The cost of
writing down inventories to net realisable value during the year ended 30 June 2021 was $79,776 (2020: $137,942).
NOTE 11: OTHER CURRENT ASSETS
Prepayments (insurance policies, rates and other fees)
Other assets
Consolidated
2021
$
373,321
26,368
399,689
2020
$
372,203
37,410
409,613
40 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 12: NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT
Consolidated
Equipment
Vehicles
ments
Equipment
Buildings
Plant &
Motor
Property
Improve-
Office
Land &
Right of Use
Assets:
Leased
Properties
Total
$
$
$
$
$
$
$
At 30 June 2019
Cost or fair value
7,047,584
216,034
1,522,114
497,550
1,823,217
Accumulated depreciation
(1,870,648)
(110,029)
(393,477)
(334,426)
-
Net book amount
5,176,936
106,005
1,128,637
163,124
1,823,217
Year ended 30 June 2020
Opening net book amount
5,176,936
106,005
1,128,637
163,124
1,823,217
Initial recognition of AASB 16
Additions
Foreign currency adjustment
Disposals
Depreciation charge
Closing net book amount
At 30 June 2020
Cost or fair value
-
377,831
1,219
(8,390)
(374,871)
5,172,725
-
-
-
27,298
15,885
65,022
-
-
34
-
(30,483)
102,820
(106,978)
1,037,578
533
-
(70,591)
158,088
-
-
-
-
1,137,502
254,712
-
-
11,106,499
(2,708,580)
8,397,919
8,397,919
1,137,502
740,748
1,786
(8,390)
(411,158)
(994,081)
-
-
-
-
-
1,823,217
981,056
9,275,484
7,369,281
221,417
1,438,194
478,584
1,823,217
1,392,214
12,722,907
Accumulated depreciation
(2,196,556)
(118,597)
(400,616)
(320,496)
-
(411,158)
(3,447,423)
Net book amount
5,172,725
102,820
1,037,578
158,088
1,823,217
981,056
9,275,484
Year ended 30 June 2021
Opening net book amount
5,172,725
102,820
1,037,578
158,088
1,823,217
981,056
9,275,484
Additions
Changes to lease terms
Foreign currency adjustment
Disposals
Depreciation charge
Closing net book amount
At 30 June 2021
Cost or fair value
360,755
-
(9,020)
(601)
(368,363)
5,155,496
-
-
-
-
9,872
-
(111)
-
(24,693)
78,127
(87,797)
959,542
41,357
-
1,051
-
(64,686)
135,810
-
-
-
-
-
-
411,984
87,584
-
-
87,584
(8,080)
(601)
(468,094)
(1,013,633)
1,823,217
600,546
8,752,738
7,625,895
221,417
1,433,531
451,512
1,823,217
1,479,798
13,035,370
Accumulated depreciation
(2,470,399)
(143,290)
(473,989)
(315,702)
-
(879,252)
(4,282,632)
Net book amount
5,155,496
78,127
959,542
135,810
1,823,217
600,546
8,752,738
All items of property, plant and equipment were recorded at cost as at 30 June 2021 and 30 June 2020.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 13: NON-CURRENT ASSETS – INTANGIBLE ASSETS
Consolidated
At 30 June 2019
Cost or fair value
Research &
Development
Goodwill
$
$
Patents,
Trademarks
& Other
Rights
$
Total
$
1,426,882
14,662,554
889,177
16,978,613
Accumulated amortisation and impairment
(677,718)
-
(327,626)
(1,005,344)
Net book amount
749,164
14,662,554
561,551
15,973,269
Year ended 30 June 2020
Opening net book amount
Additions
Foreign currency adjustment
Amortisation charge
Closing net book amount
At 30 June 2020
Cost or fair value
14,662,554
561,551
15,973,269
749,164
214,402
-
(179,389)
-
(38,367)
-
784,177
14,624,187
-
(7,469)
(71,602)
482,480
214,402
(45,836)
(250,991)
15,890,844
1,570,861
14,624,187
878,149
17,073,197
Accumulated amortisation and impairment
(786,684)
-
(395,669)
(1,182,353)
Net book amount
784,177
14,624,187
482,480
15,890,844
Year ended 30 June 2021
Opening net book amount
Additions
Foreign currency adjustment
Amortisation charge
Closing net book amount
At 30 June 2021
Cost or fair value
784,177
234,463
-
(150,691)
14,624,187
482,480
15,890,844
-
5,049
-
4,995
102
(70,097)
417,480
239,458
5,151
(220,788)
15,914,665
867,949
14,629,236
1,421,721
14,629,236
884,142
16,935,099
Accumulated amortisation and impairment
(553,772)
-
(466,662)
(1,020,434)
Net book amount
867,949
14,629,236
417,480
15,914,665
All intangible assets were recorded at cost as at 30 June 2021 and 30 June 2020. Patents, trademarks and other rights are
amortised over their estimated useful lives, which vary from 3 to 20 years. Capitalised development costs are amortised over
their useful lives, which vary from 1 to 8 years.
(a)
Impairment tests for goodwill
Goodwill is allocated to the consolidated entity’s cash generating units (CGUs) identified according to business and geographical
segments.
Consumables CGU
Precious Metals CGU
Capital Equipment CGU
European Sales Office CGU
Consolidated
2021
$
8,636,541
3,944,860
1,650,171
397,664
2020
$
8,633,701
3,929,968
1,650,171
410,347
14,629,236
14,624,187
42 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 13: NON-CURRENT ASSETS – INTANGIBLE ASSETS continued
(b) Significant estimate: key assumptions used for value-in-use calculations
The recoverable amount of a CGU is determined based on value-in-use calculations which require the use of assumptions. The
forecast cash flows for 2022 are based on the Board-approved budget. The cash flows for 2023 to 2026 have been based on
extrapolating the 2022 forecast by using average growth rates of 3.2% to 10%. Growth rates are based on past experience and
future expectations. The Company is not aware of any significant variations from external market data. Terminal values of 4x to
5x were used in calculating the value-in-use for each CGU, which equates to a long-term growth rate of the company. The pre-
tax discount rate of 11.28% reflects specific risks relating to each CGU. The potential impacts of COVID-19 have been factored
into all of the company’s assumptions. This has not resulted in any significant variations to short-term or long-term forecasts.
(c) Sensitivity to change in assumptions
The recoverable amount of the CGUs exceeds the carrying amount based on impairment testing performed at 30 June 2021. A
decrease of 40% in the projected annual cash flows or an increase of 1% in the pre-tax discount rate of 11.28% does not result in
an impairment of the goodwill. These changes would be considered reasonably possible changes to the key assumptions.
(d)
Impairment charge
No impairment charges have been deemed necessary for the current period.
NOTE 14: NON-CURRENT ASSETS – DEFERRED TAX ASSETS
Amounts recognised directly in equity:
Share issue expenses
Amounts recognised in profit or loss:
Employee benefits
Deferred tax asset recognised on FY17 and FY18 losses by German subsidiary
Deferred tax asset recognised on AASB 16 lease liabilities
Business acquisition expenses
Depreciation of tangible assets
Accruals
Provisions
Net deferred tax assets
Movements:
Opening balance at 1 July
(Charged)/credited to profit or loss (note 7)
Closing balance at 30 June
Deferred tax assets expected to be recovered within 12 months
Deferred tax assets expected to be recovered after more than 12 months
Consolidated
2021
$
2020
$
537
-
429,162
383,005
160,214
12,852
115
48,104
21,178
1,054,630
1,055,167
891,689
163,478
1,055,167
267,787
787,380
1,055,167
345,040
444,682
-
29,610
15,787
51,307
5,263
891,689
891,689
924,535
(32,846)
891,689
232,674
659,015
891,689
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 15: CURRENT LIABILITIES – TRADE AND OTHER PAYABLES
Trade payables
Sundry creditors and accruals
Employee benefits – annual leave (a)
Consolidated
2021
$
542,250
838,615
649,835
2020
$
631,711
538,096
540,111
2,030,700
1,709,918
Terms and conditions of trade payables vary between suppliers; however, terms of trade are generally 30 days.
(a) Amounts not expected to be settled within the next 12 months
The entire obligation is presented as current, since the Group does not have an unconditional right to defer settlement. However,
based on past experience, the Group does not expect all employees to take the full amount of accrued leave within the next 12
months. The following amounts reflect leave that is not expected to be taken within the next 12 months:
Annual leave obligations expected to be settled after 12 months
(b) Foreign exchange risk exposure
Information about the Group’s exposure to foreign exchange risk is provided in note 2.
NOTE 16: CURRENT LIABILITIES – PROVISIONS
Provision for platinum loan (a)
Long service leave (b)
Dividends payable to ordinary shareholders
Making good of leases
Other provisions
Consolidated
2021
$
2020
$
428,891
356,473
Consolidated
2021
$
2020
$
3,788,471
4,244,751
531,478
515,305
85,912
15,000
6,456
68,302
15,000
4,138
4,427,317
4,847,496
(a) Provision for platinum loan
XRF has borrowed (and has title to under a master contract) $3,788,471 of platinum metal, which is inventoried to facilitate
manufacturing processes and reduce lead times. This is funded by three loan facilities, with terms of up to 12 months. Interest is
calculated at market rates and payable annually. At maturity, these facilities will be renewed for additional terms or the
platinum will be returned. These liabilities are offset by an inventory asset of $3,788,471.
(b) Amounts not expected to be settled within the next 12 months
The current provision for long service leave includes all unconditional entitlements where employees have completed the
required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The
entire amount is presented as current, since the Group does not have an unconditional right to defer settlement. Based on past
experience, the Group does not expect all employees to take the full amount of accrued long service leave or require payment
within the next 12 months. The following amounts reflect leave that is not expected to be paid within the next 12 months:
Long service leave obligations expected to be settled after 12 months
398,609
386,479
Consolidated
2021
$
2020
$
44 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 17: CURRENT & NON-CURRENT LIABILITIES – LONG-TERM BORROWINGS
Property loan 1
Consolidated
2021
2020
Current
$
824,754
824,754
Non-Current
$
-
-
Current
$
111,192
Non-Current
$
824,754
111,192
824,754
1 Consists of a three-year, interest-bearing loan for $1,112,000, used to fund the purchase of a property in Melbourne.
Instalments are paid monthly (including principal and interest), at a rate of 1.26% per annum (2020: 2.24%). As security for the
loan facility, the lender holds a registered first mortgage over the acquired property, plus unlimited cross guarantees and
indemnities by all subsidiaries within the XRF group (excluding subsidiaries in Canada and Germany). The fair value of the loan is
estimated to be $828,938, calculated using current market interest rates. The carrying value of the loan is $824,754. Covenants
applicable to the loan include: the loan to property value ratio must not exceed 65%; the interest cover ratio must not be less
than 3.5x; the debt to tangible net worth ratio must not exceed 55%. The Group has met all covenant requirements to date.
Net debt reconciliation
Total borrowings at 1 July
Proceeds from borrowings
Repayment of borrowings
Total borrowings at 30 June
NOTE 18: LEASES - RIGHT OF USE ASSETS AND LIABILITIES
The following right-of-use assets have been recognised on the balance sheet at 30 June 2021:
Leased properties (refer to note 12)
Total right-of-use assets
The following liabilities have been recognised on the balance sheet at 30 June 2021:
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
(a) Extension and termination options
2021
$
2020
$
935,946
2,258,926
-
819,215
(111,192)
(2,142,195)
824,754
935,946
2021
$
600,546
600,546
2020
$
981,056
981,056
2021
$
383,110
233,099
616,209
2020
$
436,520
564,520
1,001,040
Extension and termination options are included in a number of property leases across the group. These terms are used to
maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are
exercisable only by the group and not by the respective lessor. Approximately 64% of the total lease payments made during the
year relate to optional lease extension periods.
(b) Critical judgements in determining the lease term
Potential future cash outflows of $481,558 have not been included in the lease liability because it is not reasonably certain that
the leases will be extended (or not terminated).
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 19: NON-CURRENT LIABILITIES – DEFERRED TAX LIABILITIES
Amounts recognised in profit or loss
Research and development
Deferred tax liability recognised on AASB 16 lease right of use assets
Depreciation
Other
Net deferred tax liabilities
Movements:
Opening balance at 1 July
Charged/(credited) to profit or loss (note 7)
Closing balance 30 June
NOTE 20: NON-CURRENT LIABILITIES – PROVISIONS
Consolidated
2021
$
2020
$
225,667
156,142
138,180
10,624
530,613
295,411
235,202
530,613
215,649
-
69,771
9,991
295,411
230,423
64,988
295,411
Consolidated
2021
$
2020
$
68,785
50,547
Employee benefit – long service leave
NOTE 21: ISSUED CAPITAL
Issued capital
Ordinary shares fully paid
Total issued capital
Movements in ordinary share capital:
Consolidated
Consolidated
2021
Shares
2020
Shares
2021
$
2020
$
134,561,093
133,825,803
18,802,517
18,584,489
134,561,093
133,825,803
18,802,517
18,584,489
Date
Details
shares
Price ($)
$
Number of
Issue
1 July 2019
Opening balance
30 June 2020
Closing balance
1 July 2020
Opening balance
16 October 2020
30 June 2021
Shares issued under dividend reinvestment plan
Closing balance
133,825,803
133,825,803
133,825,803
735,290
134,561,093
18,584,489
18,584,489
18,584,489
218,028
18,802,517
0.30
46 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 21: ISSUED CAPITAL continued
(a) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the
number of and amount paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon
a poll each share is entitled to one vote.
(b) Dividend reinvestment plan
The parent entity has a dividend reinvestment plan in place and shares were issued to participants in October 2020.
(c) Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue
to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the
cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The gearing ratios at 30 June 2021 and 30 June 2020 were as follows:
Total borrowings
Less: cash and cash equivalents
Net debt / (positive cash position)
Total equity
Total equity plus net debt
Gearing ratio
NOTE 22: RESERVES AND RETAINED PROFITS
(a) Reserves
Foreign currency translation reserve
Share-based payments reserve
Balance 30 June
(b) Retained Profits
Movements in retained profits were as follows:
Balance 1 July
Net profit for the year
Dividends paid or provided for
Balance 30 June
(c) Nature and purpose of reserves
Foreign currency translation reserve
Consolidated
2021
$
2020
$
824,754
935,946
(5,256,378)
(3,634,171)
(4,431,624)
(2,698,225)
39,102,913
35,635,471
34,671,289
32,937,246
Net debt
-12.78%
Net debt
-8.19%
Consolidated
2021
$
2020
$
562,380
759,243
569,860
759,243
1,321,623
1,329,103
15,721,879
13,938,757
5,130,455
3,121,380
(1,873,561)
(1,338,258)
18,978,773
15,721,879
The foreign currency translation reserve is used to recognise the unrealised gains and losses arising from the consolidation of
subsidiaries denominated in currencies other than Australian dollars.
Share-based payment reserve
The share-based payments reserve is used to recognise the value of equity-settled share-based payments.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 23: DIVIDENDS
Final dividend for the prior financial year, paid in the current financial year
Total dividends provided for or paid
Consolidated
2021
$
2020
$
1,873,561
1,873,561
1,338,258
1,338,258
A fully franked dividend of 2.0 cents per share has been declared on ordinary shares post 30 June 2021.
Franked Dividends
Consolidated
2021
$
2020
$
Franking credits available for subsequent financial years based on a tax rate of 26% (2020:27.5%)
6,822,618
6,255,168
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
(a)
(b)
(c)
franking credits that will arise from the payment of the amount of the provision for income tax;
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of
subsidiaries were paid as dividends.
The franked portions of the final dividends recommended after 30 June 2021 will be franked out of existing franking credits or
out of franking credits arising from the payment of income tax in the year ended 30 June 2021. The impact on the franking
account of the dividend recommended by the directors since year end, but not recognised as a liability at year end, will be a
reduction in the franking account of $897,074 (2020: $710,661).
NOTE 24: CONTINGENCIES
At 30 June 2021, the consolidated entity had no material contingent liabilities in respect of claims, contingent considerations,
associates and joint ventures or any other matters.
NOTE 25: COMMITMENTS
(a) Lease commitments
XRF Labware Pty Ltd has lease agreements with external suppliers for the provision of 108 kg of platinum, which is used for
working capital purposes. These lease agreements are renewed either quarterly or annually and fees are paid on the current
market price of platinum. The current agreements will expire on various dates between November 2021 and June 2022 and will
be renewed accordingly.
(b) Financing arrangements
The Group’s undrawn borrowing facilities were as follows as at 30 June 2021:
Bank overdraft facility
Bank guarantee facility (AUD denominated)
Import loan facilities
Consolidated
2021
$
500,000
69,963
1,500,000
2,069,963
2020
$
500,000
66,544
1,500,000
2,066,544
48 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 26: REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the Company, its related practices
and non-related audit firms:
BDO - Australia
Audit and review of financial reports
Taxation services
Other services
BDO - Belgium
Audit and review of financial reports
Taxation services
BDO - Canada
Taxation services
BDO - UK
Audit and review of financial reports
Consolidated
2021
$
2020
$
121,108
45,343
-
123,245
44,621
529
44,450
7,735
41,147
7,488
7,638
11,578
9,375
235,659
7,414
236,022
NOTE 27: RELATED PARTY TRANSACTIONS
(a) Parent entity
The ultimate parent and controlling entity is XRF Scientific Limited which at 30 June 2021 owns 100% of all subsidiaries listed in
note 28.
(b)
Interests in subsidiaries
Interests in subsidiaries are set out in note 28.
(c) Directors and key management compensation
Short-term employee benefits
Post-employment benefits
Long-term benefits
Consolidated
2021
$
895,797
68,737
7,671
972,205
2020
$
838,230
63,387
9,463
911,080
No other post-employment or termination benefits have been provided. Detailed remuneration disclosures are available in the
remuneration report from pages 10-15.
(d) Loans to key management personnel
There were no loans to any key management personnel during either of the years ended 30 June 2021 or 30 June 2020.
(e) Other transactions with key management personnel
Premises were rented from a related entity of Director David Brown during the financial year. These properties were rented on
normal commercial terms and conditions, totaling $104,404 (2020: $107,997). No amounts were outstanding at the end of the
year.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 28: SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities, and results of the following subsidiaries in accordance
with the accounting policy described in note 1(b):
Name of entity
XRF Chemicals Pty Ltd
XRF Labware Pty Ltd
XRF Technology (WA) Pty Ltd
XRF Technology (VIC) Pty Ltd
XRF Scientific Americas Inc
XRF Scientific Europe SPRL
XRF Scientific Europe GmbH
XRF Scientific UK Ltd
Precious Metals Engineering (WA) Pty Ltd
XFlux Pty Ltd
Gestion Scancia Inc
Country of
Incorporation
Australia
Australia
Australia
Australia
Canada
Belgium
Germany
United Kingdom
Australia
Australia
Canada
Class of
shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
The proportion of ownership interest is equal to the proportion of voting power held.
Entity holding
2021
%
2020
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
NOTE 29: RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH FLOW PROVIDED
BY OPERATING ACTIVITIES
Profit for the year
Depreciation and amortisation
Net exchange differences
Net (gain) loss on sale of non-current assets
(Increase) decrease in trade and other debtors
(Increase) decrease in inventories
(Increase) decrease in other current assets
(Increase) decrease in deferred tax asset
(Decrease) increase in trade and other creditors
(Decrease) increase in provision for income taxes
(Decrease) increase in provision for deferred income tax
(Decrease) increase in other liabilities
(Decrease) increase in other provisions
Net cash inflow from operating activities
NOTE 30: SHARE-BASED PAYMENTS
There were no share-based payments during the year ended 30 June 2021 (2020: Nil).
Consolidated
2021
$
5,130,455
1,234,423
(4,775)
(581)
(708,429)
2020
$
3,121,380
1,245,072
138,002
8,390
297,260
(1,220,325)
(2,596,615)
9,925
(163,478)
320,782
106,099
235,202
(25,971)
(401,940)
4,511,387
9,123
32,845
(380,359)
36,290
64,988
40,539
2,184,778
4,201,693
50 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 31: EARNINGS PER SHARE
(a) Basic earnings per share
Profit attributable to the ordinary equity holders of the company
(b) Diluted earnings per share
Profit attributable to the ordinary equity holders of the Company
Consolidated
2021
Cents
2020
Cents
3.8
3.8
$
2.3
2.3
$
(c) Reconciliations of earnings used in calculation earnings per share
Profit attributable to the ordinary equity holders of the company
5,130,455
3,121,380
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic
earnings per share
134,345,542
133,825,803
Number
Number
NOTE 32: PARENT ENTITY FINANCIAL INFORMATION
(a)
Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Statement of Financial Position
Current assets
Total assets
Current liabilities
Total liabilities
Shareholder’s equity
Issued capital
Reserves
Retained earnings
Total comprehensive income / (loss) for the year before tax
Tax benefit / (expense)
Total comprehensive income / (loss) for the year after tax
(b) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2021 or 30 June 2020.
2021
$
2020
$
14,446,005
13,589,032
27,953,827
26,886,930
22,901,613
20,179,735
23,439,865
20,481,075
18,802,517
18,584,489
1,392,200
1,492,817
(15,680,755)
(13,671,451)
4,513,962
6,405,855
(292,665)
156,923
(135,742)
(195,111)
60,913
(134,198)
NOTE 33: EVENTS OCCURRING AFTER THE REPORTING DATE
The COVID-19 pandemic is ongoing and while it had limited financial impact for the consolidated entity up to 30 June 2021, it is
not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation changes regularly
and is dependent on measures imposed by the Australian Government and other countries, such as (but not limited to) social
distancing requirements, quarantine, travel restrictions, lockdowns and any economic stimulus that may be provided.
A final dividend of 2.0 cents per share fully franked (FY20: 1.4 cents per share fully franked) was declared on 23 August 2021,
with a record date of 1 October 2021 and payment date of 15 October 2021.
There were no other events subsequent to the reporting date which have significantly affected or may significantly affect the XRF
Scientific Limited operations, results or state of affairs in future years.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
This page has been left blank intentionally.
52 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2021
XRF Scientific Limited and its controlled entities
ACN 107 908 314
The directors of the company declare that:
1.
The financial statements, comprising the consolidated statement of profit or loss and other comprehensive
income, consolidated statement of financial position, consolidated statement of cash flow, consolidated
statement of changes in equity and accompanying notes, are in accordance with the Corporations Act 2001
and:
(a)
(b)
Comply with Accounting Standards and the Corporations Regulations 2001 and other mandatory
professional reporting requirements after 2001; and
Give a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of
its performance for the year ended on that date.
2.
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.
3.
The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer as
required by section 295A.
4.
The company has included in the notes to the financial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf
of the directors by.
Fred S Grimwade
Chairman
Dated this 23rd day of August 2021
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 53
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of XRF Scientific Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of XRF Scientific Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2021, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, 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:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
financial performance for the year ended on that date; and
(ii)
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 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 confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
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.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Impairment Assessment of Goodwill
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 13 of the financial report,
goodwill represents a significant asset which
the Group has recorded in the statement of
financial position. Under the Australian
Accounting Standards goodwill is required to be
tested annually for impairment.
As set out in Note 13, the directors’ assessment
of the recoverability of goodwill requires
significant judgement, in particular in
estimating future growth rates, discount rates
and the expected cash flows of cash generating
units (“CGUs”) to which the goodwill has been
allocated.
As a result this was determined to be a key
audit matter due to the above noted
judgements and the significance of goodwill to
the Group’s financial position.
Our procedures included, but were not limited to
the following:
Evaluating the Group’s determination of CGUs
and the allocation of assets to the carrying
value of CGU’s;
Obtaining the Group’s value in use models and
agreeing the first years forecast to board
approved budgets;
Evaluating management’s ability to achieve
cash flows by comparing prior period forecasts
against actual results;
Assessing the key inputs in the value in use
models including the forecast net profit after
tax, discount rates, terminal value
determination and growth rates for each CGU;
Using our internal valuation specialist to
assess the reasonableness of the discount
rate;
Performing a sensitivity analysis on the key
financial assumptions in the models. These
included budgeted net profit after tax,
multipliers used in the terminal year of cash
flows, and the discount rates applied;
Assessing management’s consideration of the
impact of COVID-19 on the forecast financial
performance of CGU’s; and
Evaluating the adequacy of the related
disclosures in the financial report.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2021, but does not include the
financial report and the 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 ability of the group 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 has 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 (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 10 to 15 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of XRF Scientific Limited, for the year ended 30 June 2021,
complies with section 300A of the Corporations Act 2001.
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.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth, 23 August 2021
SHAREHOLDER INFORMATION
Additional information (as at 31 July 2021) required by the ASX Listing Rules and not disclosed elsewhere in this
Annual Report is set out below:
SUBSTANTIAL SHAREHOLDINGS
The number of shares held by substantial shareholders and their associates is as follows:
Shareholder
Number of Ordinary Shares 1
Private Portfolio Managers
Michael Karl Korber
D & GD Brown Nominees Pty Ltd 2
12,197,368
11,243,135
9,600,000
1 Based on information available to the Company, including substantial holding announcements released to the market.
2 D & GD Brown Nominees Pty Ltd is a company owned by David Brown and his wife. David Brown is a director of XRF Scientific Limited.
NUMBER OF OPTION HOLDERS
Class of Security
Nil
VOTING RIGHTS
Number of Holders
-
In accordance with the Constitution of the Company and the Corporations Act 2001 (Cth), every member present in
person or by proxy at a general meeting of the members of the Company has:
• On a vote taken by a show of hands, one vote; and
• On a vote taken by a poll, one vote for every fully paid ordinary share held in the Company
A poll may be demanded at a general meeting of the members of the Company in the manner permitted by the
Corporations Act 2001 (Cth).
DISTRIBUTION OF SHARE AND OPTION HOLDERS
Distribution of Shares & Options
1-1,000
1,000-5,000
5,001-10,000
10,001-100,000
100,001 and above
Number of
Holders of
Ordinary Shares
Number of
Holders of
Options
66
307
228
666
173
1,440
–
–
–
–
–
–
58 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT
SHAREHOLDER INFORMATION
TOP 20 SHAREHOLDERS
No.
Holder Name
Number of
Ordinary Shares
Percentage of
Ordinary Shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
NATIONAL NOMINEES LIMITED
MICHAEL KARL KORBER
D & GD BROWN NOMINEES PTY LTD 1
EVELIN INVESTMENTS PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
STEPHEN WILLIAM PROSSOR & FIONA CHRISTIAN PROSSOR
GREAT WESTERN CAPITAL PTY LTD
DAVID BROWN & GLENYS DAWN BROWN
TZELEPIS NOMINEES PTY LTD
G & E PROPERTIES PTY LTD
MANDEL PTY LTD
PEBADORE PTY LTD
WESTFERRY OPERATIONS PTY LTD
FREDERIC DAVIDTS
BETA GAMMA PTY LTD
JEFFREY DAVID BROWN & PENNY NARELLE BROWN
PROBEX PROPRIETARY LIMITED
JGH METZ PTY LTD
MR WILLIAM ROBERT SIMSON
13,915,145
11,243,135
7,060,000
6,594,000
3,043,401
2,827,152
2,669,767
2,649,578
2,540,000
2,100,000
2,023,535
1,850,000
1,800,000
1,700,000
1,668,706
1,570,000
1,495,965
1,000,000
805,661
800,000
10.34%
8.36%
5.25%
4.90%
2.26%
2.10%
1.98%
1.97%
1.89%
1.56%
1.50%
1.37%
1.34%
1.26%
1.24%
1.17%
1.11%
0.74%
0.60%
0.59%
1 D & GD Brown Nom PL is a company owned by David Brown and his wife. David Brown is a director of XRF Scientific Limited.
69,356,045
51.53%
RESTRICTED SECURITIES
There are currently no restricted securities.
NON-MARKETABLE PARCELS
Class of Security
Ordinary shares
Number of Securities
Number of Holders
12,482
67
UNQUOTED SECURITIES
The Company does not have any unquoted securities.
ON-MARKET BUY BACK
The Company does not have a current on-market buy-back scheme.
XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT 59
CORPORATE DIRECTORY
DIRECTORS
Fred Grimwade (Non-Executive Chairman)
David Brown (Non-Executive Director)
David Kiggins (Non-Executive Director)
Vance Stazzonelli (Managing Director)
COMPANY SECRETARIES
Vance Stazzonelli
Andrew Watson
KEY MANAGEMENT PERSONNEL
Andrew Watson (Chief Financial Officer)
REGISTERED OFFICE
86 Guthrie Street
Osborne Park WA 6017
Tel: +61 8 9244 0600
Fax: +61 8 9244 9611
COMPANY AUDITOR
BDO
38 Station Street
Subiaco WA 6008
BANKERS
HSBC Bank Australia
Level 1, 190 St Georges Terrace
Perth, WA 6000
SOLICITORS
HWL Ebsworth
Level 20, 240 St Georges Terrace
Perth WA 6000
SHARE REGISTRY
Automic
Level 2, 267 St Georges Terrace
Perth WA 6000
Phone: 1300 288 664
WEBSITE
www.xrfscientific.com
ASX
Company Code: XRF
60 XRF SCIENTIFIC LIMITED | 2021 ANNUAL REPORT