SciDev Limited Annual Report 2021

Plain-text annual report

Annual Report 2021 Making water work harder >80% of our staff are tertiary educated as scientists, engineers and chemists >20% operational efficiency generated 150 hours of research per client to develop a bespoke chemistry solution to meet our clients specific requirements 12 new solutions developed and commercialised by SciDev since 2019 to specifically address a clients unique environmental problem 1000 mega litres of water treated generating <150 tonnes of waste 10m tonnes of dry tailings treated preventing >200 million litres of water passing into tailings dams 2 SCIDEV LIMITEDANNUAL REPORT 2021 Contents Chairman’s Letter Managing Director & CEO’s Letter Review of Operations Sustainability Directors Report Remuneration Report Auditor’s Independence Declaration Statement of Profit and Loss Statement of Financial Position Statement of Changes in Equity Statement of Cash Flow Notes to the Financial Statements Director’s Declaration Independent Auditor’s Report Additional ASX Information Corporate Directory 4 5 9 14 17 20 32 33 34 35 36 37 76 77 82 84 Lewis Utting, our very capable CEO, has surrounded himself with some exceptionally skilled senior executives. When you combine this expertise and energy, the potential market size and increasing environmental issues associated with water, I believe we have a great opportunity to build a global environmental services company. With considerable scope to expand our current operational footprint across our four key verticals, I look forward to being a part of the future sustainable growth of the Company. Yours sincerely, Vaughan Busby VAUGHAN BUSBY Letter from the Chairperson Working closely with my fellow Board members and the SciDev team, I am confident that our environmentally sustainable technologies and solutions will continue to play an important role in solving water problems on a global scale. Dear Shareholder, FY21 has been a pivotal year for the company with revenues more than doubling to $42.5m and the company posting an after-tax profit of $3.4m. Credit for this excellent result must go to Lewis and the management team as well as the outgoing Chairman, Trevor Jones who retired at the end of FY21 after 13 years in the role. Trevor has played a crucial role in the Company’s development and I’d like to take this opportunity, on behalf of the Board, to thank him for his hard work. It is an honour to join your Board as Chairman at an exciting time in the Company’s development. Over the last 12 months, SciDev has had impressive growth securing major new contracts, expanding its sales pipeline and strengthening its market position through strategic acquisitions. The Company is well positioned as an emerging leader in the environmental solutions market servicing water intensive industries. SciDev’s environmental solutions allow our clients to recycle and reuse water, reduce waste footprints, minimise costs and improve operational efficiencies to position the company for sustainable and rapid global growth. 4 SCIDEV LIMITEDANNUAL REPORT 2021Letter from the Managing Director & Chief Executive Officer The 2021 financial year was another extremely successful period for SciDev as we executed on our strategy to establish our position as an emerging leader in the environmental solutions market focused on water intensive industries. SciDev brings together world-class technology, chemistry and application expertise to solve pressing operational and environmental issues for our clients. Our core work for clients when dealing with liquid wastes, is to develop bespoke solutions that challenge the status quo and deliver cost savings and operational efficiency improvements. SciDev’s approach to tackling the global Per- and poly-fluoralkyl substances (PFAS) problem delivers greater than 99.9999% removal in a commercial application, which is over 100 times greater than the industry standard. Our approach to dewatering tunnel boring waste in construction delivers improved environmental outcomes through the replacement of dangerous materials with a SciDev chemistry, reducing waste disposal costs and carbon footprint, while improving productivity. Our solutions are designed not only to provide a commercial cost reduction but to provide alternatives to petrochemical based chemical solutions. In FY21, our business continued to make progress across all our verticals of Mining & Mineral processing, Oil & Gas, Infrastructure & Construction, and Water Treatment. Our client base grew to over 70, we drove a 135% uplift in revenue for the year, improved our gross profit margin to 24% and pleasingly, delivered a net profit after tax of $3.4m. Reflecting on the year, I am proud that SciDev progressed several Environmental, Social and Governance (ESG) projects that were high on our agenda. Most notably: • The successful commercialisation of our plant- based chemistries in the mining, oil & gas and infrastructure sectors • Our contribution to the Schools Plus program which delivers science learning outcomes to over 200 Indigenous students in the Great Victorian Desert • Appointing a new Auditor and executing on board rejuvenation initiatives to provide a strong platform for further growth I would like to thank all our employees for their immense efforts over the year, especially given the past and current challenges being felt across the world due to the COVID-19 pandemic. I would also like to take this opportunity to thank Trevor Jones for his time as Chair of SciDev. Trevor announced his retirement this year as part of the rejuvenation of SciDev’s board. Trevor has helped lay strong foundations for the Company to realise the benefits of new commercial relationships and expand its global reach across our global client base. 5 SCIDEV LIMITEDANNUAL REPORT 2021Following Trevor’s departure, we recently announced the appointment of Vaughan Busby as independent Chair. Vaughan is a trained chemist and has extensive experience as a company director. We are delighted to have someone of Vaughan’s calibre join the SciDev Board. OUR PEOPLE AND CULTURE Our people are the key to our business and we remain committed to attracting and retaining the best talent at all levels. The health and safety of our people remains the core priority for myself and the Company. Pleasingly, we delivered another year in FY21 of zero lost time injuries within our workforce, with continued improvement in safety-based led indicator reporting. Our comprehensive Covid-19 Safe Workplace Policy remained in place throughout the year, ensuring updates were communicated regularly to all employees. Our team expanded during FY21 via the acquisition of Haldon Industries. Haldon’s attitude and style of doing business is strongly aligned with SciDev’s approach and culture which has made the integration of the business an extremely positive experience for both parties. I would like to welcome all the Haldon team and thank them for their commitment to our ongoing success. The Haldon Principals, Sean Halpin, and Jake Reardon have joined our expanded executive team and will play a pivotal role in our future success. As I touched on earlier, SciDev had the opportunity to reinvest and reconnect with the community during the year. As a company we recognise the importance of supporting different community groups and have done so through partnerships, sharing knowledge and skills, and financial support. An important part of our community engagement is to ensure all our employees drive a culture of support and diversity through our organistaion. During the year, we started an initiative to support disadvantaged students through the Schools Plus program. SciDev has currently pledged $60,000 in support of the cause which will underpin the Schools Plus ‘Two Ways Science’ project. The project helps support remote Indigenous schools and communities develop and implement an integrated learning program. The program connects cultural knowledge of the local community with Western science and the Australian education curriculum. We are looking forward to assisting the Schools Plus program further in FY22 and will hopefully have the opportunity to visit the schools in person to see the benefits SciDev has provided. As part of our focus on diversity and inclusion, our team came together in May to recognise the LGBTI community as we celebrated International Day Against Homophobia, Biphobia, and Transphobia, as part of our efforts to combat discrimination and embrace diversity. 80 70 60 50 40 30 20 10 0 18% 119% 135% 209% 2020 2021 2020 2021 2020 2021 2020 2021 Revenue ($m) Customers Employees Organic Growth Revenue ($m) 6 SCIDEV LIMITEDANNUAL REPORT 2021FY21 REVENUE BY VERTICAL FY 21 REVENUE BY REGION 12% 16% 35% 36% Water Construction Mining Oil & Gas 8% Other 42% 50% North America Australia OUR COMPETITIVE ADVANTAGE STRONG ORGANIC GROWTH Over the course of FY21 we continued to expand our businesses by securing key wins across our four key verticals. We are well positioned to continue to drive growth by offering our bespoke chemistry and engineering solutions to our global client base, helping deliver sustainable outcomes for themselves and the environment. I am proud of what the team at SciDev have achieved in this period and look forward to the year ahead with confidence. Yours sincerely, Lewis Utting LEWIS UTTING Our unique combination of world-class technology, chemistry and application expertise enables us to deliver site-specific solutions to deliver better outcomes for our clients. Over 80% of our employees are tertiary educated as scientists, engineers, and chemists - greatly aiding our business development process. Our highly skilled team has the expertise to specifically design site specific solutions to solve the unique problems of our end clients. On average, we invest over 150 hours of research per client to develop a bespoke solution to meet their specific requirements. SciDev is results driven. Through on-site trials and ongoing contract work we have established a large database of quantitative results that demonstrates our product drives >20% operational plant process efficiency, reduces plant down time and drives cost savings for our clients. Our competitive advantage delivers environmentally better outcomes for our clients which will continue to position our company for future growth. 7 SCIDEV LIMITEDANNUAL REPORT 2021SciDev brings together world-class technology, chemistry and application expertise to solve pressing operational and environmental issues for the water, oil and gas, mining and construction markets 8 SCIDEV LIMITEDANNUAL REPORT 2021Review of Operations SciDev’s bespoke solutions focus on reducing the production of wastewater from industrial processes across a range of industries. We deliver sustainable chemistry, application and dosage optimisation that reduce processing costs, eliminate poor performance and reduce wastewater production. Our services can be utilised in a range of industries including Mining & Mineral processing, Oil & Gas, Infrastructure & Construction, and Wastewater. FY21 FINANCIAL HIGHLIGHTS • Revenue from clients increased in FY21 by 135% to $42.5m (FY20: $18m) • Cash receipts for FY21 elevated to $41.8m (FY20: $20m) • Net cash position at 30 June of $7m with $3.7m of inventory at hand FY21 OPERATIONAL HIGHLIGHTS • Strategic acquisition of Haldon Industries Pty Ltd (Haldon), an Australian based environmental engineering and solutions company focussed on the water and persistent organic pollutant sectors • Agreement with Société Le Nickel (a subsidiary of Eramet) to provide MaxiFlox® chemistry for SLN’s New Caledonian nickel operations • Field qualifications announced at Fortescue Metal Group’s Solomon Hub • Extension of the relationship with ExxonMobil via purchase order for approximately US$0.5 million of product and associated professional services • The commencement of the BHP Olympic Dam field validation project with a smooth transition to SciDev’s MaxiFlox® technology • Contract award to design, construct and commission a Sequencing Batch Reactor Leachate Treatment Plant for the $2.6 billion Sydney Gateway Project FINANCIAL REVIEW The consolidated entity reported revenue of $42.5m for the period, representing a 135% increase on the prior year results of A$18m. SciDev’s record revenue generation was achieved through organic growth via contract wins across several verticals. Contribution from the Haldon acquisition was recognised from 12 May 2021 to the end of the quarter. Net profit of $3.4m was reported for the year with net operating cash outflow of $1.3m. The company maintained a strong gross profit margin of 24% (FY20 17%) in line with the prior year. The company has continued to invest for growth and anticipates revenue growth to outpace expenditure, driving improving margins in coming years. At the end of the period, the consolidated entity had a net cash position of $7m, with $3.7m in 50 inventory at hand. 135% m $ 40 30 20 10 0 9 521% 2019 2020 2021 SCIDEV LIMITEDANNUAL REPORT 2021Review of Operations During FY21, SciDev continued to successfully execute on its strategy of solving operational and environmental issues relating to water across multiple global industrial markets. Its unique combination of proprietary research and specialised manufacturing enabled it to deliver site-specific products delivering better outcomes for its clients. SciDev delivers bespoke professional services, engineering, and chemistry solutions MINING & MINERAL PROCESSING SciDev continued to execute supply and services into all major clients such as Iluka, Yancoal, Glencore and Peabody. Business development activities continue across several operations and commodities such as coal, nickel, copper, gold and iron ore. Several producers have confirmed acceptance of our MaxiFlox® technology, proceeding to field validation which we anticipate will take place during FY22, with other projects now in commercial discussion. Post the end of the financial year, SciDev ceased providing chemistry to BHP’s Olympic Dam Operation. The initial six-month trial order was successful and delivered improved operating performance to the site. However, SciDev’s inability to access the site due to travel restrictions resulted in the team being unable to use its technical expertise to differentiate the benefits of its technology. Without this differentiation the ongoing supply was essentially commoditised. While SciDev received a request for proposal from BHP, the pricing terms did not meet SciDev’s internal value requirements so as a result Olympic Dam remained with their incumbent supplier. During the year, SciDev announced a trial order from Fortescue Metals Group Limited (Fortescue), one of the world’s leading producers of iron ore. The trial was conducted at the Fortescue Solomon Hub. SciDev progressed through a competitive tender process with the field qualification focussed on the performance of MaxiFlox® chemistry under plant operating conditions. The trial was run successfully and at the end of FY21 the Company remains in ongoing discussions with Fortescue to progress to commercial considerations. In March 2021, SciDev signed a contract with SLN for supply of its MaxiFlox® chemistry. SLN is a subsidiary of Eramet, which is the world’s number one producer of ferronickel, a key raw material input to the stainless steel market. The project has passed through laboratory and field qualifications and the Company’s MaxiFlox® chemistry and OptiFlox® technology will be used onsite to improve operational efficiency and water use. 10 SCIDEV LIMITEDANNUAL REPORT 2021to formulate a lightweight drilling fluid. The HFT patented technology will be part of the infield application at one of ExxonMobil’s international projects. HFT’s CatCheck® chemistry continued to be utilised in commercial applications with a major European exploration and production (E&P) client. HFT are assessing the ability of CatCheck® to enhance oil recovery from wells in the Eagle Ford Shale Province. Initial trials have demonstrated favourable results in different South Texan shale formations and further testing is underway. Activities in the Canadian oils ands industry are on track with progress outcomes to be reported in CY 2021. OIL & GAS SciDev is continuing to see activity levels recover within the US Oil & Gas sector, driving increased demand for our subsidiary Highland Fluid Technology’s (HFT) chemistry and professional services. A purchase order from a major South Texas E&P company for completion fluids has been extended and HFT is seeing additional purchase orders being placed from other existing clients. HFT’s largest dry-polymer client has committed to shift from commodity chemistry to SciDev bespoke chemistry offerings, with increased sales projections aligned with significantly increased business in H1 CY2021. A major European oil company has seconded HFT staff to provide product development and application support for new environmentally friendly oilfield performance chemistry. Several patent applications have been lodged with commercial activities now under consideration. Chemistry development initiatives with a major American multinational oil & gas corporation continue, with several HFT employees now engaged with commercial discussions expected to advance in early CY2021. During the year HFT received a purchase order from ExxonMobil for the provision of chemical and professional services, further extending the relationship between the companies. The purchase order is an extension of work conducted by HFT with ExxonMobil in 2020 and will see HFT facilities and professional services contracted 11 SCIDEV LIMITEDANNUAL REPORT 2021Review of Operations INFRASTRUCTURE & CONSTRUCTION WASTEWATER SciDev completed its work with the CYP Design and Construction Joint Venture (CYP D&C) in the June quarter as planned. SciDev had been providing chemistry and professional services to the Tunnel Boring Machines (TBM’s) on the Melbourne Metro Tunnel Project’s twin nine- kilometre rail tunnels. SciDev has been delivering MaxiDry® chemistry on site since May 2020, with exceptional performance and results for the operator. The successful project delivery from the SciDev team opens opportunities within the tunnel boring section of the infrastructure sector on a global basis. Several new project opportunities have been progressed following the employment of an expert in North America. Project discussions are advancing with projects in California, Virginia and British Columbia all focus areas for the Company. Additional opportunities are also being actively pursued in Europe and Asia. The acquisition of Haldon provides SciDev scope in the water treatment vertical and will deliver strategic opportunities such as: • Providing access to the growing per- and poly- fluoroalkyl substance (PFAS) market in Australia and the ability for SciDev to deliver a full treatment solution to major infrastructure and construction project water treatment and PFAS remediation requirements • Leveraging the complementary engineering, technology and professional services skills of both businesses to drive further business development opportunities • Diversification of SciDev’s revenue streams in terms of geography, client base, supply chain and end commodity exposure and the opportunity to provide direct chemical sales to Haldon clients • Additional skilled personnel to provide a larger talent pool and the ability to drive further tailored solutions for end clients Haldon’s revenue is generated through a combination of lump sum, ongoing work and specific bespoke projects. Haldon’s top ten clients currently account for over 90% of revenue and represent a mix of state and local government bodies, both local and international mining and construction companies. Key clients include Alcoa of Australia, Ward Civil and Environmental, Ventia, TestSafe NSW, John Holland, CPB, Remondis, Narromine Shire Council, Samsung and Dragados. The Company announced that it had been awarded the contract to design, construct and commission a Sequencing Batch Reactor (SBR) Leachate Treatment Plant (LTP) for the $2.6 billion Sydney Gateway Project. The project will be delivered on behalf of the John Holland Seymour Whyte Joint Venture, the NSW Government’s delivery partner for the project. The SBR is an activated sludge system focused on removing pollutants from wastewater, allowing the safe discharge and reuse of water. SciDev continues to drive organic growth and development activities in the Water sector, with several previously disclosed opportunities currently progressing at a reduced momentum because of Covid-19 sewerage testing. 12 SCIDEV LIMITEDANNUAL REPORT 2021Our People are the key to our business and we are committed to attracting and retaining the best talent 13 SCIDEV LIMITEDANNUAL REPORT 2021Sustainability SciDev drives efficiencies that deliver sustainable outcomes for our clients, our investors and our environment. We create world-leading, customised solutions that minimise water usage and help clients across the water, oil and gas, mining and construction markets improve their environmental impact. In 2015 the United Nations created 17 Sustainable Development Goals (SDGs), also known as the Global Goals, as a universal call to action for the world to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity. Sustainability The 17 SDGs are integrated and recognise that action in one of the areas will affect outcomes in others, they include including poverty, inequality, climate change, environmental degradation, peace and justice. for our clients, our investors and our environment. We create usage and help clients across construction & infrastructure, SciDev drives efficiencies that deliver sustainable outcomes world-leading, customised solutions that minimise water At SciDev we are adapting sustainability business practices through our business. As a company we are; • Helping solve growing PFAS issues • Reducing wastewater in the US Oilfields • Supporting the communities in which we and our customers operate • Striving to build a culture where we respect and embrace diversity in the workplace, which extends out to the wider community At SciDev we are adapting sustainability business practices thought our business and find it a great way to give back to the environment! mining & mineral processing, oil & gas, and water & As a company we have; wastewater management improve their environmental impact. In 2015 the United Nations created 17 Sustainable Development Goals (SDGs), also known as the Global Goals, as a universal call to action for the world to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity. • • • • • • Helped solve growing PFAS issues Reduce wastewater in the US Oilfields Schools Plus “Two Ways Science” project Respecting & embracing diversity in the in the workplace, which extends out to the wider community.. Innovation example Reduced inequalities example The 17 SDGs are integrated and recognise that action in one of Below highlights some of the goals impacted by our efforts; the areas will affect outcomes in others, they include including poverty, inequality, climate change, environmental degradation, peace and justice. 14 SCIDEV LIMITEDANNUAL REPORT 2021 . . Helping solve the growing PFAS issue The combination of SDV and Haldon technology can reduced waste water by over 10 times more than competitor technology, providing a low cost, more environmentally friendly solution to PFAS treatment. Per- and polyfluoroalkyl substances (PFAS) are a group of Helping solve the growing PFAS issue man-made chemicals that have been used in a variety of The combination of SDV and Haldon technology can reduced Reducing wastewater in the US Oilfields waste water by over 10 times more than competitor industries since the 1940s. PFAS chemicals are very persistent technology, providing a low cost, more environmentally in the environment and concentration levels increase over friendly solution to PFAS treatment. SciDev’s R&D program is focused on reducing the amount of Reducing wastewater in the US Oilfields REDUCING WASTEWATER IN THE US OILFIELDS wastewater generated across the key verticals we operate in. SciDev’s R&D program is focused on reducing Recycling water is at the core of our R&D efforts, minimising the amount of wastewater generated across the consumption of fresh water in industrial applications. the key verticals we operate in. Recycling water SciDev’s US subsidiary Highland Fluid Technologies (HFT) is at the core of our R&D efforts, minimising the consumption of fresh water in industrial continues to actively work with global leaders in the oilfields applications. services sector SciDev’s R&D program is focused on reducing the amount of wastewater generated across the key verticals we operate in. focused on developing new drilling Recycling water is at the core of our R&D efforts, minimising services sector SciDev’s US subsidiary Highland Fluid Technologies (HFT) continues to actively work with global leaders in the oilfields the consumption of fresh water in industrial applications. chemistries. The oil and gas sector produces over 5 barrels of SciDev’s US subsidiary Highland Fluid Technologies wastewater for every barrel of oil produced. Developing as (HFT) continues to actively work with global range of drilling technologies that perform efficiently in saline leaders in the oilfields services sector focused on developing new drilling chemistries. The oil and water will increase the amount of water that can be recycled, gas sector produces over 5 barrels of wastewater reducing water waste and minimising the freshwater footprint for every barrel of oil produced. Developing of companies. a range of drilling technologies that perform HFT friction reducers have energy by reducing friction efficiently in saline water will increase the amount pressure when pumping fluids in the oilfield. Reducing friction of water that can be recycled, reducing water reduces the energy needed to move fluids and that cuts the waste and minimising the freshwater footprint of our clients. amount of fuel used and cuts emissions to chemistries. The oil and gas sector produces over 5 barrels of range of drilling technologies that perform efficiently in saline wastewater for every barrel of oil produced. Developing as water will increase the amount of water that can be recycled, reducing water waste and minimising the freshwater footprint focused on developing new drilling lower the of companies. HFT friction reducers have energy by reducing friction environmental impact. HFT Friction Reducers are based on Reducing friction minimises the energy needed fast-hydrating, ATBS copolymers that work in harsh oilfield(s) to move fluids, cutting the amount of fuel used waters and are available in dry and liquid blended slurries. and reducing emissions to lower the environmental impact. CarrySlik Liquid Friction Reducers are a customised chemistry reduces the energy needed to move fluids and that cuts the pressure when pumping fluids in the oilfield. Reducing friction amount of fuel used and cuts emissions to lower the with high molecular weight and high activity products that environmental impact. HFT Friction Reducers are based on fast-hydrating, ATBS copolymers that work in harsh oilfield(s) CarrySlik Liquid Friction Reducers are a customised chemistry develop viscosity to improve proppant transport. with high molecular weight and high activity products that Our DrySlik Dry Friction Reducers allow oil and gas companies develop viscosity to improve proppant transport. to recycle oilfield water waters and are available in dry and liquid blended slurries. Our DrySlik Dry Friction Reducers allow oil and gas companies turning a waste to recycle oilfield turning a waste disposal problem into a disposal problem into beneficial use. Recycling oilfield waters lowers cost, reduces a beneficial use. truck traffic, improves HSE with less environmental impact. Recycling oilfield waters lowers cost, reduces truck traffic, and improves HSE with less environmental impact. truck traffic, improves HSE with less environmental impact. Our DrySlik Dry Friction Reducers allow oil and gas companies beneficial use. Recycling oilfield waters lowers cost, reduces to recycle oilfield turning a waste disposal problem into a time, causing environmental and health risks across a range of industrial sites. Per- and polyfluoroalkyl substances (PFAS) are a group of HELPING SOLVE THE GROWING PFAS ISSUE man-made chemicals that have been used in a variety of Per- and poly-fluoralkyl substances (PFAS) are industries since the 1940s. PFAS chemicals are very persistent a group of man-made chemicals that have in the environment and concentration levels increase over commercialised a robust PFAS treatment strategy that developed, designed, executed Haldon and has considers several variables and outcomes in its application been used in a variety of industries since the 1940s. PFAS chemicals are very allowing PFAS removal to levels that are below those that can time, causing environmental and health risks across a range of industrial sites. be achieved using conventional techniques. The strategy is persistent in the environment and Haldon has centred around Haldon having a mobile licence to treat PFAS and commercialised a robust PFAS treatment strategy that using the utilisation of various ion exchange and absorptive considers several variables and outcomes in its application techniques in a sequence tailored to each project’s unique concentration levels increase over executed developed, designed, time, causing environmental and health risks across a range of industrial sites. allowing PFAS removal to levels that are below those that can characteristics and treatment objectives. Haldon plants be achieved using conventional techniques. The strategy is received the first EPA licenses for mobile PFAS treatment in centred around Haldon having a mobile licence to treat PFAS NSW & WA providing the opportunity to roll out their solutions using the utilisation of various ion exchange and absorptive in those regions. techniques in a sequence tailored to each project’s unique The combination of SciDev and Haldon technology delivers a characteristics and treatment objectives. Haldon plants significantly improved outcome for customer with PFAS issues. received the first EPA licenses for mobile PFAS treatment in Haldon’s PFAS technology works better with water with low NSW & WA providing the opportunity to roll out their solutions solid levels and the utilisation of SDV’s Maxiflox Chemistry in those regions. separates the solid matter and provides a clean feed liquid to SciDev Water Services has designed, developed, executed and commercialised a robust PFAS treatment strategy that considers several variables and outcomes in its application allowing PFAS removal to levels that are below those that can be achieved using conventional techniques. The combination of SciDev and Haldon technology delivers a the Haldon process. significantly improved outcome for customer with PFAS issues. Haldon’s PFAS technology works better with water with low solid levels and the utilisation of SDV’s Maxiflox Chemistry The strategy is centered separates the solid matter and provides a clean feed liquid to around the Company having the Haldon process. a mobile licence to treat PFAS using the utilisation of various ion exchange and absorptive techniques in a sequence tailored to each project’s unique characteristics and treatment objectives. Our plants received the first EPA licenses for mobile PFAS treatment in NSW & WA providing the opportunity to roll out their solutions in those regions. Our PFAS technology works better with water with low solid levels and the utilisation of SDV’s Maxiflox Chemistry separates the solid matter and provides a clean feed liquid to the Haldon process. Our technology can reduce waste water by over 100 times more than competitor technology, providing a low cost, more environmentally friendly solution to PFAS treatment. 15 SCIDEV LIMITEDANNUAL REPORT 2021 Schools Plus “Two way Science” project Innovation example SciDev’s unique combination of proprietary research and specialised manufacturing enables us to deliver site-specific products delivering better outcomes for our customers. Over 80% of our staff are are tertiary educated as scientists, Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas porttitor congue massa. Fusce posuere, magna sed pulvinar ultricies, purus lectus malesuada libero, sit amet commodo magna eros quis urna. engineers and chemists. We recognise the importance of Lorem ipsum dolor sit amet, consectetuer adipiscing elit. education, especially amongst children and that is why SciDev Maecenas porttitor congue massa. Fusce posuere, magna sed are proud to support the Australian national education charity pulvinar ultricies, purus lectus malesuada libero, sit amet Schools Plus. commodo magna eros quis urna. SciDev partner with Schools Plus in the delivery of funding to Lorem ipsum dolor sit amet, consectetuer adipiscing elit. assist disadvantaged communities improve learning Maecenas porttitor congue massa. Fusce posuere, magna sed outcomes for their students. Since inception, Schools Plus has pulvinar ultricies, purus lectus malesuada libero, sit amet added more than $17.8 million into Australia’s school system, commodo magna eros quis urna. supporting over 758 schools, over 620 projects and benefiting 183,000 students. Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas porttitor congue massa. Fusce posuere, magna sed SciDev has provided financial support to underpin the ‘Two pulvinar ultricies, purus lectus malesuada libero, sit amet Ways Science Programme’ at the Oak Valley Cluster of Schools commodo magna eros quis urna. (Amata Anangu, Amata, Tjuntjuntjara, Great Victorian Desert, Yalata Anangu and Yalata). It is estimated that the project will Water Example Sustainability Schools Plus “Two way Science” project directly benefit 204 students, 67 teachers and 84 community members as the program aims to support the community in building cultural identity, teach science, reinforce literacy and numeracy skills and incorporate technology throughout the 2021 school year. Innovation example Respecting & embracing diversity Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas porttitor congue massa. Fusce posuere, magna sed pulvinar ultricies, purus lectus malesuada libero, sit amet commodo magna eros quis urna. Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas porttitor congue massa. Fusce posuere, magna sed Lorem ipsum dolor sit amet, consectetuer adipiscing elit. pulvinar ultricies, purus lectus malesuada libero, sit amet Maecenas porttitor congue massa. Fusce posuere, magna sed commodo magna eros quis urna. Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas porttitor congue massa. Fusce posuere, magna sed Lorem ipsum dolor sit amet, consectetuer adipiscing elit. pulvinar ultricies, purus lectus malesuada libero, sit amet Maecenas porttitor congue massa. Fusce posuere, magna sed commodo magna eros quis urna. Lorem ipsum dolor sit amet, consectetuer adipiscing elit. pulvinar ultricies, purus lectus malesuada libero, sit amet Maecenas porttitor congue massa. Fusce posuere, magna sed commodo magna eros quis urna. Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas porttitor congue massa. Fusce posuere, magna sed pulvinar ultricies, purus lectus malesuada libero, sit amet SciDev’s unique combination of proprietary research and SCHOOLS PLUS “TWO WAY SCIENCE” PROJECT specialised manufacturing enables us to deliver site-specific SciDev partner with Schools Plus in the delivery products delivering better outcomes for our customers. Over of funding to assist disadvantaged communities 80% of our staff are are tertiary educated as scientists, improve learning outcomes for their students. engineers and chemists. We recognise the importance of Since inception, Schools Plus has added more than $17.8 million into Australia’s school system, education, especially amongst children and that is why SciDev supporting over 758 schools, over 620 projects are proud to support the Australian national education charity and benefiting 183,000 students. Schools Plus. learning improve SciDev has provided financial support to underpin SciDev partner with Schools Plus in the delivery of funding to the ‘Two Ways Science Programme’ at the assist disadvantaged communities Oak Valley Cluster of Schools (Amata Anangu, outcomes for their students. Since inception, Schools Plus has Amata, Tjuntjuntjara, Great Victorian Desert, Yalata Anangu and Yalata). It is estimated that added more than $17.8 million into Australia’s school system, the project will directly benefit 204 students, 67 supporting over 758 schools, over 620 projects and benefiting teachers and 84 community members as the 183,000 students. program aims to support the community in building cultural identity, teach science, reinforce SciDev has provided financial support to underpin the ‘Two literacy and numeracy skills and incorporate Ways Science Programme’ at the Oak Valley Cluster of Schools technology throughout the 2021 school year. (Amata Anangu, Amata, Tjuntjuntjara, Great Victorian Desert, Diversity in the workplace mirrors the diversity of the broader RESPECTING & EMBRACING DIVERSITY community, encompassing age, gender, ethnicity, cultural and Diversity in the workplace mirrors the diversity other personal factors. SciDev respects the diversity of all commodo magna eros quis urna. of the broader community, encompassing age, employees, consultants and contractors and cultivates an gender, ethnicity, cultural and other personal environment of fairness, respect and equal opportunity. factors. SciDev respects the diversity of all employees, consultants and contractors and SciDev believes that the pursuit of diversity in the workplace cultivates an environment of fairness, respect and increases the pool of talent available, enhances individual equal opportunity. SciDev believes that the pursuit commodo magna eros quis urna. work-life balance, encourages personal achievement, of diversity in the workplace increases the pool improves co-operation and assists in the optimisation of of talent available, enhances individual work-life organisational performance. balance, encourages personal achievement, improves co-operation and assists in the During the year we supported the International Day Against optimisation of organisational performance. commodo magna eros quis urna. Homophobia, Biphobia and Transphobia (IDAHOBIT). IDAHOBIT During the year we supported the International Day was started in 2004 to raise awareness of LBGT violations Day Against Homophobia, Biphobia and and stimulate interest in LGBT rights work worldwide. Transphobia (IDAHOBIT). IDAHOBIT Day was started in 2004 to raise awareness of LBGT violations and stimulate interest in LGBT rights work worldwide. commodo magna eros quis urna. Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas porttitor congue massa. Fusce posuere, magna sed pulvinar ultricies, purus lectus malesuada libero, sit amet pulvinar ultricies, purus lectus malesuada libero, sit amet pulvinar ultricies, purus lectus malesuada libero, sit amet Yalata Anangu and Yalata). It is estimated that the project will Water Example directly benefit 204 students, 67 teachers and 84 community members as the program aims to support the community in building cultural identity, teach science, reinforce literacy and numeracy skills and incorporate technology throughout the 2021 school year. Respecting & embracing diversity Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas porttitor congue massa. Fusce posuere, magna sed pulvinar ultricies, purus lectus malesuada libero, sit amet commodo magna eros quis urna. Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas porttitor congue massa. Fusce posuere, magna sed pulvinar ultricies, purus lectus malesuada libero, sit amet Diversity in the workplace mirrors the diversity of the broader commodo magna eros quis urna. community, encompassing age, gender, ethnicity, cultural and other personal factors. SciDev respects the diversity of all employees, consultants and contractors and cultivates an environment of fairness, respect and equal opportunity. SciDev believes that the pursuit of diversity in the workplace Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas porttitor congue massa. Fusce posuere, magna sed pulvinar ultricies, purus lectus malesuada libero, sit amet commodo magna eros quis urna. increases the pool of talent available, enhances individual Lorem ipsum dolor sit amet, consectetuer adipiscing elit. work-life balance, encourages personal achievement, Maecenas porttitor congue massa. Fusce posuere, magna sed improves co-operation and assists in the optimisation of pulvinar ultricies, purus lectus malesuada libero, sit amet organisational performance. commodo magna eros quis urna. During the year we supported the International Day Against Homophobia, Biphobia and Transphobia (IDAHOBIT). IDAHOBIT Day was started in 2004 to raise awareness of LBGT violations 16 and stimulate interest in LGBT rights work worldwide. SCIDEV LIMITEDANNUAL REPORT 2021 Directors Report The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘consolidated entity’) consisting of SciDev Limited (referred to hereafter as the ‘company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the year ended 30 June 2021. DIRECTORS The following persons were directors of SciDev Limited during the whole of the financial year, except where noted below, and up to the date of this report: • Vaughan Busby (appointed a Director and Non-executive Chairman on 9 August 2021) • Lewis E Utting • Simone Watt • Jon Gourlay • Dan O’Toole (appointed a Director on 3 February 2021 and Acting Chairman from 30 June 2021 to 9 August 2021) • Trevor A Jones (former Chairman - resigned 30 June 2021) PRINCIPAL ACTIVITIES The principal activity of the consolidated entity is delivery of process control, professional services, equipment design and construction (including build, own operate services) and chemistry in the Mining and Mineral Processing, Infrastructure and Construction, Water Treatment and Oil & Gas markets. DIVIDENDS There were no dividends paid, recommended or declared during the current or previous financial year. REVIEW OF OPERATIONS The Review of Operations can be found on pages 9—12 of this report. INFORMATION ON DIRECTORS Vaughan Busby (B.Pharm, MBA) Non-executive Chairman (appointed 9 August 2021) Mr Busby trained as a chemist and has extensive experience as a company director, having sat on a number of private and ASX listed boards over the last 15 years. He currently serves as a non-executive director for Energy Queensland Limited, a government-owned corporation and the largest energy company in Australia. He is also a non-executive director for EnergyOne (ASX:EOL), a company providing specialist software to the energy industry and Netlogix Group Holdings Limited, a New Zealand based company specialising in supply chain logistics. Other current directorships: Non-executive Director of Energy One Limited (from listing on ASX on 12 January 2007 to present) Former directorships (last 3 years): None Special responsibilities: Chairman Interests in shares: Nil Interests in options: Nil Lewis Utting (BASc) Managing Director and Chief Executive Officer Mr Utting joined SciDev in March 2018 then the Board in October 2018 as Executive Director and was later appointed Managing Director and Chief Executive Officer in early 2019. In this time he has driven the transformation of SciDev growing revenues and profits with a focus on common industry challenges across several sectors and leveraging adjacent supply chain synergies. Mr Utting has over 20 years’ experience in Asia, North America, South America, Middle east and Africa across the water treatment and specialty chemicals sectors. Mr Utting 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: 5,448,129 Interests in options: 800,000 17 SCIDEV LIMITEDANNUAL REPORT 2021Directors Report 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 technology-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: Member of the Audit and Risk Committee and the Nomination and Remuneration Committee Interests in shares: 5,063,280 Interests in options: 250,000 Jon Gourlay (BCom, C.A, GAICD) Non-executive Director Mr Gourlay is a chartered accountant with extensive experience in finance and project management, risk management, business improvement and investor relations, with a focus on the resources and technology sectors. Mr Gourlay has held senior management roles including most recently, 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 Dan O’Toole (BEng(Hons), EngExec, FlEAust, MAusIMM, MAICD) Non-executive Director (appointed 3 February 2021) Mr O’Toole brings over 35 years of experience across the engineering and consulting sectors including over 18 years in executive leadership roles within Coffey International Limited and pitt&sherry. Mr O’Toole is currently the Chairman of Viotel Limited, a private company focussed on empowering mining, transport and infrastructure businesses to better mitigate risks using world- class monitoring technology. Prior to his current position, Mr O’Toole was the Chief Executive Officer of pitt&sherry, one of Australia’s most dynamic consulting engineering companies with a team of high-calibre professional consultants servicing the Transport Infrastructure, Mining, Energy, Industrial, and Tourism & Recreation market sectors. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Member of the Audit and Risk Committee and the Nomination and Remuneration Committee and Acting Chairman from 30 June 2021 to 9 August 2021 Interests in shares: Nil Interests in options: Nil Trevor A Jones (B.Comm (Melb)) Chairman (resigned 30 June 2021) 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. He was appointed as a Non- executive Director of SciDev on 28 February 2007. Special responsibilities: Chairman of the Audit and Risk Committee and member of the Nomination and Remuneration Committee Other current directorships: None Former directorships (last 3 years): None Interests in shares: 954,628 Interests in options: Nil Special responsibilities: Chairman of the Corporate Governance Committee, a member of the Audit and Risk Committee, and Chairman of the Nomination and Remuneration Committee Interests in shares: 1,202,500* Interests in options: Nil 18 SCIDEV LIMITEDANNUAL REPORT 2021MEETING 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 2021, and the number of meetings attended by each director 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.. * Trevor Jones resigned on 30 June 2021. ** Dan O’Toole was appointed on 3 February 2021. In addition to the Board and Committee meetings outlined above, during the year an additional 6 Board circular resolutions were passed. ‘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. * Interests in the shares and options of the company as at the date of resignation as a director. COMPANY SECRETARY Mr Heath L Roberts (Dip Law (S.A.B.) and Grad Dip Legal Practice (UTS)) Mr Roberts is a commercial solicitor with over 20 years of listed company experience. He has acted for SciDev in various capacities over the years and brings strong transactional, compliance and capital raising experience to the role. Figure 1 MEETINGS OF DIRECTORS Full Board Nomination & Rumuneration Committee Audit & Risk Committee Attended Held Attended Held Attended Held Trevor A Jones* Lewis Utting Simone Watt Jon Gourlay Dan O’Toole** 9 9 9 9 7 9 9 9 9 7 6 - 6 6 3 5 - 5 5 3 5 - 5 5 3 6 - 6 6 3 19 SCIDEV LIMITEDANNUAL REPORT 2021Remuneration Report (audited) The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. This includes key leaders of the Company’s operating subsidiaries in Australia and overseas. 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 20 both short and long term incentives, with an appropriate balance of at-risk remuneration. The Company’s Annual Remuneration review was carried out in August 2020. This review establishing strata grades within the Company, and allocations for fixed remuneration, short- term incentive (STI) and long term incentive (LTI) applicable to each strata grade. The percentage allocations between fixed remuneration, STI and LTI varies between the strata grades, with an emphasis on higher at-risk STI and LTI elements for more senior executives. A relationship between Company performance and remuneration has been developed and implemented, with the STI or LTI component of remuneration delivered on a performance-linked basis, as either. • Equity issues to executives, with performance conditions based on financial performance, share price performance and duration of employment milestones, and • In some cases cash bonuses, which are also financial performance linked • providing a clear structure for earning rewards This approach provides a clear structure for earning rewards. 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, the Non-Executive Directors and other senior executives. During the year, the Company commenced an active Board rejuvenation program, recognising the need to ensure that the Board’s skillset and governance structure remains fit for purpose reflective of SciDev’s growth aspirations. As part of the Board rejuvenation process, the Board appointed an independent, external governance advisory group to conduct a comprehensive review of the Company’s Board and Committee structures and memberships and performance of the Chairman and Directors. The Board and Governance Review process, conducted by Guerdon and Associates, has provided useful insight into the Company’s Board and Governance mechanisms. Constructive initiatives have been identified that, over time, will SCIDEV LIMITEDANNUAL REPORT 2021be implemented to ensure SciDev’s governance structure remains fit for purpose relative to its growth aspirations. NON-EXECUTIVE DIRECTORS REMUNERATION Fees and payments to the Non-executive Directors reflect the demands which are made on, and the responsibilities of, the Non–executive Directors. The Board undertakes a review of Non- executive Directors’ fees and payments annually. The independent review process described above will guide Non-executive Director roles and responsibilities moving forward. Separate from the Board rejuvenation process outlined above, during H1FY2021 the Board commissioned an independent, external review of Non-executive Directors remuneration levels by Guerdon Associates. The outcomes of the review process has validated that the fees paid to Non-executive Directors are below the median for peer companies. 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 A$400,000 was approved by shareholders at the Company’s 2007 Annual General Meeting held on 14 November 2007. The amount paid to Non-executive Directors of the parent entity (SciDev Limited) during the year to 30 June 2021 was $231,032 (2020: $204,562). In addition, Non-executive Directors are entitled to participate in issues of securities pursuant to the SciDev Employee Share Scheme (the SciDev ESS). The value of any securities 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 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 2021 financial year the Company granted no securities to Non-executive Directors. EXECUTIVE REMUNERATION SciDev’s executive pay and reward framework has three primary components, 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 standard 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. (II) SHORT-TERM INCENTIVES Managing Director & Chief Executive Officer The Managing Director was eligible for a short- term incentive (STI) cash bonus payment of up to $200,000 based on the achievement of KPIs determined by the Nomination and Remuneration Committee for the calendar year ended 31 December 2020. 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. 21 SCIDEV LIMITEDANNUAL REPORT 2021Remuneration Report (audited) Use of remuneration consultants The company utilised remuneration consultants through the year ended 30 June 2021 as set out above. Remuneration voting and comments at the company’s 10 November 2020 Annual General Meeting (the 2020 AGM) At the 2020 AGM, 99.7% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2020. The company did not receive any specific feedback at the 2020 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 during the financial year ended 30 June 2021 consisted of the following directors of SciDev Limited: • Trevor A Jones - Non-executive Chairman (resigned 30 June 2021) • Lewis E Utting - Managing Director & Chief Executive Officer • Simone Watt - Non-executive Director • Jon Gourlay - Non-executive Director • Dan O’Toole - Non-executive Director (appointed a Director on 3 February 2021 and Acting Chair on 30 June 2021) And the following persons: • John Fehon - Chief Financial Officer • Heath Roberts - Company Secretary and General Counsel The total potential STI was set at a level so as to provide sufficient incentive to achieve the 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 for are met. During the 2021 year, a cash bonus of $116,250 was paid in respect of the 31 December 2020 year on recommendation of the Nomination & Remuneration Committee and resolution of the Board. This payment was included in the relevant quarterly disclosure (Appendix 4C dated 12 April 2021). Mr Utting remains eligible to earn part or all of the balance of this STI based on the relevant financial and operational targets to 30 June 2021. Thereafter, his STI and LTI assessment will align with each financial year. Senior Executives STIs paid to senior executives are made on a discretionary basis as determined by the Managing Director & Chief Executive Officer in consultation with the Nomination and Remuneration Committee. These incentives, while not guaranteed, are directly linked to the achievement of KPIs established around various performance targets including 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. Cash bonuses were paid to a number of executives in respect of the 30 June 2021 financial year. (III) LONG-TERM INCENTIVES Long-term performance incentives (LTI) are delivered through the grant of securities to executive directors and selected senior executives from time to time as part of their remuneration. Performance rights with performance hurdles applicable to any performance period (including how they will be measured) are set out in any such invitation to the eligible executives. During the 2021 financial year the Company granted performance rights to senior executives and staff under the terms of the SciDev ESS, however no performance rights were granted to any of the Board members or the Managing Director and Chief Executive Officer 22 SCIDEV LIMITEDANNUAL REPORT 20212021 Short-term benefits Postemployment benefits Long-term benefits Share-based payments Cash salary & Fees $ Bonus $ Super annuation & Annual Leave $ Long Service Leave $ Option (b) $ Rights (c) $ Totale $ Non-Executive Directors: Trevor A Jones (Chairman) 82,236 Simone Watt Jon Gourlay Dan O'Toole (a) Executive Directors: 52,500 52,500 25,000 - - - - 6,976 4,458 4,987 2,375 - - - - - - - - - - - - Lewis E Utting 446,250 200,000 54,189 13,072 369 70,113 Other Key Management Personnel: John Fehon (c) Heath Roberts (c) 255,666 228,000 - - 24,699 8,676 - - 22 - 33,618 3,763 - - - - - - - 89,212 56,958 57,487 27,375 783,993 322,681 231,763 1,142,152 200,000 97,684 21,748 391 107,494 - 1,569,469 a) Dan O’Toole was appointed a Non-executive Director on 3 February 2021. The above reported remuneration relates to the period from 3 February 2021 to 30 June 2021. 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. c) Performance rights were granted to John Fehon and Heath Roberts on 15 December 2020. The rights had a fair value of $0.49774 per right. An expense has not been recorded as the non-market conditions are not expected to be met. The following table has been restated as a result of a recalculation of FY2020 option valuations. 2020 - (Restated) Short-term benefits Postemployment benefits Long-term benefits Share-based payments Cash salary & Fees $ Bonus $ Super annuation & Annual Leave $ Long Service Leave $ Option (b) $ Rights (c) $ Totale $ Non-Executive Directors: Trevor A Jones (Chairman) 69,444 Simone Watt Jon Gourlay Executive Directors: 44,999 4,107 - - - 6,597 4,275 390 - - - - - - 27,500 27,500 71,500 Lewis E Utting 368,666 100,000 34,833 44,311 34 169,887 Other Key Management Personnel: John Fehon (c) Heath Roberts (c) 108,333 244,795 - - 10,291 8,230 - - - - 59,382 4,237 - - - - - - 103,541 76,774 75,997 717,731 186,236 249,032 840,344 100,000 56,386 52,541 34 360,006 - 1,409,311 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. c) The share-based payments (options) granted to Directors in July 2019 were subject to approval by shareholders, which was obtained on 23 July 2019. The option remuneration as presented in the 30 June 2020 Remuneration Report, was determined based on a May 2019 grant date valuation, rather than the date the options were approved by shareholders (23 July 2019). Accordingly, the prior year comparatives for all of the Directors and KMP have been adjusted to update for this valuation change. The previous total of $143,029 has been restated to $360,006. The impact of this change has been updated (as applicable) throughout the Remuneration Report. 23 SCIDEV LIMITEDANNUAL REPORT 2021The proportion of remuneration linked to performance and the fixed proportion are as follows. The 2020 figures have been restated as a result of a recalculation of FY2020 option valuations. Fixed remuneration At risk - STI At risk - LTI 2021 2020 2021 2020 2021 2020 Non-Executive Directors: Trevor A Jones (Chairman) Simone Watt Jon Gourlay Dan O’Toole Executive Directors: 100% 100% 100% 100% 73% 64% 6% - - - - - - - - - Lewis E Utting 66% 62% 25% 14% Other Key Management Personnel: John Fehon) Heath Roberts 90% 98% 68% 98% - - - - - - - - 9% 10% 2% 27% 36% 94% - 24% 32% 2% The proportion of remuneration linked to performance and the fixed proportion are as follows. The 2020 figures have beenrestated as a result of a recalculation of FY2020 option valuations. Name Executive Directors: Lewis E Utting SERVICE AGREEMENTS Cash bonus paid/payable Cash bonus forfeited 2021 100% 2020 50% 2021 - 2020 50% 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: Ongoing Details: Base salary of $450,000 plus superannuation. Mr Utting is also entitled to an STI bonus of $200,000 per 12 month period subject to meeting certain performance based milestones and an LTI of $250,000 in performance based equity (options or shares) under the terms of the Company’s ESS. The terms of the LTI grant have not been finalised and issued to Mr Utting for CY2020 because of the COVID-19 pandemic. Mr Utting’s salary, allowances and performance bonus is reviewed annually by the Nomination and Remuneration Committee. The contract may be terminated by 6 months’ notice from either party. 24 SCIDEV LIMITEDANNUAL REPORT 2021Name: Title: John Fehon Chief Financial Officer Agreement commenced: 3 February 2020 Term of agreement: Ongoing 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. Name: Title: Heath Roberts Company Secretary & General Counsel Agreement commenced: 1 March 2017 Term of agreement: Ongoing 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. Voluntary Remuneration Reductions Commencing 1 July 2020 - 30 September 2020 Recognising the uncertainty on world financial markets as a result of COVID-19, certain members of the KMP volunteered base pay reductions during the period from 1 July 2020 to 30 September 2020. These voluntary reductions did not accrue and are not to be 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 2021. Options The terms and conditions of the prior year grants of options over ordinary shares are as follows: Name Number of options granted Grant date Vested date Expiry date Trevor Jones 250,000 23/07/2019 23/07/2019 23/07/2022 Lewis E Utting 800,000 23/07/2019 23/07/2019 23/07/2022 Lewis E Utting 800,000 23/07/2019 30/06/2021 23/07/2022 Simone Watt 250,000 23/07/2019 23/07/2019 23/07/2022 Jon Gourlay 650,000 23/07/2019 23/07/2019 23/07/2022 John Fehon 75,000 03/02/2020 03/02/2020 23/07/2022 John Fehon 75,000 03/02/2020 30/06/2021 23/07/2022 Heath Roberts 200,000 16/05/2019 16/05/2019 23/07/2022 Heath Roberts 200,000 16/05/2019 30/06/2021 23/07/2022 Fair value per option at grant date (a) Exercise price Vested % $0.12 $0.10 $0.10 $0.12 $0.12 $0.12 $0.12 $0.10 $0.10 $0.11 $0.13 $0.17 $0.11 $0.11 $0.61 $0.63 $0.00 $0.04 100% 100% 100% 100% 100% 100% 100% 100% 100% (a) The fair value per option has been restated to reflect changes to the grant date as outlined above. 25 SCIDEV LIMITEDANNUAL REPORT 2021With the exception of the options granted to Lewis Utting (Managing Director and Chief Executive Officer), which had performance conditions which were required to be met in order to earn the grant, all the other options granted had no performance conditions. The options granted to Mr Utting consist of 2 tranches. The options formed part of Mr Utting’s contracted remuneration package which was disclosed when he was appointed Managing Director and Chief Executive Officer of the Company (ref: ASX announcement 30 April 2019). The issue of these options were subsequently approved by shareholders on 23 July 2019. Mr Utting voluntarily redistributed some of his options to other members of the executive team. The first tranche vested on grant date and the second tranche was subject to a service vesting condition and a performance condition related to achieving break-even less Directors’ costs. The options issued to the Directors were premium priced options and reported as remuneration over the vesting period. The options granted to John Fehon (CFO) consists of 2 tranches. The first tranche were not premium priced options and are subject to reporting as remuneration in the year of grant. The second tranche is subject to a service vesting condition and is reported as remuneration over the vesting period. The options granted to Heath Roberts (Company Secretary & General Counsel) consists of 2 tranches. The first tranche were not premium priced options and are subject to reporting as remuneration in the year of grant. The second tranche is subject to a service vesting condition and is reported as remuneration over the vesting period. 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. The Board has discretion under the ESS to apply good leaver provisions 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 sharebased payment arrangements since the grant date. 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 2021 are set out below: Name Trevor Jones Lewis E Utting Simone Watt Jon Gourlay John Fehon Heath Roberts 2021 2020 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 $ - - - - - - - 104,000 - - - - 27,500 240,000 27,500 71,500 93,000 8,000 27,500 - - 71,500 45,750 - There were no options for directors and other key management personnel that lapsed during the year ended 30 June 2021. 26 SCIDEV LIMITEDANNUAL REPORT 2021Performance rights During the year, the Company issued 2,133,399 performance rights, in two tranches of 1,408,399 and 725,000 respectively, under the terms of the Company’s ESS. In order for the performance rights to vest (convert to fully paid ordinary shares) the holder must meet: • A test related to SciDev share price performance ($2.00), and • A test related to relevant segment cashflow performance ≥ break-even, and • A continued employment or ‘good leaver’ test The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Name Number of rights granted Grant date Vesting date and exercisable date Expiry date Share price hurdle for vesting Fair value per right at grant date John Fehon 130,000 15/12/2020 31/10/2022 31/10/2022 Heath Roberts 120,000 15/12/2020 31/10/2022 31/10/2022 $2.000 $2.000 $0.49740 $0.49740 The Performance Rights carry none of the rights of ordinary shares and, in particular, no right to vote, receive dividends or participate in bonus or rights issues. No Directors of the company participated in the grant of performance rights. The vesting conditions of these performance rights are forecast not to be met, and therefore no expense has been recognised in remuneration in respect of these rights in the period. None of the rights granted during the year vested. Additional information The earnings of the consolidated entity for the five years to 30 June 2021 are summarised below: Sales revenue 42,524,908 17,906,551 2,655,799 2,029,373 1,846,985 Profit/(loss) after income tax 3,452,968 (875,238) (2,032,527) 1,001,869 (597,340) 2021 $ 2020 $ 2019 $ 2018 $ 2017 $ The factors that are considered to affect total shareholders return (‘TSR’) are summarised below: Share price at financial year end ($) Basic earnings per share (cents per share)* 2021 $ 0.85 2.26 2020 $ 0.58 2019 $ 0.09 (0.69) (2.69) 2018 $ 0.07 2.02 2017 $ 0.12 (2.30) * The earnings per share for 2018 and 2017 have been adjusted for the effect of the share consolidation completed in December 2018. 27 SCIDEV LIMITEDANNUAL REPORT 2021ADDITIONAL 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: Received during the year on the exercise of options Additions/ others Disposals/ others Balance at the end of the year - - - 114,247 - - - 1,202,550 Balance at the start of the year - 1,088,303 5,367,421 800,000 30,707 (749,999) 5,448,129 5,063,280 856,349 - 288,333 100,000 - - - - - - 98,279 - 21,326 6,093 - - - - - 5,063,280 954,628 - 309,659 106,093 12,763,686 800,000 270,652 (749,999) 13,084,339 Ordinary shares Vaughan Busby Trevor A Jones Lewis E Utting Simone Watt Jon Gourlay Dan O’Toole John Fehon Heath Roberts 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 Lewis E Utting Simone Watt John Fehon Heath Roberts Balance at the start of the year 1,600,000 250,000 75,000 400,000 2,325,000 Granted Exercised Expired/ forfeited/ others Balance at the end of the year - - - - - (800,000) - - - (800,000) - - - - - 800,000 250,000 75,000 400,000 1,525,000 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 2021. 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 2021. The facility is secured against the consolidated entity’s inventory and incurs interest at 15% per annum. $nil (2020: $nil) was drawn down on this facility and $nil (2020: $nil) repaid during the 2021 financial year. The loan balance at 30 June 2021 was $nil (2020: $nil). 28 SCIDEV LIMITEDANNUAL REPORT 2021A director, Simone Watt, is a director of Sinoz Chemicals and Commodities Pty Ltd (Sinoz) and has the capacity to significantly influence the decision-making of the company. The consolidated entity has leased premises from Sinoz during the 2021 financial year. The lease contract was based on normal commercial terms and conditions. Amounts recognised as expenses Rent and related expenses: $6,030 (2020: $nil) Finance costs: $nil (2020: $nil) 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 2021. This concludes the remuneration report, which has been 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 2021 are set out below: 2021 2020 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 yerar Trevor Jones Lewis E Utting Simone Watt Jon Gourlay John Fehon Heath Roberts - - - - - - - 104,000 - - - - 27,500 240,000 27,500 71,500 93,000 8,000 27,500 - - 71,500 45,750 - There were no options for directors and other key management personnel that lapsed during the year ended 30 June 2021. Performance rights During the year, the Company issued 2,133,399 performance rights, in two tranches of 1,408,399 and 725,000 respectively, under the terms of the Company’s ESS. In order for the performance rights to vest (convert to fully paid ordinary shares) the holder must meet: • A test related to SciDev share price performance ($2.00), and • A test related to relevant segment cashflow performance ≥ break-even, and • A continued employment or ‘good leaver’ test The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Number of rights granted 130,000 120,000 Vesting date and exercisable date Grant date Expiry date Share price hurdle for vesting Fair value per right at grant date 15/12/2020 31/10/2022 31/10/2022 15/12/2020 31/10/2022 31/10/2022 $2.000 $2.000 $0.49740 $0.49740 John Fehon Heath Roberts The Performance Rights carry none of the rights of ordinary shares and, in particular, no right to vote, receive dividends or participate in bonus or rights issues. No Directors of the company participated in the grant of performance rights. The vesting conditions of these performance rights are forecast not to be met, and therefore no expense has been recognised in remuneration in respect of these rights in the period. None of the rights granted during the year vested. 29 SCIDEV LIMITEDANNUAL REPORT 2021ADDITIONAL INFORMATION The earnings of the consolidated entity for the five years to 30 June 2021 are summarised below: 2021 $ 2020 $ 2019 $ 2018 % 2017 $ Sales revenue 42,524,908 17,906,551 2,655,799 2,029,373 1,846,985 Profit/(loss) after income tax 3,452,968 (875,238) (2,032,527) 1,001,869 (597,340) The factors that are considered to affect total shareholders return (‘TSR’) are summarised below: Share price at financial year end ($) Basic earnings per share (cents per share)* 2021 $ 0.85 2.26 2020 $ 0.58 2019 $ 0.09 (0.69) (2.69) 2018 % 0.07 2.02 2017 $ 0.12 (2.30) * The earnings per share for 2018 and 2017 have been adjusted for the effect of the share consolidation completed in December 2018. SHARES UNDER OPTION Unissued ordinary shares of SciDev Limited under option at the date of this report are as follows: Grant date 23 July 2019 23 July 2019 16 May 2019 16 May 2019 Expiry date Exercise price Number under option 23 July 2022 23 July 2022 23 July 2022 23 July 2022 $0.100 $0.120 $0.100 $0.120 800,000 250,000 400,000 850,000 2,300,000 All of the unexercised options were granted under the SciDev Employee Share Scheme (see note 40). 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 UNDER PERFORMANCE RIGHTS Unissued ordinary shares of SciDev Limited under performance rights at the date of this report are as follows Grant date 15 December 2020 26 May 2021 Expiry date Exercise price Number under option 31 October 2022 30 June 2022 $0.000 $0.000 1,408,399 725,000 2,133,399 No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate in any share issue of the company or of any other body corporate. SHARES ISSUED ON THE EXERCISE OF OPTIONS There were 1,425,000 ordinary shares of SciDev Limited issued on the exercise of options during the year ended 30 June 2021 and up to the date of this report. SHARES ISSUED ON THE EXERCISE OF PERFORMANCE RIGHTS There were no ordinary shares of SciDev Limited issued on the exercise of performance rights during the year ended 30 June 2021 and up to the date of this report. 30 SCIDEV LIMITEDANNUAL REPORT 2021INDEMNITY AND INSURANCE OF OFFICERS • all non-audit services have been reviewed and 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. approved to ensure that they do not impact the integrity and objectivity of the auditor; and • None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision- making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards. OFFICERS OF THE COMPANY WHO ARE FORMER PARTNERS OF ERNST & YOUNG There are no officers of the company who are former partners of Ernst & Young. 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. PROCEEDINGS ON BEHALF OF THE COMPANY AUDITOR No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings. NON-AUDIT SERVICES Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 30 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 30 to the financial statements do not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons: Ernst & Young was appointed auditor on 10 June 2021. They serve 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 LEWIS E UTTING Managing Director & Chief Executive Officer 30 August 2021 Sydney 31 SCIDEV LIMITEDANNUAL REPORT 202132 SCIDEV LIMITEDANNUAL REPORT 2021 Statement of Profit and Loss and other comprehensive income SciDev Limited Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2021 For the year ended 30 June 2021 Revenue Other income Interest revenue Expenses Changes in inventories, and raw materials and consumables used Contractors Depreciation and amortisation expense Employee benefits expense Engineering and other consultants expenses Insurance Loss on disposal of assets Listing and share registry expenses Professional fees Short-term facility expenses and outgoings Travel, accommodation and conference Write-off of assets Other expenses Finance costs Profit/(loss) before income tax benefit Income tax benefit Profit/(loss) after income tax benefit for the year attributable to the owners of SciDev Limited Other comprehensive income/(loss) Items that will not be reclassified subsequently to profit or loss Gain on the revaluation of equity instruments at fair value through other comprehensive income, net of tax Items that may be reclassified subsequently to profit or loss Foreign currency translation Note 2021 $ 2020 $ 5 6 7 8 42,524,908 18,061,342 1,711,761 923 587,855 2,784 (32,366,160) (629,918) (929,771) (6,253,852) (978,648) (275,161) - (121,761) (381,870) (167,657) (312,854) (39,671) (827,078) (147,532) (14,954,716) (97,582) (377,760) (2,845,448) (535,834) (165,406) (6,902) (150,999) (706,810) (199,136) (294,832) - (556,454) (35,688) 805,659 (2,275,586) 2,647,309 1,400,348 3,452,968 (875,238) 810,289 - (1,080,723) (36,310) Other comprehensive income/(loss) for the year, net of tax (270,434) (36,310) Total comprehensive income/(loss) for the year attributable to the owners of SciDev Limited Basic earnings/(loss) per share Diluted earnings/(loss) per share 3,182,534 (911,548) Cents Cents 39 39 2.26 2.23 (0.69) (0.69) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 33 SCIDEV LTD 2021ANNUAL REPORT 34 SCIDEV LTD 2021ANNUAL REPORTFor the year ended 30 June 2021 Statement of Financial Position SciDev Limited Consolidated statement of financial position As at 30 June 2021 Note 2021 2020 $ $ Assets Current assets Cash and cash equivalents 9 7,010,025 4,481,783 Trade and other receivables 10 7,682,728 2,170,036 Contract assets 11 441,551 - Inventories 12 3,792,740 4,805,023 Income tax refund due 3,049 32,623 Other 336,718 153,254 Total current assets 19,266,811 11,642,719 Non-current assets Financial assets at fair value through other comprehensive income 13 2,720,887 1,502,900 Property, plant and equipment 14 6,383,862 1,196,808 Intangibles 15 24,129,773 11,402,074 Deferred tax 16 3,603,973 1,364,362 Other 45,282 64,053 Total non-current assets 36,883,777 15,530,197 Total assets 56,150,588 27,172,916 Liabilities Current liabilities Trade and other payables 17 9,528,707 8,500,186 Contract liabilities 18 262,646 - Lease liabilities 20 2,465,441 182,780 Employee benefits 21 400,391 126,448 Provisions 22 3,538,664 285,258 Total current liabilities 16,195,849 9,094,672 Non-current liabilities Borrowings 19 279,883 284,918 Lease liabilities 20 2,384,957 70,655 Provisions 22 5,675,342 313,500 Total non-current liabilities 8,340,182 669,073 Total liabilities 24,536,031 9,763,745 Net assets 31,614,557 17,409,171 The above consolidated statement of financial position should be read in conjunction with the accompanying notes Consolidated statement of changes in equity For the year ended 30 June 2021 Issued capital $ Other equity $ Reserves $ Accumulated losses $ Total equity $ Balance at 1 July 2019 76,899,789 Loss after income tax benefit for the year Other comprehensive income/(loss) for the year, net of tax Total comprehensive income/(loss) for the year Transactions with owners in their capacity as owners: Contributions of equity (note 23) Transaction costs net of tax (note 23) Share-based payments (note 40) Options exercised and lapsed (note 23) Contingent consideration (note 24) Transfer from reserves to accumulated losses - - - - 2,210,703 (74,411,471) 4,699,021 - (875,238) (875,238) (36,310) - (36,310) (36,310) (875,238) (911,548) - - - 13,152,292 (299,598) - 122,050 - - - - - - 569,975 - - - 199,029 (2,885,944) - 645,199 - - - 2,763,894 - (645,199) 13,152,292 (299,598) 199,029 - 569,975 - Balance at 30 June 2020 89,874,533 569,975 132,677 (73,168,014) 17,409,171 Issued capital $ Other equity $ Reserves $ Accumulated losses $ Total equity $ Balance at 1 July 2020 89,874,533 569,975 132,677 (73,168,014) 17,409,171 Profit after income tax benefit for the year Other comprehensive income/(loss) for the year, net of tax Total comprehensive income/(loss) for the year - - - - - - - 3,452,968 3,452,968 (270,434) - (270,434) (270,434) 3,452,968 3,182,534 Transactions with owners in their capacity as owners: Share-based payments (note 40) Contributions of equity (note 23) Transaction costs net of tax (note 23) Options exercised (note 23) Contingent consideration (note 24) - 10,927,000 (191,975) 125,000 262,175 - - - - (262,175) 162,827 - - - - - - - - - 162,827 10,927,000 (191,975) 125,000 - Balance at 30 June 2021 100,996,733 307,800 25,070 (69,715,046) 31,614,557 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes 35 SCIDEV LTD 2021ANNUAL REPORT 36 SCIDEV LTD 2021ANNUAL REPORTFor the year ended 30 June 2021 Consolidated statement of cash flows The above consolidated statement of cash flows should be read in conjunction with the accompanying notes SciDev Limited Consolidated statement of cash flows For the year ended 30 June 2021 Note 2021 2020 $ $ Cash flows from operating activities Receipts from customers (inclusive of GST) 41,852,628 20,452,172 Payments to suppliers and employees (inclusive of GST) (43,370,670) (20,397,597) (1,518,042) 54,575 Short term facility and outgoings (167,657) (199,136) Government grants and subsidies 105,501 - Interest received 923 2,784 R&D tax incentive received 380,361 - Interest and other finance costs paid (147,532) (35,688) Income taxes refunded 29,574 - Net cash used in operating activities 38 (1,316,872) (177,465) Cash flows from investing activities Payment for purchase of business, net of cash acquired 35 (1,700,000) (870,765) Payments for property, plant and equipment 14 (414,493) (752,768) Payments for intangibles 15 (186,551) (118,275) Payments for security deposits - (50,878) Payments for contingent consideration (267,031) - Proceeds from disposal of property, plant and equipment 64,900 - Proceeds from release of security deposits 17,706 - Net cash used in investing activities (2,485,469) (1,792,686) Cash flows from financing activities Proceeds from issue of shares 7,000,000 5,071,902 Proceeds from borrowings 1,093,139 284,918 Repayment of leases (870,760) - Proceeds from exercise of share options 125,000 - Share issue transaction costs (191,975) - Repayment of borrowings (817,639) (661,095) Net cash from financing activities 6,337,765 4,695,725 Notes to the consolidated financial statements For the year ended 30 June 2021 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 30 August 2021. 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: Conceptual Framework for Financial Reporting (Conceptual Framework) Amendments to IFRS 3 Definition of a Business Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform Amendments to IAS 1 and IAS 8 Definition of Material The consolidated entity has adopted the revised Accounting Standards and Interpretations from 1 July 2020 but they have not had a material impact on the consolidated entity's financial statements. 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 other comprehensive income. 2. 37 SCIDEV LTD 2021ANNUAL REPORT 38 SCIDEV LTD 2021ANNUAL REPORTThe above 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. Comparative information Some comparative information has been reclassified for presentation purposes. 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 34. 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 2021 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. Notes to the consolidated financial statements For the year ended 30 June 2021 2. Significant accounting policies continued Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: • When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or • When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. SciDev Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group. In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group. 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 39 SCIDEV LTD 2021ANNUAL REPORT 40 SCIDEV LTD 2021ANNUAL REPORTInvestments 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, its carrying value is written off. Financial assets at fair value through other comprehensive income Upon initial recognition, the consolidated entity can elect to classify irrevocably its equity investments as equity instruments designated at fair value through Other Comprehensive Income (OCI) when they meet the definition of equity under AASB 132 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis. Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment. The consolidated entity elected to classify irrevocably its non-listed equity investments under this category. 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 comprehensive income. Impairment of non-financial assets Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. Finance costs Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred. Notes to the consolidated financial statements For the year ended 30 June 2021 2. Significant accounting policies continued 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 The following 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 2021. The consolidated entity has not yet completed a detailed review of these, however does not expect any of them to have a material impact on the financial results upon adoption. Amendments to AASB 3: Reference to Conceptual Framework Amendments to AASB 137: Onerous Contracts – Costs of Fulfilling a Contract Amendments to AASB 116: Property, Plant and Equipment: Proceeds before Intended Use Amendments to AASB 137: Onerous Contracts – Costs of Fulfilling a Contract Amendments to AASB 101: Classification of Liabilities as Current or Non-current Amendments to AASB 101 and IFRS Practice Statement 2 – Disclosure of Accounting Policies Amendments to AASB 108 – Definition of Accounting Estimates Amendments to AASB 112 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction 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. Carrying value of goodwill and non-financial assets Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the consolidated entity is not yet committed to or significant future investments that will enhance the performance of the assets of the CGU being tested. 41 SCIDEV LTD 2021ANNUAL REPORT42 SCIDEV LTD 2021ANNUAL REPORTCarrying value of goodwill and non-financial assets Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the consolidated entity is not yet committed to or significant future investments that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the consolidated entity. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are disclosed and further explained in note 15. Fair value of contingent consideration The consolidated entity has estimated the fair value of contingent consideration payable in connection with business combinations by determining the present value of expected future payments, discounted using a risk-adjusted discount rate. The estimate of future payments is based on forecast EBITDA of the acquired business over a three-year period. The acquisition accounting is provisional at 30 June 2021. 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 and the availability of past losses for use. 4. Operating Segments Identification of reportable operating segments The consolidated entity operates in primarily two geographical segments: Australia and the United States. The primary business segment is the treatment of industrial waste. 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 2021, revenue from 1 customer amounted to $6,936,531 arising from sales in the Australia segment, and revenue from 1 customer amounted to $4,760,454 arising from sales in the United States segment. 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. No other customer contributed 10% or more to the consolidated entity's revenue for both 2021 and 2020. Notes to the consolidated financial statements For the year ended 30 June 2021 4. Operating Segments continued Operating segment information 2021 Revenue Sales to external customers Intersegment sales Total sales revenue Interest revenue Total revenue Adjusted EBITDA* Depreciation and amortisation Interest revenue Finance costs Professional fees in connection with business combinations Profit before income tax benefit Income tax benefit Profit after income tax benefit Assets Segment assets Total assets Total assets includes: Acquisition of non-current assets Liabilities Segment liabilities Total liabilities Eliminations & Australia United States adjustments $ $ $ Total $ 25,593,180 - 25,593,180 923 25,594,103 16,931,728 99,923 17,031,651 - 17,031,651 - (99,923) (99,923) - (99,923) 42,524,908 - 42,524,908 923 42,525,831 2,964,131 (671,026) (204,714) 2,088,391 (929,771) 923 (147,532) (206,352) 805,659 2,647,309 3,452,968 64,954,166 12,224,296 (21,027,874) 56,150,588 56,150,588 414,493 186,551 - 601,044 42,476,655 3,087,250 (21,027,874) 24,536,031 24,536,031 * Adjusted EBITDA excludes the effects of significant items of income and expenditure which may have an impact on the quality of earnings because of isolated or non-recurring events. 43 SCIDEV LTD 2021ANNUAL REPORT 44 SCIDEV LTD 2021ANNUAL REPORT Eliminations and Australia United States adjustments Total 2020 $ $ $ $ Revenue Sales to external customers 12,286,522 5,620,029 - 17,906,551 Intersegment sales 2,574,870 2,271,474 (4,846,344) - Total sales revenue 14,861,392 7,891,503 (4,846,344) 17,906,551 Other revenue 142,345 12,446 - 154,791 Interest revenue 2,784 - - 2,784 Total revenue 15,006,521 7,903,949 (4,846,344) 18,064,126 Adjusted EBITDA* (1,431,852) (345,838) 813 (1,776,877) Depreciation and amortisation (377,760) Interest revenue 2,784 Finance costs (35,688) Professional fees in connection with business combinations (88,045) Loss before income tax benefit (2,275,586) Income tax benefit 1,400,348 Loss after income tax benefit (875,238) Assets Segment assets 21,012,266 11,681,957 (5,521,307) 27,172,916 Total assets 27,172,916 Total assets includes: Acquisition of non-current assets 2,871,201 8,509,546 - 11,380,747 Liabilities Segment liabilities 10,554,626 4,730,426 (5,521,307) 9,763,745 Total liabilities 9,763,745 • Adjusted EBITDA excludes the effects of significant items of income and expenditure which may have an impact on the quality of earnings because of isolated or non-recurring events. 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 Disaggregation of revenue The disaggregation of revenue from contracts with customers is based on the location of the customers as follows: 2021 2020 $ $ Revenue from contracts with customers Treatment fees and product sales 42,524,908 17,906,551 Other revenue Other revenue - 154,791 Revenue 42,524,908 18,061,342 Notes to the consolidated financial statements For the year ended 30 June 2021 5. Revenue continued Geographical regions Australia United States Asia Timing of revenue recognition Goods transferred at a point in time Services transferred over time 2021 $ 2020 $ 21,067,988 18,033,927 3,422,993 10,922,996 5,551,031 1,432,524 42,524,908 17,906,551 40,568,581 1,956,327 17,906,551 - 42,524,908 17,906,551 Accounting policy for revenue recognition The consolidated entity recognises revenue as follows: 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 consideration 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. Warranties associated with contracts are recorded as provisions. Sale of goods Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, 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, based on inputs, for fixed- fee arrangements or as the services are provided for time-and-materials arrangements. The performance obligations relating to these arrangements are expected to have a duration of one year or less. 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. 45 SCIDEV LTD 2021ANNUAL REPORT 46 SCIDEV LTD 2021ANNUAL REPORT6. Other income 2021 2020 $ $ Net foreign exchange gain 200,265 83,123 Net gain on disposal of property, plant and equipment 27,490 - Subsidies and grants 1,462,064 501,527 Sundry 21,942 3,205 Other income 1,711,761 587,855 Other income includes research and development tax incentive and government grants. Research and development tax incentive is recognised in the period in which the grant submission is completed. Government grants are recognised when there is reasonable assurance that the consolidated entity will comply with the conditions attached to it and that the grant will be received. 7. Expenses 8. Income tax benefit 2021 2020 $ $ Profit/(loss) before income tax includes the following specific expenses: Finance costs Interest and finance charges paid/payable on borrowings 99,756 21,800 Interest and finance charges paid/payable on lease liabilities 47,776 13,888 Finance costs expensed 147,532 35,688 Superannuation expense Defined contribution superannuation expense 289,283 187,239 2021 2020 $ $ Income tax benefit Deferred tax - origination and reversal of temporary differences (2,647,309) (1,400,348) Aggregate income tax benefit (2,647,309) (1,400,348) Deferred tax included in income tax benefit comprises: Increase in deferred tax assets (note 16) (2,647,309) (1,364,362) Decrease in deferred tax liabilities - (35,986) Deferred tax - origination and reversal of temporary differences (2,647,309) (1,400,348) Numerical reconciliation of income tax benefit and tax at the statutory rate Profit/(loss) before income tax benefit 805,659 (2,275,586) Tax at the statutory tax rate of 30% (2020: 27.5%) 241,698 (625,786) Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Non-deductible expenses 9,293 245,985 Government grants - (27,500) 250,991 (407,301) Prior year temporary differences not recognised now recognised - (43,655) Recognition of additional carry forward losses (2,579,670) (997,958) Tax losses relating to overseas subsidiaries not recognised 227,402 189,124 Deferred tax prior period adjustment - (35,986) Impact of change in tax rates on opening deferred tax balance (124,033) - Research and development tax credit (421,999) (104,572) Income tax benefit (2,647,309) (1,400,348) Notes to the consolidated financial statements For the year ended 30 June 2021 8. Income tax benefit continued Amounts charged directly to equity Deferred tax expense (note 16) Tax losses not recognised Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit @ 30% 2021 $ 2020 $ 407,698 - 56,240,036 64,080,927 16,872,011 19,224,278 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) 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; (ii) 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 at bank Cash on deposit 2021 $ 2020 $ 6,960,025 50,000 4,481,783 - 7,010,025 4,481,783 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 2021 $ 2020 $ 6,521,610 1,161,118 2,111,383 58,653 7,682,728 2,170,036 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. 47 SCIDEV LTD 2021ANNUAL REPORT 48 SCIDEV LTD 2021ANNUAL REPORT10. Trade and other receivables continued 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. 11. Contract assets The balance at 30 June 2021 represents contract assets associated with the SciDev Water Services business. The business was acquired during the current financial year (refer note 35). Accounting policy for contract assets Contract assets are recognised when the consolidated entity has transferred goods or services to the customer but where the consolidated entity is yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment purposes. 12. Inventories 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. No inventory on hand at 30 June 2021 is being recorded at net realisable value. 13. Financial assets at fair value through other comprehensive income 2021 2020 $ $ Current assets Contract assets 441,551 - 2021 2020 $ $ Current assets Stock in transit - at cost 226,529 547,877 Stock on hand - at cost 3,566,211 4,257,146 3,792,740 4,805,023 2021 2020 $ $ Non-current assets Unlisted equity securities 2,720,887 1,502,900 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 1,502,900 1,502,900 Revaluation increments 1,217,987 - Closing fair value 2,720,887 1,502,900 Notes to the consolidated financial statements For the year ended 30 June 2021 13. Financial assets at fair value through other comprehensive income continued Investment in Tartana Resources Limited Included in the total value of unlisted securities at 30 June 2021 is an investment of $2,717,987 in Tartana Resources Ltd (Tartana). 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 completed on 22 January 2018, on which date control of IZR passed to the acquirer, 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. On 4 February 2021, R3D Resources Limited (ASX:R3D) announced an off-market all scrip takeover bid for 100% of the fully paid ordi- nary shares and 100% of the options in Tartana. The offer closed on 31 July 2021 and at that date R3D had a relevant interest in 99.89% of Tartana shares. SciDev received 13,589,935 R3D shares and 2,727,987 attaching options for the shares it held in Tartana. The options are exercisable at $0.40 within 5 years from the date of issue. Refer to note 28 for further information on fair value measurement. 14 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 2021 $ 2020 $ 567,886 (297,060) 270,826 7,077,063 (1,534,336) 5,542,727 668,159 (117,121) 551,038 38,942 (19,671) 19,271 186,480 (86,068) 100,412 2,204,673 (1,247,984) 956,689 284,340 (164,395) 119,945 61,090 (41,328) 19,762 6,383,862 1,196,808 49 SCIDEV LTD 2021ANNUAL REPORT 50 SCIDEV LTD 2021ANNUAL REPORT14 Property plant and equipment continued Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Included in the above line items are right-of-use assets over the following: Accounting policy for property, plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expendi-ture 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 com-prises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commence-ment date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of invento-ries, 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 of $167,657 on short-term leases were ex-pensed to profit or loss as incurred (2020: $199,136). Office buildings and warehouses Plant and equipment Motor vehicles Office equipment Total $ $ $ $ $ Balance at 1 July 2019 - 286,266 - 17,188 303,454 Additions - 742,632 - 10,136 752,768 Additions through business combinations - 196,782 132,897 - 329,679 Disposals - (6,902) - - (6,902) Adoption of AASB 16 186,480 - - - 186,480 Exchange differences - (4,301) (4,469) - (8,770) Depreciation expense (86,068) (257,788) (8,483) (7,562) (359,901) Balance at 30 June 2020 100,412 956,689 119,945 19,762 1,196,808 Additions - 402,269 10,053 2,171 414,493 Additions through business combinations (note 35) - 4,883,096 356,048 6,709 5,245,853 Disposals - (28,202) (9,208) - (37,410) Adjustments - 1,503 (25) - 1,478 Exchange differences 1,208 (25,319) (6,444) - (30,555) Recognition of right-of-use asset 381,406 - 111,976 - 493,382 Depreciation expense (212,200) (647,309) (31,307) (9,371) (900,187) Balance at 30 June 2021 270,826 5,542,727 551,038 19,271 6,383,862 Office buildings and warehouses Plant and equipment Motor vehicles Total $ $ $ $ Recognition of right-of-use asset 186,480 - - 186,480 Additions through business combinations (note 33) - - 91,857 91,857 Exchange differences - - (4,469) (4,469) Depreciation expense (86,068) - (8,483) (94,551) Balance at 30 June 2020 100,412 - 78,905 179,317 Recognition of right-of-use asset 381,406 - 111,976 493,382 Additions through business combinations (note 33) - 4,723,664 - 4,723,664 Exchange differences 1,208 - (6,444) (5,236) Depreciation expense (212,200) (363,359) (23,008) (598,567) Balance at 30 June 2021 270,826 4,360,305 161,429 4,792,560 Notes to the consolidated financial statements For the year ended 30 June 2021 14 Property plant and equipment continued 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, whichever 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. 15. Intangibles Non-current assets Goodwill - at cost Trade marks and intellectual property - at cost Less: Accumulated amortisation 2021 $ 2020 $ 23,606,453 10,987,134 798,080 (274,760) 523,320 670,125 (255,185) 414,940 24,129,773 11,402,074 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 2019 Additions Additions through business combinations Exchange differences Adjustment Amortisation expense Balance at 30 June 2020 Additions Additions through business combinations (note 35) Exchange differences Write off of assets Amortisation expense Trade marks and intellectual property $ 216,281 118,275 42,001 (2,897) 59,139 (17,859) 414,940 186,551 - (7,438) (41,149) (29,584) Goodwill $ 1,030,018 - 9,957,116 - - - 10,987,134 - 13,687,501 (1,068,182) - - Total $ 1,246,299 118,275 9,999,117 (2,897) 59,139 (17,859) 11,402,074 186,551 13,687,501 (1,075,620) (41,149) (29,584) Balance at 30 June 2021 23,606,453 523,320 24,129,773 51 SCIDEV LTD 2021ANNUAL REPORT 52 SCIDEV LTD 2021ANNUAL REPORT15 Intangibles continued Impairment testing for goodwill 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 (within the company's 5-year plan) using variable rates, together with a terminal value. The exception to this is the provisional goodwill balance of $13,687,501 which was recognised through business combinations in May 2021 (refer note 35). The recoverable amount of the Australia 2 cash generating unit (CGU), which forms part of the Australia group of CGUs, has been determined based on fair value less costs of disposal given the proximity of the transaction to period end. Goodwill is monitored by management at the following level: 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 1 CGU (measured by value-in-use) include: (a) Post-tax discount rate of 6.5% (2020: 6%) per annum; (b) Average revenue growth over the five-year period of 47.9% (2020: 43.9%); (c) Average growth in gross margin over the five-year period of -1.3% (2020: 2.1%); and (d) Average per annum increase in operating expenses of 31.4% (2020: 34.7%). Key assumptions in the discounted cashflow model for the United States CGU include: (a) Post-tax discount rate of 14% (2020: 6%) per annum; (b) Average revenue growth over the five-year period of 47.8% (2020: 53.3%); (c) Average growth in gross margin over the five-year period of 14.8% (2020: 2.6%); and (d) Average per annum increase in operating expenses of 30.4% (2020: 26.4%). The discount rate 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 development 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. 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. 2021 2020 $ $ Australian Group of CGUs - Australia 1 3,002,084 3,002,084 - Australia 2 13,687,501 - United States CGU 6,915,868 7,985,050 23,605,453 10,987,134 Notes to the consolidated financial statements For the year ended 30 June 2021 15 Intangibles continued 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. 16 Deferred Tax Non-current assets Deferred tax asset comprises temporary differences attributable to: Breakdown of closing deferred tax balances: Tax losses Employee benefits Accrued expenses Equity instruments at fair value through other comprehensive income Prepayment Deferred tax asset Movements: Opening balance Credited to profit or loss (note 8) Charged to equity (note 8) Closing balance 17 Trade and other payables Current liabilities Trade payables Payable to the vendors of Haldon Industries BAS payable Other payables 2021 $ 2020 $ 3,888,078 120,117 52,834 (407,698) (49,358) 1,306,813 49,849 7,700 - - 3,603,973 1,364,362 1,364,362 2,647,309 (407,698) - 1,364,362 - 3,603,973 1,364,362 2021 $ 2020 $ 7,617,673 879,685 280,775 750,574 7,823,591 - 238,775 437,820 9,528,707 8,500,186 Refer to note 27 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. 53 SCIDEV LTD 2021ANNUAL REPORT 54 SCIDEV LTD 2021ANNUAL REPORT18 Contract liabilities Unsatisfied performance obligations The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end of the reporting period was $262,646 as at 30 June 2021 ($nil as at 30 June 2020) and is expected to be recognised as revenue in future periods as follows: Accounting policy for contract liabilities Contract liabilities represent the consolidated entity's obligation to transfer goods or services to a customer and are recognised when a customer pays consideration, or when the consolidated entity recognises a receivable to reflect its unconditional right to consideration (whichever is earlier) before the consolidated entity has transferred the goods or services to the customer. 19 Borrowings Paycheck Protection Program loan 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: • The loan has an interest rate of 1%. • Loans issued prior to 5 June 2020 have a maturity of 2 years. Loans issued after 5 June 2020 have a maturity of 5 years. • Loan payments have been deferred for six months. · The loan is unsecured. Movements in Paycheck Protection Program loan: Refer to note 27 for further information on financial instruments. Subsequent to 30 June 2021, the loan was forgiven (refer note 37). 2021 2020 $ $ Current liabilities Contract liabilities 262,646 - 2021 2020 $ $ Within 6 months 262,646 - 2021 2020 $ $ Non-current liabilities Loan - Paycheck Protection Program (USA) 279,883 284,918 2021 2020 $ $ Opening balance 284,918 - Debt converted into subsidy (266,459) - Receipts 275,500 284,918 Exchange differences (14,076) - Closing balance 279,883 284,918 Notes to the consolidated financial statements Notes to the consolidated financial statements For the year ended 30 June 2021 For the year ended 30 June 2021 Notes to the consolidated financial statements For the year ended 30 June 2021 Borrowings continued 19 Borrowings continued 19 19 Borrowings continued Total facilities Total facilities Bank loan Bank loan Loan - Kanins International Pty Ltd Total facilities Loan - Kanins International Pty Ltd Loan - Paycheck Protection Program (USA) Bank loan Loan - Paycheck Protection Program (USA) Leases Loan - Kanins International Pty Ltd Leases Invoice purchase facility Loan - Paycheck Protection Program (USA) Invoice purchase facility Leases Invoice purchase facility Used at the reporting date Used at the reporting date Used at the reporting date Bank loan Bank loan Loan - Kanins International Pty Ltd Loan - Kanins International Pty Ltd Loan - Paycheck Protection Program (USA) Bank loan Loan - Paycheck Protection Program (USA) Leases Loan - Kanins International Pty Ltd Leases Invoice purchase facility Loan - Paycheck Protection Program (USA) Invoice purchase facility Leases Invoice purchase facility Unused at the reporting date Unused at the reporting date Bank loan Bank loan Loan - Kanins International Pty Ltd Loan - Kanins International Pty Ltd Loan - Paycheck Protection Program (USA) Bank loan Loan - Paycheck Protection Program (USA) Leases Loan - Kanins International Pty Ltd Leases Invoice purchase facility Loan - Paycheck Protection Program (USA) Invoice purchase facility Leases Invoice purchase facility Unused at the reporting date 2021 2021 $ $ 2021 $ - - 490,000 490,000 279,883 - 279,883 4,850,398 490,000 4,850,398 6,000,000 279,883 6,000,000 11,620,281 4,850,398 11,620,281 6,000,000 11,620,281 - - - - 279,883 - 279,883 4,850,398 - 4,850,398 - 279,883 - 5,130,281 4,850,398 5,130,281 - 5,130,281 - - 490,000 490,000 - - - - 490,000 - 6,000,000 - 6,000,000 6,490,000 - 6,490,000 6,000,000 2020 2020 $ $ 2020 $ 3,529,000 3,529,000 510,000 510,000 284,918 3,529,000 284,918 253,435 510,000 253,435 5,000,000 284,918 5,000,000 9,577,353 253,435 9,577,353 5,000,000 9,577,353 - - - - 284,918 - 284,918 253,435 - 253,435 - 284,918 - 538,353 253,435 538,353 - 538,353 3,529,000 3,529,000 510,000 510,000 - 3,529,000 - - 510,000 - 5,000,000 - 5,000,000 9,039,000 - 9,039,000 5,000,000 The above facilities have the following maturity dates: The above facilities have the following maturity dates: - Loan - Kanins International Pty Ltd - 2 October 2021 The above facilities have the following maturity dates: - Loan - Kanins International Pty Ltd - 2 October 2021 - Loan - Paycheck Protection Program - 10 March 2026 - Loan - Kanins International Pty Ltd - 2 October 2021 - Loan - Paycheck Protection Program - 10 March 2026 - Invoice purchase facility - no maturity date - Loan - Paycheck Protection Program - 10 March 2026 - Invoice purchase facility - no maturity date Accounting policy for borrowings - Invoice purchase facility - no maturity date Accounting policy for borrowings Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are 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. subsequently measured at amortised cost using the effective interest method. Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are 6,490,000 9,039,000 subsequently measured at amortised cost using the effective interest method. 20 20 Lease liabilities Lease liabilities 20 Lease liabilities Current liabilities Current liabilities Lease liability - land and buildings Lease liability - land and buildings Lease liability - motor vehicles Current liabilities Lease liability - motor vehicles Lease liability - equipment Lease liability - land and buildings Lease liability - equipment Lease liability - motor vehicles Lease liability - equipment Non-current liabilities Non-current liabilities Lease liability - land and buildings Lease liability - land and buildings Lease liability - motor vehicles Non-current liabilities Lease liability - motor vehicles Lease liability - equipment Lease liability - land and buildings Lease liability - equipment Lease liability - motor vehicles Lease liability - equipment Refer to note 27 for further information on financial instruments. Refer to note 27 for further information on financial instruments. Refer to note 27 for further information on financial instruments. 55 2021 2021 $ $ 2021 $ 276,770 276,770 73,225 73,225 2,115,446 276,770 2,115,446 73,225 2,465,441 2,115,446 2,465,441 2,465,441 16,985 16,985 123,061 123,061 2,244,911 16,985 2,244,911 123,061 2,384,957 2,244,911 2,384,957 4,850,398 2,384,957 4,850,398 2020 2020 $ $ 2020 $ 89,574 89,574 93,206 93,206 - 89,574 - 93,206 182,780 - 182,780 182,780 15,594 15,594 55,061 55,061 - 15,594 - 55,061 70,655 - 70,655 253,435 70,655 253,435 4,850,398 253,435 SCIDEV LTD 2021ANNUAL REPORT 56 SCIDEV LTD 2021ANNUAL REPORT20 Lease liabilities continued Land and buildings: The consolidated entity has leases for warehouses and offices. Rental contracts are typically made for a fixed period of 3 - 5 years with options to extend. With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the statement of financial position. The consolidated entity classifies its right-of-use assets in a consistent manner to its property, plant and equipment. Most extension options have been included in the lease liability. Motor vehicles: The consolidated entity leases motor vehicles under finance lease and hire purchase. The leases are secured over the individual motor vehicles that the lease relates to. Equipment: The consolidated entity leases certain equipment under a lease that expires on 30 June 2023 and there are no options to extend. The lease is secured over the individual asset the lease relates to. A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are subsequently remeasured by increasing the carrying value to reflect interest on the lease liabilities, reducing the carrying value to reflect lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. 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. 21 Employment benefits 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. Defined contribution superannuation expense Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred. 2021 2020 $ $ Current liabilities Annual leave 399,559 126,320 Long service leave 832 128 400,391 126,448 Notes to the consolidated financial statements For the year ended 30 June 2021 22 Provisions Current liabilities Contingent consideration Warranties Non-current liabilities Contingent consideration Contingent consideration 2021 $ 2020 $ 3,538,664 - 267,031 18,227 3,538,664 285,258 5,675,342 313,500 9,214,006 598,758 The contingent consideration relates to the acquisition of Haldon Industries and ProSol Pty Ltd and represents the cash component of the contingent consideration. It is measured at the present value of the estimated liability. Movements in provisions Movements in each class of provision during the current financial year, other than employee benefits, are set out below: 2021 Carrying amount at the start of the year Additions through business combinations (note 35) Payments Unused amounts reversed Carrying amount at the end of the year Accounting policy for provisions Contingent consideration Warranties $ $ 580,531 8,900,506 (267,031) - 18,227 - - (18,227) 9,214,006 - 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. 23 Issued Capital Ordinary shares - fully paid 158,370,242 140,889,052 100,996,733 89,874,533 2021 Shares 2020 Shares 2021 $ 2020 $ 57 SCIDEV LTD 2021ANNUAL REPORT 58 SCIDEV LTD 2021ANNUAL REPORT23 Issued capital continued Movements in ordinary share capital 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. (a) Share placement and shares issued to service provider • 30 June 2020 On 20 September 2019 SciDev Limited announced the placement of 16,000,000 new ordinary shares with local institutional and sophisticated 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. • 30 June 2021 On 24 July 2020 SciDev Limited announced the placement of 7,692,308 new ordinary shares with two leading Australian Fund Managers at an issue price of $0.65 per share. Details Date Shares Issue price $ Balance 1 July 2019 107,263,157 76,899,789 Share placement (a) 20 September 2019 16,000,000 $0.260 4,160,000 Options exercised 3 October 2019 100,000 $0.250 25,000 Options exercised 3 October 2019 200,000 $0.250 50,000 Options exercised 3 October 2019 2,250,000 $0.250 562,500 Options exercised 1 November 2019 200,000 $0.250 50,000 Options exercised 19 November 2019 500,000 $0.250 125,000 Options exercised 19 November 2019 50,000 $0.250 12,500 Shares issued to service provider (a) 19 November 2019 192,307 $0.260 50,000 Options exercised 19 November 2019 650,000 $0.250 162,500 Shares issued to acquire ProSol Australia Pty Ltd (c) 25 November 2019 684,000 $0.590 403,560 Options exercised 13 December 2019 675,000 $0.120 81,000 Options exercised 16 January 2020 350,000 $0.120 42,000 Options exercised 10 February 2020 75,000 $0.120 9,000 Options exercised 27 February 2020 325,000 $0.120 39,000 Shares issued to acquire Highland Fluid Technology Inc. (d) 28 February 2020 11,349,588 $0.650 7,377,232 Options exercised 26 June 2020 25,000 $0.120 3,000 Share issue expenses - $0.000 (299,598) Options exercised - transfer from share-based payments reserve - $0.000 122,050 Balance 30 June 2020 140,889,052 89,874,533 Share placement (a) 24 July 2020 7,692,308 $0.650 5,000,000 Options exercised 29 July 2020 125,000 $0.120 15,000 Shares issued to the vendor of ProSol Australia Pty Ltd (c) 29 July 2020 436,959 $0.600 262,175 Share purchase plan (b) 21 August 2020 3,076,923 $0.650 2,000,000 Options exercised 17 November 2020 800,000 $0.100 80,000 Options exercised 26 November 2020 125,000 $0.120 15,000 Options exercised 15 January 2021 75,000 $0.120 9,000 Options exercised 3 May 2021 50,000 $0.120 6,000 Shares issued to vendor of the Haldon Industries business (e) 12 May 2021 5,100,000 $0.770 3,927,000 Share issue expenses - $0.000 (191,975) Balance 30 June 2021 158,370,242 100,996,733 Notes to the consolidated financial statements For the year ended 30 June 2021 23 Issued capital continued (b) Share purchase plan • 30 June 2021—On 21 August 2020 SciDev Limited issued 3,076,923 new ordinary shares at $0.65 per share pursuant to a Share Purchase Plan (SPP). (c) Shares issued to acquire ProSol Australia Pty Ltd • • 30 June 2020—On 25 November 2019 SciDev Limited issued 684,000 ordinary shares at $0.59 per share to acquire ProSol Australia Pty Ltd. 30 June 2021 - On 29 July 2020 SciDev Limited issued 436,959 ordinary shares at $0.60 per share to the vendor of ProSol Australia Pty Ltd (ProSol) being part of the first tranche of milestoned consideration under the terms of acquisition of ProSol Australia Pty Ltd (see note 24). (d) Shares issued to acquire Highland Fluid Technology Inc - 30 June 2020 On 28 February 2020 SciDev Limited issued 11,349,588 ordinary shares at $0.65 per share to acquire Highland Fluid Technology Inc. (e) Shares issued to the vendor of Haldon Industries • 30 June 2021—On 12 May 2021 SciDev Limited issued 5,100,000 ordinary shares at $0.77 per share to acquire the Haldon Industries business (refer note 35). 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 and lease liabilities (current and non-current) 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 2020 Annual Report. The consolidated entity monitors capital on the basis of its working capital position (i.e. liquidity risk). The net working capital (current assets less current liabilities) of the consolidated entity at 30 June 2021 was $3,070,962 (2020: $2,548,047). 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. 59 SCIDEV LTD 2021ANNUAL REPORT 60 SCIDEV LTD 2021ANNUAL REPORT24 Other equity The contingent consideration relates to the acquisition of ProSol Pty Ltd and represents the fair value of the consideration to be settled by the issue of SciDev Ltd shares. 25 Reserves 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. 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. Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: 2021 2020 $ $ Contingent consideration 307,800 569,975 2021 2020 $ $ Opening balance 569,975 - Acquisition of ProSol Pty Ltd - 569,975 Issue of shares (262,175) - Closing balance 307,800 569,975 2021 2020 $ $ Revaluation reserve 810,289 - Foreign currency reserve (1,117,033) (36,310) Share-based payments reserve 331,814 168,987 25,070 132,677 Revaluation Foreign currency Share-based payments Transactions with non-controlling reserve reserve reserve interests Total $ $ $ $ $ Balance at 1 July 2019 - - 2,855,902 (645,199) 2,210,703 Foreign currency translation - (36,310) - - (36,310) Share-based payments - - 199,029 - 199,029 Options exercised and lapsed - - (2,885,944) - (2,885,944) Transfer to accumulated losses - - - 645,199 645,199 Balance at 30 June 2020 - (36,310) 168,987 - 132,677 Revaluation - gross 1,217,987 - - - 1,217,987 Deferred tax (407,698) - - - (407,698) Foreign currency translation - (1,080,723) - - (1,080,723) Share-based payments - - 162,827 - 162,827 Balance at 30 June 2021 810,289 (1,117,033) 331,814 - 25,070 Notes to the consolidated financial statements For the year ended 30 June 2021 Notes to the consolidated financial statements For the year ended 30 June 2021 Notes to the consolidated financial statements For the year ended 30 June 2021 26 Dividends 26 There were no dividends paid, recommended or declared during the current or previous financial year. Dividends Dividends 26 There were no dividends paid, recommended or declared during the current or previous financial year. 27 There were no dividends paid, recommended or declared during the current or previous financial year. 27 Financial instruments Financial risk management objectives Financial instruments 27 Financial instruments Financial risk management objectives The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the 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 unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk consolidated entity. The consolidated entity does not enter into or trade financial instruments, including derivative financial unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the instruments for speculative purposes. consolidated entity. The consolidated entity does not enter into or trade financial instruments, including derivative financial unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the instruments for speculative purposes. Risk management is carried out by company management and the Board of Directors. Financial risks are identified and consolidated entity. The consolidated entity does not enter into or trade financial instruments, including derivative financial evaluated and where considered necessary strategies are put in place to investigate and/or minimise such risks. 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 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 Market risk Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a Foreign currency risk currency that is not the entity’s functional currency. The consolidated entity has a trade finance facility utilised for the purchase Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a Foreign currency risk of US$ denominated invoices. Purchases through the facility are transacted at the prevailing spot A$/US$ exchange rate and the currency that is not the entity’s functional currency. The consolidated entity has a trade finance facility utilised for the purchase Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a outstanding amount under the facility is always denominated in A$. The consolidated entity has not entered into any foreign of US$ denominated invoices. Purchases through the facility are transacted at the prevailing spot A$/US$ exchange rate and the currency that is not the entity’s functional currency. The consolidated entity has a trade finance facility utilised for the purchase currency hedging contracts during the year. outstanding amount under the facility is always denominated in A$. The consolidated entity has not entered into any foreign of US$ denominated invoices. Purchases through the facility are transacted at the prevailing spot A$/US$ exchange rate and the currency hedging contracts during the year. The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilities at the outstanding amount under the facility is always denominated in A$. The consolidated entity has not entered into any foreign reporting date were as follows: currency hedging contracts during the year. The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilities at the reporting date were as follows: reporting date were as follows: 2020 The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilities at the $ 2020 $ - Assets - cash - US dollars 2020 126,688 Assets - receivables - US dollars $ Assets - cash - US dollars - (6,872,057) Liabilities - US dollars 126,688 Assets - receivables - US dollars Assets - cash - US dollars - (6,872,057) Liabilities - US dollars (6,745,369) Net liabilities denominated in foreign currencies 126,688 Assets - receivables - US dollars (6,872,057) Liabilities - US dollars (6,745,369) Net liabilities denominated in foreign currencies The following table shows how profit or loss and equity would have been affected by changes in USD that were reasonably Net liabilities denominated in foreign currencies (6,745,369) possible at the reporting date. The percentage change is the expected overall volatility of the USD, which is based on The following table shows how profit or loss and equity would have been affected by changes in USD that were reasonably management's assessment of reasonable possible fluctuations taking into consideration movements over the last 12 months possible at the reporting date. The percentage change is the expected overall volatility of the USD, which is based on The following table shows how profit or loss and equity would have been affected by changes in USD that were reasonably each year and the spot rate at each reporting date. management's assessment of reasonable possible fluctuations taking into consideration movements over the last 12 months possible at the reporting date. The percentage change is the expected overall volatility of the USD, which is based on each year and the spot rate at each reporting date. management's assessment of reasonable possible fluctuations taking into consideration movements over the last 12 months 2021 $ 2021 $ 1,731,680 2021 1,219,796 $ 1,731,680 (3,091,804) 1,219,796 1,731,680 (3,091,804) (140,328) 1,219,796 (3,091,804) (140,328) (140,328) each year and the spot rate at each reporting date. AUD strengthened Effect on profit AUD strengthened before tax Effect on profit AUD strengthened before tax 14,033 Effect on profit before tax 14,033 % change % change 10% % change 10% Effect on equity Effect on equity 14,033 Effect on equity 14,033 AUD weakened Effect on profit AUD weakened before tax Effect on profit AUD weakened before tax (14,033) Effect on profit before tax (14,033) % change % change 10% % change 10% Effect on equity Effect on equity (14,033) Effect on equity (14,033) 10% 14,033 AUD strengthened 14,033 % change % change 10% % change 10% Effect on profit before tax Effect on profit before tax 674,537 Effect on profit before tax 674,537 AUD strengthened Effect on equity AUD strengthened Effect on equity 674,537 Effect on equity 674,537 10% (14,033) (14,033) AUD weakened % change % change 10% % change 10% Effect on profit before tax Effect on profit before tax (674,537) Effect on profit before tax (674,537) AUD weakened Effect on equity AUD weakened Effect on equity (674,537) Effect on equity (674,537) 2021 2021 US Dollar 2021 US Dollar US Dollar 2020 2020 US dollar 2020 US dollar US dollar The actual foreign exchange gain for the year ended 30 June 2021 was $200,265 (2020: $83,123). 674,537 674,537 10% 10% (674,537) (674,537) The actual foreign exchange gain for the year ended 30 June 2021 was $200,265 (2020: $83,123). Price risk The actual foreign exchange gain for the year ended 30 June 2021 was $200,265 (2020: $83,123). The consolidated entity is not exposed to any significant price risk. Price risk The consolidated entity is not exposed to any significant price risk. Price risk The consolidated entity is not exposed to any significant price risk. 61 SCIDEV LTD 2021ANNUAL REPORT 62 SCIDEV LTD 2021ANNUAL REPORT27 Financial instruments Interest rate risk The consolidated entity was exposed to variable interest rate risks on cash deposits. A reasonably possible increase of 100 basis points (2020: 100 basis points) in interest rates at the reporting date would have increased the profit before tax by $70,100 (2020: $44,818). The percentage change is based on the expected volatility of interest rates using market data and analysts forecasts. As at the reporting date, the consolidated entity had the following deposits: An analysis by remaining contractual maturities in shown in 'liquidity and interest rate risk management' below. 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. There was no expected credit loss provision at 30 June 2021 and 30 June 2020 and there were no movements in the provision during the 2021 financial year as there were no changes in the credit risk of customers. There were no debts written off during the 2021 financial year (2020: nil). 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 monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. Remaining contractual maturities The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. 2021 2020 Weighted average interest rate Balance Weighted average interest rate Balance % $ % $ Cash at bank and on deposit - 7,010,025 - 4,481,783 Net exposure to cash flow interest rate risk 7,010,025 4,481,783 Notes to the consolidated financial statements For the year ended 30 June 2021 27 Financial instruments continued 2021 Non-interest bearing Trade payables and other payables Contingent consideration Interest-bearing - fixed rate Other loans Lease liability Total non-derivatives 2020 Non-interest bearing Trade payables and other payables Contingent consideration Interest-bearing - fixed rate Other loans Lease liability Total non-derivatives 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ 9,528,707 3,568,664 - 2,814,311 - 3,620,000 - 2,551,989 279,883 2,500,671 - 82,532 15,649,360 5,594,865 3,702,532 - - - - - 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities `$ 9,528,707 10,002,975 279,883 5,135,192 24,946,757 Remaining contractual maturities $ 8,500,186 267,031 - 313,500 - 182,780 8,949,997 284,918 70,655 669,073 - - - - - - - - - - 8,500,186 580,531 284,918 253,435 9,619,070 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. 28 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 2021 Assets Equity securities Equity securities - other Total assets Liabilities Contingent consideration Total liabilities Level 1 $ Level 2 $ Level 3 $ Total $ - - - - - 2,717,987 2,900 2,720,887 - - - 2,717,987 2,900 2,720,887 - - 9,214,006 9,214,006 9,214,006 9,214,006 63 SCIDEV LTD 2021ANNUAL REPORT 64 SCIDEV LTD 2021ANNUAL REPORT28 Fair value measurement continued Valuation techniques for fair value measurements categorised within level 2 and level 3 Level 2: Equity securities The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. The balance in equity securities at 30 June 2021 represents shares held in Tartana Resources Ltd (an unlisted entity) which were exchanged for ordinary shares and options in ASX listed R3D Resources Ltd in July 2021 following the completion of a takeover offer (note 13). All significant inputs required to value the shares in Tartana at 30 June 2021 were based on the quoted market price for the R3D securities (based on the listing price per the prospectus lodged with the ASX). Level 3: Contingent consideration If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. 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 and EBITDA. The estimate of the input is 89% and an increase to 100% (decrease to 78%) would increase (decrease) fair value by $1,078,473. Level 3 assets and liabilities Movements in level 3 assets and liabilities during the current and previous financial year are set out below: There were no gains or losses relating to level 3 liabilities held at 30 June 2021 and 30 June 2020. Accounting policy for fair value measurement When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Level 1 Level 2 Level 3 Total 2020 $ $ $ $ Assets Equity securities - 1,500,000 - 1,500,000 Equity securities - other - 2,900 - 2,900 Total assets - 1,502,900 - 1,502,900 Liabilities Contingent consideration - - 580,531 580,531 Total liabilities - - 580,531 580,531 Contingent consideration Total $ $ Balance at 1 July 2019 - - Transfers into level 3 580,531 580,531 Balance at 30 June 2020 580,531 580,531 Additions 8,900,506 8,900,506 Payments (267,031) (267,031) Balance at 30 June 2021 9,214,006 9,214,006 Notes to the consolidated financial statements For the year ended 30 June 2021 28 Fair value measurement continued 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. 29 Key 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 Share-based payments 2021 $ 2020 $ 1,342,152 97,684 22,139 107,494 940,344 56,386 52,575 360,006 1,569,469 1,409,311 The 30 June 2020 amounts have been restated. Refer to the Remuneration Report for further details. 30 Remuneration of auditors During the financial year the following fees were paid or payable for services provided by Ernst & Young, the auditor of the company, and its network firms: Audit services - Ernst & Young Audit or review of the financial statements Other services - Ernst & Young* Tax compliance services Transaction services Audit services - Rothsay Chartered Accountants Audit or review of the financial statements Other services - Rothsay Chartered Accountants Tax compliance services 2021 $ 2020 $ 90,000 6,300 119,620 125,920 215,920 - - - - - 12,000 40,000 5,000 - 17,000 40,000 * All non-audit services provided by Ernst & Young were performed and paid prior to Ernst & Young's appointment as auditor. 65 SCIDEV LTD 2021ANNUAL REPORT 66 SCIDEV LTD 2021ANNUAL REPORT31 Contingent liabilities The consolidated entity did not have any contingent liabilities other than those disclosed in Note 22 and Note 33 as at 30 June 2021 (2020: none other than those disclosed in Note 22 and Note 33). 32 Commitments There were no capital commitments as at 30 June 2021 for the consolidated entity (2020: nil). 33 Related party transactions Parent entity SciDev Limited is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 36. Key management personnel Disclosures relating to key management personnel are set out in note 29 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: A director, Simone Watt, is a director of Sinoz Chemicals and Commodities Pty Ltd (Sinoz) and has the capacity to significantly influence the decision-making of the company. The consolidated entity has leased premises from Sinoz during the 2021 financial year. The lease contract was based on normal commercial terms and conditions. Receivable from and payable to related parties There were no trade receivables from or trade payables to related parties at the current and previous reporting date. Loans to/from related parties 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 2021. The facility is secured against the consolidated entity's inventory and incurs interest at 15% per annum. $nil (2020: $nil) was drawn down on this facility and $nil (2020: $nil) repaid during the 2021 financial year. The loan balance at 30 June 2021 was $nil (2020: $nil). 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. 2021 2020 $ $ Payment for other expenses: Rent paid to other related party 6,030 - Notes to the consolidated financial statements Notes to the consolidated financial statements For the year ended 30 June 2021 For the year ended 30 June 2021 Notes to the consolidated financial statements For the year ended 30 June 2021 34 34 Parent entity information Parent entity information Parent entity information Set out below is the supplementary information about the parent entity. 34 Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Statement of profit or loss and other comprehensive income Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Profit/(loss) after income tax Profit/(loss) after income tax Other comprehensive income/(loss) for the year, net of tax Profit/(loss) after income tax Other comprehensive income/(loss) for the year, net of tax Total comprehensive income/(loss) Other comprehensive income/(loss) for the year, net of tax Total comprehensive income/(loss) Statement of financial position Statement of financial position Total comprehensive income/(loss) Guarantees entered into by the parent entity in relation to the debts of its subsidiaries Guarantees entered into by the parent entity in relation to the debts of its subsidiaries Statement of financial position Guarantees entered into by the parent entity in relation to the debts of its subsidiaries Total current assets Total current assets Total non-current assets Total current assets Total non-current assets Total assets Total non-current assets Total assets Total current liabilities Total assets Total current liabilities Total non-current liabilities Total current liabilities Total non-current liabilities Total liabilities Total non-current liabilities Total liabilities Net assets Total liabilities Net assets Equity Net assets Equity Equity Issued capital Issued capital Other equity Other equity Revaluation reserve Issued capital Revaluation reserve Foreign currency reserve Other equity Foreign currency reserve Share-based payments reserve Revaluation reserve Share-based payments reserve Accumulated losses Foreign currency reserve Accumulated losses Share-based payments reserve Accumulated losses Total equity Total equity Parent Parent 2021 2021 $ Parent $ 2021 1,127,889 $ 1,127,889 195,923 1,127,889 195,923 1,323,812 195,923 1,323,812 2020 2020 $ $ 2020 (542,813) $ (542,813) - (542,813) - (542,813) - (542,813) 1,323,812 (542,813) Parent Parent 2021 2021 $ Parent $ 2021 1,399,920 $ 1,399,920 2020 2020 $ $ 2020 446,893 $ 446,893 30,939,634 1,399,920 30,939,634 19,663,035 446,893 19,663,035 32,339,554 30,939,634 32,339,554 20,109,928 19,663,035 20,109,928 829,495 32,339,554 829,495 617,439 20,109,928 617,439 - 829,495 - 829,495 - 829,495 329,094 617,439 329,094 946,533 329,094 946,533 31,510,059 829,495 31,510,059 19,163,395 946,533 19,163,395 31,510,059 101,303,248 101,303,248 307,800 307,800 810,289 101,303,248 810,289 (614,366) 307,800 (614,366) 239,806 810,289 239,806 (70,536,718) (614,366) (70,536,718) 239,806 31,510,059 (70,536,718) 31,510,059 19,163,395 90,181,048 90,181,048 569,975 569,975 - 90,181,048 - - 569,975 - 76,979 - 76,979 (71,664,607) - (71,664,607) 76,979 19,163,395 (71,664,607) 19,163,395 The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2021 and 30 June 2020, other than 19,163,395 Total equity The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2021 and 30 June 2020, other than under the terms of the acquisition of the Haldon business by SciDev Water Services Pty Limited (SWSPL). The parent entity under the terms of the acquisition of the Haldon business by SciDev Water Services Pty Limited (SWSPL). The parent entity The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2021 and 30 June 2020, other than irrevocably and unconditionally guarantees the due and punctual performance of SWSPL's present and future obligations and irrevocably and unconditionally guarantees the due and punctual performance of SWSPL's present and future obligations and under the terms of the acquisition of the Haldon business by SciDev Water Services Pty Limited (SWSPL). The parent entity the payment of all present and future liabilities of SWSPL under that acquisition agreement. the payment of all present and future liabilities of SWSPL under that acquisition agreement. irrevocably and unconditionally guarantees the due and punctual performance of SWSPL's present and future obligations and Contingent liabilities Contingent liabilities the payment of all present and future liabilities of SWSPL under that acquisition agreement. The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020. The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020. Contingent liabilities The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020. The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020. The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020. 31,510,059 Significant accounting policies Significant accounting policies The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020. The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 2, except for The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 2, except for Significant accounting policies the following: the following: The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 2, except for • • the following: • • • Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. indicator of an impairment of the investment. indicator of an impairment of the investment. Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an • indicator of an impairment of the investment. 67 SCIDEV LTD 2021ANNUAL REPORT 68 SCIDEV LTD 2021ANNUAL REPORT35 Business combinations Current year business combinations Haldon Industries On 12 May 2021, SciDev Water Services Pty Ltd Limited acquired the business operations and assets of Haldon Industries Pty Ltd (Haldon). Haldon is an Australian-based environmental solutions company focused on the water treatment sectors. The acquisition of Haldon provides the consolidated entity with presence and scale in the infrastructure and water verticals via Haldon's key services of water treatment, remediation, groundwater dewatering and onsite liquid waste treatment. The total consideration for the acquisition was $15,407,191 consisting of a cash payment of $2,579,685, 5,100,000 SciDev Limited shares valued at $3,927,000, and contingent consideration of $8,900,506. The contingent consideration is based on the achievement of EBITDA targets for the 2021, 2022, and 2023 financial years with EBITDA subject to a minimum of 20% of revenue. The fair value of the contingent consideration arrangement was estimated using a discounted cash flow (DCF) method. The key assumption was the assumed probability-adjusted EBITDA. The goodwill of $13,687,501 is attributable to the expected future benefits of the acquired business increasing SciDev’s presence and scale in the infrastructure, water, and wastewater verticals via Haldon's key services of water treatment, remediation, groundwater dewatering and onsite liquid waste treatment. As a result of the proximity of the transaction to year end and the business integration activities required, the acquisition accounting is not yet complete and accordingly, the assets acquired and liabilities assumed are measured on a provisional basis. If new information obtained within twelve months from the acquisition date about facts and circumstances that existed at the acquisition date identifies adjustments to the above amounts or any additional provisions that existed at the acquisition date, then the accounting for the acquisition will be revised. Details of the acquisition are as follows: Fair value $ Trade receivables 1,987,329 Plant and equipment 159,432 Office equipment 6,709 Motor vehicles 356,048 Equipment - right-of-use assets 4,723,664 Trade and other payables (385,626) Employee benefits (147,018) Lease liability - equipment (4,723,664) Lease liability - other (257,184) Net assets acquired 1,719,690 Goodwill 13,687,501 Acquisition-date fair value of the total consideration paid and payable 15,407,191 Representing: Cash paid to vendor 1,700,000 Cash payable to vendor 879,685 SciDev Limited shares issued to vendor 3,927,000 Contingent consideration 8,900,506 15,407,191 Cash used to acquire business, net of cash acquired: Acquisition-date fair value of the total consideration transferred 15,407,191 Less: payments to be made in future periods (879,685) Less: contingent consideration (8,900,506) Less: shares issued by company as part of consideration (3,927,000) Net cash used 1,700,000 Notes to the consolidated financial statements For the year ended 30 June 2021 35 Business combinations continued Revenue and profit contribution If the acquisitions had occurred on 1 July 2020, the consolidated pro-forma revenue and profit for the year ended 30 June 2021 would have been as follows: SciDev Ltd and its other controlled entities $ Haldon Industries $ Total $ Revenue 9,145,236 40,568,581 49,713,817 Net profit/(loss) for the period after tax 676,070 3,488,359 4,164,429 The acquired business contributed revenues of $1,956,327 and a net loss of $35,391 to the consolidated entity for the period from 12 May 2021 to 30 June 2021. Acquired receivables The fair value of acquired trade receivables is $1,987,329 and the gross contractual amount for trade receivables due is $1,987,329. Consequently, there was no loss allowance recognised on acquisition. Acquisition-related costs Acquisition-related costs totalling $206,352 that were not directly attributable to the issue of shares are included in Professional fees in the statement of profit or loss and other comprehensive income. Prior year business combinations The following prior year business combinations were completed during the current financial year and there were no changes to the provisional balances recorded in the prior year as disclosed in note 33 in the 2020 Annual Report. On 1 March 2020 SciDev Limited acquired 100% of issued capital of Highland Fluid Technology Inc (Highland). The total consideration for the acquisition of $7,377,232, consisting of 11,349,588 SciDev Limited shares valued at $0.65 per share. Goodwill of 7,985,050 was recognised on acquisition. On 28 November 2019 SciDev Limited acquired 100% of the issued capital of ProSol Australia Pty Limited (Prosol). 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, based on the sales achieved during the earn-out period (payable in cash and shares) on 31 July 2020 and 31 July 2021. Goodwill of $1,972,506 was recognised on acquisition. 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 classification 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. 69 SCIDEV LTD 2021ANNUAL REPORT 70 SCIDEV LTD 2021ANNUAL REPORT35 Business combinations continued 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. 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 reassessment 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 information possible to determine fair value. 36 Interests in subsidiaries * SciDev (US) LCC is a wholly-owned subsidiary of SciDev International Holdings Pty Ltd. 37 Events after the reporting period On 26 August 2021, the company received confirmation that the loan owing by its subsidiary Highland Fluid Technology Inc, in terms of the Paycheck Protection Program (USA), had been forgiven. The balance outstanding on the loan at 30 June 2021 was US$209,809 (A$279,883). On 4 February 2021, R3D Resources Limited (ASX:R3D) announced an off-market all scrip takeover bid for 100% of the fully paid ordinary shares and 100% of the options in Tartana. The offer closed on 31 July 2021 and at that date R3D had a relevant interest in 99.89% of Tartana shares. SciDev received 13,589,935 R3D shares and 2,727,987 attaching options for the shares it held in Tartana. The options are exercisable at $0.40 within 5 years from the date of issue. Refer to note 13 for further information. No other matter or circumstance has arisen since 30 June 2021 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. Ownership interest Principal place of business / 2021 2020 Name Country of incorporation % % Highland Fluid Technology Inc United States 100% 100% Intec Copper Pty Ltd Australia 100% 100% Intec Envirometals Pty Ltd Australia 100% 100% ProSol Australia Pty Ltd Australia 100% 100% Science Developments Pty Ltd Australia 100% 100% SciDev International Holdings Pty Ltd Australia 100% 100% SciDev (US) LCC* United States 100% 100% SciDev Water Services Pty Ltd Australia 100% - Notes to the consolidated financial statements For the year ended 30 June 2021 Notes to the consolidated financial statements For the year ended 30 June 2021 38 Cash flow information Reconciliation of profit/(loss) after income tax to net cash used in operating activities 38 Cash flow information Reconciliation of profit/(loss) after income tax to net cash used in operating activities Profit/(loss) after income tax benefit for the year Adjustments for: Profit/(loss) after income tax benefit for the year Depreciation and amortisation Share-based payments Adjustments for: Write off of assets Depreciation and amortisation Net loss/(gain) on disposal of non-current assets Share-based payments Paycheck Protection Program (USA) subsidy Write off of assets R&D tax incentive Net loss/(gain) on disposal of non-current assets Other - non-cash Paycheck Protection Program (USA) subsidy Foreign currency differences R&D tax incentive Other - non-cash Change in operating assets and liabilities: Foreign currency differences Decrease/(increase) in trade and other receivables Increase in contract assets Change in operating assets and liabilities: Decrease/(increase) in inventories Decrease/(increase) in trade and other receivables Decrease in income tax refund due Increase in contract assets Increase in deferred tax assets Decrease/(increase) in inventories Decrease/(increase) in prepayments Decrease in income tax refund due Increase in trade and other payables Increase in deferred tax assets Increase in contract liabilities Decrease/(increase) in prepayments Decrease in deferred tax liabilities Increase in trade and other payables Increase/(decrease) in employee benefits Increase in contract liabilities Increase/(decrease) in other provisions Decrease in deferred tax liabilities Decrease in other operating liabilities Increase/(decrease) in employee benefits Increase/(decrease) in other provisions Decrease in other operating liabilities Net cash used in operating activities Non-cash investing and financing activities Net cash used in operating activities Non-cash investing and financing activities Shares issued to acquire ProSol Australia Pty Ltd Shares issued to acquire Highland Fluid Technology Inc. Shares issued to acquire ProSol Australia Pty Ltd Shares issued to the Haldon Industries business Shares issued to acquire Highland Fluid Technology Inc. Additions to right-of-use assets Shares issued to the Haldon Industries business Paycheck Protection Program (USA) loan converted into a subsidy Additions to right-of-use assets Paycheck Protection Program (USA) loan converted into a subsidy Changes in liabilities arising from financing activities Changes in liabilities arising from financing activities Balance at 1 July 2019 Net cash used in financing activities Changes through business combinations Balance at 1 July 2019 Recognition on adoption of AASB 16 Net cash used in financing activities Changes through business combinations Recognition on adoption of AASB 16 Balance at 30 June 2020 Net cash from/(used in) financing activities Paycheck Protection Program (USA) loan converted into a subsidy Balance at 30 June 2020 Acquisition of leases Net cash from/(used in) financing activities Changes through business combinations (note 35) Paycheck Protection Program (USA) loan converted into a subsidy Exchange differences Acquisition of leases Changes through business combinations (note 35) Exchange differences Balance at 30 June 2021 2021 $ 2021 $ 3,452,968 3,452,968 929,771 162,827 39,671 929,771 (27,490) 162,827 (266,459) 39,671 (422,918) (27,490) - (266,459) 13,116 (422,918) - 13,116 (3,102,445) (441,551) 1,012,283 (3,102,445) 29,574 (441,551) (2,647,309) 1,012,283 (183,464) 29,574 909,926 (2,647,309) 262,646 (183,464) - 909,926 126,925 262,646 (1,164,943) - - 126,925 (1,164,943) - (1,316,872) 2020 $ 2020 (875,238) $ (875,238) 377,760 199,029 - 377,760 6,902 199,029 - - - 6,902 (32,623) - (24,643) - (32,623) (24,643) 44,444 - (4,037,153) 44,444 - - (1,364,362) (4,037,153) 10,987 - 5,647,141 (1,364,362) - 10,987 (35,986) 5,647,141 (33,606) - 579,553 (35,986) (639,670) (33,606) 579,553 (639,670) (177,465) (1,316,872) (177,465) 2021 $ 2021 $ 262,175 - 262,175 3,927,000 - 493,382 3,927,000 266,459 493,382 266,459 Lease liabilities $ Lease liabilities - $ (31,096) 98,051 - 186,480 (31,096) 98,051 186,480 253,435 (870,760) - 253,435 493,382 (870,760) 4,980,848 - (6,507) 493,382 4,980,848 (6,507) 4,850,398 2020 $ 2020 403,560 $ 7,377,232 403,560 - 7,377,232 186,480 - - 186,480 - Total $ Total - $ (376,177) 728,050 - 186,480 (376,177) 728,050 186,480 538,353 (595,260) (266,459) 538,353 493,382 (595,260) 4,980,848 (266,459) (20,583) 493,382 4,980,848 (20,583) 5,130,281 Borrowings $ Borrowings - $ (345,081) 629,999 - - (345,081) 629,999 - 284,918 275,500 (266,459) 284,918 - 275,500 - (266,459) (14,076) - - (14,076) 279,883 Balance at 30 June 2021 279,883 4,850,398 5,130,281 71 SCIDEV LTD 2021ANNUAL REPORT 72 SCIDEV LTD 2021ANNUAL REPORT39 Earnings per share Accounting policy for earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of SciDev Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. 40 Share-based payments (a) Options Employee Share Scheme Share-based compensation benefits are provided to employees via the SciDev Employee Share Scheme. At the 2014 Annual General Meeting, shareholders approved the SciDev Employee Share Scheme (the Scheme). All Directors, employees and consultants are eligible to participate in the Scheme. Options granted under the Scheme to eligible participants are for no additional consideration. Options 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 and approved by shareholders on 23 July 2019, the Nomination & Remuneration Committee recommended, and the Board approved that the Company granted 5,200,000 unquoted options, 2,000,000 options have an exercise price of $0.10 and 3,200,000 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 2,150,000 unquoted options to executives and staff (not Directors). 1,750,000 have an exercise price of $0.12 and 400,000 have an exercise price of $0.10. All options have an expiry date of 23 July 2022. The first tranche of 1,075,000 options were not subject to any vesting conditions and vested on grant date and the second tranche of 1,075,000 options are subject to a service vesting condition. The value of the options granted was $46,500. 2021 2020 $ $ Profit/(loss) after income tax attributable to the owners of SciDev Limited 3,452,968 (875,238) Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 152,573,170 127,531,298 Adjustments for calculation of diluted earnings per share: Options over ordinary shares 2,178,466 - Weighted average number of ordinary shares used in calculating diluted earnings per share 154,751,636 127,531,298 Cents Cents Basic earnings/(loss) per share 2.26 (0.69) Diluted earnings/(loss) per share 2.23 (0.69) Notes to the consolidated financial statements For the year ended 30 June 2021 40 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. 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 $366,500. On 3 February 2020, the company granted 150,000 unquoted options to the Chief Financial Officer. The options have an exercise price of $0.12 and 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 $93,000. On 11 November 2019, the company granted 150,000 unquoted options to an employee. The options have an exercise price of $0.12 and 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 $84,000. Set out below are summaries of options granted: 2021 Grant date Expiry 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 Exercise price Balance at the start of the year $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 Granted Exercised Expired/ forfeited/ other Balance at the end of the year - - - - - - - - (375,000) (800,000) - - - (1,175,000) - - - - - - - 400,000 950,000 800,000 250,000 75,000 75,000 2,550,000 Weighted average exercise price $0.109 $0.000 $0.106 $0.000 $0.111 The weighted average share price at the date of exercise of options exercised during the year ended 30 June 2021 was $0.88. 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 Balance at the start of the year $0.250 $0.250 $0.250 $0.250 $0.100 $0.120 $0.100 $0.120 $0.120 $0.120 550,000 2,250,000 650,000 500,000 - - - - - - Granted Exercised - - - - 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) 3,950,000 5,200,000 (5,400,000) Expired/ forfeited/ other Balance at the end of the year - - - - - (25,000) - - - - (25,000) - - - - 400,000 1,325,000 1,600,000 250,000 75,000 75,000 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. 73 SCIDEV LTD 2021ANNUAL REPORT 74 SCIDEV LTD 2021ANNUAL REPORT40 Share-based payments continued Set out below are the options exercisable at the end of the financial year: The weighted average remaining contractual life of options outstanding at the end of the financial year was 1.06 years (2020: 2.06 years). (b) Performance rights The company granted performance rights to nominated employees on 15 December 2020 and 26 May 2021. The vesting of any performance rights have non-market conditions assigned to each individual based on their business unit, an employment condition and a single market condition of the company share price of $2.00 per share for 10 consecutive days. The performance rights granted on 15 December 2020 and 26 May 2021 vest on 30 June 2022 and 31 October 2022 respectively. Set out below are summaries of performance rights granted under the plan: Set out below are the performance rights exercisable at the end of the financial year: The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 1.22 years. The fair value of performance rights granted was measured using the Monte Carlo simulation pricing model. The valuation model inputs used to determine the fair value at the grant date, are as follows: 2021 Balance at Expired/ Balance at Exercise the start of forfeited/ the end of Grant date Expiry date price the year Granted Exercised other the year 15/12/2020 31/10/2022 $0.000 - 1,408,399 - - 1,408,399 26/05/2021 30/06/2022 $0.000 - 725,000 - - 725,000 - 2,133,399 - - 2,133,399 2021 2020 Grant date Expiry date Number Number 16/05/2019 23/07/2022 1,350,000 1,725,000 23/07/2019 23/07/2022 1,050,000 1,850,000 11/11/2019 23/07/2022 75,000 75,000 03/02/2020 23/07/2022 75,000 75,000 2,550,000 3,725,000 2021 2020 Grant date Expiry date Number Number 15/12/2020 31/10/2022 1,408,399 - 26/05/2021 30/06/2022 725,000 - 2,133,399 - Share price Exercise Expected Dividend Risk-free Fair value Grant date Expiry date at grant date price volatility yield interest rate at grant date 15/12/2020 31/10/2022 $0.780 $0.000 110.00% - 0.03% $0.49740 26/05/2021 30/06/2022 $0.755 $0.000 84.00% - (0.12%) $0.24190 Notes to the consolidated financial statements For the year ended 30 June 2021 40 Share-based payments continued (c) Expenses arising from share-based payment transactions The total expense arising from share-based payment transactions recognised during the period as part of employee benefits expense was $162,827 (2020: $199,029). Accounting policy for share-based payments Equity-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. The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Black-Scholes or the Monte Carlo models that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. 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 non-market conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. 75 SCIDEV LTD 2021ANNUAL REPORT 76 SCIDEV LTD 2021ANNUAL REPORTDirector’s 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 2021 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 30 August 2021 Sydney Director’s 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 2021 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 30 August 2021 Sydney Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au Independent auditor’s report to the members of SciDev Limited Report on the audit of the financial report Opinion We have audited the financial report of SciDev Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2021 and of its consolidated financial 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 requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (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 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 judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 77 SCIDEV LIMITEDANNUAL REPORT 2021 Carrying Value of Goodwill Why significant How our audit addressed the key audit matter In accordance with the requirements of the Australian Accounting Standards, the Group is required to test all cash generating units (CGUs) annually for impairment where goodwill is present. The Group assesses the recoverable amount of each CGU using a discounted cash flow forecast to determined value in use (VIU). As disclosed in Note 15 to the financial statements, no impairment was identified as at 30 June 2021. Assumptions used in the forecast of cash flows are highly judgmental and inherently subjective. Specifically, judgement is required to assess the reasonability of forecast growth rates, margins, operating costs, discount rates and terminal growth rates. As a result, of the above and the extent of audit effort and judgement required, we considered the goodwill carrying value assessment to be a key audit matter. With the assistance of our valuation specialists, our audit procedures included the following: • We considered the Group’s identification of CGU for completeness and consistency with Australian Accounting Standards. • We assessed whether the impairment testing methodology used met the requirements of Australian Accounting Standards. • We tested the mathematical accuracy of the cash flow models • We assessed the basis of preparing cash flow forecasts and considered the accuracy of the Group’s previous forecasts and budgets and current performance. • We assessed the appropriateness of the cash flow forecasts, including forecast revenue growth and margins with reference to current trading performance, historical growth rates and industry data and forecasts. • We assessed the appropriateness the discount rates and growth rates with reference to publicly available information for comparable companies in the industry and markets in which the Group operates. • We performed sensitivity analyses to evaluate whether a reasonably possible change in assumptions could cause the carrying amount of the CGU to exceed its recoverable amount. • We cross-checked the recoverable amount and EBITDA multiples derived from the discounted cashflow models against a range from comparable companies and transactions. • We considered the Group’s net assets against market capitalisation. • We evaluated the adequacy of the disclosures relating to the goodwill carrying values in the financial report, including those made with respect to judgements and estimates. Acquisition of Haldon Industries Pty Ltd Why significant How our audit addressed the key audit matter As described in Note 35, the Group acquired the business and assets of Haldon Industries Pty Ltd (“Haldon”) in exchange for cash, equity and contingent consideration (payable on achievement of EBITDA milestones). The acquisition assessed to be business combination under Australian Accounting Standards. In accordance with the Australian Accounting Standards, the Group has 12 months from the acquisition date to finalise its business combination accounting. At 30 June 2021, the Group recognised the acquired assets, liabilities and contingent liabilities at their provisional fair values. The accounting for business combinations is inherently complex. In particular, the inclusion of contingent Our audit procedures included the following: • We read the Business and Asset Sale Agreement and Amendment Deeds (collectively the “Agreement”) and assessed the Group’s treatment of the transaction as a business combination under Australian Accounting Standards. • We considered the reasonability of the acquisition date based on the terms of the Agreement and the point at which control of Haledon was obtained by the Group. In considering the transaction price for the business combination: A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 78 SCIDEV LIMITEDANNUAL REPORT 2021 Why significant How our audit addressed the key audit matter consideration, as part of the transaction price for the acquisition, and the provisional fair valuation of the acquired assets, liabilities and contingent liabilities requires judgement. For this reason, and due to the significance of the transaction to the Group’s balance sheet, we considered the provisional business combination accounting for the acquisition of Haldon to be a key audit matter. • We tested the fixed consideration paid by the Group with reference to share issuance documents and bank statements. • We considered the treatment of the contingent consideration based on terms of the Agreement and the intent of the parties at the acquisition date. • We obtained the Group’s provisional calculation of the contingent consideration amount and assessed the reasonability of the assumptions used based on Group’s budgets and forecasts at the time of the acquisition. In considering the provisional business combination accounting: • We obtained the acquisition balance sheet and tested its clerical accuracy. • On a sample basis, tested the provisional fair values recognised for the working capital assets and liabilities acquired. • We obtained the Group’s calculation of goodwill and tested the clerical accuracy of the amount recognised as the difference between the transaction consideration and the provisional fair values attributed to acquired assets, liabilities and contingent liabilities. • We evaluated the adequacy of the acquisition disclosures in the financial statements. Information other than the financial report and auditor’s report thereon The directors are responsible for the other information. The other information comprises the information included in the Company’s 2021 annual report, but does not include the financial report and our auditor’s report thereon. We obtained the Directors’ Report that is to be included in the Annual Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the Annual Report after the date of this auditor’s report. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. 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. Responsibilities of the directors for the financial report The directors of the Company 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 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 79 SCIDEV LIMITEDANNUAL REPORT 2021 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 relating 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 responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment 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. ► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 80 SCIDEV LIMITEDANNUAL REPORT 2021 responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year 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 audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the Directors’ Report for the year ended 30 June 2021. In our opinion, the Remuneration Report of SciDev Limited for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001. Responsibilities 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. Ernst & Young Siobhan Hughes Partner Sydney 31 August 2021 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 81 SCIDEV LIMITEDANNUAL REPORT 2021 82 SCIDEV LTD 2021ANNUAL REPORTSciDevLimitedAnnualReport202175|Additional ASX Information Shareholder InformationThe shareholder information set out below was applicable as at 21 October 2021.A. Distribution of equity securitiesAnalysis of numbers of equity security holders by size of holding:Class of equity security Ordinary shares Name Number of Shareholders Number of Shares 1– 1,000591245,7921,001 – 5,0006821,795,0415,001 – 10,0003302,596,39010,001 – 100,00060019,684,507100,001 and over151134,811,5122,354159,133,242B. Substantial holders14.12%Substantial shareholders as at 21 October 2021 are listed below:Perennial Value Management Limited (PVM)Australian Super Pty Ltd7.69%Equity security holders The names of the twenty largest holders of quoted equity securities as at 21 October 2021 are listed below: Name Ordinary shares Number held Percentage of issued shares 15,759,1169.903%13,848,1708.702%7,605,0374.779%7,150,9084.494%6,428,5724.040%5,100,0003.205%5,000,0003.142%4,518,1402.839%3,806,8732.392%3,249,4772.042%2,882,4461.811%2,768,1351.740%2,161,1371.358%2,006,4671.261%1,999,2331.256%1,607,9261.010%1,552,8130.976%1,466,6670.922%1,466,6670.922%NATIONAL NOMINEES LIMITED J P MORGAN NOMINEES AUSTRALIA BNP PARIBAS NOMS PTY LTD CITICORP NOMINEES PTY LIMITED JIANFENG ZHANG & HALDON INDUSTRIES PTY LTD KANINS AUSTRALIA PTY LTD MR LEWIS EDWARD UTTING & MR KEVIN SMITH MR KIERAN GREGORY RODGERS PUNTERO PTY LTD BNP PARIBAS NOMINEES PTY LTD NUOER CHEMICAL AUSTRALIA MR KIERAN GREGORY RODGERS & CALAMA HOLDINGS PTY LTD NATJAD & ASSOCIATED PTY LTD MERRILL LYNCH (AUSTRALIA) MR MARTIN EDWARD MEYER MRS KATHLEEN WATT LONGWIN CAPITAL FINANCE LTD 1,466,6670.922%Top 20 Shareholder Total 91,844,45157.715%SciDevLimitedAnnualReport202175|Additional ASX Information Shareholder InformationThe shareholder information set out below was applicable as at 21 October 2021.A. Distribution of equity securitiesAnalysis of numbers of equity security holders by size of holding:Class of equity security Ordinary shares Name Number of Shareholders Number of Shares 1– 1,000591245,7921,001 – 5,0006821,795,0415,001 – 10,0003302,596,39010,001 – 100,00060019,684,507100,001 and over151134,811,5122,354159,133,242B. Substantial holders14.12%Substantial shareholders as at 21 October 2021 are listed below:Perennial Value Management Limited (PVM)Australian Super Pty Ltd7.69%Equity security holders The names of the twenty largest holders of quoted equity securities as at 21 October 2021 are listed below: Name Ordinary shares Number held Percentage of issued shares 15,759,1169.903%13,848,1708.702%7,605,0374.779%7,150,9084.494%6,428,5724.040%5,100,0003.205%5,000,0003.142%4,518,1402.839%3,806,8732.392%3,249,4772.042%2,882,4461.811%2,768,1351.740%2,161,1371.358%2,006,4671.261%1,999,2331.256%1,607,9261.010%1,552,8130.976%1,466,6670.922%1,466,6670.922%NATIONAL NOMINEES LIMITED J P MORGAN NOMINEES AUSTRALIA BNP PARIBAS NOMS PTY LTD CITICORP NOMINEES PTY LIMITED JIANFENG ZHANG & HALDON INDUSTRIES PTY LTD KANINS AUSTRALIA PTY LTD MR LEWIS EDWARD UTTING & MR KEVIN SMITH MR KIERAN GREGORY RODGERS PUNTERO PTY LTD BNP PARIBAS NOMINEES PTY LTD NUOER CHEMICAL AUSTRALIA MR KIERAN GREGORY RODGERS & CALAMA HOLDINGS PTY LTD NATJAD & ASSOCIATED PTY LTD MERRILL LYNCH (AUSTRALIA) MR MARTIN EDWARD MEYER MRS KATHLEEN WATT LONGWIN CAPITAL FINANCE LTD 1,466,6670.922%Top 20 Shareholder Total 91,844,45157.715%SciDevLimitedAnnualReport202176|Total Ordinary Shares on Issue 159,133,242100.00%B.Voting rightsThe voting rights attaching to each class of equity securities are set out below:(a)Ordinary sharesOn a show of hands every member present at a meeting in person or by proxy shall have one vote and up on a poll eachshare shall have one vote.(b)OptionsNo voting rights.C.Summary of options issuedName Number of Options Number of Holders % Options Issued 1,200,0002Options expiring 23 July 2022 with an exercise price of $0.10 Option holders with more than 20% of above class: 800,00066.6%Lewis Utting Heath Roberts 400,00033.3%1,100,00011Options expiring 23 July 2022 with an exercise price of $0.12 Option holders with more than 20% of above class: 250,00023%250,000 23%Simone Watt Jamiel Muhor Jeffrey Zhang 250,000 23%D. Summary of performance rights issuedName Number of PerformanceRights Number of Holders % Options Issued 1,278,39924Performance rights expiring 31 October 2022 Performance rights holders with more than 20% of above class: 00%725,000 18312,50043%Performance rights expiring 30 June 2022 Performance rights holders with more than 20% of above class: Sean Halpin Jake Reardon 312,500 43%SciDevLimitedAnnualReport202176|Total Ordinary Shares on Issue 159,133,242100.00%B.Voting rightsThe voting rights attaching to each class of equity securities are set out below:(a)Ordinary sharesOn a show of hands every member present at a meeting in person or by proxy shall have one vote and up on a poll eachshare shall have one vote.(b)OptionsNo voting rights.C.Summary of options issuedName Number of Options Number of Holders % Options Issued 1,200,0002Options expiring 23 July 2022 with an exercise price of $0.10 Option holders with more than 20% of above class: 800,00066.6%Lewis Utting Heath Roberts 400,00033.3%1,100,00011Options expiring 23 July 2022 with an exercise price of $0.12 Option holders with more than 20% of above class: 250,00023%250,000 23%Simone Watt Jamiel Muhor Jeffrey Zhang 250,000 23%D. Summary of performance rights issuedName Number of PerformanceRights Number of Holders % Options Issued 1,278,39924Performance rights expiring 31 October 2022 Performance rights holders with more than 20% of above class: 00%725,000 18312,50043%Performance rights expiring 30 June 2022 Performance rights holders with more than 20% of above class: Sean Halpin Jake Reardon 312,500 43%SciDevLimitedAnnualReport202176|Total Ordinary Shares on Issue 159,133,242100.00%B.Voting rightsThe voting rights attaching to each class of equity securities are set out below:(a)Ordinary sharesOn a show of hands every member present at a meeting in person or by proxy shall have one vote and up on a poll eachshare shall have one vote.(b)OptionsNo voting rights.C.Summary of options issuedName Number of Options Number of Holders % Options Issued 1,200,0002Options expiring 23 July 2022 with an exercise price of $0.10 Option holders with more than 20% of above class: 800,00066.6%Lewis Utting Heath Roberts 400,00033.3%1,100,00011Options expiring 23 July 2022 with an exercise price of $0.12 Option holders with more than 20% of above class: 250,00023%250,000 23%Simone Watt Jamiel Muhor Jeffrey Zhang 250,000 23%D. Summary of performance rights issuedName Number of PerformanceRights Number of Holders % Options Issued 1,278,39924Performance rights expiring 31 October 2022 Performance rights holders with more than 20% of above class: 00%725,000 18312,50043%Performance rights expiring 30 June 2022 Performance rights holders with more than 20% of above class: Sean Halpin Jake Reardon 312,500 43%83 SCIDEV LTD 2021ANNUAL REPORTSciDevLimitedAnnualReport202176|Total Ordinary Shares on Issue 159,133,242100.00%B.Voting rightsThe voting rights attaching to each class of equity securities are set out below:(a)Ordinary sharesOn a show of hands every member present at a meeting in person or by proxy shall have one vote and up on a poll eachshare shall have one vote.(b)OptionsNo voting rights.C.Summary of options issuedName Number of Options Number of Holders % Options Issued 1,200,0002Options expiring 23 July 2022 with an exercise price of $0.10 Option holders with more than 20% of above class: 800,00066.6%Lewis Utting Heath Roberts 400,00033.3%1,100,00011Options expiring 23 July 2022 with an exercise price of $0.12 Option holders with more than 20% of above class: 250,00023%250,000 23%Simone Watt Jamiel Muhor Jeffrey Zhang 250,000 23%D. Summary of performance rights issuedName Number of PerformanceRights Number of Holders % Options Issued 1,278,39924Performance rights expiring 31 October 2022 Performance rights holders with more than 20% of above class: 00%725,000 18312,50043%Performance rights expiring 30 June 2022 Performance rights holders with more than 20% of above class: Sean Halpin Jake Reardon 312,500 43%84 SCIDEV LTD 2021ANNUAL REPORTDirector’s 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 2021 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 30 August 2021 Sydney SciDevLimitedAnnualReport202177|Corporate Directory Directors Vaughan Busby Lewis E Utting Simone Watt Jon Gourlay Dan O’Toole Chairman Managing Director & Chief Executive Officer Non-executive Director Non-executive Director Non-executive Director Company secretary Heath L Roberts Registered office C/-Boardroom Pty LimitedLevel 12, Grosvenor Place 225 George Street Sydney NSW 2000 Phone: 1300 737 760 Principal place of business Unit 1 8 Turbo Road Kings Park NSW 2148 Phone: (02) 9622 5185 Share register Boardroom Pty Limited Level 12 225 George Street Sydney NSW 2000 Phone: 1300 737 760 Auditor Ernst & Young 200 George St Sydney NSW 2000 Stock exchange listing SciDev Limited shares are listed on the Australian Securities Exchange (ASX code: SDV) Website www.scidev.com.au Corporate governance statement www.scidev.com.au/about-us/governance/ 85 SCIDEV LTD 2021ANNUAL REPORTABN 25 001 150 849 ADDRESS Unit 1, 8 Turbo Road, Kings Park NSW 2148, Australia PHONE: +61 2 9622 5185 EMAIIL: projects@scidev.com.au WEBSITE: www.scidev.com.au 86 SCIDEV LIMITEDANNUAL REPORT 2021

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