Rua Bioscience Half Year Results

PO Box 1387, Gisborne 4040, Aotearoa New Zealand | 0800 RUABIO | www.ruabio.com



FOR PUBLIC RELEASE
NZX Limited
Wellington

Friday, 25 February 2022

Rua Half-Year Result – Constructive Period with First Product, First Revenue Imminent

Highlights for the six months to 31 December 2021:
•
July
– Rua begins work in earnest with the University of Waikato on Hyperspectral
imaging in anticipation of entering the $2.5b cannabis testing industry
•
September
- Rua gains GMP Certification of our Gisborne manufacturing facility
•
October
– Prime launches Rua documentary series
•
November
– Rua enters into a conditional agreement to purchase Zalm Therapeutics and
secures significant Callaghan Innovation funding
•
December
- Rua Bioscience given the green light to distribute its first product to New
Zealand patients

Rua Bioscience Limited (NZX: RUA) has today announced its financial results for the six months to
31 December 2021.

The loss after tax for the six months to 31 December 2021 was $2.46m, with total cash and
investments on hand at the end of the period of $12.29m.

In that time, the company achieved several critical milestones in its strategy, crucially gaining
GMP certification and receiving verification that its first medicinal cannabis product meets the NZ
Medicinal Cannabis Agency's (Medsafe's) quality standards. These milestones enable the
company to distribute its first medicine in New Zealand, which it intends to do by the end of
March or early April 2022.

Rua Chief Executive Officer Rob Mitchell said the six-month period was exceptional for the
company, with the team managing expenditure while making significant strides in providing
quality medicinal cannabis products.

"Our major focus has been on making medicinal cannabis products available to patients, a
milestone we are now only a matter of weeks away from achieving", he says.

Rua Chief Financial Officer Hamish White says the result was in line with the company's
expectations for the half-year as Rua moves to commercialisation.

"The company's investment focus was on those areas that will deliver revenue, investing in new
product development and select long-term opportunities across the medicinal cannabis value
chain."


Update on Key Milestones

Readying for Sustainable and Scalable Domestic and Export Sales
Rua made significant steps towards producing its first products and hence first revenues. In
September 2021, Rua received Good Manufacturing Practice (GMP) certification to manufacture
its first medicinal cannabis product, a CBD oil. GMP certification is the global standard for all
pharmaceuticals and certifies that Rua can manufacture a consistently safe product and of
acceptable quality. GMP is a prerequisite for both domestic and export sales.
MARKET ANNOUNCEMENT

PO Box 1387, Gisborne 4040, Aotearoa New Zealand | 0800 RUABIO | www.ruabio.com

GMP certification was followed in December 2021 by verification that the same product meets the
NZ Medicinal Cannabis Agency's (Medsafe's) quality standards, enabling Rua to distribute its first
medicine in New Zealand. The certified compounded CBD oil will be made available as a
prescription-only medicine through GPs in late March or early April. Rua will manufacture the
medicine in its purpose-built facility in Gisborne.

Rua entered a conditional agreement to purchase New Zealand-owned medicinal cannabis
company Zalm Therapeutics in November 2021. Approved by shareholders at a special meeting in
January 2022, the acquisition will enable Rua to supplement its premium Rua-branded product
with a range of Australian-grown cannabis oil products. Rua expects to make these products
available for New Zealand patients in the second half of CY2022.

The Zalm acquisition also unlocks access to a facility in Mildura that will soon be one of
Australasia's largest and most technologically advanced indoor growing and manufacturing sites.
Cann Group will deliver world-class globally competitive GMP quality ingredients at scale through
this facility. Cann has recently received GMP certification of its Southern facility (in Melbourne)
and is currently commissioning Mildura. Acquiring Zalm's third-party contract with Cann should
give Rua faster access to global markets and generate export revenue sooner.

Plant Discovery and Breeding
Our crop growing programme is essential as a business focusing on commercialising unique
cannabis cultivars; the resulting genetics are some of our most important assets.

Indoors, Rua's cultivation team has been running at full capacity as they work through the battery
of engineering and validation trials required before Rua can grow commercially. In December,
that activity extended to its outdoor facility with East Coast Cannabis Company (E3C) as its first
local cultivation partner. This summer, E3C is responsible for Rua's outdoor trial crop, planting,
managing, and harvesting unique Rua cultivars in the company's 3,000m
2
outdoor growing
facility. The arrangement with E3C brings expertise, expands our outdoor cultivation capacity,
and establishes pathways for a new generation of local growers to participate in the global
industry.

Research and Development
Rua has also been working to create long-term value across the medicinal cannabis value chain
by developing world-class partnerships and programmes in the R&D space.

In July 2021, Rua began working in earnest with the University of Waikato on Hyperspectral
imaging with a view to entering the $2.5b cannabis testing industry. This world-leading project
blends Rua's outstanding cultivation expertise with the exceptional agritech research expertise of
the team at WaikatoLink, in hopes of revolutionising medicinal cannabis crop management
practices.

Secured in November 2021, a Callaghan Innovation grant of $376,000 will support a projected
$1.25m investment into plant science and the creation of uniquely superior medicinal cannabis
products. Rua will deploy the funding across the company's value chain, looking at specific
innovations from cultivation to packaging, including identifying high-performing commercial
cultivars, advancements in CO2 extraction, packaging, and DNA tracking and protection of
unique Rua cultivars. Rua expects these projects will add significant value to the company over
time.

Team Capability and Capacity – Recruiting for the Future
Rua's recruitment strategy focuses on two equally critical components: building a capable and
committed team that will propel the company towards commercialisation, creating highly-skilled,
well-paid jobs for the people of Te Tairāwhiti.
Rua continues to attract world-class talent. Our team now includes scientific, quality and
manufacturing expertise from Europe, the United States and Asia Pacific. Pleasingly, in this period,
51% of Rua's team had iwi or whānau connections to the East Coast.

PO Box 1387, Gisborne 4040, Aotearoa New Zealand | 0800 RUABIO | www.ruabio.com
Towards Sustainability
In August 2021, the company released its Rua Sustainability Framework, which will guide its
sustainability programme for the foreseeable future. As well as aligning with the United Nations
Global Compact Sustainable Development Goals (SDGs), our bespoke Rua Sustainability
Framework will underpin our goal to lead the global industry as an ethical and sustainable
cannabis business. It will shape the way Rua engages with stakeholders, support sustainable
decision-making processes at all levels of the company; shape business strategy; guide
innovation; drive better performance; create value and attract investment. The company has set
several environmental, social and governance targets, which can be found on page 45 of the
company's 2021 Annual Report.


Outlook
The second half of FY22 promises to be transformational as Rua focuses squarely on driving
domestic and global sales.

The first premium Rua-branded products will be made available for prescribers in New Zealand in
late March, early April 2022. As a result of the purchase of Zalm and the subsequent relationship
with Cann, Rua expects to enter domestic and global markets faster and with a broader range of
products. This means a steadily-growing range of products for patients and prescribers and
increasingly diverse income streams for the company. There is expected to be a very modest
impact on revenue in FY22.

Our indoor cultivation team will continue to grow premium dried flower for Germany and develop
the unique Rua cultivars we will grow at scale as Rua further develops its cultivation centre of
excellence at Mangaoporo.

Globally, our commercial team will identify those sustainable offshore high-standard GMP
markets where Rua products can be market leaders. In this respect, Indian Stock Exchange listed
pharmaceutical group Dr Reddy's recent purchase of our German distributor, Nimbus Health, is
significant. With the added scale of Dr Reddy's, Rua anticipates greater reach for its products
distributed by Nimbus in the German market and potentially beyond. It is also an important signal
of the industry's growing legitimacy. Following Jazz Pharmaceuticals USD7.2bn acquisition of GW
pharmaceuticals in early 2021, Dr Reddy's move is another example of the international
pharmaceutical industry's growing interest in the burgeoning medicinal cannabis industry.

ENDS

For more information, please visit www.ruabio.com or contact:
Kerry Donovan
Communications Manager
+64 (21) 128 7689
kerry.donovan@ruabio.com


About Rua Bioscience
Rua Bioscience is a New Zealand pharmaceutical company aiming to produce cannabinoid
derived medicines for export and local markets. Rua has been an early mover in the sector and
was the first private company in New Zealand to receive a licence to cultivate cannabis for
research purposes. Founded in 2017 in Ruatorea as a subsidiary of charitable company Hikurangi
Enterprises Limited, Rua is underpinned by its mission to heal the people and heal the land. It is
committed to New Zealand's Te Tairāwhiti (East Coast) region and its local community.
www.ruabio.com

---

Interim Financial Repo
rt
Rua Bioscience Limited
For the six months ended 31 December 20
21

2
Rua Bioscience Limited
Contents
Company Directory
3
Independent Auditor's Review
Report
4 - 5

Interim Statement of Profit or Loss and Other Comprehensive Income
6
Interim Statement of Changes in Equity 7 - 8
Interim Statement of Financial Position
9
Interim Statement of Cash Flows
10

Notes forming part of the Interim Financial Statements
11 - 2
2

3
Comp
any Directory
For the six months ended 31 December 2021
Registered office address: 1 Commerce Place
A
wapuni
Gi
sborne 4
071
Contact ph
one number: 0800 782 246
Contact email address: info@ruabio.com
Country of incorporation of company: New Zealand
Company Number: 6484092
ISIN:NZRUAE0004S1
Legal form:
N
Z Limited Company
Principal activities: Pharmaceutical manufacturer
Directors:
Trevor
BURT
Panapa EHAU
Brett GAMBLE
Martin SMITH
Anna Kate STOVE
Auditor:
Pricew
aterhouseCoope
rs
Share registr
ar: Computershare Investor Services Limited
Level 1, 159 Hurstmere Road
Takapuna, Auckland 0622
Bankers:
Kiwib
a
nk
So
licitors:
Lowndes
Jord
an

PricewaterhouseCoopers, Corner Ward and Anglesea Streets, PO Box 191, Hamilton 3240 New Zealand
T: +64 7 838 3838, www.pwc.co.nz
Independent auditor’s review report
To the shareholders of Rua Bioscience Limited.

Report on the interim financial statements
Our conclusion
We have reviewed the interim financial statements of Rua Bioscience Limited (the Company), which
comprise the interim statement of financial position as at 31 December 2021, and the interim
statement of profit or loss and other comprehensive income, the interim statement of changes in equity
and the interim statement of cash flows for the six months ended on that date, and significant
accounting policies and other explanatory information.
Based on our review, nothing has come to our attention that causes us to believe that these
accompanying interim financial statements of the Company do not present fairly, in all material
respects, the financial position of the Company as at 31 December 2021, and its financial performance
and cash flows for the six months then ended, in accordance with International Accounting Standard
34 Interim Financial Reporting (IAS 34) and New Zealand Equivalent to International Accounting
Standard 34 Interim Financial Reporting (NZ IAS 34).
Basis for conclusion
We conducted our review in accordance with the New Zealand Standard on Review Engagements
2410 (Revised) Review of Financial Statements Performed by the Independent Auditor of the Entity
(NZ SRE 2410 (Revised)). Our responsibility is further described in the Auditor’s responsibility for the
review of the financial statements section of our report.

We are independent of the Company in accordance with the relevant ethical requirements in New
Zealand relating to the audit of the annual financial statements, and we have fulfilled our other ethical
responsibilities in accordance with these ethical requirements. Other than in our capacity as auditor we
have no relationship with, or interests in, the Company.

Directors responsibility for the financial statements
The Directors of the Company are responsible on behalf of the Company for the preparation and fair
presentation of these interim financial statements in accordance with IAS 34 and NZ IAS 34 and for
such internal control as the Directors determine is necessary to enable the preparation and fair
presentation of the interim financial statements that are free from material misstatement, whether due
to fraud or error.
Auditor’s responsibility for the review of the financial statements
Our responsibility is to express a conclusion on the interim financial statements based on our review.
NZ SRE 2410 (Revised) requires us to conclude whether anything has come to our attention that
causes us to believe that the interim financial statements, taken as a whole, are not prepared in all
material respects, in accordance with IAS 34 and NZ IAS 34.
A review of interim financial statements in accordance with NZ SRE 2410 (Revised) is a limited
assurance engagement. We perform procedures, primarily consisting of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying analytical and other review
procedures. The procedures performed in a review are substantially less than those performed in an
audit conducted in accordance with International Standards on Auditing (New Zealand) and
International Standards on Auditing and consequently does not enable us to obtain assurance that we
might identify in an audit. Accordingly, we do not express an audit opinion on these interim financial
statements.

PwC 5
Who we report to
This report is made solely to the Company’s Shareholders as a body. Our review work has been
undertaken so that we might state to the Company’s Shareholders those matters which we are
required to state to them in our review report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Shareholders, as a body,
for our review procedures, for this report, or for the conclusion we have formed.

The engagement partner on the review resulting in this independent auditor’s review report is Maxwell
John Dixon.


For and on behalf of:





Chartered Accountants Hamilton
24 February 2022

6
Rua Bio
science Limited
Interim statement of profit or loss and other
comprehensive income
For the six months ended 31 December 2021
Note
For the six
months ended
31 December
2021
(unaudited)
For the six
months ended
31 December
2020
(unaudited)
$
$
Research and development expenses (1,652,073) (881,637)
Other expenses (2,228,932) (2,593,596)
Operating loss before net financing costs (3,881,005) (3,475,233)
Other income 5 360,443 268,860
Interest income 63,433 2,416
Interest expense -(8,480)
Interest expense – leases (21,333) (8,948)
Net finance (expense)/income 42,100 (15,012)
Loss before tax (3,478,462) (3,221,385)
Income tax credit 6 1,013,596 888,107
Loss after tax (2,464,866) (2,333,278)
Other comprehensive income - -
Total comprehensive loss for the period
attributable to shareholders
(2,464,866) (2,333,278)
Earnings per
share attributable to the
ordinary equity holders of the parent
Loss from operations
Basic ($)
(0.02)(0.02)
Diluted ($)
(0.02)(0.02)
_______
_______
The ab
ove statements should be read in conjunction with the accompanying notes.

7

Rua Bioscience Limited


Interim statement of changes in equity
For the six months ended 31 December 2021


Note
Share

Share option

Accumulated

Total


capital

reserve

losses

equity











$


$


$


$










Opening balance at 1 July 2021
(
audited
)


37,418,499

614,767

(
9,199,220
)


28,834,046









Total comprehensive loss for the period







-

Loss for the period

-

-

(2,464,866)

(2,464,866)
-

Other comprehensive income

-

-

-

-
Total comprehensive loss for the period
-

-

(
2,464,866
)


(
2,464,866
)









Transactions with owners of the Company







-

Issue of share capital

-

-

-

-
-

Costs of issuing share capital

-

-

-

-
-

Employee share options expense

-
81,495

-

81,495
-

Share options vested and exercised
14
652,262

(652,262)

-

-
Total transactions with
owners of the Company

652,262

(
570,767
)


-

81,495


















Balance at 31 December 2021
(
unaudited
)



38,070,761

44,000

(
11,664,086
)


26,450,675


The above statements should be read in conjunction with the accompanying notes.

8
Rua Bio
science Limited

Interim statement of changes in equity
For the six months ended 31 December 2020
Note
Share
Share option
Accumulated
Total
capital
reserve
losses
equity
$

$

$

$

Opening balance at 1 July 2020
(
audited
)

18,922,913

260,308

(
4,781,260
)

14,401,961

Total comprehensive loss for the period
-
Loss for the period
-
-
(2,333,278)
(2,333,278)
-
Other comprehensive income
-
-
-
-
Total comprehensive loss for the period
-
-
(
2,333,278
)

(
2,333,278
)

Transactions with owners of the Company
-
Issue of share capita
l
20,000,000
-
-
20,000,000
-
Costs of issuing share capi
tal
(1,504,414)
-
-
(1,504,414)
-
Employee share options expense
-
303,354
-
303,354
Total transactions with
owners of the Company
18,495,586
303,354
-
18,798,940
Balance at 31 December 2020
(
unaudited
)

37,418,499
563,662
(
7,114,538
)

30,867,623
The ab
ove statements should be read in conjunction with the accompanying notes.

9
Rua Bioscience Limited
Interim statement of financial position
As at 31 December 2021
The interim financial statements on pages 6 to 22 were approved and authorised for issue by the Board of
Directors on 24 February 2022 and were signed on its behalf by:
______________________ (Director) ______________________ (Director)
The above statements should be read in conjunction with the accompanying notes.

Note
As at
31 December
2021
As at
30 June
2021
(unaudited)
$
(audited)
$
Current assets
Cash and cash equivalents 2,263,243
3,359,479
Other receivables and current assets 759,074
605,927
Prepayments 234,667
110,527
Inventory 7 83,537
-
Investments 4 10,033,851
13,041,549
Total current assets 13,374,372
17,117,482
Non-current assets
Property, plant and equipment 8 6,118,001 6,174,610
Goodwill 4,000,000 4,000,000
Right-of-use lease assets 8 883,592 929,897
Other receivables 75,000 75,000
Deferred tax asset 3,568,076 2,554,480
Total non-current assets 14,644,669 13,733,987
Total assets 28,019,041 30,851,469
Current liabilities
Trade and other payables 480,483 510,167
Employee benefit liabilities 173,429 233,862
Lease liabilities 9 154,045 133,958
Borrowings 9 -10,762
Deferred grant income 9,500 -
Share-based payment liability 14 -286,647
Total current liabilities 817,457 1,175,396
Non-current liabilities
Lease liabilities 9 750,909 810,120
Share-based payment liability 14 -31,907
Total non-current liabilities 750,909 842,027
Total liabilities 1,568,366 2,017,423
Net assets 26,450,675 28,834,046
Equity
Accumulated losses (11,664,086) (9,199,220)
Share capital 13 38,070,761 37,418,499
Share option reserve 44,000 614,767
Total equity 26,450,675 28,834,046

10

Rua Bioscience Limited

Interim statement of cash flows
For the six months ended 31 December 2021


Note For the 6
months to
31 Dec 2021
For the 6
months to
31 Dec 2020
(unaudited) (unaudited)
$ $


Cash flows from operating activities

Grant income received 234,516 646,305

Payments to suppliers and employees (3,962,823) (2,620,705)
Net cash inflows/
(outflows) from operating activities (3,728,307) (1,974,400)


Cash flows from investing activities

Interest income 51,214 25,139
Proceeds from maturing investments 16,070,711 -
Proceeds from the sale of property, plant and equipment - 15,739

Purchase of property, plant and equipment (310,947) (1,098,780)
Payment in relation to listing bond - (75,000)
Investment deposits made (13,070,711) -
Net cash inflows/
(outflows) from investing activities 2,740,267 (1,132,902)


Cash flows from financing activities

Issue of ordinary shares - 20,000,000
Repayment of borrowings (10,762) (56,955)
Repayment of lease liabilities (72,332) (39,784)
Interest paid (25,102) (17,428)
Share issue costs paid - (1,508,188)
Net cash inflows/
(outflows) from financing activities (108,196) 18,377,645

Net increase/
(decrease) in cash and cash equivalents (1,096,236) 15,270,343

Cash and cash equivalents at beginning of the period 3,359,479 3,937,501

Exchange (losses)/gains on cash and cash equivalents - -

Cash and cash equivalents at end of the period 2,263,243 19,207,844


The above statements should be read in conjunction with the accompanying notes.

11

Rua Bioscience Limited
Notes forming part of the interim financial statements
For the six months ended 31 December 2021



1. Reporting Entity
Rua Bioscience Limited (formerly Hikurangi Cannabis Company Ltd) (“the Company”) is a
company incorporated and domiciled in New Zealand and registered under the Companies Act
1993.
The Company is principally engaged in the business of pharmaceuticals manufacturing.
2. Basis of preparation
(a) Statement of compliance

These unaudited condensed interim financial statements have been prepared for the six
months ended 31 December 2021. The Company is designated as a profit-oriented entity for
financial reporting. These financial statements provide an update on the interim performance
of the Company, and should be read in conjunction with the full year financial statements
presented for the year ended 30 June 2021 from which the same accounting policies and
methods of computation have been followed.
The interim financial statements are prepared in accordance with:
• NZ IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting.
• Generally Accepted Accounting Practice in New Zealand (NZ GAAP).
• The accounting policies and methods of computation in the most recent annual financial
statements.
• The Financial Markets Conduct Act 2013, and NZX equity listing rules.

The Company is a for-profit entity for the purposes of complying with NZ GAAP.

The financial statements are presented in New Zealand dollars ($), which is also the Company’s
functional currency. All financial information presented has been rounded to the nearest dollar.

(b) Significant accounting policies

The accounting policies and computation methods used in the preparation of the interim
financial statements are consistent with those used as at 30 June 2021 and 31 December 2020.

(c) Basis of measurement

The interim financial statements have been prepared on a historical cost basis, except for the
following items (refer to individual accounting policies for details):
- Borrowings (fair value disclosed) – note 4
- Financial assets and liabilities at amortised cost (fair value disclosed) – note 4
- Liabilities for cash-settled share-based payments – (presented as share based payment
liability in the statement of financial position)

12
Rua Bioscience Limited
Notes forming part of the interim financial statements
For the six months ended 31 December 2021



2. Basis of preparation (continued)
(d) New standards, interpretations and amendments effective or applied for the first time

Inventory

Subsequent to it having received verification from the NZ Medicinal Cannabis Agency (Medsafe)
for the sale and distribution of medicinal CBD products, the Company has recognised inventory
in its statement of financial position for the first time in the interim period ended 31 December
2021. Refer to note 7 for details of the accounting policy.

The Company has not adopted any other significant new standards, interpretations and
amendments in the interim period with a material impact on the financial statements.

(e) Accounting estimates and judgements made

There have been no material revisions to the nature and amount of estimates of, and
judgements in relation to, amounts reported in prior periods.

(f) Going concern

The financial statements have been prepared on the going concern basis, which assumes that
the Company will continue to be able to meet its liabilities as they fall due for the foreseeable
future.

The Company incurred a net loss of $2,464,866 during the period ended 31 December 2021.

The capital raised at the IPO has provided a sufficient runway for to the company to continue
operating as a going concern while it continues the development of its research projects,
product suite and sales opportunities.

The purchase of Zalm Therapeutics Ltd in January 2022 (refer to note 15) creates a significant
opportunity for the company in terms of expansion of our product portfolio and the opportunity
for scalable revenue generation.

In the coming year, the Company is transitioning into commercialisation where the income
generated from products will begin to fund the operations of the company to the point where
the Company is financially sustainable and begins to generate profits.

Over the six-month period to December 2021, the Company obtained two key licenses that
allow it to commercialise its first product and create the foundation for further commercial
opportunities. These were a License to Manufacture Medicine (GMP) & New Medical Cannabis
Product Application (CBD100).

Currently there are no indications that the Company will not be able to continue as a going
concern. The Company has net current assets and the Directors are of the opinion that the
Company is able to settle its liabilities as they fall due. There are risks related to future
assumptions being made, particularly around the timeframes related to obtaining regulatory
approvals for products, sales volumes and the sales price of these products. The Company is
monitoring and managing these risks, however there are no indications at this point in time
that they will affect the Company’s ability to continue as a going concern.

13
Rua Bioscience Limited
Notes forming part of the interim financial statements
For the six months ended 31 December 2021



2. Basis of preparation (continued)
(g) Impact of COVID-19
The Company has considered the potential impact of COVID-19 as part of its preparation of
these accounts and in relation to the operations. Pharmaceutical manufacturing is considered
an essential service and, as such, Rua has and plans to continue trading throughout all alert
levels. This has limited the impact of COVID-19 and the Government’s response on the
Company. The Company has experienced delays in receiving goods and services from
international suppliers and market partners who have been affected from Covid-19.

3. Segment Reporting
The Company operates predominantly in one segment, its primary business being
pharmaceutical manufacturing in New Zealand.
The chief operating decision maker has been identified as the Chief Executive Officer (CEO)
as they make all the key strategic resource allocation decisions related to the Company’s
segment.

4. Financial instruments and Financial Risk Management, and Capital Management

Categories and fair values of the Company’s financial instruments


Financial Assets
at Amortised Cost
Financial Liabilities
at Amortised Cost
Total
Carrying Amount
Fair
Value
31 December 2021
(unaudited)
$ $ $ $


Investments 10,033,851 10,033,851
(a)
Cash and cash equivalents 2,263,243 - 2,263,243 (a)
Other receivables 75,000 75,000 (a)
Trade and other payables - (480,483) (480,483) (a)
Lease liabilities - (904,954) (904,954)

Total 12,372,094 (1,385,437)

30 June 2021 (audited)

Investments 13,041,549 13,041,549 (a)
Cash and cash equivalents 3,359,479 - 3,359,479 (a)
Other receivables 75,000 - 75,000 (a)
Trade and other payables - (510,167) (510,167) (a)
Borrowings - (10,762) (10,762) (b)
Lease liabilities - (944,078) (944,078)

16,476,028 (1,465,007)

(a) Due to their short-term nature, the carrying value of these financial instruments approximates their fair value.
They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs
including counterparty and own credit risk.
(b) Due to the market rate of lending for the remaining term and outstanding balance not being materially different
from the current effective interest rate, the carrying value of these financial instruments approximates their
fair value. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable
inputs including own credit risk.

14
Rua Bioscience Limited
Notes forming part of the interim financial statements
For the six months ended 31 December 2021



5. Revenue and other income

Revenue and other income streams recognised by the Company include:

6 months to
31 Dec 2021
(unaudited)
6 months to
31 Dec 2020
(unaudited)
$ $

Revenue (from contracts with customers) - -
Research and development grant income 358,698 268,860
Sundry income 1,745 -
Total 360,443 268,860


6. Income tax

Tax is charged at 28% for the six months ended 31 December 2021 (2020: 28%) representing the
best estimate of the average annual effective tax rate expected to apply for the full year,
applied to the pre-tax income of the six month period.

The Company has assessed the realisation of the deferred tax asset at the reporting date and
considers that it is probable that future taxable profits will be available to realise the deferred
tax asset. Key factors supporting the assessment include:

 Sales of Rua and Azana products into New Zealand and other global markets;
 Securing an export agreement with German distributor, Nimbus Health;
 Potential licensing revenue from Research and Development projects;
 Completing the Company’s cultivation and extraction facilities; and
 Forecasted taxable profits in the foreseeable future that are sufficient to utilise the
deferred tax asset.
The Directors have considered the likelihood of these key factors occurring and have determined
that it is probable that the Company will commercialise its production and generate sufficient
future taxable profits to realise the deferred tax asset.

15
Rua Bioscience Limited
Notes forming part of the interim financial statements
For the six months ended 31 December 2021



7. Inventory

Inventories are recognised at the lower of cost and net realisable value. Cost comprises all costs
of purchase, costs of conversion and other costs incurred in bringing the inventories to their
present location and condition.

Inventories are measured on a first-in-first-out basis to determine the cost of ordinarily
interchangeable items.

31 Dec 2021
(unaudited)
30 June 2021
(audited)
$ $

Raw Materials 77,822 -
Consumables 5,715 -
Total 83,537 -


8. Property, plant and equipment and Right-of-use lease assets

Significant transactions during the 6 months to 31 December 2021

 The Company has incurred an additional $110,715 on the construction of its Ruatoria
Plant and Extraction facilities.

 The Company has entered into three portacom leases, resulting in an additional $37,977
of right-of-use lease assets.


9. Borrowings and Lease liabilities

Significant movements in the Company’s debt balances (Borrowings and Lease liabilities) during the
period are detailed in the tables below:


6 months to 31 Dec 2021
(unaudited)


NON-CASH CASH CASH
Opening New leases Payment of
prior year
accrued
interest
Payment Closing
$ $ $ $

Borrowings 10,762 - - (10,762) -
Lease liabilities 944,078 36,977 (3,769) (72,332) 904,954
954,840 36,977
(3,769) (83,094) 904,954

16
Rua Bioscience Limited
Notes forming part of the interim financial statements
For the six months ended 31 December 2021



9. Borrowings and Lease liabilities (continued)

6 months to 31 Dec 2020
(unaudited)


NON-CASH CASH CASH
Opening New leases Payment of
prior year
accrued
interest
Payment Closing
$ $ $ $ $

Borrowings 88,931 - - (56,955) 31,976
Lease liabilities 259,863 57,662 - (39,784) 277,741
348,794 57,662 -
(96,739) 309,717


10. Related party transactions

6 Months to 31 December 2020

The Company listed on the NZX on 22 October 2020.

The Company has no ultimate parent entity. There are no individual shareholders holding more
than 20% of the ordinary shares of the Company at reporting date.

6 Months to 31 December 2021

The Company has no ultimate parent entity. There are no individual shareholders holding more
than 20% of the ordinary shares of the Company at reporting date.

17
Rua Bioscience Limited
Notes forming part of the interim financial statements
For the six months ended 31 December 2021



10. Related party transactions (continued)

During the period the Company entered into the below transactions with entities related to
shareholders and key management personnel.


Nature of
transactions
Transaction
amount
Amounts
receivable
(payable)

6 Months to
31 Dec 2021
(unaudited)
31 December
2021
(unaudited)
$ $

EECOMS Purchases 361 -
Mitchel Family Trust Purchases 1,620 -



Nature of
transactions
Transaction
amount
Amounts
receivable
(payable)

6 Months to 31
Dec 2020
(unaudited)
30 June
2021
(audited)
$ $

EECOMS Purchases 5,416 -
Hikurangi Enterprises
Limited Purchases - 27,000
Mitchel Family Trust Purchases 3,450 1,250

18
Rua Bioscience Limited
Notes forming part of the interim financial statements
For the six months ended 31 December 2021


10. Related party transactions (continued)

Key management personnel compensation

Compensation of key management personnel (being those persons having authority and
responsibility for planning, directing and controlling the activities of the Company, including
the directors) was as follows:

6 months to
31 December 2021
(unaudited)
6 months to
31 December 2020
(unaudited)
$ $

Directors fees 135,346 106,010
Short-term employee benefits 663,845 441,611
Defined contribution plan payments 20,812 12,727
Share-based payment expense 67,641 448,549

Total key management personnel
compensation

887,644

1,008,897


11. Contingent liabilities

There were no contingent liabilities at the end of the period (2020: nil).


12. Biological assets

The Company remains in a research and development phase and as such the plants and produce
resulting from current operations are not being developed for sale, or for transformation into
agricultural produce or additional biological assets.

Accordingly, related costs are recognised in profit or loss rather than in the recognition of a
biological asset in accordance with NZ IAS 41 Agriculture, until such time as the Company moves
past the research and development phase.

19
Rua Bioscience Limited
Notes forming part of the interim financial statements
For the six months ended 31 December 2021


13. Share Capital



31 December 2021
(unaudited)
30 June 2021
(audited)
Number Number

Opening shares 140,262,591 17,003,096

Effect of share split* - 83,009,129
Shares issued** 1,476,676 40,250,366

Total share capital 141,739,267 140,262,591


*On 15 September 2020, the Company completed a 5.882:1 share split.

**During the period ended 30 June 2021, the Company issued 40,000,000 shares by way of
listing on the NZX. They also issued a further 250,366 shares through the vesting of the ESOP
issue 3. During the 6 month period ended 31 December 2021, 1,476,676 vested share options
were exercised into ordinary shares.


14. Share-based payments

(a) Relevant information relating to the Company’s share-based payments

 During the current period, Issue #2 was modified such that portions of the share
options either (i) vested immediately or (ii) were forfeit immediately. As a result of
this modification, any associated cash settled share-based payment liability was also
(i) settled or (ii) extinguished.

 During the current period, the Company issued an employee share option plan (ESOP)
in the form of equity-settled share options to senior management, and selected
employees (“Issue #4”).

 All tranches:

o Are subject to a general service vesting condition (i.e. if the party terminates
their employment with the company, the share options are forfeited).
o Are subject to a market condition based on the VWAP for the 10-trading-day
prior to vesting date.
o Have a $nil exercise price.
o Are subject to the following exercise dates:
 One third can be exercised one month after vesting
 One third can be exercised one year after vesting
 One third can be exercised two years after vesting

20
Rua Bioscience Limited
Notes forming part of the interim financial statements
For the six months ended 31 December 2021


14. Share-based payments (continued)

(i) Share option balances


Issue #1 Issue #2 Issue #4 Total
No. No. No. No.

Opening
(1 July 2021) 1,996,939 301,453 - 2,298,392

- Options issued - - 2,478,400 2,478,400
- Options vested (1,298,746) (177,930) -
(1,476,676)
- Options forfeited - (58,820) -
(58,820)
- Options cancelled (698,193) (64,703) -
(762,896)

Closing (31 December 2021) - - 2,478,400 2,478,400


(ii) Vested share options balances outstanding

Issue #1 Issue #2 Issue #4 Total
No. No. No. No.

Opening
(1 July 2021) - - - -

- New options vested 1,298,746 177,931 - 1,476,676
- Options exercised (1,298,746) (177,931) -
(1,476,676)

Closing
(31 December 2021) - - - -

21

Rua Bioscience Limited

Notes forming part of the in
terim financial statements
For the six months ended 31 December 2021


14. Share-based paym
ents (continued)


(iii) Specific ESOP details

The following information is relevant in the determination of the
fair value of share options of the new ESOP issued in the per
iod (Issue #4).



Equity Settled

ESOP Issue #4

31 December 2021

30 June 2021

Option pricing model used
Monte Carlo
n/a

Weighted average share price


$0.23
n/a
Exercise price
$nil
n/a

Weighted average remaining contractual life
(
in days
)

274
n/a

Volatility
85%
n/a

22


Rua Bioscience Limited
Notes forming part of the interim financial statements
For the six months ended 31 December 2021


15. Events after the reporting date

Acquisition of Zalm Therapeutics Limited

On 19 January 2022, the Company acquired 100% of the voting equity instruments of Zalm
Therapeutics Limited.

The purchase price is calculated on the equity value equivalent of $10m as at 12 November 2021
(based on a price of approximately $0.4095 per Rua share being the 60-day volume weighted
average price up to 12 November 2021), and is paid through the issue of:

 8,140,000 new Rua ordinary shares (i.e. the Initial Shares); and
 16,280,000 Performance Shares.

Conversion of the Performance Shares into ordinary shares is contingent on the completion of two
critical milestones.

Achievement of Milestone 1 and Milestone 2 is not interdependent and either Milestone could be
achieved but not the other.

On completion and issue of the Initial Shares, Rua will control $874,439 of cash retained in Zalm
with $500,000 held in escrow by the vendor's solicitors to be released to Rua on achievement of
either Milestone 1 or Milestone 2. If neither milestone is achieved, the escrowed cash (plus interest)
will be released to the Zalm Vendor Shareholders.



At the date of authorisation of these financial statements the application of acquisition accounting
required for business combinations has not been completed.

---

Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)



Results for announcement to the market
Name of issuer Rua Bioscience Ltd
Reporting Period 6 months to 31
st
December 2021
Previous Reporting Period 6 months to 31
st
December 2020
Currency
Amount (000s) Percentage change
Revenue from continuing
operations
$360 34%
Total Revenue $360 34%
Net profit/(loss) from
continuing operations
($2,465) (6%)
Total net profit/(loss) ($2,465) (6%)
Interim/Final Dividend
Amount per Quoted Equity
Security
None
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.16 $0.18
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Net tangible asset per share is calculated by dividing net assets
less intangible assets by the total shares on issue at the end of
the period.
Authority for this announcement
Name of person

authorised
to make this announcement
Rob Mitchell
Contact person for this
announcement
Kerry Donovan
Contact phone number +64 (21) 128 7689
Contact email address kerry.donovan@ruabio.com
Date of release through MAP

25/01/2022

Unaudited financial statements accompany this announcement.