SILEX SYSTEMS LIMITED ASX: SLX OTCQX: SILXY
Silex Systems Limited
ABN 69 003 372 067
Appendix 4D
ASX Half-year information - 31 December 2015
Lodged with the ASX under Listing Rule 4.2A
This information should be read in conjunction with the 30 June 2015 Annual Report and the full financial report for the year ending 30 June 2015.
Results for announcement to the market 2
Half-year financial report 5
Silex Systems Limited half-year ended 31 December 2015 (Previous corresponding period:
half-year ended 31 December 2014)
Results for announcement to the market
31 December 2015 $ | 30 June 2015 $ | Movement $ | Movement % |
Cash and cash equivalents and Held to maturity investments | 51,049,529 | 55,161,228 | (4,111,699) | 7.5% | |
Half-year | Half-year | Movement | Movement |
ended 31 | ended 31 | ||
December | December | ||
2015 | 2014 | ||
$ | $ | $ | % |
Revenue from continuing operations Revenue from discontinued operations Revenue from ordinary activities | 825,063 1,738,165 | 2,609,158 95,984 | (1,784,095) 1,642,181 | 68.4% 1710.9% | |
2,563,228 | 2,705,142 | (141,914) | 5.2% | |
Earnings before interest, tax, depreciation, amortisation and impairment from continuing operations (EBITDA) | (1,214,914) | (1,998,708) | 783,794 | 39.2% | |
Net loss from continuing operations after tax attributable to members | (406,846) | (952,006) | 545,160 | 57.3% | |
Net loss from discontinued operations after tax attributable to members | (610,977) | (5,737,241) | 5,126,264 | 89.4% | |
Net loss from ordinary activities after tax attributable to members | (1,017,823) | (6,689,247) | 5,671,424 | 84.8% | |
Net loss for the period attributable to members | (1,017,823) | (6,689,247) | 5,671,424 | 84.8% | |
The completion of our corporate restructure announced in June 2014, combined with focussing our activities on the SILEX laser uranium enrichment technology commercialisation program was the Company's primary objective during the half-year ended 31 December 2015. These financial statements reflect the financial impact of the restructure with our sole continuing operation being activities associated with the SILEX laser uranium enrichment technology.
The half-year ended 31 December 2015 saw the Company largely complete the restructure with the following key activities:
Translucent: Over the past decade, California-based subsidiary Translucent Inc developed a novel set of semiconductor materials known as 'Rare Earth Oxides' (REOTM) for application to the manufacturing of next generation devices in the semiconductor and power electronics industries. A recent assessment of business development options for Translucent resulted in the signing of an exclusive License and Assignment Agreement with UK-based IQE Plc on 15 September 2015. A license fee payment of approximately US$1.4m is due to be paid by IQE by 15 March 2016. As a result of this Agreement, the Translucent REOTM technology has been transferred to IQE's Greensboro, North Carolina manufacturing facility for the completion of product development and commercialisation activities during a 30-month license period. More importantly, should IQE elect to exercise the right to purchase the technology within this period by payment of a further US$5m, Translucent may earn an attractive perpetual royalty stream from IQE upon generation of revenues resulting from use of the technology. The Translucent facility in Palo Alto, California was vacated in December 2015. Translucent Inc will remain a Californian-based company in order to service the abovementioned Agreement.
Solar Systems: The pursuit of opportunities to realise value from the sale of assets and intellectual property surrounding the unique 'Dense Array' concentrated photovoltaic (CPV) system for utility-scale solar power generation continues, with sale proceeds of approximately $2.3m received to date. The land, buildings and generating assets at Bridgewater and Mildura in Victoria were sold in December 2015. Meanwhile negotiations with third parties continue in relation to the sale of intellectual property and other assets. The Solar Systems manufacturing plant at Abbotsford was also decommissioned and subsequently closed in December 2015.
The corporate restructure initiated in June 2014 was largely complete at the time of writing with operating cash burn in the Translucent and Solar Systems subsidiaries eliminated.
The core focus of the Company is firmly set on the commercialisation program for the SILEX laser uranium enrichment technology, exclusively licensed to GE-Hitachi Global Laser Enrichment LLC (GLE), based in Wilmington, North Carolina. Despite the market driven cutbacks announced by GLE in July 2014, the program continued to yield positive progress during 2015 with program milestones achieved in both the Sydney and Wilmington project sites. Ongoing laser system development activities funded by Silex at Lucas Heights (Sydney) resulted in the key demonstration of prototype commercial-scale plant laser systems during the period in review. In parallel, GLE funded activities in the Test Loop facility in Wilmington resulted in the successful demonstration of key process efficiency improvements which have the potential to lower both operating and capital costs. Silex remains firmly committed to providing ongoing support to GLE at both sites. Additionally, in recent months we have increased our involvement in commercialisation and business development activities in conjunction with GLE and its shareholders, GE-Hitachi and Cameco. To this end, meetings with various stakeholders were held during the half-year to discuss business development strategies. These discussions continue with an assessment of options for increasing project funding currently underway.
Whilst the markets for uranium and enrichment services currently remain depressed, we remain encouraged by the various positive developments for the global nuclear industry. These include the restart of the third Japanese nuclear reactor in January, the continued new nuclear plant builds in the US and the UK, in addition to extensions being granted to the operating lives of existing nuclear plants which could see many of these plants generating clean, reliable and affordable baseload electricity for up to 80 years. Aggressive new reactor build continues in China, India, South Korea, UAE and Russia equating to billions of dollars of investment into the nuclear industry. The SILEX Technology, believed to be the only third generation laser enrichment technology being commercialised in the world, remains our key asset and the best path forward to deliver value to our shareholders.
This half-year report should be read in conjunction with the Operational Update released in conjunction with this report and recent ASX announcements.
Our cash balance as at 31 December 2015 was $51.0m, a net decrease of $4.1m during the half-year as a result of our final restructure activities and continued investment in the SILEX laser uranium enrichment technology.
Receipts from customers and government grants reduced by $13.9m in the current half-year compared to the half-year ended 31 December 2014. The prior corresponding period included $11.5m for the R&D Tax Incentive ($nil in the current period) and $1.8m of receipts from GLE for Recoverable project costs ($nil in the current period). The R&D Tax Incentive for FY15 was received in February 2016.
Partly offsetting the reduced receipts was a reduction of $6.1m in payments to suppliers and employees in the current half-year compared to the half-year ended 31 December 2014. Payments in the current period included various employee termination payments which contributed to the $1.5m reduction in liabilities associated with discontinued operations with total headcount reducing significantly during the half-year. In addition, sale proceeds of $2.6m were received during the half-year from the sale of property, plant and equipment.
There was a reduction of $0.1m in revenue from ordinary activities during the half-year. As a result of the changes announced by GLE in July 2014 to the funding and pace of the commercialisation program to align with adverse market conditions in the nuclear industry, there was a $1.5m reduction in Recoverable project costs on the Uranium Enrichment Project to the prior corresponding period.
Interest income also decreased from $1.1m in the previous period to $0.8m in the current period as a result of lower average cash / term deposit holdings and lower interest rates in the current period.
Partly offsetting these reductions was License fee income of $1.5m in the current period ($nil in previous corresponding period) for Translucent resulting from the License and Assignment Agreement with IQE.
EBITDA from continuing operations for the half-year ended 31 December 2015 was a loss of $1.2m. This comprises a loss from continuing operations of $0.4m adjusted for net interest income of $0.8m and depreciation and amortisation of $0.02m.
Further commentary is provided in the next section.
The loss from continuing operations reduced by $0.5m to $0.4m compared to the previous corresponding period. Revenue reduced by $1.8m which consisted of the $1.5m reduction in Recoverable project costs and $0.3m reduction in Interest income. Partly offsetting the reduced revenue was a $1.0m increase in Other income for the Company's R&D Tax Incentive. Expenses reduced by
$1.3m compared to the previous corresponding period reflecting a lower operating cost base following the Company's restructure.
The Silex Board announced the immediate cessation of the Solar Systems business operation on 30 July 2015. Various assets were sold to third parties during the half-year with the pursuit of residual opportunities and negotiations to realise value from the sale of the remaining assets and IP continuing at the time of writing.
As a result of the exclusive License and Assignment Agreement, for the Translucent technology that was signed on the 15 September 2015, the technology was transferred to IQE Plc during the half-year for the completion of product development and commercialisation activities. The Translucent operations in Palo Alto, California ceased at the end of in December 2015.
The loss from discontinued operations reduced by $5.2m to $0.6m in the current period as activities to cease operations at Solar Systems and Translucent were implemented. The improved result was mainly due to a reduction in expenses of $4.4m. Revenue from discontinued operations increased by $1.6m primarily as a result of the Translucent License fee. This was partly offset by a
$0.9m reduction in Other income. The reduced R&D Tax Incentives and Government grants income was partly offset by an increased profit on sale of assets.
The net loss from ordinary activities of $1.0m decreased by $5.7m compared to the prior corresponding period. The net loss is comprised of the loss from continuing operations attributable to members of $0.4m (a decrease of $0.5m) and the loss from discontinued operations of $0.6m attributable to members (a decrease of $5.2m compared to the prior corresponding period). Meanwhile, investment in technical and commercialisation activities for the SILEX laser uranium enrichment technology continues.
No dividends have been paid or proposed during the reporting period.
Silex Systems Limited issued this content on 22 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 21 February 2016 23:23:26 UTC
Original Document: http://www.silex.com.au/Silex/media/Announcements/App-4D-Dec-2015-final.pdf?ext=.pdf
