SciDev Limited Annual Report 2019

Plain-text annual report

ANNUAL REPORT 2019 1 Scidev ltd ABN 25 001 150 849 Financial Report for the year ended 30 june 2019 2 SciDev Ltd REPORT 2019 ANNUAL TABLE OF CONTENTS Chairman’s Le(cid:425)er Managing Director & CEO’s Le(cid:425)er Review of Opera(cid:415)ons Director’s Report Remunera(cid:415)on Report Auditor's independence declara(cid:415)on Statement of proﬁt or loss and other comprehensive income Statement of ﬁnancial posi(cid:415)on Statement of changes in equity Statement of cash ﬂows Notes to the ﬁnancial statements Directors' declara(cid:415)on Independent auditor's report Addi(cid:415)onal ASX Informa(cid:415)on Corporate directory Page 4 5 7 11 14 23 24 25 26 27 28 61 62 66 68 3 Chairman’s Le(cid:425)er Dear fellow SciDev shareholder The 2019 ﬁnancial year has seen a signiﬁcant step-change for your company. Managing Director and CEO Lewis U(cid:427)ng delivers a comprehensive update on the business’s performance in the following pages and I won’t speak to that in detail here. However, I would like to highlight the major ini(cid:415)a(cid:415)ves undertaken by SciDev this year. Our People – the success of SciDev is based on our excep(cid:415)onally skilled people and I extend my sincere thanks to them. SciDev took the ini(cid:415)a(cid:415)ve of improving our people with the appointment of Lewis U(cid:427)ng in March 2018. Lewis was appointed as Managing Director and CEO of the company in April 2019 and has driven a signiﬁcant period of momentum for the company. Lewis is well supported by a team of highly capable engineers led by Jamiel Muhor and Jeﬀrey Zhang - who joined the team via our strategic alignment with Nuoer Group. With Simone Wa(cid:425) joining the Board in October 2018 followed by Jon Gourlay in mid -2019 and support from our Company Secretary Heath Roberts, we have a ﬁrst class team that can con(cid:415)nue to build on the successes delivered to date. Our Technology – SciDev’s innova(cid:415)ve Op(cid:415)Flox® process control system improves the mineral processing systems at our customers opera(cid:415)ons, delivering addi(cid:415)onal processing (cid:415)me and reduced consumable spend for end users. Our in house exper(cid:415)se, coupled with our strategic partnership with Nuoer Group is providing a leading supply of high-quality chemical product and technology sales. Our Shareholders – we have recognised that in order to do jus(cid:415)ce to our ambi(cid:415)ous growth plans the Company has required addi(cid:415)onal capital. A $2.5million capital raising was undertaken in February 2019 at $0.06 per share; by way of placement and rights issue, followed by a second capital raising of $4.16 million in September 2019 at $0.26 per share, by way of ins(cid:415)tu(cid:415)onal placement. We recognise and thank both our long term shareholders and our new ins(cid:415)tu(cid:415)onal shareholders for your support. I pass my thanks to my fellow Board Members, and look forward to sharing SciDev’s ongoing success as the forthcoming year unfolds. Yours sincerely Trevor Jones Chairman 4 SciDev Ltd REPORT 2019 ANNUAL Managing Director & CEO Dear Shareholders, It is a privilege to write my ﬁrst le(cid:425)er to you as CEO and Managing Director of SciDev. The past year has seen signiﬁcant progress from the Company across several areas. Recent contract wins reﬂect the commercial viability of our technology, posi(cid:415)oning SciDev as an emerging leader in solid-liquid separa(cid:415)on across a range of industries. We will con(cid:415)nue to work with our exis(cid:415)ng founda(cid:415)on customers in Peabody and Iluka, delivering bespoke solu(cid:415)ons to meet their processing needs. SciDev will con(cid:415)nue to push into new markets where our people, chemistries and technology can add value. We are pleased to have announced our ﬁrst major order from the US shale industry in July 2019. The oil and gas and construc(cid:415)on markets oﬀer an exci(cid:415)ng area for growth and the company will con(cid:415)nue to focus on those industries in several regions. Our strategic rela(cid:415)onship with Nuoer Group in Oceania reﬂects our evolu(cid:415)on as a company. The rela(cid:415)onship assists in the ability for SciDev to execute on our growth ambi(cid:415)ons quickly. Our joint ability to scale solu(cid:415)ons from Research and Development into commercial applica(cid:415)ons is key to our mutual success. Our people Our business is based on our people, just as much as on our technology. SciDev technology is backed up with expert support from our workforce of highly skilled engineers and chemists who have decades of relevant global industry experience. Our people engage directly with our customers, on site, to build bespoke solu(cid:415)ons to their processing requirements. We believe that the presence of our dedicated and highly trained staﬀ on site, driving bespoke solu(cid:415)ons to exceed our customers’ requirements, is a unique diﬀeren(cid:415)ator that our larger global compe(cid:415)tors simply cannot match. The Company has expanded our staﬀ over FY19 with several key addi(cid:415)ons allowing us to broaden our technology por(cid:414)olio to ensure we can con(cid:415)nue to provide complete solu(cid:415)ons to our end users. We will con(cid:415)nue to invest in developing our people to ensure that the company has the right people to match our technologies and drive growth for SciDev. I would like to thank all the SciDev staﬀ for their signiﬁcant eﬀorts this year. As we enter into FY2020 I believe the company is well placed from an opera(cid:415)onal and ﬁnancial perspec(cid:415)ve, our commitment to our customers and recent momentum will con(cid:415)nue to deliver growth throughout the current year and beyond. Developing our strategic rela(cid:415)onships During the year SciDev announced a binding agreement to acquire the exclusive distribu(cid:415)on and marke(cid:415)ng rights in Australia and other Oceanic countries for polymer products produced by the Chinese based Nuoer Group. Securing the exclusive distribu(cid:415)on and marke(cid:415)ng rights with Nuoer delivers SciDev an expanded market opportunity for the MaxiFlox® technology, supply chain security and a world class partner that can manufacture products to SciDev speciﬁca(cid:415)ons. The broadening coopera(cid:415)on between the two groups is expected to deliver unparalleled industry reach and signiﬁcant growth opportuni(cid:415)es for SciDev as evidenced through our growth during the year FY19. Our rela(cid:415)onship with the Sinoz Group con(cid:415)nues to strengthen. The Sinoz Group are a globally signiﬁcant manufacturer and supplier of chemicals and reagents to the mining and agribusiness sectors. Our technologies are highly complementary to Sinoz’s product oﬀering across the mineral processing reagent value chain. SciDev will con(cid:415)nue to beneﬁt from our rela(cid:415)onship with Sinoz, primarily in accelerated business development opportuni(cid:415)es in the base metals mineral processing industry. 5 Managing Director & CEO con(cid:415)nued Business review The past ﬁnancial year saw SciDev take considerable strides in the development and commercializa(cid:415)on of our technologies and chemistries. Key customer developments during the year include:  Announcement of the delivery of our ﬁrst full container load (FCL) into the con(cid:415)nental United States through our subsidiary SciDev (US) LLC (ref ASX 23 May 2019). The order was to SciDev MOU partner Phoenix Process Equipment Company and is the result of marke(cid:415)ng eﬀorts over the prior periods. Con(cid:415)nued evalua(cid:415)ons conducted across several coal projects in both the Bowen Basin and NSW coal ﬁelds with (cid:415)er-one producers. SciDev is conﬁdent that some of these projects will further develop into commercial opportuni(cid:415)es for both chemical solu(cid:415)ons and the Op(cid:415)Flox® system. Our ﬁrst sales into the US oil and gas market were announced post the end of the ﬁnancial year. The order for fric(cid:415)on reducers was des(cid:415)ned for the US Permian basin. The total orders to date for SciDev’s proprietary MaxiFlox® technology are AUD$1.08m. Post the end of the ﬁnancial year the Company announced that it has signed a three (3) year agreement for the supply and service of its MaxiFlox® chemistry to Iluka Resources. The annual value of the contract over the term is likely to be between AUD $2.6M – AUD $4.0M.    Key areas of focus for SciDev in 2020 As we enter FY20 we are seeing the hard work from the SciDev team over the last few quarters convert in to sales contracts with recurring revenue streams. Our goal of increasing our revenues with a view to becoming cashﬂow posi(cid:415)ve is now within reach. Considering this achievement and the recent mul(cid:415)-year contract agreement with Iluka, SciDev is oﬀ to an excellent start in FY 2020. The focus for SciDev and the management team through the FY20 ﬁnancial year will be to:  Drive our revenue line through the execu(cid:415)on of a well-structured business development pipeline in the Oil & Gas and mineral processing sectors. Develop large customer opportuni(cid:415)es across several con(cid:415)nents where the synergies for the Op(cid:415)Flox® & MaxiFlox® combina(cid:415)on can deliver the greatest value to our customers and subsequent value to shareholders. Build upon the Company’s momentum in the Australian coal industry, transi(cid:415)oning across applica(cid:415)on, mineral types and key industry players with our Op(cid:415)Flox® technology. Further develop the opportuni(cid:415)es presented through SciDev (US) LLC into the US oil and gas sector focussing on transi(cid:415)oning R&D chemistries into bespoke produc(cid:415)on solu(cid:415)ons. Extend our technology into the precious metal and base metal sectors throughout Australia and Asia, while looking for other opportuni(cid:415)es in currently unrealised sec(cid:415)ons of the mineral processing value chain. Renew our eﬀort in the Australian water and wastewater sector with strategic partnerships and licensing opportuni(cid:415)es with global operators and key end users. Deliver upon our recent agreement with Iluka in the mineral sands sector delivering value and further developing this rela(cid:415)onship Con(cid:415)nue to strengthen and leverage our rela(cid:415)onship with Nuoer through joint marke(cid:415)ng and R&D eﬀorts in key market areas while also reﬁning the geographic manufacturing footprint.        On behalf of the SciDev team I would like to thank the board, our highly talented & mo(cid:415)vated team and our shareholders for another year of progression. I look forward to delivering another successful year in FY20. Yours sincerely Lewis U(cid:427)ng Managing Director & CEO 6 Review of Opera(cid:415)ons SciDev is a solu(cid:415)on provider to the water, mining, oil & gas and construc(cid:415)on industries focussing on solid-liquid separa(cid:415)on. The Company’s solu(cid:415)ons are built on the supply of bespoke chemistry to solve environmental and processing challenges in the industries we serve. is manufactured using our novel Our chemistry inhouse manufacturing methods. Where we don’t have the infrastructure to manufacture in house, we partner with key industry partners. During the year we partnered with Nuoer China to supply bespoke chemistry exclusively for the Oceanic region and with key customers globally. This partnership allows SciDev to penetrate a USD$8B market with a complete chemistry por(cid:414)olio. Our solu(cid:415)on-based approach has been bolstered with the inclusion of a Professional Services oﬀering which allows key SciDev personnel to solve bespoke customer problems and iden(cid:415)fy addi(cid:415)onal opportuni(cid:415)es for our products and services. Our innova(cid:415)ve Op(cid:415)Flox® process control system improves the mineral processing path for our customers, delivering addi(cid:415)onal processing (cid:415)me and reduced consumable spend for end users. SciDev Ltd REPORT 2019 ANNUAL   FY19 Highlights  Revenues from customers increased by 31.9% to $2.92m  Net cash posi(cid:415)on at end of period of $1.76m supported by successful placement to Nuoer Group and a $2.5m fund raising Entered into a binding agreement to acquire the exclusive distribu(cid:415)on and marke(cid:415)ng rights in Australia and other Oceanic countries for polymer products produced by Chinese base Nuoer Group Lewis U(cid:427)ng commenced as CEO & Managing Director in April 2019 Established North American presence with SciDev (US) LLC with ﬁrst product sales to SciDev MOU partner Phoenix Process Equipment Company with Nuoer manufactured product Con(cid:415)nued evalua(cid:415)on across several coal projects in the Bowen Basin and NSW coal ﬁelds with (cid:415)er-one producers.The Op(cid:415)ﬂox® system trial con(cid:415)nues at a major coking coal opera(cid:415)on with further commercial discussions an(cid:415)cipated in the coming quarters Strengthening of the board with the addi(cid:415)on of Newcrest mining professional Jon Gourlay and Simone Wa(cid:425) from our strategic investor Sinoz as Non Execu(cid:415)ve Directors Post the end of the ﬁnancial year, the company announced:     Receipt of its ﬁrst major order for fric(cid:415)on reducers from the oil & gas companies in the US Permian Basin. The A$1.08m order validates SciDev’s strong US push. Awarded a long term MaxiFlox® sales contract with Iluka Resources which is expected to be AUS$8m – AUD$12m over the course of the contract. Comple(cid:415)on of a $4.16m capital raising to fund future growth.   The past year has seen signiﬁcant progress from the consolidated en(cid:415)ty that establishes SciDev as a leader in process control and chemistry products for solids-liquids separa(cid:415)on. SciDev has expanded with several key addi(cid:415)ons to people and broadening of its product por(cid:414)olio to ensure it can provide complete solu(cid:415)ons to its end users. 7 Review of Opera(cid:415)ons con(cid:415)nued Financial Review The consolidated en(cid:415)ty delivered record revenue for the period $2.92m, a 32% increase on the previous year. The record revenue can be a(cid:425)ributed to organic growth in the water sector and sales pull through from the Nuoer transac(cid:415)on announced in February 2019. Net cash ou(cid:414)lows from opera(cid:415)ons during the year ended 30 June 2019 were $1.548m (a signiﬁcant increase from the prior year's net ou(cid:414)lows of $0.892m). Despite the ou(cid:414)low increasing on a full year basis, the consolidated en(cid:415)ty was close to cash break-even in Q4 where the loss from opera(cid:415)ng ac(cid:415)vi(cid:415)es was $0.28m. The increase in net cash ou(cid:414)lows from opera(cid:415)ons was principally a result of increases in raw materials and consumables (inventory required to grow), employee beneﬁts expense (people required to execute growth) and professional fees. At the end of the period the consolidated en(cid:415)ty had a net cash posi(cid:415)on of $1.76m. The balance sheet strength reﬂects the inﬂow of in funds ($0.57m announced on 11 February) and the thecompany successful comple(cid:415)on of a $2.5m capital raising undertaken in February 2019. from the Nuoer Group’s strategic investment The consolidated en(cid:415)ty's robust ﬁnancial posi(cid:415)on will allow SciDev to accelerate the rollout of our technologies and con(cid:415)nue to strengthen and execute on our growing business development. Opera(cid:415)onal Review Coal Ini(cid:415)a(cid:415)ves – North America During FY19 SciDev announced the delivery of our ﬁrst full container load (FCL) into the con(cid:415)nental United States through our subsidiary SciDev (US) LLC (refer ASX 23 May 2019). The order was to SciDev MOU partner Phoenix Process Equipment Company and is the result of marke(cid:415)ng eﬀorts over the prior periods. 8 The chemistry, manufactured to SciDev speciﬁca(cid:415)on by Nuoer China, is set to be used in solids-liquid separa(cid:415)on projects in key mineral processing applica(cid:415)ons. The arrangement builds on SciDev's exis(cid:415)ng sales in North America and illustrates the value of the Company's partnerships with both Nuoer China and Phoenix. As previously announced, North America represents a poten(cid:415)al $1.4 billion-dollar market for SciDev. Coal Ini(cid:415)a(cid:415)ves ‐ Australia Addi(cid:415)onal evalua(cid:415)ons were conducted across several coal projects in both the Bowen Basin and NSW coal ﬁelds with (cid:415)er-one producers. SciDev is conﬁdent that some of these projects will further develop into commercial opportuni(cid:415)es for both chemical solu(cid:415)ons and the Op(cid:415)Flox® system. Oil and Gas ini(cid:415)a(cid:415)ves – North America Post the end of the ﬁnancial year (22 July 2019) SciDev announced its ﬁrst sales into the US oil and gas market. The order for fric(cid:415)on reducers was des(cid:415)ned for the US Permian basin. The total orders to date are AUD$1.08m. Order volumes are expected to con(cid:415)nue to grow, with further commercial ﬁeld evalua(cid:415)ons to be undertaken in FY20 to determine the poten(cid:415)al ﬁnancial returns to SciDev from this very large market. for SciDev’s proprietary Op(cid:415)Flox® technology Mineral Sands – Australia Post the end of the ﬁnancial year (30 August) SciDev announced that it has signed a three (3) year agreement for the supply and service of its MaxiFlox® chemistry to Iluka Resources. The annual value of the contract over the term is likely to be between AUD $2.6m – AUD $4.0m. During an extensive evalua(cid:415)on period on site, SciDev was able to build a knowledge base allowing for the design of bespoke chemistry speciﬁc to the Jacinth Ambrosia opera(cid:415)on. Addi(cid:415)onal discussions are underway to integrate the SciDev Op(cid:415)Flox® system into the Jacinth-Ambrosia opera(cid:415)on. The program of work started in March 2018 and the successful conclusion validates the commercial u(cid:415)lity of SciDev's MaxiFlox® chemistry in the mine tailings space. Importantly, it highlights the calibre of the SciDev team in execu(cid:415)ng the technical and commercial evalua(cid:415)ons over an extended period with a (cid:415)er one Australian mining company. SciDev Ltd REPORT 2019 ANNUAL There were no other signiﬁcant changes in the state of aﬀairs of the consolidated en(cid:415)ty during the ﬁnancial year. Ma(cid:425)ers subsequent to the end of the ﬁnancial year On 22 July 2019 the company reported its ﬁrst major sales into the US oil and gas market. The company's shareholders approved the issue of the following op(cid:415)ons at a General Mee(cid:415)ng held on 23 July 2019:  2,000,000 op(cid:415)ons to Mr Lewis E U(cid:427)ng - Managing Director and Chief Execu(cid:415)ve Oﬃcer 650,000 op(cid:415)ons to Mr Jon Gourlay - Non-execu(cid:415)ve Director 250,000 op(cid:415)ons Mr Trevor A Jones - Non-execu(cid:415)ve Chairman 250,000 op(cid:415)ons to Ms Simone Wa(cid:425) - Non-execu(cid:415)ve Director    The op(cid:415)ons issued to Mr Lewis U(cid:427)ng have an exercise price of 10 cents and the op(cid:415)ons issued to the other Directors have an exercise price of 12 cents. The op(cid:415)ons granted to Mr Lewis U(cid:427)ng are subject to ves(cid:415)ng condi(cid:415)ons. The op(cid:415)ons granted to the non- execu(cid:415)ve Directors do not have any ves(cid:415)ng condi(cid:415)ons. The op(cid:415)ons expire on 23 July 2022. These op(cid:415)ons form part of a broader op(cid:415)on issue to the Board and senior execu(cid:415)ves totalling 5,350,000 op(cid:415)ons in total; refer to ASX announcement dated 16 August 2019. On 30 August 2019 the company announced a major chemical supply and equipment leasing contract with Iluka Resources. On the 13 September 2019, the company announced the placement of 16m new ordinary shares with ins(cid:415)tu(cid:415)onal and sophis(cid:415)cated investors at an issue price of $0.26 per share to raise total proceeds of $4.16 million. local The 16m new shares represented 15% of the company’s exis(cid:415)ng shares on issue, which is the maximum number of ordinary shares that were able to be issued under ASX lis(cid:415)ng rules. The funds from the placement will predominantly be used to increase inventory, con(cid:415)nue development of the consolidated en(cid:415)ty's Op(cid:415)Flox and MaxiFlox technology, and increase working capital. The capital raising was completed on 20 September 2019. 9 Nuoer & SciDev Rela(cid:415)onship During the year (ref ASX 11 February 2019) SciDev announced a binding agreement to acquire the exclusive distribu(cid:415)on and marke(cid:415)ng rights in Australia and other Oceanic countries for polymer products produced by Chinese base Nuoer Group. Securing the exclusive distribu(cid:415)on and marke(cid:415)ng rights with Nuoer delivers SciDev an expanded market opportunity for the MaxiFlox® technology, supply chain security and a world class partner that can manufacture products to SciDev speciﬁca(cid:415)ons. Through the framework agreement, SciDev and Nuoer Group are undertaking an in-depth analysis of market opportuni(cid:415)es both within the Oceania region and in other jurisdic(cid:415)ons. The broadening coopera(cid:415)on between the two groups is expected to deliver unparalleled industry reach and signiﬁcant growth opportuni(cid:415)es for SciDev evidenced through our growth during the year. Signiﬁcant changes in the state of aﬀairs On 4 December 2018 the company completed a 10 to 1 consolida(cid:415)on of its issued shares and op(cid:415)ons. The number of ordinary shares on issue at the date of the consolida(cid:415)on decreased from 638,152,007 to 63,815,201. On 11 February 2019, SciDev announced it had entered into a binding Heads of Agreement (HOA) to acquire the exclusive distribu(cid:415)on and marke(cid:415)ng rights in Australia and other Oceanic countries for polymer products produced by the China-based Nuoer Group (Nuoer Group). Under the terms of the HOA, SciDev's wholly owned subsidiary, Science Developments Pty Ltd (SDPL), has been granted the exclusive distribu(cid:415)on and marke(cid:415)ng rights from the Nuoer Group's Australian opera(cid:415)ng en(cid:415)ty, Nuoer Chemical Australia Pty Ltd (NCA) for a 10-year period. On 12 February 2019, 1,666,667 shares were issued to the Nuoer Group at a price of 6 cents per share to acquire the distribu(cid:415)on and marke(cid:415)ng rights for Nuoer Group products in Australia and other Oceanic countries. On the same day, 5,000,000 shares were issued to directors/employees of Nuoer Chemical Australia Pty Ltd at a price of 6 cents per share for contribu(cid:415)on of working capital. On 13 March 2019, the company issued 22,614,624 shares at a price of 6 cents per share in terms of a 2 for 7 non-renounceable en(cid:415)tlements issue. The funds raised from the issue of shares will be used to accelerate the company's business growth.      Further develop the opportuni(cid:415)es presented through SciDev (US) LLC into the US oil & gas sector. Extend SciDev's technology into the precious metal and base metal sectors throughout Australia and Asia, while looking for other opportuni(cid:415)es in currently unrealised sec(cid:415)ons of the mineral processing value chain. Renew SciDev's eﬀort in the Australian water and wastewater sector with strategic partnerships and licensing opportuni(cid:415)es with global operators and key end users. Deliver upon recent agreement with Iluka in the mineral sands sector delivering value and further developing this rela(cid:415)onship. SciDev's Con(cid:415)nue rela(cid:415)onship with Nuoer through joint marke(cid:415)ng and R&D eﬀorts in key market areas while also reﬁning the geographic manufacturing footprint. strengthen leverage and to Review of Opera(cid:415)ons con(cid:415)nued FY20 Outlook No other ma(cid:425)er or circumstance has arisen since 30 June 2019 that has signiﬁcantly aﬀected, or may signiﬁcantly aﬀect the consolidated en(cid:415)ty's opera(cid:415)ons, the results of those opera(cid:415)ons, or the consolidated en(cid:415)ty's state of aﬀairs in future ﬁnancial years . Likely developments and expected results of opera(cid:415)ons:  The focus for SciDev and the management team through the FY20 ﬁnancial year is:  Drive SciDev's revenue line through the execu(cid:415)on of a well structured business development pipeline in the Oil & Gas and mineral processing sectors. Key large customer opportuni(cid:415)es across several con(cid:415)nents where the synergies for the Op(cid:415)Flox & MaxiFlox combina(cid:415)on can deliver the greatest value to SciDev's to shareholders. Build upon the SciDev’s momentum in the Australian coal industry, transi(cid:415)oning across applica(cid:415)on, mineral types and key industry players with our Op(cid:415)Flox® technology. subsequent customers value and   10 SciDev Ltd REPORT 2019 ANNUAL Directors Report The directors present their report, together with the ﬁnancial statements, on the consolidated en(cid:415)ty (referred to herea(cid:332)er as the 'consolidated en(cid:415)ty') consis(cid:415)ng of SciDev Limited (referred to herea(cid:332)er as the 'company' or 'parent en(cid:415)ty') and the en(cid:415)(cid:415)es it controlled at the end of, or during, the year ended 30 June 2019. 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 Lewis E U(cid:427)ng (appointed 29 October 2018) Simone Wa(cid:425) (appointed 29 October 2018) Jon Gourlay (appointed 28 May 2019) Kieran G Rodgers (resigned 19 March 2019) Daniel (Don) Joseph Cronin (resigned 31 December 2018) Principal ac(cid:415)vi(cid:415)es The principal ac(cid:415)vity of the consolidated en(cid:415)ty is delivery of process control and chemistry products for solids-liquids separa(cid:415)on. Dividends There were no dividends paid, recommended or declared during the current or previous ﬁnancial year. Review of Opera(cid:415)ons The review of opera(cid:415)ons can be found on pages 8 to 10 of this Annual Report. Environmental regula(cid:415)on The consolidated en(cid:415)ty is not subject to any signiﬁcant environmental regula(cid:415)on under Australian Commonwealth or State law. Informa(cid:415)on on directors Name, independence sta- tus and qualiﬁca(cid:415)ons Trevor Jones Chairman B.Comm (Melb) Experience, interests in shares, special responsibili(cid:415)es and other directorships  Mr. Jones has spent over 30 years working in the ﬁnance industry in Australia, United Kingdom and the USA. During this (cid:415)me, he has held senior execu(cid:415)ve posi(cid:415)ons in investment funds management, stockbrok- ing and corporate ﬁnance, and gained a broad experience of capital structuring and capital raising, par(cid:415)cu- larly in the mining sector.  Mr. Jones was manager of equity por(cid:414)olios for Shell Australia and Na(cid:415)onal Employers Mutual in the Unit- ed Kingdom. He was a Director of County NatWest Securi(cid:415)es Australia Limited in London and then Director of Corporate Finance with Westpac Ins(cid:415)tu(cid:415)onal Bank in Sydney. More recently Mr. Jones was the Sydney Chief Execu(cid:415)ve for Melbourne-based Austock Group and was Chairman of both its Corporate Finance and Investment Management divisions. He was appointed as a Non-execu(cid:415)ve Director of SciDev on 28 Febru- ary 2007.  Chairman of the Corporate Governance Commi(cid:425)ee and a member of the Audit and Risk Commi(cid:425)ee and the Nomina(cid:415)on and Remunera(cid:415)on Commi(cid:425)ee.  Holds a relevant interest in 738,303 shares and 350,000 op(cid:415)ons  No other listed company directorships 11 Directors Report con(cid:415)nued Informa(cid:415)on on directors Name, independence status and qualiﬁca(cid:415)ons Lewis U(cid:427)ng Director (appointed 29 October 2018) Managing Director & CEO (appointed Managing Director and CEO on 30 April 2019) BASc Experience, interests in shares, special responsibili(cid:415)es and other directorships  Mr U(cid:427)ng has over 15 years' experience in the water treatment, mining and chemical industries.  Lewis began his career in 2001 with Buckman Laboratories, moving to Hercules Chemicals, then in 2005 to Ciba, speciﬁcally to work in the water treatment and mining sector. Ciba was acquired by BASF in 2008, Lewis was Global Project Manager and Global Business Development man- ager for the BASF mining solu(cid:415)ons business. Lewis has successfully nego(cid:415)ated licence agreements, take or pay arrangements, technology divestment, and commissioned research with both consul(cid:415)ng ﬁrms and academia in support of new technology development. He has authored and co-authored several technical papers and also holds a patent applica(cid:415)on in the area of tailings (mining waste) disposal.    Holds a relevant interest in 4,830,221 shares and 2,500,000 op(cid:415)ons  No other listed company directorships Simone Wa(cid:425) Non‐Execu(cid:415)ve Director BASc  Ms Wa(cid:425) is the Managing Director of Sinoz Chemical and Commodi(cid:415)es (Sinoz), which is a global company supplying reagents and technology-based improvements to the mining and agribusiness industries.  Ms Wa(cid:425)s is also a Director of Kemtec Mineral Processing and Kanins Interna(cid:415)onal, which are both part of the Sinoz Group of companies. She has extensive experience in the areas of strategic sourcing and supplier management, business development and sales and marke(cid:415)ng.  Member of the Audit and Risk Commi(cid:425)ee and the Nomina(cid:415)on and Remunera(cid:415)on Commi(cid:425)ee  Holds a relevant interest in 5,000,780 shares and 250,000 op(cid:415)ons  No other listed company directorships Jon Gourlay Non‐Execu(cid:415)ve Director (appointed 28 May 2019) BCom, C.A  Mr Jon Gourlay is a chartered accountant with extensive experience in ﬁnance and project management, risk management, business improvement and investor rela(cid:415)onships, with a focus on the resources and technology sectors. Mr Gourlay is currently Commercialisa(cid:415)on Manager, Technology and Innova(cid:415)on for New- crest Mining, with prior roles in investor rela(cid:415)ons, analysis and improvement of Newcrest's opera(cid:415)ons at the Lihir Island Gold Mine in Papua New Guinea..  Member of the Audit and Risk Commi(cid:425)ee and the Nomina(cid:415)on and Remunera(cid:415)on Commi(cid:425)ee  Holds a relevant interest in 206,349 shares and 650,000 op(cid:415)ons  No other listed company directorships 12 SciDev Ltd REPORT 2019 ANNUAL Name, independence status and qualiﬁca(cid:415)ons Kieran G Rodgers Managing Director (resigned 19 March 2019) B.E. (Hons.) Min. (UNSW), M.B.A. (IMD) Daniel J Cronin Non‐Execu(cid:415)ve Director (resigned 31 December 2018) B.E. (Uni. College, Cork) M.Sc. (Southampton), MBA (LBS) Experience, interests in shares, special responsibili(cid:415)es and other directorships  Mr. Rodgers joined SciDev in March 2001 a(cid:332)er 13 years of experience in merchant banking and ﬁnancial consul(cid:415)ng, principally at Resource Finance Corpora(cid:415)on Ltd, which speciﬁcally focused on the Australian and interna(cid:415)onal resources industry. He was appointed as an Execu(cid:415)ve Director of SciDev on 28 February 2007. Mr. Rodgers was appointed Managing Director on 6 February 2012.  Holds a relevant interest in 5,065,944* shares and 200,000* op(cid:415)ons  No other listed company directorships  Mr. Cronin was appointed to the Board of SciDev on 26 November 2013. Mr. Cronin began his career as an Engineer with the Bri(cid:415)sh consul(cid:415)ng ﬁrm Halcrow, working for 6 years in the UK and South America. This was followed by 5 years working in project management with the construc(cid:415)on Company Gammon in Hong Kong and Singapore. Following comple(cid:415)on of an MBA degree, he was employed in the chemical industry for 23 years, ini(cid:415)ally with Sandoz and later with Degussa and BASF. He has worked in senior general management roles in Zurich, Sydney and Singapore. His most recent posi(cid:415)on was Senior Vice President – Construc(cid:415)on Chemicals for BASF with responsibility for Europe, Middle East and Africa. Chairman of the Audit and Risk Commi(cid:425)ee and a member of the Corporate Governance Commi(cid:425)ee and the Nomina(cid:415)on and Remunera(cid:415)on Commi(cid:425)ee   Holds a relevant interest in 465,955* shares and 200,000* op(cid:415)ons  No other listed company directorships 'Other current directorships' quoted above are current directorships for listed en(cid:415)(cid:415)es only and excludes directorships of all other types of en(cid:415)(cid:415)es, unless otherwise stated. 'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed en(cid:415)(cid:415)es only and excludes directorships of all other types of en(cid:415)(cid:415)es, unless otherwise stated. * Interests in the shares and op(cid:415)ons of the company as at the date of resigna(cid:415)on as a director. Company Secretary Mr Heath L Roberts (Dip Law (S.A.B.) and Grad Dip Legal Prac(cid:415)ce (UTS)) was appointed to the posi(cid:415)on 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 capaci(cid:415)es over the years and brings strong transac(cid:415)onal, compliance and capital raising experience to the role. Mee(cid:415)ngs of directors The number of mee(cid:415)ngs of the company's Board of Directors ('the Board') and of each Board commi(cid:425)ee held during the year ended 30 June 2019, and the number of mee(cid:415)ngs a(cid:425)ended by each director were: Full Board Nomina(cid:415)on and Remunera(cid:415)on Commi(cid:425)ee A(cid:425)ended Held A(cid:425)ended Held Audit and Risk Commi(cid:425)ee A(cid:425)ended Audit and Risk Commi(cid:425)ee Held Trevor A Jones Lewis E U(cid:427)ng (appointed 29 October 2018) Simone Wa(cid:425) (appointed 29 October 2018) Jon Gourlay (appointed 28 May 2019) Kieran G Rodgers (resigned 19 March 2019) Daniel J Cronin (resigned 31 December 2018) 7 7 7 1 6 2 9 7 7 1 7 2 3 - 2 - - 1 3 - 2 - - 1 3 - 2 - - 2 Held: represents the number of mee(cid:415)ngs held during the (cid:415)me the director held oﬃce or was a member of the relevant commi(cid:425)ee. 3 - 2 - - 2 13 Remunera(cid:415)on report The remunera(cid:415)on report details the key management personnel remunera(cid:415)on arrangements in for accordance with the requirements of the Corpora(cid:415)ons Act 2001 and its Regula(cid:415)ons. the consolidated en(cid:415)ty, Key management personnel are those persons having authority and responsibility for planning, direc(cid:415)ng and controlling the ac(cid:415)vi(cid:415)es of the en(cid:415)ty, directly or indirectly, including all directors. The remunera(cid:415)on report is set out under the following main headings:  Principles used to determine the nature and amount of remunera(cid:415)on      Details of remunera(cid:415)on Service agreements Share-based compensa(cid:415)on Addi(cid:415)onal informa(cid:415)on Addi(cid:415)onal disclosures rela(cid:415)ng to key management personnel Principles used to determine the nature and amount of remunera(cid:415)on The objec(cid:415)ve of the consolidated en(cid:415)ty's execu(cid:415)ve reward framework is to ensure reward for performance is compe(cid:415)(cid:415)ve and appropriate for the results delivered. The framework aligns execu(cid:415)ve reward with the achievement of strategic objec(cid:415)ves and the crea(cid:415)on of value for shareholders, and it is considered to conform to the market best prac(cid:415)ce for the delivery of reward. The Board of Directors ('the Board') ensures that execu(cid:415)ve reward sa(cid:415)sﬁes the following key criteria for good reward governance prac(cid:415)ces:      performance linkage / alignment of execu(cid:415)ve compensa(cid:415)on; compe(cid:415)(cid:415)veness and reasonableness; acceptability to shareholders; capital management. transparency; and remunera(cid:415)on commi(cid:425)ee which provides advice on remunera(cid:415)on and incen(cid:415)ve policies and prac(cid:415)ces and makes speciﬁc recommenda(cid:415)ons on remunera(cid:415)on packages and other terms of employment for the Managing Director, other senior execu(cid:415)ves and Non-Execu(cid:415)ve Directors. The Corporate Governance Statement provides further informa(cid:415)on on the role of this Commi(cid:425)ee. Non‐execu(cid:415)ve directors remunera(cid:415)on Fees and payments to the Non-Execu(cid:415)ve Directors reﬂect the demands which are made on, and the responsibili(cid:415)es of, the Non– Execu(cid:415)ve Directors. The Board undertakes a review of Non- Execu(cid:415)ve Directors’ fees and payments annually. limit, which remunera(cid:415)on Non-Execu(cid:415)ve Directors’ fees are determined within an aggregate is Non-Execu(cid:415)ve Directors’ cash periodically recommended for approval by shareholders. The current limit of $400,000 was approved by shareholders at the 2007 Annual General Mee(cid:415)ng held on 14 November 2007. The amount paid to non-execu(cid:415)ve directors of the parent en(cid:415)ty (SciDev Limited) during the year to 30 June 2019 was $122,937 (2018: $125,316). In addi(cid:415)on, Non-Execu(cid:415)ve Directors are able to par(cid:415)cipate in issues of op(cid:415)ons pursuant to the SciDev Employee Share Scheme. The value of any op(cid:415)ons granted to Non-Execu(cid:415)ve Directors are not included in the aggregate cash remunera(cid:415)on limit as they are not cash based payments. the cased where Directors seek equity based (op(cid:415)on) In remunera(cid:415)on over cash based remunera(cid:415)on, considera(cid:415)on will be given to such request and, in any case, shareholder approval would be required for any such equity based remunera(cid:415)on for Directors. Execu(cid:415)ve remunera(cid:415)on The execu(cid:415)ve pay and reward framework has two components, which together comprise the execu(cid:415)ve’s total remunera(cid:415)on:   base pay, superannua(cid:415)on and non-monetary beneﬁts; and long term incen(cid:415)ves through par(cid:415)cipa(cid:415)on in the SciDev Employee Share Scheme. The combina(cid:415)on of remunera(cid:415)on. these comprises the execu(cid:415)ve's total The Group has structured an execu(cid:415)ve remunera(cid:415)on framework that is market compe(cid:415)(cid:415)ve. The framework provides for a mix of ﬁxed pay and also variable pay and includes long term incen(cid:415)ves, when appropriate. A rela(cid:415)onship between Company performance and remunera(cid:415)on is now being developed and implemented, with a modest component of future cash remunera(cid:415)on to be performance linked and equity (op(cid:415)on) issues to execu(cid:415)ves having performance based milestones. The Board has established a nomina(cid:415)on and 14 SciDev Ltd REPORT 2019 ANNUAL Details of remunera(cid:415)on Amounts of remunera(cid:415)on Details of the remunera(cid:415)on of key management personnel of the consolidated en(cid:415)ty are set out in the following tables. The key management personnel of the consolidated en(cid:415)ty consisted of the following directors of SciDev Limited:   Trevor A Jones - Non-execu(cid:415)ve Chairman Lewis E U(cid:427)ng - Managing Director and Chief Execu(cid:415)ve Oﬃcer (appointed a Director on 29 October 2018, and Managing Director and CEO on 30 April 2019)     Simone Wa(cid:425) - Non-execu(cid:415)ve Director (appointed 29 October 2018) Jon Gourlay - Non-execu(cid:415)ve Director (appointed 28 May 2019) Kieran G Rodgers - Managing Director (resigned 19 March 2019) Daniel J Cronin - Non-execu(cid:415)ve Director (resigned 31 December 2018) And the following person:  Jianfeng Zhang - Marke(cid:415)ng and Strategy Director of Science Developments Pty Limited (from 10 April 2019) 15 Base pay Base pay is structured as a total employment cost package, which may be delivered as a combina(cid:415)on of cash and prescribed non- ﬁnancial beneﬁts as nego(cid:415)ated between the Company and the execu(cid:415)ve. Execu(cid:415)ves are oﬀered a compe(cid:415)(cid:415)ve base pay that comprises a ﬁxed component of cash salary and superannua(cid:415)on. Base pay for each senior execu(cid:415)ve is reviewed annually to ensure the execu(cid:415)ve’s pay is compe(cid:415)(cid:415)ve with the market. There is no guaranteed base pay increase included in any execu(cid:415)ve’s contract. In some cases cash performance based bonuses will be oﬀered to execu(cid:415)ves. SciDev Employee Share Scheme Informa(cid:415)on on the SciDev Employee Share Scheme is set out in note 34. Par(cid:415)cipa(cid:415)on in the SciDev Employee Share Scheme is at the discre(cid:415)on of the Board and there is no guarantee of annual par(cid:415)cipa(cid:415)on by any execu(cid:415)ve. Use of remunera(cid:415)on consultants During the ﬁnancial year ended 30 June 2019, the consolidated en(cid:415)ty, through the Nomina(cid:415)on and Remunera(cid:415)on Commi(cid:425)ee, engaged Lucan Group, remunera(cid:415)on consultants, to review the CEO and Managing Director's remunera(cid:415)on package. Lucan Group was paid $750 for these services. Vo(cid:415)ng and comments made at the company's 29 November 2018 Annual General Mee(cid:415)ng ('AGM') At the 29 November 2018 AGM, 99% of the votes received supported the adop(cid:415)on of the remunera(cid:415)on report for the year ended 30 June 2018. The company did not receive any speciﬁc feedback at the AGM regarding its remunera(cid:415)on prac(cid:415)ces. An agreed set of protocols were put in place to ensure that the remunera(cid:415)on recommenda(cid:415)ons would be free from undue inﬂuence from the Managing Director and CEO. These protocols include requiring that the consultant not communicate with or provide any informa(cid:415)on rela(cid:415)ng to the outcome of the engagement with the Managing Director and CEO whilst the process was underway. The Board is also required to make inquiries of the consultant's processes at the conclusion of the engagement that any recommenda(cid:415)ons made have been free from undue inﬂuence. The Board is sa(cid:415)sﬁed that these protocols were followed and as such there was no undue inﬂuence. they are sa(cid:415)sﬁed to ensure that Remunera(cid:415)on report con(cid:415)nued Short-term beneﬁts Post- employment beneﬁts Long-term beneﬁts Cash salary Annual leave Non- Super- and fees accrual monetary annua(cid:415)on Long service leave Termina- (cid:415)on beneﬁts Total 64,431 25,340 - 22,500 - - - - 260,000 260,000 14,964 18,056 - - - - - - 6,121 2,407 - 2,138 24,700 24,700 - - - - 749 - - - - - 4,333 130,000 70,552 27,747 - 24,638 300,413 437,089 2019 Non‐Execu(cid:415)ve Directors: Trevor A Jones (Chairman) Simone Wa(cid:425) (a) Jon Gourlay (a) Daniel J Cronin (b) Execu(cid:415)ve Directors: Lewis E U(cid:427)ng (c) Kieran G Rodgers (b) Other Key Management Personnel: Jianfeng Zhang (d) 31,666 663,937 2,805 35,825 - - 3,048 63,114 83 5,165 - 130,000 37,602 898,041 (a) (b) (c) (d) Ms Simone Wa(cid:425) and Mr Jon Gourlay were appointed Non-execu(cid:415)ve Directors on 29 October 2018 and 28 May 2019 respec(cid:415)vely. Mr Gourlay did not receive any remunera(cid:415)on from the company during the 2019 ﬁnancial year. Mr Daniel J Cronin and Mr Kieran G Rodgers resigned on 31 December 2018 and 19 March 2019 respec(cid:415)vely. Mr Rodgers’ remunera(cid:415)on for the year included termina(cid:415)on payments set out in his employment contract. Mr Lewis U(cid:427)ng was appointed Project Director on 1 March 2018, appointed to the SciDev Board of Directors on 29 October 2018 and became Managing Director and Chief Execu(cid:415)ve Oﬃcer on 30 April 2019. Mr Jianfeng Zhang was appointed Marke(cid:415)ng and Strategy Director of Science Developments Pty Limited on 10 April 2019. 16 SciDev Ltd REPORT 2019 ANNUAL Short-term beneﬁts Post- employment beneﬁts Long-term beneﬁts Cash salary Consultancy Non- Super- Long service and fees fee monetary annua(cid:415)on leave Total 2018 Non‐Execu(cid:415)ve Directors: Trevor A Jones (Chairman) Daniel J Cronin Execu(cid:415)ve Directors: Kieran G Rodgers Other Key Management Personnel: Lewis E U(cid:427)ng (a) 69,444 45,000 268,424 72,917 455,785 - - - - - - - 6,597 4,275 - - 76,041 49,275 2,259 20,900 31,007 322,590 - 2,259 6,927 38,699 - 31,007 79,844 527,750 (a) Lewis U(cid:427)ng was appointed Project Director on 1 March 2018 The propor(cid:415)on of remunera(cid:415)on linked to performance and the ﬁxed propor(cid:415)on are as follows: Name 2019 2018 2019 2018 2019 2018 Fixed remunera(cid:415)on At risk - STI At risk - LTI Non‐Execu(cid:415)ve Directors: Trevor A Jones (Chairman) Simone Wa(cid:425) Daniel J Cronin Execu(cid:415)ve Directors: Lewis E U(cid:427)ng Kieran G Rodgers 100% 100% 100% 100% 100% 100% - 100% 100% 100% Other Key Management Personnel: Jianfeng Zhang 100% - - - - - - - - - - - - - - - - - - - - - - - - - 17 Remunera(cid:415)on report con(cid:415)nued Service agreements Remunera(cid:415)on 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: Name: Title: Agreement commenced: Term of agreement: Details: Lewis E U(cid:427)ng Managing Director and CEO 30 April 2019 Ongoing Mr U(cid:427)ng was employed as a Project Director un(cid:415)l 29 April 2019 and Managing Director and CEO therea(cid:332)er. Mr U(cid:427)ng had a base salary of $260,000 plus superannua(cid:415)on un(cid:415)l 29 April 2019 which subsequently increased to $280,000 plus superannua(cid:415)on following his appointment as Managing Director and CEO. He is also en(cid:415)tled to a bonus of $100,000 and holds 2,500,000 op(cid:415)ons. Mr U(cid:427)ng's salary, allowances and performance bonus will be reviewed annually by the Nomina(cid:415)on and Remunera(cid:415)on Commi(cid:425)ee. The contract may be terminated by 6 months’ no(cid:415)ce from either party. Kieran G Rodgers Managing Director 1 March 2018 Ongoing - resigned 19 March 2019 Base salary for the year ended 30 June 2019 of $260,000 plus superannua(cid:415)on, that was reviewed annually by the Nomina(cid:415)on and Remunera(cid:415)on Commi(cid:425)ee. The contract could be terminated by 6 months’ no(cid:415)ce from either party. Key management personnel have no en(cid:415)tlement to termina(cid:415)on payments in the event of removal for misconduct. Share-based compensa(cid:415)on Issue of shares There were no shares issued to directors and other key management personnel as part of compensa(cid:415)on during the year ended 30 June 2019. Op(cid:415)ons There were no op(cid:415)ons over ordinary shares granted to or vested by directors and other key management personnel as part of compensa(cid:415)on during the year ended 30 June 2019. There were no op(cid:415)ons for directors and other key management personnel that lapsed during the year ended 30 June 2019. Addi(cid:415)onal informa(cid:415)on The earnings of the consolidated en(cid:415)ty for the ﬁve years to 30 June 2019 are summarised below: Sales revenue 2,655,799 2,029,373 1,846,985 1,352,346 1,316,493 (Loss)/proﬁt a(cid:332)er income tax (2,032,527) 1,001,869 (597,340) (458,130) (856,446) 2019 $ 2018 $ 2017 $ 2016 $ 2015 $ 18 SciDev Ltd REPORT 2019 ANNUAL Addi(cid:415)onal disclosures rela(cid:415)ng 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 en(cid:415)ty, including their personally related par(cid:415)es, is set out below: Ordinary shares Trevor A Jones Lewis E U(cid:427)ng Simone Wa(cid:425) Jon Gourlay Kieran G Rodgers Daniel J Cronin Jianfeng Zhang Balance at Received Balance at the start of as part of Addi(cid:415)ons/ Disposals/ the end of the year remunera(cid:415)on other (a) other (b) (c) the year 5,742,331 35,512,267 - - 23,516,578 4,659,554 - 69,430,730 - - - - - - - - 164,068 (5,168,096) 738,303 3,129,492 (33,811,538) 4,830,221 5,000,780 206,349 - - 5,000,780 206,349 17,714,287 (41,230,865) - (4,659,554) - - 6,666,667 - 6,666,667 32,881,643 (84,870,053) 17,442,320 (a) (b) (c) Includes the shares held by Directors, including their personally related par(cid:415)es, at the date of their appointment. Includes the eﬀect of the 10:1 share consolida(cid:415)on that was completed on 4 December 2018. Includes the removal from the table of the shareholdings for key management personnel who have resigned during the period. Op(cid:415)on holding The number of op(cid:415)ons over ordinary shares in the company held during the ﬁnancial year by each director and other members of key management personnel of the consolidated en(cid:415)ty, including their personally related par(cid:415)es, is set out below: Op(cid:415)ons over ordinary shares Trevor A Jones Lewis E U(cid:427)ng Kieran G Rodgers Daniel J Cronin Balance at the start of Expired/ Forfeited / other Balance at the end of the year Granted Exercised (a) (b) the year 1,000,000 5,000,000 2,000,000 2,000,000 10,000,000 - - - - - - - - - - (900,000) (4,500,000) (2,000,000) (2,000,000) 100,000 500,000 - - (9,400,000) 600,000 (a) (b) Includes the eﬀect of the 10:1 share/op(cid:415)on consolida(cid:415)on that was completed on 4 December 2018. Includes the removal from the table of the op(cid:415)ons held by key management personnel who have resigned during the period. 19 Mr Jainfeng Zhang, a director of Science Developments Pty Ltd and KMP, is also a director and shareholder of Nuoer Australia Pty Ltd. The consolidated en(cid:415)ty sold to and purchased from Nuoer Australia Pty Ltd goods and services during the 2019 ﬁnancial year, in par(cid:415)cular chemicals. The contracts were based on normal commercial terms and condi(cid:415)ons. Amounts recognised as revenue Product sales: $584,366 (2018: nil) Amounts recognised as expenses Raw materials and consumables: $118,050 (2018: nil) Amounts recognised as assets and liabili(cid:415)es Current assets - trade receivables: $252,307 (2018: nil) There were no other transac(cid:415)ons with key management personnel of the group, including their close family members and en(cid:415)(cid:415)es related to them, during the ﬁnancial year ended 30 June 2019. This concludes the remunera(cid:415)on report, which has been audited. Remunera(cid:415)on report con(cid:415)nued Loans to key management personnel and their related par(cid:415)es There were no loans owing by key management personnel of the group, including their close family members and en(cid:415)(cid:415)es related to them, during the ﬁnancial year ended 30 June 2019. Other transac(cid:415)ons with key management personnel and their related par(cid:415)es A director, Simone Wa(cid:425), is a director of Kanins Interna(cid:415)onal Pty Ltd and has the capacity to signiﬁcantly inﬂuence decision making of that company. Kanins Interna(cid:415)onal Pty Ltd provided SciDev Limited with a US$350,000 working capital facility for an ini(cid:415)al 12-month term during the 2019 ﬁnancial year. The facility was secured against the consolidated en(cid:415)ty's inventory and incurred interest at 15% per annum. $73,007 was drawn down on this facility and fully repaid during the 2019 ﬁnancial year. A director, Simone Wa(cid:425), is a director of Kemtec Mineral Processing Pty Ltd and has the capacity to signiﬁcantly inﬂuence decision leased making of that company. The consolidated en(cid:415)ty has equipment to Kemtec Mineral Processing Pty Ltd during the 2019 ﬁnancial year. The lease contracts were based on normal commercial terms and condi(cid:415)ons. Amounts recognised as revenue Treatment fees and product sales: $91,080 (2018: nil) Amounts recognised as expenses Finance costs: $3,539 (2018: nil) The Managing Director, Lewis U(cid:427)ng, is a director and majority shareholder of U(cid:427)ng and Muhor Environmental Pty Ltd (UAME Pty Ltd). The consolidated en(cid:415)ty purchased consultancy services from UAME Pty Ltd during the 2019 ﬁnancial year for the provision of administra(cid:415)ve, business development and engineering services. These services were provided by Mr Jamiel Muhor and Task Me Away Pty Ltd, prior to Mr Muhor and Task Me Away Pty Ltd contrac(cid:415)ng directly to the consolidated en(cid:415)ty. The contract was based on normal commercial terms and condi(cid:415)ons and it was into prior to Lewis U(cid:427)ng being employed by the entered consolidated en(cid:415)ty. Amounts recognised as expenses Professional fees: $278,767 (2018: nil) Bonus: $11,856 (2018: nil) Expense claim reimbursement: $70,228 (2018: nil) 20 SciDev Ltd REPORT 2019 ANNUAL Exercise price Number under op(cid:415)on $0.25 $0.25 $0.25 $0.25 $0.100 $0.120 550,000 2,250,000 650,000 500,000 2,000,000 3,350,000 9,300,000 Shares under op(cid:415)on Unissued ordinary shares of SciDev Limited under op(cid:415)on at the date of this report are as follows: Grant date 10 December 2014* 2 February 2017** 14 August 2017* 28 December 2017*** 23 July 2019* 23 July 2019* Expiry date 28 November 2019 28 November 2019 28 November 2019 28 November 2019 23 July 2022 23 July 2022 * Op(cid:415)ons granted under the SciDev Employee Share Scheme ** Op(cid:415)ons granted to the Lead Manager and Underwriter for services rendered in connec(cid:415)on with the placement of shares and a share purchase plan *** Op(cid:415)ons granted to a key service provider (non-Director) for services rendered. No person en(cid:415)tled to exercise the op(cid:415)ons had or has any right by virtue of the op(cid:415)on to par(cid:415)cipate in any share issue of the company or of any other body corporate. Shares issued on the exercise of op(cid:415)ons There were no ordinary shares of SciDev Limited issued on the exercise of op(cid:415)ons during the year ended 30 June 2019 and up to the date of this report. Indemnity and insurance of oﬃcers The company has indemniﬁed the directors and execu(cid:415)ves of the company for costs incurred, in their capacity as a director or execu(cid:415)ve, 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 execu(cid:415)ves of the company against a liability to the extent permi(cid:425)ed by the Corpora(cid:415)ons 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 en(cid:415)ty 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 en(cid:415)ty. Proceedings on behalf of the company No person has applied to the Court under sec(cid:415)on 237 of the Corpora(cid:415)ons 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. 21 Remunera(cid:415)on report con(cid:415)nued 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 25 to the ﬁnancial statements. The directors are sa(cid:415)sﬁed 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 compa(cid:415)ble with the general standard of independence for auditors imposed by the Corpora(cid:415)ons Act 2001. The directors are of the opinion that the services as disclosed in note 25 to the ﬁnancial statements do not compromise the external auditor's independence requirements of the Corpora(cid:415)ons 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 objec(cid:415)vity of the auditor; and none of the services undermine the general principles rela(cid:415)ng to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accoun(cid:415)ng Professional and Ethical Standards Board, including reviewing or audi(cid:415)ng the auditor's own work, ac(cid:415)ng in a management or decision-making capacity for the company, ac(cid:415)ng 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 declara(cid:415)on A copy of the auditor's independence declara(cid:415)on as required under sec(cid:415)on 307C of the Corpora(cid:415)ons Act 2001 is set out immediately a(cid:332)er this directors' report. Auditor Rothsay Chartered Accountants con(cid:415)nues in oﬃce in accordance with sec(cid:415)on 327 of the Corpora(cid:415)ons Act 2001. This report is made in accordance with a resolu(cid:415)on of directors, pursuant to sec(cid:415)on 298(2)(a) of the Corpora(cid:415)ons Act 2001. On behalf of the directors ___________________________ Lewis E U(cid:427)ng Managing Director 27 September 2019 Sydney 22 SciDev Ltd REPORT 2019 ANNUAL Auditor’s independence declara(cid:415)on 23 Statement of proﬁt or loss and other comprehensive income For the year ended 30 June 2019 Revenue Other income Interest revenue Expenses Changes in inventories Raw materials and consumables used Employee beneﬁts expense Deprecia(cid:415)on and amor(cid:415)sa(cid:415)on expense Engineering and other consultants expenses Loss on disposal of assets Insurance Lis(cid:415)ng and share registry expenses Professional fees Rent and related expenses Travel, accommoda(cid:415)on and conference Other expenses Finance costs Proﬁt/(loss) before income tax beneﬁt/(expense) Note 2019 $ 2018 $ 5 6 2,921,060 2,200,768 336,645 2,336,187 - 12,999 28,141 (4,345) (2,033,901) (1,251,282) (1,330,076) (1,006,057) (212,767) (194,171) (31,068) (2,896) (27,621) - (56,532) (46,067) (84,464) (35,075) (757,080) (557,902) (189,851) (151,050) (278,329) (143,211) (285,980) (158,060) (6,627) (6,111) (2,008,450) 993,727 Income tax beneﬁt/(expense) 8 (24,077) 8,142 Proﬁt/(loss) a(cid:332)er income tax beneﬁt/(expense) for the year a(cid:425)ributable to the owners of SciDev Limited (2,032,527) 1,001,869 Other comprehensive income for the year, net of tax - - Total comprehensive income for the year a(cid:425)ributable to the owners of SciDev Limited (2,032,527) 1,001,869 Basic earnings per share Diluted earnings per share 24 Cents Cents 33 33 (2.69) (2.69) 2.02 2.02 SciDev Ltd REPORT 2019 ANNUAL Note 2019 $ 2018 $ 9 10 11 12 13 14 15 16 17 8 18 1,756,209 806,099 264,325 22,679 2,849,312 1,502,900 303,454 1,246,299 3,052,653 568,187 727,946 236,184 1,754 1,534,071 1,502,900 260,954 1,266,033 3,029,887 5,901,965 4,563,958 1,009,529 - 155,276 1,164,805 35,986 2,153 38,139 370,279 31,938 167,247 569,464 44,108 - 44,108 1,202,944 613,572 4,699,021 3,950,386 19 20 76,899,789 2,210,703 (74,411,471) 4,699,021 74,118,627 2,210,703 (72,378,944) 3,950,386 Statement of ﬁnancial posi(cid:415)on For the year ended 30 June 2019 Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Other Total current assets Non-current assets Financial assets at fair value through other comprehensive income Property, plant and equipment Intangibles Total non-current assets Total assets Liabili(cid:415)es Current liabili(cid:415)es Trade and other payables Borrowings Employee beneﬁts Total current liabili(cid:415)es Non-current liabili(cid:415)es Deferred tax Employee beneﬁts Total non-current liabili(cid:415)es Total liabili(cid:415)es Net assets Equity Issued capital Reserves Accumulated losses Total equity Refer to note 2 for detailed informa(cid:415)on on restatement of compara(cid:415)ves - adop(cid:415)on of AASB 9 'Financial instruments' 25 Statement of changes in equity For the year ended 30 June 2019 Issued capital $ Accumulated Reserves losses Total equity $ $ $ Balance at 1 July 2017 73,673,290 2,169,223 (73,380,813) 2,461,700 Proﬁt a(cid:332)er income tax beneﬁt for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year - - - Transac(cid:415)ons with owners in their capacity as owners: Contribu(cid:415)ons of equity, net of transac(cid:415)on costs (note 19) 445,337 - - - - Share-based payments (note 34) - 41,480 1,001,869 1,001,869 - - 1,001,869 1,001,869 - - 445,337 41,480 Balance at 30 June 2018 74,118,627 2,210,703 (72,378,944) 3,950,386 Issued capital $ Accumulated Reserves losses Total equity $ $ $ Balance at 1 July 2018 74,118,627 2,210,703 (72,378,944) 3,950,386 Loss a(cid:332)er income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year - - - Transac(cid:415)ons with owners in their capacity as owners: Contribu(cid:415)ons of equity, net of transac(cid:415)on costs (note 19) 2,781,162 - - - - (2,032,527) (2,032,527) - - (2,032,527) (2,032,527) - 2,781,162 Balance at 30 June 2019 76,899,789 2,210,703 (74,411,471) 4,699,021 26 Statement of cash ﬂows For the year ended 30 June 2019 Cash ﬂows from opera(cid:415)ng ac(cid:415)vi(cid:415)es Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received R&D tax oﬀset received Interest and other ﬁnance costs paid Income taxes paid Net cash used in opera(cid:415)ng ac(cid:415)vi(cid:415)es Cash ﬂows from inves(cid:415)ng ac(cid:415)vi(cid:415)es Repayment of cash received for disposal of Zeehan Project Payments for property, plant and equipment Payments for intangibles Payments for security deposits Proceeds from disposal of Zeehan Project SciDev Ltd REPORT 2019 ANNUAL Note 2019 $ 2018 $ 2,774,656 2,311,575 (4,616,859) (3,507,670) (1,842,203) (1,196,095) - 332,981 (6,627) (32,199) 6,749 303,112 (6,111) - 31 (1,548,048) (892,345) 13 14 (300,000) (225,225) (37,929) - - (97,045) (53,109) (10,800) 50,000 250,000 Proceeds from disposal of ﬁnancial assets at fair value through other comprehensive income 500,000 - Net cash from/(used in) inves(cid:415)ng ac(cid:415)vi(cid:415)es (13,154) 89,046 Cash ﬂows from ﬁnancing ac(cid:415)vi(cid:415)es Proceeds from issue of shares - net of transac(cid:415)on costs Proceeds from borrowings Repayment of borrowings Net cash from ﬁnancing ac(cid:415)vi(cid:415)es Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the ﬁnancial year 2,781,162 445,337 73,007 - (104,945) (12,565) 2,749,224 432,772 1,188,022 (370,527) 568,187 938,714 Cash and cash equivalents at the end of the ﬁnancial year 9 1,756,209 568,187 27 Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 1. General informa(cid:415)on The ﬁnancial statements cover SciDev Limited as a consolidated en(cid:415)ty consis(cid:415)ng of SciDev Limited and the en(cid:415)(cid:415)es it controlled at the end of, or during, the year. The ﬁnancial statements are presented in Australian dollars, which is SciDev Limited's func(cid:415)onal and presenta(cid:415)on currency. is a SciDev Limited limited by shares, listed public company incorporated and domiciled in Australia. Its registered oﬃce and principal place of business are: Registered oﬃce C/-Boardroom Pty Limited Level 12, Grosvenor Place 225 George Street, Sydney NSW 2000 Principal place of business Unit 1 8 Turbo Road, Kings Park NSW 2148 A descrip(cid:415)on of the nature of the consolidated en(cid:415)ty's opera(cid:415)ons and its principal ac(cid:415)vi(cid:415)es are included in the directors' report, which is not part of the ﬁnancial statements. The ﬁnancial statements were authorised for issue, in accordance with a resolu(cid:415)on of directors, on 26 September 2019. The directors have the power to amend and reissue the ﬁnancial statements. Note 2. Signiﬁcant accoun(cid:415)ng policies The principal accoun(cid:415)ng policies adopted in the prepara(cid:415)on of the ﬁnancial statements are set out either in the respec(cid:415)ve notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated. New or amended Accoun(cid:415)ng Standards and adopted The consolidated en(cid:415)ty has adopted all of the new or amended Accoun(cid:415)ng Standards and Interpreta(cid:415)ons issued by the Australian Accoun(cid:415)ng Standards Board ('AASB') that are mandatory for the current repor(cid:415)ng period. Interpreta(cid:415)ons 28 Any new or amended Accoun(cid:415)ng Standards or Interpreta(cid:415)ons that are not yet mandatory have not been early adopted. The adop(cid:415)on of these Accoun(cid:415)ng Standards and Interpreta(cid:415)ons did not have any signiﬁcant impact on the ﬁnancial performance or posi(cid:415)on of the consolidated en(cid:415)ty. The following Accoun(cid:415)ng Standards and Interpreta(cid:415)ons are most relevant to the consolidated en(cid:415)ty: AASB 9 Financial Instruments The consolidated en(cid:415)ty has adopted AASB 9 from 1 July 2018. The standard introduced new classiﬁca(cid:415)on and measurement models for ﬁnancial assets. A ﬁnancial asset shall be measured at amor(cid:415)sed cost if it is held within a business model whose objec(cid:415)ve is to hold assets in order to collect contractual cash ﬂows which arise on speciﬁed dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objec(cid:415)ve is to both hold assets in order to collect contractual cash ﬂows which arise on speciﬁed dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other ﬁnancial assets are classiﬁed and measured at fair value through proﬁt or loss unless the en(cid:415)ty makes an irrevocable elec(cid:415)on losses on equity on con(cid:415)ngent instruments in other considera(cid:415)on recognised comprehensive income ('OCI'). ini(cid:415)al recogni(cid:415)on to present gains and (that are not held-for-trading or in a business combina(cid:415)on) Despite these requirements, a ﬁnancial asset may be irrevocably designated as measured at fair value through proﬁt or loss to reduce the eﬀect of, or eliminate, an accoun(cid:415)ng mismatch. For ﬁnancial liabili(cid:415)es designated at fair value through proﬁt or loss, the standard requires the por(cid:415)on of the change in fair value that relates to the en(cid:415)ty's own credit risk to be presented in OCI (unless it would create an accoun(cid:415)ng mismatch). New simpler hedge accoun(cid:415)ng requirements are intended to more closely align the accoun(cid:415)ng treatment with the risk management ac(cid:415)vi(cid:415)es of the en(cid:415)ty. New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12- month ECL method unless the credit risk on a ﬁnancial instrument has increased signiﬁcantly since ini(cid:415)al recogni(cid:415)on in which case the life(cid:415)me ECL method is adopted. For receivables, a simpliﬁed approach to measuring expected credit losses using a life(cid:415)me expected loss allowance is available. SciDev Ltd REPORT 2019 ANNUAL The Directors have considered and concluded that the going concern basis of prepara(cid:415)on of the ﬁnancial statements is appropriate and any poten(cid:415)al uncertainty regarding going concern is mi(cid:415)gated by the following:  On 11 February 2019, SciDev Ltd (SDV) announced it had entered into a binding Heads of Agreement (HOA) to acquire the exclusive distribu(cid:415)on and marke(cid:415)ng rights in Australia and other Oceanic countries for polymer products produced by the China-based Nuoer Group (Nuoer Group). Under the terms of the HOA, SDV's wholly owned subsidiary, Science Developments Pty Ltd (SDPL), has been granted the exclusive distribu(cid:415)on and marke(cid:415)ng rights from the Nuoer Group's Australian opera(cid:415)ng en(cid:415)ty, Nuoer Chemical Australia Pty Ltd (NCA) for a 10-year period. The exclusive distribu(cid:415)on and marke(cid:415)ng rights to Nuoer Group's water-soluble polymers is expected to delivering demonstrably expanded market opportuni(cid:415)es for the SDV patent Op(cid:415)Flox technology and other beneﬁts for SDV.   At 30 June 2019 the consolidated en(cid:415)ty had net current assets of $1,684,507 (2018: $964,607) and cash balances of $1,756,209 (2018: $568,187) and an undrawn A$500,000 credit facility. On the 13 September 2019, the company announced the placement of 16,000,0000 new ordinary shares with local ins(cid:415)tu(cid:415)onal and sophis(cid:415)cated investors at an issue price of $0.26 per share to raise total proceeds of $4.16 million. The funds from the placement will predominantly be used to inventory, con(cid:415)nue development of the consolidated en(cid:415)ty's Op(cid:415)Flox and MaxiFlox technology, and increase working capital. increase Based on the above, the Directors are of the opinion that at the date of signature of the ﬁnancial report there are reasonable and supportable grounds to believe that the consolidated en(cid:415)ty will be able to meet its liabili(cid:415)es from its assets in the ordinary course of business, for a period of not less than twelve months from the date of signature of the audit report on this ﬁnancial report to the date of signature of the audit report on the ﬁnancial report for the year ending 30 June 2020, and has accordingly prepared the ﬁnancial report on a going concern basis. 29 Note 2. Signiﬁcant accoun(cid:415)ng policies (cont..) AASB 9 Financial Instruments (cont..) At the date of ini(cid:415)al applica(cid:415)on (1 July 2018) the consolidated en(cid:415)ty assessed that there were no classiﬁca(cid:415)on, measurement and impairment adjustments required to any of its ﬁnancial assets and liabili(cid:415)es except for, ﬁnancial assets in the sum of $1,502,900 'available-for-sale' at 30 June 2018 and now classiﬁed as reclassiﬁed as 'ﬁnancial assets at fair value other comprehensive income'. 'Interest revenue' is no longer included in the 'Revenue' note and is now shown separately on the face of the statement of proﬁt or loss and other in a resul(cid:415)ng comprehensive reclassiﬁca(cid:415)on of $12,999 for the year ended 30 June 2018. income, contract-based AASB 15 Revenue from Contracts with Customers The consolidated en(cid:415)ty has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model for revenue recogni(cid:415)on. The core principle of the standard is that an en(cid:415)ty shall recognise revenue to depict the transfer of promised goods or services to customers at an amount that reﬂects the considera(cid:415)on to which the en(cid:415)ty expects to be en(cid:415)tled in exchange for those goods or services. The standard introduced a new recogni(cid:415)on model with a measurement approach that is based on an alloca(cid:415)on of the transac(cid:415)on price. This is described further in the accoun(cid:415)ng policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an en(cid:415)ty's statement of ﬁnancial posi(cid:415)on as a contract liability, a contract asset, or a receivable, depending on the rela(cid:415)onship between the en(cid:415)ty's performance and the customer's payment. Customer acquisi(cid:415)on costs and costs to fulﬁl a contract can, subject to certain criteria, be capitalised as an asset and amor(cid:415)sed over the contract period. revenue The adop(cid:415)on of this standard has no impact on the ﬁnancial performance and posi(cid:415)on of the consolidated en(cid:415)ty. Going concern For the year ended 30 June 2019 the consolidated en(cid:415)ty generated an opera(cid:415)ng loss a(cid:332)er income tax of $2,032,527 (2018: $987,331 loss before taking into account the net gain from the sale of Intec Zeehan Residues Pty Ltd). Net cash ou(cid:414)lows from opera(cid:415)ons were $1,548,048 (2018: $892,345) for the year ended 30 June 2019. Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 2. Signiﬁcant accoun(cid:415)ng policies (cont..) Australian Basis of prepara(cid:415)on These general purpose ﬁnancial statements have been prepared in accordance with and Interpreta(cid:415)ons issued by the Australian Accoun(cid:415)ng Standards Board ('AASB') and the Corpora(cid:415)ons Act 2001, as appropriate for for-proﬁt oriented en(cid:415)(cid:415)es. These ﬁnancial statements also comply with Interna(cid:415)onal Financial Repor(cid:415)ng Standards as issued by the Interna(cid:415)onal Accoun(cid:415)ng Standards Board ('IASB'). Accoun(cid:415)ng Standards Historical cost conven(cid:415)on The ﬁnancial statements have been prepared under the historical cost conven(cid:415)on, except for, where applicable, ﬁnancial assets and liabili(cid:415)es at fair value through proﬁt or loss. Cri(cid:415)cal accoun(cid:415)ng es(cid:415)mates The prepara(cid:415)on of the ﬁnancial statements requires the use of certain cri(cid:415)cal accoun(cid:415)ng es(cid:415)mates. It also requires management to exercise its judgement in the process of applying the consolidated en(cid:415)ty's accoun(cid:415)ng policies. The areas involving a higher degree of judgement or complexity, or areas where assump(cid:415)ons and es(cid:415)mates are signiﬁcant to the ﬁnancial statements, are disclosed in note 3. Parent en(cid:415)ty informa(cid:415)on In accordance with the Corpora(cid:415)ons Act 2001, these ﬁnancial statements present the results of the consolidated en(cid:415)ty only. Supplementary informa(cid:415)on about the parent en(cid:415)ty is disclosed in note 28. Principles of consolida(cid:415)on The consolidated ﬁnancial statements incorporate the assets and liabili(cid:415)es of all subsidiaries of SciDev Limited ('company' or 'parent en(cid:415)ty') as at 30 June 2019 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 en(cid:415)ty'. Subsidiaries are all those en(cid:415)(cid:415)es over which the consolidated en(cid:415)ty has control. The consolidated en(cid:415)ty controls an en(cid:415)ty when the consolidated en(cid:415)ty is exposed to, or has rights to, variable returns from its involvement with the en(cid:415)ty and has the ability to aﬀect those returns through its power to direct the ac(cid:415)vi(cid:415)es of the en(cid:415)ty. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated en(cid:415)ty. They are de-consolidated from the date that control ceases. 30 Intercompany transac(cid:415)ons, balances and unrealised gains on in the consolidated en(cid:415)ty are transac(cid:415)ons between en(cid:415)(cid:415)es eliminated. Unrealised losses are also eliminated unless the transac(cid:415)on provides evidence of the impairment of the asset transferred. Accoun(cid:415)ng policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated en(cid:415)ty. The acquisi(cid:415)on of subsidiaries is accounted for using the acquisi(cid:415)on method of accoun(cid:415)ng. A change in ownership interest, without the loss of control, is accounted for as an equity transac(cid:415)on, where the diﬀerence between the considera(cid:415)on transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity a(cid:425)ributable to the parent. Where the consolidated en(cid:415)ty loses control over a subsidiary, it derecognises the assets including goodwill, liabili(cid:415)es and non- controlling interest in the subsidiary together with any cumula(cid:415)ve transla(cid:415)on diﬀerences recognised in equity. The consolidated en(cid:415)ty recognises the fair value of the considera(cid:415)on received and the fair value of any investment retained together with any gain or loss in proﬁt or loss. Foreign currency transla(cid:415)on The ﬁnancial statements are presented in Australian dollars, which is SciDev Limited's func(cid:415)onal and presenta(cid:415)on currency. Foreign currency transac(cid:415)ons Foreign currency transac(cid:415)ons are translated into Australian dollars using the exchange rates prevailing at the dates of the transac(cid:415)ons. Foreign exchange gains and losses resul(cid:415)ng from the se(cid:425)lement of such transac(cid:415)ons and from the transla(cid:415)on at ﬁnancial year-end exchange rates of monetary assets and liabili(cid:415)es denominated in foreign currencies are recognised in proﬁt or loss. Foreign opera(cid:415)ons The assets and liabili(cid:415)es of foreign opera(cid:415)ons are translated into Australian dollars using the exchange rates at the repor(cid:415)ng date. The revenues and expenses of foreign opera(cid:415)ons are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transac(cid:415)ons, for the period. All resul(cid:415)ng foreign exchange diﬀerences are recognised in other comprehensive income through the foreign currency reserve in equity. The foreign currency reserve is recognised in proﬁt or loss when the foreign opera(cid:415)on or net investment is disposed of. SciDev Ltd REPORT 2019 ANNUAL method. Gains and losses are recognised in proﬁt or loss when the asset is derecognised or impaired. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the consolidated en(cid:415)ty intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon ini(cid:415)al recogni(cid:415)on. Impairment of ﬁnancial assets The consolidated en(cid:415)ty recognises a loss allowance for expected credit losses on ﬁnancial assets which are either measured at amor(cid:415)sed cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated en(cid:415)ty's assessment at the end of each repor(cid:415)ng period as to whether the ﬁnancial instrument's credit risk has increased signiﬁcantly since ini(cid:415)al recogni(cid:415)on, based on reasonable and supportable informa(cid:415)on that is available, without undue cost or eﬀort to obtain. Where there has not been a signiﬁcant increase in exposure to credit risk since ini(cid:415)al recogni(cid:415)on, a 12-month expected credit loss allowance is es(cid:415)mated. losses. The amount of expected credit This represents a por(cid:415)on of the asset's life(cid:415)me expected credit losses that is a(cid:425)ributable to a default event that is possible within the next 12 months. Where a ﬁnancial asset has become credit impaired or where it is determined that credit risk has increased signiﬁcantly, the loss allowance is based on the asset's life(cid:415)me expected credit loss recognised is measured on the basis of the probability weighted present value of an(cid:415)cipated cash shor(cid:414)alls over the life of the instrument discounted at the original eﬀec(cid:415)ve interest rate. For ﬁnancial assets measured at through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in proﬁt or loss. fair value 31 Note 2. Signiﬁcant accoun(cid:415)ng policies (cont..) Current and non-current classiﬁca(cid:415)on Assets and liabili(cid:415)es are presented in the statement of ﬁnancial posi(cid:415)on based on current and non-current classiﬁca(cid:415)on. An asset is classiﬁed as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated en(cid:415)ty's normal opera(cid:415)ng cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months a(cid:332)er the repor(cid:415)ng period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to se(cid:425)le a liability for at least 12 months a(cid:332)er the repor(cid:415)ng period. All other assets are classiﬁed as non-current. A liability is classiﬁed as current when: it is either expected to be se(cid:425)led in the consolidated en(cid:415)ty's normal opera(cid:415)ng cycle; it is held primarily for the purpose of trading; it is due to be se(cid:425)led within 12 months a(cid:332)er the repor(cid:415)ng period; or there is no uncondi(cid:415)onal right to defer the se(cid:425)lement of the liability for at least 12 months a(cid:332)er the repor(cid:415)ng period. All other liabili(cid:415)es are classiﬁed as non- current. Deferred tax assets and liabili(cid:415)es are always classiﬁed as non-current. included as part of the Investments and other ﬁnancial assets Investments and other ﬁnancial assets are ini(cid:415)ally measured at fair value. Transac(cid:415)on costs are ini(cid:415)al measurement, except for ﬁnancial assets at fair value through proﬁt or loss. Such assets are subsequently measured at either amor(cid:415)sed cost or fair value depending on their classiﬁca(cid:415)on. Classiﬁca(cid:415)on is determined based on both the business model within which such assets are held and the contractual cash ﬂow characteris(cid:415)cs of the ﬁnancial asset unless, an accoun(cid:415)ng mismatch is being avoided. Financial assets are derecognised when the rights to receive cash ﬂows have expired or have been transferred and the consolidated en(cid:415)ty has transferred substan(cid:415)ally all the risks and rewards of ownership. When there is no reasonable expecta(cid:415)on of recovering part or all of a ﬁnancial asset, it's carrying value is wri(cid:425)en oﬀ. Loans and receivables Loans and receivables are non-deriva(cid:415)ve ﬁnancial assets with ﬁxed or determinable payments that are not quoted in an ac(cid:415)ve market. They are carried at amor(cid:415)sed cost using the eﬀec(cid:415)ve interest rate Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 2. Signiﬁcant accoun(cid:415)ng policies (cont..) Leases The determina(cid:415)on 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. discount rate speciﬁc to the asset or cash-genera(cid:415)ng unit to which the asset belongs. Assets that do not have independent cash ﬂows are grouped together to form a cash-genera(cid:415)ng unit. Finance costs Finance costs a(cid:425)ributable to qualifying assets are capitalised as part of the asset. All other ﬁnance costs are expensed in the period in which they are incurred. A dis(cid:415)nc(cid:415)on is made between ﬁnance leases, which eﬀec(cid:415)vely transfer from the lessor to the lessee substan(cid:415)ally all the risks and beneﬁts incidental to the ownership of leased assets, and opera(cid:415)ng leases, under which the lessor eﬀec(cid:415)vely retains substan(cid:415)ally all such risks and beneﬁts. 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 acquisi(cid:415)on 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 posi(cid:415)on. Cash ﬂows are presented on a gross basis. The GST components of cash ﬂows arising from inves(cid:415)ng or ﬁnancing ac(cid:415)vi(cid:415)es which are recoverable from, or payable to the tax authority, are presented as opera(cid:415)ng cash ﬂows. Commitments and con(cid:415)ngencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. New Accoun(cid:415)ng Standards and Interpreta(cid:415)ons not yet mandatory or early adopted Australian Accoun(cid:415)ng Standards and Interpreta(cid:415)ons that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated en(cid:415)ty for the annual repor(cid:415)ng period ended 30 June 2019. 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 is no reasonable certainty that the consolidated en(cid:415)ty will obtain ownership at the end of the lease term. lease term if there Opera(cid:415)ng lease payments, net of any incen(cid:415)ves received from the lessor, are charged to proﬁt or loss on a straight-line basis over the term of the lease. Impairment of non-ﬁnancial assets Goodwill and other intangible assets that have an indeﬁnite useful life are not subject to amor(cid:415)sa(cid:415)on and are tested annually for impairment, or more 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. if events or changes frequently 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 es(cid:415)mated future cash ﬂows rela(cid:415)ng to the asset using a pre-tax 32 Note 2. Signiﬁcant accoun(cid:415)ng policies (cont..) The consolidated en(cid:415)ty's assessment of the impact of these new or amended Accoun(cid:415)ng Standards and Interpreta(cid:415)ons, most relevant to the consolidated en(cid:415)ty, are set out below. AASB 16 Leases This standard is applicable to annual repor(cid:415)ng periods beginning on or a(cid:332)er 1 January 2019. The standard replaces AASB 117 'Leases' and for lessees will eliminate the classiﬁca(cid:415)ons of opera(cid:415)ng leases and ﬁnance leases. Subject to excep(cid:415)ons, a 'right- of-use' asset will be capitalised in the statement of ﬁnancial posi(cid:415)on, measured at the present value of the unavoidable future lease payments to be made over the lease term. The excep(cid:415)ons 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 accoun(cid:415)ng 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 incen(cid:415)ves received, ini(cid:415)al direct costs incurred and an es(cid:415)mate of any future restora(cid:415)on, removal or dismantling costs. Straight-line opera(cid:415)ng lease expense recogni(cid:415)on will be replaced with a deprecia(cid:415)on charge for the leased asset (included in opera(cid:415)ng 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, Deprecia(cid:415)on and Amor(cid:415)sa(cid:415)on) results will be improved as the opera(cid:415)ng expense is replaced by interest expense and deprecia(cid:415)on in proﬁt or loss under AASB 16. For classiﬁca(cid:415)on within the statement of cash ﬂows, the lease payments will be separated into both a principal (ﬁnancing ac(cid:415)vi(cid:415)es) and interest (either opera(cid:415)ng or ﬁnancing ac(cid:415)vi(cid:415)es) component. For lessor accoun(cid:415)ng, the standard does not substan(cid:415)ally change how a lessor accounts for leases. The consolidated en(cid:415)ty will adopt this standard from 1 July 2019 but the impact of its adop(cid:415)on is yet to be assessed by the consolidated en(cid:415)ty. SciDev Ltd REPORT 2019 ANNUAL Note 3. Cri(cid:415)cal accoun(cid:415)ng assump(cid:415)ons judgements, es(cid:415)mates and The prepara(cid:415)on of the ﬁnancial statements requires management to make judgements, es(cid:415)mates and assump(cid:415)ons that aﬀect the reported amounts in the ﬁnancial statements. Management con(cid:415)nually evaluates its judgements and es(cid:415)mates in rela(cid:415)on to assets, liabili(cid:415)es, con(cid:415)ngent liabili(cid:415)es, revenue and expenses. Management bases its judgements, es(cid:415)mates and assump(cid:415)ons on historical experience and on other various factors, including expecta(cid:415)ons of future events, management believes to be reasonable under the circumstances. The resul(cid:415)ng accoun(cid:415)ng judgements and es(cid:415)mates will seldom equal the related actual results. The judgements, es(cid:415)mates and assump(cid:415)ons that have a signiﬁcant risk of causing a material adjustment to the carrying amounts of assets and liabili(cid:415)es (refer to the respec(cid:415)ve notes) within the next ﬁnancial year are discussed below. indicate in circumstances Goodwill The consolidated en(cid:415)ty tests annually, or more frequently if events or changes impairment, whether goodwill has suﬀered any impairment, in accordance with the accoun(cid:415)ng policy stated in note 2. The recoverable amounts of cash-genera(cid:415)ng units have been determined based on value-in-use calcula(cid:415)ons. These calcula(cid:415)ons require the use of assump(cid:415)ons, including es(cid:415)mated discount rates based on the current cost of capital and growth rates of the es(cid:415)mated future cash ﬂows. For informa(cid:415)on rela(cid:415)ng to the value-in-use calcula(cid:415)ons refer to note 14. Note 4. Opera(cid:415)ng segments Iden(cid:415)ﬁca(cid:415)on of reportable opera(cid:415)ng segments The consolidated en(cid:415)ty 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. Opera(cid:415)ng and business segments are reported in a manner consistent with the internal repor(cid:415)ng provided to the chief opera(cid:415)ng decision makers. The chief opera(cid:415)ng decision maker, who for alloca(cid:415)ng resources and assessing performance of the opera(cid:415)ng segments, has been iden(cid:415)ﬁed as the Board of Directors. is responsible 33 Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 4. Opera(cid:415)ng segments (cont…) Major customers During the year ended 30 June 2019 approximately 57% of the consolidated en(cid:415)ty's external revenue was derived from sales to the consolidated en(cid:415)ty's 3 largest customers (2018: 52% of consolidated external revenue was a(cid:425)ributable to one customer). No other customer contributed 10% or more to the consolidated en(cid:415)ty's revenue for both 2019 and 2018. Revenue by geographical area The consolidated en(cid:415)ty operates primarily in one geographical segment being Australia. Revenue a(cid:425)ributable to overseas subsidiaries is not material to the consolidated en(cid:415)ty. Accoun(cid:415)ng policy for opera(cid:415)ng segments Opera(cid:415)ng segments are presented using the 'management approach', where the informa(cid:415)on presented is on the same basis as the internal reports provided to the Chief Opera(cid:415)ng Decision Makers ('CODM'). The CODM is responsible for the alloca(cid:415)on of resources to opera(cid:415)ng segments and assessing their performance. Note 5. Revenue Sales revenue Treatment fees and product sales Other revenue Royalty Other revenue Revenue 2019 $ 2018 $ 2,655,799 2,029,373 - 265,261 265,261 14,125 157,270 171,395 2,921,060 2,200,768 Accoun(cid:415)ng policy for revenue recogni(cid:415)on The consolidated en(cid:415)ty recognises revenue as follows: Revenue from contracts with customers Revenue is recognised at an amount that reﬂects the considera(cid:415)on to which the consolidated en(cid:415)ty is expected to be en(cid:415)tled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated en(cid:415)ty: iden(cid:415)ﬁes the contract with a customer; iden(cid:415)ﬁes the performance obliga(cid:415)ons in the contract; determines the transac(cid:415)on price which takes into account es(cid:415)mates of variable considera(cid:415)on and the (cid:415)me value of money; allocates the transac(cid:415)on price to the separate performance obliga(cid:415)ons on the basis of the rela(cid:415)ve stand-alone selling price of each dis(cid:415)nct good or service to be delivered; and recognises revenue when or as each performance obliga(cid:415)on is sa(cid:415)sﬁed in a manner that depicts the transfer to the customer of the goods or services promised. 34 SciDev Ltd REPORT 2019 ANNUAL Note 5. Revenue (cont..) Variable considera(cid:415)on within the transac(cid:415)on price, if any, reﬂects concessions provided to the customer such as discounts, rebates and refunds, any poten(cid:415)al bonuses receivable from the customer and any other con(cid:415)ngent events. Such es(cid:415)mates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable considera(cid:415)on is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a signiﬁcant reversal in the amount of cumula(cid:415)ve revenue recognised will not occur. The measurement constraint con(cid:415)nues un(cid:415)l the uncertainty associated with the variable considera(cid:415)on is subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability. Sale of goods Revenue from the sale of goods is recognised at the point in (cid:415)me when the customer obtains control of the goods, which is generally at the (cid:415)me of delivery. Consul(cid:415)ng services and treatment fees Consul(cid:415)ng services and treatment fees are recognised using the percentage-of-comple(cid:415)on method for ﬁxed-fee arrangements or as the services are provided for (cid:415)me-and-materials arrangements. Interest Interest revenue is recognised as interest accrues using the eﬀec(cid:415)ve interest method. This is a method of calcula(cid:415)ng the amor(cid:415)sed cost of a ﬁnancial asset and alloca(cid:415)ng the interest income over the relevant period using the eﬀec(cid:415)ve interest rate, which is the rate that exactly discounts es(cid:415)mated 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. 35 Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 6. Other income Net foreign exchange gain Net gain on disposal of Intec Zeehan Residues Pty Ltd Subsidies and grants Reimbursement of expenses Other income Note 7. Expenses Proﬁt/(loss) before income tax includes the following speciﬁc expenses: Rental expense rela(cid:415)ng to opera(cid:415)ng leases Minimum lease payments Superannua(cid:415)on expense Deﬁned contribu(cid:415)on superannua(cid:415)on expense Note 8. Income tax Income tax expense/(beneﬁt) Deferred tax - origina(cid:415)on and reversal of temporary diﬀerences Adjustment recognised for prior periods Aggregate income tax expense/(beneﬁt) Deferred tax included in income tax expense/(beneﬁt) comprises: Decrease in deferred tax liabili(cid:415)es Numerical reconcilia(cid:415)on of income tax expense/(beneﬁt) and tax at the statutory rate Proﬁt/(loss) before income tax beneﬁt/(expense) Tax at the statutory tax rate of 27.5% Tax eﬀect amounts which are not deduc(cid:415)ble/(taxable) in calcula(cid:415)ng taxable income: Non-deduc(cid:415)ble expenses Non-assessable income Adjustment recognised for prior periods Current year tax losses not recognised Current year temporary diﬀerences not recognised Adjustment to deferred tax balances Income tax expense/(beneﬁt) 36 2019 $ - - 332,981 3,664 2018 $ 20,181 1,989,200 303,112 23,694 336,645 2,336,187 2019 $ 2018 $ 156,169 106,519 96,666 74,951 2019 $ 2018 $ (8,122) 32,199 (8,142) - 24,077 (8,142) (8,122) (8,142) (2,008,450) 993,727 (552,324) 273,275 8,121 (91,570) (635,773) 32,199 649,194 (21,543) - 43,105 (630,386) (314,006) - 340,933 (30,715) (4,354) 24,077 (8,142) SciDev Ltd REPORT 2019 ANNUAL Note 8. income tax (cont..) Tax losses not recognised Unused tax losses for which no deferred tax asset has been recognised Poten(cid:415)al tax beneﬁt @ 27.5% 2019 $ 2018 $ 67,709,864 66,114,631 18,620,213 18,181,524 The above poten(cid:415)al tax beneﬁt for tax losses has not been recognised in the statement of ﬁnancial posi(cid:415)on. These tax losses can only be u(cid:415)lised in the future if the con(cid:415)nuity of ownership test is passed, or failing that, the same business test is passed. Deferred tax liability Deferred tax liability comprises temporary diﬀerences a(cid:425)ributable to: Amounts recognised in proﬁt or loss: Brand name Deferred tax liability Movements: Opening balance Credited to proﬁt or loss Closing balance 2019 $ 2018 $ 35,986 44,108 35,986 44,108 44,108 (8,122) 52,250 (8,142) 35,986 44,108 Accoun(cid:415)ng 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 jurisdic(cid:415)on, adjusted by the changes in deferred tax assets and liabili(cid:415)es a(cid:425)ributable to temporary diﬀerences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabili(cid:415)es are recognised for temporary diﬀerences at the tax rates expected to be applied when the assets are recovered or liabili(cid:415)es are se(cid:425)led, based on those tax rates that are enacted or substan(cid:415)vely enacted, except for:  When the deferred income tax asset or liability arises from the ini(cid:415)al recogni(cid:415)on of goodwill or an asset or liability in a transac(cid:415)on that is not a business combina(cid:415)on and that, at the (cid:415)me of the transac(cid:415)on, aﬀects neither the accoun(cid:415)ng nor taxable proﬁts; or  When the taxable temporary diﬀerence is associated with interests in subsidiaries, associates or joint ventures, and the (cid:415)ming 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 deduc(cid:415)ble temporary diﬀerences and unused tax losses only if it is probable that future taxable amounts will be available to u(cid:415)lise those temporary diﬀerences and losses. 37 Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 8. Income tax (cont..) The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each repor(cid:415)ng 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 liabili(cid:415)es are oﬀset only where there is a legally enforceable right to oﬀset current tax assets against current tax liabili(cid:415)es and deferred tax assets against deferred tax liabili(cid:415)es; and they relate to the same taxable authority on either the same taxable en(cid:415)ty or diﬀerent taxable en(cid:415)(cid:415)es which intend to se(cid:425)le simultaneously. SciDev Limited (the 'head en(cid:415)ty') and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolida(cid:415)on regime. The head en(cid:415)ty and each subsidiary in the tax consolidated group con(cid:415)nue 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 addi(cid:415)on to its own current and deferred tax amounts, the head en(cid:415)ty also recognises the current tax liabili(cid:415)es (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. Assets or liabili(cid:415)es arising under tax funding agreements with the tax consolidated en(cid:415)(cid:415)es are recognised as amounts receivable from or payable to other en(cid:415)(cid:415)es 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, resul(cid:415)ng in neither a contribu(cid:415)on by the head en(cid:415)ty to the subsidiaries nor a distribu(cid:415)on by the subsidiaries to the head en(cid:415)ty. Cash on hand Cash at bank 2019 $ 2018 $ 150 1,756,059 150 568,037 1,756,209 568,187 Note 9. Current assets - cash and cash equivalents Accoun(cid:415)ng policy for cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with ﬁnancial ins(cid:415)tu(cid:415)ons, other short-term, highly liquid investments with original maturi(cid:415)es of three months or less that are readily conver(cid:415)ble to known amounts of cash and which are subject to an insigniﬁcant risk of changes in value. 38 SciDev Ltd REPORT 2019 ANNUAL 2019 $ 2018 $ 779,210 26,889 - 457,430 14,266 256,250 806,099 727,946 Note 10. Current assets - trade and other receivables Trade receivables Other receivables Amount due by Tartana Resources Limited Allowance for expected credit losses On adop(cid:415)on of AASB 9 'Financial instruments', the consolidated en(cid:415)ty has changed the accoun(cid:415)ng for impairment losses for receivables by replacing the previous 'incurred loss approach' with a forward-looking 'expected credit loss' (ECL) approach and has calculated its ECL based on the consolidated en(cid:415)ty's historical credit loss experience, adjusted for forward-looking factors speciﬁc to its receivables and the economic environment. The consolidated en(cid:415)ty does not have any history of impairment of its trade receivables. The consolidated en(cid:415)ty transacts with a limited number of established customers and operates under strict credit policies approved by the Board of Directors. No impairment loss has be been recognised for trade receivables. Accoun(cid:415)ng policy for trade and other receivables Trade receivables are ini(cid:415)ally recognised at fair value and subsequently measured at amor(cid:415)sed cost using the eﬀec(cid:415)ve interest method, less any allowance for expected credit losses. Trade receivables are generally due for se(cid:425)lement within 30 days. The consolidated en(cid:415)ty has applied the simpliﬁed approach to measuring expected credit losses, which uses a life(cid:415)me expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amor(cid:415)sed cost, less any allowance for expected credit losses. Note 11. Current assets - inventories Stock on hand - at cost 2019 $ 2018 $ 264,325 236,184 Accoun(cid:415)ng 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 es(cid:415)mated selling price in the ordinary course of business less the es(cid:415)mated costs of comple(cid:415)on and the es(cid:415)mated costs necessary to make the sale. 39 Notes to the ﬁnancial statements For the year ended 30 June 2019 12. Non-current assets - ﬁnancial assets at fair value through other comprehensive income Unlisted equity securi(cid:415)es Considera(cid:415)on from disposal of Intec Zeehan Residues Pty Ltd Reconcilia(cid:415)on Reconcilia(cid:415)on of the fair values at the beginning and end of the current and previous ﬁnancial year are set out below: Opening fair value Addi(cid:415)ons* Disposals* Revalua(cid:415)on increments Closing fair value 2019 $ 2018 $ 1,502,900 - 698,900 804,000 1,502,900 1,502,900 1,502,900 500,000 (641,026) 141,026 2,900 1,500,000 - - 1,502,900 1,502,900 Refer to note 23 for further informa(cid:415)on on fair value measurement. * On 25 October 2017, SciDev Limited (SciDev) entered into a condi(cid:415)onal sale agreement to dispose of Intec Zeehan Residues Pty Ltd (IZR), whose principal asset was the Zeehan Zinc Project. The disposal was in order to generate cash ﬂow for the expansion of the consolidated en(cid:415)ty's core businesses. The disposal was completed on 22 January 2018, on which date control of IZR passed to the acquirer, Tartana Resources Ltd (Tartana). The total considera(cid:415)on was 15,000,000 ordinary shares in Tartana at a deemed price of 10 cents per share and $500,000 in cash. SciDev received $300,000 of the cash component and 7,760,000 ordinary shares in Tartana. SciDev and Tartana subsequently agreed to vary the terms of the sale agreement resul(cid:415)ng in an addi(cid:415)onal 5,000,000 Tartana shares to be issued to SciDev and the dele(cid:415)on of the $500,000 cash component of the transac(cid:415)on. SciDev agreed to repay the $300,000 it received from Tartana and used the proceeds from the sale of 6,410,256 Tartana shares to fund the repayment. The total considera(cid:415)on for the transac(cid:415)on of $2,000,000 remained unchanged. 40 SciDev Ltd REPORT 2019 ANNUAL 2019 $ 2018 $ 748,552 (462,286) 286,266 50,954 (33,766) 17,188 619,949 (358,995) 260,954 31,028 (31,028) - 303,454 260,954 Note 13. Non-current assets - property, plant and equipment Plant and equipment - at cost Less: Accumulated deprecia(cid:415)on Oﬃce equipment - at cost Less: Accumulated deprecia(cid:415)on Reconcilia(cid:415)ons Reconcilia(cid:415)ons of the wri(cid:425)en down values at the beginning and end of the current and previous ﬁnancial year are set out below: Balance at 1 July 2017 Addi(cid:415)ons Deprecia(cid:415)on expense Balance at 30 June 2018 Addi(cid:415)ons Disposals Deprecia(cid:415)on expense Balance at 30 June 2019 Plant and Equipment $ Oﬃce Equipment $ Total $ 290,123 97,045 (126,214) 260,954 205,299 (27,621) (152,366) 1,078 - (1,078) - 19,926 - (2,738) 291,201 97,045 (127,292) 260,954 225,225 (27,621) (155,104) 286,266 17,188 303,454 Property, plant and equipment secured under ﬁnance leases Refer to note 26 for further informa(cid:415)on on property, plant and equipment secured under ﬁnance leases. Accoun(cid:415)ng policy for property, plant and equipment Plant and equipment is stated at historical cost less accumulated deprecia(cid:415)on and impairment. Historical cost includes expenditure that is directly a(cid:425)ributable to the acquisi(cid:415)on of the items. Deprecia(cid:415)on is calculated on a straight-line basis to write oﬀ the net cost of each item of property, plant and equipment over their expected useful lives as follows: Plant and equipment Oﬃce equipment 4-7 years 2-8 years The residual values, useful lives and deprecia(cid:415)on methods are reviewed, and adjusted if appropriate, at each repor(cid:415)ng date. Plant and equipment under lease are depreciated over the unexpired period of the lease or the es(cid:415)mated 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 en(cid:415)ty. Gains and losses between the carrying amount and the disposal proceeds are taken to proﬁt or loss. 41 Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 14. Non-current assets - intangibles Goodwill - at cost Trade marks and intellectual property - at cost Less: Accumulated amor(cid:415)sa(cid:415)on 2019 $ 2018 $ 1,030,018 1,030,018 465,871 (249,590) 216,281 427,942 (191,927) 236,015 1,246,299 1,266,033 Reconcilia(cid:415)ons Reconcilia(cid:415)ons of the wri(cid:425)en down values at the beginning and end of the current and previous ﬁnancial year are set out below: Balance at 1 July 2017 Addi(cid:415)ons Amor(cid:415)sa(cid:415)on expense Balance at 30 June 2018 Addi(cid:415)ons Amor(cid:415)sa(cid:415)on expense Balance at 30 June 2019 Trademarks and Intellectual property $ Goodwill $ 1,030,018 - - 1,030,018 - - 249,785 53,109 (66,879) 236,015 37,929 (57,663) Total $ 1,279,803 53,109 (66,879) 1,266,033 37,929 (57,663) 1,030,018 216,281 1,246,299 Impairment tes(cid:415)ng Goodwill which was acquired through a business combina(cid:415)on, has been allocated to the Science Development Pty Ltd cash-genera(cid:415)ng unit (CGU). The recoverable amount of the consolidated en(cid:415)ty's goodwill has been determined by a value-in-use calcula(cid:415)on using a discounted cash ﬂow model, based on a 1 year projec(cid:415)on period approved by management and extrapolated for a further 4 years using variable rates, together with a terminal value. Key assump(cid:415)ons are those to which the recoverable amount of an asset or cash-genera(cid:415)ng units is most sensi(cid:415)ve. Key assump(cid:415)ons in the discounted cashﬂow model include: (a) (b) (c) (d) Post-tax discount rate of 15% (2018: 15%) per annum; Average revenue growth over the ﬁve-year period of 1,243% (2018: 46%); Average growth in gross margin over the ﬁve-year period of 1,433% (2018: 39%); and Average per annum increase in opera(cid:415)ng expenses of 5% (2018: 16%). 42 SciDev Ltd REPORT 2019 ANNUAL 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 amor(cid:415)sed on a straight-line basis over the period of their expected beneﬁt, being their ﬁnite life of 10 years. Note 14. Non-current assets - intangibles (cont..) The discount rate of 15% post-tax reﬂects management’s es(cid:415)mate of the (cid:415)me value of money and the consolidated en(cid:415)ty’s weighted average cost of capital, the risk free rate and the vola(cid:415)lity of the share price rela(cid:415)ve to market movements. Management believes the projected revenue growth rate is prudent and jus(cid:415)ﬁed, based on management's expecta(cid:415)ons of the company's business development pipeline. The budgeted gross margin is based on past performance and management's expecta(cid:415)ons for the future. Management has budgeted for opera(cid:415)ng costs based on the current structure of the business, adjus(cid:415)ng for inﬂa(cid:415)onary increases but not reﬂec(cid:415)ng any future restructurings or cost saving measures. Sensi(cid:415)vity to change of assump(cid:415)ons If the next year’s ﬁnancial budget used in the value-in-use calcula(cid:415)on had been 10% (2018: 10%) lower than management’s es(cid:415)mates at 30 June 2019, the consolidated en(cid:415)ty would have a recoverable amount in excess of $5 million (2018: $3.17 million) against the carrying amount of the cash genera(cid:415)ng unit to which the goodwill relates. If the post-tax discount rate applied to the cash ﬂow projec(cid:415)ons of this CGU had been 30% (2018: 30%) higher than management’s es(cid:415)mates (20% instead of 15%) (2018: 20% instead of 15%), the consolidated en(cid:415)ty would have a recoverable amount in excess of $4.6 million (2018: $2.91 million) against the carrying amount of intangible assets and property, plant and equipment. Accoun(cid:415)ng policy for intangible assets Intangible assets acquired as part of a business combina(cid:415)on, other than goodwill, are ini(cid:415)ally measured at their fair value at the date of the acquisi(cid:415)on. Intangible assets acquired separately are ini(cid:415)ally recognised at cost. Indeﬁnite life intangible assets are not amor(cid:415)sed and are subsequently measured at cost less any intangible assets are subsequently impairment. Finite measured at cost less amor(cid:415)sa(cid:415)on and any impairment. The gains or from the in proﬁt or derecogni(cid:415)on 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 pa(cid:425)ern of consump(cid:415)on or useful life are accounted for prospec(cid:415)vely by changing the amor(cid:415)sa(cid:415)on method or period. losses recognised loss arising life Goodwill Goodwill arises on the acquisi(cid:415)on of a business. Goodwill is not amor(cid:415)sed. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate 43 Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 15. Current liabili(cid:415)es - trade and other payables Trade payables BAS payable Other payables 2019 $ 2018 $ 783,397 52,937 173,195 260,079 67,376 42,824 1,009,529 370,279 Refer to note 22 for further informa(cid:415)on on ﬁnancial instruments. Accoun(cid:415)ng policy for trade and other payables These amounts represent liabili(cid:415)es for goods and services provided to the consolidated en(cid:415)ty prior to the end of the ﬁnancial year and which are unpaid. Due to their short-term nature they are measured at amor(cid:415)sed cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recogni(cid:415)on. Note 16. Current liabili(cid:415)es - borrowings Lease liability Refer to note 22 for further informa(cid:415)on on ﬁnancial instruments. 2019 $ 2018 $ - 31,938 Accoun(cid:415)ng policy for borrowings Loans and borrowings are ini(cid:415)ally recognised at the fair value of the considera(cid:415)on received, net of transac(cid:415)on costs. They are subsequently measured at amor(cid:415)sed cost using the eﬀec(cid:415)ve interest method. Where there is an uncondi(cid:415)onal right to defer se(cid:425)lement of the liability for at least 12 months a(cid:332)er the repor(cid:415)ng date, the loans or borrowings are classiﬁed as non-current. Note 17. Current liabili(cid:415)es - employee beneﬁts Annual leave Long service leave Accoun(cid:415)ng policy for employee beneﬁts 2019 $ 2018 $ 32,619 122,657 40,534 126,713 155,276 167,247 Short‐term employee beneﬁts Liabili(cid:415)es for wages and salaries, including non-monetary beneﬁts, annual leave and long service leave expected to be se(cid:425)led wholly within 12 months of the repor(cid:415)ng date are measured at the amounts expected to be paid when the liabili(cid:415)es are se(cid:425)led. Deﬁned contribu(cid:415)on superannua(cid:415)on expense Contribu(cid:415)ons to deﬁned contribu(cid:415)on superannua(cid:415)on plans are expensed in the period in which they are incurred. 44 SciDev Ltd REPORT 2019 ANNUAL 2019 $ 2018 $ 2,153 - Note 18. Non-current liabili(cid:415)es - employee beneﬁts Long service leave Accoun(cid:415)ng policy for other long‐term employee beneﬁts The liability for annual leave and long service leave not expected to be se(cid:425)led within 12 months of the repor(cid:415)ng date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the repor(cid:415)ng date using the projected unit credit method. Considera(cid:415)on is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the repor(cid:415)ng date on na(cid:415)onal government bonds with terms to maturity and currency that match, as closely as possible, the es(cid:415)mated future cash ou(cid:414)lows. Note 19. Equity - issued capital 2019 Shares 2018 Shares 2019 $ 2018 $ Ordinary shares - fully paid 107,263,157 569,041,473 76,899,789 74,118,627 Movements in ordinary share capital Details Balance Share placement Balance Share placement Share placement Share consolida(cid:415)on (10 to 1) Date 1 July 2017 29 June 2018 30 June 2018 10 August 2018 11 August 2018 4 December 2018 Shares Issue price $ 494,818,673 74,222,800 569,041,473 52,443,867 16,666,667 (574,336,806) $0.006 $0.006 $0.006 $0.000 73,673,290 445,337 74,118,627 314,663 100,000 - Shares issued to Nuoer Chemical Australia Pty Ltd 12 February 2019 1,666,667 $0.060 100,000 Shares issued to employees of Nuoer Chemical Australia Pty Ltd Share placement En(cid:415)tlements issue Share placement Share issue transac(cid:415)on costs 12 February 2019 12 February 2019 13 March 2019 9 April 2019 5,000,000 1,166,666 22,614,624 12,999,999 - $0.060 $0.060 $0.060 $0.060 $0.000 Balance 30 June 2019 107,263,157 300,000 70,000 1,266,949 780,000 (150,450) 76,899,789 45 Capital risk management The consolidated en(cid:415)ty's objec(cid:415)ves when managing capital is to safeguard its ability to con(cid:415)nue as a going concern, so that it can provide returns for shareholders and beneﬁts for other stakeholders and to maintain an op(cid:415)mum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of ﬁnancial posi(cid:415)on, 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 en(cid:415)ty may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The consolidated en(cid:415)ty would look to raise capital when an opportunity to invest in a business or company was seen as value adding rela(cid:415)ve to the current company's share price at the (cid:415)me of the investment. The consolidated en(cid:415)ty is not ac(cid:415)vely pursuing addi(cid:415)onal investments in the short term as it con(cid:415)nues to integrate and grow its exis(cid:415)ng businesses in order to maximise synergies. There are no externally imposed capital requirements. The capital risk management policy remains unchanged from the 2018 Annual Report. The consolidated en(cid:415)ty monitors capital on the basis of its working capital posi(cid:415)on (i.e. liquidity risk). The net working capital of the consolidated en(cid:415)ty at 30 June 2019 was $1,684,507 (2018: $964,607). Accoun(cid:415)ng policy for issued capital Ordinary shares are classiﬁed as equity. Incremental costs directly a(cid:425)ributable to the issue of new shares or op(cid:415)ons are shown in equity as a deduc(cid:415)on, net of tax, from the proceeds. Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 19. Equity - issued capital (cont..) Ordinary shares Ordinary shares en(cid:415)tle the holder to par(cid:415)cipate in dividends and the proceeds on the winding up of the company in propor(cid:415)on 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 mee(cid:415)ng in person or by proxy shall have one vote and upon a poll each share shall have one vote. Share placement 30 June 2018 The company issued 74,222,800 ordinary shares on 29 June 2018 in terms of a placement to sophis(cid:415)cated and professional investors at an issue price of 0.6 cents per share. 30 June 2019 On 10 August 2018 and 11 August 2018, the company completed Tranche 2 of the share placement previously announced on 25 June 2018. Tranche 2 comprised the placement of 69,110,534 shares at an issue price of 0.6 cents per share to raise $414,663. An Extraordinary General Mee(cid:415)ng of the company was held on 2 August 2018 to approve ma(cid:425)ers rela(cid:415)ng to both Tranches of the share placement announced on 25 June 2018. On 12 February 2019, 1,166,666 shares were issued at a price of 6 cents per share. On 9 April 2019, 12,999,999 shares were issued at a price of 6 cents per share. Shares issued to the Nuoer Group and nominees of the Nuoer Group On 12 February 2019, 1,666,667 shares were issued to the Nuoer Group at a price of 6 cents per share to acquire the distribu(cid:415)on and marke(cid:415)ng rights for Nuoer Group products in Australia and other Oceanic countries. On the same day, 5,000,000 shares were issued to employees of Nuoer Chemical Australia Pty Ltd at price of 6 cents per share. En(cid:415)tlements issue On 15 March 2019, the company issued 22,614,624 shares at a price of 6 cents per share in terms of a 2 for 7 non-renounceable en(cid:415)tlements issue. Share consolida(cid:415)on On 4 December 2018 the company completed a 10 to 1 consolida(cid:415)on of its issued shares and op(cid:415)ons. 46 SciDev Ltd REPORT 2019 ANNUAL 2019 $ 2018 $ 2,855,902 (645,199) 2,855,902 (645,199) 2,210,703 2,210,703 Note 20. Equity - reserves Share-based payments reserve Transac(cid:415)ons with non-controlling interests Share‐based payments reserve The reserve is used to recognise the value of equity beneﬁts provided to employees and directors as part of their remunera(cid:415)on, and other par(cid:415)es as part of their compensa(cid:415)on for services. Transac(cid:415)ons with non‐controlling interests A change in ownership interest, without the loss of control, is accounted for as an equity transac(cid:415)on, where the diﬀerence between the considera(cid:415)on transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity a(cid:425)ributable to the parent. Movements in reserves Movements in each class of reserve during the current and previous ﬁnancial year are set out below: Balance at 1 July 2017 Share-based payments Balance at 30 June 2018 Balance at 30 June 2019 Note 21. Equity - dividends Share-based pay- ments reserve $ Transac(cid:415)ons with non- controlling interests $ Total $ 2,814,422 41,480 (645,199) - 2,169,223 41,480 2,855,902 (645,199) 2,210,703 2,855,902 (645,199) 2,210,703 Dividends There were no dividends paid, recommended or declared during the current or previous ﬁnancial year. Franking Credits Franking credits available for subsequent ﬁnancial years based on a tax rate of 27.5% 82,824 82,824 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 repor(cid:415)ng date franking debits that will arise from the payment of dividends recognised as a liability at the repor(cid:415)ng date franking credits that will arise from the receipt of dividends recognised as receivables at the repor(cid:415)ng date. 2019 $ 2018 $ 47 Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 22. Financial instruments Financial risk management objec(cid:415)ves The consolidated en(cid:415)ty's ac(cid:415)vi(cid:415)es 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 en(cid:415)ty's overall risk management program focuses on the unpredictability of ﬁnancial markets and seeks to minimise poten(cid:415)al adverse eﬀects on the ﬁnancial performance of the consolidated en(cid:415)ty. The consolidated en(cid:415)ty does not enter into or trade ﬁnancial instruments, including deriva(cid:415)ve ﬁnancial instruments, for specula(cid:415)ve purposes. Risk management is carried out by company management and the Board of Directors. Financial risks are iden(cid:415)ﬁed and evaluated and, where considered necessary, strategies are put in place to inves(cid:415)gate and/or minimise such risks. Market risk Foreign currency risk Foreign exchange risk arises when future commercial transac(cid:415)ons and recognised assets and liabili(cid:415)es are denominated in a currency that is not the en(cid:415)ty’s func(cid:415)onal currency. The consolidated en(cid:415)ty has a trade ﬁnance facility u(cid:415)lised 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 en(cid:415)ty has not entered into any foreign currency hedging contracts during the year. The consolidated en(cid:415)ty is not exposed to any signiﬁcant foreign currency risk. Price risk The consolidated en(cid:415)ty is not exposed to any signiﬁcant price risk. Interest rate risk The consolidated en(cid:415)ty's main interest rate risk arises from borrowings. Borrowings obtained at variable rates expose the consolidated en(cid:415)ty to interest rate risk. Borrowings obtained at ﬁxed rates expose the consolidated en(cid:415)ty to fair value interest rate risk. As at the repor(cid:415)ng date, the consolidated en(cid:415)ty had the following variable rate borrowings outstanding: Leases Net exposure to cash ﬂow interest rate risk 2019 2018 Weighted average interest rate % - Weighted average interest rate % Balance $ Balance $ - - 6.00% 31,938 31,938 An analysis by remaining contractual maturi(cid:415)es in shown in 'liquidity and interest rate risk management' below. 2018 - An oﬃcial increase/decrease in interest rates of 100 basis points would have an adverse/favourable eﬀect on proﬁt before tax of $319 per annum. The percentage change is based on the expected vola(cid:415)lity of interest rates using market data and analysts forecasts. Credit risk The consolidated en(cid:415)ty has adopted a life(cid:415)me expected loss allowance in es(cid:415)ma(cid:415)ng expected credit losses to trade receivables through the use of a provisions matrix using ﬁxed rates of credit loss provisioning. These provisions are considered representa(cid:415)ve across all customers of the consolidated en(cid:415)ty based on recent sales experience, historical collec(cid:415)on rates and forward-looking informa(cid:415)on that is available. Generally, trade receivables are wri(cid:425)en oﬀ when there is no reasonable expecta(cid:415)on of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no ac(cid:415)ve enforcement ac(cid:415)vity and a failure to make contractual payments for a period greater than 1 year. 48 SciDev Ltd REPORT 2019 ANNUAL Note 22. Financial instruments (cont..) Credit risk (cont..) Credit risk refers to the risk that a counterparty will default on its contractual obliga(cid:415)ons resul(cid:415)ng in ﬁnancial loss to the consolidated en(cid:415)ty.There is no signiﬁcant concentra(cid:415)on of credit risk to any single en(cid:415)ty. The maximum exposure to credit risk at the repor(cid:415)ng 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 posi(cid:415)on 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 en(cid:415)ty to maintain suﬃcient liquid assets (mainly cash and cash equivalents) and available borrowing facili(cid:415)es to be able to pay debts as and when they become due and payable. The consolidated en(cid:415)ty manages liquidity risk by maintaining adequate cash reserves and available borrowing facili(cid:415)es by con(cid:415)nuously monitoring actual and forecast cash ﬂows and matching the maturity proﬁles of ﬁnancial assets and liabili(cid:415)es. Remaining contractual maturi(cid:415)es The following tables detail the consolidated en(cid:415)ty's remaining contractual maturity for its ﬁnancial instrument liabili(cid:415)es. The tables have been drawn up based on the undiscounted cash ﬂows of ﬁnancial liabili(cid:415)es based on the earliest date on which the ﬁnancial liabili(cid:415)es are required to be paid. The tables include both interest and principal cash ﬂows disclosed as remaining contractual maturi(cid:415)es and therefore these totals may diﬀer from their carrying amount in the statement of ﬁnancial posi(cid:415)on. - 2019 Non‐interest bearing Trade payables and other payables Total non-deriva(cid:415)ves - 2018 Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years Over 5 years $ $ Remaining contractual maturi(cid:415)es $ - 1,009,529 1,009,529 - - - - - - 1,009,529 1,009,529 Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years Over 5 years $ $ Remaining contractual maturi(cid:415)es $ Non‐interest bearing Trade payables and other payables - 370,279 Interest‐bearing ‐ variable Lease liability Total non-deriva(cid:415)ves 6.00% 34,911 405,190 - - - - - - - 370,279 - - 34,911 405,190 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. 49 Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 23. Fair value measurement Market risk Fair value hierarchy The following tables detail the consolidated en(cid:415)ty's assets and liabili(cid:415)es, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is signiﬁcant to the en(cid:415)re fair value measurement, being: Level 1: Quoted prices (unadjusted) in ac(cid:415)ve markets for iden(cid:415)cal assets or liabili(cid:415)es that the en(cid:415)ty 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 - 2019 Assets Equity securi(cid:415)es Equity securi(cid:415)es - other Total assets - 2018 Assets Considera(cid:415)on from disposal of subsidiary Equity securi(cid:415)es Equity securi(cid:415)es - other Total assets Level 1 $ Level 2 $ Level 3 $ Total $ Level 1 $ - - - - - - - 1,500,000 2,900 1,502,900 Level 2 $ Level 3 $ 804,000 696,000 2,900 1,502,900 - - - - - - - 1,500,000 2,900 1,502,900 Total $ 804,000 696,000 2,900 1,502,900 There were no transfers between levels during the ﬁnancial year. Valua(cid:415)on techniques for fair value measurements categorised within level 2 and level 3 The considera(cid:415)on from disposal of subsidiary (2018: $804,000) and the equity securi(cid:415)es (2019: $1,500,000; 2018: $696,000) represent the non- cash considera(cid:415)on received from the disposal of a subsidiary to an unlisted en(cid:415)ty. The fair value of these ﬁnancial assets has been determined using the expected ini(cid:415)al public oﬀer (IPO) price the unlisted en(cid:415)ty is expec(cid:415)ng when it lists on the Australian Securi(cid:415)es Exchange (ASX). Accoun(cid:415)ng policy for fair value measurement When an asset or liability, ﬁnancial or non-ﬁnancial, is measured at fair value for recogni(cid:415)on 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 transac(cid:415)on between market par(cid:415)cipants at the measurement date; and assumes that the transac(cid:415)on will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. 50 SciDev Ltd REPORT 2019 ANNUAL Note 23. Fair value measurement (cont..) Fair value is measured using the assump(cid:415)ons that market par(cid:415)cipants 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. Valua(cid:415)on 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 liabili(cid:415)es 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. Classiﬁca(cid:415)ons are reviewed at each repor(cid:415)ng 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 exper(cid:415)se is either not available or when the valua(cid:415)on is deemed to be signiﬁcant. External valuers are selected based on market knowledge and reputa(cid:415)on. 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 veriﬁca(cid:415)on of the major inputs applied in the latest valua(cid:415)on and a comparison, where applicable, with external sources of data. Note 24. Key management personnel disclosures Compensa(cid:415)on The aggregate compensa(cid:415)on made to directors and other members of key management personnel of the consolidated en(cid:415)ty is set out below: Short-term employee beneﬁts Post-employment beneﬁts Long-term beneﬁts Termina(cid:415)on beneﬁts Note 25. Remunera(cid:415)on of auditors 2019 $ 2018 $ 699,762 63,114 5,165 130,000 458,044 38,699 31,007 - 898,041 527,750 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 2019 $ 2018 $ 37,292 49,050 5,500 4,000 42,792 53,050 51 Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 26. Commitments Lease commitments ‐ opera(cid:415)ng Commi(cid:425)ed at the repor(cid:415)ng date but not recognised as liabili(cid:415)es, payable: Within one year One to ﬁve years Lease commitments ‐ ﬁnance Commi(cid:425)ed at the repor(cid:415)ng date and recognised as liabili(cid:415)es, payable: Within one year Total commitment Less: Future ﬁnance charges Net commitment recognised as liabili(cid:415)es Represen(cid:415)ng: Lease liability - current (note 16) 2019 $ 2018 $ 110,304 134,011 53,750 - 244,315 53,750 - - - - - 34,911 34,911 (2,973) 31,938 31,938 Opera(cid:415)ng lease commitments includes contracted amounts for various warehouses, oﬃces and plant and equipment under non-cancellable opera(cid:415)ng leases expiring within 1 - 3 years with, in some cases, op(cid:415)ons to extend. The leases have various escala(cid:415)on clauses. On renewal, the terms of the leases are renego(cid:415)ated. The motor vehicle related to the ﬁnance lease had a wri(cid:425)en down value of $34,655 at 30 June 2018 and the lease expired during the 30 June 2019 ﬁnancial year. Note 27. Related party transac(cid:415)ons Parent en(cid:415)ty SciDev Limited is the parent en(cid:415)ty. Subsidiaries Interests in subsidiaries are set out in note 29. Key management personnel Disclosures rela(cid:415)ng to key management personnel are set out in note 24 and the remunera(cid:415)on report included in the directors' report. 52 SciDev Ltd REPORT 2019 ANNUAL 2019 $ 2018 $ 675,446 118,050 360,851 3,539 121,301 - - - - - 2019 $ 2018 $ 252,307 - Note 27. Related party transac(cid:415)ons (cont..) Transac(cid:415)ons with related par(cid:415)es Details of transac(cid:415)ons between the consolidated en(cid:415)ty and related par(cid:415)es are disclosed below: Sale of goods and services: Sale of goods to other related party Payment for goods and services: Purchase of goods from other related party Payment for services from other related party Payment for other expenses: Interest paid to other related party Other transac(cid:415)ons: Subscrip(cid:415)on for new ordinary shares by key management personnel as result of share placement Receivable from and payable to related par(cid:415)es The following balances are outstanding at the repor(cid:415)ng date in rela(cid:415)on to transac(cid:415)ons with related par(cid:415)es: Current receivables: Trade receivables from other related party Loans to/from related par(cid:415)es There were no loans to or from related par(cid:415)es at the current and previous repor(cid:415)ng date. Balances and transac(cid:415)ons between the company and its subsidiaries, which are related par(cid:415)es of the company, have been eliminated on consolida(cid:415)on and are not disclosed in this note. Terms and condi(cid:415)ons All transac(cid:415)ons were made on normal commercial terms and condi(cid:415)ons and at market rates. 53 Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 28. Parent en(cid:415)ty informa(cid:415)on Set out below is the supplementary informa(cid:415)on about the parent en(cid:415)ty. Statement of proﬁt or loss and other comprehensive income Proﬁt/(loss) a(cid:332)er income tax Other comprehensive income for the year, net of tax Total comprehensive income Statement of ﬁnancial posi(cid:415)on Total current assets Total non-current assets Total assets Total current liabili(cid:415)es Total non-current liabili(cid:415)es Total liabili(cid:415)es Net assets Equity Issued capital Share-based payments reserve Accumulated losses Total equity Parents 2019 $ 2018 $ (1,081,461) 776,764 - - (1,081,461) 776,764 Parent 2019 $ 2018 $ 1,161,944 634,979 5,293,273 4,027,795 6,455,217 4,662,774 369,778 277,963 926 - 370,704 277,963 6,084,513 4,384,811 77,206,307 2,763,894 (73,885,688) 74,425,145 2,763,894 (72,804,228) 6,084,513 4,384,811 Guarantees entered into by the parent en(cid:415)ty in rela(cid:415)on to the debts of its subsidiaries The parent en(cid:415)ty has provided guarantees for the ﬁnance lease rela(cid:415)ng to plant and equipment leased by Science Developments Pty Ltd. The parent en(cid:415)ty had no other guarantees in rela(cid:415)on to the debts of its subsidiaries as at 30 June 2019 and 30 June 2018. 54 SciDev Ltd REPORT 2019 ANNUAL Note 28. Parent en(cid:415)ty informa(cid:415)on (cont..) Con(cid:415)ngent liabili(cid:415)es The parent en(cid:415)ty had no con(cid:415)ngent liabili(cid:415)es as at 30 June 2019 and 30 June 2018. Capital commitments ‐ Property, plant and equipment The parent en(cid:415)ty had no capital commitments for property, plant and equipment as at 30 June 2019 and 30 June 2018. Signiﬁcant accoun(cid:415)ng policies The accoun(cid:415)ng policies of the parent en(cid:415)ty are consistent with those of the consolidated en(cid:415)ty, as disclosed in note 2, except for the following:   Investments in subsidiaries are accounted for at cost, less any impairment, in the parent en(cid:415)ty. Dividends received from subsidiaries are recognised as other income by the parent en(cid:415)ty and its receipt may be an indicator of an impairment of the investment. Note 29. Interests in subsidiaries The consolidated ﬁnancial statements incorporate the assets, liabili(cid:415)es and results of the following subsidiaries in accordance with the accoun(cid:415)ng policy described in note 2: Name Intec Copper Pty Ltd Intec Envirometals Pty Ltd Science Developments Pty Ltd SciDev Interna(cid:415)onal Holdings Pty Ltd* SciDev (US) LCC* Principal place of business / Country of incorpora(cid:415)on Australia Australia Australia Australia United States Ownership interest 2019 % 2018 % 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% - - * SciDev (US) LCC is a wholly-owned subsidiary of SciDev Interna(cid:415)onal Holdings Pty Ltd and both subsidiaries were incorporated on 8 May 2019 Note 30. Events a(cid:332)er the repor(cid:415)ng period On 22 July 2019 the company reported its ﬁrst major sales into the US oil and gas market. On 23 July 2019 the company's shareholders approved the issue of the following op(cid:415)ons at a General Mee(cid:415)ng:     2,000,000 op(cid:415)ons to Mr Lewis E U(cid:427)ng - Managing Director and Chief Execu(cid:415)ve Oﬃcer 650,000 op(cid:415)ons to Mr Jon Gourlay - Non-execu(cid:415)ve Director 250,000 op(cid:415)ons Mr Trevor A Jones - Non-execu(cid:415)ve Chairman 250,000 op(cid:415)ons to Ms Simone Wa(cid:425) - Non-execu(cid:415)ve Director The op(cid:415)ons issued to Mr Lewis U(cid:427)ng have an exercise price of 10 cents and the op(cid:415)ons issued to the other Directors have an exercise price of 12 cents. The op(cid:415)ons granted to Mr Lewis U(cid:427)ng are subject to ves(cid:415)ng condi(cid:415)ons. The op(cid:415)ons granted to the non-execu(cid:415)ve Directors do not have any ves(cid:415)ng condi(cid:415)ons. The op(cid:415)ons expire on 23 July 2022. These op(cid:415)ons form part of a broader op(cid:415)on issue to the Board and senior execu(cid:415)ves totalling 5,350,000 op(cid:415)ons in total; refer to ASX announcement dated 16 August 2019. 55 Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 30. Events a(cid:332)er the repor(cid:415)ng period (cont..) On 30 August 2019 the company announced a major chemical supply and equipment leasing contract with Iluka Resources. On the 13 September 2019, the company announced the placement of 16,000,0000 new ordinary shares with local ins(cid:415)tu(cid:415)onal and sophis(cid:415)cated investors at an issue price of $0.26 per share to raise total proceeds of $4.16 million. The funds from the placement will predominantly be used to increase inventory, con(cid:415)nue development of the consolidated en(cid:415)ty's Op(cid:415)Flox and MaxiFlox technology, and increase working capital. The capital raising was completed on 20 September 2019. No other ma(cid:425)er or circumstance has arisen since 30 June 2019 that has signiﬁcantly aﬀected, or may signiﬁcantly aﬀect the consolidated en(cid:415)ty's opera(cid:415)ons, the results of those opera(cid:415)ons, or the consolidated en(cid:415)ty's state of aﬀairs in future ﬁnancial years. Note 31. Reconcilia(cid:415)on of proﬁt/(loss) a(cid:332)er income tax to net cash used in opera(cid:415)ng ac(cid:415)vi(cid:415)es Proﬁt/(loss) a(cid:332)er income tax beneﬁt/(expense) for the year Adjustments for: Deprecia(cid:415)on and amor(cid:415)sa(cid:415)on Share-based payments Net loss/(gain) on disposal of non-current assets Interest received - non-cash Other expenses - non-cash Change in opera(cid:415)ng assets and liabili(cid:415)es: Increase in trade and other receivables Increase in inventories Increase in prepayments Increase in trade and other payables Decrease in deferred tax liabili(cid:415)es Increase/(decrease) in employee beneﬁts Net cash used in opera(cid:415)ng ac(cid:415)vi(cid:415)es Note 32. Changes in liabili(cid:415)es arising from ﬁnancing ac(cid:415)vi(cid:415)es Balance at 1 July 2017 Net cash used in ﬁnancing ac(cid:415)vi(cid:415)es Balance at 30 June 2018 Net cash used in ﬁnancing ac(cid:415)vi(cid:415)es Balance at 30 June 2019 56 2019 $ 2018 $ (2,032,527) 1,001,869 212,767 - 27,621 - 6,250 194,171 41,480 (1,989,200) (6,250) - (334,403) (28,141) (20,925) 639,250 (8,122) (9,818) (137,679) (4,345) - 11,869 (8,142) 3,882 (1,548,048) (892,345) Lease liability $ Total $ 44,503 (12,565) 31,938 (31,938) 44,503 (12,565) 31,938 (31,938) - - SciDev Ltd REPORT 2019 ANNUAL Note 33. Earnings per share Proﬁt/(loss) a(cid:332)er income tax a(cid:425)ributable to the owners of SciDev Limited (2,032,527) 1,001,869 Numbers Numbers Weighted average number of ordinary shares used in calcula(cid:415)ng basic earnings per share 75,683,979 49,522,537 Weighted average number of ordinary shares used in calcula(cid:415)ng diluted earnings per share 75,683,979 49,522,537 2019 $ 2018 $ Basic earnings per share Diluted earnings per share Cents Cents (2.69) (2.69) 2.02 2.02 Op(cid:415)ons are considered to be poten(cid:415)al ordinary shares but were an(cid:415)-dilu(cid:415)ve in nature and therefore the diluted loss per share is the same as the basic loss per share. These op(cid:415)ons could poten(cid:415)ally dilute basic earnings per share in the future. The weighted average number of ordinary shares for 2018 has been restated for the eﬀect of the share consolida(cid:415)on (10 to 1) completed in December 2018, in accordance with AASB 133 'Earnings per share'. Accoun(cid:415)ng policy for earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the proﬁt a(cid:425)ributable 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 determina(cid:415)on of basic earnings per share to take into account the a(cid:332)er income tax eﬀect of interest and other ﬁnancing costs associated with dilu(cid:415)ve poten(cid:415)al ordinary shares and the weighted average number of shares assumed to have been issued for no considera(cid:415)on in rela(cid:415)on to dilu(cid:415)ve poten(cid:415)al ordinary shares. Note 34. Share-based payments Employee Share Scheme Share based compensa(cid:415)on beneﬁts are provided to employees via the SciDev Employee Share Scheme. At the 2014 Annual General Mee(cid:415)ng, shareholders approved the SciDev Employee Share Scheme (the Scheme). All Directors, employees and consultants are eligible to par(cid:415)cipate in the Scheme. Op(cid:415)ons granted under the Scheme to eligible par(cid:415)cipants are for no addi(cid:415)onal considera(cid:415)on. Op(cid:415)ons are granted for a ﬁve-year period, and vest and are exercisable immediately, unless otherwise stated. Op(cid:415)ons granted under the Scheme carry no dividend or vo(cid:415)ng rights. The gran(cid:415)ng of op(cid:415)ons is at the Board’s discre(cid:415)on and no individual has a contractual right to receive op(cid:415)ons. The fair value of op(cid:415)ons 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 uncondi(cid:415)onally en(cid:415)tled to the op(cid:415)ons. 57 Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 34. Share-based payments (cont..) The fair value at grant date is determined using share op(cid:415)on valua(cid:415)on models that take into account the exercise price, the term of the op(cid:415)on, the impact of dilu(cid:415)on, the share price at grant date, the expected price vola(cid:415)lity of the underlying share, the expected dividend yield and the risk free interest rate for the term of the op(cid:415)on. The fair value of the op(cid:415)ons granted is adjusted to reﬂect market ves(cid:415)ng condi(cid:415)ons, but excludes the impact of any non-market ves(cid:415)ng condi(cid:415)ons (for example, proﬁtability and sales growth targets). Non-market ves(cid:415)ng condi(cid:415)ons are included in assump(cid:415)ons about the number of op(cid:415)ons that are expected to become exercisable. At each repor(cid:415)ng date, the en(cid:415)ty revises its es(cid:415)mate of the number of op(cid:415)ons that are expected to become exercisable. The employee beneﬁt expense recognised each period takes into account the most recent es(cid:415)mate. On 14 August 2017, the company issued 6.5 million unquoted op(cid:415)ons to execu(cid:415)ves and staﬀ (not Directors). The op(cid:415)ons have an exercise price of $0.025, vested on grant date and expire on 28 November 2019. The value of the op(cid:415)ons granted was $30,568. There were no op(cid:415)ons granted under the scheme during the 2019 ﬁnancial year. Other share‐based payments On 2 February 2017 the company granted 22,500,000 op(cid:415)ons to the Lead Manager and Underwriter for services rendered in connec(cid:415)on with the placement of shares and the share purchase plan. The op(cid:415)ons have an exercise price of $0.025, vested on grant date and expire on 28 November 2019. The value of the op(cid:415)ons granted was $160,828. On 28 December 2017, the company issued 5 million unquoted op(cid:415)ons to a key service provider (non-Director) for services rendered. The op(cid:415)ons have an exercise price of $0.025, vested on grant date and expire on 28 November 2019. The value of the op(cid:415)ons granted was $10,912. Set out below are summaries of op(cid:415)ons granted: 2019 Grant date Expiry date 10/12/2014 02/02/2017 14/08/2017 28/12/2017 28/11/2019 28/11/2019 28/11/2019 28/11/2019 Exercise Price* Balance at the start of the year $0.025 $0.025 $0.025 $0.025 5,500,000 22,500,000 6,500,000 5,000,000 39,500,000 Granted Exercised - - - - - Expired/ forfeited/ other* Balance at the end of the year - - - - - (4,950,000) (20,250,000) (5,850,000) (4,500,000) (35,550,000) 550,000 2,250,000 650,000 500,000 3,950,000 Weighted average exercise price $0.025 $0.000 $0.000 $0.000 $0.025 * Included in expired/forfeited/other is the eﬀect of the 10:1 share/op(cid:415)on consolida(cid:415)on that was completed on 4 December 2018. The op(cid:415)on exercise price increased as a result of the 1:10 consolida(cid:415)on to $0.25. 58 SciDev Ltd REPORT 2019 ANNUAL Note 34. Share-based payments (cont..) 2018 Grant date Expiry date 10/12/2014 02/02/2017 14/08/2017 28/12/2017 28/11/2019 28/11/2019 28/11/2019 28/11/2019 Exercise price Balance at the start of the year Granted Exercised Expired/ forfeited/ other Balance at the end of the year $0.025 $0.025 $0.025 $0.025 5,500,000 22,500,000 - - 28,000,000 - - 6,500,000 5,000,000 11,500,000 - - - - - - - - - - 5,500,000 22,500,000 6,500,000 5,000,000 39,500,000 Weighted average exercise price * $0.025 $0.025 $0.000 $0.000 $0.025 * The op(cid:415)on exercise price increased as a result of the 1:10 consolida(cid:415)on to $0.25. Set out below are the op(cid:415)ons exercisable at the end of the ﬁnancial year: Grant date Expiry date 10/12/2014 02/02/2017 14/08/2017 28/12/2017 28/11/2019 28/11/2019 28/11/2019 28/11/2019 2019 Number 2018 Number 550,000 2,250,000 650,000 500,000 5,500,000 22,500,000 6,500,000 5,000,000 3,950,000 39,500,000 The weighted average remaining contractual life of op(cid:415)ons outstanding at the end of the ﬁnancial year was 0.41 years (2018: 1.41 years). The fair value of op(cid:415)ons granted was measured using the Black-Scholes op(cid:415)on pricing model. Accoun(cid:415)ng policy for share‐based payments Equity-se(cid:425)led and cash-se(cid:425)led share-based compensa(cid:415)on beneﬁts are provided to employees. Equity-se(cid:425)led transac(cid:415)ons are awards of shares, or op(cid:415)ons over shares, that are provided to employees in exchange for the rendering of services. Cash-se(cid:425)led transac(cid:415)ons are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price. 59 Notes to the ﬁnancial statements For the year ended 30 June 2019 Note 34. Share-based payments (cont..) The cost of equity-se(cid:425)led transac(cid:415)ons are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes op(cid:415)on pricing model that takes into account the exercise price, the term of the op(cid:415)on, the impact of dilu(cid:415)on, the share price at grant date and expected price vola(cid:415)lity of the underlying share, the expected dividend yield and the risk free interest rate for the term of the op(cid:415)on, together with non-ves(cid:415)ng condi(cid:415)ons that do not determine whether the consolidated en(cid:415)ty receives the services that en(cid:415)tle the employees to receive payment. No account is taken of any other ves(cid:415)ng condi(cid:415)ons. The cost of equity-se(cid:425)led transac(cid:415)ons are recognised as an expense with a corresponding increase in equity over the ves(cid:415)ng period. The cumula(cid:415)ve charge to proﬁt or loss is calculated based on the grant date fair value of the award, the best es(cid:415)mate of the number of awards that are likely to vest and the expired por(cid:415)on of the ves(cid:415)ng period. The amount recognised in proﬁt or loss for the period is the cumula(cid:415)ve amount calculated at each repor(cid:415)ng date less amounts already recognised in previous periods. If the non-ves(cid:415)ng condi(cid:415)on is within the control of the consolidated en(cid:415)ty or employee, the failure to sa(cid:415)sfy the condi(cid:415)on is treated as a cancella(cid:415)on. If the condi(cid:415)on is not within the control of the consolidated en(cid:415)ty or employee and is not sa(cid:415)sﬁed during the ves(cid:415)ng period, any remaining expense for the award is recognised over the remaining ves(cid:415)ng period, unless the award is forfeited. If equity-se(cid:425)led awards are cancelled, it is treated as if it has vested on the date of cancella(cid:415)on, and any remaining expense is recognised immediately. If a new replacement award is subs(cid:415)tuted for the cancelled award, the cancelled and new award is treated as if they were a modiﬁca(cid:415)on. The cost of cash-se(cid:425)led transac(cid:415)ons is ini(cid:415)ally, and at each repor(cid:415)ng date un(cid:415)l vested, determined by applying either the Binomial or Black-Scholes op(cid:415)on pricing model, taking into considera(cid:415)on the terms and condi(cid:415)ons on which the award was granted. The cumula(cid:415)ve charge to proﬁt or loss un(cid:415)l se(cid:425)lement of the liability is calculated as follows:  during the ves(cid:415)ng period, the liability at each repor(cid:415)ng date is the fair value of the award at that date mul(cid:415)plied by the expired por(cid:415)on of the ves(cid:415)ng period. from the end of the ves(cid:415)ng period un(cid:415)l se(cid:425)lement of the award, the liability is the full fair value of the liability at the repor(cid:415)ng date.  All changes in the liability are recognised in proﬁt or loss. The ul(cid:415)mate cost of cash-se(cid:425)led transac(cid:415)ons is the cash paid to se(cid:425)le the liability. Market condi(cid:415)ons are taken into considera(cid:415)on in determining fair value. Therefore any awards subject to market condi(cid:415)ons are considered to vest irrespec(cid:415)ve of whether or not that market condi(cid:415)on has been met, provided all other condi(cid:415)ons are sa(cid:415)sﬁed. If equity-se(cid:425)led awards are modiﬁed, as a minimum an expense is recognised as if the modiﬁca(cid:415)on has not been made. An addi(cid:415)onal expense is recognised, over the remaining ves(cid:415)ng period, for any modiﬁca(cid:415)on that increases the total fair value of the share-based compensa(cid:415)on beneﬁt as at the date of modiﬁca(cid:415)on. 60 SciDev Ltd REPORT 2019 ANNUAL Directors’ declara(cid:415)on In the director’s opinion     the a(cid:425)ached ﬁnancial statements and notes comply with the Corpora(cid:415)ons Act 2001, the Accoun(cid:415)ng Standards, the Corpora(cid:415)ons Regula(cid:415)ons 2001 and other mandatory professional repor(cid:415)ng requirements; the a(cid:425)ached ﬁnancial statements and notes comply with Interna(cid:415)onal Financial Repor(cid:415)ng Standards as issued by the Interna(cid:415)onal Accoun(cid:415)ng Standards Board as described in note 2 to the ﬁnancial statements; the a(cid:425)ached ﬁnancial statements and notes give a true and fair view of the consolidated en(cid:415)ty's ﬁnancial posi(cid:415)on as at 30 June 2019 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 declara(cid:415)ons required by sec(cid:415)on 295A of the Corpora(cid:415)ons Act 2001. Signed in accordance with a resolu(cid:415)on of directors made pursuant to sec(cid:415)on 295(5)(a) of the Corpora(cid:415)ons Act 2001. On behalf of the directors ___________________________ Lewis E U(cid:427)ng Managing Director 27 September2019 Sydney 61 Independent Auditor’s Report 62 SciDev Ltd REPORT 2019 ANNUAL 63 Independent Auditor’s Report con(cid:415)nued 64 SciDev Ltd REPORT 2019 ANNUAL 65 Addi(cid:415)onal ASX Informa(cid:415)on Shareholder Informa(cid:415)on The shareholder informa(cid:415)on set out below was applicable as at 21 October 2019. Distribu(cid:415)on of equity securi(cid:415)es A. Analysis of numbers of equity security holders by size of holding 1,001 5,001 10,001 100,001 - and over 1,000 5,000 10,000 100,000 Class of equity security Ordinary shares Number of shareholders 371 220 180 392 146 1,309 Number of shares 94,784 618,734 1,481,975 14,087,108 109,530,556 125,813,157 B. Substan(cid:415)al holders Substan(cid:415)al shareholders as at 21 October 2019 are listed below: Jianfeng Zhang and Yangmei hang Perennial Value Management Limited 6.81% 5.25% Equity security holders The names of the twenty largest holders of quoted equity securi(cid:415)es as at 21 October 2018 are listed below: Name Na(cid:415)onal Nominees Limited Jianfeng Zhang & Yangmei Zheng Kanins Australia Pty Ltd Mr Lewis U(cid:427)ng & Ms Helena Lehos CS Fourth Nominees Pty Limited Mr Kieran Gregory Rodgers Po Box R750 J P Morgan Nominees Australia Pty Limited Brispot Nominees Pty Ltd Merrill Lynch (Australia) Nominees Pty Limited CS Third Nominees Pty Limited Puntero Pty Ltd Natjad & Associated Pty Ltd Taycol Nominees Pty Ltd <211 A/C> Nuoer Chemical Australia Pty Ltd Mr Alan Conigrave Ci(cid:415)corp Nominees Pty Limited Mr Kieran Gregory Rodgers & Mrs Patricia Marie Rodgers HSBC Custody Nominees (Australia) Limited GP Securi(cid:415)es Pty Ltd Australian Executor Trustees Limited Total Securities of Top 20 Holdings Total Ordinary Shares on Issue 66 Ordinary shares Number held Percentage of issued shares 6,483,112 6,428,572 5,000,000 4,500,000 4,224,030 3,059,477 2,950,729 2,469,107 2,461,459 2,302,289 2,301,667 2,262,414 2,250,000 2,142,858 2,100,000 2,030,396 2,006,467 1,713,797 1,575,000 1,557,273 59,818,647 125,813,157 5.153% 5.110% 3.974% 3.577% 3.357% 2.432% 2.345% 1.963% 1.956% 1.830% 1.829% 1.798% 1.788% 1.703% 1.669% 1.614% 1.595% 1.362% 1.252% 1.238% 47.546% 100.00% SciDev Ltd REPORT 2019 ANNUAL C. Vo(cid:415)ng rights The vo(cid:415)ng rights a(cid:425)aching to each class of equity securi(cid:415)es are set out below: (a) (b) Ordinary shares On a show of hands every member present at a mee(cid:415)ng in person or by proxy shall have one vote and upon a poll each share shall have one vote. Op(cid:415)ons No vo(cid:415)ng rights. D. Summary of op(cid:415)ons issued Op(cid:415)ons expiring 28 November 2019 with an exercise price of $0.25 1,400,000 7 No. of Op(cid:415)ons No. of Holders % Op(cid:415)ons Issued Op(cid:415)on holders with more than 20% of above class Lewis U(cid:427)ng Bre(cid:425) Salisbury 500,000 300,000 35.7% 21.4% No. of Op(cid:415)ons No. of Holders % Op(cid:415)ons Issued Op(cid:415)ons expiring 23 July 2022 with an exercise price of $0.10 2,000,000 1 Op(cid:415)on holders with more than 20% of above class Lewis U(cid:427)ng 2,000,000 100% No. of Op(cid:415)ons No. of Holders % Op(cid:415)ons Issued Op(cid:415)ons expiring 23 July 2022 with an exercise price of $0.12 3,350,000 12 Op(cid:415)on holders with more than 20% of above class NIL 67 Company Directory Directors Trevor A Jones - Chairman Lewis E U(cid:427)ng - Managing Director Simone Wa(cid:425) - Non-execu(cid:415)ve Director Jon Gourlay - Non-execu(cid:415)ve Director Company secretary Heath L Roberts No(cid:415)ce of annual general mee(cid:415)ng The details of the 2019 annual general mee(cid:415)ng of SciDev Limited are: Registered oﬃce Principal place of business Share register Auditor Northside Conference Centre The Boardroom Corner of Oxley St and Pole Lane Crows Nest NSW 2065 11am on Thursday, 28 November 2019 C/-Boardroom Pty Limited Level 12, Grosvenor Place 225 George Street, Sydney NSW 2000 Phone: 1300 737 760 Unit 1 8 Turbo Road Kings Park NSW 2148 Phone: (02) 9622 5185 Boardroom Pty Limited Level 12 225 George Street, Sydney NSW 2000 Phone: 1300 737 760 Rothsay Chartered Accountants Level 12 O'Connell Street Sydney NSW 2000 Stock exchange lis(cid:415)ng SciDev Limited shares are listed on the Australian Securi(cid:415)es Exchange (ASX code: SDV), the Deutsche Boerse (Code: INF) and as American Depository Receipts on the OTC Markets (Code: ICLJY) Website www.scidev.com.au Corporate governance statement www.scidev.com.au/corporate-governance 68 69 70

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