SciDev Ltd 2017 Annual Report
Contents
Page
Letter from the Chairman and Managing Director
Director’s Report
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 Financial Statements
Director’s Declaration
Independent Auditor’s Report
Schedule of Tenements
Shareholder Information
Corporate Directory
2
3
13
14
15
16
17
18
46
47
51
51
53
SciDev Ltd 2017 Annual Report
Letter from the Chairman and Managing Director
Dear SciDev Shareholder,
25 October 2017
This is SciDev Limited’s (‘SciDev’ or ‘the Company’) sixteenth Annual Report since listing on the Australian Securities
Exchange (ASX) and includes the audited financial statements for the financial year ending 30 June 2017. The period
has been one of growth and achievement for the Company.
During the 2016/17 year, the Company recorded a 35% increase in revenue to $1.925 million due to higher chemical
sales and OptiFlox® System leasing fees. However, the Company recorded a loss after tax of $0.597 million, which was
higher than the loss after tax of $0.458 million for the previous corresponding period due to several factors including
higher depreciation charges, higher raw material costs and higher professional fees. Cash outflows from operating
activities were $0.225 million, which were principally due to higher customer sales represented a material improvement
from the prior year at ($0.541 million).
The 2016/17 year marked a steep change for the Company, both from an operational and corporate standpoint.
Following a successful share placement and share purchase plan, Intec Ltd moved to 100% ownership of Science
Developments Pty Ltd (Science Developments) by exercising its option to acquire the 50% of shares it did not previously
own. Intec Ltd was subsequently renamed SciDev Ltd following the transaction, with the name change approved by
Shareholders at the Extraordinary General Meeting held on 25 January 2017.
SciDev secured a number of significant contract wins during FY2017, including the installation of an OptiFlox® System
at Peabody Energy’s 12Mtpa Wilpinjong Mine in New South Wales. The installation followed a successful six-month trial,
which contributed to the design of the Mark-2 version of the OptiFlox® System. Additionally, the Company deployed
the first OptiFlox® System in the Australian dairy industry, with the deployment at a production facility owned by
industry leader Lion Dairy and Drinks (Lion). This marks a significant achievement for the Company, as its technology is
now being implemented in both the coal and dairy industries.
The commercialisation of the OptiFlox® System was greatly assisted by entering into an exclusive manufacturing and
customer agreement with Burkert Fluid Control Systems (Burkert). Burkert, a world leading manufacturer of measure
and control systems for liquids and gases, worked with SciDev for around 18 months prior to the agreement to develop
the OptiFlox® System to a commercial ready stage.
During the financial year, SciDev retained 100% ownership of the Zeehan zinc slag dump in Tasmania, with the
Company consolidating two leases held over the slag dump into one mining lease. The Board and Management continue
to explore opportunities, on both a corporate and operational level, to realise the value of the asset and look forward to
updating the market as these opportunities come to fruition.
During the year the Company progressed several research and development initiatives, focussing principally on
additional applications of the OptiFlox® technology in the coal industry. SciDev is confident that the OptiFlox® System
can be effectively utilised in other areas of a coal preparation plant in addition to the tailings thickener. These include
de-watering operations such as belt-presses, coal thickeners and flotation operations.
The key objectives for the current financial year are as follows:
Installations/trials of additional OptiFlox® Systems in the Australian coal and dairy industries;
The progression of opportunities in overseas markets, such as North America;
•
•
• A better understanding of the applicability of OptiFlox® Technology; and
• Value realisation from the Zeehan Zinc Project in Tasmania.
As announced on 1 March 2017, Robert Waring resigned as SciDev’s Company Secretary. We would like to take this
opportunity to thank Robert for his contribution and wish him well in all his future endeavours. The Board is also pleased
to welcome Heath Roberts as our new Company Secretary, who brings extensive experience from his work in the legal
profession, and will contribute his significant expertise around equity markets.
We would also like to thank shareholders for their ongoing support and commitment. We look forward to updating you
on our endeavours and achievements throughout this financial year.
Yours sincerely,
Trevor Jones
Chairman
Kieran Rodgers
Managing Director
2
SciDev Ltd 2017 Annual Report
Directors Report
The directors present their report, together with the financial statements, on the consolidated entity (referred to
hereafter as the 'consolidated entity') consisting of SciDev Limited (referred to hereafter as the 'Company' or 'SciDev')
and the entities it controlled at the end of, or during, the year ended 30 June 2017.
At an Extraordinary General Meeting held on 25 January 2017, a resolution to change the name of the company to
SciDev Limited was approved by shareholders.
Directors
The following persons were directors of SciDev Limited during the whole of the financial year and up to the date of this
report, unless otherwise stated:
Trevor A Jones
Kieran G Rodgers
Daniel (Don) Joseph Cronin
Principal activities
The principal activity of the Group is the manufacture and supply of organic chemicals for industrial wastewater
treatment.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
During FY2017, the Company recorded a net loss after tax of $0.597 million, compared to a loss after tax of $0.458
million for the previous corresponding period. Net cash flows from operating activities in FY2017 were ($0.225 million)
compared with ($0.541 million) for the prior year.
Operational progress
The Company agreed to an exclusive manufacturing and customer agreement with Burkert Fluid Control Systems
(Burkert) for the development and fabrication of the OptiFlox® System.
Following the Company’s successful six-month trial at Peabody Energy’s (Peabody) 12mtpa Wilpingjong mine, Burkert
assisted in the design of the OptiFlox® System Mark-2 System. The Mark-2 System is materially smaller in size, but
boasts enhanced reporting and operating capabilities.
Following the trial and the development of the OptiFlox® System Mark-2 System, the Company secured a two-year
contract for the supply of a system and associated chemicals at the aforementioned Peabody site. The total contract
value is estimated at between $350,000 - $400,000 per annum and will see Peabody pay a monthly leasing fee for the
use of the system, together with the purchase of associated waste-water treatment chemicals.
During the financial year the Company broadened the industry footprint of the OptiFlox® System following its deployment
at a major Australian dairy processing facility operated by Lion Dairy & Drinks (Lion). The deployment of the system
followed an initial purchase order for a 12-month period. Lion has been a longstanding customer of SciDev and this
commercial arrangement, similar to the arrangement with Peabody, will provide for the receipt of monthly payments for
the use of the OptiFlox® System as well as concurrent chemical sales.
The agreements secured with both Peabody Energy and Lion during the financial year are validation of the Company’s
strategy in leveraging its customer base for wastewater treatment chemicals to extend its sales pipeline for the OptiFlox®
System.
The Board and management remain confident that the upcoming financial year additional OptiFlox® Systems will be
deployed in both the coal and dairy sectors, further validating its technology and waste water chemical product suite.
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SciDev Ltd 2017 Annual Report
Corporate activities
The Company witnessed significant progression during FY2017 through the completion of a successful Share Placement
(Placement) and Share Purchase Plan (SPP) and the acquisition of the additional 50% of Science Developments Pty Ltd
(Science Developments).
The placement, which raised $1.5 million through the issue of 125 million new shares at an issue price of $0.012 per
share to professional and sophisticated investors, was completed in January 2017. The placement was carried out in two
stages, the first stage of approximately 45 million shares to raise $0.54 million occurred on 19 December 2016 while the
second stage, the issue of around 80 million shares to raise $0.96 million, was finalised shortly afterwards. Three of the
Company’s Directors took part in the Placement for an aggregate amount of $60,000.
To allow Company shareholders to participate in capital raising activities a Share Purchase Plan (SPP) was also announced
during the period. The SPP was conducted on the same terms as the placement with an aim to raise $0.6 million. The
Company was pleased to announce the SPP was heavily oversubscribed with applications received amounting to
$1,387,396. The SPP was underwritten to an amount of $0.5 million by Taylor Collison Limited.
The funds raised from the SPP and Placement were used to exercise Intec Ltd’s option to acquire the additional 50% of
Science Developments. The transaction, which was completed on 27 February 2017, saw Intec Ltd assume 100% control
of the business, with the Company renamed SciDev Ltd subsequent to the transaction.
The consideration paid for the exercise of the option totalled $0.9 million and comprised of $0.66 million in cash, as well
as the issue of 20 million fully-paid ordinary shares at a deemed issue price of $0.012 per share to Paul Pembroke, the
Technical Director of Science Developments.
Zeehan Slag Dump, Tasmania
The Company has maintained its ownership over the Zeehan Slag Dump and recently consolidated its two granted mining
leases over the slag dump into one mining lease. Throughout the period, management has been assessing several options
to generate value from its ownership of the asset. These include the direct sale of material, blending strategies and
Australian based beneficiation processes to realise value for shareholders.
Outlook
The Company remains positive that the previous financial year has set a strong foundation for growth over the coming
period.
The focus for the upcoming financial year will be as follows:
Installations/trials of additional OptiFlox® Systems in the Australian coal industry;
Installations/trials of additional OptiFlox® Systems in the Australian dairy industry;
The progression of opportunities in overseas markets, such as North America;
•
•
•
• A better understanding of the applicability of OptiFlox® Technology across other industries;
• Value realisation from the Zeehan slag dump in Tasmania; and
•
Further R & D to enhance the Company’s manufacturing capabilities.
Significant changes in the state of affairs
Significant changes in the state of affairs of the group during the financial year were as follows.
Issued capital increased by $2,031,313 (from $71,641,977 to $73,673,290) as the result of a share placement, share
purchase plan and the issue of shares to acquire the remaining 50% in Science Developments Pty Ltd. Details of the
changes in issued capital are disclosed in note 19 to the financial statements.
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SciDev Ltd 2017 Annual Report
On 27 February 2017, the company exercised its option to acquire the remaining 50% of Science Developments Pty Ltd.
The consideration paid for the exercise of the option amounted to $900,000 and was comprised of $660,000 in cash and
the issue of 20 million fully paid ordinary shares in the company. Science Developments Pty Ltd is now a wholly owned
subsidiary of the company.
There were no other significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
On 14 August 2017, the company issued 6.5 million unquoted options to executives and staff (not Directors). The options
were granted under the SciDev Ltd Employee Share Scheme. The options have an exercise price of $0.025 and an expiry
date of 28 November 2019.
No other matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect
the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future
financial years.
Likely developments and expected results of operations
Information on likely developments in the operations of the consolidated entity and the expected results of operations
have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice
to the consolidated entity.
Going concern
The consolidated entity generated an operating loss after income tax of $597,340 (2016: $458,130) and net cash
outflows from operations of $225,298 (2016: $541,397) in the year ended 30 June 2017. At 30 June 2017, the
consolidated entity had net assets of $2,461,700 (2016: $1,766,899) and cash balances of $938,714 (2016: $478,089).
These matters give rise to a material uncertainty that may cast doubt whether the consolidated entity can continue as a
going concern and realise its assets and extinguish its liabilities in the ordinary course of business and at amounts stated
in the financial statements. The continuing viability of the consolidated entity and its ability to continue as a going concern
and meet its debts and commitments as and when they fall due are dependent upon the consolidated entity being
successful in the following:
● Commercialisation of the Optiflox® System with resultant increased product sales and technology leasing fees;
● The raising sufficient capital by way of either additional debt and/or equity capital; and
● The receipt of proceeds from the sale of non-core assets.
The Directors are of the opinion that sufficient additional funding will be secured and are themselves likely to participate
in any future equity capital raising. The financial report has therefore been prepared on the basis of a going concern.
This basis presumes that funds from the above sources will be available to finance future operations, and to repay
liabilities and that the realisation of assets and settlement of liabilities will occur in the normal course of business.
However, the Directors note that if sufficient funds are not raised through the above-mentioned sources, the going
concern basis may not be appropriate with the result that the group may have to realise its assets and extinguish its
liabilities other than in the ordinary course of business and in amounts different from those stated in the financial report.
The company's auditor has, without qualifying their audit opinion, included an 'emphasis of matter' paragraph in their
audit report which draws attention to the aforementioned uncertainty regarding going concern.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or
State law.
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SciDev Ltd 2017 Annual Report
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Trevor A Jones
Chairman
B.Comm. (Melb)
Mr. Jones has spent over 30 years working in the finance industry in Australia, United
Kingdom and the USA. During this time, he has held senior executive positions in
investment funds management, stockbroking and corporate finance, and gained a
broad experience of capital structuring and capital raising, particularly in the mining
sector. Mr. Jones was manager of equity portfolios for Shell Australia and National
Employers Mutual in the United Kingdom. He was a Director of County NatWest
Securities Australia Limited in London and then Director of Corporate Finance with
Westpac Institutional Bank in Sydney. More recently Mr. Jones was the Sydney Chief
Executive for Melbourne-based Austock Group and was Chairman of both its
Corporate Finance and Investment Management divisions. He was appointed as a
Non-executive Director of SciDev on 28 February 2007.
None
None
Chairman of the Corporate Governance Committee and a member of the Audit
Committee and the Nomination and Remuneration Committee
5,742,331
1,000,000
Kieran G Rodgers
Managing Director
B.E. (Hons.) Min. (UNSW), M.B.A. (IMD)
Mr. Rodgers joined SciDev in March 2001 after 13 years of experience in merchant
banking and financial consulting, principally at Resource Finance Corporation Ltd,
which specifically focused on the Australian and international resources industry. He
was appointed as an Executive Director of SciDev on 28 February 2007. Mr. Rodgers
was appointed Managing Director on 6 February 2012.
None
None
Managing Director and member of the Corporate Governance Committee
23,516,577
2,000,000
Daniel J Cronin
Non-executive Director
B.E. (Uni. College, Cork) M.Sc. (Southampton), MBA (LBS)
Mr. Cronin was appointed to the Board of SciDev on 26 November 2013. Mr. Cronin
began his career as an Engineer with the British consulting firm Halcrow, working
for 6 years in the UK and South America. This was followed by 5 years working in
project management with the construction Company Gammon in Hong Kong and
Singapore. Following completion of an MBA degree, he was employed in the chemical
industry for 23 years, initially with Sandoz and later with Degussa and BASF. He has
worked in senior general management roles in Zurich, Sydney and Singapore. His
most recent position was Senior Vice President – Construction Chemicals for BASF
with responsibility for Europe, Middle East and Africa.
None
None
Chairman of the Audit Committee and a member of the Corporate Governance
Committee and the Nomination and Remuneration Committee
4,659,554
2,000,000
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of
all other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
6
SciDev Ltd 2017 Annual Report
Company secretary
Mr Robert J Waring (B.Ec. (Syd), C.A., F.C.I.S., F.Fin., F.A.I.C.D, MAusIMM) was appointed to the position of Company
Secretary of SciDev Limited in December 1998 and resigned on 1 March 2017. Mr Waring has over 40 years’ experience
in financial and corporate roles including over 20 years in Company secretarial roles for ASX-listed companies and 18
years as a Director of ASX-listed companies. He is a Director of Oakhill Hamilton Pty Ltd, which provides secretarial and
corporate advisory services to a range of listed and unlisted companies.
Mr Heath L Roberts (Dip Law (S.A.B.) and Grad Dip Legal Practice (UTS)) was appointed to the position of Company
Secretary of SciDev Limited on 1 March 2017. Mr Roberts is a commercial solicitor with over 20 years of listed company
experience. He has acted for SciDev in various capacities over the years and brings strong transactional, compliance and
capital raising experience to the role.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held during the
year ended 30 June 2017, and the number of meetings attended by each director were:
Full Board
Audit Committee
Attended
Held
Attended
Held
Trevor A Jones
Kieran G Rodgers
Daniel J Cronin
8
8
8
8
8
8
2
-
2
2
-
2
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity,
in accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic
objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the
delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria
for good reward governance practices:
●
●
●
●
●
competitiveness and reasonableness;
acceptability to shareholders;
performance linkage / alignment of executive compensation;
transparency; and
capital management.
The Group has structured an executive remuneration framework that is market competitive. The framework provides for
a mix of fixed pay and also variable pay and includes long term incentives, when appropriate. There is no defined
relationship between Company performance and remuneration at this point in time. However, the matter is under
continual review. The fixed proportion of remuneration is currently 100%. The Board has established a nomination and
remuneration committee which provides advice on remuneration and incentive policies and practices and makes specific
recommendations on remuneration packages and other terms of employment for the Managing Director, other senior
executives and Non-Executive Directors. The Corporate Governance Statement provides further information on the role
of this Committee.
7
SciDev Ltd 2017 Annual Report
Non-executive directors remuneration
Fees and payments to the Non-Executive Directors reflect the demands which are made on, and the responsibilities of,
the Non–Executive Directors. The Board undertakes a review of Non-Executive Directors’ fees and payments annually.
Non-Executive Directors’ fees are determined within an aggregate Non-Executive Directors’ cash remuneration limit,
which is periodically recommended for approval by shareholders. The current limit of $400,000 was approved by
shareholders at the 2007 Annual General Meeting held on 14 November 2007. The amount paid to non-executive directors
of the parent entity (SciDev Limited) during the year to 30 June 2017 was $114,444 (2016: $114,444). In addition, Non-
Executive Directors are able to participate in issues of options pursuant to the SciDev Employee Share Scheme. The
value of any options granted to Non-Executive Directors are not included in the aggregate cash remuneration limit as
they are not cash based payments.
Executive remuneration
The executive pay and reward framework has two components, which together comprise the executive’s total
remuneration:
●
●
base pay, superannuation and non-monetary benefits; and
long term incentives through participation in the SciDev Employee Share Scheme.
The combination of these comprises the executive's total remuneration.
Base pay
Base pay is structured as a total employment cost package, which may be delivered as a combination of cash and
prescribed non-financial benefits at the executive’s discretion. Executives are offered a competitive base pay that
comprises a fixed component of cash salary and superannuation. Base pay for each senior executive is reviewed annually
to ensure the executive’s pay is competitive with the market. There is no guaranteed base pay increase included in any
executive’s contract.
SciDev Employee Share Scheme
Information on the Intec Employee Share Scheme is set out in note 36. Participation in the SciDev Employee Share
Scheme is at the discretion of the Board and there is no guarantee of annual participation by any executive.
Use of remuneration consultants
The company did not engage remuneration consultants during the financial year ended 30 June 2017.
Voting and comments made at the company's 30 November 2016 Annual General Meeting ('AGM')
At the 30 November 2016 AGM, 98.99% of the votes received supported the adoption of the remuneration report for the
year ended 30 June 2016. The company did not receive any specific feedback at the AGM regarding its remuneration
practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
The key management personnel of the consolidated entity consisted of the following directors of SciDev Limited:
●
●
●
Trevor A Jones - Non-executive Chairman
Daniel J Cronin - Non-executive Director
Kieran G Rodgers - Managing Director
Short-term benefits
Post-
employment
benefits
Long-term
benefits
2017
$
Cash salary Consulting
and fees
Non-
Super-
monetary annuation
fees
$
Long service
leave
$
Total
$
Non-Executive Directors:
Trevor A Jones (Chairman)
Daniel J Cronin
69,444
45,000
-
2,000
$
-
-
$
6,597
4,275
-
-
76,041
51,275
Executive Directors:
Kieran G Rodgers
215,000
329,444
-
2,000
27,128
27,128
20,425
31,297
9,137
9,137
271,690
399,006
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SciDev Ltd 2017 Annual Report
Short-term benefits
Post-
employment
benefits
2016
$
Cash salary Consulting
and fees
Non-
Super-
monetary annuation
fees
$
$
Total
$
Non-Executive Directors:
Trevor A Jones (Chairman)
Daniel J Cronin
Executive Directors:
Kieran G Rodgers
$
-
-
69,444
45,000
-
7,000
6,597
4,275
76,041
56,275
215,000
329,444
-
7,000
16,329
16,329
20,425
31,297
251,754
384,070
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Trevor A Jones (Chairman)
Daniel J Cronin
Executive Directors:
Kieran G Rodgers
Fixed remuneration
2017
2016
At risk - STI
At risk - LTI
2017
2016
2017
2016
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Kieran G Rodgers
Managing Director
1 March 2015
3 years
Base salary for the year ended 30 June 2016 of $215,000 plus superannuation, to
be reviewed annually by the Nomination and Remuneration Committee. The contract
may be terminated by 6 months’ notice from either party.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2017.
Options
There were no options over ordinary shares granted to or vested by directors and other key management personnel as
part of compensation during the year ended 30 June 2017.
Details of options over ordinary shares that lapsed for directors and other key management personnel during the year
ended 30 June 2017 are set out below:
Name
Grant date
Vesting date
Number of
Number of
options
granted
options
lapsed
Trevor A Jones
Kieran G Rodgers
9 December 2011
9 December 2011
21 November 2016
21 November 2016
400,000
1,200,000
400,000
1,200,000
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SciDev Ltd 2017 Annual Report
Additional information
The earnings of the consolidated entity for the five years to 30 June 2017 are summarised below:
Sales revenue
Loss after income tax
1,846,985
(597,340)
1,352,346
(458,130)
1,316,493
(856,446)
911,740
(1,261,134) (2,626,224)
308,315
2017
$
2016
$
2015
$
2014
$
2013
$
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Ordinary shares
Trevor A Jones
Kieran G Rodgers
Daniel J Cronin
Balance at Received
the start of as part of
the year
remuneration Additions
Disposals/
other
Balance at
the end of
the year
2,832,777
20,004,623
3,000,000
25,837,400
-
-
-
-
2,909,554
3,511,954
1,659,554
8,081,062
-
-
-
-
5,742,331
23,516,577
4,659,554
33,918,462
Option holding
The number of options over ordinary shares in the company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set out
below:
Balance at
the start of
the year
Granted
Exercised
other
Expired/
forfeited/
Balance at
the end of
the year
Options over ordinary shares
Trevor A Jones
Kieran G Rodgers
Daniel J Cronin
Options over ordinary shares
Trevor A Jones
Kieran G Rodgers
Daniel J Cronin
1,400,000
3,200,000
2,000,000
6,600,000
-
-
-
-
-
-
-
-
(400,000)
(1,200,000)
-
(1,600,000)
1,000,000
2,000,000
2,000,000
5,000,000
Vested and Vested and
exercisable unexercisable
Balance at
the end of
the year
1,000,000
2,000,000
2,000,000
5,000,000
-
-
-
-
1,000,000
2,000,000
2,000,000
5,000,000
Loans to key management personnel and their related parties
There were no loans owing by key management personnel of the group, including their close family members and entities
related to them, during the financial year ended 30 June 2017.
Other transactions with key management personnel and their related parties
There were no other transactions with key management personnel of the group, including their close family members
and entities related to them, during the financial year ended 30 June 2017.
This concludes the remuneration report, which has been audited.
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SciDev Ltd 2017 Annual Report
Shares under option
Unissued ordinary shares of SciDev Limited under option at the date of this report are as follows:
Grant date
Expiry date
10 December 2014*
2 February 2017**
14 August 2017***
28 November 2019
28 November 2019
28 November 2019
Exercise
price
Number
under option
$0.025
5,500,000
$0.025 22,500,000
$0.025
6,500,000
34,500,000
Options granted to employees under the SciDev Employee Share Scheme
*
** Options granted to the Lead Manager and Underwriter for services rendered in connection with the placement of
shares and a share purchase plan
*** Options granted to executives and staff under the SciDev Employee Share Scheme
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue
of the company or of any other body corporate.
No options were granted to the directors or any of the five highest remunerated officers of the company since the end of
the financial year.
Shares issued on the exercise of options
There were no ordinary shares of SciDev Limited issued on the exercise of options during the year ended 30 June 2017
and up to the date of this report.
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of
the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the
company or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking
responsibility on behalf of the company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
auditor are outlined in note 26 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001.
11
SciDev Ltd 2017 Annual Report
The directors are of the opinion that the services as disclosed in note 26 to the financial statements do not compromise
the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved 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 APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company,
acting as advocate for the company or jointly sharing economic risks and rewards.
●
Officers of the company who are former partners of Rothsay Chartered Accountants
There are no officers of the company who are former partners of Rothsay Chartered Accountants.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set
out immediately after this directors' report.
Auditor
Rothsay Chartered Accountants continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the directors
___________________________
Kieran G Rodgers
Managing Director
26 September 2017
Sydney
12
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
As lead auditor of SciDev Limited for the year ended 30 June 2017, I declare that, to the best of my
knowledge and belief, there have been:
• no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
• no contraventions of any applicable code of professional conduct in relation to the audit.
Rothsay Chartered Accountants
Frank Vrachas
Partner
Sydney, 26 September 2017
SciDev Ltd 2017 Annual Report
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2017
Revenue
Other income
Expenses
Changes in inventories
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expense
Engineering and other consultants expenses
Insurance
Listing and share registry expenses
Professional fees
Rent and related expenses
Travel, accommodation and conference
Other expenses
Finance costs
Loss before income tax expense
Note
5
6
7
7
2017
$
2016
$
1,925,233
1,423,072
243,802
351,138
(46,673)
(955,068)
(741,253)
(152,193)
(157,684)
(44,081)
(38,635)
(140,974)
(124,467)
(90,162)
(125,012)
(26,628)
22,263
(780,694)
(701,317)
(85,763)
(147,660)
(37,247)
(25,496)
(106,167)
(105,137)
(71,740)
(81,994)
(26,427)
(473,795)
(373,169)
Income tax expense
8
(123,545)
(84,961)
Loss after income tax expense for the year
(597,340)
(458,130)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Gain on revaluation of other financial assets
Reclassification on disposal of available-for-sale financial assets
Other comprehensive income for the year, net of tax
-
-
-
22,465
(40,565)
(18,100)
Total comprehensive income for the year
(597,340)
(476,230)
Loss for the year is attributable to:
Non-controlling interest
Owners of SciDev Limited
Total comprehensive income for the year is attributable to:
Non-controlling interest
Owners of SciDev Limited
84,811
(682,151)
22,458
(480,588)
(597,340)
(458,130)
84,811
(682,151)
22,458
(498,688)
(597,340)
(476,230)
Cents
Cents
Basic earnings per share
Diluted earnings per share
34
34
(0.18)
(0.18)
(0.16)
(0.16)
Refer to note 3 for detailed information on Restatement of comparatives.
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
14
SciDev Ltd 2017 Annual Report
Consolidated Statement of Financial Position
For the year ended 30 June 2017
Note
2017
$
2016
$
1 July 2015
$
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax refund due
Other
Total current assets
Non-current assets
Other financial assets
Property, plant and equipment
Intangibles
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Employee benefits
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Equity attributable to the owners of SciDev Limited
Non-controlling interest
9
10
11
8
12
13
14
15
16
17
18
8
19
20
21
938,714
334,017
231,839
-
1,754
1,506,324
478,089
215,524
278,040
11,253
1,756
984,662
926,394
321,106
255,777
5,425
-
1,508,702
2,900
291,201
1,279,803
1,573,904
2,900
228,545
1,269,090
1,500,535
57,200
221,323
1,288,905
1,567,428
3,080,228
2,485,197
3,076,130
358,410
11,957
163,365
-
533,732
105,136
336,491
139,466
-
581,093
177,754
355,466
-
111,298
644,518
32,546
52,250
84,796
71,323
65,882
137,205
113,718
74,765
188,483
618,528
718,298
833,001
2,461,700
1,766,899
2,243,129
2,169,223
73,673,290 71,641,977 71,641,977
2,671,694
(73,380,813) (72,698,662) (72,218,074)
2,095,597
147,532
1,596,909
169,990
2,461,700
-
2,653,594
Total equity
2,461,700
1,766,899
2,243,129
Refer to note 3 for detailed information on Restatement of comparatives.
The above statement of financial position should be read in conjunction with the accompanying notes
15
SciDev Ltd 2017 Annual Report
Statement of Changes in Equity
For the year ended 30 June 2017
Issued
capital
$
Reserves
$
Accumulated
losses
$
Non-
controlling
interest
$
Total equity
$
Balance at 1 July 2015
71,641,977
2,671,694 (72,218,074)
147,532
2,243,129
Profit/(loss) after income tax expense for the
year
Other comprehensive income for the year,
net of tax
-
-
-
(480,588)
22,458
(458,130)
(18,100)
-
-
(18,100)
Total comprehensive income for the year
-
(18,100)
(480,588)
22,458
(476,230)
Balance at 30 June 2016
71,641,977
2,653,594 (72,698,662)
169,990
1,766,899
Issued
capital
$
Reserves
$
Accumulated
losses
$
Non-
controlling
interest
$
Total equity
$
Balance at 1 July 2016
71,641,977
2,653,594 (72,698,662)
169,990
1,766,899
Profit/(loss) after income tax expense for the
year
Other comprehensive income for the year,
net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction
costs (note 19)
Share-based payments (note 35)
Transactions with non-controlling interests
(note 32)
-
-
-
-
-
(682,151)
84,811
(597,340)
-
-
-
-
(682,151)
84,811
(597,340)
2,031,313
-
-
160,828
-
(645,199)
-
-
-
-
-
2,031,313
160,828
(254,801)
(900,000)
Balance at 30 June 2017
73,673,290
2,169,223 (73,380,813)
-
2,461,700
The above statement of changes in equity should be read in conjunction with the accompanying notes
16
SciDev Ltd 2017 Annual Report
Statement of Cash Flows
For the year ended 30 June 2017
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
1,999,539
(2,304,164) (2,268,673)
1,671,695
Note
2017
$
2016
$
Interest received
R&D tax offset received
Interest and other finance costs paid
Income taxes paid
(304,625)
13,387
218,492
(26,628)
(125,924)
(596,978)
18,990
162,690
(26,427)
(99,672)
Net cash used in operating activities
33
(225,298)
(541,397)
Cash flows from investing activities
Payments for non-controlling interest in subsidiary
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of intangibles
Net cash from/(used in) investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Repayment of borrowings
31
13
14
(660,000)
(190,764)
(52,143)
-
-
-
(58,414)
-
207,531
(14,756)
(902,907)
134,361
19
2,100,000
(147,859)
(363,311)
-
-
(41,269)
Net cash from/(used in) financing activities
1,588,830
(41,269)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
460,625
478,089
(448,305)
926,394
Cash and cash equivalents at the end of the financial year
9
938,714
478,089
The above statement of cash flows should be read in conjunction with the accompanying notes
17
SciDev Ltd 2017 Annual Report
Notes to the Financial Statement 30 June 2017
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective
notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. None of the new
standards and amendments to standards affected any of the amounts recognised in the current period or any prior
period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Going concern
The consolidated entity generated an operating loss after income tax of $597,340 (2016: $458,130) and net cash
outflows from operations of $225,298 (2016: $541,397) in the year ended 30 June 2017. At 30 June 2017 the
consolidated entity had net assets of $2,461,700 (2016: $1,766,899) and cash balances of $938,714 (2016: $478,089).
These matters give rise to a material uncertainty that may cast doubt whether the consolidated entity can continue as a
going concern and realise its assets and extinguish its liabilities in the ordinary course of business and at amounts stated
in the financial statements. The continuing viability of the consolidated entity and its ability to continue as a going concern
and meet its debts and commitments as and when they fall due are dependent upon the consolidated entity being
successful in the following:
●
●
●
Commercialisation of the Optiflox® System with resultant increased product sales and technology leasing fees;
The raising sufficient capital by way of either additional debt and/or equity capital; and
The receipt of proceeds from the sale of non-core assets.
The Directors are of the opinion that sufficient additional funding will be secured and are themselves likely to participate
in any future equity capital raising. The financial report has therefore been prepared on the basis of a going concern.
This basis presumes that funds from the above sources will be available to finance future operations, and to repay
liabilities and that the realisation of assets and settlement of liabilities will occur in the normal course of business.
However, the Directors note that if sufficient funds are not raised through the above-mentioned sources, the going
concern basis may not be appropriate with the result that the group may have to realise its assets and extinguish its
liabilities other than in the ordinary course of business and in amounts different from those stated in the financial report.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, financial
assets and liabilities at fair value through profit or loss.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 2.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity
only. Supplementary information about the parent entity is disclosed in note 30.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of SciDev Limited ('company'
or 'parent entity') as at 30 June 2017 and the results of all subsidiaries for the year then ended. SciDev Limited and its
subsidiaries together are referred to in these financial statements as the 'consolidated entity'.
18
SciDev Ltd 2017 Annual Report
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an
entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the
date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly
in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss
and other comprehensive income, statement of financial position and statement of changes in equity of the consolidated
entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results
in a deficit balance.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained
together with any gain or loss in profit or loss.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as
non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating
cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period;
or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the
risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively
retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the
lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the
end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line
basis over the term of the lease.
19
SciDev Ltd 2017 Annual Report
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.
Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset
or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together
to form a cash-generating unit.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed
in the period in which they are incurred.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2017.
The consolidated entity's assessment of the impact of these new or amended Accounting Standards and Interpretations,
most relevant to the consolidated entity, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all
previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset
shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to
collect contractual cash flows, which arise on specified dates and solely principal and interest. All other financial
instrument assets are to be classified and measured at fair value through profit or loss unless the entity makes an
irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-
trading) in other comprehensive income ('OCI'). For financial liabilities, the standard requires the portion of the change
in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting
mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment
with the risk management activities of the entity. New impairment requirements will use an 'expected credit loss'
('ECL') model to recognise an allowance. Impairment will be measured under a 12-month ECL method unless the credit
risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method
is adopted. The standard introduces additional new disclosures. The consolidated entity will adopt this standard from 1
January 2018 but the impact of its adoption is yet to be assessed by the consolidated entity.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a
single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written,
verbal or implied) to be identified, together with the separate performance obligations within the contract; determine the
transaction price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the
separate performance obligations on a basis of relative stand-alone selling price of each distinct good or service, or
estimation approach if no distinct observable prices exist; and recognition of revenue when each performance obligation
is satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the
performance obligation would be satisfied when the customer obtains control of the goods.
20
SciDev Ltd 2017 Annual Report
For services, the performance obligation is satisfied when the service has been provided, typically for promises to transfer
services to customers. For performance obligations satisfied over time, an entity would select an appropriate measure of
progress to determine how much revenue should be recognised as the performance obligation is satisfied. Contracts with
customers will be presented in an entity's statement of financial position as a contract liability, a contract asset, or a
receivable, depending on the relationship between the entity's performance and the customer's payment. Sufficient
quantitative and qualitative disclosure is required to enable users to understand the contracts with customers; the
significant judgements made in applying the guidance to those contracts; and any assets recognised from the costs to
obtain or fulfil a contract with a customer. The consolidated entity will adopt this standard from 1 January 2018 but the
impact of its adoption is yet to be assessed by the consolidated entity.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB
117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions,
a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the
unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12
months or less and leases of low-value assets (such as personal computers and small office furniture) where an
accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to
profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease
prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal
or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for
the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance
costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when
compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and
Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit
or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated into
both a principal (financing activities) and interest (either operating or financing activities) component. For lessor
accounting, the standard does not substantially change how a lessor accounts for leases. The consolidated entity will
adopt this standard from 1 July 2019 but the impact of its adoption is yet to be assessed by the consolidated entity.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its
judgements, estimates and assumptions on historical experience and on other various factors, including expectations of
future events, management believes to be reasonable under the circumstances. The resulting accounting judgements
and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective
notes) within the next financial year are discussed below.
Goodwill
The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment,
whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 1. The recoverable
amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require
the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the
estimated future cash flows. For information relating to the value-in-use calculations refer to note 14.
Note 3. Restatement of comparatives
Reclassification
For the year ended 30 June 2016 the net gain on disposal of investments, income from subsidies and grants, and income
from the reimbursement of expenses have been reclassified from 'Revenue' to 'Other income' in the statement of profit
or loss.
The expenses in the statement of profit or loss for the year ended 30 June 2016 were not presented using a consistent
classification based on either the nature of expenses or their function within the consolidated entity. For the year ended
30 June 2017 the consolidated entity has presented expenses in the statement of profit or loss based on the nature of
the expense and the comparatives have been reclassified to reflect the changes in presentation.
The 30 June 2016 statement of financial position has been restated as follows: the income tax receivable and
prepayments are disclosed separately on the face of the statement of financial position under current assets, and the
loans from related related parties have been reclassified from trade and other payables to borrowings.
21
2016
$
$
2016
$
Reported Adjustment Restated
1,774,210
(351,138) 1,423,072
-
351,138
351,138
-
22,263
(758,431)
(22,263)
(307,529) 307,529
(37,247)
(25,496)
(106,167)
(71,740)
(66,879)
-
-
-
-
(15,115)
(373,169)
(84,961)
(458,130)
(18,100)
(476,230)
22,458
(480,588)
(458,130)
22,458
(498,688)
(476,230)
-
-
-
-
-
-
-
-
-
-
-
22,263
(780,694)
-
(37,247)
(25,496)
(106,167)
(71,740)
(81,994)
(373,169)
(84,961)
(458,130)
(18,100)
(476,230)
22,458
(480,588)
(458,130)
22,458
(498,688)
(476,230)
SciDev Ltd 2017 Annual Report
Statement of profit or loss and other comprehensive income
Extract
Revenue
Other income
Expenses
Changes in inventories
Raw materials and consumables used
Administration expense
Insurance
Listing and share registry expenses
Professional fees
Travel, accommodation and conference
Other expenses
Loss before income tax expense
Income tax expense
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Loss for the year is attributable to:
Non-controlling interest
Owners of SciDev Limited
Total comprehensive income for the year is attributable to:
Non-controlling interest
Owners of SciDev Limited
22
SciDev Ltd 2017 Annual Report
Statement of financial position at the beginning of the earliest comparative period
Extract
Assets
Current assets
Trade and other receivables
Income tax refund due
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Total liabilities
Net assets
1 July 2015
$
$
1 July 2015
$
Reported
Adjustment Restated
326,531
-
1,508,702
(5,425)
5,425
-
321,106
5,425
1,508,702
3,076,130
-
3,076,130
277,754
255,466
644,518
833,001
2,243,129
(100,000)
100,000
177,754
355,466
644,518
833,001
2,243,129
2016
$
-
-
-
$
Statement of financial position at the end of the earliest comparative period
2016
$
Extract
Assets
Current assets
Trade and other receivables
Income tax refund due
Other
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Total liabilities
Net assets
Reported
Adjustment Restated
228,533
-
-
984,662
(13,009)
11,253
1,756
-
215,524
11,253
1,756
984,662
2,485,197
-
2,485,197
205,136
236,491
581,093
718,298
1,766,899
(100,000)
100,000
-
-
-
105,136
336,491
581,093
718,298
1,766,899
Note 4. Operating segments
Identification of reportable operating segments
The consolidated entity operates in primarily one geographical segment, namely Australia. The primary business segment
is the treatment of industrial waste including the manufacture and supply of chemicals for the treatment of waste water.
Operating and business segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision makers. 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.
23
SciDev Ltd 2017 Annual Report
Major customers
During the year ended 30 June 2017 approximately [XX]% (2016: [XX]%) of the consolidated entity's external revenue
was derived from sales to the consolidated entity's largest customer. No other customer contributed 10% or more to the
consolidated entity's revenue for both 2017 and 2016.
Revenue by geographical area
The consolidated entity operates in one geographical segment being Australia. Revenue from overseas customers is not
material to the consolidated entity.
Accounting policy for operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
Note 5. Revenue
Sales revenue
Treatment fees and product sales
Other revenue
Interest
Other revenue
Revenue
2017
$
2016
$
1,846,985
1,352,346
13,387
64,861
78,248
16,726
54,000
70,726
1,925,233
1,423,072
Accounting policy for revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue
can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
Sale of goods
Sale of goods revenue is recognised at the point of sale, which is where the customer has taken delivery of the goods,
the risks and rewards are transferred to the customer and there is a valid sales contract. Amounts disclosed as revenue
are net of sales returns and trade discounts.
Consulting services and treatment fees
Consulting services and treatment fees are recognised using the percentage-of-completion method for fixed-fee
arrangements or as the services are provided for time-and-materials arrangements.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Note 6. Other income
Net gain on disposal of investments
Subsidies and grants
Reimbursement of expenses
Other income
2017
$
2016
$
-
218,492
25,310
171,331
162,690
17,117
243,802
351,138
24
SciDev Ltd 2017 Annual Report
Note 7. Expenses
Loss before income tax includes the following specific expenses:
Rental expense relating to operating leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
Note 8. Income tax
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decrease in deferred tax liabilities
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-deductible expense
Current year tax losses not recognised
Current year temporary differences not recognised
Income tax expense
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30%
2017
$
2016
$
124,467
105,137
55,204
78,638
2017
$
2016
$
137,177
(13,632)
93,844
(8,883)
123,545
84,961
(13,632)
(8,883)
(473,795)
(373,169)
(142,139)
(111,951)
3,631
(8,504)
(138,508)
(120,455)
249,635
12,418
194,514
10,902
123,545
84,961
2017
$
2016
$
65,116,209 64,794,786
19,534,863 19,438,436
The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These tax
losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business
test is passed.
25
SciDev Ltd 2017 Annual Report
Deferred tax liability
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Brand name
Deferred tax liability
Movements:
Opening balance
Credited to profit or loss
Closing balance
Income tax refund due
Income tax refund due
2017
$
2016
$
52,250
65,882
52,250
65,882
65,882
(13,632)
74,765
(8,883)
52,250
65,882
2017
$
2016
$
-
11,253
Accounting policy for income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable
to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when
the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted,
except for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or 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 nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and
the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
●
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available
for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that
it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
SciDev Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated
group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to
account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer
within group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated
group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary
in the tax consolidated group.
26
SciDev Ltd 2017 Annual Report
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in
neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
Note 9. Current assets - cash and cash equivalents
Cash on hand
Cash at bank
Cash on deposit
2017
$
2016
$
150
438,564
500,000
150
477,939
-
938,714
478,089
Accounting policy for cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
Note 10. Current assets - trade and other receivables
Trade receivables
Other receivables
2017
$
2016
$
303,480
30,537
189,580
25,944
334,017
215,524
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $127,650 as at 30 June
2017 ($93,444 as at 30 June 2016).
The consolidated entity did not consider a credit risk on the aggregate balances after reviewing the credit terms of
customers based on recent collection practices.
The ageing of the past due but not impaired receivables are as follows:
Past due 1-30 days
Past due 31-60 days
Past due 61+ days
2017
$
105,718
21,932
-
2016
$
63,742
9,900
19,802
127,650
93,444
Accounting policy for trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is
objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms
of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or
financial reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators
that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset's
carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
27
SciDev Ltd 2017 Annual Report
Other receivables are recognised at amortised cost, less any provision for impairment.
Note 11. Current assets - inventories
Stock on hand - at cost
2017
$
2016
$
231,839
278,040
Accounting policy for inventories
Stock on hand is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net
of rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
Note 12. Non-current assets - other financial assets
Shares in unlisted companies - at cost
Less: Provision for impairment
Note 13. Non-current assets - property, plant and equipment
Plant and equipment - at cost
Less: Accumulated depreciation
Office equipment - at cost
Less: Accumulated depreciation
2017
$
2016
$
27,600
(24,700)
27,600
(24,700)
2,900
2,900
2017
$
2016
$
522,904
(232,781)
290,123
377,726
(151,854)
225,872
31,028
(29,950)
1,078
31,028
(28,355)
2,673
291,201
228,545
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Balance at 1 July 2015
Additions
Depreciation expense
Balance at 30 June 2016
Additions
Disposals
Depreciation expense
Balance at 30 June 2017
Plant and
equipment equipment
Office
$
$
Total
$
216,038
58,414
(48,580)
5,285
-
(2,612)
221,323
58,414
(51,192)
225,872
190,764
(17,345)
(109,168)
2,673
-
-
(1,595)
228,545
190,764
(17,345)
(110,763)
290,123
1,078
291,201
28
SciDev Ltd 2017 Annual Report
Property, plant and equipment secured under finance leases
Refer to note 28 for further information on property, plant and equipment secured under finance leases.
Accounting policy for property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives as follows:
Plant and equipment
Office equipment
4-7 years
2-8 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.
Plant and equipment under lease are depreciated over the unexpired period of the lease or the estimated useful life of
the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to
the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or
loss.
Note 14. Non-current assets - intangibles
Goodwill - at cost
Trade marks and intellectual property - at cost
Less: Accumulated amortisation
2017
$
2016
$
1,030,018
1,030,018
374,833
(125,048)
249,785
322,690
(83,618)
239,072
1,279,803
1,269,090
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Balance at 1 July 2015
Additions
Amortisation expense
Balance at 30 June 2016
Additions
Amortisation expense
Balance at 30 June 2017
Trade marks
and
intellectual
Goodwill
property
$
$
Total
$
1,030,018
-
-
258,887
14,756
(34,571)
1,288,905
14,756
(34,571)
1,030,018
-
-
239,072
52,143
(41,430)
1,269,090
52,143
(41,430)
1,030,018
249,785
1,279,803
Impairment testing
Goodwill which was acquired through a business combination, has been allocated to the Science Development Pty Ltd
cash-generating unit (CGU). The recoverable amount of the consolidated entity's goodwill has been determined by a
value-in-use calculation using a discounted cash flow model, based on a 1 year projection period approved by
management and extrapolated for a further 4 years using variable rates, together with a terminal value.
Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive.
29
SciDev Ltd 2017 Annual Report
Key assumptions in the discounted cashflow model include:
a. Post-tax discount rate of 12.5% (2016: 8%) per annum;
b. Revenue growth of 45% in 2018, 49% in 2019 reducing to 9% in 2020;
c. Growth in gross margin of 60% in 2018, 56% in 2019 reducing to 9% in 2020; and
d. Average per annum increase in operating expenses of 5% (2016: 18%).
The discount rate of 12.5% post-tax reflects management’s estimate of the time value of money and the consolidated
entity’s weighted average cost of capital, the risk free rate and the volatility of the share price relative to market
movements.
Management believes the projected revenue growth rate is prudent and justified, based on past performance and
management's expectations of market development.
The budgeted gross margin is based on past performance and management's expectations for the future.
Management has budgeted for operating costs based on the current structure of the business, adjusting for inflationary
increases but not reflecting any future restructurings or cost saving measures.
Sensitivity to change of assumptions
If the next year’s financial budget used in the value-in-use calculation had been 10% lower than management’s estimates
at 30 June 2017, the consolidated entity would have a recoverable amount in excess of $2.02 million against the carrying
amount of the cash generating unit to which the goodwill relates. If the post-tax discount rate applied to the cash flow
projections of this CGU had been 20% higher than management’s estimates (15% instead of 12.5%), the consolidated
entity would have a recoverable amount in excess of $2.14 million against the carrying amount of intangible assets and
property, plant and equipment.
Accounting policy for intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair
value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life
intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible
assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit
or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds
and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed
annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the
amortisation method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried
at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not
subsequently reversed.
Trade marks and intellectual property
Significant costs associated with trade marks and intellectual property are deferred and amortised on a straight-line basis
over the period of their expected benefit, being their finite life of 10 years.
Note 15. Current liabilities - trade and other payables
Trade payables
BAS payable
Other payables
2017
$
287,455
16,851
54,104
2016
$
65,355
9,053
30,728
358,410
105,136
Refer to note 23 for further information on financial instruments.
Accounting policy for trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the
financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not
discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
30
SciDev Ltd 2017 Annual Report
Note 16. Current liabilities - borrowings
Trade finance facility
Loans from related parties
Lease liability
2017
$
2016
$
-
-
11,957
196,535
100,000
39,956
11,957
336,491
Refer to note 18 for further information on assets pledged as security and financing arrangements.
Refer to note 23 for further information on financial instruments.
Note 17. Current liabilities - employee benefits
Annual leave
Long service leave
Accounting policy for employee benefits
2017
$
67,659
95,706
2016
$
52,897
86,569
163,365
139,466
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the
liabilities are settled.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Note 18. Non-current liabilities - borrowings
Lease liability
Refer to note 23 for further information on financial instruments.
The total secured liabilities (current and non-current) are as follows:
Trade finance facility
Lease liability
2017
$
2016
$
32,546
71,323
2017
$
2016
$
-
44,503
196,535
111,279
44,503
307,814
Assets pledged as security
The leases relate to a motor vehicle provided to the Managing Director and plant and equipment owned by Science
Developments Pty Ltd. The motor vehicle lease liability is effectively secured over the motor vehicle. The shareholders
of Science Developments Pty Ltd have provided guarantees for the finance lease relating to plant and equipment.
The trade finance facility is secured by way of a guarantee by a Director related Company of a Director of Science
Developments Pty Ltd.
31
SciDev Ltd 2017 Annual Report
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Trade finance
Used at the reporting date
Trade finance
Unused at the reporting date
Trade finance
2017
$
2016
$
-
-
-
250,000
196,535
53,465
Accounting policy for borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date,
the loans or borrowings are classified as non-current.
Note 19. Equity - issued capital
2017
Shares
2016
Shares
2017
$
2016
$
Ordinary shares - fully paid
494,818,673 299,818,669 73,673,290 71,641,977
Movements in ordinary share capital
Details
Balance
Balance
Share placement
Share purchase plan
Share placement
Acquisition of shares in Science Developments Pty
Ltd
Share issue transaction costs
Date
Shares
Issue price
$
1 July 2015
299,818,669
71,641,977
30 June 2016
19 December 2016
12 January 2017
2 February 2017
299,818,669
44,972,800
50,000,004
80,027,200
$0.012
$0.012
$0.012
71,641,977
539,674
600,000
960,326
27 February 2017
20,000,000
-
$0.012
$0.000
240,000
(308,687)
Balance
30 June 2017
494,818,673
73,673,290
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and
the company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share placement
The company issued 44,972,800 and 80,027,200 ordinary shares on 19 December 2016 and 2 February 2017
respectively, in terms of a conditional placement to sophisticated and professional investors at an issue price of 1.2 cents
per share.
Share purchase plan
On 12 January 2017 the company issued 50,000,004 ordinary shares under a Share Purchase Plan at an issue price of
1.2 cents per share. The plan was fully subscribed.
32
SciDev Ltd 2017 Annual Report
Acquisition of Science Developments Pty Ltd
The company exercised its option to acquire the remaining 50% of Science Developments Pty Ltd. The consideration paid
for the exercise of the option amounted to $900,000 and was comprised of $660,000 in cash and the issue of 20,000,000
ordinary shares at an issue price of 1.2 cents per share.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so
that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is
calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as
value adding relative to the current company's share price at the time of the investment. The consolidated entity is not
actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses
in order to maximise synergies.
There are no externally imposed capital requirements.
The capital risk management policy remains unchanged from the 2016 Annual Report.
The consolidated entity monitors capital on the basis of its working capital position (i.e. liquidity risk). The net working
capital of the consolidated entity at 30 June 2017 was $972,592 (2016: $403,569).
Accounting policy for 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.
Note 20. Equity - reserves
Share-based payments reserve
Transactions with non-controlling interests
2017
$
2016
$
2,814,422
(645,199)
2,653,594
-
2,169,223
2,653,594
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Transactions with non-controlling interests
A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference
between the consideration transferred and the book value of the share of the non-controlling interest acquired is
recognised directly in equity attributable to the parent.
33
SciDev Ltd 2017 Annual Report
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Asset
revaluation
reserve
$
Share-based
payments
reserve
$
Transactions
with non-
controlling
interests
$
Balance at 1 July 2015
Revaluation - gross
Cumulative gain reclassified to profit or loss on sale of
available-for-sale financial assets
18,100
22,465
(40,565)
2,653,594
-
-
Balance at 30 June 2016
Share-based payments
Acquisition of non-controlling interest in Science
Developments Pty Ltd
Balance at 30 June 2017
-
-
-
-
Note 21. Equity - non-controlling interest
Issued capital
Reserves
Retained profits
Total
$
2,671,694
22,465
(40,565)
2,653,594
160,828
-
-
-
-
-
2,653,594
160,828
-
(645,199)
(645,199)
2,814,422
(645,199)
2,169,223
2017
$
2016
$
-
-
-
-
9,005
101,575
59,410
169,990
Note 22. Equity - dividends
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Franking credits
2017
$
2016
$
Franking credits available for subsequent financial years based on a tax rate of 27.5%
82,824
160,268
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
●
●
●
franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
Note 23. Financial instruments
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk,
price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program
focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial
performance of the consolidated entity. The consolidated entity does not enter into or trade financial instruments,
including derivative financial instruments, for speculative purposes.
Risk management is carried out by Company management and the Board of Directors. Financial risks are identified and
evaluated and, where considered necessary, strategies are put in place to investigate and/or minimise such risks.
34
SciDev Ltd 2017 Annual Report
Market risk
Foreign currency risk
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated
in a currency that is not the entity’s functional currency. The consolidated entity has a trade finance facility utilised for
the purchase of US$ denominated invoices. Purchases through the facility are transacted at the prevailing spot A$/US$
exchange rate and the outstanding amount under the facility is always denominated in A$. The consolidated entity has
not entered into any foreign currency hedging contracts during the year.
Price risk
The consolidated entity is not exposed to any significant price risk.
Interest rate risk
The consolidated entity's main interest rate risk arises from borrowings. Borrowings obtained at variable rates expose
the consolidated entity to interest rate risk. Borrowings obtained at fixed rates expose the consolidated entity to fair
value interest rate risk.
As at the reporting date, the consolidated entity had the following variable rate borrowings outstanding:
2017
2016
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$
Balance
$
Trade finance facility and leases
6.00%
44,503
6.00%
307,814
Net exposure to cash flow interest rate risk
44,503
307,814
An analysis by remaining contractual maturities in shown in 'liquidity and interest rate risk management' below.
An official increase/decrease in interest rates of 100 (2016: 100) basis points would have an adverse/favourable effect
on profit before tax of $455 (2016: $3,078) per annum. The percentage change is based on the expected volatility of
interest rates using market data and analysts forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
consolidated entity.There is no significant concentration of credit risk to any single entity. The maximum exposure to
credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment
of those assets, as disclosed in the statement of financial position and notes to the financial statements. There is no
trade debtor or other receivable amount where collateral has been received as security or pledged.
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and
cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities
by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and
liabilities.
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities.
The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on
which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed
as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of
financial position.
35
SciDev Ltd 2017 Annual Report
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
- 2017
Non-interest bearing
Trade payables and other
payables
-
358,410
-
Interest-bearing - variable
Trade finance and lease liability
Total non-derivatives
6.00%
11,957
370,367
32,546
32,546
- 2016
Non-interest bearing
Trade and other payables
-
105,136
-
Interest-bearing - variable
Trade finance and lease liability
6.00%
236,491
71,323
Interest-bearing - fixed rate
Loans from related parties
Total non-derivatives
6.00%
100,000
441,627
-
71,323
Remaining
contractual
maturities
$
358,410
44,503
402,913
Remaining
contractual
maturities
$
105,136
307,814
100,000
512,950
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 24. Fair value measurement
Fair value hierarchy
The following tables detail the consolidated entity's assets and liabilities, measured or disclosed at fair value, using a
three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly
Level 3: Unobservable inputs for the asset or liability
- 2017
Assets
Unlisted investments
Total assets
- 2016
Assets
Unlisted investments
Total assets
Level 1
$
Level 2
$
Level 3
$
Total
$
-
-
Level 1
$
-
-
2,900
2,900
Level 2
$
2,900
2,900
-
-
Level 3
$
-
-
2,900
2,900
Total
$
2,900
2,900
There were no transfers between levels during the financial year.
Valuation techniques for fair value measurements categorised within level 2 and level 3
Unquoted investments have been valued using a discounted cash flow model.
36
SciDev Ltd 2017 Annual Report
Accounting policy for fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the
fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge
and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an
analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison,
where applicable, with external sources of data.
Note 25. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated
entity is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
2017
$
2016
$
358,572
31,297
9,137
352,773
31,297
-
399,006
384,070
Note 26. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Rothsay Chartered Accountants,
the auditor of the company:
Audit services - Rothsay Chartered Accountants
Audit or review of the financial statements
Other services - Rothsay Chartered Accountants
Tax compliance services
2017
$
2016
$
31,300
29,500
5,500
-
36,800
29,500
37
SciDev Ltd 2017 Annual Report
Note 27. Contingent assets
The Group holds a 2.5% net smelter royalty in relation to future base metals extracted from certain tenements in the
Hellyer/Que River region of Tasmania. The Group also holds a mining lease and retention licence covering a stockpile of
zinc-bearing residue near Zeehan, Tasmania.
As a result of a transaction entered into by Intec International Projects Pty Ltd (“IIP”) with Monument Mining Limited, a
Company listed on the Toronto Stock Exchange, SciDev is entitled to receive a 5% royalty on fees generated by IIP in
relation to Intec Process applications. This transaction occurred after SciDev divested its 50% shareholding in IIP. In
addition, SciDev retains its rights to its portion of unpaid fees relating to the IRC Project.
Note 28. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Lease commitments - finance
Committed at the reporting date and recognised as liabilities, payable:
Within one year
One to five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Representing:
Lease liability - current (note 16)
Lease liability - non-current (note 18)
2017
$
2016
$
61,750
-
48,581
38,324
61,750
86,905
16,329
34,911
49,100
81,281
51,240
(6,737)
130,381
(19,102)
44,503
111,279
11,957
32,546
39,956
71,323
44,503
111,279
Operating lease commitments includes contracted amounts for various warehouses, offices and plant and equipment
under non-cancellable operating leases expiring within 1 year with, in some cases, options to extend. The leases have
various escalation clauses. On renewal, the terms of the leases are renegotiated.
The motor vehicle related to the finance lease has a written down value of $32,272 (2016: $54,011) and the lease
expires within five years. The terms of the lease provide for the consolidated entity to acquire the motor vehicle for an
agreed residual value at the end of the lease period.
There are no minimum annual expenditure requirements attached to the tenements held by the consolidated entity.
Note 29. Related party transactions
Parent entity
SciDev Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 31.
Key management personnel
Disclosures relating to key management personnel are set out in note 25 and the remuneration report included in the
directors' report.
38
SciDev Ltd 2017 Annual Report
Transactions with related parties
Details of transactions between the consolidated entity and related parties are disclosed below:
Other transactions:
Subscription for new ordinary shares by key management personnel as result of the share
placement and share purchase plan
89,744
-
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
2017
$
2016
$
Current borrowings:
Loans from other related parties*
2017
$
2016
$
-
100,000
*
Mr Paul Pembroke and Mr Mark Wells, Directors and former shareholders of Science Developments Pty Ltd, both
provided unsecured loans of $50,000 on commercial terms to Science Developments Pty Ltd. The loans were
unsecured and bore interest at 6% per annum. The loans were repaid during the 2017 financial year.
Balances and transactions between the company and its subsidiaries, which are related parties of the company, have
been eliminated on consolidation and are not disclosed in this note.
Note 30. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Other comprehensive income for the year, net of tax
Total comprehensive income
Parent
2017
$
2016
$
(759,995)
(503,280)
-
(18,100)
(759,995)
(521,380)
39
SciDev Ltd 2017 Annual Report
Statement of financial position
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Parent
2017
$
2016
$
781,510
479,843
2,631,209
1,458,297
3,412,719
1,938,140
258,941
204,551
32,546
44,504
291,487
249,055
3,121,232
1,689,085
73,979,808 71,948,494
2,722,414
2,561,586
(73,580,990) (72,820,995)
3,121,232
1,689,085
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2017 and 30 June 2016.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2017 and 30 June 2016.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2017 and 30 June 2016.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1,
except for the following:
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
Note 31. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned
subsidiaries in accordance with the accounting policy described in note 1:
Name
Intec Copper Pty Ltd
Intec Environmetals Pty Ltd
Science Developments Pty Ltd
Intec Zeehan Residues Pty Ltd*
*
Subsidiary of Intec Environmentals Pty Ltd
Ownership interest
2016
2017
%
%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50.00%
100.00%
Principal place of business /
Country of incorporation
Australia
Australia
Australia
Australia
40
SciDev Ltd 2017 Annual Report
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary with non-
controlling interests in accordance with the accounting policy described in note 1:
Principal place of
business /
Country of
Name
incorporation
Science
Developments Pty
Ltd
Australia
Principal
activities
Supplier of
chemicals for
industrial
wastewater
treatment
Parent
Ownership
interest
2017
Ownership
interest
2016
Non-controlling interest
Ownership
interest
2016
Ownership
interest
2017
%
%
%
%
100.00%
50.00%
-
50.00%
Summarised financial information
Summarised financial information of the subsidiary with non-controlling interests that are material to the consolidated
entity are set out below:
Summarised statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Summarised statement of profit or loss and other comprehensive income
Revenue
Expenses
Profit before income tax expense
Income tax expense
Profit after income tax expense
Other comprehensive income
Total comprehensive income
Statement of cash flows
Net cash from operating activities
Net cash used in investing activities
Net cash used in financing activities
Net decrease in cash and cash equivalents
Other financial information
Profit attributable to non-controlling interests
Accumulated non-controlling interests at the end of reporting period
41
2016
$
495,299
92,716
588,015
374,945
26,820
401,765
186,250
1,569,038
(1,409,553)
159,485
(93,844)
65,641
-
65,641
89,036
(73,170)
(31,696)
(15,830)
32,820
169,990
SciDev Ltd 2017 Annual Report
Transactions with non-controlling interests
On 27 February 2017 the consolidated entity acquired the remaining 50% of the ordinary shares of Science Developments
Pty Ltd. With the 50% acquisition the consolidated entity now holds a 100% interest in Science Developments Pty Ltd.
The total consideration paid amounted to $900,000 and was comprised of $660,000 in cash and the issue of 20 million
fully paid ordinary shares at a deemed issue price of 12 cents per share amounting to $240,000. Immediately prior to
the purchase, the carrying amount of the existing 50% non-controlling interest in Science Developments Pty Ltd was
$254,801. The consolidated entity recognised a decrease in non-controlling interests of $254,801 and a decrease in
equity attributable to owners of the parent of $645,199. The effect on the equity attributable to the owners of SciDev
Limited during the year is summarised as follows:
2017
$
2016
$
Carrying amount of non-controlling interests acquired
Consideration paid to non-controlling interests
254,801
(900,000)
Excess of consideration paid recognised in the transactions with non-controlling interests
reserve within equity
(645,199)
-
-
-
There were no transactions with non-controlling interests in 2016.
Note 32. Events after the reporting period
On 14 August 2017, the company issued 6.5 million unquoted options to executives and staff (not Directors). The options
were granted under the SciDev Ltd Employee Share Scheme. The options have an exercise price of $0.025 and an expiry
date of 28 November 2019.
No other matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect
the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future
financial years.
Note 33. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Net loss/(gain) on disposal of non-current assets
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
Decrease in income tax refund due
Decrease in prepayments
Increase/(decrease) in trade and other payables
Decrease in deferred tax liabilities
Increase in employee benefits
Increase in other provisions
Decrease in other operating liabilities
Net cash used in operating activities
2017
$
2016
$
(597,340)
(458,130)
152,193
17,345
85,763
(171,331)
(118,493)
46,201
11,253
2
253,274
(13,632)
23,899
-
-
97,998
(22,263)
-
-
(72,618)
(8,883)
-
28,168
(20,101)
(225,298)
(541,397)
42
SciDev Ltd 2017 Annual Report
Note 34. Earnings per share
Loss after income tax
Non-controlling interest
2017
$
2016
$
(597,340)
(84,811)
(458,130)
(22,458)
Loss after income tax attributable to the owners of SciDev Limited
(682,151)
(480,588)
Weighted average number of ordinary shares used in calculating basic earnings per share 386,472,852 299,818,669
Weighted average number of ordinary shares used in calculating diluted earnings per
share
386,472,852
299,818,669
Number
Number
Basic earnings per share
Diluted earnings per share
Cents
Cents
(0.18)
(0.18)
(0.16)
(0.16)
Options are considered to be potential ordinary shares but were anti-dilutive in nature and therefore the diluted loss per
share is the same as the basic loss per share.
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of SciDev Limited, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
Note 35. Share-based payments
Employee Share Scheme
Share based compensation benefits are provided to employees via the SciDev Employee Share Scheme.
At the 2014 Annual General Meeting, shareholders approved the SciDev Employee Share Scheme (the Scheme). All
Directors, employees and consultants are eligible to participate in the Scheme. Options granted under the Scheme to
eligible participants are for no additional consideration. Options are granted for a five-year period, and vest and are
exercisable immediately, unless otherwise stated. Options granted under the Scheme carry no dividend or voting rights.
The granting of options is at the Board’s discretion and no individual has a contractual right to receive options.
The fair value of options granted under the SciDev Employee Share Scheme is recognised as an employee benefit expense
with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during
which the employees become unconditionally entitled to the options.
The fair value at grant date is determined using share option valuation models that take into account the exercise price,
the term of the option, the impact of dilution, the share price at grant date, the expected price volatility of the underlying
share, the expected dividend yield and the risk free interest rate for the term of the option.
The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any
non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are
included in assumptions about the number of options that are expected to become exercisable. At each reporting date,
the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit
expense recognised each period takes into account the most recent estimate.
43
SciDev Ltd 2017 Annual Report
There were no options granted under the scheme during the 2017 and 2016 financial year.
Other share-based payments
On 2 February 2017 the company granted 22,500,000 options to the Lead Manager and Underwriter for services rendered
in connection with the placement of shares and the share purchase plan (refer note 8). The options have an exercise
price of $0.025, vested on grant date and expire on 28 November 2019. The value of the options granted was $160,828.
Set out below are summaries of options granted:
2017
Grant date
Expiry date
09/12/2011
10/12/2014
02/02/2017
21/11/2016
28/11/2019
28/11/2019
Exercise
price
$0.030
$0.025
$0.025
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
3,300,000
5,500,000
-
8,800,000
-
-
22,500,000
22,500,000
-
-
-
-
(3,300,000)
-
-
-
5,500,000
22,500,000
(3,300,000) 28,000,000
Weighted average exercise price
$0.027
$0.025
$0.000
$0.030
$0.025
2016
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
09/12/2011
10/12/2014
21/11/2016
28/11/2019
$0.030
$0.025
3,300,000
5,500,000
8,800,000
-
-
-
-
-
-
-
-
-
3,300,000
5,500,000
8,800,000
Weighted average exercise price
$0.027
$0.000
$0.000
$0.000
$0.027
Set out below are the options exercisable at the end of the financial year:
Grant date
Expiry date
09/12/2011
10/12/2014
02/02/2017
21/11/2016
28/11/2019
28/11/2019
2017
Number
2016
Number
-
5,500,000
22,500,000
3,300,000
5,500,000
-
28,000,000 8,800,000
The fair value of options granted was measured using the Black-Scholes option pricing model.
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at
the grant date, are as follows:
Grant date
Expiry date
Share price
at grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest rate at grant date
Fair value
02/02/2017
28/11/2019
$0.013
$0.025
110.00%
-
2.25%
$0.007
Accounting policy for share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount
of cash is determined by reference to the share price.
44
SciDev Ltd 2017 Annual Report
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of
the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions
that do not determine whether the consolidated entity receives the services that entitle the employees to receive
payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either
the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the
award was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by
the expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at
the reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid
to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other
conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition
is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not
satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period,
unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
45
SciDev Ltd 2017 Annual Report
Directors’ Declaration
In the directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position
as at 30 June 2017 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Kieran G Rodgers
Managing Director
26th September 2017
Sydney
46
SCIDEV LIMITED
INDEPENDENT AUDITOR’S REPORT
To the Directors of SciDev Limited
Opinion
We have audited the financial report of SciDev Limited (“SciDev”) and its controlled entities (the “Group”), which
comprises the consolidated statement of financial position as at 30 June 2017, the consolidated statement of profit or
loss and other comprehensive income, the consolidated statement of changes in equity and the 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 financial report of the Group is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its performance for the year
ended on that date; and
(b) 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 as 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 and Ethical Standards Board's APES 110 Code of Ethics for
Professional Accountants (“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.
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the Company incurred a net loss of $597,340
during the year ended 30 June 2017 and a net cash outflow from operations of $225,298. As stated in Note 1, these
events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may
cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of
this matter.
47
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.
Key Audit Matter
How our Audit Addressed the Key Audit Matter
Impairment of Goodwill
The impairment assessment
made by management over
the Company’s goodwill
balance is a key audit matter
as it incorporates significant
judgments in respect of
factors such as forecast cash
flows, growth rates and
discount rates as well as
economic assumptions such as
inflation.
Our procedures included:
• Assessing management’s determination of the Group’s CGUs based on
our understanding of the group. We also compared this to the internal
reporting of the group to assess how revenue is reported.
• Evaluating management’s cash flow forecast along with the
assumptions and methodologies used. We also took into consideration
the results of the current year actual results to the prior forecasts to
assess management’s ability to accurately forecast results.
• Evaluating the assessment performed by management to ensure the
methodology appeared reasonable and the assumptions noted in the
forecasts were accurately reflected.
• Reviewing the discounting applied to determine if it was reasonable in
the current market and reflective of the rate of interest the Group
would be able to obtain finance if required.
• Verifying the calculations for mathematical accuracy and considered
the sensitivity of the calculation by varying the assumptions and
applying other values within a reasonable range.
Responsibility of Directors for the Financial Report
The directors of the Group are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is
free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the 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 Group or to cease operations, or have no realistic alternative but to do
so.
48
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 Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
49
From the matters communicated with the directors, we determine those matters that were of most significance in the
audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 7 to 11 of the Directors’ Report for the year ended 30 June
2017. 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.
Opinion on the Remuneration Report
In our opinion, the Remuneration Report of SciDev Limited (“SciDev”), for the year ended 30 June 2017, complies with
section 300A of the Corporations Act 2001.
Rothsay Chartered Accountants
Frank Vrachas
Partner
Sydney, 26 September 2017
50
SciDev Ltd 2017 Annual Report
Schedule of Tenements
At 25 September 2017, the Group held the following tenement:
Tenement number
Tenement name
Expiry
date
Area
Km2
Security
deposits
held
$
Annual
expenditure
commitments
$
Tenements held by Intec Zeehan Residues Pty Ltd
Mining Lease
3M/2017
Zeehan
1 February
2023
1.0
11,000
Nil
The Group also holds a 2.5% Net Smelter Return Royalty (NSR Royalty) in relation to base metals extracted from the
following Tasmanian tenements:
EL48/2003: Mt Block Exploration Licence;
EL24/2004: Bulgobac River Exploration Licence;
CML103M/1987: Hellyer Mine Lease; and
ML68M/1984: Que River Mine Lease.
Shareholder Information
The shareholder information set out below was applicable as at 26 September 2017
Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Class of equity security
Ordinary shares
Number of shareholders
Number of shares
1
1,001
5,001
10,001
-
-
-
-
100,001 and over
1,000
5,000
10,000
100,000
164
137
73
322
380
1,076
47,518
390,192
568,101
17,448,642
476,364,220
494,818,673
51
SciDev Ltd 2017 Annual Report
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities as at 26 September 2017 are listed below:
Name
Kieran Gregory Rodgers & Patricia Maree Rodgers
PW Pembroke Pty Ltd
Kathleen Frances Watt
Martin Edward Meyer
Longwin Capital Finance Ltd
Stuart Andrew Spiteri
Markham Hanna & Rita Hanna
Calama Holdings Pty Ltd
Donald Alexander Bell & Lexie Ann Bell
GP Securities Pty Ltd
The Genuine Snake Oil Company Pty Ltd
J P Morgan Nominees Australia Ltd
Alan Conigrave
Brian Harry Rivers
Kang We Li
Symington Pty Ltd
The Stephens group Pty Ltd
Puntero Pty Ltd
HSBC Custody Nominees (Australia) Pty Ltd
Ianaki Semerdziev
Total of Top 20 Shareholdings
Other Shareholders
Total Ordinary Shares on Issue
Ordinary shares
Number held
23,514,178
20,000,000
18,416,667
14,666,667
14,666,667
11,400,000
10,630,813
10,000,001
10,000,000
9,000,000
8,000,000
7,314,031
7,000,000
6,700,000
6,688,888
6,000,000
5,750,000
5,231,739
5,186,828
5,095,221
494,818,673
Percentage of
issued shares
4.75
4.04
3.72
2.96
2.96
2.30
2.15
2.02
2.02
1.82
1.62
1.48
1.42
1.35
1.35
1.21
1.16
1.06
1.05
1.03
41.48
58.52
100.00
Unquoted equity securities
Options over ordinary shares issued
Substantial holders
There are no Substantial holders in the company.
Number
on issue
Number
of holders
34,500,000
8
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities.
52
SciDev Ltd 2017 Annual Report
Corporate Directory
Directors
Trevor A Jones - Chairman
Kieran G Rodgers - Managing Director
Daniel J Cronin - Non-executive Director
Company secretary
Heath L Roberts
Notice of annual general meeting
The details of the annual general meeting of SciDev Limited are:
The Boardroom Northside Conference Centre
Corner of Oxley Street and Pole Lane
Crows Nest NSW 2065
4:00 pm on Thursday 30th November 2017
Registered office and principal place
of business
Office
105/ 45 Atchison Street
St Leonards
NSW 2065
Phone: 0438 675 510
Share register
Auditor
Patent Attorney
Boardroom Pty Limited
Level 12
225 George Street
Sydney
NSW 2000
Phone: (02) 9290 9600
Rothsay Chartered Accountants
Level
12 O'Connell Street
Sydney
NSW 2000
Griffith Hack
100 Miller Street
North Sydney
NSW 2060
Stock exchange listing
SciDev Limited shares are listed on the Australian Securities Exchange (ASX code:
SDV) and the Deutsche Boerse (Code: INF).
Website
www.scidev.com.au
Corporate governance statement
www.scidev.com.au/corporate-governance
53