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ANNUAL REPORT
2017
IMPORTANT NOTICE
FORWARD LOOKING STATEMENTS AND BUSINESS RISKS:
Some risk factors that could affect future results and
commercial prospects include, but are not limited to: the
outcome of the GLE restructure; results from the SILEX uranium
enrichment engineering development program being conducted
jointly by the Company and GLE; the demand for natural
uranium and enriched uranium; the time taken to develop the
SILEX technology; the potential development of competing
technologies; the potential for third party claims against the
Company’s ownership of Intellectual Property; the potential
impact of government regulations or policies in the USA,
Australia or elsewhere; results from IQE’s commercialisation
program and the demand for cREO™ products; and the
outcomes of various commercialisation strategies undertaken
by the Company and/or its Licensees GLE and IQE.
Silex Systems is a research and development Company whose
primary asset is the SILEX laser uranium enrichment technology,
originally developed at the Company’s technology facility in
Sydney, Australia. The SILEX technology, licensed exclusively
to GE-Hitachi Global Laser Enrichment LLC (GLE) in the USA,
is currently in the engineering scale-up stage and plans for
commercial deployment remain speculative and high risk.
Silex also has an interest in a unique semiconductor technology
known as ‘cREO™’ through its ownership of subsidiary
Translucent Inc. The cREO™ technology is exclusively licensed
to IQE Plc based in the UK. IQE is progressing the cREO™
technology towards commercial deployment in various
advanced semiconductor products. The outcome of IQE’s
commercialisation program remains subject to technology and
market risks.
The commercial potential of these two technologies is currently
unknown. Accordingly, the statements in this report regarding
the future of the SILEX technology, the cREO™ technology and
any associated 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.
SILEX SYSTEMS LIMITED
ABN 69 003 372 067
CONTENTS
CHAIR’S REPORT
CEO’S REPORT
BUSINESS OVERVIEW
HISTORICAL BACKGROUND
DIRECTOR’S REPORT
CORPORATE GOVERNANCE STATEMENT
CONCISE FINANCIAL REPORT
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
SHAREHOLDERS’ INFORMATION
COMPANY DIRECTORY
2
4
6
12
16
38
39
51
53
55
11
Silex Annual Report 2017Silex Annual Report 2017 CHAIR’S
REPORT
Dr Lisa McIntyre
Chair
“Our goal continues to
be squarely focussed
on positioning ourselves
to participate in the
forecasted recovery of
the global market for
nuclear fuel expected
from the mid-2020’s.”
2
Dear Fellow Shareholder,
During the year ended 30 June 2017 we made significant
progress with the execution of our fundamental strategy - to
protect and advance our core asset, the SILEX laser based
uranium enrichment technology. Our goal continues to be
squarely focussed on positioning ourselves to participate in
the forecasted recovery of the global market for nuclear fuel
expected from the mid-2020’s. This has been the key driver
of our efforts to restructure the exclusive Licensee of the
SILEX technology, GE-Hitachi Global Laser Enrichment LLC
(GLE) and includes the possibility of Silex becoming a majority
shareholder in GLE.
The restructure of GLE has been pursued in a depressed
market for nuclear fuel, which has not only hampered our
attempts to secure new investors for GLE, but also continued
to have a negative impact on our share price. Our current
cash reserves of ~$40 million is equivalent to ~$0.23 per
share, which we believe attributes little value to our two world-
class technologies, the SILEX technology and Translucent’s
cREO™ technology. Despite these difficult conditions, Silex
continues to push forward with activities to restructure GLE
and to support the commercialisation of the SILEX technology.
Meanwhile, IQE Plc continues to advance the product
development and commercialisation program for our subsidiary
Translucent’s cREO™ technology, with progress to date
meeting expectations. I will comment further on this below.
STRATEGY
The execution of our business strategy has included several
parallel streams of activities and has resulted in a very busy time
for my fellow directors and the Silex team. We have increased
our activities in the US, the target market for deployment of the
SILEX technology and continue to evaluate new opportunities
to participate in the nuclear fuel cycle. We continue to engage
extensively with the many stakeholders in GLE and Silex
with respect to the SILEX technology. Here in Australia, we
work hard to ensure the retention of our talented team and
maintaining our Sydney facility as a centre of innovation whilst
focussing on effective cost management to ensure the most
efficient use of cash reserves. All of these efforts have been
underpinned by our ongoing attention to long-term value
creation objectives, risk management and strong governance.
CORPORATE GOVERNANCE
In recent years, we have restructured and reduced the size of
our Board to reflect the changing requirements of the Company.
The Board remains committed to ensuring we have a diverse,
experienced and competent mix of directors on the Board
with complementary skills and industry knowledge to meet the
Company’s evolving needs. Robert Lee joined the Board on 1
July 2015, and will stand for re-election by shareholders at our
2017 Annual General Meeting. Robert is an astute Company
director who brings a great deal of financial, management and
governance acumen to the Silex Board.
Silex Annual Report 2017 With regard to remuneration, as a result of the GLE restructure
taking longer than anticipated, the People & Remuneration
Committee made some difficult decisions with respect to
the remuneration of the Company’s KMP. No remuneration
increases were awarded in FY2017 for our CEO/MD or
our Board and our Board continues to not receive fees for
Committee participation or for extraordinary time contributed
to the Company’s activities. Being mindful of the difficulties
faced by the Company, our CEO/MD forfeited his eligibility to
receive a Short-Term Incentive (STI) for FY2017. Our CFO/
Company Secretary also forfeited 90% of her STI for FY2017.
THE YEAR AHEAD
Despite the current challenges that exist in the market for
nuclear fuel, we continue to push forward with activities to
support our Licensee, GLE with the commercialisation of
our unique and potentially disruptive SILEX technology. As
announced on 1 September 2017, this may involve Silex taking
a majority interest in GLE. We are excited by this prospect and
the opportunity to have greater participation in the technology
commercialisation program in the US. We continue to believe
the SILEX technology is the best path forward to re-build
long-term value for our shareholders and we intend to be well
positioned to participate in the inevitable recovery of the global
nuclear industry that is forecast over the medium term.
We also remain pleased with progress made in IQE’s product
development program during the 30-month option period,
after which time IQE may elect to acquire Translucent’s
cREO™ technology. Should IQE proceed with this acquisition,
a further payment of US$5 million will be payable. In light of
current progress, IQE has determined an optimal route to
commercialisation within a 2 to 3-year timeframe, after which
time a royalty of up to 6% may be payable on IQE’s products
that embody the cREO™ technology.
On behalf of the Silex Board and Management, I would like
to thank you, my fellow shareholders for your interest and
ongoing support of Silex. I look forward to updating you again
at our Annual General Meeting in November.
Dr Lisa McIntyre
Chair
25 September 2017
33
Silex Annual Report 2017Silex Annual Report 2017
Your company Silex Systems (Silex), is today well placed
to leverage over two decades of world-leading innovation,
resulting in the emergence of technological breakthroughs in
two key global industries:
i. The nuclear fuel industry – with the unique third
generation SILEX laser enrichment technology –
targeting commercialisation through a landmark
agreement between exclusive Licensee GE-Hitachi
Global Laser Enrichment LLC (GLE) and the US
Department of Energy (DOE) to produce natural grade
uranium from DOE tails inventories for sale into the global
uranium market, commencing in the mid 2020’s; and
ii. The semiconductor industry – with the unique
‘cREO™’ technology developed by US-based subsidiary
Translucent Inc – targeting commercialisation through
an exclusive license agreement with UK-based IQE Plc,
a world leading producer of advanced semiconductor
products for next-generation digital electronics and
wireless communications devices.
Over recent years Silex has been caught up in difficult
market challenges, particularly in relation to the nuclear
fuel markets which are the target of our core asset – the
SILEX technology. This has resulted in significant delays
to the commercialisation program causing erosion in our
share price and dwindling shareholder value. It is important
to note that this situation is driven by external factors -
principally the downturn in the nuclear industry precipitated
by the shutdown of the entire Japanese nuclear fleet and
premature retirements of reactor units in several other
countries. We firmly believe that this situation will correct
over the medium term, as the expansion of nuclear capacity
gathers momentum around the world and the current market
difficulties give way to a new era of innovation in safe, clean
and efficient nuclear technology.
CEO’S
REPORT
Dr Michael Goldsworthy
CEO/Managing Director
“We have been
encouraged by recent
positive developments
in the nuclear industry
and the extensive
nuclear build programs
unfolding in China,
Russia, India and other
parts of the world.”
4
Silex Annual Report 2017 We are therefore pleased to be able to report to our
shareholders that our efforts to lead the restructure of GLE
as disclosed in recent announcements, have provided us
with new opportunities to become more directly involved
in the technology commercialisation program and in GLE’s
business development path. To this end, Silex and GE-
Hitachi Nuclear Energy (GEH) recently signed an extension
to the term sheet originally signed in April 2016, after GEH
disclosed at that time, its intention to exit GLE due to
changes in its business priorities. The term sheet extension
includes several amendments which provide Silex and GEH a
more efficient and clearer path to finalizing negotiations on a
full and binding Purchase and Sale Agreement (PSA) for the
acquisition of GEH’s 76% interest in GLE.
Whilst Management continues to lead the process to attract
new investors to GLE, the Silex Board is also considering
the possibility of the Company taking a majority interest in
GLE through the restructure process. This would facilitate a
more active role in the further development and de-risking
of the technology, greater participation in GLE’s business
development activities, and potentially a better return for
shareholders in the medium to long term. That said, the path
to majority ownership will be dependent on obtaining relevant
US Government approvals, which are not assured and
may take up to 12 months to complete. We look forward to
updating shareholders as these options materialise.
In November 2016, we announced the signing of an
agreement between GLE and the US DOE, under which
GLE is entitled to purchase around 300,000 metric tons of
depleted tails stockpiled at DOE sites in Paducah, Kentucky
and Portsmouth, Ohio. Under this Agreement, GLE plans
to construct the world’s first commercial laser enrichment
plant with the SILEX technology in Paducah, to re-enrich the
tails inventories into natural grade uranium, for sale into the
global uranium market. We continue to view the Paducah
commercial opportunity as an optimal path to market for GLE
and the SILEX technology.
The long-term fundamentals for the SILEX technology and
GLE will be underpinned by the anticipated recovery of
the global markets for natural and enriched uranium. Key
contributing factors to the expected recovery of the nuclear
fuel markets include the restart of nuclear reactors in Japan
– now starting to gather pace, and the continued growth in
global nuclear energy capacity. We have been encouraged by
recent positive developments in the nuclear industry and the
extensive nuclear build programs unfolding in China, Russia,
India and other parts of the world. We therefore remain
committed to finalising the GLE restructure and supporting
the commercialisation of the SILEX technology, believing this
is the best path forward to rebuild value for our shareholders.
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
55
Silex Annual Report 2017Silex Annual Report 2017 BUSINESS
OVERVIEW
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
6
THE SILEX LASER URANIUM
ENRICHMENT TECHNOLOGY
BUSINESS DESCRIPTION
Silex invented and initially developed the ‘SILEX’ laser-based
uranium enrichment technology in Sydney during the 1990’s.
The technology was licensed exclusively in 2006 to GE-Hitachi
Global Laser Enrichment LLC (‘GLE’), a business venture
currently 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
markets are the global nuclear fuel markets 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 governments of 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.
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 and constitutes a major
component of nuclear fuel costs accounting for around one
third of the cost of nuclear fuel and up to 5% of the total cost
of the electricity generated at current prices.
Uranium enrichment involves increasing the atomic
concentration of the ‘active’ U235 isotope from 0.7% in natural
uranium to approximately 5% required for reactor fuel. GLE
and Silex are jointly developing the SILEX third generation
laser enrichment technology:
• Separation of Isotopes by Laser EXcitation (SILEX)
• Highly selective excitation of 235UF6 to separate isotopes
The two methods of uranium enrichment used to date have
been the now obsolete Gas Diffusion (first generation) and
Gas Centrifuge (second generation). Silex’s third generation
laser-based process provides much higher enrichment
process efficiency compared to these earlier methods,
potentially offering significantly lower overall costs.
Silex Annual Report 2017 URANIUM ENRICHMENT TECHNOLOGY
GASEOUS DIFFUSION
CENTRIFUGE
LASER EXCITATION
1st generation technology
2nd generation technology
3rd generation technology
ß = 1.004
High cost
Obsolete
ß ~ 1.25
Lower cost
ß ~ 2 - 201 (Classified number)
Most cost effective
Current technology
In commercialisation phase
THE NUCLEAR FUEL PRODUCTION
The SILEX technology can be utilised in 2 steps of the Nuclear
Fuel Cycle to produce:
1. natural grade uranium via re-enrichment of tails
inventories; and
2. enriched uranium for use as fuel in nuclear power reactors.
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:
•
Inherently higher efficiency resulting in lower costs;
• Smaller environmental footprint than centrifuge and
diffusion plants;
• Greater flexibility in producing advanced fuels for next
generation small modular reactors (SMR’s); and
• Anticipated to have the lowest capital costs of all
enrichment technologies.
Significantly, the SILEX technology is the only third generation
laser-based uranium enrichment technology under commercial
development in the world today.
1. ß is the process efficiency
THE SILEX TECHNOLOGY LICENSE
AGREEMENT WITH GLE
Silex’s agreement with GLE is an exclusive worldwide
commercialisation and licensing agreement for the SILEX
technology. The underlying value in 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.
Uranium Production
Refinining & Conversion
Enrichment
Electricity
Power Distribution
Power Plant
SILEX/GLE
Other
Fuel
Fabrication
77
Silex Annual Report 2017Silex Annual Report 2017 •
the Paducah commercial plant opportunity (to produce
natural grade uranium from the reprocessing of tails
inventories owned by the US Department of Energy (DOE))
under the Agreement signed between the DOE and GLE.
PROJECT ACTIVITIES UPDATE – FULL-SCALE
ENGINEERING AND ECONOMIC VALIDATION
The focus of the Company is firmly set on the remainder of the
commercialisation program for the SILEX technology.
Phase
Objectives
Test Loop technology
demonstration and NRC
commercial plant license approval
Phase I
Phase II
Status
Completed
2013
Economic and engineering
validation for the initial commercial
production module
Commenced
in 2013
Phase III
Construction of the first full-scale
commercial production facility
Paducah
Opportunity
Whilst the pace of this commercialisation program was
slowed significantly by GLE in July 2014 in line with continued
adverse conditions in the nuclear fuel markets, the technology
engineering and economic validation program has continued
to achieve significant progress during FY2017. Additional
technology demonstration activities relating to improved
process efficiency and scaled-up laser system performance
were completed during the year in review at the Wilmington
and Sydney project sites respectively.
Subject to successfully completing the GLE restructure, we
will aim for the commercialisation program to be ramped up as
soon as funding permits, in anticipation of the commencement
of a recovery in nuclear fuel market conditions.
BUSINESS OVERVIEW (CONTINUED)
GLE RESTRUCTURE
The Company’s primary focus in FY2017 was on the
continued development and commercialisation of our core
asset – the SILEX technology - and the restructure of our
Licensee GE-Hitachi Global Laser Enrichment LLC (GLE). GE-
Hitachi Nuclear Energy (GEH) announced in April 2016 that
they intend to exit GLE, due to changes in business priorities
and the continuing difficult conditions being experienced in the
nuclear fuel markets. On 29 April 2016, Silex signed a Term
Sheet with GEH securing an exclusive option to acquire GEH’s
76% interest in GLE, and the right to assign in part or in whole
the acquisition terms to third parties.
On 1 September 2017 Silex announced an amendment and
extension of the Term Sheet to allow the parties additional time
to work towards a mutually acceptable restructure of GLE.
The extended Term Sheet includes several amendments which
provide Silex and GEH a more efficient and clearer path to
finalizing negotiations on a full and binding Purchase and Sale
Agreement (PSA) for the acquisition of GEH’s interest in GLE.
The amended and extended Term Sheet, which will remain
in force until either execution of the PSA or the termination of
negotiations, contemplates Silex acquiring a majority interest
in GLE. Whilst uncertainties remain in finalizing the transaction
documentation, Silex is targeting execution of the PSA before
the end of CY2017.
Under the amended and extended term sheet signed with
GEH, Silex further agreed to continue to reimburse GEH its
pro-rata share of funding for the Wilmington operation. This is
in addition to Silex funding the development of commercial-
scale laser systems at its Lucas Heights facility in Sydney. GLE
shareholder Cameco (24% owner of GLE) remains supportive
of Silex’s efforts to restructure GLE.
Meanwhile Silex continues to take the lead on the search for
new investors in GLE in order to keep its restructure options
open, with the possibility of assigning part of its rights under
the Term Sheet to high calibre strategic investors who are
capable of supporting GLE’s transition to market with the
SILEX technology. Discussions continue to advance with a
number of interested parties.
Silex firmly believes that GLE is the best vehicle to take the
SILEX technology to market, based on the preservation of
several key assets and opportunities which will underpin GLE’s
value going forward. These assets and opportunities include:
the highly skilled and specialised engineering team based
in Wilmington (in addition to the highly talented laser
development team in Sydney);
the Test Loop demonstration facility that has operated
since 2010 and continues to advance the technology
towards full-scale demonstration;
the combined construction and operating license (COL)
granted by the US Nuclear Regulatory Commission in
2012 for a potential commercial enrichment plant in
Wilmington, NC;
•
•
•
8
Silex Annual Report 2017 THE PADUCAH OPPORTUNITY
NUCLEAR POWER OUTLOOK
The Paducah commercial plant opportunity continues to be
viewed as an ideal path to market for the SILEX technology.
The opportunity would allow for the initial commercial
deployment of the technology on a smaller scale and at
a lower cost, representing a lower risk path to market for
investors and other stakeholders.
The opportunity would involve construction of GLE’s proposed
‘Paducah Laser Enrichment Facility’ (PLEF) utilising the SILEX
technology to re-enrich around three hundred thousand metric
tons of depleted tails inventories owned by the DOE. An
agreement between GLE and the DOE providing for the sale
of the tails inventories to GLE was signed in November 2016.
The tails re-enrichment at the PLEF would occur over a period
of 40 years or more, resulting in the production of natural
grade uranium which could then be sold into the expanding
global uranium market. At a nominal production rate of around
2000 metric tons of natural uranium hexafluoride (UF6) per
year (subject to applicable regulations), this would rank as a
large ‘Tier 1’ uranium mine by today’s standards.
Subject to a recovery in uranium market pricing and receipt of
required regulatory approvals and securing project financing,
the Paducah commercial plant opportunity represents an
ideal path to full commercial deployment of our potentially
disruptive laser enrichment technology.
WILMINGTON ENRICHMENT
PLANT OPPORTUNITY
In 2012, GLE obtained a combined construction and
operating license (COL) 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 Wilmington plant
COL approval is the first license granted in the world for a
commercial laser enrichment facility.
Domestic enrichment capacity in the US is currently
approximately one third of the total US enrichment
requirements. In this light, there remains considerable interest
from US utilities in the possibility of a new US-based enrichment
supplier as the enrichment market recovers. GLE and Silex
will continue to monitor enrichment market conditions as the
Wilmington enrichment plant opportunity evolves.
Challenging market conditions continued to impact the
nuclear fuel markets throughout FY2017. This was not
unexpected given the continued slow pace of the restart of
the Japanese nuclear reactor fleet following the Fukushima
disaster in 2011 and the announcement of the premature
retirement of a number of reactors in the US and Europe. As a
result, demand for enrichment and uranium remains low and
prices continue to be depressed.
Longer term, a more positive outlook remains for the nuclear
industry, driven by the merits of nuclear power as a clean
and efficient emissions-free source of base load electricity
becoming better understood around the world. Seven new
reactor units commenced operations in the past year giving a
total of 447 operable reactors globally. With an additional 58
reactors under construction and 162 planned – the demand
and supply fundamentals of the nuclear fuel markets are set to
recover in the coming years.
Billions of dollars of investment continues to be made every
year in the nuclear industry with new nuclear plant builds
continuing in the US and the UK, as well as more extensive
programs in China, Russia, India and South Korea. This is in
addition to extensions being granted to the operating lives of
existing nuclear plants which could see many of these plants
generating clean, reliable and affordable baseload electricity
for up to 80 years.
NUCLEAR FUEL MARKET OUTLOOK
The predicted growth in nuclear reactor build as highlighted
above underpins the forecast market conditions that could
support increasing demand for nuclear fuel from the mid
2020’s. Both uranium and enrichment (U and SWU) price
recovery and uncovered demand are expected to improve,
according to industry analysts Ux Consulting and others. In
addition, given the current environment which has precipitated
the curtailment of future projects and expansion opportunities
and shuttering of existing capacity by both U and SWU
producers, ‘accessible’ supply could decrease as demand
increases. This provides potential for GLE and the SILEX
technology to participate in the global market for uranium and
enrichment from the mid 2020’s.
We therefore remain encouraged by these developments in
the global nuclear industry. We continue to believe the SILEX
technology commercialisation program being conducted
jointly by GLE and Silex, remains the best path forward to
deliver value to our shareholders.
99
Silex Annual Report 2017Silex Annual Report 2017 BUSINESS OVERVIEW (CONTINUED)
ACTIVITIES DURING THE YEAR IN REVIEW
Following the successful transfer of Translucent’s unique
epitaxy equipment and associated cREO™ technology to IQE’s
North Carolina production facility in 2016, effort and focus has
been applied to product development for several applications
of the unique cREO™ technology.
IQE have continued to make good progress and are meeting
target development milestones for initial products utilising
the cREO™ materials. The product development program
involves using two of Translucent’s production reactors to
produce various cREO™ templates on silicon wafers for
trialling within the IQE Group and select commercial partners,
with initial focus on wireless communications devices and
power electronics devices. In light of this progress, IQE has
determined an optimal route to commercialisation within a 2 to
3-year timeframe.
BUSINESS FACTS
PLATFORM
Semiconductor materials
LOCATIONS
Technology Development by Licensee
IQE – Greensboro, North Carolina, USA
Corporate Office
Sydney, NSW, Australia
THE TRANSLUCENT cREO™
SEMICONDUCTOR TECHNOLOGY
BUSINESS DESCRIPTION
Over the past decade, Silex subsidiary Translucent Inc
developed a novel set of semiconductor materials known
as ‘crystalline Rare Earth Oxides’ (cREO™) for application
to the manufacturing of next generation devices in the
semiconductor, digital communications and power electronics
industries. Following the extensive pursuit of business
development options for Translucent, an exclusive License
and Assignment Agreement was signed with UK-based IQE
Plc (LON:IQE) in September 2015. IQE is the global leader
in the design and manufacture of advanced semiconductor
wafer products.
THE TRANSLUCENT – IQE AGREEMENT
Following the signing of the exclusive License and Assignment
Agreement with UK-based IQE in September 2015, an
initial license fee of US$1.4 million was paid by IQE in March
2016 following the transfer of the cREO™ technology to
IQE’s Greensboro, North Carolina manufacturing facility. In
accordance with the agreement, the product development
and commercialisation activities are to be conducted by IQE
during a 30-month option and license period. Should IQE elect
to exercise the right to purchase the technology within this
period, the payment of a further US$5 million will be made.
More importantly, the potential commercial applications
that IQE have identified for the technology may result in an
attractive perpetual royalty of up to 6% of revenues generated
by IQE from use of the cREO™ technology.
10
Silex Annual Report 2017 1111
Silex Annual Report 2017Silex Annual Report 2017 HISTORICAL
BACKGROUND
1988
Silex is established by founder Dr Michael Goldsworthy as a
technology research and development subsidiary of Sonic
Healthcare Limited, an Australian publicly listed company.
1990
Silex begins researching the isotope separation concepts of
co-inventors Dr Michael Goldsworthy and Dr Horst Struve.
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.
1996
Silex is divested from Sonic Healthcare Limited and sets about
establishing the commercial viability of the SILEX technology.
1998
2001
Silex lists on the Australian Stock Exchange (ASX) under the
symbol ‘SLX’.
The SILEX technology is officially Classified by the US and
Australian Governments. The implications of classification
relate mainly to security protocols.
2000
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 portfolio.
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.
2006
Silex and the General Electric Company sign an exclusive
Technology Commercialisation and License Agreement for the
SILEX laser uranium enrichment technology in May, with US
Government authorisations received in October.
12
Silex Annual Report 2017 Our mission is to deliver the unique and disruptive SILEX
laser uranium enrichment technology as the next generation
technology for the global uranium enrichment industry.
2007
2011
Transfer of the SILEX Uranium Enrichment Project to GE’s
Wilmington, North Carolina (USA) nuclear fuel plant is
completed. Hitachi joins GE as project partner.
Silex successfully completes an $89 million capital raising and
a share purchase plan which raises a further $20 million.
Silex successfully completes a $50 million capital raising
in October.
2012
2008
GE-Hitachi Global Laser Enrichment LLC (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 potential 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 Corporation announce that Cameco, 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 ~36 month
review process.
In July, GLE announces the on-schedule start-up of the Test
Loop to evaluate the next-generation SILEX laser uranium
enrichment technology.
2010
In April, GLE and Silex announce the successful completion of
the Test Loop initial measurement program.
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.
2014
The US Department of Energy (DOE) selects GLE for future
operations at its Paducah, Kentucky Site. 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 laser uranium enrichment
technology. The strategic review also involves an accelerated
transition to market for subsidiaries Solar Systems and
Translucent.
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.
1313
Silex Annual Report 2017Silex Annual Report 2017 HISTORICAL BACKGROUND (CONTINUED)
2015
2017
In September, Silex announced that GEH and Silex agreed
to amend and extend the Term Sheet for the acquisition of
GEH’s 76% interest in GLE, providing Silex and GEH a more
efficient and clearer path to finalizing negotiations on a full
and binding Purchase and Sale Agreement (PSA) for the
acquisition of GEH’s 76% interest in GLE.
The SILEX technology maturation program continues to
advance at both the GLE, Wilmington and Silex, Lucas
Heights project sites, with several engineering scale-up and
economic validation deliverables achieved during the year.
IQE continued to meet target development milestones for initial
products utilising subsidiary Translucent’s cREO™ materials.
Two of Translucent’s production reactors are being used to
produce various cREO™ templates on silicon wafers for trialling
within the IQE Group and by select commercial partners.
Work continues at reduced pace on the commercialisation of
the SILEX laser 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 September, Silex subsidiary Translucent Inc’s unique
semiconductor technology known as ‘cREO™’ was exclusively
licensed to IQE Plc based in the UK. Under the terms of the
License and Assignment Agreement, IQE has 30 months
in which to elect to acquire Translucent’s technology.
Translucent ceased its Californian operation in December
2015 following the successful transfer of the technology and
commercialisation program to IQE.
2016
GEH announced in April that it is looking to exit GLE, due
to changes in business priorities and the continuing difficult
market conditions. Silex subsequently executed a Term Sheet
with GEH securing an exclusive option to acquire GEH’s 76%
interest in GLE, and the right to assign in part or in whole the
acquisition terms to third parties.
In November, GLE and the US Department of Energy (DOE)
signed an agreement for the sale and purchase of depleted
uranium hexafluoride (DUF6) for potential re-enrichment in the
first SILEX laser enrichment facility in Paducah, Kentucky. The
opportunity would result in the SILEX technology processing
around 300,000 metric tons of depleted uranium (tails)
stockpiles owned by the DOE for over 40 years.
14
Silex Annual Report 2017 CONCISE FINANCIAL REPORT
for the year ended 30 June 2017
SILEX SYSTEMS LIMITED
& ITS SUBSIDIARIES
ABN 69 003 372 067
DIRECTORS’ REPORT
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 2017.
1. Directors
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 – Chair
Dr M P Goldsworthy
Mr R A R Lee
Mr C D Wilks
2. Principal activities
During the year, the principal activity of the Company was the continued development and commercialisation of our core asset,
the laser isotope separation process for uranium enrichment known as the SILEX technology in conjunction with exclusive
licensee, GE-Hitachi Global Laser Enrichment LLC (GLE).
3. Dividend
No dividend payments were made during the year. No dividend has been recommended or declared by the Board.
16
Silex Annual Report 2017 DIRECTORS’ REPORT
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 profit from discontinued operations
Net (loss) for the year
Net (loss) is attributable to:
Owners of Silex Systems Limited
2017
$
2016
$
1,365,646
1,617,655
(10,211,489)
(4,700,759)
–
(10,211,489)
92,558
(10,118,931)
–
(4,700,759)
1,303,871
(3,396,888)
(10,118,931)
(3,396,888)
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 SILEX Technology Commercialisation Program
Market for Nuclear Reactor Fuel
The global demand for nuclear fuel, and specifically uranium and enrichment services remains depressed with prices struggling
to move above decade lows. The continued slow pace of the restart of the Japanese nuclear reactor fleet, and nuclear policy
uncertainty in countries such as the US, Germany, France and South Korea has contributed to weaker growth and a delay to the
expected return to a more balanced demand and supply scenario in the markets for nuclear fuel.
Looking to the medium term and beyond, we continue to believe that the outlook for the nuclear industry is positive and that
market growth will return. Our view is supported by the World Nuclear Association’s account of 58 reactors being currently
under construction. Additionally, with the start-up of 7 new reactor units in the past year, there are 447 operable reactors globally
at present. With a further 162 reactors planned with approvals, funding or commitments in place – we expect to witness the
rebalancing of demand and supply fundamentals in nuclear fuel markets over the coming years.
1717
Silex Annual Report 2017Silex Annual Report 2017 DIRECTORS’ REPORT
The GLE Restructure
The search for new investors to restructure the exclusive licensee of the SILEX laser uranium enrichment technology, GE-Hitachi
Global Laser Enrichment LLC (GLE), continued during the year despite a backdrop of challenging market conditions that have
defined the nuclear industry since the Fukushima accident in 2011. Silex has led the search for new investors in GLE who are
capable of backing GLE’s transition to market and supporting the commercialisation of the SILEX technology. Engagement with
the various stakeholders in the restructure of GLE has also been a key focus for Silex and is ongoing.
At the time of writing, a number of parties continue to assess the GLE restructure opportunity and progress with their due
diligence. Silex also continues to consider the potential to take a majority equity interest in GLE such that we can have greater
visibility and participation in the technology commercialisation program going forward. Silex continues to believe that GLE is the
best vehicle to take the SILEX technology to market, based on the preservation of several key assets which will underpin the
value of GLE and the SILEX technology.
The Technology Maturation Plan
Further technology maturation including several engineering scale-up and economic validation deliverables were achieved
during FY2017 at both the GLE, Wilmington, North Carolina and Silex, Sydney project sites. Activities in the Test Loop facility in
Wilmington included the commissioning of key process equipment which resulted in the successful demonstration of efficiency
improvements and the potential to lower operating and capital costs. Laser system development activities in Sydney included
test and reliability of the prototype commercial-scale plant laser system and the ongoing development of plant control systems
required for the integrated prototype commercial technology demonstration to be conducted in Wilmington in the 2020 timeframe.
The Paducah Project Opportunity
Pursuant to the signing of the agreement between GLE and the US DOE in November 2016, the Paducah commercial
opportunity is viewed by the Company as an ideal path to market for GLE and the SILEX technology. The opportunity would
see the construction of the first laser enrichment facility and the commercial deployment of the SILEX technology to re-enrich
~300,000 metric tons of depleted uranium (tails) stockpiles owned by the DOE.
The tails re-enrichment would occur over a period of 40+ years, resulting in the production of natural grade uranium which could
then be sold into the global uranium market which is expected to expand in the future. At a nominal production rate of around
2,000 metric tons of natural uranium hexafluoride (UF6) per year (subject to applicable regulations), this project would rank as a
large ‘Tier 1’ uranium mine by today’s standards.
Discontinued Operations – Translucent and Solar Systems
In June 2014, Silex announced a major restructure which aimed to return the Company’s focus solely on the SILEX laser
enrichment technology. The restructure was completed in FY2016 and resulted in the exclusive licensing of Translucent’s
unique semiconductor technology known as crystalline Rare Earth Oxide (cREO™) to IQE Plc based in the UK (LON: IQE). IQE
is progressing the cREO™ technology towards commercial deployment in various advanced semiconductor markets. Under
the terms of the License and Assignment Agreement signed in September 2015, IQE has until March 2018 in which to elect
to acquire Translucent’s technology at which time an additional amount of US$5m will be payable. Translucent ceased its
Californian operations in December 2015 following the successful transfer of the technology to IQE.
During FY2017, IQE continued to make good progress in meeting target development milestones for initial products using the
cREO™ materials. The product development program involves using two of Translucent’s production reactors to produce various
cREO™ templates on silicon wafers for trialling within the IQE group and select commercial partners, with initial focus on wireless
communications devices and power electronics devices. In light of this progress, IQE has determined an optimal route to
commercialisation within a 2 to 3-year timeframe.
Silex subsidiary Solar Systems Pty Ltd also ceased operations during FY2016. Various property, plant and equipment and
technology assets were sold to third parties.
18
Silex Annual Report 2017 DIRECTORS’ REPORT
Financial review
A summary of our consolidated income statement is set out below:
Revenue from continuing operations
Other income
Research and development materials
Development expenditure
Employee benefits expense
Consultants and professional fees
Rent, utilities and property outgoings
Other expenses
Income tax expense
Net (loss) from continuing operations
Net profit from discontinued operations
Net (loss) for the year
2017
$
1,365,646
940,847
(207,498)
(6,668,102)
(3,676,747)
(914,782)
(411,461)
(639,392)
2016
$
1,617,655
1,467,828
(60,107)
(2,550,261)
(3,091,636)
(951,041)
(433,766)
(699,431)
–
–
(10,211,489)
92,558
(10,118,931)
(4,700,759)
1,303,871
(3,396,888)
The net loss from ordinary activities of $10.1m increased by $6.7m compared to the prior year. The net loss is comprised of the
loss from continuing operations of $10.2m (an increase of $5.5m compared to the prior year) and the profit from discontinued
operations of $0.1m (compared to $1.3m for the prior year).
Further commentary on the results from our operations and the factors contributing to the increased net loss from ordinary
activities (after tax) attributable to members is provided below.
Continuing Operations – Silex Systems
The Silex Systems segment result was a $10.2m loss in the current year compared to a $4.7m loss in the prior year.
Revenue (Interest income) reduced by $0.3m as average cash balances and interest rates declined. Other income reduced
by $0.5m which was due to a $0.5m reduction in Research and Development tax incentive income. There was an increase
in expenses from continuing operations of $4.7m compared to the prior year. This was mainly due to $6.7m of Development
expenditure in the current year relating to Silex’s reimbursement of GEH’s pro-rata share of funding for GLE’s Wilmington
operations ($2.6m in the prior year). In addition, Employee benefits expense increased by $0.6m largely as a result of an
increased support for continuing operations and the GLE restructure.
Discontinued Operations – Translucent and Solar Systems
The Silex Board announced the cessation of the Solar Systems business operation on 30 July 2015. Various property, plant and
equipment and technology assets were sold to third parties with total proceeds of $2.8m received, of which $0.5m was received
during the year ended 30 June 2017. All (held for sale) assets of the Solar Systems business have now been sold.
As a result of the exclusive License and Assignment Agreement with IQE Plc for Translucent’s proprietary cREO™ technology, the
product development and commercialisation program was transferred to IQE. The Translucent, Palo Alto, California operation
ceased upon the successful transfer of the cREO™ technology in late 2015.
The profit from discontinued operations was $0.1m in the current year compared to a profit of $1.3m in the prior year. The
current year result was mainly due a $0.1m profit on sale of residual Solar Systems’ assets ($1.3m in the prior period).
1919
Silex Annual Report 2017Silex Annual Report 2017
DIRECTORS’ REPORT
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 2017
$
30 June 2016
$
44,520,749
7,367,498
51,888,247
55,098,350
1,706,048
56,804,398
2,479,087
116,892
2,595,979
2,950,265
104,728
3,054,993
49,292,268
53,749,405
49,292,268
53,749,405
As at 30 June 2017, total assets were $51.9m. Significant assets are cash holdings of $42.7m (cash and term deposits), and
Available-for-sale financial assets of $7.3m. Total liabilities were $2.6m and included trade and other payables of $1.8m.
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
2017
Cents
2016
Cents
(6.0)
(6.0)
(5.9)
(5.9)
(2.8)
(2.8)
(2.0)
(2.0)
20
Silex Annual Report 2017 DIRECTORS’ REPORT
6. Significant changes in state of affairs
The financial position and performance of the Company continued to be affected by the Company’s participation in the
restructure of the exclusive licensee for the SILEX technology, GLE. This effort is consistent with the objectives of the Company’s
2014 major strategic review which aimed to return the Company’s focus to the development and commercialisation of its
foundation technology and core asset – the SILEX technology.
Silex continued its efforts to attract new investors to support a restructure of GLE, after GE-Hitachi (GEH) disclosed in 2016 their
intention to divest their 76% stake in GLE. Silex holds an exclusive, assignable option over GEH’s 76% equity stake in GLE in
accordance with the provisions of a Term Sheet signed by Silex and GEH in April 2016 and as last amended and extended on
31 August 2017 (refer ASX Announcement dated 1 September 2017). The amended Term Sheet, which will remain in force until
either execution of the PSA or the termination of negotiations, contemplates Silex acquiring a majority interest in GLE.
Pursuant to the amended Term Sheet, Silex will continue to contribute 76% of the funding of GLE’s Wilmington, North Carolina
operations in addition to funding Silex’s laser development activities at its Lucas Heights facility south of Sydney. The amended
Term Sheet provides a revised framework for the GLE restructure, including a more efficient and clearer path to finalizing
negotiations on a full and binding Purchase and Sale Agreement for the acquisition of GEH’s 76% interest in GLE.
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.
7. Matters subsequent to the end of the financial year
Between 30 June 2017 and 22 September 2017, the IQE Plc share price (LON:IQE) has increased considerably. Combined
with movements in exchange rates, the value of the shares (disclosed as Available-for-sale financial assets) has increased by
approximately $4,500,000 since 30 June 2017. Gains or losses arising from changes in the fair value of shares classified as
available-for-sale are recognised in other comprehensive income. The financial effects of the movements in fair value since 30
June 2017 will be recognised in the financial statements for the year ended 30 June 2018.
As announced to the ASX on 1 September 2017, Silex and GE-Hitachi Nuclear Energy (GEH) reached agreement to further
amend and extend the Term Sheet for the exclusive assignable option over GEH’s 76% interest in GLE. The amended Term
Sheet, which will remain in force until either execution of a binding Purchase and Sales Agreement (PSA) or the termination of
negotiations, contemplates Silex taking a majority interest in GLE. Pursuant to the amended Term Sheet Silex will continue to
contribute 76% of the funding of GLE’s Wilmington, North Carolina operations in addition to funding Silex’s laser development
activities at its Lucas Heights facility south of Sydney. The total funding support for the 6 months ending 31 December 2017 is
expected to be approximately $6.5 million.
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.
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Silex Annual Report 2017Silex Annual Report 2017 DIRECTORS’ REPORT
8. Likely developments and expected results of operations
Overview
Silex is a research and development company whose primary asset is the SILEX laser uranium enrichment technology which
is licensed exclusively to GE-Hitachi Global Laser Enrichment LLC (GLE). As outlined above, GE-Hitachi Nuclear Energy
(GEH) is intending to exit GLE, due to changes in business priorities and the continuing adverse market conditions driven by
the Fukushima disaster in 2011. Silex continues in its efforts to restructure GLE and on 1 September 2017 announced the
agreement to amend and extend the PSA Term Sheet that was originally signed with GEH in April 2016. At the time of writing, a
number of parties continue to assess the GLE restructure opportunity and progress with their due diligence activities. In parallel
Silex continues to consider the possibility of taking a majority equity interest in GLE, which would provide the Company greater
visibility and participation in the technology commercialisation program going forward.
In light of the above, future potential milestone receipts and royalties under the Amended and Restated Technology
Commercialisation and License Agreement (ARTCLA) signed with GLE in 2013 may be significantly delayed or changed by
several factors, including the slowdown in the pace of GLE’s commercialisation program announced in July 2014, the outcome
of the restructure of GLE, and the timing of the recovery in the markets for uranium and enrichment services. At this time, it
is too early to speculate how the final outcome of the GLE restructure will affect the Company’s position under the ARTCLA,
particularly if Silex proceeds with the acquisition of a majority interest in GLE. That said, the Company is striving to maximise the
potential returns from commercialisation of the SILEX technology under a variety of possible future scenarios.
The implementation of the Company’s major strategic review announced on 30 June 2014 involved decisions to cease the Solar
Systems operations in Victoria and the Translucent operations in California. An exclusive License and Assignment Agreement for
Translucent’s technology was signed in September 2015 with UK-based IQE Plc (IQE) as noted above. The outcome of IQE’s
commercialisation program remains uncertain.
The Company’s future prospects and results remain largely dependent on the outcomes of the commercialisation programs
for the SILEX and cREO™ technologies, the GLE restructure and funding for the remaining commercialisation program, and a
recovery in the markets for both uranium and enrichment services.
Business strategies and future prospects
The SILEX Technology
In recent years, the Company has refocussed its resources and attention to our core asset, the SILEX laser based uranium
enrichment technology. We remain 100% committed to the SILEX technology and its successful commercialisation in
collaboration with exclusive licensee GLE. We intend to continue to protect our core asset and position ourselves to participate
in the forecasted recovery of the global market for nuclear fuel in the mid-2020’s.
Central to the execution of our strategy are the following:
• efforts to increase Silex’s involvement with GLE – potentially as a significant shareholder;
• increased presence in the US, the target market for deployment of the SILEX technology;
• ongoing evaluation of new opportunities to participate in the nuclear fuel cycle;
• retention of our talent and maintaining our Sydney facility as a centre of innovation; and
• focus on effective cost management to ensure the most efficient use of cash reserves.
The SILEX technology represents a unique third-generation laser-based solution for production of two key components of
nuclear power reactor fuel:
• natural grade uranium via re-enrichment of tails inventories (i.e. the Paducah commercial plant project); and
• enriched uranium for use as fuel in today’s conventional nuclear power reactors – in the form of low enriched uranium (LEU),
as well as customised fuel for the next generation fleet of small modular reactors (SMR’s) - in the form of high assay LEU.
22
Silex Annual Report 2017 DIRECTORS’ REPORT
The SILEX technology maturation program continues to advance at both the GLE, Wilmington and Silex, Sydney project sites,
with several engineering scale-up and economic validation deliverables achieved during the year. Activities at the Test Loop
facility in Wilmington included the commissioning and demonstration of key process equipment components which resulted
in the confirmation of significant efficiency improvements and the potential to lower operating and capital costs. Laser system
development activities in Sydney included the commissioning and demonstration of a prototype production-scale laser system
and the development of associated control systems, all of which will be combined for a major integrated demonstration of the
prototype commercial technology to be conducted in Wilmington.
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 2013
Economic and engineering validation for the initial commercial production module
Commenced in 2013
Phase III
Construction of the first full-scale commercial production facility
Paducah Opportunity
Status of Nuclear Fuel Markets
The global demand for nuclear fuel, and specifically uranium and enrichment services remains depressed. The continued slow
pace of the restart of the Japanese nuclear reactor fleet, and nuclear policy uncertainty in countries such as the US, Germany,
France and South Korea has contributed to weaker growth and a delay to the expected return to a more balanced demand and
supply scenario in the markets for nuclear fuel.
Looking to the medium term and beyond, we continue to believe that the outlook for the nuclear industry is positive and that
market growth will return. Our view is supported by the World Nuclear Association’s account of 58 reactors being currently
under construction. Additionally, with the start-up of 7 new reactor units in the past year, there are 447 operable reactors globally
at present. With a further 162 reactors planned with approvals, funding or commitments in place – we expect to witness the
rebalancing of demand and supply fundamentals in nuclear fuel markets over the coming years.
We continue to believe our core asset, the SILEX technology and the only third generation laser enrichment technology being
commercialised in the world, is the best path forward to deliver value to our shareholders. However, the risks surrounding
nuclear industry growth prospects and the related nuclear fuel market conditions, and the outcome of the GLE restructure, could
impact the commercialisation program outlined above.
2323
Silex Annual Report 2017Silex Annual Report 2017 DIRECTORS’ REPORT
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
Independent non-executive director for five years and Chair for
three years. Extensive experience as a Company Director. Other
current directorship roles include icare NSW, HCF, Studiosity Pty
Ltd and the University of Sydney. Executive career in strategy,
commercialisation and performance support as a senior partner of
global strategy firm L.E.K. Consulting for 20 years.
Other current listed company directorships
None
Former listed company directorships in last 3 years
Non-executive director of Cover-More Group Limited from November
2013 to April 2017
Special responsibilities
Chair of the Board
Member of Audit Committee
Chair of People & Remuneration Committee
Interests in shares and options
Ordinary shares – Silex Systems Limited
Options over ordinary shares –
Silex Systems Limited
48,230
Nil
Dr Michael Goldsworthy BSc (Hons), MSc, PhD, FAIP, GAICD.
Chief Executive Officer/Managing Director
Experience and expertise
CEO/MD for twenty-five years. Founder of the Company and co-
inventor of the SILEX uranium enrichment technology.
Other current listed company directorships
Former listed company directorships in last 3 years
None
None
Special responsibilities
Interests in shares and options
Chief Executive Officer / Managing Director
Ordinary shares – Silex Systems Limited
Options over ordinary shares –
Silex Systems Limited
5,979,055
Nil
Mr Christopher Wilks BComm, FAICD.
Non-executive director
Experience and expertise
Other current listed company directorships
Non-executive director for twenty-nine years. Finance director and
CFO of Sonic Healthcare Limited. Various other directorships of
public companies held over the last thirty years.
Executive director of Sonic Healthcare Limited since 1989 (Finance
director since 1993)
Former listed company directorships in last 3 years
None
Special responsibilities
Member 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
2,814,021
Nil
24
Silex Annual Report 2017
DIRECTORS’ REPORT
Mr Robert Lee BSc, MBA, GAICD.
Independent non-executive director
Experience and expertise
Independent non-executive director for two years. Experienced
company director, corporate adviser and former Executive Director
of Macquarie Group Limited. Currently a non-executive director of
Westmead IVF and Maple-Brown Abbott Limited.
Other current listed company directorships
Former listed company directorships in last 3 years
None
None
Special responsibilities
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 R A R Lee
Mr C D Wilks
Directors’
Meetings
Audit Committee
Meetings
People & Committee
Meetings
Number
Held
Number
Attended
Number
Held
Number
Attended
Number
Held
Number
Attended
12
12
12
12
12
12
12
12
3
*
3
3
3
*
3
3
2
*
2
2
2
*
2
2
* Not a member of the relevant committee at the time the scheduled meetings were held
2525
Silex Annual Report 2017Silex Annual Report 2017 DIRECTORS’ REPORT
11. Remuneration Report
Dear Fellow Shareholders,
On behalf of the Board and as Chair of the Company’s People and Remuneration Committee, I am pleased to present to you
the FY2017 Silex Systems Limited Remuneration Report, for which we seek your support at our Annual General Meeting in
November.
The details of the remuneration received by the Company’s Key Management Personnel (KMP) are prepared in accordance with
accounting standards, legislative requirements and best practice corporate governance guidance. The following comments aim
to provide greater insight into the Committee’s remuneration decisions with respect to FY2017 and our remuneration policies
and practices generally.
The Company’s primary focus during FY2017 was leading the activities relating to the restructure of GLE, the exclusive licensee
of the unique and potentially disruptive SILEX laser based uranium enrichment technology. The restructure has been hindered by
challenging business conditions in the markets for nuclear fuel that are attributable to the ongoing depressed state of the nuclear
industry in a post-Fukushima operating environment. These conditions continue with the recovery of the markets for uranium and
enrichment services expected to take longer than originally anticipated due to the continued slow pace of reactor restarts in Japan
and nuclear policy uncertainty in countries such as the US, Germany, France and South Korea. Despite these difficult conditions,
Silex continues to push forward with activities to restructure GLE and continue the commercialisation of the SILEX technology.
With respect to our other technology license, we have been pleased this year with the product development progress made by the
exclusive licensee of the Translucent cREO™ semiconductor technology, IQE Plc. IQE continue to pursue several potential paths for
the commercial deployment of the cREO™ technology with its utilisation planned in a number of IQE’s growing product segments.
As a result of the GLE restructure taking longer than anticipated, the Committee made some difficult decisions with respect to
the remuneration of the Company’s KMP. No remuneration increases were awarded in FY2017 for our CEO/MD or our Board
and our Board continues to not receive fees for Committee participation or for extraordinary time contributed to the Company’s
activities. Being mindful of the difficulties faced by the Company, our CEO/MD forfeited his eligibility to receive a Short-Term
Incentive (STI) for FY2017. Our CFO/Company Secretary also forfeited 90% of her STI for FY2017. We also remain aware of
shareholder concern that any long-term equity based remuneration is linked to growth in shareholder value. Therefore, at this
time, it has been determined that eligibility of our executives to participate in long-term incentives will continue to be deferred.
Following a full review of the remuneration package of our CFO/Company Secretary, an increase of 12.65% to Total Fixed
Remuneration and a 25% increase to the maximum available STI was awarded from 1 July 2016. An additional $25,000
was included on a one-off basis to the FY2017 STI with $12,500 awarded in February 2017, reflecting our CFO’s significant
contribution to facilitating the due diligence activities conducted by potential investors in GLE. The balance of the maximum
available STI for FY2017 of $112,500 was forfeited.
As we move forward in FY2018, the Company continues to focus on minimising cash burn where possible and maximising
shareholder value in all our activities related to the GLE restructure.
On behalf of the Board, I invite you to review the full report and thank you for your continued support during these difficult times.
I look forward to answering any questions you may have at our Annual General Meeting in November 2017.
Dr Lisa McIntyre
Chair, People & Remuneration Committee
26
Silex Annual Report 2017
DIRECTORS’ REPORT
The Directors present the Remuneration Report for the year ended 30 June 2017, 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 2016 Annual General Meeting
e) Executive KMP remuneration structure
f)
g) Non-executive directors’ remuneration
h) Directors’ and KMP remuneration
i) Details of share-based compensation and bonuses
j) Shares under option
Link between FY2017 remuneration and performance
a) Directors and KMP disclosed in this report
The 2017 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
Dr L M McIntyre
Dr M P Goldsworthy
Mr R A R Lee
Mr C D Wilks
Other executive KMP
Ms J E Ducie
b) Remuneration governance
Board oversight
Chair and Non-executive director
CEO/Managing Director – Executive director
Non-executive director
Non-executive director
CFO/Company Secretary
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.
2727
Silex Annual Report 2017Silex Annual Report 2017 DIRECTORS’ REPORT
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.
Members of the People & Remuneration Committee were as follows:
Committee members
Dr L M McIntyre – Chair
Mr R A R Lee
Mr C D Wilks
Committee secretary
Number of meetings in FY2017
Ms A N Scott to 26 May 2017, Ms J E Ducie from 29 May 2017
2
Other individuals who regularly attended meetings
Dr M P Goldsworthy – CEO/MD
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/Corporate-Governance.
Use of remuneration consultants
The Company did not engage remuneration consultants during FY2017. The Company has previously engaged AON Hewitt to
conduct a thorough review of KMP and Board remuneration and structure. The recommendations from the most recent review
were fully implemented during FY2015 and FY2016. The Company continues to access market data and industry remuneration
surveys and reports on a regular basis.
c) Linking remuneration structure to company performance
Remuneration strategy, policy and framework
In determining executive KMP remuneration, the Board’s policy is based on the principle of aligning remuneration outcomes
with the successful delivery of strategy whilst ensuring our remuneration practices are designed to attract, motivate and retain
highly qualified and specialised personnel. High regard for contemporary market practice, good governance and alignment to
changing business circumstances is maintained at all times. 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.
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 and operating environment. This review is
conducted in consultation with independent remuneration consultants where appropriate.
28
Silex Annual Report 2017 DIRECTORS’ REPORT
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
outcomes, as well as
functional 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 FY2017. At this time, it has been
determined that no LTIs will be granted for FY2018.
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 unlikely 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 2016 Annual General Meeting
Silex Systems Limited received more than 97% of “yes” votes on its Remuneration Report for the 2016 financial year.
e) Executive KMP remuneration structure
For FY2017, executive KMP remuneration packages included a mix of total fixed remuneration (TFR) and short-term 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.
For FY2017, the TFR for our CEO/MD remained unchanged. Following a full review of the remuneration package of our CFO/
Company Secretary, an increase of 12.65% to TFR was implemented from 1 July 2016.
2929
Silex Annual Report 2017Silex Annual Report 2017 DIRECTORS’ REPORT
Short-term Incentives (STI)
Composition
Assessment
CEO/Managing Director
CFO/Company Secretary
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.
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.*
Total Maximum
Opportunity
At Risk
$200,000
Yes
$125,000**
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 and execution of
Company strategy. At all times, the Board has the discretion to make a final determination based on share price performance or other factors.
** Total Maximum Opportunity reduced to $100,000 for FY2018.
Long-term Incentive (LTI)
No long-term incentives were granted during FY2017 to the CEO/MD or CFO/Company Secretary.
At the time of writing, it has been determined that no long-term incentives will be granted to the CEO/MD or CFO/Company
Secretary during FY2018.
f) Link between FY2017 remuneration and performance
FY2017 performance and impact on remuneration
Throughout FY2017, the Company’s primary focus was on the continued development and commercialisation of the SILEX
technology and the Company remained vigilant with respect to its efforts to restructure exclusive licensee, GLE and to respond
to challenging operating conditions in the nuclear industry.
The STI performance criteria for FY2017 for the CEO/MD and CFO/Company Secretary were heavily focussed on the
deliverables associated with the GLE restructure and the SILEX technology. Key performance criteria included achievement of
a restructure of GLE, attainment of commercialisation and development milestones for the SILEX technology and delivery of
financial rigour and operational cost reductions.
A one-off STI of $12,500 was awarded in February 2017 to our CFO/Company Secretary reflecting her significant contribution to
the due diligence being conducted by potential investors in GLE.
Significant progress was made in all key performance areas, however being mindful of the difficulties faced by the Company, our
CEO/MD forfeited his eligibility to receive a STI for FY2017 and our CFO/Company Secretary forfeited 90% of her eligibility to
receive a STI for FY2017 ($12,500 awarded from total maximum opportunity of $125,000).
30
Silex Annual Report 2017 DIRECTORS’ REPORT
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
2013
2014
2015
2016
2017
EPS
Cents
(0.1)
(17.3)
(21.1)
(2.0)
(5.9)
KMP STI award
$
Share price at 30 June
$
140,000
76,000
322,400
211,000
12,500
2.20
1.16
0.46
0.31
0.37
Contractual arrangements with executive KMPs
Component
Total Fixed Remuneration
CEO/MD
$550,000
CFO/Company Secretary
$325,000
Contract duration
Ongoing Common Law Contract
Ongoing Common Law Contract
Notice by the individual
or Company
6 months
6 months
Termination of employment
(without cause)
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
Termination of employment (with
cause) or by the individual
STI/LTI not awarded
STI/LTI not awarded
g) Non-executive directors’ remuneration
Non-executive directors receive a board fee. They do not receive performance-based pay or retirement allowances. The fees are
exclusive of superannuation.
With effect from 1 April 2016, all non-executive directors agreed to reduce their remuneration with the cessation of committee fees.
The aggregate non-executive directors’ fees are reviewed periodically by the Board taking into account comparable roles and
market data provided by an independent remuneration consultant. The non-executive 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 the aggregate significantly reduced from $465,905 in FY2014 to $260,000 in FY2017. The Silex Board
currently comprises three non-executive directors and an executive director. The current Board size and composition is deemed
appropriate in light of the current activities of the Company.
The current fee structure is outlined below:
Board
Committee
Chair
100,000
–
Member
80,000
–
Additional fees may be payable to non-executive directors should they undertake specific consulting projects for the Company in
the areas of their expertise.
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Silex Annual Report 2017Silex Annual Report 2017 DIRECTORS’ REPORT
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.
Fixed remuneration
Cash
salary
and fees*
$
Non-
monetary
benefits*
$
Annual
and Long
service
leave**
$
Post-
employment
benefits
– super-
annuation
$
Variable
remuneration
Other***
$
Cash
bonus*
$
Deferred
rights#
$
Total
$
Name
Year
Executive directors
Dr M P
Goldsworthy
2017
2016
505,987
505,500
10,264
10,624
4,527
9,505
Non-executive directors (NED)
Dr L M
McIntyre
Mr R A R Lee
Mr C D Wilks
Mr A M Stock
(until 31/8/2015)
2017
2016
2017
2016
2017
2016
2017
2016
100,000
110,500
80,000
89,164
85,416
121,500
–
15,667
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other key management personnel and group executives
2017
2016
2017
2016
2017
2016
295,084
255,486
–
51,781
801,071
812,767
–
–
–
12,973
10,264
23,597
16,123
22,921
–
(6,730)
20,650
25,696
Ms J E Ducie
Mr C R Murray
(until 31/8/2015)
Total
executive
directors and
other KMP
Total NED
remuneration
Total KMP
remuneration
34,916
34,908
9,500
10,498
7,600
8,471
8,115
11,543
–
1,488
29,916
29,908
–
–
–
–
–
–
–
–
–
–
–
–
–
–
18,688
229,284
–
–
555,694
140,000
24,725
725,262
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
109,500
120,998
87,600
97,635
93,531
133,043
–
17,155
12,500
71,000
–
353,623
2,970
382,285
–
–
–
–
–
–
305,996
909,317
64,832
–
12,500
83,504
229,284
211,000
27,695 1,413,543
2017
2016
265,416
336,831
2017
1,066,487
2016
1,149,598
–
–
–
–
10,264
23,597
20,650
25,696
25,215
32,000
90,047
–
–
–
–
–
12,500
–
–
290,631
368,831
– 1,199,948
115,504
229,284
211,000
27,695 1,782,374
* Short-term benefits as per Corporations Regulations 2M 3.03(1) Item 6.
** Other long-term benefits as per Corporations Regulations 2M 3.03(1) Item 8.
*** Other includes termination payments made to Mr C R Murray.
# Equity-settled share based payments as per Corporations Regulations 2M 3.03(1) Item 11.
32
Silex Annual Report 2017 DIRECTORS’ REPORT
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 *
2017
2016
2017
2016
2017
2016
Directors
Dr L M McIntyre
Dr M P Goldsworthy
Mr R A R Lee
Mr C D Wilks
Mr A M Stock
Other Executive KMP
Ms J E Ducie
Mr C R Murray
100.0%
100.0%
100.0%
100.0%
N/A
100.0%
77.3%
100.0%
100.0%
100.0%
N/A
–
N/A
N/A
N/A
96.5%
N/A
80.6%
100.0%
3.5%
N/A
N/A
19.3%
N/A
N/A
N/A
18.6%
0.0%
N/A
–
N/A
N/A
N/A
–
N/A
N/A
3.4%
N/A
N/A
N/A
0.8%
0.0%
*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
No grant of options affected remuneration in the current reporting period or will affect remuneration in a future reporting period.
There were no options granted or any options exercised by any individual during FY2017 (or FY2016).
STI bonuses
For each STI award for the year ended 30 June 2017 (payable in the form of a cash bonus), the percentage of the bonus
awarded or forfeited is set out below:
2017
Dr M P Goldsworthy
Ms J E Ducie
Total opportunity
$
200,000
125,000
Awarded
%
0%
10%
Forfeited
%
100%
90%
A one-off STI award of $12,500 was made in February 2017 to our CFO/Company Secretary reflecting the significant
contribution made to facilitating the due diligence activities conducted by potential investors in GLE.
LTI deferred rights and cash incentives
No LTI’s were in place for the year ended 30 June 2017.
3333
Silex Annual Report 2017Silex Annual Report 2017
DIRECTORS’ REPORT
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:
2017
Name
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
Directors of Silex
Systems Limited
Dr L M McIntyre
Dr M P Goldsworthy
Mr R A R Lee
Mr C D Wilks
Other Executive KMP
Ms J E Ducie
48,230
5,979,055
–
2,814,021
3,759
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
48,230
5,979,055
–
2,814,021
3,759
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
compen-
sation
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
2017
Name
Directors of Silex
Systems Limited
Dr M P Goldsworthy
1,102,207
Mr C D Wilks
367,035
Other Executive KMP
Ms J E Ducie
60,000
–
–
–
(1,102,207)
(367,035)
(60,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
j) Shares under option
There were no unissued ordinary shares of Silex Systems Limited under option at the date of this report.
Securities Trading Policy
The Silex Securities 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, staff are only permitted to trade in Silex securities during certain open
periods. The Silex Securities Trading Policy is available on the Company’s website at www.silex.com.au/Corporate-Governance.
34
Silex Annual Report 2017 DIRECTORS’ REPORT
12. Company Secretary
Ms J E Ducie BBus, CA, GAICD 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.
13. 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.
14. 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.
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.
15. 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.
3535
Silex Annual Report 2017Silex Annual Report 2017 DIRECTORS’ REPORT
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
Total remuneration for other assurance services
Other services
Seminars and training courses
Total remuneration for other services
Total remuneration for non-audit services
2017
$
2016
$
–
–
582
582
582
–
–
–
–
–
16. Auditors
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.
17. Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 37.
This report is made in accordance with a resolution of the Directors.
Dr M P Goldsworthy
CEO/MD
Sydney, 22 September 2017
Mr C D Wilks
Director
36
Silex Annual Report 2017
DIRECTORS’ REPORT
Auditor’s Independence Declaration
As lead auditor for the audit of Silex Systems Limited for the year ended 30 June 2017, 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.
David Ronald
Partner
PricewaterhouseCoopers
Sydney
22 September 2017
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000
GPO BOX 2650, SYDNEY NSW 2001
T +61 2 8266 0000, F +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation
3737
Silex Annual Report 2017Silex Annual Report 2017 CORPORATE GOVERNANCE STATEMENT
Silex Systems Limited (the Company) and the Board are committed to achieving and demonstrating the highest standards of
corporate governance. The Company has reviewed its corporate governance practices against the Corporate Governance
Principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council.
The 2017 Corporate Governance Statement is dated as at 30 June 2017 and reflects the corporate governance practices
in place throughout the 2017 financial year. The 2017 Corporate Governance Statement was approved by the Board on 21
September 2017 and lodged with the ASX Appendix 4G, on 22 September 2017. 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/Corporate-Governance.
38
Silex Annual Report 2017 CONCISE FINANCIAL REPORT
for the year ended 30 June 2017
CONTENTS
Financial statements
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
40
41
42
43
44
45
50
51
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 2017. 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.
SILEX SYSTEMS LIMITED
& ITS SUBSIDIARIES
ABN 69 003 372 067
CONSOLIDATED INCOME STATEMENT
for the year ended 30 June 2017
Revenue from continuing operations
Other income
Research and development materials
Development expenditure
Finance costs
Depreciation and amortisation expense
Employee benefits expense
Consultants and professional fees
Printing, postage, freight, stationery and communications
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 profit from discontinued operations
Net (loss) for the year
Net (loss) is attributable to:
Owners of Silex Systems Limited
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
2
3
2017
$
1,365,646
940,847
(207,498)
2016
$
1,617,655
1,467,828
(60,107)
(6,668,102)
(2,550,261)
(11)
(27,349)
(55)
(27,191)
(3,676,747)
(3,091,636)
(914,782)
(72,897)
(411,461)
(155,223)
(383,912)
(951,041)
(99,574)
(433,766)
(143,418)
(429,193)
(10,211,489)
(4,700,759)
–
–
(10,211,489)
(4,700,759)
4
92,558
(10,118,931)
1,303,871
(3,396,888)
(10,118,931)
(3,396,888)
Cents
Cents
(6.0)
(6.0)
(5.9)
(5.9)
(2.8)
(2.8)
(2.0)
(2.0)
The above consolidated income statement should be read in conjunction with the accompanying notes.
40
Silex Annual Report 2017 CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the year ended 30 June 2017
Net (loss) for the year
Other comprehensive income
Items that may be reclassified to profit or loss:
Changes in the fair value of available-for-sale financial assets
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
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
2017
$
2016
$
(10,118,931)
(3,396,888)
5,716,932
(53,342)
5,663,590
(283,451)
(51,181)
(334,632)
(4,455,341)
(3,731,520)
(4,455,341)
(4,455,341)
(3,731,520)
(3,731,520)
(10,211,489)
(4,700,759)
5,756,148
(4,455,341)
969,239
(3,731,520)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
4141
Silex Annual Report 2017Silex Annual Report 2017 CONSOLIDATED BALANCE SHEET
as at 30 June 2017
Note
30 June 2017
$
30 June 2016
$
1,876,319
40,801,837
1,842,593
44,520,749
1,581,746
49,700,328
3,466,276
54,748,350
4
–
350,000
44,520,749
55,098,350
7,284,502
82,996
–
7,367,498
51,888,247
1,624,251
80,001
1,796
1,706,048
56,804,398
1,846,984
632,103
2,479,087
–
2,479,087
116,892
116,892
2,595,979
49,292,268
1,799,049
472,837
2,271,886
678,379
2,950,265
104,728
104,728
3,054,993
53,749,405
231,750,374
231,752,170
15,653,086
9,989,496
(198,111,192)
(187,992,261)
49,292,268
53,749,405
Assets
Current assets
Cash and cash equivalents
Held to maturity investments – term deposits
Trade and other receivables
Assets classified as held for sale
Total current assets
Non-current assets
Available-for-sale financial assets
Property, plant and equipment
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Liabilities associated with discontinued operations
4
Total current liabilities
Non-current liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
42
Silex Annual Report 2017 CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
for the year ended 30 June 2017
Attributable to owners of Silex Systems Limited
Contributed equity
$
Reserves
$
Accumulated losses
$
Total
$
Balance at 30 June 2015
231,753,076
10,296,433
(184,595,373)
57,454,136
Net (loss) for the year
Other comprehensive income
Total comprehensive
income for the year
–
–
–
–
(3,396,888)
(334,632)
–
(3,396,888)
(334,632)
(334,632)
(3,396,888)
(3,731,520)
Transactions with owners in their capacity as owners
Employee shares and options
– value of employee services
Deferred tax recognised
directly in equity
–
(906)
(906)
Balance at 30 June 2016
231,752,170
27,695
–
27,695
9,989,496
–
–
–
27,695
(906)
26,789
(187,992,261)
53,749,405
Net (loss) for the year
Other comprehensive income
Total comprehensive
income for the year
–
–
–
–
(10,118,931)
5,663,590
–
(10,118,931)
5,663,590
5,663,590
(10,118,931)
(4,455,341)
Transactions with owners in their capacity as owners
Deferred tax recognised
directly in equity
(1,796)
(1,796)
–
–
–
–
(1,796)
(1,796)
Balance at 30 June 2017
231,750,374
15,653,086
(198,111,192)
49,292,268
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
4343
Silex Annual Report 2017Silex Annual Report 2017
CONSOLIDATED STATEMENT
OF CASH FLOWS
for the year ended 30 June 2017
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) from operating activities
Cash flows from investing activities
2017
$
2016
$
2,672,348
5,467,115
(13,157,109)
(13,835,072)
1,449,905
1,942,298
(11)
(67)
(9,034,867)
(6,425,726)
Proceeds from held to maturity investments – term deposits
8,898,491
4,473,123
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from sale of intangibles
Net cash inflows from investing activities
Cash flows from financing activities
Net cash (outflows) from financing activities
(31,906)
289,100
175,000
(42,608)
2,586,838
–
9,330,685
7,017,353
–
–
Net increase in cash and cash equivalents
295,818
591,627
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 the financial year*
1,581,746
(1,245)
1,876,319
987,777
2,342
1,581,746
*Held to maturity investments excluded from Cash and cash equivalents
40,801,837
49,700,328
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
44
Silex Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
30 June 2017
Note 1 Segment information
Segment revenue and segment result information provided to the Board of Directors for the Silex segment, the one reportable
segment for the year ended 30 June 2017 is contained in the consolidated income statement.
Segment assets were $44,468,260 at 30 June 2017 compared to $54,594,394 at 30 June 2016.
Segment liabilities were $2,595,979 at 30 June 2017 compared to $2,376,614 at 30 June 2016.
(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. Solar Systems and Translucent 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
Note 2 Revenue
From continuing operations
Interest income
From discontinued operations (note 4)
License fees
Recoverable project costs from IQE
Sale of goods
Interest income
2017
$
(10,211,489)
(10,211,489)
2016
$
(4,700,759)
(4,700,759)
2017
$
2016
$
1,365,646
1,365,646
1,617,655
1,617,655
131,148
130,487
–
3,751
265,386
1,821,297
216,786
93,151
22,717
2,153,951
4545
Silex Annual Report 2017Silex Annual Report 2017
NOTES TO THE FINANCIAL STATEMENTS
30 June 2017
Note 3 Other income
From continuing operations
Research and development tax incentive
Profit on sale of property, plant and equipment
From discontinued operations (note 4)
Research and development tax incentive
Profit on sale of property, plant and equipment
2017
$
2016
$
940,847
1,459,095
–
8,733
940,847
1,467,828
41,058
114,000
155,058
2,002,079
1,340,055
3,342,134
(i) Research and development tax incentive
Research and development tax incentive income of $981,905 (2016: $3,461,174) 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 2017 NOTES TO THE FINANCIAL STATEMENTS
30 June 2017
Note 4 Discontinued operations and Assets held for sale
In accordance with the continued implementation of the outcome of the Company’s major strategic review and resulting
restructure, the Solar Systems and Translucent businesses have been disclosed as discontinued operations.
On 30 July 2015, Silex announced a decision had been made to cease business operations at Solar Systems. During the year
ended 30 June 2017, the residual assets held for sale were sold. On 15 September 2015, Silex announced that Translucent
had signed a License and Assignment Agreement with IQE Plc with the technology commercialisation program subsequently
transferred to IQE in late 2015. As a result, these two former business segments, net of cash, some receivables and Available-
for-sale financial assets (shares in IQE) are reported as held for sale.
A summary of the results of the discontinued operations is provided below.
Revenue (note 2)
Other income (note 3)
Expenses
Profit before income tax
Income tax expense
Profit after income tax of the discontinued operations
Net cash inflows/(outflows) from operating activities
Net cash inflows from investing activities
Net cash inflows from the discontinued operations
Property, plant and equipment
Intangible assets
Total assets of disposal group held for sale
Trade and other payables
Provisions
Total Liabilities associated with discontinued operations
2017
$
265,386
155,058
(327,886)
92,558
–
92,558
2017
$
2016
$
2,153,951
3,342,134
(4,192,214)
1,303,871
–
1,303,871
2016
$
1,227,061
(2,114,844)
464,000
3,064,790
1,691,061
949,946
2017
$
2016
$
–
175,000
–
–
175,000
350,000
2017
$
–
–
–
2016
$
(303,819)
(374,560)
(678,379)
4747
Silex Annual Report 2017Silex Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
30 June 2017
Note 5 Contingent liabilities and commitments in accordance
with Purchase and Sale Agreement Term Sheet
(i) Contingent liabilities
In April 2016, Silex signed a Non-Binding Purchase and Sale Agreement (PSA) Term Sheet with GENE Holdings (GENE), GE-
Hitachi Nuclear Energy Americas LLC (GEHA) and General Electric Company (GE). In January 2017, the Term Sheet was
extended to 31 March 2017 and in April 2017, the Term Sheet was further extended to 31 August 2017. The Term Sheet and
extensions provide terms of a proposed Purchase and Sale Agreement (PSA) whereby Silex may acquire the shares owned by
GENE and GEHA (together as ‘GEH’) representing 76% of the issued capital of GE-Hitachi Global Laser Enrichment LLC (GLE).
Silex has the exclusive right to assign its rights to acquire GEH’s 76% equity stake in GLE in full or in part to new investors.
Whilst the Term Sheet and extensions are principally Non-Binding, there are certain Binding Obligations. Silex has a Binding
Funding Agreement Obligation and is required to make certain reimbursements to the Sellers (GEH). Expenses recorded in the
current year amounted to $6,668,102.
In addition, if a binding PSA is signed then Silex and any of its assignees are required to make additional funding payments to
GEH. As per the Term Sheet signed in April 2016 and as extended, in the event that Silex elects to purchase the full 76% of
GEH equity that is available for the sale and a binding PSA is executed, the maximum amount of additional funding payable by
Silex (a contingent liability) is US$1,125,000 for the 15 months to 31 March 2017. At the current point in time, the timing of any
outflow of funds is uncertain and subject to Silex signing a binding PSA and either fully or partially assigning its rights under the
Term Sheet to new investors.
Refer to Note 7 for details of the amendment and extension of the Term Sheet after year end.
(ii) Commitments in accordance with Purchase and Sale Agreement Term Sheet
Under the Term Sheet Binding Funding provisions, Silex is required to reimburse the Sellers for a further US$1,000,000 for
expenditure for the 2 months to 31 August 2017.
Note 6 Dividends
No dividends were declared or paid during the year or in the prior year.
48
Silex Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS
30 June 2017
Note 7 Events occurring after reporting date
Between 30 June 2017 and the date of this report, the IQE Plc share price (LON:IQE) has increased considerably. Combined
with movements in exchange rates, the value of the shares (disclosed as Available-for-sale financial assets) has increased by
over approximately $4,500,000 since 30 June 2017. Gains or losses arising from changes in the fair value of shares classified
as available-for-sale are recognised in other comprehensive income. The financial effects of the movements in fair value since 30
June 2017 will be recognised in the financial statements for the year ended 30 June 2018.
As announced to the ASX on 1 September 2017, Silex and GE-Hitachi Nuclear Energy (GEH) reached agreement to further
amend and extend the Term Sheet for the exclusive assignable option over GEH’s 76% interest in GLE. The amended Term
Sheet, which will remain in force until either execution of a binding Purchase and Sales Agreement (PSA) or the termination of
negotiations, contemplates Silex taking a majority interest in GLE. Pursuant to the amended Term Sheet Silex will continue to
contribute 76% of the funding of GLE’s Wilmington, North Carolina operations in addition to funding Silex’s laser development
activities at its Lucas Heights facility south of Sydney. This funding support for the 6 months ending 31 December 2017 is
expected to be approximately $6.5 million.
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 8 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 2017. 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.
4949
Silex Annual Report 2017Silex Annual Report 2017 DIRECTORS’ DECLARATION
30 June 2017
The directors declare that in their opinion, the concise financial report of the consolidated entity for the year ended 30 June 2017
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 2017. 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
Mr C D Wilks
Director
Sydney, 22 September 2017
50
Silex Annual Report 2017
INDEPENDENT AUDITOR’S REPORT
to the members of Silex Systems Limited
Report on the audit of the concise financial report
Our opinion
In our opinion, the accompanying concise financial report of Silex Systems Limited (the Company) and its controlled entities
(together, the Group) for the year ended 30 June 2017 complies with Australian Accounting Standard AASB 1039 Concise
Financial Reports.
What we have audited
The Group concise financial report derived from the financial report of the Group for the year ended 30 June 2017 comprises:
• the consolidated balance sheet as at 30 June 2017
• the consolidated income statement for the year then ended
• the consolidated statement of comprehensive income for the year then ended
• the consolidated statement of changes in equity for the year then ended
• the consolidated statement of cash flows for the year then ended
• the related notes.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of the concise financial report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the concise financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
Concise financial report
The concise financial report does not contain all the disclosures required by the Australian Accounting Standards in the
preparation of the financial report. Reading the concise financial report and the auditor’s report thereon, therefore, is not a
substitute for reading the financial report and the auditor’s report thereon.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000
GPO BOX 2650, SYDNEY NSW 2001
T +61 2 8266 0000, F +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation
5151
Silex Annual Report 2017Silex Annual Report 2017 INDEPENDENT AUDITOR’S REPORT
to the members of Silex Systems Limited
The financial report and our report thereon
We expressed an unmodified audit opinion on the financial report in our report dated 22 September 2017. That report also includes:
• The communication of key audit matters. Key audit matters are those matters that, in our professional judgement, were of
most significance in our audit of the financial report of the current period.
Responsibilities of the directors for the concise financial report
The directors 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 is
necessary to enable the preparation of the concise financial report.
Auditor’s responsibilities for the audit of the concise financial report
Our responsibility is to express an opinion on whether the concise financial report, complies in all material respects, with AASB
1039 Concise Financial Reports based on our procedures which were conducted in accordance with Auditing Standard ASA
810 Engagements to Report on Summary Financial Statements.
Report on the remuneration report
The following paragraphs are copies from our report on the remuneration report of Silex Systems Limited for the year ended 30
June 2017.
Our opinion on the remuneration report
We have audited the remuneration report included in pages 26 to 34 of the directors’ report for the year ended 30 June 2017.
In our opinion, the remuneration report of Silex Systems Limited for the year ended 30 June 2017 complies with section 300A of
the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based
on our audit conducted in accordance with Australian Auditing Standards.
PricewaterhouseCoopers
David Ronald
Partner
52
Sydney
22 September 2017
Silex Annual Report 2017 SHAREHOLDERS’ INFORMATION
30 June 2017
1. Information relating to shareholders as at 6 September 2017
(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 rights
– 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
Global X Management Company
1,978
2,370
786
1,093
163
6,390
52.77%
2,330
Ordinary shares
29,801,030
13,097,044
5353
Silex Annual Report 2017Silex Annual Report 2017
SHAREHOLDERS’ INFORMATION
30 June 2017
(b) Names of Twenty Largest Holders as at 6 September 2017
Name
Jardvan Pty Ltd
HSBC Custody Nominees (Australia) Limited
Mr Paul Cozzi
Majenta Holdings Pty Ltd
Polly Pty Ltd
J P Morgan Nominees Australia Limited
Throvena Pty Ltd
Citicorp Nominees Pty Limited
Hamlac Pty Ltd
Mr Christopher David Wilks
Felson Holdings Pty Ltd
Quintal Pty Ltd
Sporran Lean Pty Ltd
Old Digger Pty Ltd
Houghton Waterville Pty Ltd
Quadrangle Nominees Limited
Mithena Holdings Pty Ltd
Mr Xiangyang Wu
Hillboi Nominees Pty Ltd
Mr Luca Rotter + Ms Jane Louise Abbott
Number of
securities
29,801,030
15,686,219
7,870,000
5,703,923
4,073,863
3,448,670
2,978,203
2,804,055
2,525,937
2,405,070
2,251,000
2,002,952
1,749,999
1,629,865
1,000,000
847,245
817,139
808,870
779,295
775,000
Percentage
held
17.48%
9.20%
4.62%
3.35%
2.39%
2.02%
1.75%
1.64%
1.48%
1.41%
1.32%
1.17%
1.03%
0.96%
0.59%
0.50%
0.48%
0.47%
0.46%
0.45%
89,958,335
52.77%
2. Interest of directors in shares as at 6 September 2017
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 6 September 2017
As at 6 September 2017, no securities were subject to voluntary escrow.
4. Unquoted equity securities as at 6 September 2017
There were no unquoted equity securities at 6 September 2017.
54
Silex Annual Report 2017 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
PEOPLE & REMUNERATION
COMMITTEE
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
STOCK EXCHANGE
Listed on the Australian Stock
Exchange, Ticker: SLX
Suite 8.01, Level 8
56 Clarence Street
Sydney NSW 2000, Australia
Listed on the OTCQX International,
Ticker: SILXY
Postal address: PO Box 364, Sydney
NSW 2001, Australia
AUDITORS
📞 +61 2 9704 8888
📠 +61 2 9704 8851
✉
💻 www.silex.com.au
investor.relations@silex.com.au
PricewaterhouseCoopers
SOLICITORS
Baker & McKenzie
SHARE REGISTRY
Computershare Registry Services
Pty Limited
Level 5, 115 Grenfell Street, Adelaide,
South Australia 5000, Australia
GPO Box 1903 Adelaide
South Australia 5001, Australia
📞 Enquiries:
Within Australia: 1300 556 161
Outside Australia: +61 8 8236 2300
✉ web.queries@computershare.com.au
💻 www.computershare.com.au
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: 1 ADR = 5 ordinary shares
Symbol: SILXY
CUSIP: 827046 10 3 9414F102
Exchange: OTCQX
Country: Australia
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