Rua Releases Annual Report for Year Ended 30 June 2023
Te Ripoata a Ta u
Rua Bioscience
Annual Report 2023
23Rua Bioscience ― Annual Report 2023
Maori founded, Te Tairawhiti based
Rua Bioscience Limited (NZX: RUA) is a
pioneering medicinal cannabis company
with global ambitions. We are nimble
operators at both ends of the value
chain, continuing R&D and genetic
discovery in Ruatorea while establishing
distribution channels in export markets
around the world.
I whakapumautia te kamupene o Rua (NZX: Rua)
ki roto o te Tairawhiti, a, he kamupene Maori tenei
e tipu rautini ana. Ko nga ringaringa o te kaupene
e toro atu ana ki nga topito o te ao whanui. He
kakama matou, e toia ana i nga taha e rua o te
taura whai hua, he rangahau tonu te whai, he
whakahura i nga momo ira ki Ruatorea tonu te
whai, me te whakau i nga makete ara hokohoko
ki te Ao whanui.
―
Cover - Rua tohu.
Designed by Maia Gibbs.
The patterns speak to the journey that the company is on.
With guidance from the past moving forward to create a
positive future for our people.
Puhoro takes the movement inspired by our moana and
awa to move effectively forward carrying the hopes and
dreams of the next generation.
Mangopare draws inspiration from the hammerhead
shark, a prominent tohu seen across Te Tairawhiti
speaking to the courage and strength of the people that
sit within the rohe. Koru draws its inspiration from the fern.
Growing upwards towards its goals and aspirations.
45Rua Bioscience ― Annual Report 2023
Nau mai haere mai e nga Iwi
katoa, anei nga korero mo
Rua Bioscience
Welcome to Rua Bioscience
In the FY23 Annual Report we will update
you on Rua Bioscience and the progress
we’ve made in the past 12 months, outline
our current performance, and share our
plans for the future.
We’ll give you insight into our industry and
the ever-changing national and global
environments within which we operate
as an ambitious early stage medicinal
cannabis company.
We’ll also explore our deep connection to
Te Tairawhiti, and the responsibilities we
carry as a company established to have
a positive impact on our people
and whenua.
Rua is committed to reporting openly and
honestly on our performance, providing
information that is clear and easily
understood. If you have any feedback
on this annual report please email
info@ruabio.com
―
Sunrise over Mangaoporo
Photo credit: Eru Walker
67Rua Bioscience ― Annual Report 2023
Anna Stove
Chair
Tony Barclay
Chair Audit, Finance and Risk
Nga korero a nga Ringatohu
Directors’ statement
The Directors are pleased to present Rua Bioscience Limited’s Annual
Report and consolidated financial statements for the year ended 30
June 2023.
The Directors are not aware of any circumstances since the end of
the year that have significantly affected or may significantly affect
the operations of Rua Bioscience. This annual report is dated
15 September 2023 and is signed on behalf of the Board by:
Directors’ statement
Rarangi korero
Table of contents
Directors’ statement6
Achievements at a glance8
Board of Directors14
Results at a glance9
Chair’s report10
CEO’s report12
Our people17
Senior Management16
Rua’s unique growth strategy22
Financial commentary24
Global progress26
Rua's key markets28
Impact programmes32
Towards sustainability38
Financial statements40
Shareholder information91
Who we are18
Our values20
Contact directory102
89Rua Bioscience ― Annual Report 2023
Mawhiti mai ki nga whakatutukitanga
Achievements at a glance
Mawhiti mai ki nga hua nui
Results at a glance
Revenue from customers
$358k
Cash and investments
$4.56m
Total revenue and other income
$6.53m
Loss before tax
-$5.96m
Net assets
$20.12m
Subsequent activity
In August 2023 Rua made its first product available
for sale in Australia.
Generated first international revenue, from sale of
products in Germany.
Launched first Rua-branded medicinal cannabis
products in Germany with distribution partner
Nimbus Health.
Right sized the business to ensure a capital-light
model, focused on developing unique genetics and
executing export-led strategy.
Exported first cannabis genetics to Australia.
Signed supply and distribution agreements for
growth market of Australia.
Signed five-year supply agreement with
Motagon targeting Poland and Czechia.
Achievements at a glance
1011Rua Bioscience ― Annual Report 2023
Te ripoata a te Heamana
Chair’s report
Kua huri te kei o te waka o Rua,
e anga atu ana matou ki te
pae tawhiti, kia hokona atu i a
matou rautini i te ao whanui.
The stern of the Rua waka has
pivoted. We are advancing
toward our long-range goals,
to sell our medicinal cannabis
worldwide.
Chair’s report
FY23 was a year of pivotal change for Rua
Together with the Board and the rest of the
Rua team, we have been identifying where
true value lies in the medicinal cannabis
industry. We have honed our strategic
direction, prepared for our next stage of
growth and achieved long-held ambitions
to sell products internationally.
At the same time we have held fast to our
roots, our connections to the whenua, wai
and moana, and the whanau of
Te Tairawhiti.
Rua’s strategy
We have a fundamental belief in making
our unique cultivars and medicinal cannabis
products available across the world to
change people's lives. To accelerate growth
and deliver a positive return to shareholders,
over FY23 we have refined and crystallised
our export-led strategy.
Today, we are a nimble operator focused at
both ends of the value chain, with a capital-
light approach. We are continuing R&D
and genetic discovery in Ruatorea while
developing distribution channels in export
markets around the world.
This unique strategy sets us apart, and is
enabling us to deliver scalable value as we
establish a sustainable global company.
Notable successes include launching Rua’s
first GMP-quality medicines in Germany
– becoming one of the first medicinal
cannabis companies in New Zealand to
introduce a branded product in this market.
Generating our first international sales
was a critical commercial milestone and a
highlight of the year for us all.
The Board also sees significant value
in other European markets and the
growth market of Australia, where Rua is
establishing a strong sales presence.
Financial results
Rua reported a loss before tax for the year
to 30 June 2023 of $5.96m (FY22 $7.49m).
Revenue from customers was $358k, and
the company remains well capitalised.
These results are within the expectations
of the Board, as the company continues to
develop international revenue pipelines.
Our people
The year has seen core changes to the
Board and Management team, as the
company moves into the next stage of
its expansion.
In July 2022 Chief Executive Officer Rob
Mitchell announced his retirement, after
building a world-class team.
Having been on the Board since 2019 and
previously headed up a pharmaceutical
company, I was appointed Managing
Director. My remit was to lead the process
of sharpening the strategy, right sizing the
business to ensure it delivered a capital-
light model, and appointing a new Chief
Executive Officer.
Following a thorough recruitment process,
Paul Naske - who was recruited by Rua’s
co-founders in 2019 - was promoted to CEO
in February 2023. Paul has hit the ground
running and is doing an exceptional job of
taking Rua into new global markets.
On behalf of the Board I would like to take
this opportunity to thank and acknowledge
the work of past CEO Rob Mitchell and CFO
Hamish White, along with past Chair Trevor
Burt, Directors Brett Gamble and Martin
Smith who stepped down from the company
in FY23. Individually and collectively, they
have been instrumental in taking Rua to
where it is today, launching the company
on the NZX and leading with vision
and integrity.
We also acknowledge the communities of
Ruatorea and the East Coast, who continue
to face challenges caused by multiple severe
weather events.
Sustainability and impact programmes
This year we continued to measure, manage
and reduce our greenhouse gas emissions,
as part of our environmental, social and
governance (ESG) framework.
Rua’s unique commitment to positive impact
programmes, coupled with its growth
ambitions in an area of the health industry
with such potential, are what drew me to
the company in the first place. I am proud to
see this continue, with the Compassionate
Access Programme extended and 11
students awarded scholarships this year.
Looking forward to FY24
Three years post IPO, we have the strategy,
the people and the product pathways firmly
in place for this exciting new phase of the
company’s development. We look forward to
another year of meeting positive milestones.
Hei konei ra mo tenei wa, noho ora mai.
Anna Stove
Chair
Corporate governance
The Board’s succession plan is designed to align
with Rua’s commercial pathway. We ensure that
Directors collectively have the appropriate skills
required to oversee the company through key
phases of business growth. The Board now consists
of four Directors, and reflects Rua’s principles of
diversity and inclusion.
Chair Trevor Burt and Directors Brett Gamble and
Martin Smith retired in FY23.
Teresa Ciprian was appointed as a Director on 1
August 2022. She has an exceptional international
background in commercialisation, innovation and
business development in the primary sector, and
brings strong governance capability.
Tony Barclay joined the Board in May 2023. He has
decades of healthcare and publicly listed company
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. BDO has been engaged to provide
independent financial advice and oversight, with
Liam Walker appointed as Rua’s virtual CFO.
The Rua Board follows Maramataka, the Maori
lunar calendar, and we set our Board meeting dates
accordingly. Maramataka highlights the connection
between the phases of the moon and our wellbeing,
and gives us the best days to ensure high energy.
1213Rua Bioscience ― Annual Report 2023
Te ripoata a te Kaiwhakahaere
CEO’s report
CEO’s report
Competitive advantages
Rua has a number of competitive
advantages in the medicinal cannabis
market. These include a local focus,
in Ruatorea, on R&D and genetic
discovery; global scale supply
agreements in Australia and the EU;
and established sales, marketing and
distribution partnerships across Europe
and Australasia.
We spent FY23 further refining both
our strategy and our operational
structure, to ensure we can continue
moving at pace and capitalising on the
opportunities before us.
Local GMP manufacturing
facility closure
One of the most significant decisions
we made this year was to close our local
GMP manufacturing facility. It was a
logical move from a business point of
view, resulting in reduced overheads
and expenditure, and underpinning our
capital-light model.
But from a people point of view, it was a
really tough decision.
With the team having been involved
from the inception to design and build,
it was a confronting time for us all as
we worked through the reality of the
situation. I could not be prouder of how
everyone understood the rationale and
helped us achieve the right outcome.
Focus on genetics and exports
Having stopped local GMP
manufacturing, our team has been
able to focus on developing valuable
points of difference in the areas of
genetic discovery.
We are accelerating our global brand
strategy. This year some of our long-
established partnerships resulted in our
first international sales, and we opened
up new product pipelines in other
growing global markets.
We’re working with our supply partners
around the world to build out our
portfolio and create products using our
unique varieties, developed through our
extensive R&D programme in Ruatorea.
The success of this approach is shown in
some significant achievements in FY23.
Entry into new markets
As noted in the Chair’s report, in April 2023
Rua successfully launched its first GMP-
quality medicines in Germany - the largest
and most developed medicinal cannabis
market in Europe.
We intend to expand our product offering
and eventually distribute the varieties from
our Ruatorea facility through this channel.
Rua has the bold ambition of becoming a
market leader in Germany and the EU. To
that end, we have also signed a five-year
supply agreement with European cannabis
distributor Motagon. We are focusing on
entering the complex but fast-growing Polish
market, and also exploring opportunities in
Czechia and, separately, the UK.
Closer to home, Rua is also launching into
the Australian market, which is the second
largest medicinal cannabis market in the
world. Company licences and distribution
channels are in place, and in August 2023
we made our first product available for sale.
In October 2022 we exported our first
cannabis genetics to Australia. This was the
initial step in developing the pathway to
grow East Coast genetics overseas.
Our plans for FY24
• Continuing R&D and genetic discovery
at our Ruatorea facility.
• Working with our supply and cultivation
partners to develop exciting new
products.
• Signing further supply agreements that
provide cost-effective access to GMP-
quality medicines.
• Expanding our product offering in
Germany.
• Establishing a strong sales presence in
Australia.
• Progressing our entry into Poland,
Czechia and the UK.
Scan the QR code
to watch a video
of Paul giving an
update on Rua's
plans to grow
genetics at scale.
An acknowledgement
While the year was, overall, a very positive one
for Rua, there have been many challenges for
the communities of Tairawhiti. Severe weather
hammered the region and caused extensive
damage and upheaval. It’s humbling to see how
people, including our staff, supported each other
during these incredibly difficult times. I would also
like to acknowledge the dedication of the team
at Rua to their community and the company.
Ka noho pumau matou ki te kaupapa o Rua hei
oranga ma tatou katoa.
Naku na,
Paul Naske
Chief Executive
Officer
Ko te tumanako kei te ora
rawa atu koutou. Kua tini te
whakatakotoranga o Rua, kua
whakaniko kua whakapakari
i te kamupene kia tutuki ai a
matou wawata.
The structure of Rua has
changed. We have enhanced
and strengthened the company
in order to achieve our desires.
1415Rua Bioscience ― Annual Report 2023
Te Poari Ringatohu
Board of Directors
Rua Bioscience’s Board of
Directors are deeply invested
in the Rua kaupapa. They
possess a wealth of domestic
and international business,
pharmaceutical and strategic
expertise. This year Anna Stove
was appointed Chair and we
welcomed Teresa Ciprian and
Tony Barclay.
Co-founder of Rua Bioscience,
Panapa established New
Zealand’s first tertiary
training course for cannabis
cultivation via the Eastern
Institute of Technology. From
Ruatorea, with a degree in
management, Panapa is
a co-founder of numerous
social enterprises and holds
governance roles across a
wide range of for-profit and
charitable organisations.
Panapa lives in Te Tairawhiti
and focuses on developing
economic opportunities
alongside his people. He has
been a Director of Rua since
its inception in October 2017.
Panapa Ehau
Executive Director,
Co-Founder
Kaiwhakau / Ringatohu
Ngati Uepohatu, Ngati Porou
Anna Stove
Chair
Heamana
Board of Directors
Teresa has an exceptional
background in innovation,
commercialisation, marketing,
and business development
in the primary sector. She
has significant international
business experience, having
held a variety of senior roles for
Danone based in both North
America and France focusing
on their domestic and global
markets. Teresa has also advised
a number of internationally-
focused businesses on their
growth strategies and brings
strong governance capability
having served on the Boards of
Firstlight Foods Ltd, AgResearch,
Prolife Foods, Food Standards
Australia and New Zealand,
and Zespri. Teresa has a track
record of helping develop highly
capable leaders, strong brands,
accumulation of IP, and seeing
organisations flourish through
continuous improvement. Teresa
joined the Board in August 2022.
Tony brings over 30 years’
experience in business and 22
years of healthcare experience.
Tony was CFO at medical
device company Fisher &
Paykel Healthcare from the
time of separation from
Fisher & Paykel Appliances
in 2001 until retiring from
full-time employment in
2018. Prior to Fisher & Paykel
Healthcare, Tony worked
for Price Waterhouse and
Arnott & Biscuits in finance
roles. Tony holds a number
of Directorships in private
companies, all in MedTech.
Tony holds a BCom from the
University of Otago and is a
Chartered Accountant and a
member of the New Zealand
Institute of Directors and
INFINZ. Tony was appointed
to the Board on 1 May 2023.
Bronson was raised in Gisborne.
He is an Investment Manager
in Te Tira Haumi, the Maori
Investment team at NZTE,
based in Tamaki Makaurau.
He has regional responsibilities
for Te Tai Tokerau rohe and
the wider Taupo to Wellington
region. He is also the national
renewable energy sector lead
for Maori. Bronson previously
worked as KPMG's Maori
Sector Driver, the GSMA
(Global System for Mobile
Communications) in London as
the Head of Procurement and
Strategic Partnerships. Prior to
that, Bronson worked in Spark's
Technology Procurement and
Risk Assurance teams. Bronson
is a qualified Chartered
Accountant with a Bachelor
of Commerce from Victoria
University. Bronson is strongly
associated with Nga Kaitatau
Maori o Aotearoa, the National
Maori Accountants Network.
Anna has been a Director of Rua
since May 2019, and was elected
Board Chair with effect from 1
May 2023. She also served as the
company’s Managing Director
from August 2022 until March
2023. Anna has a successful 25+
year track record leading and
driving transformational change
within the pharmaceutical
sector. She has held various
senior executive roles within NZ,
Asia Pacific and Europe, most
recently as NZ General Manager
for GlaxoSmithKline. Anna has
a strong passion for improving
the quality of life for all through
driving business’ strategic growth.
Anna is also a Director of Pacific
Edge Ltd and Chair of TAB NZ.
Her previous governance roles
include Chair of Global Women
NZ, Director of Medicines NZ,
Vice-Chair of Pukekohe Park
and Vice Chair of Shooting Star
Children’s Hospice London, UK.
Teresa Ciprian
Non-Executive Director
Ringatohu Whakatu Pu
Tony Barclay
Non-Executive Director
Ringatohu Whakatu Pu
Bronson Marshall
Board Observer
Kaimatakitaki Poari
Ngati Porou, Te Atihaunui-a-
Paparangi, Ngati Rangi
1617Rua Bioscience ― Annual Report 2023
Liam Walker
Virtual Chief
Financial Officer
Apiha Kaiwhakahaere Putea
Mai Tawhiti
Our Senior Management Team is charged with delivering
operational excellence, executing Rua’s strategy, and leading
Rua’s expansion into global medicinal cannabis markets.
Nga pou Matua
Senior Management
Te tira o Rua
Our people
Paul has held a range of
leadership positions in business
strategy and development,
including roles as General
Manager of Corson Grain and
as a Business Unit Manager
at Fletcher Building. Paul has
been overseeing Rua’s topline
business operations since the
beginning of 2019 and has
been vital to the design and
efficient execution of Rua’s
global strategy. His knowledge
of the commercial environment
ensures Rua’s alignment with
the business needs of our global
clients. Paul was promoted
to the role of Chief Executive
Officer in February 2023.
Liam is a BDO Partner based
in Auckland. He joined BDO in
2007. Liam provides proactive
financial advice to a wide range
of clients in the healthcare,
construction, freight and logistics
industries. He delivers a blend
of commercial, financial and
strategic knowledge to identify
a business’ impediments, and
solutions to help them grow. A
strong believer in innovation, he
aims to help clients spend more
time on their business, rather
than in it. Liam plays an active
role as vCFO with a number of
his clients, including Rua.
Emma has been with Rua
since October 2019 and was
instrumental in establishing the
GMP standards and agreements
necessary for Rua to operate.
Emma holds a Masters of
Science (MSc) in Forensic
Chemistry from the University
of Strathclyde, Scotland as well
as a Bachelor of Science (BSc)
majoring in Medicinal Chemistry
from the University of Auckland.
Emma came to Rua from ESR
where she was part of the
Forensic Drug Chemistry Team.
Paul Naske
Chief Executive Officer
Kaiwhakahaere Matua
Emma McIldowie
Quality and
Corporate Affairs
Kaiwhakahaere Kounga Me Nga
Take Rangatopu
Our people
1819Rua Bioscience ― Annual Report 2023
Te kamupene o Rua
Who we are
Rua is a pioneering medicinal
cannabis company with
global ambitions. Maori-
founded in Ruatorea, we
provide medicinal cannabis
products for local and export
markets. We remain focused
on creating intergenerational
social impact in Te Tairawhiti.
Our purpose
To deliver cannabis-based medicines that change people’s lives.
How we will achieve our purpose
Develop a financially sustainable business that inspires the
next generation, establishes high value career pathways, and
provides cannabis-based medicines for our community.
Who we are
―
Pete Sollitt - Ngati Porou
Grower Technician
2021Rua Bioscience ― Annual Report 2023
Nga uara
Our values
Since our earliest days, Rua has held true to our
four key values. These values define who we are
and underpin everything we do as a successful,
sustainable and trusted partner.
Ponotanga
We respect diversity. We have integrity in all relationships.
Whakawhanaungatanga
We collaborate for success.
Mauitanga
We do “business as unusual”. We celebrate learning and curiosity, innovation
and courage. We have hope for the future.
Oranga
We work for healthy whanau and healthy whenua. We prioritise the
wellbeing of our customers, staff, family and the wider industry.
Our values
―
Talmage Herbert
Head Cultivator
Growth strategy2223Rua Bioscience ― Annual Report 2023
Te rautaki whakatupu ahurea o Rua
Rua’s unique growth strategy
Rua has a nimble, capital-light approach to the
medicinal cannabis market. We outsource cultivation
and manufacturing, which means we can operate
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.
Unique genetics
selected at Ruatorea
Germany | Australia
Aotearoa New Zealand
Poland | Czechia | UK
We operate at both ends of
the value chain where capital
requirements are low and
we leverage our expertise to
deliver scalable value with
trusted partners.
1. Genetics
2. Cultivation
3. Manufacturing
4. Distribution
Partner with best in class for
low cost, scalable delivery.
We work with cultivation and
manufacturing companies
closer to our key markets.
This allows Rua to grow our
revenues in a capital-light
manner.
Scan the QR code
with your phone
to watch our CEO
talking about
Rua's role in the
value chain.
2425Rua Bioscience ― Annual Report 2023Financial commentary
―
Panapa Ehau
Co-founder and Executive Director
Nga korero mo nga putea
FY23 financial commentary
In FY23 Rua delivered its first international sales and
implemented a capital light model, positioning it
strongly for its next phase of development and growth.
Income
Rua’s total revenue from customers in FY23 was $358k (FY22 $24k),
largely reflecting the company’s first sales in Germany.
Total 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.
Capital light business model
In the second half of FY23, the company made the decision to close the
GMP manufacturing facility in Te Tairawhiti and establish a capital light
business model. This has resulted in reduced overheads and expenditure.
Loss for the year
In line with the Board’s expectations, Rua had a net loss before tax
for the year ended 30 June 2023 of $5.96m (FY22 $7.5m). This year
the company recorded significant non-cash impairments, largely
attributable to the impairment of the GMP manufacturing facility
assets and Zalm supply contract.
Balance sheet
The company remains well capitalised with cash, cash equivalents and
investments on hand at the end of the year of $4.56m (FY22 $9.94m).
Rua’s total assets were $20.95m, with total liabilities of $0.83m, resulting
in net assets of $20.12m.
Financial oversight
Rua monitors cashflow to ensure it has the appropriate resources
to meet key milestones. As the company further invests in sales and
marketing, and building revenue streams in high growth international
markets, it will continue its prudent and considered approach to
financial management.
Rua engaged BDO to provide independent oversight, financial
monitoring and advice, and appointed Liam Walker as the company’s
virtual CFO. This builds on a pre-existing relationship with BDO and is
an efficient and effective solution for Rua at this stage of growth.
FY23 saw new appointments to the Board, ensuring the optimum
balance of business experience, strategic skill sets and governance
expertise is maintained.
2627Rua Bioscience ― Annual Report 2023
Kokiri ki te ao
Global progress
From the outset, Rua has
understood we must go global to
support local. We are focusing on
high growth markets in Europe, as
well as our neighbours Australia,
which is the second largest
medicinal cannabis market
in the world.
FY23 saw Rua record its first
international sales, with clear
pathways to revenue in FY24.
Key
Aotearoa New ZealandRua’s home.
AustraliaFirst sales in FY24.
GermanyFirst sales in FY23, in partnership with Nimbus Health.
PolandFive-year supply agreement with Motagon.
CzechiaFive-year supply agreement with Motagon.
United KingdomSigned term sheets with distributor.
Global progress
United
Kingdom
Czechia
Poland
Germany
Australia
Aotearoa
New Zealand
2829Rua Bioscience ― Annual Report 2023
Germany
Germany is the largest and most developed medicinal cannabis
market in Europe and projected to be worth around $700m by the
end of this calendar year.
1
In April 2023, Rua successfully launched its first GMP-quality
medicines in Germany – becoming one of the first medicinal
cannabis companies in New Zealand to introduce a branded product
in the market. This was a critical commercial milestone and highlight
of the year. The response to the product exceeded our expectations.
Our entry into the German market was alongside our distribution
partner Nimbus Health, a specialised wholesaler and importer of
cannabinoid medicines that is part of Dr Reddy’s Laboratories.
In June 2023, Rua generated our first revenue from the sale of
products in Germany.
With an established path to market and revenue, Rua and Nimbus
Health intend to expand the product offering in Germany. In time, we
will distribute the genetics from Rua’s Ruatorea facility through this
same channel.
Nga makete
Rua’s key markets
Poland, Czechia, UK
In FY23 Rua signed a five-year supply
agreement with Motagon, and aim to be
early movers in the emerging markets of
Poland and Czechia.
Poland is one of the fastest growing
medicinal cannabis markets in Europe
and by the end of 2023 is expected to
be worth over $90m.
2
With no domestic
cultivation, it is a major importer of
dried cannabis flower.
Rua’s immediate focus will be on entering
the Polish market. This is being overseen
by a world-class regulatory team, and a
detailed product dossier was submitted
to Polish authorities in March 2023. The
product approval process is expected to
take around 12 months, with revenue
to follow.
Rua will also advance plans for Czechia,
which is one of the most progressive
medicinal cannabis markets in Europe
and has seen steady growth over the last
five years.
We are working on establishing a
pipeline into the smaller, but promising,
UK market. We have identified a
distribution company and signed term
sheets which allow us to progress through
to formal distribution agreements.
―
1 Proprietary management
information.
―
2 Proprietary management
information.
Europe
―
Rua Launch Germany
Paul Naske
Panapa Ehau
Jessika Nowak
―
Gdańsk, Poland
3031Rua Bioscience ― Annual Report 2023
Australia
Australia has long been a focus of Rua’s
export strategy, both for growing and
distributing product internationally, and
for securing new revenue streams. It is the
second largest medicinal cannabis market
in the world, estimated to be worth over
$240m currently and growing rapidly.
3
During the second half of FY23 we
established the pipeline for Rua-branded
product to be sold in Australia, with
company licences and distribution
channels in place.
In August 2023 the company took delivery
of its first product and made it available for
sale. This begins to establish a strong sales
presence and a clear pathway to further
revenue in FY24.
―
3 Penington Institute Australia, May 2023.
Australia
Aotearoa New Zealand
The New Zealand medicinal cannabis market is currently
worth about $12.5m annually.
4
The complex commercial
and regulatory environment means that the greatest
opportunities for Rua to generate meaningful revenue, and
returns back to shareholders and our local communities,
currently lie in export markets.
In December, Manatu Hauora, the Ministry of Health,
began an industry-wide review of its regulatory settings.
In our view, the New Zealand medicinal cannabis scheme
provides a robust framework for prescribers and patients,
but there is some work to do to create an equally robust
commercial framework. We are wholly supportive of
this review.
While our main growth markets are overseas, we remain
firmly entrenched in Aotearoa and have plans to introduce
new products. Throughout FY23 we continued to support
the health outcomes of New Zealand patients by
providing a consistent supply of GMP-certified cannabis
medicines, both manufactured by Rua and through our
Compassionate Access Programme.
Ruatorea, in Te Tairawhiti on the East Coast of Aotearoa, is
our home. At our facility in Mangaoporo we are continuing
R&D and genetic discovery. We expect to export more of our
genetics, developing unique Rua varieties.
―
4 Official Information
Act requests to the
Ministry of Health, and
proprietary management
information.
―
Sydney Harbour
3233Rua Bioscience ― Annual Report 2023
Impact areas Target
EnvironmentalIdentify ways to mitigate our emissions, with a particular focus on
travel emissions.
Set emissions reduction targets and work towards achieving them.
Complete our annual GHG emissions report.
Continue to improve the quality of data captured for carbon
reporting while simplifying data collection.
Further investigate renewable energy utilisation.
SocialContinue providing scholarships and further education and training
opportunities to local rangatahi, aligned with Rua kaupapa.
Expand Rua’s Compassionate Access Programme, which provides
fully subsidised medicinal cannabis products to those in Te Tairawhiti
who are most in need.
Monitor worker health and wellbeing, and support staff in managing
their health and wellness.
Continue to contribute to cannabis law and regulations reform.
Continue developing opportunities for NZ cannabis genetics to enter
international research and development pathways.
GovernanceConduct annual review of Board succession plan to enhance overall
capabilities.
Further strengthen the Board’s approach to ethical governance, and
set objectives for diversity in the management team and Board.
Continue with aspiring Director development programme.
By delivering on the Rua Sustainability Framework,
we will provide transparency to our community,
shareholders, management and Board.
Over the coming year we will work on and progress
all the areas of our Sustainability Framework.
This includes measuring all operational emissions
required under the international standard for
carbon footprints, ISO 14064-1 supply chain.
Nga hotaka whakaawe
Impact programmes
Impact programmes
3435Rua Bioscience ― Annual Report 2023Impact programmes
While Rua continues to expand into
international markets, enhancing positive social
and economic impacts at home in Te Tairawhiti
is woven into the fabric of everything we do.
In 2020, Rua committed $50,000 over two years
to a series of community capability projects.
This funding was matched by community trust
and economic development agency Trust
Tairawhiti.
Nga toa whiwhi karahipi o te tau
Congratulations to our FY23 scholarship recipients
Rua’s scholarship programme is designed to celebrate the aspirations of
local rangatahi, and help them to drive meaningful, sustainable social
and economic impact in the communities of Te Tairawhiti.
The scholarships are open to students who are studying in areas related
to Rua’s activities, and who either live in Te Tairawhiti or have affiliations
to the region.
With the support of Rua Bioscience and Trust Tairawhiti, 11 students were
awarded scholarships in FY23.
Rua Bioscience Scholarships
“I am very humbled and grateful to
be a recipient of this scholarship.
Our family are Rua Bioscience
shareholders because my parents
believe in the values of Rua to
achieve healthy lifestyles and to
uplift communities of the East
Coast of New Zealand.”
- Manaia Puha
Student visits to Rua Bioscience
The Rua facility at Ruatorea showcases cutting
edge cannabis research and cultivation in action.
In 2022 we guided four kura from Te Tairawhiti
through our genetics centre of excellence, providing
them with a thought-provoking look at the future of
locally developed cannabis IP and potential
career pathways.
To date, the fund has supported 27 Rua
Bioscience graduate and post-graduate
scholarships, one internship, the Rua career
series, and a number of student exposure
visits and industry exposure visits. These are
all managed by Rua’s dedicated Community
Engagement Coordinator.
In FY23 we focused on inspiring the next
generation of scientists and entrepreneurs.
Industry exposure visits
Last year Rua facilitated a trip for local students to
our R&D partners at universities, Crown Research
Institutes and other government agencies, and
specialist businesses across New Zealand. This gave
them valuable learning opportunities and a unique
hands-on experience. Our second planned industry
exposure visit will happen before the end of 2023
with a trip to Wellington.
Aaria Reedy from Ngata Memorial College is seeking matauranga
rongoa at Te Wananga of Aotearoa.
William Batten from Gisborne Boys’ High School is studying Biomedical
Sciences at Auckland University.
Kyan Scott from Lytton High School has started a Bachelor of Health
Science at Auckland University.
Tomairangi Pihema-Brown is following her passion for Paramedicine
at AUT.
Merin David-Tomoana from Gisborne Boys’ High School is studying for
a Bachelor of Forestry Science at Canterbury University.
Sofia Newman from Gisborne Girls High School is studying for a
Bachelor of Science majoring in ecology and biodiversity at Victoria
University.
D’Vante Tautau-Broughton-Tuapawa from Kahukuranui is seeking
matauranga in Law and Māori at Victoria University.
Manaia Puha from Tolaga Bay Area School is studying Business and
Math at Victoria University.
Pagan Barbarich-Waikari from Gisborne Girls High School has begun a
Bachelor of Arts majoring in Political Science at Victoria University.
Karma Hohepa from Ngata Memorial College is studying Psychology
and Law at Waikato University.
Heni Paringatai from Te Kura Kaupapa Maori o Kawakawa mai Tawhiti
is studying Anthropology and Maori at Otago University.
E tautoko, e whakaawe ana i nga tauira
Supporting and inspiring students
3637Rua Bioscience ― Annual Report 2023Compassionate Access Programme
He Putanga Aroha
Compassionate Access Programme
At Rua Bioscience, our Compassionate Access
Programme is at the core of our mission to make a
positive impact in our community.
The programme shares the benefits of medicinal
cannabis with those in Te Tairawhiti who are
most in need. It provides up to 30 local patients
per month who have genuine barriers to access
and a clinical need with access to fully subsidised
medicinal cannabis products.
In the last year we have expanded the programme
to include all approved medicinal cannabis
products in New Zealand, increasing the product
forms and treatment options available to patients.
This process is managed by local prescribers, and
is fully subscribed.
“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 Tairawhiti. As Rua continues
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 more social
impact programmes.”
- Paul Naske, CEO
Rua has supplied
medicinal cannabis to
30 Tairawhiti patients
per month in 2023,
and we aim to do
more as we extend
our Compassionate
Access Programme.
Te ripoata GHG o Rua mo FY23
Rua’s FY23 GHG report
GHG emissions are a key contributor to climate
change. The New Zealand government has set a
2050 target of net zero emissions of all GHGs other
than biogenic methane.
The first step in taking impactful climate action is to
understand the amount and type of GHG emissions
a business generates. Informed decisions can then
be made to implement effective reductions.
For this purpose, we measured our emissions
inventory for FY23, and have committed to
managing and reducing our GHGs.
Total GHG emissions tCO2-e
Total GHG emissions by scope tCO2-e
GHG emissions by source (%) FY23
Scope ➀ and ➁ emissions
reduced by 40%
Excluding the one off refrigerant leak in FY22,
Rua's core GHG emmissions have reduced 40%
year on year. These changes can be attributed to
reduced diesel and electricity consumption, and
changes to the emissions factors for electricity
due to grid decarbonisation.
Scope ➂ emissions a challenge
While total emissions have decreased,
challenges remain. As Rua continues to expand
its international business, travel emissions have
increased accordingly. This, along with previously
unmeasured staff commute emissions, has raised
Scope 3 emissions.
During FY24 Rua will set targets for reduction
and consider some innovative ideas to help us
achieve this.
Scope
➀
1423133204278
Scope
➁
Scope
➂
217129
39% Air travel
21% Fleet fuels – diesel and petrol
16% Electricity
14% Staff commute
10% Other
■ FY22 | ■ FY23
■ FY22 | ■ FY23
One off
refrigerant leak
Scope
➀
Direct GHG emissions from sources owned or
controlled by Rua, or emissions released into
the atmosphere as the direct result of the
company’s activities.
Scope
➁
Indirect GHG emissions from the generation of
purchased electricity, heat and steam.
Scope
➂
Indirect GHG emissions that occur as a
consequence of Rua’s activities but from
sources not owned or controlled by the
company, such as air travel.
3839Rua Bioscience ― Annual Report 2023Towards sustainability
Whai hua mo apopo
Towards sustainability
As a company with a deep sense of
kaitiakitanga, we believe Rua has a
responsibility to protect and nurture
the environment, and share the
benefits of a successful business with
our community.
We have developed a bespoke Rua
Sustainability Framework that aligns
with the United Nations Global
Compact Sustainable Development
Goals. It underpins our dedication
to being an ethical and sustainable
medicinal cannabis company.
This Framework informs business
strategy, shapes how we engage with
stakeholders, supports sustainable
decision-making processes and
creates value.
In FY22 we undertook our first
comprehensive carbon audit, to set a
base year from which to benchmark
our greenhouse gas (GHG) emissions
year on year.
Then in FY23 MyImprint completed
a full GHG report and awarded Rua
a certificate endorsing that we have
achieved REDUCE status by:
• Measuring Scope 1, 2 and 3 GHG
emissions in accordance with with
the GHG Protocol.
• Identifying three key emissions
and planning to reduce them.
• Showing a reduction in carbon
emissions in line with a science-
aligned target for Scope 1 and 2.
This is another important step for us
in our journey to become a genuinely
sustainable company.
39%
14%
10%
21%
16%
4041Rua Bioscience ― Annual Report 2023
Nga ripoata putea
Financial statements
Financial statements
Rarangi purongo putea
Index to the consolidated financial statements
Independent Auditor’s Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Notes Forming Part of the Consolidated Financial Statements
Shareholder Information
Contact Directory
42
48
49
50
51
52
91
102
OTHER INFORMATION
43Rua Bioscience ― Annual Report 202342Financial statements
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.
45Rua Bioscience ― Annual Report 202344Financial statements
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.
47Rua Bioscience ― Annual Report 202346Financial statements
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
484949Rua Bioscience ― Annual Report 202348Financial statements
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2023
Note2023
$
2022
$
Revenue from contracts with customers 5357,67524,226
Other income6323,905621,872
Net fair value gains/(losses)135,851,032-
Total revenue and other income6,532,612646,098
Changes in inventories of finished goods
and work in progress
7(339,551)(128,643)
Research and development costs7(1,587,704)(2,977,522)
Other expenses7(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 income202,129138,145
Interest expense-(70)
Interest expense - leases(19,079)(40,752)
Net finance income183,05097,323
Loss before tax (5,958,506)(7,485,985)
Income tax (expense)/credit8(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 tax38-
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.
Consolidated Statement
of Changes in Equity
For the year ended 30 June 2023
Note
Share
capital
Foreign
currency
translation
reserve
Share
option
reserve
Accumulated
losses
Total
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 capital133,820,916---3,820,916
- Costs of issuing share capital23--179,181-179,181
- Employee share options
expense
23652,262-(652,262)--
Total transactions
with owners
4,473,178(473,081)-4,000,097
Balance at 30 June 202241,891,677141,686(17,835,272)24,198,091
Opening balance at
1 July 2022
41,891,677141,686(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 capital13,191,790,800---1,790,800
- Employee share options
expense
23--90,616-90,616
- Share options vested and
exercised
2320,240-(20,240)--
Total transactions
with owners
1,811,040-70,376-1,881,416
Balance at 30 June 202343,702,71738212,062(23,794,552)20,120,265
The above statements should be read in conjunction with the accompanying notes.
51Rua Bioscience ― Annual Report 202350Financial statements
Consolidated Statement of Financial Position
As at 30 June 2023
Note2023
$
2022
$
Current assets
Cash and cash equivalents 42,529,3381,897,285
Other receivables 16862,9911,070,323
Prepayments163,361166,521
Investments42,032,0558,041,493
Inventory 1114,319218,805
Total current assets 5,602,06411,394,427
Non-current assets
Property, plant and equipment 124,438,6815,843,284
Goodwill13,1410,448,08210,448,082
Intangible assets14286,1685,016,035
Right-of-use lease assets 15100,577796,772
Other receivables1675,00075,000
Total non-current assets 15,348,50822,179,173
Total assets 20,950,57233,573,600
Current liabilities
Trade and other payables 17522,544438,378
Contract liabilities5-2,062
Employee benefit liabilities18180,083459,735
Lease liabilities4,1546,722128,544
Deferred grant income 13,1039,500
Contingent consideration payable13-3,820,916
Total current liabilities 13762,4524,859,135
Non-current liabilities
Contingent consideration payable13-3,820,916
Lease liabilities4,1567,855695,458
Total non-current liabilities 67,8554,516,374
Total liabilities830,3079,375,509
Net assets 20,120,26524,198,091
Equity
Share capital 1943,702,71741,891,677
Accumulated losses (23,794,552)(17,835,272)
Foreign currency translation reserve38-
Share option reserve 212,062141,686
Total equity 20,120,26524,198,091
The consolidated financial statements on pages 48 to 90 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.
Consolidated Statement
of Cash Flows
For the year ended 30 June 2023
Note2023
$
2022
$
Cash flows from operating activities
Receipts from customers278,08524,280
Grant income received104,378696,171
Payments to suppliers and employees(6,302,684)(7,565,373)
Net cash inflows/(outflows) from operating activities9(5,920,221)(6,844,922)
Cash flows from investing activities
Interest income211,567113,360
Proceeds from sale of plant and equipment34,8541,656
Proceeds from maturing investments413,000,00029,070,711
Cash acquired in acquisition of subsidiary
(net of cash paid)
-876,452
Proceeds from contingent consideration receivable13500,000-
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 activities6,672,6495,591,365
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 equivalents632,053(1,462,194)
Cash and cash equivalents at beginning of year1,897,2853,359,479
Cash and cash equivalents at end of year42,529,3381,897,285
The above statements should be read in conjunction with the accompanying notes.
53Rua Bioscience ― Annual Report 202352Financial statements
Notes Forming Part of the 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).
(d) New standards, interpretations and amendments
(i) Indented 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);
2. Basis of preparation (continued)
• 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) Indented, 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.
(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.
55Rua Bioscience ― Annual Report 202354Financial statements
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 brand strategy through the development of
an international product pipeline built on the Group’s existing manufacturing 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 future 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
cashflows 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 programme and product development innovations.
The purchase of Zalm Therapeutics Limited 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.
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.
2. Basis of preparation (continued)
The Group also has a number of fixed assets from its 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, however there are no indications at this point in time that they will affect
the Group’s ability to continue as a going concern.
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).
(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.
57Rua Bioscience ― Annual Report 202356Financial statements
2. Basis of preparation (continued)
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.
(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.
(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.
2. Basis of preparation (continued)
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.
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.
59Rua Bioscience ― Annual Report 202358Financial statements
4. Financial instruments - risk management (continued)
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.
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
Financial
assets at
amortised
cost
Financial
liabilities at
amortised
cost
Financial
liabilities at
fair value
through profit
or loss
Total
carrying
amount
Fair
value
FY23$$$$$
Investments2,032,0552,032,055(a)
Cash and cash equivalents2,529,3382,529,338(a)
Trade and other receivables173,620173,620(a)
Trade and other payables(276,801) (276,801)(a)
Lease liabilities(114,577) (114,577)(b)
Contingent consideration--n/a
Total4,735,013(391,378)-
Financial
assets at
amortised
cost
Financial
liabilities at
amortised
cost
Financial
liabilities at
fair value
through profit
or loss
Total
carrying
amount
Fair
value
FY22$$$$$
Investments8,041,4938,041,493(a)
Cash and cash equivalents1,897,2851,897,285(a)
Other receivables575,000575,000(a)
Trade and other payables(317,427)(317,427)(a)
Lease liabilities (824,002)(824,002)(b)
Contingent consideration (7,641,832)(7,641,832)n/a
Total10,513,778(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.
4. Financial instruments - risk management (continued)
61Rua Bioscience ― Annual Report 202360Financial statements
(a) Standard & Poor’s, Moody’s, Fitch.
4. Financial instruments - risk management (continued)
(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 Company 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
(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 have
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:
Credit
rating
(a)
Cash and cash
equivalentsInvestments
Other
receivablesTotal
30 June 2023$$$$
KiwibankA1, AA2,529,3382,032,055-4,561,393
Total2,529,3382,032,0554,561,393
30 June 2022
$$$
KiwibankA1, AA1,897,2858,041,493-9,938,778
ANZAA, A+500,000500,000
Total1,897,2858,041,493500,00010,438,778
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.
(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.
Interest rates on interest bearing cash and cash equivalents and investments range between 1.15% - 5.00%
(2022: 0.35% - 1.80%).
30 June 202330 June 2022
Equity
$
Profit
$
Equity
$
Profit
$
10% strengthening of the NZD5,7277,954--
10% weakening of the NZD(13,564)18,839--
63Rua Bioscience ― Annual Report 202362Financial statements
4. Financial instruments - risk management (continued)
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:
As at 30 June 2023
Up to 3
months
Between
3 and 12
months
Between
1 and 2
years
Between
2 and 5
years
Over
5 yearsTotal
$$$$$$
Trade and other payables276,801----276,801
Lease liabilities13,67439,46321,09945,00011,250130,486
Total290,47539,46321,09945,00011,250407,287
As at 30 June 2022$$$$$$
Trade and other payables317,427----317,427
Lease liabilities47,585113,981119,464,317,169374,021972,220
Total365,012113,981119,464317,169374,0211,289,647
(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.
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).
5. Revenue from contracts with customers (continued)
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.
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 Zealand89,467 24,226
Sale of goods - Germany268,208-
Total revenue from contracts with customers3 57, 675 24,226
65Rua Bioscience ― Annual Report 202364Financial statements
20232022
$$
Research and development grant income289,204584,180
NZTE grant income-36,689
Total government grant income289,204620,869
Gain on sale of property, plant and equipment-1,003
Gain on early termination of leases13,096-
Other income21,605-
Total other income323,905621,872
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:
5. Revenue from contracts with customers (continued)
Contract balances
20232022
NOTE
$$
Specific expenses included in operating loss
before net financing costs for the year:
Cultivation costs520,011 875,738
Extraction and manufacturing437,849578,740
Changes in inventories of finished goods
and work in progress
339,551128,643
Impairment expense12, 145,568,718-
Accommodation and travel116,30036,665
Communications85,002236,278
Depreciation of property, plant and equipment 580,764645,502
Depreciation of right-of-use lease assets101,260171,101
Amortisation – intangible assets2,960-
Direct research and development expenses290,324628,023
General275,238256,811
Professional services1,009,6251,378,464
Insurance157,050132,788
Motor vehicle expenses39,89055,738
Charitable expenses57,41718,782
Licenses51,32446,515
Office expenses68,69064,737
Selling and marketing935,047131,959
Employee benefit expense2,043,7662,842,067
Foreign exchange loss3,1362,993
Total expenses12,683,9228,231,544
Included in the above:
Employee benefit expense
- Short term benefits (wages and salaries)1,869,5962,556,773
- Defined contribution plan83,55496,662
- Share-based payment expense90,616188,632
Total employee benefit expense2,043,7662,842,067
Research and development expenses
- Direct costs290,324628,023
- Indirect costs1,297,3802,349,499
Total research and development expenses1,587,7042,977,522
Impairment expenses
- Property, plant and equipment12841,811-
- Intangible assets144,726,907-
Total impairment expenses5,568,718-
7. Expenses
Contract liability
2023
$
2022
$
As at 1 July2,062-
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
67Rua Bioscience ― Annual Report 202366Financial statements
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:
20232022
$$
Audit and review of the financial statements
- Audit of the financial statements135,775131,250
- Review of half year financial statements30,14927,143
Total audit and review fees165,924158,393
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.
20232022
$$
Current tax on profits for the year774-
Total current tax774-
Origination and reversal of temporary differences(1,351,212)190,642
Prior year tax losses not recognised1,351,212959,348
Prior period adjustments-77
Total deferred tax (income)/expense-1,150,067
Total income tax (income)/expense7741,150,067
8. Income tax (continued)
(i) Income tax recognised in profit or loss
The income tax expense/(credit) recognised for the year includes current and deferred tax as
presented below:
(ii) Reconciliation of income tax expense
The reconciliation of income tax expense is presented below:
20232022
$$
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 purposes22,42854,406
- Non-assessable income(1,704,973)(121,826)
- Tax losses not recognised for deferred tax 3,351,7013,313,485
- Prior period adjustments-77
Total income tax (income)/expense7741,150,067
(iii) Imputation credits
The Company has $769,357 of imputation credits as at 30 June 2023 (2022: $310,713).
69Rua Bioscience ― Annual Report 202368Financial statements
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.
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
entitle-
mentsBuildings
Intangible
assets
Lease
liabilities
and
right-of-
use lease
assets
Share-
based
payments
– cash
settled
Share-
based
payments
– equity
settled
Carried
forward
tax
lossesTotal
$$$$$$$$
As at 1 July 202131,859(15,383)-3,97089,195134,2792,310,5602,554,480
Amounts
recognised
- In profit or loss13,049(1,927)-3,653(89,195)(116,222)(959,348)(1,149,990)
- Arising on
business
combinations
--(1,404,490)---- (1,404,490)
- In OCI--------
At 30 June 202244,908(17,310)(1,404,490)7,623-18,0571,351,212-
As at 1 July 202244,908(17,310)(1,404,490)7,623-18,0571,351,212-
Amounts
recognised
- In profit or loss(16,404)25,5271,325,465(3,703)-20,327(1,351,212)-
- Arising on
business
combinations
--------
- In OCI--------
At 30 June 202328,5048,217(79,025)3,920-38,384--
71Rua Bioscience ― Annual Report 202370Financial statements
9. Notes Supporting Statement of Cash Flows
(i) Reconciliation of net operating cash flows to profit/loss
20232022
$$
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)
580,764643,571
- Add back: Depreciation – RoU lease asset
(3)
101,265170,894
- Add back: Amortisation – intangible asset2,960-
- Add back: Impairment expense5,568,720-
- 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 & equipment11,347-
- 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 expense19,07940,822
- Deduct: Interest income(202,129)(138,145)
- Add back: Cost of goods given away under CAS52,26818,782
- Deduct: Fair value gain on contingent consideration(5,851,032)-
- Deduct: Costs capitalised into ROU assets-(793)
360,6591,744,822
Movements in working capital:
- (Increase)/decrease in other receivables
(1)
(292,629)99,119
- (Increase)/decrease in prepayments3,160(55,994)
- (Increase)/decrease in inventories152,218(237,587)
- Increase/(decrease) in trade and other payables
(2)
93,7633,335
- Increase/(decrease) in contract liabilities(2,062)2,062
- Increase/(decrease) in employee benefit liabilities(279,652)225,873
- Increase/(decrease) in deferred grant income3,6039,500
(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.
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 2023NON-CASHNON-CASHCASHCASH
Opening
New
leases
Lease
remeasure-
ments
Payment
of prior
year
accrued
interestPaymentClosing
$$$$$$
Lease liabilities824,002-608,129-(101,296)114,577
824,002-608,129-(101,296)114,577
30 June 2022NON-CASHNON-CASHCASHCASH
Opening
New
leases
Lease
remeasure-
ments
Payment
of prior
year
accrued
interestPaymentClosing
$$$$$$
Borrowings 10,762 - - (10,762) -
Lease liabilities944,078 36,977 (3,769)(153,284) 824,002
954,840 36,977 (3,769) (164,046) 824,002
10. Earnings per share
Basic earnings per share (EPS) is calculated by dividing the profit attributable to shareholders of the Group
by the weighted average number of ordinary shares on issue during the year, excluding shares held as
treasury stock.
Diluted earnings per share assumes conversion of all dilutive potential ordinary shares in determining the
denominator.
In both years, the Group has not adjusted the weighted average number of shares used in diluted EPS to
reflect the impact of outstanding share-options granted, because as the Group is loss-making, the impact of
the outstanding share options granted is “anti-dilutive” (i.e. decreases the loss per share).
.
Numerator20232022
$$
(Loss) for the year and earnings (basic and diluted EPS) (5,959,280)(8,636,052)
20232022
DenominatorNo. sharesNo. shares
Weighted average number of shares (basic and diluted EPS)153,728,201144,166,088
73Rua Bioscience ― Annual Report 202372Financial statements
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.
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.
20232022
$$
Raw materials-166,028
Consumables-8,098
Work in progress-20,967
Finished goods14,31923,712
Total14,319218,805
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.
12. Property, plant and equipment (continued)
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.
75Rua Bioscience ― Annual Report 202374Financial statements
12. Property, plant and equipment (continued)
Buildings
and fitout
Cultivation
containers
Office
equipment
Plant and
equipmentVehicles
Capital
worksTotal
Year ended
30 June 2023
$$$$$$$
Opening net
book value
4,146,968 116,281 112,777 1,418,068 39,989 9,201 5,843,284
Additions11,488-8,32124,16920,591-64,569
Acquired on business
combination
-------
Depreciation charge(313,899)(11,629)(24,497)(213,600)(17,138)-(580,763)
Impairment charge(486,230)--(355,581)--(841,811)
Disposals--(19,294)(27,304)--(46,598)
Transfers---9,201-(9,201)-
Closing net
book value
3,358,327104,65277,307854,95343,442-4,438,681
Cost4,828,288159,196151,4391,874,337181,786-7,195,046
Accumulated
impairment
(486,230)--(355,581)--(841,811)
Accumulated
depreciation
(983,731)(54,544)(74,132)(663,803)(138,344)-(1,914,554)
Net book
amount
3,358,327104,65277,307854,95343,442-4,438,681
Buildings
and fitout
Cultivation
containers
Office
equipment
Plant and
equipmentVehicles
Capital
worksTotal
Year ended
30 June 2022
$$$$$$$
Opening net
book value
4,399,586 129,202 124,993 1,273,642 61,297 185,890 6,174,610
Additions - - 16,121- 3,321296,911 316,353
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)
Transfers98,596 - 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
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 valueFair valueFair valueFair value
$$$$
Level 3 fair values30 June 2022
Remeasurement
gain / (loss)Settlement30 June 2023
Milestone 1(3,820,916)2,030,1161,790,800*-
Milestone 2(3,820,916)3,820,916--
Total(7,641,832)5,851,0321,790,800-
* Refer note 19.
77Rua Bioscience ― Annual Report 202376Financial statements
(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: $25,262,067)
over the carrying value. No impairment of goodwill has been recognised as at 30 June 2023 (2022: nil).
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.
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 Estimated discounted cash flow
production (refer below) (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.
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 inputsRange of inputs
30 Jun 2022 30 Jun 2023
Relationship of unobservable
inputs to fair value
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.
Goodwill
Supplier
contractsTotal
$$$
(i) Cost
At 1 July 202210,448,082
5,016,03515,464,117
Acquired through business combinations-
--
At 30 June 202310,448,0825,016,03515,464,117
At 1 July 20214,000,000-4,000,000
Acquired through business combinations6,448,0825,016,03511,464,117
At 30 June 202210,448,0825,016,03515,464,117
(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 20214,000,000-4,000,000
At 30 June 202210,448,0825,016,03515,464,117
At 30 June 202310,448,082286,16810,734,250
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.
79Rua Bioscience ― Annual Report 202378Financial statements
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.
20232022
Expenses and income in the period$$
Depreciation
- Leases of property (land and buildings)47,545114,247
- Vehicles32,38332,383
- Plant21,33324,472
Interest expense19,08744,535
Balance sheet and cash flow statements
Carrying amount of right-of-use asset
- Leases of property (land and buildings)88,606738,908
- Vehicles11,97844,362
- Plant-13,502
Additions to right-of-use assets-37,977
Total cash outflow related to leases120,379209,304
(ii) Information regarding the Group’s leases and leasing activity
The Group leases a number of properties including land, buildings, including commercial office premises, in
the jurisdiction from which it operates.
As standard industry practice, one of the Group’s property leases are subject to periodic CPI increases and/
or market rent reviews. A 1% increase in these payments would result in an additional $244 cash outflow
(2022: $907) compared to the current period’s cash outflow.
The Group’s property leases typically include renewal and termination options. The Group must assess
whether it reasonably expects (or not) to exercise these when determining the lease term.
The Group has one property lease (2022: two property leases) where the Group has assessed it does not
reasonably expect to exercise all available renewal options, resulting in a potential additional lease term of 2
years (2022: 10 - 20 years) and potential future lease payments of $48,792 (2022: $109,020 - $689,160) that
are not currently included in measurement of the lease liability recognised for these leases.
15. Leases (continued)
(i) Lease related balances as at period end, and amounts for the period
81Rua Bioscience ― Annual Report 202380Financial statements
16. Other receivables
20232022
Note$$
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 escrow13
-500,000
Financial assets classified as amortised cost –
non-current
Non-trade receivables75,00075,000
Financial assets classified as amortised cost - total4173,620575,000
GST receivable36,41689,210
Other receivables -2,008
Withholding tax receivable86,94526,524
Government grants receivable
- Research and development tax credit641,010398,408
- Other-54,173
Other receivables764,371570,323
Total other receivables937,9911,145,323
17. Trade and other payables
20232022
Note$$
Trade payables4276,801317,427
Other payables245,743120,951
Total trade and other payables522,544438,378
The Group applies the NZ IFRS 9 simplified approach to measuring expected credit losses using a lifetime
expected credit loss provision for trade receivables. To measure expected credit loss on a collective basis,
trade receivables are grouped based on similar credit risk and rating.
The expected loss rates are based on the Group’s historical credit losses. The historical loss rates are then
adjusted for current and forward-looking information on macroeconomic factors affecting the Group’s
customers. At reporting date, none of the Group’s trade receivables were past 30 days due.
18. Employee benefit liabilities
Short-term employee benefit liabilities represent those that are expected to be settled wholly within 12
months after the end of the period in which the employees render the related service.
For defined contribution plans (Kiwisaver), the Group has no further payment obligations once the
contributions have been paid. The contributions are recognised as an employee benefit expense when
they are due.
19. Share capital
The Group’s ordinary shares are classified as equity instruments. Incremental costs directly attributable to
the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects, including costs
related to shares still to be issued.
At 30 June 2023, share capital comprised 158,136,265 authorised and issued ordinary shares (2022:
149,879,267). All issued shares are fully paid and have no par value. The holders of ordinary shares are
entitled to receive dividends as declared from time to time and are entitled to one vote per share at
meetings of the Group, and rank equally with regard to the Group’s residual assets. Dividends are unlikely
to be declared whilst the Group is in the growth phase.
20232022
$$
Short term employee benefits payable
- Wages and salaries73,780287,768
- Accrual for annual and sick leave 104,840168,419
178,620456,187
Defined contribution plan payable1,4633,548
Total employee benefit liabilities180,083459,735
20232022
No. sharesNo. shares
Opening shares149,879,267140,262,591
Shares issued*
’
**8,256,9989,616,676
Total share capital 158,136,265149,879,267
* 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 for 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).
83Rua Bioscience ― Annual Report 202382Financial statements
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)
$$
30 June 2023
Alvarium Investments (NZ) LimitedPurchases(2,300)-
Ciprian ConsultingPurchases(4,337)-
Hikurangi Enterprises LimitedSales1,000-
Mitchell Family TrustPurchases(1,087)-
30 June 2022
Alvarium Investments (NZ) LimitedPurchases(6,900)-
EECOMS LtdPurchases(314)-
Mitchell Family TrustPurchases(4,752)-
(iii) Key Management personnel compensation
Compensation of key Management personnel (being those persons having authority and responsibility for
planning, directing and controlling the activities of the Group, including the Directors) was as follows:
20232022
$$
Directors fees261,462270,000
Short-term employee benefits1,164,6831,425,080
Defined contribution plan payments39,99636,931
Share-based payment expense127,426138,641
Total key management personnel compensation 1,593,5671,870,652
21. Contingent liabilities
There were no contingent liabilities at balance date that would affect the consolidated financial statements.
22. Biological assets
The Group currently still undertakes significant research and development activities and as such the plants
and produce currently resulting from these operations are not being developed for sale, or for transformation
into agricultural produce or additional biological assets. Under the Group’s licensing requirements, plants
must be destroyed and therefore hold no value at balance date. The plants are destroyed by way of being
composted and as they are not able to be traded, they have no value from a product manufacturing
perspective.
Accordingly, related costs are recognised in profit or loss rather than in the recognition of a biological
asset in accordance with NZ IAS 41 Agriculture, until such time as the Group moves past the research
and development phase. The agricultural assets will be recognised at fair value once the regulations allow
commercial production and they are used for commercial production.
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.
85Rua Bioscience ― Annual Report 202384Financial statements
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.
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
[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.
23. Share-based payments (continued)
(b) Key features and balances of ESOPs (continued)
- ESOP Issue #2 was subject to the following conditions:
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.
87Rua Bioscience ― Annual Report 202386Financial statements
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
(ii) Balance of vested share options yet to be exercised
Issue #1
No.
Issue #2
No.
Issue #3
No.
Issue #4
No.
Issue #5
No.
Issue #6
No.
Total
No.
At 1 July 20211,996,939301,453----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----2,450,0002,100,0004,550,000
- Options vested----(272,721)-(272,721)
- Options forfeited---(1,617,800)(933,002)-(2,550,802)
At 30 June 2023---699,4001,244,2772,100,0004,043,677
Issue #1
No.
Issue #2
No.
Issue #3
No.
Issue #4
No.
Issue #5
No.
Issue #6
No.
Total
No.
At 1 July 2021-------
- New options vested1,298,746177,931----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
23. Share-based payments (continued)
(b) Key features and balances of ESOPs (continued)
- 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
- 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.
89Rua Bioscience ― Annual Report 202388Financial statements
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
ESOP Issue #4 20232022
Option pricing model usedMonte-CarloMonte-Carlo
Weighted average share price$0.23$0.23
Exercise price $nil$nil
Weighted average contractual life (in days)366731
Volatility85%85%
Equity settled
ESOP Issue #5 20232022
Option pricing model usedBinomialN /A
Weighted average share price$0.17N /A
Exercise price $nilN /A
Weighted average contractual life (in days)488N /A
Volatility78%N /A
Equity settled
ESOP Issue #6 20232022
Option pricing model usedBinomialN /A
Weighted average share price$0.16N /A
Exercise price $nilN /A
Weighted average contractual life (in days)187N /A
Volatility81%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.
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 settledCash-settled
ESOP Issue #1
Tranche 3A – 3D, and 4A – 4E
2022202120222021
Option pricing model usedN /ABlack-ScholesN /ABlack-Scholes
Weighted average
share price
• Tranche 4A – 4E N /A$0.30N /A$0.41
• Tranche 3A – 3DN /A$0.50N /A$0.41
Exercise price$nil$nil
Weighted average contractual life
(in days)
• Tranche 4A – 4E N /A93N /A184
• Tranche 3A – 3D N /A184N /A184
Volatility
• Tranche 4A – 4E N /A96%N /A78%
• Tranche 3A – 3DN /A80%N /A78%
Equity settledCash-settled
ESOP Issue #2
Tranche 3A – 3D, 4 and 5A – 5E
2022202120222021
Option pricing model usedN /ABlack-ScholesN /ABlack-Scholes
Weighted average
share price
• Tranche 3A – 3D N /A$0.50N /A$0.41
• Tranche 4 N /A$0.41N /A$0.41
• Tranche 5A – 5EN /A$0.36N /A$0.41
Exercise price$nil$nil
Weighted average contractual life
(in days)
• Tranche 3A – 3D N /A645N /A549
• Tranche 4 from reporting date –
no confirmed conditions)
N /A645N /A645
• Tranche 5A – 5E N /A549N /A549
Volatility
• Tranche 3A – 3E N /A76%N /A78%
• Tranche 4 N /A78%N /A78%
• Tranche 5A – 5EN /A80%N /A78%
91Rua Bioscience ― Annual Report 202390Financial statements
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
2023202220232022
Zalm Therapeutics
LimitedNew Zealand100%100%--
Rua Bioscience Australia
Pty Ltd Australia100%---
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:
20232022
$$
Total assets20,950,57233,573,600
(less): Intangible assets(10,734,250)(15,464,117)
(less): Total liabilities(830,307)(9,375,508)
Net tangible assets9,386,0158,733,975
Number of shares issued at balance date 158,136,265149,879,267
Net tangible assets per share0.06 0.06
Nga Korero mo nga
kaipupuri hea
Shareholder information
9293Rua Bioscience ― Annual Report 2023Shareholder information
RangeTotal HoldersShareholding% Shares
1 - 499366112,6520.07
500 - 999222163,9920.10
1,000 - 1,999361466,7100.30
2,000 - 4,9997532,401,0731.52
5,000 - 9,9993722,550,8391.61
10,000 - 49,99969213,616,2568.61
50,000 - 99,999744,967,2823.14
100,000 - 499,9997615,597,7429.86
500,000 - 999,999128,849,6785.60
1,000,000 Over20109,410,04169.19
Total2,948158,136,265100.00
Shareholder Information
Spread of Shareholders
As at 31 August 2023
Rua’s Statement of Corporate Governance as at 14th September 2023 can be found here:
www.ruabio.com/investors
Rua is not in strict compliance with principle 3.1 of the NZX Corporate Governance Code dated 17 June 2022
which recommends that an issuer’s audit committee should comprise solely of non-executive directors.
Since July 2023 Panapa Ehau has been a member of Rua’s Audit, Finance and Risk Committee and is also an
executive director. Panapa’s membership of the Committee has been endorsed by the Board and is the result
of a reduction in the number of Directors in the last year to four, with all Directors participating more broadly
across the Committees. The Committee follows appropriate practices whenever a matter under consideration
involves a conflict of interest for any director.
Name
Shareholding% Shares
FANG GROUP INVESTMENT LIMITED23,584,93914.91
NEW ZEALAND DEPOSITORY NOMINEE LIMITED 19,792,09212.52
TAILORSPACE CAPITAL LIMITED11,129,3757.0 4
MICHAEL JOHN WILDING8,509,5565.38
HIKURANGI ENTERPRISES LIMITED8,132,6205.14
FNZ CUSTODIANS LIMITED6,768,1144.28
RIDINGS BROTHERS LIMITED4,492,1962.84
ROBERT IAN FYFE4,306,0602.72
HIKURANGI BIOACTIVES LIMITED PARTNERSHIP4,000,0002.53
MARTIN WALTER SMITH & ANETA LISA BIRD & SARA MAREE LUNAM 2,544,7321.61
PATHFINDER NOMINEES LIMITED - NZCSD2,513,1391.59
CUSTODIAL SERVICES LIMITED2,484,3401.57
ENQUIRE LIMITED1,700,0001.08
FORSYTH BARR CUSTODIANS LIMITED1,564,5320.99
AORAKI HOLDINGS (NO 2) LIMITED1,536,1230.97
JOSEPH DAVENPORT1,387,2700.88
BOTANITECH PTY LIMITED1,361,0080.86
GREG ANTONY ANDERSON & NICOLA MARIE ANDERSON 1,273,5100.81
YANLING HUANG1,210,0000.77
FNZ CUSTODIANS LIMITED1,120,4350.71
Top 20 holders of ORDINARY SHARES total109,410,04169.19
Total remaining holders balance48,726,22430.81
Top 20 Shareholders
The names and holdings of the 20 largest registered shareholders in Rua as at 31 August 2023 were:
9495Rua Bioscience ― Annual Report 2023Shareholder information
Substantial Product Holders
According to notices given under the Financial Markets Conduct Act 2013, the following were substantial
product holders of Rua as at 30 June 2023. The total number of voting securities (fully paid ordinary shares)
of Rua as at 30 June 2023 was 158,136,265.
Directors’ Shareholdings Interests
As at 30 June 2023 the Directors of the Company had the following relevant interests in Rua’s shares.
Directors’ Share Dealings
In accordance with the Companies Act 1993 between 1 July 2022 and 30 June 2023 the Board received the
following disclosures from Directors of acquisitions and dispositions of relevant interests in shares issued by
the Company and details of such dealings were entered in the Company’s interests register.
NameShareholdingOptions
Anna Stove763,896nil
Panapa Ehau473,49859,800
Tony Barclay50,000nil
Brett Gamble* (held via Aoraki Investments (No 2) Limited)1,536,123nil
Brett Gamble* (held via Positano Holdings Limited)269,791nil
DirectorTransactionNumber of securitiesPrice per securityDate
Tony BarclayPurchase of Shares50,000$0.1815 May 2023
NameShareholdings
FANG GROUP INVESTMENT LIMITED23,584,939
TAILORSPACE CAPITAL LIMITED11,129,375
MICHAEL JOHN WILDING8,509,556
HIKURANGI ENTERPRISES LIMITED8,132,620
ANDREW CHARLES WILLIAMS7,756,838
Directors' Interests
The following are details of general disclosures of interest by Directors holding office as at 30 June 2023,
pursuant to section 140(2) of the Companies Act 1993. The Director will be regarded as interested in all
transactions between Rua and the disclosed entities. Includes past and present Board members.
Current DirectorsCompanyPosition
Anna StovePacific Edge LimitedDirector and Shareholder
TAB NZChair
Panapa EhauHikurangi Enterprises LtdDirector
Hikurangi Huataukina TrustTrustee
Teresa CiprianFirstlight Foods LtdDirector
Aspeq LtdDirector
Goodfood Group LtdDirector
Superthriller Jetsprint LtdDirector and Shareholder
Food Standards Australia and New ZealandDirector
Garden to Table TrustTrustee
Tony BarclayBaymatob Pty LtdChair and Shareholder
Veriphi LimitedDirector and Shareholder
Pacific Edge LimitedDirector and Shareholder
Previous DirectorsCompanyPosition
Brett GambleAlvarium Investments (NZ) LtdDirector
New Zealand Discretionary
Investment Management Services Ltd
Director
Newton Ross LtdDirector
Pathfinder Asset Management LtdDirector
Mike Greer Homes & Related CompaniesDirector
Gough Investments & Related CompaniesDirector and CEO
*Brett Gamble retired from the Board on 30 June 2023
9697Rua Bioscience ― Annual Report 2023Shareholder information
Independent Directors
In order for a Director to be independent, the Board has determined that they must not be an employee of
Rua or any of its subsidiaries and must have no disqualifying relationships. Independence is determined by
the Board, in accordance with the independence requirements of the NZX Listing Rules and having regard to
the factors described in the Code. Director independence is monitored by the Board on an ongoing basis.
NZX Listing Rules require that there must at all times be at least three Directors of whom two are ordinarily
resident in New Zealand and at least two are independent Directors.
Rua has four Directors of whom three were considered to be independent as at 30 June 2023. Those three
are: the Chair, Anna Stove; Teresa Ciprian and Tony Barclay. Panapa Ehau is a Director, employee and co-
founder of Rua and Director of Hikurangi Enterprises Ltd. which is a substantial shareholder in Rua.
Board and Officer Gender Composition
The gender composition of Directors and the Officers as at 30 June 2023 was as follows:
The Disclosure Committee meets as required.
F 30 June 2023 30 June 2022
PositionFemaleMaleFemaleMale
Director2214
Officers*7125
Evaluation of Performance Against Diversity Policy
Rua’s approach to diversity is outlined in its Diversity and Inclusion Policy, which is available on Rua’s website.
Key areas of focus are:
• Attracting, selecting and retaining qualified and diverse applicants and aiming to have a focus on ethnic
and gender diversity.
• Remunerating and rewarding in an equitable manner on the basis of skill, knowledge and merit.
• Maintaining a workplace that is accommodating of diverse and changing life situations and enables
employees to manage their work and lives through flexible working arrangements.
• Striving for a diverse representation of different groups in society across all levels of Rua’s business and
based on Rua’s origins and values (see the Code of Ethics for a description of Rua’s values).
The Board recognises the critical nature of diversity and inclusion and has ensured this is a key consideration
when making the skill-based appointments required to ensure robust governance as Rua transitions from
start-up to commercialisation. The Board has reviewed Rua’s diversity profile and considers that, at this time,
there is good diversity on the factors that are most relevant to Rua and its employees:
• Understanding and adoption of a bi-cultural working environment is deeply embodied within Rua’s culture.
All recent company publications include content in English and Maori.
• The make-up of the Board is sufficiently diverse for the purposes of forming a strong team, providing
specialised knowledge and expertise in relevant markets, and driving strong business performance.
• Of the 13 employees, 8 are female and 5 are male.
The Board have set a gender diversity objective for the Board of 40% men, 40% women and 20% of
any gender. The Company currently meet this objective.
Meeting Attendance
Board
Audit, Finance and
Risk Management
Remuneration and
Nominations
Current DirectorsAttendedAttendedAttended
Tony Barclay2 of 21 of 1
Teresa Ciprian10 of 103 of 46 of 6
Panapa Ehau11 of 11
Anna Stove11 of 111 of 11 of 1
Board
Audit, Finance and
Risk Management
Remuneration and
Nominations
Previous DirectorsAttendedAttendedAttended
Trevor Burt10 of 103 of 37 of 7
Brett Gamble10 of 114 of 44 of 7
Martin Smith4 of 43 of 3
* An officer is a person who is concerned or takes part in the management of Rua’s business and who reports directly to the
Board or the Chief Executive Officer.
9899Rua Bioscience ― Annual Report 2023
Single figure
remuneration
Percentage STI
against
maximum
Percentage LTI
against
maximum
Span of LTI
performance
period
2023CEO $560,291 80%0%N /A
2022CEO $559,033 77.5%55%2020 - 2021
Remuneration rangeEmployees
100,000-110,0001
110,001-120,0004
130,001-140,0001
140,001-150,0001
160,001-170,0001
200,001-210,0002
210,001-220,0001
260,001-270,0001
Shareholder information
The table above includes the equity settled ESOP issues.
Employee Remuneration
In addition to his Director’s fee, Panapa Ehau also receives a salary as an employee of Rua. In FY23, his salary
was $46,264 and Directors Fee was $45,173 for a total remuneration of $91,437. There was no STI or LTI paid to
Panapa Ehau in FY23.
In addition to her Director’s fee, Anna Stove also received a salary for acting as Managing Director of Rua
between August 2022 and March 2023 of $212,237 for a total remuneration of $238,487. There was no STI or LTI
paid to Anna Stove in FY23.
The number of employees of Rua (not being Directors) who received remuneration and other benefits in their
capacity as employees during the year ended 30 June 2023 that exceeded $100,000 per annum is set out in the
table below.
Directors’ Remuneration
Director remuneration is made up of an annual base fee, an additional Chair fee (if applicable) and some
Directors are participants in Rua’s share option plan.
A Director fee pool of $324,000 per annum has been approved by shareholders. Any increase to that pool
requires shareholder approval. The base fee for the Chair is $90,000 and for a Director is $45,000. Committee
Chairs are paid a fee for the additional work the role requires. Members of Committees are not paid an
additional fee. The full Director fee pool was not used as a result of the reduction in the number
of Directors.
Current DirectorsPositionDirectors' feesCommittee fees
Total
remuneration
Tony BarclayChair - ARC$7,788$7,788
Teresa CiprianChair - Rems$41,250$41,250
Panapa Ehau$45,173$45,173
Anna StoveChair$26,250$26,250
Previous DirectorsPositionDirectors' feesCommittee fees
Total
remuneration
Trevor BurtChair$75,000$75,000
Brett GambleChair - ARC$45,000$4,500$49,500
Martin SmithChair - Rems$15,000$1,500$16,500
Total$261,461
* Salary and Fees includes Kiwisaver and Employer Superannuation Contribution Tax (ESCT).
** Other benefits include the use of a company car only.
CEO and MD Remuneration
For the financial year ended 30 June 2023, the STI scheme for Rob Mitchell was set as a percentage of base
cash remuneration, being 30%. The STI payment to Rob Mitchell relating to the financial year was $40,194,
being 80% of the maximum available STI. There was no STI remuneration paid to the other CEOs/MDs
in FY23.
For the financial year ended 30 June 2023, the CEOs/MDs received a total of $508,906 in fixed annual
remuneration. The CEOs (but not the MD) were participants in the Employee Share Options programme
(which includes both equity and cash settled components) and received no vesting of any interests in the
financial year.
During the financial year Paul Naske in his capacity as CEO was issued 1,400,000 options as part of the
Company’s Employee Share Option Scheme. Details of Rua’s Employee Share Option Schemes are set out in
Note 23 to the financial statements.
Two-year summary – CEO remuneration
CEO remuneration FY23
Salary andOther Pay for performanceTotal
2023fees*benefits**SubtotalSTILT ISubtotalremuneration
Rob Mitchell $218,538 $7,650 $226,188 $40,194 $40,194 $266,382
Anna Stove $212,237 - $212,237
- - $212,237
Paul Naske $78,131 $3,541 $81,672 - - $81,672
Total CEO
remuneration
$508,906 $11,191 $520,097 $40,194 - $40,194 $560,291
Donations
The following donations were made by Rua and its subsidiaries in the year to 30 June 2023.
Compassionate Access Programme$52,268
Medical Cannabis Awareness New Zealand$3,000
Other Koha$2,149
Total$57,417
101Rua Bioscience ― Annual Report 2023100Shareholder information
Auditor Fees
Fees paid to the auditors include payments to PricewaterhouseCoopers for the following:
There were no other fees payable by the company for other serices provided by that firm for FY23.
Dividend Policy
The payment of dividends is not guaranteed, will be at the discretion of the Board, and dependent on a
number of factors.
These factors include the general business environment, operating results and the financial condition of Rua,
future funding requirements, any contractual, legal or regulatory restrictions on the payment of dividends by
Rua and any other factors the Board may consider relevant.
20232022
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 $158,593
NZX Disclosures
Rua has not applied for nor relied on any NZX waivers during the financial year ending 30 June 2023.
103Rua Bioscience ― Annual Report 2023102
Nga mokamoka o te kamupene
Contact directory
Company Number
6484092
Issued Capital
158,136,265 Ordinary Shares
Registered Office
Rua Bioscience Limited
1 Commerce Place,
Awapuni, Gisborne 4071
Phone: 0800 RUABIO (782 246)
Share Registrar
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road,
Takapuna, Auckland 0622
Phone: +64 (9) 488 8700
Directors
Anna Stove
Panapa Ehau
Teresa Ciprian
Tony Barclay
Chief Executive Officer
Paul Naske
Auditors
PricewaterhouseCoopers
Legal Advisers
Lowndes Jordan
Level 15, 188 Quay Street
Auckland 1010
Phone: +64 (9) 309 2500
Website
ruabio.com
Facebook
facebook.com/ruabioscience
Instagram
instagram.com/ruabioscience
LinkedIn
linkedin.com/company/rua-bioscience
Contact directory
―
This document is printed on an environmentally responsible paper, produced
using Elemental Chlorine Free (ECF), FSC
®
certified, Mixed Source pulp
from Responsible Sources, and manufactured under the strict ISO14001
Environmental Management System.
Rua has printed, to order, a limited quantity of the FY23 Annual Report. It is also
available to view at ruabio.com.
Hei konei ra mo tenei wa,
tena koutou i tautoko i tenei
kaupapa, i tenei kamupene.
ruabio.com
---
PO Box 1387, Gisborne 4040, Aotearoa New Zealand | 0800 RUABIO | www.ruabio.com
FOR PUBLIC RELEASE
NZX Limited
Wellington
Friday 15 September 2023
Rua Bioscience Limited Releases Annual Report for Year Ended 30 June 2023
Tena koutou,
Today we have released our Annual Report for the 12 months ending 30 June 2023 (FY23).
In our Annual Report we provide an overview of Rua’s pivotal year, which has seen us focus on
developing unique genetics, executing our export-led strategy and achieving our first
international sales. You can read more about the benefits of our capital-light operating model,
and our preparations for our next stage of growth.
The Annual Report is attached and available now on the Rua website www.ruabio.com/annual-
report. Those who have requested it will receive a hard copy in the post in due course
For more information, please visit www.ruabio.com or contact:
ENDS
For more information, please visit www.ruabio.com or contact:
Paul Naske
Chief Executive Officer
+64 21 445 154
Paul.naske@ruabio.com
MARKET 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.