Rua Bioscience Half Year Results

Rua Bioscience Limited
Results for announcement to the market
Reporting Period12 months to December 2022
Previous Reporting Period12 months to December 2021
Amount (000s)Percentage change
Revenue from ordinary
activities
254 NZD-29.0%
Profit (loss) from ordinary
activities after tax attributable to
security holders
719 NZD+129.0%
Net profit (loss) attributable to
security holders
719 NZD+129.0%
No dividends declared
31 Dec 202131 Dec 2022
Net tangible assets per security
0.160 NZD0.100 NZD
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PO Box 1387, Gisborne 4040, Aotearoa New Zealand | 0800 RUABIO | www.ruabio.com



FOR PUBLIC RELEASE
NZX Limited
Wellington

Tuesday, 28 February 2023

Rua Half-Year Result – Results as expected, with German launch i mminent

Rua’s highlights for the six months to 31 December 2022:
⋅ June – Received first domestic revenues.
⋅ July – Signed an agreement with European Medicinal Cannabis Distributor, Motagon to become its preferred
Australia/NZ supplier of medicinal cannabis products.
⋅ July – Announced the appointment of Teresa Ciprian as an Independent Non-Executive Director and the
appointment of Anna Stove as Managing Director upon Rob Mitchell’s retirement.
⋅ October – Exported first cannabis genetics to Cann Group in Australia as the company further advance its end-
to-end cultivation and supply chain solution at scale.
⋅ October – Confirmed its first international order marking a significant commercial milestone for the export-
focused company.
⋅ December – Prepared for its first international product launch and continued its genetic discovery
programme.

Rua Bioscience Limited (NZX: RUA) has today announced its financial results for the six months to 31 December
2022 (HY23).

The Group reported a net profit after tax of $718,703 for the period ending 31 December 2022. Excluding fair
value gain on contingent consideration of $4,100,932, the Group incurred an operating loss of $3,382,229.
The results are in line with expectations as the company established its product and revenue pipelines and further
positioned itself to compete globally.

Developing Global Revenues - Launch-ready in Germany, Well-positioned in Poland
In HY23, the Group’s primary focus has been on preparing for Rua’s German la unch, as well as establishing
agreements in other high-value European markets.
Managing Director, Anna Stove, says market entry and first revenues are “tantalisingly close”. She is optimistic
about the Group’s future in Germany. The largest and most developed medicinal cannabis market in Europe is
expected to be worth around NZ$755m by the close of 2023, and NZ$1.4b by 2025.
“The working relationship we have with Nimbus Health is incredibly constructive and the quality of the Cann
Group flower is outstanding. Our teams in Germany and New Zealand will ensure a seamless international launch
of, what we believe will be, one of the highest THC dried flower medicines on the market. Alongside German
appreciation of our kaupapa, we believe this will give Rua a significant competitive advantage on market entry,”
she says.

In the same period, the Group signed an agreement with European Medicinal Cannabis Distributor, Motagon
becoming its preferred Australia/NZ supplier of medicinal cannabis products
. Last week, Rua announced a
subsequent five-year master supply agreement, which ensures Rua’s access to key markets in Central and Eastern
Europe. Of particular interest to Rua are Czechia and Poland.
Poland is described as one of the fastest-growing markets in Europe and is expected to be worth NZ$92m by the
close of 2023. In positioning itself as an early-mover, Rua expects to be one of only a few companies with access
to this challenging but potentially lucrative market.
MARKET ANNOUNCEMENT

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


Leveraging Rua’s Global Scale
Rua’s acquisition of Zalm has secured an end-to-end cultivation and supply solution, which the Group believes
will prove a major competitive advantage. Through Cann Group, Rua has preferential access to substantial
volumes of very competitively priced products, which allows Rua to build a meaningful market presence faster and
with a greater economy of scale. This arrangement also gives Rua the ability to export its unique East Coast
genetics currently under development by the company’s cultivation team at Mangaoporo.

Providing Quality Products for New Zealand Patients
Rua continued to support the health outcomes of New Zealand patients, providing a consistent supply of GMP-
certified medicine. In HY23, the Group continued to work through New Zealand’s complex commercial and
regulatory environments to ensure that a pipeline of new products will be made available to patients.
During this period, the company appointed a specialist medical science liaison who provides New Zealand GPs and
Specialists with medicinal cannabis education and targeted prescription support. This role is focused on Rua’s
largest prescribing population, as well as supporting prescribers in Te Tairāwhiti.

Advancing Unique Genetics
In HY23, the Group also advanced its genetics discovery programme, investing in the identification and supply of
unique genetics that will form the basis of Rua’s future medicines.
Rua’s supply agreement with Cann Group ensures the Group has cost-effective access to GMP-quality medicines
at a global scale. Stove says “long-term success will be contingent upon Rua’s ability to build brand equity and
valuable intellectual property through the development of unique genetics.”
Throughout the period, the Group’s cultivation and product development teams continued in-house discovery
trials intended to identify unique and desirable genetics from plants within the company’s extensive genetic
library. In October, the company exported its first set of genetics to Cann Group. Rua anticipates many such
exports will follow as the company advances a scalable end-to-end cultivation and supply chain that heroes plants
with uniquely Rua cannabinoid and terpene profiles.

Creating Impact
In Te Tairawhiti, the Group continued to honour its social responsibilities.
During the reporting period, Rua maintained its Compassionate Access programme. Managed by local prescribers,
the programme ensures patients in Te Tairāwhiti with genuine need, have access to Rua medicine at no charge.
The company also maintained its community engagement programme with a focus on local rangatahi (youth). In
this period, the company supported the aspirations of senior students in the areas of health, science, business and
te ao Māori.
“The goal of our community engagement programme is to inspire and create opportunity for the next generation.
For now, it is small but scalable. As we build sustainable revenues it will flourish,” Stove says.

Ensuring Rua’s Future
In September, the Group undertook a strategic review, rightsizing Rua for future opportunities. The Board
concentrated on strategy throughout HY23 and expects that work to deliver in the second half of the year.
“At our AGM, we made a commitment that we would scale up to meet the commercial milestones we promised
our investors. Since then, Rua has been actively assessing the commercial environment, exploring where the true
value lies and where our unique strengths can propel us.
“Our vision remains the same and our commitment to creating an intergenerational business remains strong, and
we need to be flexible around our strategy and structure. We believe we now have the right focus and agility to
encourage faster growth and ensure a sustainable future,” Stove says.

Outlook
The second half of the 2023 financial year will see the Group work at pace to expand its market presence in
Europe and Australasia and to develop the unique genetics that will provide future brand and product
differentiation.
Stove says, “with a strong focus on R&D, world-class regulatory expertise, a global-scale supply agreement, and
established sales and marketing partnerships across Europe, we believe Rua is well positioned to compete on the
global stage”.

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

Subsequent Event - Cyclone Gabrielle
Rua’s operations suffered minor disruptions in the wake of Cyclone Gabrielle.
In Gisborne, Rua’s head office and manufacturing facility were closed. Neither site sustained damage, but water
and connectivity issues presented major challenges. With ample stocks of medicine available through Rua’s
distributor in Christchurch, there were no supply disruptions.
Rua’s R&D facility at Ruatorea remained operational. The team in Ruatorea worked quickly to bed down Rua’s
R&D crops and worked tirelessly to keep the company’s genetic catalogue alive and R&D projects thriving. As a
result of their incredible efforts, Rua’s indoor and outdoor grows remain on track.
Rua’s main cultivation supply is off-shore and was not impacted.

Ends.

The person who authorised this announcement:
Trevor Burt, Chairman.

For shareholder enquiries please visit www.ruabio.com or contact:
Kerry Donovan
Communications and Corporate Affairs Manager
info@ruabio.com
0800 RUABIO

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1






Interim Financial Report
Rua Bioscience Limited
For the six months ended 31 December 2022

2



Rua Bioscience Limited




Contents

Company Directory
3




Independent Auditor's Review
Report
4 - 5




Condensed consolidated Statement of Profit or Loss and Other Comprehensive Income
6




Condensed Consolidated Statement of
Changes in Equity
7 - 8




Condensed Consolidated Statement of
Financial Position
9




Condensed Consolidated Statement of Cash Flows
10




Notes forming part of the Condensed Consolidated Financial
Statements
11 - 19

3
Company Directory
For the six months ended 31 December 2022
R
egistered office address: 1 Commerce Place
Awapuni
Gisborne 4071
C
ontact phone number: 0800 782 246
C
ontact email address: info@ruabio.com
C
ountry of incorporation of company: New Zealand
C
ompany Number: 6484092
I
SIN: NZRUAE0004S1
L
egal form: NZ Limited Company
Pr
incipal activities: Pharmaceutical manufacturer
D
irectors: Trevor BURT
Panapa EHAU
Brett GAMBLE
Anna Kate STOVE
Teresa FARAC-CIPRIAN
A
uditor: PricewaterhouseCoopers
S
hare registrar: Computershare Investor Services Limited
Level 1, 159 Hurstmere Road
Takapuna, Auckland 0622
Ba
nkers: Kiwibank
S
olicitors: Lowndes Jordan

Independent auditor’s review report
To the shareholders of Rua Bioscience Limited.
Report on the condensed consolidated financial statements
Our conclusion
We have reviewed the condensed consolidated financial statements of Rua Bioscience Limited (the
Company), which comprise the condensed consolidated statement of financial position as at 31
December 2022, and the condensed consolidated statement of profit or loss and other comprehensive
income, the condensed consolidated statement of changes in equity and the condensed consolidated
statement of c ash 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 the
accompanying condensed consolidated financial statements of t he Company do not present fairly, in
all material respects, the financial position of the Company as at 31 December 2022, and its fi
nancial
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 responsibilities are further described in the Auditor’s responsibilities for
the review of the interim financial statements section of our report.
We are independent of the Company in accordance with the relevant ethical requirements in New
Z
ealand 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 i nterests in, the Company.
Responsibilities of Directors responsibility for the condensed consolidated financial
statements
The Directors of the Company are responsible on behalf of the Company for the preparation and fair
presentation of these condensed consolidated 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 condensed consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s responsibilities for the review of the condensed consolidated financial statements
Our responsibility is t o express a conclusion on the condensed consolidated 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 condensed consolidated 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 condensed consolidated 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 perf
ormed in a review are substantially less than those performed
in an audit conducted in accordance with International Standards on Auditing and International
Standards on Auditing (New Zealand) and consequently does not enable us to obtain assurance that
we might identify in an audit. Accordingly, we do not express an audit opi
nion on these condensed
consolidated financial statements.
PricewaterhouseCoopers, PwC Centre, 6 Albion Street, PO Box 645, Napier 4140 New Zealand
T:
+64 6 835 6144, www.pwc.co.nz
4

PwC
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 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:
Napier
Chartered Accountants
28 February 2023
5

6
Rua Bioscience Limited
Condensed Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the six months ended 31 December 2022


Note
For the six
months ended
31 December
2022
(unaudited)
For the six
months ended
31 December
2021
(unaudited)
$
$



Revenue from contracts with customers 5 62,819 -
Other income 6 191,586 360,443

Changes in inventories of finished goods and
work in progress
8 (122,240)
-
Research and development expenses (981,059) (1,652,073)
Other expenses (2,621,990) (2,228,932)
Net fair value gains/(losses) on financial
liabilities at fair value through profit or loss
4(ii) 4,100,932 -
Profit/(loss) before net financing costs 630,048 (3,520,562)



Interest income 101,265 63,433
Interest expense - -
Interest expense – leases (12,610) (21,333)
Net finance income 88,655 42,100

Profit/(loss) before tax 718,703 (3,478,462)

Income tax credit 7 - 1,013,596

Profit/(loss) after tax 718,703 (2,464,866)

Other comprehensive income - -

Total comprehensive profit/(loss) for the
period attributable to shareholders
718,703 (2,464,866)


Earnings per share attributable to the
ordinary equity holders of the parent




Loss from operations

Basic ($)
0.005 (0.02)
Diluted ($)
0.004 (0.02)

_______ _______



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

7

Rua Bioscience Limited
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 December 2022


Note Share

Share option Accumulated

Total
capital

reserve losses

equity

$

$ $

$

Opening balance at 1 July 2022 (audited) 41,891,677 141,686 (17,835,272) 24,198,091

Total comprehensive loss for the period
- Profit for the period - - 718,703 718,703
- Other comprehensive income - - - -
Total comprehensive income for the period - - 718,703 718,703

Transactions with owners of the Company
- Issue of share capital 4(ii), 15 1,790,800 - - 1,790,800
- Employee share options expense - (15,679) - (15,679)
- Share options vested and exercised - - - -
Total transactions with owners of the Company 1,790,800 (15,679) - 1,775,121


Balance at 31 December 2022 (unaudited) 43,682,477 126,007 (17,116,569) 26,691,915






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

8
Rua Bioscience Limited
Condensed Consolidated 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

- - - -
- Employee share options expense - 81,495 - 81,495
- Share options vested and exercised 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.

9

Rua Bioscience Limited
Condensed Consolidated Statement of Financial Position
As at 31 December 2022

The condensed consolidated financial statements on pages 6 to 19 were approved and authorised for issue by
the Board of Directors on 28
th
February 2023 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
2022
As at
30 June 2022


(unaudited)
$
(audited)
$

Current assets
Cash and cash equivalents 1,708,187
1,897,285

Other receivables and current assets 691,153
1,070,323

Prepayments 185,773
166,521

Inventory 8 137,927
218,805

Investments 4 5,050,110
8,041,493

Total current assets 7,773,150
11,394,427


Non-current assets
Property, plant and equipment 9 5,583,294
5,843,284

Goodwill 10 10,448,082
10,448,082

Intangible assets 10 5,016,035
5,016,035

Right-of-use lease assets 9 191,994
796,772

Other receivables 75,000
75,000

Total non-current assets 21,314,405 22,179,173

Total assets 29,087,555 33,573,600

Current liabilities
Trade and other payables 305,951
438,378

Contract liability -
2,062

Employee benefit liabilities 117,731 459,735
Lease liabilities 11 85,723 128,544
Deferred grant income 13,103 9,500
Contingent consideration payable 4 1,750,100 3,820,916
Total current liabilities 2,272,608
4,859,135


Non-current liabilities
Contingent consideration payable 4 - 3,820,916
Lease liabilities 11 123,032 695,458
Total non-current liabilities 123,032 4,516,374

Total liabilities 2,395,640
9,375,509


Net assets 26,691,915 24,198,091

Equity
Share capital 4(ii), 15 43,682,477 41,891,677
Accumulated losses (17,116,569) (17,835,272)
Share option reserve 126,007 141,686
Total equity 26,691,915 24,198,091

10

Rua Bioscience Limited
Condensed Consolidated Statement of Cash Flows
For the six months ended 31 December 2022


Note For the 6
months to
31 Dec 2022
For the 6
months to
31 Dec 2021
(unaudited) (unaudited)
$ $


Cash flows from operating activities

Receipts from customers 60,756 -
Grant income received 34,378 234,516
Sundry income received 10,837 -

Payments to suppliers and employees (3,770,172) (3,962,823)
Net cash outflows from operating activities (3,664,201) (3,728,307)


Cash flows from investing activities

Interest income 92,647 51,214
Proceeds from maturing investments 8,000,000 16,070,711
Proceeds from release of financial assets in escrow 500,000 -
Proceeds from the sale of property, plant and equipment 2,504 -

Purchase of property, plant and equipment (46,875) (310,947)
Investment deposits made (5,000,000) (13,070,711)
Net cash inflows from investing activities 3,548,276 2,740,267


Cash flows from financing activities

Repayment of borrowings - (10,762)
Repayment of lease liabilities (60,563) (72,332)
Interest paid (12,610) (25,102)
Share issue costs paid - -
Net cash outflows from financing activities (73,173) (108,196)

Net decrease in cash and cash equivalents (189,098) (1,096,236)

Cash and cash equivalents at beginning of the period 1,897,285 3,359,479

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

Cash and cash equivalents at end of the period 1,708,187 2,263,243


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

11

Rua Bioscience Limited
Notes forming part of the Condensed Consolidated Financial Statements
For the six months ended 31 December 2022



1. Reporting Entity
The condensed consolidated financial statements comprise the results of Rua Bioscience
Limited and its subsidiary (together, “the Group”).
Rua Bioscience Limited (“the Company”) is a company incorporated and domiciled in New
Zealand and registered under the Companies Act 1993. The address of the Company’s
registered office and principal place of business is 1 Commerce Place, Awapuni, Gisborne.
The Company is principally engaged in the business of research and development,
pharmaceuticals manufacturing and sales.
2. Basis of preparation
(a) Statement of compliance

These unaudited interim consolidated financial statements have been prepared for the six
months ended 31 December 2022. These interim consolidated financial statements provide an
update on the interim performance of the Group, and should be read in conjunction with the
full year consolidated financial statements presented for the year ended 30 June 2022 from
which the same accounting policies and methods of computation have been followed.
The interim consolidated 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 Group is a for-profit entity for the purposes of complying with NZ GAAP.

The consolidated interim financial statements are presented in New Zealand dollars ($), which
is also the Group’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 consolidated
interim financial statements are consistent with those used as at 30 June 2022 and 31 December
2021.

(c) Basis of measurement

The consolidated 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
­ Contingent consideration – note 4

12
Rua Bioscience Limited
Notes forming part of the Condensed Consolidated Financial Statements
For the six months ended 31 December 2022



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


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

The Group reported a net profit of $718,703 for the period ended 31 December 2022. Excluding
the fair value gain on contingent consideration of $4,100,932, the Group incurred an operating
loss of $3,382,229.

The capital raised at the IPO has provided a sufficient runway for to the company to continue
operating as a going concern while it focuses on global sales opportunities and continues the
development of its Genetic Discovery Program and Product Development innovations.

The purchase of Zalm Therapeutics Ltd in January 2022 creates a significant opportunity for
the company in terms of expansion of our product portfolio and the opportunity for scalable
supply and revenue generation capability.

The Group is focusing on commercialisation of cannabinoid medicines so that the income
generated from products will begin to fund the operations of the Group to the point where the
Company is financially sustainable and begins to generate profits.

Over the six-month period to December 2022, the Group has progressed its commercial activity
for its pipeline of products in key target markets. The Group continues to progress its research
products with goal of commercialising this IP in the medium term.

Currently there are no indications that the Group will not be able to continue as a going
concern. The Group has net current assets and the Directors are of the opinion that the Group
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 Group is monitoring and
managing these risks, however there are no indications at this point in time that they will affect
the Group’s ability to continue as a going concern.

13
Rua Bioscience Limited
Notes forming part of the Condensed Consolidated Financial Statements
For the six months ended 31 December 2022



3. Segment Reporting
The Group operates in one segment, its primary business being research and development and
the sale and manufacture of pharmaceutical products 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 Group’s
segment.

The Group currently derives revenue from customers through the sale of goods to a single
distributor in New Zealand. The Group currently only derives revenue from a single product
line and therefore revenue is not disaggregated further.

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

(i) Categories and fair values of the Group’s financial instruments


Financial
Assets

at Amortised Cost
Financial
Liabilities

at Amortised Cost
Financial
Liabilities

at Fair Value through
Profit or Loss
Total
Carrying Amount
Fair
Value
31 December
2022 (unaudited)
$ $
$
$ $


Investments 5,050,110 -
-
5,050,110
(a)
Cash and cash
equivalents
1,708,187 -
-
1,708,187 (a)
Other receivables 75,000 -
-
75,000 (a)
Trade and other
payables
- (305,951)
-
(309,951) (a)
Lease liabilities - (208,755)
-
(208,755) (b)
Contingent
consideration
- - (1,750,100) (1,750,100) (c)



Total 6,833,297 (514,706)
(1,750,100)




30 June 2022
(audited)






Investments 8,041,493 8,041,493 (a)
Cash and cash
equivalents
1,897,285 1,897,285 (a)
Other receivables 575,000 575,000 (a)
Trade and other
payables
(438,378) (438,378) (a)
Lease liabilities (824,002) (824,002) (b)
Contingent
consideration
(7,641,832) (7,641,832) (c)



Total 10,513,778 (1,262,380) (7,641,832)

(a) Due to their short-term nature, the carrying value of these financial instruments approximates their fair value.

(b) Not required to be disclosed per NZ IFRS 7.

(c) Measured at fair value (i.e., carrying amount equals fair value).

.

14
Rua Bioscience Limited
Notes forming part of the interim consolidated financial statements
For the six months ended 31 December 2022



4. Financial instruments and Financial Risk Management, and Capital Management (continued)

(ii) Fair value information regarding contingent consideration

Note 6 months to
31 Dec 2022
(unaudited)
30 June 2022
(audited)
$ $
Opening balance 7,641,832 -
Arising on business combination - 7,641,832
Change in fair value estimate (4,100,932) -
Consideration settled (shares) 15 (1,790,800) -

Closing balance 1,750,100 7,641,832


Contingent consideration comprises the Group’s probability-weighted assessment of
discounted amounts payable to vendors in respect of business acquisitions. During the period
a fair value gain of $4.1m was recognised through the condensed consolidated statement of
profit or loss and other comprehensive income relating to the contingent consideration for
the Zalm acquisition. This reflects a $2.0m realised gain that was recognised on the
completion of milestone 1 and a $2.1m unrealised gain relating to milestone 2. The Group’s
weighted-average probabilities with respect to Milestone 2 have not materially changed as at
31 December 2022.

Th e contingent consideration balance of $1,750,100 at 31 December 2022 is expected to be
settled in shares of Rua Bioscience Limited. This is expected to become payable following the
achievement of specified product revenue milestones by December 2023 (Milestone 2).

5. Revenue from contracts with customers

Revenue streams recognised by the Group include:

6 months to
31 Dec 2022
(unaudited)
6 months to
31 Dec 2021
(unaudited)
$ $

Sale of goods 62,819 -
Total 62,819 -


6. Other income

Other income streams recognised by the Group include:
Note 6 months to
31 Dec 2022
(unaudited)
6 months to
31 Dec 2021
(unaudited)
$ $

Research and development grant income 167,654 358,698
Gain on early termination of lease 9 13,096 -
Sundry income 10,836 1,745
Total 191,586 360,443

15
Rua Bioscience Limited
Notes forming part of the interim consolidated financial statements
For the six months ended 31 December 2022



7. Income tax

Significant management judgement has been exercised to determine that future taxable profits
for the Group are beyond a reliable forecast horizon and that no net deferred tax asset should
be recognised.

The unrecognised deferred tax asset is comprised of tax losses of $4,466,489 (30 June 2022:
$nil).

8. Inventory

Significant transactions during the 6 months to 31 December 2022

• Due to market pressures, the carrying value of certain inventories exceeded their net
realisable value, therefore, an inventory write-down was recorded related to the following
classes of inventory:

31 Dec 2022
(unaudited)
31 Dec 2021
(unaudited)
$ $

Raw materials 1,679 -
Consumables 3,625 -
Work in progress 82,324
Total write-down 87,628 -


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

Significant transactions during the 6 months to 31 December 2022


• The Group purchased additional property, plant and equipment of $37,279 primarily in
relation to vehicles and additional development of its Ruatorea Plant and Extraction
facilities.

• The Group ended one of its leases early at its Commerce Place site resulting in a
$486,899 reduction in Right-of -use assets and a gain of $13,096 from early termination
(refer Note 6).

• The termination of the Commerce Place lease agreement also resulted in a
remeasurement of a second lease premises at Commerce Place which reduced the
remaining lease term in accordance with the provisions of the Group’s lease
agreements. This resulted in an additional $84,875 decrease in Right-of -use assets.

10. Intangible assets and Goodwill

Significant transactions during the 6 months to 31 December 2022

• No amortisation expense has been recognised for the period ended 31 December 2022
as the Group has not begun to purchase product from Cann Group under the supply
contract intangible asset.
• There was no impairment recognised in respect of the Group’s goodwill and intangible
assets for the period ended 31 December 2022.

16


Rua Bioscience Limited
Notes forming part of the interim consolidated financial statements
For the six months ended 31 December 2022



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


6 months to 31 Dec 2022
(unaudited)

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

Lease liabilities 824,022 - (54,689) (499,995) - (60,563) 208,755
824,022 - (54,689) (499,995) - (60,563) 208,755

6 months to 31 Dec 2021
(unaudited)

NON-CASH NON-CASH NON-CASH CASH CASH
Opening New leases Lease
remeasurements
Lease
terminations
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

17

Rua Bioscience Limited
Notes forming part of the interim consolidated financial statements
For the six months ended 31 December 2022


12. Related party transactions

6 Months to 31 December 2022

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

6 Months to 31 December 2021

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


During the period the Group 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 2022
(unaudited)
31 December
2022
(unaudited)
$ $

Alvarium Investments Purchases 2,300 -
EECOMS Purchases - -
Mitchel Family Trust Purchases 1,087 -



Nature of
transactions
Transaction
amount
Amounts
receivable
(payable)

6 Months to 31
Dec 2021
(unaudited)
30 June 2022
(audited)
$ $

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

18
Rua Bioscience Limited
Notes forming part of the interim consolidated financial statements
For the six months ended 31 December 2022


12. 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 Group, including the
directors) was as follows:

6 months to 31
December
2022(unaudited)
6 months to 31
December
2021(unaudited)
$ $

Directors’ fees 131,423 135,346
Short-term employee benefits 793,816 663,845
Defined contribution plan payments 29,539 20,812
Share-based payment expense 27,470 67,641

Total key management personnel
compensation

982,248

887,644


13. Contingent liabilities

There were no contingent liabilities at the end of the period (2021: nil).


14. Biological assets

The Group currently still undertakes significant research and development activities and as
such the plants and produce currently resulting from these operations are not being developed
for sale, or for transformation into agricultural produce or additional biological assets. Under
the Group’s licensing requirements, plants must be destroyed and therefore hold no value at
balance date. The plants are destroyed by way of being composted and as they are not able to
be traded, they have no value from a product manufacturing perspective.

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 Group moves
past the research and development phase. The agricultural assets will be recognised at fair
value once the regulations allow commercial production and they are used for commercial
production.

19
Rua Bioscience Limited
Notes forming part of the interim consolidated financial statements
For the six months ended 31 December 2022


15. Share Capital



31 December 2022
(unaudited)
30 June 2022
(audited)
Number Number

Opening shares 149,879,267 140,262,591

Shares issued*
,
** 8,140,000 9,616,676

Total share capital 158,019,267 149,879,267


* During the year ended 30 June 2022:
▪ 1,476,676 vested share options were exercised into ordinary shares.
▪ 8,140,000 ordinary shares were issued as part of the consideration paid for the
acquisition of Zalm Therapeutics Limited.

**During the period ended 31 December 2022, the Group issued 8,140,000 shares as part of
Milestone 1 consideration for the acquisition of Zalm Therapeutics Limited.

16. Events after the reporting date

In February 2023, the North Island of New Zealand, and in particular Gisborne and the Hawkes Bay,
experienced a significant weather event, Cyclone Gabrielle.

The event caused major disruptions across Tairawhiti and resulted in closures to the Group’s
Gisborne head office and manufacturing facility. Although no damage was sustained to either site,
water and connectivity issues limit the Group’s ability to operate a full capacity.

The Group’s research and development facility at Ruatorea did not sustain damage and remains
operational. Research and development (both indoor and outdoor) crops were unaffected by the
weather events.

The Group does not expect that there will be any material financial impact from this event.