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SCIDEV LTD Annual Report 2019
65761_rns_2019-10-27_56cf4cd3-ce3b-4cb3-87f6-c402291f191c.pdf
Annual Report
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2019 ANNUAL REPORT
Scidev ltd ABN 25 001 150 849 Financial Report for the year ended 30 june 2019
TABLE OF CONTENTS
| Page | |
|---|---|
| Chairman's Letter | 4 |
| Managing Director & CEO's Letter | 5 |
| Review of Operations | 7 |
| Director's Report | 11 |
| Remuneration Report | 14 |
| Auditor's independence declaration | 23 |
| Statement of profit or loss and other comprehensive income | 24 |
| Statement of financial position | 25 |
| Statement of changes in equity | 26 |
| Statement of cash flows | 27 |
| Notes to the financial statements | 28 |
| Directors' declaration | 61 |
| Independent auditor's report | 62 |
| Additional ASX Information | 66 |
| Corporate directory | 68 |
3
Chairman's LeƩer
Dear fellow SciDev shareholder
The 2019 financial year has seen a significant step-change for your company.
Managing Director and CEO Lewis Uƫng delivers a comprehensive update on the business's performance in the following pages and I won't speak to that in detail here. However, I would like to highlight the major iniƟaƟves undertaken by SciDev this year.
Our People – the success of SciDev is based on our excepƟonally skilled people and I extend my sincere thanks to them. SciDev took the iniƟaƟve of improving our people with the appointment of Lewis Uƫng in March 2018. Lewis was appointed as Managing Director and CEO of the company in April 2019 and has driven a significant period of momentum for the company. Lewis is well supported by a team of highly capable engineers led by Jamiel Muhor and Jeffrey Zhang - who joined the team via our strategic alignment with Nuoer Group. With Simone WaƩ joining the Board in October 2018 followed by Jon Gourlay in mid -2019 and support from our Company Secretary Heath Roberts, we have a first class team that can conƟnue to build on the successes delivered to date.
Our Technology – SciDev's innovaƟve OpƟFlox® process control system improves the mineral processing systems at our customers operaƟons, delivering addiƟonal processing Ɵme and reduced consumable spend for end users. Our in house experƟse, coupled with our strategic partnership with Nuoer Group is providing a leading supply of high-quality chemical product and technology sales.
Our Shareholders – we have recognised that in order to do jusƟce to our ambiƟous growth plans the Company has required addiƟonal capital. A $2.5million capital raising was undertaken in February 2019 at $0.06 per share; by way of placement and rights issue, followed by a second capital raising of $4.16 million in September 2019 at $0.26 per share, by way of insƟtuƟonal placement. We recognise and thank both our long term shareholders and our new insƟtuƟonal shareholders for your support.
I pass my thanks to my fellow Board Members, and look forward to sharing SciDev's ongoing success as the forthcoming year unfolds.
Yours sincerely
Trevor Jones Chairman
Managing Director & CEO
Dear Shareholders,
It is a privilege to write my first leƩer to you as CEO and Managing Director of SciDev. The past year has seen significant progress from the Company across several areas. Recent contract wins reflect the commercial viability of our technology, posiƟoning SciDev as an emerging leader in solid-liquid separaƟon across a range of industries.
We will conƟnue to work with our exisƟng foundaƟon customers in Peabody and Iluka, delivering bespoke soluƟons to meet their processing needs. SciDev will conƟnue to push into new markets where our people, chemistries and technology can add value. We are pleased to have announced our first major order from the US shale industry in July 2019. The oil and gas and construcƟon markets offer an exciƟng area for growth and the company will conƟnue to focus on those industries in several regions.
Our strategic relaƟonship with Nuoer Group in Oceania reflects our evoluƟon as a company. The relaƟonship assists in the ability for SciDev to execute on our growth ambiƟons quickly. Our joint ability to scale soluƟons from Research and Development into commercial applicaƟons is key to our mutual success.
Our people
Our business is based on our people, just as much as on our technology. SciDev technology is backed up with expert support from our workforce of highly skilled engineers and chemists who have decades of relevant global industry experience. Our people engage directly with our customers, on site, to build bespoke soluƟons to their processing requirements.
We believe that the presence of our dedicated and highly trained staff on site, driving bespoke soluƟons to exceed our customers' requirements, is a unique differenƟator that our larger global compeƟtors simply cannot match.
The Company has expanded our staff over FY19 with several key addiƟons allowing us to broaden our technology porƞolio to ensure we can conƟnue to provide complete soluƟons to our end users. We will conƟnue to invest in developing our people to ensure that the company has the right people to match our technologies and drive growth for SciDev.
I would like to thank all the SciDev staff for their significant efforts this year. As we enter into FY2020 I believe the company is well placed from an operaƟonal and financial perspecƟve, our commitment to our customers and recent momentum will conƟnue to deliver growth throughout the current year and beyond.
Developing our strategic relaƟonships
During the year SciDev announced a binding agreement to acquire the exclusive distribuƟon and markeƟng rights in Australia and other Oceanic countries for polymer products produced by the Chinese based Nuoer Group.
Securing the exclusive distribuƟon and markeƟng rights with Nuoer delivers SciDev an expanded market opportunity for the MaxiFlox® technology, supply chain security and a world class partner that can manufacture products to SciDev specificaƟons. The broadening cooperaƟon between the two groups is expected to deliver unparalleled industry reach and significant growth opportuniƟes for SciDev as evidenced through our growth during the year FY19.
Our relaƟonship with the Sinoz Group conƟnues to strengthen. The Sinoz Group are a globally significant manufacturer and supplier of chemicals and reagents to the mining and agribusiness sectors. Our technologies are highly complementary to Sinoz's product offering across the mineral processing reagent value chain. SciDev will conƟnue to benefit from our relaƟonship with Sinoz, primarily in accelerated business development opportuniƟes in the base metals mineral processing industry.
5
Managing Director & CEO conƟnued
Business review
The past financial year saw SciDev take considerable strides in the development and commercializaƟon of our technologies and chemistries. Key customer developments during the year include:
- Announcement of the delivery of our first full container load (FCL) into the conƟnental United States through our subsidiary SciDev (US) LLC (ref ASX 23 May 2019). The order was to SciDev MOU partner Phoenix Process Equipment Company and is the result of markeƟng efforts over the prior periods.
- ConƟnued evaluaƟons conducted across several coal projects in both the Bowen Basin and NSW coal fields with Ɵer-one producers. SciDev is confident that some of these projects will further develop into commercial opportuniƟes for both chemical soluƟons and the OpƟFlox® system.
- Our first sales into the US oil and gas market were announced post the end of the financial year. The order for fricƟon reducers was desƟned for the US Permian basin. The total orders to date for SciDev's proprietary MaxiFlox® technology are AUD$1.08m.
- Post the end of the financial year the Company announced that it has signed a three (3) year agreement for the supply and service of its MaxiFlox® chemistry to Iluka Resources. The annual value of the contract over the term is likely to be between AUD $2.6M – AUD $4.0M.
Key areas of focus for SciDev in 2020
As we enter FY20 we are seeing the hard work from the SciDev team over the last few quarters convert in to sales contracts with recurring revenue streams. Our goal of increasing our revenues with a view to becoming cashflow posiƟve is now within reach. Considering this achievement and the recent mulƟ-year contract agreement with Iluka, SciDev is off to an excellent start in FY 2020. The focus for SciDev and the management team through the FY20 financial year will be to:
- Drive our revenue line through the execuƟon of a well-structured business development pipeline in the Oil & Gas and mineral processing sectors.
- Develop large customer opportuniƟes across several conƟnents where the synergies for the OpƟFlox® & MaxiFlox® combinaƟon can deliver the greatest value to our customers and subsequent value to shareholders.
- Build upon the Company's momentum in the Australian coal industry, transiƟoning across applicaƟon, mineral types and key industry players with our OpƟFlox® technology.
- Further develop the opportuniƟes presented through SciDev (US) LLC into the US oil and gas sector focussing on transiƟoning R&D chemistries into bespoke producƟon soluƟons.
- Extend our technology into the precious metal and base metal sectors throughout Australia and Asia, while looking for other opportuniƟes in currently unrealised secƟons of the mineral processing value chain.
- Renew our effort in the Australian water and wastewater sector with strategic partnerships and licensing opportuniƟes with global operators and key end users.
- Deliver upon our recent agreement with Iluka in the mineral sands sector delivering value and further developing this relaƟonship
- ConƟnue to strengthen and leverage our relaƟonship with Nuoer through joint markeƟng and R&D efforts in key market areas while also refining the geographic manufacturing footprint.
On behalf of the SciDev team I would like to thank the board, our highly talented & moƟvated team and our shareholders for another year of progression. I look forward to delivering another successful year in FY20.
Yours sincerely
Lewis Uƫng Managing Director & CEO
Review of OperaƟons
SciDev is a soluƟon provider to the water, mining, oil & gas and construcƟon industries focussing on solid-liquid separaƟon. The Company's soluƟons are built on the supply of bespoke chemistry to solve environmental and processing challenges in the industries we serve.
Our chemistry is manufactured using our novel inhouse manufacturing methods. Where we don't have the infrastructure to manufacture in house, we partner with key industry partners. During the year we partnered with Nuoer China to supply bespoke chemistry exclusively for the Oceanic region and with key customers globally. This partnership allows SciDev to penetrate a USD$8B market with a complete chemistry porƞolio.
Our soluƟon-based approach has been bolstered with the inclusion of a Professional Services offering which allows key SciDev personnel to solve bespoke customer problems and idenƟfy addiƟonal opportuniƟes for our products and services. Our innovaƟve OpƟFlox® process control system improves the mineral processing path for our customers, delivering addiƟonal processing Ɵme and reduced consumable spend for end users.
FY19 Highlights
- Revenues from customers increased by 31.9% to $2.92m
- Net cash posiƟon at end of period of $1.76m supported by successful placement to Nuoer Group and a $2.5m fund raising
- Entered into a binding agreement to acquire the exclusive distribuƟon and markeƟng rights in Australia and other Oceanic countries for polymer products produced by Chinese base Nuoer Group
- Lewis Uƫng commenced as CEO & Managing Director in April 2019 Established North American presence with SciDev (US) LLC with first product sales to SciDev MOU partner Phoenix Process Equipment Company with Nuoer manufactured product
- ConƟnued evaluaƟon across several coal projects in the Bowen Basin and NSW coal fields with Ɵer-one producers.The OpƟflox® system trial conƟnues at a major coking coal operaƟon with further commercial discussions anƟcipated in the coming quarters
- Strengthening of the board with the addiƟon of Newcrest mining professional Jon Gourlay and Simone WaƩ from our strategic investor Sinoz as Non ExecuƟve Directors
- Post the end of the financial year, the company announced:
- Receipt of its first major order for fricƟon reducers from the oil & gas companies in the US Permian Basin. The A$1.08m order validates SciDev's strong US push.
- Awarded a long term MaxiFlox® sales contract with Iluka Resources which is expected to be AUS$8m – AUD$12m over the course of the contract.
- CompleƟon of a $4.16m capital raising to fund future growth.
The past year has seen significant progress from the consolidated enƟty that establishes SciDev as a leader in process control and chemistry products for solids-liquids separaƟon. SciDev has expanded with several key addiƟons to people and broadening of its product porƞolio to ensure it can provide complete soluƟons to its end users.
Review of OperaƟons conƟnued
Financial Review
The consolidated enƟty delivered record revenue for the period $2.92m, a 32% increase on the previous year. The record revenue can be aƩributed to organic growth in the water sector and sales pull through from the Nuoer transacƟon announced in February 2019.
Net cash ouƞlows from operaƟons during the year ended 30 June 2019 were $1.548m (a significant increase from the prior year's net ouƞlows of $0.892m). Despite the ouƞlow increasing on a full year basis, the consolidated enƟty was close to cash break-even in Q4 where the loss from operaƟng acƟviƟes was $0.28m. The increase in net cash ouƞlows from operaƟons was principally a result of increases in raw materials and consumables (inventory required to grow), employee benefits expense (people required to execute growth) and professional fees.
At the end of the period the consolidated enƟty had a net cash posiƟon of $1.76m. The balance sheet strength reflects the inflow of funds from the Nuoer Group's strategic investment in thecompany ($0.57m announced on 11 February) and the successful compleƟon of a $2.5m capital raising undertaken in February 2019.
The consolidated enƟty's robust financial posiƟon will allow SciDev to accelerate the rollout of our technologies and conƟnue to strengthen and execute on our growing business development.
OperaƟonal Review
Coal IniƟaƟves – North America
During FY19 SciDev announced the delivery of our first full container load (FCL) into the conƟnental United States through our subsidiary SciDev (US) LLC (refer ASX 23 May 2019). The order was to SciDev MOU partner Phoenix Process Equipment Company and is the result of markeƟng efforts over the prior periods.
The chemistry, manufactured to SciDev specificaƟon by Nuoer China, is set to be used in solids-liquid separaƟon projects in key mineral processing applicaƟons. The arrangement builds on SciDev's exisƟng sales in North America and illustrates the value of the Company's partnerships with both Nuoer China and Phoenix. As previously announced, North America represents a potenƟal $1.4 billion-dollar market for SciDev.
Coal IniƟaƟves ‐ Australia
AddiƟonal evaluaƟons were conducted across several coal projects in both the Bowen Basin and NSW coal fields with Ɵer-one producers. SciDev is confident that some of these projects will further develop into commercial opportuniƟes for both chemical soluƟons and the OpƟFlox® system.
Oil and Gas iniƟaƟves – North America
Post the end of the financial year (22 July 2019) SciDev announced its first sales into the US oil and gas market. The order for fricƟon reducers was desƟned for the US Permian basin. The total orders to date for SciDev's proprietary OpƟFlox® technology are AUD$1.08m. Order volumes are expected to conƟnue to grow, with further commercial field evaluaƟons to be undertaken in FY20 to determine the potenƟal financial returns to SciDev from this very large market.
Mineral Sands – Australia
Post the end of the financial year (30 August) SciDev announced that it has signed a three (3) year agreement for the supply and service of its MaxiFlox® chemistry to Iluka Resources. The annual value of the contract over the term is likely to be between AUD $2.6m – AUD $4.0m. During an extensive evaluaƟon period on site, SciDev was able to build a knowledge base allowing for the design of bespoke chemistry specific to the Jacinth Ambrosia operaƟon. AddiƟonal discussions are underway to integrate the SciDev OpƟFlox® system into the Jacinth-Ambrosia operaƟon. The program of work started in March 2018 and the successful conclusion validates the commercial uƟlity of SciDev's MaxiFlox® chemistry in the mine tailings space. Importantly, it highlights the calibre of the SciDev team in execuƟng the technical and commercial evaluaƟons over an extended period with a Ɵer one Australian mining company.
Nuoer & SciDev RelaƟonship
During the year (ref ASX 11 February 2019) SciDev announced a binding agreement to acquire the exclusive distribuƟon and markeƟng rights in Australia and other Oceanic countries for polymer products produced by Chinese base Nuoer Group. Securing the exclusive distribuƟon and markeƟng rights with Nuoer delivers SciDev an expanded market opportunity for the MaxiFlox® technology, supply chain security and a world class partner that can manufacture products to SciDev specificaƟons. Through the framework agreement, SciDev and Nuoer Group are undertaking an in-depth analysis of market opportuniƟes both within the Oceania region and in other jurisdicƟons. The broadening cooperaƟon between the two groups is expected to deliver unparalleled industry reach and significant growth opportuniƟes for SciDev evidenced through our growth during the year.
Significant changes in the state of affairs
On 4 December 2018 the company completed a 10 to 1 consolidaƟon of its issued shares and opƟons. The number of ordinary shares on issue at the date of the consolidaƟon decreased from 638,152,007 to 63,815,201.
On 11 February 2019, SciDev announced it had entered into a binding Heads of Agreement (HOA) to acquire the exclusive distribuƟon and markeƟng rights in Australia and other Oceanic countries for polymer products produced by the China-based Nuoer Group (Nuoer Group). Under the terms of the HOA, SciDev's wholly owned subsidiary, Science Developments Pty Ltd (SDPL), has been granted the exclusive distribuƟon and markeƟng rights from the Nuoer Group's Australian operaƟng enƟty, Nuoer Chemical Australia Pty Ltd (NCA) for a 10-year period. On 12 February 2019, 1,666,667 shares were issued to the Nuoer Group at a price of 6 cents per share to acquire the distribuƟon and markeƟng rights for Nuoer Group products in Australia and other Oceanic countries. On the same day, 5,000,000 shares were issued to directors/employees of Nuoer Chemical Australia Pty Ltd at a price of 6 cents per share for contribuƟon of working capital.
On 13 March 2019, the company issued 22,614,624 shares at a price of 6 cents per share in terms of a 2 for 7 non-renounceable enƟtlements issue.
The funds raised from the issue of shares will be used to accelerate the company's business growth.
There were no other significant changes in the state of affairs of the consolidated enƟty during the financial year.
MaƩers subsequent to the end of the financial year
On 22 July 2019 the company reported its first major sales into the US oil and gas market.
The company's shareholders approved the issue of the following opƟons at a General MeeƟng held on 23 July 2019:
- 2,000,000 opƟons to Mr Lewis E Uƫng Managing Director and Chief ExecuƟve Officer
- 650,000 opƟons to Mr Jon Gourlay Non-execuƟve Director
- 250,000 opƟons Mr Trevor A Jones Non-execuƟve Chairman
- 250,000 opƟons to Ms Simone WaƩ Non-execuƟve Director
The opƟons issued to Mr Lewis Uƫng have an exercise price of 10 cents and the opƟons issued to the other Directors have an exercise price of 12 cents. The opƟons granted to Mr Lewis Uƫng are subject to vesƟng condiƟons. The opƟons granted to the nonexecuƟve Directors do not have any vesƟng condiƟons. The opƟons expire on 23 July 2022. These opƟons form part of a broader opƟon issue to the Board and senior execuƟves totalling 5,350,000 opƟons in total; refer to ASX announcement dated 16 August 2019.
On 30 August 2019 the company announced a major chemical supply and equipment leasing contract with Iluka Resources.
On the 13 September 2019, the company announced the placement of 16m new ordinary shares with local insƟtuƟonal and sophisƟcated investors at an issue price of $0.26 per share to raise total proceeds of $4.16 million.
The 16m new shares represented 15% of the company's exisƟng shares on issue, which is the maximum number of ordinary shares that were able to be issued under ASX lisƟng rules. The funds from the placement will predominantly be used to increase inventory, conƟnue development of the consolidated enƟty's OpƟFlox and MaxiFlox technology, and increase working capital. The capital raising was completed on 20 September 2019.
Review of OperaƟons conƟnued
FY20 Outlook
No other maƩer or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the consolidated enƟty's operaƟons, the results of those operaƟons, or the consolidated enƟty's state of affairs in future financial years .
Likely developments and expected results of operaƟons:
-
The focus for SciDev and the management team through the FY20 financial year is:
- Drive SciDev's revenue line through the execuƟon of a well structured business development pipeline in the Oil & Gas and mineral processing sectors.
- Key large customer opportuniƟes across several conƟnents where the synergies for the OpƟFlox & MaxiFlox combinaƟon can deliver the greatest value to SciDev's customers and subsequent value to shareholders.
- Build upon the SciDev's momentum in the Australian coal industry, transiƟoning across applicaƟon, mineral types and key industry players with our OpƟFlox® technology.
-
Further develop the opportuniƟes presented through SciDev (US) LLC into the US oil & gas sector.
-
Extend SciDev's technology into the precious metal and base metal sectors throughout Australia and Asia, while looking for other opportuniƟes in currently unrealised secƟons of the mineral processing value chain.
-
Renew SciDev's effort in the Australian water and wastewater sector with strategic partnerships and licensing opportuniƟes with global operators and key end users.
-
Deliver upon recent agreement with Iluka in the mineral sands sector delivering value and further developing this relaƟonship.
-
ConƟnue to strengthen and leverage SciDev's relaƟonship with Nuoer through joint markeƟng and R&D efforts in key market areas while also refining the geographic manufacturing footprint.
Directors Report
The directors present their report, together with the financial statements, on the consolidated enƟty (referred to hereaŌer as the 'consolidated enƟty') consisƟng of SciDev Limited (referred to hereaŌer as the 'company' or 'parent enƟty') and the enƟƟes it controlled at the end of, or during, the year ended 30 June 2019.
Directors
The following persons were directors of SciDev Limited during the whole of the financial year and up to the date of this report, unless otherwise stated:
Trevor A Jones Lewis E Uƫng (appointed 29 October 2018) Simone WaƩ (appointed 29 October 2018) Jon Gourlay (appointed 28 May 2019) Kieran G Rodgers (resigned 19 March 2019) Daniel (Don) Joseph Cronin (resigned 31 December 2018)
Principal acƟviƟes
The principal acƟvity of the consolidated enƟty is delivery of process control and chemistry products for solids-liquids separaƟon.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of OperaƟons
The review of operaƟons can be found on pages 8 to 10 of this Annual Report.
Environmental regulaƟon
The consolidated enƟty is not subject to any significant environmental regulaƟon under Australian Commonwealth or State law.
InformaƟon on directors
| Name, independence status and qualificaƟons | Experience, interests in shares, special responsibiliƟes and other directorships |
|---|---|
| Trevor JonesChairman | Mr. Jones has spent over 30 years working in the finance industry in Australia, United Kingdom and theUSA. During this Ɵme, he has held senior execuƟve posiƟons in investment funds management, stockbroking and corporate finance, and gained a broad experience of capital structuring and capital raising, parƟcu |
| B.Comm (Melb) | larly in the mining sector. |
| Mr. Jones was manager of equity porƞolios for Shell Australia and NaƟonal Employers Mutual in the United Kingdom. He was a Director of County NatWest SecuriƟes Australia Limited in London and then Directorof Corporate Finance with Westpac InsƟtuƟonal Bank in Sydney. More recently Mr. Jones was the SydneyChief ExecuƟve for Melbourne-based Austock Group and was Chairman of both its Corporate Finance andInvestment Management divisions. He was appointed as a Non-execuƟve Director of SciDev on 28 February 2007. | |
| Chairman of the Corporate Governance CommiƩee and a member of the Audit and Risk CommiƩee andthe NominaƟon and RemuneraƟon CommiƩee. | |
| Holds a relevant interest in 738,303 shares and 350,000 opƟons | |
| No other listed company directorships |
Directors Report conƟnued
InformaƟon on directors
| Name, independencestatus and qualificaƟons | Experience, interests in shares, special responsibiliƟes and other directorships |
|---|---|
| Lewis UƫngDirector (appointed 29October 2018)Managing Director & CEO | Mr Uƫng has over 15 years' experience in the water treatment, mining and chemical industries.Lewis began his career in 2001 with Buckman Laboratories, moving to Hercules Chemicals, then in 2005 toCiba, specifically to work in the water treatment and mining sector.Ciba was acquired by BASF in 2008, Lewis was Global Project Manager and Global Business Development manager for the BASF mining soluƟons business. |
| (appointed ManagingDirector and CEO on 30April 2019)BASc | Lewis has successfully negoƟated licence agreements, take or pay arrangements, technology divestment, andcommissioned research with both consulƟng firms and academia in support of new technology development.He has authored and co-authored several technical papers and also holds a patent applicaƟon in the area oftailings (mining waste) disposal.Holds a relevant interest in 4,830,221 shares and 2,500,000 opƟonsNo other listed company directorships |
| Simone WaƩNon‐ExecuƟve DirectorBASc | Ms WaƩ is the Managing Director of Sinoz Chemical and CommodiƟes (Sinoz), which is a global companysupplying reagents and technology-based improvements to the mining and agribusiness industries.Ms WaƩs is also a Director of Kemtec Mineral Processing and Kanins InternaƟonal, which are both part of theSinoz Group of companies. She has extensive experience in the areas of strategic sourcing and suppliermanagement, business development and sales and markeƟng.Member of the Audit and Risk CommiƩee and the NominaƟon and RemuneraƟon CommiƩeeHolds a relevant interest in 5,000,780 shares and 250,000 opƟonsNo other listed company directorships |
| Jon GourlayNon‐ExecuƟve Director(appointed 28 May 2019)BCom, C.A | Mr Jon Gourlay is a chartered accountant with extensive experience in finance and project management, riskmanagement, business improvement and investor relaƟonships, with a focus on the resources andtechnology sectors. Mr Gourlay is currently CommercialisaƟon Manager, Technology and InnovaƟon for Newcrest Mining, with prior roles in investor relaƟons, analysis and improvement of Newcrest's operaƟons at theLihir Island Gold Mine in Papua New GuineaMember of the Audit and Risk CommiƩee and the NominaƟon and RemuneraƟon CommiƩeeHolds a relevant interest in 206,349 shares and 650,000 opƟonsNo other listed company directorships |
| Name, independencestatus and qualificaƟons | Experience, interests in shares, special responsibiliƟes and other directorships |
|---|---|
| Kieran G RodgersManaging Director(resigned 19 March 2019) | Mr. Rodgers joined SciDev in March 2001 aŌer 13 years of experience in merchant banking and financialconsulƟng, principally at Resource Finance CorporaƟon Ltd, which specifically focused on the Australian andinternaƟonal resources industry. He was appointed as an ExecuƟve Director of SciDev on 28 February 2007.Mr. Rodgers was appointed Managing Director on 6 February 2012. |
| B.E. (Hons.) Min. (UNSW), | Holds a relevant interest in 5,065,944* shares and 200,000* opƟons |
| M.B.A. (IMD) | No other listed company directorships |
| Daniel J CroninNon‐ExecuƟve Director(resigned 31 December2018) | Mr. Cronin was appointed to the Board of SciDev on 26 November 2013. Mr. Cronin began hiscareer as an Engineer with the BriƟsh consulƟng firm Halcrow, working for 6 years in the UK and SouthAmerica. This was followed by 5 years working in project management with the construcƟon CompanyGammon in Hong Kong and Singapore. Following compleƟon of an MBA degree, he was employed in thechemical industry for 23 years, iniƟally with Sandoz and later with Degussa and BASF. He has worked in |
| B.E. (Uni. College, Cork) | senior general management roles in Zurich, Sydney and Singapore. His most recent posiƟon was Senior Vice |
| M.Sc. (Southampton), | President – ConstrucƟon Chemicals for BASF with responsibility for Europe, Middle East and Africa. |
| MBA (LBS) | Chairman of the Audit and Risk CommiƩee and a member of the Corporate Governance CommiƩee and theNominaƟon and RemuneraƟon CommiƩee |
| Holds a relevant interest in 465,955* shares and 200,000* opƟons | |
| No other listed company directorships |
'Other current directorships' quoted above are current directorships for listed enƟƟes only and excludes directorships of all other types of enƟƟes, unless otherwise stated. 'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed enƟƟes only and excludes directorships of all other types of enƟƟes, unless otherwise stated. * Interests in the shares and opƟons of the company as at the date of resignaƟon as a director.
Company Secretary
Mr Heath L Roberts (Dip Law (S.A.B.) and Grad Dip Legal PracƟce (UTS)) was appointed to the posiƟon of Company Secretary of SciDev Limited on 1 March 2017. Mr Roberts is a commercial solicitor with over 20 years of listed company experience. He has acted for SciDev in various capaciƟes over the years and brings strong transacƟonal, compliance and capital raising experience to the role.
MeeƟngs of directors
The number of meeƟngs of the company's Board of Directors ('the Board') and of each Board commiƩee held during the year ended 30 June 2019, and the number of meeƟngs aƩended by each director were:
| NominaƟon and RemuneraƟon | Audit and Risk | Audit and Risk | ||||
|---|---|---|---|---|---|---|
| Full Board | CommiƩee | CommiƩee | CommiƩee | |||
| AƩended | Held | AƩended | Held | AƩended | Held | |
| Trevor A Jones | 7 | 9 | 3 | 3 | 3 | 3 |
| Lewis E Uƫng | ||||||
| (appointed 29 October 2018) | 7 | 7 | - | - | - | - |
| Simone WaƩ | ||||||
| (appointed 29 October 2018) | 7 | 7 | 2 | 2 | 2 | 2 |
| Jon Gourlay | ||||||
| (appointed 28 May 2019) | 1 | 1 | - | - | - | - |
| Kieran G Rodgers | ||||||
| (resigned 19 March 2019) | 6 | 7 | - | - | - | - |
| Daniel J Cronin | ||||||
| (resigned 31 December 2018) | 2 | 2 | 1 | 1 | 2 | 2 |
Held: represents the number of meeƟngs held during the Ɵme the director held office or was a member of the relevant commiƩee.
RemuneraƟon report
The remuneraƟon report details the key management personnel remuneraƟon arrangements for the consolidated enƟty, in accordance with the requirements of the CorporaƟons Act 2001 and its RegulaƟons.
Key management personnel are those persons having authority and responsibility for planning, direcƟng and controlling the acƟviƟes of the enƟty, directly or indirectly, including all directors.
The remuneraƟon report is set out under the following main headings:
- Principles used to determine the nature and amount of remuneraƟon
- Details of remuneraƟon
- Service agreements
- Share-based compensaƟon
- AddiƟonal informaƟon
- AddiƟonal disclosures relaƟng to key management personnel
Principles used to determine the nature and amount of remuneraƟon
The objecƟve of the consolidated enƟty's execuƟve reward framework is to ensure reward for performance is compeƟƟve and appropriate for the results delivered. The framework aligns execuƟve reward with the achievement of strategic objecƟves and the creaƟon of value for shareholders, and it is considered to conform to the market best pracƟce for the delivery of reward. The Board of Directors ('the Board') ensures that execuƟve reward saƟsfies the following key criteria for good reward governance pracƟces:
- compeƟƟveness and reasonableness;
- acceptability to shareholders;
- performance linkage / alignment of execuƟve compensaƟon;
- transparency; and
- capital management.
The Group has structured an execuƟve remuneraƟon framework that is market compeƟƟve. The framework provides for a mix of fixed pay and also variable pay and includes long term incenƟves, when appropriate. A relaƟonship between Company performance and remuneraƟon is now being developed and implemented, with a modest component of future cash remuneraƟon to be performance linked and equity (opƟon) issues to execuƟves having performance based milestones. The Board has established a nominaƟon and
remuneraƟon commiƩee which provides advice on remuneraƟon and incenƟve policies and pracƟces and makes specific
recommendaƟons on remuneraƟon packages and other terms of employment for the Managing Director, other senior execuƟves and Non-ExecuƟve Directors. The Corporate Governance Statement provides further informaƟon on the role of this CommiƩee.
Non‐execuƟve directors remuneraƟon
Fees and payments to the Non-ExecuƟve Directors reflect the demands which are made on, and the responsibiliƟes of, the Non– ExecuƟve Directors. The Board undertakes a review of Non-ExecuƟve Directors' fees and payments annually.
Non-ExecuƟve Directors' fees are determined within an aggregate Non-ExecuƟve Directors' cash remuneraƟon limit, which is periodically recommended for approval by shareholders. The current limit of $400,000 was approved by shareholders at the 2007 Annual General MeeƟng held on 14 November 2007. The amount paid to non-execuƟve directors of the parent enƟty (SciDev Limited) during the year to 30 June 2019 was $122,937 (2018: $125,316). In addiƟon, Non-ExecuƟve Directors are able to parƟcipate in issues of opƟons pursuant to the SciDev Employee Share Scheme. The value of any opƟons granted to Non-ExecuƟve Directors are not included in the aggregate cash remuneraƟon limit as they are not cash based payments.
In the cased where Directors seek equity based (opƟon) remuneraƟon over cash based remuneraƟon, consideraƟon will be given to such request and, in any case, shareholder approval would be required for any such equity based remuneraƟon for Directors.
ExecuƟve remuneraƟon
The execuƟve pay and reward framework has two components, which together comprise the execuƟve's total remuneraƟon:
- base pay, superannuaƟon and non-monetary benefits; and
- long term incenƟves through parƟcipaƟon in the SciDev Employee Share Scheme.
The combinaƟon of these comprises the execuƟve's total remuneraƟon.
Base pay
Base pay is structured as a total employment cost package, which may be delivered as a combinaƟon of cash and prescribed nonfinancial benefits as negoƟated between the Company and the execuƟve. ExecuƟves are offered a compeƟƟve base pay that comprises a fixed component of cash salary and superannuaƟon. Base pay for each senior execuƟve is reviewed annually to ensure the execuƟve's pay is compeƟƟve with the market. There is no guaranteed base pay increase included in any execuƟve's contract. In some cases cash performance based bonuses will be offered to execuƟves.
SciDev Employee Share Scheme
InformaƟon on the SciDev Employee Share Scheme is set out in note 34. ParƟcipaƟon in the SciDev Employee Share Scheme is at the discreƟon of the Board and there is no guarantee of annual parƟcipaƟon by any execuƟve.
Use of remuneraƟon consultants
During the financial year ended 30 June 2019, the consolidated enƟty, through the NominaƟon and RemuneraƟon CommiƩee, engaged Lucan Group, remuneraƟon consultants, to review the CEO and Managing Director's remuneraƟon package. Lucan Group was paid $750 for these services.
VoƟng and comments made at the company's 29 November 2018 Annual General MeeƟng ('AGM')
At the 29 November 2018 AGM, 99% of the votes received supported the adopƟon of the remuneraƟon report for the year ended 30 June 2018. The company did not receive any specific feedback at the AGM regarding its remuneraƟon pracƟces.
An agreed set of protocols were put in place to ensure that the remuneraƟon recommendaƟons would be free from undue influence from the Managing Director and CEO. These protocols include requiring that the consultant not communicate with or provide any informaƟon relaƟng to the outcome of the engagement with the Managing Director and CEO whilst the process was underway. The Board is also required to make inquiries of the consultant's processes at the conclusion of the engagement to ensure that they are saƟsfied that any recommendaƟons made have been free from undue influence. The Board is saƟsfied that these protocols were followed and as such there was no undue influence.
Details of remuneraƟon
Amounts of remuneraƟon
Details of the remuneraƟon of key management personnel of the consolidated enƟty are set out in the following tables.
The key management personnel of the consolidated enƟty consisted of the following directors of SciDev Limited:
- Trevor A Jones Non-execuƟve Chairman
- Lewis E Uƫng Managing Director and Chief ExecuƟve Officer (appointed a Director on 29 October 2018, and Managing Director and CEO on 30 April 2019)
- Simone WaƩ Non-execuƟve Director (appointed 29 October 2018)
- Jon Gourlay Non-execuƟve Director (appointed 28 May 2019)
- Kieran G Rodgers Managing Director (resigned 19 March 2019)
- Daniel J Cronin Non-execuƟve Director (resigned 31 December 2018)
And the following person:
Jianfeng Zhang - MarkeƟng and Strategy Director of Science Developments Pty Limited (from 10 April 2019)
RemuneraƟon report conƟnued
| Short-term benefits | Postemploymentbenefits | Long-termbenefits | |||||
|---|---|---|---|---|---|---|---|
| Cash salary | Annual leave | Non- | Super- | Longservice | TerminaƟon | ||
| and fees | accrual | monetary | annuaƟon | leave | benefits | Total | |
| 2019 | |||||||
| Non‐ExecuƟve Directors: | |||||||
| Trevor A Jones (Chairman) | 64,431 | - | - | 6,121 | - | - | 70,552 |
| Simone WaƩ (a) | 25,340 | - | - | 2,407 | - | - | 27,747 |
| Jon Gourlay (a) | - | - | - | - | - | - | - |
| Daniel J Cronin (b) | 22,500 | - | - | 2,138 | - | - | 24,638 |
| ExecuƟve Directors: | |||||||
| Lewis E Uƫng (c) | 260,000 | 14,964 | - | 24,700 | 749 | - | 300,413 |
| Kieran G Rodgers (b) | 260,000 | 18,056 | - | 24,700 | 4,333 | 130,000 | 437,089 |
| Other Key Management Personnel: | |||||||
| Jianfeng Zhang (d) | 31,666 | 2,805 | - | 3,048 | 83 | - | 37,602 |
| 663,937 | 35,825 | - | 63,114 | 5,165 | 130,000 | 898,041 |
(a) Ms Simone WaƩ and Mr Jon Gourlay were appointed Non-execuƟve Directors on 29 October 2018 and 28 May 2019 respecƟvely. Mr Gourlay did not receive any remuneraƟon from the company during the 2019 financial year.
(b) Mr Daniel J Cronin and Mr Kieran G Rodgers resigned on 31 December 2018 and 19 March 2019 respecƟvely. Mr Rodgers' remuneraƟon for the year included terminaƟon payments set out in his employment contract.
(c) Mr Lewis Uƫng was appointed Project Director on 1 March 2018, appointed to the SciDev Board of Directors on 29 October 2018 and became Managing Director and Chief ExecuƟve Officer on 30 April 2019.
(d) Mr Jianfeng Zhang was appointed MarkeƟng and Strategy Director of Science Developments Pty Limited on 10 April 2019.
| Cash salaryConsultancyNon-Super-Long serviceand feesfeemonetaryannuaƟonleaveTotal2018Non‐ExecuƟve Directors:Trevor A Jones (Chairman)69,444--6,597-Daniel J Cronin45,000--4,275-ExecuƟve Directors:Kieran G Rodgers268,424-2,25920,90031,007Other Key Management Personnel:Lewis E Uƫng (a)72,917--6,927-455,785-2,25938,69931,007 | Short-term benefits | Postemploymentbenefits | Long-termbenefits | ||
|---|---|---|---|---|---|
| 76,041 | |||||
| 49,275 | |||||
| 322,590 | |||||
| 79,844 | |||||
| 527,750 |
(a) Lewis Uƫng was appointed Project Director on 1 March 2018
The proporƟon of remuneraƟon linked to performance and the fixed proporƟon are as follows:
| Fixed remuneraƟon | At risk - STI | At risk - LTI | ||||
|---|---|---|---|---|---|---|
| Name | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 |
| Non‐ExecuƟve Directors: | ||||||
| Trevor A Jones (Chairman) | 100% | 100% | - | - | - | - |
| Simone WaƩ | 100% | - | - | - | - | - |
| Daniel J Cronin | 100% | 100% | - | - | - | - |
| ExecuƟve Directors: | ||||||
| Lewis E Uƫng | 100% | 100% | - | - | - | - |
| Kieran G Rodgers | 100% | 100% | - | - | - | - |
| Other Key Management Personnel: | ||||||
| Jianfeng Zhang | 100% | - | - | - | - | - |
RemuneraƟon report conƟnued
Service agreements
RemuneraƟon and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows:
| Name: | Lewis E Uƫng |
|---|---|
| Title: | Managing Director and CEO |
| Agreement commenced: | 30 April 2019 |
| Term of agreement: | Ongoing |
| Details: | Mr Uƫng was employed as a Project Director unƟl 29 April 2019 and Managing Director and CEOthereaŌer. Mr Uƫng had a base salary of $260,000 plus superannuaƟon unƟl 29 April 2019 whichsubsequently increased to $280,000 plus superannuaƟon following his appointment as ManagingDirector and CEO. He is also enƟtled to a bonus of $100,000 and holds 2,500,000 opƟons. |
| Mr Uƫng's salary, allowances and performance bonus will be reviewed annually by the NominaƟonand RemuneraƟon CommiƩee. | |
| The contract may be terminated by 6 months' noƟce from either party. | |
| Name: | Kieran G Rodgers |
| Title: | Managing Director |
| Agreement commenced: | 1 March 2018 |
| Term of agreement: | Ongoing - resigned 19 March 2019 |
| Details: | Base salary for the year ended 30 June 2019 of $260,000 plus superannuaƟon, that was reviewedannually by the NominaƟon and RemuneraƟon CommiƩee. The contract could be terminated by 6months' noƟce from either party. |
Key management personnel have no enƟtlement to terminaƟon payments in the event of removal for misconduct.
Share-based compensaƟon
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensaƟon during the year ended 30 June 2019.
OpƟons
There were no opƟons over ordinary shares granted to or vested by directors and other key management personnel as part of compensaƟon during the year ended 30 June 2019.
There were no opƟons for directors and other key management personnel that lapsed during the year ended 30 June 2019.
AddiƟonal informaƟon
The earnings of the consolidated enƟty for the five years to 30 June 2019 are summarised below:
| 2019 | 2018 | 2017 | 2016 | 2015 | |
|---|---|---|---|---|---|
| $ | $ | $ | $ | $ | |
| Sales revenue | 2,655,799 | 2,029,373 | 1,846,985 | 1,352,346 | 1,316,493 |
| (Loss)/profit aŌer income tax | (2,032,527) | 1,001,869 | (597,340) | (458,130) | (856,446) |
AddiƟonal disclosures relaƟng 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 enƟty, including their personally related parƟes, is set out below:
| Balance at | Received | Balance at | |||
|---|---|---|---|---|---|
| the start of | as part of | AddiƟons/ | Disposals/ | the end of | |
| the year | remuneraƟon | other (a) | other (b) (c) | the year | |
| Ordinary shares | |||||
| Trevor A Jones | 5,742,331 | - | 164,068 | (5,168,096) | 738,303 |
| Lewis E Uƫng | 35,512,267 | - | 3,129,492 | (33,811,538) | 4,830,221 |
| Simone WaƩ | - | - | 5,000,780 | - | 5,000,780 |
| Jon Gourlay | - | - | 206,349 | - | 206,349 |
| Kieran G Rodgers | 23,516,578 | - | 17,714,287 | (41,230,865) | - |
| Daniel J Cronin | 4,659,554 | - | - | (4,659,554) | - |
| Jianfeng Zhang | - | - | 6,666,667 | - | 6,666,667 |
| 69,430,730 | - | 32,881,643 | (84,870,053) | 17,442,320 |
(a) Includes the shares held by Directors, including their personally related parƟes, at the date of their appointment.
(b) Includes the effect of the 10:1 share consolidaƟon that was completed on 4 December 2018.
(c) Includes the removal from the table of the shareholdings for key management personnel who have resigned during the period.
OpƟon holding
The number of opƟons over ordinary shares in the company held during the financial year by each director and other members of key management personnel of the consolidated enƟty, including their personally related parƟes, is set out below:
| Balance atthe start of | Expired/Forfeited /other | Balance atthe end of | |||
|---|---|---|---|---|---|
| the year | Granted | Exercised | (a) (b) | the year | |
| OpƟons over ordinary shares | |||||
| Trevor A Jones | 1,000,000 | - | - | (900,000) | 100,000 |
| Lewis E Uƫng | 5,000,000 | - | - | (4,500,000) | 500,000 |
| Kieran G Rodgers | 2,000,000 | - | - | (2,000,000) | - |
| Daniel J Cronin | 2,000,000 | - | - | (2,000,000) | - |
| 10,000,000 | - | - | (9,400,000) | 600,000 |
(a) Includes the effect of the 10:1 share/opƟon consolidaƟon that was completed on 4 December 2018.
(b) Includes the removal from the table of the opƟons held by key management personnel who have resigned during the period.
RemuneraƟon report conƟnued
Loans to key management personnel and their related parƟes
There were no loans owing by key management personnel of the group, including their close family members and enƟƟes related to them, during the financial year ended 30 June 2019.
Other transacƟons with key management personnel and their related parƟes
A director, Simone WaƩ, is a director of Kanins InternaƟonal Pty Ltd and has the capacity to significantly influence decision making of that company. Kanins InternaƟonal Pty Ltd provided SciDev Limited with a US$350,000 working capital facility for an iniƟal 12-month term during the 2019 financial year. The facility was secured against the consolidated enƟty's inventory and incurred interest at 15% per annum. $73,007 was drawn down on this facility and fully repaid during the 2019 financial year.
A director, Simone WaƩ, is a director of Kemtec Mineral Processing Pty Ltd and has the capacity to significantly influence decision making of that company. The consolidated enƟty has leased equipment to Kemtec Mineral Processing Pty Ltd during the 2019 financial year. The lease contracts were based on normal commercial terms and condiƟons.
Amounts recognised as revenue
Treatment fees and product sales: $91,080 (2018: nil)
Amounts recognised as expenses
Finance costs: $3,539 (2018: nil)
The Managing Director, Lewis Uƫng, is a director and majority shareholder of Uƫng and Muhor Environmental Pty Ltd (UAME Pty Ltd). The consolidated enƟty purchased consultancy services from UAME Pty Ltd during the 2019 financial year for the provision of administraƟve, business development and engineering services. These services were provided by Mr Jamiel Muhor and Task Me Away Pty Ltd, prior to Mr Muhor and Task Me Away Pty Ltd contracƟng directly to the consolidated enƟty. The contract was based on normal commercial terms and condiƟons and it was entered into prior to Lewis Uƫng being employed by the consolidated enƟty.
Amounts recognised as expenses
Professional fees: $278,767 (2018: nil) Bonus: $11,856 (2018: nil) Expense claim reimbursement: $70,228 (2018: nil) Mr Jainfeng Zhang, a director of Science Developments Pty Ltd and KMP, is also a director and shareholder of Nuoer Australia Pty Ltd. The consolidated enƟty sold to and purchased from Nuoer Australia Pty Ltd goods and services during the 2019 financial year, in parƟcular chemicals. The contracts were based on normal commercial terms and condiƟons.
Amounts recognised as revenue
Product sales: $584,366 (2018: nil)
Amounts recognised as expenses
Raw materials and consumables: $118,050 (2018: nil)
Amounts recognised as assets and liabiliƟes
Current assets - trade receivables: $252,307 (2018: nil)
There were no other transacƟons with key management personnel of the group, including their close family members and enƟƟes related to them, during the financial year ended 30 June 2019.
This concludes the remuneraƟon report, which has been audited.
Shares under opƟon
Unissued ordinary shares of SciDev Limited under opƟon at the date of this report are as follows:
| Exercise | Number | ||
|---|---|---|---|
| Grant date | Expiry date | price | under opƟon |
| 10 December 2014* | 28 November 2019 | $0.25 | 550,000 |
| 2 February 2017** | 28 November 2019 | $0.25 | 2,250,000 |
| 14 August 2017* | 28 November 2019 | $0.25 | 650,000 |
| 28 December 2017*** | 28 November 2019 | $0.25 | 500,000 |
| 23 July 2019* | 23 July 2022 | $0.100 | 2,000,000 |
| 23 July 2019* | 23 July 2022 | $0.120 | 3,350,000 |
| 9,300,000 |
* OpƟons granted under the SciDev Employee Share Scheme
** OpƟons granted to the Lead Manager and Underwriter for services rendered in connecƟon with the placement of shares and a share purchase plan
*** OpƟons granted to a key service provider (non-Director) for services rendered.
No person enƟtled to exercise the opƟons had or has any right by virtue of the opƟon to parƟcipate in any share issue of the company or of any other body corporate.
Shares issued on the exercise of opƟons
There were no ordinary shares of SciDev Limited issued on the exercise of opƟons during the year ended 30 June 2019 and up to the date of this report.
Indemnity and insurance of officers
The company has indemnified the directors and execuƟves of the company for costs incurred, in their capacity as a director or execuƟve, 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 execuƟves of the company against a liability to the extent permiƩed by the CorporaƟons 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 enƟty 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 enƟty.
Proceedings on behalf of the company
No person has applied to the Court under secƟon 237 of the CorporaƟons 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.
RemuneraƟon report conƟnued
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 25 to the financial statements.
The directors are saƟsfied 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 compaƟble with the general standard of independence for auditors imposed by the CorporaƟons Act 2001.
The directors are of the opinion that the services as disclosed in note 25 to the financial statements do not compromise the external auditor's independence requirements of the CorporaƟons 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 objecƟvity of the auditor; and
- none of the services undermine the general principles relaƟng to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the AccounƟng Professional and Ethical Standards Board, including reviewing or audiƟng the auditor's own work, acƟng in a management or decision-making capacity for the company, acƟng as advocate for the company or jointly sharing economic risks and rewards.
Officers of the company who are former partners of Rothsay Chartered Accountants There are no officers of the company who are former partners of Rothsay Chartered Accountants.
Auditor's independence declaraƟon
A copy of the auditor's independence declaraƟon as required under secƟon 307C of the CorporaƟons Act 2001 is set out immediately aŌer this directors' report.
Auditor
Rothsay Chartered Accountants conƟnues in office in accordance with secƟon 327 of the CorporaƟons Act 2001.
This report is made in accordance with a resoluƟon of directors, pursuant to secƟon 298(2)(a) of the CorporaƟons Act 2001.
On behalf of the directors
___________________________
Lewis E Uƫng Managing Director
27 September 2019 Sydney
Auditor's independence declaraƟon
| E [email protected]W www.rothsay.com.au | P 02 8815 5400F 02 8815 5401 | GPO Box 542Sydney NSW 2001 | A Level 1/12 O'Connell StreetSydney NSW 2000 | ||
|---|---|---|---|---|---|
| CHARTERED AAUSTRALIA + P | Liability limited by a scheme approved under Professional Standards Legislation | ABN 59 087 479 410 |
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
| Note | 2019 | ||
|---|---|---|---|
| $ | $ | ||
| Revenue | 5 | 2,921,060 | 2,200,768 |
| Other income | 6 | 336,645 | 2,336,187 |
| Interest revenue | - | 12,999 |
| Profit/(loss) before income tax benefit/(expense) | (2,008,450) | 993,727 | |
|---|---|---|---|
| Income tax benefit/(expense) | 8 | (24,077) | 8,142 |
| Profit/(loss) aŌer income tax benefit/(expense) for the year aƩributable to the owners of SciDevLimited | (2,032,527) | 1,001,869 | |
| Other comprehensive income for the year, net of tax | - | - | |
| Total comprehensive income for the year aƩributable to the owners of SciDev Limited | (2,032,527) | 1,001,869 | |
| Cents | Cents | ||
| Basic earnings per share | 33 | (2.69) | 2.02 |
| Diluted earnings per share | 33 | (2.69) | 2.02 |
Statement of financial posiƟon
For the year ended 30 June 2019
| Note | 2019$ | 2018$ | |
|---|---|---|---|
| Assets | |||
| Current assets | |||
| Cash and cash equivalents | 9 | 1,756,209 | 568,187 |
| Trade and other receivables | 10 | 806,099 | 727,946 |
| Inventories | 11 | 264,325 | 236,184 |
| Other | 22,679 | 1,754 | |
| Total current assets | 2,849,312 | 1,534,071 | |
| Non-current assets | |||
| Financial assets at fair value through other comprehensive income | 12 | 1,502,900 | 1,502,900 |
| Property, plant and equipment | 13 | 303,454 | 260,954 |
| Intangibles | 14 | 1,246,299 | 1,266,033 |
| Total non-current assets | 3,052,653 | 3,029,887 | |
| Total assets | 5,901,965 | 4,563,958 | |
| LiabiliƟes | |||
| Current liabiliƟes | |||
| Trade and other payables | 15 | 1,009,529 | 370,279 |
| Borrowings | 16 | - | 31,938 |
| Employee benefits | 17 | 155,276 | 167,247 |
| Total current liabiliƟes | 1,164,805 | 569,464 | |
| Non-current liabiliƟes | |||
| Deferred tax | 8 | 35,986 | 44,108 |
| Employee benefits | 18 | 2,153 | - |
| Total non-current liabiliƟes | 38,139 | 44,108 | |
| Total liabiliƟes | 1,202,944 | 613,572 | |
| Net assets | 4,699,021 | 3,950,386 | |
| Equity | |||
| Issued capital | 19 | 76,899,789 | 74,118,627 |
| Reserves | 20 | 2,210,703 | 2,210,703 |
| Accumulated losses | (74,411,471) | (72,378,944) | |
| Total equity | 4,699,021 | 3,950,386 |
Refer to note 2 for detailed informaƟon on restatement of comparaƟves - adopƟon of AASB 9 'Financial instruments'
Statement of changes in equity
For the year ended 30 June 2019
| Issued | Accumulated | |||
|---|---|---|---|---|
| capital | Reserves | losses | Total equity | |
| $ | $ | $ | $ | |
| Balance at 1 July 2017 | 73,673,290 | 2,169,223 | (73,380,813) | 2,461,700 |
| Profit aŌer income tax benefit for the year | - | - | 1,001,869 | 1,001,869 |
| Other comprehensive income for the year, net of tax | - | - | - | - |
| Total comprehensive income for the year | - | - | 1,001,869 | 1,001,869 |
| TransacƟons with owners in their capacity as owners: | ||||
| ContribuƟons of equity, net of transacƟon costs (note 19) | 445,337 | - | - | 445,337 |
| Share-based payments (note 34) | - | 41,480 | - | 41,480 |
| Balance at 30 June 2018 | 74,118,627 | 2,210,703 | (72,378,944) | 3,950,386 |
| Issued | Accumulated | |||
| capital | Reserves | losses | Total equity | |
| $ | $ | $ | $ | |
| Balance at 1 July 2018 | 74,118,627 | 2,210,703 | (72,378,944) | 3,950,386 |
| Loss aŌer income tax expense for the year | - | - | (2,032,527) | (2,032,527) |
| Other comprehensive income for the year, net of tax | - | - | - | - |
| Total comprehensive income for the year | - | - | (2,032,527) | (2,032,527) |
| TransacƟons with owners in their capacity as owners: | ||||
| ContribuƟons of equity, net of transacƟon costs (note 19) | 2,781,162 | - | - | 2,781,162 |
| Balance at 30 June 2019 | 76,899,789 | 2,210,703 | (74,411,471) | 4,699,021 |
Statement of cash flows
For the year ended 30 June 2019
| Note | 2019 | 2018 | |
|---|---|---|---|
| $ | $ | ||
| Cash flows from operaƟng acƟviƟes | |||
| Receipts from customers (inclusive of GST) | 2,774,656 | 2,311,575 | |
| Payments to suppliers and employees (inclusive of GST) | (4,616,859) | (3,507,670) | |
| (1,842,203) | (1,196,095) | ||
| Interest received | - | 6,749 | |
| R&D tax offset received | 332,981 | 303,112 | |
| Interest and other finance costs paid | (6,627) | (6,111) | |
| Income taxes paid | (32,199) | - | |
| Net cash used in operaƟng acƟviƟes | 31 | (1,548,048) | (892,345) |
| Cash flows from invesƟng acƟviƟes | |||
| Repayment of cash received for disposal of Zeehan Project | (300,000) | - | |
| Payments for property, plant and equipment | 13 | (225,225) | (97,045) |
| Payments for intangibles | 14 | (37,929) | (53,109) |
| Payments for security deposits | - | (10,800) | |
| Proceeds from disposal of Zeehan Project | 50,000 | 250,000 | |
| Proceeds from disposal of financial assets at fair value through other comprehensive income | 500,000 | - | |
| Net cash from/(used in) invesƟng acƟviƟes | (13,154) | 89,046 | |
| Cash flows from financing acƟviƟes | |||
| Proceeds from issue of shares - net of transacƟon costs | 2,781,162 | 445,337 | |
| Proceeds from borrowings | 73,007 | - | |
| Repayment of borrowings | (104,945) | (12,565) | |
| Net cash from financing acƟviƟes | 2,749,224 | 432,772 | |
| Net increase/(decrease) in cash and cash equivalents | 1,188,022 | (370,527) | |
| Cash and cash equivalents at the beginning of the financial year | 568,187 | 938,714 | |
| Cash and cash equivalents at the end of the financial year | 9 | 1,756,209 | 568,187 |
For the year ended 30 June 2019
Note 1. General informaƟon
The financial statements cover SciDev Limited as a consolidated enƟty consisƟng of SciDev Limited and the enƟƟes it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is SciDev Limited's funcƟonal and presentaƟon 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, Grosvenor Place 225 George Street, Sydney NSW 2000
Principal place of business Unit 1 8 Turbo Road, Kings Park NSW 2148
A descripƟon of the nature of the consolidated enƟty's operaƟons and its principal acƟviƟes 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 resoluƟon of directors, on 26 September 2019. The directors have the power to amend and reissue the financial statements.
Note 2. Significant accounƟng policies
The principal accounƟng policies adopted in the preparaƟon of the financial statements are set out either in the respecƟve notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended AccounƟng Standards and InterpretaƟons adopted
The consolidated enƟty has adopted all of the new or amended AccounƟng Standards and InterpretaƟons issued by the Australian AccounƟng Standards Board ('AASB') that are mandatory for the current reporƟng period.
Any new or amended AccounƟng Standards or InterpretaƟons that are not yet mandatory have not been early adopted.
The adopƟon of these AccounƟng Standards and InterpretaƟons did not have any significant impact on the financial performance or posiƟon of the consolidated enƟty.
The following AccounƟng Standards and InterpretaƟons are most relevant to the consolidated enƟty:
AASB 9 Financial Instruments
The consolidated enƟty has adopted AASB 9 from 1 July 2018. The standard introduced new classificaƟon and measurement models for financial assets. A financial asset shall be measured at amorƟsed cost if it is held within a business model whose objecƟve is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objecƟve is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the enƟty makes an irrevocable elecƟon on iniƟal recogniƟon to present gains and losses on equity instruments (that are not held-for-trading or conƟngent consideraƟon recognised in a business combinaƟon) in other comprehensive income ('OCI').
Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounƟng mismatch. For financial liabiliƟes designated at fair value through profit or loss, the standard requires the porƟon of the change in fair value that relates to the enƟty's own credit risk to be presented in OCI (unless it would create an accounƟng mismatch). New simpler hedge accounƟng requirements are intended to more closely align the accounƟng treatment with the risk management acƟviƟes of the enƟty. New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12 month ECL method unless the credit risk on a financial instrument has increased significantly since iniƟal recogniƟon in which case the lifeƟme ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifeƟme expected loss allowance is available.
Note 2. Significant accounƟng policies (cont..)
AASB 9 Financial Instruments (cont..)
At the date of iniƟal applicaƟon (1 July 2018) the consolidated enƟty assessed that there were no classificaƟon, measurement and impairment adjustments required to any of its financial assets and liabiliƟes except for, financial assets in the sum of $1,502,900 classified as 'available-for-sale' at 30 June 2018 and now reclassified as 'financial assets at fair value other comprehensive income'.
'Interest revenue' is no longer included in the 'Revenue' note and is now shown separately on the face of the statement of profit or loss and other comprehensive income, resulƟng in a reclassificaƟon of $12,999 for the year ended 30 June 2018.
AASB 15 Revenue from Contracts with Customers
The consolidated enƟty has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model for revenue recogniƟon. The core principle of the standard is that an enƟty shall recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideraƟon to which the enƟty expects to be enƟtled in exchange for those goods or services. The standard introduced a new contract-based revenue recogniƟon model with a measurement approach that is based on an allocaƟon of the transacƟon price. This is described further in the accounƟng policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an enƟty's statement of financial posiƟon as a contract liability, a contract asset, or a receivable, depending on the relaƟonship between the enƟty's performance and the customer's payment. Customer acquisiƟon costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amorƟsed over the contract period.
The adopƟon of this standard has no impact on the financial performance and posiƟon of the consolidated enƟty.
Going concern
For the year ended 30 June 2019 the consolidated enƟty generated an operaƟng loss aŌer income tax of $2,032,527 (2018: $987,331 loss before taking into account the net gain from the sale of Intec Zeehan Residues Pty Ltd). Net cash ouƞlows from operaƟons were $1,548,048 (2018: $892,345) for the year ended 30 June 2019.
The Directors have considered and concluded that the going concern basis of preparaƟon of the financial statements is appropriate and any potenƟal uncertainty regarding going concern is miƟgated by the following:
- On 11 February 2019, SciDev Ltd (SDV) announced it had entered into a binding Heads of Agreement (HOA) to acquire the exclusive distribuƟon and markeƟng rights in Australia and other Oceanic countries for polymer products produced by the China-based Nuoer Group (Nuoer Group). Under the terms of the HOA, SDV's wholly owned subsidiary, Science Developments Pty Ltd (SDPL), has been granted the exclusive distribuƟon and markeƟng rights from the Nuoer Group's Australian operaƟng enƟty, Nuoer Chemical Australia Pty Ltd (NCA) for a 10-year period. The exclusive distribuƟon and markeƟng rights to Nuoer Group's water-soluble polymers is expected to delivering demonstrably expanded market opportuniƟes for the SDV patent OpƟFlox technology and other benefits for SDV.
- At 30 June 2019 the consolidated enƟty had net current assets of $1,684,507 (2018: $964,607) and cash balances of $1,756,209 (2018: $568,187) and an undrawn A$500,000 credit facility.
- On the 13 September 2019, the company announced the placement of 16,000,0000 new ordinary shares with local insƟtuƟonal and sophisƟcated investors at an issue price of $0.26 per share to raise total proceeds of $4.16 million. The funds from the placement will predominantly be used to increase inventory, conƟnue development of the consolidated enƟty's OpƟFlox and MaxiFlox technology, and increase working capital.
Based on the above, the Directors are of the opinion that at the date of signature of the financial report there are reasonable and supportable grounds to believe that the consolidated enƟty will be able to meet its liabiliƟes from its assets in the ordinary course of business, for a period of not less than twelve months from the date of signature of the audit report on this financial report to the date of signature of the audit report on the financial report for the year ending 30 June 2020, and has accordingly prepared the financial report on a going concern basis.
For the year ended 30 June 2019
Note 2. Significant accounƟng policies (cont..)
Basis of preparaƟon
These general purpose financial statements have been prepared in accordance with Australian AccounƟng Standards and InterpretaƟons issued by the Australian AccounƟng Standards Board ('AASB') and the CorporaƟons Act 2001, as appropriate for for-profit oriented enƟƟes. These financial statements also comply with InternaƟonal Financial ReporƟng Standards as issued by the InternaƟonal AccounƟng Standards Board ('IASB').
Historical cost convenƟon
The financial statements have been prepared under the historical cost convenƟon, except for, where applicable, financial assets and liabiliƟes at fair value through profit or loss.
CriƟcal accounƟng esƟmates
The preparaƟon of the financial statements requires the use of certain criƟcal accounƟng esƟmates. It also requires management to exercise its judgement in the process of applying the consolidated enƟty's accounƟng policies. The areas involving a higher degree of judgement or complexity, or areas where assumpƟons and esƟmates are significant to the financial statements, are disclosed in note 3.
Parent enƟty informaƟon
In accordance with the CorporaƟons Act 2001, these financial statements present the results of the consolidated enƟty only.
Supplementary informaƟon about the parent enƟty is disclosed in note 28.
Principles of consolidaƟon
The consolidated financial statements incorporate the assets and liabiliƟes of all subsidiaries of SciDev Limited ('company' or 'parent enƟty') as at 30 June 2019 and the results of all subsidiaries for the year then ended. SciDev Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated enƟty'.
Subsidiaries are all those enƟƟes over which the consolidated enƟty has control. The consolidated enƟty controls an enƟty when the consolidated enƟty is exposed to, or has rights to, variable returns from its involvement with the enƟty and has the ability to affect those returns through its power to direct the acƟviƟes of the enƟty. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated enƟty. They are de-consolidated from the date that control ceases.
Intercompany transacƟons, balances and unrealised gains on transacƟons between enƟƟes in the consolidated enƟty are eliminated. Unrealised losses are also eliminated unless the transacƟon provides evidence of the impairment of the asset transferred. AccounƟng policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated enƟty.
The acquisiƟon of subsidiaries is accounted for using the acquisiƟon method of accounƟng. A change in ownership interest, without the loss of control, is accounted for as an equity transacƟon, where the difference between the consideraƟon transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity aƩributable to the parent.
Where the consolidated enƟty loses control over a subsidiary, it derecognises the assets including goodwill, liabiliƟes and noncontrolling interest in the subsidiary together with any cumulaƟve translaƟon differences recognised in equity. The consolidated enƟty recognises the fair value of the consideraƟon received and the fair value of any investment retained together with any gain or loss in profit or loss.
Foreign currency translaƟon
The financial statements are presented in Australian dollars, which is SciDev Limited's funcƟonal and presentaƟon currency.
Foreign currency transacƟons
Foreign currency transacƟons are translated into Australian dollars using the exchange rates prevailing at the dates of the transacƟons. Foreign exchange gains and losses resulƟng from the seƩlement of such transacƟons and from the translaƟon at financial year-end exchange rates of monetary assets and liabiliƟes denominated in foreign currencies are recognised in profit or loss.
Foreign operaƟons
The assets and liabiliƟes of foreign operaƟons are translated into Australian dollars using the exchange rates at the reporƟng date. The revenues and expenses of foreign operaƟons are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transacƟons, for the period. All resulƟng 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 operaƟon or net investment is disposed of.
Note 2. Significant accounƟng policies (cont..)
Current and non-current classificaƟon
Assets and liabiliƟes are presented in the statement of financial posiƟon based on current and non-current classificaƟon.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated enƟty's normal operaƟng cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months aŌer the reporƟng period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to seƩle a liability for at least 12 months aŌer the reporƟng period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be seƩled in the consolidated enƟty's normal operaƟng cycle; it is held primarily for the purpose of trading; it is due to be seƩled within 12 months aŌer the reporƟng period; or there is no uncondiƟonal right to defer the seƩlement of the liability for at least 12 months aŌer the reporƟng period. All other liabiliƟes are classified as noncurrent. Deferred tax assets and liabiliƟes are always classified as non-current.
Investments and other financial assets
Investments and other financial assets are iniƟally measured at fair value. TransacƟon costs are included as part of the iniƟal measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amorƟsed cost or fair value depending on their classificaƟon. ClassificaƟon is determined based on both the business model within which such assets are held and the contractual cash flow characterisƟcs of the financial asset unless, an accounƟng mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated enƟty has transferred substanƟally all the risks and rewards of ownership. When there is no reasonable expectaƟon of recovering part or all of a financial asset, it's carrying value is wriƩen off.
Loans and receivables
Loans and receivables are non-derivaƟve financial assets with fixed or determinable payments that are not quoted in an acƟve market. They are carried at amorƟsed cost using the effecƟve interest rate
method. Gains and losses are recognised in profit or loss when the asset is derecognised or impaired.
Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the consolidated enƟty intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon iniƟal recogniƟon.
Impairment of financial assets
The consolidated enƟty recognises a loss allowance for expected credit losses on financial assets which are either measured at amorƟsed cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated enƟty's assessment at the end of each reporƟng period as to whether the financial instrument's credit risk has increased significantly since iniƟal recogniƟon, based on reasonable and supportable informaƟon that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since iniƟal recogniƟon, a 12-month expected credit loss allowance is esƟmated.
This represents a porƟon of the asset's lifeƟme expected credit losses that is aƩributable 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 lifeƟme expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anƟcipated cash shorƞalls over the life of the instrument discounted at the original effecƟve interest rate. For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss.
For the year ended 30 June 2019
Note 2. Significant accounƟng policies (cont..)
Leases
The determinaƟon of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.
A disƟncƟon is made between finance leases, which effecƟvely transfer from the lessor to the lessee substanƟally all the risks and benefits incidental to the ownership of leased assets, and operaƟng leases, under which the lessor effecƟvely retains substanƟally all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the consolidated enƟty will obtain ownership at the end of the lease term.
OperaƟng lease payments, net of any incenƟves received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amorƟsaƟon and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other nonfinancial 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 esƟmated future cash flows relaƟng to the asset using a pre-tax
discount rate specific to the asset or cash-generaƟng unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generaƟng unit.
Finance costs
Finance costs aƩributable 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 acquisiƟon 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 posiƟon.
Cash flows are presented on a gross basis. The GST components of cash flows arising from invesƟng or financing acƟviƟes which are recoverable from, or payable to the tax authority, are presented as operaƟng cash flows.
Commitments and conƟngencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
New AccounƟng Standards and InterpretaƟons not yet mandatory or early adopted
Australian AccounƟng Standards and InterpretaƟons that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated enƟty for the annual reporƟng period ended 30 June 2019.
Note 2. Significant accounƟng policies (cont..)
The consolidated enƟty's assessment of the impact of these new or amended AccounƟng Standards and InterpretaƟons, most relevant to the consolidated enƟty, are set out below.
AASB 16 Leases
This standard is applicable to annual reporƟng periods beginning on or aŌer 1 January 2019. The standard replaces AASB 117 'Leases' and for lessees will eliminate the classificaƟons of operaƟng leases and finance leases. Subject to excepƟons, a 'rightof-use' asset will be capitalised in the statement of financial posiƟon, measured at the present value of the unavoidable future lease payments to be made over the lease term. The excepƟons relate to short-term leases of 12 months or less and leases of lowvalue assets (such as personal computers and small office furniture) where an accounƟng policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incenƟves received, iniƟal direct costs incurred and an esƟmate of any future restoraƟon, removal or dismantling costs. Straight-line operaƟng lease expense recogniƟon will be replaced with a depreciaƟon charge for the leased asset (included in operaƟng costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, DepreciaƟon and AmorƟsaƟon) results will be improved as the operaƟng expense is replaced by interest expense and depreciaƟon in profit or loss under AASB 16. For classificaƟon within the statement of cash flows, the lease payments will be separated into both a principal (financing acƟviƟes) and interest (either operaƟng or financing acƟviƟes) component.
For lessor accounƟng, the standard does not substanƟally change how a lessor accounts for leases. The consolidated enƟty will adopt this standard from 1 July 2019 but the impact of its adopƟon is yet to be assessed by the consolidated enƟty.
Note 3. CriƟcal accounƟng judgements, esƟmates and assumpƟons
The preparaƟon of the financial statements requires management to make judgements, esƟmates and assumpƟons that affect the reported amounts in the financial statements. Management conƟnually evaluates its judgements and esƟmates in relaƟon to assets, liabiliƟes, conƟngent liabiliƟes, revenue and expenses. Management bases its judgements, esƟmates and assumpƟons on historical experience and on other various factors, including expectaƟons of future events, management believes to be reasonable under the circumstances. The resulƟng accounƟng judgements and esƟmates will seldom equal the related actual results. The judgements, esƟmates and assumpƟons that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabiliƟes (refer to the respecƟve notes) within the next financial year are discussed below.
Goodwill
The consolidated enƟty tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill has suffered any impairment, in accordance with the accounƟng policy stated in note 2. The recoverable amounts of cash-generaƟng units have been determined based on value-in-use calculaƟons. These calculaƟons require the use of assumpƟons, including esƟmated discount rates based on the current cost of capital and growth rates of the esƟmated future cash flows. For informaƟon relaƟng to the value-in-use calculaƟons refer to note 14.
Note 4. OperaƟng segments
IdenƟficaƟon of reportable operaƟng segments
The consolidated enƟty operates in primarily one geographical segment, namely Australia. The primary business segment is the treatment of industrial waste including the manufacture and supply of chemicals for the treatment of waste water.
OperaƟng and business segments are reported in a manner consistent with the internal reporƟng provided to the chief operaƟng decision makers. The chief operaƟng decision maker, who is responsible for allocaƟng resources and assessing performance of the operaƟng segments, has been idenƟfied as the Board of Directors.
For the year ended 30 June 2019
Note 4. OperaƟng segments (cont…)
Major customers
During the year ended 30 June 2019 approximately 57% of the consolidated enƟty's external revenue was derived from sales to the consolidated enƟty's 3 largest customers (2018: 52% of consolidated external revenue was aƩributable to one customer). No other customer contributed 10% or more to the consolidated enƟty's revenue for both 2019 and 2018.
Revenue by geographical area
The consolidated enƟty operates primarily in one geographical segment being Australia. Revenue aƩributable to overseas subsidiaries is not material to the consolidated enƟty.
AccounƟng policy for operaƟng segments
OperaƟng segments are presented using the 'management approach', where the informaƟon presented is on the same basis as the internal reports provided to the Chief OperaƟng Decision Makers ('CODM'). The CODM is responsible for the allocaƟon of resources to operaƟng segments and assessing their performance.
Note 5. Revenue
| 2019 | 2018 | |
|---|---|---|
| $ | $ | |
| Sales revenue | ||
| Treatment fees and product sales | 2,655,799 | 2,029,373 |
| Other revenue | ||
| Royalty | - | 14,125 |
| Other revenue | 265,261 | 157,270 |
| 265,261 | 171,395 | |
| Revenue | 2,921,060 | 2,200,768 |
AccounƟng policy for revenue recogniƟon
The consolidated enƟty recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideraƟon to which the consolidated enƟty is expected to be enƟtled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated enƟty: idenƟfies the contract with a customer; idenƟfies the performance obligaƟons in the contract; determines the transacƟon price which takes into account esƟmates of variable consideraƟon and the Ɵme value of money; allocates the transacƟon price to the separate performance obligaƟons on the basis of the relaƟve stand-alone selling price of each disƟnct good or service to be delivered; and recognises revenue when or as each performance obligaƟon is saƟsfied in a manner that depicts the transfer to the customer of the goods or services promised.
Note 5. Revenue (cont..)
Variable consideraƟon within the transacƟon price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potenƟal bonuses receivable from the customer and any other conƟngent events. Such esƟmates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideraƟon 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 cumulaƟve revenue recognised will not occur. The measurement constraint conƟnues unƟl the uncertainty associated with the variable consideraƟon is subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability.
Sale of goods
Revenue from the sale of goods is recognised at the point in Ɵme when the customer obtains control of the goods, which is generally at the Ɵme of delivery.
ConsulƟng services and treatment fees
ConsulƟng services and treatment fees are recognised using the percentage-of-compleƟon method for fixed-fee arrangements or as the services are provided for Ɵme-and-materials arrangements.
Interest
Interest revenue is recognised as interest accrues using the effecƟve interest method. This is a method of calculaƟng the amorƟsed cost of a financial asset and allocaƟng the interest income over the relevant period using the effecƟve interest rate, which is the rate that exactly discounts esƟmated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
For the year ended 30 June 2019
Note 6. Other income
| 2019 | 2018 | |
|---|---|---|
| $ | $ | |
| Net foreign exchange gain | - | 20,181 |
| Net gain on disposal of Intec Zeehan Residues Pty Ltd | - | 1,989,200 |
| Subsidies and grants | 332,981 | 303,112 |
| Reimbursement of expenses | 3,664 | 23,694 |
| Other income | 336,645 | 2,336,187 |
| Note 7. Expenses | ||
| 2019 | 2018 | |
| $ | $ | |
| Profit/(loss) before income tax includes the following specific expenses: | ||
| Rental expense relaƟng to operaƟng leases | ||
| Minimum lease payments | 156,169 | 106,519 |
| SuperannuaƟon expense | ||
| Defined contribuƟon superannuaƟon expense | 96,666 | 74,951 |
| Note 8. Income tax | ||
| 2019 | 2018 | |
| Income tax expense/(benefit) | $ | $ |
| Deferred tax - originaƟon and reversal of temporary differences | (8,122) | (8,142) |
| Adjustment recognised for prior periods | 32,199 | - |
| Aggregate income tax expense/(benefit) | 24,077 | (8,142) |
| Deferred tax included in income tax expense/(benefit) comprises: | ||
| Decrease in deferred tax liabiliƟes | (8,122) | (8,142) |
| Numerical reconciliaƟon of income tax expense/(benefit) and tax at the statutory rate | ||
| Profit/(loss) before income tax benefit/(expense) | (2,008,450) | 993,727 |
| Tax at the statutory tax rate of 27.5% | (552,324) | 273,275 |
| Tax effect amounts which are not deducƟble/(taxable) in calculaƟng taxable income: | ||
| Non-deducƟble expenses | 8,121 | 43,105 |
| Non-assessable income | (91,570) | (630,386) |
| (635,773) | (314,006) | |
| Adjustment recognised for prior periods | 32,199 | - |
| Current year tax losses not recognised | 649,194 | 340,933 |
| Current year temporary differences not recognised | (21,543) | (30,715) |
| Adjustment to deferred tax balances | - | (4,354) |
| Income tax expense/(benefit) | 24,077 | (8,142) |
Note 8. income tax (cont..)
| 2019$ | 2018$ | |
|---|---|---|
| Tax losses not recognised | ||
| Unused tax losses for which no deferred tax asset has been recognised | 67,709,864 | 66,114,631 |
| PotenƟal tax benefit @ 27.5% | 18,620,213 | 18,181,524 |
The above potenƟal tax benefit for tax losses has not been recognised in the statement of financial posiƟon. These tax losses can only be uƟlised in the future if the conƟnuity of ownership test is passed, or failing that, the same business test is passed.
| 2019 | 2018 | |
|---|---|---|
| $ | $ | |
| Deferred tax liability | ||
| Deferred tax liability comprises temporary differences aƩributable to: | ||
| Amounts recognised in profit or loss: | ||
| Brand name | 35,986 | 44,108 |
| Deferred tax liability | 35,986 | 44,108 |
| Movements: | ||
| Opening balance | 44,108 | 52,250 |
| Credited to profit or loss | (8,122) | (8,142) |
| Closing balance | 35,986 | 44,108 |
AccounƟng policy for income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdicƟon, adjusted by the changes in deferred tax assets and liabiliƟes aƩributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabiliƟes are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabiliƟes are seƩled, based on those tax rates that are enacted or substanƟvely enacted, except for:
- When the deferred income tax asset or liability arises from the iniƟal recogniƟon of goodwill or an asset or liability in a transacƟon that is not a business combinaƟon and that, at the Ɵme of the transacƟon, affects neither the accounƟng nor taxable profits; or
- When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the Ɵming 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 deducƟble temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to uƟlise those temporary differences and losses.
For the year ended 30 June 2019
Note 8. Income tax (cont..)
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporƟng date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabiliƟes are offset only where there is a legally enforceable right to offset current tax assets against current tax liabiliƟes and deferred tax assets against deferred tax liabiliƟes; and they relate to the same taxable authority on either the same taxable enƟty or different taxable enƟƟes which intend to seƩle simultaneously.
SciDev Limited (the 'head enƟty') and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidaƟon regime. The head enƟty and each subsidiary in the tax consolidated group conƟnue 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 addiƟon to its own current and deferred tax amounts, the head enƟty also recognises the current tax liabiliƟes (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 liabiliƟes arising under tax funding agreements with the tax consolidated enƟƟes are recognised as amounts receivable from or payable to other enƟƟes 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, resulƟng in neither a contribuƟon by the head enƟty to the subsidiaries nor a distribuƟon by the subsidiaries to the head enƟty.
| 2019$ | 2018$ | |
|---|---|---|
| Cash on hand | 150 | 150 |
| Cash at bank | 1,756,059 | 568,037 |
| 1,756,209 | 568,187 |
Note 9. Current assets - cash and cash equivalents
AccounƟng policy for cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial insƟtuƟons, other short-term, highly liquid investments with original maturiƟes of three months or less that are readily converƟble to known amounts of cash and which are subject to an insignificant risk of changes in value.
Note 10. Current assets - trade and other receivables
| 2019$ | 2018$ | |
|---|---|---|
| Trade receivables | 779,210 | 457,430 |
| Other receivables | 26,889 | 14,266 |
| Amount due by Tartana Resources Limited | - | 256,250 |
| 806,099 | 727,946 |
Allowance for expected credit losses
On adopƟon of AASB 9 'Financial instruments', the consolidated enƟty has changed the accounƟng for impairment losses for receivables by replacing the previous 'incurred loss approach' with a forward-looking 'expected credit loss' (ECL) approach and has calculated its ECL based on the consolidated enƟty's historical credit loss experience, adjusted for forward-looking factors specific to its receivables and the economic environment.
The consolidated enƟty does not have any history of impairment of its trade receivables. The consolidated enƟty transacts with a limited number of established customers and operates under strict credit policies approved by the Board of Directors.
No impairment loss has be been recognised for trade receivables.
AccounƟng policy for trade and other receivables
Trade receivables are iniƟally recognised at fair value and subsequently measured at amorƟsed cost using the effecƟve interest method, less any allowance for expected credit losses. Trade receivables are generally due for seƩlement within 30 days.
The consolidated enƟty has applied the simplified approach to measuring expected credit losses, which uses a lifeƟme expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amorƟsed cost, less any allowance for expected credit losses.
Note 11. Current assets - inventories
| 2019$ | 2018$ | |
|---|---|---|
| Stock on hand - at cost | 264,325 | 236,184 |
AccounƟng policy for inventories
Stock on hand is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of rebates and discounts received or receivable.
Net realisable value is the esƟmated selling price in the ordinary course of business less the esƟmated costs of compleƟon and the esƟmated costs necessary to make the sale.
For the year ended 30 June 2019
12. Non-current assets - financial assets at fair value through other comprehensive income
| 2019$ | 2018$ | |
|---|---|---|
| Unlisted equity securiƟes | 1,502,900 | 698,900 |
| ConsideraƟon from disposal of Intec Zeehan Residues Pty Ltd | - | 804,000 |
| 1,502,900 | 1,502,900 | |
ReconciliaƟon
ReconciliaƟon of the fair values at the beginning and end of the current and previous financial year are set out below:
| Closing fair value | 1,502,900 | 1,502,900 |
|---|---|---|
| RevaluaƟon increments | 141,026 | - |
| Disposals* | (641,026) | - |
| AddiƟons* | 500,000 | 1,500,000 |
| Opening fair value | 1,502,900 | 2,900 |
Refer to note 23 for further informaƟon on fair value measurement.
* On 25 October 2017, SciDev Limited (SciDev) entered into a condiƟonal sale agreement to dispose of Intec Zeehan Residues Pty Ltd (IZR), whose principal asset was the Zeehan Zinc Project. The disposal was in order to generate cash flow for the expansion of the consolidated enƟty's core businesses. The disposal was completed on 22 January 2018, on which date control of IZR passed to the acquirer, Tartana Resources Ltd (Tartana).
The total consideraƟon was 15,000,000 ordinary shares in Tartana at a deemed price of 10 cents per share and $500,000 in cash. SciDev received $300,000 of the cash component and 7,760,000 ordinary shares in Tartana.
SciDev and Tartana subsequently agreed to vary the terms of the sale agreement resulƟng in an addiƟonal 5,000,000 Tartana shares to be issued to SciDev and the deleƟon of the $500,000 cash component of the transacƟon. SciDev agreed to repay the $300,000 it received from Tartana and used the proceeds from the sale of 6,410,256 Tartana shares to fund the repayment. The total consideraƟon for the transacƟon of $2,000,000 remained unchanged.
Note 13. Non-current assets - property, plant and equipment
| 2019 | 2018 | |
|---|---|---|
| $ | $ | |
| Plant and equipment - at cost | 748,552 | 619,949 |
| Less: Accumulated depreciaƟon | (462,286) | (358,995) |
| 286,266 | 260,954 | |
| Office equipment - at cost | 50,954 | 31,028 |
| Less: Accumulated depreciaƟon | (33,766) | (31,028) |
| 17,188 | - | |
| 303,454 | 260,954 |
ReconciliaƟons
ReconciliaƟons of the wriƩen down values at the beginning and end of the current and previous financial year are set out below:
| Plant and | Office | ||
|---|---|---|---|
| Equipment$ | Equipment$ | Total$ | |
| Balance at 1 July 2017 | 290,123 | 1,078 | 291,201 |
| AddiƟons | 97,045 | - | 97,045 |
| DepreciaƟon expense | (126,214) | (1,078) | (127,292) |
| Balance at 30 June 2018 | 260,954 | - | 260,954 |
| AddiƟons | 205,299 | 19,926 | 225,225 |
| Disposals | (27,621) | - | (27,621) |
| DepreciaƟon expense | (152,366) | (2,738) | (155,104) |
| Balance at 30 June 2019 | 286,266 | 17,188 | 303,454 |
Property, plant and equipment secured under finance leases Refer to note 26 for further informaƟon on property, plant and equipment secured under finance leases.
AccounƟng policy for property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciaƟon and impairment. Historical cost includes expenditure that is directly aƩributable to the acquisiƟon of the items.
DepreciaƟon 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 years |
|---|---|
| Office equipment | 2-8 years |
The residual values, useful lives and depreciaƟon methods are reviewed, and adjusted if appropriate, at each reporƟng date.
Plant and equipment under lease are depreciated over the unexpired period of the lease or the esƟmated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated enƟty. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
For the year ended 30 June 2019
Note 14. Non-current assets - intangibles
| 2019 | 2018 | |
|---|---|---|
| $ | $ | |
| Goodwill - at cost | 1,030,018 | 1,030,018 |
| Trade marks and intellectual property - at cost | 465,871 | 427,942 |
| Less: Accumulated amorƟsaƟon | (249,590) | (191,927) |
| 216,281 | 236,015 | |
| 1,246,299 | 1,266,033 |
ReconciliaƟons
ReconciliaƟons of the wriƩen down values at the beginning and end of the current and previous financial year are set out below:
| Trademarks and | |||
|---|---|---|---|
| Intellectual | |||
| Goodwill | property | Total | |
| $ | $ | $ | |
| Balance at 1 July 2017 | 1,030,018 | 249,785 | 1,279,803 |
| AddiƟons | - | 53,109 | 53,109 |
| AmorƟsaƟon expense | - | (66,879) | (66,879) |
| Balance at 30 June 2018 | 1,030,018 | 236,015 | 1,266,033 |
| AddiƟons | - | 37,929 | 37,929 |
| AmorƟsaƟon expense | - | (57,663) | (57,663) |
| Balance at 30 June 2019 | 1,030,018 | 216,281 | 1,246,299 |
Impairment tesƟng
Goodwill which was acquired through a business combinaƟon, has been allocated to the Science Development Pty Ltd cash-generaƟng unit (CGU). The recoverable amount of the consolidated enƟty's goodwill has been determined by a value-in-use calculaƟon using a discounted cash flow model, based on a 1 year projecƟon period approved by management and extrapolated for a further 4 years using variable rates, together with a terminal value.
Key assumpƟons are those to which the recoverable amount of an asset or cash-generaƟng units is most sensiƟve.
Key assumpƟons in the discounted cashflow model include:
- (a) Post-tax discount rate of 15% (2018: 15%) per annum;
- (b) Average revenue growth over the five-year period of 1,243% (2018: 46%);
- (c) Average growth in gross margin over the five-year period of 1,433% (2018: 39%); and
- (d) Average per annum increase in operaƟng expenses of 5% (2018: 16%).
Note 14. Non-current assets - intangibles (cont..)
The discount rate of 15% post-tax reflects management's esƟmate of the Ɵme value of money and the consolidated enƟty's weighted average cost of capital, the risk free rate and the volaƟlity of the share price relaƟve to market movements.
Management believes the projected revenue growth rate is prudent and jusƟfied, based on management's expectaƟons of the company's business development pipeline.
The budgeted gross margin is based on past performance and management's expectaƟons for the future.
Management has budgeted for operaƟng costs based on the current structure of the business, adjusƟng for inflaƟonary increases but not reflecƟng any future restructurings or cost saving measures.
SensiƟvity to change of assumpƟons
If the next year's financial budget used in the value-in-use calculaƟon had been 10% (2018: 10%) lower than management's esƟmates at 30 June 2019, the consolidated enƟty would have a recoverable amount in excess of $5 million (2018: $3.17 million) against the carrying amount of the cash generaƟng unit to which the goodwill relates. If the post-tax discount rate applied to the cash flow projecƟons of this CGU had been 30% (2018: 30%) higher than management's esƟmates (20% instead of 15%) (2018: 20% instead of 15%), the consolidated enƟty would have a recoverable amount in excess of $4.6 million (2018: $2.91 million) against the carrying amount of intangible assets and property, plant and equipment.
AccounƟng policy for intangible assets
Intangible assets acquired as part of a business combinaƟon, other than goodwill, are iniƟally measured at their fair value at the date of the acquisiƟon. Intangible assets acquired separately are iniƟally recognised at cost. Indefinite life intangible assets are not amorƟsed and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amorƟsaƟon and any impairment. The gains or losses recognised in profit or loss arising from the derecogniƟon of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected paƩern of consumpƟon or useful life are accounted for prospecƟvely by changing the amorƟsaƟon method or period.
Goodwill
Goodwill arises on the acquisiƟon of a business. Goodwill is not amorƟsed. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate
that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.
Trade marks and intellectual property
Significant costs associated with trade marks and intellectual property are deferred and amorƟsed on a straight-line basis over the period of their expected benefit, being their finite life of 10 years.
For the year ended 30 June 2019
Note 15. Current liabiliƟes - trade and other payables
| 2019$ | 2018$ | |
|---|---|---|
| Trade payables | 783,397 | 260,079 |
| BAS payable | 52,937 | 67,376 |
| Other payables | 173,195 | 42,824 |
| 1,009,529 | 370,279 |
Refer to note 22 for further informaƟon on financial instruments.
AccounƟng policy for trade and other payables
These amounts represent liabiliƟes for goods and services provided to the consolidated enƟty prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amorƟsed cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recogniƟon.
Note 16. Current liabiliƟes - borrowings
| 2019 | 2018 | |
|---|---|---|
| $ | $ | |
| Lease liability | - | 31,938 |
Refer to note 22 for further informaƟon on financial instruments.
AccounƟng policy for borrowings
Loans and borrowings are iniƟally recognised at the fair value of the consideraƟon received, net of transacƟon costs. They are subsequently measured at amorƟsed cost using the effecƟve interest method.
Where there is an uncondiƟonal right to defer seƩlement of the liability for at least 12 months aŌer the reporƟng date, the loans or borrowings are classified as non-current.
Note 17. Current liabiliƟes - employee benefits
| 2019$ | 2018$ | |
|---|---|---|
| Annual leave | 32,619 | 40,534 |
| Long service leave | 122,657 | 126,713 |
| 155,276 | 167,247 |
AccounƟng policy for employee benefits
Short‐term employee benefits
LiabiliƟes for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be seƩled wholly within 12 months of the reporƟng date are measured at the amounts expected to be paid when the liabiliƟes are seƩled.
Defined contribuƟon superannuaƟon expense
ContribuƟons to defined contribuƟon superannuaƟon plans are expensed in the period in which they are incurred.
Note 18. Non-current liabiliƟes - employee benefits
| 2019$ | 2018$ | |
|---|---|---|
| Long service leave | 2,153 | - |
AccounƟng policy for other long‐term employee benefits
The liability for annual leave and long service leave not expected to be seƩled within 12 months of the reporƟng date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporƟng date using the projected unit credit method. ConsideraƟon is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporƟng date on naƟonal government bonds with terms to maturity and currency that match, as closely as possible, the esƟmated future cash ouƞlows.
Note 19. Equity - issued capital
| 2019 | 2018 | 2019 | 2018 |
|---|---|---|---|
| Shares | Shares | $ | $ |
| 107,263,157 | 569,041,473 | 76,899,789 | 74,118,627 |
Movements in ordinary share capital
| Details | Date | Shares | Issue price | $ |
|---|---|---|---|---|
| Balance | 1 July 2017 | 494,818,673 | 73,673,290 | |
| Share placement | 29 June 2018 | 74,222,800 | $0.006 | 445,337 |
| Balance | 30 June 2018 | 569,041,473 | 74,118,627 | |
| Share placement | 10 August 2018 | 52,443,867 | $0.006 | 314,663 |
| Share placement | 11 August 2018 | 16,666,667 | $0.006 | 100,000 |
| Share consolidaƟon (10 to 1) | 4 December 2018 | (574,336,806) | $0.000 | - |
| Shares issued to Nuoer Chemical Australia Pty Ltd | 12 February 2019 | 1,666,667 | $0.060 | 100,000 |
| Shares issued to employees of Nuoer Chemical | ||||
| Australia Pty Ltd | 12 February 2019 | 5,000,000 | $0.060 | 300,000 |
| Share placement | 12 February 2019 | 1,166,666 | $0.060 | 70,000 |
| EnƟtlements issue | 13 March 2019 | 22,614,624 | $0.060 | 1,266,949 |
| Share placement | 9 April 2019 | 12,999,999 | $0.060 | 780,000 |
| Share issue transacƟon costs | - | $0.000 | (150,450) | |
| Balance | 30 June 2019 | 107,263,157 | 76,899,789 |
For the year ended 30 June 2019
Note 19. Equity - issued capital (cont..)
Ordinary shares
Ordinary shares enƟtle the holder to parƟcipate in dividends and the proceeds on the winding up of the company in proporƟon 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 meeƟng in person or by proxy shall have one vote and upon a poll each share shall have one vote.
Share placement
30 June 2018
The company issued 74,222,800 ordinary shares on 29 June 2018 in terms of a placement to sophisƟcated and professional investors at an issue price of 0.6 cents per share.
30 June 2019
On 10 August 2018 and 11 August 2018, the company completed Tranche 2 of the share placement previously announced on 25 June 2018. Tranche 2 comprised the placement of 69,110,534 shares at an issue price of 0.6 cents per share to raise $414,663. An Extraordinary General MeeƟng of the company was held on 2 August 2018 to approve maƩers relaƟng to both Tranches of the share placement announced on 25 June 2018.
On 12 February 2019, 1,166,666 shares were issued at a price of 6 cents per share.
On 9 April 2019, 12,999,999 shares were issued at a price of 6 cents per share.
Shares issued to the Nuoer Group and nominees of the Nuoer Group On 12 February 2019, 1,666,667 shares were issued to the Nuoer Group at a price of 6 cents per share to acquire the distribuƟon and markeƟng rights for Nuoer Group products in Australia and other Oceanic countries. On the same day, 5,000,000 shares were issued to employees of Nuoer Chemical Australia Pty Ltd at price of 6 cents per share.
EnƟtlements issue
On 15 March 2019, the company issued 22,614,624 shares at a price of 6 cents per share in terms of a 2 for 7 non-renounceable enƟtlements issue.
Share consolidaƟon
On 4 December 2018 the company completed a 10 to 1 consolidaƟon of its issued shares and opƟons.
Capital risk management
The consolidated enƟty's objecƟves when managing capital is to safeguard its ability to conƟnue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an opƟmum capital structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial posiƟon, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated enƟty may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated enƟty would look to raise capital when an opportunity to invest in a business or company was seen as value adding relaƟve to the current company's share price at the Ɵme of the investment. The consolidated enƟty is not acƟvely pursuing addiƟonal investments in the short term as it conƟnues to integrate and grow its exisƟng businesses in order to maximise synergies.
There are no externally imposed capital requirements.
The capital risk management policy remains unchanged from the 2018 Annual Report.
The consolidated enƟty monitors capital on the basis of its working capital posiƟon (i.e. liquidity risk). The net working capital of the consolidated enƟty at 30 June 2019 was $1,684,507 (2018: $964,607).
AccounƟng policy for issued capital Ordinary shares are classified as equity.
Incremental costs directly aƩributable to the issue of new shares or opƟons are shown in equity as a deducƟon, net of tax, from the proceeds.
Note 20. Equity - reserves
| 2019$ | 2018$ | |
|---|---|---|
| Share-based payments reserve | 2,855,902 | 2,855,902 |
| TransacƟons with non-controlling interests | (645,199) | (645,199) |
| 2,210,703 | 2,210,703 | |
Share‐based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneraƟon, and other parƟes as part of their compensaƟon for services.
TransacƟons with non‐controlling interests
A change in ownership interest, without the loss of control, is accounted for as an equity transacƟon, where the difference between the consideraƟon transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity aƩributable to the parent.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
| Balance at 1 July 2017 | Share-based paymentsreserve$ | TransacƟonswith noncontrollinginterests$ | Total$ | |
|---|---|---|---|---|
| 2,814,422 | (645,199) | 2,169,223 | ||
| Share-based payments | 41,480 | - | 41,480 | |
| Balance at 30 June 2018 | 2,855,902 | (645,199) | 2,210,703 | |
| Balance at 30 June 2019 | 2,855,902 | (645,199) | 2,210,703 |
Note 21. Equity - dividends
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Franking Credits
| 2019$ | 2018$ | |
|---|---|---|
| Franking credits available for subsequent financial years based on a tax rate of 27.5% | 82,824 | 82,824 |
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
- franking credits that will arise from the payment of the amount of the provision for income tax at the reporƟng date
- franking debits that will arise from the payment of dividends recognised as a liability at the reporƟng date
- franking credits that will arise from the receipt of dividends recognised as receivables at the reporƟng date.
For the year ended 30 June 2019
Note 22. Financial instruments
Financial risk management objecƟves
The consolidated enƟty's acƟviƟes 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 enƟty's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potenƟal adverse effects on the financial performance of the consolidated enƟty. The consolidated enƟty does not enter into or trade financial instruments, including derivaƟve financial instruments, for speculaƟve purposes.
Risk management is carried out by company management and the Board of Directors. Financial risks are idenƟfied and evaluated and, where considered necessary, strategies are put in place to invesƟgate and/or minimise such risks.
Market risk
Foreign currency risk
Foreign exchange risk arises when future commercial transacƟons and recognised assets and liabiliƟes are denominated in a currency that is not the enƟty's funcƟonal currency. The consolidated enƟty has a trade finance facility uƟlised 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 enƟty has not entered into any foreign currency hedging contracts during the year. The consolidated enƟty is not exposed to any significant foreign currency risk.
Price risk
The consolidated enƟty is not exposed to any significant price risk.
Interest rate risk
The consolidated enƟty's main interest rate risk arises from borrowings. Borrowings obtained at variable rates expose the consolidated enƟty to interest rate risk. Borrowings obtained at fixed rates expose the consolidated enƟty to fair value interest rate risk.
As at the reporƟng date, the consolidated enƟty had the following variable rate borrowings outstanding:
| 2019 | 2018 | |||
|---|---|---|---|---|
| Weightedaverage interest | Weightedaverage interest | |||
| rate | Balance | rate | Balance | |
| % | $ | % | $ | |
| Leases | - | -6.00% | 31,938 | |
| Net exposure to cash flow interest rate risk | - | 31,938 |
An analysis by remaining contractual maturiƟes in shown in 'liquidity and interest rate risk management' below.
2018 - An official increase/decrease in interest rates of 100 basis points would have an adverse/favourable effect on profit before tax of $319 per annum. The percentage change is based on the expected volaƟlity of interest rates using market data and analysts forecasts.
Credit risk
The consolidated enƟty has adopted a lifeƟme expected loss allowance in esƟmaƟng expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representaƟve across all customers of the consolidated enƟty based on recent sales experience, historical collecƟon rates and forward-looking informaƟon that is available.
Generally, trade receivables are wriƩen off when there is no reasonable expectaƟon of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no acƟve enforcement acƟvity and a failure to make contractual payments for a period greater than 1 year.
Note 22. Financial instruments (cont..)
Credit risk (cont..)
Credit risk refers to the risk that a counterparty will default on its contractual obligaƟons resulƟng in financial loss to the consolidated enƟty.There is no significant concentraƟon of credit risk to any single enƟty. The maximum exposure to credit risk at the reporƟng 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 posiƟon and notes to the financial statements. There is no trade debtor or other receivable amount where collateral has been received as security or pledged.
Liquidity risk
Vigilant liquidity risk management requires the consolidated enƟty to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing faciliƟes to be able to pay debts as and when they become due and payable.
The consolidated enƟty manages liquidity risk by maintaining adequate cash reserves and available borrowing faciliƟes by conƟnuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabiliƟes.
Remaining contractual maturiƟes
The following tables detail the consolidated enƟty's remaining contractual maturity for its financial instrument liabiliƟes. The tables have been drawn up based on the undiscounted cash flows of financial liabiliƟes based on the earliest date on which the financial liabiliƟes are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturiƟes and therefore these totals may differ from their carrying amount in the statement of financial posiƟon.
| Weightedaverageinterest rate | 1 year or less | Between 1and 2 years | Between 2and 5 years | Over 5 years | RemainingcontractualmaturiƟes | |
|---|---|---|---|---|---|---|
| - 2019 | % | $ | $ | $ | $ | $ |
| Non‐interest bearing | ||||||
| Trade payables and other payables | - | 1,009,529 | - | - | - | 1,009,529 |
| Total non-derivaƟves | 1,009,529 | - | - | - | 1,009,529 | |
| Weightedaverageinterest rate | 1 year or less | Between 1and 2 years | Between 2and 5 years | Over 5 years | RemainingcontractualmaturiƟes | |
| - 2018 | % | $ | $ | $ | $ | $ |
| Non‐interest bearing | ||||||
| Trade payables and other payables | - | 370,279 | - | - | - | 370,279 |
| Interest‐bearing ‐ variable | ||||||
| Lease liability | 6.00% | 34,911 | - | - | - | 34,911 |
| Total non-derivaƟves | 405,190 | - | - | - | 405,190 |
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
For the year ended 30 June 2019
Note 23. Fair value measurement
Market risk
Fair value hierarchy
The following tables detail the consolidated enƟty's assets and liabiliƟes, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the enƟre fair value measurement, being:
Level 1: Quoted prices (unadjusted) in acƟve markets for idenƟcal assets or liabiliƟes that the enƟty 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
| Level 1 | Level 2 | Level 3 | Total | |
|---|---|---|---|---|
| - 2019 | $ | $ | $ | $ |
| Assets | ||||
| Equity securiƟes | - | 1,500,000 | - | 1,500,000 |
| Equity securiƟes - other | - | 2,900 | - | 2,900 |
| Total assets | - | 1,502,900 | - | 1,502,900 |
| Level 1 | Level 2 | Level 3 | Total | |
| - 2018 | $ | $ | $ | $ |
| Assets | ||||
| ConsideraƟon from disposal of subsidiary | - | 804,000 | - | 804,000 |
| Equity securiƟes | - | 696,000 | - | 696,000 |
| Equity securiƟes - other | - | 2,900 | - | 2,900 |
| Total assets | - | 1,502,900 | - | 1,502,900 |
There were no transfers between levels during the financial year.
ValuaƟon techniques for fair value measurements categorised within level 2 and level 3
The consideraƟon from disposal of subsidiary (2018: $804,000) and the equity securiƟes (2019: $1,500,000; 2018: $696,000) represent the noncash consideraƟon received from the disposal of a subsidiary to an unlisted enƟty. The fair value of these financial assets has been determined using the expected iniƟal public offer (IPO) price the unlisted enƟty is expecƟng when it lists on the Australian SecuriƟes Exchange (ASX).
AccounƟng policy for fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recogniƟon 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 transacƟon between market parƟcipants at the measurement date; and assumes that the transacƟon will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Note 23. Fair value measurement (cont..)
Fair value is measured using the assumpƟons that market parƟcipants 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. ValuaƟon 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 liabiliƟes 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. ClassificaƟons are reviewed at each reporƟng date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal experƟse is either not available or when the valuaƟon is deemed to be significant. External valuers are selected based on market knowledge and reputaƟon. 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 verificaƟon of the major inputs applied in the latest valuaƟon and a comparison, where applicable, with external sources of data.
Note 24. Key management personnel disclosures
CompensaƟon
The aggregate compensaƟon made to directors and other members of key management personnel of the consolidated enƟty is set out below:
| 2019 | 2018 | |
|---|---|---|
| $ | $ | |
| Short-term employee benefits | 699,762 | 458,044 |
| Post-employment benefits | 63,114 | 38,699 |
| Long-term benefits | 5,165 | 31,007 |
| TerminaƟon benefits | 130,000 | - |
| 898,041 | 527,750 |
Note 25. RemuneraƟon of auditors
During the financial year the following fees were paid or payable for services provided by Rothsay Chartered Accountants, the auditor of the company:
| 2019$ | 2018$ | |
|---|---|---|
| Audit services ‐ Rothsay Chartered Accountants | ||
| Audit or review of the financial statements | 37,292 | 49,050 |
| Other services ‐ Rothsay Chartered Accountants | ||
| Tax compliance services | 5,500 | 4,000 |
| 42,792 | 53,050 |
For the year ended 30 June 2019
Note 26. Commitments
| 2019 | 2018 | |
|---|---|---|
| $ | $ | |
| Lease commitments ‐ operaƟng | ||
| CommiƩed at the reporƟng date but not recognised as liabiliƟes, payable: | ||
| Within one year | 110,304 | 53,750 |
| One to five years | 134,011 | - |
| 244,315 | 53,750 | |
| Lease commitments ‐ finance | ||
| CommiƩed at the reporƟng date and recognised as liabiliƟes, payable: | ||
| Within one year | - | 34,911 |
| Total commitment | - | 34,911 |
| Less: Future finance charges | - | (2,973) |
| Net commitment recognised as liabiliƟes | - | 31,938 |
| RepresenƟng: | ||
| Lease liability - current (note 16) | - | 31,938 |
OperaƟng lease commitments includes contracted amounts for various warehouses, offices and plant and equipment under non-cancellable operaƟng leases expiring within 1 - 3 years with, in some cases, opƟons to extend. The leases have various escalaƟon clauses. On renewal, the terms of the leases are renegoƟated.
The motor vehicle related to the finance lease had a wriƩen down value of $34,655 at 30 June 2018 and the lease expired during the 30 June 2019 financial year.
Note 27. Related party transacƟons
Parent enƟty SciDev Limited is the parent enƟty.
Subsidiaries Interests in subsidiaries are set out in note 29.
Key management personnel Disclosures relaƟng to key management personnel are set out in note 24 and the remuneraƟon report included in the directors' report.
Note 27. Related party transacƟons (cont..)
TransacƟons with related parƟes
Details of transacƟons between the consolidated enƟty and related parƟes are disclosed below:
| 2019 | 2018 | |
|---|---|---|
| $ | $ | |
| Sale of goods and services: | ||
| Sale of goods to other related party | 675,446 | - |
| Payment for goods and services: | ||
| Purchase of goods from other related party | 118,050 | - |
| Payment for services from other related party | 360,851 | - |
| Payment for other expenses: | ||
| Interest paid to other related party | 3,539 | - |
| Other transacƟons: | ||
| SubscripƟon for new ordinary shares by key management personnel as result of share placement | 121,301 | - |
| Receivable from and payable to related parƟes | ||
| The following balances are outstanding at the reporƟng date in relaƟon to transacƟons with related parƟes: | ||
| 2019 | 2018 | |
| $ | $ | |
| Current receivables: | ||
| Trade receivables from other related party | 252,307 | - |
Loans to/from related parƟes
There were no loans to or from related parƟes at the current and previous reporƟng date.
Balances and transacƟons between the company and its subsidiaries, which are related parƟes of the company, have been eliminated on consolidaƟon and are not disclosed in this note.
Terms and condiƟons
All transacƟons were made on normal commercial terms and condiƟons and at market rates.
For the year ended 30 June 2019
Note 28. Parent enƟty informaƟon
Set out below is the supplementary informaƟon about the parent enƟty.
Statement of profit or loss and other comprehensive income
| Parents | |
|---|---|
| 2019 | 2018 |
| $ | $ |
| (1,081,461) | 776,764 |
| - | - |
| (1,081,461) | 776,764 |
Statement of financial posiƟon
| Parent | ||
|---|---|---|
| 2019 | 2018 | |
| $ | $ | |
| Total current assets | 1,161,944 | 634,979 |
| Total non-current assets | 5,293,273 | 4,027,795 |
| Total assets | 6,455,217 | 4,662,774 |
| Total current liabiliƟes | 369,778 | 277,963 |
| Total non-current liabiliƟes | 926 | - |
| Total liabiliƟes | 370,704 | 277,963 |
| Net assets | 6,084,513 | 4,384,811 |
| Equity | ||
| Issued capital | 77,206,307 | 74,425,145 |
| Share-based payments reserve | 2,763,894 | 2,763,894 |
| Accumulated losses | (73,885,688) | (72,804,228) |
| Total equity | 6,084,513 | 4,384,811 |
Guarantees entered into by the parent enƟty in relaƟon to the debts of its subsidiaries
The parent enƟty has provided guarantees for the finance lease relaƟng to plant and equipment leased by Science Developments Pty Ltd. The parent enƟty had no other guarantees in relaƟon to the debts of its subsidiaries as at 30 June 2019 and 30 June 2018.
Note 28. Parent enƟty informaƟon (cont..)
ConƟngent liabiliƟes
The parent enƟty had no conƟngent liabiliƟes as at 30 June 2019 and 30 June 2018.
Capital commitments ‐ Property, plant and equipment
The parent enƟty had no capital commitments for property, plant and equipment as at 30 June 2019 and 30 June 2018.
Significant accounƟng policies
The accounƟng policies of the parent enƟty are consistent with those of the consolidated enƟty, as disclosed in note 2, except for the following:
- Investments in subsidiaries are accounted for at cost, less any impairment, in the parent enƟty.
- Dividends received from subsidiaries are recognised as other income by the parent enƟty and its receipt may be an indicator of an impairment of the investment.
Note 29. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabiliƟes and results of the following subsidiaries in accordance with the accounƟng policy described in note 2:
| Ownership interest | ||||
|---|---|---|---|---|
| Principal place of business / | 2019 | 2018 | ||
| Name | Country of incorporaƟon | % | % | |
| Intec Copper Pty Ltd | Australia | 100.00% | 100.00% | |
| Intec Envirometals Pty Ltd | Australia | 100.00% | 100.00% | |
| Science Developments Pty Ltd | Australia | 100.00% | 100.00% | |
| SciDev InternaƟonal Holdings Pty Ltd* | Australia | 100.00% | - | |
| SciDev (US) LCC* | United States | 100.00% | - |
* SciDev (US) LCC is a wholly-owned subsidiary of SciDev InternaƟonal Holdings Pty Ltd and both subsidiaries were incorporated on 8 May 2019
Note 30. Events aŌer the reporƟng period
On 22 July 2019 the company reported its first major sales into the US oil and gas market.
On 23 July 2019 the company's shareholders approved the issue of the following opƟons at a General MeeƟng:
- 2,000,000 opƟons to Mr Lewis E Uƫng Managing Director and Chief ExecuƟve Officer
- 650,000 opƟons to Mr Jon Gourlay Non-execuƟve Director
- 250,000 opƟons Mr Trevor A Jones Non-execuƟve Chairman
- 250,000 opƟons to Ms Simone WaƩ Non-execuƟve Director
The opƟons issued to Mr Lewis Uƫng have an exercise price of 10 cents and the opƟons issued to the other Directors have an exercise price of 12 cents. The opƟons granted to Mr Lewis Uƫng are subject to vesƟng condiƟons. The opƟons granted to the non-execuƟve Directors do not have any vesƟng condiƟons. The opƟons expire on 23 July 2022. These opƟons form part of a broader opƟon issue to the Board and senior execuƟves totalling 5,350,000 opƟons in total; refer to ASX announcement dated 16 August 2019.
For the year ended 30 June 2019
Note 30. Events aŌer the reporƟng period (cont..)
On 30 August 2019 the company announced a major chemical supply and equipment leasing contract with Iluka Resources.
On the 13 September 2019, the company announced the placement of 16,000,0000 new ordinary shares with local insƟtuƟonal and sophisƟcated investors at an issue price of $0.26 per share to raise total proceeds of $4.16 million. The funds from the placement will predominantly be used to increase inventory, conƟnue development of the consolidated enƟty's OpƟFlox and MaxiFlox technology, and increase working capital. The capital raising was completed on 20 September 2019.
No other maƩer or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the consolidated enƟty's operaƟons, the results of those operaƟons, or the consolidated enƟty's state of affairs in future financial years.
Note 31. ReconciliaƟon of profit/(loss) aŌer income tax to net cash used in operaƟng acƟviƟes
| 2019 | 2018 | |
|---|---|---|
| $ | $ | |
| Profit/(loss) aŌer income tax benefit/(expense) for the year | (2,032,527) | 1,001,869 |
| Adjustments for: | ||
| DepreciaƟon and amorƟsaƟon | 212,767 | 194,171 |
| Share-based payments | - | 41,480 |
| Net loss/(gain) on disposal of non-current assets | 27,621 | (1,989,200) |
| Interest received - non-cash | - | (6,250) |
| Other expenses - non-cash | 6,250 | - |
| Change in operaƟng assets and liabiliƟes: | ||
| Increase in trade and other receivables | (334,403) | (137,679) |
| Increase in inventories | (28,141) | (4,345) |
| Increase in prepayments | (20,925) | - |
| Increase in trade and other payables | 639,250 | 11,869 |
| Decrease in deferred tax liabiliƟes | (8,122) | (8,142) |
| Increase/(decrease) in employee benefits | (9,818) | 3,882 |
| Net cash used in operaƟng acƟviƟes | (1,548,048) | (892,345) |
Note 32. Changes in liabiliƟes arising from financing acƟviƟes
| Lease liability | Total | |
|---|---|---|
| $ | $ | |
| Balance at 1 July 2017 | 44,503 | 44,503 |
| Net cash used in financing acƟviƟes | (12,565) | (12,565) |
| Balance at 30 June 2018 | 31,938 | 31,938 |
| Net cash used in financing acƟviƟes | (31,938) | (31,938) |
| Balance at 30 June 2019 | - | - |
Note 33. Earnings per share
| 2019 | 2018 | |
|---|---|---|
| $ | $ | |
| Profit/(loss) aŌer income tax aƩributable to the owners of SciDev Limited | (2,032,527) | 1,001,869 |
| Numbers | Numbers | |
| Weighted average number of ordinary shares used in calculaƟng basic earnings per share | 75,683,979 | 49,522,537 |
| Weighted average number of ordinary shares used in calculaƟng diluted earnings per share | 75,683,979 | 49,522,537 |
| Cents | Cents | |
| Basic earnings per share | (2.69) | 2.02 |
| Diluted earnings per share | (2.69) | 2.02 |
OpƟons are considered to be potenƟal ordinary shares but were anƟ-diluƟve in nature and therefore the diluted loss per share is the same as the basic loss per share. These opƟons could potenƟally dilute basic earnings per share in the future.
The weighted average number of ordinary shares for 2018 has been restated for the effect of the share consolidaƟon (10 to 1) completed in December 2018, in accordance with AASB 133 'Earnings per share'.
AccounƟng policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit aƩributable 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 determinaƟon of basic earnings per share to take into account the aŌer income tax effect of interest and other financing costs associated with diluƟve potenƟal ordinary shares and the weighted average number of shares assumed to have been issued for no consideraƟon in relaƟon to diluƟve potenƟal ordinary shares.
Note 34. Share-based payments
Employee Share Scheme
Share based compensaƟon benefits are provided to employees via the SciDev Employee Share Scheme.
At the 2014 Annual General MeeƟng, shareholders approved the SciDev Employee Share Scheme (the Scheme). All Directors, employees and consultants are eligible to parƟcipate in the Scheme. OpƟons granted under the Scheme to eligible parƟcipants are for no addiƟonal consideraƟon. OpƟons are granted for a five-year period, and vest and are exercisable immediately, unless otherwise stated. OpƟons granted under the Scheme carry no dividend or voƟng rights. The granƟng of opƟons is at the Board's discreƟon and no individual has a contractual right to receive opƟons.
The fair value of opƟons granted under the SciDev Employee Share Scheme is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become uncondiƟonally enƟtled to the opƟons.
For the year ended 30 June 2019
Note 34. Share-based payments (cont..)
The fair value at grant date is determined using share opƟon valuaƟon models that take into account the exercise price, the term of the opƟon, the impact of diluƟon, the share price at grant date, the expected price volaƟlity of the underlying share, the expected dividend yield and the risk free interest rate for the term of the opƟon.
The fair value of the opƟons granted is adjusted to reflect market vesƟng condiƟons, but excludes the impact of any non-market vesƟng condiƟons (for example, profitability and sales growth targets). Non-market vesƟng condiƟons are included in assumpƟons about the number of opƟons that are expected to become exercisable. At each reporƟng date, the enƟty revises its esƟmate of the number of opƟons that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent esƟmate.
On 14 August 2017, the company issued 6.5 million unquoted opƟons to execuƟves and staff (not Directors). The opƟons have an exercise price of $0.025, vested on grant date and expire on 28 November 2019. The value of the opƟons granted was $30,568.
There were no opƟons granted under the scheme during the 2019 financial year.
Other share‐based payments
On 2 February 2017 the company granted 22,500,000 opƟons to the Lead Manager and Underwriter for services rendered in connecƟon with the placement of shares and the share purchase plan. The opƟons have an exercise price of $0.025, vested on grant date and expire on 28 November 2019. The value of the opƟons granted was $160,828.
On 28 December 2017, the company issued 5 million unquoted opƟons to a key service provider (non-Director) for services rendered. The opƟons have an exercise price of $0.025, vested on grant date and expire on 28 November 2019. The value of the opƟons granted was $10,912.
Set out below are summaries of opƟons granted:
2019
| Balance at | Expired/ | Balance at | |||||
|---|---|---|---|---|---|---|---|
| Exercise | the start of | forfeited/ | the end of | ||||
| Grant date | Expiry date | Price* | the year | Granted | Exercised | other* | the year |
| 10/12/2014 | 28/11/2019 | $0.025 | 5,500,000 | - | - | (4,950,000) | 550,000 |
| 02/02/2017 | 28/11/2019 | $0.025 | 22,500,000 | - | - | (20,250,000) | 2,250,000 |
| 14/08/2017 | 28/11/2019 | $0.025 | 6,500,000 | - | - | (5,850,000) | 650,000 |
| 28/12/2017 | 28/11/2019 | $0.025 | 5,000,000 | - | - | (4,500,000) | 500,000 |
| 39,500,000 | - | - | (35,550,000) | 3,950,000 | |||
| Weighted average exercise price | $0.025 | $0.000 | $0.000 | $0.000 | $0.025 |
* Included in expired/forfeited/other is the effect of the 10:1 share/opƟon consolidaƟon that was completed on 4 December 2018. The opƟon exercise price increased as a result of the 1:10 consolidaƟon to $0.25.
Note 34. Share-based payments (cont..)
2018
| Balance at | Expired/ | Balance at | |||||
|---|---|---|---|---|---|---|---|
| Exercise | the start of | forfeited/ | the end of | ||||
| Grant date | Expiry date | price | the year | Granted | Exercised | other | the year |
| 10/12/2014 | 28/11/2019 | $0.025 | 5,500,000 | - | - | - | 5,500,000 |
| 02/02/2017 | 28/11/2019 | $0.025 | 22,500,000 | - | - | - | 22,500,000 |
| 14/08/2017 | 28/11/2019 | $0.025 | - | 6,500,000 | - | - | 6,500,000 |
| 28/12/2017 | 28/11/2019 | $0.025 | - | 5,000,000 | - | - | 5,000,000 |
| 28,000,000 | 11,500,000 | - | - | 39,500,000 | |||
| Weighted average exercise price * | $0.025 | $0.025 | $0.000 | $0.000 | $0.025 |
* The opƟon exercise price increased as a result of the 1:10 consolidaƟon to $0.25.
Set out below are the opƟons exercisable at the end of the financial year:
| 2019 | 2018 | ||
|---|---|---|---|
| Grant date | Expiry date | Number | Number |
| 10/12/2014 | 28/11/2019 | 550,000 | 5,500,000 |
| 02/02/2017 | 28/11/2019 | 2,250,000 | 22,500,000 |
| 14/08/2017 | 28/11/2019 | 650,000 | 6,500,000 |
| 28/12/2017 | 28/11/2019 | 500,000 | 5,000,000 |
| 3,950,000 | 39,500,000 |
The weighted average remaining contractual life of opƟons outstanding at the end of the financial year was 0.41 years (2018: 1.41 years).
The fair value of opƟons granted was measured using the Black-Scholes opƟon pricing model.
AccounƟng policy for share‐based payments
Equity-seƩled and cash-seƩled share-based compensaƟon benefits are provided to employees.
Equity-seƩled transacƟons are awards of shares, or opƟons over shares, that are provided to employees in exchange for the rendering of services. Cash-seƩled transacƟons are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price.
For the year ended 30 June 2019
Note 34. Share-based payments (cont..)
The cost of equity-seƩled transacƟons are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes opƟon pricing model that takes into account the exercise price, the term of the opƟon, the impact of diluƟon, the share price at grant date and expected price volaƟlity of the underlying share, the expected dividend yield and the risk free interest rate for the term of the opƟon, together with non-vesƟng condiƟons that do not determine whether the consolidated enƟty receives the services that enƟtle the employees to receive payment. No account is taken of any other vesƟng condiƟons.
The cost of equity-seƩled transacƟons are recognised as an expense with a corresponding increase in equity over the vesƟng period. The cumulaƟve charge to profit or loss is calculated based on the grant date fair value of the award, the best esƟmate of the number of awards that are likely to vest and the expired porƟon of the vesƟng period. The amount recognised in profit or loss for the period is the cumulaƟve amount calculated at each reporƟng date less amounts already recognised in previous periods.
The cost of cash-seƩled transacƟons is iniƟally, and at each reporƟng date unƟl vested, determined by applying either the Binomial or Black-Scholes opƟon pricing model, taking into consideraƟon the terms and condiƟons on which the award was granted. The cumulaƟve charge to profit or loss unƟl seƩlement of the liability is calculated as follows:
- during the vesƟng period, the liability at each reporƟng date is the fair value of the award at that date mulƟplied by the expired porƟon of the vesƟng period.
- from the end of the vesƟng period unƟl seƩlement of the award, the liability is the full fair value of the liability at the reporƟng date.
All changes in the liability are recognised in profit or loss. The ulƟmate cost of cash-seƩled transacƟons is the cash paid to seƩle the liability.
Market condiƟons are taken into consideraƟon in determining fair value. Therefore any awards subject to market condiƟons are considered to vest irrespecƟve of whether or not that market condiƟon has been met, provided all other condiƟons are saƟsfied.
If equity-seƩled awards are modified, as a minimum an expense is recognised as if the modificaƟon has not been made. An addiƟonal expense is recognised, over the remaining vesƟng period, for any modificaƟon that increases the total fair value of the share-based compensaƟon benefit as at the date of modificaƟon.
If the non-vesƟng condiƟon is within the control of the consolidated enƟty or employee, the failure to saƟsfy the condiƟon is treated as a cancellaƟon. If the condiƟon is not within the control of the consolidated enƟty or employee and is not saƟsfied during the vesƟng period, any remaining expense for the award is recognised over the remaining vesƟng period, unless the award is forfeited.
If equity-seƩled awards are cancelled, it is treated as if it has vested on the date of cancellaƟon, and any remaining expense is recognised immediately. If a new replacement award is subsƟtuted for the cancelled award, the cancelled and new award is treated as if they were a modificaƟon.
Directors' declaraƟon
In the director's opinion
- the aƩached financial statements and notes comply with the CorporaƟons Act 2001, the AccounƟng Standards, the CorporaƟons RegulaƟons 2001 and other mandatory professional reporƟng requirements;
- the aƩached financial statements and notes comply with InternaƟonal Financial ReporƟng Standards as issued by the InternaƟonal AccounƟng Standards Board as described in note 2 to the financial statements;
- the aƩached financial statements and notes give a true and fair view of the consolidated enƟty's financial posiƟon as at 30 June 2019 and of its performance for the financial year ended on that date; and
- there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
The directors have been given the declaraƟons required by secƟon 295A of the CorporaƟons Act 2001.
Signed in accordance with a resoluƟon of directors made pursuant to secƟon 295(5)(a) of the CorporaƟons Act 2001.
On behalf of the directors
___________________________
Lewis E Uƫng Managing Director
27 September2019 Sydney
Independent Auditor's Report
| A Level 1/12 O'Connell StreetSydney NSW 2000 | GPO Box 542Sydney NSW 2001 | P 02 8815 5400F 02 8815 5401 | E [email protected]W www.rothsay.com.au | A |
|---|---|---|---|---|
| ABN 59 087 479 410 | Liability limited by a scheme approved under Professional Standards Legislation | CHARTERED ACCOUNAUSTRALIA - NEW JEALA |
| Key Audit Matter | How our Audit Addressed the Key Audit Matter |
|---|---|
| Impairment of GoodwillThe impairment assessmentmade by management overthe Company's goodwillbalance is a key audit matteras it incorporates significantjudgments in respect offactors such as forecast cashflows, growth rates anddiscount rates as well aseconomic assumptions such asinflation. | Our procedures included:Assessing management's determination of the Group's CGUs based on٠our understanding of the group. We also compared this to the internalreporting of the group to assess how revenue is reported.Evaluating management's cash flow forecast along with the٠assumptions and methodologies used. We also took into considerationthe results of the current year actual results to the prior forecasts toassess management's ability to accurately forecast results.Evaluating the assessment performed by management to ensure the٠methodology appeared reasonable and the assumptions noted in theforecasts were accurately reflected.Reviewing the discounting applied to determine if it was reasonable in٠the current market and reflective of the rate of interest the Groupwould be able to obtain finance if required.Verifying the calculations for mathematical accuracy and considered٠the sensitivity of the calculation by varying the assumptions andapplying other values within a reasonable range. |
| Sale to Tartana ResourcesLtd of Intec Zeehan ResiduesPty LtdThe sale of Intec ZeehanResidues Pty Ltd to TartanaResources Limited (Tartana) isa key audit matter due to thequantum of the transaction,the impact on the group's netasset position and the impacton the group should thetransaction not be finalised. | Our procedures included:Reviewing the terms of the Share Sale Agreement to ensure the٠transaction had been recorded and disclosed in accordance with theterms of the agreement.Understanding the status of the transaction and where milestones have٠not been met, clarifying with management why and what impact it hason the transaction being finalised.Ensuring the elements of the transaction are correctly accounted for٠from both a sale and an acquisition perspective.Agreed the consideration received from the sale to the agreement and٠where already received, to bank records.Assessed the investment for impairment.٠ |
Independent Auditor's Report conƟnued
AddiƟonal ASX InformaƟon
Shareholder InformaƟon
The shareholder informaƟon set out below was applicable as at 21 October 2019.
A. DistribuƟon of equity securiƟes
Analysis of numbers of equity security holders by size of holding
| Class of equity security | |||||
|---|---|---|---|---|---|
| Ordinary shares | |||||
| Number of shareholders | Number of shares | ||||
| 1,000 | 371 | 94,784 | |||
| 1,001 | 5,000 | 220 | 618,734 | ||
| 5,001 | 10,000 | 180 | 1,481,975 | ||
| 10,001 | - | 100,000 | 392 | 14,087,108 | |
| 100,001 | and over | 146 | 109,530,556 | ||
| 1,309 | 125,813,157 |
B. SubstanƟal holders
SubstanƟal shareholders as at 21 October 2019 are listed below:
| Jianfeng Zhang and Yangmei hang | 6.81% |
|---|---|
| Perennial Value Management Limited | 5.25% |
Equity security holders
The names of the twenty largest holders of quoted equity securiƟes as at 21 October 2018 are listed below:
| Ordinary shares | Percentage of | |
|---|---|---|
| Name | Number held | issued shares |
| NaƟonal Nominees Limited | 6,483,112 | 5.153% |
| Jianfeng Zhang & Yangmei Zheng | 6,428,572 | 5.110% |
| Kanins Australia Pty Ltd | 5,000,000 | 3.974% |
| Mr Lewis Uƫng & Ms Helena Lehos | 4,500,000 | 3.577% |
| CS Fourth Nominees Pty Limited <hsbc 11="" a="" au="" c="" cust="" ltd="" nom=""> | 4,224,030 | 3.357% |
| Mr Kieran Gregory Rodgers Po Box R750 | 3,059,477 | 2.432% |
| J P Morgan Nominees Australia Pty Limited | 2,950,729 | 2.345% |
| Brispot Nominees Pty Ltd | 2,469,107 | 1.963% |
| Merrill Lynch (Australia) Nominees Pty Limited | 2,461,459 | 1.956% |
| CS Third Nominees Pty Limited <hsbc 13="" a="" au="" c="" cust="" ltd="" nom=""> | 2,302,289 | 1.830% |
| Puntero Pty Ltd | 2,301,667 | 1.829% |
| Natjad & Associated Pty Ltd <cc &="" a="" c="" fund="" super=""> | 2,262,414 | 1.798% |
| Taycol Nominees Pty Ltd <211 A/C> | 2,250,000 | 1.788% |
| Nuoer Chemical Australia Pty Ltd | 2,142,858 | 1.703% |
| Mr Alan Conigrave | 2,100,000 | 1.669% |
| CiƟcorp Nominees Pty Limited | 2,030,396 | 1.614% |
| Mr Kieran Gregory Rodgers & Mrs Patricia Marie Rodgers | 2,006,467 | 1.595% |
| HSBC Custody Nominees (Australia) Limited | 1,713,797 | 1.362% |
| GP SecuriƟes Pty Ltd | 1,575,000 | 1.252% |
| Australian Executor Trustees Limited | 1,557,273 | 1.238% |
| Total Securities of Top 20 Holdings | 59,818,647 | 47.546% |
| Total Ordinary Shares on Issue | 125,813,157 | 100.00% |
C. VoƟng rights
The voƟng rights aƩaching to each class of equity securiƟes are set out below:
(a) Ordinary shares
On a show of hands every member present at a meeƟng in person or by proxy shall have one vote and upon a poll each share shall have one vote.
(b) OpƟons No voƟng rights.
D. Summary of opƟons issued
| No. ofOpƟons | No. ofHolders | % OpƟonsIssued |
|---|---|---|
| 1,400,000 | 7 | |
| 35.7% | ||
| 300,000 | 21.4% | |
| % OpƟons | ||
| OpƟons | Holders | Issued |
| 500,000No. of | No. of |
| OpƟons expiring 23 July 2022 with an exercise price of $0.10 | 2,000,000 | 1 | |
|---|---|---|---|
| OpƟon holders with more than 20% of above classLewis Uƫng | 2,000,000 | 100% | |
| No. of | No. of | % OpƟons | |
| OpƟons | Holders | Issued | |
| OpƟons expiring 23 July 2022 with an exercise price of $0.12 | 3,350,000 | 12 |
OpƟon holders with more than 20% of above class NIL
Company Directory
| Directors | Trevor A Jones - Chairman |
|---|---|
| Lewis E Uƫng - Managing Director | |
| Simone WaƩ - Non-execuƟve Director | |
| Jon Gourlay - Non-execuƟve Director | |
| Company secretary | Heath L Roberts |
| NoƟce of annual general meeƟng | The details of the 2019 annual general meeƟng of SciDev Limited are: |
| Northside Conference Centre | |
| The Boardroom | |
| Corner of Oxley St and Pole Lane | |
| Crows Nest NSW 2065 | |
| 11am on Thursday, 28 November 2019 | |
| 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 RoadKings Park | |
| NSW 2148 | |
| Phone: (02) 9622 5185 | |
| Share register | Boardroom Pty Limited |
| Level 12 | |
| 225 George Street, SydneyNSW 2000 | |
| Phone: 1300 737 760 | |
| Auditor | Rothsay Chartered Accountants |
| Level | |
| 12 O'Connell Street | |
| SydneyNSW 2000 | |
| Stock exchange lisƟng | SciDev Limited shares are listed on the Australian SecuriƟes Exchange (ASX code: SDV), the Deutsche |
| Boerse (Code: INF) and as American Depository Receipts on the OTCMarkets (Code: ICLJY) | |
| Website | www.scidev.com.au |
| Corporate governance statement | www.scidev.com.au/corporate-governance |
