Rua Bioscience Half Year Results

Rua Bioscience Limited
Results announcement




Results for announcement to the market
Name of issuer Rua Bioscience Limited
Reporting Period 6 months to 31 December 2023
Previous Reporting Period 6 months to 31 December 2022
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$141 (44%)
Total Revenue $141 (44%)
Net profit/(loss) from
continuing operations
-$10,851 (1,610%)
Total net profit/(loss) -$10,851 (1,610%)
Interim/Final Dividend
Amount per Quoted Equity
Security
$0.00
Imputed amount per Quoted
Equity Security
$0.00
Record Date $0.00
Dividend Payment Date $0.00
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.05 $0.07
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer unaudited interim financial statements
Authority for this announcement
Name of person

authorised
to make this announcement
Paul Naske
Contact person for this
announcement
Paul Naske
Contact phone number +64 (21) 445 154
Contact email address Paul.naske@ruabio.com
Date of release through MAP

29 February 2024

Unaudited financial statements accompany this announcement.

---

1




















Rua Bioscience Limited


Interim financial report

For the six months ended 31 December 2023

2



Rua Bioscience Limited




Contents

Company Directory
3




Condensed consolidated Statement of Profit or Loss and Other Comprehensive Income
4




Condensed Consolidated Statement of Changes in Equity 5 – 6




Condensed Consolidated Statement of Financial Position
7




Condensed Consolidated Statement of Cash Flows
8




Notes forming part of the Condensed Consolidated Financial Statements
9 - 20

3
Company Directory
For the six months ended 31 December 2023



Country of incorporation of company: New Zealand

Company Number: 6484092

Legal form: NZ Limited Company

Principal activities: Pharmaceutical Distribution and Marketing

Registered office: 1 Commerce Place
Awapuni
Gisborne

Directors: Anna STOVE – Chair
Panapa EHAU
Teresa FARAC-CIPRIAN
Tony BARCLAY

Auditor:

PricewaterhouseCoopers

Bankers: Kiwibank

Solicitors: Lowndes Jordan

4

Rua Bioscience Limited

Condensed Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the six months ended 31 December 2023


Note
For the six
months ended
31 December
2023
(unaudited)
For the six
months ended
31 December
2022
(unaudited)
$
$


Revenue from contracts with customers 5 16,988 62,819
Other income 6 124,418 191,586

Changes in inventories of finished goods and
work in progress
(20,249)
(122,240)
Research and development expenses (558,400) (981,059)
Other expenses (1,883,277) (2,621,990)
Impairment expense 8,9 (8,609,935) -
Net fair value gains/(losses) on financial
liabilities at fair value through profit or loss
4(ii) - 4,100,932
(Loss)/profit before net financing costs (10,930,455) 630,048


Interest income 87,491 101,265
Interest expense – leases (8,866) (12,610)
Net finance income 78,625 88,655

(Loss)/profit before tax (10,851,830) 718,703

Income tax expense 7 - -

(Loss)/profit after tax (10,851,830) 718,703

Other comprehensive income - -

Items that will may be reclassified to profit or loss:
-

- Exchange gains arising on translation of foreign operations
1,820

Total comprehensive (loss)/profit for the
period attributable to shareholders
(10,850,010) 718,703

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




(Loss)/profit from operations

Basic ($)
(0.069) 0.005
Diluted ($)
(0.069) 0.004

_______ _______


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

5

Rua Bioscience Limited

Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 December 2023








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

Note
Share
capital

Foreign
currency
translation
reserve
Share option
reserve
Accumulated
losses

Total equity

$

$ $ $

$

Opening balance at 1 July 2023 (audited) 43,702,717 38 212,062 (23,794,552) 20,120,265

Total comprehensive loss for the period
- Loss for the period - - - (10,851,830) (10,851,830)
- Other comprehensive income - 1,820 - - 1,820
Total comprehensive loss for the period - 1,820 - (10,851,830) (10,850,010)

Transactions with owners
- Issue of share capital

- - - - -
- Employee share options expense - - 205,853 - 205,853
- Share options vested and exercised - - - - -
Total transactions with owners - - 205,853 - 205,853


Balance at 31 December 2023 (unaudited) 43,702,717 1,858 417,915 (34,646,382) 9,476,108

6
Rua Bioscience Limited

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

Note Share

Share option Accumulated

Total
capital

reserve losses

equity

$

$ $

$

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

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

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


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






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

7

Rua Bioscience Limited

Condensed Consolidated Statement of Financial Position
As at 31 December 2023

The condensed consolidated financial statements on pages 4 to 20 were approved and authorised for
issue by the Board of Directors on 29
th
February 2024 and were signed on its behalf by:


______________________ (Director) ______________________ (Director)
The above statements should be read in conjunction with the accompanying notes.




Note
As at
31 December
2023
As at
30 June
2023


(unaudited)
$
(audited)
$

Current assets

Cash and cash equivalents 972,266
2,529,338

Government grants receivable 340,347
641,011

Other receivables and current assets 126,443
221,980

Prepayments 221,064
163,361

Inventory 248,559
14,319

Investments 1,527,888
2,032,055

Assets in disposal groups classified as held for
sale
16 1,406,791
-

Total current assets
4,843,358 5,602,064
Non-current assets

Property, plant and equipment 8 2,750,199
4,438,681

Goodwill 9 2,194,947
10,448,082

Intangible assets 9 5,105
286,168

Right-of-use lease assets 8 162,134
100,577

Other receivables 75,000
75,000

Total non-current assets
5,187,386 15,348,508
Total assets
10,030,744 20,950,572
Current liabilities

Trade and other payables 206,374
522,544

Employee benefit liabilities 157,586 180,083
Lease liabilities 10 43,661 46,722
Liabilities in disposal groups classified as held
for sale
16 22,990


Deferred grant income - 13,103
Total current liabilities
430,611
762,452

Non-current liabilities
Lease liabilities 10 124,025 67,855
Total non-current liabilities
124,025
67,855

Total liabilities
554,636
830,307


Net assets
9,476,108 20,120,265
Equity
Share capital 15 43,702,717 43,702,717
Accumulated losses (34,646,382) (23,794,552)
Foreign currency translation reserve 1,858 38
Share option reserve 417,915 212,062
Total equity 9,476,108 20,120,265

8

Rua Bioscience Limited

Condensed Consolidated Statement of Cash Flows
For the six months ended 31 December 2023


Note For the six
months to
31 Dec 2023
For the six
months to
31 Dec 2022
(unaudited) (unaudited)
$ $


Cash flows from operating activities

Receipts from customers 99,929 60,756
Grant income received 409,825 34,378
Sundry income received 2,152 10,837
Payments to suppliers and employees (2,643,734) (3,770,172)
Net cash outflows from operating activities (2,131,828) (3,664,201)


Cash flows from investing activities

Interest income 91,658 92,647
Proceeds from maturing investments 2,000,000 8,000,000
Proceeds from release of financial assets in escrow - 500,000
Proceeds from the sale of property, plant and equipment 33,708 2,504

Purchase of property, plant and equipment (1,208) (46,875)
Investment deposits made (1,500,000) (5,000,000)
Net cash inflows from investing activities 624,158 3,548,276


Cash flows from financing activities

Repayment of lease liabilities (40,957) (60,563)
Interest paid (8,866) (12,610)
Net cash outflows from financing activities (49,823) (73,173)

Net decrease in cash and cash equivalents (1,557,493) (189,098)

Cash and cash equivalents at beginning of the period 2,529,338 1,897,285

Exchange (losses)/gains on cash and cash equivalents 421 -

Cash and cash equivalents at end of the period 972,266 1,708,187


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

9

Rua Bioscience Limited
Notes forming part of the Condensed Consolidated Financial Statements
For the six months ended 31 December 2023



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

These unaudited interim consolidated financial statements have been prepared for the six
months ended 31 December 2023. These interim consolidated financial statements provide an
update on the interim performance of the Group, and should be read in conjunction with the
full year consolidated financial statements presented for the year ended 30 June 2023 from
which the same accounting policies and methods of computation have been followed.

The interim consolidated financial statements are prepared in accordance with:
• NZ IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting.
• Generally Accepted Accounting Practice in New Zealand (NZ GAAP).
• The accounting policies and methods of computation in the most recent annual financial
statements.
• The Financial Markets Conduct Act 2013, and NZX equity listing rules.

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

The consolidated interim financial statements are presented in New Zealand dollars ($), which
is the company’s functional and also the Group’s presentational currency. All financial
information presented has been rounded to the nearest dollar, except where otherwise
indicated.

(b) Significant accounting policies

The accounting policies and computation methods used in the preparation of the consolidated
interim financial statements are consistent with those used as at 30 June 2023 and 31 December
2022.

(c) Basis of measurement

The consolidated interim financial statements have been prepared on a historical cost basis,
except for the following items (refer to individual accounting policies for details):
­ Borrowings (fair value disclosed) – note 4
­ Financial assets and liabilities at amortised cost (fair value disclosed) – note 4

10
Rua Bioscience Limited
Notes forming part of the Condensed Consolidated Financial Statements
For the six months ended 31 December 2023



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


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

(e) Accounting estimates and judgements made

As at 31 December 2023, the recoverable value of its cash-generating unit (CGU) is measured
based on value-in-use (previously, fair value less costs of disposal ) (refer to note 9).

With the exception of the goodwill impairment, there have been no material revisions to the
nature and amount of estimates of, and judgements in relation to, amounts reported in prior
periods.

(f) Going concern

The consolidated condensed 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 a period of at least 12 months from the date of signing these interim financial
statements.

Given the Group’s net operating loss of $10,851,830 and net operating cash outflow of
$2,131,828 for the period ended 31 December 2023, and reduced liquid net asset position, the
Board and management have prepared cash flow forecasts for the next 12 months which
indicate that the Group will not have sufficient cash to meet its minimum expenditure
commitments and support its current levels of activity.

These financial statements do not include any adjustments relating to the classification and
recoverability of recorded asset amounts or to the amounts and classification of liabilities that
may be necessary should the Group be unable to continue as a going concern.

The challenges experienced resulting in a shortfall of funding are due in large part:

a) The extended time taken to bring products into the markets of Australia and New
Zealand due to the complexities of local regulations.
b) The disruption in sales in the German market as a result of a partial product recall.
c) Supplier constraints in Australia resulting in reduced sales initially.
During the last 12 months the Group made the important strategic decision to cease GMP
manufacturing operations in New Zealand which significantly reduced cash outflow. The Group
refocused our efforts on developing unique genetics and outsourcing cultivation to trusted
partners. This refined approach not only allows for effective scaling of operations, but also
enhances profit margins by minimising capital outlays.

By adopting this strategy, the Group effectively lower the regulatory hurdles associated with
entering new markets and streamline the logistics of shipping, ensuring a reduction in both
time and resources spent. This strategic refinement further demonstrates the Groups
commitment to environmental sustainability, reducing our carbon footprint through more
localised production.

11
Rua Bioscience Limited
Notes forming part of the Condensed Consolidated Financial Statements
For the six months ended 31 December 2023



2. Basis of preparation (continued)
The manufacturing partners the Group are working with have significant scale and can provide
high quality products at a lower cost compared to products manufactured in New Zealand,
ultimately resulting in better margins for the Group.

The Board and Management firmly believe that this strategy is in the best interests of
shareholders, positioning the Group for sustainable growth, operational efficiency, and
enhanced shareholder value.

Accordingly, the Directors remain focused and committed to:

(i) Maximising sales opportunities in Australia, Germany and New Zealand to bring
forward available cash needed for growth. This competitive edge originates from the
Groups proprietary intellectual property (IP) in the genetics arena, complemented
by Rua’s unique foundational story and dedication to social objectives, marking the
Group’s distinct position in the industry.

(ii) Actively manage the ongoing working capital requirements, including focusing on
ensuring an appropriate level of expenditure in line with the Group’s available cash
resources.

(iii) Freeing up capital invested in fixed assets that no longer meet the Groups
immediate strategic goals. Specifically, Rua is actively marketing the Gisborne
manufacturing assets to interested parties. (Refer to note 16 for details of the
Groups non-current assets currently classified as available for sale).


(iv) Securing additional investment to ensure a sustainable business with a planned
future capital raise. The Group has had previous success in 2020 in raising capital
based on pre-revenue cash flow forecasts and believes that current investors remain
committed to the success of the Group to achieve its strategy.

The Directors have a positive outlook for the Group. Management expect to execute on the
above plans, the business to remain a going concern, additional time is required to determine
the success of; the sustainable market demand for our products; the ability to dispose of the
Gisborne manufacturing assets and the ability to execute on securing additional capital.

As such, there is a material uncertainty that may cast significant doubt on the Group’s ability
to continue as a going concern. These financial statements do not include any adjustments
relating to the classification and recoverability of recorded asset amounts or to the amounts
and classification of liabilities that may be necessary should the Group be unable to continue
as a going concern.

12
Rua Bioscience Limited
Notes forming part of the Condensed Consolidated Financial Statements
For the six months ended 31 December 2023



2. Basis of preparation (continued)
In considering the Group’s ability to continue operation, the Board has adopted conservative
revenue forecasts. It should be noted that these forecasts do not account for additional revenue
opportunities such as emerging sales pipelines that have already been contracted in the UK,
Poland, Czechia and Canada. In addition, the Rua brand, the kaupapa of the company, the
close connections to the community of Ruatorea and the corresponding access to unique
cannabis strains are ultimately some of the Group’s most significant intangible assets which are
a unique competitive advantage.

3. Segment Reporting
The Group operates in one segment, its primary business being research and development and
the sale of pharmaceutical products in Germany, Australia 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 derives revenue from customers through the sale of goods in New Zealand,
Germany and Australia. 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

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


Financial
Assets
at Amortised Cost
Financial
Liabilities
at Amortised Cost
Total
Carrying Amount
Fair
Value
31 December 2023
(unaudited)
$ $ $ $


Investments 1,527,888 - 1,527,888
(a)
Cash and cash
equivalents
972,266 - 972,266 (a)
Other receivables 75,000 - 75,000 (a)
Trade and other payables - (137,115) (137,115) (a)
Lease liabilities - (167,686) (167,686) (b)
Liabilities in disposal
groups classified as held
for sale
- (22,990) (22,990) (a)
Total 2,575,154 (327,791)

30 June 2023 (audited)

Investments 2,032,055 - 2,032,055 (a)
Cash and cash
equivalents
2,529,338 - 2,529,338 (a)
Trade and other
receivables
173,620 - 173,620 (a)
Trade and other payables - (276,801) (276,801) (a)
Lease liabilities - (114,577) (114,577) (b)
Total 4,735,013 (391,378)

(a) Due to their short-term nature, the carrying value of these financial instruments approximates their fair value.
(b) Not required to be disclosed per NZ IFRS 7.

13
Rua Bioscience Limited
Notes forming part of the Condensed Consolidated Financial Statements
For the six months ended 31 December 2023



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

(ii) Fair value information regarding contingent consideration

Note 6 months to
31 Dec 2023
(unaudited)
6 months to
31 Dec 2022
(unaudited)
$ $
Opening balance - 7,641,832
Arising on business combination - -
Change in fair value estimate - (4,100,932)
Consideration settled (shares) 15 - (1,790,800)

Closing balance - 1,750,100

5. Revenue from contracts with customers

Revenue streams recognised by the Group include:

For the six
months ended
31 Dec 2023
(unaudited)
For the six
months ended
31 Dec 2022
(unaudited)
$ $

Sale of goods – New Zealand 2,249 62,819
Sale of goods – Australia 14,739 -
Total 16,988 62,819

6. Other income

Other income streams recognised by the Group include:

For the six
months ended
31 Dec 2023
(unaudited)
For the six
months ended
31 Dec 2022
(unaudited)
$ $

Research and development grant income 122,265 167,654
Gain on early termination of lease - 13,096
Sundry income 2,153 10,836
Total 124,418 191,586

7. Income tax

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

The unrecognised deferred tax asset is comprised of tax losses of $7,028,257 (30 June 2023:
$6,451,736) and other temporary differences of $148,542 (30 June 2023: $212,920).

14
Rua Bioscience Limited
Notes forming part of the interim consolidated financial statements
For the six months ended 31 December 2023



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

Significant transactions during the six months to 31 December 2023

 The Group sold of $44,760 of plant and equipment assets during the period for a net
loss on disposal of $10,804.

 The Group has entered into a new lease agreement for the property at 1 Commerce
Place in Gisborne. This has resulted in an addition of $116,514 in the right of use asset
and corresponding lease liability

 The Group’s manufacturing facility (carrying value: $1,387,517) has been reclassified
to assets held for sale (refer to note 16 below) upon the property being marketed but
not yet sold as at 31 December 2023.

 Plant and equipment which remains idle as a result of the Group’s cessation of New
Zealand manufacturing has been written down to its recoverable amount of $76,593,
which was determined in reference to the fair value less of costs of disposal for the
various assets as at 31 December 2023.

9. Intangible assets and Goodwill

Intangible assets

During the period ended 31 December 2023, the Group was notified by Cann Group that they
had given notice to terminate its existing in-place supply agreement. There is a 12-month notice
period under the terms of the contract. As a result, an impairment charge of $280,207 has been
recognised against the supply contract to reflect the remaining estimated volumes that the
Group expects to purchase under the contract across the remaining 12-month period.

Goodwill

The Group tests whether goodwill has suffered any impairment on an annual basis or where
there are specific indicators of impairment in the period.

As at 31 December 2023, the Group’s market capitalisation exceeded the carrying value of
the net assets of the cash-generating unit (CGU) and as such, the Group has undertaken a
value-in-use calculation to determine the recoverable amount of the CGU.

Value-in-use calculations require the use of various estimates and judgements. The
calculations use cash flow projections based on financial budgets approved by management
covering a five-year period which include consideration of the following:

 The existing competitive environment in the key markets which the Group currently
operates in, including the Group’s existing and projected market share, and indicators
of overall growth in those markets.
 The current life-cycle stage of the medicinal cannabis industry and the continued
trajectory towards maturity.
 The maturation of supply chains in the industry, as well as the Group’s ability to exploit
these going forwards.
 The Group’s current loss-making position, reflecting its early commercial phase, and
operating cashflow requirements as well as the steps taken to date to address these.

15

Rua Bioscience Limited
Notes forming part of the interim consolidated financial statements
For the six months ended 31 December 2023



9. Intangible assets and Goodwill (continued)

Cash flows beyond the five-year period are extrapolated using the estimated growth rates
stated below. These growth rates are consistent with forecasts in industry reports specific to
the industry in which the CGU operates:

Assumptions and approach used to determine values

As at 31 December 2023
Forecasted sales and costs of sales

This is based on current market share in existing sales
channels as well as industry trends as at the reporting date.

Cash flows for the next five-year period are extrapolated
using annual estimated growth rates comprising a CAGR of
110%. This CAGR reflects the low base the business is
beginning with, growth rates consistent with forecasts in
industry reports specific to the industry in which the CGU
operates, the supply agreements the business has in place and
the markets in which the business currently has distribution
agreements in place or employees in market.


110%
Pre-tax discount rate

Reflects specific risks relating to the relevant activities of the
Group.

25.13%
Long-term growth rate

This is the weighted average growth rate used to extrapolate
cash flows beyond the budget period.

2%

As at 31 December 2023, the carrying amount of the entire CGU was $13,354,348 which
exceeded the recoverable amount of the CGU by $5,101,213.

As a result, an impairment loss of $8,253,135 (2022: $nil) was recognised against the carrying
value goodwill.

This goodwill impairment, a significant portion of which was attributed to the historical
acquisition of Zalm Therapeutics, stems from a comprehensive analysis conducted by
Management and the Board. Through this analysis, which evaluated various growth
scenarios, it became apparent that the acquisition has not delivered the expected
financial returns.

16


Rua Bioscience Limited
Notes forming part of the interim consolidated financial statements
For the six months ended 31 December 2023



10. Borrowings and Lease liabilities

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


For the six months ended 31 Dec 2023
(unaudited)

NON-CASH NON-CASH NON-CASH NON-CASH CASH
Opening New leases Lease
remeasurements
Lease
terminations
Reclassification
(Note 16)
1

Payment Closing
$ $ $ $ $ $

Lease liabilities 114,577 116,514 542 - (22,990) (40,957) 167,686
114,577 116,514 542 - (22,990) (40,957) 167,686

1
Lease liabilities reclassified to liabilities directly associated with assets classified as held for sale. Refer to note 16.

For the six months ended 31 Dec 2022
(unaudited)

NON-CASH NON-CASH NON-CASH NON-CASH CASH
Opening New leases Lease
remeasurements
Lease
terminations
Reclassification Payment Closing
$ $ $ $ $ $ $

Lease liabilities 824,022 - (54,709) (499,995) - (60,563) 208,755
824,022 - (54,709) (499,995) - (60,563) 208,755

17

Rua Bioscience Limited
Notes forming part of the interim consolidated financial statements
For the six months ended 31 December 2023



11. Related party transactions

Six Months to 31 December 2023 and 31 December 2022

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

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

Nature of
transactions
Transaction
amount
Amounts
receivable
(payable)

For the six
months ended
31 Dec 2023
(unaudited)
31 December
2023

(unaudited)
$ $

Hikurangi Enterprises Limited Asset Disposal 209 -
EECOMS Asset Disposal 3,000 -


Nature of
transactions
Transaction
amount
Amounts
receivable
(payable)

For the six
months ended
31 Dec 2022
(unaudited)
31 December
2022

(unaudited)
$ $

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

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:

For the six
months ended 31
December 2023
(unaudited)
For the six months
ended 31
December 2022
(unaudited)
$ $

Directors’ fees 120,000 131,423
Short-term employee benefits 131,649 793,816
Defined contribution plan payments 4,122 29,539
Share-based payment expense 81,004 27,470

Total key management personnel
compensation

336,775

982,248

18

Rua Bioscience Limited
Notes forming part of the interim consolidated financial statements
For the six months ended 31 December 2023


12. Contingent liabilities

There were no contingent liabilities at the end of the period (2022: nil).

13. 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.

14. Group restructure

On 13 September 2023, the net assets of Zalm Therapeutics Limited (a subsidiary of the Group)
were transferred by way of a distribution to the Company, and then deregistered.

15. Share Capital



31 December 2023
(unaudited)
30 June 2023
(audited)
Number Number

Opening shares 158,136,265 149,879,267

Shares issued* - 8,256,998

Total share capital 158,136,265 158,136,265


* 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 Milestone 1 consideration for the
acquisition of Zalm Therapeutics Limited.

19
Rua Bioscience Limited
Notes forming part of the interim consolidated financial statements
For the six months ended 31 December 2023



16. Assets held for sale

Assets held for sale

In October 2023, the Group engaged real estate agent Bayleys to market its manufacturing
facility for sale which resulted in the associated property, plant and equipment and right-of-
use assets meeting the criteria for held for sale from that date.

The following assets and liabilities were reclassified as held for sale as at 31 December 2023 in
relation to the Group’s decision to market its manufacturing facility for sale as part of its wider
operational restructure:

Note Net book value
transferred to
assets held for
sale
Fair value
loss

31 December
2023
(unaudited)



Assets classified as held for sale
Property, plant and
equipment
8
1,387,517 - 1,387,517
Right-of-use assets
8
19,274 - 19,274
Total assets held for sale

1,406,791 - 1,406,791



Liabilities classified as held for sale
Lease liabilities
10
(22,990) - (22,990)
Total liabilities classified as held
for sale
(22,990) - (22,990)

Total net assets held for
sale

1,364,527 - 1,364,527

Assets classified as held for sale during the period ended 31 December 2023 were measured at
the lower of their carrying value and fair value less costs to sell at the time of the
reclassification. No write down to fair value has been recognised as the fair value less costs to
sell exceed the current carrying value of the assets held for sale.

The fair value of the building and right-of-use asset associated with the lease of the land upon
which the building sits was determined using an income capitalisation approach as undertaken
by a registered value, and is a level 3 measurement.

The key inputs under this approach are an average market rent of $139,032 per annum based
on recent comparable rentals and yield and discount rates of 8.5% and 9.5% respectively.

20
Rua Bioscience Limited
Notes forming part of the interim consolidated financial statements
For the six months ended 31 December 2023


17. Events after the reporting date

Subsequent to the reporting date, the Group has served legal proceedings against
Cannoperations Pty Limited (‘Cann’), claiming damages for a breach of contractual rights to
exclusively sell Cann Group’s medical cannabis products in Australia. This follows several
unsuccessful attempts to remedy this matter with Cann outside the courts.

The proceedings commenced by the Group in the Supreme Court of Victoria are in respect of a
claim by the Group that Cann has breached an exclusive supply term provided for in the supply
contract.

That exclusive supply term provides that Cann will supply specific medicinal cannabis products
exclusively to the Group for re-sale in Australia and New Zealand during the term of the
contract. Management and the Board are of the view that these breaches have caused the
Group to suffer significant damages.

---

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



FOR PUBLIC RELEASE
NZX Limited
Wellington

Half-Year (HY24) Financial Results: A Strategic Shift Towards Global Growth

Rua Bioscience (NZX:RUA) is pleased to share our financial results and operational achievements for the 6-month
period ended 31 December 2023. This period has been marked by strategic expansion and notable growth
initiatives, as outlined below:

September Rua launches in Australia, the largest medicinal cannabis market globally.
November Rua expands product portfolio in Australia.
December
Appointed Australian based Chief of Sales and Marketing, to drive growth and market share
in this key market.
Signed a Distribution Agreement with Target Health, to supply Rua product in the growing
UK market.
January Signed royalty agreement with Apollo Green of Canada to take unique Rua genetics to
global markets.
Engaged in trials with trusted cultivation partners in Portugal, to lay the groundwork for
growing our unique genetics close to target market, reinforcing our capital light, highly
scalable business model.
February Initiated legal proceedings against Cann Group, claiming damages for a breach of
contractual rights to exclusively sell Cann’s medicinal cannabis products in Australia.

Financial Results

The Group reported a net loss before tax of $10,851,830 for the period ended 31 December 2023 (HY24) which
includes a one-off goodwill impairment of $8,253,135. This result compares to a profit of $718,703 in the prior
corresponding period, which included a fair value gain on contingent consideration of $4,100,932. When
normalised for these exceptional items, the Group incurred an operating loss of $2,598,695 for HY24, marking an
improvement from a $3,382,229 loss in the preceding period.

The goodwill impairment, a significant portion of which was attributed to the acquisition of Zalm, stems from a
comprehensive analysis conducted by Management and the Board. Through this analysis, which evaluated
various growth scenarios, it became apparent that the acquisition has not delivered the expected financial
returns. It is critical to note that this adjustment is non-cash in nature and does not affect the Groups cash flow or
operational liquidity.

Furthermore, the net cash outflow from operating activities was $2,131,828 down 42% from $3,664,201 in the
prior corresponding period. This improvement is attributed to our strategic shift towards a capital-light operating
model, particularly outsourcing commercial manufacturing.

MARKET ANNOUNCEMENT

PO Box 1387, Gisborne 4040, Aotearoa New Zealand | 0800 RUABIO | www.ruabio.com
The Group strategy of taking a capital light approach is working and cash expenses of the company continue to
reduce. We have also initiated the sale of the Rua manufacturing assets which will increase cash revenues and
improve the cash runway. The Board are aware though, that more funding will be required in the coming months
to fund revenue growth in existing and new markets and explore the next phase of strategic partnerships. We are
proactively engaging partners to assist in facilitating capital raising efforts. This is expected to take place in the
coming months.

Strategic Overview and Operational Highlights

Rua remains committed to its, capital-light, highly scalable business model, positioning the company for
competitive advantage and significant industry growth. Rua sets itself apart from other companies in the sector
by operating at both ends of the value chain, leveraging our expertise in breeding and selection of unique genetics
and the supply of products on a global scale.

By adopting this strategy, the Group effectively lower the regulatory hurdles associated with entering new
markets and streamline the logistics of shipping, ensuring a reduction in both time and resources spent. This
strategic refinement further demonstrates the Groups commitment to environmental sustainability, reducing our
carbon footprint through more localised production.

Rua continues to operate as one of few companies in the sector with a unique foundational story and an inherent
focus on delivering intergenerational impact to our people, our land, and our communities.

Innovative Genetic Research

Rua’s R&D facility in Ruatorea is breaking new ground in genetic discovery and breeding, collaborating closely with
intergenerational growers in our community to produce and distribute unique genetics globally. Our focus on
converting illicitly sourced genetics into legitimate, high-quality products is a cornerstone of our strategy. A
significant milestone was achieved recently through the signing of an Agreement with Apollo Green for supply of
Rua genetics to the Canadian market, furthering Rua’s global reach.

Product Supply on a Global Scale

Rua has made substantial progress in supplying product to the world’s largest global medicinal cannabis markets,
namely Germany, Australasia and the UK.

Germany: In recent developments, German authorities have initiated legislative procedures aiming to establish an
adult-use market through decriminalisation or legalisation. In addition, the government is looking to streamline
patient access, reducing bureaucratic hurdles, and integrating digital health solutions to improve efficiency of
prescribing. Rua, in collaboration with its distribution partner Nimbus Health (part of Dr Reddy’s Group) aim to
capitalise on this market expansion and remain committed to growing their sales presence and product offering in
this key market.

Following a successful launch in Germany, a partial product recall meant that no sales in Germany were recorded
for the recent half year. Rua, in collaboration with Nimbus have since developed two additional robust supply
lines into the German market with sales expected of an expanded product portfolio in the coming months.

Australia: The Australian market is now considered one of the largest medicinal cannabis markets in the world. In
the first 6-months of 2023, the market prescribed 1.5million units of product. Rua successfully launched in this
key market in September 2023. and has experienced month-on-month growth Rua remains committed to
significantly increasing our sales presence in Australia, which will be driven by the newly appointed Australian
Chief of Sales and Marketing, and new product launches.

New Zealand: The New Zealand market is witnessing significant growth, with increasing awareness from doctors
and patients alike. Rua has recently received approval for a product tailored specifically for the NZ market and
are poised to commence sales, promising a new revenue stream and enhanced market presence.

PO Box 1387, Gisborne 4040, Aotearoa New Zealand | 0800 RUABIO | www.ruabio.com
UK: In December 2023 Rua signed a distribution agreement with Target Healthcare, a prominent UK
pharmaceutical distributor, signalling a major step towards Rua’s expansion into the UK market. This
collaboration is set to fast-track the introduction of Rua products to the UK, aiming for a regulatory approval and
early revenue generation in a fast-growing market.

Fostering Positive Social Impact

Rua remains deeply committed to creating meaningful social impact that spans generations. A cornerstone of our
approach to corporate social responsibility is our pioneering Compassionate Access Programme, coupled with our
dedication to empowering youth through our Rangatahi Scholarship Programme. These initiatives are more than
just corporate philanthropy; they are integral parts of our identity and strategic vision.

Compassionate Access Programme: Rua continues to operate its successful programme offering medicines at no
cost to 30 qualifying individuals In Te Tairawhiti. Rua remains committed to significantly growing the
programme, ensuring equitable access to medicines and represents a significant effort towards addressing
medical needs of the community through compassionate grounds.

Rangatahi Scholarships: Rua has continued to grow its scholarship programme since its inception in 2010,
empowering 40 local rangatahi into further education. The scholarship programme awarded a total of 10
scholarships over the six-month period with contributions in 2023 from Tairawhiti Contractors, Livingston Creative
Ltd and Lowndes Jordan.

Outlook

As we move forward, Rua is focused on disrupting the market by leveraging our strategy that poses a significant
challenge to competitors less able to anticipate future market shifts. The Rua brand and kaupapa, our proprietary
intellectual property in cannabis genetics, and our commitment to social impact will drive our success and provide
Rua with competitive advantage, not replicable by others, in the ever-evolving medicinal cannabis industry.

We are optimistic about the opportunities ahead and are committed to delivering value to our stakeholders,
communities, and patients worldwide.



ENDS

The person who authorised this announcement:
Paul Naske
Chief Executive Officer

For shareholder enquiries please visit www.ruabio.com or contact:
info@ruabio.com
0800 RUABIO