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Annual Report
2015
Important
Notice
Forward Looking Statements
and Business Risks:
Silex Systems is a research and development company whose assets are its proprietary rights
in various technologies, including, but not limited to, the SILEX Technology, Solar Systems
technology, and Translucent technology. Several of the Company’s technologies are in the
development stage and have not been commercially deployed, and therefore are high-risk.
Accordingly, the statements in this report regarding the future of the Company’s technologies
and commercial prospects are forward looking and actual results could be materially different
from those expressed or implied by such forward looking statements as a result of various
risk factors.
Some risk factors that could affect future results and commercial prospects include, but are not
limited to: results from the SILEX uranium enrichment commercialisation program; the demand
for enriched uranium; the outcomes of the Company’s interests in the development of various
semiconductor, photonics and alternative energy technologies; the time taken to develop
various technologies; the development of competing technologies; the potential for third party
claims against the Company’s ownership of Intellectual Property associated with its numerous
technologies; the potential impact of government regulations or policies; and the outcomes of
various commercialisation strategies undertaken by the Company.
Silex Systems Limited ABN 69 003 372 067
Contents
02
Chair’s Report
04
CEO’s Report
10 Company Overview
14 Directors’ Report
38
Corporate Governance Statement
39 Concise Financial Report
51
Independent Auditor’s Report to the Members
53 Shareholders’ Information
57 Company Directory
Chair’s
Report
Dr Lisa McIntyre
Chair
Dear Fellow Shareholders,
As you may be aware, the year ended 30 June 2015 was
my first full year as Chair of the Silex Board. I am therefore
very pleased to report on the progress that has been made
over the year by the Board and our Management team to
implement the major restructure resulting from the Company’s
2014 strategic business review. Completion of the restructure
will result in the return of our focus solely to the development
and commercialisation of our core asset, the SILEX Laser
Uranium Enrichment Technology.
The restructure, which is expected to be completed by the
end of calendar year 2015, has resulted in significant changes
in all areas of the Company. These changes included the
following key measures:
• The signing of an agreement in September 2015 for
the license and assignment of subsidiary Translucent’s
semiconductor technology with UK-based IQE Plc;
• The cessation of the Solar Systems’ business in July 2015,
alongside ongoing effort to pursue residual opportunities
identified during the rigorous divestment process;
• Closure of the ChronoLogic business (in September
2014); and
• A reduction of 50% in corporate headcount as the
Company looks to streamline operations and reduce
costs across the entire business.
Our June 2014 strategic review announcement was followed
by an announcement in July 2014 that the Licensee for
the SILEX Technology, GE-Hitachi Global Laser Enrichment
LLC (GLE), was slowing down the funding and pace of the
commercialisation program to align with adverse trading
conditions in the global nuclear markets. It is important to
note that good progress continues to be made with the
commercialisation program and that the key commercial terms
of our license agreement, in particular the royalty structure,
have not changed. In addition, GLE’s negotiations with the
US Department of Energy regarding the strategically important
opportunity in Paducah, Kentucky are nearing completion.
A full update of the SILEX Uranium Enrichment Project is
provided by Dr Michael Goldsworthy, our CEO/MD, in his
following report.
“I remain excited by the prospects
for Silex Systems and the SILEX
Technology based on the potential
that this innovative and disruptive
Australian technology holds”
Corporate Governance
A process of Board restructuring and renewal continued
as part of the Company’s strategic review. An evaluation of
the number and composition of Directors was completed
with the Board resolving to reduce from six (6) to four (4)
directors including our CEO/MD. We welcomed Robert Lee
to the Board on 1 July 2015 to replace Andrew Stock who
retired on 31 August 2015. The Board thanks Mr Stock for
his experience and contribution to the Company during his
tenure and recommends the election of Mr Lee at our Annual
General Meeting in November.
2
Silex Annual Report 2015 Outlook
We remain committed to positioning Silex for the inevitable
turnaround in the nuclear industry and nuclear fuel markets
over the coming years and to delivering long-term value for
our shareholders. I remain excited by the prospects for Silex
Systems and the SILEX Technology based on the potential
that this innovative and disruptive Australian technology holds.
On behalf of the Silex Board and Management team,
I would like to thank our shareholders for their patience
and support as we work to complete our strategic review
and continue to navigate our Company through this difficult
period. I look forward to updating you again at our Annual
General Meeting in November.
Dr Lisa McIntyre
Chair
2 October 2015
We believe that we have an appropriate mix of skills,
experience and industry knowledge on the Board for our
current opportunities and challenges, particularly as we
return the Company’s focus to the SILEX Technology.
As part of the full operational review conducted during the
year, some difficult remuneration decisions were made
which included the Board’s decision that no remuneration
increases be awarded to the Company’s Key Management
Personnel (KMP) for FY 2015 and for FY 2016. Substantial
changes were also implemented to the remuneration
package of our CEO/MD, with an agreed reduction from
1 January 2015 of approximately 55% to Total Maximum
Potential Remuneration. It has now been 3 years since a total
remuneration increase was awarded to any KMP, which we
believe is appropriate given the changes and difficulties that
have been experienced by Silex, and taking into account
shareholders’ interests and good governance.
Financial Performance
Our net loss for the year of $35.9 million was impacted by
the outcomes of our strategic review. The net loss included
impairment charges from a detailed review of Solar Systems’
and Translucent’s asset carrying values, the anticipated costs
associated with the dismantling and decommissioning of
various facilities and employee termination payments made
during the year. Importantly net cash burn (excluding the
FY 2013 GLE milestone receipt in July 2014) reduced by
48% from FY 2014 to FY 2015.
At the time of writing, Silex maintains a solid cash reserve
position of $51.5 million with cash burn for FY 2016 and
beyond expected to reduce significantly.
3
Silex Annual Report 2015
CEO’S
Report
Dr Michael Goldsworthy
CEO/Managing Director
The financial year ended 30 June 2015 has been one of the
most challenging periods in the history of Silex, beginning
with the implementation of a major restructure which resulted
from a strategic review of our entire business, as disclosed
to the ASX in June 2014. Shortly after this, the licensee for
our core SILEX Laser Uranium Enrichment Technology,
GE-Hitachi Global Laser Enrichment LLC (GLE) announced
its own restructure in response to adverse nuclear fuel market
conditions, involving a slowing down of the commercialisation
project for the SILEX Technology.
We continue to work towards the completion of our
restructure, which will result in a significant reduction in
cash burn and a singular focus of the Company on the
SILEX Technology. It is anticipated that all restructuring
activities will be completed by the end of this calendar year.
Silex is in a strong financial
position with cash reserves of
~$51.5 million
With the Company’s focus returning solely to our core SILEX
Technology, we were pleased to see a number of recent
developments which suggest the beginning of a recovery in
the global markets for natural and enriched uranium could be
near. These include the first restart of a nuclear power plant in
Sendai, Japan, after being shut down for a number of years,
and the continued firming of the market price for uranium.
We continue to believe the medium to long term outlook for
these markets will involve a return to strong growth as the
global nuclear industry expands. Most importantly, we remain
confident in the potential for our enrichment technology,
the only third generation laser enrichment technology being
commercialised in the world, to compete in these markets.
At the time of writing, Silex is in a strong financial position
with cash reserves of ~$51.5 million.
The Company’s restructure is now largely complete with the
following major outcomes:
i) ChronoLogic: The first major outcome of the restructure
was the closure of the ChronoLogic business which was
completed in September 2014.
ii) Solar Systems: On 30 July 2015, the Silex Board
announced the cessation of Solar Systems’ business
operations, following a rigorous but unsuccessful global
process to attract new investment. In light of the interest
shown in Solar Systems’ technology during the divestment
process, the company has retained the IP and associated
expertise to pursue residual opportunities.
iii) Translucent: The pursuit of business development
options for Translucent’s novel semiconductor materials being
developed for application in advanced semiconductor and
power electronics devices accelerated during the year. This
process culminated in the signing of an exclusive License
and Assignment Agreement with UK-based IQE Plc on
15 September 2015. Under this Agreement, the Translucent
technology will be transferred to IQE for the completion of
product development and commercialisation activities during
a 30-month license period, during which IQE can elect to
acquire the technology. Meanwhile, the Translucent facility
in Palo Alto, California will be closed down by the end of
December 2015.
iv) Corporate: There has been a 50% reduction in headcount
in our group corporate office.
4
Silex Annual Report 2015 Business Overview
The SILEX Laser Uranium Enrichment Technology
Business Facts
Platform
Nuclear Fuel for Clean Electricity Generation
Locations
Technology Development:
Silex: Lucas Heights, NSW, Australia
GLE: Wilmington, North Carolina, USA
Corporate Office
Sydney, NSW, Australia
Business Description
Silex invented and initially developed the ‘SILEX’ laser-based
uranium enrichment technology in Sydney during the 1990’s.
The technology is licensed exclusively to GE-Hitachi Global
Laser Enrichment LLC (‘GLE’), a business venture comprising
GE (51%), Hitachi (25%) and Cameco (24%). Silex and GLE
jointly continue to commercialise the technology for potential
deployment in the USA. The target market is the global
nuclear fuel market for natural and enriched uranium, worth
several billions of dollars annually.
Background
The SILEX Technology was invented by Silex Systems
scientists Dr Michael Goldsworthy and Dr Horst Struve in
the mid 1990’s. In order to facilitate the potential commercial
deployment of the technology in the United States, an
Agreement for Cooperation between the United States
and Australia was signed in May 2000.
In June 2001, the technology was officially Classified by
the United States and Australian governments, bringing
the project formally under the strict security and regulatory
protocols of each country.
In 2006, Silex signed a Technology Commercialisation and
License agreement with General Electric Company (GE) to
develop and commercialise the technology to enrich uranium
for use in nuclear power reactors around the world. Since
2008, the project has been managed by GE subsidiary GLE.
5
Silex Annual Report 2015 CEO’S REPORT (continued)
Uranium Enrichment
Naturally occurring uranium must be enriched before it
can be used as fuel in a nuclear power reactor. Enrichment
is a technically difficult process. It constitutes a major
component of nuclear fuel costs accounting for around
40% of the cost of nuclear fuel and up to 5% of the total
cost of the electricity generated.
Uranium enrichment involves increasing the atomic
concentration of the ‘active’ U-235 isotope from 0.7%
in natural uranium to approximately 5% required for
reactor fuel.
The two methods of uranium enrichment used to date
have been the now obsolete Gas Diffusion (first generation)
and Centrifuge (second generation). Silex’s third generation
laser-based process provides much higher enrichment
process efficiency compared to these earlier methods,
offering lower costs and greater overall efficiency.
6
The SILEX Technology
The SILEX Technology is a unique laser-based process
that has the potential to economically separate uranium
isotopes as well as several other elements. It has a
number of advantages over other uranium enrichment
processes including:
• Breakthrough in efficiency – SILEX is the most cost effective
enrichment method
• Smaller footprint than centrifuge and diffusion plants
• Anticipated to have the lowest capital costs of all
enrichment technologies
Significantly, the SILEX Technology is currently the only third
generation laser-based uranium enrichment technology under
development in the world.
GLE Agreement
Silex Systems’ agreement with GLE is an exclusive worldwide
commercialisation and licensing agreement for the SILEX
Laser Uranium Enrichment Technology. The underlying value
of the agreement with GLE is a perpetual royalty of up to
12 percent payable to Silex, comprising:
• A base royalty of 7 percent of revenues generated from
enrichment services using the SILEX Technology; and
• An additional royalty of up to 5 percent based on the
total cost of deployment, whereby the lower the cost of
deployment per unit production, the higher the royalty.
Additionally, under the commercialisation and license
agreement there are potentially two further milestone
payments payable:
• US$5 million – on commencement of construction of the
initial commercial plant; and
• US$15 million – upon verification by the US Nuclear
Regulatory Commission of construction compliance and
operational readiness of the initial commercial plant.
These milestone payments follow the US$15 million milestone
payment that was received by Silex in July 2013, triggered by
the successful completion of the Test Loop Phase 1 Program
Milestone: Technology Demonstration and Validation.
Silex Annual Report 2015 The Year in Review
GLE Restructure
In July 2014, GLE announced a significant restructure in
response to worsening trading conditions in the global
nuclear fuel markets, which were initially triggered by the
events in Fukushima, Japan in March 2011. The restructure
resulted in the consolidation of GLE operations to Wilmington,
North Carolina. Meanwhile, an opportunity to build the first
commercial production plant in Paducah, Kentucky is the
subject of continuing negotiations with the US Department of
Energy, as detailed below. Notwithstanding the restructure,
the key commercial terms of the licence agreement between
Silex and GLE remain unchanged.
Paducah Commercial Laser
Enrichment Opportunity
In November 2013, the US Department of Energy (DOE)
selected SILEX Technology licensee GLE to enter into
exclusive negotiations for future operations at the DOE’s
nuclear fuel site in Paducah, Kentucky. These negotiations,
concerning the establishment of GLE’s proposed Paducah
Laser Enrichment Facility (PLEF), are nearing completion with
an outcome likely in the next few months.
The Paducah opportunity would potentially involve using the
PLEF to reprocess hundreds of thousands of tonnes of high
assay tails inventories owned by the DOE, which are left over
from previous enrichment activities in the US using inefficient
gas diffusion technology. Reprocessing would occur over a 40
year period to produce natural grade uranium (about a third
of the feed quantity) and low assay tails. The natural grade
uranium produced at the PLEF would be sold into the global
uranium market, and depending on the production rate,
would be equivalent to one of the world’s largest uranium
mines. The production rate is likely to be regulated, under
legislation currently being considered by the US Congress,
at around 2000 metric tonnes of uranium (in the form of UF6),
or around 5 million pounds equivalent of uranium oxide
(U3O8) per year.
The current enrichment market is
around 50 million SWU per annum
which equates to approximately
US$4 billion per annum at current
long term pricing levels
Subject to a recovery in the market price of uranium and
receipt of required regulatory approvals, the PLEF opportunity
could represent an excellent path to market for our disruptive
laser enrichment technology and provide a foundation for
further expansion by GLE into the enrichment market if and
when new capacity is needed. As previously disclosed, in
2012 GLE obtained a combined construction and operating
license from the US Nuclear Regulatory Commission (NRC)
for an enrichment plant of up to 6 million separative work
units (SWU – the unit for enrichment) planned for Wilmington,
North Carolina. The current enrichment market is around
50 million SWU per annum which equates to approximately
US$4 billion per annum at current long term pricing levels.
Before the Fukushima accident, the market was around 60
million SWU and approaching US$10 billion in annual sales.
Silex Annual Report 2015
7
CEO’S REPORT (continued)
Project Activities Update -
Phase II: Full-Scale Engineering
and Economic Validation
The Nuclear Industry Outlook -
Japanese Reactor Restarts and
Global Nuclear Expansion
The GLE and Silex project teams remain focussed on
Phase II of the Commercialisation Program, which includes
economic and engineering validation of the technology. GLE
is conducting a phased approach to commercialisation of the
SILEX Laser Uranium Enrichment Technology, as follows:
Phase
Objectives
Phase I
Test Loop technology
demonstration and
NRC commercial plant
license approval
Status
Completed
Phase II
Engineering and economic
validation for the initial
commercial production module
Commenced
in 2012
Phase III Construction of the first full-scale
commercial production facility
Yet to
commence
Following the GLE restructure announced in July 2014,
Phase II activities previously conducted at Oak Ridge,
Tennessee have been consolidated into the Test Loop
facility in Wilmington, North Carolina. The ongoing test and
optimisation activities in Wilmington continue to produce
positive results, including the successful demonstration of key
technology process improvements which have the potential to
lower operating and capital costs of a commercial production
facility. This continuing work provides a solid base for the
design of the full-scale commercial production plant.
A small team based at our Lucas Heights facility in Sydney,
comprising the core of Silex’s laser technology expertise,
continues to make good progress with the development of
commercial-scale plant laser systems. The team recently
completed a major milestone with the demonstration of
the first integrated plant-scale laser system operating over
extended periods. This work, which is funded by Silex, will
also ensure our core competency in the SILEX Technology
is maintained, and will assist GLE in the completion of the
Phase II program.
The market for nuclear fuel, including natural and enriched
uranium, remains depressed, with both the uranium and
enrichment markets continuing to experience a challenging
pricing environment. A key contributing factor to the expected
recovery of the nuclear fuel markets is the restart of nuclear
reactors in Japan, which have been largely shutdown since
2011. The first reactor restart occurred on 11 August 2015
at the Sendai nuclear power plant in southern Japan, with
the second Sendai unit expected to restart before the end of
2015. Another 24 reactors are currently in the restart approval
process, according to the World Nuclear Association (WNA)
(world-nuclear.org). Japan has also recently confirmed its
commitment to nuclear power generation detailing a program
setting out a target to produce a fifth of its power from
nuclear energy by 2030.
The team recently completed
a major milestone with the
demonstration of the first
integrated plant-scale laser system
operating over extended periods.
Meanwhile, the construction of new nuclear power plants
around the world is accelerating again as Governments
continue to focus on energy security and low emissions
electricity generation. For example, the US Environmental
Protection Agency’s recently released Clean Power Plan
allows new nuclear reactors to be counted towards meeting
federal emissions limits. This initiative effectively confirms the
commitment of the US to nuclear power. This is in addition to
China and India both moving ahead with significant nuclear
power expansion programs.
8
Silex Annual Report 2015
CEO’S REPORT (continued)
According to the WNA, there are currently 436 operable
reactors around the world with ~380 GWe generating
capacity. Another 67 reactors are under construction in 14
countries, including 24 in China, 6 in India, and 5 in the USA.
A further 166 reactors are on order or planned and 322
reactors are proposed to be built. Under the New Policies
Scenario in the International Energy Agency’s World Energy
Outlook 2014, global nuclear capacity is predicted to grow
to 624 GWe by 2040. Under the low-carbon ‘450 Scenario’,
capacity could more than double to 862 GWe by 2040.
Whichever scenario prevails, significant expansion of global
nuclear capacity is likely over the next two decades and
beyond. If so, this will ensure growing demand for both
natural and enriched uranium, and potentially a positive
outlook for Silex, subject to successful commercialisation
of the SILEX Laser Uranium Enrichment Technology over
the coming years.
Outlook
We expect to complete the restructure of the Company
in the coming months and thereafter be in position to focus
on our core SILEX Laser Uranium Enrichment Technology.
We remain committed to the nuclear industry and are
confident that there will be a potentially significant expansion
of global nuclear capacity over the next two decades and
beyond. This will ensure growing demand for both natural
and enriched uranium in the future, and hopefully a positive
outlook for Silex, subject to successful commercialisation
of the SILEX Technology over the next few years.
We look forward to sharing our results with you and providing
a further update at the Annual General Meeting in November.
Dr Michael Goldsworthy
CEO/Managing Director
Silex Annual Report 2015
Silex Annual Report 2015
9
9
Company
Overview
Mission: To deliver the unique and disruptive SILEX laser enrichment
technology as the next generation technology for the global uranium
enrichment industry.
Historical Background
1988
1996
Silex is established by founder Dr Michael Goldsworthy as
a technology research and development subsidiary of Sonic
Healthcare Limited, an Australian publicly listed company.
Silex is divested from Sonic Healthcare Limited and
sets about establishing the commercial viability of the
SILEX Technology.
1990
1998
Silex begins researching the isotope separation concepts of
co-inventors Dr Michael Goldsworthy and Dr Horst Struve.
Silex lists on the Australian Stock Exchange (ASX) under
the symbol ‘SLX’.
1993
2000
The unique principles of the SILEX (Separation of Isotopes
by Laser EXcitation) Process are formulated.
1995
‘Proof of Principle’ demonstration of the SILEX Process is
achieved at the Company’s laboratories in Lucas Heights,
Sydney. Uranium enrichment, the largest market for isotope
separation, becomes Silex’s primary focus.
An Agreement for Cooperation between the US and
Australian Governments is signed, paving the way for
continued development of the SILEX Technology for uranium
enrichment, and facilitating its future transfer to the US.
The first macroscopic demonstration of the SILEX uranium
process is successfully achieved.
Silex wins the 2000 Australian Technology Award for
Excellence in the Manufacturing and Engineering sector.
Silex raises $36 million through a share issue to assist
in funding the development of its technology.
10
Silex Annual Report 2015 2001
2008
The SILEX Technology is officially Classified by the US and
Australian Governments. The implications of classification
relate mainly to security protocols.
2002
The SILEX Uranium Enrichment Project achieves a key
milestone with the first full demonstration on practical
uranium enrichment using the SILEX ‘Direct Measurement
Facility’ at Lucas Heights, Sydney.
2004
Silex successfully commissions the world’s first silicon laser
enrichment pilot plant.
2006
Silex and the General Electric Company sign an exclusive
Technology Commercialisation and License Agreement
for the SILEX Uranium Enrichment Technology in May,
with US Government authorisations received in October.
2007
Transfer of the SILEX Uranium Enrichment Project to GE’s
Wilmington, North Carolina (USA) nuclear fuel plant is
completed in the first half. Hitachi joins GE as project partner.
GE-Hitachi signs Letters of Intent for uranium enrichment
services and support using the SILEX Technology with Exelon
and Entergy - the two largest nuclear power utilities in the US.
Silex successfully completes a $50 million capital raising
in October.
Global Laser Enrichment (GLE), formed as a subsidiary of
GE-Hitachi Nuclear Energy (GEH) to commercialise the SILEX
Technology, announces it has selected its Wilmington, North
Carolina, headquarters site for the first commercial SILEX
uranium enrichment facility.
GLE is notified that the US Nuclear Regulatory Commission
(NRC) has approved a license to operate the Test Loop for
the demonstration of the next generation SILEX laser uranium
enrichment technology.
GEH and Cameco Corp. announce that Cameco Corporation,
the world’s largest uranium producer, has joined the GLE
venture. Cameco paid US$123.8 million for a 24% stake in
GLE. GE retains 51% ownership with Hitachi at 25%.
2009
In August, the US Nuclear Regulatory Commission (NRC)
announces it has accepted GLE’s license application
to construct and operate a commercial SILEX uranium
enrichment facility in Wilmington, triggering a ~30 month
review process.
In July, GLE announces the on-schedule start-up of the
Test Loop to evaluate the next-generation SILEX Uranium
Enrichment Technology.
2010
In April, GLE and Silex announce the successful completion
of the Test Loop initial measurement program.
11
Silex Annual Report 2015 2011
2014
Silex successfully completes an $89 million capital raising
and a share purchase plan which raises a further $20 million.
2012
In September, the US NRC approves the world’s first
Construction and Operating License for a commercial
laser enrichment plant utilising the SILEX Technology at
Wilmington, North Carolina.
2013
In May, GLE and Silex achieve the successful completion
of the Test Loop Program Phase I Milestone: Technology
Demonstration and Validation in Wilmington, North Carolina
– triggering a US$15 million milestone payment from GLE to
Silex (which was received in July 2013).
Silex lists on the OTCQX exchange in the US under the
symbol ‘SILXY’ in June.
The US Department of Energy (DOE) selects GLE for future
operations at its Paducah, Kentucky Site in November.
The DOE and GLE commence negotiations for a 40-year
contract to have the SILEX Technology commercially
deployed for the re-enrichment of depleted uranium tails.
In June, Silex announces completion of a strategic review
of the entire business, determining to refocus efforts on its
primary economic asset, the SILEX Uranium Enrichment
Technology. The strategic review also involves an accelerated
transition to market for subsidiaries Solar Systems and
Translucent and results in the cessation of operations
at ChronoLogic.
In July, GLE announces its own restructure in response
to worsening trading conditions in the global nuclear fuel
markets, initially triggered by the events in Fukushima, Japan
in March 2011. The changes result in the consolidation of
GLE’s operations. Importantly, the key commercial terms of
Silex’s licence agreement with GLE do not change.
2015
Work continues on the commercialisation of the SILEX
Uranium Enrichment Technology at GLE’s test loop facility in
Wilmington, North Carolina (with GLE funding) and at Silex’s
Lucas Heights laser facility in Sydney (under Silex funding).
In August, Silex provides a submission to the South Australian
Government’s Nuclear Fuel Cycle Royal Commission,
supporting further processing of uranium produced in South
Australia, including enrichment using the SILEX Technology.
12
Silex Annual Report 2015
Concise
Financial
Report
for the year ended 30 June 2015
SILEX SYSTEMS LIMITED
& ITS SUBSIDIARIES
ABN 69 003 372 067
Silex Annual Report 2015
13
Your directors present their report on the consolidated entity consisting of Silex Systems Limited (Silex or the Company) and the
entities it controlled at the end of, or during the year ended 30 June 2015.
1. Directors and company secretary
The following persons were directors of Silex Systems Limited during the whole of the financial year and up to the date
of this report:
Dr L M McIntyre
Dr M P Goldsworthy
Mr C D Wilks
Mr R A R Lee was appointed as a director on the 1 July 2015 and continues in office as at the date of this report. Mr A M Stock
was a director from the beginning of the financial year until his retirement on 31 August 2015.
The Company secretary is Ms J E Ducie BBus, CA, GAICD. Ms Ducie was appointed to the position of Company secretary in
2010. Before joining Silex, Ms Ducie held a senior finance position in the Construction industry in the Middle East and prior to
that worked as a Senior Associate with a Chartered Accounting Practice.
2. Principal activities
During the year the principal continuing activities of the consolidated entity consisted of the commercialisation of the Company’s
foundation technology – the laser isotope separation process for uranium enrichment known as the ‘SILEX Technology’. In
addition, a restructure as a result of the strategic review of the entire business in June 2014 was implemented and is nearing
completion at the time of writing. The restructure resulted in the following activities for our subsidiary business interests:
i)
ii)
Solar Systems: Following a rigorous but unsuccessful global process to attract new investment for Solar Systems,
the Silex Board announced the cessation of business operations on 30 July 2015. The pursuit of opportunities to realise
value for the sale of assets and intellectual property surrounding the unique ‘Dense Array’ concentrated photovoltaic (CPV)
system for utility-scale solar power stations was continuing at the time of writing. Solar Systems Pty Ltd is a wholly owned
subsidiary of Silex.
Translucent: The pursuit of business development options for Translucent’s novel semiconductor materials for application
to the manufacturing of next generation devices in the semiconductor and power electronics industries accelerated during
the year with technical due diligence undertaken by several third parties. This process culminated in the signing of an
exclusive License and Assignment Agreement with UK-based IQE Plc on 15 September 2015. As a result of the Agreement,
the Translucent technology will be transferred to IQE Plc for the completion of product development and commercialisation
activities during the 30-month license period. Meanwhile, the Translucent facility in Palo Alto, California will be closed down
by the end of December 2015. Translucent Inc will remain a Californian-based company (in which Silex has a 99% fully
diluted interest) in order to service the abovementioned Agreement.
3. Dividend
No dividend payments were made during the year. No dividend has been recommended or declared by the Board.
14
Directors’ ReportSilex Annual Report 2015 4. Review of operations and activities
Information on the operations and financial position of the consolidated entity and its business strategies and prospects is set
out below and in section 8 ‘Likely developments and expected results of operations’.
Trading Results
A summary of consolidated revenue and results is set out below:
Revenue from continuing operations
(Loss) before income tax expense
Income tax expense
Net (loss) from continuing operations
Net (loss) from discontinued operations
Net (loss) for the year
Net (loss) is attributable to:
Owners of Silex Systems Limited
Non-controlling interests
2015
$
2014
$
3,674,860
7,113,672
(2,284,993)
(1,253,137)
-
-
(2,284,993)
(33,659,803)
(35,944,796)
(1,253,137)
(28,378,323)
(29,631,460)
(35,944,796)
(29,488,786)
-
(142,674)
(35,944,796)
(29,631,460)
Key information about the consolidated operations, results and financial position
Comments on the operations and the results of those operations are set out below:
The focus of the Company in FY 2015 has been the implementation of the outcomes of the major strategic review announced
by the Silex Board on 30 June 2014 that will result in the return of the Company’s focus to the development of the Company’s
foundation technology and core asset – the ‘SILEX’ laser uranium enrichment technology. The resulting restructure has
seen a number of significant changes completed, including, a full operational review with a significant reduction in headcount,
the closure of the ChronoLogic business, and in parallel, a rigorous global search for business development options to
accelerate the transition to market for subsidiaries Solar Systems and Translucent. The implementation of the restructure is
nearing completion.
The announcement of the strategic review was followed soon after by SILEX Technology Licensee, GE-Hitachi Global Laser
Enrichment LLC (‘GLE’), announcing its own restructure in July 2014. GLE’s restructure resulted in the slowdown of the
commercialisation project in response to adverse conditions in the nuclear fuel markets, largely precipitated by the shutdown
of the Japanese nuclear industry after the Fukushima disaster. GLE has completed its restructure, resulting in a significant
reduction of funding for activities in its US operations, which have now been consolidated in Wilmington, North Carolina.
Additionally, Silex took over funding of activities at its Lucas Heights facility in Sydney, which continues to progress with the
development of commercial-scale plant laser systems and providing ongoing support to the GLE team in Wilmington.
15
Directors’ ReportSilex Annual Report 2015 Following a rigorous search for new investment for Solar Systems which was ultimately unsuccessful, the Silex Board
announced on 30 July 2015 the immediate cessation of the Solar Systems business operations. However, given the
considerable interest shown in the Solar Systems technology, the IP and associated expertise has been retained to pursue
residual opportunities. The pursuit of business development options for Translucent continued during the year with several
interested parties advancing technical due diligence. The due diligence resulted in a License and Assignment Agreement
for the Translucent technology being signed on 15 September 2015, under which the transfer of the technology to IQE Plc
will occur over a 30-month license period. Both businesses have been reported as held for sale and discontinued operations
in these accounts.
We expect to complete the restructure of the Company in the coming months and thereafter focus solely on our core ‘SILEX’
laser uranium enrichment technology. Accordingly, these financial statements have been presented to show the financial impact
of the restructure. We continue to believe that the medium to long term outlook for uranium and enrichment services will return
to positive growth and therefore view the SILEX Technology - the only third generation laser enrichment technology being
commercialised in the world - as our key asset and the best path forward to deliver value to our shareholders.
Financial review
A summary of our consolidated income statement is set out below:
Revenue from continuing operations
Other income
Research and development materials
Employee benefits expense
Consultants and professional fees
Other expenses
Income tax expense
2015
$
3,674,860
42,475
(154,296)
(4,017,953)
(642,304)
(1,187,775)
-
2014
$
7,113,672
569
(560,854)
(5,552,858)
(817,515)
(1,436,151)
-
Net (loss) from continuing operations
(2,284,993)
(1,253,137)
Net (loss) from discontinued operations
Net (loss) for the year
(33,659,803)
(35,944,796)
(28,378,323)
(29,631,460)
The net loss from ordinary activities of $35.9m increased by $6.3m compared to the prior year. The net loss is comprised
of the loss from continuing operations of $2.3m (an increase of $1.0m compared to the prior year) and the loss from
discontinued operations of $33.7m (an increase of $5.3m compared to the prior year). The increase in loss from continuing
operations is in line with expectations as a result of Silex now funding the Lucas Heights activities following GLE’s restructure
announced in July 2014.
The net loss from discontinued operations includes the operations of Solar Systems and Translucent as well as a small loss
for the ChronoLogic operation that ceased in September 2014. Significant expenses for the period included impairment of the
carrying value of property, plant and equipment, and intangibles of $19.3m held by Solar Systems and Translucent combined,
in accordance with Australian Accounting Standards. In addition, the net loss included the anticipated costs associated with
the dismantling and decommissioning of various facilities, further write downs of inventory holdings and employee termination
payments made during the year.
The above noted factors are the key drivers of the increased net loss from ordinary activities (after tax) attributable to members.
Further commentary on the results from our operations is provided below.
16
Directors’ ReportSilex Annual Report 2015 Continuing Operations - Silex Systems
The Silex Systems segment result was a $2.3m loss in the current year compared to $1.3m loss in the previous year. The
increased loss was largely due to a reduction of $3.0m in revenue from Recoverable projects costs in the Uranium Enrichment
Project. Interest income also decreased to $2.2m in the current year compared to $2.6m in the previous year as a result of lower
interest rates and lower average cash / term deposit holdings in the current year. In addition, there was a reduction in expenses
from continuing operations of $2.4m compared to the prior year, including a decrease in employee benefits expense of $1.5m
and a decrease in research and development materials costs of $0.4m.
Discontinued Operations – Solar Systems, Translucent, ChronoLogic and Silex Solar
The $33.7m loss from discontinued operations ($28.4m loss in the prior year) includes operating losses of $11.0m ($15.7m in
the prior year) from the Solar Systems, Translucent, ChronoLogic and Silex Solar businesses. The loss was also impacted by
the impairment of the carrying value of property, plant and equipment and intangible assets of $19.3m ($12.4m in the prior year)
held by Solar Systems and Translucent, a provision for the dismantling and decommissioning of the Companies’ various facilities
of $1.8m ($0.3m of restructuring provisions in the prior year) and $0.8m of inventory write-downs, taking the carrying value of
Solar Systems inventory to $nil. Losses on derecognition of non-controlling interest in discontinued activities was $0.8m ($nil in
the prior year).
The Silex Board announced the immediate cessation of the Solar Systems business operation on 30 July 2015 following a
rigorous search for new investment which was ultimately unsuccessful. Given the considerable interest shown in the Solar
Systems technology throughout the process, the IP and associated expertise has been retained to pursue residual opportunities.
Third party technical due diligence activities conducted during the year in relation to Translucent’s technology resulted in the
signing of a License and Assignment Agreement with UK-based IQE Plc on 15 September 2015. The scale of Translucent’s
operations was reduced during the year with an emphasis on conversion of business development opportunities.
The closure of the ChronoLogic business was completed in September 2014. ChronoLogic was derecognised as a subsidiary
during the year for accounting purposes and an adjustment of $0.8m has been processed on consolidation to clear the
accumulated losses attributable to the minority shareholding. This had the effect of increasing the loss from discontinued
operations by $0.8m.
Balance sheet
A summary of our balance sheet is set out below:
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Total equity
30 June 2015
$
30 June 2014
$
61,951,409
97,343,949
67,451
119,311
62,018,860
97,463,260
4,451,614
113,110
4,564,724
5,266,206
111,971
5,378,177
57,454,136
92,085,083
57,454,136
92,085,083
17
Directors’ ReportSilex Annual Report 2015 As at 30 June 2015, total assets were $62m. Significant assets are cash holdings of $55.2m (cash and term deposits), trade
and other receivables of $5.2m and assets held for sale of $1.6m. Total liabilities were $4.6m and included liabilities associated
with our discontinued operations of $3.1m. The Company does not have any borrowings (e.g. bank debt).
5. Earnings per share
Earnings per share for (loss) from continuing operations attributable to the
ordinary equity holders of the Company
Basic earnings per share
Diluted earnings per share
Earnings per share for (loss) attributable to the ordinary equity holders
of the Company
Basic earnings per share
Diluted earnings per share
2015
Cents
(1.3)
(1.3)
(21.1)
(21.1)
2014
Cents
(0.7)
(0.7)
(17.3)
(17.3)
6. Significant changes in state of affairs
The implementation of the Company’s strategic review, as announced in June 2014 is nearing completion, with the business
returning its sole focus to the core SILEX Technology. Whilst the strategic review implementation will deliver financial and
operational benefits to Silex in future years, the current year result has been impacted by asset impairments, provisions for
the dismantling and decommissioning of various facilities, further write downs of inventory holdings and employee termination
payments made during the year.
Following a rigorous search for new investment which was ultimately unsuccessful, the Silex Board announced on 30 July 2015
the immediate cessation of the Solar Systems’ business operations. Given the considerable interest shown in the Solar Systems’
technology, the IP and associated expertise has been retained to pursue residual opportunities.
On 15 September 2015, the Silex Board announced the signing of an agreement for the license and assignment of subsidiary
Translucent’s unique semiconductor technology with UK-based IQE Plc. The agreement provides for the transfer of the
Translucent technology to IQE during the 30-month license period to complete product commercialisation and will result in the
closure of the Translucent facility at Palo Alto, California.
Additionally, as reported previously, all ChronoLogic activities ceased in September 2014. There were no other significant
changes in the state of affairs of the Company during the financial year not otherwise dealt with in this report.
18
Directors’ ReportSilex Annual Report 2015 7. Matters subsequent to the end of the financial year
Solar Systems
On 30 July 2015, Silex announced the immediate cessation of Solar Systems’ business operations. The announcement
followed a rigorous extended global process to attract new investment in Solar Systems which ultimately was unsuccessful.
As the process revealed considerable interest in Solar Systems’ unique ‘Dense Array’ concentrating dish technology
during the divestment process, the Company has retained the IP and associated expertise to pursue residual opportunities.
The resulting financial effect of the 30 July 2015 decision, which is largely staff redundancy costs, has not been brought to
account in the financial statements for the year ended 30 June 2015. Redundancy costs of approximately $1.0m are expected
to be brought to account in the financial statements for the year ended 30 June 2016.
Translucent
On 15 September 2015, Silex announced the signing of a License and Assignment Agreement with UK-based IQE Plc for
Translucent’s technology. The agreement grants IQE an exclusive 30-month license to complete product development and
commercialisation activities, with an option exercisable at any time during the 30-month license period, for IQE to acquire
Translucent’s technology. If successfully commercialised the agreement also provides for a perpetual royalty on the sale of
products incorporating the Translucent technology.
As a result of the agreement, the Translucent facility at Palo Alto, California will no longer be required and will be closed down
by the end of December 2015. The services of two key engineers will be retained for 12 months to facilitate the transfer of
the technology to IQE. The financial effect of the 15 September 2015 announcement, including a maximum license fee of
USD$1.5m (minimum of USD$1.415m) payable by 15 March 2016 and a small amount of staff redundancy costs, have not been
brought to account in the financial statements for the year ended 30 June 2015 and will be brought to account in the financial
statements for the year ended 30 June 2016. Should the option be exercised by IQE for the acquisition of the technology, a
further payment of USD$5m would be due to Translucent.
Other
The consolidated entity is not aware of any other matters or circumstances which are not otherwise dealt with in the financial
statements that have significantly, or may significantly, affect the operations of the consolidated entity, the results of its
operations or the state of the consolidated entity in subsequent years other than those referred to above.
8. Likely developments and expected results of operations
Silex is a technology company with its primary asset being the ‘SILEX’ laser uranium enrichment technology which is currently
licensed exclusively to GE-Hitachi Global Laser Enrichment LLC (‘GLE’). The Company’s future prospects remain largely
dependent on the outcomes of the phased commercialisation program and a recovery in the accessible markets for both
uranium and enrichment services.
19
Directors’ ReportSilex Annual Report 2015 Business strategies and future prospects – Silex Systems
Silex invented a novel method for enriching uranium using lasers in the mid-1990’s, and after conducting development and
demonstration activities in Australia, is currently supporting the commercialisation of the SILEX Technology in Wilmington, North
Carolina, USA under an exclusive Technology Commercialisation and License Agreement with GLE – a business venture owned
by GE (51%), Hitachi (25%) and Cameco (24%).
On 24 July 2014, GLE announced that they would slow the pace of the commercialisation program for the SILEX laser uranium
enrichment technology to align with adverse market conditions being experienced in the uranium and enrichment services
markets primarily as a result of the shut-down of the Japanese nuclear power industry after the Fukushima accident. While
these changes have resulted in the consolidation of GLE operations, importantly, Phase II technology commercialisation work is
continuing at the Test Loop facility in Wilmington, North Carolina under GLE funding, and also at the laser development facility
in Lucas Heights, Sydney under Silex funding. Meanwhile, Silex has been informed that negotiations with the US Department
of Energy (DOE) concerning the establishment of the Paducah Laser Enrichment Facility (PLEF) are nearing completion with an
outcome likely in the next few months.
GLE and Silex continue to conduct a stage-gated approach to commercialisation of the SILEX laser enrichment technology,
albeit at reduced pace, with the following three phases:
Phase
Phase I
Phase II
Objectives
Status
Test Loop technology demonstration and NRC commercial plant license approval
Completed
Economic and engineering validation for the initial commercial production module
Commenced in 2012
Phase III
Construction of the first full-scale commercial production facility
Yet to commence
The successful completion of the Test Loop Program Phase I Milestone (technology validation) resulted in a USD$15m milestone
payment to Silex in July 2013.
The market for nuclear fuel, including natural and enriched uranium, remains depressed, with both the uranium and enrichment
markets continuing to experience a challenging pricing environment. The global nuclear industry is still suffering the impacts
of the Fukushima event in 2011 and the shutdown of the entire Japanese nuclear power plant fleet for much longer than
anticipated. As a result, the demand for natural and enriched uranium has been slower to recover than expected and remains
in significant oversupply. The price of uranium remains down, however has started to show signs of recovery, having increased
by ~30% since June 2014. Unfortunately downward pricing pressure continues to be witnessed in the enrichment market with
prices down over 50% since the events of Fukushima.
A key contributing factor to the expected recovery of the nuclear fuel markets is the restart of nuclear reactors in Japan, which
have been largely shutdown since 2011. The first reactor restart occurred on 11 August 2015 at the Sendai nuclear power plant,
with the second Sendai unit expected to restart before the end of 2015. At the time of writing another 24 reactors were in the
restart approval process, according to the World Nuclear Association (WNA) (world-nuclear.org). Japan recently confirmed its
commitment to nuclear power generation detailing a program setting out a target to produce around one fifth of its power from
nuclear energy by 2030.
Meanwhile, the construction of new nuclear power plants around the world is accelerating again as Governments continue
to focus on energy security and low emissions electricity generation. For example, the US Environmental Protection Agency’s
recently released Clean Power Plan allows new nuclear reactors to be counted towards meeting federal carbon emissions limits.
This initiative effectively confirms the commitment of the US to nuclear power. This is in addition to China and India both moving
ahead with significant nuclear power expansion programs.
According to the WNA, at the time of writing there were 436 operable reactors around the world with ~380 GWe generating
capacity. Another 67 reactors are under construction in 14 countries, including 25 in China, 6 in India, and 5 in the USA. A
further 166 reactors are on order or planned and 322 reactors are proposed to be built. Under the New Policies Scenario in the
International Energy Agency’s World Energy Outlook 2014, global nuclear capacity is predicted to grow to 624 GWe by 2040.
Under the low-carbon ‘450 Scenario’, nuclear generating capacity could more than double to 862 GWe by 2040.
20
Directors’ ReportSilex Annual Report 2015 Whichever scenario prevails, significant expansion of global nuclear capacity is likely over the next two decades and beyond. If
so, this will ensure growing demand for both natural and enriched uranium, and potentially a positive outlook for Silex, subject
to successful commercialisation of the SILEX laser enrichment technology by GLE over the coming years. However, the risks
surrounding nuclear industry growth prospects and the related nuclear fuel market conditions, most of which are beyond our
control, could impact the Phase II and Phase III commercialisation programs outlined above.
Silex Systems Restructure
On 30 June 2014, Silex announced the completion of a strategic review of the entire business, resulting in a major restructure
of the Company in order to refocus efforts on our primary economic asset, the SILEX laser enrichment technology. At the time
of writing the restructure was largely complete. The Silex Board announced the cessation of Solar Systems’ business operations
on 30 July 2015, following a rigorous but unsuccessful global process to attract new investment. The Company has retained
the IP and associated expertise to pursue residual opportunities. The Silex Board also announced a License and Assignment
Agreement for the Translucent technology on the 15 September 2015 following a period of positive third party technical
due diligence activities being conducted. The agreement provides for the licensing of Translucent’s technology to IQE over
a 30-month period during which a product development and commercialisation program will be completed. Consequently,
the Translucent facility in Palo Alto, California will be closed by the end of the calendar year.
9. Information on Directors
a) Directors’ profiles
The following information is current as at the date of this report:
Dr Lisa McIntyre BSc (Hons), PhD, GAICD.
Chair – Independent non-executive director
Experience and expertise
Other current listed
company directorships
Former listed company
directorships in last 3 years
Special responsibilities
Independent non-executive director for three years and Chair for one year. Extensive
experience in strategy, commercialisation and performance issues as a senior partner
of global strategy firm L.E.K. Consulting for 20 years. Director of numerous companies
including HCF, Cover-More Group Limited, GenesisCare and Your Tutor Pty Ltd.
Non-executive director of Cover-More Group Limited since November 2013.
None
Chair of the Board
Member of Audit Committee
Chair of People & Remuneration Committee
Interests in shares and options
Ordinary shares – Silex Systems Limited
48,230
Options over ordinary shares – Silex Systems Limited
Nil
21
Directors’ ReportSilex Annual Report 2015 Dr Michael Goldsworthy BSc (Hons), MSc, PhD, FAIP, GAICD.
Chief Executive Officer/Managing Director
Experience and expertise
Other current listed
company directorships
Former listed company
directorships in last 3 years
CEO/MD for twenty three years. Founder of the Company and co-inventor of the SILEX
uranium enrichment technology.
None
None
Special responsibilities
Chief Executive Officer / Managing Director
Interests in shares and options
Ordinary shares – Silex Systems Limited
Options over ordinary shares – Silex Systems Limited
5,979,055
1,102,207
Mr Christopher Wilks BComm, FAICD.
Non-executive director
Experience and expertise
Other current listed
company directorships
Former listed company
directorships in last 3 years
Special responsibilities
Non-executive director for twenty seven years. Finance director and CFO of Sonic
Healthcare Limited. Various directorships held on the boards of a number of public
companies over the last twenty years.
Finance director of Sonic Healthcare Limited since 1989
None
Business development and corporate strategy
Member of Audit Committee
Member of People & Remuneration Committee
Interests in shares and options
Ordinary shares – Silex Systems Limited
2,814,021
Options over ordinary shares – Silex Systems Limited
367,035
Mr Robert Lee BSc MBA.
Independent non-executive director
Experience and expertise
Other current listed
company directorships
Former listed company
directorships in last 3 years
Special responsibilities
Independent non-executive director from 1 July 2015. Experienced company director,
corporate adviser and former Executive Director of Macquarie Group Limited.
None
None
Chair of Audit Committee
Member of People & Remuneration Committee
Interests in shares and options
Ordinary shares – Silex Systems Limited
Options over ordinary shares – Silex Systems Limited
Nil
Nil
22
Directors’ ReportSilex Annual Report 2015 The following individual is a former director of the Silex Board:
Mr Andrew Stock BEng (Chem) (Hons), FIE Aust, GAICD.
Independent non-executive director until 31 August 2015
Experience and expertise
Non-executive director for 2 years
Other current listed
company directorships
Former listed company
directorships in last 3 years
Special responsibilities
Non-executive director of Horizon Oil Limited (director since 2011)
Non-executive director of Geodynamics Limited (2003 to 2015)
Chair of Audit Committee
Member of People & Remuneration Committee
Interests in shares and options
Ordinary shares – Silex Systems Limited
Options over ordinary shares – Silex Systems Limited
Nil
Nil
10. Meetings
The number of directors’ meetings held during the financial year and the number of meetings attended by each director are set
out in the following table:
Director’s name
Dr L M McIntyre
Dr M P Goldsworthy
Mr A M Stock
Mr C D Wilks
Directors’
Meetings
Audit Committee
Meetings
People & Remuneration
Committee Meetings
Number
Held
Number
Attended
Number
Held
Number
Attended
Number
Held
Number
Attended
15
15
15
15
15
15
13
15
2
*
2
2
2
*
2
2
2
*
2
2
2
*
2
2
* Not a member of the relevant committee at the time the scheduled meetings were held.
23
Directors’ ReportSilex Annual Report 2015 11. Remuneration Report
Dear Shareholders,
I am pleased to present to you the Silex Systems Limited Remuneration Report for the year ended 30 June 2015.
As you are aware, throughout the year, the Company the Board and Management progressed with the implementation of the
Company’s 2014 major strategic review that will result in the return of the Company’s focus to the development of our core
asset, the SILEX laser enrichment technology. This restructure is now largely complete and has resulted in significant changes,
including the closure of the ChronoLogic business completed in September 2014, a reduction of 50% in corporate headcount,
a License and Assignment Agreement being signed for the Translucent technology in September 2015 and the pursuit of
residual business development options for Solar Systems.
The restructure included a full operational review, with various roles combined to streamline operations and reduce costs
where possible. Some difficult decisions were made which impacted the Company’s Key Management Personnel (KMP),
which included the Board’s decision that no remuneration increases be awarded for FY 2015 and more recently for FY 2016.
It has now been 3 years since a total remuneration increase was awarded to KMP.
In addition, substantial changes were implemented to the remuneration package of our CEO/MD with an agreed reduction
from 1 January 2015 of approximately 55% to Total Maximum Potential Remuneration. This included a reduction of 31% in
Total Fixed Remuneration.
As the restructure of the Company draws to a conclusion, it is likely that a further review of the structure and value of KMP
remuneration will take place, with a continued aim to align remuneration to changing role responsibilities, business size and
structure. The People & Remuneration Committee remains committed to an ongoing review of our remuneration policies and
practices taking into account shareholders perspectives and good governance.
As Chair of the People & Remuneration Committee, I can assure you that the Committee remains mindful of shareholder
concern that any long-term equity based remuneration is linked to growth in shareholder value. Therefore, as the Company
returns its focus to the core SILEX Technology and implements the resulting restructure, it has again been determined that
no long-term incentives will be granted to the CEO/MD and CFO/Company Secretary during FY 2016.
Further details on our remuneration approach and the remuneration for the 2015 financial year are set out within this
Remuneration Report. On behalf of the Board, I invite you to review the full report and thank you for your continued interest.
I look forward to answering any questions you may have at our Annual General Meeting in November 2015.
Dr Lisa McIntyre
Chair, People & Remuneration Committee
24
Directors’ ReportSilex Annual Report 2015
The Directors present the Remuneration Report for the year ended 30 June 2015, outlining key aspects of our remuneration
policy and framework and remuneration awarded for the Company’s non-executive directors, executive directors and other
executive key management personnel.
The report contains the following sections:
a) Directors and KMP disclosed in this report
b) Remuneration governance
c) Linking remuneration structure to company performance
d) Voting and comments made at the Company’s 2014 Annual General Meeting
e) Executive KMP remuneration structure
f)
g) Non-executives directors’ remuneration
h) Director’s and KMP remuneration
i) Details of share-based compensation and bonuses
j) Shares under option
Link between FY 2015 remuneration and performance
a) Directors and KMP disclosed in this report
The 2015 Remuneration Report has been prepared in accordance with the requirements of section 300A of the Corporations
Act 2001 and accounting standard requirements and applies to KMP of the Company. KMP are defined as those persons who
have authority and responsibility for planning, directing and controlling the activities of the Company.
Name
Position
Non-executive and executive directors
Chair and Non-executive director
CEO/Managing Director – Executive director
Non-executive director (until 31 August 2015)
Non-executive director
CFO/Company Secretary
CEO – Solar Systems (until 31 August 2015)
Dr L M McIntyre
Dr M P Goldsworthy
Mr A M Stock
Mr C D Wilks
Other Executive KMP
Ms J E Ducie
Mr C R Murray
b) Remuneration governance
Board oversight
The Silex Board is ultimately responsible for ensuring that the Company’s remuneration structure is equitable and aligned with
the long-term interests of shareholders. The Board and its advisors are independent of Management when making decisions
affecting employee remuneration.
People & Remuneration Committee structure
The People & Remuneration Committee is a committee of the Board currently comprised of a majority of independent
non-executive directors. Its role is to make recommendations to the Board regarding the Company’s remuneration policies
and practices, including those applicable to the Company’s KMP.
25
Directors’ ReportSilex Annual Report 2015
Members of the People & Remuneration Committee were as follows:
Committee members
Committee secretary
Number of meetings in FY 2015
Dr L M McIntyre – Chair
Mr A M Stock (until 31 August 2015)
Mr C D Wilks
Ms A N Scott
2
Other individuals who regularly attended meetings
Dr M P Goldsworthy – CEO/MD
Mr C M Murray – CEO – Solar Systems
Ms J E Ducie – CFO/Company Secretary
The role of the People & Remuneration Committee is to:
• Review and recommend to the Board the appropriate remuneration policies and practices that are competitive and reasonable
for the Company and its specific application to KMP, as well as the general application to all employees;
• Determine remuneration levels of the CEO/MD and other KMP;
• Manage the incentive plans which apply to executive directors and senior executives (the executive team), including key
performance indicators and performance hurdles; and
• Review and make recommendations to the Board regarding the remuneration of non-executive directors.
The role and responsibilities of the People & Remuneration Committee are set out in the People & Remuneration Committee
Charter, which is available on the Company’s website at www.silex.com.au/about/corporate-governance.
Use of remuneration consultants
Following the engagement of AON Hewitt in FY 2014 to conduct a thorough review of KMP and Board remuneration and
structure, the recommendations from that review were fully implemented during FY 2015 and it was not deemed necessary
to engage a remuneration consultant for the FY 2015 remuneration review. The Company continues to access market data
and industry remuneration surveys and reports on a regular basis.
Once the strategic review’s implementation has been finalised it is envisioned that a further full review of KMP remuneration
will be conducted, with a third party remuneration consultant engaged to assist in the completion of the review.
c) Linking remuneration structure to company performance
Remuneration strategy, policy and framework
In determining executive KMP remuneration, the Board aims to ensure that remuneration practices are designed to attract,
motivate and retain highly qualified personnel, whilst having regard for contemporary market practice, good governance
and alignment to changing business circumstances and strategy execution as we work towards commercialisation of our
technologies. The Company aims to reward executive KMP with a level and mix of remuneration commensurate with their
position and responsibilities within the Company that is competitive within the market in which they were recruited. Those
executive KMP who have a greater ability to influence outcomes have a greater portion of their overall remuneration package
‘at risk’.
26
Directors’ ReportSilex Annual Report 2015 Remuneration for executive KMP is reviewed annually and considers market data, insights into remuneration trends, the
performance of the Company and the individual, and the broader economic environment. This review is conducted in
consultation with independent remuneration consultants where appropriate.
The executive KMP remuneration framework has two components:
• Total fixed remuneration; and
• At-risk incentives.
Element
Purpose
Performance Metrics
Potential Value
Total Fixed Remuneration
(TFR)
At Risk Incentives – Short-
term Incentive (STI)
Provide competitive
market salary, including
superannuation and non-
monetary benefits.
Reward executive’s
performance, representative
of their contribution to
achievement of Company
and/or divisional outcomes,
as well as divisional Key
Performance Indicators (KPIs).
Reference to role, market
and experience.
Positioned at median
market rate.
Rewards are generally
based on a percentage of
the executive’s Total Fixed
Remuneration (TFR).
Linked to key performance
hurdles that may include
financial metrics such as
operating cash flow and
non-financial measures, such
as commercial deliverables,
and other specific operational
and strategic deliverables for
the Company.
Long-term Incentives (LTI) were not offered to the CEO/MD or CFO/Company Secretary in FY 2015. LTIs will not be offered as
part of the KMP remuneration structure until completion of the major strategic review.
Assessing performance and claw-back of remuneration
The People & Remuneration Committee is responsible for assessing performance against KPIs and determining the incentive
awards to be paid. To assist in this assessment, the Committee receives detailed reports on performance from management
which are based on independently verifiable data such as financial measures, market information and data from independently
run surveys. At all times the Board has the discretion to make a final determination based on share price performance or
other factors.
In the event of serious misconduct or a material misstatement in the Company’s financial statements the Board can cancel
or defer performance-based remuneration and may also claw back performance-based remuneration paid in previous
financial years.
d) Voting and comments made at the Company’s 2014 Annual General Meeting
Silex Systems Limited received more than 97% of “yes” votes on its remuneration report for the 2014 financial year.
27
Directors’ ReportSilex Annual Report 2015 e) Executive KMP remuneration structure
For FY 2015, executive KMP remuneration packages included a mix of total fixed remuneration (TFR) and at-risk incentives.
Total Fixed Remuneration (TFR)
TFR is comprised of base salary, superannuation and packaged benefits. TFR is reviewed annually, or on promotion. It is
benchmarked against market data for comparable roles in companies in a similar industry and with similar market capitalisation.
The Committee aims to position executives at or near the median, with flexibility to take into account capability, experience, and
value to the organisation and performance of the individual.
In FY 2015, the TFR for the Silex CEO/MD was significantly reduced by mutual agreement, effective from 1 January 2015.
The TFR for all other KMP remained unchanged for FY 2015, with no increases awarded.
Short-term Incentives (STI)
Composition
Assessment
CEO/Managing Director
CFO/Company Secretary
CEO – Solar Systems
Awards may be delivered
in cash or Restricted Silex
Systems Limited ordinary
shares subject to shareholder
approval.
Awards are currently paid
in cash. A portion of the
payment may also be
delivered in Restricted
Silex Systems Limited
ordinary shares.
Awards are currently paid
in cash. A portion of the
payment may also be
delivered in Restricted
Silex Systems Limited
ordinary shares.
Award is subject to the
achievement of agreed
performance criteria
comprising financial metrics
and specific key strategic and
commercial objectives.*
Award is subject to the
achievement of divisional
and Company financial
performance, supplemented
by strategic and commercial
measures specific to business
unit deliverables.*
Award is subject to the
achievement of Solar Systems
financial performance,
supplemented by strategic
and commercial measures
specific to the Solar
Systems business.*
Total Maximum Opportunity
$200,000**
At Risk
Yes
$80,000
Yes
$160,000
Yes
*For commercially sensitive reasons, short-term incentive targets for executive KMP are not published within this Remuneration Report, however
the People & Remuneration Committee believe that all targets are set appropriately and align with shareholder expectations. At all times the
Board has the discretion to make a final determination based on share price performance or other factors.
** Total Maximum STI Opportunity reduced from $400,000 to $200,000 from 1 July 2014.
Long-term Incentive (LTI)
No long-term incentives were granted during FY 2015 to the CEO/MD or CFO/Company Secretary.
The LTI/Success Fee Bonus for the CEO – Solar Systems, was not time-bound and remained an ongoing potential incentive
throughout FY 2015. The maximum incentive opportunity was in-line with the objectives of the Board’s major strategic review
and was tied to the financial close of a transaction for the Solar Systems business or assets and the value secured for Silex
shareholders, after taking into account Silex’s investment to date. As a result of the announcement of the cessation of the Solar
Systems’ business operations on 30 July 2015 and redundancy of the CEO, no long-term incentive was payable and the LTI
was terminated.
The People & Remuneration Committee and Silex Board remain mindful of shareholder concern that any long-term incentive
remuneration be linked to growth in shareholder value. Therefore, as the Company returns its focus to the core SILEX
Technology, it has been determined that no long-term incentives will be granted to the CEO/MD or CFO/Company Secretary
during FY 2016.
28
Directors’ ReportSilex Annual Report 2015 f) Link between FY 2015 remuneration and performance
FY 2015 performance and impact on remuneration
Throughout FY2015, the Company continued to implement the outcomes of the major strategic review. The Company
underwent significant strategic changes, with a full operational restructure and significant reduction in headcount as the
business looked to focus on the development of the Company’s foundation technology and core asset – the SILEX laser
uranium enrichment technology.
The STI performance criteria for FY 2015 for the Silex CEO/MD and Solar Systems CEO were heavily focussed on the
deliverables resulting from the strategic review. Key performance criteria met included the delivery of operational cost reductions
in all areas of the Company, strategic initiatives to secure third party interest in the Solar Systems and Translucent businesses
and achievement of significant progress in the commercialisation of the SILEX Technology against a backdrop of difficult
market conditions. As a result, the Board awarded the Silex CEO/MD and the Solar Systems CEO 70% and 64% respectively
of the maximum short-term incentives available. These incentives were paid in cash after satisfying the required service and
performance conditions. The Board believes that the achievements made under the STI deliverables in FY 2015 will set the
Company on a path to rebuilding long-term value.
The FY 2015 STI for the CFO/Company Secretary was cancelled and a retainer equal to the maximum STI opportunity put in
place in November 2014. This was in light of the significant restructure that resulted from the major strategic review and the
considerable absorption of duties following a 50% headcount reduction in corporate resources. This retainer is time bound and
expires on 30 September 2015; with payment to be made in October 2015 should the eligibility criteria be satisfied.
Statutory performance indicators
We aim to align KMP remuneration to our strategic and business objectives and the creation of shareholder wealth. The below
table shows measures of the Company’s financial performance over the last five years as required by the Corporations Act
2001. However, as a pre-revenue company, the below measures are generally not the measures used in determining the variable
amounts of remuneration to be awarded to KMPs. As a consequence, there is no direct correlation between the statutory key
performance measures and the variable remuneration awarded.
Year ended 30 June
2011
2012
2013
2014
2015
EPS
Cents
(19.6)
(21.6)
(0.1)
(17.3)
(21.1)
KMP STI Award
$
Share price at 30 June
$
13,761
304,000
140,000
76,000
322,400*
2.92
3.20
2.20
1.16
0.46
* Includes CFO/Company Secretary Retainer based bonus of $80,000 with eligibility criteria expiring 30 September 2015. This bonus,
if awarded, will be payable in FY 2016.
29
Directors’ ReportSilex Annual Report 2015 Contractual arrangements with executive KMPs
Component
Total Fixed Remuneration
Contract duration
Notice by the individual or
Company
Termination of employment
(without cause)
Termination of
employment (with cause)
or by the individual
CEO/MD
$550,000
Ongoing Common
Law Contract
6 months
CFO/Company Secretary
CEO - Solar Systems
$ 288,500
Ongoing Common
Law Contract
6 months
$400,000
Ongoing Common
Law Contract
6 months
Partial payment for pro-rata
STI may be applicable at the
Board’s discretion
Partial payment for pro-rata
STI may be applicable at the
Board’s discretion
Partial payment for pro-rata
STI may be applicable at the
Board’s discretion
STI/LTI not awarded
STI/LTI not awarded
STI/LTI not awarded
*Total Fixed Remuneration reduced from $800,000 to $550,000 from 1 January 2015.
g) Non-executive directors’ remuneration
Non-executive directors receive a board fee and fees for chairing or participating on board committees. They do not receive
performance-based pay or retirement allowances. The fees are exclusive of superannuation.
The aggregate directors’ fees are reviewed annually by the Board taking into account comparable roles and market data
provided by the Board’s independent remuneration consultant. The director’s fees remain well within the limits of the shareholder
approved aggregate directors fee pool maximum of $750,000, as approved by shareholders at the 2011 AGM and have in
aggregate significantly reduced over the period. During the period, the process of Board renewal continued with one director
retiring from the Board. The Silex Board comprises of three non-executive directors and an executive director. The current Board
size is deemed appropriate in light of the re-focused activities of the Company.
The current fee structure is outlined below:
Board
Committee
Chair
100,000
8,000
Member
80,000
6,000
Additional fees may be payable to non-executive directors should they undertake specific consulting projects for the Company in
the areas of their expertise.
30
Directors’ ReportSilex Annual Report 2015 h) Directors’ and KMP remuneration
The table below has been prepared in accordance with the requirements of the Corporations Act 2001 and relevant accounting
regulations in Australia. This table details the remuneration for the Company’s KMP for the current and previous financial year.
Short-term employee benefits
Post-
employment
benefits
Long
term
benefits
Share based
payments
Cash
salary &
fees *
$
Cash
bonus
$
Non -
monetary
benefits
$
Super
annuation
$
Long
service
leave
$
Options
$
Deferred
rights
$
Total
$
Name
Year
Executive directors
16,554
19,035
34,983
(1,189)
100,797
125,981 1,048,419
24,975
4,561 231,390
116,320 1,186,035
Dr M P Goldsworthy 2015
631,293
140,000
2014
789,754
Non-executive directors
Dr L M McIntyre
Mr A M Stock
(from 1/8/2013)
Mr C D Wilks
Prof S W R Burdon
(until 25/6/2014)
Mr R P Campbell
(until 30/9/2013)
Dr C S Goldschmidt
(until 2/5/2014)
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
114,000
94,159
94,000
83,833
132,625
145,095
-
112,000
-
23,500
-
72,318
-
-
-
-
-
-
-
-
-
-
-
-
-
Other key management personnel and Company executives
2015
2014
2015
2014
265,190 80,000**
266,400
20,000
-
-
352,368
102,400
14,626
179,073
56,000
454
2015 1,248,851
322,400
2014 1,235,227
76,000
31,180
19,489
Ms J E Ducie
Mr C R Murray
(from 6/1/2014)
Total executive
directors and
other KMP’s
Total NED
remuneration
Total KMP
remuneration
-
-
-
-
-
-
-
-
-
-
-
-
10,830
8,710
8,930
7,755
12,599
13,422
-
10,360
-
2,174
-
6,689
29,983
24,975
37,012
29,387
-
-
-
-
-
-
-
-
-
-
-
-
4,361
4,152
682
454
-
-
-
-
33,566
77,053
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
124,830
102,869
102,930
91,588
178,790
235,570
-
122,360
-
25,674
-
79,007
2,962
382,496
387
1,801
317,715
-
-
-
-
507,088
265,368
101,978
3,854
100,797
128,943 1,938,003
79,337
9,167
231,777
118,121 1,769,118
2015
2014
340,625
530,905
-
-
-
-
2015 1,589,476
322,400
2014 1,766,132
76,000
31,180
19,489
32,359
49,110
134,337
128,447
-
-
33,566
77,053
-
-
406,550
657,068
3,854
134,363
128,943 2,344,553
9,167
308,830
118,121 2,426,186
* Inclusive of movement in annual leave accruals.
** Retainer based bonus with eligibility criteria expiring 30 September 2015. This bonus, if awarded, will be payable in FY 2016.
31
Directors’ ReportSilex Annual Report 2015
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Fixed remuneration
At risk- STI
At risk - LTI *
2015
2014
2015
2014
2015
2014
Directors
Dr L M McIntyre
Dr M P Goldsworthy
Mr A M Stock
Mr C D Wilks
Prof S W R Burdon
Mr R P Campbell
Dr C S Goldschmidt
Other Executive KMP
Ms J E Ducie
Mr C R Murray
100.0%
65.0%
100.0%
81.2%
-
-
-
78.3%
79.8%
100.0%
70.7%
100.0%
67.3%
100.0%
100.0%
100.0%
93.0%
78.9%
N/A
13.4%
N/A
N/A
-
-
-
N/A
0.0%
N/A
N/A
N/A
N/A
N/A
N/A
21.6%
N/A
18.8%
-
-
-
20.9%
20.2%
6.3%
21.1%
0.8%
0.0%
N/A
29.3%
N/A
32.7%
N/A
N/A
N/A
0.7%
N/A
*This relates to options and deferred shares issued on a LTI basis with the percentages based on the value of amounts expensed during the year.
i) Details of share-based compensation and bonuses
Options
The terms and conditions of each grant of options affecting remuneration in the current or a future reporting period are as follows:
Grant date
5 July 2011
Expiry date
4 July 2016
8 December 2011
7 December 2016
Exercise
price
Value per option
at grant date
Date exercisable (subject
to share price hurdle)
Share price
hurdle
$2.92
$2.04
$1.18
$0.63
100% after 5 July 2013
100% after 8 December 2014
$3.05
$2.13
Options granted under the plan carry no dividend or voting rights.
Details of options over ordinary shares in the Company provided as remuneration to KMP are shown below. When exercisable,
each option is convertible into one ordinary share of Silex Systems Limited. Vesting of the options following the vesting date is
subject to meeting the share price hurdle.
The exercise price of the options is based on the volume weighted average price of the shares for the 5 trading days preceding
the date of issue.
Name
Year of
grant
Years in
which options
may vest
Number
of options
granted
Dr M P Goldsworthy
Y/E 30/06/2012 Y/E 30/06/2015
1,102,207
Mr C D Wilks
Ms J E Ducie
Y/E 30/06/2012 Y/E 30/06/2015
Y/E 30/06/2012 Y/E 30/06/2014
367,035
60,000
Number
of options
forfeited during
the year
Maximum total
value of grant
to vest ($)
-
-
-
-*
-*
N/A
Vested %
-
-
100
*The options issued to Dr M P Goldsworthy and Mr C D Wilks were subject to a Total Shareholder Return (TSR) vesting condition which was not
met as at the end of the performance period being 30 June 2015.
32
Directors’ ReportSilex Annual Report 2015
The assessed fair value at grant date of options granted to individuals is allocated equally over the period from grant date
to vesting date, and the amount is included in the remuneration tables above. Fair values on grant date are independently
determined using a binomial option pricing model that takes into account the exercise price, the term of the option, the impact
of dilution, the share price at grant date and expected volatility of the underlying share, the expected dividend yield and the
risk-free interest rate for the term of the option.
The Employee Share Option Plan (No. 1) under which the above options were issued to Ms J E Ducie was terminated by a
resolution of the Silex Board in accordance with the plan rules on 24 October 2013. There were no options granted or any
options exercised by any individual during FY 2015.
Bonuses and rights to deferred shares
For each award of deferred shares, the percentage of bonus awarded or forfeited in the financial year is set out below. All shares
issued were subject to an escrow period ending 30 June 2015.
Name
Dr M P Goldsworthy
Ms J E Ducie
Awarded
%
Forfeited
%
Performance
period
Year
granted
Number
granted
25%
80%
75%
20%
Y/E 30/06/2013
Y/E 30/06/2014
44,843
Y/E 30/06/2013
Y/E 30/06/2014
3,759
Value
per
share
$
2.23
2.66
Value of
shares
issued
$
100,000
9,999
Equity instruments held by KMP
The below table shows the number of ordinary shares in the Company that were held during the financial year by KMP of the
Company, including by entities related to them:
2015
Directors
Dr L M McIntyre
Dr M P Goldsworthy
Mr A M Stock
Mr C D Wilks
Other Executive KMP
Ms J E Ducie
Mr C R Murray
Balance at the
start of the year
Received during
the year on
the exercise
of options
Received on
vesting of rights
to shares
Other changes
during the year
Balance at the
end of the year
8,230
5,979,055
-
2,814,021
3,759
-
-
-
-
-
-
-
-
-
-
-
-
-
40,000
-
-
-
-
-
48,230
5,979,055
-
2,814,021
3,759
-
33
Directors’ ReportSilex Annual Report 2015
The below table shows the number of options over ordinary shares in the Company that were held during the financial year by
KMP of the Company, including by entities related to them:
Balance at
the start of
the year
Granted
during the
year as
compensation
Lapsed
during
the year
Forfeited
during
the year
Exercised
during the
year
Balance
at the
end of
the year
Vested and
exercisable
at the end
of the year Unvested
2015
Name
Directors
Dr M P Goldsworthy
1,102,207
Mr C D Wilks
367,035
Other Executive KMP
Ms J E Ducie
100,000
-
-
-
-
-
-
-
-
-
-
1,102,207
-
367,035
-
1,102,207
-
367,035
-
100,000
60,000
-
j) Shares under option
Unissued ordinary shares of Silex Systems Limited under option at the date of this report are as follows:
Number of options
Issue price of shares
Grant date
Expiry date
40,000
100,000
1,469,242
1,609,242
$5.28
$2.92
$2.04
15th October 2010
14th October 2015
5th July 2011
4th July 2016
8th December 2011
7th December 2016
No option holder has any right under the options to participate in any other share issue of the Company or any other entity.
Share Trading Policy
The Silex Share Trading Policy applies to all staff including KMP. It prohibits staff from buying or selling Silex securities at
times when they are in possession of inside information. In addition, KMP are only permitted to trade in Silex securities during
certain open periods. The policy applies other restrictions with regard to hedging arrangements. KMP must not enter into any
hedging arrangements.
34
Directors’ ReportSilex Annual Report 2015 12. Indemnification and insurance of directors
The Company has entered into agreements to indemnify the directors of the Company against all liabilities to persons (other
than the Company or related body corporate) which arise out of the performance of their normal duties as directors or executive
officers unless the liability relates to conduct involving lack of good faith. The Company has agreed to indemnify the directors
and executive officers against all costs and expenses incurred in defending an action that falls within the scope of the indemnity.
The Directors’ & Officers’ Liability Insurance provides cover against all costs and expenses involved in defending legal actions
and any resulting payments arising from a liability to persons (other than the Company) incurred in their position as a director or
executive officer unless the conduct involves a wilful breach of duty or an improper use of inside information or position to gain
advantage. The insurance policy does not allow specific disclosure of the nature of the liabilities insured against or the premium
paid under the policy.
13. Environmental regulation
The parent entity is subject to the environmental and health and safety regulations applicable to tenants of the Lucas Heights
Science and Technology Centre. The parent entity is also bound by the rules and regulations set out in the Australian Radiation
Protection and Nuclear Safety Act, 1998, and is a licensee under the Act. Solar Systems is subject to a number of regulations
including VIC Occupational Health and Safety Act 2004, VIC Occupational Health and Safety Regulations 2007, VIC Dangerous
Goods Act 1985, VIC Dangerous Goods (Storage and Handling) Interim Regulations 2011.
To the best of the Directors’ knowledge, all environmental and health and safety regulatory requirements have been met and
there have been no claims made during the financial year.
14. Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Company and/or the consolidated entity are important.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for non-audit services provided during the year
are set out below.
The Board of Directors has considered the position and, in accordance with the advice received from the Audit Committee,
is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set
out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and objectivity
of the auditor
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants.
35
Directors’ ReportSilex Annual Report 2015 During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, its
related practices and non-related audit firms:
Other assurance services
PricewaterhouseCoopers Australian firm
Audit of government grants
Total remuneration for other assurance services
Other services
Corporate services
Total remuneration for other services
Total remuneration for non-audit services
15. Auditors
2015
$
2014
$
5,000
5,000
20,400
20,400
25,400
10,000
10,000
75,400
75,400
85,400
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.
16. Auditors’ independence declaration
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 37.
This report is made in accordance with a resolution of the Directors.
Dr M P Goldsworthy
CEO/MD
Sydney, 25 September 2015
Mr C D Wilks
Director
36
Directors’ ReportSilex Annual Report 2015
Auditor’s Independence Declaration
As lead auditor for the audit of Silex Systems Limited for the year ended 30 June 2015, I declare that, to the best of my
knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Silex Systems Limited and the entities it controlled during the period.
Stephen Humphries
Partner
PricewaterhouseCoopers
Sydney
25 September 2015
PricewaterhouseCoopers, ABN 52 780 433 757
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171
T +61 2 8266 0000, F +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation
37
Directors’ ReportSilex Annual Report 2015 Silex Systems Limited (the Company) and the Board are committed to achieving and demonstrating the highest standards
of corporate governance. The Company Limited has reviewed its corporate governance practices against the Corporate
Governance Principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council.
The 2015 Corporate Governance Statement is dated as at 30 June 2015 and reflects the corporate governance practices
in place throughout the 2015 financial year. The 2015 Corporate Governance Statement was approved by the Board on
22 September 2015. A description of the Company’s current corporate governance practices is set out in the Company’s
Corporate Governance Statement which can be viewed at www.silex.com.au/about/corporate-governance.
38
Corporate Governance StatementSilex Annual Report 2015
Concise
Financial
Report
30 June 2015
Contents
Financial statements
40
41
42
43
44
45
50
51
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Directors’ declaration
Independent auditor’s report to the members
Relationship of the concise financial report to the full financial report
The concise financial report is an extract from the full financial report for the year ended 30 June 2015. The financial
statements and specific disclosures included in the concise financial report have been derived from the full financial report.
The concise financial report cannot be expected to provide as full an understanding of the financial performance, financial
position and financing and investing activities of Silex Systems Limited and its subsidiaries as the full financial report. Further
financial information can be obtained from the full financial report.
The full financial report and auditor’s report will be sent to members on request, free of charge. Please call +61 2 9704 8888
and request a copy of the full financial report (or email enquiries@silex.com.au). Alternatively, you can access both the full
financial report and the concise report via the internet on our website: www.silex.com.au.
ABN 69 003 372 067
39
Silex Annual Report 2015 Consolidated income statement
for the year ended 30 June 2015
Revenue from continuing operations
Other income
Research and development materials
Finance costs
Depreciation and amortisation expense
Employee benefits expense
Consultants and professional fees
Printing, postage, freight and stationery
Rent, utilities and property outgoings
Net foreign exchange losses
Other expenses from continuing activities
(Loss) before income tax expense
Income tax expense
Net (loss) from continuing operations
Net (loss) from discontinued operations
Net (loss) for the year
Net (loss) is attributable to:
Owners of Silex Systems Limited
Non-controlling interests
Earnings per share for (loss) from continuing operations
attributable to the ordinary equity holders of the Company
Basic earnings per share
Diluted earnings per share
Earnings per share for (loss) attributable to the ordinary equity holders
of the Company
Basic earnings per share
Diluted earnings per share
Note
3
4
2015
$
3,674,860
42,475
(154,296)
(349)
(59,821)
2014
$
7,113,672
569
(560,854)
(529)
(81,287)
(4,017,953)
(5,552,858)
(642,304)
(55,462)
(474,107)
-
(598,036)
(2,284,993)
-
(817,515)
(80,911)
(473,459)
(37,665)
(762,300)
(1,253,137)
-
(2,284,993)
(1,253,137)
5
(33,659,803)
(35,944,796)
(28,378,323)
(29,631,460)
(35,944,796)
(29,488,786)
-
(142,674)
(35,944,796)
(29,631,460)
2015
Cents
2014
Cents
(1.3)
(1.3)
(21.1)
(21.1)
(0.7)
(0.7)
(17.3)
(17.3)
The above consolidated income statement should be read in conjunction with the accompanying notes.
40
Silex Annual Report 2015
Consolidated statement of
comprehensive income
for the year ended 30 June 2015
Net (loss) for the year
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Attributable to:
Owners of Silex Systems Limited
Non-controlling interest
Total comprehensive income for the year
Total comprehensive income for the period attributable to owners
of Silex Systems Limited arises from:
Continuing operations
Discontinued operations
2015
$
2014
$
(35,944,796)
(29,631,460)
275,747
275,747
(295,336)
(295,336)
(35,669,049)
(29,926,796)
(35,669,049)
(29,784,122)
-
(142,674)
(35,669,049)
(29,926,796)
(2,284,993)
(33,384,056)
(35,669,049)
(1,253,137)
(28,530,985)
(29,784,122)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
41
Silex Annual Report 2015 Consolidated balance sheet
as at 30 June 2015
Assets
Current assets
Cash and cash equivalents
Held to maturity investments - term deposits
Trade and other receivables
Inventories
Assets classified as held for sale
Total current assets
Non-current assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Liabilities associated with discontinued operations
Total current liabilities
Non-current liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Capital and reserves attributable to owners of:
Silex Systems Limited
Non-controlling interest
Total equity
Note
30 June 2015
$
30 June 2014
$
6
5
987,777
54,173,451
5,214,694
-
3,178,811
60,756,039
2,571,418
18,498
60,375,922
66,524,766
1,575,487
61,951,409
30,819,183
97,343,949
64,061
2,702
688
67,451
110,226
2,491
6,594
119,311
62,018,860
97,463,260
968,673
425,919
1,394,592
3,057,022
4,451,614
1,469,740
1,237,149
2,706,889
2,559,317
5,266,206
113,110
113,110
4,564,724
57,454,136
111,971
111,971
5,378,177
92,085,083
231,753,076
231,671,231
10,296,433
9,882,811
(184,595,373)
(148,650,577)
57,454,136
-
57,454,136
92,903,465
(818,382)
92,085,083
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
42
Silex Annual Report 2015 Consolidated statement of
changes in equity
for the year ended 30 June 2015
Attributable to owners of Silex Systems Limited
Contributed
equity
$
Reserves
$
Accumulated
losses
$
Non-
controlling
interests
$
Total
$
Total
$
Balance at 30 June 2013
231,417,226
9,744,529 (119,161,791)
121,999,964
(675,708)
121,324,256
Net (loss) for the year
Exchange differences on
translation of foreign operations
Total comprehensive income
for the year
-
-
-
-
(29,488,786)
(29,488,786)
(142,674)
(29,631,460)
(295,336)
-
(295,336)
-
(295,336)
(295,336)
(29,488,786)
(29,784,122)
(142,674)
(29,926,796)
Transactions with owners in their capacity as owners
Transaction costs from the issue
of shares
Employee shares and options-
value of employee services
Transfer from share-based
payments reserve
Deferred tax recognised directly
in equity
(4,966)
-
-
696,178
262,560
(262,560)
(3,589)
254,005
-
433,618
-
-
-
-
-
(4,966)
696,178
-
(3,589)
687,623
-
-
-
-
-
(4,966)
696,178
-
(3,589)
687,623
Balance at 30 June 2014
231,671,231
9,882,811 (148,650,577)
92,903,465
(818,382)
92,085,083
Net (loss) for the year
Exchange differences on
translation of foreign operations
Total comprehensive income
for the year
-
-
-
-
(35,944,796)
(35,944,796)
275,747
-
275,747
275,747
(35,944,796)
(35,669,049)
-
-
-
(35,944,796)
275,747
(35,669,049)
Transactions with owners in their capacity as owners
Transfer of non-controlling interest
on derecognition
Transaction costs from the issue
of shares
Employee shares and options-
value of employee services
Transfer from share-based
payments reserve
Deferred tax recognised directly
in equity
-
(3,228)
-
-
-
222,737
84,862
(84,862)
211
-
81,845
137,875
-
-
-
-
-
-
-
818,382
818,382
(3,228)
222,737
-
211
-
-
-
-
(3,228)
222,737
-
211
219,720
818,382
1,038,102
Balance at 30 June 2015
231,753,076
10,296,433 (184,595,373)
57,454,136
-
57,454,136
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
43
Silex Annual Report 2015 Consolidated statement of
cash flows
for the year ended 30 June 2015
Cash flows from operating activities
Receipts from customers and government grants (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest paid
Net cash (outflows)/inflows from operating activities
Cash flows from investing activities
Payments for held to maturity investments - term deposits
Proceeds from held to maturity investments - term deposits
Payments for property, plant and equipment
Payments for intangibles
Proceeds from sale of property, plant and equipment
Net cash inflows/(outflows) from investing activities
Cash flows from financing activities
Transaction costs from issue of shares
Net cash (outflows) from financing activities
2015
$
2014
$
14,506,671
30,060,966
(24,718,382)
(28,773,788)
2,284,445
(1,805)
(7,929,071)
1,971,167
(529)
3,257,816
-
(5,092,196)
6,582,588
(215,990)
(651,570)
14,636
5,729,664
-
(708,533)
(2,935,502)
6,773
(8,729,458)
(3,228)
(3,228)
(4,966)
(4,966)
Net (decrease) in cash held
(2,202,635)
(5,476,608)
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash
Cash and cash equivalents at end of year *
3,178,811
11,601
987,777
8,720,156
(64,737)
3,178,811
Non-cash financing and investing activities
-
-
*Held to maturity investments excluded from Cash and cash equivalents
54,173,451
60,756,039
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
44
Silex Annual Report 2015
Notes to the financial statements
30 June 2015
Note 1 Significant changes in the current accounting period
The financial position and performance of the Company was particularly affected by the implementation of the outcomes
of the strategic review announced by the Board on 30 June 2014 that will result in the return of the Company’s focus to the
development of the Company’s foundation technology and core asset – the SILEX laser enrichment technology. The resulting
restructure has seen a number of significant changes completed, including a full operational review with a significant reduction
in headcount, the closure of the ChronoLogic business, and in parallel, a rigorous search for business development options
to accelerate the transition to market for subsidiaries Solar Systems and Translucent. The implementation of the restructure
is nearing completion.
Solar Systems and Translucent have been shown as discontinued operations in the income statement with the prior year
comparatives adjusted. The result of the discontinued operations was impacted by the impairment of the carrying value of
property, plant and equipment and intangible assets of $19,316,583 ($12,379,766 in the prior period).
In July 2014, SILEX Technology Licensee GE-Hitachi Global Laser Enrichment LLC (‘GLE’) announced its own restructure,
resulting in the slowdown of the commercialisation project in response to adverse conditions in the nuclear fuel markets, largely
precipitated by the shutdown of the shutdown of the Japanese nuclear industry after the Fukushima disaster. As a result, Silex
made redundancies and has taken over funding of activities at its Lucas Heights facility in Sydney.
Note 2 Segment information
Total segment revenue
Revenue from external customers
Silex Systems
2015
$
3,674,860
3,674,860
Total
2015
$
Silex Systems
2014
$
3,674,860
3,674,860
7,113,672
7,113,672
Total
2014
$
7,113,672
7,113,672
Segment result
(2,284,993)
(2,284,993)
(1,253,137)
(1,253,137)
Total segment assets
59,794,515
59,794,515
64,764,354
64,764,354
Total segment liabilities
1,507,702
1,507,702
2,064,813
2,064,813
(i) Segment result
The Board of Directors assess the performance of the operating segment based on a result that excludes exchange gains
and losses on intercompany loans which eliminate on consolidation and impairment of intangibles on consolidation. Solar
Systems, Translucent, ChronoLogic and Silex Solar have been disclosed as discontinued operations and not as reportable
segments. A reconciliation of the segment result to Net (loss) from continuing operations is provided as follows.
Segment result
Net (loss) before income tax from continuing operations
2015
$
(2,284,993)
(2,284,993)
2014
$
(1,253,137)
(1,253,137)
45
Silex Annual Report 2015 Notes to the financial statements
30 June 2015 (continued)
Note 3 Revenue
From continuing operations
Recoverable project costs from GLE
Interest income
From discontinued operations (note 5)
Sale of goods
Services
Interest income
Note 4 Other income
From continuing operations
Foreign currency exchange gains (net)
Profit on sale of property, plant and equipment
Other
From discontinued operations (note 5)
Research and development tax incentive
Government grants
Profit on sale of property, plant and equipment
2015
$
2014
$
1,493,766
2,181,094
3,674,860
4,540,761
2,572,911
7,113,672
132,924
35,168
14,921
183,013
233,608
1,582
62,866
298,056
2015
$
42,475
-
-
42,475
2014
$
-
455
114
569
4,508,336
668,276
14,636
16,000,440
9,080,315
6,318
5,191,248
25,087,073
(i) Government grants
Government solar project grants of $602,603 (2014: $9,030,904), were recognised as Other income by Solar Systems during
the financial year. The Company has met the conditions of the grants and the income has been recognised. Export Market
Development Grant income of $65,673 (2014: $49,411) was recognised as Other income during the financial year by Solar
Systems. There are no unfulfilled conditions attached to these grants.
(ii) Research and development tax incentive
Research and development tax incentive income of $4,508,336 (2014: $16,000,440) was recognised as Other income by the
Company during the year. The Company has met the conditions of the tax incentive.
46
Silex Annual Report 2015
Notes to the financial statements
30 June 2015 (continued)
Note 5 Discontinued operations
In accordance with the continued implementation of the outcome of the Company’s strategic review throughout FY 2015,
the Solar Systems and Translucent businesses have been disclosed as discontinued operations as at 30 June 2015, with
restatement of the comparative consolidated income statement and consolidated statement of comprehensive income to reflect
this change. The Silex Solar and ChronoLogic operations have continued to be reported as discontinued with their activities
ceasing in October 2012 and September 2014 respectively.
A summary of the results of the discontinued operations of Solar Systems, Translucent, ChronoLogic and Silex Solar
is provided below.
Revenue (note 3)
Other income (note 4)
Expenses
(Loss) before income tax
Income tax expense
2015
$
183,013
5,191,248
(39,034,064)
(33,659,803)
-
2014
$
298,056
25,087,073
(53,763,452)
(28,378,323)
-
(Loss) after income tax of the discontinued operations
(33,659,803)
(28,378,323)
Net cash (outflows) from operating activities
Net cash (outflows) from investing activities
Net cash (outflows) from the discontinued operations
Trade and other payables
Provisions
Total Liabilities associated with discontinued operations
2015
$
2014
$
(6,237,983)
(12,129,534)
(812,586)
(3,621,541)
(7,050,569)
(15,751,075)
2015
$
(936,805)
(2,120,217)
(3,057,022)
2014
$
(1,905,028)
(654,289)
(2,559,317)
47
Silex Annual Report 2015 Notes to the financial statements
30 June 2015 (continued)
Note 6 Assets held for sale
As previously reported, on 30 June 2014, in accordance with the Company’s strategic review, Silex commenced an accelerated
transition to market for subsidiaries Solar Systems and Translucent. As a result, as at 30 June 2014 the assets and liabilities
of these two businesses, net of cash and held to maturity investments, were reported as Held for Sale. As the implementation
of the strategic review draws to a conclusion, Solar Systems and Translucent assets have continued to be reported as being
Held for Sale as at 30 June 2015.
Revenue
Other income
Expenses
(Loss) before income tax
Income tax expense
(Loss) after income tax of the held for sale businesses
Impairment of goodwill on consolidation – Translucent
Losses of other discontinued operations
(Loss) after income tax of discontinued operations
Trade and other receivables
Inventories
Property, plant & equipment
Intangible assets
2015
$
175,675
5,190,000
(37,899,886)
(32,534,211)
-
2014
$
284,882
24,009,678
(43,810,181)
(19,515,621)
-
(32,534,211)
(19,515,621)
-
(1,125,592)
(8,477,619)
(385,083)
(33,659,803)
(28,378,323)
2015
$
320,658
18,228
1,236,601
-
2014
$
10,699,722
885,924
9,475,930
9,757,607
Total assets of disposal group held for sale
1,575,487
30,819,183
Note 7 Dividends
No dividends were declared or paid during the year or in the prior year.
48
Silex Annual Report 2015 Notes to the financial statements
30 June 2015 (continued)
Note 8 Events occurring after reporting date
Solar Systems
On 30 July 2015, Silex announced the immediate cessation of Solar Systems’ business operations. The announcement followed
a rigorous extended global process to attract new investment in Solar Systems which ultimately was unsuccessful. However, as
the process revealed considerable interest in the Solar Systems concentrating dish technology during the divestment process,
the Company has retained the IP and associated expertise to pursue residual opportunities.
The resulting financial effect of the 30 July decision, which is largely staff redundancy costs, has not been brought to account
in the financial statements for the year ended 30 June 2015. Redundancy costs of approximately $1.0m are expected to be
brought to account in the financial statements for the year ended 30 June 2016.
Translucent
On 15 September 2015, Silex announced the signing of a License and Assignment Agreement with UK-based IQE Plc for
Translucent’s technology. The agreement grants IQE an exclusive 30-month license to complete product development and
commercialisation activities, with an option exercisable at any time during the 30-month license period, for IQE to acquire
Translucent’s technology. If successfully commercialised the agreement also provides for a perpetual royalty on the sale of
products incorporating the Translucent technology.
As a result of the agreement, the Translucent facility at Palo Alto, California will no longer be required and will be closed down
by the end of December 2015. The services of two key engineers will be retained for 12 months to facilitate the transfer of
the technology to IQE. The financial effect of the 15 September 2015 announcement, including a maximum license fee of
USD$1.5m (minimum of USD$1.415m) payable by 15 March 2016 and a small amount of staff redundancy costs, have not
been brought to account in the financial statements for the year ended 30 June 2015 and will be brought to account in
the financial statements for the year ended 30 June 2016. Should the option be exercised by IQE for the acquisition of the
technology, a further payment of USD$5m would be due to Translucent.
Other
The consolidated entity is not aware of any other matters or circumstances which are not otherwise dealt with in the financial
statements that have significantly, or may significantly, affect the operations of the consolidated entity, the results of its
operations or the state of the consolidated entity in subsequent years other than those referred to in this report.
Note 9 Basis of preparation
This concise financial report relates to the consolidated entity consisting of Silex Systems Limited and the entities it controlled
at the end of, or during, the year ended 30 June 2015. The accounting policies have been consistently applied to all years
presented, unless otherwise stated below.
The financial statements in this report are presented in Australian dollars.
49
Silex Annual Report 2015 Directors’ declaration
30 June 2015
The directors declare that in their opinion, the concise financial report of the consolidated entity for the year ended 30 June 2015
as set out on pages 39 to 49 complies with Accounting Standard AASB 1039: Concise Financial Reports.
The concise financial report is an extract from the full financial report for the year ended 30 June 2015. The financial statements
and specific disclosures included in the concise financial report have been derived from the full financial report.
The concise financial report cannot be expected to provide as full an understanding of the financial performance, financial
position and financing and investing activities of the consolidated entity as the full financial report, which is available on request.
This declaration is made in accordance with a resolution of the directors.
Dr M P Goldsworthy
CEO/MD
Sydney, 25 September 2015
Mr C D Wilks
Director
50
Silex Annual Report 2015
Independent auditor’s report
to the members of Silex Systems Limited
Report on the concise financial report
We have audited the accompanying concise financial report of Silex Systems Limited (the company), which comprises the
consolidated balance sheet as at 30 June 2015, the consolidated income statement, consolidated statement of comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that
date and related notes, derived from the audited financial report of the company for the year ended 30 June 2015 for Silex
Systems Limited Group (the consolidated entity). The concise financial report does not contain all the disclosures required
by the Australian Accounting Standards and accordingly, reading the concise financial report is not a substitute for reading
the audited financial report.
Directors’ responsibility for the concise financial report
The directors of the company are responsible for the preparation of the concise financial report in accordance with Accounting
Standard AASB 1039 Concise Financial Reports, and the Corporations Act 2001, and for such internal control as the directors
determine are necessary to enable the preparation of the concise financial report.
Auditor’s responsibility
Our responsibility is to express an opinion on the concise financial report based on our audit procedures which were conducted
in accordance with Auditing Standard ASA 810 Engagements to Report on Summary Financial Statements. We have conducted
an independent audit, in accordance with Australian Auditing Standards, of the financial report of the consolidated entity
for the year ended 30 June 2015. We expressed an unmodified audit opinion on that financial report in our report dated
25 September 2015. The Australian Auditing Standards require that we comply with relevant ethical requirements relating
to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report for the year
is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the concise financial
report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the concise financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation of the concise financial report in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control.
PricewaterhouseCoopers, ABN 52 780 433 757
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171
T +61 2 8266 0000, F +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation
51
Silex Annual Report 2015 Independent auditor’s report
to the members of Silex Systems Limited (continued)
Our procedures include testing that the information in the concise financial report is derived from, and is consistent with, the
financial report for the year, and examination on a test basis, of audit evidence supporting the amounts and other disclosures
which were not directly derived from the financial report for the year. These procedures have been undertaken to form an opinion
whether, in all material respects, the concise financial report complies with AASB 1039 Concise Financial Reports.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors
of Silex Systems Limited would be in the same terms if given to the directors as at the date of this auditor’s report.
Auditor’s opinion
In our opinion, the concise financial report of the consolidated entity for the year ended 30 June 2015 complies with Australian
Accounting Standard AASB 1039 Concise Financial Reports.
Report on the remuneration report
The following paragraphs are copied from our report on the remuneration report for the year ended 30 June 2015.
We have audited the remuneration report included in pages 24 to 34 of the directors’ report for the year ended 30 June 2015.
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.
52
Silex Annual Report 2015 Auditor’s opinion
In our opinion, the remuneration report of Silex Systems Limited for the year ended 30 June 2015 complies with section 300A
of the Corporations Act 2001.
Matters relating to the electronic presentation of the audited concise financial report
This auditor’s report relates to the concise financial report and remuneration report of Silex Systems Limited (the company)
for the year ended 30 June 2015 included on Silex Systems Limited web site. The company’s directors are responsible for
the integrity of the Silex Systems Limited web site. We have not been engaged to report on the integrity of this web site. The
auditor’s report refers only to the concise financial report and remuneration report named above. It does not provide an opinion
on any other information which may have been hyperlinked to/from the concise financial report or the remuneration report. If
users of this report are concerned with the inherent risks arising from electronic data communications they are advised to refer to
the hard copy of the audited financial report and remuneration report to confirm the information included in the audited financial
report and remuneration report presented on this web site.
PricewaterhouseCoopers
Stephen Humphries
Partner
Sydney
25 September 2015
53
Silex Annual Report 2015 Shareholder’s Information
30 June 2015
1. Information relating to shareholders as at 15 September 2015
(a) Distribution schedule
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total number of holders of each class of security
Voting right
- on a show of hands
- on a poll
Percentage of total holding held by the largest 20 holders
Number of total holding less than a marketable parcel of shares
Substantial shareholders
Jardvan Pty Ltd
M&G Investment (including M&G Investment Funds (3) & (12), M&G Investment Management Limited, M&G
Limited, M&G Group Limited and Prudential plc)
Global X Management Company
2,141
2,769
952
1,178
124
7,164
57.53%
2,345
Ordinary shares
29,801,030
17,050,000
12,086,216
54
Silex Annual Report 2015
Shareholder’s Information
30 June 2015 (continued)
(b) Names of Twenty Largest Holders as at 15 September 2015
Name
Jardvan Pty Ltd
HSBC Custody Nominees (Australia) Limited
Majenta Holdings Pty Ltd
Polly Pty Ltd
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
National Nominees Limited
Throvena Pty Ltd
Hamlac Pty Ltd
Mr Christopher David Wilks
Quintal Pty Ltd
Mr Paul Cozzi
CS Fourth Nominees Pty Ltd
Felson Holdings Pty Ltd
Quadrangle Nominees Limited
Mithena Holdings Pty Ltd
UBS Wealth Management Australia Nominees Pty Ltd
Mr Peter James Thomas + Ms Helen Thomas
Hillboi Nominees Pty Ltd
Mr Robert Bradfield
Number of
securities
29,801,030
29,620,163
Percentage held
17.48%
17.38%
5,703,923
4,073,863
3,951,216
3,347,512
3,162,367
2,978,203
2,525,937
2,405,070
2,002,952
2,000,000
1,292,092
1,000,000
847,245
817,139
765,045
627,000
605,000
540,000
3.35%
2.39%
2.32%
1.96%
1.86%
1.75%
1.48%
1.41%
1.17%
1.17%
0.76%
0.59%
0.50%
0.48%
0.45%
0.37%
0.35%
0.32%
98,065,757
57.53%
55
Silex Annual Report 2015 Shareholder’s Information
30 June 2015 (continued)
2. Interest of directors in shares as at 15 September 2015
Dr L M McIntyre
Dr M P Goldsworthy
Mr R A R Lee
Mr C D Wilks
Ordinary shares
48,230
5,979,055
-
2,814,021
Interest held
Beneficially
Personally/Beneficially
N/A
Personally/Beneficially
3. Securities subject to voluntary escrow as at 15 September 2015
As at 15 September 2015, no securities were subject to voluntary escrow.
4. Unquoted equity securities as at 15 September 2015
Options issued under the Silex Systems Limited
Employee Share Option Plan to take up ordinary shares
Other options issued to take up ordinary shares *
* These are options to Dr M P Goldsworthy (1,102,207) and Mr C D Wilks (367,035).
Number on issue
Number of
holders
140,000
1,469,242
3
2
56
Silex Annual Report 2015
Company Directory
Directors
Dr L M McIntyre – Chair
Dr M P Goldsworthy – CEO/MD
Mr R A R Lee
Mr C D Wilks
Audit Committee
Mr R A R Lee – Chair
Dr L M McIntyre
Mr C D Wilks
Share Registry
Computershare Registry Services Pty Limited
Level 5, 115 Grenfell Street, Adelaide,
South Australia 5000, Australia
GPO Box 1903 Adelaide SA 5001, Australia
Enquiries within Australia:
Enquiries outside Australia: +61 8 8236 2300
Email: web.queries@computershare.com.au
Website: www.computershare.com.au
1300 556 161
Stock Exchange
People & Remuneration Committee
Listed on the Australian Stock Exchange, Ticker: SLX
Listed on the OTCQX International, Ticker: SILXY
Dr L M McIntyre – Chair
Mr R A R Lee
Mr C D Wilks
Company Secretary
Ms J E Ducie
Registered Office and Principal
Place of Business
Suite 8.03, Level 8
56 Clarence Street
Sydney NSW 2000, Australia
Postal address:
PO Box 364, Sydney NSW 2001, Australia
Phone: +61 2 9704 8888
Fax: +61 2 9279 1051
Email: investor.relations@silex.com.au
Website: www.silex.com.au
Auditors
PricewaterhouseCoopers
Solicitors
Baker & McKenzie
Bankers
Australia and New Zealand Banking Group Limited
American Depository Receipts
(ADR) Information
Silex Systems Limited’s ADRs may be purchased
on the US OTCQX market.
Details are as follows:
Ratio:
Symbol:
CUSIP:
Exchange: OTCQX
Australia
Country:
1 ADR = 5 ordinary shares
SILXY
827046 10 3 9414F102
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www.silex.com.au