Silex : Half Year Accounts (Appendix 4D)

ASX: SLXOTCQX: SILXY

Silex Systems Limited

ABN 69 003 372 067

Appendix 4D

ASX Half-year information - 31 December 2020

Lodged with the ASX under Listing Rule 4.2A

This information should be read in conjunction with the 30 June 2020 Annual Report and the full financial report for the year ending 30 June 2020.

Contents	Page
Results for announcement to the market	2
Half-year financial report	4

Silex Systems Limited half-year ended 31 December 2020

(Previous corresponding period: half-year ended 31 December 2019)

Results for announcement to the market

31 December 2020	30 June 2020	Movement	Movement
$	$	$	%

Cash and cash equivalents and Term deposits

15,091,045

18,415,034

(3,323,989)

18.1%



Half-year ended 31 December 2020	Half-year ended 31 December 2019	Movement	Movement
$	$	$	%

Revenue from ordinary activities	105,836	262,573	(156,737)	59.7%	
Other income	644,962	454,144	190,818	42.0%	

Earnings before interest, tax, depreciation, amortisation and impairment from continuing operations (EBITDA)

(3,811,034)

(5,257,725)

1,446,691

27.5%



Net loss from ordinary activities after tax attributable to members	(3,813,282)	(5,172,435)	1,359,153	26.3%	
Net loss for the period attributable to members	(3,813,282)	(5,172,435)	1,359,153	26.3%	

No dividends have been paid or proposed during the reporting period

Overview

Silex Systems is primarily focused on the development of the SILEX laser enrichment technology for two key global industries:

• i) The nuclear fuel industry - with the unique third generation SILEX uranium enrichment technology; and

• ii) The emerging quantum computing industry - with the SILEX Zero-Spin Silicon project.

On 16 December 2019, Silex announced it had executed a binding Membership Interest Purchase Agreement (MIPA) between Silex, Cameco Corporation (Cameco) and GE-Hitachi Nuclear Energy (GEH) for the joint purchase of GEH's 76% interest in GE-Hitachi Global Laser Enrichment LLC (GLE). Closing of the Agreement occurred on 31 January 2021, following conclusion of the US Government approval process. As a result, Silex acquired a 51% majority interest in GLE and Cameco increased its interest from 24% to 49%. Several other agreements and documents were executed and closed simultaneously including a site lease to enable the continuance of GLE's operations at its Test Loop facility in Wilmington, North Carolina, and various arrangements with GLE partner Cameco, including an option for Cameco to potentially acquire a further 26% equity in GLE from Silex at fair market value.

Silex is also working on a project for the production of high-purity 'Zero-Spin Silicon' (ZS-Si) for the fabrication of next-generation processor chips which will power silicon-based quantum computers. The project is being undertaken with project partners Silicon Quantum Computing Pty Ltd and UNSW Sydney at Silex's Lucas Heights facility.

In accordance with the sale of Silex subsidiary Translucent Inc's semiconductor material technology known as cREOTM to IQE Plc (IQE) in early 2018, minimum annual royalties commenced being paid for the year ended 31 December 2019. The initial minimum annual royalty of US$400k was received in early CY2020, and the second minimum annual royalty is due for receipt by the end of February 2021.

Silex Systems Limited

Results for announcement to the market (continued)

As at 31 December 2020, the Company's balance sheet had total assets of $29.1m and net assets of $27.3m, which included $15.1m in cash and term deposits, and IQE shares of $12.2m.

This half-year report should be read together with the Operational Update released in conjunction with this report and recent ASX announcements.

Explanation of the net loss from ordinary activities after tax attributable to members

The net loss from ordinary activities decreased by $1.4m compared to the previous corresponding period. This was mainly due to a $1.5m decrease in Development expenditure relating to Silex's obligation to continue to reimburse GEH for the funding of GLE's Wilmington Test Loop activities. The Development expenditure in the previous corresponding period included an amount of US$1.125m for the reimbursement of costs held over from the previous Term Sheet agreed with GEH.

Cash and cash equivalents & Term Deposits

The cash and term deposits balance as at 31 December 2020 was $15.1m, a net decrease of $3.3m during the half-year primarily due to our ongoing commitment to the SILEX uranium technology commercialisation program, including the reimbursement payments to GEH in accordance with the MIPA as outlined above.

Net cash outflows from operating activities for the half-year to 31 December 2020 were $3.0m compared to $2.2m for the half-year ended 31 December 2019. Receipts from Customers and government grants increased by $0.3m compared to the previous corresponding period mainly due to COVID-19 Federal Government assistance and CRC-P grant funding received in the current period ($nil in the previous corresponding period.) Payments to suppliers and employees increased by $0.8m. This was partly due to a $0.5m increase in payments to GEH (the current period included 7 monthly cash reimbursements to GEH compared to 5 months in the previous period). Interest received decreased by $0.3m as a result of lower interest rates and lower average cash holdings in the current period.

Revenue from ordinary activities

There was a reduction of $0.2m in revenue from ordinary activities during the half-year. Interest income decreased from $0.3m in the previous corresponding period to $0.1m in the current period as a result of lower average cash/term deposit holdings and lower interest rates.

Earnings before interest, tax, depreciation, amortisation and impairment from continuing operations (EBITDA)

EBITDA from continuing operations for the half-year ended 31 December 2020 was a loss of $3.8m. This comprises a loss from continuing operations of $3.8m adjusted for net interest income of $0.1m and depreciation and amortisation of $0.1m.

Explanation of dividends

No dividends have been paid or proposed during the reporting period.

Silex Systems Limited
Half-year financial report
31 December 2020
Contents
Directors' report	5
Consolidated income statement	8
Consolidated statement of comprehensive income	9
Consolidated balance sheet	10
Consolidated statement of changes in equity	11
Consolidated cash flow statement	12
Notes to the consolidated financial statements	13
Directors' declaration	19
Independent auditor's review report to the members	20

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the Annual Report for the year ended 30 June 2020, the full financial report for the year ending 30 June 2020 and any public announcements made by Silex Systems Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

Silex Systems Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is Building 64, Lucas Heights Science and Technology Centre, New Illawarra Road, Lucas Heights NSW 2234.