Thank you very much, Adrian, and thanks to everyone for taking the time to join us this morning. To open, I just wanted to state that FY 2025 is a pivotal year for SciDev . At first glance, the financial results are largely in line with what we delivered in FY 2024, but it's important to call out the significant strategic advancements that we've made throughout the year and also the strategic investments that we've made to accelerate future growth. Over the coming slides, we'll walk through a lot of the detail around the financials, do a bit of a deep dive there, and provide some of the narrative that sits behind the numbers.
We're also going to unpack some of those strategic wins, focus on the areas that we've invested in and we've reinvested returns in for our future growth, and also talk to how, with both of them tied together, we're in a great position to be able to deliver meaningful growth into FY 2026 and beyond. To start, we'll just kick into the sort of the what and the why around SciDev . As always, our purpose is to deliver innovative solutions that solve the industry's most complex water problems. We're split into two operational business segments: chemical services and water technologies. Both of them provide a wide range of innovative technologies and solutions to a range of end markets and now very much a global footprint. I think it's important to do just a quick refresh on strategy.
As ever, we are acutely focused on achieving our winning aspiration of building a diversified, globally significant portfolio of industry-leading water businesses. What sits below that tier, that's the first cube seen on the top of that pyramid. What sits below that tier is our global market focuses, and that gives us the guardrails within which the portfolio is going to be operated from a market sense. Each one of these areas has got regulatory tailwinds, has got growing addressable markets, but importantly, has a need for tech-driven solutions for the clients that operate within those markets. Beneath that, it talks to our operating model, and this is the framework within which it is going to facilitate us achieving our strategy.
It talks to the owner mindset that we foster within the business, having appropriate governance, delineation of business units, and ensuring that we remain scalable and agile as we continue to grow and scale. The last piece is our core competencies and capabilities, and really, they're the foundation for this strategic pyramid, and they're the tools that we're going to need to be able to achieve this strategy. Talking everything from tech and R&D focused, ensuring that we maintain ourselves at the coal face through to disciplined capital management, operational excellence, and M&A to supplement our organic growth ambitions also. To the left of the screen, we've just called out a number of our strategic focus areas for FY 2026.
Market share growth right up there, front and center, and that's about developing and converting a high-quality pipeline, continued margin expansion, and continuing on that journey of pivoting away from commodity low-margin products and services through to higher margin proprietary products. Operating leverage, and that's driving earnings growth by maximizing the utilization of our existing infrastructure and assets while maintaining a very disciplined cost base, which we can leverage as we layer revenue on top of that. Tech and innovation are very much a core to who we are as a business and also to our strategy, maintaining that technical edge and that superiority from a competitive perspective. When we run into the 2025 highlights, I'm not going to talk in too much detail about this because Anna will cover it in the common slides, but revenue of $103 million was down slightly on FY 2024.
Throughout the year, we saw that impacted by a softer Q2 from some seasonality there, but largely, the story that sits beneath that is around that conversion away from higher value, lower margin contracts through to more proprietary chemistry. We've also seen some unfavorable phasing in the terms of the execution of some mining and water contracts throughout the year, but that really takes away from our FY 2025 results, but certainly shores up our FY 2025 results, shores up our FY 2026 pipeline. EBITDA $7.1 million, down on prior year, but would certainly be up on prior year if we built into it or if we didn't strategically reinvest earnings back into accelerating growth across the business.
More positively, gross margin of 28%, again, talks to that strategic shift over to higher margin projects, and we finished the year from a cash perspective in a better position than when we started it, maintaining positive operating cash flow throughout the year. We've got our $10 million working capital facility there to support our ongoing organic growth ambitions. From an operational perspective, as I said before, we made some really significant strategic advancements across the board and across each one of our business units. We extended our operational footprint across our core markets, strengthening our presence, and that's largely in terms of strengthening our sales presence, our market-facing presence in North America, Asia-Pacific, and Europe. Within the oil field, after a focused push into the Permian , we converted our first material contract in that space, which would generate $10 million throughout the year.
Also, very pleasingly, we saw CapEx sales increase 46% throughout the year. Again, another sort of core component of our energy services strategy was to focus on the growth of CapEx sales. We had some milestone wins in PFAS treatment in Europe and North America, securing our first commercial contracts, one being with the U.S. Department of Defense, our primary target client for the U.S. market. More broadly, we continued to develop a strong pipeline across each one of our business units, and that talks back to that strategic focus of expanding our market share across the business. We reinvested heavily in the business this year, strategically looking to increase our business development capability, focused largely on international expansion and positioning the business to deliver growth not only into FY 2026, but in the years to come.
We strengthened our board throughout the year to support that next phase of strategic growth for us. That's an initial sort of high-level snapshot. I'm going to hand over to the CFO, Anna Hooper, now to talk through some of the finances in some greater detail, and then afterwards, I'll pick up a bit of a segment breakdown prior to running into outlook. Anna, over to you.
Okay, focusing first on earnings year-on-year. SciDev delivered solid financial performance in FY 2025, as Seán's just talked about, reinvesting profits into initiatives to drive growth into 2026 and beyond. From a revenue perspective, revenue contracted 5% compared to FY 2024. Revenue from chemical services was largely flat, and from water technologies, it contracted 26%. Pleasingly, the gross margin for the group improved by 2% compared to 2024, and we're now at 28% gross margin, and that reflects this continued transition to proprietary products that command higher margin than commodity chemistries. Moving on to underlying EBITDA, underlying EBITDA performance for the year was $7.1 million, which is 19% lower than in FY 2024, but includes cost of growth significance, growth initiatives that we embarked upon and continued with across all of our business units.
Operating cash flow was positive at $2.9 million for the year, and included within the operating cash flow is $3 million of U.S. tax payments, which included a catch-up from FY 2024 of $0.7 million. Whilst it should be noted that Australia continues to have significant unutilized tax losses, the U.S. has been in a tax-paying position for the last two financial years. Previous to that, we were also utilizing losses. Moving on to the statutory EBITDA, statutory EBITDA is $6.2 million, and that's after the inclusion of $900,000 of costs that relate to an unsuccessful acquisition that we embarked upon in FY 2024, and the costs were incurred in FY 2024 will be paid for cash removed in FY 2026. We recorded a tax loss or a net loss after tax of $900,000 in FY 2025.
That was after depreciation, which was flat year-on-year at $4.2 million and interest and finance costs at $500,000 million. What should be noted in there is that the tax expense in FY 2025 was $2.3 million, and that's some $400,000 million higher than in FY 2024, and that reflects higher taxable income in the U.S. in 2025 than 2024. Next slide, Seán. From an operating cash flow, it was positive in FY 2025 at $2.9 million. It's a key focus for management, and we metric EBITDA cash conversion. We achieved 90% cash conversion in both 2025 and also in 2024, and the team's very focused on the importance of working capital management.
As of June 2025, we had a significant increase in the amounts outstanding from customers as we've increased our debt to a period, particularly in the oil field, but that's been largely offset by amounts payable to suppliers by extending supplier terms. Our inventory was flat year-on-year at about $7.4 million. I think we talked about this previously, but tax paid this year was $3 million. That compares to only $1.1 million last year. In part, that's higher tax expense this year, but also we paid $700,000 of tax related to FY 2024 in 2025. That was delayed due to tax and hurricane relief provisions, which were in place in the latter half of FY 2024.
Within our investing cash flows is the acquisition of 25 new ISOs for use in the energy services business, and overall, our PPE has remained stable year-on-year at about $11 million net, with CapEx being offset and new leases being offset by depreciation. Within financing activities, the company paid the final consideration of $3.2 million relating to the 2021 acquisition of Holden Industries, and this was funded by a non-revolving credit facility from Westpac. The total debt outstanding to Westpac is $3.5 million as of 30 June, and the closing cash in the business is $9.7 million. Seán, back to you.
Thank you very much, Anna. I'm just going to run through some brief segment performance, calling out some of the particular highlights from each segment and talking to the investment that's been made throughout the last 12 months and finishing on some outlook. As Anna mentioned, in chemical services, we had largely flat line revenue, but from a highlights perspective, a lot of these have been called out before, but we saw that increase in CapEx sales of 46% year-on-year, again, a key cornerstone of the energy services strategy. We saw the growth of our customer footprint in U.S. oil and gas. We reduced our customer concentration. It's been especially of late, a slightly more challenging environment in there in what we've been able in U.S. oil and gas, and we've been able to demonstrate our ability to grow our customer footprint when you work within that challenging market conditions.
We spoke about before that real milestone contract within the Permian Basin expected to generate $10 million of revenue in FY 2026. This is a perfect example of how investment in the business has been able to generate short-term returns for us. We had been unsuccessful in trying to penetrate the Permian Basin in previous years. We invested in growing our sales team, put our boots on the ground to target the region, and by the end of the calendar year, after a period of some field trialing, we were able to secure that first material contract, which is great to see. That's the trend that we hope to see not only across our energy services business, but throughout the rest of the business where we have invested in increasing that sales team.
In the mining, construction, and infrastructure, we saw a number of multi-year Maxiflos contracts secured within the period, despite having a number of contracts delayed throughout the year. As I spoke to before, that shores up those contracts are still yet to be executed, and once secured, would certainly continue to shore up our FY 2026 revenue. From an investment perspective, I spoke before, it's been largely about increasing our sales force, focused on the growth into new markets, into new basins, into new regions, both within our energy services division, but also more broadly in the Americas to target the mining market, focused largely on Central America and Canada at the moment. From a CapEx perspective, Anna spoke about we increased our fleet of ISOs in the energy services business to strengthen that onsite delivery and that last mile delivery component of what we provide.
From an outlook perspective, there are potentially some near-term headwinds that we need to be prepared for. Lower oil prices are creating some schedule gaps for some EMP clients, including some of our clients. We have demonstrated in the past, as I mentioned, that we can increase market share and bring on new business within a receiving market, but that is certainly a market dynamic that we need to be very conscious of. In the medium term, there is some material opportunity for us in U.S. shale gas production as it begins to ramp up over the next sort of 12, 18, 24 months as new delivery infrastructure comes online.
We're already seeing some slight uplift in market activity within the Haynesville Shale, and we are going to be targeting BD and sales efforts in that region to try and get some early wins and early runs on the board in anticipation of that market uplift and that increased demand. In process chemistry, very much focused on conversion and the growth of our existing pipeline. Our water technologies division delivered revenue 26% down on FY 2024, and again, largely impacted by some delayed contract execution within the business. We also saw two challenging projects within the term that both impacted the EBITDA contribution of the business and also the business segment and also the revenue contribution. They are now both in the rearview mirror, and we have certainly put those projects to bed.
We've taken those lessons learned, and they will certainly not be impacting our FY 2026 performance on a go-forward basis. From a highlight perspective, we had some great domestic wins, a $5.6 million water treatment plant for a New South Wales infrastructure project and a $2.5 million fluorophilic project for the remediation of the former Memorial Paris Station, both of which, again, sort of key significant contract wins within the domestic market. As we spoke already, some of the real milestone wins were the first initial wins in the U.K. and Sweden and the first initial wins in the U.S. with the Department of Defense. They are so significant to us because over the last sort of 18 to 24 months of trying to develop those markets, the headwinds that we've had have been based around the fact that we haven't had in-region operations.
We haven't validated the technology within the region either in terms of having demonstrated experience, and we didn't have the local reference sites to be able to provide new customers. Both of these advancements in each market deal with those head-on and put us in a great position now moving into FY 2026. From an investment perspective, I was focused on the continued development of the European and North American PFAS markets. That's, again, sales, personnel, and also the technical personnel that need to support that, it being a very technical sale. Domestically, we made some key hires in design, engineering, and contract management to really bolster up that team. This was in response to some of those challenging projects. We now have the team strengthened and the processes in place to strengthen that project execution and ensure that similar issues don't impact us looking forward.
Our fluorophilics and Regenexx was independently verified within the U.S., looking at both performance and also the long-term project lifecycle cost advantages. That third-party validation is not something that we've needed to develop the European market or the domestic market, but has been a key requirement we have found in really penetrating that North American market. That's, again, a body of work that has been done, is a once-off, and will certainly aid us in securing new contracts in FY 2026. Outlook domestically, we're looking for return to profitability. We've got a high level of conviction that the business can certainly deliver on that based on the pipeline that we have. We're looking to commence those delayed contracts through FY 2026, but also in the new rigor and process and structure that we've built into the team from a delivery perspective.
In Europe and North America, it's going to be continued development, continued conversion of opportunities, and really focusing on winning and delivering larger projects. With Europe in particular, given the amount of traction that is building in that market, our expectations from that business in FY 2026 is to achieve EBITDA break even. More broadly, from an outlook perspective, you're going to see a lot of repeatability in terms of the areas of focus for us looking forward. Right. I think broadly, as a theme, it's going to be delivering strong returns from that strategic investment that we've made in FY 2025 and leveraging that strategic advancement that's been made over the last 12 months as well. Key focus on pipeline conversion. We know we've got deep and robust pipelines and a strong backlog across our domestic and international markets.
We're going to leverage the pain of those delayed opportunities in FY 2025 to, again, feed a successful FY 2026. We'll continue on our shift towards higher margin proprietary chemistries and solutions and move away from the high revenue, low margin commodity sales. A big focus on profitability and improving profitability both through that operating leverage piece as we spoke about before, but also seeing our water technologies business return to EBITDA profit, continued focus on international growth, and really looking to that medium-term upside. How do we position ourselves in the U.S. oil and gas market to be able to capitalize off of that increase in U.S. shale production that is coming in the next sort of 12- 18 months? Adrian, that is all from the presentation at this stage. I think now is a good time to hand back over to you for Q&A. Thank you.
Thank you, Seán. Just a reminder for those that want to ask a question, at the bottom of your screen, the Q&A section, we can work through each of them in turn. Seán, lots on the call, not surprisingly, and lots of questions as well. Let me kick off with the first one here. What are the major growth drivers over the next few years, and can you add some more details on potential acquisitions you may have explored as well?
Certainly can. From a growth driver perspective, because we are operating with this sort of diversified portfolio of businesses, we have a range of different sort of opportunities and potential catalysts for growth. I think in the oil field, we've spoken about it. We've got big opportunity in the U.S. shale gas play. From a water tech perspective, it's really the growing global PFAS market, and I think what's going to drive that growth is the fact that we have sort of laid the groundwork and the foundations both domestically and internationally. We now have runs on the board that we can leverage to continue to grow on that front. We're continuing to see a positive trend in international mining, both domestic and international mining, where there's a growing need for solutions and chemistries that can improve their water efficiency.
I think within that bag, it's really hard to call out one in particular that's going to drive growth over the next 12 months, but I think we're in a very favorable position that we have a number of different growth avenues. From an M&A perspective, we've been quite vocal in the market in that a lot of our M&A effort is likely to be focused on increasing our operational capacity within the European and North American water technology space. We've done a great job of building brand awareness and getting those initial contract wins, but eventually, we're going to be at a point where to truly capitalize off of the extent of the opportunity, we're going to need increased operational capability. That is not today, but we've certainly been looking down those avenues.
Anna spoke to the cost associated with a transaction that we didn't progress with, and while I can't provide too much detail around that, that was a very creative acquisition, water tech focused within the European market. It was one that we really saw a lot of value in and one that we progressed through the financial DD stage. Ultimately, from a financing perspective, with the backdrop of a weakening share price, it got to the point where to proceed with the transaction would be too diluted for existing shareholders. We backed out of the transaction as it was no longer in the best interest of the business or our shareholders at that. I think that's a good point to sort of call out the discipline that the business has from a capital management, a capital allocation perspective, the discipline that we bring into M&A and our M&A strategy. Looking forward in the next 12 months, I think we'll continue to look at opportunities as they present themselves, and it's certainly a key part of our growth strategy looking forward.
Thanks, Seán. Some pretty important messages in that. A quick question for you, Anna. I know you spoke about it a couple of times when you went through the financials, just a question with respect to the tax and just the profile of tax over recent years and this most recent year as well. If you could just talk to that, please.
Yeah, okay. It's probably important that we don't only pay tax in the U.S., so on U.S. taxable income, we don't pay tax in Australia and won't for some time. We had tax losses that were basically being unwound into FY 2022, 2023 and only started paying tax in FY 2024. The tax expense is higher in FY 2025 than it was in FY 2024, and I guess the reasons that it's relevant or sort of focused in on it is that it impacts the reconciliation from EBIT to NPAT quite significantly and also has an impact on operating cash flow.
Thanks, Anna. Back to you, Seán, you spoke about the number of people, boots on the ground specifically. The question here is about how many new salespeople have you added and where are they based?
Oh, it's yeah, great question. That's been spread across each one of the business units in each one of the regions. We've now added two heads in the sort of 2.5 heads in the energy services business. We've increased our team in both North American and European water technologies by one head each, and we've also added another two bodies into our international mining team as well, so sort of six in total. We've also invested in growing out the marketing team that sits behind that and provides them with the assets to go and sell as well. That's in the region of seven FTEs.
Thanks, Seán. Now, just to catch up, good question here. With the growth in CatChek, who are you displacing, and is it largely yourself?
It's not largely ourselves. What we're displacing is traditional surfactants that are being added into the frac chemistry blend. I think when we think about CatChek, it is, and I've used this phrase, we are largely peerless in the space in terms of the fact that it provides, it's a multi-benefit additive both on the frac cycle, but also provides significant production benefits as well. Although there are traditional surfactants that sort of aid in frac efficiency, from a more broader benefit perspective, we are quite peerless in the market. Really, the key to this success is just incremental sales. It's getting more data points, it's getting more runs on the board, it's increasing the brand awareness, and as we continue to provide with these blue chip EMP companies, the phone is ringing more and more because it's a very vocal industry. It's a small industry.
Everyone wants to know what Devon are running in their operations, and when we talk about the growth plan for CatChek, I think we can continue to expect incremental sales and incremental build of that sales pipeline until we get to a real inflection point where that growth becomes exponential.
Thanks, Seán. Next one, I think you spoke quite a lot about the reinvestment that's been going on across the business, but question simply, why aren't you dropping more to the bottom line in your water treatment business? The segment numbers show not much EBITDA.
Yeah, so, I mean, there's a number of things at play there. I think domestically, certainly, the business was impacted by two underperforming projects, one on the design and construct side and one on the build and operate side. There's a range of challenges in there, some of it on design. We were entering into, I suppose, a more rigorous design environment, having to meet more stringent design criteria that did cause a significant amount of rework that we had to perform at our own cost. On the build and operate side, it was more on contract management at a project management level. Domestically, that has certainly had a negative impact on the year. We have rectified that. We have changed the structure of that team.
We've brought in the necessary skills and experience that we need to ensure that we can continue to grow in those areas, take on those more challenging projects and those tighter contracts, and be able to deliver. We certainly expect to see profitability from our domestic water technologies business in FY 2026. As I mentioned a number of times, return to profitability is a core focus from that business. Elsewhere, we've also invested in that international expansion piece, and that's obviously a key investment as well. They're largely the two components with regard to the water tech segments.
Thanks, Seán. This question goes to the U.S. Department of Defense, which you spoke about in your presentation. How's the trial going and what is the planned finish date? If they're happy with how things go with the trial, do you think it will lead to a U.S. Department of Defense-wide contract, or is it just for a small part of the department?
At the moment, it is servicing five individual defense bases across Texas and Oklahoma, and what we're calling that is the milk run in that it's small volumes of highly contaminated PFAS waste that are being generated on these operations. We've been constructing a mobile unit that will be able to be taken around these sites and treat these low volumes of water. The project is yet to really kick off and gain huge traction. We've just completed the build of the mobile system. We have the first milk run planned for October. I think the beauty of that contract for us is it gives us dots on the map from a U.S. Department of Defense perspective and a PFAS treatment perspective. We're able to demonstrate that we've been on site on multiple bases and that we've been able to successfully treat PFAS across multiple bases as well.
Real validation of the technology and our operational capability with the U.S. Department of Defense. If it is successful, there's already conversations about extending that from five bases to seven and then potentially to 10 after that. For us, it's about having those reference points and then when we start to bid for larger U.S. Department of Defense contracts that we have those runs on the board and those reference points to be able to point to.
Thanks, Seán. Sounds very perspective. Just on question with Nua, the JV, how is the Nua distribution agreement benefiting the business, and what are the early positive indicators?
The distribution agreement has two essential pieces. One is that Nua is our manufacturing partner that supplies our domestic business. The benefits that we're getting through that agreement are high-quality product and our ability to fine-tune the specs that we require. Once we're on site and we want to, whether it's tweak the molecular weight or the charge associated with the chemistry that we're provided, to be able to have a bespoke product for an individual application, Nua has been able to rapidly get that into full-scale production for us and get it out to site quickly. We've got an agility that Nua provides, a quality that they provide, and also scale in that they are the second largest producer of polyacrylamide chemistry on the planet. Through the joint venture, we've had some early wins, which is a 50/50 joint venture with Nua, Damsol, and Singapore.
We've had some early revenues and very small scale over the last year, and that joint venture is focused on tackling more price-sensitive large-scale contracts on a global basis. We're developing that pipeline. We have both our staff and Nua staff focused on identifying opportunities and pursuing them. We've had some trials both on the lab and on-plant trials now scheduled into FY 2026. I think certainly a positive outlook with regard to the Nua joint venture.
Thanks, Seán. Next one, given the larger investments for growth in FY 2026, how do you see CapEx and OpEx going forward in FY 2026 and even FY 2027?
Is that a CFO, Anna?
Okay, from a CapEx perspective, we've actually reduced the CapEx we spent over the last couple of years. As the water business has moved from being primarily a build and operate business to now a design and construct and build and operate a portfolio business, the requirement for CapEx from that business is a whole lot less. I don't see CapEx increasing a whole heap over the next few years. I think where we are now or even slightly lower is probably more realistic for CapEx. From an OpEx perspective, we see ourselves as a growth company and we'll continue to evaluate growth opportunities for the business and where we think that it makes sense to invest for growth. We will continue to do that, obviously in a disciplined and in a sort of sensitive to our operating cash flow and our sort of required returns. I think from an OpEx perspective, we will continue. We see growth as very important and investing for growth is very important.
Thanks, Anna. I think I know how Seán's going to answer this next question given your comments. Given the price where it is and investors often think about this and look at your net cash position, I think there's a bit of a sugar hit here, but is there any opportunity for a share buyback or is all capital needed for growth?
I think at the moment, share buyback isn't something that's within our strategy. As always, we evaluate every opportunity in making sure that we're making the right decisions from a capital allocation and management perspective. As Anna said, at the moment, the extent of our capital will be focused on growth initiatives and fueling the working capital for continued organic growth.
Thanks, Seán. Just a couple of questions. I'll combine these with respect to CatChek again. You spoke a lot about the benefits, but can you expand a bit on what CatChek does better than other competing products, and simply how big could CatChek get?
Again, great questions on that front. We have some lofty aspirations for CatChek in terms of what it does. We use the phrase multi-benefit additive. We also use the phrase production and an uncertain when we're talking about CatChek. Basically, it's a fines control and clay control chemical, and what it does is it manages fines migration downhole. It allows for the product to penetrate more deeply, allows for a more efficient frac, and just cleans up that formation, stabilizes that formation through the frac process. What that then leads to is an increase in EOR. What we're seeing is an increase in the production initially, a slowing down of initial decline curves, and as we're building out that data set over time, we're seeing that increase in production maintained over a number of years. These are wells that once online, you know, potentially could run 10, 20, 30 years.
We're continuously building out that data set. From an uplift perspective, we are comfortable saying that we can deliver a 10% increase in EOR. From an oil recovery perspective, when applied to gas plays, there is significant uplift from that 10%, and we have seen improvements in up to 40% initially. That's what makes this shale gas piece for us and growth in that market so very, very attractive. In terms of how big it could be, we want an environment where for applicable formations these EMP customers don't want to not use CatChek. They're afraid not to use CatChek because they won't see that production benefit. I think it's a really unique piece in that it improves the efficiency of the frac, which is the CapEx cycle for our customers, and also improves the oil recovery, which is the revenue perspective.
In terms of sort of overall P&L improvement for these EMP companies, it really stands out there. A huge amount of potential for CatChek. Like I said, that growth will continue to be incremental before we get to a position where this is just part of how wells are frac going forward.
Yeah, thanks, Seán. Bit of complexity needed in answering this next question given the uncertainties, but can you comment on the potential impact of tariffs in the U.S. market?
Anna, that's a nice one for you.
Yeah, look, obviously there's been a whole heap of uncertainty in the U.S. on tariffs and a whole bunch of other economic kind of factors. We don't have long-term sort of priced-in contracts in the oil fields. That's just not how it works. Each individual well completion or completion job is priced separately, and the opportunity therefore to sort of vary our prices is based upon our input prices. We do import as part of our supply chain, so not directly, but our suppliers import, if you like, on our behalf some products from India and China and Mexico and a few other places. We are able to source products from different places, including the U.S., if it makes sense. We've varied that supply chain and taken on new suppliers during the year to move around the tariffs.
I guess we're not locked into bearing the risk or the cost of those tariffs at this stage, and that's not to say that we were able to pass on every cent of the tariff, but the mechanisms mean that the way the contracts are structured means that we're not priced into those contracts. Beyond that, the tariffs have no impact on the Australian-based businesses. For the process chemistry business and for the water business in Australia and Asia-Pacific at this stage, there are no impacts from the U.S. tariff.
Thanks, Anna. Cleared that up. Next question, just looking at the economic profile of water sales, is it the case not much profit upfront, and then as you operate and supply, there's better profit?
Okay, so it actually depends on the operating model of the project. Every project's different. Some of our projects are build and operate, where we build a water treatment plant and then operate, and in those cases, whilst we do recognize some revenue as we build and then commission the plant, the majority of the revenue is recognized as that plant operates, and sometimes that's on a variable basis, so per liter treated, for example. For the design and construct projects, they're construction projects essentially, and they're treated as construction projects. There's a percentage completion methodology applied to revenue recognition of those jobs, and revenue and profit is recognized throughout the sort of duration of those jobs. Does that answer the question?
That's great. Thanks, Anna. Going to the challenging water projects you'd made reference to, in the water segment, which impacted the results this year, can you give more detail on what went wrong and why those issues won't resurface again?
I've spoken to this already, but it was across two projects, one in design and construct, one in build and operate. The design and construct was about a very intricate design. It was less about the actual design itself and more about the environment that the plant was required to operate in, which was a new sort of market environment with standards that the existing team hadn't been hugely familiar with in the past. What it needed to rectify that was some redesign work and then some retrofitting of the existing system as it was built, which was not insignificant. What we've done to address that is invest in the design and engineering capabilities of that team to be able to meet the needs of the projects that we want to deliver and the markets that we want to operate in.
It's about the growth journey of that business, you know, and the types of build and operate projects that was the cornerstone of our water tech business to then being able to take on larger scale design and construct work and now going into the more complex end of design and construct. I think we've built out that team now and have the processes in place to be able to meet the needs of that market. On the build and operate side, that was largely contractual, and we needed to increase just the level as we're delivering larger value contracts, increase the level of sophistication within that team when it comes to contract and commercial management. That's something that we've done. We've improved our sort of project governance processes within that business, and we're certainly set.
These are legacy issues that we had actually sort of largely rectified early in the year, but the consequences of which from a financial perspective were felt throughout the year. Certainly in a very different perspective and a very different position in terms of the strength, capability, and skill set within that team at the moment and very well positioned to be able to deliver these projects even now at a much larger scale without the same level of issues.
Thanks, Seán. I've got a final question here. Is it realistic that you can grow activities in Europe without more established presence on the ground locally, and how many personnel do you currently have there?
We've got three boots on the ground at the moment. There are two parts to that question. One is to really tackle this building opportunity. We're going to need to grow our capabilities in some way, shape, or form, but it's very much market dependent. When we look at the European market, we've broken it down into U.K., the Nordics, and other opportune areas such as Italy where there's growing action in terms of PFAS management. Within the Nordics, the approach that we've taken is working through a channel partner, Swedish Hydro. That's been really efficient for us both in terms of a project delivery perspective and from a capital management perspective. We've been able to receive deposits upfront for the construction. We've built those systems using third-party manufacturers out of Turkey, which has been a really positive experience.
We know that that's a model that we can continue to leverage both in the Nordics and in other regions to enable us to grow our presence, increase our revenue, and our profitability within the region without heavily investing in additional capabilities within the team.
Thanks, Seán. Look, we've run a couple of minutes over time, so we'll call it there, but I'll hand back to you for closing remarks before we end this session.
Okay, thank you, Adrian, and yeah, thanks for coordinating traffic for us. I'll try and keep this very brief, but I just wanted to, Anna, to close, take a step back really and look at SciDev as a business more holistically. I think when we look at the foundations of the business, we have our diversified portfolio, which gives us with our diversified revenue streams, operating multiple technologies, multiple business units across multiple end markets. That gives us a real robustness within the business and resilience, but what it also provides us is with a very scalable model. Add to that financial stability that we've been able to demonstrate over the past number of years, maintaining positive operating cash cycles and with a strong balance sheet to deliver growth.
Add to that a significant opportunity that we've spoken about in terms of the markets that we operate in, the growing addressable markets, and the need for tech-driven solutions. Now, our ability to deliver those solutions really comes from our technical superiority and the fact that we've got market-leading technology to be able to service the needs of our customer base and service these industries both today and into the future. If we take that as a foundation with our diversified revenue, stable financials, growing opportunities, and market-leading technology, and then add to that the significant progress that we've made from a strategic perspective and also the strategic investments that we've made over the last 12 months, it puts us in a really solid position to deliver that meaningful growth that we've been speaking about in through FY 2026 and into the future. That is all for me. Thank you all again for taking the time to join us and look forward to speaking with many of you over the coming weeks. Thank you.