Annual
Report
2022
Forward Looking Statements
and Risk Factors:
About Silex Systems Limited
(ASX: SLX) (OTCQX: SILXY)
Silex Systems Limited ABN 69 003 372 067 (Silex) is a
technology commercialisation company whose primary
asset is the SILEX laser enrichment technology, originally
developed at the Company’s technology facility in
Sydney, Australia. The SILEX technology has been under
development for uranium enrichment jointly with US-based
exclusive licensee Global Laser Enrichment LLC (GLE)
for a number of years. Success of the SILEX uranium
enrichment technology development program and the
proposed Paducah commercial project remain subject to a
number of factors including the satisfactory completion of
the engineering scale-up program and nuclear fuel market
conditions and therefore remains subject to associated
risks.
Silex is also at various stages of development of additional
commercial applications of the SILEX technology,
including the production of ‘Zero-Spin Silicon’ for the
emerging technology of silicon-based quantum computing.
The ‘Zero-Spin Silicon’ project remains dependent on the
outcomes of the project and the viability of silicon quantum
computing and is therefore subject to various risks. The
commercial future of the SILEX technology is therefore
uncertain and any plans for commercial deployment are
speculative.
Additionally, Silex has an interest in a unique
semiconductor technology known as ‘cREO®’ through
its 100% ownership of subsidiary Translucent Inc. The
cREO® technology developed by Translucent has been
acquired by IQE Plc based in the UK. IQE has paused the
development of the cREO® technology until a commercial
opportunity arises. The future of IQE’s development
program for cREO® is uncertain and remains subject to
various technology and market risks.
Forward Looking Statements
The commercial potential of these technologies is currently
unknown. Accordingly, no guarantees as to the future
performance of these technologies can be made. The
nature of the statements in this Report regarding the future
of the SILEX technology as applied to uranium enrichment
and Zero-Spin Silicon production, the cREO® technology
and any associated commercial prospects are forward-
looking and are subject to a number of variables, including
but not limited to, unknown risks, contingencies and
assumptions which may be beyond the control of Silex, its
directors and management. You should not place reliance
on any forward-looking statements as actual results could
be materially different from those expressed or implied by
such forward looking statements as a result of various risk
factors. Further, the forward-looking statements contained
in this Report involve subjective judgement and analysis
and are subject to change due to management’s analysis
of Silex’s business, changes in industry trends, government
policies and any new or unforeseen circumstances. The
Company’s management believes that there are reasonable
grounds to make such statements as at the date of this
Report. Silex does not intend, and is not obligated, to
update the forward-looking statements except to the extent
required by law or the ASX Listing Rules.
Risk Factors
Risk factors that could affect future results and commercial
prospects of Silex include, but are not limited to: ongoing
economic and social uncertainty, including in relation
to the impacts of the COVID-19 pandemic; geopolitical
risks, in particular relating to Russia’s invasion of Ukraine
and tensions between China and Taiwan which may
impact global supply chains; uncertainties related to
the effects of climate change and mitigation efforts; the
results of the SILEX uranium enrichment engineering
development program; the market demand for natural
uranium and enriched uranium; the outcome of the project
for the production of ‘Zero-Spin Silicon’ for the emerging
technology of silicon-based quantum computing; the
potential development of, or competition from alternative
technologies; the potential for third party claims against
the Company’s ownership of Intellectual Property;
the potential impact of prevailing laws or government
regulations or policies in the USA, Australia or elsewhere;
results from IQE’s commercialisation program and the
market demand for cREO® products; actions taken by
the Company’s commercialisation partners and other
stakeholders that could adversely affect the technology
development programs and commercialisation strategies;
and the outcomes of various strategies and projects
undertaken by the Company.
Contents
Chair’s Report
CEO’s Report
Technology Overview
Directors’ Report
Corporate Governance Statement
Financial Report
Directors’ declaration
Independent Auditor’s Report to the Members
Shareholders’ Information
Company Directory
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SILEX ANNUAL REPORT 2022
1
Chair’s Report
Dear Fellow Shareholders,
On behalf of the Silex Board, it is my pleasure to
present our 2022 Annual Report for Silex Systems
Limited. During the year ended 30 June 2022, your
Board and Management team remained dedicated to
the commercialisation of our innovative SILEX laser
enrichment technology across multiple global markets,
with a priority focus on contributing to the reliable and
sustainable supply of nuclear fuel for the world’s clean
energy needs and developing quantum materials for
next-generation quantum computing.
We continued to advance our commercialisation
programs targeting both the global nuclear fuel industry
with the unique SILEX uranium enrichment technology
and the emerging quantum computing industry with
the SILEX Zero-Spin Silicon project - with pleasing
results and significant progress on both fronts.
With regard to the SILEX uranium enrichment
technology, we are witnessing some significant
refocussing on the importance of nuclear power as a
key source of zero-emissions base load electricity in
a carbon-constrained world. There are also changing
dynamics in the nuclear fuel markets, that have the
potential to create a ‘Triple Opportunity’ for Silex
through our ownership of a 51% interest in SILEX
uranium enrichment technology licensee, Global Laser
Enrichment (GLE). While no decision has yet been
made, Silex and our GLE joint venture partner Cameco
Corporation, are reviewing the feasibility of accelerating
GLE’s commercialisation program in response to these
emerging opportunities.
The SILEX uranium enrichment commercialisation
program is underpinned by the agreement between
GLE and the US Department of Energy for the
proposed Paducah, Kentucky project. This large,
2
multi-decade project could enable the SILEX
technology to become the ‘go to’ technology for the
production of all three grades of nuclear fuel required
for today’s conventional nuclear power reactors and for
next-generation of advanced Small Modular Reactors
(SMRs) currently under development.
It is encouraging to reflect on the progress that
GLE and Silex have made with the SILEX uranium
enrichment technology commercialisation program
during the past year. We have seen pleasing results
and opportunities emanating from the rebuilding
of GLE post-closing of the restructure of the joint
venture between Silex and Cameco. This includes
securing appointees for GLE’s new executive team and
increasing GLE’s presence in the nuclear fuel industry.
GLE executed two Letters of Intent with market leading
US nuclear utilities and we have been preparing
to respond to a potential acceleration of GLE’s
commercialisation program. It has been particularly
pleasing to see the US government focussed on
domestic supply of nuclear fuel for which GLE could
potentially be a key player.
The Company’s silicon enrichment project is being
conducted at our Lucas Heights facility in collaboration
with world-leading quantum computing partners,
Silicon Quantum Computing Pty Ltd (SQC) and
UNSW Sydney. It is now in its third stage which is
scheduled for completion at the end of CY2022.
Enriched silicon, in the form of Zero-Spin Silicon
(ZS-Si), is a key enabling material for silicon-based
quantum computing. The project remains on track to
achieve its aim of verifying the capability of the SILEX
technology for commercial production of high purity
ZS-Si. We were delighted to announce the completion
of construction of the facility in July 2022 and at the
SILEX ANNUAL REPORT 2022 Our goal is to deliver long-term value
to you, our shareholders, and to do
this with a relentless focus on risk
management and prudent governance.
Our goal is to deliver long-term value to you, our
shareholders, and to do this with a relentless focus on
risk management and prudent governance.
I would like to sincerely thank our CEO, Michael
Goldsworthy and CFO, Julie Ducie for their leadership
and tenacity and the unwavering efforts of our
outstanding team. I thank them for their continued
focus and expertise as they strive to execute Silex’s
strategy and to capitalise on the growth opportunities
for your Company.
Finally, my fellow Board members and I, and Silex
Management thank you for your continued support.
I look forward to updating you again at our Annual
General Meeting in October.
Craig Roy
Chair
30 August 2022
time of writing, this facility was being commissioned in
preparation for enrichment testing.
The ZS-Si project has been supported by $1.8
million of funding from SQC and a $3 million Federal
Government funding grant from the CRC-P. We
would like to thank SQC and UNSW Sydney for their
expertise, commitment and support of this potentially
ground-breaking project.
Corporate Governance
The Silex Board underwent some changes during the
year that resulted in the appointment of Helen Cook as
a Non-executive Director in October 2021 to replace
Melissa Holzberger. We are delighted with Helen’s
appointment and would like to sincerely thank Melissa
for her astute counsel and valuable contributions to
the Company during her tenure. Helen’s appointment
adds a wealth of nuclear industry experience to
our Board and I am very pleased to lead a diverse
and high-quality Board with a keen focus on our
commercialisation programs and risk and governance.
The Year Ahead
Whilst we all faced some disruptions during FY2022
due to COVID-19, we remain acutely focussed on
progressing the commercialisation programs for the
SILEX technology, and ensuring that we are at all times
positioning to leverage your Company into global
growth markets, specifically the uranium and nuclear
fuel industry, and the emerging quantum computing
industry. We are also continuing to assess technical
opportunities in the field of medical radioisotopes
and paths to market with potential commercial and
strategic partners.
3
SILEX ANNUAL REPORT 2022 CEO’s Report
Dear Fellow Shareholders,
I am pleased to provide my report for FY2022, a year
in which Silex’s technology commercialisation projects
progressed significantly and we saw the opening up
of additional opportunities to add shareholder value
in the coming years. This was all achieved against
the challenging backdrop of COVID-19. I would
like to thank our employees and other stakeholders
who worked tirelessly in our efforts to deliver on our
objectives in FY2022.
Uranium Enrichment Project
Under ordinary circumstances, FY2022 was shaping
up as a solid year of consolidation and positive
progress in the commercialisation of the SILEX uranium
enrichment technology, following the completion of the
acquisition of SILEX licensee, Global Laser Enrichment
(GLE) in January 2021. GLE’s commercialisation
plans were steadily ramped up under the new jointly
controlled venture (Silex 51% and Cameco 49%) and
the newly installed executive team.
Then in February this year, Russia’s invasion of Ukraine
turned FY2022 into a year of very extraordinary
circumstances, with energy markets being thrown into
chaos as trade sanctions were progressively imposed
on many Russian exports. Today, the global nuclear
fuel industry remains vulnerable to the threat of lasting
sanctions and this has precipitated the most significant
shake up of the nuclear fuel markets in decades. It
became clearly evident that the global nuclear industry
had become very reliant on Russian sourced nuclear
fuel and nuclear technology.
The US nuclear industry currently imports around
20% of its enriched uranium fuel requirements from
Russia, with similar levels of reliance in other parts of
the Western nuclear industry - broadly defined as the
nuclear industry not including Russia, China and their
allies. To compound this situation, the Western nuclear
industry has been in decline over the past decade, with
several countries scaling back their nuclear industries
and cutting investment in new nuclear fuel assets.
Ironically, global concerns over the increasingly severe
impacts of climate change have spurred renewed
interest in nuclear power over recent years, however
this did not transpose to commensurate investment in
nuclear fuel supply chains and infrastructure.
In the US, this situation has given rise to an urgent
need to establish new domestic nuclear fuel production
capability and capacity in order to support a reliable
and resilient nuclear fuel supply chain. This in turn has
opened up new opportunities for GLE, the exclusive
licensee of the SILEX laser technology for uranium
enrichment.
The ‘Triple Opportunity’ emerging for GLE and the
SILEX technology in the global nuclear fuel supply chain,
driven by climate change threats and geopolitical issues
outlined above, consists of the following:
1. Production of natural grade uranium in the form of
converted UF6;
2. Production of low enriched uranium for existing
nuclear power plants; and
3. Production of higher assay fuel for next-generation
advanced SMR1 plants.
1 Advanced Small Modular Reactors (SMRs) produce up to 300MWe power (20% to 30% of large conventional reactors)
4
SILEX ANNUAL REPORT 2022 GLE’s commercialisation plans were steadily
ramped up under the new jointly controlled
venture (Silex 51% and Cameco 49%) and
the newly installed executive team.
We are firmly of the view that we are witnessing a rapidly
changing global energy landscape and expect nuclear
power generation demand to increase as the world
seeks resilient and sustainable carbon-free base load
electricity generation. The SILEX uranium enrichment
technology – the only third-generation enrichment
technology being commercialised today, can help make
nuclear power more efficient and cost-effective.
The Triple Opportunity and progress made in the SILEX
uranium technology commercialisation program are
fully detailed in this Report.
Silicon Enrichment Project
Silex made excellent progress in the Zero-Spin Silicon
(ZS-Si) project during the year. This project aims to
demonstrate the commercial potential of our unique
SILEX laser enrichment technology to produce highly
enriched silicon – a key enabling material for silicon-
based quantum computing. This project has also
dramatically increased in strategic importance over
the year, as the majority of the world’s current supply
of enriched silicon is sourced from Russia. Impending
trade sanctions have translated into increased interest
in our project and a greater urgency to commercialise
this important technology.
At the time of writing, the Pilot Demonstration Facility
which was constructed within the year in review,
was being commissioned in preparation for the
commencement of enrichment testing. Testing will
continue to the end of CY2022, at which time it is
anticipated that the demonstration will have verified
the capability of the SILEX technology to cost-
effectively produce high purity ZS-Si at commercial
scale. The initial commercial quantities may potentially
be produced in CY2023 and sold to project partner,
Silicon Quantum Computing Pty Ltd under an offtake
agreement signed in 2019. This could mark the
beginning of a new and growing revenue stream and
position Silex as a reliable global supplier of this key
strategic material.
Further detail on progress achieved in the ZS-Si Project
and the related market outlook is provided in this Report.
Prioritising Health and Safety, ESG
Core to our operations and values is prioritisation of
the health and safety of our team. During the year we
continued to focus on the health, safety and wellbeing
of our team members across all sites and thankfully, we
reported no lost time injuries or reportable incidents.
Full-time operations were maintained at the Company’s
Lucas Heights facility with appropriate measures
to mitigate the ever-present risks associated with
the COVID-19 pandemic. Efforts to safely minimise
disruptions to the Company’s activities is ongoing.
The Company is well positioned to support and
develop its ESG program over the coming year. Our
focus on environmental sustainability is underpinned
by our aspirations in the nuclear fuel industry, which
will help make zero-emissions nuclear energy
more affordable. Furthermore, our focus on social
responsibility is leveraged through our ZS-Si project for
quantum computing, an emerging technology which
will drive innovation and solutions to many of society’s
intractable problems such as climate change, and
more affordable medical treatment.
5
SILEX ANNUAL REPORT 2022 Exciting times lie ahead for both our uranium
enrichment project and our silicon enrichment project.
Finally, I take this opportunity to thank our shareholders
for your ongoing support. I would also like to thank
the Silex and GLE teams for their dedication and
tireless efforts, and to our Board for their continued
support of the Company’s strategy. I am in awe of the
progress our teams have made over the year in both
our uranium and silicon projects, and look forward
to providing a further update at the Annual General
Meeting in October.
Dr Michael
Goldsworthy
CEO/Managing Director
30 August 2022
6
SILEX ANNUAL REPORT 2022 Technology
Overview
About Silex
Silex Systems Limited (Silex) is an Australian
technology company focused on the commercialisation
of our innovative SILEX laser enrichment technology for
application to:
92
14
U
Uranium
238.03
Si
Silicon
28.0855
Uranium production
and enrichment
(nuclear power)
Silicon enrichment
(silicon quantum
computing)
Other potential markets
(e.g. medical radioisotopes)
The SILEX Laser Isotope Separation (LIS) technology
was invented by Silex Systems scientists Dr Michael
Goldsworthy and Dr Horst Struve in the 1990’s at its
Lucas Heights facility south of Sydney, Australia.
Today, Silex is actively pursuing two applications
of the SILEX LIS Technology:
• Uranium Enrichment: for the production of
natural and enriched uranium
• Silicon Enrichment: for the emerging silicon
quantum computing industry
7
SILEX ANNUAL REPORT 2022 Our ESG Commitment
Sustainability is core to our mission
and values, prioritising the health and
safety of our people and environmental
responsibility in everything we do.
We are focused on delivering value through the
responsible development and commercialisation of our
technology and by continually addressing any potential
social and environmental impacts of our operations.
At Silex, we have a well-defined ESG commitment
with three focus areas:
1. Health, safety and wellbeing of our people
2. Environmental responsibility
3. Strong corporate governance
Health, safety and wellbeing
At the core of our ESG commitment is the health,
safety and wellbeing of our people, the safety of our
operations and the communities in which we operate.
Our philosophy is defined by respect for each other
and embracing diversity and inclusion. We recognise
the benefits of diversity and promoting equal
opportunities at all times.
Environment
We are committed to bringing innovative technologies
to market which can have a positive impact on the
global environment. In particular, our SILEX technology
is currently focused on:
i) improving efficiencies in nuclear fuel production for
the generation of zero-emissions nuclear power and
contributing to climate change mitigation efforts;
ii) developing novel isotopically engineered materials
which are key to enabling next-generation quantum
computing and nuclear medicine technologies,
providing humanity with disruptive tools to solve
many global-scale environmental and social issues
driven by unchecked human population growth.
At the same time, we are committed to protecting the
environment in which we operate by mitigating any
potential risks or impacts of our activities.
Governance
Silex is committed to aspiring to, and demonstrating the
highest standards of corporate governance. The Board’s
focus is on enhancing the interests of shareholders and
other key stakeholders whilst ensuring the Company
is responsibly operated so that risks are effectively
managed or mitigated and our operations are consistent
with our ESG commitment at all times.
8
SILEX ANNUAL REPORT 2022 92
U
Uranium
238.03
The SILEX Laser Uranium
Enrichment Technology
The SILEX technology was invented by Silex Systems
scientists Dr Michael Goldsworthy and Dr Horst Struve
in the 1990’s at Lucas Heights, Sydney. 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
SILEX technology commercialisation project formally
under the strict nuclear safeguards, security and
regulatory protocols of each country.
The development and commercialisation program
for the SILEX uranium enrichment technology has
been undertaken jointly since 2007 by Silex (at its
Lucas Heights, Sydney facility) and by Global Laser
Enrichment LLC (in Wilmington, North Carolina), under
an agreement originally executed in 2006 (and as
amended in 2021). GLE is the exclusive licensee of
the SILEX uranium enrichment technology.
Silex acquired a 51% interest in GLE in January 2021
following conclusion of a US Government approval
process for a restructure of GLE which also resulted
in Cameco Corporation, one of the world’s largest
uranium and nuclear fuel suppliers increasing its interest
from 24% to 49%. The terms of the GLE restructure
were in accordance with a binding Membership
Interest Purchase Agreement between Silex, Cameco
Corporation (Cameco) and GE-Hitachi Nuclear Energy
(GEH) that was executed in December 2019 for the joint
purchase of GEH’s 76% interest in GLE.
Underpinning GLE’s commercialisation of the SILEX
technology, is the landmark 2016 agreement with the
US Department of Energy for the purchase of over
200,000 metric tons of depleted uranium hexafluoride
(UF6), being tails material stockpiled from previous
decades of enrichment operations at the DOE’s
gaseous diffusion facility in Paducah, which was
shut down in 2013. The Agreement was amended in
2020 to bring it into alignment with evolving market
conditions. This tails material will be the feedstock for
GLE’s Paducah Laser Enrichment Facility (PLEF).
Uranium Enrichment
Naturally occurring uranium is dominated by two
isotopes, U235 and U238. Nuclear energy is produced
by the splitting (or ‘fission’) of the U235 atoms.
Natural uranium is made up of ~0.7% of the ‘active’
U235 isotope with the balance (~99.3%) made up of
the U238 isotope. Uranium enrichment is the process
of concentrating or enriching the U235 isotope up to
approximately 5% for use as fuel in a conventional
nuclear power reactor. Enrichment is a technically
difficult process and accounts for around 30% of the
cost of nuclear fuel and approximately 5% of the total
cost of the electricity generated by nuclear power.
The Separation of Isotopes by Laser EXcitation
(SILEX) process is the only third-generation enrichment
technology at an advanced stage of commercialisation
today. It is able to effectively enrich uranium through
highly selective laser excitation of the fluorinated form
of uranium – the 235UF6 isotopic molecule.
The two methods of uranium enrichment used to date
are the now obsolete Gas Diffusion technique (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.
9
SILEX ANNUAL REPORT 2022 Nuclear Fuel Production
The SILEX technology could become a major
contributor to nuclear fuel production for the world’s
current and future nuclear reactor fleet, through the
production of uranium in several different forms:
• Natural Grade Uranium (Unat): via enrichment of
Department of Energy (DOE) owned inventories of
depleted UF6 tails at the proposed Paducah Laser
Enrichment Facility (PLEF) to produce uranium (in
the form of converted UF6) at natural U235 assay
of ~0.7%;
• Low Enriched Uranium (LEU / LEU+): for use
as fuel in today’s conventional large-scale nuclear
power reactors – which require fuel with U235 assays
of between 4% and 5%, and potentially LEU+, a
new grade of fuel with U235 assays between 5% and
10% being considered by several utilities for use
in current nuclear reactors to improve economic
performance; and
• High Assay LEU (HALEU): a customised fuel for
next-generation advanced SMRs currently under
development – many of which require fuel with
U235 assays between 10% and 20%.
Evolution of Enrichment
Technology
1st Generation Technology
Gaseous Diffusion
Very low efficiency
High cost
Obsolete
2nd Generation Technology
Centrifuge
Modest efficiency
Lower cost
Current technology
3rd Generation Technology
SILEX Laser
High efficiency
Anticipated to
be lowest cost
The future of
uranium enrichment
SILEX laser process much higher separation
efficiencies vs. centrifuge technology
Uranium production and enrichment are the
two largest value drivers of the nuclear fuel
cycle, accounting for nearly 80% of the
value of a fuel bundle.
Key features of the SILEX Uranium
Enrichment Technology
The SILEX technology is a unique laser-based
process that has the potential to economically
separate uranium isotopes (as well as
commercially valuable isotopes of several other
elements). It has a number of advantages over
other uranium enrichment processes including:
• Inherently higher efficiency and throughput
resulting in lower enrichment costs;
• Smaller environmental footprint than
centrifuge and diffusion plants;
• Greater flexibility in producing advanced
fuels for advanced SMRs; and
• Anticipated to have the lowest enrichment
plant capital costs.
10
SILEX ANNUAL REPORT 2022 The SILEX Uranium Enrichment
Commercialisation Vehicle:
Global Laser Enrichment LLC (GLE)
GLE is the exclusive licensee of the SILEX uranium
enrichment technology. GLE is a 51% / 49% jointly-
controlled venture between Silex and global uranium
and nuclear fuel provider Cameco Corporation.
GLE’s exclusive worldwide license to commercialise
the SILEX technology for uranium enrichment is in
accordance with a Technology Commercialisation and
License Agreement, amended in 2021. The technology
commercialisation project is being conducted jointly at
GLE’s Wilmington, North Carolina facility and at Silex’s
Sydney facility with the current focus on completion
of the full-scale demonstration of the SILEX uranium
technology utilising a pilot plant, being built at GLE’s
Test Loop facility.
Silex and Cameco have also negotiated terms for
an option for Cameco to purchase from Silex at fair
market value, an additional 26% interest in GLE,
potentially increasing their interest to 75% (subject
to US Government approvals). This option can be
exercised by Cameco from two years from completion
of the transaction (i.e., from January 2023) up until the
date 30 months after the technology is satisfactorily
demonstrated at full commercial pilot scale.
The GLE/Silex Pilot Demonstration Project
for the SILEX Technology:
The Pilot Demonstration Project being conducted
jointly by Silex and GLE is progressing well with
momentum building. Since their appointments in
2021, GLE’s new CEO Stephen Long and CCO James
Dobchuk are leading GLE’s commercialisation project
with great enthusiasm. Numerous engineering and
technical appointments have been made over the
past year, and continue to be made for both the GLE
technology team in Wilmington, NC and for the Silex
technology team in Lucas Heights, Sydney.
The focus of the technology development project is
on maturation of full-scale laser systems and process
separator equipment required for a commercial pilot
demonstration, to be conducted at GLE’s Test Loop
facility in Wilmington.
2 UxC, LLC various reports Q1 and Q2, 2022
Testing of the first module of full-scale laser systems
required for the pilot demonstration was being
completed at the time of writing. The laser module,
which was designed and built at Silex’s Lucas Heights
laser technology development centre, will be shipped
to Wilmington and installed over the coming months.
Fabrication of additional laser system modules is
well advanced, with all modules required for the pilot
demonstration facility scheduled to be shipped to
Wilmington in 2023.
Prototype testing of pilot-scale separator and gas
handling systems at GLE’s Test Loop facility is well
advanced, with the construction of remaining pilot-
scale equipment on track to be completed around the
end of CY2023. After integration and commissioning,
the full SILEX technology pilot demonstration facility
is expected to be put into service as early as 2024
(assuming acceleration of the commercialisation
timeline, as outlined above).
Successful completion of the pilot demonstration project
would result in the technology reaching TRL-6 level
– a key milestone in the de-risking of the technology
before the focus turns to the construction of the first
commercial SILEX uranium enrichment plant.
The ‘Triple Opportunity’ for GLE
and SILEX Technology:
Two key factors are driving potential transformation of
the global nuclear fuel supply chain, presenting GLE
with a ‘Triple Opportunity’ to produce three different
grades of nuclear fuel – all via the deployment of SILEX
laser-based uranium enrichment technology:
1. the growing shift towards utilisation of nuclear
power by many countries around the world in
response to heightened concerns over global
climate change;
2. the impact of the Russian invasion of Ukraine
which threatens to disrupt the significant supply of
Russian nuclear fuel to the US and other Western
markets.
Russia has historically provided a large proportion of
global capacity for uranium, conversion and enrichment
at 14%, 27% and 39% respectively2 and Western
nuclear fuel markets have become highly dependent on
Russian nuclear fuel supply. This has created urgency
in establishing alternative supply sources to replace
Russian sourced fuel in the medium to long term.
11
SILEX ANNUAL REPORT 2022 GLE is very well positioned to help address the emerging supply issues with the unique ability to
potentially produce all three grades of nuclear fuel required for current and future nuclear power plants
at the planned Paducah Laser Enrichment Facility (PLEF) – described as the ‘Triple Opportunity’:
PLEF I: Production of natural grade UF6 via tails processing with the SILEX technology
(the original PLEF Project) which will also help alleviate UF6 conversion supply pressure;
PLEF II: Production of LEU and LEU+ from natural UF6 via an extension of the PLEF
with additional SILEX enrichment capacity to supply fuel for existing reactors;
PLEF III: Production of HALEU via additional capacity of SILEX technology to supply
fuel for next-generation advanced SMRs.
The first opportunity is the original Paducah uranium production project which GLE has been planning
for several years. The second and third opportunities, which could also be located at Paducah, would
basically involve the addition of more SILEX technology uranium enrichment production modules
(without further development of the technology).
Potential Commercialisation Timelines3:
While no decision has yet been made, Silex and Cameco are assessing the potential to accelerate
GLE’s commercialisation timeline, starting with the earlier completion of the pilot demonstration
program. This could be coupled with bringing forward a commercial feasibility assessment and NRC
licensing activities for the planned PLEF project. The diagram below depicts the baseline (original)
and potentially accelerated timelines for commercialisation activities:
Baseline – GLE Commercialisation Timeline:
Commercial Pilot Demonstration4
PLEF5 Feasibility and Licensing
PLEF EPC6
PLEF Commercial
Operations
c. 2025
c. 2027
c. 2030
Potential Acceleration – GLE Commercialisation Timeline7:
Commercial Pilot Demonstration4,
Feasibility and Licensing
PLEF EPC
PLEF Commercial Operations
c. 2025
c. 2027
c. 2030
3 Timelines subject to technology demonstration outcomes, market conditions, licensing, commercial support and other factors
4 Includes achievement of Technology Readiness Level 6 (TRL-6) as defined by DOE Technology Readiness Assessment Guide (G 413.3-4A)
5 PLEF: Paducah Laser Enrichment Facility
6 Engineering, Procurement and Construction (EPC) of commercial plant
7 Potential acceleration remains subject to due diligence assessment and may very according to differing scenarios
12
SILEX ANNUAL REPORT 2022 Strategic Engagement with Industry
and Government Organisations:
GLE’s business strategy includes active engagement
with industry and government organisations, aimed at
developing areas of collaboration and support which
will help expedite and de-risk GLE’s commercialisation
of the SILEX technology and the potential
commencement of the multi-purpose PLEF. Strategic
engagement continues in the following three areas:
1. US Nuclear Utility Collaborations –
Letters of Intent
In June, GLE signed two non-binding Letters of Intent
(LOI) with US utilities Constellation Energy Generation
and Duke Energy. The LOIs include measures
to support GLE’s deployment of SILEX uranium
enrichment technology in the US and help address
emerging demands across the nuclear fuel supply
chain – described above as the ‘Triple Opportunity’.
2. US DOE – HALEU Availability Program
In February, GLE submitted a response to the DOE
regarding its Request for Information (RFI) for the
proposed HALEU Availability Program. This program
seeks to address the establishment of US domestic
HALEU production capability as soon as possible.
The next step will be the issuance of a Request
for Proposals (RFP) by the DOE. GLE plans to
respond to the RFP and explore opportunities to
be a potential participant in the HALEU Availability
Program. Importantly, a US$700m funding package
for the HALEU Availability Program was included in
the Inflation Reduction Act which passed into law in
August 2022.
3. Industry Trade Organisations
GLE has joined several trade and industry
organisations in order to engage with various
stakeholders and to keep abreast of industry
developments. These include the Uranium Producers
of America (UPA), the Nuclear Energy Institute (NEI)
based in Washington DC, and the World Nuclear
Association (WNA) based in London.
13
SILEX ANNUAL REPORT 2022 The Original Paducah Uranium
Production Opportunity:
The SILEX Technology License
Agreement with GLE:
The original proposed Paducah commercial project
involving the enrichment of depleted UF6 tails
inventories owned by the US Department of Energy
(DOE) was conceived as an ideal path to market for the
SILEX uranium enrichment technology and GLE during
the period when a worldwide oversupply of enrichment
services existed. Underpinning this opportunity is the
2016 Sales Agreement between GLE and the DOE
which provides GLE access to large stockpiles of
depleted uranium tails inventories. This Agreement
was amended in 2020 to bring it into alignment with
evolving market conditions.
The PLEF I commercial project opportunity involves
GLE constructing the proposed natural UF6 production
plant utilising the SILEX technology to enrich the DOE
tails inventories which have been stored in the form of
depleted uranium hexafluoride (UF6 – containing U235
assays from 0.25% up to 0.5%) to produce natural
grade uranium (assay of ~0.7%). Subject to completion
of the technology commercialisation project, regulatory
approvals, financing and prevailing market conditions,
it is possible the PLEF I plant may commence
commercial operations as early as 2027.
The PLEF I plant will potentially produce natural UF6
at a rate equivalent to a uranium mine with an annual
output of up to 5 million pounds of uranium oxide for
approximately 30 years, ranking in the top
ten of today’s uranium mines by production volume.
The Technology Commercialisation and License
Agreement between Silex and GLE is an exclusive
worldwide license for exploitation of the SILEX
technology for uranium enrichment. The License
Agreement is independent of Silex’s 51% equity
interest in GLE and related commercial benefits flowing
from that equity interest. The License Agreement
includes royalty revenues and milestone payments to
Silex as follows:
• Perpetual royalty of a minimum of 7% – on GLE’s
enrichment SWU revenues from use of the SILEX
technology
• US$20 million in Milestone Payments – payable
to Silex triggered by commercial development
milestones
A US$15 million milestone payment was also received
by Silex in July 2013. This was triggered by the
successful completion of the Test Loop Phase 1
Program Milestone: Technology Demonstration and
Validation. This milestone involved the demonstration
of efficient enrichment with the SILEX laser technology
at the prototype level.
14
SILEX ANNUAL REPORT 2022 Nuclear Power Outlook And Fuel Market Update
Nuclear power plays an increasingly important role in
the supply of carbon-free base load electricity and is
anticipated to play a much greater role in the energy
mix as countries around the world adopt energy
policies to meet more urgent net-zero emissions
targets. As evidenced at the 26th Conference of the
Parties to the UN Framework Convention on Climate
Change (COP26) held in Glasgow in November
2021, there are many countries which have prioritised
government policy initiatives relating to tackling climate
change and ensuring energy security, stating that
nuclear power should form a meaningful part of their
energy mix in the future.
According to the World Nuclear Association, there
are currently 437 operable nuclear reactors globally
with 59 reactors under construction and hundreds
more planned. Today’s operating reactor fleet currently
generates ~10% of the world’s electricity supply. These
numbers could rise significantly over the next decade
as governments strive to address the key issues of
climate change and energy security.
World Nuclear Reactor Population
437
340 (78%)
59 (14%)
89 (20%)
Operable Reactors
Reactors Under
Construction
Planned Reactors
Proposed Reactors*
USA
France
Japan
China
Russia
South Korea
India
Other
*Other Proposed Reactors include 16 proposed in Saudi Arabia, 10 proposed in UK, 8 in Turkey and 8 in South Africa
Source: World Nuclear Association August 2022
The US is the world’s largest producer of nuclear
power with 92 operable reactors, currently accounting
for more than 30% of worldwide nuclear generation of
electricity. Despite bold nuclear construction programs
in China, India and the Middle East, the US is expected
to remain the largest nuclear power generator for
years to come. Growth in demand for nuclear power
is also being evidenced with life extensions for existing
reactors. In the US, nearly all of the operable reactors
have been granted operating licence extensions from
40 to 60 years, with some potentially planning to
operate for 80 years or more.
There is also growing interest and significant
international investment being made into the
development of next-generation advanced Small
15
SILEX ANNUAL REPORT 2022 Modular Reactor (SMR) technologies. Many advanced
SMRs are being designed to operate with HALEU fuel,
whilst other SMRs will use conventional LEU fuel or in
some cases, LEU+ fuel.
The global nuclear fuel markets for uranium, conversion
services and uranium enrichment services, have been
tightening in recent years as the nuclear industry
downturn of the prior decade slowly dissipated and
climate change issues have turned public sentiment
back in favour of nuclear power. From 2017, when the
term price of uranium traded at ~US$30 per pound, the
term price of uranium has rallied to ~US$50 per pound.
Likewise, term conversion prices have increased from
~US$12/kg to ~US$26/kg in the same period.
Following the Russian invasion of Ukraine in February
2022, nuclear fuel markets, in particular for enrichment,
have tightened even further. As a result of the exposed
dependency on Russia, uranium enrichment term
contract prices have substantially increased from
around US$70/SWU to over US$135/SWU since
February as utilities seek to secure fuel supplies under
the growing threat of sanctions on Russian sourced
enriched uranium.
With significant growth forecasted in nuclear power
generation around the world and the ever-increasing
awareness of the potential contribution of nuclear
energy to mitigate the adverse effects of climate change,
we remain encouraged by the various opportunities
emerging for the SILEX uranium enrichment technology
and GLE in the global nuclear industry.
16
SILEX ANNUAL REPORT 2022 14
Si
Silicon
28.0855
ZS-Si Production for
Quantum Computing
In late 2019, Silex launched a R&D project in
conjunction with project partners Silicon Quantum
Computing Pty Ltd (SQC) and UNSW Sydney (UNSW),
to develop a process for the commercial production of
high-purity ‘Zero-Spin Silicon’ (ZS-Si) using a variant of
the SILEX laser isotope separation (LIS) technology.
ZS-Si is a unique form of isotopically enriched silicon
which is a key enabling material for the fabrication
of next-generation processor chips which will power
silicon-based quantum computers. Until recently,
most of the world’s supply of enriched silicon came
from Russia, produced with conventional centrifuge
technology. The Russian invasion of Ukraine has
placed this supply under threat of disruption, which has
given rise to some urgency in establishing alternative
supply. Silex anticipates that, with a successful
conclusion to the ZS-Si project, it can provide a secure
and resilient alternative source of enriched silicon to
users around the world.
Stages 1 and 2 – Completed:
The first stage, completed in June 2020, involved a
‘proof-of-concept’ validation of the silicon enrichment
process using laboratory-scale equipment, and
initial optimisation of the process. The second stage,
completed in early 2022, involved testing and further
optimisation of the LIS technology utilising a purpose-
built prototype facility. Since the completion of stage
two, the prototype facility has been used extensively
to increase process efficiency and throughput, with
improvements incorporated into stage three work.
Stage 3: Demonstration of ZS-Si production
at commercial pilot scale – Ongoing:
The third stage of the project has to date focused on
the design, construction and commissioning of the pilot
demonstration facility. In July 2022, Silex announced the
completion of construction of the pilot demonstration
facility. At the time of writing, commissioning
activities were being completed in preparation for the
commencement of enrichment testing.
The third stage of the project will culminate with the
demonstration of production of ZS-Si from the SILEX
pilot production facility with initial production tests to
be undertaken by the end of 2022. The project remains
on track to achieve its objectives of utilising a variant of
the SILEX LIS technology to produce highly enriched
silicon in the form of ZS-Si, and to establish the
manufacturing technology and capability to scale-up
production as silicon-based quantum computing gains
traction globally over the next decade.
The first batches of high purity ZS-Si product will be
purchased by SQC under an Offtake Agreement that
was executed in December 2019. The Agreement
includes SQC making three annual payments of
$300,000, all of which have been received, as an offset
against future purchases of ZS-Si produced by Silex.
Silex will retain ownership of the ZS-Si production
technology and related Intellectual Property developed
through the project.
The three-year project, which has a total budget
of around $8 million, was awarded a $3m Federal
Government funding grant from the CRC-P in February
2020, with SQC contributing another $1.8m including
$900k in equity and $900k in cash for advanced ZS-Si
purchases.
Quantum Computing and ZS-Si Outlook:
Quantum computers are expected to be thousands of
times more powerful than the most advanced of today’s
conventional computers, opening new frontiers and
opportunities in many industries, including medicine,
artificial intelligence, cybersecurity and global financial
systems. Many countries around the world are investing
heavily in the development of quantum computing
technology, with governments and key corporates (such
as Intel, IBM, Google, Microsoft and others) vying for
leadership in this emerging strategic industry.
ZS-Si is a key enabling material for the silicon Quantum
Computer (QC) processor chip. Natural silicon (Si)
consists of 3 isotopes: 92.2% Si-28, 3.1% Si-30
(each with zero electron spin state) and 4.7% Si-29
17
SILEX ANNUAL REPORT 2022 (with a spin state of ½). The presence of Si-29 in
concentrations above 500 parts per million (ppm)
(0.05%) prevents effective QC performance, so ZS-Si
or enriched silicon must be produced by elimination
of the Si-29 isotope. The lower the concentration
of Si-29, the better a silicon quantum processor will
perform in terms of computational power, accuracy
and reliability.
Current methods for production of enriched silicon are
limited and costly with only small quantities produced
annually, mostly using gas centrifuge technology.
Should the ZS-Si project be successful, it could
potentially enable Australia to establish itself as a
world-leader in ZS-Si production. Furthermore, if the
market for ZS-Si evolves as anticipated, this could
create a new value-added export market for Australia.
As the ZS-Si project progresses, Silex will engage with
other potential customers, including global computer
chip manufacturers who are also developing silicon
quantum computing technology.
18
SILEX ANNUAL REPORT 2022
Financial Report
for the year ended 30 June 2022
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 2022.
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:
Mr C A Roy
Dr M P Goldsworthy
Mr C D Wilks
Ms M K Holzberger was a director from the beginning of the year until her resignation on 14 October 2021.
Ms H G Cook was appointed as a director on 14 October 2021 and continues in office at the date of this report.
2. Principal activities
Silex is primarily focused on the development of the SILEX laser enrichment technology for two key global
industries:
(i) The nuclear fuel industry – with the unique third-generation SILEX uranium enrichment technology; and
(ii) The emerging quantum computing industry – with the SILEX Zero-Spin Silicon project.
The development and commercialisation program for the SILEX uranium enrichment technology has been
undertaken jointly since 2007 by Silex (at its Lucas Heights, Sydney facility) and by Global Laser Enrichment LLC
(GLE) (in Wilmington, North Carolina). GLE is the exclusive licensee of the SILEX uranium enrichment technology.
GLE is a 51%/49% jointly-controlled venture between Silex and global uranium and nuclear fuel provider Cameco
Corporation.
The SILEX Zero-Spin Silicon (ZS-Si) project commenced in December 2019 and is being undertaken with project
partners Silicon Quantum Computing Pty Ltd (SQC) and UNSW Sydney (UNSW) at Silex’s Lucas Heights facility,
with the objective of developing a variant of the SILEX technology for the commercial production of ZS-Si, a key
enabling material for the emerging silicon quantum computing industry.
3. Dividend
No dividend payments were made during the year. No dividend has been recommended or declared by the Board.
4. Operating and Financial Review
The review contains the following sections:
a) Operations
b) Financial Results
c) Financial Position
d) Business Strategy and Future Prospects
20
SILEX ANNUAL REPORT 2022 Directors’ Report
a) Operations
Silex’s operations are currently focused on the development and commercialisation of the SILEX enrichment
technology for two commercial applications:
(i) Uranium production and enrichment for the production of fuel for the nuclear power industry; and
(ii) Silicon enrichment for the production of ‘Zero-Spin Silicon’ used in the emerging quantum computing industry.
SILEX Uranium Enrichment
The development and commercialisation program for the SILEX uranium enrichment technology has been
undertaken jointly since 2007 by Silex (at its Lucas Heights, Sydney facility) and by GLE (in Wilmington, North
Carolina), under an agreement originally executed in 2006 (and as amended in 2021). GLE is the exclusive
licensee of the SILEX uranium enrichment technology. Silex acquired a 51% interest in GLE in January 2021
following conclusion of a US Government approval process for a restructure of GLE which also resulted in Cameco
Corporation, one of the world’s largest uranium and nuclear fuel suppliers increasing its interest from 24% to 49%.
The terms of the GLE restructure were in accordance with a binding Membership Interest Purchase Agreement
(MIPA) between Silex, Cameco Corporation (Cameco) and GE-Hitachi Nuclear Energy (GEH) that was executed in
December 2019 for the joint purchase of GEH’s 76% interest in GLE.
Silex and Cameco also negotiated terms for an option for Cameco to purchase from Silex at fair market value, an
additional 26% interest in GLE, potentially increasing their interest to 75% (subject to US Government approvals).
This option can be exercised by Cameco from two years from completion of the transaction (i.e., from 31 January
2023) up until the date 30 months after the technology is satisfactorily demonstrated at full commercial pilot scale.
The technology commercialisation program is currently advancing at both the Silex, Sydney and the GLE,
Wilmington project sites. Laser system development activities in Sydney includes maturation of commercial-
scale pilot laser systems. Activities in Wilmington include the scaling-up of enrichment process equipment and
preparation of the Test Loop facility for future deployment of pilot-scale production equipment required for pre-
commercial uranium enrichment testing.
The aim of the uranium enrichment project is to complete construction of full-scale laser and separator equipment
which will be deployed in GLE’s Test Loop facility in Wilmington, to demonstrate commercial pilot-scale (TRL-6)
enrichment of the SILEX technology by the mid-2020’s. GLE’s owners are currently assessing the feasibility of
accelerating this timeline in light of emerging geopolitical issues in the nuclear fuel supply chain. Furthermore, these
emergent issues may potentially result in multiple opportunities for the SILEX technology in the global nuclear fuel
industry including for natural and enriched uranium.
Zero-Spin Silicon for Quantum Computing Process
In December 2019, Silex launched a new R&D project in conjunction with project partners SQC and UNSW. The
aim of the Zero-Spin Silicon (ZS-Si) project is to verify the capability of the SILEX laser isotope separation (LIS)
technology for commercial production of a unique form of isotopically enriched silicon which is a key enabling
material for next generation processor chips which will power silicon-based quantum computers. Silex’s LIS
technology has the potential to efficiently produce ZS-Si to provide a secure supply of this material for initial
customer SQC, in support of its world-leading efforts to commercialise silicon-based quantum computing
technology in conjunction with UNSW.
The three-year, three-stage ZS-Si project was awarded a $3 million Federal Government funding grant from the
Cooperative Research Centres Projects (CRC-P) in February 2020. The current project is due for completion
at the end of CY2022 with the planned demonstration of production of initial quantities of ZS-Si from a recently
constructed pilot demonstration facility at the Company’s Lucas Heights technology development centre.
21
SILEX ANNUAL REPORT 2022 Directors’ Report
The initial commercial quantities of ZS-Si may potentially be produced from the Silex pilot facility from CY2023, and
may be purchased by SQC under an Offtake Agreement executed in December 2019. The Agreement includes SQC
making three annual payments of $300,000, all of which have been received, as an offset against future purchases of
ZS-Si produced by Silex.
cREO® Technology
The cREO® technology was purchased by UK-based IQE Plc (AIM: IQE) in early 2018 in accordance with a 2015
License and Assignment Agreement. To date, Silex has received technology purchase payments of US$6.4 million
(in IQE shares) and minimum royalties of US$1.3 million, including US$500k on 25 February 2022.
In March 2022, IQE advised that it has paused development of the innovative cREO® advanced semiconductor
technology until a commercial opportunity arises. Prior to the pause in development, IQE had been developing a
product called IQepiMo™ which was built on cREO®, targeting 5G filters for mobile handset devices. IQE has said
the technology has become a longer term development opportunity and will retain the technology, capability and IP
enabling redeployment if and when appropriate, subject to the continued payment of minimum royalties to Silex.
b) Financial Results
A summary of consolidated revenue and results is set out below:
Revenue from continuing operations
Other income
(Loss) before tax
Income tax expense
Net (loss) from continuing operations
Net (loss) for the year
Net (loss) is attributable to:
Owners of Silex Systems Limited
2022
$
4,394,754
2,817,759
2021
$
2,067,875
1,365,733
(9,464,422)
(6,927,268)
-
-
(9,464,422)
(9,464,422)
(6,927,268)
(6,927,268)
(9,464,422)
(6,927,268)
The net loss from ordinary activities was $9.5m compared to $6.9m in the prior year. The increase in net loss from
ordinary activities is mainly due to an increase in activities at GLE compared to the prior year. Silex’s 51% share of
the GLE loss increased by $5.8m in the current year (reported as share of net loss of associates and joint ventures
accounted for using the equity method). The prior year included five months of losses following the closing of the
GLE acquisition on 31 January 2021.
The net loss was partly offset by a $1.6m reduction in Development expenditure, reflecting the cessation of
Silex’s obligation to reimburse GEH for our share of GLE’s funding at closing. In addition, Silex recommenced
being reimbursed by GLE for its costs on the uranium project from closing, resulting in an increase of $3.0m in
Recoverable project costs revenue in the current year. Other income increased by $1.5m in the current year mainly
due to a foreign currency exchange gain of $0.6m (a loss of $0.2m in the prior year) and a $0.4m increase in
Research and development tax incentive income.
Employee benefits expense and Research and development materials were also higher in the current year, with
increases of $1.4m and $0.6m respectively to the prior period, as our headcount and project activities increased.
Further commentary on the results from our operations and the factors contributing to the decreased net loss from
ordinary activities (after tax) attributable to members is provided below.
22
SILEX ANNUAL REPORT 2022 Directors’ Report
Silex Systems
The loss generated by Silex Systems reduced from $3.8m in the prior year to $1.8m in the current year. This was
mainly due to the increase in Recoverable project costs revenue of $3.0m. This increase was partly offset by an
increase in expenses (mainly Employee benefits expense and Research and development materials).
Translucent
The Translucent segment result was a $0.03m profit in the current year compared to a profit of $0.7m in the prior
year. The prior year result included $0.7m Royalty revenue from the sale of intellectual property related to the cREO®
technology to IQE Plc.
Silex USA
The Silex USA segment result was a loss of $7.7m compared to a loss of $3.8m in the prior year. Activities at GLE
have increased following the closing of the GLE acquisition on 31 January 2021.
c) Financial Position
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 2022
$
30 June 2021
$
49,683,771
4,433,088
54,116,859
22,746,967
1,294,859
24,041,826
2,717,549
853,156
3,570,705
50,546,154
1,931,124
39,571
1,970,695
22,071,131
50,546,154
22,071,131
As at 30 June 2022, Silex’s net assets were $50.5m. Significant assets include cash holdings of $42.5m (cash and
term deposits) and Financial assets at fair value through Other comprehensive income of $4.0m (shares in IQE). The
increase in net assets of $28.5m was mainly due to the completion of an equity raise by way of a placement which
was followed by a Share Purchase Plan. The net proceeds from the issue of shares were $38.4m. Partly offsetting
this was the net loss for the year and a reduction of $1.8m in the value of the IQE shares. Payments for investments
accounted for using the equity method (i.e., the Company’s investment in GLE) were $10.1m in the current period
($3.0m in the prior corresponding period).
d) Business Strategy and Future Prospects
Silex’s Strategy
Silex is a technology commercialisation company, focused on the commercialisation of our innovative SILEX laser
enrichment technology across multiple markets, with a priority focus on contributing to the reliable and sustainable
supply of nuclear fuel for the world’s clean energy needs and quantum materials for next generation quantum
computing technology.
23
SILEX ANNUAL REPORT 2022 Directors’ Report
The execution of our strategy is through the following activities:
• Pursuit of the ‘Triple Opportunity’ emerging in the nuclear fuel supply chain for the SILEX uranium enrichment
technology through our ownership of a 51% interest in exclusive uranium technology licensee GLE;
• Developing the SILEX technology for the production of enriched silicon in the form of Zero-Spin Silicon – a key
material required for quantum computer chip fabrication; and
• Progressing our assessment of additional potential applications of the SILEX technology in fields such as medical
radioisotopes together with potential commercial and strategic partners.
SILEX Uranium Enrichment
The SILEX technology is the only known third-generation laser-based uranium enrichment technology under
commercial development today. Subject to the successful completion of the commercialisation project, market
conditions and other factors, the SILEX technology could become a major contributor to nuclear fuel production for
the world’s current and future nuclear reactor fleet, through the production of uranium in several different forms:
• Natural Grade Uranium (Unat): via enrichment of Department of Energy (DOE) owned inventories of depleted
UF6 tails at the proposed Paducah Laser Enrichment Facility (PLEF) to produce uranium (in the form of converted
UF6) at natural U235 assay of ~0.7%;
• Low Enriched Uranium (LEU): for use as fuel in today’s conventional large-scale nuclear power reactors –
which require fuel with U235 assays of between 4% and 5%, and potentially LEU+, a new grade of fuel with U235
assays between 5% and 10% being considered by several utilities for use in current nuclear reactors to improve
economic performance; and
• High Assay LEU (HALEU): a customised fuel for next generation advanced Small Modular Reactors (SMRs)
currently under development – many of which require fuel with U235 assays of between 10% and 20%.
Uranium production and enrichment are the two largest value drivers of the nuclear fuel cycle, accounting for
nearly 80% of the value of a reactor fuel bundle at current market prices. Commercialisation of the SILEX uranium
enrichment technology through licensee GLE may enable the SILEX technology to become a unique, multi-purpose
nuclear fuel production platform for existing and emerging nuclear power generation systems.
Status of Nuclear Fuel Markets
Nuclear power plays an increasingly important role in the supply of carbon-free base load electricity and is
anticipated to play a much greater role in the energy mix as countries around the world adopt energy policies
to meet more urgent net-zero emissions targets. As evidenced at the 26th Conference of the Parties to the UN
Framework Convention on Climate Change (COP26) held in Glasgow in November 2021, there are many countries
which have prioritised government policy initiatives relating to tackling climate change and ensuring energy security,
stating that nuclear power should form a meaningful part of their energy mix in the future.
According to the World Nuclear Association, there are currently 437 operable nuclear reactors globally with 59
reactors under construction and hundreds more planned. Today’s operating reactor fleet currently generates ~10%
of the world’s electricity supply. These numbers could rise significantly over the next decade as governments strive
to address the key issues of climate change and energy security.
The US is the world’s largest producer of nuclear power with 92 operable reactors, currently accounting for more
than 30% of worldwide nuclear generation of electricity. Despite bold nuclear construction programs in China, India
and the Middle East, the US is expected to remain the largest nuclear power generator for years to come. Growth
in demand for nuclear power is also being evidenced with life extensions for existing reactors. In the US, nearly all
of the operable reactors have been granted operating licence extensions from 40 to 60 years, with some potentially
planning to operate for 80 years or more.
24
SILEX ANNUAL REPORT 2022 Directors’ Report
There is also growing interest and significant investment being made into the development of next generation
advanced SMR technologies. Many advanced SMRs are being designed to operate with HALEU fuel, whilst other
SMRs will use conventional LEU fuel or in some cases, LEU+ fuel.
The global nuclear fuel markets for uranium, conversion services and uranium enrichment services, have been
tightening in recent years as the nuclear industry downturn of the prior decade slowly dissipated and climate
change issues have turned public sentiment back in favour of nuclear power. From 2017, when the term price of
uranium traded at ~US$30 per pound, the term price of uranium has rallied to ~US$50 per pound. Likewise, term
conversion prices have increased from ~US$12/kg to ~US$26/kg in the same period.
Following the Russian invasion of Ukraine in February 2022, nuclear fuel markets, in particular for enrichment, have
tightened even further. As a result of the exposed dependency on Russia, uranium enrichment term contract prices
have substantially increased from around US$70/SWU1 to over US$135/SWU since February as utilities seek to
secure fuel supplies under the growing threat of sanctions on Russian sourced enriched uranium.
With significant growth forecasted in nuclear power generation around the world and the ever-increasing awareness
of the potential contribution of nuclear energy to mitigate the adverse effects of climate change, we remain
encouraged by the various opportunities emerging for the SILEX technology and GLE in the global nuclear industry.
The ‘Triple Opportunity’ for GLE and SILEX Technology
Two key factors are driving potential transformation of the global nuclear fuel supply chain, which in turn is
presenting GLE with a ‘Triple Opportunity’ to produce three different grades of nuclear fuel, Unat, LEU/LEU+ and
HALEU – all via the deployment of the SILEX uranium enrichment technology:
(1) the growing shift towards utilisation of nuclear power by many countries around the world in response to
heightened concerns over global climate change;
(2) the impact of the Russian invasion of Ukraine which threatens to disrupt the significant supply of Russian
nuclear fuel to the US and other Western markets.
These factors have highlighted the degree to which Western nuclear fuel markets have become highly dependent
on Russian nuclear fuel supply. Russia has historically provided a large proportion of global capacity for uranium,
conversion and enrichment at 14%, 27% and 39% respectively2.
This has created some urgency in establishing alternative supply sources to replace Russian sourced fuel in the
medium-term. While there is no short-term solution to this situation, GLE could be very well positioned to help
address the emerging nuclear fuel supply chain issues with the unique potential to produce all three grades of
nuclear fuel required for current and future nuclear plants at the planned multi-purpose PLEF:
PLEF I: Production of natural grade UF6 via tails processing with the SILEX technology (the original PLEF
Project) which will also help alleviate UF6 conversion supply pressure;
PLEF II: Production of LEU and LEU+ from natural UF6 via an extension of the PLEF with additional SILEX
enrichment capacity to supply fuel for existing reactors;
PLEF III: Production of HALEU via additional capacity of SILEX technology to supply fuel for next generation
advanced SMRs.
The first opportunity is the original Paducah uranium production project which GLE has been planning for several
years. The second and third opportunities, which could also be located at Paducah, would basically involve the
addition of more SILEX technology uranium enrichment production modules (without further development of the
technology).
1SWU – Separative Work Unit – is the unit of enrichment traded in the market
2 UxC, LLC various reports Q1 and Q2, 2022
25
SILEX ANNUAL REPORT 2022 Directors’ Report
Strategic Engagement with Industry and Government Organisations
GLE’s business strategy includes active engagement with industry and government organisations, aimed at
developing areas of collaboration and support which will help expedite and de-risk GLE’s commercialisation
of the SILEX technology and the potential commencement of the PLEF. In June 2022, GLE signed two non-
binding Letters of Intent (LOI) with US utilities Constellation Energy Generation and Duke Energy. The LOIs include
measures to support GLE’s deployment of SILEX uranium enrichment technology in the US and help address
emerging demands across the nuclear fuel supply chain – described above as the ‘Triple Opportunity’.
Potential Commercialisation Timelines*
While no decision has yet been made, Silex and Cameco are assessing the potential to accelerate GLE’s
commercialisation timeline, starting with the earlier completion of the pilot demonstration project. This could
be coupled with bringing forward a commercial feasibility assessment and NRC licensing activities for the
planned PLEF project. The diagram below depicts the baseline (original) and potentially accelerated timelines for
commercialisation activities:
Baseline – GLE Commercialisation Timeline:
Commercial Pilot Demonstration#
PLEF‡ Feasibility and Licensing
PLEF EPC†
PLEF Commercial
Operations
c. 2025
c. 2027
c. 2030
Potential Acceleration – GLE Commercialisation Timeline≈:
Commercial Pilot Demonstration#,
Feasibility and Licensing
PLEF EPC
PLEF Commercial Operations
c. 2025
c. 2027
c. 2030
The original proposed Paducah commercial project involving the enrichment of depleted UF6 tails inventories owned
by the US DOE was conceived as an ideal path to market for the SILEX uranium enrichment technology and GLE
during the period when a worldwide oversupply of enrichment services existed. Underpinning this opportunity is
the 2016 Sales Agreement between GLE and the DOE which provides GLE access to large stockpiles of depleted
uranium tails inventories. This Agreement was amended in 2020 to bring it into alignment with evolving market
conditions.
The PLEF I commercial project opportunity involves GLE constructing the proposed natural UF6 production plant
utilising the SILEX technology to enrich the DOE tails inventories which have been stored in the form of depleted
uranium hexafluoride (UF6 – containing U235 assays from 0.25% up to 0.5%) to produce natural grade uranium
(assay of ~0.7%). Subject to completion of the technology commercialisation project, regulatory approvals,
financing and prevailing market conditions, it may be possible the PLEF I plant could commence commercial
operations as early as 2027.
* Timelines subject to technology demonstration outcomes, market conditions, licensing, commercial support and other factors
# Includes achievement of Technology Readiness Level 6 (TRL-6) as defined by DOE Technology Readiness Assessment Guide (G 413.3-4A)
‡ PLEF: Paducah Laser Enrichment Facility
† Engineering, Procurement and Construction (EPC) of commercial plant
≈ Potential acceleration remains subject to due diligence assessment and may very according to differing scenarios
26
SILEX ANNUAL REPORT 2022 Directors’ Report
The PLEF I plant will potentially produce natural UF6 at a rate equivalent to a uranium mine with an annual output of
up to 5 million pounds of uranium oxide for approximately 30 years, ranking in the top ten of today’s uranium mines
by production volume.
SILEX Technology License Agreement with GLE
The Technology Commercialisation and License Agreement between Silex and GLE is an exclusive worldwide
license for exploitation of the SILEX technology for uranium enrichment. The License Agreement is independent of
Silex’s 51% equity interest in GLE and related commercial benefits flowing from that equity interest. The License
Agreement includes royalty revenues and milestone payments to Silex as follows:
• Perpetual royalty of a minimum of 7% - on GLE’s enrichment SWU revenues from use of the SILEX technology
• US$20 million in Milestone Payments – payable to Silex triggered by commercial development milestones
A US$15 million milestone payment was also received by Silex in July 2013. This was triggered by the successful
completion of the Test Loop Phase 1 Program Milestone: Technology Demonstration and Validation. This milestone
involved the demonstration of efficient enrichment with the SILEX laser technology at the prototype level. The
receipt of potential additional milestone payments and royalties and the associated timing remains uncertain.
The Company continues to take a considered approach to the SILEX technology commercialisation program in line
with current market conditions. Ultimately, the future of the technology and likelihood of success in the remaining
commercialisation program is dependent on the continued recovery in the global markets for natural and enriched
uranium. Commercialisation of the SILEX uranium enrichment technology therefore remains subject to these and
other risks.
Zero-Spin Silicon for Quantum Computing
Silex’s LIS technology has the potential to efficiently produce ZS-Si to provide a secure source of supply of this key
enabling material for the emerging silicon quantum computing market, with sales of initial small quantities of ZS-Si
anticipated to commence in 2023. The first batches of high purity ZS-Si product may be purchased by project
partner, SQC under an Offtake Agreement that was executed in December 2019.
Quantum computers are expected to be thousands of times more powerful than the most advanced of today’s
conventional computers, opening new frontiers and opportunities in many industries, including medicine, artificial
intelligence, cybersecurity and global financial systems. Many countries around the world are investing heavily in the
development of quantum computing technology, with governments and key corporates (such as Intel, IBM, Google,
Microsoft and others) vying for leadership in this emerging strategic industry.
The first stage of the three-stage project was successfully completed in June 2020, establishing ‘proof-of-
concept’ for the silicon laser isotope separation (LIS) process identified by Silex. The second stage of the project
was completed in January 2022 which involved the design, construction and operation of a scaled-up prototype
demonstration facility, verifying the efficiency and scalability of the silicon LIS technology and the underlying
economic limit of the process (in terms of achievable isotopic purity).
The third stage, scheduled to be completed in CY2022, aims to verify the capability of the SILEX technology for
commercial production of high purity ZS-Si from the SILEX pilot demonstration facility, leading to a full techno-
economic assessment of the ZS-Si business case. The construction of the pilot demonstration facility was
completed in July 2022 and is currently being commissioned. Initial enrichment testing will commence shortly.
Following pilot production demonstration and the full economic assessment of the ZS-Si business case, the
Company may proceed with the construction of a SILEX commercial ZS-Si production plant at Silex’s Lucas
Heights facility to produce ZS-Si in multiple product formats. The ZS-Si project remains dependent on the
outcomes of the project and the viability of silicon quantum computing and is therefore at risk.
27
SILEX ANNUAL REPORT 2022 Directors’ Report
cREO® Technology
In March 2022, IQE advised that it has paused development of the innovative cREO® advanced semiconductor
technology until a commercial opportunity arises. Prior to the pause in development, IQE had been developing
a product called IqepiMo™ which was built on cREO®, targeting 5G filters for mobile handset devices. IQE has
said the technology has become a longer term development however, will retain the technology, capability and IP
enabling redeployment if and when appropriate, subject to the continued payment of minimum royalties to Silex.
Minimum annual royalties have been payable by IQE since CY2019 with the CY2021 minimum royalty of US$500k
being received in February 2022.
The commercial prospects of the cREO® technology and the potential for any further minimum royalty payments
remain uncertain and subject to risk following the pause in IQE’s development program.
5. Earnings per share
Earnings per share (loss) from continuing operations attributable to the ordinary equity holders of the Company
2022
Cents
2021
Cents
Basic earnings per share
Diluted earnings per share
Earnings per share (loss) attributable to the ordinary equity holders of the Company
Basic earnings per share
Diluted earnings per share
(4.8)
(4.8)
(4.8)
(4.8)
(4.0)
(4.0)
(4.0)
(4.0)
6. Significant changes in state of affairs
On 27 September 2021, Silex announced that it had completed an equity raise by way of a placement. 25,972,391
ordinary shares were issued. A Share Purchase Plan was also offered to eligible shareholders and a further
5,343,812 shares were issued. Total cash received from the placement and Share Purchase Plan, net of transaction
costs, was $38.4m.
7. Matters subsequent to the end of the financial year
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 Directors’ Report.
28
SILEX ANNUAL REPORT 2022 Directors’ Report
8.
Information on Directors
The following information is current as at the date of this report:
Mr Craig Roy MBA, MSc, FAICD.
Chair – Independent non-executive director
Experience and expertise
Other current listed company
directorships
Former listed company
directorships in last 3 years
Special responsibilities
Independent non-executive director and Chair since January 2019. Former Deputy
CEO of the CSIRO. Extensive experience as a company director and is currently a
Non-executive Director of Sydney Water and Chair of the Australian Research Data
Commons.
None
None
Chair of the Board
Member of Audit Committee
Chair of People & Remuneration Committee
Chair of Global Laser Enrichment Holdings LLC
Interests in shares, options and rights
Number of ordinary shares
259,507
Number of options
Number of rights
Nil
Nil
Dr Michael Goldsworthy BSc (Hons), MSc, PhD, FAIP, GAICD.
Chief Executive Officer/Managing Director
Experience and expertise
CEO/MD for thirty years. Founder of the Company and co-inventor of the SILEX
laser isotope separation technology. Dr Goldsworthy has been the driving force
behind the commercialisation program for the SILEX technology.
Other current listed company
directorships
None
Former listed company directorships in
last 3 years
None
Special responsibilities
Chief Executive Officer / Managing Director
Director of Global Laser Enrichment Holdings LLC
Interests in shares, options and rights
Number of ordinary shares
6,176,055
Number of options
Number of rights
900,000
487,500
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SILEX ANNUAL REPORT 2022 Directors’ Report
Mr Christopher Wilks BCom, FAICD.
Non-executive director
Experience and expertise
Non-executive director since 1988. Finance director and CFO of Sonic Healthcare
Limited. Various directorships of public companies held over the years.
Other current listed company
directorships
Executive director of Sonic Healthcare Limited since 1989 (Finance director since
1993)
Former listed company directorships in
last 3 years
None
Special responsibilities
Chair of Audit Committee
Member of People & Remuneration Committee
Interests in shares, options and rights
Number of ordinary shares
2,833,716
Number of options
Number of rights
Nil
Nil
Ms Helen Cook LLM, LLB (Hons), BA.
Independent non-executive director
Experience and expertise
Independent non-executive director since October 2021. Commercial lawyer
and international nuclear law specialist. Principal of GNE Advisory Pty Ltd, a law
practice dedicated to the global civil nuclear energy sector.
Other current listed company
directorships
None
Former listed company directorships in
last 3 years
None
Special responsibilities
Member of Audit Committee
Member of People & Remuneration Committee
Interests in shares, options and rights
Number of ordinary shares
12,000
Number of options
Number of rights
Nil
Nil
30
SILEX ANNUAL REPORT 2022
Directors’ Report
The following director is a former director of the Silex Board:
Ms Melissa Holzberger LLM, Dip Intl Nuclear Law, LLB, BA, GDLP, FGIA, GAICD.
Independent non-executive director
Resigned 14 October 2021
Experience and expertise
Independent non-executive director 2.5 years. Experienced company director,
commercial lawyer and international nuclear law specialist. Founder and principal
of the firm Sloan Holzberger Lawyers, is a Non-executive director of ASX-listed
company, Paladin Energy Limited and is a member of the Federal Government’s
Australian Radiation Protection and Nuclear Safety Agency’s (ARPANSA) Radiation
Health and Safety Advisory Council.
Other current listed company
directorships
Non-executive director of Paladin Energy Limited since May 2021.
Former listed company directorships in
last 3 years
None
Special responsibilities
Chair of Audit Committee (until 14 October 2021)
Member of People & Remuneration Committee (until 14 October 2021)
Interests in shares, options and rights
Number of ordinary shares (as at 14 October 2021) 27,777
Number of options
Number of rights
Nil
Nil
9. 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
Mr C A Roy
Dr M P Goldsworthy
Ms H G Cook
Mr C D Wilks
Former director
Ms M K Holzberger
Directors’
Meetings
Audit Committee
Meetings
People & Remuneration
Committee Meetings
Number
Held*
Number
Attended
Number
Held*
Number
Attended
Number
Held*
Number
Attended
20
20
10
20
10
20
20
10
20
8
3
2
3
1
3
2
3
1
2
2
2
-
2
2
2
-
*Number of meetings held during the time the director held office or was a member of the committee during the year
Not a member of the relevant committee at the time the scheduled meetings were held
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SILEX ANNUAL REPORT 2022 Directors’ Report
10. Remuneration Report
On behalf of the People & Remuneration Committee and the Board, I am pleased to present to you the FY2022
Silex Systems Limited Remuneration Report, for which we seek your support at our Annual General Meeting
(AGM) in October 2022. 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 Company’s People & Remuneration Committee oversees remuneration strategy, policy and framework, and
executive KMP remuneration. The Committee regularly evaluates the Company’s strategy and objectives and
makes remuneration recommendations to the Board which include focused performance measures for executive
KMP. Our remuneration strategy has the following objectives:
• attract, motivate and retain highly qualified and specialised personnel;
• alignment of remuneration outcomes with the successful delivery of the Company’s strategy;
• align the interests of our directors and executive KMP with Silex’s shareholders and other stakeholders; and
• ensure competitive, reasonable and transparent renumeration outcomes with appropriate standards of
governance.
The Company continued its execution of its strategic priorities in FY2022, with solid progress on the SILEX uranium
enrichment technology demonstration and commercialisation program in conjunction with GLE and addressing the
evolving nuclear fuel market conditions. In addition, our ZS-Si project continued to progress at a steady pace and is
now preparing for the final stages of demonstration of production for initial quantities of ZS-Si from the SILEX pilot
demonstration facility.
As communicated in our last Remuneration Report, we have now granted multi-year incentives for our CEO/MD (as
approved by shareholders at the 2021 AGM) and for our CFO/Company Secretary. These multi-year, equity-based
incentives are viewed as both modest and appropriate given the significance of the potential achievement of the
targets on the long-term value for shareholders. These incentives and the underlying performance objectives are
described further in the report.
The Committee and the Board believe equity-based compensation is important to conserve cash reserves as
much as possible and to motivate employees to align their interests with those of our shareholders to drive positive
outcomes in the longer term. Our Employee Incentive Plan (EIP), is an important component of our remuneration
structure to drive performance, incentivise retention and to also attract the best possible candidates for our
Company. We are pleased that staff have welcomed the opportunity to receive equity-based compensation. The
EIP allows us to use a variety of equity awards, vesting criteria, eligibility and tailored key performance indicators as
may be appropriate from time to time.
Following a 12-year base remuneration freeze for our CEO/MD and a 6-year freeze for our CFO/Company Secretary
and following careful consideration of performance, market data and conditions, the Board approved an increase
of 8.72% for our CEO/MD and 7.07% for our CFO/Company Secretary from 1 July 2022. In addition, and as a
reflection of the substantially increased activities and additional governance responsibilities of the Company and
GLE and following consideration of market data, an increase of $20,000 per annum was resolved to be paid to the
Chair from 1 July 2022. These increases will be reflected in next year’s Remuneration Report. All other Board and
Committee fees remain unchanged since the last Remuneration Report.
Details of the remuneration outcomes for FY2022, reflecting the achievements during the year and the new multi-
year equity-based remuneration arrangements for our executive KMP are provided in this report.
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SILEX ANNUAL REPORT 2022 Directors’ Report
We believe that our remuneration programs are modest, effective, align our team’s interests with those of the
Company’s shareholders and reflect strong governance. We continuously monitor market developments and best
practice recommendations with respect to compensation to ensure our decisions are appropriate in relation to the
Company’s performance and to enable adjustment of our remuneration structure and practices as required.
We invite you to review the full Remuneration Report and we look forward to answering any questions you may
have at our AGM in October 2022.
Craig Roy
Chair, People & Remuneration Committee
33
SILEX ANNUAL REPORT 2022 Directors’ Report
The Directors present the Remuneration Report for the year ended 30 June 2022, 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 (KMP).
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 at the Company’s 2021 Annual General Meeting
(e) Elements of executive KMP remuneration
(f) Link between FY2022 remuneration and performance
(g) Contractual arrangements with executive KMPs
(h) Non-executive directors’ remuneration arrangements
(i) Directors’ and KMP remuneration
(j) Performance-based remuneration granted and forfeited during the year
(k) Terms and conditions of the equity-based payment arrangements
(l) Reconciliation of options, rights and ordinary shares held by executive KMP
a) Directors and KMP disclosed in this report
The 2022 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. The KMP covered in this report are as follows:
Name
Position
Non-executive and executive directors
Mr C A Roy
Dr M P Goldsworthy
Chair and Non-executive director
CEO/Managing Director – Executive director
Ms H G Cook (from 14 October 2021)
Non-executive director
Mr C D Wilks
Non-executive director
Former Non-executive director
Ms M K Holzberger (until 14 October 2021)
Non-executive director
Other executive KMP
Ms J E Ducie
CFO/Company Secretary
34
SILEX ANNUAL REPORT 2022 Directors’ Report
b) Remuneration governance
Board oversight
The Silex Board is ultimately responsible for ensuring that the Company’s remuneration structure is equitable and
aligned with the long-term interests of shareholders. The Board and its advisors are independent of Management
when making decisions affecting employee remuneration.
People & Remuneration Committee structure
The People & Remuneration Committee is a committee of the Board comprised of a majority of independent non-
executive directors. The Chair of the Committee is also an independent non-executive director. 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 as at the 30 June 2022
were as follows:
Committee members
Committee secretary
Mr C A Roy | Chair
Ms H G Cook
Mr C D Wilks
Ms J E Ducie
Number of meetings in FY2022
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 appropriate remuneration policies and practices that are competitive and
reasonable for the Company relative to its performance, and to make specific recommendations in relation to
KMP compensation, as well as the general application to all employees;
• Determine and recommend remuneration levels of the CEO/MD and CFO/Company Secretary for Board
approval;
• Manage the incentive plans which apply to executive KMP, 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: https://www.silex.com.au/corporate/
corporate-governance/.
The Company did not engage remuneration consultants during FY2022. The Company accesses market data and
industry remuneration surveys and reports on a regular basis.
35
SILEX ANNUAL REPORT 2022 Directors’ Report
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.
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.
Following a review of the Company’s executive KMP incentive programs during FY2021, a multi-year incentive
program was developed, involving the issue of Short-term incentives (STIs), Long-term incentives (LTIs) and an
Extended LTI using a variety of equity-based awards and therefore aligned with the creation of shareholder value
over the long-term. The new Extended LTI for our CEO/MD was approved by shareholders at the 2021 AGM, and a
similar incentive was granted for our CFO/Company Secretary.
The executive KMP remuneration framework comprises of two components:
• Total fixed remuneration; and
• At-risk incentives.
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SILEX ANNUAL REPORT 2022 Directors’ Report
Remuneration structure
Element
Purpose
Performance
Metrics
Structure
Value
Total Fixed
Remuneration
(TFR)
STI*
Provide competitive
market salary,
including
superannuation
and non-monetary
benefits
Reward for in-
year performance,
retention via 2-year
escrow period applied
to any equity incentive
award
Nil
Base remuneration
Positioned at median
market rate and with
reference to role
experience
Performance may
be linked to financial
metrics such as cash
flow management
and to non-financial
measures, such
as commercial
deliverables, and
other specific
operational and
strategic deliverables
for the Company.
CEO: FY2022 - 75,000
Performance Rights**
Potential value:
$81,818
(Nb. FY2022 to FY2025 –award of
75,000 Performance Rights per annum.
Underlying performance criteria to be
set by the Board at the commencement
of each financial year)
A one-off gross cash bonus of
$60,000 was awarded to the CEO
for FY2022 in recognition of the
rebuilding of GLE post-closing of
the Silex acquisition and general
strong Company performance
across the Company’s technology
commercialisation projects.
Value:
$60,000
CFO: FY2022 - 70,000
Performance Rights
Potential value:
$51,436
(Nb. FY2022 to FY2024 – award of
70,000 Performance Rights per annum.
Underlying performance criteria to be
set by the Board at the commencement
of each financial year)
Value:
$50,000
A one-off gross cash bonus of
$50,000 was awarded to the CFO
for FY2022 in recognition of the
rebuilding of GLE post-closing of
the Silex acquisition and general
strong Company performance
across the Company’s technology
commercialisation projects.
37
SILEX ANNUAL REPORT 2022 Directors’ Report
Element
Purpose
Performance
Metrics
Structure
Value
LTI*
Alignment to long-
term shareholder
value, retention via
2-year escrow period
applied to any equity
incentive award
Performance linked
to contribution
to the creation of
shareholder value
over the longer term.
CEO: FY2022 – 750,000 options**
issued 29 October 2021***,
representing 150,000 options per
annum for FY2021 through to and
including FY2025
Potential value:
$577,470
Expensed over FY2021
to FY2027.
CFO: FY2022 – 300,000 options
issued 29 October 2021***,
representing 100,000 options per
annum for FY2022 through to and
including FY2024
Potential value:
$139,390
Expensed over FY2022
to FY2026.
Extended LTI*
Alignment to long-
term shareholder
value, retention via
2-year escrow period
applied to any equity
incentive award
Performance linked
to scale-up of
the unique SILEX
uranium enrichment
technology by 31
December 2025.
CEO: FY2022 – 412,500
Performance Rights** (to cover 5.5
performance years commencing
1 July 2020 and ending 31
December 2025)
Potential value:
$466,950
Performance linked to
long-term shareholder
value, retention.
CFO: 300,000 Performance Rights
(to cover 5 performance years
commencing 1 July 2021 and
ending 30 June 2026)
Potential value:
$239,550
Expensed over FY2022
to FY2026.
* At all times the Board has the discretion to make a final determination based on Company performance or other factors. Incentive awards may
be clawed back or cancelled if the relevant executive acts fraudulently or dishonestly or breaches their obligations to the Company
**Approved by shareholders at the 2021 AGM
***Option exercise price of $0.94, based on the 10-trading day VWAP preceding 25 June 2021
38
SILEX ANNUAL REPORT 2022 Directors’ Report
TFR is comprised of base salary and superannuation. 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. With regard to FY2022, it was once
again resolved that no increases be awarded with respect to TFR.
Being cognizant of a 12 and 6-year base remuneration freeze for our CEO/MD and CFO/Company Secretary
respectively and following careful consideration of performance, market data and conditions, the Committee
recommended an increase of 8.72% for our CEO/MD and 7.07% for our CFO/Company Secretary from 1 July
2022 (i.e., for FY2023).
A multi-year equity-based incentive program has been developed, involving the issue of Short-term incentives
(STIs), Long-term incentives (LTIs) and Extended LTIs for the CEO/MD and CFO/Company Secretary. Annual STIs
and LTIs have been set through to FY2024 for the CFO and FY2025 for the CEO, in order to drive performance
and talent retention. STIs have a 12-month performance period. LTIs are assessed over a three-year period and are
designed to promote long-term stability in share price appreciation.
The CEO’s Extended LTI has performance criteria specifically tailored to outcomes relating to the scale-up of
the unique SILEX uranium enrichment technology and will be assessed over a performance period ending 31
December 2025. Achievement of the CEO’s Extended LTI will be subject to independent Board verification. The
Extended LTI for the CFO has performance criteria tailored to growth in long-term shareholder value and will be
assessed over a performance period ending 30 June 2026.
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 all senior management. 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.
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 at the Company’s 2021 Annual General Meeting
Silex Systems Limited received more than 95% of “yes” votes on its Remuneration Report for the 2021 financial year.
39
SILEX ANNUAL REPORT 2022 Directors’ Report
e) Elements of executive KMP remuneration
The executive KMP remuneration for FY2022 comprised the following elements:
CEO/MD
CFO/Company Secretary
Total Fixed Remuneration (TFR)
Composition
Base salary and superannuation
Base salary and superannuation
Assessment
Based on responsibilities, performance and market
data
Based on responsibilities, performance and market
data
At risk
No
Short-Term Incentives
No
Composition
An equity-based STI may be granted annually at the
discretion of the Board. As per shareholder approval
at the 2021 AGM, the current STI comprises an
annual grant of 75,000 Performance Rights through
to FY2025.
An equity-based STI may be granted annually at
the discretion of the Board. The STI is intended to
comprise an annual grant of 70,000 Performance
Rights through to FY2024.
Opportunity
75,000 Performance Rights
70,000 Performance Rights
Assessment
KPIs were intended to be stretch targets and
focussed on delivering priorities associated with
increasing shareholder value, including delivery
of technology milestones for the Company’s
projects and the achievement of other strategic and
commercial performance measures associated with
both Silex and GLE.
Assessment: 95% of the performance rights will
vest subject to completion of an underlying service-
condition ending 31 July 2022. 71,250 shares are
pending for issue to the CEO. The shares to be
issued are subject to a 2-year trading restriction from
the date of issue.
KPIs were intended to be stretch targets and
focussed on delivering priorities associated with
increasing shareholder value, including delivery
of technology milestones for the Company’s
projects and the achievement of other strategic and
commercial performance measures associated with
both Silex and GLE.
Assessment: 95% of the performance rights will
vest subject to completion of an underlying service-
condition ending 31 July 2022. 66,500 shares are
pending for issue to the CFO. The shares to be
issued are subject to a 2-year trading restriction from
the date of issue.
One-off Cash
STI
A one-off gross cash bonus of $60,000 was awarded
in recognition of the rebuilding of GLE post-closing
of the Silex acquisition and general strong Company
performance across the Company’s technology
commercialisation projects.
A one-off gross cash bonus of $50,000 was awarded
in recognition of the rebuilding of GLE post-closing
of the Silex acquisition and general strong Company
performance across the Company’s technology
commercialisation projects.
Board
discretion
The Board has discretion to adjust remuneration
outcomes up or down to prevent any inappropriate
reward outcomes, including reducing (down to zero,
if appropriate) any STI award.
The Board has discretion to adjust remuneration
outcomes up or down to prevent any inappropriate
reward outcomes, including reducing (down to zero,
if appropriate) any STI award.
Long-Term Incentives
Composition
As per shareholder approval at the 2021 AGM, an
equity-based LTI to cover five performance years
(i.e., FY2021 through to and including FY2025) was
issued. The multi-year incentive, equivalent to an
annual grant of 150,000 options, was issued on 29
October 2021 for the five years ending 30 June 2025.
An equity-based LTI to cover three performance
years has been granted (i.e., FY2022 through to
and including FY2024). The multi-year incentive,
equivalent to an annual grant of 100,000 options,
was issued on 29 October 2021 for three years
ending 30 June 2024.
Opportunity
Issue of 750,000 options (i.e., 150,000 options
attributable to each year from FY2021 to FY2025)
Issue of 300,000 options (i.e., 100,000 options
attributable to each year from FY2022 to FY2024)
40
SILEX ANNUAL REPORT 2022 Directors’ Report
CEO/MD
CFO/Company Secretary
Assessment
The equity-based LTI have vesting periods that end
from 25 June 2024 to 30 June 2027. In the event
the options are eligible to be exercised, any resulting
allotment of Silex Systems Limited shares will be
subject to a further escrow period of 2 years.
Exercise price
In accordance with shareholder approval, the
options’ exercise price is $0.94. This exercise price
was determined based on the volume weighted
average price at which the Company’s shares were
traded on the Australian Stock Exchange for the
10-trading days preceding 25 June 2021.
The equity-based LTI have vesting periods that end
from 30 June 2024 to 30 June 2026. Any resulting
allotment of Silex Systems Limited shares on
completion of the underlying service-condition and
option exercise, will be subject to a further escrow
period of 2 years.
The options’ exercise price of $0.94 was determined
based on the volume weighted average price at
which the Company’s shares are traded on the
Australian Stock Exchange for the 10-trading days
preceding the 25 June 2021.
Forfeiture and
termination
Options will lapse if vesting conditions are not met.
Options will be forfeited on cessation of employment
unless the Board determines otherwise.
Options will lapse if vesting conditions are not met.
Options will be forfeited on cessation of employment
unless the Board determines otherwise.
Board
discretion
The Board has discretion to adjust remuneration
outcomes up or down to prevent any inappropriate
reward outcomes, including reducing (down to zero,
if appropriate) any LTI award.
The Board has discretion to adjust remuneration
outcomes up or down to prevent any inappropriate
reward outcomes, including reducing (down to zero,
if appropriate) any LTI award.
Extended Long-Term Incentive
Composition
As per shareholder approval at the 2021 AGM, the
equity-based Extended LTI is a multi-year incentive
equivalent to 412,500 Performance Rights for a 5.5
year performance period ending 31 December 2025.
An equity-based Extended LTI is a multi-year
incentive equivalent to 300,000 Performance Rights
for a 5-year performance period ending 30 June
2026.
Opportunity
Issue of 412,500 Performance Rights
Assessment
The performance period of the Extended LTI
commenced on 1 July 2020 and ends 31 December
2025. The performance criteria are linked to
specifically tailored outcomes relating to the scale-up
of the unique SILEX uranium enrichment technology
and will be assessed over a performance period
ending 31 December 2025. Achievement will be
subject to independent Board verification and the
Extended LTI may be subject to early-vesting. In
the event the performance criteria is achieved, any
resulting allotment of Silex Systems Limited shares
will be subject to a further escrow period of 2 years.
Issue of 300,000 Performance Rights (granted 21
June 2022 and to be issued in FY2023)
The performance period of the Extended LTI
commenced on 1 July 2021 and ends 30 June
2026. The Extended LTI is subject to service-based
and performance-based criteria linked to increased
shareholder value. In the event the vesting criteria is
achieved, any resulting allotment of Silex Systems
Limited shares will be subject to a further escrow
period of 2 years.
Forfeiture and
termination
Performance Rights will lapse if performance
conditions are not met. Rights will be forfeited
on cessation of employment unless the Board
determines otherwise.
Performance Rights will lapse if performance
conditions are not met. Rights will be forfeited
on cessation of employment unless the Board
determines otherwise.
Board
discretion
The Board has discretion to adjust remuneration
outcomes up or down to prevent any inappropriate
reward outcomes, including reducing (down to zero,
if appropriate) any Extended LTI award.
The Board has discretion to adjust remuneration
outcomes up or down to prevent any inappropriate
reward outcomes, including reducing (down to zero,
if appropriate) any Extended LTI award.
41
SILEX ANNUAL REPORT 2022 Directors’ Report
f) Link between FY2022 remuneration and performance
FY2022 performance and impact on remuneration
The Company’s performance during FY2022 remained strong, with continued delivery on a number of strategic
priorities including, solid progress with the execution of the SILEX uranium enrichment technology demonstration
and commercialisation program in conjunction with GLE and preparing to respond to evolving nuclear fuel
market conditions, and the continued progress with regard to our ZS-Si project, which is in the final stages
of demonstration of production for initial quantities of ZS-Si from the SILEX pilot demonstration facility. This
performance and the execution of the various opportunities presenting to the Company was reflected in the
appreciation of the Silex share price during FY2022. For further information on the Company’s performance during
the year, refer to the Operating and Financial Review in Section 4 of this Directors’ Report.
As a result of these positive achievements, the Board awarded both the CEO/MD and CFO/Company Secretary
95% of the FY2022 performance rights (subject to completion of the service-condition ending 31 July 2022). In
addition, the Board’s implementation of multi-year equity-based incentives for the Company’s executive KMP is
intended to retain KMP and to provide longer term benefits if key service and performance conditions are met
together with sustained appreciation in shareholder value.
Statutory performance indicators
We aim to align executive 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 only a partial correlation between the statutory key performance measures and the variable
remuneration awarded.
Year ended
30 June
EPS
Cents
Total STI awards
to KMP ($)
Share price at
30 June ($)
2018
2019
2020
2021
2022*
(2.7)
(3.0)
(4.5)
(4.0)
(4.8)
N/A
60,000
61,600
62,935
228,601
0.20
0.40
0.78
0.90
2.10
*Includes one-off performance payment (cash) of $60,000 for the CEO/MD and $50,000 for the CFO/Company Secretary and STIs paid via
Performance Rights
42
SILEX ANNUAL REPORT 2022 Directors’ Report
g) Contractual arrangements with executive KMPs
Component
CEO/MD
CFO/Company Secretary
Total Fixed Remuneration
$550,000
$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, if applicable,
may be at Board discretion
Partial payment for pro-rata STI, if applicable,
may be at Board discretion
Unvested LTI and Extended LTI may remain on
foot subject to achievement of the performance
criteria at the original date of testing
Unvested LTI and Extended LTI may remain
on foot subject to achievement of the
performance criteria at the original date of
testing
Payment of Long Service Leave accrued
prior to 31 December 2014 at pre-1 January
2015 TFR of $800,000. Long Service Leave
accrued after 1 January 2015 will be payable
as per statutory requirements
Termination of employment
(with cause) or by the
individual
STI is not awarded and all unvested LTI
and Extended LTI will lapse. Vested and
unexercised LTI may be exercised following
termination at Board discretion
STI is not awarded, and all unvested LTI
and Extended LTI will lapse. Vested and
unexercised LTI may be exercised following
termination at Board discretion
43
SILEX ANNUAL REPORT 2022 Directors’ Report
h) Non-executive directors’ remuneration arrangements
Non-executive directors receive a directors’ fee and a fee for chairing or participating on Board committees. They
do not receive performance-based pay or retirement allowances. The fees are exclusive of superannuation and
are reviewed annually taking into account comparable roles and market data. The directors’ fees were reviewed in
FY2022 and an annual fee increase of $20,000 was resolved to be paid to the Chair with effect from 1 July 2022
reflecting the substantial increase in activities and additional governance responsibilities of the Company and GLE.
Other Board and Committee fees have not changed since the last Remuneration Report.
Additional fees may be payable to non-executive directors should they undertake specific consulting projects for
the Company in the areas of their expertise. No additional fees were paid for additional services and consulting
rendered during FY2022.
The maximum annual aggregate directors’ fee pool limit is $750,000 and was approved by shareholders at the
2011 AGM.
All non-executive directors enter into a written agreement with the Company in the form of a letter appointment.
The current annual fee structure is outlined below:
Chair
Other Non-executive directors
Audit Committee – Chair
Audit Committee – Member
People & Remuneration Committee – Chair
People & Remuneration Committee – Member
Other
From
1 July 2022
120,000
80,000
Year ended
30 June 2022
100,000
80,000
10,000
8,000
10,000
8,000
10,000
8,000
8,000
8,000
Global Laser Enrichment Holdings LLC – Chair*
40,000
40,000
* Payable from 1 January 2021 for the 3 years ending 31 December 2023. Payable 50% in cash and 50% via the issue of Silex shares,
as approved by shareholders at the 2021 AGM.
44
SILEX ANNUAL REPORT 2022 Directors’ Report
i) 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
Variable remuneration
Cash
salary and
fees*
$
Non –
monetary
benefits –
shares‡
$
Annual
and long
service
leave#
$
Post-
employment
benefits
$
Perf.
Payments
(cash)*
$
Perf. Rights
(deferred
shares)‡
$
Options‡
$
Perf.
Related
%
Total
$
Name
Year
Executive directors
Dr M P Goldsworthy
2022
524,406
2021
526,106
-
-
21,952
5,494
Non-executive directors
Mr C A Roy†
Ms H G Cook
(from 14/10/2021)
Mr C D Wilks
Former directors
Ms M K Holzberger
(until 14/10/2021)
2022
2021
2022
2021
2022
2021
2022
2021
154,242
46,408
137,358
10,000
68,571
-
97,429
96,000
28,389
98,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other key management personnel and group executives
Ms J E Ducie
2022
2021
299,406
302,906
-
-
-
-
10,838
19,009
32,790
24,503
823,812
829,012
2022
2021
2022
2021
348,631
46,408
331,358
10,000
-
-
Total executive
directors and
other KMP
Total NED
remuneration
Total KMP ≈
remuneration
27,468
60,000
151,037 156,754
941,617
23,894
-
3,803
6,857
-
9,743
9,120
2,839
9,310
-
-
-
-
-
-
-
-
-
43,758
21,202
620,454
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
200,650
151,161
75,428
-
107,172
105,120
31,228
107,310
39%
10%
-
-
-
-
-
-
-
-
27,468
50,000
122,784
86,325
596,821
22,094
-
20,190
21,462
385,661
43%
11%
54,936
110,000
273,821 243,079
1,538,438
45,988
19,439
22,233
-
-
-
63,948
42,664
1,006,115
-
-
-
414,478
-
363,591
2022
1,172,443
46,408
32,790
74,375
110,000
273,821 243,079
1,952,916
2021
1,160,370
10,000
24,503
68,221
-
63,948
42,664
1,369,706
* 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. The amounts disclosed in this column represent the increase/
(decrease) in the associated provisions.
‡ Equity-settled share-based payments as per Corporations Regulations 2M.3.03(1) Item 11. With regard to the group’s executives, this includes
STI (via Performance Rights), LTI (via Options) and Extended LTI (via Performance Rights).
† The Company commenced payment of directors’ fees for the role of Chair of Global Laser Enrichment Holdings LLC to Mr C A Roy from 1
January 2021. Refer to section h) for further details.
≈ Total KMP remuneration (including executive KMP and NEDs) has increased by $583,210 compared to the prior year. $446,696 of the
increase is due to an increase in share-based payments, including the accounting impact of the multi-year equity-based incentives for the
Company’s executive KMP. $110,000 of the increase relates to one-off performance payments (cash) to executive KMP.
45
SILEX ANNUAL REPORT 2022
Directors’ Report
j) Performance-based remuneration granted and forfeited during the year
A summary of the performance-based remuneration granted and forfeited to the executive KMP during FY2022:
STI (Rights)
STI (Cash)
LTI (Options)
Extended LTI (Rights)
Total
opportunity
$
Awarded*
%
Forfeited
%
Total
opportunity
$
Awarded
%
Forfeited
%
Value
granted**
$
Value
exercised
$
Value
granted**
$
Awarded
%
Forfeited
%
81,818
95%
5%
60,000
100%
0% 577,470
115,500 466,950
51,436
95%
5%
50,000
100%
0% 139,390
91,500 239,550
-
-
-
-
Name
Dr M P
Goldsworthy
Ms J E
Ducie
* STI (Rights) Awards subject to completion of service-based condition ending 31 July 2022.
** The value at grant date calculated in accordance with AASB 2 Share-based Payment of options and rights granted during the year as part of
remuneration. The Extended LTI rights for Dr M P Goldsworthy were issued 29 October 2021 and the Extended LTI rights for Ms J E Ducie are
pending for issue.
k) Terms and conditions of the equity-based payment arrangements
STI – Performance Rights
Commencing FY2021, an annual STI in the form of Performance Rights is to be issued to executive KMP. The rights
vest at the end of a 12-month performance period subject to the achievement of individually tailored KPIs. Each
right that vests is converted into one ordinary share. The rights carry no dividend or voting rights.
The fair value of the rights is determined based on the market price of the Company’s shares at the grant date
or for those rights which are subject to a market condition, with reference to a Monte Carlo simulation taking into
account the volatility of the Company’s shares and other factors.
Grant Date
26/07/2021
26/07/2021
14/10/2021
14/10/2021
Vesting
date
31/07/2022
31/07/2022
31/07/2022
31/07/2022
Value per right
grant date
Performance
achieved %
Vested
%*
$0.791
$0.510
$1.132
$0.721
94%
100%
94%
100%
-
-
-
-
* Award subject to completion of service-based condition ending 31 July 2022.
46
SILEX ANNUAL REPORT 2022
Directors’ Report
LTI – Options
The number of options over ordinary shares in the Company provided as remuneration to executive KMP is shown
below. The options carry no dividend or voting rights. The options are subject to a service-based condition which
must be satisfied for the options to vest.
When exercisable, each option is convertible into one ordinary share of Silex Systems Limited. The exercise price of
options is based on the volume weighted average price at which the Company’s shares are traded on the Australian
Stock Exchange for the 10-trading days before the options are granted or for the 10-trading days preceding a
Board resolution to grant options. Details of options vested during the year are shown below.
The terms and conditions of each grant of options affecting remuneration in the current or a future reporting period
are as follows:
Grant date
21/05/2019
02/12/2019
01/04/2020
23/11/2020
24/03/2021
26/07/2021
26/07/2021
26/07/2021
14/10/2021
14/10/2021
14/10/2021
14/10/2021
14/10/2021
Vesting and
exercise date
Expiry date Exercise price
Value per
option
at grant date
21/05/2022
20/05/2024
21/05/2022
01/12/2024
01/04/2023
31/03/2025
23/11/2023
22/11/2025
24/03/2024
23/03/2026
30/06/2024
28/10/2026
30/06/2025
30/06/2027
30/06/2026
30/06/2028
25/06/2024
28/10/2026
30/06/2024
28/10/2026
30/06/2025
28/10/2027
30/06/2026
28/10/2028
30/06/2027
28/10/2029
$0.35
$0.35
$0.21
$0.57
$1.20
$0.94
$0.94
$0.94
$0.94
$0.94
$0.94
$0.94
$0.94
$0.1635
$0.1589
$0.1458
$0.3056
$0.6709
$0.4321
$0.4714
$0.4904
$0.7249
$0.7249
$0.7727
$0.7965
$0.8308
Performance
achieved % Vested %
100%
100%
100%
100%
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
Extended LTI – Performance Rights
Extended LTIs in the form of Performance Rights have been granted to executive KMP. The rights vest at the end
of multi-year performance periods subject to the achievement of individually tailored objectives. Each right that
vests is converted into one ordinary share. The rights carry no dividend or voting rights.
The fair value of the rights is determined based on the market price of the Company’s shares at the grant date
or for those rights which are subject to a market condition, with reference to a Monte Carlo simulation taking into
account the volatility of the Company’s shares and other factors.
Grant date
14/10/2021
21/06/2022
21/06/2022
21/06/2022
21/06/2022
Vesting
date
Value per
right grant date
Performance
achieved
Vested
%
No later than 31/12/2025
30/06/2023
30/06/2024
30/06/2025
30/06/2026
$1.132
$0.742
$0.808
$0.809
$0.835
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
TBD
47
SILEX ANNUAL REPORT 2022 Directors’ Report
l) Reconciliation of options, rights and ordinary shares held by executive KMP
Options held by KMP
The table below shows a reconciliation of options held by each executive KMP from the beginning to the end of
FY2022. There were no vested and exercisable options as at 30 June 2022.
Vested
Balance at
end of year
Balance at
the start
of the year
Granted as
compensation
Number
%
Exercised
Other
changes
Vested and
exercisable
Unvested
100,000
150,000
-
-
-
750,000
100,000
100%
100,000
-
-
-
-
-
-
100,000
100,000
200,000
- 100,000
100%
100,000
-
-
-
-
-
-
-
-
-
-
-
-
300,000
-
-
-
-
-
-
-
-
-
-
150,000
-
750,000
-
-
-
-
100,000
200,000
-
300,000
Name and grant date
Dr M P Goldsworthy
02/12/2019
23/11/2020
14/10/2021
Ms J E Ducie
21/05/2019
01/04/2020
24/03/2021
26/07/2021
Rights held by KMP
The table below shows a reconciliation of rights held by each KMP from the beginning to the end of FY2022.
Name and grant date
Dr M P Goldsworthy
14/10/2021
14/10/2021*
Ms J E Ducie**
25/09/2020
25/10/2021*
Balance at the
start of the year
Granted as
compensation
Number
%
Number
%
Balance at end of
year (Unvested)
Vested
Forfeited
-
-
412,500
75,000
-
-
-
-
-
-
-
-
412,500
75,000
50,000
-
-
41,666
83%
8,334
17%
70,000
-
-
-
-
-
70,000
*95% of the performance rights will vest subject to completion of an underlying service-condition on 31 July 2022.
**300,000 Extended LTI rights for Ms J E Ducie with a grant date of 21 June 2022 will be issued in FY2023.
48
SILEX ANNUAL REPORT 2022
Directors’ Report
Shares 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:
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
Mr C A Roy
Dr M P Goldsworthy
Ms H G Cook
Mr C D Wilks
Former director
Ms M K Holzberger*
Other executive KMP
Ms J E Ducie
175,000
5,999,055
N/A
2,814,021
27,777
-
100,000
-
77,000
-
-
-
-
-
-
20,000
100,000
41,666
* This information relates to the period the individual was a director.
Securities Trading Policy
84,507
-
12,000
19,695
259,507
6,176,055
12,000
2,833,716
-
-
N/A
161,666
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/corporate-governance/.
49
SILEX ANNUAL REPORT 2022 Directors’ Report
11. Shares under option
Unissued ordinary shares of Silex Systems Limited under option at the date of this report are as follows:
Date options granted*
Expiry date
Issue price of shares
Number under option
21/05/2019
01/04/2020
23/11/2020
24/03/2021
26/07/2021
14/10/2021
18/03/2022
20/05/2024
31/03/2025
22/11/2025
23/03/2026
Various
Various
17/03/2027
$0.35
$0.21
$0.57
$1.20
$0.94
$0.94
$1.19
140,000
660,000
150,000
1,000,000
300,000
750,000
600,000
* The options granted include issues to eligible employees in accordance with the Employee Incentive Plan and includes options granted as
remuneration to KMP.
No option holder has any right under the options to participate in any other share issue of the Company or any
other entity. No options were granted since the end of the financial year.
12. Company secretary
Ms J E Ducie BBus, CA, MBA (Exec), 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 Deeds 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.
50
SILEX ANNUAL REPORT 2022 Directors’ Report
14. Environmental regulation
Silex seeks to be compliant with all environmental laws and regulations relevant to its operations. The Company
monitors compliance on a regular basis. The Audit Committee has oversight of environmental risks and compliance.
The Company is subject to the environmental and health and safety regulations applicable to tenants of the Lucas
Heights Science and Technology Centre. The Company 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, prosecutions commenced or fines incurred 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.
During the year, there were no fees paid or payable for non-audit services provided by the auditor of the parent
entity, its related practices and non-related audit firms.
16. Auditors’ independence declaration
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is
set out on page 52.
This report is made in accordance with a resolution of the Directors.
Dr M P Goldsworthy
CEO/MD
Sydney, 25 August 2022
Mr C A Roy
Chair
51
SILEX ANNUAL REPORT 2022 Auditor’s independence declaration
As lead auditor for the audit of Silex Systems Limited for the year ended 30 June 2022, I declare that to the best of
my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Silex Systems Limited and the entities it controlled during the year.
Aishwarya Chandran
Partner
PricewaterhouseCoopers
Sydney
25 August 2022
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
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T +61 2 9659 2476, F +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation
52
SILEX ANNUAL REPORT 2022 Corporate Governance Statement
30 June 2022
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 (4th Edition) published by the ASX Corporate Governance
Council.
The 2022 Corporate Governance Statement is dated as at 30 June 2022 and reflects the corporate governance
practices in place throughout the 2022 financial year. The 2022 Corporate Governance Statement was approved
by the Board and lodged with the ASX Appendix 4G on 25 August 2022. 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.
53
SILEX ANNUAL REPORT 2022 54
SILEX ANNUAL REPORT 2022 Financial Report
for the year ended 30 June 2022
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
56
57
58
59
60
61
103
104
This financial report covers the consolidated entity consisting of Silex Systems Limited and its subsidiaries.
The financial report is presented in the Australian currency.
Silex Systems Limited is a company limited by its shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is:
Silex Systems Limited
Building 64
Lucas Heights Science & Technology Centre
New Illawarra Road
Lucas Heights NSW 2234
Australia
A description of the nature of the consolidated entity’s operations and its principal activities is included in the
Directors’ Report on pages 20 to 28, which is not part of this financial report.
The financial report was authorised for issue by the Directors on 25 August 2022. The Directors have the power
to amend and reissue the financial report.
All announcements, financial reports and other information are available on our website: www.silex.com.au
SILEX SYSTEMS LIMITED
& ITS SUBSIDIARIES
ABN 69 003 372 067
55
SILEX ANNUAL REPORT 2022 Consolidated income statement
for the year ended 30 June 2022
Revenue from contracts with customers
Interest revenue
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
Notes
3
3
4
5
5
Printing, postage, freight, stationery and communications
Property outgoings
Net foreign exchange losses
Net impairment gains /(losses)
Share of net loss of associates and joint ventures accounted for using the
equity method
15(b)
Other expenses from continuing activities
(Loss) before income tax
Income tax expense
Net (loss) from continuing operations
Net (loss) for the year
Net (loss) is attributable to:
Owners of Silex Systems Limited
6
2022
$
4,217,102
177,652
4,394,754
2,817,759
(1,238,917)
2021
$
1,924,440
143,435
2,067,875
1,365,733
(594,567)
–
(1,601,413)
(20,123)
(441,495)
(5,840,343)
(604,905)
(62,072)
(66,609)
–
13,554
(7,952,325)
(463,700)
(9,464,422)
–
(9,464,422)
(9,464,422)
(1,590)
(312,332)
(4,427,100)
(675,834)
(46,529)
(46,973)
(219,823)
(2,665)
(2,125,072)
(306,978)
(6,927,268)
–
(6,927,268)
(6,927,268)
(9,464,422)
(6,927,268)
Cents
Cents
Earnings per share (loss) from continuing operations attributable to the ordinary equity holders of the company
Basic earnings per share
Diluted earnings per share
21
21
Earnings per share (loss) attributable to the ordinary equity holders of the company
Basic earnings per share
Diluted earnings per share
21
21
(4.8)
(4.8)
(4.8)
(4.8)
(4.0)
(4.0)
(4.0)
(4.0)
The above consolidated income statement should be read in conjunction with the accompanying notes.
56
SILEX ANNUAL REPORT 2022 Consolidated statement of comprehensive income
for the year ended 30 June 2022
Net (loss) for the year
Other comprehensive income
Items that may be reclassified to profit or loss:
Notes
2022
$
2021
$
(9,464,422)
(6,927,268)
Exchange differences on translation of foreign operations
622,006
(829,010)
Items that will not be reclassified to profit or loss:
Changes in the fair value of equity investments at fair value through other
comprehensive income
7(e)
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
(2,319,217)
(1,697,211)
2,015,407
1,186,397
(11,161,633)
(5,740,871)
(11,161,633)
(11,161,633)
(5,740,871)
(5,740,871)
The above consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes.
57
SILEX ANNUAL REPORT 2022
Consolidated balance sheet
as at 30 June 2022
Assets
Current assets
Cash and cash equivalents
Other financial assets at amortised cost – term deposits
Trade and other receivables
Other current assets
Financial assets at fair value through other comprehensive income
Total current assets
Non-current assets
Investments accounted for using the equity method
Right-of-use assets
Property, plant and equipment
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Notes
30 June 2022
$
30 June 2021
$
7(a)
7(b)
7(c)
7(d)
7(e)
15(b)
9(a)
7(f)
8(a)
9(a)
8(b)
9(a)
8(b)
5,036,333
37,500,000
2,817,239
332,219
3,997,980
49,683,771
3,121,797
990,489
320,802
4,433,088
54,116,859
6,402,798
7,700,000
2,628,652
215,743
5,799,774
22,746,967
916,254
42,041
336,564
1,294,859
24,041,826
1,717,766
1,123,767
200,191
799,592
36,613
770,744
2,717,549
1,931,124
782,311
70,845
853,156
3,570,705
50,546,154
1,791
37,780
39,571
1,970,695
22,071,131
10(a)
10(b)
10(c)
271,543,434
232,645,003
11,043,273
12,002,259
(232,040,553)
(222,576,131)
50,546,154
22,071,131
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
58
SILEX ANNUAL REPORT 2022 Consolidated statement changes in equity
for the year ended 30 June 2022
Attributable to owners of Silex Systems Limited
Contributed equity
$
Reserves
$
Accumulated losses
$
Total
$
Balance at 30 June 2020
232,645,003
10,470,065
(215,648,863)
27,466,205
Net (loss) for the year
Other comprehensive income
Total comprehensive
income for the year
–
–
–
–
(6,927,268)
1,186,397
–
(6,927,268)
1,186,397
1,186,397
(6,927,268)
(5,740,871)
Transactions with owners in their capacity as owners
Employee share schemes –
value of employee services
–
–
345,797
345,797
–
–
345,797
345,797
Balance at 30 June 2021
232,645,003
12,002,259
(222,576,131)
22,071,131
Net (loss) for the year
Other comprehensive income
Total comprehensive
income for the year
–
–
–
–
(9,464,422)
(1,697,211)
–
(9,464,422)
(1,697,211)
(1,697,211)
(9,464,422)
(11,161,633)
Transactions with owners in their capacity as owners
Contributions of equity net
of transaction costs
Employee share schemes –
value of employee services
Transfer from share-based
payments reserve
38,614,990
–
–
1,021,666
283,441
(283,441)
38,898,431
738,225
–
–
–
–
38,614,990
1,021,666
–
39,636,656
Balance at 30 June 2022
271,543,434
11,043,273
(232,040,553)
50,546,154
The above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes.
59
SILEX ANNUAL REPORT 2022 Consolidated statement of cash flows
for the year ended 30 June 2022
Notes
2022
$
2021
$
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 inflows/(outflows) from operating activities
11(a)
Cash flows from investing activities
Payment for investments accounted for using the equity method
Payments for financial assets at amortised cost – term deposits
Proceeds from other financial assets at amortised cost – term deposits
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from sale of financial assets at fair value through
other comprehensive income
7(e)
6,813,725
(6,452,730)
71,767
(20,123)
412,639
(10,139,080)
(43,800,000)
14,000,000
(125,362)
–
–
Net cash (outflows)/inflows from investing activities
(40,064,442)
Cash flows from financing activities
Proceeds from issue of shares, net of transaction costs
10(a)
Repayment of principal elements of leases
Net cash inflows from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash
Cash and cash equivalents at end of year*
38,502,173
(304,721)
38,197,452
(1,454,351)
6,402,798
87,886
5,036,333
2,841,240
(7,874,844)
260,193
(1,590)
(4,775,001)
(3,005,054)
–
9,100,000
(182,614)
1,682
3,877,575
9,791,589
–
(199,337)
(199,337)
4,817,251
1,615,034
(29,487)
6,402,798
Non-cash financing and investing activities
11(b)
*Term deposits excluded from Cash and cash equivalents
37,500,000
7,700,000
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
60
SILEX ANNUAL REPORT 2022
Note
1
Contents
Significant changes in the current reporting period
Page
62
How numbers are calculated
2
3
4
5
6
7
8
9
10
11
Risk
12
13
14
Segment information
Revenue from continuing operations
Other income
Expenses
Income tax expense
Assets
Liabilities
Leases
Equity
Cash flow information
Critical accounting estimates and judgements
Financial risk management
Climate Change
Group structure
15
Interests in other entities
Additional notes to the financial statements
16
17
18
19
20
21
22
23
Commitments for expenditure and guarantees
Events occurring after reporting date
Related party transactions
Share-based payments
Remuneration of auditors
Earnings per share
Parent entity financial information
Summary of significant accounting policies
62
64
65
66
67
68
72
74
75
78
79
79
83
83
86
86
86
86
91
92
94
95
61
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022
Note 1 Significant changes in the current reporting period
On 27 September 2021, Silex announced that it had completed an equity raise by way of a placement.
25,972,391 ordinary shares were issued. A Share Purchase Plan was also offered to eligible shareholders and a
further 5,343,812 shares were issued. Total cash received from the placement and Share Purchase Plan, net of
transaction costs, was $38.4m.
Note 2 Segment information
a) Description of segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Board of Directors. Management
has determined that there are three operating segments based on the reports reviewed by Management and the
Board of Directors to make strategic decisions. These segments are Silex Systems, Translucent and Silex USA.
Silex Systems is based in New South Wales and Translucent and Silex USA are based in North Carolina. The Silex
USA segment includes the loss from GLE.
b) Segment information provided to Management and the Board of Directors
The segment information provided to Management and the Board of Directors for the reportable segments for the
year ended 30 June 2022 is as follows:
Segment result
The Board of Directors assess the performance of the operating segments based on results that excludes exchange
gains and losses on intercompany loans which eliminate on consolidation. A reconciliation of the segment result to Net
(loss) from continuing operations is provided as follows:
2022
Total segment revenue
Inter-segment revenue
Revenue from external customers
Interest revenue
Revenue from continuing operations
Silex Systems
$
Translucent
$
Silex USA
$
4,258,382
1,029,025
(41,280)
(1,029,025)
4,217,102
177,652
4,394,754
–
–
–
–
–
–
Total
$
5,287,407
(1,070,305)
4,217,102
177,652
4,394,754
Segment result
(1,812,697)
26,387
(7,678,112)
(9,464,422)
Other profit and loss disclosures
Depreciation and amortisation
Interest expense
Income tax expense
Share of net loss of joint venture using
the equity method
441,495
20,123
–
–
–
–
–
–
–
–
–
441,495
20,123
–
7,952,325
7,952,325
62
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Total segment assets
Total assets include:
Additions to non-current assets (other than deferred
tax and investments in joint ventures)
Amount invested in joint ventures accounted
for using the equity method
46,623,708
4,258,888
3,234,263
54,116,859
1,196,615
-
-
-
-
1,196,615
10,139,080
10,139,080
Total segment liabilities
3,559,673
11,032
-
3,570,705
2021
Total segment revenue
Inter-segment revenue
Silex Systems
$
Translucent
$
Silex USA
$
Total
$
1,363,821
(105,509)
1,619,261
-
2,983,082
(953,133)
-
(1,058,642)
Revenue from external customers
1,258,312 666,128
Interest revenue
Revenue from continuing operations
Segment result
Other profit and loss disclosures
Depreciation and amortisation
Interest expense
Income tax expense
Share of net loss of joint venture accounted for
using the equity method
Total segment assets
Total assets include:
Additions to non-current assets (other than deferred
tax and investments in joint ventures)
Amount invested in joint ventures accounted
for using the equity method
143,435
1,401,747
(3,791,942)
-
666,128
663,353
-
-
-
1,924,440
143,435
2,067,875
(3,798,679)
(6,927,268)
312,332 -
-
312,332
1,590 -
-
1,590
-
-
-
-
-
-
2,125,072
2,125,072
15,422,737
7,647,681
971,408
24,041,826
372,253 -
-
372,253
Total segment liabilities
1,961,692
9,003
-
c) Other segment information
(i) Segment revenue
-
-
3,005,054
3,005,054
1,970,695
Sales between Silex entities are carried out at arm’s length and are eliminated on consolidation.
Silex is domiciled in Australia. Segment revenues are allocated based on the country in which the customer is
located. The amount of the Company’s revenue from external customers in the United States is $4,217,102
(2021: $1,258,312) and the total segment revenue from external customers in Wales, United Kingdom is $nil
(2021: $666,128).
Translucent and Silex USA are domiciled in the United States.
63
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022
(ii) Segment result
The Board of Directors assess the performance of the operating segments based on results that excludes
exchange gains and losses on intercompany loans which eliminate on consolidation. 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
(iii) Segment assets
2022
$
2021
$
(9,464,422)
(9,464,422)
(6,927,268)
(6,927,268)
Assets which eliminate on consolidation such as investments in controlled entities and intercompany
receivables are excluded from segment assets. Segment assets agree to the balance sheet for both periods.
The total of non-current assets located in Australia is $1,311,291 (2021: $340,635) and the total of these
non-current assets located in the United States is $3,121,797 (2021: $954,224).
(iv) Segment liabilities
Reportable segment liabilities exclude intercompany loans, income tax payable and deferred tax liabilities.
Segment liabilities agree to the balance sheet for both periods.
Note 3 Revenue from continuing operations
Recoverable project costs
Royalty–revenue - sale of cREO® technology
Interest revenue
2022
$
2021
$
4,217,102 1,258,312
-
666,128
4,217,102
1,924,440
177,652
143,435
4,394,754
2,067,875
Revenue is measured at the fair value of the consideration received or receivable.
a) Revenue is recognised for the major business activities as follows:
(i) Recoverable project costs
Project costs recoverable from GLE for the Company’s costs incurred for the SILEX uranium enrichment
development program is recorded as Revenue when the related costs are incurred. Revenue recognised in
advance is recognised as accrued income. Revenue is recognised at a point in time.
64
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 (ii) Royalty–revenue - sale of intellectual property – cREO® technology – accounting policy and significant
judgements Variable consideration from the sale of Translucent’s cREO® technology is required to be
estimated in accordance with AASB 15 Revenue from Contracts with Customers. In accordance with the
2015 Option, License and Assignment Agreement between the Company and IQE Plc, IQE is required to
make minimum royalty payments for the 6 years ending 31 December 2024. The third annual payment
of US$500,000, which was accrued in the year ended 30 June 2021, was invoiced and received during
the year. The variable consideration in the form of royalties relating to the sale of the cREO® technology
is calculated using the most likely amount method. The revenue is currently recognised at a point in time
and estimated at each reporting date. The Company has not accrued the fourth minimum annual royalty
payment (US$500,000) during the year ended 30 June 2022.
(iii)
Interest revenue
Interest revenue is recognised on a time proportion basis using the effective interest method.
b) Disaggregation of revenues
Revenues of $4,217,102 (2021: $1,258,312) were derived from GLE for Recoverable project costs on the uranium
enrichment project. GLE is based in the US. Royalty revenue of $nil (2021: $666,128) was derived from IQE Plc in
relation to the sale of the cREO® technology. IQE Plc is based in Wales, United Kingdom.
Note 4 Other Income
Research and development tax incentive
Cooperative Research Centres Project (CRC-P) Grant
Government Assistance - COVID related
Foreign currency exchange gains (net)
Other income - project subsidy
Profit on sale of property, plant and equipment
2022
$
2021
$
1,512,324
1,087,674
423,336
128,927
-
147,450
591,972
290,127
-
-
-
1,682
2,817,759
1,365,733
Government grants relating to the Research and development tax incentive are recognised when there is
reasonable assurance that the grant will be received and the amount can be reliably calculated.
(i) Research and development tax incentive
Research and development tax incentive income of $1,512,324 (2021: $1,087,674) was recognised as
Other income by the Company during the year. The Company has met the conditions of the tax incentive.
(ii) Cooperative Research Centres Project (CRC-P) Grant
CRC-P Grant income of $423,336 (2021: $128,927) was recognised during the year. The Company has
met the conditions of the grant.
(iii) Government Assistance – COVID related
Government assistance income (COVID-19 related) in the form of JobKeeper and Cash Boost of $nil
(2021: $147,450) was recognised during the year. JobKeeper and Cash Boost income was accounted
for as government grants and disclosed as Other income in accordance with AASB 120 Accounting for
Government Grants and Disclosures of Government Assistance. The Company has met the conditions of
the government assistance programs.
65
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Note 5 Expenses
Net (loss) from continuing operations before income tax includes the following expenses:
Depreciation of plant and equipment – refer note 7(f)
Depreciation on right-of-use assets – refer note 9(b)
Total depreciation and amortisation
Finance costs
Interest and finance charges paid/payable
Finance costs expensed
Defined contribution superannuation expense
Foreign exchange losses (net)
2022
$
2021
$
141,124
116,996
300,371
441,495
195,336
312,332
20,123
20,123
1,590
1,590
269,124
213,036
-
219,823
66
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Note 6 Income tax expense
This note provides an analysis of the Company’s income tax expense and explains why a deferred tax asset has not
been recognised by the Company.
(a) Numerical reconciliation of income tax expense to prima facie tax payable
(Loss) before income tax expense
Income tax calculated @ 25.0% (2021: 26.0%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
2022
$
2021
$
(9,464,422)
(2,366,106)
(6,927,268)
(1,801,090)
Share based payments
269,519
(Loss) on disposal of Financial assets at fair value through other comprehensive income
-
Research and development tax incentive
Other government assistance
Sundry items
Net deferred tax asset not recognised
Effect of higher rates on overseas income
Income tax expense
89,907
(92,112)
344,791
(9,750)
472,494
-
2,000 1,552
(1,622,093)
(1,466,702)
1,507,317
1,388,319
114,776
78,383
-
-
The Australian Government enacted legislation during the year which reduces the corporate tax rate for certain
small and medium entities from 26% for FY2021 to 25% for FY2022 and later income years. The Company expects
to qualify for this reduction. As a consequence, the Company has remeasured its deferred tax balances based on
the effective tax rate that will apply in the year the temporary differences are expected to reverse.
2022
$
2021
$
(b) Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at tax rate
190,776,276
179,171,210
45,513,665
42,917,494
A deferred tax asset has not been recognised as the consolidated entity has a history of tax losses.
The benefit of a deferred tax asset will only be obtained if:
(i)
(ii)
the consolidated entity derives future assessable income of a nature and of an amount sufficient to enable
the benefit from the deductions for the losses to be realised;
the consolidated entity continues to comply with the conditions for deductibility imposed by tax legislation;
and
(iii) no changes in tax legislation adversely affect the consolidated entity in realising the benefit from the
deductions for the losses.
67
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022
Note 7 Assets
This note provides information about the Company’s assets.
Note 7(a) Current assets - Cash and cash equivalents
Cash at bank and on hand
2022
$
2021
$
5,036,333
6,402,798
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other shortterm,
highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
Additional information on the Company’s exposure to interest rate risk is discussed in note 13.
Note 7(b) Current assets - Other financial assets at amortised cost - Term deposits
Bank deposits
2022
$
2021
$
37,500,000
7,700,000
Other financial assets at amortised cost are assets held to collect the contractual cash flows and the contractual
terms give rise to cash flows that are solely payments of principal and interest. Other financial assets at amortised
cost are included in current assets as all have maturities less than 12 months from the end of the reporting period.
The bank deposits at 30 June 2022 earn interest at between 0.3% and 1.85% (2021: between 0.25% and 1.10%).
Note 7(c) Trade and other receivables
Trade receivables from contracts with customers
Accrued royalty revenue from sale of Translucent’s cREO® technology
Accrued income - other
Derivative financial instruments - forward exchange contracts
Other receivables
Loss allowance
30 June 2022
$
30 June 2021
$
425,755
504,131
-
2,144,404
158,603
88,477
-
666,128
1,397,153
-
74,563
(13,323)
2,817,239
2,628,652
(i) Accrued royalty revenue from sale of cREO® technology
This represents accrued consideration from the sale of cREO® technology (royalties).
(ii) Accrued income - other
Accrued income includes accrued research and development tax incentive, accrued COVID-19 related government assistance,
accrued project subsidy income and accrued interest.
(iii) Impairment of receivables
Information about the impairment of receivables can be found in note 13(c).
(iv) Foreign exchange and interest rate risk
Information concerning the Company’s exposure to foreign currency in relation to trade and other receivables is provided in note 13.
(vi) Fair value and credit risk
Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value. Refer note 13
for information on credit risk.
68
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Note 7(d) Current assets - Other current assets
Prepayments
2022
$
2021
$
332,219
215,743
Note 7(e) Current assets - Financial assets at fair value through other
comprehensive income
2022
$
2021
$
Level 1*
Listed securities
Equity securities – shares in IQE Plc
3,997,980
5,799,774
* Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives and equity securities) is based on
quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Company is the current
bid price.
During the prior year, the Company sold 30% of its shares in IQE Plc and received $3,877,575 (US$3,018,722). The gain was
included in Other comprehensive income. No shares were sold in the current year. Refer also to point (ii) below.
(i) Classification and measurement of financial assets at fair value through other comprehensive income
The Company irrevocably elected to value its shares in IQE at 30 June 2019 as financial assets at fair value through other
comprehensive income. This election was made so that large movements in the value of the shares do not significantly impact
the consolidated income statement. The shares are classified as Level 1 in the fair value hierarchy. There were no dividends
received during the current or prior years.
For an analysis of the sensitivity of financial assets at fair value through other comprehensive income to foreign exchange rate
and price risk, refer to note 13(b).
(ii) Amounts recognised in Other comprehensive income
During the year, the following gains/(losses) were recognised in Other comprehensive income:
(Losses)/profits recognised in Other comprehensive income (refer note 10(b))
(2,319,217)
2,015,407
2022
$
2021
$
69
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Note 7(f) Non-current assets –
Property, plant and equipment
At 30 June 2020
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2021
Opening net book amount
Exchange differences
Additions
Disposals
Depreciation charge
Closing net book value
At 30 June 2021
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2022
Opening net book amount
Exchange differences
Additions
Disposals
Depreciation charge
Closing net book value
At 30 June 2022
Cost
Accumulated depreciation
Net book amount
Plant & equipment
$
Motor vehicles
$
Total
$
1,152,197
(901,330)
69,190
(48,557)
250,867 20,633
1,221,387
(949,887)
271,500
250,867
-
20,633
(554)
182,614 -
-
(107,373)
326,108
-
(9,623)
10,456
271,500
(554)
182,614
-
(116,996)
336,564
1,330,804
(1,004,696)
54,535
1,385,339
(44,079)
(1,048,775)
326,108
10,456
336,564
326,108
10,456
336,564
-
-
125,362
-
-
(138,190)
313,280
-
(2,934)
7,522
-
125,362
-
(141,124)
320,802
1,456,166
(1,142,886)
313,280
58,087
1,514,253
(50,565)
(1,193,451)
7,522
320,802
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Company and the
cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement
during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts of the assets,
net of their residual values, over their estimated useful lives, as follows:
• Leasehold improvements 2 – 5 years
• Plant and Machinery 1 – 10 years
• Vehicles 3 – 7 years
• Furniture, fittings and equipment 3 – 10 years
70
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 The asset’s residual value and useful live are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount (refer note 23(h)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income
statement. When revalued assets are sold, it is Company policy to transfer the amounts included in other reserves in respect of
those assets to retained earnings.
Note 7(g) Deferred tax assets
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Provision for employee entitlements, warranties, restructuring and
decommissioning
Depreciation and amortisation
Payables and other provisions
Financial assets at fair value through other comprehensive income
Lease liabilities
Deferred grant income
Credit losses
Tax losses
Set-off deferred tax liabilities pursuant to set-off provisions
Net deferred tax assets not recognised*
Net deferred tax assets
* A deferred tax asset has not been recognised as the consolidated entity has a history of tax losses.
2022
$
2021
$
217,609
-
575,827
127,960
245,626
202,131
11,198
572,839
-
9,601
4,696
3,645
-
3,131
45,513,665
46,685,383
(3,512,344)
42,917,494
43,720,039
(2,271,892)
(43,173,039)
(41,448,147)
-
-
71
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Note 8 Liabilities
This note provides information about the Company’s liabilities.
Note 8(a) Trade and other payables
Trade creditors
Unearned income
Other payables
2022
$
2021
$
479,548
298,426
918,785 614,578
319,433
1,717,766
210,763
1,123,767
These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial
year which are unpaid. The amounts are unsecured. Trade creditors are usually paid within 45 days of recognition.
Trade creditors, derivative financial instruments and other payables are presented as current liabilities unless
payment is not due within 12 months from the reporting date.
(i) Amounts not expected to be settled within the next 12 months
Other payables include accruals for annual leave. The entire annual leave obligation is presented as current, since
the Company does not have an unconditional right to defer settlement. However, based on past experience, the
Company does not expect all employees to take the full amount of accrued annual leave or require payment within
the next 12 months. The following amounts reflect leave that is not to be expected to be taken or paid within the
next 12 months:
Current annual leave obligations expected to be settled after 12 months
2022
$
41,341
2021
$
8,735
(ii) Risk exposure
Information about the Company’s exposure to foreign exchange risk is provided in note 13.
Note 8(b) Provisions
Employee benefits - long service
leave
Warranty provision
Make good provision
Current
$
653,511
146,081
-
799,592
2022
Non-current
$
Total
$
Current
$
2021
Non-current
$
30,845
684,356
584,663
37,780
-
146,081
146,081
40,000
40,000
-
-
Total
$
622,443
146,081
40,000
870,437
770,744
37,780
808,524
40,000
70,845
(i) Amounts not expected to be settled within the next 12 months
The current provision for long service leave includes all unconditional entitlements where employees have
completed the required period of service and also those where employees are entitled to pro-rata payments
in certain circumstances. The entire amount is presented as current, since the Company does not have an
unconditional right to defer settlement. However, based on past experience, the Company does not expect all
employees to take the full amount of accrued long service leave or require payment within the next 12 months. The
following amounts reflect leave that is not to be expected to be taken or paid within the next 12 months.
Current long service leave obligations expected to be settled after 12 months
2022
$
2021
$
622,040
537,889
72
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022
Movements in each class of provision during the financial year, other than long service leave, are set out below:
Carrying amount at start of the year
Carrying amount at end of the year
Warranty
$
146,081
146,081
Provision is made for the estimated warranty claims in respect of solar panels that were previously sold by the Company.
The claims may be settled in the next financial year and this may be extended into future years.
Carrying amount at start of the year
Carrying amount at end of the year
Make good
$
40,000
40,000
The Company is required to restore its leased premises under the terms of the lease contracts. A provision has been recognised
for the present value of the estimated expenditure required to meet these obligations.
Note 8(c) Non-current liabilities - Deferred tax liabilities
The balance comprising temporary differences attributable to:
Foreign currency cash balances and loans
Financial assets at fair value through other comprehensive income
Depreciation and amortisation
Right-of-use assets
Accrued income
Set off deferred tax liabilities pursuant to set-off provisions
Net deferred tax liabilities
2022
$
2021
$
3,092,455
1,635,158
-
382,896
34,282
247,622
137,985
3,512,344
-
10,510
243,328
2,271,892
(3,512,344)
(2,271,892)
-
-
73
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Note 9 Leases
This note provides information for leases where the Company is a lessee.
Note 9(a) Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
Right-of-use assets
Buildings
Equipment
Lease liabilities
Current
Non-current
2022
$
988,848
1,641
990,489
200,191
782,311
982,502
2021
$
37,940
4,101
42,041
36,613
1,791
38,404
Additions to the right-of-use assets during the current year were $1,248,819 (2021: $189,639).
Note 9(b) Amounts recognised in the income statement
The income statement shows the following amounts related to leases:
Depreciation charge on right-of-use assets
Buildings
Equipment
Interest expense (included in finance costs)
2022
$
2021
$
297,911
192,876
2,460 2,460
300,371 195,336
20,123
1,590
The total cash outflows for leases during the current year was $324,844 (2021: $200,827).
Note 9(c) The Company’s leasing activities and how these are accounted for
The Company leases buildings and equipment. Rental contracts are generally for fixed periods of 1 year to 5 years
but may have extension options. Leases are recognised as a right-of-use asset and a corresponding liability at the
date at which the leased asset is available for use by the Company.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
74
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 • fixed payments less any lease incentive receivable;
• variable lease payments that are based on an index or rate, initially measured using the index or rate as at the
commencement date;
• amounts expected to be payable by the Company under residual value guarantees;
• the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
• payments of penalties for terminating the lease, if the lease term reflects the Company exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of
the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to
pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic
environment with similar terms, security and conditions.
Lease payments are allocated between principal and finance cost. The finance costs are charged to profit or loss
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability
for each period.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made before the commencement date less any lease incentives received; and
• any initial direct costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a
straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
Note 10 Equity
The note provides information about the Company’s equity.
Note 10(a) Contributed equity
(i) Share capital
Ordinary shares
Fully paid
Parent entity
Parent entity
2022
Shares
2021
Shares
2022
$
2021
$
204,974,961
172,767,339 271,543,434
232,645,003
75
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Notes to the financial statements
30 June 2022
(iii) Movements in ordinary share capital
Date
30 June 2020
30 June 2021
Details
Balance
Balance
1 September 2021
Issue of shares - performance rights
1 October 2021
Issue of shares - capital raise
29 October 2021
Issue of shares - Share Purchase Plan
8 November 2021
Issue of shares - other *
Various
Various
Issue of shares - options exercise
Transfer from share-based payments reserve - options
Less: Transaction costs arising on share issues
30 June 2022
Balance
Number of
shares
172,767,339
172,767,339
381,940
25,972,391
5,343,812
84,507
424,972
-
204,974,961
-
204,974,961
Total
$
232,645,003
232,645,003
213,928
32,984,937
7,000,001
112,817
148,740
69,513
273,174,939
(1,631,505)
271,543,434
* As per shareholder approval granted at the 2021 AGM, 84,507 shares issued in lieu of cash Director’s fees for the 3-years ending 31
December 2023
(iii) Ordinary shares
Ordinary shares are classified as equity. Ordinary shares entitle the holder to participate in dividends and the
proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options,
or for the acquisition of a business, are not included in the cost of the acquisition as part of the purchase
consideration.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to
one vote, and upon a poll each share is entitled to one vote.
(iv) Options
Information relating to the Silex Systems Limited Employee Incentive Plan, including details of options issued,
exercised and lapsed during the financial year and options outstanding at the end of the financial year, is set
out in note 19(b).
(v) Performance Rights
Information relating to the Silex Systems Limited Employee Incentive Plan, including details of Performance
Rights issued, vested/forfeited and lapsed during the financial year and rights outstanding at the end of the
financial year, is set out in note 19(c).
(vi) Capital risk management
The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern
and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may issue new shares.
76
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Notes to the financial statements
30 June 2022
Note 10(b) Reserves
Foreign currency translation reserve
Revaluation - Fair value through other comprehensive income
Transactions with non-controlling interests
Share-based payments reserve
Movements in reserves:
Foreign currency translation reserve
Balance at the beginning of the financial year
Net exchange differences on translation of foreign controlled entity
Balance at the end of the financial year
Revaluation - Fair value through other comprehensive income
Balance at the beginning of the financial year
Differences on revaluation
Balance at the end of the financial year
Transactions with non-controlling interests
Balance at the beginning of the financial year
Balance at the end of the financial year
Share-based payments reserve
Balance at the beginning of the financial year
Share-based payment expense
Transfer to share capital
Balance at the end of the financial year
Nature and purpose of reserves:
(i) Foreign currency translation reserve
2022
$
2021
$
(40,089)
(662,095)
(1,763,566)
555,651
(2,906,913)
(2,906,913)
15,753,841
15,015,616
11,043,273
12,002,259
2022
$
2021
$
(662,095)
622,006
(40,089)
166,915
(829,010)
(662,095)
2022
$
2021
$
555,651
(1,459,756)
(2,319,217)
(1,763,566)
2,015,407
555,651
2022
$
2021
$
(2,906,913)
(2,906,913)
(2,906,913)
(2,906,913)
2022
$
2021
$
15,015,616
14,669,819
1,021,666 345,797
(283,441)
-
15,753,841
15,015,616
Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency
translation reserve, as described in note 23(c). The reserve is recognised in profit and loss when the net
investment is disposed of.
77
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Notes to the financial statements
30 June 2022
(ii) Revaluation – Fair value through other comprehensive income
Changes in the fair value of investments that are classified as fair value through other comprehensive income
are recognised in Other comprehensive income and accumulated in a separate reserve within equity. Amounts
are not reclassified to profit or loss when the associated assets are sold or impaired.
(iii) Transactions with non-controlling interests
This reserve is used to record the differences described in note 23(b) which may arise as a result of
transactions with non-controlling interests that do not result in a loss of control.
(iv) Share-based payments reserve
The Share-based payments reserve is used to recognise:
• the grant date fair value of options issued to employees but, not exercised;
• the grant date fair value of deferred shares (i.e., performance rights) granted to employees but, not yet vested;
and
• the grant date fair value of shares to be issued.
Note 10(c) Accumulated losses
Accumulated losses at the beginning of the financial year
Net (loss) attributable to members of Silex Systems Limited
Accumulated losses at the end of the financial year
Note 11 Cash flow information
(a) Reconciliation of net (loss) after income tax to net
cash (outflows) from operating activities
Net (loss) after income tax
Depreciation and amortisation
Non cash employee benefits expense - share based payments
(Profit) on sale of plant and equipment
Net exchange differences
Share of net losses of joint ventures
(Increase)/decrease in prepayments and other current assets
(Increase) in trade and other debtors
(Increase)/decrease in accrued income - other
Increase in trade and other creditors
Increase in provisions
Net cash inflows/(outflows) from operating activities
(b) Non-cash investing and financing activities
2022
$
2021
$
(222,576,131)
(215,648,863)
(9,464,422)
(6,927,268)
(232,040,553)
(222,576,131)
2022
$
2021
$
(9,464,422)
(6,927,268)
441,495
1,078,074
-
54,318
7,952,325
(116,476)
(107,464)
(81,123)
593,999
61,913
412,639
312,332
345,797
(1,682)
24,051
2,125,072
182,378
(467,789)
(428,695)
28,166
32,637
(4,775,001)
Details regarding Non-cash investing and financing activities are disclosed in other notes. The acquisition of right-of-
use assets is detailed in note 9 and options and rights issued under the Silex Systems Limited Employee Incentive
Plan in note 19.
78
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Notes to the financial statements
30 June 2022
Note 12 Critical accounting estimates and judgments
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the entity and that are believed to be
reasonable under the circumstances.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results.
The area involving significant estimates or judgements is the recognition of variable consideration (in the form of
revenue royalties) from the sale of the cREO® technology (note 3).
Note 13 Financial risk management
The Company’s activities expose it to a variety of financial risks; market risk (including foreign exchange risk,
interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management program
focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial
performance of the Company. The Company uses different methods to measure different types of risk to which it is
exposed. These methods include sensitivity analysis in the case of interest rate and foreign exchange risk.
Risk management is carried out by senior management under policies approved by the Board of Directors. Senior
management identifies, evaluates and manages financial risks. The Board provides principles for overall risk
management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk and credit
risk and investing excess liquidity.
(a) Derivatives
Foreign exchange contracts are used to manage foreign exchange risk. The Company may enter into forward
exchange contracts which are economic hedges for foreign currencies to be traded at a future date but do not
satisfy the requirements for hedge accounting. These contracts are fair valued by comparing the contracted rate
to the current market rate for a contract with the same remaining period to maturity. Any changes in fair values are
taken to the income statement immediately.
The Company’s policy is to hedge a proportion of its anticipated cash flows in USD. At year end, the Company held
US$1,650,000 forward exchange contracts with contractual dates up to October 2022 (2021: US$nil of forward
exchange) to purchase USD as part of its strategy to minimise the financial effects of foreign currency fluctuations.
The Board monitors the Company’s hedging strategy on a continuing basis. The fair value of derivative contracts
outstanding at year end totals $158,603 and is recorded in Trade and other receivables (2021: $nil).
79
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Notes to the financial statements
30 June 2022
(b) Market risk
(i) Foreign exchange risk
The Company operates internationally and is exposed to foreign exchange risk arising from currency
exposures, primarily with respect to the US dollar.
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are
denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity
analysis and cash flow forecasting.
The Company’s exposure to USD foreign currency risk at the reporting date, expressed in Australian dollars,
was as follows:
Cash and cash equivalents
Trade and other receivables
2022
AUD
923,236
846,755
2021
AUD
4,041,384
616,378
Forward exchange contracts - buy foreign currency
2,235,731
-
Profit or loss is sensitive to the value of the AUD compared to the USD.
Impact on post-tax profit
2022
$
2021
$
(543,173)
(607,534)
734,881
821,958
Impact on other
components of equity
2022
$
(543,173)
734,881
2021
$
(607,534)
821,958
AUD/USD - increase by 15%
AUD/USD - decrease by 15%
The Company also owns shares in IQE Plc, a UK based company, resulting from the 2015 Option, License
and Assignment Agreement signed. IQE’s shares are listed on the London Stock Exchange (GBP currency)
(AIM: IQE). The impact of an increase or decrease in the AUD/GBP would not impact post-tax profits as it
is accounted for in Other comprehensive income. The impact of a 15% increase in the AUD/GBP would
decrease other components of equity by $521,476 (2021: $756,492) and a 15% decrease in the AUD/GBP
would increase other components of equity by $705,526 (2021: $1,023,490).
(ii) Cash flow and fair value interest rate risk
As the Company has interest-bearing assets, the Company’s income and operating cash flows are influenced
by changes in market interest rates. Company policy is to maintain the majority of cash and cash equivalents
at fixed rates by the use of term deposits.
The Company manages its cash flow interest rate risk by having a spread of maturity dates with different
institutions.
As at the reporting date, the Company had the following variable interest rate cash and cash equivalents:
Cash and cash equivalents
0.61%
4,680,495
-
Weighted average
interest rate %
Balance
$
Weighted average
interest rate %
Balance
$
-
30 June 2022
30 June 2021
Profit or loss is sensitive to higher / lower interest income from cash and cash equivalents as a result of
changes in interest rates.
80
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Notes to the financial statements
30 June 2022
Impact on post-tax profit
2022
$
4,269
(4,269)
2021
$
-
-
Impact on other
components of equity
2022
$
4,269
(4,269)
2021
$
-
-
Interest rates - increase by 1.00%
Interest rates - decrease by 1.00%
(iii) Price risk
The Company’s exposure to equity securities price risk arises from the Company’s shares in IQE Plc which are
classified in the balance sheet as financial assets at fair value through other comprehensive income.
The impact of an increase or decrease in the IQE share price would not impact post-tax profits as it is
accounted for in Other comprehensive income. The impact of a 10% increase in IQE’s share price would
increase other components of equity by $399,798 (2021: $579,977) and a 10% decrease in IQE’s share price
would reduce other components of equity by $399,798 (2021: $579,977). The impact of a 20% increase in
IQE’s share price would increase other components of equity by $799,596 (2021: $1,159,955) and a 20%
decrease in IQE’s share price would reduce other components of equity by $799,596 (2021: $1,159,955).
(c) Credit risk
Credit risk arises from cash and cash equivalents, term deposits, contract assets and receivables. The Company
has a concentration of credit risk with its main receipts coming from GLE for Recoverable project costs, banks
(interest income) and government (Research and development tax incentive and CRC-P grant).
The Company has policies in place to ensure that transactions are with entities with an appropriate credit history.
For banks and financial institutions, only independently rated parties with a minimum rating as approved by the
Board are accepted. Cash transactions are limited to high credit quality financial institutions. The Company has
policies that limit the amount of credit exposure to any one financial institution. As the Company holds a 51%
interest in GLE, the credit risk is mitigated.
The credit quality of customers, banks and governments can be assessed by reference to external credit ratings
(if available). If they are independently rated, these ratings are used. Otherwise, if there is no independent rating,
the Company assesses the credit quality by taking into account the financial position, past experience and other
factors.
Impairment of financial assets
While cash and cash equivalents are subject to the impairment requirements of AASB 9, the identified impairment
loss was immaterial. All of the Company’s term deposits (disclosed under AASB 9 as Other financial assets at
amortised cost) are considered to have low credit risk given the credit ratings of the bank where the deposits are
held. The Company has reviewed the credit ratings and corporate default rates of the various banks by credit rating
agencies. Applying the expected credit loss model, the identified impairment loss was immaterial at 30 June 2022
and 30 June 2021.
81
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Notes to the financial statements
30 June 2022
Cash and cash equivalents and other financial assets at amortised cost - term deposits
ANZ Banking Group Limited
National Australia Bank
Bendigo and Adelaide Bank Limited
Bank of Queensland
Bank of America
2022
$
2021
$
27,281,264
5,617,682
5,500,000
4,000,000
2,000,000
7,500,000
255,069
-
3,500,000
985,116
42,536,333
14,102,798
Trade and other receivables are also subject to the expected credit loss model. Impairment losses for accrued
interest revenue and accrued Research and development tax incentive were also immaterial at 30 June 2022 (and
at 30 June 2021) after reviewing the credit ratings of the various banks (interest) and the Federal Government
(Research and development tax incentive).
The Company also had accrued royalty revenue at 30 June 2022 of $nil from the sale of the Company’s cREO®
technology (2021: $666,128). The accrued royalty revenue in the prior year related to minimum royalties for the
year ended 31 December 2021. A 2.0% expected credit loss rate was applied to the prior year balance with a loss
allowance of $13,323 booked at 30 June 2021.
(d) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of
funding through an adequate amount of committed credit facilities and the ability to close out market positions. The
Company manages liquidity by continuously monitoring forecast and actual cash flows and matching the maturity
profiles of financial assets and liabilities.
Financing arrangements
The Company had access to the following undrawn borrowing facilities at the reporting date:
Floating rate
Expiring within one year (documentary credit facility and visa facility)
2022
$
2021
$
200,000
200,000
200,000
200,000
The documentary credit facility and visa facility may be drawn at any time and is subject to annual review.
82
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Notes to the financial statements
30 June 2022
Maturities of financial liabilities
The tables below analyse the Company’s financial liabilities into relevant maturity groupings based on the remaining
period at the reporting date to the contractual maturity date. The amounts disclosed in the tables are the
contractual undiscounted cash flows.
Less than 6
months
$
6-12
months
$
Between 1
and 2 years
$
Between
2 and 5
years
$
Over 5
years
$
Total
contractual
cash flows
$
Carrying
Amounts
(assets)/
liabilities
$
607,541
114,434
721,975
-
135,472
135,472
-
-
276,780
574,490
276,780
574,490
-
-
-
607,541
1,101,176
607,541
982,502
1,708,717
1,590,043
Less than 6
months
$
6-12
months
$
Between 1
and 2 years
$
Between
2 and 5
years
$
Over 5
years
$
Total
contractual
cash flows
$
Carrying
Amounts
(assets)/
liabilities
$
389,409
20,759
410,168
-
16,882
16,882
-
1,832
1,832
-
-
-
-
-
-
389,409
39,473
428,882
389,409
38,404
427,813
At 30 June 2022
Non-derivatives
Non-interest bearing
Lease liabilities
Total non-derivatives
At 30 June 2021
Non-derivatives
Non-interest bearing
Lease liabilities
Total non-derivatives
(e) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their
fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by
discounting the future contractual values at the current market interest rates that is available to the Company for
similar instruments.
Note 14 Climate Change
In preparing these consolidated financial statements the group has considered the impact of climate change risks
on the assets and liabilities recognised and presented within the consolidated financial statements. The Company is
continuing to develop its assessment of the impact of climate change in line with emerging industry and regulatory
guidance.
Note 15 Interests in other entities
(a) Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 23(b).
83
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Notes to the financial statements
30 June 2022
Name of entity
Translucent Inc
Silex USA LLC
Place of business/country
of incorporation
Class of
shares
USA
Ordinary
Total
USA
Interest
Total
2022
%
100.0%
100.0%
100%
100%
2021
%
100.0%
100.0%
100%
100%
(b) Interests in joint ventures
Set out below are details of the Global Laser Enrichment Holdings LLC (GLE Holdco) joint venture as at 30 June
2022, which is material to the Company:
Place of
business/
country of
% of
ownership
interest
Nature of Measurement
Carrying amount
Name of entity
incorporation
2022
2021
relationship
method
2022
2021
Global Laser
Enrichment Holdings
LLC
USA
51%
51% Joint venture
Equity method
3,121,797
916,254
GLE Holdco acquired Global Laser Enrichment LLC (GLE) on 31 January 2021. GLE holds the exclusive worldwide
license to commercialise the SILEX technology for uranium enrichment. GLE’s current focus is to complete the
full-scale demonstration of the technology utilising a pilot plant currently being built in Wilmington, NC. Cameco
Corporation indirectly owns the remaining 49% of GLE Holdco.
(i) Significant judgement: existence of joint control
In accordance with the Amended and Restated Limited Liability Company Agreement of GLE Holdco,
decisions of the Governing Board are based on the voting of percentage of interests held by the GLE Holdco
Governing Board Members. Silex’s Governing Board Members hold 51% interest and the Cameco Governing
Board Members, 49%. The affirmative vote of Governing Board members representing greater than 51% of the
total percentage interests is required for an affirmative vote. Therefore, Silex has joint control of GLE Holdco
with Cameco.
(ii) Commitments and contingent liabilities in respect of the GLE Holdco joint venture
Commitments - joint ventures
Commitment to provide funding for joint venture’s capital commitments, if called
6,512,588
3,717,586
2022
$
2021
$
Contingent liabilities - joint venture
Share of joint venture’s contingent liabilities
-
-
(iii) Summarised financial information for GLE Holdco joint venture
The tables below provide summarised financial information for the GLE Holdco joint venture. The information
disclosed reflects the amounts presented in the financial statements of GLE Holdco and not Silex’s share of
those amounts. The information has been amended to reflect adjustments made by the Company when using
the equity method, including fair value adjustments and modifications for differences in accounting policy.
84
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022
Notes to the financial statements
30 June 2022
a) Summarised balance sheet
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current assets
Current liabilities
Financial liabilities (excluding trade payables)
Other current liabilities
Total current liabilities
Non-current liabilities
Financial liabilities (excluding trade payables)
Other non-current liabilities
Total non-current liabilities
Net assets
b) Reconciliation to carrying amounts
Opening net assets
Additional capital contributed
(Loss) for the period
Other comprehensive income
Closing net assets
Company’s share in %
Company’s share in $
Carrying amount
Summarised statement of comprehensive income
Revenue
Interest income
Depreciation and amortisation
Interest expense
Income tax expense
(Loss) from continuing operations
(Loss) for the period
Other comprehensive income
Total comprehensive income
2022
$
2021
$
8,923,862 3,486,276
625,447 305,190
9,549,309 3,791,466
7,186,774 7,423,570
855,117 720,889
2,271,850 1,729,474
3,126,967 2,450,363
7,463,276 6,961,436
24,669 6,661
7,487,945 6,968,097
6,121,171 1,796,576
2022
$
2021
$
1,796,576
-
19,908,492 5,895,282
(15,592,794)
(4,166,808)
8,897 68,102
6,121,171 1,796,576
51%
3,121,797
3,121,797
51%
916,254
916,254
2022
$
2021
$
-
-
-
-
1,169,800 440,407
148,393 62,928
-
-
(15,592,794)
(15,592,794)
(4,166,808)
(4,166,808)
8,897 68,102
(15,583,897)
(4,098,706)
(c) Transactions with non-controlling interests
There were no transactions with non-controlling interests in the current year or in the prior year.
85
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022
Notes to the financial statements
30 June 2022
Note 16 Commitments for expenditure and guarantees
The Company did not have any Capital expenditure contracted at the reporting date that was not recognised as
liabilities (2021: $nil). The Company has not provided any guarantees as at 30 June 2022 (2021: $nil).
Note 17 Events occurring after reporting date
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 18 Related party transactions
(a) Subsidiaries
Interests in subsidiaries are set out in note 15(a).
(b) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
(c) Transactions with other related parties
The following transactions occurred with related parties:
Contributions to superannuation funds on behalf of employees
Note 19 Share-based payments
(a) Silex Systems Limited Employee Incentive Plan
2022
$
2021
$
1,282,443
1,160,370
74,375
32,790
563,308
68,221
24,503
116,612
1,952,916
1,369,706
2022
$
2021
$
290,524
225,136
The Silex Systems Limited Employee Incentive Plan (the Plan) was established in May 2019 by a resolution of the
Silex Board and was approved by Shareholders at the 2019 Annual General Meeting. All full-time and part-time staff
and executive directors of the consolidated entity are eligible to participate in the Plan. The Company established
the Plan to encourage employees to share in the ownership of the Company and to promote the long-term success
of the Company as a goal shared by all employees. In accordance with the Plan, an award of options, performance
rights or exempt share awards may be granted.
Participation in the Plan is at the Board’s discretion and no individual has a contractual right to participate in the
Plan or to receive any guaranteed benefits.
86
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Notes to the financial statements
30 June 2022
(b) Options
Under the Plan, options issued were granted for no consideration. The options granted to staff are for a five-year
period and become exercisable after three years of the date of the grant. The options granted to executive KMP are
with respect to multi-year performance periods ending between 25 June 2024 and 30 June 2027 for the CEO/MD
and between 30 June 2024 and 30 June 2026 for the CFO/Company Secretary. The options expire approximately
two years following expiry of the various performance periods. The options lapse if the holder ceases to be an
eligible employee other than by reason of death or permanent disablement, unless the Board determines otherwise
in its absolute discretion. Options granted under the plan carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary share. The exercise price of options is based on the
volume weighted average price at which the Company’s shares are traded on the Australian Stock Exchange for
the 10-trading days before the options are granted or for the 10-trading days preceding a Board resolution to grant
options. Amounts received on the exercise of options are recognised as share capital.
Set out below are summaries of options granted under the Plan including the options outstanding at the end of the
year:
Consolidated and parent entity – 2022
Expiry
date
Exercise
price
(cents)
Balance
at start
of year
(Number)
Issued
during
the year
(Number)
Lapsed/
forfeited
during
the year
(Number)
Exercised
during
the year
(Number)
Balance
at end of
the year
(Number)
Exercisable
at the end of
year
(Number)
Grant date
21/05/2019
20/05/2024
02/12/2019
01/12/2024
01/04/2020
31/03/2025
23/11/2020
22/11/2025
35
35
21
57
500,000
100,000
660,000
150,000
24/03/2021
23/03/2026
120
1,000,000
-
-
-
-
-
(35,028)
(324,972)
140,000
140,000
-
(100,000)
-
-
-
-
-
-
660,000
150,000
-
-
-
- 1,000,000
-
26/07/2021
28/10/2026
26/07/2021
30/06/2027
26/07/2021
30/06/2028
14/10/2021
28/10/2026
14/10/2021
28/10/2026
14/10/2021
28/10/2027
14/10/2021
28/10/2028
14/10/2021
28/10/2029
94
94
94
94
94
94
94
94
18/03/2022
17/03/2027
119
-
-
-
-
-
-
-
-
-
100,000
-
100,000
100,000
-
-
150,000
-
150,000
-
150,000
-
150,000
-
150,000
-
600,000
-
-
-
-
-
-
-
-
-
-
100,000
100,000
100,000
150,000
150,000
150,000
150,000
150,000
600,000
-
-
-
-
-
-
-
-
-
2,410,000
1,650,000
(35,028)
(424,972) 3,600,000
140,000
Weighted average exercise price
$0.68
$1.03
$0.35
$0.35
$0.88
$0.35
87
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Notes to the financial statements
30 June 2022
Consolidated and parent entity – 2021
Grant date
Expiry date
21/05/2019
20/05/2024
02/12/2019
01/12/2024
01/04/2020
31/03/2025
23/11/2020
22/11/2025
Exercise
price
(cents)
35
35
21
57
24/03/2021
23/03/2026
120
Balance
at start
of year
(Number)
500,000
100,000
660,000
-
-
Issued
during
the year
(Number)
-
-
-
Lapsed/
forfeited
during
the year
(Number)
-
-
-
150,000
-
Exercised
during
the year
(Number)
-
-
-
-
Balance
at end of
the year
(Number)
500,000
Exercisable
at the end of
year
(Number)
-
100,000
-
660,000
-
150,000
-
1,000,000
-
- 1,000,000
-
Weighted average exercise price
$0.28
$1.12
1,260,000
1,150,000
-
-
- 2,410,000
-
-
$0.68
-
The market price of shares under option at 30 June 2022 was $2.10 (2021: $0.90). The weighted average
remaining contractual life of share options outstanding at the end of the period was 4.1 years (2021: 4.0 years).
88
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Notes to the financial statements
30 June 2022
Fair value of options granted
The assessed fair value at grant date of options granted during the year ended 30 June 2022 was determined
using a Binomial option pricing model that takes into account the exercise price, the term of the option, the impact
of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend
yield and the risk-free interest rate for the term of the options. The assessed fair value of options at grant date and
the model inputs included the following:
Fair
value
(cents)
Grant
date
Vesting
date
Exercise
Price
(cents)
Share
price at
grant date
(cents)
Expiry
date
Expected
volatility
Expected
dividend
yield
Risk-free
interest
rate
Days to
expiration
43.21 26/07/2021
30/06/2024
94 28/10/2026
47.14 26/07/2021
30/06/2025
94 30/06/2027
49.04 26/07/2021
30/06/2026
94 30/06/2028
72.49 14/10/2021
25/06/2024
94 28/10/2026
72.49 14/10/2021
30/06/2024
94 28/10/2026
77.27 14/10/2021
30/06/2025
94 28/10/2027
79.65 14/10/2021
30/06/2026
94 28/10/2028
83.08 14/10/2021
30/06/2027
94 28/10/2029
74.35 18/03/2022
18/03/2025
119 17/03/2027
102
102
102
146
146
146
146
146
130
73%
73%
70%
73%
73%
73%
70%
70%
74%
-
-
-
-
-
-
-
-
-
0.49%
0.64%
0.75%
0.79%
0.79%
1.01%
1.16%
1.30%
2.03%
1,435
1,800
2,165
1,396
1,396
1,761
2,126
2,492
1,460
A 22.5% discount for lack of marketability was applied to the options granted 26 July 2021 and 14 October 2021
as these options have a 2-year restriction on trading from the date of exercise.
The assessed fair value of options at grant date and the model inputs for options issued in the prior year included
the following:
Fair
value
(cents)
Grant date
Vesting
date
Exercise
Price
(cents)
Expiry
date
30.60 23/11/2020 30/06/2023
57
22/11/2025
67.10 24/03/2021 24/06/2024
120
23/03/2026
Share
price at
grant date
(cents)
58.5
125.5
Expected
volatility
Expected
dividend
yield
Risk-free
interest
rate
Days to
expiration
72%
73%
-
-
0.10%
0.10%
1,460
1,460
The expected price volatility is based on the historical volatility adjusted for any expected changes to future volatility
due to publicly available information.
(c) Performance Rights
The rights issued under the Plan were subject to performance-based and service-based vesting conditions. Rights
convert into one ordinary share each on vesting at an exercise price of nil, subject to the satisfaction of vesting
conditions. If an employee ceases to be employed by the Company during the vesting period, the rights will be
forfeited, except in limited circumstances that are at the discretion of the Board.
89
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Notes to the financial statements
30 June 2022
Set out below are summaries of performance rights granted under the Plan:
Consolidated and parent entity – 2022
Grant date
Exercise Price
25/09/2020
23/11/2020
26/07/2021
14/10/2021
25/10/2021
Nil
Nil
Nil
Nil
Nil
Balance at
start of year
(Number)
Issued during
the year
(Number)
390,000
100,000
-
-
70,000
Lapsed/
forfeited
during the
year
(Number)
(85,060)
(23,000)
-
Exercised
during
the year
(Number)
(304,940)
(77,000)
-
-
-
487,500
-
-
250,000
-
-
Balance at end of
the year (Number)
-
-
70,000
487,500
250,000
490,000
807,500
(108,060)
(381,940)
807,500
Consolidated and parent entity – 2021
Grant date
Exercise Price
25/09/2020
23/11/2020
Nil
Nil
Balance at
start of year
(Number)
-
-
-
Issued during
the year
(Number)
Lapsed/
forfeited
during the
year
(Number)
Exercised
during the year
(Number)
Balance at end of
the year (Number)
390,000
-
-
100,000
-
-
490,000
-
-
390,000
100,000
490,000
The fair value of rights granted on 26 July 2021 that do not have market conditions was $0.791 and the fair value
of rights granted on 26 July 2021 that have market conditions was $0.51. The fair value of rights granted on 14
October 2021 that do not have market conditions was $1.132 and the fair value of rights granted on 14 October
2021 that have market conditions was $0.721. The fair value of rights granted on 25 October 2021 was $1.291.
The fair values were estimated taking the market price of the Company’s shares on the grant date and noting that
no dividends were expected to be received during the vesting period. A 22.5% discount for lack of marketability
was applied to the rights granted on 26 July 2021 and 14 October 2021 as the rights have a 2-year restriction on
trading following conversion of the vested rights to ordinary shares. An 11.25% discount for lack of marketability
was applied to the rights granted on 25 October 2021 as the rights have a 1-year restriction on trading following
conversion of the vested rights to ordinary shares.
For the prior year, the fair value of rights granted on 25 September 2020 and 23 November 2020, that have market
conditions was $0.216 and $0.235 respectively.
The model inputs for the rights granted during the year ended 30 June 2022 (with the 26 July 2021 issue listed first,
the 14 October 2021 next and the 25 October 2021 issue last – unless advised otherwise) included:
(i) Rights are granted for no consideration for all issues
(ii) Exercise price $nil for all issues
(iii) Grant date: 26 July 2021, 14 October 2021 and 25 October 2021 (2021: 25 September 2020 and 23
November 2020)
(iv) Vesting date: 31 July 2021 except for the extended long-term incentive rights which have a vesting date of
no later than 25 December 2025 (2021: 31 July 2021 and 30 June 2021)
(v) Share price at grant date: $1.02, $1.46 and $1.455 (2021: $0.565 and $0.585)
90
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022
Notes to the financial statements
30 June 2022
(vi) Expected volatility of the Company’s shares: 78%, 78% and 78% (2021: 77% and 77%)
(vii) Expected dividend yield: nil and nil (2021: nil and nil)
(viii) Risk-free interest rate: 0.017%, 0.043% and 0.108% (2021: 0.13% and 0.06%)
A Monte Carlo simulation approach was used to value the rights that are subject to market conditions. 300,000
Extended LTI rights with market conditions (i.e., 4 tranches of 75,000 rights) have been granted to the CFO/
Company Secretary. The fair value has been calculated using a Monte Carlo simulation approach. Inputs include:
the rights will be issued for no consideration, have an exercise price of nil, a grant date of 21 June 2022, share
price at grant date of $1.865, expected volatility of 75% and expected risk-free interest rates between 2.87% and
3.69%, vesting dates of 30 June 2023, 30 June 2024, 30 June 2025 and 30 June 2026. A 22.5% discount for lack
of marketability has been applied. The fair value has been calculated at $0.742, $0.808, $0.809 and $0.835.
(d) Shares granted to the Chair (as approved at the 2021 AGM)
The Silex Chair also serves as the Chair of the GLE Holdco Governing Board until 31 December 2023. In view
of the extra work load and responsibility associated with the role of GLE Chair, it was resolved to pay additional
Directors’ fees from 1 January 2021. As per shareholder approval granted at the 2021 AGM, 50% of the annual
fees for the 3-year tenure have been paid via the issue of Silex shares. 84,507 shares at the 10-trading day volume
weighted average price at which the Company’s shares traded on the Australian Stock Exchange preceding 17
December 2020, being $0.71, were issued on 8 November 2021. A proportion of the shares will vest annually
in line with the completion of each year of service through to 31 December 2023. 28,169 shares vested on 31
December 2021. The assessed fair value of the shares is based on the share price on 8 November 2021 of $1.335.
(e) Expenses arising from share-based transactions
Total expenses arising from share-based payment transactions recognised during the period as part of
remuneration expense were as follows:
Options granted and to be granted
Performance rights granted and to be granted
Shares to be granted in lieu of Directors’ fees
Note 20 Remuneration of auditors
2022
$
2021
$
519,097
137,975
512,569 197,822
46,408 10,000
1,078,074
345,797
During the year the following fees were paid or payable for services provided by PricewaterhouseCoopers Australia
(PwC) as auditor of the parent entity, Silex Systems Limited, its related practices and non-audit firms:
Auditors of the Company – PwC
Audit and review of financial reports
Company
Controlled entities and joint ventures
Total audit and review of financial reports
2022
$
2021
$
96,300
104,000
-
12,000
96,300
116,000
Total services provided by PwC
96,300
116,000
91
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Note 21 Earnings per share
(a) Basic earnings per share
Total basic earnings per share attributable to the ordinary equity holders of the Company
2022
Cents
(4.8)
2021
Cents
(4.0)
Basic earnings per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
(b) Diluted earnings per share
Total diluted earnings per share attributable to the ordinary equity holders of the Company
2022
Cents
(4.8)
2021
Cents
(4.0)
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
92
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 (c) Reconciliation of earnings used in calculating earnings per share
Basic earnings per share
(Loss) attributable to the ordinary equity holders of the Company
used in calculating basic earnings per share
Diluted earnings per share
(Loss) attributable to the ordinary equity holders of the Company
used in calculating basic earnings per share
(d) Weighted average number of shares used in the denominator
Weighted average number of ordinary shares on issue used
in the calculation of basic earnings per share:
Weighted average number of ordinary shares on issue used
in the calculation of diluted earnings per share:
(e) Information concerning the classification of securities
2022
$
2021
$
(9,464,422)
(6,927,268)
(9,464,422)
(6,927,268)
2022
Number
2021
Number
196,045,799
172,767,339
196,045,799
172,767,339
Options and performance rights granted in the current and prior years were not included in the calculation of diluted
earnings per share because they are anti-dilutive for the year ended 30 June 2022. The options and performance
rights could potentially dilute basic earnings per share in the future.
Further information about options and performance rights is included in note 19.
93
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Note 22 Parent entity financial information
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance Sheet
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Shareholders’ equity
Issued capital
Reserves
Share-based payments
Accumulated losses
Total equity
Net (loss) for the period
2022
$
2021
$
45,312,985
46,625,394
2,706,517
3,559,673
15,044,132
15,956,274
2,453,923
2,493,494
43,065,721
13,462,780
271,543,434
232,645,003
15,558,967
14,820,742
(244,036,680)
(234,002,965)
43,065,721
13,462,780
(10,033,715)
(4,973,682)
Total comprehensive income
(10,033,715)
(4,973,682)
The Net (loss) for the period above differs from the segment result disclosed in note 2 as the segment result
excludes exchange gains and losses on intercompany loans (which eliminate on consolidation), write-downs of
intercompany loans (which eliminate on consolidation) and impairment charges for investments in subsidiaries
(which eliminate on consolidation).
(b) Guarantees entered into by the parent company
The parent has provided $nil (2021: $nil) guarantees.
(c) Contractual commitments for the acquisition of property, plant or equipment
As at 30 June 2022 (and 30 June 2021), the parent entity did not have any contractual commitments for the
acquisition of property, plant or equipment.
(d) Basis of preparation
This parent entity financial information has been prepared on the same basis as the consolidated financial
statements except as set out below:
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial
statements of Silex Systems Limited. Dividends received from associates are recognised in the parent entity’s profit
or loss, rather than being deducted from the carrying amount of these investments.
94
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Note 23 Summary of significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of these consolidated
financial statements to the extent that they have not already been disclosed in the other notes above. These
policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements
are for the group consisting of Silex Systems Limited and its subsidiaries.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act
2001. Silex Systems Limited is a for-profit entity for the purposes of preparing the financial statements.
(i) Compliance with IFRS
The consolidated financial statements of the Silex Systems Limited group also comply with International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
(ii) Historical cost convention
These financial statements have been prepared on a historical cost basis, except for Financial assets at fair
value through other comprehensive income which are measured at fair value.
(iii) New standards and interpretations not yet adopted
Certain new accounting standards, amendments to accounting standards and interpretations have been
published that are not mandatory for 30 June 2022 reporting periods and have not been adopted early by the
Company. These standards, amendments or interpretations are not expected to have a material impact on the
entity in the current or future reporting periods and on foreseeable future transactions.
(b) Principles of consolidation and equity accounting
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Silex Systems
Limited (the parent entity) as at 30 June 2022 and the results of all subsidiaries for the year then ended. Silex
Systems Limited and its subsidiaries together are referred to in this financial report as the Company, Silex, the
consolidated entity or the group.
Subsidiaries are all those entities over which the Company has control, being the power to govern the financial
and operating policies, generally accompanying a shareholding of more than onehalf of the voting rights. The
existence and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Company. They are deconsolidated from the date that control ceases. The
acquisition method of accounting is used to account for business combinations by the Company.
Intercompany transactions, balances and unrealised gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment
of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Company.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
income statement, statement of comprehensive income, statement of changes in equity and balance sheet
respectively.
95
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 (ii) Joint arrangements
Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint operations
or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather
than the legal structure of the joint arrangement.
The Company’s investment in GLE Holdco is a joint venture. Interests in joint ventures are accounted for using
the equity method, after initially being recognised at cost in the consolidated balance sheet.
(iii) Equity method of accounting for joint ventures
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter
to recognise the Company’s share of the post-acquisition profits or losses of the investee in profit or loss, and
the Company’s share of movements in Other comprehensive income of the investee in Other comprehensive
income. Dividends received or receivable from joint ventures are recognised as a reduction in the carrying
amount of the investment.
Where the Company’s share of losses in an equity-accounted investment equals or exceeds its interest in the
entity, including any other unsecured long-term receivables, the Company does not recognise further losses,
unless it has incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the Company and its joint ventures are eliminated to the extent of
the Company’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have
been changed where necessary to ensure consistency with the policies adopted by the Company.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy
described in note 23(h).
(iv) Changes in ownership interests
The Company treats transactions with non-controlling interests that do not result in a loss of control, as
transactions with equity owners of the Company. A change in ownership interest results in an adjustment
between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests
in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any
consideration paid or received is recognised in a separate reserve within equity attributable to owners of Silex
Systems Limited.
When the Company ceases to consolidate or equity account for an investment because of a loss of control,
joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the
change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for
the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial
asset. In addition, any amounts previously recognised in Other comprehensive income in respect of that entity
are accounted for as if the Company had directly disposed of the related assets or liabilities. This may mean
that amounts previously recognised in Other comprehensive income are reclassified to profit or loss.
If the ownership interest in a joint venture or an associate is reduced but joint control or significant influence is
retained, only a proportionate share of the amounts previously recognised in Other comprehensive income are
reclassified to profit or loss where appropriate.
(c) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Company’s entities are measured using the currency
of the primary economic environment in which the entity operates (the functional currency). The consolidated
financial statements are presented in Australian dollars, which is Silex Systems Limited’s functional and
presentation currency.
96
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 (ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income statement.
(iii) Group companies
The results and financial position of all the group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet;
• income and expenses for each income statement and statement of comprehensive income are translated at
average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and expenses are translated at the dates of the
transactions); and
• all resulting exchange differences are recognised in Other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and
of borrowings, are recognised in Other comprehensive income. The Company’s funding of its investment in its
subsidiaries has been deemed part of its net investment. When a foreign operation is sold or borrowings forming
part of the net investment are repaid, a proportionate share of such exchange differences are recognised in the
income statement as part of the gain or loss on sale.
(d) Revenue recognition
The accounting policies for the Company’s revenue from contracts with customers are explained in note 3.
(e) Government grants and Research and development tax incentive income
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant
will be received and the group will comply with all attached conditions. Note 4 provides further information on
how the Company accounts for government grants. Research and development tax incentive income is based on
eligible activities in the period.
97
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 (f) Income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based
on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when
the assets are recovered or liabilities are settled, based on those tax rates which are enacted for each jurisdiction.
The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to
measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from
the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these
temporary differences if they arose in a transaction, other than a business combination, that at the time of the
transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and
tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of
the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly
in equity.
(g) Leases
The Company’s leasing policy is described in note 9(c).
(h) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate they might be impaired.
Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to
sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash generating units). Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
(i) Investments and other financial assets
(i) Classification
The Company classifies its financial assets in the following categories:
• those to be measured subsequently at fair value (either through Other comprehensive income (OCI) or
through profit or loss); and
• those to be at amortised cost.
The classification depends on the Company’s business model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For
investments in equity instruments that are not held for trading, this will depend on whether the Company has
made an irrevocable election at the time of initial recognition to account for the equity investment at fair value
through other comprehensive income (FVOCI).
The Company reclassifies debt investments when and only when its business model for managing those
assets changes.
98
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 (ii) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade date, being the date on which the
Company commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have been transferred and the Company has transferred
substantially all the risks and rewards of ownership.
(iii) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets at fair value through profit or loss are
expensed in profit or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the Company’s business model for managing the
asset and the cash flow characteristics of the asset. There are three measurement categories into which the
Company classifies its debt instruments:
(a) Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortised cost. Interest revenue
from these financial assets is included in revenue using the effective interest rate method. Any gain or
loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses)
together with foreign exchange gains and losses. Impairment losses are presented as separate line item
in the statement of profit or loss.
(b) FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets,
where the assets’ cash flows represent solely payments of principal and interest, are measured
at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition
of impairment gains or losses, interest income and foreign exchange gains and losses which are
recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss
previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/
(losses). Interest income from these financial assets is included in finance income using the effective
interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and
impairment expenses are presented as separate line item in the statement of profit or loss.
(c) FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain
or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and
presented net within other gains/(losses) in the period in which it arises.
Equity instruments
The Company subsequently measures all equity investments at fair value. Where the Company’s Management
has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent
reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.
Dividends from such investments is recognised in profit or loss as other income when the group’s right to
receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement
of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments
measured at FVOCI are not reported separately from other changes in fair value.
(iv) Impairment
The Company assesses on a forward-looking basis, the expected credit losses associated with its debt
instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether
there has been a significant increase in credit risk. Refer note 13(c) for further details.
99
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 (j) Measurement and fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and
availableforsale securities) is based on quoted market prices at the balance sheet date.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques. The Company uses a variety of methods and makes
assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer
quotes for similar instruments are used for longterm debt instruments held. Other techniques, such as estimated
discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of
forward exchange contracts is determined using forward exchange market rates at the balance sheet date.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to
approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting
the future contractual cash flows at the current market interest rate that is available to the Company for similar
financial instruments.
(k) Employee benefits
(i) Wages and salaries, annual leave and personal leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave are recognised in other
payables in respect of employees’ services up to the reporting date and are measured at the amounts
expected to be paid when the liabilities are settled. Liabilities for nonaccumulating personal leave are
recognised when the leave is taken and measured at the rates paid or payable.
(ii) Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured as the
present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. Consideration is given to expected future wage
and salary levels, experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the reporting date on national government bonds with terms to maturity and
currency that match, as closely as possible, the estimated future cash outflows.
(iii) Retirement benefit obligations
Employees of the Company are entitled to benefits on retirement, disability or death from the Company’s
defined contribution retirement plans. The fund receives fixed contributions from the Company and the
Company’s legal or constructive obligation is limited to these contributions. Contributions to the defined
contribution fund are recognised as an expense as they become payable.
(iv) Share-based payments
Share-based compensation benefits have been provided to employees via the Silex Systems Limited Employee
Incentive Plan (the Plan) which was established in May 2019. Information relating to the Plan is set out in note 19.
Options
The fair value of options granted under the Plan are recognised as an employee benefit expense with a
corresponding increase in equity in the share-based payments reserve. The fair value is measured at grant date
and recognised over the period during which the employees become unconditionally entitled to the options.
The fair value at grant date is determined using a Binomial option pricing model that takes into account
the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the
non-tradeable nature of the option, the share price at grant date and expected price volatility of the underlying
share, the expected dividend yield and the risk-free interest rate for the term of the option.
100
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 The fair value of the options granted excludes the impact of any non-market vesting conditions. Non-market
vesting conditions are included in assumptions about the number of options that are expected to become
exercisable. At each balance sheet date, the Company revises its estimate of the number of options that are
expected to become exercisable. The employee benefit expense recognised each period takes into account
the most recent estimate.
Upon the exercise of options, the relevant balance of the sharebased payments reserve is transferred to share
capital.
Performance Rights
Performance Rights granted under the Plan are a right to acquire fully paid ordinary shares in the Company
for $nil consideration, subject to meeting certain pre-determined key performance indicators and vesting
conditions. These may be used as a short-term or long-term incentive vehicle. For Performance Rights with
non-market vesting conditions, the estimated number of rights that will vest are revised at the end of each
reporting period and adjustments are recognised in profit or loss and the share-based payments reserve. For
Performance Rights with market vesting conditions, the fair value at grant date is calculated using a Monte
Carlo simulation and recognised in profit or loss. No adjustment is made for the estimated number of rights
that will vest at each reporting date as this has already been factored into the grant date fair value of the rights.
The fair value is recognised over the relevant service period.
Shares in lieu of cash for Directors’ Fees
Shares may be granted to directors in lieu of cash for services performed (subject to shareholder approval).
The fair value of the shares is calculated on the grant date. The expense is recognised in the profit or loss over
the service period to which the issue of shares relates to. The amount relating to future periods (unearned
amount) is included in Trade and other receivables.
(v) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or
when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognises
termination benefits when it is demonstrably committed to either terminating the employment of current
employees according to a detailed formal plan without possibility of withdrawal or to providing termination
benefits as a result of an offer made to encourage voluntary redundancy.
(l) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is
not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset
or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance
sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.
101
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 (m) Research and development costs
Expenditure on research activities, undertaken with the prospect of obtaining new scientific or technical knowledge
and understanding, is recognised in the income statement as an expense when it is incurred.
Costs incurred on development projects relating to the design and testing of new or improved products are
recognised as intangible assets when it is probable that the project will be a success considering its commercial
and technical feasibility and its costs can be measured reliably. Other expenditure that does not meet these
expenditure criteria are recognised as an expense as incurred. Given the stage of development of the Company’s
technologies, research and development costs are expensed as incurred.
(n) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds
102
Notes to the financial statements30 June 2022SILEX ANNUAL REPORT 2022 Directors’ declaration
30 June 2022
In the directors’ opinion:
(a) the financial statements and notes set out on pages 55 to 102 are in accordance with the Corporations Act
2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2022 and of its
performance for the financial year ended on that date; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
Note 23(a) confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Dr M P Goldsworthy
CEO/MD
Sydney, 25 August 2022
Mr C A Roy
Chair
103
SILEX ANNUAL REPORT 2022 Independent auditor’s report
To the members of Silex Systems Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Silex Systems Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2022 and of its financial
performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
• the consolidated balance sheet as at 30 June 2022
• 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 consolidated income statement for the year then ended
• the notes to the consolidated financial statements, which include significant
accounting policies and other explanatory information
• the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial report section
of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 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 & Ethical Standards Board’s APES 110
Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
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
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T +61 2 9659 2476, F +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation
104
SILEX ANNUAL REPORT 2022 Independent auditor’s report
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on
the financial report as a whole, taking into account the geographic and management structure of the Group, its
accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
Our audit focused on where the Group made subjective
judgements; for example, significant accounting estimates
involving assumptions and inherently uncertain future
events.
The Group's operational and financial processes are
managed by a corporate function in Sydney, where
substantially all of our audit procedures are performed.
For the purpose of our audit we used overall Group materiality
of $0.47 million, which represents approximately 5% of the
Group’s loss before tax.
We applied this threshold, together with qualitative
considerations, to determine the scope of our audit and the
nature, timing and extent of our audit procedures and to
evaluate the effect of misstatements on the financial report
as a whole.
We chose Group loss before tax because, in our view, it is the
benchmark against which the performance of the Group is
most commonly measured.
We utilised a 5% threshold based on our professional
judgement, noting it is within the range of commonly
acceptable thresholds.
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
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T +61 2 9659 2476, F +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation
105
SILEX ANNUAL REPORT 2022
Independent auditor’s report
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 for the current period. The key audit matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. Further, any commentary on the outcomes of a particular audit procedure is made in that context. We
communicated the key audit matters to the Audit and Risk Committee.
Key audit matter
How our audit addressed the key audit matter
Recoverable project costs
(Refer to note 3)
Our audit procedures included:
Project costs incurred by Silex Systems
Limited in relation to the Uranium
Enrichment Project (“UEP”) are
recharged to GLE.
We considered this matter a key audit
matter due to the magnitude of the
revenue, and the judgemental nature
of determining which expenses can be
recharged.
considering the Group’s accounting policy in line with the Australian Accounting
Standards;
developing an understanding and evaluating key controls over the revenue to
receivables business process;
for a sample of revenue transactions, obtaining source documents, evidencing cash
receipts, assessing that the costs incurred were recognised in the right period and
eligible to be recharged;
evaluating the related financial statement disclosures for consistency with Australian
Accounting Standards requirements.
Other information
The directors are responsible for the other information. The other information comprises the information included
in the annual report for the year ended 30 June 2022, but does not include the financial report and our auditor’s
report thereon. Prior to the date of this auditor’s report, the other information we obtained included the Company
Directory, Forward Looking Statements and Risk Factors, Directors’ report, Corporate Governance Statement and
Shareholders’ information.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
When we read the other information not yet received, if we conclude that there is a material misstatement therein,
we are required to communicate the matter to the directors and use our professional judgement to determine the
appropriate action to take.
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
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T +61 2 9659 2476, F +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation
106
SILEX ANNUAL REPORT 2022 Independent auditor’s report
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true and
fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf.
This description forms part of our auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 32 to 49 of the directors’ report for the year ended 30
June 2022.
In our opinion, the remuneration report of Silex Systems Limited for the year ended 30 June 2022 complies with
section 300A of the Corporations Act 2001.
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
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T +61 2 9659 2476, F +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation
107
SILEX ANNUAL REPORT 2022 Independent auditor’s report
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
Aishwarya Chandran
Partner
PricewaterhouseCoopers
Sydney
25 August 2022
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
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T +61 2 9659 2476, F +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation
108
SILEX ANNUAL REPORT 2022 Shareholders’ information
Information relating to shareholders as at 12 August 2022
(a) Distribution of equity securities
Holding
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Class of equity security: Ordinary
Shares
Options
Performance rights
No. of
holders
% of
shares
No. of
holders
% of
options
No. of
holders
% of
rights
2,503
2,683
817
1,145
235
0.62%
3.48%
3.08%
16.90%
75.92%
-
-
-
16
8
24
-
-
-
-
-
-
-
-
-
26.67%
21
39.63%
73.33% 1
60.37%
100.00%
22
100.00%
Total number of holders
7,383
100.00%
There were 519 holders of less than a marketable parcel of ordinary shares.
(b) Names of twenty largest quoted equity security holders as at 12 August 2022
Name
Jardvan Pty Ltd
McCusker Holdings Pty Ltd
Majenta Holdings Pty Ltd
HSBC Custody Nominees (Australia) Limited
Polly Pty Ltd
Hillboi Nominees Pty Ltd
Citicorp Nominees Pty Limited
Sachem Cove Special Opportunities Fund LP
Throvena Pty Ltd
Spar Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Pty Limited
Hamlac Pty Ltd
Mr Christopher David Wilks
Silicon Quantum Computing Pty Ltd
National Nominees Limited
Quintal Pty Ltd
BNP Paribas Noms Pty Ltd
Sporran Lean Pty Ltd
BNP Paribas Nominees Pty Ltd
Number of
securities
29,801,030
Percentage held
14.54%
8,000,000
5,703,923
4,127,002
4,073,863
4,039,835
3,488,628
3,118,965
2,978,203
2,863,234
2,765,256
2,537,087
2,525,937
2,405,070
2,300,000
2,088,935
2,002,952
1,828,389
1,791,000
1,776,585
3.90%
2.78%
2.01%
1.99%
1.97%
1.70%
1.52%
1.45%
1.40%
1.35%
1.24%
1.23%
1.17%
1.12%
1.02%
0.98%
0.89%
0.87%
0.87%
90,215,894
44.01%
109
SILEX ANNUAL REPORT 2022
Shareholders’ information
Information relating to shareholders as at 12 August 2022
(c) Substantial holders
Name
Jardvan Pty Ltd
(d) Voting rights
Number of
securities
29,801,030
Percentage held
14.54%
The voting rights attaching to each class of equity securities are set out below:
• Ordinary shares: On a show of hands every member present at a meeting in person or by proxy shall have one
vote and upon a poll each share shall have one vote.
• Options: No voting rights.
• Performance rights: No voting rights.
(e) Securities subject to voluntary escrow as at 12 August 2022
As at 12 August 2022, shares subject to voluntary escrow were as follows:
Number of shares
Escrow period ends
263,274
28,169
118,666
28,169
100,000
100,000
31/08/2022
31/12/2022
31/08/2023
31/12/2023
22/05/2024
06/06/2024
(f) Unquoted equity securities as at 12 August 2022
Options issued under the Silex Systems Limited Employee Incentive Plan
Performance rights issued under the Silex Systems Limited Employee Incentive Plan
Number on
issue
3,600,000
807,500
Number of
holders
24
22
110
SILEX ANNUAL REPORT 2022 Company directory
Directors
Mr C A Roy | Chair
Dr M P Goldsworthy | CEO/MD
Ms H G Cook
Mr C D Wilks
People & Remuneration
Committee
Mr C A Roy | Chair
Ms H G Cook
Mr C D Wilks
Audit Committee
Mr C D Wilks | Chair
Ms H G Cook
Mr C A Roy
Company Secretary
Ms J E Ducie
Registered Office and
Principal Place of
Business
Building 64, Lucas Heights
Science & Technology Centre
New Illawarra Road
Lucas Heights NSW 2234, Australia
Postal address:
PO Box 75, Menai Central
NSW 2234, Australia
P +61 2 9704 8888
F +61 2 9704 8851
E
W www.silex.com.au
investor.relations@silex.com.au
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
E web.queries@computershare.com.au
W www.computershare.com.au
Stock Exchange
Listed on the Australian Stock
Exchange, Ticker: SLX
Listed on the OTCQX International,
Ticker: SILXY
Auditors
PricewaterhouseCoopers
Solicitors
Dentons Australia Limited
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
www.silex.com.au