Rua Bioscience Annual Results
FOR PUBLIC RELEASE
NZX Limited
Wellington
Tuesday, 29 August 2023
Rua
Bioscience Limited releases annual results
Results in line with expectations and achieves first international sales.
Summary financials
FY23 $ FY22 $
Revenue (from customers) 357,675 24,226
Revenue (incl. fair value gains) 6,532,612 646,098
Profit/(Loss) before tax (5,958,506) (7,485,985)
FY23 milestones
• October 2022: Exported first cannabis genetics to Australia.
• February 2023: Signed five-year supply agreement with Motagon targeting Poland
and Czechia.
• March 2023: Announced the closure of local GMP manufacturing facility to focus on
developing unique genetics and executing export-led strategy.
• April 2023: First Rua-branded medicinal cannabis product launched in Germany
with distribution partner Nimbus Health (part of Dr Reddy’s Laboratories).
• June 2023: First revenue from sale of products in Germany.
Māori founded, Te Tairāwhiti based Rua Bioscience Limited (NZX: RUA) is a pioneering
medicinal cannabis company. In FY22 the company concentrated on preparing for entry
into international markets, while in the year to 30 June 2023 Rua started to deliver on their
export strategy.
MARKET ANNOUNCEMENT
Rua signed supply and distribution agreements targeting growth markets in Australasia,
Poland and Czechia; expanded supply partnerships in Australia and Europe; and
successfully launched product into Germany, generating their first international sales.
As the only N ew Zealand-based medicinal cannabis company with an explicit focus on
delivering social impact, Rua also extended its commitment to its Impact Programme for
residents of Te Tairāwhiti.
Key appointments
The year has seen core changes to the management team and board, as the company
moves into the next stage of its expansion.
In August 2022, Chief Executive Officer Rob Mitchell retired and board member Anna Stove
was appointed Managing Director. Her remit was to guide the process of sharpening the
strategy, right sizing the business, and appointing a new Chief Executive Officer. Paul
Naske, who was recruited by the co-founders in 2019, was promoted to CEO in February
2023.
At the board level, Chair Trevor Burt and D irector Brett Gamble retired in May and June
2023 respectively. Teresa Ciprian was appointed as a Director on 1 August 2022 bringing
an exceptional international background in commercialisation, innovation and business
development in the primary sector, and brings strong governance capability. Tony
Barclay joined the b oard in May 2023. He has decades of publicly listed company and
healthcare experience, and holds a number of directorships, all in MedTech. Anna Stove
was appointed Chair in May 2023, while co-founder Panapa Ehau continues as an
Executive Director.
“Together with the board and the rest of the Rua team, we have been identifying where
true value lies in the medicinal cannabis industry,” said Ms Stove.
“Since our inception, Rua has had an export-led strategy. To accelerate growth and
deliver a positive return to shareholders, over FY23 we continued to hone this strategy and
prepare for our next phase of development – all while achieving some notable firsts.”
Financial results
Rua’s loss before tax for the year to 30 June 2023 was $5.96m (FY22 $7.49m). The
company remains well capitalised, with cash, cash equivalents and investments on hand
at the end of the period of $4.56m (FY22 $9.94m).
These results are within the expectations of the board, as the company continued to
develop international revenue pipelines. This year the company recorded significant non-
cash impairments, largely attributable to the impairment of the GMP manufacturing
facility and Zalm supply contract.
In the second half of FY23, the company made the decision to close the GMP
manufacturing facility in Tairāwhiti and establish a capital light business model. This has
resulted in reduced overheads and expenditure.
Revenue was recorded as $6.53m (FY22 $0.65m) of which $5.85m was a non-cash fair
value gain as a result of a reduction in the payment liability to ex-Zalm shareholders.
Revenue from customers was $358k (FY22 $24k).
Rua’s strategy
“Rua has a uniquely nimble approach to the medicinal cannabis market,” said CEO Paul
Naske.
“By outsourcing cultivation and manufacturing, we are operating at pace at both ends of
the value chain. We are continuing R&D and genetic discovery in Ruatorea and
establishing distribution channels in export markets around the world.
“We’re working with our supply partners around the world to build out our portfolio and
create products using our internally developed varieties. Rua’s supply agreements
provide cost-effective access to GMP-quality medicines.
“This is enabling us to deliver scalable value, as we establish a sustainable global
company and take our brand to the world.”
Germany
In April 2023, Rua successfully launched its first GMP-quality medicine in Germany –
becoming one of the first medicinal cannabis companies in New Zealand to introduce a
branded product in the market. Germany is the largest and most developed medicinal
cannabis market in Europe and projected to be worth around NZ$700m by the end of this
calendar year.
1
“Our entry into the German market, alongside our distribution partner Nimbus Health, was
a critical commercial milestone and highlight of the year,” said Mr Naske. “The response
to the product exceeded our expectations.”
With an established path to market and revenue, Rua and Nimbus Health intend to
expand the product offering in Germany. In time, Rua will distribute the genetics from their
Ruatorea facility through this same channel.
Australia
Rua is now launching into the Australian market. This is the second largest medicinal
cannabis market in the world, estimated to be worth over $240m currently and growing
rapidly.
2
During the second half of FY23 Rua established the pipeline for Rua-branded
product to be sold in Australia, with company licences and distribution channels in place.
During August 2023 the company took delivery of its first product and made it available
for sale, which begins to establish a strong sales presence and a clear pathway to further
revenue in FY24.
Poland and Czechia
“Rua has the bold ambition of becoming a market leader in Germany and the EU,” said Mr
Naske. “We have signed a five-year supply agreement with Motagon and aim to be early
movers in the emerging markets of Poland and Czechia.
Rua’s immediate focus will be on entering the Polish market with a detailed product
dossier submitted to Polish authorities in February 2023. Poland is one of the fastest-
growing markets in Europe and by the end of 2023, the Polish medicinal cannabis market
is expected to be worth over NZ$90m.
3
With no domestic cultivation, it is a major importer
of dried flower.
Social impact
Rua’s Compassionate Access Programme shares the benefits of medicinal cannabis with
those in the Te Tairāwhiti community who can most benefit. Managed by local prescribers,
the programme ensures up to 30 patients per month in Te Tairāwhiti, who meet specific
criteria, have access to fully subsidised medicinal cannabis products.
In addition to the Compassionate Access Programme, Rua has a S cholarship P rogramme
designed to celebrate the aspirations of local rangatahi and help drive meaningful long
term social and economic impact in the communities of Tairāwhiti. With the support of
Rua Bioscience and Trust Tairāwhiti, 11 students were awarded undergraduate
scholarships in FY23.
“At Rua, providing social and economic impacts with programmes like these is woven into
the fabric of everything we do,” said Mr Naske.
“We are committed to maximising the potential of the emerging medicinal cannabis
industry to enhance health, promote wellbeing, and underpin prosperity for the people of
Te Tairāwhiti. As we continue to expand into export markets and build a sustainable
business, this will in turn grow value for shareholders and is ultimately going to help us
support intergenerational opportunities like these.”
1. Proprietary Management information.
2. Penington Institute Australia, May 2023.
3. Proprietary Management information.
ENDS
For more information, please visit www.ruabio
.com or contact:
Paul Naske
Chief Executive Officer
+64 (21) 445 154
Paul.naske@ruabio
.com
---
Rua Bioscience Limited
Consolidated Financial Statements
For the year ended
30 June 2023
Rua Bioscience Limited
Contents
Company Directory
3
Independent Auditor's Report
4 – 8
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
9
Consolidated Statement of Changes in Equity 10
Consolidated Statement of Financial Position
11
Consolidated Statement of Cash
Flows
12
Notes forming part of the Consolidated Financial
Statements
13 - 57
3
Company Directory
For the year ended 30 June 2023
Country of incorporation of company: New Zealand
Company Number: 6484092
Legal form: NZ Limited Company
Principal activities: Pharmaceutical Distribution
Registered office: 1 Commerce Place
Awapuni
Gisborne
Directors: Anna STOVE – Chair
Panapa EHAU
Teresa FARAC-CIPRIAN (appointed 1 August 2022)
Tony BARCLAY (appointed 1 May 2023)
Directors who retired during the last 12
months:
Trevor BURT (retired 1 May 2023)
Brett GAMBLE (retired 30 June 2023)
Martin SMITH (retired 12 October 2022)
Auditor: PricewaterhouseCoopers
Bankers: Kiwibank
Solicitors: Lowndes Jordan
PricewaterhouseCoopers, Level 3, 6 Albion St, PO Box 645, Napier, 4110, New Zealand
T: +64 6 835 6144, F: +64 6 835 0360, pwc.co.nz
Independent auditor’s report
To the shareholders of Rua Bioscience Limited
Our opinion
In our opinion, the accompanying consolidated financial statements of Rua Bioscience Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 30 June 2023, its financial performance and its cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards
(NZ IFRS) and International Financial Reporting Standards (IFRS).
What we have audited
The Group's consolidated financial statements comprise:
● the consolidated statement of financial position as at 30 June 2023;
● the consolidated statement of profit or loss and other comprehensive income for the year then
ended;
● the consolidated statement of changes in equity for the year then ended;
● the consolidated statement of cash flows for the year then ended; and
● the notes to the consolidated financial statements, which include significant accounting
policies and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the consolidated financial statements
section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
International Code of Ethics for Professional Accountants (including International Independence
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
Other than in our capacity as auditor we have no relationship with, or interests in, the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the consolidated financial statements of the current year. These matters were addressed
in the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
PwC 5
Description of the key audit matter How our audit addressed the key audit matter
Business restructure
As described in Note 2(f) of the financial
statements, the Group has gone through a
significant restructure during the period,
including changing its business operating
model and ceasing manufacturing.
This has resulted in:
- a change to focus on key export
markets, primarily Europe and
Australia;
- a reduction of headcount to resize
the workforce with the closure of
the manufacturing facility; and
- plant and equipment related to the
manufacturing process being
written down by $0.84m (Note
12).
The change in focus has resulted in a re-
forecast of future sales and related key
assumptions. This is particularly
challenging to forecast, requiring
judgement, as the Group are in the early
stages of market entry.
As at 30 June 2023 a number of assets
related to the manufacturing process have
been written down to their recoverable
value. Post year end they are being
considered for potential sale. Given the
specialised nature of the property, plant
and equipment, when applying their
judgements and assumptions to
determine the recoverable value, and the
impairment amount, management's
estimation for certain assets has been
made in the absence of comparable
external sales data. This increases the
associated estimation uncertainty risk.
Due to the level of audit effort, particularly
in relation to assessing future sales
growth, the estimation and judgement
involved with impairing assets to their
recoverable amount, and potential for
asset sales, the business restructure is
recognised as a Key Audit Matter within
our Audit Report.
In considering the appropriateness of impacts of the
business restructure on the financial statements, we
have:
● Met with management and discussed sales
strategies and status in key export markets
with reference back to sales contracts and
agreements;
● Assessed management’s forecast sales for
2024 and performed down side sensitivity
analysis;
● Tested restructure related expenditure;
● Assessed management’s consideration of the
sale of assets, particularly given their
specialised nature;
● Obtained management’s assessment of the
recoverable value for plant and equipment,
with reference to available information, and
considered the impairment applied;
● Considered the judgements and assumptions
used by management when impairing assets,
and applied sensitivities to the estimates that
were arrived at in the absence of external
sales data;
● Considered management's assessment that
the plant and equipment related to
manufacturing did not meet the recognition
requirements for disclosure as held for sale
assets at year end; and
● Considered the adequacy of the related
disclosures in the financial statements against
the requirements of NZ IFRS.
PwC 6
Description of the key audit matter How our audit addressed the key audit matter
Impairment of Intangible Assets -
supply contract
As described in Note 14, as part of the
Zalm Therapeutic Limited acquisition
made in 2022, a supply contract intangible
(to supply both flower and oils) was
recognised in the purchase price
allocation. The contract as at 30 June
2022 was valued at $5.02m.
Forecasting product demand can be
inherently difficult when entering new
markets, particularly where the products
are new and/or being developed. During
the 2023 financial year, management
assessed market opportunities as part of
their updated sales strategy, and noted
that the demand for oils is not yet at the
levels they were previously forecasting
when valuing the intangible asset in the
prior year.
In addition, management has noted the
supply price they are paying is no longer
expected to reduce as anticipated in the
sale and purchase agreement. Both of
these matters were factors which
management considered when
undertaking an impairment assessment in
respect of the intangible asset, which has
resulted in an impairment of $4.73m. This
has reduced the balance at 30 June 2023
to $0.29m.
Given the level of audit effort and
judgement involved, this matter is
recognised as a Key Audit Matter within
our Audit Report.
Our audit procedures have focused on the key
judgements included in the impairment assessment.
To audit the intangible asset impairment, we have:
● Assessed the inputs into the valuation model
including:
○ Meeting with management to discuss
changes from the prior year, demand
for products, and plans for future sales
and cost of sales;
○ Challenging management’s
assumptions in relation to the
changes to the valuation model based
on available data;
○ Assessing the reduction in volumes
from the prior year with reference to
the change in business model, and
the actual and forecast sales;
○ Agreeing the quantities to supporting
information; and
○ Agreeing cost of sales to supporting
documentation, including the original
valuation.
● Understood management’s impairment
assessment, challenged the assumptions, and
re-performed calculations within, and
adjustments to, the valuation model to ensure
mathematical accuracy;
● Reviewed the supply agreement and sale and
purchase agreement with regards to the
requirements for the reduction in the supply
price of the inventory; and
● Assessed management’s revised sales
models.
Our audit approach
Overview
Overall group materiality: $68,600, which represents 1% of Total Expenses
excluding one off impairments.
We chose Total Expenses excluding one off impairments as the benchmark
because, in our view, it is the benchmark against which the performance of the
PwC 7
Group is most commonly measured by users, and is a generally accepted
benchmark. We have excluded the impairment of intangible assets and
property, plant and equipment as one off adjustments that are not expected to
occur on a regular basis.
Following our assessment of the risk of material misstatement, full scope audits
were performed for all entities in the Group.
As reported above, we have two key audit matters, being:
● Business restructure
● Impairment of Intangible Assets - supply contract
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the consolidated financial statements. In particular, we considered where
management made subjective judgements; for example, in respect of significant accounting estimates
that involved making assumptions and considering future events that are inherently uncertain. As in all
of our audits, we also addressed the risk of management override of internal controls, including among
other matters, consideration of whether there was evidence of bias that represented a risk of material
misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance about whether the consolidated financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material if,
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the consolidated financial statements as a whole as set out
above. These, together with qualitative considerations, helped us to determine the scope of our audit,
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate, on the consolidated financial statements as a whole.
How we tailored our group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion
on the consolidated financial statements as a whole, taking into account the structure of the Group, the
accounting processes and controls, and the industry in which the Group operates.
Other information
The Directors are responsible for the other information. The other information comprises the
information included in the Annual report, but does not include the consolidated financial statements
and our auditor's report thereon. The Annual report is expected to be made available to us after the
date of this auditor's report.
Our opinion on the consolidated financial statements does not cover the other information and we will
not express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated.
PwC 8
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the Directors and use our
professional judgement to determine the appropriate action to take.
Responsibilities of the Directors for the consolidated financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal
control as the Directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to liquidate
the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements, as a whole, are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (NZ) and ISAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is
located at the External Reporting Board’s website at:
https://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an auditor’s
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 Company and the Company’s shareholders, as a body, for our
audit work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Maxwell John
Dixon.
For and on behalf of:
Chartered Accountants
28 August 2023
Napier
9
Rua Bioscience Limited
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2023
Note
2023
2022
$ $
Revenue from contracts with customers 5 357,675 24,226
Other income 6 323,905 621,872
Fair value gains 13 5,851,032 -
Total revenue and other income 6,532,612 646,098
Changes in inventories of finished goods and work in progress 7 (339,551) (128,643)
Research and development costs 7 (1,587,704) (2,977,522)
Other expenses 7 (10,746,913) (5,123,241)
Total expenses before operating loss (12,674,168) (8,229,406)
Operating loss before net financing income (6,141,556) (7,583,308)
Interest income 202,129 138,145
Interest expense - (70)
Interest expense - leases (19,079) (40,752)
Net finance income 183,050 97,323
Loss before tax (5,958,506) (7,485,985)
Income tax expense 8 (774) (1,150,067)
Loss after tax (5,959,280) (8,636,052)
Other comprehensive income:
Items that will or may be reclassified to profit or loss:
Exchange gains arising on translation of foreign operations 38 -
Other comprehensive income for the year, net of tax 38 -
Total comprehensive loss for the year attributable to
shareholders
(5,959,242) (8,636,052)
Earnings per share attributable to the
ordinary equity holders of the Company
Loss from operations
Basic ($)
10 (0.04) (0.06)
Diluted ($)
10 (0.04) (0.06)
_______ _______
The above statements should be read in conjunction with the accompanying notes.
10
Rua Bioscience Limited
Consolidated Statement of Changes in Equity
For the year ended 30 June 2023
Note
Share
Foreign
currency
translation
Share option
Accumulated
Total
capital reserve reserve losses equity
$ $ $ $
Opening balance at 1 July 2021 37,418,499 - 614,767 (9,199,220) 28,834,046
Total comprehensive loss for the year
- Loss for the year
-
-
-
(8,636,052)
(8,636,052)
- Other comprehensive income - - - - -
Total comprehensive loss for the year - - - (8,636,052) (8,636,052)
Transactions with owners
- Issue of share capital 13 3,820,916 - - - 3,820,916
- Employee share options expense 23 - - 179,181 - 179,181
- Share options vested and exercised 23 652,262 - (652,262) - -
Total transactions with owners 4,473,178 - (473,081) - 4,000,097
Balance at 30 June 2022 41,891,677 - 141,686 (17,835,272) 24,198,091
Opening balance at 1 July 2022 41,891,677 - 141,686 (17,835,272) 24,198,091
Total comprehensive loss for the year
- Loss for the year - - - (5,959,280) (5,959,280)
- Other comprehensive income - 38 - - 38
Total comprehensive loss for the year - 38 - (5,959,280) (5,959,242)
Transactions with owners
- Issue of share capital 13, 19 1,790,800 - - - 1,790,800
- Employee share options expense 23 - - 90,616 - 90,616
- Share options vested and exercised 23 20,240 - (20,240) - -
Total transactions with owners 1,811,040 - 70,376 - 1,881,416
Balance at 30 June 2023 43,702,717 38 212,062 (23,794,552) 20,120,265
The above statements should be read in conjunction with the accompanying notes.
11
Rua Bioscience Limited
Consolidated Statement of Financial Position
As at 30 June 2023
Note 2023 2022
$ $
Current assets
Cash and cash equivalents 4
2,529,338 1,897,285
Trade and other receivables 16
862,991 1,070,323
Prepayments
163,361 166,521
Investments 4
2,032,055 8,041,493
Inventory 11
14,319 218,805
Total current assets
5,602,064 11,394,427
Non-current assets
Property, plant and equipment 12
4,438,681 5,843,284
Goodwill 13,14
10,448,082 10,448,082
Intangible assets 14
286,168 5,016,035
Right-of-use lease assets 15
100,577 796,772
Other receivables 16
75,000 75,000
Total non-current assets
15,348,508 22,179,173
Total assets
20,950,572 33,573,600
Current liabilities
Trade and other payables 17
522,544 438,378
Contract liabilities 5
- 2,062
Employee benefit liabilities 18 180,083 459,735
Lease liabilities 4,15 46,722 128,544
Deferred grant income 13,103 9,500
Contingent consideration payable 13 - 3,820,916
Total current liabilities
762,452 4,859,135
Non-current liabilities
Contingent consideration payable 13 - 3,820,916
Lease liabilities 4,15 67,855 695,458
Total non-current liabilities
67,855 4,516,374
Total liabilities
830,307 9,375,509
Net assets 20,120,265 24,198,091
Equity
Share capital 19
43,702,717 41,891,677
Accumulated losses
(23,794,552) (17,835,272)
Foreign currency translation reserve
38 -
Share option reserve
212,062 141,686
Total equity 20,120,265 24,198,091
The consolidated financial statements on pages 9 to 57 were approved and authorised for issue by
the Board of Directors on 28 August 2023 and were signed on its behalf by:
______________________ (Director) ______________________ (Director)
The above statements should be read in conjunction with the accompanying notes.
12
Rua Bioscience Limited
Consolidated Statement of Cash Flows
For the year ended 30 June 2023
Note 2023 2022
$ $
Cash flows from operating activities
Receipts from customers 278,085 24,280
Grant income received 104,378 696,171
Payments to suppliers and employees (6,302,684) (7,565,373)
Net cash inflows/(outflows) from operating activities 9 (5,920,221) (6,844,922)
Cash flows from Investing activities
Interest income 211,567 113,360
Proceeds from sale of plant and equipment 34,854 1,656
Proceeds from maturing investments 4 13,000,000 29,070,711
Cash acquired in acquisition of subsidiary (net of cash
paid)
- 876,452
Proceeds from contingent consideration receivable 13 500,000 -
Investment deposits made (7,000,000) (24,070,711)
Purchase of property, plant and equipment (73,772) (400,103)
Net cash inflows/(outflows) from investing activities 6,672,649 5,591,365
Cash flows from financing activities
Repayment of borrowings - (10,762)
Principal elements of lease payments (101,296) (153,284)
Interest paid (19,079) (44,591)
Net cash inflows/(outflows) from financing activities (120,375) (208,637)
Net increase/(decrease) in cash and cash equivalents 632,053 (1,462,194)
Cash and cash equivalents at beginning of year 1,897,285 3,359,479
Cash and cash equivalents at end of year 4 2,529,338 1,897,285
The above statements should be read in conjunction with the accompanying notes.
13
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
1. Reporting Entity
The consolidated financial statements comprise the results of Rua Bioscience Limited and its
subsidiaries (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, and
pharmaceutical distribution and marketing.
2. Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with New Zealand
Generally Accepted Accounting Practice (NZ GAAP), being in accordance with New Zealand
Equivalents to International Financial Reporting Standards (NZ IFRS) and other New Zealand
accounting standards and authoritative notices that are applicable to entities that apply NZ IFRS
and International Financial Reporting Standards (IFRS). They comply with interpretations issued
by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS. The
consolidated financial statements have also been prepared in accordance with the requirements
of the Companies Act 1993, the Financial Markets Conduct Act 2013 and the Main Board/Debt
Market Listing Rules of NZX Limited.
The Group is a for-profit entity for the purposes of complying with NZ GAAP.
These consolidated financial statements include non-GAAP financial measures that are not
prepared in accordance with NZ IFRS. The Group presents Net Tangible Assets, in Note 26 . The
Group believes that this non-GAAP measure provides useful information to readers, as this is a
required disclosure under the NZX Listing Rules, but it should not be viewed in isolation, nor
considered as a substitute for measures reported in accordance with NZ IFRS. Non-GAAP measures
as reported by the Group may not be comparable to similarly titled amounts reported by other
companies.
The consolidated 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
Significant accounting policies have been disclosed alongside the related notes in the consolidated
financial statements.
(c) Basis of measurement
The consolidated financial statements have been prepared on a historical cost basis, except for
the items detailed in note 2(h).
14
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
2. Basis of preparation (continued)
(d) New standards, interpretations and amendments
(i) New standards mandatorily effective during the period
New standards that have become mandatorily effective in the annual consolidated financial
statements for the year ended 30 June 2023, none of which have had a significant effect on
the Group are:
• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to
NZ IAS 16);
• Annual Improvements to NZ IFRS Standards 2018-2020 (Amendments to NZ IFRS 1,
NZ IFRS 9, NZ IFRS 16 and NZ IAS 41);
• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to NZ IAS 37); and
• Amendments to IAS 1 – Classification of Liabilities as Current or Non-current
(Deferral of Effective Date).
(ii) Issued, but not yet effective
There are a number of standards, amendments to standards, and interpretations which have
been issued that are effective in future accounting periods that the Group has decided not to
adopt early.
The following amendments are effective for the periods beginning on or after 1 January 2023:
• Amendments to IAS 1 – Classification of Liabilities as Current or Non-current
(effective 1 January 2023);
• Amendments to FRS 44 – Disclosure of Fees for Audit Firms’ Services
• Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction –
Amendments to NZ IAS 12 Income Taxes (effective 1 January 2023);
• NZ CS 1 Climate-related Disclosures
• NZ CS 2 Adoption of Aotearoa New Zealand Climate Standards
• NZ CS 3 General Requirements for Climate-related Disclosures
The Group does not expect these new and amended standards to have a material impact on
the Group.
15
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
2. Basis of preparation (continued)
(e) Accounting estimates and judgements made
The preparation of the consolidated financial statements, in conformity with NZ IFRS, requires
management to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an on-going basis, with revisions to
accounting estimates recognised in the period in which the estimates are revised and in any future
periods affected.
Details of significant judgements and estimates made by management in the current period
include:
Judgements
− Recognition (or not) of deferred tax assets related to carried forward tax losses (note 8).
− Classification of contingent consideration (note 13).
− Useful life of externally acquired intangible assets (note 14).
− Recognition of research and development tax credits and research and development expenses
(notes 6, note 7 and note 16).
− Determination of non-current assets held for sale and discontinued operations (note 2(l)).
− Recognition (or not) of renewal options in determining lease liabilities (note 15).
− Preparation of the financial statements on a going concern basis (note 2(g)).
Estimates
− Estimation of contingent consideration (note 13).
− Assessment of impairment for non-financial assets (note 12 and note 14).
The Group has performed an initial assessment of potential climate related risks and considered
the location of facilities and other key operations in the region it operates in and concluded that
there is no material impact on the current consolidated financial statements.
16
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
2. Basis of preparation (continued)
(f) Restructure
During the current reporting period, the Group made significant restructuring decisions whereby
it decided to cease local GMP manufacturing and accelerate its global business strategy through
the development of an international product pipeline built on the Group’s existing and developing
partnerships, and its ongoing research activities which are focussed on continuing to develop its
unique sustainable and protected IP around cultivars and cultivation techniques.
The decision to move towards an export strategy is driven by higher growth potential in European
and Australian markets which also allows the Group to shift to capital-efficient operation in the
immediate term.
As a result of the restructure, the Group has firstly redeployed, where possible, its plant and
machinery assets from its previous manufacturing operation in Gisborne to its ongoing cultivation,
research and development operations in Ruatorea. The Board has also identified significant items
of property, plant and equipment which are still being assessed for potential sale in future periods
to free up further operating cash flows. The restructure has also resulted in changes to previous
estimates and judgements associated with the Group’s cash flows which is reflected in the Group’s
assessment for impairment with respect to certain non-financial assets (see note 12 and 14).
(g) 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 incurred a net loss of $5,959,242 for the year ended 30 June 2023.
In the past year the Group has refocused its strategy and made the difficult decision to stop
manufacturing GMP medicine in Te Tairawhiti ( see note 2(f)). The board and management believe
this decision is in the best interests of its shareholders long term.
The Group can now focus efforts on generating sales and attracting higher margins in a capital
light and more efficient manner. Utilising key cultivation partners for manufacture of Rua products
in jurisdictions where the product will be sold reduces regulatory difficulties and saves significant
amounts of time and resource on shipping. The manufacturing partners the Group is working with
have significant scale and can provide products at a low cost compared to products manufactured
in New Zealand, ultimately resulting in better margins for the Group.
The Group’s capital raise in October 2020 has provided a sufficient runway for the Group 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 Limite d in February 2022 created a significant opportunity for
the Group in terms of expansion of its product portfolio and the opportunity for scalable supply
and revenue generation capability.
The Group’s focus on commercialisation of cannabinoid medicines in multiple countries around
the world will generate income and begin to fund the operations of the company to the point
where the Group is financially sustainable and begins to generate profits.
17
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
2. Basis of preparation (continued)
(g) Going Concern (continued)
Over the six-month period to June 2023, the Group has progressed its commercial activities
significantly and has launched product in Germany and has recently received licenses to distribute
product in the Australian market. Establishing these pipelines in key target markets takes
significant amounts of time and resources. The Group continues to progress its research and
development with the goal of commercialising this intellectual property to offer new and exciting
cannabis varieties around the world.
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 also has a number of fixed assets from
it s previous GMP manufacturing activities that will likely be on-sold in future periods and the
values associated with these assets is yet to be fully realised. The Group is monitoring and
managing these risks.
Taking regard of the above and while acknowledging the uncertainties associated with the risks
noted, the Directors consider these uncertainties do not represent a material uncertainty that
would cast significant doubt on the Group’s ability to continue as a going concern.
(h ) Estimates and assumptions
− Fair value measurement
The fair value of certain assets and liabilities included in the Group’s consolidated financial
statements is disclosed.
Determining the fair value of these assets and liabilities utilises market observable inputs and
data as far as possible. Inputs used in determining fair value measurements are categorised
into different levels based on how observable the inputs used in the valuation technique
utilised are (the ‘fair value hierarchy’):
Level 1: Quoted prices in active markets for identical items (unadjusted).
Level 2: Observable direct or indirect inputs other than Level 1 inputs.
Level 3: Unobservable inputs (i.e., not derived from market data).
The classification of an item into the above levels is based on the lowest level of the inputs
used that has a significant effect on the fair value measurement of the item.
For more detailed information in relation to the fair value measurement of the items above,
please refer to the applicable notes.
Borrowings, disclosure of fair value (note 4)
Financial assets and liabilities at amortised cost, disclosure of fair value (note 4)
Impairment of non-financial assets (notes 12 and 14)
Contingent consideration (note 13)
Share-based payments measured at fair value (note 22).
18
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
2. Basis of preparation (continued)
(i ) Basis of consolidation
Where the Company has control over an investee, it is classified as a subsidiary. The Company
controls an investee if all three of the following elements are present power over the investee,
exposure to variable returns from the investee, and the ability of the investor to use its power to
affect those variable returns. Control is reassessed whenever facts and circumstances indicate
that there may be a change in any element of control.
The consolidated financial statements present the results of the Company and its subsidiaries (“the
Group”) as if they formed a single entity. Intercompany transactions and balances between Group
companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the
“acquisition method” (refer to note 13). In the consolidated statement of financial position, the
acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their
fair values at the acquisition date. The results of acquired operations are included in the
consolidated statement of profit or loss and other comprehensive income from the date on which
control is obtained and are subsequently deconsolidated from the date on which control ceases.
(j ) Impairment of non-financial assets
The carrying amounts of the Group’s property, plant and equipment (note 12), intangible assets
(note 14) and right-of -use assets (note 15) are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists, then the asset’s
recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable
amount. Impairment losses directly reduce the carrying amount of assets and are recognised in
profit or loss.
The estimated recoverable amount of non-financial assets is the greater of their fair value less
costs to sell and value in use. Value in use is determined by estimating future cash flows from the
use and ultimate disposal of the asset and discounting these to their present value using a pre-tax
discount rate that reflects current market rates and the risks specific to the asset. For an asset
that does not generate largely independent cash inflows, the recoverable amount is determined
for the cash-generating unit to which the asset belongs.
Impairment losses are reversed when there is a change in the estimate used to determine the
recoverable amount and there is an indication that the impairment loss has decreased or no longer
exists. An impairment loss is reversed only to the extent that the asset's carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised. All other impairment losses are reversed
through profit or loss.
19
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
2. Basis of preparation (continued)
(k ) Foreign currency translation
Transactions entered into by Group entities in a currency other than the currency of the primary
economic environment in which they operate (their "functional currency") are recorded at the
rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are
translated at the rates ruling at the reporting date. Exchange differences arising on the
retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or
loss, except for foreign currency borrowings qualifying as a hedge of a net investment in a foreign
operation, in which case exchange differences are recognised in other comprehensive income and
accumulated in the foreign exchange reserve along with the exchange differences arising on the
retranslation of the foreign operation.
Exchange gains and losses arising on the retranslation of monetary financial assets are treated as
a separate component of the change in fair value and recognised in profit or loss. Exchange gains
and losses on non-monetary OCI financial assets form part of the overall gain or loss in OCI
recognised in respect of that financial instrument.
On consolidation, the results of overseas operations are translated into New Zealand dollars at
rates approximating to those ruling when the transactions took place. All assets and liabilities of
overseas operations, including goodwill arising on the acquisition of those operations, are
translated at the rate ruling at the reporting date. Exchange differences arising on translating the
opening net assets at opening rate and the results of overseas operations at actual rate are
recognised in other comprehensive income and accumulated in the foreign exchange reserve.
Exchange differences recognised in profit or loss in Group entities' separate financial statements
on the translation of long-term monetary items forming part of the Group's net investment in the
overseas operation concerned are reclassified to other comprehensive income and accumulated in
the foreign exchange reserve on consolidation.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign
exchange reserve relating to that operation up to the date of disposal are transferred to the
consolidated statement of comprehensive income as part of the profit or loss on disposal.
20
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
2. Basis of preparation (continued)
(k ) Foreign currency translation (continued)
(l) Non-current assets held for sale and discontinued operations
Non-current assets held for sale
Non-current assets are classified as held for sale when, and only when,:
− They are available for immediate sale;
− Management is committed to a plan to sell or distribute to owners;
− It is unlikely that significant changes to the plan will be made or that the plan will be
withdrawn;
− An active programme to locate a buyer has been initiated;
− The asset or disposal group is being marketed at a reasonable price in relation to its fair
value; and
− A sale is expected to complete within 12 months from the date of classification.
Non-current assets and disposal groups classified as held for sale are measured at the lower of:
− Their carrying amount immediately prior to being classified as held for sale in accordance
with the group's accounting policy; and
− Fair value less costs of disposal.
Following the classification as held for sale, non-current assets) are not depreciated.
Discontinued operations
A discontinued operation is a component of the Group's business that represents a separate major line
of business or geographical area of operations or is a subsidiary acquired exclusively with a view to
resale, that has been disposed of, has been abandoned or that meets the above held for sale criteria.
As at 30 June 2023, Management has determined that the Group’s non-current assets did not meet the
criteria to be classified as held for sale and the previous local GMP manufacturing activities (note 2(f))
did not meet the definition of a discontinued operation.
3. Segment Reporting
The Group operates in one segment, its primary business being research and development and the
sale of pharmaceutical products in Germany and 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 in New Zealand
and Germany. The Group’s revenues are analysed by geography on the basis of the jurisdiction in
which the goods are sold and have been disaggregated in this way in note 5.
21
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
4. Financial instruments and Financial Risk Management and Capital Management
This note describes:
(A) The Group’s accounting policies with respect to financial instruments recognised in the
Group’s consolidated financial statements, and detail of those balances.
(B) The nature of the financial risk that the Group is exposed to, and the Group’s objectives,
policies and processes for managing those risks, the methods used to measure them, and
sensitivity analysis to movements in rates (where applicable).
(C) The nature of the Group’s Capital Management policies.
(A) Financial instruments recognised
The Group recognises financial assets and financial liabilities when it becomes party to the
contractual provisions of the financial instrument.
Financial assets
The Group classifies its financial assets depending on the purpose for which the asset was acquired
(i.e. the business model) and the contractual terms of the cash flows.
Amortised cost
These represent financial assets where the objective is to hold these assets in order to collect
contractual cash flows that represent solely payments of principal and interest. These comprise
cash and cash equivalents, certain trade and other receivables and term deposit investments.
Cash and cash equivalents comprise of cash on hand and demand deposits, as well as highly liquid
deposits that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value, with terms of 90 days or less. Otherwise, deposits with a
term greater than 90 days but less than 1 year are presented as “investments”.
These financial assets are:
− Initially measured at fair value, plus directly attributable transaction costs.
− Subsequently measured at amortised cost using the effective interest rate method, less
provision for impairment. Cash and cash equivalents and investments are held with
“investment grade” financial institutions and are deemed to have no significant increase in
credit risk in terms of impairment.
− Derecognised when the contractual rights to the cash flows from the financial asset expire or
are transferred.
Impairment provisions for current trade receivables are recognised on the simplified approach
within NZ IFRS 9 using a provision matrix in the determination of the lifetime expected credit
losses. During this process, the probability of the non-payment of the trade receivables is assessed.
This probability is then multiplied by the amount of expected loss arising from default to
determine the lifetime expected credit loss for the trade receivable. For trade receivables, which
are reported net, such provisions are recorded in a separate provision account with the loss being
recognised in profit or loss. On confirmation that the trade receivable will not be collectable, the
gross carrying value of the asset is written off against the associated provision.
22
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
4. Financial instruments - Risk Management (continued)
Financial liabilities
The Group classifies its financial liabilities depending on whether (or not) it meets the definition
of a financial liability at fair value.
Financial liabilities at fair value through profit and loss
These comprise contingent consideration recognised in the consolidated statement of financial
position and are carried at fair value. Changes in fair value are recognised in the consolidated
statement of profit or loss and other comprehensive income.
Other financial liabilities at amortised cost
These include trade and other payables and lease liabilities recognised in the consolidated
statement of financial position.
These financial liabilities are:
− Initially measured at fair value, plus directly attributable transaction costs.
− Subsequently measured at amortised cost using the effective interest rate method.
− Derecognised when the contractual obligation to settle the obligation is discharged,
cancelled, or expires.
Categories and fair values of the Group’s financial instruments
2023
Financial
Assets at
Amortised
Cost
Financial
Liabilities
At Amortised
Cost
Financial
Liabilities at
Fair Value
through Profit
or Loss
Total Carrying
Amount
Fair
Value
$ $ $ $ $
Investments 2,032,055 2,032,055 (a)
Cash and cash
equivalents
2,529,338
2,529,338
(a)
Trade and other
receivables
173,620
173,620
(a)
Trade payables
(276,801)
(276,801)
(a)
Lease liabilities
(114,577)
(114,577)
(b)
Contingent
consideration
-
-
n/a
Total 4,735,013 (391,378) -
(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.
23
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
4. Financial instruments - Risk Management (continued)
2022
Financial Assets
at Amortised
Cost
Financial
Liabilities
At Amortised
Cost
Financial
Liabilities at
Fair Value
through Profit
or Loss
Total Carrying
Amount
Fair
Value
$ $ $ $ $
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 payables
(317,427)
(317,427)
(a)
Lease liabilities
(824,002)
(824,002)
(b)
Contingent
consideration
(7,641,832)
(7,641,832)
n/a
Total 10,513,778 (1,141,429) (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.
(B) Financial risk management
The Board has overall responsibility for the determination of the Group’s risk management
objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the effective implementation of the
objectives and policies to the Group's finance function. The Board receives monthly reports from
the Chief Financial Officer through which it reviews the effectiveness of the processes put in place
and the appropriateness of the objectives and policies it sets. The Group's finance team also review
the risk management policies and processes and report their findings to the Audit, Finance & Risk
Committee.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible
without unduly affecting the Group’s competitiveness and flexibility. Further details regarding
these policies as they relate to the specific financial risks that the Group is exposed to are set out
below:
Through its operations, the Group is exposed to the following financial risks:
(a) Credit risk
(b) Market risk
i. Interest rate risk, and
ii. Foreign exchange risk
(c) Liquidity risk.
24
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
4. Financial instruments - Risk Management (continued)
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a counterparty to a financial asset fails to
meet their contractual obligations. The Group’s exposure to credit risk is represented by the
carrying amount of cash and cash equivalents, trade and other receivables and investments.
The Group only holds cash and cash equivalents and investments with financial institutions that
are independently determined credit ratings of "A" or higher.
If wholesale customers are independently rated, these ratings are used. Otherwise, if there is no
independent rating, risk control assesses the credit quality of the customer, taking into account
its financial position, past experience and other factors. Individual risk limits are set based on
internal or external ratings in accordance with limits set by the board. The compliance with credit
limits by wholesale customers is regularly monitored by line management.
The Group has an Audit, Finance & Risk Committee that monitors credit risk as part of its wider
duties.
Cash and cash equivalents and investments held with financial institutions are presented in the
table below:
30 June 2023
Credit
rating
(a)
Cash and cash
equivalents
Investments
Other
receivables
Total
$ $ $ $
Kiwibank A1, AA 2,529,338 2,032,055 - 4,561,393
Total 2,529,338 2,032,055 - 4,561,393
30 June 2022
Credit
rating
(a)
Cash and cash
equivalents
Investments
Other
receivables
Total
$ $ $ $
Kiwibank A1, AA 1,897,285 8,041,493 - 9,938,778
ANZ AA, A+ - - 500,000 500,000
Total 1,897,285 8,041,493 500,000 10,438,778
(a) Standard & Poor’s, Moody’s, Fitch
Interest rates on interest bearing cash and cash equivalents and investments range between 1.15%
- 5.00% (2022: 0.35% - 1.80 %).
25
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
4. Financial instruments - Risk Management (continued)
(b) Market risk
Market risk arises from the Group’s:
− Use of interest-bearing borrowings (interest rate risk)
− Credit sales and purchases in foreign currencies (foreign currency risk), and
− Prices of key commodity inputs (price risk)
i. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates.
The Group is exposed to fair value interest rate risk from its lease liabilities with rates between
6.00% - 11.10% (2022: 4.00% - 7.50%).
The Group manages its interest rate risk by placing surplus funds on medium term interest-
returning investments with financial institutions (per above).
ii. Foreign exchange risk
The Group is exposed to movements in foreign exchange rates through transactions and balances
denominated in foreign currencies. The Group’s exposures to foreign exchange risk are as follows:
− Sales transactions of $268,207 (2022: $nil) denominated in foreign currencies, which are
mainly denominated in Euro.
− Inventory purchase transactions of $208,222 (2022: $nil) denominated in foreign currencies,
which are mainly denominated in Australian Dollar amounts.
− Net investments in foreign operations of $2,457 (2022: $nil).
The Group has an Audit, Finance & Risk Committee that monitors foreign exchange risk as part of
its wider duties.
There are no open forward exchange contracts at the end of the reporting period (2022: no open
forward exchange contracts).
The net foreign exchange loss recognised for the year was $3,136 (2022: $2,993) (note 7).
Sensitivity analysis
The following table presents the Group’s sensitivity from a reasonably possible strengthening or
weakening NZD against foreign currencies, with all other variables held constant.
30 June 2023 30 June 2022
Equity Profit Equity Profit
$ $ $ $
10% strengthening of the NZD 5,727 7,954 - -
10% weakening of the NZD (13,564) (18,839) - -
26
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
4. Financial instruments - Risk Management (continued)
(c) Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the
Group will encounter difficulty in meeting its financial obligations as they fall due.
The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its
liabilities when they become due. To achieve this the Group maintains a monthly forecast on
its future cash position to ensure it can meet financial obligations when they fall due.
The Board receives monthly financial statements which include statements of financial position,
performance, and cash flow, as well as budget/forecast variance reports, to ensure it holds or
will hold cash equivalents to meet its obligations.
The following table sets out the contractual maturities (representing undiscounted contractual
cash-flows) of financial liabilities:
Up to 3 Between Between Between Over Total
Months 3 and 12 1 and 2 2 and 5 5 years
As at 30 June 2023 months year years
$ $ $ $ $ $
Trade payables 276,801 - - - - 276,801
Lease liabilities 13,674 39,463 21,099 45,000 11,250 130,486
Total 290,475 39,463 21,099 45,000 11,250 407,287
As at 30 June 2022
Trade payables 317,427 - - - - 317,427
Lease liabilities 47,585 113,981 119,464, 317,169 374,021 972,220
Total 365,012 113,981 119,464 317,169 374,021 1,289,647
(C) Capital Management
The Group’s objectives when managing capital are to safeguard the entity's ability to continue
as a going concern, so that it can continue to fund activities for the purposes of deriving
sustainable returns to its shareholders and other stakeholders.
The Group’s capital structure consists of Equity of the Group (comprising issued capital and
retained earnings). The Group is not subject to any externally imposed capital requirements.
The Board continually reviews the capital structure of the Group. As part of this review, the
Board considers the availability and cost of capital and the risks associated therein.
27
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
5. Revenue from contracts with customers
The Group recognises revenue from the sale of goods at a point-in-time when control of the
goods has transferred to the customer. The Group identifies the point which control passes
based on the following indicators:
− Whether physical delivery of the products to the agreed location has occurred;
− Whether the Group no longer has physical possession;
− Whether the Group has a present right to payment;
− Whether the Group has transferred legal title to the customer;
− Whether the customer has accepted the goods; and
− Whether the Group retains any of the significant risks and rewards of the goods in question.
Where goods are sold through distributors, judgement is required to assess whether control
passes:
(i) When the goods are delivered to the distributor (in which case, the distributor is the
Group’s customer, and is acting as a “principal” in its own right), or instead
(ii) To a party further in the supply chain (in which case, the distributor is acting as the Group’s
“agent”, rather than as a “principal”, and the Group’s “customer” (referred to as the ‘end
customer’) may be a retailer, wholesaler or approved prescriber).
In order to determine whether or not control passes to the distributor, and the distributor is
acting as a “principal” in its own right and as such, the Group’s customer, the Group considers
the following indicators:
− Whether the Distributor is responsible for fulfilling the promise to provide goods to the
end customer;
− Whether the Distributor takes physical possession of the goods before they are delivered
to the end customer, and assumes all substantive inventory risk associated with the goods;
and
− Whether the Distributor has discretion to set the price for goods sold to the end customer.
Where distributors demonstrate that they are responsible for the above indicators, including
substantive inventory risk, they are considered to be acting as a principal, and therefore,
customers of the Group.
Where distributors are acting as the Group’s agent, the Group’s customer is considered to be
the end customer.
Typically, distributors in New Zealand are considered to be the Group’s customer. Distributors
in Germany are considered to be the Group’s agents.
28
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
5. Revenue from contracts with customers (continued)
Determining the transaction price - Variable consideration
The terms of the Group’s contracts with New Zealand customers include elements of variable
consideration which constrain the amount of revenue recognised at a point in time:
− Certain contracts provide customers with a limited right of return over expired products
(products typically have an expiry of no more than 9 months from the date of purchase).
Payment terms are 60 days from invoice.
The Group estimates the value of goods that are expected to be returned using the
expected value method such that it is highly probable that there will not be a reversal of
previously recognised revenue when goods are returned.
A refund liability is recognised where cash received exceeds the revenue recognised.
− Contracts containing pricing adjustments, rebates and other fees paid to customers are
recognised as a reduction in revenue at the time that the related sale is recognised.
These arrangements include instances where the Group reimburses its distributors for
discounts provided to their customers.
Repurchase agreements
The Group’s arrangements also include clauses allowing the Group to repurchase goods
transferred to customers giving rise to a call option. These call options are not conditional.
Because goods are repurchased at the original selling price, this constitutes a financing
arrangement and the Group recognises a contract liability for the amounts which it expects
to repay. Revenue is recognised once the call option expires or is recognised. Because these
arrangements are short-term in nature, the Group does not consider this to be a significant
financing arrangement and does not account for the time value of money.
2023 2022
$ $
Performance obligations satisfied at a point-in-time
Sale of goods – New Zealand 89,467 24,226
Sale of goods - Germany 268,208 -
Total Revenue from Contracts with Customers 357,675 24,226
Contract Balances
Contract Liability
2023 2022
$ $
As at 1 July 2,062 -
Amounts included in opening contract liabilities that were
recognised as revenue during the period
(2,062) -
Cash received and/or trade debtors recognised in advance of
performance and not recognised as revenue as at period end
- 2,062
As at 30 June - 2,062
29
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
6. Other income
(i) Government grants
Government grants are recognised at their fair value where there is reasonable assurance that
the grant will be received and the Group will comply with all attached conditions. Government
grants relating to costs are deferred and recognised in profit or loss over the period necessary
to match them with the costs that they are intended to compensate. They are recognised as
other income rather than reducing the costs that they are intended to compensate.
The Group currently receives government grants in the form of R&D tax incentive credits,
received from the Inland Revenue Department (IRD).
R&D tax incentive credits are accounted for as government grant income as opposed to income
tax credits as the benefit is independent of the taxable profit or tax liability where the Group
is eligible for a cash refund; specific conditions exist for the Group, the R&D activities and the
expenditure to be eligible for the tax credits; and the tax credits are not structured as an
additional deduction in computing taxable profit.
The Group has reasonable assurance at the reporting date that the R&D tax incentive will be
received and all attached conditions will be complied with. The Group expects to receive the
tax credit when the return is filed subsequent to the end of the reporting period.
Other income streams recognised by the Group include:
2023 2022
$ $
Research and development grant income 289,204 584,180
NZTE grant income - 36,689
Total government grant income 289,204 620,869
Gain on sale of property, plant and equipment - 1,003
Gain on early termination of leases 13,096 -
Other Income 21,605 -
Total other income 323,905 621,872
30
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
7. Expenses
2023 2022
Note $ $
Specific expenses included in operating loss before net
financing costs for the year:
Cultivation costs 520,011 875,738
Extraction and manufacturing 437,849 578,740
Changes in inventories of finished goods and work in
progress
339,551 128,643
Impairment expense 12, 14 5,568,718 -
Accommodation and travel 116,300 36,665
Communications 85,002 236,278
Depreciation of property, plant and equipment 580,764 645,502
Depreciation of right-of-use lease assets 101,260 171,101
Amortisation – intangible assets 2,960 -
Direct research and development expenses 290,324 628,023
General 275,238 256,811
Professional services 1,009,625 1,378,464
Insurance 157,050 132,788
Motor vehicle expenses 39,890 55,738
Charitable expenses 57,417 18,782
Licenses 51,324 46,515
Office expenses 68,690 64,737
Selling and marketing 935,047 131,959
Employee benefit expense 2,043,766 2,842,067
Foreign exchange loss 3,136 2,993
12,683,922 8,231,544
Included in the above:
Employee benefit expense
- Short term benefits (wages and salaries) 1,869,596 2,556,773
- Defined contribution plan 83,554 96,662
- Share-based payment expense 90,616 188,632
Total employee benefit expense 2,043,766 2,842,067
Research and development expenses
- Direct costs 290,324 628,023
- Indirect costs 1,297,380 2,349,499
Total research and development expenses 1,587,704 2,977,522
Impairment expenses
- Property, plant and equipment 12 841,811 -
- Intangible assets 14 4,726,907 -
Total impairment expenses 5,568,718 -
31
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
7. Expenses (Continued)
(i) Research and development
Research and development expenditure that does not meet the development criteria in NZ
IAS 38 Intangible Assets for recognition as intangible assets is expensed as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a
subsequent period.
Currently the Group is still in the research phase (refer to note 22 Biological assets) and
related costs are recognised in profit or loss accordingly until such time as the Group moves
into the development phase and the relevant recognition criteria are met.
(ii) Fees paid to auditors
Fees paid to auditors include payments to PricewaterhouseCoopers for the following:
2023 2022
$ $
Audit and review of the financial statements
- Audit of the financial statements 135,775 131,250
- Review of half year financial statements 30,149 27,143
Total fees paid to auditors 165,924 158,393
8. Income tax
Tax expense/(credit) comprises current and deferred tax.
Current tax is the expected tax payable or receivable on the taxable income or loss for the
year, using tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, using tax rates enacted or substantively enacted
at the reporting date.
In determining the amount of current and deferred tax the Group takes into account the
impact of uncertain tax positions and whether additional taxes and interest may be due. The
Group believes that its accruals for tax liabilities are adequate for all open tax years based
on its assessment of many factors, including interpretations of tax law and prior experience.
This assessment relies on estimates and assumptions and may involve a series of judgements
about future events. New information may become available that causes the Group to change
its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities
will impact tax expense in the period that such a determination is made.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary
differences, to the extent that it is probable that future taxable profits will be available
against which they can be utilised. Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable that the related tax benefit will
be realised.
32
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
8. Income Tax (continued)
(i) Income tax recognised in profit or loss
The income tax expense/(credit) recognised for the year includes current and deferred tax as
presented below:
2023 2022
$ $
Current tax on profits for the year 774 -
Total current tax 774 -
Origination and reversal of temporary differences (1,351,212) 190,642
Prior year tax losses not recognised 1,351,212 959,348
Prior period adjustments - 77
Total deferred tax expense - 1,150,067
Total income tax expense 774 1,150,067
(ii) Reconciliation of income tax expense
The reconciliation of income tax expense is presented below:
2023 2022
$ $
Loss before income tax expense
(5,958,506) (7,485,985)
Tax expense/(income) @28% (1,668,382) (2,096,075)
Add/(less) reconciling items
- Expenses not deductible for tax purposes 22,428 54,406
- Non-assessable income (1,704,973) (121,826)
- Tax losses not recognised for deferred tax 3,351,701 3,313,485
- Prior period adjustments - 77
Total income tax expense 774 1,150,067
(iii) Imputation credits
The Company has $769,357 of imputation credits as at 30 June 2023 (2022: $310,713).
33
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
8. Income Tax (continued)
(iv) Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a
tax rate of 28%.
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.
An amount of deferred tax asset of $6,664,656 (2022: $959,348) has not been recognised. The
unrecognised deferred tax asset is comprised of tax losses of $6,451, 736 (2022: $3,494,307)
and other temporary differences of $212, 920 (2022: nil).
The Group offsets assets and liabilities if, and only if, it has a legal enforceable right to set
off current tax assets and current tax liabilities and the deferred tax assets and deferred tax
liabilities relate to income taxes levied by the same tax authority.
34
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
8. Tax expense (continued)
(iv) Deferred tax (continued)
Details of the deferred tax asset and liability amounts recognised in profit or loss are as follows:
Employee
entitlements
Buildings Intangible
assets
Lease liabilities and
Right-of-use lease
assets
Share-based
payments –
cash settled
Share-based
payments –
equity settled
Carried
forward tax
losses
Total
$ $ $ $ $ $ $ $
As at 1 July 2021 31,859 (15,383) - 3,970 89,195 134,279 2,310,560 2,554,480
Amounts recognised
- In profit or loss 13,049 (1,927) - 3,653 (89,195) (116,222) (959,348) (1,149,990)
- Arising on business
combinations
-
-
(1,404,490)
-
-
-
-
(1,404,490)
- In OCI - - - - - - - -
At 30 June 2022 44,908 (17,310) (1,404,490) 7,623 - 18,057 1,351,212 -
As at 1 July 2022 44,908 (17,310) (1,404,490) 7,623 - 18,057 1,351,212 -
Amounts recognised
- In profit or loss (16,404) 25,527 1,325,465 (3,703) - 20,327 (1,351,212) -
- Arising on business
combinations
- - - - - - - -
- In OCI - - - - - - - -
At 30 June 2023 28,504 8,217 (79,025) 3,920 - 38,384 - -
35
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
9. Notes supporting statement of cash flows
(i) Reconciliation of net operating cash flows to profit/loss
2023 2022
$ $
Net loss for the year (5,959,280) (8,636,052)
Adjustments for non-cash and non-operating activity items:
-
Add back: Depreciation – Property, Plant &
Equipment
(3)
580,764 643,571
- Add back: Depreciation – RoU lease asset
(3)
101,265 170,894
- Add back: Amortisation – intangible asset 2,960 -
- Add back: Impairment expense 5,568,720 -
- Add back: Deferred tax expense - 1,150,067
- Deduct: Gain on sale of Property, Plant & Equipment - (1,003)
- Add back: Loss on sale of Property, Plant & Equipment 11,347 -
- Deduct: Gain on early termination of leases (13,199) -
- Deduct: Share-based payment credit - (139,373)
- Add back: Share-based payment expense 90,616 -
- Add back: Interest expense 19,079 40,822
- Deduct: Interest income (202,129) (138,145)
- Add back: Cost of goods given away under CAS 52,268 18,782
- Deduct: Fair value gain on contingent consideration (5,851,032) -
- Deduct: Costs capitalised into ROU assets - (793)
360,659 1,744,822
Movements in working capital:
- (Increase)/decrease in other receivables
(1)
(292,629) 99,119
- (Increase)/decrease in prepayments 3,160 (55,994)
- (Increase)/decrease in inventories 152,217 (237,587)
- Increase/(decrease) in trade and other payables
(2)
93,763 3,335
- Increase/(decrease) in contract liabilities (2,062) 2,062
- Increase/(decrease) in employee benefit liabilities (279,652) 225,873
- Increase/(decrease) in deferred grant income 3,603 9,500
(321,600) 46,308
Net cash outflows from operating activities (5,920,221) (6,844,922)
(1)
Excludes accruals for interest income (investing activity)
(2)
Excludes accruals for interest expense (financing activity), and payables related to property, plant & equipment
(investing activity)
(3)
Depreciation of $5,790 (2022: $1,931) and amortisation of $3,583 (2022: $207) related to building facilities, plant and
equipment and intangible assets used to manufacture and procure is included in changes in inventories of finished
goods and work in progress.
36
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
9. Notes supporting statement of cash flows (continued)
(ii) Changes in the Group’s liabilities arising from financing activities (cash and non-cash)
30 June 2023 NON-CASH NON-CASH CASH CASH
Opening New leases Lease
remeasure-
ments
Payment of prior
year accrued
interest
Payment Closing
$ $ $ $ $ $
Lease
liabilities 824,002 - 608,129 - (101,296) 114,577
824,002 - 608,129 - (101,296) 114,577
30 June 2022 NON-CASH NON-CASH CASH CASH
Opening New
leases
Lease
remeasure
-ments
Payment of prior
year accrued
interest
Payment Closing
$ $ $ $ $ $
Borrowings 10,762 - - (10,762) -
Lease
liabilities
944,078
36,977
(3,769)
(153,284)
824,002
954,840 36,977 (3,769) (164,046) 824,002
37
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
10. Earnings per share
Basic earnings per share (EPS) is calculated by dividing the profit attributable to shareholders
of the Group by the weighted average number of ordinary shares on issue during the year,
excluding shares held as treasury stock.
Diluted earnings per share assumes conversion of all dilutive potential ordinary shares in
determining the denominator.
In both years, the Group has not adjusted the weighted average number of shares used in
diluted EPS to reflect the impact of outstanding share-options granted, because as the Group is
loss-making, the impact of the outstanding share options granted is “anti-dilutive” (i.e.
decreases the loss per share).
2023 2022
Numerator $ $
(Loss) for the year and earnings (basic and diluted EPS) (5,959,280) (8,636,052)
2023 2022
Denominator No. shares No. shares
Weighted average number of shares (basic and diluted EPS)
153,728,201 144,166,088
11. 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. All inventories are held at their net realisable value at reporting
date.
Inventories are measured on a first-in-first-out basis to determine the cost of ordinarily
interchangeable items.
2023 2022
$ $
Raw Materials - 166,028
Consumables - 8,098
Work in progress - 20,967
Finished Goods 14,319 23,712
Total 14,319 218,805
Amounts recognised in profit or loss
Inventories recognised as an expense during the year amounted to $242,285 (2022: $39,727).
The Group reported write-downs of inventory to net realisable value of $97,266 (2022: $88,916)
in the consolidated statement of profit or loss and other comprehensive income.
The write-down includes adjustments of $86,677 to finished goods which failed ongoing quality
testing after reporting date.
38
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
12. Property, plant and equipment
Property, plant and equipment are stated at historical cost less any accumulated depreciation
and impairment losses. Costs includes expenditure directly attributable to the acquisition of
assets, and includes the cost of replacements that are eligible for capitalisation when these are
incurred.
Where self-constructed items take a substantial period of time to construct for their intended
use (“qualifying asset”) borrowing costs are capitalised to the initial cost of item, with
associated cash flows presented within interest expense paid in the consolidated statement of
cash flows.
Where material parts of an item of property, plant and equipment have different useful lives,
they are accounted for as separate items (major components) of property, plant and
equipment.
The cost of property, plant and equipment constructed by the Group, including capital work in
progress, includes the cost of all materials used in construction, associated direct labour and
an appropriate proportion of variable and fixed overheads, and where applicable borrowing
costs. Costs cease to be capitalised as soon as the asset is ready for productive use.
Depreciation is calculated on a diminishing value basis over the estimated useful life of the
asset based on estimates by management. Assets' estimated useful life is reassessed annually.
The following estimated depreciation rates have been used:
− Buildings and fitout 2% to 50% (2022: 2% to 50%)
− Cultivation Containers 10% (2022: 10%)
− Office Equipment 13% to 67% (2022: 13% to 67%)
− Plant and Equipment 8% to 100% (2022: 8% to 100%)
− Vehicles 13% to 40% (2022: 40%)
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the
difference between the net proceeds from disposal and the carrying amount of the item) is
recognised in profit or loss.
Subsequent expenditure is capitalised only when it is probable that the future economic
benefits associated with the expenditure will flow to the Group. Ongoing repairs and
maintenance is expensed as incurred.
Impairment
As a result of the Group’s restructuring during the year, the Group elected to cease its
manufacturing activities in Gisborne. The associated assets, primarily comprised of the
manufacturing facility buildings, and the associated plant and equipment, were therefore idle
at reporting date while management consider potential options to dispose of these assets.
The building was written down to its recoverable amount of $1,407,732, which was determined
in reference to the building’s fair value less costs of disposal. The level 3 fair value of the
building was derived using the income approach. The key inputs under this approach are an
average market rent of $139,032 per annum based on recent comparable rentals (as determined
by an independent valuer) and yield rates and discount rates of 8.50% and 9.50% respectively.
The plant and equipment was also written down to its recoverable amount of $517,040, which
was determined in reference to the fair value less costs of disposal of the various assets. The
level 2 fair value of these assets was derived using the sales comparison approach. The key
input under this approach was the recent observable selling prices for assets of similar nature,
adjusted for condition and location.
39
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
12 . Property, plant and equipment (continued)
Buildings
and fitout
Cultivation
Containers
Office
Equipment
Plant and
equipment
Vehicles Capital
works
Total
Year ended 30 June 2023 $ $ $ $ $ $ $
Opening net book value 4,146,968 116,281 112,777 1,418,068 39,989 9,201 5,843,284
Additions 11,488 - 8,321 24,169 20,591 - 64,569
Acquired on business combination - - - - - -
Depreciation charge (313,899) (11,629) (24,497) (213,600) (17,138) - (580,763)
Impairment charge (486,230) - - (355,581) - - (841,811)
Disposals - - (19,294) (27,304) - - (46,598)
Transfers - - - 9,201 - (9,201) -
Closing net book value 3,358,327 104,652 77,307 854,953 43,442 - 4,438,681
Cost 4,828,288 159,196 151,439 1,874,337 181,786 - 7,195,046
Accumulated impairment (486,230) - - (355,581) - - (841,811)
Accumulated depreciation (983,731) (54,544) (74,132) (663,803) (138,344) - (1,914,554)
Net book amount 3,358,327 104,652 77,307 854,953 43,442 - 4,438,681
40
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
12 . Property, plant and equipment (continued)
Buildings
and fitout
Cultivation
Containers
Office
Equipment
Plant and
equipment
Vehicles Capital
works
Total
Year ended 30 June 2022 $ $ $ $ $ $ $
Opening net book value 4,399,586 129,202 124,993 1,273,642 61,297 185,890 6,174,610
Additions - - 16,121 - 3,321 296,911 316,353
Acquired on business
combination
- - 524 - - - 524
Depreciation charge (351,214) (12,921) (39,798) (216,939) (24,629) - (645,501)
Disposals (net book value) - - (2,702) - - - (2,702)
Transfers 98,596 - 13,639 361,365 - (473,600) -
Closing net book value 4,146,968 116,281 112,777 1,418,068 39,989 9,201 5,843,284
Cost 4,816,799 159,197 206,617 1,901,808 161,195 9,201 7,254,817
Accumulated depreciation (669,831) (42,916) (93,840) (483,740) (121,206) - (1,411,533)
Net book amount 4,146,968 116,281 112,777 1,418,068 39,989 9,201 5,843,284
41
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
13. Goodwill and Business Combinations
The consolidated financial statements incorporate the results of business combinations using the
acquisition method, as at the acquisition date.
Goodwill resulting from business combinations represents the excess between:
− The fair value of (i) the consideration paid, (ii) any previous held interest, and (iii) any
remaining non-controlling interest, and
− The fair value of the net identifiable assets, and their associated acquisition date deferred
tax balances.
Acquisition-related costs are expensed as incurred.
On initial recognition, goodwill is allocated to the cash generating units ('CGU') that are expected
to benefit from a business combination that gives rise to the goodwill (a CGU being the smallest
group of assets for which there are separately identifiable cash flows).
Subsequently, a CGU to which goodwill has been allocated is tested for impairment on an annual
basis, and at any other time where there is an indicator of impairment, by comparing the CGU’s
carrying amount to its recoverable amount.
Any impairment recognised against goodwill is not subsequently reversed in future periods where
the recoverable amount of a CGU increases above its carrying amount.
(i) Business combinations during the prior year
Acquisition of Zalm Therapeutics Limited
On 4 February 2022, the Company acquired 100% of the voting equity instruments of Zalm
Therapeutics Limited (“Zalm”).
Zalm is a New Zealand-based medicinal cannabis business with supply and distribution
arrangements for Good Manufacturing Practice (“GMP”)-grade cannabis products to New Zealand
and global markets.
The acquisition provided the Company with significantly earlier access to cannabis derived
medicines at scale, through Zalm’s in-place supply agreement with one of Australia’s leading
listed medical cannabis companies (Cann Group Limited) who during the prior reporting period
had finalised the commissioning of one of Australasia’s largest and most technologically
advanced indoor growing facilities.
The purchase consideration paid for the acquisition of Zalm included contingent consideration
payable which was classified as a financial liability and has been remeasured during the current
financial year as follows:
Fair value Fair value Fair value Fair value
$ $ $ $
Level 3 fair values 30 June 2022
Remeasurement
gain / (loss)
Settlement
30 June 2023
Milestone 1 (3,820,916) 2,030,116 1,790,800* -
Milestone 2 (3,820,916) 3,820,916 - -
Total (7,641,832) 5,851,032 1,790,800 -
*refer note 19
42
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
13. Goodwill and Business Combinations (continued)
Valuation inputs and relationships to fair value
The following table summarises the quantitative information about the significant unobservable
inputs used in level 3 fair value measurements for the contingent consideration payable in the
Zalm acquisition:
Item
Unobservable
inputs
Range of inputs Relationship of unobservable
inputs to fair value
30 Jun 2022 30 Jun 2023
Milestone 2
Probability of
achievement
100% 0% A change in the achievement
probability of 25% would result
in a fair value change of +/-
$955,229.
Probability of achievement is an unobservable input in the fair value measurement of Milestone
2. There has been a decrease in probabilities in the current reporting period as the likelihood of
Zalm’s supplier, Cann Group, meeting the technical documentation, price and quantity targets
associated with Milestone 2 has decreased.
(ii) Impairment testing of goodwill
Goodwill is monitored at a company level, of a single cash-generating-unit (CGU).
The recoverable amount of the CGU has been determined based on fair value less costs of
disposal, being the price that would be received between market participants at the
measurement date, less any directly incremental transaction costs and costs to bring the CGU to
a saleable condition.
The recoverable value is based on an estimate of market value at the reporting date based on
the quoted share price of $0.15 per share. The share issue price at reporting date is based on
the quoted price on the NZX listed exchange and represents a “level 1” fair value measurement
per the fair value hierarchy.
In 2023, determination of the recoverable value of the Group (being the CGU) was based on an
estimate of market value at the reporting date based on the quoted share price of $0.15 per
share. The share issue price at reporting date is based on the quoted price on the NZX listed
exchange and represents a “level 1” fair value measurement per the fair value hierarchy.
In determining the recoverable value of the CGU, the Group has headroom of $4,232,720 (2022:
$2 5,262,067) over the carrying value. No impairment of goodwill has been recognised as at 30
June 2023 (2022: nil).
43
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
14. Intangible assets
Intangible assets are recognised on business combinations if they are separate from the acquired
entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are
arrived at by using the appropriate valuation techniques.
The significant intangibles recognised by the Group, their useful lives and the methods used to
determine the cost of intangibles acquired in a business combination are as follows:
Intangible asset Useful economic life Valuation method
Supplier contracts Finite – based on units of
production (refer below)
Estimated discounted cash flow
(comparative income
differential method)
Supplier contracts are amortised on a units-of -supply basis, being the actual volume of units
purchased for production relative to the expected volumes purchased over the life of the
contract.
(i) Cost
Goodwill
$
Supplier
Contracts
$
Total
$
At 1 July 2022 10,448,082 5,016,035 15,464,117
Acquired through business combinations - - -
At 30 June 2023 10,448,082 5,016,035 15,464,117
At 1 July 2021 4,000,000 - 4,000,000
Acquired through business combinations 6,448,082 5,016,035 11,464,117
At 30 June 2022 10,448,082 5,016,035 15,464,117
(ii) Accumulated amortisation and
impairment
At 1 July 2022 - - -
Amortisation charge - (2,960) (2,960)
Impairment charge - (4,726,907) (4,726,907)
At 30 June 2023 - (4,729,867) (4,729,867)
At 1 July 2021 - - -
Amortisation charge - - -
At 30 June 2022 - - -
(iii) Net book value
At 1 July 2021 4,000,000 - 4,000,000
At 30 June 2022 10,448,082 5,016,035 15,464,117
At 30 June 2023 10,448,082 286,168 10,734,250
Impairment
The impairment charges recognised against the supply contract reflect the fact that the
remaining estimated volumes that the Group expected to purchase under the supply contract
had significantly decreased compared to the volumes previously estimated as part of its initial
recognition. Estimates were revised due to external indicators that demand for certain products
available under the supply contract were significantly reduced as a result of changes in the
market during the reporting period.
44
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
15 . Leases
All leases are accounted for by recognising a right-of -use asset and a lease liability except for:
− Leases of low value assets; and
− Leases with a duration of 12 months or less.
Initial measurement
Lease liabilities are measured at the present value of the contractual payments due to the
lessor over the lease term, with the discount rate determined by reference to the rate inherent
in the lease unless (as is typically the case) this is not readily determinable, in which case the
Group’s incremental borrowing rate on commencement of the lease is used. Variable lease
payments are only included in the measurement of the lease liability if they depend on an index
or rate, however in such cases the initial present value determination assumes that the variable
element will remain unchanged throughout the lease term.
Other variable lease payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes:
− amounts expected to be payable under any residual value guarantee;
− the exercise price of any purchase option granted in favour of the Group if it is reasonably
certain to assess that option;
− any penalties payable for terminating the lease, if the term of the lease has been
estimated on the basis of termination option being exercised.
Right-of -use assets are initially measured at the amount of the lease liability, reduced for any
lease incentives received, and increased for:
− lease payments made at or before commencement of the lease;
− initial direct costs incurred; and
− the amount of any provision recognised where the Group is contractually required to
dismantle, remove or restore the leased asset (typically make-good provisions on buildings)
Subsequent measurement
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a
constant rate on the balance outstanding and are reduced for lease payments made.
Right-of -use assets are depreciated on a straight-line basis over the remaining term of the lease
or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the
lease term. Right-of -use assets are also subject to impairment assessment at reporting date.
Remeasurement
When the Group revises its determination of the use (or non-use) of renewal and/or termination
options, the carrying amount of the lease liability is adjusted to reflect the payments to make
over the revised term, which are discounted at the revised discount rate.
The carrying value of lease liabilities is similarly revised when the variable element of future
lease payments dependent on a rate or index is revised, however this is discounted at the
original discount rate.
In both cases an equivalent adjustment is made to the carrying value of the right-of -use asset,
with the revised carrying amount being depreciated over the remaining (revised) lease term.
45
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
15. Leases (continued)
(i) Lease related balances as at period end, and amounts for the period
2023 2022
Expenses and income in the period $ $
Depreciation
- Leases of property (land and buildings) 47,545 114,247
- Vehicles 32,383 32,383
- Plant 21,333 24,472
Interest expense 19,087 44,535
Balance sheet and cash flow statements
Carrying amount of Right-of-use asset
- Leases of property (land and buildings) 88,606 738,908
- Vehicles 11,978 44,362
- Plant - 13,502
Additions to Right-of-use assets - 37,977
Total cash outflow related to leases 120,379 209,304
(ii) Information regarding the Group’s leases and leasing activity
The Group leases a number of properties including land, buildings, including commercial office
premises, in the jurisdiction from which it operates.
As standard industry practice, one of the Group’s property leases are subject to periodic CPI
increases and/or market rent reviews. A 1% increase in these payments would result in an
additional $244 cash outflow (2022: $907) compared to the current period’s cash outflow.
The Group’s property leases typically include renewal and termination options. The Group must
assess whether it reasonably expects (or not) to exercise these when determining the lease
term.
The Group has one property lease (2022: two property leases) where the Group has assessed it
is does not reasonably expect to exercise all available renewal options, resulting in a potential
additional lease term of 2 years (2022: 10 - 20 years) and potential future lease payments of
$48,792 (2022: $109,020 - $689,160) that are not currently included in measurement of the
lease liability recognised for these leases.
46
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
16. Trade and other receivables
2023 2022
Note $ $
Financial assets classified as amortised cost – current
Trade receivables 98,620 -
Less: provision for impairment of trade receivables - -
Trade receivables – net 98,620 -
Cash consideration held in Escrow 13 - 500,000
Financial assets classified as amortised cost –
non-current
Non-trade receivables 75,000 75,000
Financial assets classified as amortised cost - total 4 173,620 575,000
GST receivable 36,416 89,210
Other receivables - 2,008
Withholding tax receivable 86,945 26,524
Government grants receivable
- Research and development tax credit 641,010 398,408
- Other - 54,173
Other receivables (current portion) 764,371 570,323
Total other receivables 937,991 1,145,323
The Group applies the NZ IFRS 9 simplified approach to measuring expected credit losses using a
lifetime expected credit loss provision for trade receivables. To measure expected credit loss on a
collective basis, trade receivables are grouped based on similar credit risk and rating.
The expected loss rates are based on the Group’s historical credit losses. The historical loss rates
are then adjusted for current and forward-looking information on macroeconomic factors affecting
the Group’s customers. At reporting date, none of the Group’s trade receivables were past 30 days
due.
17 . Trade and other payables
2023 2022
Note $ $
Trade payables 4 276,801 317,427
Other payables 245,743 120,951
Total trade and other payables 522,544 438,378
47
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
18 . Employee benefit liabilities
Short-term employee benefit liabilities represent those that are expected to be settled wholly
within 12 months after the end of the period in which the employees render the related service.
For defined contribution plans (Kiwisaver), the Group has no further payment obligations once the
contributions have been paid. The contributions are recognised as an employee benefit expense
when they are due.
2023 2022
$ $
Short term employee benefits payable
- Wages and salaries 73,780 287,768
- Accrual for annual and sick leave 104,840 168,419
178,620 456,187
Defined contribution plan payable 1,463 3,548
Total employee benefit liabilities 180,083 459,735
19. Share Capital
The Group’s ordinary shares are classified as equity instruments. Incremental costs directly
attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any
tax effects, including costs related to shares still to be issued.
2023 2022
No. No.
Opening shares 149,879,267 140,262,591
Shares issued*,** 8,256,998 9,616,676
Total share capital 158,136,265 149,879,267
* During the year ended 30 June 2023:
− 116,998 vested share options were exercised into ordinary shares.
− 8,140,000 ordinary shares were issued as part of the Milestone 1 consideration paid
the acquisition of Zalm Therapeutics Limited (see note 13).
** 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 (see note 13).
At 30 June 2023, share capital comprised 158,136,265 authorised and issued ordinary shares (2022:
149,879,267). All issued shares are fully paid and have no par value. The holders of ordinary shares
are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at meetings of the Group, and rank equally with regard to the Group’s residual assets.
Dividends are unlikely to be declared whilst the Group is in the growth phase.
48
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
20. Related party transactions
(i) Company information
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.
(ii) Transactions and balances with related parties
During the year the Group entered into the below transactions with entities related to key
management personnel.
Nature of
transactions
Sale/(purchase)
amount
Amounts receivable
(payable)
$ $
30 June 2023
Alvarium Investments (NZ)
Limited
Purchases (2,300) -
Ciprian consulting Purchases (4,337) -
Hikurangi Enterprises
Limited
Sales 1,000
Mitchel Family Trust Purchases (1,087) -
30 June 2022
Alvarium Investments (NZ)
Limited
Purchases (6,900) -
EECOMS Ltd Purchases (314) -
Mitchel Family Trust Purchases (4,752) -
(iii) 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:
2023 2022
$ $
Directors fees 261,462 270,000
Short-term employee benefits 1,164,683 1,425,080
Defined contribution plan payments 39,996 36,931
Share-based payment expense 127,426 138,641
Total key management personnel compensation 1,593,567 1,870,652
49
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
21. Contingent liabilities
There were no contingent liabilities at balance date that would affect the consolidated financial
statements.
22. Biological assets
The Group 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.
23 . Share-based payments
(a) Accounting policy
Equity-settled share-based payments
The grant‑date fair value of equity‑settled share‑based payment arrangements granted to employees
and directors is recognised as an expense, with a corresponding increase in equity (share-based
payment reserve), over the vesting period of the awards.
The share-based payment cost recognised is generally determined by multiplying a value component
to a number component. The value component reflects the possibility of not meeting market
performance conditions. No adjustments are made for the likelihood of not meeting any service
and/or non-market performance conditions. The number component reflects the number of equity
instruments for which the service and any non-market performance conditions are expected to be
satisfied.
50
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
23. Share-based payments (continued)
(b ) Key features and balances of ESOPs
The Group grants options to certain employees under a number of employee share option schemes.
− ESOP Issue #1 was subject to the following conditions:
Tranche [Vesting period] Vesting conditions
Tranche 3A [25 months]
Non-market performance conditions relating to the Company receiving NZ Medsafe
“Good Manufacturing Practice” (GMP) within a prescribed time frame.
Tranche 3B [25 months]
Non-market performance conditions relating to the Company completing its first
commercial harvest in relation to sales agreement with a specified customer within a
prescribed timeframe.
Tranche 3C [25 months]
Non-market performance conditions relating to the Company achieving EU GMP
certification within a prescribed timeframe.
Tranche 3D [25 months]
Non-market performance conditions relating to the Company achieving sales into the
German market within a prescribed timeframe.
Tranche 4A [25 months]
Non-market performance conditions relating to the establishment of a board-approved
grower partner and collaboration agreement with a specified target party.
Tranche 4B [25 months]
Non-market performance conditions relating to establishment of a commercialisation
plan between the company and a specified target entity.
Tranche 4C [25 months]
Non-market performance conditions relating to the company achieving various medicinal
cannabis licences and authorities.
Tranche 4D [25 months]
Non-market performance conditions relating to board-approved cash-flow and funding
plans being confirmed.
Tranche 4E [25 months] Service condition.
In addition, the Group has elected to pay the PAYE tax associated with the share options
granted, in addition to the share options (i.e. no net settlement feature). Accordingly, this
feature of ESOP Issue #1 is accounted for as a cash-settled share based payment.
At reporting date, ESOP Issue #1 has fully vested and the associated number of options were
awarded to eligible employees based on the service conditions satisfied at the vesting date. All
vested options have been exercised. The weighted average share price on the exercise date
was $0.40;
51
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
23. Share-based payments (continued)
(b) Key features and balances of ESOPs (continued)
− ESOP Issue #2 was subject to the following conditions:
Tranche [Vesting period] Vesting conditions
Tranche 3A [30 months]
Non-market performance conditions relating to the Company receiving NZ Medsafe
“Good Manufacturing Practice” (GMP) within a prescribed time frame.
Tranche 3B [30 months]
Non-market performance conditions relating to the Company completing its first
commercial harvest in relation to sales agreement with a specified customer within a
prescribed timeframe.
Tranche 3C [30 months]
Non-market performance conditions relating to the Company achieving EU GMP
certification within a prescribed timeframe.
Tranche 3D [30 months]
Non-market performance conditions relating to the Company achieving sales into the
German market within a prescribed timeframe.
Tranche 4 [30 months] To be confirmed for each party prior to 1 October 2021.
Tranche 5A [30 months]
Non-market performance conditions relating to the establishment of a board-approved
grower partner and collaboration agreement with a specified target party.
Tranche 5B [30 months]
Non-market performance conditions relating to establishment of a commercialisation
plan between the company and a specified target entity.
Tranche 5C [30 months]
Non-market performance conditions relating to the company achieving various
medicinal cannabis licences and authorities.
Tranche 5D [30 months]
Non-market performance conditions relating to board-approved cash-flow and funding
plans being confirmed.
Tranche 5E [30 months] Service condition.
In addition, the Group has elected to pay the PAYE tax associated with the share options
granted, in addition to the share options (i.e. no net settlement feature). Accordingly, this
feature of ESOP Issue #2 is accounted for as a cash-settled share based payment.
At reporting date, ESOP 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.
All vested options have been exercised. The weighted average share price on the exercise date
was $0.40 ;
− In the prior period, ESOP Issue #4 was issued and is subject to the following conditions:
• Are subject to a general service vesting condition (i.e. if the party terminates their
employment with the company, the share options are forfeited);
• Are subject to a market condition based on the VWAP for the 10-trading-day prior to
vesting date;
• Grant a variable number of options subject to the market conditions met at the vesting
date;
• Have a $nil exercise price; and
• Are subject to the following exercise dates:
o One third can be exercised one month after vesting
o One third can be exercised one year after vesting
o One third can be exercised two years after vesting
52
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
23. Share-based payments (continued)
(b) Key features and balances of ESOPs (continued)
− During the year, the Group also awarded the following new ESOPs (Issue #5 and Issue #6).
ESOP Issue #5 is subject to the following conditions:
• Are subject to a general service vesting condition (i.e., if the party terminates their
employment with the company, the unvested share options are forfeited);
• Have a $nil exercise price; and
• Vest to the participating employees daily such that each award constitutes a separate
tranche with an equal number of options and identical terms and conditions.
ESOP Issue #6 is subject to the following conditions:
• Are subject to a general service vesting condition (i.e., if the party terminates their
employment with the company, the unvested share options are forfeited); and
• Have a $nil exercise price.
53
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
23. Share-based payments (continued)
(b) Key features and balances of ESOPs (continued)
(i) Balance of share options issued that are still yet to vest
Issue #1 Issue #2 Issue #4 Issue #5 Issue #6 Total
No. No. No. No. No. No.
At 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 (698,193) (123,523) (161,200) - - (982,916)
At 30 June 2022 - - 2,317,200 - - 2,317,200
At 1 July 2022 - - 2,317,200 - - 2,317,200
- Options issued - - - 2,450,000 2,100,000 4,550,000
- Options vested - - - (272,721) - (272,721)
- Options forfeited - - (1,617,800) (933,002) - (2,550,802)
At 30 June 2023 - - 699,400 1,244,277 2,100,000 4,043,677
54
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
23. Share-based payments (continued)
(b) Key features and balances of ESOPs (continued)
(ii) Balance of vested share options yet to be exercised
Issue #1 Issue #2 Issue #4 Issue #5 Issue #6 Total
No. No. No. No. No. No.
At 1 July 2021 - - - - - -
- New options vested 1,298,746 177,931 - - - 1,476,677
- Options exercised (1,298,746) (177,931) - - - (1,476,677)
At 30 June 2022 - - - - - -
At 1 July 2022 - - - - - -
- New options vested - - - 272,721 - 272,721
- Options exercised - - - (116,998) - (116,998)
At 30 June 2023 - - - 155,723 - 155,723
55
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
23. Share-based payments (continued)
(c ) Specific ESOP details
Measurement information
The following information is relevant in the determination of the fair value of share options granted:
Equity Settled Cash-settled
ESOP Issue #1: Tranche 3A – 3D, and 4A – 4E
2022 2021 2022 2021
Option pricing model used n/a Black-Scholes n/a Black-Scholes
Weighted average share price
⮚ Tranche 4A – 4E
⮚ Tranche 3A – 3D
n/a
n/a
$0.30
$0.50
n/a
n/a
0.41
0.41
Exercise price n/a $nil n/a $nil
Weighted average contractual life (in days)
⮚ Tranche 4A – 4E
⮚ Tranche 3A – 3D
n/a
n/a
93
184
n/a
n/a
184
184
Volatility
⮚ Tranche 4A – 4E
⮚ Tranche 3A – 3D
n/a
n/a
96%
80%
n/a
n/a
78%
78%
Equity-settled Cash-settled
ESOP Issue #2: Tranche 3A – 3D, 4, and 5A – 5E
2022 2021 2022 2021
Option pricing model used n/a Black-Scholes n/a Black-Scholes
Weighted average share price
⮚ Tranche 3A – 3D
⮚ Tranche 4
⮚ Tranche 5A – 5E
n/a
n/a
n/a
$0.50
$0.41
$0.36
n/a
n/a
n/a
$0.41
$0.41
$0.41
Exercise price n/a $nil n/a $nil
Weighted average contractual life (in days)
⮚ Tranche 3A – 3D
⮚ Tranche 4 (from reporting date – no confirmed conditions)
⮚ Tranche 5A – 5E
n/a
n/a
n/a
645
645
549
n/a
n/a
n/a
549
645
549
Volatility
⮚ Tranche 3A – 3D
⮚ Tranche 4
⮚ Tranche 5A – 5E
n/a
n/a
n/a
76%
78%
80%
n/a
n/a
n/a
78%
78%
78%
56
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
23. Share-based payments (continued)
(c) Specific ESOP details
Equity Settled
ESOP Issue #4
2023 2022
Option pricing model used Monte-Carlo Monte-Carlo
Weighted average share price $0.23 $0.23
Exercise price $nil $nil
Weighted average contractual life (in days) 366 731
Volatility 85% 85%
Equity Settled
ESOP Issue #5
2023 2022
Option pricing model used Binomial n/a
Weighted average share price $0.17 n/a
Exercise price $nil n/a
Weighted average contractual life (in days) 488 n/a
Volatility 78% n/a
Equity Settled
ESOP Issue #6
2023 2022
Option pricing model used Binomial n/a
Weighted average share price $0.16 n/a
Exercise price $nil n/a
Weighted average contractual life (in days) 187 n/a
Volatility 81% n/a
The volatility assumption, measured at the standard deviation of expected share price returns, is based on a statistical analysis of daily share prices over the last
3 years and 6 months of stock movements at the date of issue, matching the time to expiry on the options.
57
Rua Bioscience Limited
Notes forming part of the consolidated financial statements
For the year ended 30 June 2023
24 . Events after the reporting date
Subsequent to reporting date, a partial product recall has been initiated. Investigations are
being undertaken to determine the cause and as such any impact is currently unknown, but not
thought to be significant.
25 . Subsidiaries
The principal subsidiary of Rua Bioscience Limited, which has been included in these
consolidated financial statements, is as follows:
Name Country of
incorporation
and principal
place of
business
Proportion of
ownership interest at
30 June
Non-Controlling
interests
ownership/voting
interest at 30 June
2023 2022 2023 2022
Zalm Therapeutics
Limited
New Zealand
100% 100% - -
Rua Bioscience PTY
Limited
Australia
100% - - -
26 . Net tangible assets
Net tangible assets per share is a non-GAAP measure that is required to be disclosed by the NZX
Listing Rules. The calculation of the Group's net tangible assets per share and its reconciliation
to the consolidated balance sheet is presented below:
2023 2022
$ $
Total assets 20,950,572
33,573,600
(less): Intangible assets (10,734,250)
(15,464,117)
(less): total liabilities (8 30,307)
(9,375,508)
Net tangible assets 9,386,015
8,733,975
Number of shares issued at
balance date
158,136,265
149,879,267
Net tangible assets per share
0.06
0.06
---
Results for announcement to the market
Name of issuer Rua Bioscience Limited
Reporting Period 12 months to 30 June 2023
Previous Reporting Period 12 months to 30 June 2022
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$682 5%
Total Revenue $682 5%
Net profit/(loss) from continuing
operations
($5,959) 31%
Total net profit/(loss) ($5,959) 31%
Interim/Final Dividend
Amount per Quoted Equity Security No dividend has been declared
Imputed amount per Quoted Equity
Security
N/A
Record Date N/A
Dividend Payment Date N/A
Current period Prior comparable period
Net tangible assets per Quoted
Equity Security
$0.06 $0.06
A brief explanation of any of the
figures above necessary to enable
the figures to be understood
Rua’s FY23 performance is set out in the company’s announcement attached
to this announcement, which provides more information on: operating and
financial performance of the business and various other relevant aspects of the
financial performance for the year ended 30 June 2023. No dividend has been
declared for this period.
Authority for this announcement
Name of person authorised to make
this announcement
Paul Naske, Chief Executive Officer
Contact person for this
announcement
Paul Naske, Chief Executive Officer
Contact phone number +64 21 445 154
Contact email address paul.naske@ruabio.com
Date of release through MAP 29/08/2023
Audited financial statements accompany this announcement.
PO Box 1387, Gisborne 4040, Aotearoa New Zealand | 0800 RUABIO | www.ruabio.com
Results Announcement
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.