XRF SCIENTIFIC LIMITED
ABN 80 107 908 314
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2023
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
18
19
20
21
22
23
57
58
62
64
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 1
FINANCIAL RESULTS SUMMARY
Sales Revenue up 38%
Net Profit After Tax up 26%
55,175
7,686
40,007
31,293
29,081
6,084
5,130
3,121
FY20 FY21 FY22 FY23
Sales Revenue ($'000)
FY20 FY21 FY22 FY23
Net Profit After Tax ($'000)
Operating Cash Flow up 167%
Earnings Per Share up 25%
8,417
5.6
4.5
3.8
4,511
4,202
3,154
2.3
FY20 FY21 FY22 FY23
Operating Cash Flow ($'000)
FY20 FY21 FY22 FY23
Earnings Per Share (Cents)
2 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
Dear Fellow XRF Shareholder,
Over the past year XRF has further built on its recent
strong performance to deliver another outstanding
financial result. Total revenue continued to grow
strongly to a new record of $55.2m with all
businesses recording increased sales. Net profit
after tax again grew significantly due to the higher
increased prices and record
sales, reflecting
customer demand, and strong margins
from
continued cost management and productivity
improvements. XRF’s strong operating performance
and improved financial returns reflect our ongoing
focus on excellent customer service, high product
innovation and continued
quality, new product
capital investment.
lithium
volatile
Despite a
input price our
Consumables business had an excellent year and
welcomed some large new customers. The active
management of lithium purchases, stock and flux
sales prices supported our margins and ensured
that the business performed well during the
challenging lithium market conditions. Through its
continued efforts on product quality, new product
and production process initiatives and customer
service this business has further strengthened its
position as a global market leader.
Our Precious Metals fabrication business had a
strong year recording increased sales through the
delivery of a higher volume of platinum labware and
metal. Our Melbourne plant continues to introduce
and develop state of the art production technology
that enables us to manufacture a broader range of
customised products for our growing global client
base at lower cost. Our foreign operations increased
both sales and profit and many new customer
relationships have been established alongside
growing repeat business.
CHAIRMAN’S LETTER
Our Capital Equipment business had a very good
year with a strong increase in machine sales and
almost tripled its operating profit. Even with an
increase in our production capacity the forward
order book remains very strong. Furthermore the
recent launch of our TGA machine will potentially
increase the scale and contribution from this
business in a large adjacent market sector. A
significant contributor to our growth in sales and
profit has been our 50% owned Orbis Mining which
more than doubled the sales of their industry leading
crushers.
XRF’s outstanding
financial performance has
enabled us to once again increase fully franked
dividends paid to our shareholders while further
strengthening our balance sheet. All of our
businesses continue to have opportunities to deliver
ongoing growth and improved shareholder returns.
Furthermore we actively monitor acquisition
opportunities in adjacent sectors that will be value
accretive.
In closing I would like to thank all of XRF’s talented
and committed team of employees, ably led by our
Managing Director, Vance Stazzonelli, and my fellow
directors for their significant contribution and
ongoing effort in delivering yet another outstanding
financial result in an ever more demanding global
environment.
Fred S Grimwade
Chairman
XRF SCIENTIFIC LIMITED | 2023 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 2023.
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
2023
$
2022
$
3,397,304
2,697,495
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 3.3 cents per share to be paid on 13 October 2023 out of retained earnings at 30 June
2023.
4 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
DIRECTORS’ REPORT
REVIEW OF OPERATIONS
A review of operations during the financial year and the results of those operations found that the economic entity
continued to engage in its principal activity. The results and financial position are disclosed in the attached
financial statements.
The consolidated entity has produced a Net Profit After Tax (NPAT) of $8,181,046 for the year ended 30 June 2023,
compared with $6,093,916 for the previous year.
Details of the results for the financial year ended 30 June 2023 are as follows:
Total revenue and other income
Net profit after tax
Net profit attributable to members
Basic earnings per share – (cents per share)
Diluted earnings per share – (cents per share)
OPERATING RESULTS
2023
$
2022
$
55,301,115
40,037,316
8,181,046
7,685,827
6,093,916
6,083,736
5.6
5.6
4.5
4.5
Increase
over prior year
%
38
34
26
25
25
XRF Scientific Ltd (“XRF” or “Company” or “Group”) is pleased to report its June 2023 full-year results to
shareholders. The Company has generated a record full-year result with revenue of $55.2m and a 26% increase in
Net Profit After Tax to $7.7m.
During the year we saw strong levels of activity across the business, with the mining industry being the main
driver of activity. There was positive growth in key international markets in Europe, Asia and the Americas.
Capital equipment sales were a key highlight, with record levels of orders received.
The Board has declared a final fully franked dividend of 3.3 cents per share which is up by 32% on last year.
Our balance sheet remains robust with $10.4m in cash and $2.1m in debt at 30 June 2023. During the second half
we reduced our platinum on loan balance to $1.5m, through the purchase of an additional $0.9m in platinum
metal as an owned inventory asset. At 30 June 2023 our inventory balance included $6.8m in precious metals at
cost, of which $1.5m is on loan and $5.3m is owned.
As our revenue for the Group exceeded $50m for FY23, our Australian income tax rate increases from 25% to 30%.
As a result there has been an increase to income tax expense in the Statement of Profit or Loss and deferred tax
asset/liability and current income tax liability in the Statement of Financial Position.
The Consumables division had a strong year, generating a profit before tax of $5.2m from revenue of $16.9m. The
mining sector remained the key driver of activity, in which our products are consumed for sample testing
processes across production and exploration. Profits increased due to high product volumes and additional
margin earned on previously ordered low-cost raw materials that were part of our large inventory position. We
launched one new product line during the year (xr-Tab binder tablets) and continue to work towards further new
releases.
Lithium chemicals are a key production input and continued to increase in price during the year due to demand
from the EV sector. Working capital requirements from the lithium price increases began to stabilise during the
second half, which had a positive impact on operating cash flow.
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 5
DIRECTORS’ REPORT
OPERATING RESULTS continued
The Capital Equipment division delivered a significantly increased profit before tax of $3.4m from revenue of
$18.8m. Demand for our capital equipment products was robust, which continues into FY24. Our order book
remains at record levels, with production for some products booked out past 1H24. We have been working
towards a higher level of production capacity to deal with the increased level of orders, which includes leasing
additional factory space in Perth and Melbourne. The demand is being driven by a mix of mining and industrial
customers globally.
Included in the result, Orbis Mining generated revenue of $6.1m and total profit before tax of $1.4m (50% of PBT
allocated to non-controlling interest) compared to revenue of $2.5m for FY22 full year. The laboratory crusher
product line continues to develop increased sales momentum as a result of its growing reputation in the market.
In June 2023 we launched a new product, xrTGA, following an extensive product development process. xrTGA is a
thermogravimetric analyser (TGA), which is a laboratory instrument used for heating samples to different
temperature points and observing a change in weight. TGA’s have applications in our existing markets such as
mining of iron ore, bauxite and nickel and in the production of construction materials such as cement. In addition
it provides access to new industries where they are used in production quality control, such as food, plastics, and
agricultural products. xrTGA is available for first delivery in the December 2023 quarter and is manufactured in
Melbourne.
The Precious Metals division delivered increased revenue of $21.7m and a profit before tax of $3.6m. We
experienced high levels of reoccurring orders from mining customers, as increased sample testing requires
regular recycling of spent platinum labware products. In addition, a high level of machine orders is driving the
sale of new platinum labware products, including some large sales scheduled for 1H24. We continued to grow
our base of industrial product customers in Europe, where our office in Germany increased revenue to $7.3m
compared to $5.5m in FY22.
Our next trading update will be provided via the September quarter report in October.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
A final dividend of 3.3 cents per share fully franked (FY22: 2.5 cents per share fully franked) was declared on 18
August 2023, with a record date of 29 September 2023 and payment date of 13 October 2023.
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.
6 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
DIRECTORS’ REPORT
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 2022 to 30 June 2023 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 2023 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 | 2023 ANNUAL REPORT 7
DIRECTORS’ REPORT
INFORMATION ON DIRECTORS
Fred Grimwade
Chairman (Non-Executive)
Date of appointment:
1 May 2012 (11 years); Chairman since 29 October 2018 (5 years)
Qualifications:
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 Australian United Investment
Company Ltd and other private companies
Former directorships in last 3 years: Non-Executive Director of Select Harvests Ltd and other private companies
Special responsibilities:
Chairman of the Remuneration Committee, member of the Audit & Governance Committee
No. of shares:
David Brown
518,939 fully paid ordinary shares
Director (Non-Executive)
Date of appointment:
7 June 2004 (19 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
10,172,000 fully paid ordinary shares
Director (Non-Executive)
Date of appointment:
1 May 2012 (11 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 (5 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:
740,000 fully paid ordinary shares
No. of performance rights:
402,503 performance rights
8 XRF SCIENTIFIC LIMITED | 2023 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 2023 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.
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.
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 9
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited) continued
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 2023 and it was decided that fees would be increased to the
following amounts:
Chairman
Non-Executive Directors
Committee Chairman
$111,672
$67,473
$9,752
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.
(ii) Benefits
Executives may receive benefits including car and mileage allowances.
(iii) Superannuation
Effective from 1 July 2023, retirement benefits of 11% (2022: 10.5%) 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.
(v) Long-term incentives
The Board is cognisant of general shareholder opinion that long-term equity-based rewards for executives should
be linked to the success of the Company. To achieve this, performance rights may be awarded as a percentage of
fixed remuneration. The performance rights vest upon the satisfaction of performance criteria, following which
the Company will allocate to the executive the number of shares to which they are entitled.
10 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited) continued
(vi) Assessing performance and clawback 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 2023 is $150,000. There were five
categories of STI performance measure (plus a discretionary component) for the year ended 30 June 2023. 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 (7.5%)
• Execution of business growth strategy (27.5%)
• Compliance and risk management (5%)
• Discretionary (20%)
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 $120,000 (including
superannuation) would be paid, which is 80% 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 2023 and paid in July and August 2023. In March 2023, shares valued at
$1,000 were issued to employees eligible to participate in the Company’s employee share scheme, which included
the Chief Financial Officer. The issue of these shares was 100% at the Board’s discretion.
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 11
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited) continued
Variable Remuneration (Long-Term Incentive)
In November 2022, the Board awarded 402,503 performance rights to the Managing Director (based on 60% of his
fixed salary) and 149,215 to the Chief Financial Officer (based on 35% of his fixed salary). The performance rights
are subject to two performance conditions:
(i) Indexed Total Shareholder Returns (fair value of $0.524 per performance right)
Total Shareholder Return (TSR) measures the growth in the Group’s share price together with the value of
dividends during the period. When calculating the Group’s TSR, its share price at the beginning and end of the
performance period will be calculated as a one-month VWAP (i.e. July in year 1 and June in year 3). The
percentage of PRs out of this tranche that vest will be determined by reference to the relative TSR of the Group
achieved over the three-year performance period, compared to the TSR of the S&P/ASX Small Ordinaries
Accumulation Index (ASOAI), as follows:
Performance against the relevant condition(s)
Quantum of Performance Rights subject to performance
conditions that vest (%)
Less than index TSR
Below 100% of the proportionate change in the ASOAI index
over the relevant performance period
Equal to index TSR
At 100% of the proportionate change in the ASOAI index over
the relevant performance period
Nil
50%
Greater than index TSR
Pro-rata between 50% and 100%
Between 100% and 120% of the proportionate change in the
ASOAI index over the relevant performance period
Threshold vesting of this tranche of the PRs occurs where the Company’s TSR equals the S&P/ASX Small
Ordinaries Accumulation Index TSR over the performance period. For the whole tranche of PRs to vest, the
Company’s TSR must exceed the TSR of the S&P/ASX Small Ordinaries Index over the performance period by 20
per cent.
(ii) Earnings Per Share Compound Annual Growth Rate (fair value of $0.72 per performance right)
Earnings per share (EPS) is based on the consolidated statutory net profit after tax of the Group, in proportion to
the total number of shares issued. The Board retains the sole discretion to include or exclude certain one-off
items, to ensure the statutory profit is a true reflection of the trading results. The percentage of PRs out of this
tranche that vest will be determined by reference to the EPS compound annual growth rate (CAGR), as follows:
EPS compound annual growth rate (EPS CAGR)
Percentage of EPS-tested rights vesting
<10%
10%
Between 10% - 20%
> = 20%
Nil
50%
Pro-rata between 50% and 100%
100%
The difference in EPS between FY22 and FY25 is the basis of the EPS CAGR calculation. For example:
•
•
An EPS CAGR of 10% equates to a 33.1% increase in EPS between FY22 and FY25
An EPS CAGR of 20% equates to a 72.8% increase in EPS between FY22 and FY25
These performance conditions must be satisfied in order for the performance rights to vest. The two performance
conditions are equally weighted and operate independently of each other. The Board currently expects that it will
determine whether or not the performance conditions have been satisfied by late August 2025, after the release of
the Company’s audited financial statements.
12 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited) continued
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:
Short-term
employment
Long-term
Post-
Cash
Salary
$
Cash
Bonuses
$
Share-
Based
Payments
$
Other
$
Super-
annuation
$
Long-
Service
Leave
$
Share-
Based
Payments
$
Termin-
ation
Benefits
$
2023
Non-executive directors
Fred Grimwade
David Brown
David Kiggins
Total non-executive directors
Executive directors
Vance Stazzonelli
Total executive directors
93,575
56,538
64,710
214,823
-
-
-
-
362,017
362,017
120,000
120,000
-
-
-
-
-
-
Other key management personnel
Andrew Watson
Total key management personnel
222,000
222,000
49,550
49,550
1,000
1,000
798,840
169,550
1,000
217,697
-
*217,697
-
9,825
5,937
6,795
217,697
22,557
-
-
-
-
-
-
-
-
23,982
23,982
18,029
18,029
250,357
250,357
28,760
28,760
75,299
9,821
9,821
92,812
92,812
27,850
343,169
Short-term
employment
Long-term
Post-
Cash
Salary
$
Cash
Bonuses
$
Share-
Based
Payments
$
Other
$
Super-
annuation
$
Long-
Service
Leave
$
Share-
Based
Payments
$
Termin-
ation
Benefits
$
2022
Non-executive directors
Fred Grimwade
David Brown
David Kiggins
Total non-executive directors
Executive directors
Vance Stazzonelli
Total executive directors
85,454
54,090
61,909
201,453
-
-
-
-
292,000
292,000
72,398
72,398
-
-
-
-
-
-
-
*181,414
-
8,545
5,409
6,191
181,414
20,145
-
-
-
-
36,802
36,802
7,500
7,500
22,301
22,301
79,248
4,496
4,496
11,996
Other key management personnel
Andrew Watson
Total key management personnel
185,000
185,000
36,199
36,199
1,000
1,000
678,453
108,597
1,000
181,414
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* Technical services provided by consultancy (such as technical sales and support, analytical method development).
Percentage of performance related compensation of total remuneration
Certain executive personnel are paid performance bonuses and receive performance rights in addition to set
remuneration amounts. The Board of Directors have set these incentives to encourage growth and profitability
and they 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:
Fixed Remuneration
At risk - STI
At risk - LTI
2023
2022
2023
2022
2023
2022
Vance Stazzonelli
Andrew Watson
50%
62%
80%
84%
20%
16%
20%
16%
30%
22%
–
–
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 13
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
103,400
280,172
71,505
455,077
774,385
774,385
403,943
403,943
1,633,405
Total
$
93,999
240,913
68,100
403,012
408,700
408,700
248,996
248,996
1,060,708
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited) continued
Options issued as part of total remuneration
No options have been issued in 2022 or 2023 as part of total remuneration.
Voting and comments made at the Company’s 2022 Annual General Meeting
The Company received validly appointed proxies of 99.7% of “yes” votes on its Remuneration Report for the 2022
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).
2018/19
2019/20
2020/21
2021/22
2022/23
(d) Bonuses
EBIT
$
3,249,762
4,602,319
6,818,111
8,259,768
11,924,806
Earnings Per
Share
Dividends Declared
Per Share
Share Price
Market Cap
(at 30 June)
Cents
Cents
Cents
$
1.6
2.3
3.8
4.5
5.6
1.0
1.4
2.0
2.5
3.3
20
24
47.5
57
117
26,765,160
32,118,193
63,916,519
77,458,468
160,348,237
Each individual Key Management Personnel performance bonus was discussed and reviewed against the
requirements set out on page 10. It was agreed that the proposed performance bonuses met these conditions,
specifically individual performance against agreed Key Performance Indicators.
(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 July 2022
On-market
trades
Issued via
DRP
Issued via
ESS
Balance at
30 June 2023
500,000
9,904,524
212,900
700,000
-
172,980
-
13,484
18,939
94,696
-
26,516
-
-
-
-
518,939
10,172,200
212,900
740,000
47,921
11,789
1,815
1,000
62,525
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 2001.
14 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited) continued
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
2023
$
2022
$
12,500
247,613
5,323
17,500
10,000
192,000
4,258
12,600
1,198
900
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 $440,000 per annum
(effective 1 July 2023 and ongoing), including superannuation benefits (2022: $386,000 including superannuation
benefits). 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 $266,400 per annum
(effective 1 July 2023 and ongoing), plus superannuation benefits of 11% (2022: $222,000 plus superannuation
benefits of 10.5%). 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.
(g) Share-based compensation
Details of performance rights held by key management personnel are as follows:
Name
Vance Stazzonelli
Andrew Watson
Details of active performance rights are as follows:
Grant date
11 November 2022
•
•
Vesting conditions
Indexed Total Shareholder
Returns
Earnings Per Share
Compound Annual Growth
Rate
Balance at
1 July 2022
Issued via
Performance
Rights Plan
Balance at
30 June 2023
-
-
402,503
149,215
402,503
149,215
Performance period
1July 2022 to 30 June 2025
Participating KMP
Vance Stazzonelli
Andrew Watson
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 15
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited) continued
During the year ended 30 June 2023, shares valued at $1,000 were also issued to the Chief Financial Officer under
the XRF Scientific Exempt Employee Share Plan (2022: $1,000). There was no share-based compensation to any
other Director or Key Management Personnel for the years ended 30 June 2023 and 2022. The Company has not
adopted an employee share option scheme.
(h) Remuneration consultants
No remuneration consultants were used in the years ended 30 June 2023 and 30 June 2022.
(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 $107,835 (2022: $107,535). 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 2023 and 30 June 2022.
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 2023 are outlined in the following table. The Directors are
satisfied that the provision of non-audit services by the auditor did not compromise the independence
requirements of the Corporations Act 2001 for the following reasons:
•
All non-audit services have been reviewed by the Audit & Governance Committee to ensure that they do
not impact the impartiality and objectivity of the auditor, and
• None of the services undermine the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants.
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:
Consolidated
2023
$
2022
$
BDO - Australia
Audit and review of financial reports
Taxation services
Other services
BDO - Belgium
Audit and review of financial reports
Taxation services
Other services
BDO - Canada
Taxation services
Other services
BDO - UK
Audit and review of financial reports
143,535
28,914
11,947
15,154
9,895
2,298
8,530
-
-
Total remuneration for audit and other services
220,273
138,536
43,042
4,323
18,257
9,874
2,257
8,624
3,569
13,283
241,765
The Board is satisfied that the auditors of the Company, BDO Audit (WA) Pty Ltd remain independent.
16 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
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 18.
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
18 August 2023
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 17
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth, WA 6000
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 2023, 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
18 August 2023
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 2023
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
Profit after income tax
(Profit) / loss attributable to NCI
Note
Consolidated
2023
$
2022
$
5
55,260,722
40,008,658
(32,278,092)
(22,686,113)
22,982,630
17,322,545
5
40,393
28,658
(9,168,504)
(7,762,930)
(967,860)
(875,719)
(221,618)
(770,573)
(556,082)
(68,260)
11,789,322
8,193,358
7
(3,608,276)
(2,099,442)
8,181,046
6,093,916
(495,219)
(10,180)
Profit after income tax from continuing operations attributable to equity
holders of XRF Scientific Limited
7,685,827
6,083,736
Other comprehensive income
Items that will be classified to profit or loss
Foreign currency translation differences
Total comprehensive income for the year
22(a)
441,141
160,741
8,126,968
6,244,477
Total comprehensive income attributable to equity holders of XRF
Scientific Limited
8,126,968
6,244,477
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
5.6
5.6
4.5
4.5
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes.
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 19
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
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
Non-controlling interest
Reserves
Retained profits
Total Equity
Note
Consolidated
2023
$
2022
$
8
9
10
11
12
13
14
15
16
17
18
17
18
19
20
10,401,407
6,649,539
8,628,914
6,228,337
16,879,191
15,521,407
621,647
515,212
36,531,159
28,914,495
10,414,766
8,663,193
16,866,428
16,949,853
1,735,265
1,030,898
29,016,459
26,643,944
65,547,618
55,558,439
4,005,753
3,077,458
2,459,833
3,312,412
781,413
603,701
2,403,061
1,364,714
1,303,602
368,464
887,972
708,294
11,618,475
9,658,202
1,290,500
1,464,500
1,638,531
1,303,998
118,447
377,358
615,224
95,126
4,351,476
2,552,208
15,969,951
12,210,410
49,577,667
43,348,029
21
20,414,399
19,632,304
22(a)
22(b)
323,566
(131,653)
2,186,165
1,482,364
26,653,537
22,365,014
49,577,667
43,348,029
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying
notes.
20 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
30 JUNE 2023 – CONSOLIDATED
Issued
Share
Capital
Non-
Controlling
Interest
Share
Option
Reserve
Share-Based
Payment
Reserve
Retained
Profits
Total
Foreign
Currency
Translation
Reserve
$
$
$
$
$
$
$
Balance at 1 July 2022
19,632,304
(131,653)
759,243
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
Employee performance rights plan
Dividends paid / payable to members
Dividends paid / payable to NCI
-
-
-
495,219
-
495,219
782,095
-
-
-
782,095
-
-
-
(40,000)
(40,000)
-
-
-
-
-
-
-
-
-
-
-
-
723,121
22,365,014
43,348,029
-
441,141
7,685,827
-
8,181,046
441,141
441,141
7,685,827
8,622,187
-
262,660
-
-
262,660
-
-
-
-
-
-
-
(3,397,304)
-
782,095
262,660
(3,397,304)
(40,000)
(3,397,304)
(2,392,549)
Balance at 30 June 2023
20,414,399
323,566
759,243
262,660
1,164,262
26,653,537
49,577,667
30 JUNE 2022 – CONSOLIDATED
Issued
Share
Capital
Non-
Controlling
Interest
Share
Option
Reserve
Share-Based
Payment
Reserve
Foreign
Currency
Translation
Reserve
Retained
Profits
Total
$
$
$
$
$
$
Balance at 1 July 2021
18,802,517
-
759,243
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
Amount recognised on 50%
acquisition of Orbis
-
-
-
10,180
-
10,180
829,787
-
-
-
-
829,787
(141,833)
(141,833)
-
-
-
-
-
-
-
Balance at 30 June 2022
19,632,304
(131,653)
759,243
-
-
-
-
-
-
-
-
-
562,380
18,978,773
39,102,913
-
160,741
6,083,736
-
6,093,916
160,741
160,741
6,083,736
6,254,657
-
-
-
-
-
(2,697,495)
829,787
(2,697,495)
-
(141,833)
(2,697,495)
(2,009,541)
723,121
22,365,014
43,348,029
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying
notes.
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 21
CONSOLIDATED STATEMENT OF CASH FLOWS
AS AT 30 JUNE 2023
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Finance costs
Income taxes paid
Interest received
Note
Consolidated
2023
$
2022
$
54,418,414
39,553,438
(42,898,964)
(34,489,225)
(221,618)
(68,260)
(2,967,449)
(1,843,905)
86,135
1,849
Net cash inflow (outflow) from operating activities
29
8,416,518
3,153,897
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of PPE
Payments for business acquisitions (net of cash acquired)
Payments for research and development
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
(757,684)
(372,498)
-
-
(24,748)
9,091
(601,382)
(146,999)
(782,432)
(1,111,788)
2,711,497
2,081,912
(3,407,686)
(507,337)
(138,564)
(467,265)
(2,678,692)
(2,125,031)
(3,882,218)
(648,948)
6,649,539
3,751,868
5,256,378
1,393,161
Cash and cash equivalents at the end of the financial year
8
10,401,407
6,649,539
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
22 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 2023 was authorised for issue in accordance with
a resolution of the directors on 18 August 2023 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 2023 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.
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
24 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 year’s 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.
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
26 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the
liability,
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.
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
28 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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%
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
30 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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. These 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.
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 2022, but
they did not have any significant 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.
32 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 2023
30 June 2022
CAD
EUR
USD
CAD
EUR
USD
134,777
872,023
618,705
260,492
814,238
552,948
6,575
72,364
62,268
5,690
48,764
79,814
Based on the financial instruments held at 30 June 2023, 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 $210,601 lower / $257,401 higher (2022: $192,726
lower / $235,555 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.
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 2: FINANCIAL RISK MANAGEMENT continued
(iii) Cash flow, fair value and interest rate risk
At 30 June 2023, 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 $6,822 higher / lower (2022:
$4,981 higher / lower), mainly as a result of higher/lower interest income from cash and cash equivalents. Cash and cash
equivalent balances at 30 June 2023 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
2023
$
2022
$
10,401,407
8,618,299
10,615
6,649,539
6,216,378
11,959
19,030,321
12,877,876
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
2023
7,483,726
611,808
220,460
302,305
8,618,299
2022
5,075,832
846,807
189,310
104,429
6,216,378
34 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 2023
$
$
$
$
$
$
Carrying
Amount
(assets)/
liabilities
$
Non-derivatives
Trade and other payables
Property loan
Import loans
Total non-derivatives
As at 30 June 2022
Non-derivatives
Trade and other payables
Property loan
Import loans
Total non-derivatives
3,177,143
131,286
624,024
3,932,453
-
128,560
-
128,560
-
1,316,693
-
1,316,693
-
-
-
-
2,415,622
116,373
1,143,545
3,675,540
-
114,764
-
114,764
-
224,699
-
224,699
-
1,305,969
-
1,305,969
-
-
-
-
-
-
-
-
3,177,143
1,576,539
624,024
3,177,143
1,464,500
607,413
5,377,706
5,249,056
2,415,622
1,761,805
1,143,545
2,415,622
1,638,500
1,129,602
5,320,972
5,183,724
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 (facility limit increased from $1.5m to $3.5m during the period)
Consolidated
2023
$
2022
$
500,000
2,015
2,892,587
3,394,602
500,000
73,958
370,398
944,356
(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
$2,071,913
Fair value
$2,122,936
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 profits in FY21 and FY22. 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
Capital Equipment - Manufactures automated fusion equipment, high temperature test and production furnaces,
laboratory jaw crushers and general laboratory equipment.
Precious Metals - Manufactures products for the laboratory and industrial platinum alloy markets.
Consumables - Manufactures chemicals and other supplies for analytical laboratories.
36 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 2023 is as follows:
Full-year ended 30 June 2023
Total segment revenue
Inter segment sales
Revenue from external customers
Capital Equipment
Precious Metals
Consumables
$
18,829,453
(1,282,491)
17,546,962
$
21,665,597
(976,087)
20,689,510
$
16,938,375
-
16,938,375
Total
$
57,433,425
(2,258,578)
55,174,847
Profit before income tax expense
3,415,340
3,581,576
5,244,727
12,241,643
Full-year ended 30 June 2022
Total segment revenue
Inter segment sales
Revenue from external customers
10,781,817
(572,160)
10,209,657
18,330,077
(637,053)
17,693,024
12,104,145
-
12,104,145
41,216,039
(1,209,213)
40,006,826
Profit before income tax expense
1,144,696
2,831,119
4,124,967
8,100,782
Segment assets
At 30 June 2023
At 30 June 2022
Segment liabilities
At 30 June 2023
At 30 June 2022
Depreciation & amortisation expense
For the year ended 30 June 2023
For the year ended 30 June 2022
Capital expenditure
For the year ended 30 June 2023
For the year ended 30 June 2022
14,981,826
10,314,469
21,490,073
19,310,616
20,040,839
19,312,665
4,026,625
2,275,109
6,379,729
5,556,279
1,564,374
1,690,791
456,936
406,672
178,162
161,315
370,845
390,704
282,323
85,486
241,353
232,820
299,694
127,206
56,512,738
48,937,750
11,970,728
9,522,179
1,069,134
1,030,196
760,179
374,007
Revenue from external customers – segments
Unallocated revenue
Revenue from external customers – total
Profit before income tax expense – segments
Profit/(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
2023 ($)
2022 ($)
55,174,847
40,006,826
85,875
1,832
55,260,722
40,008,658
12,241,643
(452,321)
11,789,322
56,512,738
7,203,957
1,735,265
95,658
65,547,618
24,049,450
2,111,869
765,394
26,926,713
11,970,728
1,303,998
1,364,714
1,462,890
(132,379)
15,969,951
8,100,782
92,576
8,193,358
48,937,750
5,323,578
1,030,898
266,213
55,558,439
22,485,014
2,101,348
677,579
25,263,941
9,522,179
615,224
708,294
1,035,133
329,580
12,210,410
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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
2023
$
2022
$
54,290,513
39,289,454
590,241
293,833
456,204
261,151
55,174,587
40,006,809
86,135
1,849
55,260,722
40,008,658
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):
Full-year ended 30 June 2023
Australia
Canada
Europe
Capital Equipment Precious Metals
Consumables
$
13,918,302
773,166
2,855,494
$
9,316,290
3,150,736
8,222,484
$
14,084,379
1,141,223
1,712,773
Total
$
37,318,971
5,065,125
12,790,751
Revenue from external customers (note 4)
17,546,962
20,689,510
16,938,375
55,174,847
Full-year ended 30 June 2022
Australia
Canada
Europe
7,123,415
392,324
2,693,918
8,149,669
3,097,712
6,445,643
10,309,232
710,925
1,083,988
25,582,316
4,200,961
10,223,549
Revenue from external customers (note 4)
10,209,657
17,693,024
12,104,145
40,006,826
Other income includes the following amounts:
Miscellaneous
NOTE 6: EXPENSES
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
38 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
Consolidated
2023
$
40,393
40,393
2022
$
28,658
28,658
Consolidated
2023
$
2022
$
206,223
310,586
511,190
1,027,999
82,547
94,096
176,643
199,801
319,414
469,421
988,636
76,937
111,789
188,726
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 6: EXPENSES continued
Other specific expenses
Employee benefits expenses (included in administration expenses)
Rental expense relating to operating leases (included in occupancy expenses)
7,104,075
5,844,094
118,157
117,848
Consolidated
2023
$
2022
$
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
Tax at the Australian rate of 30% (2022: 25%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Share-based payments expense
Differences arising from tax rates applicable to foreign entities
Sundry items
Adjustments for current tax of prior periods
Income tax expense
(c) Tax consolidation legislation
Consolidated
2023
$
2022
$
3,634,575
1,995,058
(15,592)
(10,707)
108,880
(4,496)
3,608,276
2,099,442
3,608,276
2,099,442
(704,366)
688,774
(15,592)
24,269
84,611
108,880
11,789,322
11,789,322
8,193,358
8,193,358
3,536,797
2,048,339
99,499
(44,158)
26,845
-
31,705
23,894
3,618,983
2,103,938
(10,707)
(4,496)
3,608,276
2,099,442
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.
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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
2023
$
2022
$
5,401,407
5,000,000
6,649,539
-
10,401,407
6,649,539
10,401,407
10,401,407
6,649,539
6,649,539
Cash at bank earns interest at floating rates based on daily bank deposit rates of between 0% to 0.05% pa (2022: 0% 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.
(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
2023
$
2022
$
8,645,736
6,282,146
(27,437)
10,615
(65,768)
11,959
8,628,914
6,228,337
832,268
302,306
1,036,117
104,428
1,134,574
1,140,545
(65,768)
38,331
(27,437)
-
(65,768)
(65,768)
During the 2023 financial year, the allowance for impaired receivables was decreased to $27,437 (2022: allowance was $65,768).
(b) Past due but not impaired
As at 30 June 2023, trade receivables of the Group of $1,134,574 (2022: $1,140,545) 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.
40 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 (2022: Nil).
NOTE 10: CURRENT ASSETS – INVENTORIES
Raw materials and spare parts
Finished goods
Precious metals (general)
Platinum on loan (refer to note 16)
Consolidated
2023
$
2022
$
6,447,950
7,016,501
3,609,800
2,536,331
5,304,365
3,328,853
1,517,076
2,639,722
16,879,191
15,521,407
Stock was valued at lower of cost and net realisable value on 30 June 2023 and 30 June 2022.
Inventory expense
Inventories recognised as expense during the year ended 30 June 2023 amounted to $23,904,716 (2022: $15,791,827). The cost of
writing down inventories to net realisable value during the year ended 30 June 2023 was $111,004 (2022: $132,910).
NOTE 11: OTHER CURRENT ASSETS
Prepayments (insurance policies, rates and other fees)
Other assets
Consolidated
2023
$
508,099
113,548
621,647
2022
$
469,412
45,800
515,212
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 2021
Cost or fair value
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
Year ended 30 June 2022
Opening net book amount
Additions
Changes to lease terms
Foreign currency adjustment
Disposals
Depreciation charge
Closing net book amount
At 30 June 2022
Cost or fair value
5,155,496
173,848
-
(4,465)
(30,241)
(350,087)
4,944,551
78,127
139,940
-
12
(7,522)
(35,445)
175,112
959,542
14,894
-
649
-
(84,901)
890,184
135,810
1,823,217
600,546
8,752,738
43,817
-
(4,313)
(24,406)
(48,782)
102,126
-
-
-
-
-
-
596,878
-
-
372,499
596,878
(8,117)
(62,169)
(469,421)
(988,636)
1,823,217
728,003
8,663,193
7,524,448
303,409
1,420,349
348,531
1,823,217
2,076,676
13,496,630
Accumulated depreciation
(2,579,897)
(128,297)
(530,165)
(246,405)
-
(1,348,673)
(4,833,437)
Net book amount
4,944,551
175,112
890,184
102,126
1,823,217
728,003
8,663,193
Year ended 30 June 2023
Opening net book amount
Additions
Changes to lease terms
Foreign currency adjustment
Disposals
Depreciation charge
Closing net book amount
At 30 June 2023
Cost or fair value
102,126
1,823,217
4,944,551
555,336
-
22,410
(11,051)
(340,821)
5,170,425
175,112
150,692
-
7,484
(7,549)
(52,714)
273,025
890,184
4,915
-
903
-
(78,311)
817,691
46,740
-
5,945
-
(44,963)
109,848
728,003
1,378,435
625,312
-
-
8,663,193
2,136,118
625,312
36,742
(18,600)
(511,190)
(1,027,999)
-
-
-
-
-
1,823,217
2,220,560
10,414,766
7,783,580
419,084
1,414,743
347,844
1,823,217
4,080,423
15,868,891
Accumulated depreciation
(2,613,155)
(146,059)
(597,052)
(237,996)
-
(1,859,863)
(5,454,125)
Net book amount
5,170,425
273,025
817,691
109,848
1,823,217
2,220,560
10,414,766
All items of property, plant and equipment were recorded at cost as at 30 June 2023 and 30 June 2022.
42 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 13: NON-CURRENT ASSETS – INTANGIBLE ASSETS
Consolidated
At 30 June 2021
Cost or fair value
Research &
Development
Goodwill
$
$
Patents,
Trademarks
& Other
Rights
$
Total
$
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
Year ended 30 June 2022
Opening net book amount
Additions
Foreign currency adjustment
Amortisation charge
Closing net book amount
At 30 June 2022
Cost or fair value
867,949
172,763
-
(111,789)
14,629,236
741,832
92,008
-
928,923
15,463,076
417,480
200,000
17,311
(76,937)
557,854
15,914,665
1,114,595
109,319
(188,726)
16,949,853
1,449,263
15,463,076
979,864
17,892,203
Accumulated amortisation and impairment
(520,340)
-
(422,010)
(942,350)
Net book amount
928,923
15,463,076
557,854
16,949,853
Year ended 30 June 2023
Opening net book amount
Additions
Foreign currency adjustment
Amortisation charge
Closing net book amount
At 30 June 2023
Cost or fair value
928,923
24,748
-
(94,096)
859,575
15,463,076
557,854
16,949,853
-
55,391
-
15,518,467
-
13,079
(82,547)
488,386
24,748
68,470
(176,643)
16,866,428
1,148,505
15,518,467
983,218
17,650,190
Accumulated amortisation and impairment
(288,930)
-
(494,832)
(783,762)
Net book amount
859,575
15,518,467
488,386
16,866,428
All intangible assets were recorded at cost as at 30 June 2023 and 30 June 2022. 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
2023
$
8,657,596
4,055,275
2,392,003
413,593
2022
$
8,653,670
4,034,688
2,392,003
382,715
15,518,467
15,463,076
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 2024 are based on the Board-approved budget. The cash flows for 2025 to 2028 have been based on
extrapolating the 2024 forecast by using average growth rates of 3.2%. 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 14.06% reflects specific risks relating to each CGU.
(c) Sensitivity to change in assumptions
The recoverable amount of the CGUs exceeds the carrying amount based on impairment testing performed at 30 June 2023. A
decrease of 40% in the projected annual cash flows or an increase of 2% in the pre-tax discount rate of 14.06% 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 prior year 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
2023
$
2022
$
2,607
1,468
717,066
53,836
672,670
-
-
140,781
148,305
1,732,658
1,735,265
461,065
246,997
186,455
-
-
54,463
80,450
1,029,430
1,030,898
1,030,898
1,055,167
704,367
(24,269)
1,735,265
1,030,898
506,034
1,229,231
1,735,265
285,491
745,407
1,030,898
44 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 15: CURRENT LIABILITIES – TRADE AND OTHER PAYABLES
Trade payables
Sundry creditors and accruals
Employee benefits – annual leave (a)
Consolidated
2023
$
955,007
2,222,136
828,610
2022
$
1,069,228
1,346,394
661,836
4,005,753
3,077,458
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
2023
$
2022
$
546,883
436,812
Consolidated
2023
$
2022
$
1,517,076
2,639,722
522,558
193,285
217,500
9,414
451,257
145,403
15,000
61,030
2,459,833
3,312,412
(a) Provision for platinum loan
XRF has borrowed (and has title to under a master contract) $1,517,076 of platinum metal, which is inventoried to facilitate
manufacturing processes and reduce lead times. This is funded by a loan facility, with a term of 3 months. Interest is calculated
at market rates and payable at maturity. At maturity, the facility will be renewed for an additional term or the platinum will be
returned. These liabilities are offset by an inventory asset of $1,517,076.
(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
391,919
338,443
Consolidated
2023
$
2022
$
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 17: CURRENT & NON-CURRENT LIABILITIES – LONG-TERM BORROWINGS
Property loan 1
Import loan 2
Consolidated
2023
2022
Current
$
174,000
Non-Current
$
1,290,500
607,413
781,413
-
1,290,500
Current
$
174,000
1,129,602
1,303,602
Non-Current
$
1,464,500
-
1,464,500
1 Consists of a three-year, interest-bearing loan, initially used to fund the purchase of a property in Melbourne. The facility was
refinanced in 2021, extending the maturity date to November 2024. Instalments are paid monthly (including principal and
interest), at a rate of 6.27% per annum (2022: 3.7%). 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, Germany and Orbis Mining Pty Ltd). The fair value of the loan is estimated to be $1,576,539, calculated
using current market interest rates. The carrying value of the loan is $1,464,500. 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.
2 Consists of a short-term loan (less than 180 days) used to finance the importation of certain raw materials used to produce
finished goods. Interest is payable on maturity, at a rate of 6.4%.
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 2023:
Leased properties (refer to note 12)
Total right-of-use assets
The following liabilities have been recognised on the balance sheet at 30 June 2023:
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
(a) Extension and termination options
2023
$
2022
$
2,768,102
2,711,497
(3,407,686)
2,071,913
824,754
2,081,912
(138,564)
2,768,102
2023
$
2,220,560
2,220,560
2022
$
728,003
728,003
2023
$
603,701
1,638,531
2,242,232
2022
$
368,464
377,358
745,822
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 91% 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 $1,650,000 have not been included in the lease liability because it is not reasonably certain that
the leases will be extended (or not terminated).
46 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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
2023
$
2022
$
257,872
666,168
357,675
22,283
1,303,998
615,224
688,774
1,303,998
232,231
182,001
188,590
12,402
615,224
530,613
84,611
615,224
Consolidated
2023
$
2022
$
118,447
95,126
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
2023
Shares
2022
Shares
2023
$
2022
$
137,049,775
135,892,049
20,414,399
19,632,304
137,049,775
135,892,049
20,414,399
19,632,304
Date
Details
shares
Price ($)
$
1 July 2021
Opening balance
134,561,093
18,802,517
Number of
Issue
30 September 2021 Shares issued as part consideration for Orbis acquisition
313,676
0.6376
30 September 2021 Less: transaction costs
15 October 2021
Shares issued under dividend reinvestment plan
923,200
0.6200
15 October 2021
Less: transaction costs
Shares issued under employee share scheme
94,080
0.6800
22 April 2022
22 April 2022
30 June 2022
Less: transaction costs
Closing balance
1 July 2022
Opening balance
14 October 2022
14 October 2022
Shares issued under dividend reinvestment plan
Less: transaction costs
135,892,049
135,892,049
1,088,726
0.6600
17 March 2023
Shares issued under employee share scheme
69,000
1.0000
17 March 2023
30 June 2023
Less: transaction costs
Closing balance
137,049,775
200,000
(1,667)
572,384
(3,654)
63,974
(1,250)
19,632,304
19,632,304
718,559
(4,214)
69,000
(1,250)
20,414,399
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 2022.
(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 2023 and 30 June 2022 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
Options 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
2023
$
2022
$
2,071,913
2,768,102
(10,401,407)
(6,649,539)
(8,329,494)
(3,881,437)
49,577,667
43,348,029
41,248,173
39,466,592
Net debt
-20.19%
Net debt
-9.83%
Consolidated
2023
$
2022
$
1,164,262
759,243
262,660
723,121
759,243
-
2,186,165
1,482,364
22,365,014
18,978,773
7,685,827
6,083,736
(3,397,304)
(2,697,495)
26,653,537
22,365,014
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.
48 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 23: DIVIDENDS
Final dividend for the prior financial year, paid in the current financial year
Total dividends provided for or paid
Consolidated
2023
$
2022
$
3,397,304
3,397,304
2,697,495
2,697,495
A fully franked dividend of 3.3 cents per share has been declared on ordinary shares post 30 June 2023.
Franked Dividends
Consolidated
2023
$
2022
$
Franking credits available for subsequent financial years based on a tax rate of 30% (2022:25%)
9,120,005
7,561,821
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 2023 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 2023. 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 $1,938,275 (2022: $1,132,434).
NOTE 24: CONTINGENCIES
At 30 June 2023, 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 56 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 July 2023 and June 2024 and will be
renewed accordingly.
(b) Financing arrangements
The Group’s undrawn borrowing facilities were as follows as at 30 June 2023:
Bank overdraft facility
Bank guarantee facility (AUD denominated)
Import loan facilities (facility limit increased from $1.5m to $3.5m during the period)
Consolidated
2023
$
500,000
2,015
2,892,587
3,394,603
2022
$
500,000
73,958
370,398
944,356
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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
Other services
BDO - Canada
Taxation services
Other services
BDO - UK
Audit and review of financial reports
Consolidated
2023
$
2022
$
143,535
28,914
11,947
15,154
9,895
2,298
8,530
-
-
220,273
138,536
43,042
4,323
18,257
9,874
2,257
8,624
3,569
13,283
241,765
NOTE 27: RELATED PARTY TRANSACTIONS
(a) Parent entity
The ultimate parent and controlling entity is XRF Scientific Limited which at 30 June 2023 owns 50% to 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
2023
$
1,187,087
75,299
371,019
2022
$
969,464
79,248
11,996
1,633,405
1,060,708
Long-term benefits include share-based payments valued at $343,169. Refer to note 30 for further details.
No other post-employment or termination benefits have been provided. Detailed remuneration disclosures are available in the
Remuneration Report from pages 9-16.
(d) Loans to key management personnel
There were no loans to any key management personnel during either of the years ended 30 June 2023 or 30 June 2022.
(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, totalling $107,835 (2022: $107,536). No amounts were outstanding at the end of the
year.
50 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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
Orbis Mining Pty Ltd
Country of
Incorporation
Australia
Australia
Australia
Australia
Canada
Belgium
Germany
United Kingdom
Australia
Australia
Canada
Australia
Class of
shares
Ordinary
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
2023
%
2022
%
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
50
NOTE 29: RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH FLOW PROVIDED
BY OPERATING ACTIVITIES
(a) Reconciliation of profit after income tax to net cash flow provided by operating activities
Profit for the year
Depreciation and amortisation
Profit attributable to NCI
Share based payments
Net exchange differences
Net assets of acquired businesses reclassified as investing activities
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
(b) Non-cash investing and financing activities
Additions to right-of-use assets (note 12)
Shares issued to acquire 50% of Orbis Mining
Shares issued under employee share scheme (note 30)
Consolidated
2023
$
7,685,828
1,204,642
495,218
331,660
309,014
-
-
2022
$
6,083,736
1,177,362
-
-
147,389
(308,047)
32,730
(2,400,577)
(1,749,954)
(1,357,784)
(3,005,247)
(106,435)
(704,367)
928,295
656,420
688,774
1,515,088
(115,523)
24,269
1,046,758
146,657
84,611
677,720
(829,258)
(1,088,564)
8,416,518
3,153,897
Consolidated
2023
$
2,003,747
-
69,000
2022
$
596,878
200,000
63,974
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 30: SHARE-BASED PAYMENTS
Performance rights issued to employees (a)
Shares issued to employees (b)
Total share-based payments (included in administration expenses)
Consolidated
2023
$
262,660
69,000
331,660
2022
$
-
63,974
63,974
(a) Performance Rights Plan
Performance rights (PRs) are granted to employees at the discretion of the Board based on the Performance Rights Plan (Plan)
approved by the Board. The Board may invite eligible employees to participate in the Plan and acquire PRs for no consideration.
The PRs vest upon the satisfaction of any applicable vesting conditions, following which the Group will allocate one share per
PR. Vesting conditions include total shareholder return, earnings per share growth rates and service periods. Where vesting
conditions are not met, the PRs will lapse.
The fair value of the PRs granted during the year ended 30 June 2023 was determined using the Monte Carlo Simulation and
Black Scholes methods, with the following key assumptions:
Assumption
Underlying security spot price
Exercise price
Valuation date
Commencement of performance period
Performance measurement date
Performance period (years)
Remaining performance period (years)
Volatility of XRF
Volatility of the index
Risk-free rate
Dividend yield
Valuation per PR
Value
$0.80
Nil
21 October 2022
1 July 2022
30 June 2025
3.00
2.69
45%
20%
3.745%
4%
$0.524 to $0.72
On 21 October 2022, the Group received approval from shareholders to issue 402,503 PRs to the Managing Director, Vance
Stazzonelli, with performance hurdles based on total shareholder returns and earnings per share growth rates. On 11
November 2022, 1,504,278 PRs were issued to employees (including the shareholder-approved number issued to the Managing
Director). The PRs are divided into three tranches, with the following performance conditions:
(i)
Indexed Total Shareholder Returns – 612,139 PRs
Total Shareholder Return (TSR) measures the growth in the Group’s share price together with the value of dividends during the
period. When calculating the Group’s TSR, its share price at the beginning and end of the performance period will be calculated
as a one-month VWAP (i.e. July in year 1 and June in year 3). The percentage of PRs out of this tranche that vest will be
determined by reference to the relative TSR of the Group achieved over the three-year performance period, compared to the TSR
of the S&P/ASX Small Ordinaries Accumulation Index (ASOAI), as follows:
Performance against the relevant condition(s)
Quantum of Performance Rights subject to performance
conditions that vest (%)
Less than index TSR
Below 100% of the proportionate change in the ASOAI index
over the relevant performance period
Equal to index TSR
At 100% of the proportionate change in the ASOAI index over
the relevant performance period
Nil
50%
Greater than index TSR
Pro-rata between 50% and 100%
Between 100% and 120% of the proportionate change in the
ASOAI index over the relevant performance period
52 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 30: SHARE-BASED PAYMENTS continued
Threshold vesting of this tranche of the PRs occurs where the Company’s TSR equals the S&P/ASX Small Ordinaries
Accumulation Index TSR over the performance period. For the whole tranche of PRs to vest, the Company’s TSR must exceed
the TSR of the S&P/ASX Small Ordinaries Index over the performance period by 20 per cent.
(ii) Earnings Per Share Compound Annual Growth Rate – 489,143 PRs
Earnings per share (EPS) is based on the consolidated statutory net profit after tax of the Group, in proportion to the total
number of shares issued. The Board retains the sole discretion to include or exclude certain one-off items, to ensure the
statutory profit is a true reflection of the trading results. The percentage of PRs out of this tranche that vest will be determined
by reference to the EPS compound annual growth rate (CAGR), as follows:
EPS compound annual growth rate (EPS CAGR)
Percentage of EPS-tested rights vesting
<10%
10%
Between 10% - 20%
> = 20%
Nil
50%
Pro-rata between 50% and 100%
100%
The difference in EPS between FY22 and FY25 is the basis of the EPS CAGR calculation. For example:
•
•
An EPS CAGR of 10% equates to a 33.1% increase in EPS between FY22 and FY25
An EPS CAGR of 20% equates to a 72.8% increase in EPS between FY22 and FY25
(iii) Service Period – 402,996
The percentage of performance rights out of this tranche that vest, if any, will be determined after the employee has remained
continuously employed by the Group for the duration of the performance period.
(iv) Other information
At 30 June 2023, a total of 1,504,278 PRs were granted to employees.
The fair value of the PRs will be expensed proportionally over the vesting period. For the year ended 30 June 2023, the Group has
recognised $331,660 of share-based payment expense in the Consolidated Statement of Profit or Loss and Other Comprehensive
Income.
(b) Employee Share Plan
Shares issued to employees (included in administration expenses)
Consolidated
2023
$
2022
$
69,000
63,974
The XRF Scientific Exempt Employee Share Plan was set up to provide eligible employees with an opportunity to acquire shares
for no consideration, which will align their interests more closely with the Company's shareholders and provide greater incentive
for them to focus on the Company's longer-term goals. Under the rules of the plan, a holding lock will be placed on the shares
for a period of three years from the date of issue. On 17 March 2023, 69,000 shares were issued to employees, with a value of 1
dollar per share. This was the volume-weighted average price of XRF shares over the week up to the time of issue.
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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
2023
Cents
2022
Cents
5.6
5.6
$
4.5
4.5
$
(c) Reconciliations of earnings used in calculation earnings per share
Profit attributable to the ordinary equity holders of the Company
7,685,827
6,083,736
(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
136,687,618
135,469,700
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 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
2023
$
2022
$
14,705,482
14,600,397
30,045,958
29,028,263
28,255,110
25,697,280
29,573,280
26,322,546
20,414,399
19,632,304
2,094,671
1,384,129
(22,036,392)
(18,310,715)
472,678
2,705,718
408,468
(80,095)
328,373
94,732
(27,198)
67,534
(b) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2023 or 30 June 2022. Letters of financial support have
been provided to certain foreign subsidiaries to ensure their business continuity.
54 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 33: EVENTS OCCURRING AFTER THE REPORTING DATE
A final dividend of 3.3 cents per share fully franked (FY22: 2.5 cents per share fully franked) was declared on 18 August 2023,
with a record date of 29 September 2023 and payment date of 13 October 2023.
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 | 2023 ANNUAL REPORT 55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
This page has been left blank intentionally.
56 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2023
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 2023 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 18th day of August 2023
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 57
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth, WA 6000
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 2023, 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 2023 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.
Recoverability of Intangible Assets
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 13 of the financial report, goodwill
Our procedures included, but were not limited to the
represents a significant asset which the Group has
following:
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
•
Evaluating the Group’s determination of CGU’s
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;
cash generating units (“CGU”) to which the goodwill has
•
Evaluating management’s ability to achieve cash
been allocated.
As a result this was determined to be a key audit matter
flows by comparing prior period forecasts against
actual results;
due to the above noted judgements and the significance
•
Assessing the key inputs in the value in use
of goodwill to the group’s financial position.
•
•
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; 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 2023, 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 13 to 26 of the directors’ report for the year
ended 30 June 2023.
In our opinion, the Remuneration Report of XRF Scientific Limited, for the year ended 30 June 2023,
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,
18 August 2023
SHAREHOLDER INFORMATION
Additional information (as at 31 July 2023) 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
Michael Karl Korber
David Brown & Glenys Dawn Brown 2
10,789,750
10,172,200
1 Based on information available to the Company, including substantial holding announcements released to the market.
2 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, 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.
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
425
951
490
885
178
2,929
–
–
–
–
–
–
62 XRF SCIENTIFIC LIMITED | 2023 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
MICHAEL KARL KORBER
EVELIN INVESTMENTS PTY LIMITED
D & GD BROWN NOMINEES PTY LTD
DAVID BROWN & GLENYS DAWN BROWN 1
MANDEL PTY LTD
GREAT WESTERN CAPITAL PTY LTD
STEPHEN WILLIAM PROSSOR & FIONA CHRISTIAN PROSSOR
NATIONAL NOMINEES LIMITED
PEBADORE PTY LTD
G & E PROPERTIES PTY LTD
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
TZELEPIS NOMINEES PTY LTD
BETA GAMMA PTY LTD
FREDERIC DAVIDTS
JEFFREY DAVID BROWN & PENNY NARELLE BROWN
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
WILLIAM ROBERT SIMSON
CLAPSY PTY LTD
10,789,750
7,064,539
7,020,837
3,151,363
2,900,000
2,838,648
2,669,767
2,501,764
2,450,000
2,206,275
2,184,268
1,963,213
1,900,000
1,682,033
1,671,176
1,643,693
1,560,837
1,484,125
1,275,000
1,200,000
7.87%
5.15%
5.12%
2.30%
2.12%
2.07%
1.95%
1.83%
1.79%
1.61%
1.59%
1.43%
1.39%
1.23%
1.22%
1.20%
1.14%
1.08%
0.93%
0.88%
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.
60,157,288
43.89%
RESTRICTED SECURITIES
There are currently no restricted securities.
NON-MARKETABLE PARCELS
Class of Security
Ordinary shares
UNQUOTED SECURITIES
Class of Security
Performance rights
ON-MARKET BUY BACK
Number of Securities
Number of Holders
4,831
81
Number of Securities
Number of Holders
1,504,278
20
The Company does not have a current on-market buy-back scheme.
XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT 63
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
Level 9, 5 Spring Street
Perth WA 6000
BANKERS
HSBC Bank Australia
Level 33, 250 St Georges Terrace
Perth WA 6000
SOLICITORS
HWL Ebsworth
Level 20, 240 St Georges Terrace
Perth WA 6000
SHARE REGISTRY
Automic
Level 5, 191 St Georges Terrace
Perth WA 6000
Phone: 1300 288 664
WEBSITE
www.xrfscientific.com
ASX
Company Code: XRF
64 XRF SCIENTIFIC LIMITED | 2023 ANNUAL REPORT