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SciDev brings together world-class
technology, chemistry, management
and manufacturing capabilities to solve
pressing operational and environmental
issues for the Mining, Construction, Water
treatment and Oil & Gas markets.
www.SciDev.com.au
Chairman’s Report Annual Report 2020
Table of Contents
Chairman’s Letter ............................................................................................................ 3
Managing Director & CEO’s Letter .......................................................................... 4
Review of Operations ..................................................................................................... 9
17
Director’s Report ...............................................................................................................
19
Remuneration Report ................................................................................................
Auditor’s Independence Declaration .................................................................... 28
Statement of Profit or Loss and Other Comprehensive Income ........... 30
Statement of Financial Position .............................................................................. 31
Statement of Changes in Equity ............................................................................. 32
Statement of Cash Flows ............................................................................................ 33
Notes to the Financial Statements ....................................................................... 34
Directors’ Declaration .................................................................................................... 69
Independent Auditor’s Report ................................................................................... 70
Additional ASX Information ........................................................................................ 73
Corporate Directory ........................................................................................................ 75
ASX: SDV
scidev.com.au
SciDev Limited
| Annual Report 2020
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2
Annual Report 2020
| SciDev Limited
Chairman’s Report Chairman’s Letter
Dear Shareholders
On behalf of your Board of Directors, I am delighted
to present the 2020 Annual Report for SciDev.
Financial year
2020 (FY20) has
been a successful
year that saw
SciDev deliver
strong revenue
growth despite
the impacts of
the COVID-19
pandemic.
Firstly, I would like to acknowledge the tremendous work of the team
who have been able to substantially grow the business, both through
new contract wins and strategic acquisitions, in the current challenging
environment. Throughout this time, SciDev maintained its people focus
and ensured the safety of all employees. As a provider of expert profes-
sional services, our people are our greatest asset and as a company,
SciDev owes its growth to its professional team who differentiate us
from our competitors.
We continue to strengthen our relationship with Nuoer Group and
were pleased to enter a new joint venture to accelerate global growth
initiatives together. Nuoer Group is a world-class manufacturing partner
and the security of supply, coupled with SciDev’s professional services,
know-how and technology, will allow both companies to execute on
their growth objectives.
Reflecting SciDev’s strong progress in FY20, which included numerous
contract wins across key verticals and the acquisition of ProSol Australia
and Highland Fluid Technology, the company’s revenue increased
518% to A$18m. This substantial revenue growth is complemented by a
growing sales pipeline across SciDev’s target verticals, including water
and wastewater, oil and gas and construction.
On behalf of the Board, I would like to thank all our employees for
their tremendous efforts and contributions during this incredibly
challenging year.
I would like to recognise and thank Lewis Utting for his energetic and
dedicated leadership as Managing Director & Chief Executive Officer
and commend him on his development of the SciDev business in a
demanding environment. Lewis has been a major contribution to
SciDev’s performance through his ability to build a team capable of
delivering our FY20 result. I would also like to thank all shareholders for
their support of SciDev over FY20 and look forward to sharing our future
successes with you.
As a company, we are confident that the combination of our industry
expertise, innovative technology and strong partnerships will allow
SciDev to continue its growth trajectory and take advantage of the
opportunities ahead.
Yours sincerely
Trevor A Jones
Chairman
SciDev Limited
| Annual Report 2020
3
Managing Director &
Chief Executive Officer’s letter
The expertise of the SciDev team has continued to underpin our position
as an emerging leader in the markets in which we operate.
Whilst the COVID-19 pandemic challenged the macroenvironment in
the second half of FY20, SciDev continued to make substantial progress,
both as an organisation and with our customers. This reflected the
strength of our solutions and the skills of our team. Across the business,
our new contract wins represented A$11.5m of revenue. These wins have
been complemented with additional revenue from the strategic acqui-
sitions of ProSol Australia and Highland Fluid Technology (Highland),
paving the way for SciDev to enter new verticals in new markets.
Reflecting on our strategic focus on accelerating global growth
initiatives, SciDev strengthened its relationship with the Nuoer Group.
Our joint venture will bring together Nuoer Group’s manufacturing skills
and SciDev’s expert professional services and global market reach.
Together, we will use our collective strengths to jointly engage in global
business development projects. These opportunities are predominately
Chinese State-Owned operations located outside of China that would
typically not be accessible to foreign owned companies. I am delighted
to see this relationship continue to develop over time and the projects
that this partnership will execute is exciting for both the Nuoer Group
and SciDev teams.
Our people
Underpinning SciDev’s significant progress in FY20 is the expertise of its
people, which continues to differentiate us from our competitors. Our
experienced employees engage directly with customers on-site and
build solutions that continue to exceed our customers’ requirements.
People are our most important asset and as our most important
asset, SciDev adopted a comprehensive COVID-19 Workplace Policy to
ensure the safety of our people, while continuing to deliver our bespoke
solutions and professional services to customers.
The Company made several key appointments during FY20 to lay the
foundation for future growth. Our executive team was expanded and
the acquisition of ProSol Australia and Highland brought their respective
principals, Ben Gill and Kevin Smith, into the SciDev executive team.
The team additions have hit the ground running and have proven to be
valuable inclusions to SciDev, delivering significant expertise enabling
us to execute on our growth ambition.
With our incredible customer focussed team, who have delivered a
100% conversion of field validations to commercial contract, SciDev
is in a strong position to continue our growth momentum in FY21 and
beyond.
Dear Shareholders
The 2020 financial
year (FY20)
has been one
of significant
progress for
SciDev and I am
thankful for the
incredible work
of the team.
4
Annual Report 2020
| SciDev Limited
Figure 1
Increase in annual revenue
from $2.9m to $18m
Increase in customers from
28 to more than 60
Increase in staff from
8 to 26 people
Increase in organic growth
from $0.7m to $11.5m
i518%
i214%
i325%
i2300%
$18m
60+
26
$11.5m
28
8
$2.9m
2019
2020
2019
2020
2019
2020
$0.7m
2019
2020
Revenue
Customers
Staff
Organic Growth
Business Review – strong organic growth
The 2020 financial year included a wide range of customer wins
across several verticals. The team were successful in executing on our
strategy of diversifying our customer base and industry verticals while
focussing on organic growth with high value, blue chip customers. This is
illustrated by the addition of twelve new customers delivering A$11.5m in
organic growth for the year. This represents a 2,300% increase against
A$0.7m (22%) FY19, excluding our acquisitions.
Key developments during FY20 included:
•
SciDev’s supply and services into Iluka’s Jacinth Ambrosia mineral
sands operation, which was secured in late 2019 and represented
the company’s first major mineral sands project with a blue chip,
world class producer.
•
•
•
•
Expansion of the relationship with Phoenix Dewatering Equipment
Company where SciDev delivered A$3m in chemistry under the
Heads of Agreement Executed in August 2019.
SciDev’s maiden Canadian oil sands trial, with a trial order placed
with Syncrude, one of Canada’s largest operators in the oil sands
industry. The trial, scheduled for the second half of calendar
year 2020, focusses on the utilisation of SciDev’s chemistries in
Syncrude’s C$1.9bn full-scale Tailings Centrifuge Plant.
The first services agreement in the infrastructure sector with the
CYP Design and Construction Joint Venture for the provision of
professional services on the Melbourne Metro Tunnel Project. This
has expanded into supply of product and positions SciDev well in
the infrastructure sector.
Trial of SciDev’s Maxiflox® chemistry in the MMG Limited owned
Las Bambas copper mine in Peru. SciDev’s solutions were utilised
in the tailings thickener at the mine to improve water recovery
and ultimately increase the available volume in the mine’s tailings
storage facility.
Following our year end, SciDev has also secured a chemistry trial in the
hydromet and concentrator sections of BHP’s Olympic Dam operation
in South Australia. This trial represents an exciting new phase of applica-
tion of SciDev’s chemistries with one of the world’s premier miners.
In addition to these key developments, the team has secured many
other new contracts whilst delivering ongoing services seamlessly to all
of our customers.
Business Review – expansion through strategic acquisitions
In late 2019 SciDev acquired ProSol Australia for A$1.9m in total
consideration. ProSol Australia is a bespoke engineering and chemistry
company, with an outstanding reputation and excellent client base in
the mining and water treatment industries in NSW. With a leading posi-
tion in the Hunter Valley coal industry, the acquisition has strengthened
SciDev’s position with the key major coal producers in this region. The
acquisition also saw the addition of two new exceptional Newcastle
based team members to SciDev in ProSol Director Ben Gill and Technical
Account Manager Terry McHugh.
To accelerate our entry into the US oil and gas sector, in early 2020
SciDev acquired Highland Fluid Technology Inc. (Highland), a private
Houston based company, for US$6m in total consideration. Highland
supplies bespoke chemistry and services for fluid recycling and water
reuse in the US$2.5bn onshore oil and gas sector. Highland’s President
Kevin Smith and oilfield experts Chad Abbott and Tom Lingle have
already made a significant contribution to SciDev, providing us with an
expert footprint in the North American market, utilising SciDev’s existing
chemical manufacturing supply chain.
Our inorganic expansion initiatives were structured to allow the
combined organisations to leverage a common supply chain and
benefit from cross industry expertise and geographies.
SciDev Limited
| Annual Report 2020
5
Managing Director & Chief Executive Officer’s letter
Figure 2
Revenue by Market Segment
2019/20
Mining
Water
Oil & Gas
Construction
57%
19%
13%
11%
Figure 3
Revenue split by Region
2019/20
Australia
North America
Other
67%
31%
2%
Key areas of focus for SciDev in 2021
In July 2020 SciDev completed a successful A$7m capital raising. On
behalf of the team at SciDev, we are grateful for the ongoing support of
our investors. This investment will underpin our growth initiatives in FY21.
These initiatives include:
•
•
•
•
•
Increasing our raw materials and inventory holdings to deliver into
recent contract wins and growing demand for SciDev solutions.
Upgrading the Kings Park facility to build capacity for the supply
of SciDev chemistry into the domestic infrastructure and mineral
processing sectors.
Supporting the Nuoer Group Joint Venture, targeting global
business development opportunities.
Growing SciDev’s global footprint, including in the North American
oil and gas sector, the Canadian oil sands sector, and the precious
and base metal sectors globally.
Accelerating global business development initiatives and building
upon SciDev’s momentum in the Australian mining industry.
6
Annual Report 2020
| SciDev Limited
2018/19
Mining
Water
Oil & Gas
Construction
57%
42%
0%
1%
...successful in
executing on our
strategy of
diversifying our
customer base
and industry
verticals...
I would like to express my deep thanks to our outstanding team and to
the SciDev Board that has supported our growth this year. I would also
like to again thank our shareholders for their continued support. I look
forward to SciDev delivering another successful year in FY21.
Yours sincerely
Lewis Utting
Managing Director & Chief Executive Officer
SciDev Limited
| Annual Report 2020
7
Mining
Oil & Gas
Water
Treatment
Construction
8
8
Annual Report 2020
Annual Report 2020
| SciDev Limited
| SciDev Limited
Review of Operations
SciDev is a solution provider to the water,
mining, oil & gas and construction industries
focussing on solid-liquid separation.
The Company’s solutions are built on the supply of bespoke
chemistry to solve environmental and processing challenges
in the industries we serve.
Our chemistry is manufactured using our novel in-house manufacturing
methods. Where we don’t have the infrastructure to manufacture in
house, we partner with key industry partners. Our expanding partner-
ship with Nuoer China and with key customers globally allows SciDev
to penetrate a US$8b market with a complete chemistry porfolio.
Our solution-based approach has been bolstered with the inclusion of
a Professional Services offering which allows key SciDev personnel to
solve bespoke customer problems and identify additional opportunities
for our products and services. Our innovative OptiFlox® process control
system improves the mineral processing path for our customers,
delivering additional processing time and reduced consumable spend
for end users.
Professional
Services
Engineering &
Process Control
Our workforce of highly
skilled engineers and
chemists engage
with our customers
to build bespoke
solutions to their
solid-liquid processing
requirements.
OptiFlox is a patent
pending technology
that continuously
analyses and measures
key parameters in
industrial process
streams. The
technology supports
our key MaxiFlox
chemistry.
Chemistry
Our range of
proprietary chemicals
and polymers deliver
highly effective
solutions for a range
of industries.
FY20 Highlights
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Revenue from customers in 2020 is $17,906,551 (30 June 2020:
$2,655,799) and the loss for the consolidated entity after providing
for income tax amounted to $875,238 (30 June 2019: $2,032,527)
Net cash position at end of period of A$4.4m, with A$4.8m
inventory at hand
Comprehensive COVID-19 Workplace Policy developed to ensure
the safety of SciDev staff
Team expansion with key strategic roles filled in engineering,
operations, and finance
Strategic Joint Venture agreement signed with Nuoer China to
target state owned enterprise
First sales into the Oil & Gas market with SciDev chemistry
successfully developed and trialled in the US
Long term contract awarded with Iluka, the Company’s first major
project with a blue chip, world class producer
Heads of Agreement signed with North American MoU partner,
Phoenix for ~US$1.4m in product
First Services Agreement in the infrastructure sector with CYP
on the Melbourne Metro Tunnel Project
An A$4.16m at $0.26 per share capital raising in Sept 2019
introducing key institutional investors to the register
Entry into South American copper market with SciDev’s Maxiflox®
chemistry trial awarded at Las Bambas Peru
SciDev’s maiden Canadian oil sands trial awarded with Syncrude
one of Canada’s largest oil operators
Acquisition of ProSol Australia Pty Ltd (ProSol) for up to $1.9 million
in total consideration (55%:45% cash:equity)
Acquisition of Highland Fluid Technology Inc. (Highland) for up to
US$6 million in total consideration (100% equity)
SciDev Limited
| Annual Report 2020
9
Review of Operations
Post the end of the financial year, SciDev announced:
•
•
•
•
Expansion of Agreement on the Melbourne Metro Tunnel Project to
include delivery of chemistry
SciDev and Flotek (NYSE: FTK) partnered to deliver friction reducing
chemistries in the Eagle Ford Shale Basin
Completion of A$7m at $0.65 per share capital raise, with Austra-
lia’s largest super fund joining the register
Significant order from BHP for trial of MaxiFlox® at premier Olympic
Dam operation in South Australia
The Company made significant progress during FY20 with several
new contract wins across SciDev’s target verticals. SciDev continues to
deliver bespoke professional solutions to its customers that meet and
exceed their unique requirements.
Figure 4
Annual Revenue
A$m
i518%
18m
i16%
i31%
2.2m
2.9m
2018
2019
2020
1.9m
2017
18
15
12
9
6
3
0
SciDev brings together world-class technology, chemistry, manage-
ment and manufacturing capabilities to solve pressing operational and
environmental issues for the Mining, Construction, Water treatment and
Oil & Gas markets.
We like to work on complex problems, where businesses are looking for
additional operational and cost benefits. The answers we find create
opportunities for significant business improvement whilst improving the
environmental performance of our clients.
Above all, our company is driven by the commitment to the principle
of creating and sustaining a long-term relationship with our customers
by delivering real value in performance and reduced operating costs
through our innovative science and ongoing technical support.
Our chemistry is manufactured using our novel in house manufacturing
methods. Where SciDev lacks the infrastructure to manufacture in house,
we partner with key industry partners. In FY20 we further deepened our
relationship with Nuoer China, establishing a joint venture that builds
upon the binding FY19 heads of agreement between the companies.
10
Annual Report 2020
| SciDev Limited
A$18m
Revenue
i518%
Through our strategic acquisition of Highland, we have a platform to
reach into the North American oilfield market, supported by a team
of highly respected, Houston based oilfield experts. This acquisition,
and SciDev’s entry into the domestic infrastructure sector through the
Melbourne Metro Tunnel project, demonstrate our ability to identify oppor-
tunities in our target markets and execute through to revenue generation.
Financial Review
The impact of the COVID-19 pandemic on global markets, particularly
the Oil & Gas sector, slowed the company’s business development
activities in FY20.
The consolidated entity reported revenue of $18m for the period,
representing a 518% increase on the prior year. SciDev’s record revenue
generation was achieved through organic growth via contract wins
across several verticals, despite COVID-19 implications, and the contri-
butions from the ProSol and Highland acquisitions. Operating Expenses
included USA import customs duty payments of $0.9m for the period
resulting from the delay in the proposed rollback of tariffs described in
the USA China Phase One Deal 15 January 2020.
Net cash outflows from operations during the year ended 30 June 2020
were $0.2m, compared to the prior year’s net outflows of $1.5m. SciDev
delivered its first positive cash flow quarters during the financial year;
the June 2020 quarter ($1.5m) and the March 2020 quarter ($0.7m).
The improvement in cash flow reflects SciDev’s increase in sales to
customers and order to cash conversion.
At the end of the period, the consolidated entity had a net cash position
of $4.4m, with $4.8m inventory at hand. The Company’s $9.1m working
capital facilities were $7.7m undrawn at the period end. Post period end,
SciDev completed an $7m capital raise, comprising an $5m Placement
and A$2m SPP to support the acceleration of its strategic growth
objectives.
The consolidated entity’s balance sheet strength, despite COVID-19,
will allow SciDev to continue executing on its growth objectives that will
position the Company for strong performance in FY21.
Operational Review
During FY20 the company successfully executed on its strategy of
transferring technology, knowledge, know-how and supply chains from
mining and water into two large industrial sectors; Construction and Oil
& Gas. In each of these new sectors the company signed new contracts
and successfully sold with product made in house or through our Joint
Venture partner, Nuoer China.
SciDev Limited
| Annual Report 2020
11
Review of Operations
Construction
SciDev signed a services agreement with the CYP Design and Construc-
tion Joint Venture (CYP D&C), which is a joint venture between Lendlease
Engineering, John Holland and Bouygues Construction responsible for
the design and construction of the Melbourne Metro Tunnel Project’s
twin nine-kilometre rail tunnels and five new underground stations in
Melbourne.
This services agreement focusses on clay and water management
associated with the Tunnel Boring Machines (TBM) active on the Metro
Tunnel Project – East Precinct. Professional services are being delivered
by SciDev through its dedicated experts deployed on-site, focussed
on the treatment of the TBM slurry, enabling effective dewatering,
separation and disposal of solid waste and the recirculation of water
to the process. Subsequent to the end of the period, the relationship
was expanded to include delivery of SciDev’s chemistry, underpinning
expansion of production at SciDev’s Kings Park facility.
Mineral Sands
SciDev signed a major supply contract with Iluka Resources following an
extensive evaluation period on-site at Iluka’s flagship Jacinth-Ambrosia
site. The evaluation period led to a contract for SciDev’s MaxiFlox®
chemistry for an initial three-year period, with the contract expected
to deliver $8-12m over the duration. Bulk deliveries of SciDev MaxiFlox®
continued as forecast to Iluka’s Jacinth Ambrosia operation in South
Australia over the course of FY20.
SciDev continued business development activities within the Australian
minerals processing sector and commenced dialogue with another
major mineral sands producer. It is anticipated that site visits will be
scheduled when COVID-19 travel restrictions are lifted which will allow
SciDev staff to undertake technical activities for product qualification
which may have the potential to lead to full-scale plant trials.
Nickel
SciDev executed several laboratory programs and site processing audits
at the Ramu mine in Papua New Guinea, on behalf of Nuoer China.
Ramu represents SciDev’s first entry into the Asian nickel-cobalt market.
Due to COVID-19 travel restrictions, activities at Ramu remain pending
and will proceed at the first opportunity.
A commercial trial in New Caledonia with a French multinational mining
and metallurgy company initially expected to commence in Q4 FY2020
has been deferred because of current travel restrictions. OptiFlox®
systems have been ordered and will be trialled on-site along with SciDev
chemistry in FY21.
12
Annual Report 2020
| SciDev Limited
SciDev has approached several large nickel laterite operations in
Australia, ASEAN and the South Pacific which have been well received.
SciDev technologies and services will be included in upcoming product
evaluations and tenders.
Base and Precious Metals
Following lab-scale technical evaluations executed with a major
Australian copper producer, SciDev received a commitment to move to
full-scale plant trials with MaxiFlox® chemistry.
SciDev commenced a trial at the Las Bambas copper mine trial in Peru,
owned by MMG Limited. Las Bambas is a copper porphyry operation
producing c400,000 tonnes of copper per annum with an expected
mine life of 20 years.
Oil and Gas
SciDev completed the integration of Highlands in the first half of
CY2020. Highlands provides a range of chemicals and professional
services to the onshore US oil and gas sector, bringing together tech-
nology and chemistry to improve water recovery, fluid economics and
extraction performance. Following the acquisition, several significant
shipments of product were delivered to Highlands, via Nuoer China, to
West Texas.
Figure 5:
SciDev Technology Overview
Professional Services
Our workforce of highly skilled engineers and chemists
engage with our customers to build bespoke solutions to
their solid-liquid processing requirements.
Engineering & Process Control
We combine inhouse engineering knowhow with our IP
equipment and process control solutions to support the
applications of our chemistries.
Chemistry
Our range of proprietary MaxiFlox ®, xPAM, DrySLIK® and
WetSLIK polymers deliver highly effective solutions to a
range of industries.
The delivery of product highlights the supply synergies and logistics
capability of SciDev in challenging times and the strong inventory
position placed Highlands in an excellent position to capitalise on the
strengthening activity within the US oil and gas market, which was
severely impacted in FY20 by historic low oil prices.
•
Dewatering and Drilling Fluids
SciDev’s MaxiFlox® technology reached a milestone in the
Canadian oil fields, passing both environmental and performance
hurdles at the laboratory scale. This milestone was achieved
through SciDev’s trial purchase order for its chemistry from
Syncrude, one of Canada’s largest oil producers. The trial has been
confirmed and deferred to the second half of CY2020.
The trial is anticipated to last for approximately 2 weeks and will
focus on the utilisation of SciDev’s chemistries in Syncrude’s C$1.9b
full-scale Tailings Centrifuge Plant.
•
Downstream
SciDev signed a Heads of Agreement with Phoenix Process
Equipment Company, a private US-based company, following
successful validation of the Nuoer-produced chemistry. Phoenix
subsequently placed a large commercial order for US$1.4m of
product for use in its mineral processing and oil and gas processes.
World-class coordinated
technology and
chemical solutions for
solids-liquid separation
Water
•
Potable water
SciDev’s participation in a major national tender continues with
a key industry service provider and has led to opportunities to
conduct site-level evaluations of SciDev chemistry.
• Waste water
Ongoing sales were established with an additional two industry
service providers.
The impacts of COVID19 has delayed several decision making mile-
stones in the municipal water and waste water sector in FY20.
Mining
Oil & Gas
Water Treatment
Construction
Process Studies
Equipment Auditing
Operating Training
Flow Loop Testing
Piloting Programs
Flocculant Plant
Equipment
Injection
Equipment
OptiFlox® online analyser
Flocculant Plant
Equipment
TrueMud® Mixer
CrossFlow Filtration
Flocculants
Coagulants
Antiscalents
Defoamers
Rheology Modifiers
Dust Suppressants
Friction Reduction
Oil Recovery
Completion Fluids
Drilling Fluids
Flocculants
Coagulants
Antiscalents
Defoamers
SciDev Limited
| Annual Report 2020
13
Review of Operations
The new joint venture will allow Nuoer and SciDev to use their collective
strength to actively bid on the growing number of Chinese State-Owned
operations located outside of the PRC that would normally be off-limits
to western companies.
The binding FY19 heads of agreement between SciDev and Nuoer China
both remains in place and has been extended in operation. SciDev’s
exclusive marketing rights in Oceania, secured under the binding 2019
heads of agreement continue to operate outside of the new joint
venture. Additionally, the binding 2019 heads of agreement has been
extended to cover specific opportunities in North America
and Africa.
Significant changes in the state of affairs
In September 2019, SciDev completed a $4.16m capital raising by way
of Placement to local institutional and professional investors. The
Placement resulted in the issue of 16,000,000 new fully paid ordinary
shares at an issue price of $0.26c per share.
The acquisition of ProSol Australia Pty Ltd was completed on
28 November 2019. Tranche 1 of the acquisition consideration resulted in
SciDev issuing 684,000 ordinary shares to the vendors on completion.
The acquisition of Highland Fluid Technologies Inc was completed on
2 March 2020. The initial consideration for the acquisition resulted in
SciDev issuing 11,349,588 ordinary shares to the vendors.
Nuoer China and SciDev Relationship
SciDev announced that it had strengthened its strategic relationship
with Nuoer China through a new joint venture that combines the Nuoer
China’s production and manufacturing skills with SciDev’s expert
technical, marketing and sales capacity to jointly engage on worldwide
business development opportunities.
14
Annual Report 2020
| SciDev Limited
There were no other significant changes in the state of affairs of the
consolidated entity during the financial year.
On 20 August 2020, SciDev announced the trial of chemistry at BHP’s
Olympic Dam operation in South Australia.
Matters subsequent to the end of the financial year
On 9 July 2020, SciDev announced that it had extended its Services
Agreement with the CYP Design and Construction Joint Venture (CYP
D&C) on the Melbourne Metro Tunnel Project’s works package to include
the supply of SciDev’s bespoke MaxiDry® chemistry and Optiflox®
technology.
On 16 July 2020, SciDev Limited announced that it was undertaking a
$7 million capital raising, comprising:
•
•
A $5 million share placement via the issue of 7,692,308 shares at
an issue price of 65 cents per share. The placement was taken up
in full by two leading Australian Fund Managers.
A share purchase plan (SPP) capped at $2 million. The SPP was
heavily oversubscribed and closed on 14 August 2020. The
SPP subscriptions were scaled back on a pro-rata basis to the
$2 million cap, resulting in 3,076,923 new SciDev shares being
issued on 21 August 2020.
On 21 July 2020, SciDev announced it had partnered with Flotek (NYSE:
FTK) to deliver friction reducing chemistry to be used in the initial 4-wells
of a 20-well drilling program in the Eagle Ford Shale Basin in Texas, USA.
No other matter or circumstance has arisen since 30 June 2020 that
has significantly affected, or may significantly affect the consolidated
entity’s operations, the results of those operations, or the consolidated
entity’s state of affairs in future financial years.
Likely developments and expected results of operations
The focus for SciDev and the management team through the FY21
financial year is:
•
•
•
•
•
•
•
•
•
•
Continue ensuring the safety of all SciDev Ltd staff through
COVID-19 pandemic.
Driving revenue growth through the execution of SciDev’s business
development pipeline across its target verticals, complemented by
a strong focus on cash generation and tight cost controls.
Upgrading the Kings Park manufacturing facility to build capacity
for the supply of SciDev chemistry into the domestic infrastructure
and mineral processing sectors.
Capitalising on the strategic JV with Nuoer China, targeting State-
Owned operations outside of the PRC.
Continue to develop supply chains across several sectors and
geographies, particularly in North and South America.
Building on momentum in the construction sector globally and
look for opportunities to integrate into operations.
Expanding our presence in coal and oil & gas in North America and
progressing COVID-19 impacted projects.
Accelerating initiatives in the Australian water and waste water
sector.
Extending SciDev’s technology in the precious metal and base
metal sectors.
Continuing to progress discussions with strategic technology
partners.
Environmental regulation
The consolidated entity is not subject to any significant environmental
regulation under Australian Commonwealth or State law. During the
period SciDev progressed its work towards ISO14001 accreditation,
which includes the Kings Park zero liquid waste discharge site
recognition.
SciDev Limited
| Annual Report 2020
15
16
16
Annual Report 2020
Annual Report 2020
| SciDev Limited
| SciDev Limited
Directors’ Report
In FY20 SciDev made significant progress
and we are pleased to have recorded
a record revenue of $18m.
The directors present their report, together with the financial
statements, on the consolidated entity (referred to hereaf-
ter as the ‘consolidated entity’) consisting of SciDev Limited
(referred to hereafter as the ‘company’ or ‘parent entity’) and
the entities it controlled at the end of, or during, the year ended
30 June 2020.
Directors
Trevor A Jones
The following persons were directors of SciDev Limited during the whole
of the financial year and up to the date of this report:
•
•
•
•
Lewis E Utting
Simone Watt
Jon Gourlay
Principal activities
The principal activity of the consolidated entity is delivery of process
control, professional services and chemistry in the Mining, Construction,
Water treatment and Oil & Gas markets.
Dividends
Information on Directors
Trevor A Jones B.Comm. (Melb)
Chairman
Mr Jones has spent over 30 years working in the finance industry
in Australia, United Kingdom and the USA. During this time, he has
held senior executive positions in investment funds management,
stockbroking and corporate finance, and gained a broad experience
of capital structuring and capital raising, particularly in the mining
sector. Mr Jones was manager of equity portfolios for Shell Australia
and National Employers Mutual in the United Kingdom. He was a
Director of County NatWest Securities Australia Limited in London and
then Director of Corporate Finance with Westpac Institutional Bank
in Sydney. More recently Mr Jones was the Sydney Chief Executive for
Melbourne-based Austock Group and was Chairman of both its Corpo-
rate Finance and Investment Management divisions. He was appointed
as a Non-executive Director of SciDev on 28 February 2007.
Other current directorships: None
Former directorships (last 3 years): None
Special responsibilities: Chair of the Corporate Governance Committee
and a member of the Audit and Risk Committee and Chair of the
Nomination and Remuneration Committee.
There were no dividends paid, recommended or declared during the
current or previous financial year.
Interests in shares: 1,088,303
Interests in options: Nil
Review of operations
The Review of Operations can be found on pages 8–15 of this report.
SciDev Limited
| Annual Report 2020
17
Directors’ Report
Lewis Utting BASc
Managing Director & Chief Executive Officer
Jon Gourlay BCom, C.A
Non-executive Director
Lewis joined the SciDev Board in October 2018 as Executive Director and
was later appointed Managing Director and Chief Executive Officer in
early 2019. In this time, Lewis has driven the transformation of SciDev
significantly growing revenues through a focus on profitable organic
growth across several sectors. Lewis has over 18 years’ experience in
Asia, North America, South America, Middle east and Africa across the
water treatment and specialty chemicals sectors. He most recently
worked for Ciba from 2005, which was acquired by BASF in 2008
where he worked until 2017 as Global Business Development Manager
Global R&D Project Manager and for the BASF mining business. Lewis
has authored and co-authored numerous technical papers and holds
several patent applications. He holds a degree in Applied Science and is
a member of the Australian Institute of Company Directors.
Other current directorships: None
Former directorships (last 3 years): None
Special responsibilities: Managing Director
Interests in shares: 5,367,421
Interests in options: 1,600,000
Simone Watt BASc
Non-executive Director
Ms Watt is the Managing Director of Sinoz Chemical and Commodities
(Sinoz), which is a global company supplying reagents and technol-
ogy-based improvements to the mining and agribusiness industries.
Ms Watts is also a Director of Kemtec Mineral Processing and Kanins
International, 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 marketing.
Other current directorships: None
Former directorships (last 3 years): None
Special responsibilities: Chair of the Audit and Risk Committee and
member of the Nomination and Remuneration Committee
Interests in shares: 5,063,280
Interests in options: 250,000
Mr Jon Gourlay is a chartered accountant with extensive experience in
finance and project management, risk management, business improve-
ment and investor relationships, with a focus on the resources and
technology sectors. Mr Gourlay is currently Commercialisation Manager,
Technology and Innovation for Newcrest Mining, with prior roles in
investor relations, analysis and improvement of Newcrest’s operations
at the Lihir Island Gold Mine in Papua New Guinea.
Other current directorships: None
Former directorships (last 3 years): None
Special responsibilities: Member of the Audit and Risk Committee and
member of the Nomination and Remuneration Committee
Interests in shares: 856,349
Interests in options: Nil
Other current directorships quoted above are current directorships
for listed entities only and excludes directorships of all other types of
entities, unless otherwise stated.
Former directorships (last 3 years) quoted above are directorships held
in the last 3 years for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
Company secretary
Mr Heath L Roberts Dip Law (S.A.B.) and Grad Dip Legal Practice (UTS)
is a commercial solicitor with over 20 years of listed company
experience. He has acted for SciDev in various capacities over the
years and brings strong transactional, compliance and capital raising
experience to the role.
Meetings of directors
The number of meetings of the company’s Board of Directors (‘the
Board’) and of each Board committee held during the year ended
30 June 2020, and the number of meetings attended by each director
are shown in Table 1 below.
Held represents the number of meetings held during the time the
director held office or was a member of the relevant committee.
In addition to the Board and Committee meetings outlined above,
during the year an additional 12 Board circular resolutions were passed.
Table 1:
Meetings of directors
Trevor A Jones
Lewis E Utting
Simone Watt
Jon Gourlay
Full Board
Nomination & Remuneration
Committee
Audit & Risk Committee
Attended
Held
Attended
Held
Attended
Held
8
8
8
8
8
8
8
8
4
–
4
4
4
–
4
4
2
–
2
2
2
–
2
2
18
Annual Report 2020
| SciDev Limited
Remuneration Report (Audited)
The remuneration report details the key management person-
nel remuneration arrangements for the consolidated entity, in
accordance with the requirements of the Corporations Act 2001
and its Regulations.
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the activities of the
entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
•
•
•
•
•
•
Principles used to determine the nature and amount of
remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount
of remuneration
The objective of the consolidated entity’s executive reward framework
is to ensure reward for performance is competitive and appropriate for
the results delivered. The framework aligns executive reward with the
achievement of strategic objectives of the consolidated entity and the
creation of value for shareholders, and it is considered to conform to the
market best practice for the delivery of reward. The Board of Directors
(‘the Board’) ensures that executive reward satisfies the following key
criteria for good reward governance practices:
•
•
•
•
•
competitiveness and reasonableness;
acceptability to shareholders;
performance linkage / alignment of executive compensation to
business success;
transparency; and
alignment with proper capital management.
The Group has structured an executive remuneration framework that is
market competitive. The framework provides for a mix of fixed base pay
and also variable pay that includes both short and long term incentives,
as and when appropriate. A relationship between Company perfor-
mance and remuneration has been developed and implemented, with
a component of remuneration delivered on a performance linked basis
(as equity issues to executives with performance based or duration of
employment milestones) and in some cases cash bonuses, which are
also performance linked.
The Board has a Nomination and Remuneration Committee which
provides advice on remuneration and incentive policies and practices
and makes specific recommendations on remuneration packages
and other terms of employment for the Managing Director and Chief
Executive Officer, other senior executives and Non-Executive Directors.
The Corporate Governance Statement provides further information on
the role of this Committee. During the year, the Company conducted a
number of internally assessed remuneration benchmarking processes
and, separately, engaged the services of an external remuneration
consultant to independently advise the Board on its function and
membership and to provide remuneration guidance. The outcomes
of that independent benchmarking process have validated the level
of remuneration paid to the Managing Director and Chief Executive
Officer and will be utilised in guiding the remuneration of the Chair and
Non-Executive Directors moving forward.
Non-executive directors remuneration
Fees and payments to the Non-Executive Directors reflect the demands
which are made on, and the responsibilities of, the Non–Executive Direc-
tors. The Board undertakes a review of Non-Executive Directors’ fees and
payments annually. The independent review process described above
will guide Non-Executive Director remuneration moving forward.
Non-Executive Directors’ fees are determined within an aggregate
Non-Executive Directors’ cash remuneration limit, which is periodically
recommended for approval by shareholders. The current limit of
$400,000 was approved by shareholders at the Company’s 2007
Annual General Meeting held on 14 November 2007. Remuneration to
Non-Executive Directors of the parent entity (SciDev Limited) during
the year to 30 June 2020 was $204,562 (2019: $122,937). In addition,
Non-Executive Directors are entitled to participate in issues of options
pursuant to the SciDev Employee Share Scheme (the SciDev ESS).
The value of any options granted to Non-Executive Directors are not
included in the aggregate cash remuneration limit as they are not cash
based payments. In the case where Directors seek equity based (option)
remuneration over cash based remuneration, consideration will be
given to such request and, in any case, shareholder approval would be
required for any such equity based remuneration for Directors. During
the 2020 financial year the Company granted options to Non-executive
Directors in terms of the SciDev ESS. Shareholder approval was duly
sought and obtained at a shareholder’s meeting held on 23 July 2019.
Executive remuneration
SciDev’s executive pay and reward framework has three primary compo-
nents, which together comprise the executive’s total remuneration:
•
•
•
base pay, superannuation and ‘standard’ non-monetary benefits
such as sick leave, annual leave etc;
short term incentives through individually negotiated, performance
milestoned cash payments; and
long term incentives through participation in the SciDev ESS.
The combination of these comprises the executive’s total remuneration.
The three elements described above are tailored to reflect fair reward
for the individual executives’ contribution and whilst some executives
receive a component of all three elements, other executives do not.
(i) Base pay
Base pay is generally structured as a total employment cost package,
which may be delivered as a combination of cash and prescribed
non-financial benefits as negotiated between the Company and
the executive. Executives are offered a competitive base pay that
comprises a fixed component of cash salary, superannuation and stan-
dard non-monetary benefits as described above. Base pay for each
senior executive is reviewed annually to ensure the executive’s pay is
competitive with the market. There is no guaranteed base pay increase
included in any executive’s contract. In some cases cash performance
based bonuses are offered to executives.
(ii) Short-term incentives
Managing Director & Chief Executive Officer
The Managing Director & Chief Executive Officer is eligible for a short-
term incentive (STI) cash bonus payment of $200,000 based on the
achievement of KPIs determined by the Nomination and Remuneration
Committee for the period to 30 June 2021. The aim of the STI is to link
the achievement of the company’s annual and/or immediate financial
and broader operational targets with the remuneration received by
the Managing Director & Chief Executive Officer. The total potential
STI was set at a level to provide sufficient incentive to achieve the
SciDev Limited
| Annual Report 2020
19
Remuneration voting and comments at the company’s
28 November 2019 Annual General Meeting (the 2019 AGM)
At the 2019 AGM, 97% of the votes received supported the adoption of
the remuneration report for the year ended 30 June 2019. The company
did not receive any specific feedback at the 2019 AGM regarding its
remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the
consolidated entity are set out in the following tables.
The key management personnel of the consolidated entity consisted of
the following directors of SciDev Limited:
•
•
•
•
Trevor A Jones – Non-executive Chairman
Lewis E Utting – Managing Director & Chief Executive Officer
Simone Watt – Non-executive Director
Jon Gourlay – Non-executive Director
And the following persons:
John Fehon – Chief Financial Officer (appointed 3 February 2020)
•
• Heath Roberts – Company Secretary and General Counsel
Payments to former Directors
During the reporting period Mr Kieran Rodgers, who resigned as
Managing Director effective 19 March 2019, received part- termination
payment of $250,000. This payment was made in July 2019.
Directors’ Report
Remuneration Report (Audited)
operational targets and at a cost to the company that is reasonable
in the circumstances. Actual STI payments awarded to the Managing
Director & Chief Executive Officer depend on the extent to which specific
targets prescribed in the performance agreement are met. During FY20
a $100,000 bonus was paid as the executive had satisfied a perfor-
mance condition linked to Company operating cashflow breakeven
performance, less directors salary and fees. This milestone was chosen
as it was considered an appropriate measure considering the size and
status of the Company and was approved by both the Nomination
and Remuneration Committee and the Board. The methods used in
determining the milestone performance was measurement against the
financial performance of the Company and no external factors required
consideration.
Senior Executives
STIs paid to senior executives are made on a discretionary basis as
determined by the Managing Director & Chief Executive Officer. These
incentives, while not guaranteed, are directly linked to the achievement
of KPIs established around various performance targets on Safety,
Finance, Culture and Customer Satisfaction. No bonus is awarded
where performance falls below the minimum acceptable KPI levels as
determined by the Managing Director & Chief Executive Officer. There
was no cash bonus paid or accrued in respect of the 30 June 2020
financial year.
(iii) Long-term incentives
Long-term performance incentives (LTI) are delivered through the grant
of options to executive directors and selected senior executives from
time to time as part of their remuneration. Share options have an exer-
cise price and the performance hurdles applicable to any performance
period (including how they will be measured) is set out in the invitation
to the eligible executives. During the 2020 financial year the Company
granted options to the Managing Director & Chief Executive Officer and
senior executives under the terms of the SciDev ESS. For the options
granted to the Managing Director, shareholder approval was duly
sought and obtained at a shareholder’s meeting held on 23 July 2019.
Information on the SciDev ESS is set out in note 38.
Use of remuneration consultants
During the year, the Company engaged Ed Turvill Consulting (Turvill)
as remuneration consultants to provide a range of advice related to
SciDev’s Board composition, skills and peer company remuneration
benchmarking. The Turvill report has independently validated the level
of the Managing Director & Chief Executive Officer remuneration and
provided peer assessment and guidance on appropriate levels of remu-
neration for Non-Executive Directors remuneration. During the reporting
period, Turvill received $12,000 in fees for delivery of remuneration
recommendations.
To ensure that the process undertaken was free from undue influence
by parties subject to the remuneration recommendations, Turvill was
provided with autonomy to consider and advise on the matters at hand
and instruction predominately took place through the Company Secre-
tary, who was not subject of the remuneration recommendations. The
members of the Board participated in processes directed to assessing
its skills and composition directly with Turvill, however did not engage
with Turvill in relation to remuneration benchmarking or those elements
of his services that constitute remuneration recommendations.
The Board is satisfied that the remuneration recommendation was free
from undue influence by parties subject to the remuneration recom-
mendations (ie, the Board and its members) as a result of the processes
outlined in the previous paragraph.
20
Annual Report 2020
| SciDev Limited
2020
Non-Executive Directors:
Trevor A Jones (Chairman)
Simone Watt
Jon Gourlay
Executive Directors:
Lewis E Utting
Other Key Management Personnel:
John Fehon (a)
Heath Roberts
Short-term benefits
Post- employ-
ment benefits
Long-term
benefits
Share-based
payments
Cash salary
and fees
$
Annual leave
accrual
$
Super-
annuation
$
Long service
leave
$
Options (b)
$
Total
$
69,444
44,999
4,107
–
–
–
6,597
4,275
390
–
–
–
16,250
16,250
42,250
92,291
65,524
46,747
468,666
44,311
34,833
16,232
1,748
565,790
108,333
244,795
940,344
8,230
n/a
52,541
10,291
n/a
–
n/a
66,123
408
192,977
245,203
56,386
16,232
143,029
1,208,532
(a)
John Fehon was appointed Chief Financial Officer on 3 February 2020. The above reported remuneration relates to the period from 3 February
2020 to 30 June 2020.
(b) The amounts included in the share-based remuneration represent the grant date fair value of options, amortised on a straight-line basis over the
expected vesting period. Expenses are reversed where rights are forfeited due to a failure to satisfy the service conditions or there is a revision of
share rights expected to vest.
2019
Non-Executive Directors:
Trevor A Jones (Chairman)
Simone Watt (a)
Daniel J Cronin (b)
Executive Directors:
Lewis E Utting (c)
Kieran G Rodgers (b)
Other Key Management Personnel:
Jianfeng Zhang (d)
Short-term benefits
Post- employ-
ment benefits
Long-term
benefits
Cash salary
and fees
$
Annual leave
accrual
$
Super-
annuation
$
Long service
leave
$
Termination
benefits
$
64,431
25,340
22,500
260,000
260,000
31,666
663,937
–
–
–
14,964
18,056
2,805
35,825
6,121
2,407
2,138
24,700
24,700
3,048
63,114
–
–
–
749
4,333
83
5,165
Total
$
70,552
27,747
24,638
–
–
–
–
130,000
300,413
437,089
–
37,602
130,000
898,041
(a) Ms Simone Watt and Mr Jon Gourlay were appointed Non-executive Directors on 29 October 2018 and 28 May 2019 respectively. Mr Gourlay did
not receive any remuneration from the company during the 2019 financial year.
(b) Mr Daniel J Cronin and Mr Kieran G Rodgers resigned on 31 December 2018 and 19 March 2019 respectively. Mr Rodgers’ remuneration for the year
included termination payments set out in his employment contract.
(c) Mr Lewis Utting was Project Director on 1 March 2018, appointed to the SciDev Board of Directors on 29 October 2018 and became Managing
Director and Chief Executive Officer on 30 April 2019.
(d) Mr Jianfeng Zhang was appointed Marketing and Strategy Director of Science Developments Pty Limited on 10 April 2019. Mr Zhang was no
longer considered to be a KMP with effect from 1 July 2019.
SciDev Limited
| Annual Report 2020
21
Directors’ Report
Remuneration Report (Audited)
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed remuneration
At risk - STI
At risk - LTI
2020
2019
2020
2019
2020
2019
70%
60%
10%
–
82%
–
–
66%
100%
100%
100%
–
100%
100%
100%
100%
–
–
–
–
–
–
17%
–
–
–
–
–
–
–
–
–
–
–
–
–
30%
40%
90%
–
1
–
–
34%
–
–
–
–
–
–
–
–
–
–
Non-Executive Directors:
Trevor A Jones (Chairman)
Simone Watt
Jon Gourlay
Daniel J Cronin
Executive Directors:
Lewis E Utting
Kieran G Rodgers
Other Key Management Personnel:
Jianfeng Zhang
John Fehon
Heath Roberts
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements at
the date of this report are as follows:
Name:
Title:
Lewis E Utting
Managing Director and Chief Executive Officer
Agreement commenced:
30 April 2019, revised March 2020
Term of agreement:
On-going
Details:
Base salary of $450,000 plus superannuation. Mr Utting is also entitled to an STI bonus of $200,000 subject to
meeting performance-based milestones and an LTI of $250,000 in performance based equity (options or shares)
under the terms of the Company’s ESS. These LTI options have not yet been finalised and issued to Mr Utting.
Mr Utting’s salary, allowances and performance bonus is reviewed annually by the Nomination and Remuneration
Committee. This remuneration was assessed by an independent remuneration consultant during the reporting
period.
The contract may be terminated by 6 months’ notice from either party.
Name:
Title:
John Fehon
Chief Financial Officer
Agreement commenced:
3 February 2020
Term of agreement:
On-going
Details:
Base salary of $260,000 plus superannuation and performance-based $60,000 bonus.
The contract may be terminated by 3 months’ notice from either party and the contract provides for payment of
3 months’ Total Remuneration if Mr Fehon’s employment is terminated.
Name:
Title:
Heath Roberts
Company Secretary and General Counsel
Agreement commenced:
1 March 2017
Term of agreement:
On-going
Details:
Consulting per diem rate equal to that of $240,000 for full-time employment and services.
The agreement may be terminated by 1 months’ notice from either party.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
22
Annual Report 2020
| SciDev Limited
Voluntary Remuneration Reductions Commencing 1 July 2020
Recognising the uncertainty on world financial markets as a result of COVID-19 certain members of the KMP have volunteered base pay reductions.
These reductions are initially for the period 1 July 2020 – 30 September 2020 and may be extended depending on global market circumstances at
the time. These voluntary reductions do not accrue and are not repaid to the member of KMP at a future point in time. The KMP that have volunteered
reductions of between 20%-30% are Managing Director & Chief Executive Officer Lewis Utting, Chief Financial Officer John Fehon and Company
Secretary & General Counsel Heath Roberts.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2020.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management personnel in
this financial year or future reporting years are as follows:
Trevor Jones
Lewis Utting
Lewis Utting
Simone Watt
Jon Gourlay
John Fehon
John Fehon
Heath Roberts
Heath Roberts
Number
of options
granted
250,000
800,000
800,000
250,000
650,000
75,000
75,000
200,000
200,000
Grant
date
Vesting
date
Expiry
date
Exercise price
23/07/2019
23/07/2019
23/07/2019
23/07/2019
23/07/2019
03/02/2020
03/02/2020
23/07/2019
23/07/2019
23/07/2019
23/07/2019
29/06/2021
23/07/2019
23/07/2019
03/02/2020
29/06/2021
23/07/2019
29/06/2021
23/07/2022
23/07/2022
23/07/2022
23/07/2022
23/07/2022
23/07/2022
23/07/2022
23/07/2022
23/07/2022
$0.12
$0.10
$0.10
$0.12
$0.12
$0.12
$0.12
$0.10
$0.10
Fair value
per option at
grant date
$0.06500
$0.00437
$0.00437
$0.06500
$0.06500
$0.60400
$0.66630
$0.00204
$0.00204
Vested
%
100%
100%
–
100%
100%
100%
–
100%
–
With the exception of the options granted to Lewis Utting (Managing Director and Chief Executive Officer), all the other options granted to directors had
no performance conditions.
The options granted to Lewis Utting consists of 2 tranches. The first tranche have vested and the second tranche is subject to a service vesting
condition.
The options granted to Jon Gourlay (Non-executive Director) vested on grant date. Jon had specifically requested remuneration on an equity (rather
than cash) basis.
The options granted to Trevor Jones (Non-executive Chairman) and Simone Watt (Non-executive Director) vested on grant date were allotted to
recognise past service to the group.
The options granted to John Fehon (CFO) consists of 2 tranches. The first tranche vested on grant date and the second tranche is subject to a service
vesting condition.
The options granted to Heath Roberts (Company Secretary & General Counsel) consists of 2 tranches. The first tranche vested on grant date and the
second tranche is subject to a service vesting condition.
These options were issued under the Company’s ESS. The options expire on the earlier of their expiry date or termination of the employee’s employment
(however the Board does have discretion under the ESS to allow the options of an employee who has been terminated or left the company to remain in
place for the balance of their term in certain cases).
Options issued to Directors of the company were first approved by the company’s shareholders, as required by ASX Listing Rules. The options do not
entitle the holders to participate in any share issue, bonus or distribution by the Company unless first exercised in accordance with the option terms.
Options granted carry no dividend or voting rights.
There has been no alteration of the terms and conditions of the above share-based payment arrangements since the grant date.
SciDev Limited
| Annual Report 2020
23
Directors’ Report
Remuneration Report (Audited)
Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel as part of compensation
during the year ended 30 June 2020 are set out below:
2020
2019
Value of options
granted during the year
$
Value of options
exercised during the year
$
Value of options
granted during the year
$
Value of options
exercised during the year
$
Trevor Jones
Lewis Utting
Simone Watt
Jon Gourlay
John Fehon
Heath Roberts
16,250
3,497
16,250
42,250
95,275
408
21,624
10,912
–
42,250
45,300
–
–
–
–
–
–
–
–
–
–
–
–
–
There were no options for directors and other key management personnel that lapsed during the year ended 30 June 2020.
Additional information
The earnings of the consolidated entity for the five years to 30 June 2020 are summarised below:
Sales revenue
(Loss)/profit after income tax
17,906,551
(875,238)
2,655,799
(2,032,527)
2,029,373
1,001,869
1,846,985
(597,340)
1,352,346
(458,130)
2020
$
2019
$
2018
$
2017
$
2016
$
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key management personnel of the
consolidated entity, including their personally related parties, is set out below:
Ordinary shares
Trevor A Jones
Lewis E Utting
Simone Watt
Jon Gourlay
John Fehon
Heath Roberts
Balance
at the start
of the year
738,303
4,830,221
5,000,780
206,349
–
144,667
Received
during the
year on the
exercise of
options
350,000
500,000
–
650,000
75,000
100,000
Additions/
other
Disposals/
other
–
37,200
62,500
–
213,333
–
–
–
–
–
–
144,667
Balance
at the end
of the year
1,088,303
5,367,421
5,063,280
856,349
288,333
100,000
10,920,320
1,675,000
313,033
144,667
12,763,686
24
Annual Report 2020
| SciDev Limited
Option holding
The number of options over ordinary shares in the company held during the financial year by each director and other members of key management
personnel of the consolidated entity, including their personally related parties, is set out below:
Options over ordinary shares
Trevor A Jones
Lewis E Utting
Simone Watt
Jon Gourlay
John Fehon
Heath Roberts
Balance
at the start
of the year
100,000
500,000
–
–
–
100,000
Granted
Exercised
Expired/
forfeited/
other
Balance
at the end
of the year
250,000
1,600,000
250,000
650,000
150,000
400,000
(350,000)
(500,000)
–
(650,000)
(75,000)
(100,000)
700,000
3,300,000
(1,675,000)
–
–
–
–
–
–
–
–
1,600,000
250,000
–
75,000
400,000
2,325,000
Loans to key management personnel and their related parties
There were no loans owing by key management personnel of the group, including their close family members and entities related to them, during the
financial year ended 30 June 2020.
Other transactions with key management personnel and their related parties
A director, Simone Watt, is a director of Kanins International Pty Ltd and has the capacity to significantly influence decision making of that company.
Kanins International Pty Ltd provided SciDev Limited with a US$350,000 working capital facility that matures on 1 October 2020. The facility is secured
against the consolidated entity’s inventory and incurred interest at 15% per annum. $nil (2019: $73,007) was drawn down on this facility and $nil (2019:
$73,007) repaid during the 2020 financial year. The loan balance at 30 June 2020 was $nil (2019: $nil).
A director, Simone Watt, is a director of Kemtec Mineral Processing Pty Ltd and has the capacity to significantly influence decision making of that
company. The consolidated entity has leased equipment to Kemtec Mineral Processing Pty Ltd during the 2020 financial year. The lease contracts
were based on normal commercial terms and conditions.
Amounts recognised as revenue
Treatment fees and product sales: $nil (2019: $91,080)
Amounts recognised as expenses
Finance costs: $nil (2019: $3,539)
There were no other transactions with key management personnel of the group, including their close family members and entities related to them,
during the financial year ended 30 June 2020.
This concludes the remuneration report, which has been audited.
SciDev Limited
| Annual Report 2020
25
Directors’ Report
Shares under option
Unissued ordinary shares of SciDev Limited under option at the date of this report are as follows:
Grant date
16 May 2019
16 May 2019
23 July 2019
23 July 2019
11 November 2019
3 February 2020
Expiry
date
Exercise
price
Number
under option
23 July 2022
23 July 2022
23 July 2022
23 July 2022
23 July 2022
23 July 2022
$0.100
$0.120
$0.100
$0.120
$0.120
$0.120
400,000
1,325,000
1,600,000
250,000
75,000
75,000
3,725,000
All of the unexercised options were granted under the SciDev Employee Share Scheme (see note 38).
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the company or of any other
body corporate.
No options were granted to the directors or any of the five highest remunerated officers of the company since the end of the financial year.
Shares issued on the exercise of options
The following ordinary shares of SciDev Limited were issued during the year ended 30 June 2020 and up to the date of this report on the exercise of
options granted:
Date options granted
10 December 2014
2 February 2017
14 August 2017
28 December 2017
16 May 2019
23 July 2019
11 November 2019
3 February 2020
Exercise
price
Number of
shares issued
$0.250
$0.250
$0.250
$0.250
$0.120
$0.120
$0.120
$0.120
550,000
2,250,000
650,000
500,000
400,000
900,000
75,000
75,000
5,400,000
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they
may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company against a
liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount
of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related
entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to
intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those
proceedings.
26
Annual Report 2020
| SciDev Limited
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 29 to
the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor’s
behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
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 indepen-
dence requirements of the Corporations Act 2001 for the following reasons:
•
•
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accoun-
tants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a
management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards.
Officers of the company who are former partners of Rothsay Chartered Accountants
There are no officers of the company who are former partners of Rothsay Chartered Accountants.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors’
report.
Auditor
Rothsay Chartered Accountants continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
Lewis E Utting
Managing Director & Chief Executive Officer
26th August 2020
SciDev Limited
| Annual Report 2020
27
Auditor’s Independence Declaration
under Section 307c of the Corporations Act 2001
As lead auditor of SciDev Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief,
there have been:
•
•
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Rothsay Chartered Accountants
Frank Vrachas
Partner
Sydney, 26 August 2020
28
Annual Report 2020
| SciDev Limited
Financial Statements
Table of Contents
Statement of Profit or Loss and Other Comprehensive Income ........... 30
Statement of Financial Position .............................................................................. 31
Statement of Changes in Equity ............................................................................. 32
Statement of Cash Flows ............................................................................................ 33
Notes to the Financial Statements ....................................................................... 34
Directors’ Declaration .................................................................................................... 69
Independent Auditor’s Report ................................................................................... 70
SciDev Limited
| Annual Report 2020
29
Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2020
Revenue
Other income
Interest revenue
Expenses
Changes in inventories, and raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expense
Engineering and other consultants expenses
Loss on disposal of assets
Insurance
Listing and share registry expenses
Professional fees
Rent and related expenses
Travel, accommodation and conference
Other expenses
Finance costs
Loss before income tax benefit/(expense)
Income tax benefit/(expense)
Loss after income tax benefit/(expense) for the year
attributable to the owners of SciDev Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
attributable to the owners of SciDev Limited
Basic earnings per share
Diluted earnings per share
Note
5
6
2020
$
2019
$
18,061,342
2,921,060
587,855
2,784
336,645
–
(14,765,678)
(2,791,632)
(377,760)
(535,834)
(6,902)
(165,406)
(150,999)
(706,810)
(240,984)
(294,832)
(855,042)
(35,688)
(2,005,760)
(1,330,076)
(212,767)
(31,068)
(27,621)
(56,532)
(84,464)
(757,080)
(189,851)
(278,329)
(285,980)
(6,627)
(2,275,586)
(2,008,450)
1,400,348
(24,077)
(875,238)
(2,032,527)
(36,310)
(36,310)
–
–
(911,548)
(2,032,527)
7
8
Cents
Cents
37
37
(0.69)
(0.69)
(2.69)
(2.69)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
30
Annual Report 2020
| SciDev Limited
Statement of Financial Position
As at 30 June 2020
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax refund due
Other
Total current assets
Non-current assets
Financial assets at fair value through other comprehensive income
Property, plant and equipment
Intangibles
Deferred tax
Other
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Employee benefits
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Deferred tax
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Other equity
Reserves
Accumulated losses
Total equity
Note
2020
$
2019
$
9
10
11
12
13
14
15
16
18
19
20
17
18
21
19
20
22
23
24
4,481,783
2,170,036
4,805,023
32,623
153,254
1,756,209
806,099
264,325
–
22,679
11,642,719
2,849,312
1,502,900
1,196,808
11,402,074
1,364,362
64,053
1,502,900
303,454
1,246,299
–
–
15,530,197
3,052,653
27,172,916
5,901,965
8,500,186
182,780
126,448
285,258
1,009,529
–
155,276
–
9,094,672
1,164,805
284,918
70,655
–
–
313,500
669,073
–
–
35,986
2,153
–
38,139
9,763,745
1,202,944
17,409,171
4,699,021
89,874,533
569,975
132,677
(73,168,014)
76,899,789
–
2,210,703
(74,411,471)
17,409,171
4,699,021
The above statement of financial position should be read in conjunction with the accompanying notes
SciDev Limited
| Annual Report 2020
31
Statement of Changes in Equity
For the year ended 30 June 2020
Balance at 1 July 2018
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 22)
Balance at 30 June 2019
Issued
capital
$
74,118,627
–
–
–
2,781,162
76,899,789
Balance at 1 July 2019
76,899,789
Loss after income tax benefit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 22)
Share-based payments (note 38)
Options exercised
Contingent consideration
Transfer from reserves to accumulated losses
–
–
Other
equity
$
–
–
–
–
–
–
–
–
–
–
Reserves
$
Accumulated
losses
$
Total
equity
$
2,210,703
(72,378,944)
3,950,386
–
–
–
–
(2,032,527)
–
(2,032,527)
–
(2,032,527)
(2,032,527)
–
2,781,162
2,210,703
(74,411,471)
4,699,021
2,210,703
(74,411,471)
4,699,021
–
(36,310)
(875,238)
–
(875,238)
(36,310)
(36,310)
(875,238)
(911,548)
12,852,694
–
122,050
–
–
–
–
–
569,975
–
–
199,029
(2,885,944)
–
645,199
–
–
2,763,894
–
(645,199)
12,852,694
199,029
–
569,975
–
Balance at 30 June 2020
89,874,533
569,975
132,677
(73,168,014)
17,409,171
The above statement of changes in equity should be read in conjunction with the accompanying notes
32
Annual Report 2020
| SciDev Limited
Statement of Cash Flows
For the year ended 30 June 2020
Cash flows from operating activities
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 operating activities
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
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
Proceeds from disposal of financial assets at fair value through other comprehensive income
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares – net of transaction costs
Proceeds from borrowings
Repayment of borrowings and lease liabilities
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Note
2020
$
2019
$
36
33
13
14
20,452,172
(20,596,733)
2,774,656
(4,616,859)
(144,561)
(1,842,203)
2,784
–
(35,688)
–
–
332,981
(6,627)
(32,199)
(177,465)
(1,548,048)
(870,765)
–
(752,768)
(118,275)
(50,878)
–
–
–
(300,000)
(225,225)
(37,929)
–
50,000
500,000
(1,792,686)
(13,154)
5,071,902
284,918
(661,095)
2,781,162
73,007
(104,945)
4,695,725
2,749,224
2,725,574
1,756,209
1,188,022
568,187
Cash and cash equivalents at the end of the financial year
9
4,481,783
1,756,209
The above statement of cash flows should be read in conjunction with the accompanying notes
SciDev Limited
| Annual Report 2020
33
Notes to the Financial Statements
For the year ended 30 June 2020
1. General information
The financial statements cover SciDev Limited as a consolidated entity consisting of SciDev Limited and the entities it controlled at the end of,
or during, the year. The financial statements are presented in Australian dollars, which is SciDev Limited’s functional and presentation currency.
SciDev Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of
business are:
Registered office
Unit 1
8 Turbo Road
Kings Park
NSW 2148
Principal place of business
C/-Boardroom Pty Limited
Level 12, Grosvenor Place
225 George Street, Sydney
NSW 2000
A description of the nature of the consolidated entity’s operations and its principal activities 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 resolution of directors, on 26th August 2020. The directors have the
power to amend and reissue the financial statements.
2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective notes or below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting
Standards Board (‘AASB’) that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of
the consolidated entity.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 16 Leases
The consolidated entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 Leases along with three interpretations (Interpre-
tation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases-Incentives and Interpretation 127 Evaluating the
Substance of Transactions Involving the Legal Form of a Lease).
The adoption of this new Standard has resulted in the consolidated entity recognising a right-of-use asset and related lease liability in connection
with all former operating leases except for those identified as low-value or having a remaining lease term of less than 12 months from the date of
initial application.
For contracts in place at the date of initial application, the consolidated entity has elected to apply the definition of a lease from AASB 117 and
Interpretation 4 and has not applied AASB 16 to arrangements that were previously not identified as lease under AASB 117 and Interpretation 4.
On transition, for leases previously accounted for as operating leases with a remaining lease term of less than 12 months and for leases of
low-value assets the consolidated entity has applied the optional exemptions to not recognise right-of-use assets but to account for the lease
expense on a straight-line basis over the remaining lease term.
On transition to AASB 16 the weighted average incremental borrowing rate applied to lease liabilities recognised under AASB 16 was 6%.
34
Annual Report 2020
| SciDev Limited
On the date of initial application of AASB 16 (1 July 2019), a right-of-use asset was recognised for property leases amounting to $186,480. The
right-of-use asset was measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments
relating to that recognised in the statement of financial position as at 30 June 2019. There was no impact on retained earnings at 1 July 2019 as a
result of this adjustment.
Measurement of lease liabilities:
Operating lease commitments disclosed as at 30 June 2019
Discounted using the lessee’s incremental borrowing rate of 6% at the date of initial application
(Less): short-term and low value leases not recognised as a liability
Lease liability recognised as at 1 July 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
Going concern
$
244,315
(48,385)
(9,450)
186,480
81,312
105,168
186,480
For the year ended 30 June 2020 the consolidated entity generated an operating loss after income tax of $875,238 (2019:$2,032,527). Net cash
outflows from operations were $177,465 (2019: $1,548,048) for the year ended 30 June 2020.
In addition to the above, the Directors have considered the potential impact that the global pandemic COVID-19 may have on the operations of
the consolidated entity. Given the rapidly changing environment caused by COVID-19 and its impact on the Australian and global economy, along
with various policy responses by governments both in Australia and globally, it is not possible to conclusively define the potential impact that
COVID-19 may have on the operations of the consolidated entity in time, given the fluidity of government policy decision making. The Directors
however, based on current available information, are of the view that the consolidated entity has the ability to operate sustainably and as a going
concern notwithstanding the potential impact of COVID-19 and the current uncertainty it creates in relation to the potential economic impact for
both the Australian and global economies.
The Directors have considered and concluded that the going concern basis of preparation of the financial statements is appropriate and any
potential uncertainty regarding going concern is mitigated by the following:
•
At 30 June 2020 the consolidated entity had net current assets of $2,548,047 (2019: $1,684,507) and cash balances of $4,481,783 (2019:
$1,756,209) and an undrawn $510,000 credit facility.
• On 16 July 2020, the company announced the placement of 7,692,308 new ordinary shares with local institutional and sophisticated inves-
tors at an issue price of $0.65 per share to raise total proceeds of $5 million and the issue of 3,076,923 ordinary shares at $0.65 per share
in terms of a share purchase plan to raise $2 million. The funds from the placement and share purchase plan will predominantly be used to
upgrade the Kings Park facility, increase inventory and contribute to the capitalisation of the strategic joint venture with Nuoer.
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 entity will be able to meet its liabilities 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 2021, and has accordingly prepared the financial report on a going concern basis.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial
statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, financial assets and liabilities at
fair value through profit or loss.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise
its judgement in the process of applying the consolidated entity’s accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.
SciDev Limited
| Annual Report 2020
35
Notes to the Financial Statements
For the year ended 30 June 2020
2. Significant accounting policies continued
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary
information about the parent entity is disclosed in note 32.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of SciDev Limited (‘company’ or ‘parent entity’) as
at 30 June 2020 and the results of all subsidiaries for the year then ended. SciDev Limited and its subsidiaries together are referred to in these
financial statements as the ‘consolidated entity’.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated
entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated
entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of
control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of
the non-controlling interest acquired is recognised directly in equity attributable to the parent.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest
in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the
consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.
Foreign currency translation
The financial statements are presented in Australian dollars, which is SciDev Limited’s functional and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues
and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the
dates of the transactions, for the period. All resulting 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 operation or net investment is disposed of.
Income tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for
each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the
adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered
or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
• When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not
a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
• When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal
can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts
will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are
reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously
unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities
and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different
taxable entities which intend to settle simultaneously.
36
Annual Report 2020
| SciDev Limited
SciDev Limited (the ‘head entity’) and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax
consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred
tax amounts. The tax consolidated group has applied the ‘separate taxpayer within group’ approach in determining the appropriate amount of
taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax
assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable
to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability
or benefit of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by
the subsidiaries to the head entity.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity’s normal
operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset
is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity’s normal operating cycle; it is held primarily for
the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement
of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement,
except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value
depending on their classification. Classification is determined based on both the business model within which such assets are held and the
contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has
transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial
asset, it’s carrying value is written off.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the consolidated entity intends to hold for
the foreseeable future and has irrevocably elected to classify them as such upon initial recognition.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or
fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity’s assessment at
the end of each reporting period as to whether the financial instrument’s credit risk has increased significantly since initial recognition, based on
reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is
estimated. This represents a portion of the asset’s lifetime expected credit losses that is attributable 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 lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the
probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is recognised in other compre-
hensive income with a corresponding expense through profit or loss. In all other cases, the loss allowance reduces the asset’s carrying value with a
corresponding expense through profit or loss.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or
more frequently if events or changes in circumstances indicate that they might be impaired. Other non- financial assets are reviewed for impair-
ment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the present value of the
estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset
belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
SciDev Limited
| Annual Report 2020
37
Notes to the Financial Statements
For the year ended 30 June 2020
2. Significant accounting policies continued
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they
are incurred.
Goods and Services Tax (‘GST’) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax
authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to,
the tax authority is included in other receivables or other payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable
from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early
adopted by the consolidated entity for the annual reporting period ended 30 June 2020. The consolidated entity has not yet assessed the impact
of these new or amended Accounting Standards and Interpretations.
3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported
amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent
liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various
factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the consolidated
entity based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain,
staffing and geographic regions in which the consolidated entity operates. Other than as addressed in specific notes, there does not currently
appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions
which may impact the consolidated entity unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19)
pandemic.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected credit
loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions
include recent sales experience and historical collection rates.
Goodwill
The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill has
suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-generating units have
been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based
on the current cost of capital and growth rates of the estimated future cash flows. For information relating to the value-in-use calculations refer to
note 14.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable that future taxable
amounts will be available to utilise those temporary differences and losses. Judgement is required to determine the amount of deferred tax assets
that can be recognised, based upon the likely timing and the level of future profits.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount future lease
payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the consolidated
entity estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset,
with similar terms, security and economic environment.
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4. Operating segments
Identification of reportable operating segments
The consolidated entity operates in primarily two geographical segments: Australia and the United States. In the 30 June 2019 financial year the
consolidated entity operated in primarily one geographical segment being Australia and revenue attributable to overseas subsidiaries was not
material to the consolidated entity. The primary business segment is the treatment of industrial processes including the manufacture and supply
of chemicals, technology, and services for industrial processes.
Operating and business segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers.
The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been
identified as the Board of Directors.
Intersegment transactions
Intersegment transactions were made at market rates. Intersegment transactions are eliminated on consolidation.
Intersegment receivables, payables and loans
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur
non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation.
Major customers
During the year ended 30 June 2020, revenue from 2 customers amounted to $5,868,415 arising from sales in the Australia segment, and revenue
from 1 customer amounted to $3,054,467 arising from sales in the United States segment.
During the year ended 30 June 2019, revenue from 3 customers amounted to $1,513,805.
No other customer contributed 10% or more to the consolidated entity’s revenue for both 2020 and 2019.
Operating segment information
2020
Revenue
Sales to external customers
Intersegment sales
Total sales revenue
Other revenue
Interest revenue
Total revenue
EBITDA
Depreciation and amortisation
Interest revenue
Finance costs
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
Assets
Segment assets
Total assets
Total assets includes:
Acquisition of non-current assets
Liabilities
Segment liabilities
Total liabilities
Australia
United States
Eliminations &
adjustments
$
$
$
Total
$
12,286,522
2,574,870
14,861,392
142,345
2,784
5,620,029
2,271,474
7,891,503
12,446
–
–
(4,846,344)
(4,846,344)
–
–
17,906,551
–
17,906,551
154,791
2,784
15,006,521
7,903,949
(4,846,344)
18,064,126
(1,519,897)
(345,838)
–
(1,865,735)
(376,947)
2,784
(35,688)
(2,275,586)
1,400,348
(875,238)
21,012,266
11,681,957
(5,521,307)
27,172,916
27,172,916
2,871,201
8,509,546
–
11,380,747
10,554,626
4,730,426
(5,521,307)
9,763,745
9,763,745
SciDev Limited
| Annual Report 2020
39
Notes to the Financial Statements
For the year ended 30 June 2020
4. Operating segments continued
Accounting policy for operating segments
Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal
reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM is responsible for the allocation of resources to operating segments
and assessing their performance.
5. Revenue
Revenue from contracts with customers
Treatment fees and product sales
Other revenue
Other revenue
Revenue
Accounting policy for revenue recognition
The consolidated entity recognises revenue as follows:
2020
$
2019
$
17,906,551
2,655,799
154,791
265,261
18,061,342
2,921,060
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled in exchange for
transferring goods or services to a customer. For each contract with a customer, the consolidated entity: identifies the contract with a customer;
identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable considera-
tion and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone
selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a
manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds,
any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the ‘expected
value’ or ‘most likely amount’ method. The measurement of variable consideration 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 cumulative revenue recognised will not occur.
The measurement constraint continues until the uncertainty associated with the variable consideration 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 time when the performance obligations in the agreement are met, which is generally
at the time of delivery.
Consulting services and treatment fees
Consulting services and treatment fees are recognised using the percentage-of-completion method for fixed-fee arrangements or as the services
are provided for time-and-materials arrangements.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a
financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
6. Other income
Net foreign exchange gain
Subsidies and grants
Reimbursement of expenses
Sundry
Other income
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2020
$
83,123
501,527
–
3,205
2019
$
–
332,981
3,664
–
587,855
336,645
7. Expenses
Loss before income tax includes the following specific expenses:
Finance costs
Interest and finance charges paid/payable on borrowings
Interest and finance charges paid/payable on lease liabilities
Finance costs expensed
Leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
8. Income tax expense/(benefit)
Income tax expense/(benefit)
Deferred tax – origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense/(benefit)
Deferred tax included in income tax expense/(benefit) comprises:
Increase in deferred tax assets (note 15)
Decrease in deferred tax liabilities (note 21)
Deferred tax – origination and reversal of temporary differences
Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate
Loss before income tax benefit/(expense)
Tax at the statutory tax rate of 27.5%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-deductible expenses
Research and development tax incentive
Government grants
Adjustment recognised for prior periods
Current year tax losses not recognised
Current year temporary differences not recognised
Prior year temporary differences not recognised now recognised
Prior year tax losses not recognised now recognised
Tax losses relating to overseas subsidiaries not recognised
Deferred tax prior period adjustment
2020
$
2019
$
21,800
13,888
35,688
4,949
1,678
6,627
–
156,169
187,239
96,666
2020
$
2019
$
(1,400,348)
–
(1,400,348)
(1,364,362)
(35,986)
(1,400,348)
(8,122)
32,199
24,077
–
(8,122)
(8,122)
(2,275,586)
(2,008,450)
(625,786)
(552,324)
245,985
(104,572)
(27,500)
(511,873)
–
–
–
(43,655)
(997,958)
189,124
(35,986)
8,121
(91,570)
–
(635,773)
32,199
649,194
(21,543)
–
–
–
–
Income tax expense/(benefit)
(1,400,348)
24,077
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 27.5%
64,080,927
67,709,864
17,622,255
18,620,213
SciDev Limited
| Annual Report 2020
41
Notes to the Financial Statements
For the year ended 30 June 2020
8. Income tax expense/(benefit) continued
Management have determined that it is prudent to recognise prior year tax losses in the amounts included above and are in the process of
assessing the availability of other historical tax losses.
Tax losses will only be recognised and obtained if it is probable:
(i)
(ii)
the consolidated entity will derive future assessable income of a nature and an amount sufficient to enable the benefit from the deductions
for the losses and temporary difference to be realised;
the consolidated entity complies with the conditions for deductibility imposed by the tax legislation such as continuity of ownership and
same business test; and
(iii) no changes in tax legislation adversely affect the consolidated entity in realising the benefit from deductions for the losses and temporary
differences.
9. Cash and cash equivalents
Current assets
Cash on hand
Cash at bank
2020
$
2019
$
–
4,481,783
150
1,756,059
4,481,783
1,756,209
Accounting policy for cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with
original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.
10. Trade and other receivables
Current assets
Trade receivables
Other receivables
2020
$
2019
$
2,111,383
58,653
779,210
26,889
2,170,036
806,099
Allowance for expected credit losses
The consolidated entity calculates its expected credit losses (ECL) based on the consolidated entity’s historical credit loss experience, adjusted for
forward-looking factors specific to its receivables and the economic environment.
The consolidated entity does not have any history of impairment of its trade receivables. The consolidated entity transacts with a limited number
of established customers and operates under strict credit policies approved by the Board of Directors.
No impairment loss has been recognised for trade receivables.
Accounting policy for trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any
allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance.
To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
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11. Inventories
Current assets
Stock in transit – at cost
Stock on hand – at cost
2020
$
2019
$
547,877
4,257,146
–
264,325
4,805,023
264,325
Accounting policy for inventories
Stock in transit 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.
Stock on hand is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of rebates and discounts
received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated
costs necessary to make the sale.
12. Financial assets at fair value through other comprehensive income
Non-current assets
Unlisted equity securities
Reconciliation
Reconciliation of the fair values at the beginning and end of the current
and previous financial year are set out below:
Opening fair value
Additions*
Disposals*
Revaluation increments
Closing fair value
2020
$
2019
$
1,502,900
1,502,900
1,502,900
–
–
–
1,502,900
500,000
(641,026)
141,026
1,502,900
1,502,900
*
On 25 October 2017, SciDev Limited (SciDev) entered into a conditional 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
entity’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 consideration 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 resulting in an additional 5,000,000 Tartana shares to be
issued to SciDev and the deletion of the $500,000 cash component of the transaction. 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 consideration for the transaction
of $2,000,000 remained unchanged.
Refer to note 27 for further information on fair value measurement.
SciDev Limited
| Annual Report 2020
43
Notes to the Financial Statements
For the year ended 30 June 2020
13. Property, plant and equipment
Non-current assets
Office buildings and warehouses – at cost
Less: Accumulated depreciation
Plant and equipment – at cost
Less: Accumulated depreciation
Motor vehicles – at cost
Less: Accumulated depreciation
Office equipment – at cost
Less: Accumulated depreciation
2020
$
2019
$
186,480
(86,068)
100,412
–
–
–
2,204,673
(1,247,984)
748,552
(462,286)
956,689
286,266
284,340
(164,395)
119,945
61,090
(41,328)
19,762
–
–
–
50,954
(33,766)
17,188
1,196,808
303,454
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Balance at 1 July 2018
Additions
Disposals
Depreciation expense
Balance at 30 June 2019
Additions
Additions through business combinations (note 33)
Disposals
Adoption of AASB 16
Exchange differences
Depreciation expense
Office
buildings and
warehouses
$
–
–
–
–
–
–
–
–
186,480
–
(86,068)
Plant and
equipment
$
260,954
205,299
(27,621)
(152,366)
286,266
742,632
196,782
(6,902)
–
(4,301)
(257,788)
Motor vehicles
$
–
–
–
–
–
–
132,897
–
–
(4,469)
(8,483)
Office
equipment
$
–
19,926
–
(2,738)
17,188
10,136
–
–
–
–
(7,562)
Total
$
260,954
225,225
(27,621)
(155,104)
303,454
752,768
329,679
(6,902)
186,480
(8,770)
(359,901)
Balance at 30 June 2020
100,412
956,689
119,945
19,762
1,196,808
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Included in the above line items are right-of-use assets over the following:
Balance at 1 July 2019
Recognition of right-of-use asset
Additions through business combinations (note 33)
Exchange differences
Depreciation expense
Office
buildings and
warehouses
Motor vehicles
$
$
–
186,480
–
–
(86,068)
–
–
91,857
(4,469)
(8,483)
Total
$
–
186,480
91,857
(4,469)
(94,551)
Balance at 30 June 2020
100,412
78,905
179,317
Accounting policy for property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial
amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease
incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be
incurred for dismantling and removing the underlying asset, and restoring the site or asset. The consolidated entity has elected not to recognise
a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease
payments on these assets are expensed to profit or loss as incurred.
Depreciation 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
Motor vehicles
Office equipment
4-7 years
4-5 years
2-8 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, which-
ever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is
over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity.
Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
14. Intangibles
Non-current assets
Goodwill – at cost
Trade marks and intellectual property – at cost
Less: Accumulated amortisation
2020
$
2019
$
10,987,134
1,030,018
670,125
(255,185)
465,871
(249,590)
414,940
216,281
11,402,074
1,246,299
SciDev Limited
| Annual Report 2020
45
Notes to the Financial Statements
For the year ended 30 June 2020
14. Intangibles continued
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Balance at 1 July 2018
Additions
Amortisation expense
Balance at 30 June 2019
Additions
Additions through business combinations (note 33)
Exchange differences
Adjustment
Amortisation expense
Trade marks &
intellectual
property
$
236,015
37,929
(57,663)
216,281
118,275
42,001
(2,897)
59,139
(17,859)
Goodwill
$
1,030,018
–
–
1,030,018
–
9,957,116
–
–
–
Total
$
1,266,033
37,929
(57,663)
1,246,299
118,275
9,999,117
(2,897)
59,139
(17,859)
Balance at 30 June 2020
10,987,134
414,940
11,402,074
Impairment testing
Goodwill acquired through business combinations have been allocated to the following cash-generating units (CGU), being geographical regions:
Australia
United States
2020
$
2019
$
3,002,084
7,985,050
1,030,018
–
10,987,134
1,030,018
The recoverable amount of the consolidated entity’s goodwill has been determined by a value-in-use calculation using a discounted cash flow
model, based on a 1 year projection period approved by the Directors and extrapolated for a further 4 years using variable rates, together with a
terminal value.
Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive.
Key assumptions in the discounted cashflow model for the Australia CGU include:
(a) Post-tax discount rate of 6% (2019: 15%) per annum;
(b) Average revenue growth over the five-year period of 43.9% (2019: 1,243%);
(c) Average growth in gross margin over the five-year period of 2.1% (2019: 1,433%); and
(d) Average per annum increase in operating expenses of 34.7% (2019: 5%).
Key assumptions in the discounted cashflow model for the United States CGU include:
(a) Post-tax discount rate of 6% per annum;
(b) Average revenue growth over the five-year period of 53.3%;
(c) Average growth in gross margin over the five-year period of 2.6%; and
(d) Average per annum increase in operating expenses of 26.4%.
The discount rate of 6% post-tax reflects management’s estimate of the time value of money and the weighted average cost of capital, the risk
free rate and the volatility of the share price relative to market movements.
Management believes the projected revenue growth rate is prudent and justified, based on management’s expectations of the business develop-
ment pipeline for each CGU.
The budgeted gross margin is based on past performance and management’s expectations for the future.
Management has budgeted for operating costs based on the current structure of each CGU, adjusting for inflationary increases but not reflecting
any future restructurings or cost saving measures.
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Sensitivity to change of assumptions
Increases in discount rates or changes in other key assumptions, may cause the recoverable amount to fall below carrying values. Based on
current economic conditions and CGU performances, there are no reasonably possible changes to key assumptions used in the determination of
CGU recoverable amounts that would result in a material impairment to the consolidated entity.
Accounting policy for intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the
acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are
subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any
impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference
between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are
reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation
method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently
if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment
losses on goodwill are taken to profit or loss and are not subsequently reversed.
Trade marks and intellectual property
Significant costs associated with trade marks and intellectual property are deferred and amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 10 years.
15. Deferred tax
Non-current assets
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Tax losses
Employee benefits
Accrued expenses
Deferred tax asset
Movements:
Opening balance
Credited to profit or loss (note 8)
Closing balance
16. Trade and other payables
Current liabilities
Trade payables
BAS payable
Other payables
2020
$
2019
$
1,306,813
49,849
7,700
1,364,362
–
1,364,362
1,364,362
–
–
–
–
–
–
–
2020
$
2019
$
7,823,591
238,775
437,820
783,397
52,937
173,195
8,500,186
1,009,529
Refer to note 26 for further information on financial instruments.
Accounting policy for trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are
unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually
paid within 30 days of recognition.
SciDev Limited
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47
Notes to the Financial Statements
For the year ended 30 June 2020
17. Borrowings
Non-current liabilities
Loan – Paycheck Protection Program (USA)
2020
$
2019
$
284,918
–
The loan has an interest rate of 1%.
The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses (located in the USA) to keep their workers
on the payroll. The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities. The following are the
key terms and conditions of the loan:
•
•
•
•
Loans issued prior to June 5 have a maturity of 2 years. Loans issued after June 5 have a maturity of 5 years.
Loan payments have been deferred for six months.
The loan is unsecured.
Refer to note 26 for further information on financial instruments.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank loan
Loan – Kanins International Pty Ltd
Loan – Paycheck Protection Program (USA)
Leases
Invoice purchase facility
Used at the reporting date
Bank loan
Loan – Kanins International Pty Ltd
Loan – Paycheck Protection Program (USA)
Leases
Invoice purchase facility
Unused at the reporting date
Bank loan
Loan – Kanins International Pty Ltd
Loan – Paycheck Protection Program (USA)
Leases
Invoice purchase facility
2020
$
2019
$
3,529,000
510,000
284,918
253,435
5,000,000
–
498,339
–
–
–
9,577,353
498,339
–
–
284,918
253,435
1,461,000
1,999,353
3,529,000
510,000
–
–
3,539,000
–
–
–
–
–
–
–
498,339
–
–
–
7,578,000
498,339
Bank loan – 26 September 2020
The above facilities have the following maturity dates:
•
•
•
•
Invoice purchase facility – no maturity date
Loan – Paycheck Protection Program – 29 April 2022
Loan – Kanins International Pty Ltd – 1 October 2020
Accounting policy for borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently
measured at amortised cost using the effective interest method.
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18. Lease liabilities
Current liabilities
Lease liability – land and buildings
Lease liability – motor vehicles
Non-current liabilities
Lease liability – land and buildings
Lease liability – motor vehicles
2020
$
2019
$
89,574
93,206
182,780
15,594
55,061
70,655
253,435
–
–
–
–
–
–
–
Refer to note 26 for further information on financial instruments.
Accounting policy for lease liabilities
The consolidated entity has applied AASB 16 ‘Leases’ from 1 July 2019 using the modified retrospective approach where the right-of-use asset
is recognised at the date of initial application at an amount equal to the lease liability, using the consolidated entity’s current incremental
borrowing rate and comparative information has not been restated. This means comparative information is still reported under AASB 117 and
Interpretation 4.
Accounting policy applicable from 1 July 2019
For any new contracts entered into on or after 1 July 2019, the consolidated entity considers whether a contract is, or contains a lease. A lease
is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for
consideration’. To apply this definition the consolidated entity assesses whether the contract meets three key evaluations which are whether:
•
the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the
time the asset is made available to the consolidated entity
•
•
the consolidated entity has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the
period of use, considering its rights within the defined scope of the contract
the consolidated entity has the right to direct the use of the identified asset throughout the period of use.
At lease commencement date, the consolidated entity recognises a right-of-use asset and a lease liability on the statement of financial position.
The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by
the consolidated entity, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in
advance of the lease commencement date (net of any incentives received).
The consolidated entity depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end
of the useful life of the right-of-use asset or the end of the lease term. The consolidated entity also assesses the right-of-use asset for impairment
when such indicators exist.
At the commencement date, the consolidated entity measures the lease liability at the present value of the lease payments unpaid at that date,
discounted using the interest rate implicit in the lease if that rate is readily available or the consolidated entity’s incremental borrowing rate.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any
reassessment or modification, or if there are changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit or loss if the right-of-use asset
is already reduced to zero.
The consolidated entity has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of
recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-
line basis over the lease term.
On the statement of financial position, right-of-use assets and lease liabilities are separately disclosed.
Accounting policy applicable before 1 July 2019
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of
whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits inci-
dental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.
SciDev Limited
| Annual Report 2020
49
Notes to the Financial Statements
For the year ended 30 June 2020
18. Lease liabilities continued
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of
minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to
achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the lease
term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the
lease.
19. Employee benefits
Current liabilities
Annual leave
Long service leave
Non-current liabilities
Long service leave
2020
$
2019
$
126,320
128
126,448
32,619
122,657
155,276
–
2,153
126,448
157,429
Accounting policy for employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within
12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present
value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit
credit method. Consideration 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 reporting date on high quality corporate bonds with terms to maturity and
currency that match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
20. Provisions
Current liabilities
Contingent consideration
Warranties
Non-current liabilities
Contingent consideration
2020
$
2019
$
267,031
18,227
285,258
313,500
598,758
–
–
–
–
–
Contingent consideration
The contingent consideration relates to the acquisition of ProSol Pty Ltd (refer note 33) and represents the cash component of the contingent
consideration. It is measured at the present value of the estimated liability.
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Movements in provisions
Movements in each class of provision during the current financial year, other than employee benefits, are set out below:
2020
Carrying amount at the start of the year
Additions through business combinations (note 33)
Exchange differences
Carrying amount at the end of the year
Contingent
consideration
$
Warranties
$
–
580,531
–
580,531
–
19,205
(978)
18,227
Accounting policy for provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable
the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount
recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into
account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current
pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.
21. Deferred tax
Non-current liabilities
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Brand names
Deferred tax liability
Movements:
Opening balance
Credited to profit or loss (note 8)
Closing balance
22. Issued capital
2020
$
2019
$
–
–
35,986
35,986
35,986
(35,986)
44,108
(8,122)
–
35,986
Ordinary shares – fully paid
140,889,052
107,263,157
89,874,533
76,899,789
2020
Shares
2019
Shares
2020
$
2019
$
SciDev Limited
| Annual Report 2020
51
Notes to the Financial Statements
For the year ended 30 June 2020
22. Issued capital continued
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
Share placement
Share placement
Share consolidation (10 to 1)
Shares issued to Nuoer Chemical Australia Pty Ltd
Shares issued to employees of Nuoer Chemical Australia Pty Ltd
Share placement
Entitlements issue
Share placement
Share issue transaction costs
Balance
Share placement
Options exercised
Options exercised
Options exercised
Options exercised
Options exercised
Options exercised
Shares issued to service provider
Options exercised
Shares issued to acquire ProSol Australia Pty Ltd
Options exercised
Options exercised
Options exercised
Options exercised
Shares issued to acquire Highland Fluid Technology Inc.
Options exercised
Share issue expenses
Options exercised – transfer from share-based payments reserve
1 July 2018
10 August 2018
11 August 2018
4 December 2018
12 February 2019
12 February 2019
12 February 2019
13 March 2019
9 April 2019
30 June 2019
20 September 2019
3 October 2019
3 October 2019
3 October 2019
1 November 2019
19 November 2019
19 November 2019
19 November 2019
19 November 2019
25 November 2019
13 December 2019
16 January 2020
10 February 2020
27 February 2020
28 February 2020
26 June 2020
569,041,473
52,443,867
16,666,667
(574,336,806)
1,666,667
5,000,000
1,166,666
22,614,624
12,999,999
–
107,263,157
16,000,000
100,000
200,000
2,250,000
200,000
500,000
50,000
192,307
650,000
684,000
675,000
350,000
75,000
325,000
11,349,588
25,000
–
–
Balance
30 June 2020
140,889,052
$0.006
$0.006
$0.000
$0.060
$0.060
$0.060
$0.060
$0.060
$0.000
$0.260
$0.250
$0.250
$0.250
$0.250
$0.250
$0.250
$0.260
$0.250
$0.590
$0.120
$0.120
$0.120
$0.120
$0.650
$0.120
$0.000
$0.000
74,118,627
314,663
100,000
–
100,000
300,000
70,000
1,266,949
780,000
(150,450)
76,899,789
4,160,000
25,000
50,000
562,500
50,000
125,000
12,500
50,000
162,500
403,560
81,000
42,000
9,000
39,000
7,377,232
3,000
(299,598)
122,050
89,874,533
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number
of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of
authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
Share placements and shares issued to service provider
•
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
Meeting of the company was held on 2 August 2018 to approve matters relating 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.
•
30 June 2020
On 20 September 2019 SciDev Limited announced the placement of 16,000,000 new ordinary shares with local institutional and sophisti-
cated investors at an issue price of $0.26 per share. the company issued 192,307 ordinary shares to the advisor assisting with the placement
for services rendered.
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Shares issued to Nuoer China and nominees of Nuoer China
On 12 February 2019, 1,666,667 shares were issued to Nuoer China at a price of 6 cents per share and 5,000,000 shares were issued to employees
of Nuoer Chemical Australia Pty Ltd at price of 6 cents per share.
Shares issued to acquire ProSol Australia Pty Ltd
On 25 November 2019 SciDev Limited issued 684,000 ordinary shares at $0.59 per share to acquire ProSol Australia Pty Ltd (refer note 33).
Shares issued to acquire Highland Fluid Technology Inc
On 28 February 2020 SciDev Limited issued 11,349,588 ordinary shares at $0.65 per share to acquire Highland Fluid Technology Inc (refer note 33).
Entitlements 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 entitlements issue.
Share consolidation
On 4 December 2018 the company completed a 10 to 1 consolidation of its issued shares and options.
Capital risk management
The consolidated entity’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide
returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings
less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to
the current company’s share price at the time of the investment. The consolidated entity is not actively pursuing additional investments in the
short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
There are no externally imposed capital requirements.
The capital risk management policy remains unchanged from the 2019 Annual Report.
The consolidated entity monitors capital on the basis of its working capital position (i.e. liquidity risk). The net working capital of the consolidated
entity at 30 June 2020 was $2,548,047 (2019: $1,684,507).
Accounting policy for issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
23. Other equity
Contingent consideration
2020
$
2019
$
569,975
–
The contingent consideration relates to the acquisition of ProSol Pty Ltd (refer note 33) and represents the fair value of the consideration to be
settled by the issue of SciDev Ltd shares.
24. Reserves
Foreign currency reserve
Share-based payments reserve
Transactions with non-controlling interests
2020
$
2019
$
(36,310)
168,987
–
–
2,855,902
(645,199)
132,677
2,210,703
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian
dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign operations.
SciDev Limited
| Annual Report 2020
53
Notes to the Financial Statements
For the year ended 30 June 2020
24. Reserves continued
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties
as part of their compensation for services.
Transactions with non-controlling interests
A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the considera-
tion transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable 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 2018
Balance at 30 June 2019
Foreign currency translation
Share-based payments
Options exercised and lapsed
Transfer to accumulated losses
Balance at 30 June 2020
25. Dividends
Foreign
currency
reserve
Share-based
payments
reserve
Transactions
with non-
controlling
interests
$
$
Total
$
$
–
–
(36,310)
–
–
–
2,855,902
(645,199)
2,210,703
2,855,902
–
199,029
(2,885,944)
–
(645,199)
–
–
–
645,199
2,210,703
(36,310)
199,029
(2,885,944)
645,199
(36,310)
168,987
–
132,677
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Franking credits
2020
$
2019
$
Franking credits available for subsequent financial years based on a tax rate of 27.5%
–
82,824
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
(a)
(b)
(c)
franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
26. Financial instruments
Financial risk management objectives
The consolidated entity’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate
risk), credit risk and liquidity risk. The consolidated entity’s overall risk management program focusses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity does not enter
into or trade financial instruments, including derivative financial instruments, for speculative purposes.
Risk management is carried out by company management and the Board of Directors. Financial risks are identified and evaluated and, where
considered necessary, strategies are put in place to investigate and/or minimise such risks.
Market risk
Foreign currency risk
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is
not the entity’s functional currency. The consolidated entity has a trade finance facility utilised for the purchase of US$ denominated invoices.
Purchases through the facility are transacted at the prevailing spot A$/US$ exchange rate and the outstanding amount under the facility is
always denominated in A$. The consolidated entity has not entered into any foreign currency hedging contracts during the year.
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The carrying amount of the consolidated entity’s foreign currency denominated financial assets and financial liabilities at the reporting date were
as follows:
Assets
Liabilities
2020
$
2019
$
2020
$
2019
$
US dollars
126,688
–
6,872,057
–
The consolidated entity had net liabilities denominated in foreign currencies of $6,745,369 (assets of $126,688 less liabilities of $6,872,057) as at
30 June 2020. Based on this exposure, had the Australian dollar weakened/strengthened by 10% against these foreign currencies with all other
variables held constant, the consolidated entity’s profit before tax for the year would have been $674,537 lower/higher and equity would have
been $674,537 lower/higher. The percentage change is the expected overall volatility of the USD, which is based on management’s assessment
of reasonable possible fluctuations taking into consideration movements over the last 12 months each year and the spot rate at each reporting
date. The actual foreign exchange gain for the year ended 30 June 2020 was $114,063.
Price risk
The consolidated entity is not exposed to any significant price risk.
Interest rate risk
The consolidated entity’s main interest rate risk arises from borrowings. Borrowings obtained at variable rates expose the consolidated entity to
interest rate risk. Borrowings obtained at fixed rates expose the consolidated entity to fair value interest rate risk.
Credit risk
The consolidated entity has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the
use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the
consolidated entity based on recent sales experience, historical collection rates and forward-looking information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor
to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year.
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity.
There is no significant concentration of credit risk to any single entity. The maximum exposure to credit risk at the reporting date to recognised
financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position
and notes to the financial statements. There is no trade debtor or other receivable amount where collateral has been received as security or
pledged.
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) and
available borrowing facilities to be able to pay debts as and when they become due and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously moni-
toring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Remaining contractual maturities
The following tables detail the consolidated entity’s remaining contractual maturity for its financial instrument liabilities. The tables have been
drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to
be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may
differ from their carrying amount in the statement of financial position.
2020
Non-interest bearing
Trade payables and other payables
Contingent consideration
Interest-bearing – variable
Lease liability
Interest-bearing – fixed rate
Other loans
Total non-derivatives
1 year
or less
$
$
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
$
–
–
–
–
–
$
–
–
–
–
–
Remaining
contractual
maturities
$
8,500,186
580,531
253,435
284,918
9,619,070
8,500,186
267,031
–
313,500
182,780
70,655
–
284,918
8,949,997
669,073
SciDev Limited
| Annual Report 2020
55
Notes to the Financial Statements
For the year ended 30 June 2020
26. Financial instruments continued
2019
Non-interest bearing
Trade payables and other payables
Total non-derivatives
1 year
or less
$
1,009,529
1,009,529
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
$
–
–
$
–
–
$
–
–
Remaining
contractual
maturities
$
1,009,529
1,009,529
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.
27. Fair value measurement
Fair value hierarchy
The following tables detail the consolidated entity’s assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based
on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date
Level 2:
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3: Unobservable inputs for the asset or liability
2020
Assets
Equity securities
Equity securities – other
Total assets
Liabilities
Contingent consideration
Total liabilities
2019
Assets
Equity securities
Equity securities – other
Total assets
There were no transfers between levels during the financial year.
Level 1
$
–
–
–
–
–
–
–
–
Level 2
$
1,500,000
2,900
1,502,900
Level 3
$
–
–
–
Total
$
1,500,000
2,900
1,502,900
–
–
580,531
580,531
580,531
580,531
1,500,000
2,900
1,502,900
–
–
–
1,500,000
2,900
1,502,900
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Valuation techniques for fair value measurements categorised within level 2 and level 3
•
Equity securities
The equity securities represent the non-cash consideration received from the disposal of a subsidiary to an unlisted entity. The fair value of
these financial assets has been determined referrable to the adopted issue price of the equity securities at the date of their issue
($0.10 per share) and that value has been impairment tested each subsequent reporting period (without impairment being required) based
on consideration of a combination of: the proposed initial public offer (IPO) price the unlisted entity had expected when it proposed listing
on the ASX, which has been withdrawn ($0.20 cents per share); the conversion price of certain convertible notes issued by the unlisted entity
($0.125 per share), the pricing of a currently proposed rights issue to be carried out by the unlisted entity ($0.125 per share) and the net asset
backing of the entity at 30 June 2020 ($0.08 per share).
•
Contingent consideration
The valuation model for the contingent consideration considers the present value of expected future payments, discounted using a risk-
adjusted discount rate. The significant unobservable inputs are the assumed probability-adjusted revenue. The estimate of the input is 93%
and an increase to 100% (decrease to 86%) would increase (decrease) fair value by $46,469.
Level 3 assets and liabilities
Movements in level 3 assets and liabilities during the current and previous financial year are set out below:
Balance at 1 July 2018
Balance at 30 June 2019
Transfers into level 3
Balance at 30 June 2020
Contingent
consideration
$
–
–
580,531
Total
$
–
–
580,531
580,531
580,531
There were no gains or losses relating to level 3 assets held at the end of the current year.
Accounting policy for fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measure-
ment date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most
advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their
economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that
are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant
observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs
used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a
reassessment of the lowest level of input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when
the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant
change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs
applied in the latest valuation and a comparison, where applicable, with external sources of data.
28. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
2020
$
992,885
56,386
16,232
143,029
2019
$
699,762
63,114
5,165
130,000
1,208,532
898,041
SciDev Limited
| Annual Report 2020
57
Notes to the Financial Statements
For the year ended 30 June 2020
29. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Rothsay Chartered Accountants, the auditor of the
company:
Audit services – Rothsay Chartered Accountants
Audit or review of the financial statements
Other services – Rothsay Chartered Accountants
Tax compliance services
30. Commitments
Lease commitments under AASB 117 Leases:
Lease commitments – operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
2020
$
2019
$
40,000
37,292
–
40,000
5,500
42,792
2020
$
2019
$
–
–
–
110,304
134,011
244,315
Operating lease commitments includes contracted amounts for various warehouses, offices and plant and equipment under non-cancellable
operating leases expiring within 1 - 3 years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the
terms of the leases are renegotiated.
31. Related party transactions
Parent entity
SciDev Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 34.
Key management personnel
Disclosures relating to key management personnel are set out in note 28 and the remuneration report included in the directors’ report.
Transactions with related parties
Details of transactions between the consolidated entity and related parties 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 transactions:
Subscription for new ordinary shares by key management personnel as result of share placement
2020
$
2019
$
–
–
–
–
–
675,446
118,050
360,851
3,539
121,301
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| SciDev Limited
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current receivables:
Trade receivables from other related party
2020
$
2019
$
–
252,307
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Balances and transactions between the company and its subsidiaries, which are related parties of the company, have been eliminated on
consolidation and are not disclosed in this note.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
32. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Other comprehensive income for the year, net of tax
Total comprehensive income
Statement of financial position
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Other equity
Share-based payments reserve
Accumulated losses
Total equity
Parent
2020
$
2019
$
(542,813)
(1,081,461)
–
–
(542,813)
(1,081,461)
Parent
2020
$
2019
$
446,893
1,161,944
19,663,035
5,293,273
20,109,928
6,455,217
617,439
369,778
329,094
926
946,533
370,704
19,163,395
6,084,513
90,181,048
569,975
76,979
(71,664,607)
77,206,307
–
2,763,894
(73,885,688)
19,163,395
6,084,513
SciDev Limited
| Annual Report 2020
59
Notes to the Financial Statements
For the year ended 30 June 2020
32. Parent entity information continued
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2020 and 30 June 2019.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2020 and 30 June 2019.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020 and 30 June 2019.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 2, except for the following:
•
•
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impair-
ment of the investment.
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
33. Business combinations
Summary of acquisitions
Acquisition of Highland Fluid Technology Inc
On 1 March 2020 SciDev Limited acquired 100% of issued capital of Highland Fluid Technology Inc (Highland). Highland provides a range of chemi-
cals and services to the oil and gas sector, bringing together technology and chemistry to improve water recovery, fluid economics and extraction
performance. The acquisition provides access to the US oil and gas sector and complements the consolidated entity’s existing business.
The total consideration for the acquisition was $7,377,232 consisting of 11,349,588 SciDev Limited shares valued at 65 cents per share.
The goodwill of 7,985,050 is attributable to the growth expectations, expected future profitability, the workforce of the acquired business and
expected synergies. The goodwill will not be deductible for tax purposes.
Acquisition of ProSol Australia Pty Limited
On 28 November 2019 SciDev Limited acquired 100% of the issued capital of ProSol Australia Pty Limited (Prosol). ProSol is a engineering and
chemistry business providing services to the mining and water treatment industries. ProSol was acquired to provide for faster market access for
SciDev Optiflox technology into the Hunter Valley Coal Fields through ProSol’s existing relationships and other synergies with the existing SciDev
operations.
The total consideration for the acquisition was $2,482,079 consisting of a cash payment of $928,013, 684,000 SciDev Limited shares valued at
$403,560 and contingent consideration of $1,150,506. The contingent consideration is based on the sales achieved during the earn-out period and
is payable in cash and SciDev Limited shares in 2 tranches on 31 July 2020 and 31 July 2021 respectively. The fair value of the of the contingent
consideration arrangement was estimated using a discounted cash flow (DCF) method. The key assumption was the assumed probability-
adjusted revenues.
The goodwill of $1,972,506 is attributable to the key customers, its workforce and expected future benefits of the acquired business. The goodwill
will not be deductible for tax purposes.
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Details of the acquisition are as follows:
Cash and cash equivalents
Trade receivables
Inventories
Prepayments
Plant and equipment
Motor vehicles
Right-of-use assets – motor vehicles
Intellectual property
Security deposits
Trade payables
Other payables
Employee benefits
Warranty provision
Bank loans
Lease liability
Net assets/(liabilities) acquired
Goodwill
Highland Fluid
Technology Inc
Fair value
$
55,673
1,304,185
195,145
141,562
94,634
–
91,857
42,001
13,175
(1,355,581)
(443,214)
–
(19,205)
(629,999)
(98,051)
ProSol
Australia
Pty Ltd
Fair value
$
1,575
104,196
308,400
–
102,148
41,040
–
–
–
(41,453)
(3,268)
(2,625)
–
–
–
(607,818)
7,985,050
510,013
1,972,066
Total
$
57,248
1,408,381
503,545
141,562
196,782
41,040
91,857
42,001
13,175
(1,397,034)
(446,482)
(2,625)
(19,205)
(629,999)
(98,051)
(97,805)
9,957,116
Acquisition-date fair value of the total consideration transferred
7,377,232
2,482,079
9,859,311
Representing:
Cash paid to vendor
SciDev Limited shares issued to vendor
Contingent consideration
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: cash and cash equivalents
Less: contingent consideration – cash
Less: contingent consideration – shares
Less: shares issued by company as part of consideration
Net cash used/(received)
–
7,377,232
–
928,013
403,560
1,150,506
928,013
7,780,792
1,150,506
7,377,232
2,482,079
9,859,311
7,377,232
(55,673)
–
–
(7,377,232)
2,482,079
(1,575)
(580,531)
(569,975)
(403,560)
9,859,311
(57,248)
(580,531)
(569,975)
(7,780,792)
(55,673)
926,438
870,765
SciDev Limited
| Annual Report 2020
61
Notes to the Financial Statements
For the year ended 30 June 2020
33. Business combinations continued
Revenue and profit contribution
If the acquisitions had occurred on 1 July 2019, the consolidated pro-forma revenue and profit for the year ended 30 June 2020 would have been
as follows:
Highland Fluid
Technology Inc
$
ProSol
Australia
Pty Ltd
$
SciDev Ltd
and its other
controlled
entities
$
Total
$
Revenue
7,593,921
3,392,724
15,291,358
26,278,003
Net profit/(loss) for the period after tax
(2,126,678)
321,610
(733,378)
(2,538,446)
The amounts in the above table have been calculated using the results of each subsidiary and adjusting them for:
•
•
differences in the accounting policies between the consolidated entity and the subsidiary, and
the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to property, plant and
equipment and intangible assets had applied from 1 July 2019, together with the consequential tax effects.
The acquired businesses contributed the following revenues and net profit to the consolidated entity from the dates of their respective
acquisitions to 30 June 2020:
Revenue
Net profit/(loss) for the period after tax
Acquired receivables
Fair value of acquired receivables
Gross contractual amount due
Loss allowance recognised on acquisition
Acquisition-related costs
Highland Fluid
Technology Inc
$
ProSol
Australia
Pty Ltd
$
Total
$
1,011,971
2,456,468
3,468,439
(656,781)
157,100
(499,681)
Highland Fluid
Technology Inc
$
ProSol
Australia
Pty Ltd
$
Total
$
1,304,185
(1,304,185)
104,196
(104,196)
1,304,185
(1,304,185)
-
-
-
Acquisition-related costs totalling $88,045 that were not directly attributable to the issue of shares are included in Engineering and other consult-
ants expenses and Professional fees in the statement of profit or loss and other comprehensive income.
Accounting policy for business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are
acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities
incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business
combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree’s identifiable
net assets. All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for appropriate classifica-
tion and designation in accordance with the contractual terms, economic conditions, the consolidated entity’s operating or accounting policies
and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest in the acquiree at the
acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value
of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted for within equity.
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| SciDev Limited
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and
the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the
consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase
to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassess-
ment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration
transferred and the acquirer’s previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised
and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and
circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the
acquisition or (ii) when the acquirer receives all the informatio n possible to determine fair value.
34. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 2:
Name
Highland Fluid Technology Inc
Intec Copper Pty Ltd
Intec Environmentals Pty Ltd
ProSol Australia Pty Ltd
Science Developments Pty Ltd
SciDev International Holdings Pty Ltd
SciDev (US) LCC*
Principal place of business/
Country of incorporation
United States
Australia
Australia
Australia
Australia
Australia
United States
Ownership interest
2020
%
100%
100%
100%
100%
100%
100%
100%
2019
%
–
100%
100%
–
100%
100%
100%
* SciDev (US) LCC is a wholly-owned subsidiary of SciDev International Holdings Pty Ltd.
35. Events after the reporting period
On 9 July 2020, SciDev announced that it had extended its Services Agreement with the CYP Design and Construction Joint Venture (CYP D&C) on
the Melbourne Metro Tunnel Project’s works package to include the supply of SciDev’s bespoke MaxiDry® chemistry and Optiflox® technology.
On 16 July 2020, SciDev Limited announced that it was undertaking a $7 million capital raising, comprising:
•
A $5 million share placement via the issue of 7,692,308 shares at an issue price of 65 cents per share. The placement was taken up in full by
two leading Australian Fund Managers.
•
A share purchase plan (SPP) capped at $2 million. The SPP was heavily oversubscribed and closed on 14 August 2020. The SPP subscriptions
were scaled back on a pro-rata basis to the $2 million cap, resulting in 3,076,923 new SciDev shares being issued on 21 August 2020.
On 21 July 2020, SciDev announced it had partnered with Flotek (NYSE: FTK) to deliver friction reducing chemistry to be used in the initial 4-wells of
a 20-well drilling program in the Eagle Ford Shale Basin in Texas, USA.
On 24 July 2020, SciDev Limited announced that it had completed a $5 million share placement with the issue of 7,692,308 shares at an issue
price of 65 cents per share. The placement was taken up in full by two leading Australian Fund Managers.
On 20 August 2020, SciDev announced the trial of chemistry at BHP’s Olympic Dam operation in South Australia.
No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the consolidated
entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future financial years.
SciDev Limited
| Annual Report 2020
63
Notes to the Financial Statements
For the year ended 30 June 2020
36. Cash flow information
Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax benefit/(expense) for the year
Adjustments for:
Depreciation and amortisation
Share-based payments
Write off of assets
Net loss on disposal of non-current assets
Other – non-cash
Foreign currency differences
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Increase in inventories
Increase in deferred tax assets
Decrease/(increase) in prepayments
Increase in trade and other payables
Decrease in deferred tax liabilities
Decrease in employee benefits
Increase in other provisions
Decrease in other operating liabilities
2020
$
2019
$
(875,238)
(2,032,527)
377,760
199,029
(59,139)
6,902
(32,623)
(24,643)
44,444
(4,037,153)
(1,364,362)
10,987
5,647,141
(35,986)
(33,606)
579,553
(580,531)
212,767
–
–
27,621
6,250
–
(334,403)
(28,141)
–
(20,925)
639,250
(8,122)
(9,818)
–
–
Net cash used in operating activities
(177,465)
(1,548,048)
Non-cash investing and financing activities
Shares issued to acquire ProSol Australia Pty Ltd
Shares issued to acquire Highland Fluid Technology Inc.
Additions to right-of-use assets
Changes in liabilities arising from financing activities
Balance at 1 July 2018
Net cash used in financing activities
Balance at 30 June 2019
Net cash used in financing activities
Recognition on adoption of AASB 16
Changes through business combinations (note 33)
2020
$
2019
$
403,560
7,377,232
186,480
Lease
liabilities
$
31,938
(31,938)
–
(31,096)
186,480
98,051
–
–
–
Total
$
31,938
(31,938)
–
(376,177)
186,480
728,050
Borrowings
$
–
–
–
(345,081)
–
629,999
Balance at 30 June 2020
284,918
253,435
538,353
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| SciDev Limited
37. Earnings per share
Loss after income tax attributable to the owners of SciDev Limited
(875,238)
(2,032,527)
Weighted average number of ordinary shares used in calculating basic earnings per share
127,531,298
75,683,979
Weighted average number of ordinary shares used in calculating diluted earnings per share
127,531,298
75,683,979
Number
Number
2020
$
2019
$
Basic earnings per share
Diluted earnings per share
Cents
Cents
(0.69)
(0.69)
(2.69)
(2.69)
Options are considered to be potential ordinary shares but were anti-dilutive in nature and therefore the diluted loss per share is the same as the
basic loss per share. These options could potentially dilute basic earnings per share in the future.
Share transactions after the end of the reporting period
The company issued 10,769,231 ordinary shares in terms of a share placement (7,692,308 shares) and share purchase plan (3,076,923 shares) in
July and August 2020 respectively – refer note 35. These share transactions would have changed the number of ordinary shares outstanding at
30 June 2020 by 10.8% if these transactions had occurred before the end of the reporting period.
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of SciDev Limited, excluding any costs of servicing equity
other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax
effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
38. Share-based payments
Employee Share Scheme
Share based compensation benefits are provided to employees via the SciDev Employee Share Scheme.
At the 2014 Annual General Meeting, shareholders approved the SciDev Employee Share Scheme (the Scheme). All Directors, employees and
consultants are eligible to participate in the Scheme. Options granted under the Scheme to eligible participants are for no additional considera-
tion. Options granted under the Scheme carry no dividend or voting rights. The granting of options is at the Board’s discretion and no individual
has a contractual right to receive options.
On 14 August 2017, the company granted 6.5 million unquoted options to executives and staff (not Directors). The options had an exercise price of
$0.25, vested on grant date and had an expiry date of 28 November 2019. The value of the options granted was $30,568.
On 16 May 2019, the Nomination & Remuneration Committee recommended, and the Board approved that the Company granted 5,350,000
unquoted options, 2,000,000 options have an exercise price of $0.10 and 3,350,000 options have an exercise price of $0.12. All options have
an expiry date of 23 July 2022. As noted below, the Managing Director & Chief Executive Officer was ultimately issued 1,600,000 options at an
exercise price of $0.10, being less than his contracted entitlement (2,500,000), and less than approved by Shareholders approval (2,000,000), as a
result of his voluntary allocation to other executives and new staff.
On 16 May 2019, the company granted 2,200,000 unquoted options to executives and staff (not Directors). 2,200,000 options have an exercise
price of $0.12. All options have an expiry date of 23 July 2022. The first tranche of 1,100,000 options were not subject to any vesting conditions and
vested on grant date and the second tranche of 1,100,000 options are subject to a service vesting condition. The value of the options granted was
$151,889.
SciDev Limited
| Annual Report 2020
65
Notes to the Financial Statements
For the year ended 30 June 2020
38. Share-based payments continued
On 23 July 2019, following the 16 May 2019 Board approval, the company held a General Meeting which approved the grant of 2,750,000
unquoted options to Directors. All options have an expiry date of 23 July 2022. The Managing Director was granted 1,600,000 options. The options
granted to the Managing Director have an exercise price of $0.10 and are subject to a non-market performance vesting condition. The Non-
executive Directors were granted 1,150,000 options which have an exercise price of $0.12 and which vested on grant date. The value of the options
granted to the Directors was $78,247.
On 3 February 2020, the company granted 150,000 unquoted options to the Chief Financial Officer. The options have an expiry date of
23 July 2022. The first tranche of 75,000 options were not subject to any vesting conditions and vested on grant date and the second tranche
of 75,000 options are subject to a service vesting condition. The value of the options granted was $95,275.
Other share-based payments
On 2 February 2017 the company granted 22,500,000 options to the Lead Manager and Underwriter for services rendered in connection with the
placement of shares and the share purchase plan. The options had an exercise price of $0.25, vested on grant date and had an expiry date of
28 November 2019. The value of the options granted was $160,828. All options were exercised.
On 28 December 2017, the company granted 5 million unquoted options to a key service provider (non-Director) for services rendered. The options
had an exercise price of $0.25, vested on grant date and had an expiry date of 28 November 2019. The value of the options granted was $10,912.
All options were exercised.
Set out below are summaries of options granted:
2020
Grant date
Expiry date
10/12/2014
02/02/2017
14/08/2017
28/12/2017
16/05/2019
16/05/2019
23/07/2019
23/07/2019
11/11/2019
03/02/2020
28/11/2019
28/11/2019
28/11/2019
28/11/2019
23/07/2022
23/07/2022
23/07/2022
23/07/2022
23/07/2022
23/07/2022
Exercise
price
$0.250
$0.250
$0.250
$0.250
$0.100
$0.120
$0.100
$0.120
$0.120
$0.120
Balance at
the start
of the year
550,000
2,250,000
650,000
500,000
–
–
–
–
–
–
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end
of the year
–
–
–
–
400,000
1,750,000
1,600,000
1,150,000
150,000
150,000
(550,000)
(2,250,000)
(650,000)
(500,000)
–
(400,000)
–
(900,000)
(75,000)
(75,000)
–
–
–
–
–
(25,000)
–
–
–
–
–
–
–
–
400,000
1,325,000
1,600,000
250,000
75,000
75,000
3,950,000
5,200,000
(5,400,000)
(25,000)
3,725,000
Weighted average exercise price
$0.250
$0.112
$0.215
$0.120
$0.109
The weighted average share price at the date of exercise of options exercised during the year ended 30 June 2020 was $0.52.
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
$0.250
$0.250
$0.250
$0.250
Balance at
the start
of the year
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)
550,000
2,250,000
650,000
500,000
(35,550,000)
3,950,000
Weighted average exercise price
$0.025
$0.000
$0.000
$0.000
$0.250
* Included in expired/forfeited/other is the effect of the 10:1 share/option consolidation that was completed on 4 December 2018.
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Set out below are the options exercisable at the end of the financial year:
Grant date
Expiry date
10/12/2014
02/02/2017
14/08/2017
28/12/2017
16/05/2019
23/07/2019
01/11/2019
03/02/2020
28/11/2019
28/11/2019
28/11/2019
28/11/2019
23/07/2022
23/07/2022
23/07/2022
01/01/2015
2020
Number
2019
Number
–
–
–
–
1,725,000
1,850,000
75,000
75,000
550,000
2,250,000
650,000
500,000
–
–
–
–
3,725,000
3,950,000
The weighted average remaining contractual life of options outstanding at the end of the financial year was 2.06 years (2019: 0.41 years).
Measurement of fair values:
Options that vested on grant date were valued at their intrinsic value.
The fair value of options granted, that were subject to service conditions, were measured using the Black-Scholes option pricing model.
The valuation model inputs used to determine the fair value at the grant date, are as follows:
Grant date
Expiry date
Share price at
grant date
Exercise price
Expected
volatility
Dividend yield
Risk-free
interest rate
Fair value at
grant date
16/05/2019
16/05/2019
23/07/2019
23/07/2019
11/11/2019
03/02/2020
23/07/2022
23/07/2022
23/07/2022
23/07/2022
23/07/2022
23/07/2022
$0.082
$0.082
$0.185
$0.185
$0.682
$0.724
$0.100
$0.120
$0.100
$0.120
$0.120
$0.120
7.31%
7.31%
72.07%
72.07%
149.77%
152.68%
–
–
–
–
–
–
1.19%
1.19%
0.94%
0.94%
0.87%
0.06%
$0.00002
$0.00002
$0.11710
$0.10880
$0.62880
$0.66320
The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to
future volatility due to publicly available information.
The total expense arising from share-based payment transactions recognised during the period as part of employee benefits expense was
$199,029 (2019: $nil).
Accounting policy for share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services.
Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share
price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial
or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of
the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the
employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumula-
tive charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely
to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at
each reporting date less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the Binomial or Black-
Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The cumulative charge to
profit or loss until settlement of the liability is calculated as follows:
•
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired portion of the
vesting period.
•
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to settle the liability.
SciDev Limited
| Annual Report 2020
67
Notes to the Financial Statements
For the year ended 30 June 2020
38. Share-based payments continued
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to
vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is
recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as
at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancel-
lation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining
expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised imme-
diately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.
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Directors’ Declaration
In the directors’ opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity’s financial position as
at 30 June 2020 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Lewis E Utting
Managing Director & Chief Executive Officer
26 August 2020
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69
Independent Auditor’s Report
To the members of SciDev Limited
Opinion
We have audited the financial report of SciDev Limited (the “Company”) and its controlled entities (the “Group”), which
comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss
and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion the financial report of the Group is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the year ended
on that date; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent
of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical require-
ments of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the
Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of
the Group, would be in the same terms if given to the directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
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Key Audit Matter – Goodwill
How our Audit Addressed the Key Audit Matter
Impairment
Our procedures included:
The impairment assessment made by
management over the Company’s goodwill
balance is a key audit matter as it incor-
porates significant judgments in respect of
factors such as forecast cash flows, growth
rates and discount rates as well as economic
assumptions such as inflation.
•
•
•
•
•
Assessing management’s determination of the Group’s CGUs based on
our understanding of the group. We also compared this to the internal
reporting of the group to assess how revenue is reported.
Evaluating management’s cash flow forecast along with the assump-
tions and methodologies used. We also took into consideration the
results of the current year actual results to the prior forecasts to assess
managemen’ts ability to accurately forecast results.
Evaluating the assessment performed by management to ensure the
methodology appeared reasonable and the assumptions noted in the
forecasts were accurately reflected.
Reviewing the discounting applied to determine if it was reasonable in
the current market and reflective of the rate of interest the Group would
be able to obtain finance if required.
Verifying the calculations for mathematical accuracy and considered the
sensitivity of the calculation by varying the assumptions and applying
other values within a reasonable range.
Key Audit Matter - Income Taxes
How our Audit Addressed the Key Audit Matter
We considered the Group’s historical performance and prospects of being
profitable in the future.
We also considered the reasonableness of the deferred tax assets recognised
with reference to tax rules regarding recoverability of historical losses.
In the current year the Group has recognised
deferred tax assets on timing differences and
unused tax losses.
This was considered a key audit matter given
the significant judgement in determining
the appropriateness of recording these carry
forward losses as a deferred tax asset.
Other Information
The directors are responsible for the other information. The other information comprises th e information included in the Group’s
annual report for the year ended 30 June 2020 but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibility of Directors for the Financial Report
The directors of the Group are responsible for the preparation of the financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement,
whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibility for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstate-
ment, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level
of assurance but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect
a material misstatement when it exists.
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71
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of the financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
•
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the
financial report represents the underlying transactions and events in a manner that achieves fair presentation.
We communicate with the directors regarding, amongst other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence,
and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in the audit of
the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 19 to 25 of the Directors’ Report for the year ended 30 June 2020.
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on
our audit conducted in accordance with Australian Auditing Standards.
Opinion on the Remuneration Report
In our opinion, the Remuneration Report of SciDev Limited, for the year ended 30 June 2020, complies with section 300A of the
Corporations Act 2001.
Rothsay Chartered Accountants
Frank Vrachas
Partner
Sydney, 26 August 2020
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Additional ASX Information
Shareholder Information
The shareholder information set out below was applicable as at 7 October 2020.
A. Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Name
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
B. Substantial holders
Substantial shareholders as at 7 October 2020 are listed below:
Perennial Value Management Limited (PVM)
Australian Super Pty Ltd
11.41%
6.59%
Class of equity security
Ordinary shares
Number of Shareholders
Number of Shares
558
842
402
716
164
237,960
2,295,662
3,189,037
22,899,135
123,598,448
2,682
152,220,242
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| Annual Report 2020
73
Additional ASX Information
B. Substantial holders continued
Equity security holders
The names of the twenty largest holders of quoted equity securities as at 7 October 2020 are listed below:
Name
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES AUSTRALIA
JIANFENG ZHANG & YANGMEI ZHENG
MR LEWIS EDWARD UTTING & MS HELENA ELISABETH LEHOS
KANINS AUSTRALIA PTY LTD
BNP PARIBAS NOMS PTY LTD
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