Strategic
Elements
Annual Report
30 June 2020
(ABN 47 122 437 503)
For personal use only Table of Contents
Strategic Elements Limited
Corporate information
Directors’ report
Remuneration report (Audited)
Auditor’s independence declaration
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors’ declaration
Independent auditor’s report
Additional securities exchange information
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Corporate Information
Strategic Elements Limited
ABN 47 122 437 503
Directors
Charles Murphy
Matthew Howard
Elliot Nicholls
Company Secretary
Matthew Howard
Registered Office
138 Churchill Avenue
Subiaco WA 6008
Tel:
Fax:
Web: www.strategicelements.com.au
+61 8 9278 2788
+61 8 9288 4400
Page 2
Solicitors
HFW
Level 15, Brookfield Place – Tower 2
123 St George’s Terrace
Perth WA 6000
Auditors
Nexia Perth Audit Services Pty Ltd
Level 3, 88 William Street
Perth WA 6000
Securities Exchange Listing
ASX Limited
ASX Code: SOR
Share Register
Automic Group
Level 2, 267 St George’s Terrace
Perth WA 6000
Tel:
www.automicgroup.com.au
1300 288 664
For personal use only
Directors’ Report
Strategic Elements Limited
Your directors have pleasure in submitting their report, together with the financial statements on the consolidated entity (referred to
hereafter as the “consolidated entity” or the “Group”) consisting of Strategic Elements Limited (referred to hereafter as the “company”
or “parent entity”) and the entities it controlled at the end of, or during the year ended 30 June 2020.
Directors
The names of directors who held office during or since the end of the financial year and until the date of this report are as follows.
Names, qualifications and experience:
Charles Murphy - Managing Director & Acting Chairman
Mr Murphy led the Company’s registration as a Pooled Development Fund.
Mr Murphy has significant experience as an advisor to resources and technology companies on IP development, strategy, business
development, transaction structuring and capital raising. Mr Murphy is a qualified responsible Fund Manager and has a Masters Degree
in Business Administration (MBA). Mr Murphy is not currently a director of any other Australian listed company and has not held any
other directorships in listed companies during the last 3 years.
Mr Murphy was appointed to the board in October 2006 and as acting Chairman from September 2015.
Matthew Howard - Executive, Director and Company Secretary
Mr Howard has consulted to some of the largest financial institutions including Goldman Sachs, JB Were, Macquarie Bank, ANZ Bank and
National Australia Bank.
He has helped close numerous large technology transactions with some of the largest US technology companies including Oracle, Sybase
and BEA Systems. Mr Howard has a combined Business and Information Technology Bachelor Degree, a Masters Degree in Applied
Finance and a postgraduate qualification in Corporate Governance.
Mr Howard is not currently a director of any other Australian listed company and has not held any other directorships in listed companies
during the last 3 years. Mr Howard was appointed to the board in December 2008.
Elliot Nicholls - Executive Director
Mr Nicholls has worked in corporate advisory focusing on financial analysis and business model development.
Mr Nicholls has a Bachelor of Electronic Engineering with First Class Honours and a Bachelor of Commerce (Finance) from The
University of Western Australia. Mr Nicholls is not currently a director of any other Australian listed company and has not held any
other directorships in listed companies during the last 3 years.
Mr Nicholls was appointed to the board in January 2009.
Directors were in office for this entire period.
Interests in the shares and options of the Company and related bodies corporate
There are no unissued ordinary shares under options issued to employees/consultants of the Company as at the date of this report.
As at the date of this report, the interests of the directors in the shares and options of the Company were:
Director
C Murphy
M Howard
E Nicholls
Dividends
Number of fully paid.
ordinary shares.
19,942,969
8,055,192
9,600,000
Performance Rights.
3,500,000
3,500,000
1,500,000
No dividends have been paid or declared since the start of the financial year and the directors do not recommend the payment of a
dividend in respect of the financial year.
Principal activities
The Company is a registered Pooled Development Fund (PDF).
Page 3
For personal use only
Directors’ Report
About Strategic Elements
Strategic Elements Limited
The Australian Federal Government has registered Strategic Elements as a Pooled Development Fund with a mandate to back
Australian innovation. Strategic Elements generates high risk – high reward ventures and projects from combining teams of leading
scientists or innovators in the technology or resources sectors. The Company has developed a differentiated approach of identifying
and negotiating opportunities in the Australian innovation sector. As the Company is registered under the Australian Government’s
Pooled Development Fund Act 1992 (“PDF Act”) most shareholders have the opportunity to pay no tax on capital gains or dividends.
About Stealth Technologies (Stealth) – 100% Owned
Company Formation and Launch
In July 2019 Strategic Elements launched robotics and artificial intelligence Company ‘Stealth Technologies’. Strategic Elements
actively sourced and developed an experienced in-house team of international award winning PhD and Masters qualified research
engineers with deep capabilities in artificial intelligence, computer vision and robotics (hardware and software) for Stealth
Technologies. During the year the team was augmented by members of Strategic Elements Ltd and key advisors who have expertise
in complex data analytics, software development, commercialisation and business development with large multi-national corporates.
Technology Development
During the year Stealth commenced development of an automated robotics software and hardware platform that can be adapted to
different sizes of mobile vehicles and physical tasks (AxV). The first product release from the platform was also commenced in the same
period in the form of the Autonomous Security Vehicle (ASV) for Perimeter Security.
Autonomous Security Vehicle Development
Perimeter intrusion detection systems (PIDS) are used in an external environment to detect the presence of an intruder attempting to
breach a perimeter. Government regulations to improve perimeter security and curb infiltration as well as pandemic and terrorist activities
are providing lucrative growth opportunities to vendors of perimeter intrusion detection systems. PIDS are an important part of an overall
security solution, especially for critical locations and the market is projected to reach USD 21.75 Billion by 2023 (MarketandMarkets).
PIDS testing is a physical, manual process required to be completed regularly by humans to ensure PIDS are functioning properly and
will detect intrusion attempts. However PIDS testing is a mundane and repetitive task that can use significant human resources as facility
perimeters often span stretches of numerous kilometres and can be infeasible to test manually, leaving facilities open to undetected
intrusions through untested perimeters. Human interaction can also cause damage during testing.
During the year Stealth developed custom robotics built on top of its autonomous mobile platform to solve these problems, enabling
fully automated PIDS testing 365 days a year, 24 hours a day including at night. This enables the testing of multiple technologies including
microphonics, microwave, buried electromagnetic cable and photoelectric beams. PIDS technologies are deployed across vast numbers
of facilities worldwide that could potentially benefit from fully automated physical testing that the Stealth technology can provide to
increase security and reliability without increasing operating costs.
Autonomous Security Vehicle Collaboration
During the year Stealth formed a collaboration with US Company ‘Honeywell’ to build experimental autonomous robotic vehicles for the
Correctional Justice sector (primarily prisons). Honeywell is a Fortune 100 technology company that delivers industry specific solutions
that include aerospace products and services; control technologies for buildings and industry; and performance materials globally.
Honeywell operates total asset and facility management operations globally across a range of market segments including Justice,
Commercial, Health, Defence and Hospitality.
Eastern Goldfields Regional Prison
During the year the parties announced a further collaboration to create a fully autonomous security vehicle for the Eastern Goldfields
Regional Prison. A presentation was subsequently made by representatives from Stealth Technologies the WA Department of Justice and
Honeywell Building Technologies (part of U.S. Fortune 100 company Honeywell) to a global Honeywell user group forum. The parties are
working to research and develop a fully autonomous security vehicle to inspect, test and confirm the integrity of the secure perimeter
and enable these inspections to be carried out with no human intervention while integrating seamlessly into the existing technology
stack in place at the Eastern Goldfields Regional Prison.
Page 4
For personal use only Directors’ Report
Strategic Elements Limited
Honeywell EBI Integration
Through the year development was conducted to enable real-time integration with Honeywell Enterprise Buildings Integrator. The EBI
helps connect, monitor and manage core building functions and is a solution with thousands of EBI systems deployed globally. Honeywell
Building Technologies is a global business with more than 23,000 employees and creates products, software and technologies found in
more than 10 million buildings worldwide. The Honeywell Pacific Apps team is working with Stealth to build an interface between their
Security Management System (SMS) and the autonomous security vehicle for a) alarm activation and acknowledgement between the
SMS and the vehicle b) streaming live video to the SMS operators and two way voice communication and c) realtime location and status
information of the vehicle providing greater situation awareness.
Autonomous Perimeter Security and Surveillance – Outside Honeywell Collaboration
Under the collaboration Stealth has provided Honeywell with exclusivity for the correctional justice sector. Stealth can market
independently to sectors such as transport, energy, defence, government and utilities providing critical services. Perimeter security
enables security to protect employees and assets from unauthorized intrusion in sensitive areas. Opportunities for Stealth include PIDS
testing and patrol and surveillance. The Global Perimeter Security Market is forecast to be growing quickly at CAGR of 12.0% over the
forecast period 2020-2026 (reaching USD 282.26 Billion by 2025) (MarketandMarket).
Advancing Multiple Collaborations
During the year Stealth successfully signed a collaboration agreement with the University of Western Australia on Autonomous Vehicle
technology. The collaboration was subsequently successful in winning approx. $500,000 in funding from the Federal Government. Stealth
Technologies actively continued seeking collaborations with leading research institutes and experts to develop proprietary technologies
and deliver innovative solutions. Strategic Elements is leveraging its networks and experience in the innovation sector to access new
technologies in automation, robotics and artificial intelligence (including computer vision) for Stealth Technologies.
Multiple Patents Filed
During the year Stealth filed multiple patents over new developments of its autonomous robotics platform. The Stealth Autonomous
Robotics Platform (AxV) is designed for rugged and remote environments. As such, robotic vehicles are designed to operate autonomously
in the absence of people for extended periods. Two patent applications cover low cost solutions developed by Stealth Technologies
that greatly increase reliability and mitigates against system failures in autonomous robotic vehicles. A third patent application covers
robots designed to automate perimeter security intrusion detection systems. Intellectual Property covered by the patents has potential
commercial use in security, mining and agriculture.
Page 5
For personal use only Directors’ Report
Strategic Elements Limited
Development of Drone Integration
Additionally during the year Stealth Technologies commenced expanding the AxV plaform by incorporating airborne drone functionality
with its ground based autonomous and robotic vehicle platform. In sectors such as security, defence agriculture and mining drones can
augment ground based technologies to provide additional range and coverage through multi-angle video and fusion of extra sensor data
(e.g thermal, LiDAR).
About Australian Advanced Materials (AAM) – 100% Owned
The Nanocube Memory Ink is a transparent ink containing billions of nanometre scale particles. When printed onto a surface and
assembled with electrodes they operate as computer memory. Current memory technology is restricted to RF sputtering onto more rigid
silicon materials in semiconductor fabs. Whereas the Nanocube technology is a fully printed, transparent memory technology fabricated
at room temperature onto non-silicon materials.
World First Printable Transparent Demonstrator
During the year, Australian Advanced Materials showcased a world first prototype application built with the Nanocube Memory Ink. This
prototype was modelled around an access control system, where a user’s access credentials were authenticated against a glass substrate
which had been coated with the Nanocube Memory Ink. The prototype demonstrated the capabilities of new material properties utilised
in Printed Electronics by bringing together touch, display and data storage onto a transparent substrate.
During the year the Company presented its Nanocube technology demonstrator to a group in Finland which included the CEO of IDtechX
a global leader in printed electronics. IDtechX is the industry leading strategy, research and consulting firm with multi-billion dollar
companies as clients. IDtechX CEO Mr Raghu Das is renowned for assisting high growth emerging technologies large and small, from
Fortune 50 companies to start-ups and has lectured at over 500 technology events around the World.
Commenting on the Nanocube technology demonstrator CEO Raghu Das stated “I genuinely think it’s one of the best developments I’ve
seen in a while in printed electronics.” Mr Das personally offered the Company the opportunity to speak and demonstrate at its high
growth emerging technologies event in Berlin that will attract over 2,500 attendees including some of the world’s largest companies. The
event is being rescheduled due to the impact of the Coronavirus.
Not being able to work with partners overseas and physically show the demonstrator due to the Coronavirus was disappointing,
however, throughout the remainder of the year the Company established a method to receive significant external funding.
Page 6
For personal use only Directors’ Report
Strategic Elements Limited
Significant Funding Gained Through Collaboration
During the remainder of the year AAM focused on conducting research and development that would enable it to enter into a collaboration
with further funding and resources. The Company worked with its partners at the University of New South Wales and CSIRO to generate
a significant collaboration into new electronic materials for a wide range of uses in flexible electronics and significant advances in energy
efficient data storage devices. Funding was successfully secured subsequent to the year including $320,000 in cash from the Australian
Research Council Linkage and $414,000 in-kind from UNSW, as announced on 30 July 2020. Total budget for the collaborative project is
$1,069,000 and all importantly IP and commercialisation rights remain with AAM.
The collaboration enables AAM to have access to equipment, including analytical and EM facilities located at the UNSW Analytical
Centre, fabrication facilities located at the Australian National Fabrication Facility node at UNSW and via proposals to major facilities such
as CSIRO, the Australian Synchrotron and ANSTO. In particular, CSIRO Manufacturing research is based on multi-disciplinary scientific and
engineering capabilities and uses world-class infrastructure. AAM has also gained access to state-of-the-art Australian Supercomputer
facilities, including the National Computational Infrastructure (Raijin) and Pawsey Supercomputer Centre (Magnus) through the National
Computational Merit Allocation Scheme and Pawsey Energy and Resources Merit Allocation Scheme.
About Maria Resources - 100% owned
During the year two holes were drilled by Maria Resources, BH01 and BH01, targeting a buried approx. 7km diameter circular gravity
anomaly in the Officer Basin of Western Australia. The origin of the regional magnetics and local gravity anomaly is unknown. A range of
origins can be hypothesized, including meteorite impact crater, an igneous intrusion, or a salt dome.
An Induced Polarization (IP) survey analysed by Southern Geoscience Consultants indicated a broad sub-horizontal layering at 300 to
400m with chargeabilities increasing with depth. Possible geological explanations of the broad chargeable zones include widespread
sub horizontal weakly to moderately sulphidic ± graphitic sediments or large scale intrusive or alteration systems containing widespread
sulphides (2-5%). Two diamond holes were drilled into the southern edge of the circular feature in December 2019 with BH01 and BH02
drilled to 561.6m and 615.2m respectively. Analysis of the drill cores and subsequent modelling indicated the potential anomalies were
deeper than previously modelled.
BH01 and BH02 were the first mineral exploration drill holes in an adjacent area of over 100,000 square kilometres since the 1980’s. Direct
geophysical measures taken from the physical drill cores have yet to provide sufficient explanation for the gravity and IP chargeability
anomalies. The Behemoth drilling was conducted in the most economic manner feasible and was majority funded through $150,000
from a WA government grant, $150,000 from the sale of a gold project and the 43% research and development rebate. The permit is in
good standing and we are not required to make any significant further expenditure until December 2021.
Maria Resources is the recipient of an WA Govt. Exploration Incentive Scheme (EIS) for the Leviathan project. The EIS grant provides for
$150,000 in matched funding to be utilised toward drilling costs at Leviathan. Maria Resources is currently reviewing technical aspects
of the program before committing to drilling.
About Strategic Materials – 100% owned
Strategic Materials holds permits over the entire historic Golden Blocks Mines permit in New Zealand. Technical papers show the
structural similarities of the Golden Blocks goldfield and the Reefton goldfield. One of the mines (Aorangi) produced 26,000oz of gold
at a recovered grade of 36g/t and an estimated insitu grade of 59g/t, making it one of the highest-grade producing gold mines in New
Zealand. Mining within the Golden Blocks goldfield prematurely ceased in 1914 due to the war, water containment challenges and
labour shortages. Unlike other mines in New Zealand and Australia, which had substantial development work with modern technology
after the war, the Golden Blocks goldfield remained privately owned and completely untouched. This was the case until the Company
re-invigorated exploration in 2012, conducting numerous exploration programs with technical experts from New Zealand and Australia.
During the year, Strategic Materials has been evaluating the environmental footprint of future exploration, principally around drilling,
within Golden Blocks. This evaluation has been undertaken for the purposes of informing the Company and stakeholders and will be
formally completed in 2020. Strategic Materials remains focused on resuming fieldwork as soon as practically possible and execute its
strategy of bringing modern exploration technology to historic mines.
Page 7
For personal use only Directors’ Report
Review of Operations
Strategic Elements Limited
Corporate
On 27 September 2019 shareholders approved the issue of 8,500,000 Performance Rights to Directors under the Strategic Elements
Performance Rights Plan. The total expense recognised in the year for share-based payments is $143,485 (2019: $44,894).
Operating result for the year
As the group is in the research and development stage it only generates minor revenues. The consolidated entity’s loss for the year
ended 30 June 2020 was $2,547,826 (year ended 30 June 2019: $1,980,372). The loss mainly reflects the research and development
activities of the Group as well as administration costs.
Review of financial condition
At 30 June 2020, the consolidated entity had $2,270,149 in cash and term deposit balances (30 June 2019: $2,390,475).
Significant changes in the state of affairs
In the opinion of the directors there were no significant changes in the state of affairs of the consolidated entity that occurred during
the year.
Significant events after balance date
The impact of the Coronavirus (COVID-19) pandemic is ongoing and whilst it has had no financial impact for the group up to 30 June 2020,
it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing
and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing
requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
Other than the above, no matters or circumstances have arisen since the end of the financial year which significantly affected or may
significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated
entity in future financial years.
Likely developments and expected results
Disclosure of information regarding likely developments in the operations of the consolidated entity in future financial years and the
expected results of those operations has been made in the Review of Operations above.
Environmental legislation
With respect to its environmental obligations regarding its exploration activities the consolidated entity endeavours to ensure that
it complies with all regulations when carrying out any exploration and evaluation activities and is not aware of any environmental
legislation breach at this time.
Indemnification and insurance of Directors and Officers
The Company has entered into Director and Officer Protection Deeds (“Deed”) with each Director and the Company Secretary (“Officers”).
Under the Deed, the Company indemnifies the relevant Officer to the maximum extent permitted by law against legal proceedings and
any damage or loss incurred in connection with the Officer being an officer of the Company. The Company has paid insurance premiums
to insure the Officers against liability arising from any claim against the Officers in their capacity as officers of the Company.
Page 8
For personal use only Directors’ Report
Strategic Elements Limited
Remuneration Report (Audited)
This report outlines the remuneration arrangements in place for the key management personnel (“KMP”) of Strategic Elements Limited
(the “Company”) for the financial year ended 30 June 2020. The information provided in this remuneration report has been audited
as required by Section 308 (3C) of the Corporations Act 2001. The remuneration report details the remuneration arrangements for key
management personnel who are defined as those persons having authority and responsibility for planning, directing and controlling
the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the
Parent Company.
Key Management Personnel
-
-
-
Charles Murphy (Managing Director & Acting Chairman)
Matthew Howard (Executive Director)
Elliot Nicholls (Executive Director)
Remuneration philosophy
The performance of the Company depends upon the quality of the directors and executives. The philosophy of the Company in
determining remuneration levels is to:
a) set competitive remuneration packages to attract and retain high calibre employees
b) link executive rewards to shareholder value creation; and
c) establish appropriate, demanding performance hurdles for variable executive remuneration.
Remuneration Committee
The Board as a whole is responsible for the remuneration arrangements for Directors and executives of the Company and considers it
more appropriate to set aside time at Board meetings each year to specifically address matters that would ordinarily fall to a remuneration
committee.
Remuneration structure
In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration is separate
and distinct.
Non-executive director remuneration
The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors of the
highest calibre, whilst incurring a cost that is acceptable to shareholders. The ASX Listing Rules specify that the aggregate remuneration
of non-executive directors shall be determined from time to time by a general meeting. The maximum aggregate payable to non-
executive directors approved by shareholders is $100,000 per annum.
Director and executive remuneration
Remuneration consists of fixed remuneration and variable remuneration (comprising short-term and long-term incentive schemes).
Fixed remuneration
Fixed remuneration is reviewed annually by the Board. The process consists of a review of relevant comparative remuneration in the
market and internally and, where appropriate, external advice on policies and practices. The Board has access to external, independent
advice where necessary. No advice has been obtained during the year. Directors and executives are given the opportunity to receive their
fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as motor vehicles and expense payment plans.
It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Company. The
fixed remuneration component of the most highly remunerated Company directors and executives is detailed in Table 1 in this report.
Variable remuneration
The objective of the short-term incentive program is to link the achievement of the Company's operational targets with the remuneration
received by the executives charged with meeting those targets.The total potential short-term incentive available is to be set at a level so
as to provide sufficient incentive to the executive to achieve the operational targets and such that the cost to the Company is reasonable
in the circumstances. Actual payments may be granted to each executive dependent on the extent to which specific operating targets
set at the beginning of the financial year are met. The Company may also make payments to reward senior executives in a manner that
aligns remuneration with the creation of shareholder wealth.
Page 9
For personal use only Directors’ Report
Remuneration Report (Audited) (continued)
Strategic Elements Limited
Employee Share Option Plan
Under the terms of the Company’s employee share option plan (Plan), the Board may offer options to Eligible Persons or Directors of
the Company or any subsidiary based on a number of criteria including contribution to the Company, period of employment, potential
contribution to the Company in future and other factors the Board considers relevant. Upon receipt of such an offer, the Eligible Person
may nominate an associate to be issued with the options. The maximum number of options to be issued under the Plan at any one
time is 5% of the total number of shares on issue in the Company provided that the Board may increase this percentage, subject to the
Corporations Act and the ASX listing rules. The Company does not have a policy for key management personnel to hedge their equity
positions against future losses.
Executive Service Agreements
Mr Murphy, Nicholls and Howard comprise three of the four fulltime staff of Strategic Elements and provide services such as ASX
company secretarial, technical development, business development, corporate, marketing, project management whilst managing
teams of consultants across various projects and fulfilling board positions to four subsidiary companies. The Company has entered into
Executive Service agreements with the following directors:
Mr Charles Murphy (Managing Director & Acting Chairman)- Under the agreement the Company will pay up to a maximum of $280,000
per annum (exclusive of GST) in return for executive services and will provide reimbursement for all reasonable travel, accommodation
and general expenses. Payments are inclusive of superannuation. Termination by the Company is no less than a 3 month notice period
by either party or by paying the aggregate of amounts which, but for such termination, would otherwise have been paid. In addition to
this a 3 month termination payment will be paid.
Mr Matthew Howard (Director) - Under the agreement the Company will pay up to a maximum of $210,000 per annum (exclusive of GST) in
return for executive services and will provide reimbursement for all reasonable travel, accommodation and general expenses. Payments are
inclusive of superannuation. Termination by the Company is no less than a 3 month notice period by either party or by paying the aggregate
of amounts which, but for such termination, would otherwise have been paid. In addition to this a 3 month termination payment will be paid.
Mr Elliot Nicholls (Director) - Under the agreement the Company will pay up to a maximum of $190,000 per annum (exclusive of GST), in
return for executive services and will provide reimbursement for all reasonable travel, accommodation and general expenses. Payments
are inclusive of superannuation. Termination by the Company is no less than a 3 month notice period by either party or by paying the
aggregate of amounts which, but for such termination, would otherwise have been paid.
Page 10
For personal use only Directors’ Report
Strategic Elements Limited
Remuneration Report (Audited) (continued)
Table 1: Remuneration of key management personnel (KMP) for the year ended 30 June 2020 and the year ended 30 June 2019:
Short-term employee benefits
Post-
employment
benefits
Equity
Fixed Salary &
fees
Variable
remuneration
Superannuation
Performance
Rights Shares
Options
Total
Performance
Related %
Executive
directors
Charles Murphy
2020
265,000
15,000
2019
265,000
25,000
Matthew Howard
2020
195,000
15,000
2019
195,000
25,000
Elliot Nicholls
2020
174,800
15,000
2019
149,800
5,000
Total executive
2020
634,800
45,000
directors
2019
609,800
55,000
-
-
-
-
-
-
-
-
66,812
22,447
66,812
22,447
9,861
-
143,485
44,894
-
-
-
-
-
-
-
-
346,812
19.26
312,447
7.18
276,812
24.14
242,447
199,661
154,800
9.26
4.94
-
823,285
17.43
709,694
6.33
Share-based payments
Performance Rights
There were 8,500,000 Performance Rights issued during the year.
The total expense recognised in the year for share-based payments is $143,485 (2019: $44,894).
No Performance Rights vested or expired during the year.
------------------------------------------END OF RENUMERATION REPORT-----------------------------------------
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For personal use only Directors’ Report
Directors’ meetings
Strategic Elements Limited
The directors meet regularly to discuss the matters of the Company and occupy the same office therefore decisions of the Company are
frequently resolved via circular resolution. The Company aims however to have quarterly Board meetings. The directors met quarterly
during the year.
The number of meetings of directors held during the year and the number of meetings attended by each director were as follows:
Director
Board Meetings
Number of meetings eligible to attend
Number of meetings attended
Charles Murphy
Matthew Howard
Elliot Nicholls
41
41
41
41
41
41
Auditor Independence and Non-Audit Services
Section 307C of the Corporations Act 2001 requires our auditors, Nexia Perth Audit Services Pty Ltd (Nexia Perth), to provide the directors
of the Company with an Independence Declaration in relation to the audit of the financial report. This Independence Declaration is set
out on page 13 and forms part of this directors’ report for the year ended 30 June 2020.
Non-Audit Services
The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The directors are of the opinion that the services do not compromise the auditor’s independence
as all non-audit services have been reviewed to ensure that they do not impact the integrity and objectivity of the auditor and none of
the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES110 Code of Ethics
for Professional Accountants issued by the Accounting Professional & Ethical Standards Board.
Nexia Perth received, or were due to receive, the following amounts for the provision of services not related to the audit of the financial
report:
Audit of Australian Financial Services Licence (AFSL) - $3,500 (2019: $3,500)
Signed in accordance with a resolution of the directors.
Charles Murphy
Managing Director
Perth WA, 25th August 2020
Page 12
For personal use only Lead auditor’s independence declaration under section 307C of the
Corporations Act 2001
To the directors of Strategic Elements Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial
year ended 30 June 2020 there have been:
(i)
no contraventions of the auditor’s independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
Nexia Perth Audit Services Pty Ltd
M. Janse Van Nieuwenhuizen
Director
Perth
25 August 2020
For personal use only
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the Year Ended 30 June 2020
Continuing operations
Contract revenue
Cost of sales of goods
Gross profit
Other income
Depreciation
Insurances
Marketing
Professional fees
Project development expenditure
Regulatory & compliance
Remuneration
Other employees’ costs
Rent & outgoings
Share-based payments
Other expenses
Operating profit
Foreign exchange losses
Interest received
Interest expense
Loss before income tax
Income tax expense
Loss for the year
Other comprehensive income
Items that will never be reclassified to profit or loss
Items that are or may be reclassified to profit or loss
Total other comprehensive income
Total comprehensive loss
Basic and diluted loss per share (cents per share)
The accompanying notes form part of these financial statements.
Page 14
Strategic Elements Limited
CONSOLIDATED
2020
$
244,500
(61,728)
182,772
812,116
(8,550)
(62,218)
(167,693)
(216,086)
(1,512,459)
(74,615)
(679,800)
(495,432)
(48,928)
(143,485)
(154,066)
2019
$
51,250
-
51,250
406,505
(7,911)
(29,622)
(17,789)
(101,608)
(943,832)
(55,091)
(664,800)
(363,780)
(57,546)
(44,894)
(204,416)
(2,568,444)
(2,033,534)
(4,607)
29,042
(3,817)
20,618
(1,896)
57,292
(2,234)
53,162
(2,547,826)
(1,980,372)
-
-
(2,547,826)
(1,980,372)
-
-
-
-
-
-
(2,547,826)
(0.96)
(1,980,372)
(0.81)
Note
1(f)
2(a)
2(b)
23(b)
10
2(a)
2(a)
3
4
For personal use only Consolidated Statement of Financial Position
Strategic Elements Limited
As at 30 June 2020
CONSOLIDATED
2020
$
Note
2019
$
5
6
7
8
9
11
12
14
15
16
2,270,149
2,390,475
111,270
41,960
40,000
39,366
-
23,120
2,460,785
2,455,555
23,368
23,368
31,918
31,918
2,484,153
2,487,473
203,674
47,841
251,515
251,515
162,538
21,676
184,214
184,214
2,232,638
2,303,259
15,970,451
13,636,731
143,485
-
(13,881,298)
(11,333,472)
2,232,638
2,303,259
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Term deposit investments
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
The accompanying notes form part of these financial statements.
Page 15
For personal use only Consolidated Statement of Changes in Equity
Strategic Elements Limited
For the Year Ended at June 2020
Consolidated
Balance at 1 July 2018
Loss for the year
Total comprehensive loss for the year
Expiry of options
Expiry of Performance Rights
Share-based payments
Balance at 30 June 2019
Balance at 1 July 2019
Loss for the year
Total comprehensive loss for the year
Issues of shares for cash
Share issue costs
Share-based payments
Balance at 30 June 2020
Issued capital
Accumulated
losses
Share-based
payments
reserve
Total
Note
$
$
$
$
12,999,231
(9,375,935)
615,441
4,238,737
-
-
(1,980,372)
(1,980,372)
-
-
(1,980,372)
(1,980,372)
637,500
-
(637,500)
-
-
22,835
-
(22,835)
44,894
13,636,731
(11,333,472)
13,636,731
(11,333,472)
-
-
(2,547,826)
(2,547,826)
2,348,000
(14,280)
-
-
-
-
15,970,451
(13,881,298)
-
-
-
-
-
-
143,485
143,485
-
-
44,894
2,303,259
2,303,259
(2,547,826)
(2,547,826)
2,348,000
(14,280)
143,485
2,232,638
14
16
10
14
14
10
The accompanying notes form part of these financial statements.
Page 16
For personal use only
Consolidated Statement of Cash Flows
Strategic Elements Limited
For the Year Ended at June 2020
Cash flows from operating activities
Receipts from customers
Receipts from government grants/incentives
Payments to suppliers
Payments to directors & employees
Payments for project development
Payments for leases
Interest received
Interest paid
CONSOLIDATED
Note
2020
$
2019
$
244,500
751,142
(732,368)
62,298
395,457
(413,010)
(1,143,045)
(1,016,097)
(1,508,877)
(970,123)
(45,962)
28,990
(3,817)
-
57,292
(2,234)
Net cash used in operating activities
5
(2,409,437)
(1,886,417)
Cash flows from investing activities
Transfer to term deposit investment
Payments for property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of shares
Payments for costs of issue of shares
Net cash from investing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effects of exchange rate changes on cash and cash
equivalents
(40,000)
-
(40,000)
2,348,000
(14,280)
2,333,720
(115,717)
2,390,475
-
(1,927)
(1,927)
-
-
-
(1,888,344)
4,280,715
(4,609)
(1,896)
Cash and cash equivalents at end of the year
5
2,270,149
2,390,475
The accompanying notes form part of these financial statements.
Page 17
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 1.
Statement of Significant Accounting Policies
a.
Basis of compliance and preparation
Strategic Elements Limited
The Company is a listed Pooled Development Fund (PDF), incorporated in Australia and operating in Australia and New Zealand.
The Company’s principal activity is a Pooled Development Fund.
The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001 and Australian Accounting Standards issued by the Australian Accounting Standards Board.
The financial report complies with International Financial Reporting Standards and interpretations adopted by the International
Accounting Standards Board.
The accounting policies detailed below have been consistently applied to all of the years presented. The consolidated financial statements
of the Company as at and for the year ended 30 June 2020 comprise the Company and its subsidiaries (together referred to as the
“Group” or the “consolidated entity” and individually as “Group entities”). The financial report was authorised for issue on 25th August
2020.
The financial report has also been prepared on a historical cost basis. Cost is based on the fair values of the consideration given in
exchange for assets.
The financial report is presented in Australian dollars which is the consolidated entity’s functional currency.
b.
Application of new and revised International Financial Reporting Standards (AASBs)
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board
(the AASB) that are relevant to their operations and effective for the current year.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The following Accounting Standards and Interpretations are most relevant to the Group:
AASB 16 Leases
AASB 16 replaces AASB 117 Leases and sets out the principles for the recognition, measurement, presentation and disclosure of leases.
AASB 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of
more than 12 months unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its
right to use the underlying leased asset and a lease liability representing its obligations to make lease payments.
A lessee measures right-of-use assets similarly to other financial assets (such as property, plant and equipment) and lease liabilities
similar to other financial liabilities. As a consequence, a lessee recognises depreciation of the right-of-use asset and interest on the lease
liability, and also classifies cash repayments of the lease liability into a principal portion and presents them in the statement of cash flows
applying AASB 107 Statement of Cash Flows.
AASB 16 substantially carries forward the lessor accounting requirements in AASB 117 Leases. Accordingly, a lessor continues to classify
its leases as operating leases or finance leases.
The consolidated entity only has short term leases which, under the standard, can continue to be recognised on a straight line/systematic
basis over the lease term.
Page 18
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 1.
Statement of Significant Accounting Policies (continued)
Strategic Elements Limited
c.
New Accounting Standards and Interpretations not yet mandatory or early adopted
The Group has reviewed the new and revised Standards and Interpretations in issue not yet adopted for the year ended 30 June 2020.
As a result of this review the Group has determined that there is no significant impact of the Standards and Interpretations in issue not
yet adopted on the Group; therefore, no change is necessary to the Group’s accounting policies.
d.
Critical accounting estimates and judgements
The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets
and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based upon historical
experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The carrying amounts
of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within
the next annual reporting period are:
Share-based payment transactions:
The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at
the date at which they are granted. The fair value is determined using an appropriate valuation model and is based on the assumptions
detailed in Note 10.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the
consolidated entity based on known information. The consideration extends to the nature of the activities and geographic regions in
which the consolidated entry operates. Other than as addressed in specific notes, there does not currently appear to be either any
significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact
the consolidated entity unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
e.
Basis of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Strategic Elements Limited (‘Company’
or ‘parent entity’) as at 30 June 2020 and the results of all subsidiaries for the year then ended. Strategic Elements Limited and its
subsidiaries are referred to in this financial report as the Group or the consolidated entity.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting
policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit
and losses resulting from intra-group transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date
on which control is transferred out of the Group. Control exists where the Company has the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing when the Group controls another entity.
Page 19
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 1.
Statement of Significant Accounting Policies (continued)
Strategic Elements Limited
f.
Revenue and other income
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled in exchange
for transferring goods or services to a customer. For each contract with a customer, the consolidated entity: identifies the contract with
a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates
of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the
basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each
performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and
refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using
either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining
principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognised will not occur.
The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved.
Amounts received that are subject to the constraining principle are recognised as a refund liability.
Contract revenue
Revenue from a contract to provide services is recognised over time as the services are rendered based on either a fixed price or an
hourly rate.
The group earned $244,500 of contract revenue (2019: $51,250), $150,000 was earned from the sale of tenements (2019: $ nil). The
remaining $94,500 was earned from the provision of services. $30,000 was earned from the provision of consulting services (2019:
$21,250) and $64,500 was earned from services rendered to build experimental autonomous vehicles (2019: $ nil and $30,000 was
earned from the provision of software development services in 2019). Consulting services revenue was recognised as the services
were provided and the obligation met during the year. Revenue earned from services rendered to build experimental autonomous
vehicles and the provision of software development services revenue was recognised at points in time as the services were provided
and the obligations met in accordance with agreed milestones; a remaining $42,000 relating to services rendered to build experimental
autonomous vehicles remained outstanding at year end (2019: $ nil) and will be recognised at points in time as the services are provided
and the obligations met in accordance with agreed milestones.
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is generally at
the time of delivery.
Research and development refund
R&D refunds are a tax offset under the R&D tax incentive recognised on receipt of funds from the Australian Taxation Office for research
and development expenditure incurred in the previous financial year. They are presented in the statement of profit and loss and other
comprehensive income as other income.
Grant funding
Cash Boost, Jobkeeper and Exploration Incentive Scheme grants are recognised where there is reasonable assurance that the entity will
comply with the conditions attached to the grants and that the grants will be received.
Other income
Interest income is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.
Page 20
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 1.
Statement of Significant Accounting Policies (continued)
g.
Income tax
Strategic Elements Limited
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable
income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of
assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.
Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences at the balance date between
the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences except:
•
when the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is
not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or
loss; or
•
when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures,
and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference
will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses,
to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-
forward of unused tax credits and unused tax losses can be utilised, except:
•
when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; or
when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint
•
ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference
will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can
be utilised.
The carrying amount of deferred tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and
deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the
deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
Page 21
For personal use only
Notes to the Consolidated Financial Statements
30 June 2020
Note 1.
Statement of Significant Accounting Policies (continued)
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
Strategic Elements Limited
when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the
•
GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
•
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and
financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
h.
Cash and cash equivalents
Cash includes cash on hand and at call and deposits with banks or financial institutions and investments in money market instruments
which are readily convertible to cash and used in the cash management function on a day to day basis, net of bank overdraft.
i.
Project development expenditure
Exploration and evaluation
Project development costs, excluding the costs of acquiring tenements and permits, are expensed as incurred.
Acquisition costs will be assessed on a case by case basis and, if appropriate, they will be capitalised. These acquisition costs are carried
forward only if the rights to tenure of the area of interest are current and either:
•
They are expected to be recouped through successful development and exploitation of the area of interest, or
•
The activities in the area of interest at the reporting date have not reached a stage which permits a reasonable assessment of
the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the
area of interest, are continuing.
Accumulated acquisition costs in relation to an abandoned area are written off in full against profit/(loss) in the year in which the decision
to abandon the area is made.
The carrying values of acquisition costs are reviewed for impairment when events or changes in circumstances indicate the carrying value
may not be recoverable.
Research and development
Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only
when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured
reliably.
Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful
life of the project.
Page 22
For personal use only
Notes to the Consolidated Financial Statements
30 June 2020
Note 1.
Statement of Significant Accounting Policies (continued)
j.
Impairment of assets
Strategic Elements Limited
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any
indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of
the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value
over its recoverable amount is expensed to the statement of profit or loss and other comprehensive income.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
k.
Trade and other payables
Trade payables and other payables are carried at amortised cost using the effective interest method and represent liabilities for goods
and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged
to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months.
l.
Issued capital
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. Incremental costs directly attributable to the issue of new shares or options for the
acquisition of a new business are not included in the cost of acquisition as part of the purchase consideration.
m.
Share-based payment transactions
Equity settled transactions:
The Group may provide benefits to Officers and Directors in the form of share-based payments, whereby services are rendered in
exchange for shares or rights over shares (equity-settled transactions).
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the
date at which they are granted. The fair value of options granted is determined using an appropriate valuation model, further details of
which are given in Note 10.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the
shares of Strategic Elements Limited (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the
award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each balance date until vesting date reflects (i) the extent to which
the vesting period has expired and (ii) the Company’s best estimate of the number of equity instruments that will ultimately vest. No
adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the
determination of fair value at grant date. The statement of profit or loss and other comprehensive income charge or credit for a period
represents the movement in cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market
condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In
addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or
is otherwise beneficial to the employee, as measured at the date of modification.
Page 23
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 1.
Statement of Significant Accounting Policies (continued)
m.
Share-based payment transactions (continued)
Strategic Elements Limited
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for
the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement
award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as
described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of loss per share (see
Note 4).
n.
Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the
cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major
inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible
for capitalisation.
Depreciation is calculated on a diminishing value basis over the estimated useful life of the assets as follows:
Office equipment – 2.5 to 15 years
Computer equipment – 2.5 to 4 years
The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end.
(i) Impairment
The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being
estimated when events or changes in circumstances indicate that the carrying value may be impaired.
The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit to
which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value.
An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset
or cash-generating unit is then written down to its recoverable amount.
For plant and equipment, impairment losses are recognised in the statement of profit or loss and other comprehensive income in the
other expenses line item.
(ii) De-recognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from
its use or disposal.
Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the statement of profit or loss and other comprehensive income in the year the asset is derecognised.
Page 24
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 1.
Statement of Significant Accounting Policies (continued)
Strategic Elements Limited
o.
Employee benefits
(i) Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the
reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are measured at the
amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is
taken and are 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 period of service.
Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity
and currencies that match, as closely as possible, the estimated future cash outflows.
p.
Trade and other receivables
Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective
interest rate method, less any allowance for impairment. Trade receivables are generally due for settlement within periods ranging from
15 days to 30 days.
Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the
carrying amount directly. An impairment loss is recognised when there is objective evidence that the Group will not be able to collect all
amounts due according to the original contractual terms. Factors considered by the Group in making this determination include known
significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments
to the Group. The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present
value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term discounting is
not applied in determining the allowance.
q.
Earnings per share
Basic earnings per share is calculated as net profit/loss, adjusted to exclude any costs of servicing equity (other than dividends) and
preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit/loss, adjusted for:
costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as
•
•
expenses; and
•
ordinary shares, divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted
for any bonus element.
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential
Page 25
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 1.
Statement of Significant Accounting Policies (continued)
r.
Segment reporting
Strategic Elements Limited
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 of Strategic Elements Limited.
s.
Parent entity financial information
The financial information for the parent entity, Strategic Elements Limited, disclosed in Note 21 has been prepared on the same basis
as the consolidated financial statements, except as set out below.
(i) 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 Strategic
Elements 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.
(ii) Share-based payments
The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is
treated as a capital contribution to that subsidiary undertaking. The fair value of employee services received, measured by reference
to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a
corresponding credit to equity.
Note 2.
Revenue and Expenses
CONSOLIDATED
2020
$
2019
$
543,947
79,668
36,000
150,000
2,501
812,116
29,042
(3,817)
25,225
395,457
-
-
-
11,048
406,505
57,292
(2,234)
55,058
8,550
7,911
(a) Other income
Research and development tax offset
Cash flow boost Covid-19
Job seeker grant
Drilling grant
Sundry income
Bank interest received and receivable
Bank interest paid and payable
(b) Expenses
Depreciation of non-current assets
Page 26
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 3.
Income Tax
Strategic Elements Limited
Reconciliation of tax expense to statutory tax:
Loss for the year
Tax benefit at the applicable tax rate of 27.50% (2019: 27.50%)
s.40-880 expenses
Permanent differences
Change in temporary differences
Difference in tax rate of Parent Company taxed at 25% due to Pooled Development
Status
Underprovision/(overprovision) of prior year tax losses
Unrecognised tax losses
Tax expense reported in statement of profit and loss and
other comprehensive income
Unrecognised deferred tax assets:
Carried forward tax losses
Temporary differences
Components of deferred tax
Accrued income
Prepayments
Accruals
Provisions
Tax Losses
Unrecognised deferred tax assets
CONSOLIDATED
2020
2019
$
$
(2,547,826)
(1,980,372)
(700,652)
(544,602)
(4,854)
(21,909)
(4,488)
-
1,304
(5,430)
18,668
16,097
466,902
240,541
262,893
275,530
-
-
1,723,189
1,623,877
1,304
(5,430)
(3,300)
(4,727)
2,395
6,936
-
91
176
(5,697)
1,723,189
1,623,877
(1,724,493)
(1,618,447)
The potential deferred tax benefit of tax losses has not been recognised as an asset because recovery of tax losses is not considered
probable in the context of AASB 112 Income taxes. The benefit of these tax losses will only be realised if:
a)
deduction for the losses to be realised.
The Group entities derive future assessable income of a nature and of an amount sufficient to enable the benefit from the
- -
-
-
The Group entities comply with the conditions for deductibility imposed by the law; and
No changes in tax legislation adversely affect the Group entities in realising the benefit from the deduction for the loss.
b)
c)
Page 27
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 4.
Loss Per Share
Strategic Elements Limited
CONSOLIDATED
2020 2019
Cents per share Cents per share
Basic loss per share from continuing operations
(0.96)
(0.81)
Basic loss per share
The loss and weighted average number of ordinary shares used in the calculation of basic loss per share is as follows:
- Loss ($)
(2,547,826) (1,980,372)
- Weighted average number of ordinary shares (number) 264,899,037 244,776,345
Diluted loss per share
Diluted loss per share has not been calculated as the result is anti-dilutive in nature.
Note 5.
Cash and Cash Equivalents
CONSOLIDATED
2020
$
2019
$
2,270,149
2,270,149
2,390,475
2,390,475
Cash at bank and on hand
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Page 28
For personal use only
Notes to the Consolidated Financial Statements
30 June 2020
Note 5.
Cash and Cash Equivalents (continued)
Strategic Elements Limited
Cash and cash equivalents as shown in the statement of cash flows is reconciled to the related item in the statement of financial
position as noted above.
Reconciliation of loss for the year to net cash flows from operating activities:
CONSOLIDATED
2020
$
2019
$
Loss from ordinary activities after income tax
(2,547,826)
(1,980,372)
Depreciation
Foreign exchange losses
Losses on disposal of plant and equipment
Share-based payments
Changes in working capital:
(Increase)/decrease in other receivables
(Increase)/decrease in other assets
(Decrease)/increase in trade creditors and accruals
(Decrease)/increase in provisions
Cash flows from operations
Note 6.
Trade and Other Receivables
8,550
4,607
-
143,485
(69,310)
(16,246)
41,138
26,165
7,911
1,896
1,635
44,894
5,752
7,192
2,999
21,676
(2,409,437)
(1,886,417)
CONSOLIDATED
Interest receivable
Government grants available
Sundry receivable
GST recoverable
Page 29
2020
2019
$
$
52
58,473
-
52,745
111,270
-
-
3,422
38,538
41,960
For personal use only
Notes to the Consolidated Financial Statements
30 June 2020
Note 7.
Term Deposit Investment
Strategic Elements Limited
CONSOLIDATED
2020
2019
$
$
Term deposit
40,000
-
The term deposit investment has a term of 12 months and attracts an interest rate of 1%.
Note 8.
Other Current Assets
CONSOLIDATED
2020
Prepayments
Other current assets
$
38,679
687
39,366
2019
$
22,433
687
23,120
Page 30
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 9.
Property, Plant and Equipment
Strategic Elements Limited
Office
equipment
Computer
equipment
$
$
Total
$
38,308
(16,247)
22,061
38,308
(15,812)
22,496
26,264
(24,957)
1,307
26,264
(16,842)
9,422
Office
equipment
Computer equipment
Total
$ $ $
22,496
-
(435)
22,061
27,947
1,927
(1,256)
(6,122)
22,496
9,422
-
(8,115)
1,307
11,590
-
(379)
(1,789)
9,422
64,572
(41,204)
23,368
64,572
(32,654)
31,918
31,918
-
(8,550)
23,368
39,537
1,927
(1,635)
(7,911)
31,918
Consolidated
At 30 June 2020
Cost
Accumulated depreciation
At 30 June 2020 net of accumulated depreciation
At 30 June 2019
Cost
Accumulated depreciation
At 30 June 2019 net of accumulated depreciation
Consolidated
Consolidated
Year ended 30 June 2020
Year ended 30 June 2020
At 1 July 2019 net of accumulated depreciation
Additions
Depreciation charge for the year
At 30 June 2020 net of accumulated depreciation
Year ended 30 June 2019
At 1 July 2018 net of accumulated depreciation
Additions
Write offs
Depreciation charge for the year
At 30 June 2019 net of accumulated depreciation
Page 31
For personal use only
Notes to the Consolidated Financial Statements
30 June 2020
Note 10.
Share Based Payments
Strategic Elements Limited
Performance rights
Performance rights
2020
$
2019
$
143,485
143,485
44,894
44,894
On 27 September 2019 shareholders approved the issue of 8,500,000 Performance Rights (“PRs”), with a fair value of $284,414.
Service conditions were part of the performance requirements of the rights. None of the rights were converted to shares under the
terms of the Strategic Elements Performance Rights Plan.
None of the Performance Rights expired during the year.
The total expense recognised in the year for share-based payments is $143,485 (2019: $44,894).
Details of the PRs issued during the year are set out below:
Number of performance rights (PRs)
1,500,000
1,500,000
5,500,000
Tranche
No.1
Tranche
No.2
Tranche
No.3
Vesting period (months)
Performance period starts
Performance period ends
Barrier price (cents)
Value per right (cents)
Total value (dollars)
The PRs were issued to Directors as follows:
Director
Charles Murphy
Charles Murphy
Matthew Howard
Matthew Howard
Elliot Nicholls
Elliot Nichols
Page 32
12
27-Sep-19
27-Sep-20
n/a
6.3
24
24
27-Sep-19
27-Sep-19
27-Sep-20
27-Sep-20
n/a
6.3
11.99
1.73
95,414
94,500
94,500
Tranche
No.1
750,000
750,000
-
Tranche
No.2
750,000
Tranche
No.3
2,000,000
750,000
2,000,000
-
1,500,000
For personal use only
Notes to the Consolidated Financial Statements
30 June 2020
Note 10.
Share Based Payments (continued)
Vesting conditions
Strategic Elements Limited
Tranches 1 and 2 are dependent on the Directors remaining in continuous employment with the Company.
Tranche 3 is dependent on the Company achieving a market capitalisation of $30 million during the performance period.
The inputs to the PRs valuation were:
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of rights (years)
Grant date share price (cents)
Series No.1
Series No.2
Series No.3
n/a
n/a
n/a
1.0
6.30
n/a
n/a
n/a
2.0
6.30
n/a
82.91
0.73
2.0
6.30
The value of the options was calculated using the Cox, Ross and Rubinstein binomial tree method.
The expected life of the options is based on time to expiry and is not necessarily indicative of exercise patterns that may occur. No
other features of options granted were incorporated into the measurement of fair value.
8,500,000 Performance Rights were on issue at the end of the year.
2020
No.
2019
No.
-
10,500,000
8,500,000
-
-
-
(4,500,000)
(6,000,000)
8,500,000
-
-
-
Performance Rights
Outstanding at the beginning of the year
Granted during the year
Converted during the year
Lapsed during the year
Outstanding at the end of the year
Vested at the end of the year
Page 33
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 11.
Trade and Other Payables
Strategic Elements Limited
Trade payables (i)
Accrued expenses
CONSOLIDATED
2020
$
2019
$
145,977
57,697
203,674
138,000
24,538
162,538
(i) Trade payables are non-interest bearing and are normally settled on 30 day terms with the exception of insurance
premiums of $20,314 (2019: $21,706) which are payable in monthly instalments at a flat interest rate of 7.43%. The final
instalment is due 15 January 2021.
Note 12.
Provisions
Provision for annual leave
Note 13.
Remuneration of Auditors
Amounts received & receivable by the auditor:
Nexia Perth Audit Services Pty Ltd
- audit of the financial report of the Group
- other services
Page 34
CONSOLIDATED
2020
$
2019
$
47,841
47,841
21,676
21,676
CONSOLIDATED
2020
$
2019
$
28,759
3,500
32,259
25,860
3,500
29,360
For personal use only
Notes to the Consolidated Financial Statements
30 June 2020
Note 14.
Issued Capital
Strategic Elements Limited
Issued capital
Ordinary shares issued and fully paid
15,970,451
13,636,731
2020
$
2019
$
Ordinary shares entitle the holder to participate in dividends and in the proceeds and winding up of the Company in proportion to the
number of and amounts paid on the shares held.
Fully paid ordinary shares carry one vote per share and the right to dividends.
Movement in ordinary shares on issue
At beginning of year
Shares issued for cash
Share issue costs
At end of year
Note 15.
Reserves
Share-based payment reserve
Balance at beginning of year
PRs issued during the year
PRs converted during the year
PRs and options expired during the year
Balance at end of financial year
2020
2019
Number of shares
$
Number of shares
$
242,246,454
13,636,731
242,746,454
12,999,231
39,133,437
2,348,000
4,500,000
637,500
-
(14,280)
-
-
286,379,891
15,970,451
247,246,454
13,636,731
CONSOLIDATED
2020
$
2019
$
-
143,485
-
-
143,485
615,441
44,894
(637,500)
(22,835)
-
The share-based payments reserve is used to record the value of options and performance rights (PRs) granted as share-based
payments as part of total remuneration. Refer to Note 10 for further information on these options and performance rights.
Page 35
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 16.
Accumulated Losses
Strategic Elements Limited
Movement in accumulated losses:
Balance at beginning of year
CONSOLIDATED
2020
$
2019
$
(11,333,472)
(9,375,935)
Credit from option reserve on expiry of Performance Rights
-
22,835
Loss for the year
Balance at end of financial year
Note 17.
Financial Instruments
(2,547,826)
(1,980,372)
(13,881,298)
(11,333,472)
The Group’s principal financial instruments comprise cash, trade payables and trade receivables. These financial instruments arise
directly from the Group’s operations.
The main risks arising from the Group’s financial instruments are cash flow interest rate risk, liquidity risk, foreign exchange risk and
credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement
and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity
instrument are disclosed in Note 1 to the consolidated financial statements.
CONSOLIDATED
2020
2019
$ $
2,270,149
111,270
40,000
2,421,419
2,390,475
41,960
-
2,432,435
203,674
162,538
(a) Categories of financial instruments
Financial assets
Cash and cash equivalents
Trade and other receivables
Term deposit
Financial liabilities
Trade and other payables
Page 36
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 17.
Financial Instruments (continued)
Strategic Elements Limited
(b) Interest rate risk
The Group is exposed to interest rate risk due to variable interest being earned on its assets held in cash and cash equivalents.
Profile
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
Variable rate instruments
Cash and bank balances
Fixed rate instruments
Term deposit investments
CONSOLIDATED
2020
2019
Carrying amount Interest rate
$
%
Carrying
amount
$
Interest rate
%
2,270,149
0.64
2,390,475
1.41
40,000
1.00
-
-
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis
assumes that all other variables remain constant. The analysis is performed on the same basis for 2019.
30 June 2020: Consolidated
Variable rate instruments
30 June 2019: Consolidated
Variable rate instruments
Equity
Profit or loss
100bp
100bp
100bp
100bp
increase
decrease
increase
decrease
22,701
(22,701)
(22,701)
22,701
(22,701)
23,905
(23,905)
(23,905)
23,905
(23,905)
Funds that are not required in the short term are placed on deposit for a period of no more than 6 months at a fixed interest rate. The
Group’s exposure to interest rate risk and the effective interest rate by maturity is set out above.
The Group also has insurance premium arrangements of $20,314 (2019: $21,706) which are payable in monthly instalments at a flat
interest rate of 7.43% The final instalment is due 15 January 2021.
(c) Net fair values
The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and liabilities approximates their
carrying value.
Page 37
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 17.
Financial Instruments (continued)
(d) Credit risk
Strategic Elements Limited
There are no significant concentrations of credit risk within the Group, apart from its cash balances with its bank.
With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents and trade
receivables, the Group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying
amount of these instruments.
There is no requirement for collateral.
(e) Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash reserves.
The following table details the Group’s expected contractual maturity for its financial liabilities:
30 June 2020:
Consolidated
Financial liabilities
Non-interest bearing
Interest bearing
30 June 2019:
Consolidated
Financial liabilities
Non-interest bearing
Interest bearing
(f) Capital management
Less than 1
month
1 to 3 months
3 months to 1
year
1 to 5 years
Total
$ $ $ $ $
$
$
$
$
$
183,360
3,058
186,418
-
6,116
6,116
-
11,140
11,140
-
-
-
183,360
20,314
203,674
Less than 1
month
1 to 3 months
3 months to 1
year
1 to 5 years
Total
$ $ $ $ $
$
$
$
$
$
140,832
2,304
143,136
-
4,687
4,687
-
14,715
14,715
-
-
-
140,832
21,706
162,538
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it may continue to provide
returns for shareholders and benefits for other stakeholders. Due to the nature of the Group’s activities, being mineral exploration and
research and development relating to the nanocube technology, it does not have ready access to credit facilities and therefore is not
subject to any externally imposed capital requirements, with the primary source of Group funding being equity raisings.
Page 38
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 17.
Financial Instruments (continued)
Strategic Elements Limited
(g) Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The
Group has no hedging policy in place to manage those risks, however, all foreign exchange purchases are settled promptly.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the balance date
expressed in Australian dollars are as follows:
Consolidated
New Zealand dollars
Liabilities
Assets
2020
$
2019
$
2020
$
2019
$
1,595
3,348
23,599
3,497
Foreign currency sensitivity analysis
The Group is exposed to New Zealand Dollar (NZD) currency fluctuations.
The following table details the Group’s sensitivity to a 10% increase and decrease in the Australian dollar against the relevant foreign
currency. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents
management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign
currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A
positive number indicates an increase in profit or loss and other equity where the Australian dollar strengthens against the respective
currency. For a weakening of the Australian dollar against the respective currency there would be an equal and opposite impact on the
profit or loss and other equity and the balances below would be negative.
NZD impact
Profit or loss (i)
Other equity
Increase
Decrease
2020
$
2019
$
2020
$
2019
$
2,200
2,200
15
15
(2,200)
(2,200)
(15)
(15)
(i)
This is attributable to the exposure outstanding on NZD payables and the NZD bank account balance at year end in the Group.
Page 39
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Strategic Elements Limited
Note 18.
Commitments
a)
Project development expenditure commitments
In order to maintain current rights of tenure to mining tenements and permits, the Group has the following discretionary exploration
expenditure requirements up until expiry of leases. These obligations, which are subject to renegotiation upon expiry of the leases, are
not provided for in the financial statements and are payable.
Within one year
Later than one year but not later than 5 years
b) Office lease commitments
Within one year
Later than one year but not later than 5 years
Note 19.
Segment Information
CONSOLIDATED
2020
$
2019
$
135,000
780,000
915,000
21,552
-
21,552
564,101
3,979,140
4,543,241
1,194
-
1,194
The Group is managed primarily on the basis of its exploration projects (resource segment) and research and development of the
nanocube technology and robotics and AI solutions (technology segment). Operating segments are therefore determined on the same
basis.
Basis of accounting for purposes of reporting by operating segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors as the chief operating decision maker with respect to operating
segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements
of the Group.
Segment Assets
Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of economic value from
the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location.
Unless indicated otherwise in the segment assets note, investments in financial assets, deferred tax assets and intangible assets have not
been allocated to operating segments.
Segment liabilities
Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the
segment. Tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade
and other payables.
Unallocated items
The following items of revenue, expense, assets and liabilities are not allocated to operating segments as they are not considered part
of the core operations of any segment:
income tax expense;
•
deferred tax assets and liabilities; and
•
discontinuing operations.
•
Page 40
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Strategic Elements Limited
Note 19.
Segment Information (continued)
Consolidated
Year ended 30 June 2020:
Resources
Technology
Unallocated
(Corporate)
$
$
$
Total
$
Segment revenue & other income
619,788
436,828
-
1,056,616
Segment result
(593,191)
(1,207,902)
(746,733)
(2,547,826)
150,000
467,287
-
1,202
147,785
11,557
94,500
342,328
(3,358)
747
150,133
104,680
-
-
(5,192)
27,093
244,500
809,615
(8,550)
29,042
2,186,235
2,484,153
135,278
251,515
Resources
Technology
Unallocated
(Corporate)
$
$
$
Total
$
130,416
317,297
10,042
457,755
(684,643)
(136,614)
(1,159,115)
(1,980,372)
-
129,049
-
902
135,533
16,114
51,250
266,408
(1,701)
1,116
149,420
56,473
-
-
(6,210)
55,274
51,250
395,457
(7,911)
57,292
2,202,520
2,487,473
111,627
184,214
Included within segment revenue & result:
Contract revenue
R&D tax offset/government grants
Depreciation
Interest income
Segment assets
Segment liabilities
Consolidated
Year ended 30 June 2019:
Segment revenue
Segment result
Included within segment revenue & result:
Contract revenue
R&D tax offset
Depreciation
Interest income
Segment assets
Segment liabilities
Page 41
For personal use only
Notes to the Consolidated Financial Statements
30 June 2020
Strategic Elements Limited
Note 20.
Related Party Disclosures
The consolidated financial statements include the financial statements of Strategic Elements Limited and the subsidiaries listed in the
following table.
Name
Incorporation
2020
2019
2020
2019
Country of
% Equity Interest
Investment $
Maria Resources Pty Ltd
Strategic Materials Pty Ltd
Australian Advanced Materials Pty Ltd
Stealth Technologies Pty Ltd
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
1
1
1
1
1
1
1
1
Strategic Elements Limited is the ultimate Australian parent entity and ultimate parent of the Group.
Transactions between related parties are on commercial terms and conditions, no more favourable than those available to other
parties unless otherwise stated.
Transactions with related entities:
Director related entities
Remuneration for Directors is paid to entities controlled by the Directors. Please refer to the Remuneration Report in the Directors
Report and Note 23 for more detail.
During the year the Group engaged Enbit Pty Ltd, an entity related to Elliot Nicholls, a director of the Company for IT services. Enbit
received a total of $5,882 plus GST during the year (2019: $4,997 plus GST). Enbit did not acquire consulting services and software
development services from Stealth Technologies Pty Ltd during the year (2019: $21,250 and $30,000 respectively). There were no
amounts outstanding between Enbit and the consolidated entity at 30 June 2020 (2019: $nil).
Page 42
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Strategic Elements Limited
Note 21.
Parent Entity Infromation
As at, and throughout, the financial year ending 30 June 2020 the parent company of the Group was Strategic Elements Limited.
Financial position of Parent entity at year end
2020
$
2019
$
2,123,183
238,719
2,361,902
2,174,276
240,609
2,414,885
129,264
129,264
111,626
111,626
15,970,451
(13,881,298)
13,636,731
(11,333,472)
143,485
2,232,638
-
2,303,259
Year ended
30 June 2020
Year ended
30 June 2019
$
$
(2,547,826)
(1,980,372)
-
-
(2,547,826)
(1,980,372)
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Equity
Issued capital
Retained earnings
Reserves
Share-based payments
Total equity
Financial performance of Parent entity for the year
Loss for the year
Other comprehensive income
Total comprehensive loss
Page 43
For personal use only Notes to the Consolidated Financial Statements
30 June 2020
Note 22.
Contingent Liabilities
There are no contingent liabilities outstanding at the end of the year.
Note 23.
Directors’ and Executives’ Disclosures
(a)
(i)
Details of key management personnel
Directors
Charles Murphy
Matthew Howard
Elliot Nicholls
Managing Director & Acting Chairman
Executive Director
Executive Director
(b)
Key management personnel compensation
The key management personnel compensation for the year is as follows:
Short term benefits
Equity benefits
Total
(c)
Performance rights holdings of key management personnel
Strategic Elements Limited
Year ended 30 June 2020
Year ended 30 June 2019
$
$
679,800
143,485
823,285
664,800
44,894
709,694
Balance at
beginning
of year
Granted as
remuneration
Expired during
the year
Balance at end
of year
Vested
Not vested
-
-
-
-
3,500,000
3,500,000
1,500,000
8,500,000
-
-
-
-
3,500,000
3,500,000
1,500,000
8,500,000
-
-
-
-
3,500,000
3,500,000
1,500,000
8,500,000
Balance at
beginning
of year
Granted as
remuneration
Expired during
the year
Balance at end
of year
Vested
Not vested
5,250,000
5,250,000
-
(2,250,000)
(3,000,000)
(2,250,000)
(3,000,000)
-
-
10,500,000
(4,500,000)
(6,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
30 June 2020
Directors
Charles Murphy
Matthew Howard
Elliot Nicholls
Total
30 June 2019
Directors
Charles Murphy
Matthew Howard
Elliot Nicholls
Total
Page 44
For personal use only
Notes to the Consolidated Financial Statements
30 June 2020
Strategic Elements Limited
Note 24.
Events Subsquent to Reporting Date
The impact of the Coronavirus (COVID-19) pandemic is ongoing and whilst it has had no financial impact for the group up to 30 June 2020,
it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing
and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing
requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the
operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial
years.
Page 45
For personal use only Directors’ Declaration
30 June 2020
Strategic Elements Limited
1.
In the opinion of the directors of Strategic Elements Limited (the ‘Company’):
a.
the accompanying financial statements and notes are in accordance with the Corporations Act 2001 including:
i.
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its
performance for the year then ended; and
ii.
complying with Australian Accounting Standards and Corporations Regulations 2001, professional
reporting requirements and other mandatory requirements;
b.
c.
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable; and
the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued
by the International Accounting Standards Board.
2.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with
Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2020.
This declaration is signed in accordance with a resolution of the Board of Directors.
Charles Murphy
Managing Director
Dated this 25th day of August 2020
Page 46
For personal use only
Independent Auditor’s Report to the Members of Strategic Elements Ltd
Report on the audit of the financial report
Opinion
We have audited the financial report of Strategic Elements Ltd (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2020, the
consolidated statement of profit or loss and other comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
i) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
performance for the year then ended; and
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the 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.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
For personal use only
How our audit addressed the key audit
matter
We evaluated the Group’s funding and liquidity
position at 30 June 2020 and its ability to repay
its debts as and when they fall due for a minimum
of 12 months from the date of signing the
financial report. In doing so, we:
• obtained management’s cash flow forecast for
the 18 months from the commencement of the
2021 financial year;
• assessed the reliability and completeness of
management’s assumptions by comparing the
forecast cash flows to those of current and
previous years and as well as our understanding
of future events and conditions; and
• considered events subsequent to year end to
determine whether any additional facts or
information have become available since the
date on which management made
its
assessment.
Key audit matter
Funding and liquidity
Refer to note 17 (f)
and
investments
is a Pooled
Strategic Elements Limited
in
Development Fund with
exploration
technology
companies. The key activities of its investee
companies are to explore for gold and copper
minerals and
research and
to perform
development in the field of technology.
information
The investees’ activities have not yet advanced
to a stage where it is able to generate
commercial revenue, accordingly the Group is
reliant on funding from external sources, such
as capital raisings, to support its operations.
We focussed on whether the Group had
sufficient cash resources and access to funding
to allow the Group to continue as a going
concern.
The adequacy of funding and liquidity as well
as the relevant impact on the going concern
assessment is a key audit matter due to the
inherent uncertainties associated with the
future development of the Group’s projects and
the level of funding required to support that
development.
Other information
The directors are responsible for the other information. The other information comprises the information
in Strategic Elements Limited’s annual report for the year ended 30 June 2020, but does not include
the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the
other information we are required to report that fact. We have nothing to report in this regard.
Directors’ responsibility for the financial report
The directors of the Company are responsible for the preparation of the consolidated 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
For personal use only
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 consolidated financial report, the directors are responsible for assessing the Group’s
ability 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 entity or
to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibility for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at The
Australian Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 9 to 11 of the Directors’ Report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of Strategic Elements Limited for the year ended 30 June
2020, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Nexia Perth Audit Services Pty Ltd
M. Janse Van Nieuwenhuizen
Director
Perth
25 August 2020
For personal use only
Additional Securities Exchange Information
Strategic Elements Limited
Additional information required by the ASX Limited and not shown elsewhere in this report is as follows. This information is current as
at 30 June 2020.
1)
Substantial shareholders
The names of the substantial shareholders listed in the Company’s register are:
Holder
Number of fully paid
ordinary shares
Percentage
Robinia Partners Pty Ltd
19,942,969
6.96%
2)
a)
Information on equity security classes
Ordinary Shares
286,379,891 fully paid ordinary shares are held by 2,741 shareholders. All issued shares carry one vote per share and carry the rights
to dividends. 468 shareholders had an unmarketable parcel of less than $500 given a share value of 6.0c.
The number of shareholders by size of holding:
Ordinary shares
Number of holders
Number of shares
109
175
510
1,468
479
2,741
9,959
658,124
4,418,256
57,503,397
223,790,155
286,379,891
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
b)
Options
There are currently no options issued.
Page 50
For personal use only Additional Securities Exchange Information (continued)
Strategic Elements Limited
3)
Top 20 shareholders
The twenty largest holders of quoted equity securities are:
Position
Holder Name
1
2
3
4
5
6
7
8
9
10
11
12
13
13
14
15
16
17
18
19
20
ROBINIA PARTNERS PTY LTD
MRS KIM LI HOWARD &
MR MATTHEW DOMINIC MCGUINESS HOWARD
EMNET PTY LTD
MR DAVID ANTHONY BARNAO
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
STEVEN MURPHY ELECTRICAL CONTRACTORS PTY LTD
DR KUEN SENG CHAN
FEAR GOD PTY LTD
DIVERGENT ASSETS PTY LTD
MRS YADRANKA KEELING
BARLEY HOLDINGS PTY LTD
MR TONY JOHN LAMBERT &
MRS SHANE LAMBERT
EMNET PTY LTD
PARISI HOLDINGS PTY LTD
TRILLIAN BOOKS PTY LTD
MR ANDREW KANG
MR BRENDON GABRIEL CONNOR
PARISI HOLDINGS PTY LTD
MISS YUNG YUNG SO
MR GRAEME CARRAN
GRANBOROUGH PTY LTD
Total
Total issued capital - selected security class(es)
4)
On-Market Buy Back
At the date of this report, the Company is not involved in an on-market buy back.
Page 51
Holding
% IC
19,942,969
6.96%
7,764,192
2.71%
7,600,000
4,309,366
4,163,476
2.65%
1.50%
1.45%
3,975,834
1.39%
3,328,261
1.16%
3,100,000
1.08%
2,500,000
0.87%
2,350,000
2,255,374
0.82%
0.79%
2,050,000
0.72%
2,000,000
0.70%
2,000,000
0.70%
1,999,083
1,930,435
1,914,983
0.70%
0.67%
0.67%
1,700,435
0.59%
1,685,325
1,657,291
0.59%
0.58%
1,500,000
0.52%
79,727,024
27.84%
286,379,891
100.00%
For personal use only