Hydrocarbon Dynamics : Full Year Statutory Accounts

(ABN 75 117 387 354)

ANNUAL REPORT FOR THE YEAR

ENDED 31 DECEMBER 2021

TABLE OF CONTENTS

Director's Report ……………………................................................................................................... 3

Auditor's Independence Declaration ……………………........................................................................ 18

Consolidated Statement of Profit or Loss and Other Comprehensive Income ……………………… .…… 19

Consolidated Statement of Financial Position ………………............................................................... 20

Consolidated Statement of Changes in Equity ………………............................................................... 21

Consolidated Statement of Cash Flows ……………….......................................................................... 22

Notes to the Financial Statements ………………................................................................................. 23

Director's Declaration ………………................................... ……… ......................................................... 54

Independent Auditor's Report ………………....................................................................................... 55

Shareholder Information ………………................................................................................................ 59

Corporate Directory ………………....................................................................................................... 61

DIRECTORS' REPORT

In accordance with a resolution of directors, the directors present their report together with the Annual Report of Hydrocarbon Dynamics Limited (HCD) and its wholly owned subsidiaries (together referred to as the 'Group') for the financial year ended 31 December 2021 and the Independent Audit Report thereon. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

1. INFORMATION ON DIRECTORS

The directors of HCD at any time during or since the end of the financial year were:

(a) STEPHEN MITCHELL

Non-Executive Director (appointed 12 January 2016)

Special responsibilities:

Non-Executive Chairman

Experience:

Stephen has a Masters Degree in International Economics and Foreign Policy from Johns Hopkins University in Washington DC. following which he spent 12 years as a natural resources specialist at investment banks and advisory firms in the US and Australia. From 1999-2011 Stephen was the Managing Director of Molopo Energy Ltd, an ASX-listed oil and gas Company that held assets in Australia, Canada, USA, China, India and South Africa. Under his stewardship, Molopo generated a 10 fold increase in shareholder value and expanded its market capitalisation from less than $1 million into an ASX 200 company.

Directorships held in other listed entities in the last three years: None

(b) RAY SHORROCKS

Non-Executive Director (appointed 12 January 2016)

Special responsibilities:

Chairman of the Remuneration and Nomination Committee Member of the Audit Committee

Experience:

Mr Shorrocks has more than 22 years' experience in corporate finance and has advised a diverse range of mining and resource companies during his career at Patersons Securities Limited, one of Australia's largest full-service stockbroking and financial services firms. He has been instrumental in managing and structuring equity capital raisings as well as having advised extensively in the area of mergers and acquisitions.

Directorships held in other listed entities in the last three years:

He also holds, or has held, directorships in the following ASX listed companies in the last three years:

•  Alicanto Minerals (appointed 7 August 2020)

•  Auteco Minerals (appointed 28 January 2020)

•  Galilee Energy Limited (appointed 2 December 2013).

•  Bellevue Gold Limited (resigned 9 September 2019); and

•  Estrella Resources Limited (resigned 1 February 2019).

(c) ANDREW SEATON

Non-Executive Director (appointed 16 August 2019)

Special Responsibilities:

Chairman of Audit Committee

Member of the Remuneration and Nomination Committee

Experience:

Andrew is an experienced energy executive with a background in finance, project management and investment banking. Andrew was a senior executive with Santos Limited for twelve years, the last six of which he served as Chief Financial Officer. Prior to joining Santos, Andrew worked in investment banking with Merrill Lynch in Melbourne and New York. His early career included 10 years as a process engineer and project manager across a range of upstream oil and gas projects and operating plants. Andrew has an Honours Degree in Chemical Engineering and a Graduate Diploma in Business Administration.

Directorships held in other listed entities in the last three years:

He also holds, or has held, directorships in the following ASX listed companies in the last three years:

•  Strike Energy Limited (appointed 18 August 2017).

•  Rex Minerals Limited (appointed 1 December 2021)

(d) ALLAN RITCHIE

Non-Executive Director (appointed 6 April 2017, resigned 26 May 2021)

Special responsibilities:

Member of the Audit Committee

Experience:

Allan has served as a director of several private and public listed companies and is a principal of his own firm where he focuses on asset acquisitions and off-take arrangements in the energy, resources and infrastructure space. Allan is an investment banking professional with a career spanning 30 years of origination and structuring. He held senior positions at Westpac, ANZ Bank, HSBC and BNP Paribas in London, New York and Asia Pacific. He engages with the chief executives of major corporations and state-owned enterprises spanning the global resources, energy and infrastructure sectors. He was previously voted number one in the BRW Magazine poll of Financial Markets, bankers in Australia.

Allan graduated from the University of Technology Sydney with a Bachelor of Business and has a post graduate Diploma in Applied Finance from FINSIA.

Directorships held in other listed entities in the last three years:

He also holds, or has held, directorships in the following ASX listed companies in the last three years:

•  Adavale Resources Limited (resigned 10 December 2019).

(e) NICK CASTELLANO

Executive Director (appointed 6 April 2017)

Special responsibilities:

Member of the Remuneration and Nomination Committee Chairman of the Technical Advisory Board

Experience:

Nick is a Hydrocarbon Dynamics founder and is the inventor of the HCD Multi-Flow® technology. Nick spent a decade in the nuclear power program of the United States Navy, ultimately becoming the leading chief of the reactor laboratory division of the nuclear powered aircraft carrier the Dwight D. Eisenhower, where he assumed responsibilities for chemistries in the reactor plants. After leaving, Nick developed cutting edge chemistry and patented processes in the industrial water and oil industries. In the industrial water industry Nick founded an industrial water treatment company with clients such as Pepsi Cola, Coca Cola and United Dairymen. In the oil industry Nick focused on oil well chemistry, developing and founding the technology of HCD. Nick has a Bachelor of Science Degree in Biochemistry, a Masters Degree in Biochemistry and completed his MA PHD at Canterbury University.

Directorships held in other listed entities in the last three years:

None.

2. COMPANY SECRETARY

Ms Julie Edwards was appointed Company Secretary on 1 July 2016 and continues in office at the date of this report.

Julie holds a Bachelor of Commerce degree, is a member of CPA Australia and holds a Public Practice Certificate. Ms Edwards is a director and manager of Lowell Accounting Services and also provides company secretarial services for a number of other ASX listed companies and unlisted companies.

3. DIRECTORS' MEETINGS

The number of meetings of the Board and of each Board Committee held during the year (while each Director was a Director or committee member) and the number of meetings attended by each director are set out below:

Board Of Directors	Audit Committee	Remuneration & Nomination Committee
Held	Attended	Held	Attended	Held	Attended
Stephen Mitchell	12	12	-	-	-	-
Nicholas Castellano	12	12	-	-	-	-
Ray Shorrocks	12	10	2	2	-	-
Allan Ritchie	5	3	1	-	-	-
Andrew Seaton	12	11	2	2	-	-

This disclosure is made in accordance with s.300(10)(c) of the Corporations Act 2001.