Solving Problems That Matter A n n u A l R e p o R t 2 0 2 3 C o n t e n tS FY2023 Highlights our Business at a Glance Chair’s letter Ceo’s letter operations Review outlook environmental, Social and Governance Board & leadership team Financial Report Additional ASX Information Corporate Directory 02 04 06 08 12 17 18 23 24 93 IBC Who We Are A leader in environmental solutions focused on water‑intensive industries, our solutions allow clients to reuse water, improve operational efficiencies and reduce their environmental footprints. We deliver world‑leading chemistry and water treatment technology with end‑to‑end support from our specialist scientists and engineers. Working with clients across a range of industries, including Mining and Mineral processing, oil and Gas, Construction and Infrastructure, Wastewater treatment and Remediation, we deliver practical solutions to recycle, reuse and manage water. We are committed to delivering value through sustainable development. our actions ensure that we achieve economic, social and environmental sustainability in a balanced and value‑enhancing manner for all stakeholders. A S A C o M pA n Y, W e A R e : 1 Working to solve the growing global per‑and poly‑fluoroalkyl substance (pFAS) issue. 2 Reducing industry’s consumption of freshwater and generation of wastewater. 3 Supporting the communities in which we live and work. 4 Building a culture where we respect and embrace diversity in the workplace and wider community. Our Values We live by these values to strengthen our relationships with our clients and within the communities in which we operate. they define who we are: Protect the Environment We are dedicated to reducing harm and protecting our environment for future generations. Everyone Safe Everyday people are the heart of our business and nothing is more important than ensuring everyone goes home safely every day. Achieve More Together We achieve better outcomes when we work together. Challenge Boundaries We discover more possibilities when we challenge what’s possible. Go the Last Mile We deliver more by exceeding client benchmarks and adding value to everything we do. 01 SciDev Limited Annual Report 2023 FY2023 Highlights Record organic growth in net revenue, EBITDA and new contract wins. A$89.9m Re C o R D Re V e n u e A$4.1m A D J u S t e D e B ItD A 62% R e V e n u e G R o W t H Y e A R o n Y e A R 79F t e’ S 02 SciDev Limited Annual Report 2023 Water Technologies Secured two PFAS treatment contracts with Cleanaway Waste Management with a combined value of A$5.3m; Secured a trademark for our proprietary PFAS treatment technology – FluororfIX™; Delivered ten PFAS treatment Projects throughout 2023; and Appointed Vice President – Europe for Water Technologies. Chemical Services Awarded contracts with Iluka Resources with a total contract value of over A$28m; 100% growth in sales, in North America, driven by increased adoption of our of our proprietary CatChek technology; Awarded a three‑year contract agreement with First Quantum Minerals at the Ravensthorpe Nickel Operations; and $50M in new contracts with blue chip clients. 03 SciDev Limited Annual Report 2023 Our Business at a Glance Delivering Innovative Environmental Solutions Chemical Services Water Technologies Improving operational and environmental outcomes with world‑leading chemistry Innovative water treatment solutions solving complex contamination issues Specialising in water chemistry, our solutions are designed to suit a wide variety of applications, helping our clients improve their operational efficiency and minimise wastewater generation. our innovative technical capability and proprietary technologies deliver real value to our clients. We also provide a range of tailored services from “last mile delivery” to process optimisation – supporting our clients every step of the way. SciDev designs and delivers specialised water treatment solutions to remove harmful contaminants from groundwater, surface water and industrial liquid waste, allowing water to be reused or safely discharged back to the environment. SciDev areas of operation Asia – Pacific North America South America UK and Europe Middle East 04 SciDev Limited Annual Report 2023 What We Do Mining and Mineral processing Water treatment Construction and Infrastructure oil and Gas Remediation 05 SciDev Limited Annual Report 2023 Providing end‑to‑end solutions in mining and mineral processing SciDev provides our clients a wide range of mining and mineral processing solutions. our chemistries and professional services maximise the operational performance of mineral processing systems and ensure minimal water is passed as waste into the tailings circuit. our water treatment technologies provide clean water for processing, remediate historical contamination and treat and recycle a wide range of contaminated waste streams. Developing solutions for water recycling and processing SciDev is a leading supplier of products for water and wastewater treatment in the industrial, food and beverage, government and municipal sectors. We develop and deliver bespoke water solutions for a diverse range of applications. Onsite management of water is critical for the successful delivery of any large construction and infrastructure project SciDev provides end‑to‑end water management solutions for the construction and infrastructure sectors. From groundwater dewatering to water treatment and sludge dewatering our services and bespoke chemistry reduce cost and operational downtime for our clients ensuring their projects are fully compliant with environmental regulations and are delivered on time and within budget. Reducing environmental impact of onshore oil and gas operation our innovative solutions improve operational outcomes while reducing the wastewater footprint of onshore oil and gas operations. SciDev chemistries and treatment technologies increase oil production rates, minimise decline curves and prolong well lifecycles while minimising freshwater usage and the production of contaminated wastewater. our products provide superior friction reduction capabilities, even when using saltwater or high brine water. By increasing the utilisation of recycled water in onshore oil and gas production, SciDev helps companies meet their environmental regulations, limit usage of fresh water, reduce costs and improve their operational performance. Repairing our natural environments through the sustainable remediation of contaminated water SciDev’s water treatment technologies remove harmful contamination from groundwater, surface water and liquid waste for a wide range of industries. We specialise in the provision of permanent, mobile and temporary treatment solutions that mitigate our clients’ risk profile and provide “whole of life” value. our projects are delivered focusing on innovation, pragmatism and sustainability and each approach is tailored to our client’s individual treatment objectives and site constraints. Chair’s Letter De A R S H A R e H o l De R , On behalf of the Board, I am pleased to present the SciDev Ltd Annual Report for the financial year ending 30 June 2023 (FY23). 06 SciDev Limited Annual Report 2023 over the last twelve months, SciDev has continued to deliver strong financial and operational performance with record revenues and positive eBItDA. Importantly, the last twelve months have seen solid progress in building a resilient and sustainable business that is now generating consistent free cash flow from its operations. this has been achieved, in large, by management’s careful focus on working capital throughout the year. While I want to acknowledge the flat share price over the last year, it is important to note that our business has experienced material growth in terms of revenue and profitability. In addition, we have strengthened our systems, processes and governance to ensure we have a sustainable business for the future. our Chemical Services business had a successful FY23, and we see potential for significant growth in the future. on the other hand, our Water technologies business didn’t perform as we’d hoped. However, we’ve been working hard throughout the year to invest in the team and equipment to support future growth. We’ve made capital investments in several projects that will start generating revenue in FY24. I would like to take this opportunity to further detail the varying capital requirements of our businesses. Whilst, the Chemical Services business is a lower‑margin business with higher working capital requirements, the Water technologies business is a higher‑margin, more CApeX intensive business. the management team have been working diligently to manage the capital requirements of both businesses to ensure the highest‑value projects receive the necessary funding. this is now starting to pay dividends, as evidenced by the positive cash flows from operations. Many investors new to SciDev ask me what the company does. In short, SciDev cleans contaminated water (Water technologies) or reduces the amount of contaminated water that’s created from an industrial process such as mining, tunnel boring or drilling for gas (Chemical Services). Water is a critical component in many industrial processes, and with clean water becoming increasingly scarce in many geographies, SciDev helps its clients reduce costs and improve environmental outcomes. there is also growing global awareness about per‑ and poly‑fluoroalkyl (pFAS) contamination, with many companies, governments and 07 SciDev Limited Annual Report 2023 “over the last twelve months, SciDev has continued to deliver strong financial and operational performance with record revenues and positive eBIDtA.” environmental regulators only just beginning to realise the scale of the environmental issue. SciDev is well‑positioned to provide world‑leading decontamination solutions. SciDev has a great opportunity to make a significant contribution as an innovative environmental solutions provider as the world is accelerating towards a greener, more environmentally friendly economy. We are seeing increasing demand for our innovative and tailored solutions, with clients seeking new ways to recycle, reuse and treat water. the substantial progress achieved over the last year would not have been possible without our employees’ strong support and commitment. We thank them for their enormous contribution. I would also like to thank our shareholders, investors, and all stakeholders for their ongoing support throughout the year. Yours sincerely, Vaughan Busby non‑executive Chairman CEO’s Letter 08 SciDev Limited Annual Report 2023 De A R S H A R e H o l De R , I am excited to share the considerable progress we have made throughout the 2023 financial year (FY23) as we continued to improve our financial performance, grow our operational footprint and increase market share across each of our key verticals. “our client footprint continued to grow through FY23 as more companies turned to SciDev to utilise our industry‑leading solutions, this includes blue‑chip domestic and international companies such as Iluka, First Quantum Minerals, Cleanaway Waste Management, Acciona Australia, and BHp.” working capital cycles and stable cash position have provided a strong platform for sustainable growth. our client footprint continued to grow through FY23 as more companies turned to SciDev to utilise our industry‑leading solutions, this includes blue‑chip domestic and international companies such as Iluka, First Quantum Minerals, Cleanaway Waste Management, Acciona Australia, and BHp. Delivering For Our Clients Clients are the lifeblood of our company. Forging strong relationships and interacting with our clients are two major contributors to SciDev’s ongoing success. providing our client base with insightful advice, cutting‑edge technologies and pragmatic solutions to solve some of their most complex water problems has allowed us to establish key relationships and expand our client base. the continued growth of our business was reflected in over A$50m in new contracts secured during FY23. Importantly, we continue to build long‑term relationships with our clients providing us with both industry validation and the ability to expand our profile through our clients’ operations. We have commenced FY24 with considerable momentum with a strong order book and an established pipeline of contracted works. FY23 also saw the ongoing development of our environmental, Social and Governance commitments, developing a refreshed purpose statement and set of values, onboarding an impressive number of professionals, and elevating our employee and client experience. our success throughout FY23 has primarily been achieved by striving to push through boundaries and ceilings and by consistently challenging ourselves to go the last mile. SciDev in Action Growing Our Financial and Operational Footprint SciDev operates across a range of markets with a single common thread, we solve our clients’ water problems. our innovative chemistries, utilised across a range of industries, continue to improve production efficiencies, reduce waste and minimise the environmental footprints of our clients. our water treatment technologies, continue to remove harmful contaminants from our natural environment through treatment and remediation of contaminated groundwater, surface water and liquid waste. During FY23, the company experienced significant growth delivering A$89.9m in revenue, representing growth of 62% on FY22. Additionally, the company maintained positive operational cash flow throughout the year. our improved cash flow, 09 SciDev Limited Annual Report 2023 CEO’s Letter (continued) Solving Problems That Matter During the year we solidified our position as the market leader in the treatment of water and waste impacted by per‑ and poly‑fluoroalkyl substances (pFAS). pFAS are a group of man‑made forever chemicals known for their bio‑accumulation, resistance to degradation and mobility in the environment. they have been linked to a wide range of negative impacts on human health and stem from a number of industrial sources. SciDev’s industry‑leading treatment solutions can remove all detectible pFAS compounds to below the limits of reporting. our FluorofIX™ technology effectively treats high‑level pFAS contamination allowing treated water to be recycled, reused or discharged directly to the environment all while minimising the generation of by‑product wastes. the result is the most commercially viable pFAS treatment solution available on the market. SciDev has remediated over 30 pFAS‑impacted sites, treating in excess of three billion litres of pFAS‑contaminated water. Australia currently leads the world regarding the regulation and remediation of pFAS contamination. Both Federal and State Governments continue to advance legislation to reduce the amount of pFAS our families and communities are exposed to. this has led to ever growing interest in SciDev’s FluorofIX™ technology and has led to in an increased level of client engagement, including Cleanaway Waste Management limited, Australia’s largest waste management company. 10 SciDev Limited Annual Report 2023 Furthermore, pFAS continues to be a hot topic internationally. this year, the uS epA announced the proposed national primary Drinking Water Regulation (npDWR) for pFAS which will see a national standard by the end of 2023 to protect communities from pFAS‑impacted drinking water. We are also seeing increased regulation across europe including a proposed european ban on over 10,000 pFAS. the growing global focus on pFAS provides a large growth market for SciDev. to capture this opportunity, we have bolstered our capability in those regions and have appointed a Vice president – north America and a Vice president – europe for Water technologies. these roles will be responsible for implementing strategic initiatives to drive the growth of our Water technologies business in those regions. With industry‑leading technology and a growing global focus both domestically and internationally, we have an incredibly positive outlook for growth in this vertical in FY24. Our People our people drive everything we do, and we are committed to making extraordinary efforts to provide our workforce with a best‑in‑class, inclusive work environment to deliver on their full potential. to be able to keep our commitments to our clients we also recognise that talent recruitment and retention are essential to our success. to build an even stronger workforce and create an optimal employee experience, we will continue to emphasise professional development, internal promotions, and succession planning to ensure leadership continuity and a strong legacy. As we continue to build on SciDev’s strong foundations, we will focus on integrating, developing, and caring for our people; leveraging our collective expertise; optimising our ways of working; and enhancing our working environment. In so doing, we will preserve the entrepreneurial spirit that has underpinned our culture, growth, and success. Meanwhile, our “non‑negotiables” of health and safety, inclusion, ethics and compliance will remain top priorities. “I would like to take this opportunity to thank all of the SciDev team for their ongoing contribution and commitment to our organisation.” I am particularly proud of the diverse and inclusive culture we have built at SciDev. With our people being at the core of all of our technology and environmental solutions, we must provide an environment that can retain and attract the best talent. We continued to expand our workforce over FY23, both in sales and technical fields to ensure we have the right people in the right places to continue to meet our clients’ requirements and grow our business. I would like to take this opportunity to thank all of the SciDev team for their ongoing contribution and commitment to our organisation. our highly skilled team continue to engage with our clients, developing and refining our solutions and ensuring that can meet the most complex and pressing of challenges. Importantly, our team ensure that we continue to evolve as a Company, delivering operational success and ultimately value for shareholders. Pursuing Purposeful Growth During 2023, we worked hard on our next strategic cycle while tracking important market trends and engaging with stakeholders, from employees and clients to investors. We enter this new strategic cycle with good momentum. Fuelled by our successful achievements and our clear long‑term vision, we will keep building on our solid foundation. our long‑term vision sets an ambitious destination while capitalising on transformational market trends. I would like to thank everyone who supported us throughout this eventful year. I wish to express my appreciation to our team, who delivered successful outcomes across the business. I am also grateful to our clients for entrusting us with their business, our Board for providing invaluable guidance, and our shareholders for subscribing to our vision. I look forward to the year ahead and am excited about what we can achieve together. Yours sincerely, Seán Halpin Chief executive officer 11 SciDev Limited Annual Report 2023 Operations Review Effective water use is part of all business, industry and community life. Faced with climate change, water scarcity, environmental requirements and tightening operating budgets, our clients deserve the best solutions to deliver a sustainable future. We bring innovation, technical expertise and experience to help our clients address their most pressing water challenges. 111% A D J u S t e D e B ItD A A$4.1m F Y 2 3 A D J u S t e D e B ItD A C A S H A n D C A S H e Q u I VA l e n t S A$7.7m W ItH A F u R tH e R A $ 6 . 9 M I n I n V e n t o R Y At 3 0 Ju n e 2 0 2 3 . 4Qp o S ItI V e o p e R AtI n G C A S H F l o W 12 SciDev Limited Annual Report 2023 • operated on ten pFAS treatment projects throughout 2023, generating A$7.8m in revenue; • Secured a trademark for our proprietary pFAS treatment technology – FluorofIX™; • Consolidated and relocated multiple offices and operational sites into new headquarters in Seven Hills, nSW; and • Appointed Vice president – europe for Water technologies. this role will be responsible for implementing strategic initiatives to drive the growth of our Water technologies vertical in the european market. FY23 Operational Highlights • Appointed Seán Halpin as Ceo; • Awarded a three‑year contract agreement with First Quantum Minerals at the Ravensthorpe nickel operations, expected to generate A$9.5m in sales; • Awarded contracts with Iluka Resources with a total contract value of over A$28m; • Continued supply of SciDev's proprietary suspension polymer technology, Xslik 620, to major uS e&p companies; • Secured two pFAS treatment contracts with Cleanaway Waste Management with a combined value of A$5.3m; • Awarded an operation and Maintenance contract for 98 remote water quality monitoring units across multiple mines in WA; 13 SciDev Limited Annual Report 2023 Operational Review SciDev’s innovative chemistries and water treatment technologies, utilised across various industries, continue to improve production efficiencies, reduce waste, and minimise our clients’ environmental footprint. our services can be utilised in a range of industries, including Mining & Construction, energy Services and Water technologies. over the FY23 Year SciDev continued to expand its client presence, securing numerous new contracts, the growing scale of our business was reflected in over A$50m in new contracts secured during FY23. In FY23 we consolidated and relocated multiple offices and operational sites into new headquarters in Seven Hills, nSW. Operations Review (continued) Financial Review In Financial Year 2023, the company delivered record revenue of $89.9m, representing a 62% increase on the FY2022, results reflecting significant growth. SciDev’s record revenue growth was achieved organically as more clients turned to SciDev to utilise our industry‑ leading solutions. Highlights in FY23 include: SciDev delivering positive operational cash flow of $4.8m and underlying adjusted eBItDA of $4.1m. SciDev maintained a robust balance sheet with cash and cash equivalents of $7.7m on 30 June 2023 and a further $6.9m in inventory. During the year SciDev paid $3.6m for deferred consideration in relation to the acquisition of Haldon Industries. 14 SciDev Limited Annual Report 2023 Chemical Services Asia‑Pacific In Asia‑pacific, SciDev continued to establish ourselves as an industry leader in solid liquid separation chemistry for the mining and mineral processing industry. SciDev’s chemistries and professional services maximise the operational performance of mineral processing systems and ensure minimal water is passed as waste into the tailings circuit. Financial performance during the year was positively impacted by a range of new contracts with blue‑chip clients. Key activity during the year includes • Awarded a two‑year contract extension with Société le nickel (Sln) to continue the supply of our MaxiFlox® to two operational mines in new Caledonia; • Awarded a three‑year contract agreement with First Quantum Minerals at the Ravensthorpe nickel operations, which is anticipated to deliver over A$9.5m in sales over the contract term; • Awarded contracts with Iluka with a total contract value of over A$28m; • Secured a two‑year contract (with the option for a two‑year extensions) at the thunderbird Mineral Sands operation for the supply of MaxiFlox (insert registered symbol) chemistry, optiFlox equipment an technical services; • Awarded three‑year contract agreement at a large coking coal mine in southern Bowen Basin after successful extended trials in qualifying the MaxiFlox™ chemistry in late 2023; • Supply and purchase order agreements awarded for MaxiFlox™ chemistry and technical services for two tunnelling projects in Australia supporting the re‑use of water and environmentally friendly handling and disposal of waste spoil. 15 SciDev Limited Annual Report 2023 The America’s traditionally, SciDev’s main focus in the Americas was on supplying innovative chemistry to the uS oil and gas market. However, in FY23, the company expanded its reach and diversified its client base in the region. this included securing its first significant mining contract in the uS and establishing a licensing agreement to provide its chemistry to the Mexican mining sector. SciDev continues to innovate and deliver a range of chemistry solutions to our clients that improve operational efficiency and reduce their wastewater footprint. During the period SciDev operated across five oil and Gas basins in the uS, supporting multiple well‑completion fleets. Revenue in the second half of FY23 was impacted due to lower activity levels driven by lower domestic uSA natural gas prices. However, SciDev continued to expand our operational footprint in the uSA. Key activity and contract awards during the year include: • Continued to expand customer footprint in energy Services including an increased number of speciality chemistry products per well; • Continued supply of SciDev's proprietary suspension polymer technology, Xslik 620, to a major uS e&p company; • Blue Chip operator in the eagleFord Shale in South texas has approved and is utilising AmberSlik lubricant technology; • Successful field trials conducted with a major e&p client, SmartVis the permian Basin in West texas. SmartVis helps decrease wastewater volumes during the re‑completion phase of well‑development; • Secured contract with blue‑chip exploration and production company to the eagleford Shale for the utilisation of SciDev’s proprietary CatChek 15 technology; • Developed and commercialised a cement fluid loss additive for use in the cementing phase of well completion. • executed a one‑year exclusive distribution agreement with Sonora naturals S.A de C.V for the sale of SciDev’s MaxiFlox™ MaxiSperse™ and MaxiDry™ chemistry into the Mexican market; • A A$2.7m contract for the supply MaxiFlox® chemistry to a major Mining Services company in the uSA. Operations Review (continued) Water Technologies Asia‑Pacific SciDev’s water treatment business is centred around the removal of harmful contaminants from groundwater, surface water and industrial liquid waste, allowing water to be reused or safely discharged to the environment. the Company operates through both Build, own operate (Boo) and Design & Construct (D&C) commercial models and delivers our solutions to various markets. the financial performance of the water technology business was impacted by the delays in the commencement and commissioning of a number of new projects across Queensland and Victoria. these delays were driven by major scope changes requiring additional design and plant upgrade works. All projects are successfully progressing and associated revenue will be recognised in FY24. Key activity and contract awards during the year include: • Delivered ten pFAS treatment projects throughout 2023; • A an operation and Maintenance contract for 98 remote water quality monitoring units across multiple mines in WA; • two pFAS treatment contracts with Cleanaway Waste Management with a combined value of A$5.3m; • A major works contract for a tier 1 construction company to manage and treat contaminated groundwater at a residential development site in Sydney, nSW; 16 SciDev Limited Annual Report 2023 • A contract to provide a Boo Wtp to treat nutrient and pFAS‑impacted wastewater on the Sydney Metro West – Central tunnelling Works for the Acciona Ferrovial Joint Venture (AFJV) on the Sydney olympic park project. the contract has a total value of A$1.7m; • A 12‑month extension for the operations and maintenance of an existing pFAS Wtp with a major tier‑one mining client. to date, this treatment plant has treated ~one billion litres to trace levels of detection of <0.0002ug/l; and • Delivered two Design and Construct (D&C) packaged drinking water plants for the Queensland Government Qbuild public Works Division with a total contract value in excess of A$500k. Europe • Appointment of Vice president – europe for Water technologies. this role will be responsible for implementing strategic initiatives to drive the growth of our Water technologies vertical in the european market. Outlook With a growing portfolio of major new clients and strong demand across our markets, SciDev is well‑positioned to continue to grow our operational and financial footprint across FY24. Our key areas of focus in FY24 include: Ongoing focus on the health and safety of all our employees; Delivery of the Water Technologies pipeline of contracted works with a focus on the delivery of revenue from contracts secured in FY23; Ongoing development and diversification of our technology portfolio across both our Water Technologies and Chemical Services businesses; Continue our establishment as the market leader in PFAS treatment; Actively pursuing strategic opportunities to accelerate growth in the global PFAS sector with a focus on the European and North American markets; Diversification of North America business by entering new markets and broadening our service offerings where we have an established presence; Continued execution of business development opportunities in the Construction sector both domestically and overseas. 17 SciDev Limited Annual Report 2023 Environmental, Social and Governance SciDev is committed to reducing our impact and delivering value through sustainable operations and services. Our actions ensure that we achieve positive economic, social and environmental sustainability outcomes, in a balanced and value‑enhancing manner for all stakeholders. SciDev creates innovative, customised solutions to help our clients minimise wastewater and enhance their operations whilst protecting the environment. We provide efficiency gains for our clients across a range of sectors. As a company, we are: • Helping to solve the growing emerging contaminant problem, including the treatment of per and poly‑fluoroalkyl substances (pFAS); • Reducing the consumption of fresh‑water and wastewater outputs across a range of industries; • Supporting the communities in which we live and work; • Building a culture where we respect and embrace diversity in the workplace and wider community; • As an emerging company, we continue to build and formalise our commitment to sustainability. We integrate sustainable practices and considerations into all our business decisions; and • We remain committed to continually improving our eSG performance. 18 SciDev Limited Annual Report 2023 We actively work with global oilfield service leaders in the onshore uS oil and gas sector to develop new drilling chemistries. the oil and gas sector produces over five barrels of wastewater for every barrel of oil produced. the increased awareness of the environmental impact of such high levels of water discharge drives our clients to embrace new chemistry and solutions that can reduce the impact of their operations on the environment. Among other projects, SciDev has developed a range of drilling technologies that perform efficiently in saline water, reducing water waste by 50% and minimising the client’s freshwater footprint. SciDev will continue to innovate to ensure we can meet our client’s objectives centred on reducing water discharge. Environment SciDev’s sustainable chemistry and water treatment solutions focus on reducing freshwater consumption and the level of wastewater produced across industry. our technologies embrace a range of unique operating environments and challenges, including per‑and poly‑fluoroalkyl substances (pFAS) treatment, wastewater disposal from industrial sites and tailings slurry in the mining sector. By utilising our people, services, and solutions, our clients can reduce their environmental impact and achieve improved operational performance and efficiencies. one of the global environmental challenges is the emergence of pFAS, a group of man‑made chemicals used in various industries since the 1940s. pFAS chemicals are very persistent in the environment and cause environmental and health risks across various industrial sites. our water treatment plants can remove all detectible pFAS compounds to below the lowest possible commercially available laboratory limits of reporting, significantly ahead of our competitors in FY23 SciDev remediated on ten pFAS‑impacted sites. 19 SciDev Limited Annual Report 2023 Environmental, Social and Governance (continued) Social SciDev puts our workforce’s health, safety and wellbeing at the forefront of our operations, and we strive to deliver a safe and inclusive culture. Safety Diversity and Inclusion At SciDev, we prioritise Health and Safety above all else. We believe people are the heart of our business, and there is nothing more important than ensuring everyone goes home safely every day. one of our core values is “everyone Safe, everyday”, and we are committed to creating a culture that reflects this value. We encourage all employees to lead by example, promote safety and work together to continuously improve health and safety. We take a consultative and collaborative approach with everyone and encourage constant feedback. As a business, we are committed to prioritising safety in all roles and environments. to build a strong safety culture, we have developed a strategic plan that includes improving business performance, accountability, consistency, communication, and knowledge sharing. We also promote skills development and training at all levels to ensure that everyone has the necessary competencies to maintain a safe working environment. Additionally, we are optimising our processes and resources. We took the first step towards growing our culture by integrating our Quality, Health, Safety, and environmental management systems in november 2022. this triple recertification process combined the Water technologies and Chemical Services Businesses in Australia. our new integrated management system simplifies our operations and allows us to manage our business more efficiently. pivotal to SciDev’s ongoing success is our people. our leadership team are passionate about creating inclusive and high‑performing teams that respect and embrace diversity and individuality. the Company respects the diversity of all employees, consultants and contractors and cultivates an environment of fairness, respect, and equal opportunity. the Company believes that the pursuit of diversity in the workplace increases the pool of talent available, enhances individual work‑life balance, encourages personal achievement, improves cooperation, and assists in optimising organisational performance. SciDev is committed to providing a fair and equitable workplace, free from discrimination related to age, gender, ethnicity, cultural or other personal factors, in which diversity enhances Company performance and Shareholder value. the Company encourages diversity at all levels of the organisation to facilitate an appropriate mix of skills and talent to conduct its business. Active management of diversity in the workplace involves recognising and valuing the unique contribution people can make because of their individual backgrounds, different skills, experiences and perspectives. pleasingly, we have made positive progress in gender diversity, with 25% of our workforce now female. 20 SciDev Limited Annual Report 2023 In 2022, SciDev supported the Krait Foundation, which is an arm of the Wandering Warriors charitable enterprise. the Krait Foundation takes groups of retiring SoCoMe (Defence special operations) personnel and provides post‑service vocational training and support, with the aim of supporting our special forces veterans transitioning back to civilian life and creating fulfilling career opportunities for them our team also partnered with Clean‑up Australia to support World environment Day and participated in Water Aid’s Walk for Water raising, which helps raise funds and awareness so people worldwide can access clean water. Communities We recognise the importance of the local communities in which our operations occur. We strive to lessen the impact and maximise engagement of the community, promoting positive outcomes and economic development. We focus on ensuring our operations create a positive long‑term legacy, providing for future opportunity. Given the broad nature of the geographies in which SciDev operate, we interact differently with a range of communities. Recognising the importance of local engagement, SciDev strive to leave a lasting imprint on local communities via our actions, SciDev has partnered with Schools plus in the delivery of funding to assist disadvantaged communities in improving learning outcomes for their students. SciDev has provided financial support to underpin the ‘two‑Way Science programme’ at a cluster of Anangu schools (oak Valley Anangu, Amata Anangu, Fregan Anangu, Indulkana Anangu, Kenmore park Ananagu, Yalata Anangu, pipalyatjara Anangu and ernabella Anangu). the project had directly benefited over 200 students, 100 teachers and a further 100 community members in building cultural identity, teaching science, reinforcing literacy and numeracy skills and incorporating technology. this teaching and learning approach provides a way to construct meaningful engagement with the Anangu community. 21 SciDev Limited Annual Report 2023 Environmental, Social and Governance (continued) Governance SciDev is committed to a high level of governance and value and reward ethical standards, personal and corporate integrity and respect for others. SciDev’s governing documents include a Corporate Governance Statement, Board Charter and Code of Conduct policy, which provide the overlying framework of governing principles. the SciDev Board of Directors is cognisant of the importance of the Company’s corporate governance framework in establishing accountabilities and managing risk. our policies and procedures are detailed in our Corporate Governance Statement and Board Matrix, which can be viewed on the SciDev website. Ethics and Whistleblowing At SciDev, we value open and honest communication among our staff. our employees are encouraged to report any unethical behaviour or policy violations to senior management or the Board. We are committed to promoting and supporting a culture of honesty, ethical practices, corporate compliance, and governance. We also encourage the reporting of any instances of suspected illegal, fraudulent, or undesirable conduct involving our business. to ensure that our employees feel confident about raising concerns internally, we offer a reporting and investigation mechanism that is objective, confidential, and independent. this mechanism protects employees from any fear of intimidation, reprisals, or disadvantage. Ethical Sourcing and Modern Slavery We are committed to ethical and transparent business practices, and have implemented effective systems and controls to prevent any form of modern slavery in both our business operations and supply chain. We strongly believe in respecting human rights and are committed to tackling modern slavery as a vital aspect of our culture and values. Reconciliation Action Plan SciDev commits to promoting reconciliation and contributing to Australia’s effort to recognise, understand and repair the relationship between Aboriginal and/or torres Strait Islander peoples and the wider Australian community. the company is working through the framework set by Reconciliation Australia to deepen our understanding of our sphere of influence and the unique contribution we can make across the five dimensions of reconciliation: race relations, equality and equity, institutional integrity, unity and historical acceptance. 22 SciDev Limited Annual Report 2023 Board & Leadership Team Board Vaughan Busby Simone Watt Jon Gourlay Dan O’Toole Heath Roberts Non‑Executive Chairman Non‑Executive Director Non‑Executive Director Non‑Executive Director Company Secretary Leadership Team Seán Halpin Anna Hooper Sarah Stewart Ollie Kelly Chief Executive Officer Chief Financial Officer Head of Client Experience and Marketing Head of People and Culture Jamiel Muhor Head of Chemical Services, APAC Chris Dartez President – Chemical Services, Americas Todd Placek Head of Water Technologies, APAC John Wilson Quinn Smith Vice President – Water Technologies, Europe Vice President – Water Technologies, North America 23 SciDev Limited Annual Report 2023 Financial Report 24 SciDev Limited Annual Report 2023 Financial Report Directors’ Report Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report Additional ASX Information Corporate Directory 26 42 43 44 45 46 47 88 89 93 IBC 25 SciDev Limited Annual Report 2023 Directors’ Report 30 June 2023 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 2023. 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; ॰ Simone Watt ; ॰ Jon Gourlay; and ॰ Dan O’Toole. Principal activities SciDev is a leader in the environmental solutions market focused on water intensive industries. SciDev brings together worldclass technology, chemistry and application to solve pressing operational and environmental issues for the water, oil and gas, mining and construction markets. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of financial performance Revenue from clients in 2023 is $89,841,000 (30 June 2022: $55,597,000) and the loss for the consolidated entity after providing for income tax amounted to $339,000 (30 June 2022: loss of $616,000). Reconciliation of loss before income tax to EBITDA and Adjusted EBITDA (unaudited): Loss before income tax Depreciation and amortisation Finance costs EBITDA Acquisition expense – Haldon contingent consideration Non‑recurring Haldon integration costs Net fair value loss/(gain) on options held in R3D Resources Limited Adjusted EBITDA 2023 $’000 (222) 3,508 630 3,916 – – 164 4,080 2022 $’000 (1,441) 2,082 708 1,349 504 245 (164) 1,934 EBITDA and adjusted EBITDA are non‑IFRS earnings measures which do not have any standardised meaning prescribed by IFRS and therefore may not be comparable to EBITDA presented by other companies. These measures, which are unaudited, are important to management as an additional way to evaluate the consolidated entity’s performance. 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. 26 SciDev Limited Annual Report 2023 Directors’ Report (continued) Review of operations SciDev’s innovative chemistries and water treatment technologies, utilised across various end industries, continue to improve production efficiencies, reduce waste, and minimise the environmental footprints of our clients. Our services are utilised in a range of industries, including Mining & Mineral processing, Energy Services, Construction & Infrastructure, and Water Treatment. Key developments in FY23 included: ॰ Awarded two three‑year contracts with Iluka Resources with a total contract value of over A$28 million. ॰ Awarded a three‑year contract agreement with First Quantum Minerals at the Ravensthorpe Nickel Operations, expected to generate A$9.5 million in sales. ॰ Continued supply of SciDev’s proprietary suspension polymer technology, Xslik 620, to major US E&P companies. ॰ Awarded contract with Cleanaway Waste Management Limited in Victoria for the construction of a water treatment plant to treat PFAS‑impacted wastewater with a contract value of A$3.15 million. ॰ Contract with a minimum value of $2.15 million secured with Cleanaway Waste Management to deploy a BOO Water Treatment Plant in Queensland to treat PFAS‑impacted leachate. ॰ Awarded an operate and maintain contract for 98 remote water quality monitoring units across multiple mines in WA. ॰ Operated on ten PFAS treatment projects throughout 2023, generating A$7.8 million in revenue. ॰ Secured a trademark for our proprietary PFAS treatment technology. Mining and Construction FY23 saw a return to profitability for our Mining and Construction business as it continued to expand the delivery of chemistry and technology to a range of Australian and international companies. The growth in revenue and profitability was achieved by securing A$44 million in new contracts and delivering technical trials of our specialty chemistry for blue chip clients across the industry. Business development activities expanded across several operations and commodities in both mining and construction, expanding to the US, Mexico, Canada and the Caribbean. Energy Services SciDev continues to innovate and deliver chemistry solutions that increase recycled water use in onshore oil and gas production, helping companies meet environmental regulations, limit freshwater usage, reduce costs, and improve our clients’ operational performance. During the period, SciDev operated in five US Oil & Gas basins and supported multiple well‑completion fleets. The second half of FY23 revenue was impacted by lower domestic USA natural gas prices, however SciDev continued to expand its operational footprint in the USA. Water Technologies In FY23, the financial performance of the Water Technologies business was impacted by delays to the commencement of new projects due to changes in scope, requiring more design and plant upgrades. The water technologies team secured contracts in new regions in the Australian domestic market, delivering projects for new clients and further developing SciDev’s presence within Victoria and Queensland. The team continued its establishment as a market leader in per‑ and poly‑fluoroalkyl (PFAS) treatment, delivering ten PFAS treatment projects throughout the year. The year also saw the appointment of a Vice‑President Europe for Water Technologies. This role is responsible for implementing strategic initiatives to drive the growth of our Water Technologies vertical in the European market. With growing PFAS regulation and an increased global footprint, the water technologies business is set for an exciting period of growth. 27 SciDev Limited Annual Report 2023 Directors’ Report (continued) Outlook SciDev is well positioned for continued growth in FY24 and beyond, with a strong project pipeline, skilled team, and robust balance sheet. Key areas of focus include: ॰ Ongoing focus on the health and safety of all our employees. ॰ Delivery of Water Technologies pipeline of works, with the focus on the delivery of revenue from contracts secured in FY23. ॰ Ongoing development and diversification of our technology portfolio across both our Water Technologies and Chemical Services businesses. ॰ Actively pursuing strategic opportunities to accelerate growth in the global PFAS sector with a focus on the European and North American markets. ॰ Leveraging strategic partnerships and licencing agreements to increase market share in the global mining and resources sector. ॰ Diversification of North American business by entering new markets and broadening our service offerings where we have an established presence. ॰ Continued execution of business development opportunities in the Construction sector, both domestically and overseas. Significant changes in the state of affairs During the year, the consolidated entity paid contingent consideration of $3,620,000 (refer note 20) to the vendors of Haldon Industries. There were no other significant changes in the state of affairs of the consolidated entity during the financial year. Matters subsequent to the end of the financial year No matter or circumstance has arisen since 30 June 2023 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. Environmental regulation The consolidated entity is subject to a range of environmental regulations and licences under Australian Commonwealth or State laws. The Company is responsible for monitoring its compliance with these laws and is not aware of any breaches during the year. A key area of regulation are specific process licences: Group companies are holders of NSW Environmental Protection Agency (EPA) mobile waste processing PFAS licences 20878 and 21114. 28 SciDev Limited Annual Report 2023 Directors’ Report (continued) Information on directors Name: Vaughan Busby Title: Qualifications: Experience and expertise: Non‑executive Chairman B.Pharm, MBA (IMD Business School Switzerland) 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: Company Chairman Date of appointment to the Board: Interests in shares: Interests in options: 9 August 2021 Nil Nil Name: Title: Simone Watt Non‑executive Director Qualifications: BASc Experience and expertise: Other current directorships: Former directorships (last 3 years): Special responsibilities: 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 Watt is also a Director of Kemtec Mineral Processing and Kanins International, both parts of the Sinoz Group of companies. She has extensive experience in strategic sourcing and supplier management, business development and sales and marketing. None None Member of the Audit and Risk Committee and Chair of the Nomination and Remuneration Committee Date of appointment to the Board: Interests in shares: Interests in options: 29 October 2018 5,313,280 Nil 29 SciDev Limited Annual Report 2023 Directors’ Report (continued) Name: Title: Jon Gourlay Non‑executive Director Qualifications: BCom, C.A Experience and expertise: Other current directorships: Former directorships (last 3 years): Special responsibilities: Mr Gourlay is a chartered accountant with extensive experience in finance and project management, risk management, business improvement and investor relationships, 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. None None Chairman of the Audit and Risk Committee and member of the Nomination and Remuneration Committee Date of appointment to the Board: Interests in shares: Interests in options: 28 May 2019 1,067,774 Nil Name: Title: Dan O’Toole Non‑executive Director Qualifications: BEng(Hons), EngExec, FlEAust, MAusIMM, MAICD Experience and expertise: Other current directorships: Former directorships (last 3 years): Special responsibilities: 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 focused 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. None None Member of the Audit and Risk Committee and the Nomination and Remuneration Committee Date of appointment to the Board: Interests in shares: Interests in options: 3 February 2021 266,000 Nil ‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. ‘Former directorships (last 3 years)’ quoted above are directorships held in the last three (3) years for listed entities only and exclude directorships of all other types of entities unless otherwise stated. 30 SciDev Limited Annual Report 2023 Directors’ Report (continued) Company secretary Mr Heath L Roberts (Dip Law (S.A.B.) and Grad Dip Legal Practice (UTS)) is a commercial solicitor with over 20 years of listed company experience. He has acted for SciDev in various capacities over the years and brings strong transactional, compliance and capital raising experience to the role. Meetings of directors The number of meetings of the company’s Board of Directors (‘the Board’) held during the year ended 30 June 2023, and the number of meetings attended by each director were: Full Board Nomination and Remuneration Committee Audit and Risk Committee Attended Held Attended Held Attended Held Vaughan Busby Simone Watt Jon Gourlay Dan O’Toole 9 10 10 10 10 10 10 10 – – – – – – – – – 4 4 3 – 4 4 4 Held: represents the number of meetings held during the time the director held office. 31 SciDev Limited Annual Report 2023 Directors’ Report (continued) Remuneration report (audited) The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. 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; and ॰ 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. 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; ॰ 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 a mix of fixed base pay and variable pay that includes both short‑ and long‑term incentives, with an appropriate balance of at‑risk remuneration. The Company applies remuneration strata grades, with 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 vary 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. 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 Chief Executive Officer, the Non‑Executive Directors and other senior executives. 32 SciDev Limited Annual Report 2023 Directors’ Report (continued) Non‑executive directors remuneration Fees and payments to the Non‑executive Directors reflect the demands which are made on, and the responsibilities of, the Non‑executive Directors. The Board undertakes a review of Non‑executive Directors’ fees and payments annually. Non‑executive Directors’ fees are determined within an aggregate Non‑executive Directors’ cash remuneration limit, which is periodically recommended for approval by shareholders. The current limit of $400,000 was approved by shareholders at the Company’s 2007 Annual General Meeting. The amount paid to Non‑executive Directors of the parent entity (SciDev Limited) during the year to 30 June 2023 was $303,875 (2022: $295,750). 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 is 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 2023 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 including 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. (ii) Short‑term incentives Senior Executives STIs paid to senior executives are made on a discretionary basis as determined by the 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 client satisfaction. (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. Remuneration voting and comments at the company’s 15 November 2022 Annual General Meeting At the 2022 AGM, 99.78% of the votes received supported adopting the remuneration report for the year ended 30 June 2022. The company did not receive any specific feedback at the 2022 AGM regarding its remuneration practices. 33 SciDev Limited Annual Report 2023 Directors’ Report (continued) Details of remuneration Amounts of remuneration The key management personnel of the consolidated entity during the financial year ended 30 June 2023 consisted of the following directors of SciDev Limited: ॰ Vaughan Busby – Non‑executive Chairman; ॰ Simone Watt – Non‑executive Director; ॰ Jon Gourlay – Non‑executive Director; and ॰ Dan O’Toole – Non‑executive Director. And the following persons: ॰ Seán Halpin – Chief Executive Officer; ॰ Anna Hooper – Chief Financial Officer; and ॰ Heath Roberts – Company Secretary and General Counsel. Post‑ employ‑ ment benefits Short‑term Share‑based payments 2023 Vaughan Busby Simone Watt Jon Gourlay Dan O’Toole Sean Halpin(a) Heath Roberts Anna Hooper Salary & fees $ 95,000 60,000 60,000 60,000 368,289 144,000 342,824 1,130,113 Bonus $ Super annuation $ Termin ation benefits $ Shares & units $ Options & rights $ – – – – – – 57,750 57,750 9,975 6,300 6,300 6,300 28,652 – 25,292 82,819 – – – – – – – – – – – – – – – – – – – – – – – – Proportion of remun eration perform ance related % – – – – – – 14 Total $ 104,975 66,300 66,300 66,300 396,941 144,000 425,866 1,270,682 (a) Seán Halpin was appointed Interim Chief Executive Officer on 29 April 2022 and Chief Executive Officer on 11 November 2022. 34 SciDev Limited Annual Report 2023 Directors’ Report (continued) Post‑ employ‑ ment benefits Short‑term Share‑based payments 2022 Vaughan Busby(a) Simone Watt Jon Gourlay Dan O’Toole(a) Lewis Utting(b) Sean Halpin(c) John Fehon(d) Heath Roberts Anna Hooper(d) Salary & fees $ 85,284 60,000 60,000 63,580 380,657 278,205 58,334 166,000 190,595 1,342,655 Bonus $ Super annuation $ Termin ation benefits $ Shares & units $ Options & rights(e) $ – – – – – – – – – – 8,528 6,000 6,000 6,358 – – – – – – – – 40,000 264,000 146,514 – – – – – 24,000 – 5,000 86,500 – 11,784 – – – – – – 48,274 350,479 – – – 149,834 166,000 202,379 107,670 350,500 146,514 48,274 1,995,613 Total $ 93,812 66,000 66,000 69,938 831,171 Proportion of remun eration perform ance related % – – – – 18 13 – – – (a) Vaughan Busby was appointed as director and Non‑executive Chairman on 9th August 2021. Dan O’Toole was acting Chair from 1 July 2021 until 9 August 2021. (b) Lewis Utting resigned on 29 April 2022. (c) Seán Halpin was appointed Interim Chief Executive Officer on 29 April 2022. Before his appointment, he was the Commercial Director of the Water Services Division. The amounts shown above include all of Seán Halpin’s remuneration during the reporting period, whether as Interim Chief Executive Officer or as Commercial Director of Water Services. Amounts received in his position as Interim Chief Executive Officer amounted to $62,333, made up of a cash salary of $58,333, superannuation of $4,000, annual and long service leave of $4,635 and performance rights of $8,332. (d) John Fehon resigned as Chief Financial Officer on 16 September 2021 and Anna Hooper was appointed Chief Financial Officer on 6 December 2021. (e) The amounts included in the options and performance rights 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 non‑market hurdles only. No amounts will be received as remuneration as the market‑based hurdle has not been met upon expiry. 35 SciDev Limited Annual Report 2023 Directors’ Report (continued) Service agreements Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements at the date of this report are as follows: Name: Title: Seán Halpin Chief Executive Officer Agreement commenced: 11 November 2022 Term of agreement: On‑going Details: Name: Title: Base salary of $350,000 plus superannuation and STI performance‑based bonus up to $100,000 and LTI bonus up to $175,000 in performance based equity under the terms of the Company’s ESS. In addition, Mr Halpin is eligible for an equity settled Outperformance bonus of up to $400,000. The contract may be terminated by six (6) months’ notice from either party. Heath Roberts Company Secretary & General Counsel Agreement commenced: Term of agreement: 1 March 2017 On‑going Details: Name: Title: Consulting per diem rate equal to that of $240,000 for full‑time employment and services. The agreement may be terminated by one (1) month’s notice from either party. Anna Hooper Chief Financial Officer Agreement commenced: 6 December 2021 Term of agreement: On‑going Details: Base salary of $350,000 including superannuation and STI performance‑based bonus of up to $70,000 and an LTI bonus up to $162,690 in performance‑based equity under the terms of the Company’s ESS. The contract may be terminated by three (3) months’ notice from either party. Key management personnel (KMP) have no entitlement to termination payments in the event of removal for misconduct. 36 SciDev Limited Annual Report 2023 Directors’ Report (continued) Share‑based compensation Issue of shares There were no shares issued to directors or other key management personnel as part of compensation during the year ended 30 June 2023. Options The terms and conditions of the prior year grants of options over ordinary shares are as follows: Name Lewis Utting Lewis Utting Number of options granted Grant date Vesting date Expiry date 800,000 23/07/2019 23/07/2019 23/07/2022 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 John Fehon John Fehon 650,000 23/07/2019 23/07/2019 23/07/2022 75,000 03/02/2020 03/02/2020 23/07/2022 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 Exercise price $0.10 $0.10 $0.12 $0.12 $0.12 $0.12 $0.10 $0.10 $0.13 $0.17 $0.11 $0.11 $0.61 $0.63 $0.00 $0.04 Vested % 100% 100% 100% 100% 100% 100% 100% 100% With the exception of the options granted to Lewis Utting (former Managing Director and Chief Executive Officer), which had performance conditions required to be met to earn the grant, all other options granted had no performance conditions. The options issued to the Directors were premium‑priced options and 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 did 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 carried no dividend or voting rights. There has been no alteration of the terms and conditions of the above share‑based payment arrangements since the grant date. 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 2023 are set out below: Value of options granted during the year 2023 $ – – – Simone Watt John Fehon Heath Roberts Value of options exercised during the year* 2023 $ 36,250 – Value of options lapsed during the year* Value of options granted during the year Value of options exercised during the year* Value of options lapsed during the year 2023 $ – – 2022 $ – – – 2022 $ – 63,750 – 2022 $ – – – 33,000 33,000 * The value exercised/lapsed represents the intrinsic value at the exercise date/date options lapsed. 37 SciDev Limited Annual Report 2023 Directors’ Report (continued) Performance rights During the year ended 30 June 2021, the Company issued 2,133,399 performance rights, which have expired unexercised on 31 October 2022. Additional information The earnings of the consolidated entity for the five years to 30 June 2023 are summarised below: Sales revenue Profit/(loss) after income tax 2023 $’000 2022 $’000 89,841 55,597 (339) (616) 2021 $’000 42,525 3,453 2020 $’000 17,907 2019 $’000 2,656 (875) (2,033) The factors that are considered to affect total shareholders return (‘TSR’) are summarised below: Share price at financial year end ($) Basic earnings per share (cents per share) 2023 0.33 (0.18) 2022 0.18 (0.35) 2021 0.85 2.26 2020 0.58 (0.69) 2019 0.09 (2.69) Additional disclosures relating to key management personnel Shareholding The number of shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Ordinary shares Vaughan Busby Simone Watt Jon Gourlay Dan O’Toole Seán Halpin(1) Heath Roberts Anna Hooper Balance at the start of the year Received during the year on the exercise of options Additions/ other Disposals/ other Balance at the end of the year – – 5,063,280 250,000 – – 1,046,934 – 5,100,000 – – – 20,840 266,000 1,000,000 – – – – – 106,093 200,000 – – – – (306,093) – – 5,313,280 1,067,774 266,000 6,100,000 – – 11,316,307 450,000 1,286,840 (306,093) 12,747,054 (1) Mr Halpin is a director and part‑owner of Haldon Industries Pty Ltd, which is the holder of 5,100,000 shares. These are subject to escrow until 15 September 2024. Mr Halpin also has acquired interests in a further 1,000,000 shares which are not subject to escrow. 38 SciDev Limited Annual Report 2023 Directors’ Report (continued) 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 Simone Watt Heath Roberts Performance rights holding Balance at the start of the year 250,000 400,000 650,000 Granted Exercised Expired/ forfeited/ other Balance at the end of the year – – – (250,000) – (200,000) (200,000) (450,000) (200,000) – – – The number of performance rights over ordinary shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Balance at the start of the year Granted Vested Expired/ forfeited/ other Balance at the end of the year Performance rights over ordinary shares Heath Roberts 120,000 120,000 – – – – (120,000) (120,000) – – 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 2023. Other transactions with key management personnel and their related parties Seán Halpin, CEO is also a director of Haldon Industries Pty Limited (HIPL). On 12 May 2021, SciDev Limited acquired the assets and business of Haldon Industries Limited. In relation to that transaction, during the financial year 2023, SciDev Limited paid a contingent consideration of $3,620,000 and lease payments of $2,308,000. In 2022, SciDev Limited paid a contingent consideration of $2,922,039, lease payments of $2,308,000 and cash on settlement of $879,685 to HIPL. Also in FY22, SciDev received cash from clients via HIPL of $3,882,745 and incurred costs in the year via HIPL of $540,838. Amounts exclude GST. As at 30 June 2023, SciDev has a payable balance of $3,620,000 to HIPL (2022: contingent consideration of $7,240,000 to HIPL and a liability for the asset lease from HIPL of $2,308,000). There is also a trading balance owing by SciDev to HIPL of $355,940 at 30 June 2023 (2022: $319,599). A director, Simone Watt, is a director of Sinoz Chemicals and Commodities Pty Ltd (Sinoz). The consolidated entity had leased premises from Sinoz during July 2021 only and rent of $502. This arrangement ended in July 2021. 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 2023. This concludes the remuneration report, which has been audited. 39 SciDev Limited Annual Report 2023 Directors’ Report (continued) Shares under option There were no unissued ordinary shares of SciDev Limited under option outstanding at the date of this report. Shares under performance rights There were no unissued ordinary shares of SciDev Limited under performance rights outstanding at the date of this report. Shares issued on the exercise of options There were 1,725,000 ordinary shares of SciDev Limited issued on the exercise of options during the year ended 30 June 2023 (2022: 425,000 ordinary shares). At the date of the report, there were no shares under option. 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 2023 and up to the date of this report. At the date of this report there are no shares under performance rights. Indemnity and insurance of officers The company has indemnified the directors and executives of the company for costs incurred in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. Indemnity and insurance of auditor The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor. During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity. Proceedings on behalf of the company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings. Non‑audit services Details of the amounts paid or payable to the auditor for non‑audit services provided during the financial year by the auditor are outlined in note 27 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. 40 SciDev Limited Annual Report 2023 Directors’ Report (continued) The directors are of the opinion that the services as disclosed in note 27 to the financial statements do not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons: ॰ all non‑audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and ॰ none of the services undermines 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 an 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. Rounding of amounts The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to ‘rounding‑off’. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar. Auditor’s independence declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors’ report. Auditor Ernst & Young continues in office in accordance with section 327 of the Corporations Act 2001. This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the directors Vaughan Busby Chairman 29 August 2023 Sydney 41 SciDev Limited Annual Report 2023 Auditor’s Independence Declaration 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 Auditor’s independence declaration to the directors of SciDev Limited As lead auditor for the audit of the financial report of SciDev Limited for the financial year ended 30 June 2023, I declare to the best of my knowledge and belief, there have been: a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; b. No contraventions of any applicable code of professional conduct in relation to the audit; and c. No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of SciDev Limited and the entities it controlled during the financial year. Ernst & Young Siobhan Hughes Partner 29 August 2023 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 42 SciDev Limited Annual Report 2023 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2023 Revenue Other income Expenses Changes in inventories, and raw materials and consumables used Contractors and consultants Depreciation and amortisation expense Employee benefits expense Insurance Foreign exchange losses Acquisition expense – Haldon contingent consideration Professional fees Travel and accommodation Other expenses Finance costs Loss before income tax (expense)/benefit Income tax (expense)/benefit Loss after income tax (expense)/benefit for the year attributable to the owners of SciDev Limited Other comprehensive loss Items that will not be reclassified subsequently to profit or loss Loss 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 Other comprehensive loss for the year, net of tax Total comprehensive loss for the year attributable to the owners of SciDev Limited Note 5 6 2023 $'000 2022 $'000 89,841 55,597 31 631 20 7 8 (65,542) (1,244) (3,508) (12,597) (508) (194) – (953) (960) (38,182) (1,758) (2,082) (9,888) (340) (381) (504) (579) (582) (3,958) (2,665) (630) (222) (117) (339) (708) (1,441) 825 (616) (1,094) (808) 369 (725) 631 (177) (1,064) (793) Basic loss per share Diluted loss per share 35 35 Cents Cents (0.18) (0.18) (0.35) (0.35) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 43 SciDev Limited Annual Report 2023 Consolidated Statement of Financial Position As at 30 June 2023 Assets Current assets Cash and cash equivalents Trade and other receivables Contract assets Inventories Income tax refund due Other Total current assets Non‑current assets Financial assets at fair value Property, plant and equipment Intangibles Deferred tax Other Total non‑current assets Total assets Liabilities Current liabilities Trade and other payables Contract liabilities Lease liabilities Employee benefits Provisions Total current liabilities Non‑current liabilities Lease liabilities Provisions Total non‑current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity Note 2023 $'000 2022 $'000 9 10 11 12 13 14 15 8 16 17 18 19 20 18 20 21 22 7,732 7,778 601 6,930 178 633 23,852 411 12,727 25,622 4,135 627 43,522 67,374 14,770 648 1,064 452 – 16,934 2,415 – 2,415 19,349 48,025 14,064 10,268 – 7,346 3 439 32,120 1,730 7,772 25,874 3,505 156 39,037 71,157 11,787 242 2,551 432 3,620 18,632 344 3,344 3,688 22,320 48,837 119,489 119,237 (794) (70,670) 48,025 (69) (70,331) 48,837 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 44 SciDev Limited Annual Report 2023 Consolidated Statement of Changes in Equity For the year ended 30 June 2023 Balance at 1 July 2021 Loss after income tax benefit for the year Other comprehensive loss for the year, net of tax Total comprehensive loss for the year Transactions with owners in their capacity as owners: Contributions of equity (note 21) Transaction costs net of tax (note 21) Share‑based payments (note 36) Options exercised (note 21) Contingent consideration Balance at 30 June 2022 Balance at 1 July 2022 Loss after income tax expense for the year Other comprehensive loss for the year, net of tax Total comprehensive loss for the year Transactions with owners in their capacity as owners: Share based payments (note 21) Options exercised (note 21) Balance at 30 June 2023 – – – 18,550 (669) – 51 308 119,237 Issued capital $’000 119,237 – – – 65 187 119,489 Issued capital $’000 100,997 Other equity $’000 308 Reserves $’000 Accumulated losses $’000 Total equity $’000 31,615 (616) (177) (69,715) (616) – (616) (793) – – – – – 18,550 (669) 83 51 – 25 – (177) (177) – – 83 – – – – – – – – – (308) – (69) (70,331) 48,837 Other equity $’000 Reserves $’000 Accumulated losses $’000 Total equity $’000 – – – – – – – (69) (70,331) 48,837 – (339) (339) (725) (725) – – – (725) (339) (1,064) – – 65 187 (794) (70,670) 48,025 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 45 SciDev Limited Annual Report 2023 Consolidated Statement of Cash Flows For the year ended 30 June 2023 Note 2023 $'000 2022 $'000 Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Government grants and subsidies R&D tax incentive received Interest and other finance costs paid Income taxes paid Net cash from/(used in) operating activities Cash flows from investing activities Payments for deferred consideration Payments for property, plant and equipment Payments for intangibles Payments for security deposits Payments for contingent consideration Proceeds from disposal of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Repayment of leases Proceeds from exercise of share options Share issue transaction costs Net cash from/(used in) financing activities 34 15 Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial year 9 95,201 (89,173) 6,028 – – (353) (861) 4,814 – (4,113) (179) (482) 54,972 (57,214) (2,242) 119 1,044 (227) – (1,306) (880) (2,382) (141) (110) (3,620) (3,235) – 98 (8,394) (6,650) – (3,012) 187 – (2,825) (6,405) 14,064 73 7,732 18,369 (2,476) 51 (955) 14,989 7,033 7,010 21 14,064 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 46 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements 30 June 2023 Note 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 C/‑ Boardroom Pty Limited Level 12 225 George Street Sydney NSW 2000 Principal place of business Unit 1 8 Turbo Road Kings Park NSW 2148 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 29 August 2023. The directors have the power to amend and reissue the financial statements. Note 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. 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. 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. 47 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 31. 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 2023 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. 48 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Current and non‑current classification Assets and liabilities are presented in the statement of financial position based on current and non‑current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity’s normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non‑current. A liability is classified as current when: it is either expected to be settled in the consolidated entity’s normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non‑current. Deferred tax assets and liabilities are always classified as non‑current. Investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, 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 measured at amortised cost. 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. 49 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Impairment of non‑financial assets Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non‑financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs of disposal and value‑in‑use. The value‑in‑use is the present value of the estimated future cash flows relating to the asset using a pre‑tax discount rate specific to the asset or cash‑generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash‑generating unit. Finance costs Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred. Goods and Services Tax (‘GST’) and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. Rounding of amounts The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to ‘rounding‑off’. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar. 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 2023. 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. Amendment to AAS Classification of Liabilities as Current or Non‑Current Amendments to AASB 108 Definition of Accounting Estimates Amendments to AASB 1 and AASB Practice Statement 2 Disclosure of Accounting Policies Amendments to AASB 112, Deferred Tax related to Assets and Liabilities from a Single Transaction AASB 2022‑5 Amendments to AASs – Lease Liability in a Sale and Leaseback with effective date 1 January 2024 50 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 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. 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. 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 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. 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. Note 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. 51 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Major clients During the year ended 30 June 2023, revenue from 1 client amounted to $5,273,000 arising from sales in the Australia segment, and revenue from 1 client amounted to $30,778,000 arising from sales in the United States segment. During the year ended 30 June 2022, revenue from 1 client amounted to $4,378,215 arising from sales in the Australia segment, and revenue from 1 client amounted to $6,778,882 arising from sales in the United States segment. No other client contributed 10% or more to the consolidated entity’s revenue for both 2023 and 2022. Operating segment information United States $’000 Eliminations and adjustments $’000 Australia $’000 33,265 32 33,297 123 33,420 (1,653) 56,453 59 56,512 – 56,512 5,388 48,560 18,814 13,915 5,434 Total $’000 89,718 – 89,718 123 89,841 3,916 (3,508) (630) (222) (117) (339) 67,374 67,374 19,349 19,349 – (91) (91) – (91) 181 – – 2023 Revenue Sales to external clients Intersegment sales Total sales revenue Other revenue Total revenue EBITDA* Depreciation and amortisation Finance costs Loss before income tax expense Income tax expense Loss after income tax expense Assets Segment assets Total assets Liabilities Segment liabilities Total liabilities * This is a non‑IFRS measure. 52 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) 2022 Revenue Sales to external clients Intersegment sales Total revenue EBITDA* Depreciation and amortisation Finance costs Loss before income tax benefit Income tax benefit Loss after income tax benefit Assets Segment assets Total assets Liabilities Segment liabilities Total liabilities Australia $’000 27,816 25 27,841 (823) United States $’000 Eliminations and adjustments $’000 27,781 66 27,847 1,886 – (91) (91) 286 51,319 19,838 15,287 7,033 – – Total $’000 55,597 – 55,597 1,349 (2,082) (708) (1,441) 825 (616) 71,157 71,157 22,320 22,320 * This is a non‑IFRS measure. 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. 53 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 5. Revenue Revenue from contracts with customers Treatment fees and product sales Other revenue Rent Revenue Disaggregation of revenue 2023 $’000 2022 $’000 89,718 55,597 123 – 89,841 55,597 The disaggregation of revenue from contracts with clients is based on the location of the clients as follows: Geographical regions Australia United States Europe Asia Timing of revenue recognition Goods transferred at a point in time Services transferred over time 2023 $’000 2022 $’000 31,918 55,752 – 2,048 89,718 76,333 13,385 89,718 26,202 25,286 59 4,050 55,597 41,828 13,769 55,597 Accounting policy for revenue recognition The consolidated entity recognises revenue as follows: Revenue from contracts with clients 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 client. For each contract with a client, the consolidated entity: identifies the contract with a client; 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 client of the goods or services promised. Generally, sale of goods is recognised at the point in time where the client takes control of the goods, usually at the time of delivery. Treatment fees are recognised when the service is rendered and are normally either fees per specified volume treated or per treatment time. Variable consideration within the transaction price, if any, reflects concessions provided to the client such as discounts, rebates and refunds, any potential bonuses receivable from the client 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. 54 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) For design and construction contracts with clients, revenue is recognised over time, typically based on an input method using an estimate of costs incurred to date as a percentage of total estimated costs. These contracts are typically executed on the customer’s site so they control the assets as they are being built. Differences between amounts recognised as revenue and amounts billed to customers are recognised as contract assets or liabilities in the Statement of Financial Position. The measurement of revenue is an area of accounting judgement. Management uses judgement to estimate: (i) Progress in satisfying the performance obligations within the contract, which includes estimating contract costs expected to be incurred to satisfy performance obligations; and (ii) The probability of the amount to be recognised as variable consideration for approved variations and claims where the final price has not been agreed with the customer. Revenue is invoiced based on the terms of each individual contract, which may include a periodic billing schedule or achievement of specific milestones. Any warranties associated with contracts, that give rise to financial obligation, are recorded as provisions. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. Note 6. Other income Net fair value gain on other financial assets Net gain on disposal of property, plant and equipment Subsidies and grants Net gain on lease termination Sundry Other income 2023 $’000 2022 $’000 – – – 23 8 31 164 40 405 – 22 631 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. Note 7. Expenses Loss before income tax includes the following specific expenses: Finance costs Interest and finance charges paid/payable on borrowings Interest and finance charges paid/payable on lease liabilities Unwinding of the discount on provisions Finance costs expensed Superannuation expense 2023 $’000 2022 $’000 7 347 276 630 4 223 481 708 Defined contribution superannuation expense 739 580 55 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 8. Income tax Income tax expense/(benefit) Current tax Deferred tax – origination and reversal of temporary differences Aggregate income tax expense/(benefit) Deferred tax included in income tax expense/(benefit) comprises: Increase in deferred tax assets Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate Loss before income tax (expense)/benefit Tax at the statutory tax rate of 30% Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Non‑deductible expenses Tax losses relating to overseas subsidiaries not recognised Tax losses relating to overseas subsidiaries recognised Difference in overseas tax rates Prior year adjustment Income tax expense/(benefit) Amounts (credited)/charged directly to equity Deferred tax (credit)/expense Tax losses not recognised Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit @ 30% 2023 $’000 2022 $’000 686 (569) 117 – (825) (825) (569) (825) (222) (67) 195 128 – – (433) 422 117 (1,441) (432) 385 (47) 54 (966) 134 – (825) 2023 $’000 2022 $’000 (346) (633) 53,200 15,960 53,200 15,960 Management has recognised 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. 56 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Deferred tax asset The net deferred tax asset comprises temporary differences attributable to: Breakdown of closing deferred tax balances: Tax losses Employee benefits Accrued expenses Share issue costs Equity instruments at fair value through other comprehensive income Property, plant and equipment Prepayments Client contracts Trademark and intellectual property Deferred tax asset Movements: Opening balance Credited to profit or loss Credited to equity Credited to other comprehensive income Closing balance Accounting policy for income tax 2023 $’000 2022 $’000 4,758 4,439 136 598 172 – (122) (144) (569) (694) 4,135 3,505 569 – 61 130 250 229 (61) – (84) (666) (732) 3,505 2,047 825 286 347 4,135 3,505 The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: ॰ When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or ॰ When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. 57 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) 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. Note 9. Cash and cash equivalents Current assets Cash at bank Cash on deposit 2023 $’000 7,682 50 7,732 2022 $’000 14,014 50 14,064 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. 58 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 10. Trade and other receivables Current assets Trade receivables Other receivables 2023 $’000 7,593 185 7,778 2022 $’000 10,105 163 10,268 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 clients and operates under strict credit policies approved by the Board of Directors. No impairment loss has been recognised for trade receivables. Accounting policy for trade and other receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Note 11. Contract assets Current assets Contract assets 2023 $’000 2022 $’000 601 – Accounting policy for contract assets Contract assets are recognised when the consolidated entity has transferred goods or services to the client but where the consolidated entity is yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment purposes. 59 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 12. Inventories Current assets Stock in transit – at cost Stock on hand – at cost 2023 $’000 1,076 5,854 6,930 2022 $’000 – 7,346 7,346 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. Cost is based on the weighted average cost principle including expenditure incurred in acquiring the inventories and bringing them to their existing condition and location. In the case of manufactured inventories, cost includes an appropriate share of production overheads. 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 2023 is being recorded at net realisable value. Note 13. Financial assets at fair value Non‑current assets Unlisted equity securities at fair value through profit or loss Unlisted equity securities at fair value through other comprehensive income 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 Revaluation (decrements)/increments recognised in profit or loss Revaluation decrements recognised in other comprehensive income Closing fair value Refer to note 25 for further information on fair value measurement. 2023 $’000 2022 $’000 3 408 411 1,730 (164) (1,155) 411 167 1,563 1,730 2,721 164 (1,155) 1,730 60 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 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 2023 $’000 2,819 (518) 2,301 13,661 (4,679) 8,982 1,553 (426) 1,127 390 (73) 317 2022 $’000 410 (286) 124 9,714 (2,748) 6,966 849 (173) 676 33 (27) 6 12,727 7,772 Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Office buildings and warehouses $’000 Plant and equipment $’000 Motor vehicles $’000 Office equipment $’000 271 – – – 13 11 – – (171) 124 – – (91) 22 (3) – 2,819 (570) 2,301 5,543 2,131 – – 64 – – 402 (1,174) 6,966 3,756 (36) – 12 3 – 202 (1,921) 8,982 551 184 (58) – 9 (11) (6) 168 (161) 676 – – – 4 – (31) 728 (250) 1,127 19 1 – (7) – – – – (7) 6 357 – – – – – – (46) 317 Total $’000 6,384 2,316 (58) (7) 86 – (6) 570 (1,513) 7,772 4,113 (36) (91) 38 – (31) 3,749 (2,787) 12,727 Balance at 1 July 2021 Additions Disposals Adjustments Exchange differences Transfer Write off of assets Recognition of right‑of‑use assets Depreciation expense Balance at 30 June 2022 Additions Disposals Lease termination Exchange differences Transfer Adjustments Recognition of right‑of‑use assets Depreciation expense Balance at 30 June 2023 61 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Included in the above line items are right‑of‑use assets over the following: Balance at 1 July 2021 Recognition of right‑of‑use asset Exchange differences Disposals Transfers Depreciation expense Balance at 30 June 2022 Recognition of right‑of‑use asset Exchange differences Disposals Transfers Lease termination Adjustments Depreciation expense Balance at 30 June 2023 Office buildings and warehouses $ Plant and equipment $ Motor vehicles $ 271 – 13 – 11 (171) 124 2,819 22 – (3) (91) – (570) 2,301 4,361 402 (4) – – (692) 4,067 202 (11) (7) (2,895) – – (1,047) 309 162 168 8 (40) (11) (54) 233 728 6 – – – (31) (141) 795 Total $ 4,794 570 17 (40) – (917) 4,424 3,749 17 (7) (2,898) (91) (31) (1,758) 3,405 Included within right‑of‑use plant and equipment transfers is the recognition of owned assets formerly held under an equipment lease. The lease was initiated as part of the business acquisition from Haldon Industries in May 2021 and ended on 30 June 2023. Accounting policy for property, plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. A right‑of‑use asset is recognised at the commencement date of a lease. The right‑of‑use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. The consolidated entity has elected not to recognise a right‑of‑use asset and corresponding lease liability for short‑term leases with terms of 12 months or less and leases of low‑value assets. Lease payments of $980,000 on short‑term leases were expensed to profit or loss as incurred (2022: $484,000). 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 4‑7.5 years Office buildings and warehouses (leasehold improvements) Lease term of 3‑5 years Motor vehicles Office equipment 4‑5 years 2‑5 years The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. 62 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) 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. Note 15. Intangibles Non‑current assets Goodwill – at cost Trademarks and intellectual property – at cost Less: Accumulated amortisation Client contracts – at cost Less: Accumulated amortisation 2023 $’000 2022 $’000 20,861 3,729 (865) 2,864 2,600 (703) 1,897 20,576 3,544 (467) 3,077 2,600 (379) 2,221 25,622 25,874 Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Trademarks and intellectual property $’000 3,114 141 12 (190) 3,077 179 7 (2) (397) 2,864 Goodwill $’000 19,972 – 604 – 20,576 – 285 – – 20,861 Client contracts $’000 Total $’000 2,600 25,686 – – (379) 2,221 – – – (324) 1,897 141 616 (569) 25,874 179 292 (2) (721) 25,622 Balance at 1 July 2021 Additions Exchange differences Amortisation expense Balance at 30 June 2022 Additions Exchange differences Write off of assets Amortisation expense Balance at 30 June 2023 63 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (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. Goodwill is monitored by management at the following level: Australian Group of CGUs – Mining and Construction – Water Services United States CGU 2023 $’000 2022 $’000 3,002 10,054 7,805 20,861 3,002 10,054 7,520 20,576 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 Mining and Construction CGU (measured by value‑in‑use) include: (a) Post‑tax discount rate of 14% (2022: 12%) per annum; (b) Average revenue growth over the five‑year period of 12% (2022: 17%); (c) Average growth in gross margin over the five‑year period of 14% (2022: 6%); and (d) Average increase in operating expenses over the five‑year period of 12% (2022: 1.4%). Key assumptions in the discounted cashflow model for the Water Services CGU (measured by value‑in‑use) include: (a) Post‑tax discount rate of 14% (2022: 12%) per annum; (b) Average revenue growth over the five‑year period of 34% (2022: 32%); (c) Average growth in gross margin over the five‑year period of 29% (2022: 20%); and (d) Average increase in operating expenses over the five‑year period of 10% (2022: 24.6%). Key assumptions in the discounted cashflow model for the United States CGU (measured by value‑in‑use) include: (a) Post‑tax discount rate of 14% (2022: 12%) per annum; (b) Average revenue decline over the five‑year period of 2% (2022: growth of 7%); (c) Average decline in gross margin over the five‑year period of 6% (2022: growth of 1.2%); and (d) Average decline in operating expenses over the five‑year period of 1% (2022: increase of 9.4%). 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. 64 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) 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. For Water Services CGU, a 1% decrease in revenue each year will decrease the headroom between the carrying value and recoverable value by $2,909,000. A 1% increase in discount rate will reduce the headroom between the carrying value and recoverable value by $3,015,000. Based on current economic conditions and CGU performances, there are no reasonably possible changes to key assumptions used in the determination of CGU recoverable amounts that would result in a material impairment to the consolidated entity. Accounting policy for intangible assets Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period. Goodwill Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed. Trademarks and intellectual property Significant costs associated with trademarks and intellectual property are deferred and amortised on a straight‑line basis over the period of their expected benefit, being their finite life of between 10 and 20 years. Client contracts Client contracts acquired in a business combination are amortised on a straight‑line basis over the period of their expected benefit, being their finite life of 8 years. 65 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 16. Trade and other payables Current liabilities Trade payables Payable to the vendors of Haldon Industries Other payables 2023 $’000 9,662 3,620 1,488 14,770 2022 $’000 10,787 – 1,000 11,787 Refer to note 24 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. Note 17. Contract liabilities Current liabilities Unearned revenue 2023 $’000 2022 $’000 648 242 Unsatisfied performance obligations Performance obligations of contract liability balance of $242,000 recognised as at 30 June 2022 were satisfied during the current year. $242,000 was recognised as revenue in the reporting period. The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end of the reporting period was $648,000 as at 30 June 2023 ($242,000 as at 30 June 2022) and is expected to be recognised as revenue in future periods as follows: Within 6 months Accounting policy for contract liabilities 2023 $’000 648 2022 $’000 242 Contract liabilities represent the consolidated entity’s obligation to transfer goods or services to a client and are recognised when a client 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 client. 66 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 18. Lease liabilities Current liabilities Lease liability – land and buildings Lease liability – motor vehicles Lease liability – equipment Non‑current liabilities Lease liability – land and buildings Lease liability – motor vehicles Lease liability – equipment 2023 $’000 684 200 180 1,064 1,714 578 123 2,415 3,479 2022 $’000 246 60 2,245 2,551 1 171 172 344 2,895 Refer to note 24 for further information on financial instruments. 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. Where relevant, 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 leased water treatment equipment under a lease from Haldon Industries Pty Limited that expired on 30 June 2023. On that date, following payment of $1 consideration, the legal and beneficial title of the asset was transferred to SciDev Limited. The lease was secured over the individual asset the lease related to. See Related Party Transactions note 30 for further details. In addition, there are other leases for vehicles and equipment that extend beyond 30 June 2023. Set out below are the carrying amounts of lease liabilities and the movements during the period: Balance at 1 July Additions Lease termination Payments Exchange differences Disposal Adjustment Balance at 30 June 67 SciDev Limited Annual Report 2023 2023 $’000 2,895 3,749 (115) (3,012) (14) (8) (16) 2022 $’000 4,850 505 – (2,477) 17 – – 3,479 2,895 Notes to the Consolidated Financial Statements (continued) Accounting policy for lease liabilities 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. Note 19. Employee benefits Current liabilities Annual leave Long service leave Accounting policy for employee benefits Short‑term employee benefits 2023 $’000 2022 $’000 449 3 452 431 1 432 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. 68 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 20. Provisions Current liabilities Contingent consideration Non‑current liabilities Contingent consideration Contingent consideration 2023 $’000 – – – 2022 $’000 3,620 3,344 6,964 The contingent consideration related to the acquisition of Haldon Industries and represented the cash component of the contingent consideration. It was measured at the present value of the estimated liability. Upon announcement of the appointment of Sean Halpin to CEO, the Haldon acquisition terms have been varied so that the third and final tranche payment, due in the 2024 financial year, is now unconditional. The amount has not changed but has been recorded as a current payable at 30 June 2023 (note 16). 2023 Carrying amount at the start of the year Payments Additional provisions recognised Transferred to trade and other payables (note 16) Carrying amount at the end of the year 2022 Carrying amount at the start of the year Payments Additional provisions recognised Unwinding of discount Carrying amount at the end of the year Contingent consideration – Haldon $’000 6,964 (3,620) 276 (3,620) – Total $’000 9,214 (3,235) 504 481 6,964 Contingent consideration – Haldon $’000 Contingent consideration – ProSol $’000 8,901 (2,922) 504 481 6,964 313 (313) – – – 69 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 21. Issued capital Ordinary shares – fully paid 189,853,077 187,906,234 119,489 119,237 2023 Shares 2022 Shares 2023 $’000 2022 $’000 Share purchase plan (b) 29 November 2021 527,671 Movements in ordinary share capital Details Balance Options exercised Options exercised Options exercised Shares issued to the vendor of ProSol Australia Pty Ltd (c) Options exercised Share placement (a) Shares issued to settle outstanding employee incentive entitlements (d) Shares issued to employees Options exercised Share issue expenses (net of tax) Balance Options exercised Options exercised Options exercised Options exercised Shares Issue price Date 1 July 2021 5 July 2021 19 July 2021 18 August 2021 15 September 2021 25 October 2021 158,370,242 125,000 25,000 100,000 513,000 125,000 9 November 2021 27,692,308 23 December 2021 3 February 2022 3 March 2022 328,457 49,556 50,000 30 June 2022 187,906,234 12 July 2022 19 July 2022 22 July 2022 22 July 2022 800,000 250,000 200,000 475,000 221,843 $’000 100,997 15 3 12 308 15 18,000 343 181 26 6 (669) 119,237 80 30 20 57 65 $0.120 $0.120 $0.120 $0.600 $0.120 $0.650 $0.650 $0.550 $0.525 $0.120 $0.100 $0.120 $0.100 $0.120 $0.290 Shares issued to employee under ESS 1 December 2022 Balance 30 June 2023 189,853,077 119,489 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 – 30 June 2022 On 9 November 2021, SciDev Limited announced the placement of 27,692,308 new ordinary shares with institutional investors at an issue price of $0.65 per share. 70 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) (b) Share purchase plan – 30 June 2022 On 29 November 2021, SciDev Limited issued 527,671 new ordinary shares at $0.65 per share pursuant to a Share Purchase Plan (SPP). (c) Shares issued to the vendor of ProSol Australia Pty Ltd – 30 June 2022 On 15 September 2021, SciDev Limited issued 513,000 new ordinary shares at $0.60 to the vendors of ProSol Australia Pty Ltd. The shares issued represented the fair value of the contingent consideration to be settled by the issue of SciDev Limited shares. (d) Shares issued to settle outstanding employee incentive entitlements – 30 June 2022 On 23 December 2021, SciDev Limited issued 328,457 fully paid ordinary shares to the Managing Director (Lewis Utting). The shares were issued in settlement of the balance of his Short Term Incentive payment for the 30 June 2021 financial year and the payment of his Long Term Incentive for the 30 June 2021 financial year. The issue of the shares was approved by the company’s shareholders at the annual general meeting held on 25 November 2021. 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 2022 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 2023 was $6,918,000 (2022: $13,488,000). 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. 71 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 22. Reserves Financial assets at fair value through other comprehensive income reserve Foreign currency reserve Share‑based payments reserve 2023 $’000 (1,092) (117) 415 (794) 2022 $’000 2 (486) 415 (69) Financial assets at fair value through other comprehensive income (FVOCI) reserve The reserve is used to recognise increments and decrements in the fair value of financial assets at fair value through other comprehensive income. 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: Financial assets at FVOCI reserve $’000 Foreign currency reserve $’000 Sharebased payments reserve $’000 810 (1,155) 347 – – 2 (1,155) 61 – (1,092) (1,117) – – 631 – (486) – – 369 (117) 332 – – – 83 415 – – – 415 Total $’000 25 (1,155) 347 631 83 (69) (1,155) 61 369 (794) Balance at 1 July 2021 Revaluation – gross Deferred tax Foreign currency translation Share‑based payments Balance at 30 June 2022 Revaluation – gross Deferred tax Foreign currency translation Balance at 30 June 2023 72 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 23. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Note 24. Financial instruments Financial risk management objectives The consolidated entity’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity does not enter into or trade financial instruments, including derivative financial instruments for speculative purposes. Risk management is carried out by company management and the Board of Directors. Financial risks are identified and evaluated and where considered necessary strategies are put in place to investigate and/or minimise such risks. Market risk Foreign currency risk Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency. During the financial year 2022, the consolidated entity had a trade finance facility utilised for the purchase of US$ denominated invoices. Purchases through the facility are transacted at the prevailing spot A$/US$ exchange rate and the outstanding amount under the facility is always denominated in A$. The consolidated entity has not entered into any foreign currency hedging contracts during the year. The carrying amount in AUD of the consolidated entity’s foreign currency denominated financial assets and financial liabilities at the reporting date were as follows: Assets – cash – US dollars Assets – receivables – US dollars Liabilities – US dollars Net assets/(liabilities) denominated in foreign currencies 2023 $’000 48 410 (2,109) (1,651) 2022 $’000 233 211 (2,666) (2,222) The following table shows how profit or loss and equity would have been affected by changes in USD that were reasonably possible at the reporting date. The percentage change is the expected overall volatility of the USD, which is based on management’s assessment of reasonable possible fluctuations taking into consideration movements over the last 12 months each year and the spot rate at each reporting date. AUD strengthened AUD weakened Effect on profit before tax $’000 % change Effect on equity $’000 % change Effect on profit before tax $’000 Effect on equity $’000 10% 150 150 10% (183) (183) 2023 US Dollar 73 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) AUD strengthened AUD weakened Effect on profit before tax $’000 % change Effect on equity $’000 % change Effect on profit before tax $’000 Effect on equity $’000 10% 222 222 10% (222) (222) 2022 US Dollar The actual foreign exchange loss for the year ended 30 June 2023 was $194,000 (2022 loss: $381,000). Price risk SciDev Limited is exposed to equity price risk arising from its investment in R3D Resources Limited (R3D). A 1c (2022: 1c) change in the share price results in a $135,890 (2022: $135,890) change in the value of the investment in R3D. Interest rate risk The consolidated entity was exposed to variable interest rate risks on cash deposits. A reasonably possible increase of 175 basis points (2022: 175 basis points) in interest rates at the reporting date would have increased the profit before tax by $135,000 (2022: $246,120). 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: Cash at bank and on deposit Net exposure to cash flow interest rate risk 2023 2022 Weighted average interest rate % – Weighted average interest rate % – Balance $’000 7,732 7,732 Balance $’000 14,064 14,064 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 clients 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 2023 and 30 June 2022 and there were no movements in the provision during the 2023 financial year as there were no changes in the credit risk of clients. There were no debts written off during the 2023 financial year (2022: 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. The consolidated entity evaluates the concentration of risk with respect to trade receivables and contract assets as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets. 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. 74 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Liquidity risk Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) 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. Financing arrangements Unused borrowing facilities at the reporting date: Invoice purchase facility Remaining contractual maturities 2023 $’000 – 2022 $’000 6,000 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. 2023 Non‑interest bearing 1 year or less $’000 Between 1 and 2 years $’000 Between 2 and 5 years $’000 Over 5 years $’000 Remaining contractual maturities $’000 Trade payables and other payables 14,770 – – Interest‑bearing – fixed rate Lease liability Total non‑derivatives 2022 Non‑interest bearing Trade payables and other payables Contingent consideration Interest‑bearing – fixed rate Lease liability Total non‑derivatives 1,366 16,136 1 year or less $’000 11,787 3,620 2,630 18,037 1,280 1,280 1,443 1,443 – 26 26 14,770 4,115 18,885 Between 1 and 2 years $’000 Between 2 and 5 years $’000 Over 5 years $’000 Remaining contractual maturities $’000 – 3,620 216 3,836 – – 129 129 – – 20 20 11,787 7,240 2,995 22,022 The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. 75 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 25. 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. Other than the assets and liabilities included in the table below, other financial assets and liabilities are short term in nature and as such the carrying value approximates fair value. 2023 Assets Equity securities – listed Equity securities – unlisted Total assets Liabilities Contingent consideration Total liabilities 2022 Assets Equity securities – listed Equity securities – unlisted Total assets Liabilities Contingent consideration Total liabilities Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000 408 – 408 – – – 3 3 – – – – – – – 408 3 411 – – Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000 1,563 – 1,563 – – – 167 167 – – – – – 6,964 6,964 1,563 167 1,730 6,964 6,964 Management assessed that the fair values of cash and short‑term deposits, trade receivables, trade payables and other current liabilities approximate their carrying amounts largely due to the short‑term maturities of these instruments. Transfers between levels 1 and 2 There were no transfers between levels during the financial year. 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. 76 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) 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 upon acquisition considered the present value of expected future payments. The contingent consideration liability was discounted using a risk‑adjusted discount rate. The significant input to the consideration calculation was the entity’s forecast EBITDA. The probability of achieving the maximum payout under the contract was initially estimated at 88% however the target maximum EBITDA was achieved in Financial Year 2022 and hence an additional provision was recognised in that year. At 30 June 2023, the consideration is no longer considered to be contingent and the balance owing is disclosed under Trade and other payables. Level 3 assets and liabilities Movements in level 3 assets and liabilities during the current and previous financial year are set out below: Balance at 1 July 2021 Additional provisions recognised Payments Unwinding of discount recognised through net finance costs Balance at 30 June 2022 Payments Unwinding of discount recognised through net finance costs Transfers out level 3 to Trade and other payables Balance at 30 June 2023 Total losses for the previous year included in profit or loss that relate to level 3 assets held at the end of the previous year Total losses for the current year included in profit or loss that relate to level 3 assets held at the end of the current year Contingent consideration $’000 (9,214) (504) 3,235 (481) (6,964) 3,620 (276) 3,620 – (985) (276) Accounting policy for fair value measurement When an asset or liability, financial or non‑financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non‑financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement. 77 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) For recurring and non‑recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. Note 26. Key management personnel disclosures Compensation The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below: Short‑term employment benefits Post‑employment benefits Termination benefits Share‑based payments 2023 $ 2022 $ 1,187,863 1,342,655 82,819 – – 107,670 350,500 194,788 1,270,682 1,995,613 Note 27. 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: Audit services – Ernst & Young Audit or review of the financial statements Other services – Ernst & Young Immigration services Share scheme advice 2023 $ 2022 $ 293,360 227,550 – – – 6,643 13,350 19,993 293,360 247,543 Note 28. Contingent liabilities The consolidated entity did not have any contingent liabilities as at 30 June 2023 (2022: none other than those disclosed in note 20 and note 31). Note 29. Commitments There were no capital commitments as at 30 June 2023 for the consolidated entity (2022: nil). 78 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 30. Related party transactions Parent entity SciDev Limited is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 32. Key management personnel Disclosures relating to key management personnel are set out in note 26 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: Payment for other expenses: Rent paid to other related party Other transactions: 2023 $ 2022 $ – 502 Consideration paid to entity associated with key management personnel 3,620,000 2,922,039 Lease payment to entity associated with key management personnel 2,308,000 2,308,000 A director, Simone Watt, is a director of Sinoz Chemicals and Commodities Pty Ltd (Sinoz). The consolidated entity had leased premises from Sinoz during July 2021 only and paid rent of $502. This arrangement ended in July 2021. Seán Halpin, CEO, is also a director of Haldon Industries Pty Limited (HIPL). On 12 May 2021, SciDev Limited acquired the assets and business of Haldon Industries Limited. In relation to that transaction, during the financial year 2023, SciDev Limited paid a contingent consideration of $3,620,000 and lease payments of $2,308,000. In 2022, SciDev Limited paid a contingent consideration of $2,922,039, lease payments of $2,308,000 and cash on settlement of $879,685 to HIPL. Also in FY22, SciDev received cash from clients via HIPL of $3,882,745 and incurred costs in the year via HIPL of $540,838. Amounts exclude GST. Receivable from and payable to related parties As at 30 June 2023, SciDev has a payable balance of $3,620,000 to HIPL (2022: contingent consideration of $7,240,000 to HIPL and a liability for the asset lease from HIPL of $2,308,000). There is also a trading balance owed by SciDev to HIPL of $355,940 at 30 June 2023 (2022: $319,599). 79 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 31. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Loss after income tax Other comprehensive income for the year, net of tax Total comprehensive loss Statement of financial position Total current assets Total non‑current assets Total assets Total current liabilities Total non‑current liabilities Total liabilities Net assets Equity Issued capital Financial assets at fair value through other comprehensive income reserve Share‑based payments reserve Accumulated losses Total equity Parent 2023 $’000 (3,377) – 2022 $’000 (3,516) – (3,377) (3,516) Parent 2023 $’000 687 43,407 44,094 1,313 1,091 2,404 41,690 119,796 (1,092) 415 (77,429) 41,690 2022 $’000 6,562 39,716 46,278 370 – 370 45,908 119,544 2 415 (74,053) 45,908 Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2023 and 30 June 2022, other than under the terms of the acquisition of the Haldon business by SciDev Water Services Pty Limited (SWSPL). The parent entity irrevocably and unconditionally guarantees the due and punctual performance of SWSPL’s present and future obligations and the payment of all present and future liabilities of SWSPL under that acquisition agreement. Contingent liabilities The parent entity had no contingent liabilities as at 30 June 2023 and 30 June 2022. 80 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Capital commitments – Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023 and 30 June 2022. Significant accounting policies The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 2, except for the following: ॰ Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. ॰ Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment. Note 32. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2: Name Principal place of business/ Country of incorporation SciDev Energy Services Inc (formerly Highland Fluid Technology Inc)** United States SciDev Water Services Pty Ltd Science Developments Pty Ltd Intec Copper Pty Ltd Intec Envirometals Pty Ltd ProSol Australia Pty Ltd SciDev International Holdings Pty Ltd SciDev (US) LLC* SciDev Ltd*** Australia Australia Australia Australia Australia Australia United States United Kingdom * SciDev (US) LLC is a wholly‑owned subsidiary of SciDev International Holdings Pty Ltd. ** SciDev Energy Services Inc is a wholly‑owned subsidiary of SciDev (US) LLC. *** SciDev Ltd (the UK subsidiary) was incorporated during the year ended 30 June 2023. Ownership interest 2023 % 100% 100% 100% 100% 100% 100% 100% 100% 100% 2022 % 100% 100% 100% 100% 100% 100% 100% 100% – Note 33. Events after the reporting period No matter or circumstance has arisen since 30 June 2023 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. 81 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Note 34. Cash flow information Reconciliation of loss after income tax to net cash from/(used in) operating activities Loss after income tax (expense)/benefit for the year Adjustments for: Depreciation and amortisation Net gain on lease termination Share‑based payments Write off of assets Net loss/(gain) on disposal of non‑current assets Net fair value loss/(gain) on other financial assets Other expenses – non‑cash Paycheck Protection Program (USA) subsidy Expenses settled by the issue of shares Finance costs – non‑cash Foreign currency differences Change in operating assets and liabilities: Decrease/(increase) in trade and other receivables Decrease/(increase) in contract assets Decrease/(increase) in inventories Increase in income tax refund due Increase in deferred tax assets Increase in prepayments Increase in trade and other payables Increase/(decrease) in contract liabilities Increase in employee benefits Increase/(decrease) in other provisions Net cash from/(used in) operating activities Non‑cash investing and financing activities Shares issued to acquire ProSol Australia Pty Ltd Shares issued for services rendered by consultant Additions to right‑of‑use assets Paycheck Protection Program (USA) loan converted into a subsidy 82 SciDev Limited Annual Report 2023 2023 $’000 (339) 2022 $’000 (616) 3,508 2,082 (24) – 17 28 164 11 – 65 277 (48) 2,490 (601) 416 (175) (569) (194) 2,983 406 20 (3,621) 4,814 2023 $’000 – 65 3,749 – – 255 13 (40) (164) – (280) – 481 (76) (2,585) 442 (3,553) – (825) (102) 3,460 (21) 32 191 (1,306) 2022 $’000 308 – 570 280 Notes to the Consolidated Financial Statements (continued) Changes in liabilities arising from financing activities Borrowings $’000 Lease liabilities $’000 Balance at 1 July 2021 Net cash used in financing activities Debt converted into subsidy Acquisition of leases Exchange differences Balance at 30 June 2022 Net cash used in financing activities Lease termination Acquisition of leases Exchange differences Other changes Balance at 30 June 2023 280 – (280) – – – – – – – – – Note 35. Earnings per share Loss after income tax attributable to the owners of SciDev Limited Weighted average number of ordinary shares used in calculating basic earnings per share Weighted average number of ordinary shares used in calculating diluted earnings per share Basic loss per share Diluted loss per share Total $’000 5,130 (2,476) (280) 505 16 2,895 (3,012) (115) 3,749 (14) (24) 4,850 (2,476) – 505 16 2,895 (3,012) (115) 3,749 (14) (24) 3,479 3,479 2023 $’000 (339) 2022 $’000 (616) Number Number 189,684,812 177,366,254 189,684,812 177,366,254 Cents Cents (0.18) (0.18) (0.35) (0.35) Options are considered to be potential ordinary shares but were anti‑dilutive in nature and therefore the diluted loss per share is the same as the basic loss per share. These options could potentially dilute basic earnings per share in the future. 83 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Accounting policy for earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of SciDev Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Note 36. 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 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 had 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 had an exercise price of $0.12 and 400,000 had an exercise price of $0.10. All options had 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 were subject to a service vesting condition. The value of the options granted was $46,500. 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 had an expiry date of 23 July 2022. The Managing Director was granted 1,600,000 options. The options granted to the Managing Director had an exercise price of $0.10. The Non‑executive Directors were granted 1,150,000 options which had 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 had 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 were 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 had 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 were subject to a service vesting condition. The value of the options granted was $84,000. 84 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) Set out below are summaries of options granted: 2023 Grant date Expiry date 16/05/2019 23/07/2022 16/05/2019 23/07/2022 23/07/2019 23/07/2022 23/07/2019 23/07/2022 11/11/2019 23/07/2022 Exercise price Balance at the start of the year $0.100 $0.120 $0.100 $0.120 $0.120 400,000 600,000 800,000 250,000 75,000 2,125,000 Granted Exercised Expired/ forfeited/ other Balance at the end of the year – – – – – – (200,000) (200,000) (400,000) (200,000) (800,000) (250,000) (75,000) – – – (1,725,000) (400,000) – – – – – – Weighted average exercise price $0.109 $0.000 $0.108 $0.110 $0.000 The weighted average share price at the date of exercise of options exercised during the year ended 30 June 2023 was $0.21. 2022 Grant date Expiry date 16/05/2019 23/07/2022 16/05/2019 23/07/2022 23/07/2019 23/07/2022 23/07/2019 23/07/2022 11/11/2019 23/07/2022 03/02/2020 23/07/2022 Exercise price Balance at the start of the year $0.100 $0.120 $0.100 $0.120 $0.120 $0.120 400,000 950,000 800,000 250,000 75,000 75,000 2,550,000 Granted Exercised Expired/ forfeited/ other Balance at the end of the year – – – – – – – – (350,000) – – – (75,000) (425,000) – – – – – – – 400,000 600,000 800,000 250,000 75,000 – 2,125,000 Weighted average exercise price $0.111 $0.000 $0.120 $0.000 $0.109 The weighted average share price at the date of exercise of options exercised during the year ended 30 June 2022 was $0.80. Set out below are the options exercisable at the end of the financial year: 2023 Number 2022 Number – – – – 1,000,000 1,050,000 75,000 2,125,000 Grant date Expiry date 16/05/2019 23/07/2022 23/07/2019 23/07/2022 11/11/2019 23/07/2022 85 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) (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 had 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 vested on 30 June 2022 and 31 October 2022 respectively. Set out below are summaries of performance rights granted under the plan: 2023 Grant date Expiry date Exercise price Balance at the start of the year Granted Exercised Expired/ forfeited/ other Balance at the end of the year 15/12/2020 31/10/2022 $0.000 1,408,399 1,408,399 – – – – (1,408,399) (1,408,399) – – 2022 Grant date Expiry date Exercise price Balance at the start of the year Granted Exercised Expired/ forfeited/ other Balance at the end of the year 15/12/2020 31/10/2022 $0.000 1,408,399 26/05/2021 30/06/2022 $0.000 725,000 2,133,399 – – – – – – – 1,408,399 (725,000) – (725,000) 1,408,399 Set out below are the performance rights exercisable at the end of the financial year: Grant date Expiry date 15/12/2020 31/10/2022 2023 Number 2022 Number – – 1,408,399 1,408,399 (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 $65,000 (2022: $255,231). 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. 86 SciDev Limited Annual Report 2023 Notes to the Consolidated Financial Statements (continued) 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. 87 SciDev Limited Annual Report 2023 Directors’ Declaration 30 June 2023 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 2023 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 Vaughan Busby Chairman 29 August 2023 Sydney 88 SciDev Limited Annual Report 2023 Independent Auditor’s Report To the members of SciDev Limited 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 2023, 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 2023 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 89 SciDev Limited Annual Report 2023 Independent Auditor’s Report (continued) 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 determine value in use (VIU). As disclosed in Note 15 to the financial statements, no impairment was identified as at 30 June 2023. 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 CGUs 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 discounted cash flow models. • We assessed the basis of preparing the cash flow forecasts and considered the Group’s current performance and accuracy of the previous forecasts and budgets. • We assessed the appropriateness of the cash flow forecasts, including forecast revenue growth and margins, with reference to current trading performance, historical growth rates achieved, contracts and purchase orders in place, and industry data and forecasts (where available). • We assessed the appropriateness of the discount rates and terminal 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 reasonably possible changes in assumptions could cause the carrying amount of each CGU to exceed its recoverable amount. • We cross-checked the EBITDA multiples represented by the recoverable amount derived from the discounted cashflow models against a range of comparable companies and transactions. • We considered the carrying value of the Group’s net assets against its 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. 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 2023 annual report other than 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 we do not and will 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. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 90 SciDev Limited Annual Report 2023 Independent Auditor’s Report (continued) If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, 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 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. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 91 SciDev Limited Annual Report 2023 Independent Auditor’s Report (continued) ► 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 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 pages 32 to 39 of the directors’ report for the year ended 30 June 2023. In our opinion, the Remuneration Report of SciDev Limited for the year ended 30 June 2023, 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 29 August 2023 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 92 SciDev Limited Annual Report 2023 Additional ASX Information Shareholder Information The shareholder information set out below was applicable at 27th September 2023 A. Distribution of equity securities Analysis of numbers of equity security holders by size of holding: Holdings Range 1‑1,000 1,001‑5,000 5,001‑10,000 10,001‑100,000 100,001 and over Totals B. Substantial holders Substantial shareholders at 27th September 2023 as listed below Perennial Value Management Limited (PVM) Australian Super Pty Ltd Class of Equity Security Ordinary Shares Number of Shareholders Number of Shares 523 634 304 597 156 189,683 1,682,449 2,422,509 20,735,486 164,773,394 2,214 189,803,521 15.17% 8.69% 93 SciDev Limited Annual Report 2023 Additional ASX Information (continued) Equity security holders The names of the twenty largest holders of quoted equity securities at 27 September 2023 are listed below: Name HSBC CUSTODY NOMINEES J P MORGAN NOMINEES AUSTRALIA CITICORP NOMINEES PTY LIMITED FIRST TRUSTEE COMPANY (NZ) BNP PARIBAS NOMS (NZ) LTD BNP PARIBAS NOMINEES PTY LTD JIANFENG ZHANG & HALDON INDUSTRIES PTY LTD KANINS AUSTRALIA PTY LTD HSBC CUSTODY NOMINEES LYNTER PTY LTD MR ANDREW MACBRIDE PRICE MR LEWIS EDWARD UTTING & MR KIERAN GREGORY RODGERS NUOER CHEMICAL AUSTRALIA MR JAMES LEE PARKS MR KIERAN GREGORY RODGERS & MERRILL LYNCH (AUSTRALIA) MR MARTIN EDWARD MEYER MRS KATHLEEN WATT LONGWIN CAPITAL FINANCE LTD Total Securities of Top 20 Holdings Total of Securities Ordinary shares Number held 23,448,877 16,937,841 13,337,272 8,750,000 7,594,249 6,133,382 6,028,572 5,100,000 5,000,000 4,208,638 4,175,000 3,625,000 2,787,941 2,366,785 2,161,137 2,125,000 2,006,467 1,693,719 1,466,667 1,466,667 1,466,667 Percentage of issued shares 12.354% 8.924% 7.027% 4.610% 4.001% 3.231% 3.176% 2.687% 2.634% 2.217% 2.200% 1.910% 1.469% 1.247% 1.139% 1.120% 1.057% 0.892% 0.773% 0.773% 0.773% 121,879,881 64.214% 189,803,521 C. Voting rights The voting rights attaching to each class of equity securities are set out below: (a) Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. (b) Options No voting rights. 94 SciDev Limited Annual Report 2023 Auditor Ernst & Young 200 George Street Sydney NSW 2000 Stock exchange listing SciDev Limited shares are listed on the Australian Securities Exchange (ASX code: SDV) Website www.scidevltd.com Corporate governance statement www.scidevltd.com/governance Corporate Directory 30 June 2023 Directors Vaughan Busby – Non‑executive Chairman Simone Watt – Non‑executive Director Jon Gourlay – Non‑executive Director Dan O’Toole – Non‑executive Director Company secretary Heath L Roberts Registered office C/‑Boardroom Pty Limited Level 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 colliercreative.com.au #SCI0003 scidevltd.com