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ASX: SLX OTCQX: SILXY

Silex Systems Limited

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ABN 69 003 372 067

Appendix 4D

ASX Half-year information - 31 December 2021

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Lodged with the ASX under Listing Rule 4.2A

This information should be read in conjunction with the 30 June 2021 Annual Report

and the full financial report for the year ending 30 June 2021.

Contents

Page

Results for announcement to the market

2

For

Half-year financial report

4

1

Silex Systems Limited half-year ended 31 December 2021

(Previous corresponding period: half-year ended 31 December 2020)

Results for announcement to the market

31 December 2021

30 June 2021

Movement

Movement

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$

$

$

%

Cash and cash equivalents and

Term deposits

49,208,278

14,102,798

35,105,480

248.9%

Half-year ended 31

Half-year ended 31

December 2021

December 2020

Movement

Movement

$

$

$

%

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Revenue from ordinary activities

2,123,916

105,836

2,018,080

1906.8%

Other income

1,296,225

644,962

651,263

101.0%

Earnings before interest, tax,

personal

depreciation, amortisation and

impairment from continuing

operations (EBITDA)

(4,290,239)

(3,811,034)

(479,205)

12.6%

Net loss from ordinary activities

after tax attributable to members

(4,463,677)

(3,813,282)

(650,395)

17.1%

Net loss for the period attributable

to members

(4,463,677)

(3,813,282)

(650,395)

17.1%

No dividends have been paid or proposed during the reporting period

Overview

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

  1. The nuclear fuel industry - with the unique third generation SILEX uranium enrichment technology; and
  2. The emerging quantum computing industry - with the SILEX Zero-Spin Silicon project.

The development and commercialisation program for the SILEX uranium enrichment technology is being undertaken jointly by Silex (at its Lucas Heights, Sydney facility) and by Global Laser Enrichment LLC (GLE) (in Wilmington, North Carolina). GLE is the exclusive Licensee of the SILEX uranium enrichment technology. GLE was restructured in January 2021 and is now owned 51% by Silex and 49% by Cameco Corporation.

ForThe SILEX Zero-Spin Silicon (ZS-Si) project commenced in December 2019 and is being undertaken with project partners Silicon Quantum Computing Pty Ltd (SQC) and UNSW Sydney (UNSW) at Silex's Lucas Heights facility, with the objective of developing a variant of the SILEX technology for the commercial production of ZS-Si, a key enabling material for the emerging silicon quantum computing industry.

In addition, Silex's semiconductor material technology known as cREO® was purchased by UK-based IQE Plc in 2018. This technology is currently being developed by IQE for application in the 5G mobile communications industry under a license and royalty agreement. Minimum annual royalties commenced being paid for the year ended 31 December 2019. The third minimum annual royalty for CY2021 of US$500k is due for receipt by the end of February 2022.

2

Silex Systems Limited

Results for announcement to the market (continued)

As at 31 December 2021, the Company's balance sheet had total assets of $57.8m and net assets of $55.0m, which included $49.2m in cash and term deposits, IQE shares of $4.2m and receivables of $2.6m.

onlyThis half-year report should be read together with the Operational Update and presentation 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 increased by $0.7m compared to the previous corresponding period. This was mainly due to an increase in activities at GLE during the half-year. From closing of the GLE restructure, Silex's 51% share of GLE's net loss is recognised in Share of net loss of associates and joint ventures accounted for using the equity method and was $3.9m for the current period. This compares to $1.4m in the previous corresponding period which was recognised as Development expenditure up to closing of the GLE restructure in January 2021. In addition, Employee benefits expense increased $0.7m and Research and development materials increased $0.3m in the current period as the Company's technology development activities increased. The increase in expenditure for

usethe period was partly offset by an increase in revenue of $2.0m. Recoverable project costs were $2.1m in the current period compared to $nil in the prior corresponding period. Recoverable project costs, which are the reimbursement of allowable costs on the uranium enrichment project incurred by Silex, recommenced following the closing of the restructure of GLE.

Cash and cash equivalents & Term Deposits

The cash and term deposits balance as at 31 December 2021 was $49.2m, an increase of $35.1m during the half-year. Silex completed an equity raise by way of a placement which was followed by a Share Purchase Plan during the half-year. The net proceeds from the issue of shares were $38.4m.

personalNet cash inflows from operating activities for the half-year to 31 December 2021 were $0.8m compared to outflows of $3.0m for the half- year ended 31 December 2020. Receipts from Customers and government grants increased by $2.0m compared to the previous

corresponding period, mainly due to receipt of $1.9m of Recoverable project costs from GLE. Payments to suppliers and employees decreased by $2.0m. This was mainly due to the payments to fund GLE's activities being classified as investing activities during the current period. Payments for investments accounted for using the equity method (i.e., payments to fund the Company's investment in GLE) were $3.9m in the current period ($nil in the prior corresponding period).

Revenue from ordinary activities

There was a $2.0m increase in revenue from ordinary activities during the half-year. Since the completion of the restructure of GLE on 31 January 2021, Silex has recommenced being reimbursed by GLE for its costs on the uranium project. Recoverable project costs were $2.1m in the current period compared to $nil in the prior corresponding period.

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

EBITDA from continuing operations for the half-year ended 31 December 2021 was a loss of $4.3m. This comprises a loss from continuing operations of $4.5m adjusted for net interest income of $0.05m and depreciation and amortisation of $0.2m.

Explanation of dividends

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

For

3

Silex Systems Limited

Half-year financial report

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31 December 2021

Contents

Directors' report

5

Consolidated income statement

8

Consolidated statement of comprehensive income

9

useConsolidated balance sheet

10

Consolidated statement of changes in equity

11

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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 2021, the full financial report for the year ending 30 June 2021 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. For

4

Silex Systems Limited

Directors' report

Your directors present their report on the consolidated entity consisting of Silex Systems Limited (Silex or the Company) and the entities it controlled at the end of, or during, the half-year ended 31 December 2021.

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3. personalFor

Directors

The following persons were directors of Silex Systems Limited during the half-year and up to the date of this report:

Mr C A Roy - Chair

Dr M P Goldsworthy - CEO / Managing Director

Mr C D Wilks

Ms M K Holzberger was a director from the beginning of the half-year until her resignation on 14 October 2021.

Ms H G Cook was appointed as a director on 14 October 2021 and continues in office at the date of this report.

Dividend

No dividend payment has been recommended or declared by the Board.

Review of operations and activities

The Consolidated income statement on page 8 of this report sets out the main revenue and expense items for the half-year ended 31 December 2021 with comparatives for the half-year ended 31 December 2020. A summary is shown below:

6 months ended

6 months ended

31 December 2021

31 December 2020

$

$

Revenue from continuing operations

2,123,916

105,836

Other Income

1,296,225

644,962

(Loss) before tax

(4,463,677)

(3,813,282)

Income tax expense

-

-

Net (loss) from continuing operations

(4,463,677)

(3,813,282)

Net (loss) for the half-year

(4,463,677)

(3,813,282)

(Loss) is attributable to:

Owners of Silex Systems Limited

(4,463,677)

(3,813,282)

The Company incurred a loss attributable to owners of Silex Systems Limited for the half-year ended 31 December 2021 of $4.5m (loss of $3.8m for the previous corresponding period). The increase in loss was mainly due to the increase in activities at GLE during the half-year. The Company's share of losses of GLE's operations (including the reimbursement to Silex for its Recoverable project costs) was $3.9m in the current period. In the prior corresponding period, (and prior to the Company acquiring its 51% interest in GLE), the Company had Development expenditure of $1.4m which represented Silex's obligation to reimburse GE-Hitachi Nuclear Energy (GEH) for our share of GLE's Wilmington activities. Employee benefits expense increased $0.7m and Research and development materials increased $0.3m in the current period as the Company's technology development activities increased. The increase in expenditure for the period was partly offset by an increase in revenue of $2.0m. Recoverable project costs, which recommenced following the closing of the restructure of GLE, were $2.1m in the current period compared to $nil in the prior corresponding period.

The cash and term deposits balance as at 31 December 2021 was $49.2m, an increase of $35.1m during the half-year. Silex completed an equity raise by way of a placement which was followed by a Share Purchase Plan. The net proceeds from the issue of shares were $38.4m.

Net cash inflows from operating activities for the half-year to 31 December 2021 were $0.8m compared to outflows of $3.0m for the half-year ended 31 December 2020. Receipts from Customers and government grants increased by $2.0m compared to the previous corresponding period, mainly due to receipt of $1.9m of Recoverable project costs from GLE. Payments to suppliers and employees decreased by $2.0m. This was mainly due to the payments to fund GLE's activities being classified as investing activities during the current period. Payments for investments accounted for using the equity method (i.e., the Company's investment in GLE) were $3.9m in the current period ($nil in the prior corresponding period).

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Silex Systems Limited published this content on 23 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 February 2022 23:00:51 UTC.