ANNUAL
FINANCIAL
REPORT
FY2021
Cann Global Limited
ABN 18 124 873 507
& Controlled Entities
FY2021
P.02
ANNUAL FINANCIAL REPORT
CONTENT
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ABOUT CANN GLOBAL
Our vision
Our business model
Our geographic footprint
FINANCIAL STATEMENTS
Financial statements
Notes to the financial statements
Directors’ declaration
Independent auditor’s report
FY21 REVIEW
Our year in review
Executive Chair’s message
CEO’s message
ADDITIONAL INFORMATION
Shareholder information
Corporate directory
OUR BUSINESS
Our strategic priorities
Business overview
Board of directors
Senior management
DIRECTORS’ REPORT
Directors’ report including remuneration report
Auditor’s independence declaration
P.03
About
Cann Global
OUR VISION
Cann Global’s vision is to become a leader in the
production and distribution of high-quality medicinal
cannabis, natural foods and cosmeceuticals. Cann
Global strives to make a significant contribution
to building an industry which supports the value of
medicinal cannabis products and puts the patient first.
Our competitive strength comes from our team’s
strong industry expertise, combined with strategic local
and global partnerships with experts which support
cultivation, production and distribution activities.
Key to our success is building awareness of the
benefits of our products, helping build confidence
in health care practitioners to prescribe medicinal
Cannabis through research and education and working
under relevant legislative bodies in ensuring appropriate
and safe access to these products.
Cann Global has a keen focus on innovation and the
pursuit of medical advancement through research
into the safe use of cannabis for patients to create
more scientific vigour and credibility in medicinal
cannabis products, which has the potential to deliver
significant upside for shareholders.
About
Cann Global
FY2021
P.04
ANNUAL FINANCIAL REPORT
CULTIVATION
& PROCESSING
1. Health Food
4. Cosmeceutical
2. CBD Cultivation
& Extraction
3. Medicine
PRODUCT
MANUFACTURE
DISTRIBUTION
& SALES
INNOVATION
RESEARCH
CBD Cultivation in Thailand
Specialty Food
(hemp-based foods
& neutraceuticals)
Hemp based
Cosmeceuticals
Pharmaceuticals
OUR BUSINESS MODEL
Strengthen by global partnerships and a vertically integrated approach.
Ongoing focus on product development, innovation and research.
P.05
1. Health Food
Continued focus on distribution of healthy, nutritious and vitamin
packed plant-based food products for the discerning Australian and
Asian consumer.
2. CBD Cultivation & Extraction
Broad-acre industrial CBD hemp cultivation and processing in Thailand
where growing conditions are ideal.
3. Medicine
Innovative pharmaceutical products developed by our strategic
partners for distribution in Australia.
4. Cosmeceuticals
Development of unique advanced hemp-based cosmeceuticals beauty
products.
About
Cann Global
OUR BUSINESS MODEL
Through 55% owned subsidiary Cann Global Thailand
(CGT), the Group is growing high CBD, low THC cannabis
strains under different cultivation programs. Including
a plant-breeding, plant testing and new plant-funding
programs. CGT operates these commercial services
on behalf of its partners AA Bio Ltd and Green Pharma
Botanical’s Thai cultivation licenses.
Through Hemp Hulling Co. the group is involved
in hulling at its hempseeds processing plant. In
addition, through contract manufacturers the group
is manufacturing innovative formulas of hemp based
consmeceuticals.
Considerable time and resources are applied to driving
new strategies to enhance and refresh sales and
marketing to raise brand and range awareness. Cann
Global continue to focus on enhancing distribution of
products into new markets with a growing focus on
direct-to-consumer channels in Australia and other
international markets.
Research initiatives in medicinal cannabis
treatments including the preparation of a
clinical trial in Australia to confirm the safety
and efficacy of cannabis in treating patients
with Multiple Sclerosis.
Ongoing pursuit of innovation in developing
products for existing and new sectors. Recent
product development includes chia oil soft-gel
capsules as well as hemp-based cosmeceuticals.
Unique cannabinoid delivery systems have
been developed by strategic partner Canntab
Therapeutics.
Cultivation
& Processing
Product
Manufacture
Distribution
& Sales
Research
Innovation
About
Cann Global
FY2021
P.06
ANNUAL FINANCIAL REPORT
OUR BUSINESS MODEL
About
Cann Global
P.07
C a n a d a
F r a n c e
I s r a e l
T h a i l a n d
A u s t r a l i a
Cann Global operates a global business to leverage research and innovation
from its strategic partners, take advantage of efficiencies for cultivation
and processing, and access a broader market for distribution and sales.
OUR
GEOGRAPHIC
FOOTPRINT
ANNUAL FINANCIAL REPORT
FY2021
P.08
ANNUAL FINANCIAL REPORT
1 JULY 2020
Rights issue raising $4.2m to
support company growth.
20 SEPTEMBER 2020
Launch of Chia oil soft-gel capsules.
Costco places first order.
11 DECEMBER 2020
L1 Capital elect to convert
outstanding notes into equity.
25 MARCH 2021
Pilot
production
of
premium
hemp-based skincare products.
31 MARCH 2021
Plant funding model launched by
Cann Global Thailand.
24 JUNE 2021
Australian Narcotics Act amended
to streamline the licensing process
for businesses.
2 DECEMBER 2020
United Nations Commission on
Narcotic Drugs reclassifies cannabis
in the least restrictive drug
classification.
30 DECEMBER 2020
Thailand
Government
releases
regulatory framework for commercial
licenses to cultivate, process and
export CBD hemp.
26 OCTOBER 2020
Import permit received and
Canntab products ordered.
9 DECEMBER 2020
Share Placement raising $3.75m.
16 DECEMBER 2020
TGA announces down scheduling
of CBD medicine to a pharmacist
only schedule.
10 MARCH 2021
Canntab granted Australian patent.
30 MARCH 2021
Canntab receives export permit.
6 APRIL 2021
Western Sydney University to draft
protocol for MS study.
FY21 Review
OUR
YEAR IN
REVIEW
FY2021
P.09
ANNUAL FINANCIAL REPORT
DEAR SHAREHOLDERS,
I am pleased to present Cann Global Limited’s Annual Report for the
financial year ending 30 June 2021, my last as the outgoing Executive Chair.
This past financial year has seen significant changes in regulation to support
the medicinal cannabis industry across the globe, reflecting changing
attitudes to its use and Cann Global is well positioned to take advantage of
these changes.
In June last year, the Therapeutic Drug Administration in Australia announced
the down scheduling of cannabidiol (CBD) preparations from Schedule 4
(Prescription medicine) to Schedule 3 (Pharmacist Only Medicine). The TGA
stated “The decision will allow low-dose CDB containing products that have
been approved by the TGA, up to a maximum of 150 mg/day, for use in adults,
to be supplied over-the-counter by a pharmacist without a prescription.”
In December 2020 the United Nations Commission on Narcotic Drugs voted
to reclassify cannabis to the least restrictive drug classification, paving the
way for the relaxing of cannabis classifications in markets across the world.
Shortly thereafter, the Thai government released a regulatory framework
for the cultivation, processing and export of hemp. In January the Thai
government began processing applications for licences under the new
framework and Cann Global is already taking advantage of this having
established operations in preparation for this change.
The Company was also pleased to note that on 24 June 2021 the Federal
Government assented to the Narcotic Drugs Act amendments, reaffirming the
Australian government’s commitment to patient access of medical cannabis
products and bodes well for the future growth of the industry.
These regulatory changes reinforce the recognition of the medicinal
properties of cannabis by academics, researchers and policy makers globally.
Cann Global is expected to benefit from this through attitudinal changes
towards the use of cannabis and cannabis related products.
Sadly, COVID-19 is having a prolonged impact on global economies and
everyday lives. Cann Global has not been immune to this which is evidenced
predominantly in the Company’s reduced export sales. The Board together
with Management continue to assess and mitigate the risks of COVID-19 on
the business.
Cann Global benefits from having a diversified business model and its vi-
EXECUTIVE CHAIR’S MESSAGE
F21
Review
FY2021
F21
Review
Cann Global benefits from having a diversified business model and its
vision is to become a leader in the production and distribution of high-quality
medicinal cannabis, natural food and cosmetic products in the health and
wellness industry.
The Group’s strategy is to continue to innovate, educate and research to
deliver the best products for patient care and wellbeing. The Board’s
commitment to research is evident in the decision to continue the study
of an identified strain of cannabis on the impacts of Multiple Sclerosis and
other autoimmune diseases.
Whilst we continue to be disappointed that the share price does not reflect
the growth opportunities within our business we are pleased with the
company’s progress towards the launch of some exciting new products.
Under the leadership of David Austin as incoming Independent Chair
and our dedicated executive team, I am confident the Company is well
positioned for growth. Further to the change of Chair, we continue to focus
on introducing appropriate new skill sets to the Board and are in discussion
with two new Non-Executive Director candidates to strengthen the Board’s
capability.
I would like to thank all of Cann Global’s staff and shareholders for their
support during my time as Chair.
Pnina Feldman
Executive Chair (Outgoing, resigned 30 August 2021)
P.10
ANNUAL FINANCIAL REPORT
EXECUTIVE CHAIR’S MESSAGE
FY2021
F21
Review
DEAR SHAREHOLDERS,
I would first like to thank Ms Pnina Feldman for her stewardship of the
company over the last 13 years and in particular over the period of
transitioning the Company from a mining exploration entity to a company
focused on leveraging the opportunities within the medicinal cannabis
industry.
I would also like to thank the Board for having the confidence in my
ability to lead Cann Global through the next phase of its growth as the
new Chairman.
Having been a director on the Board of Cann Global since its re-listing
in 2019 I am delighted to be appointed as Chairman at such an exciting
time for the business. I will work cohesively with the Board and the
management team to drive the Company’s vision to fruition and
will provide further commentary on the company strategy at the
upcoming AGM.
David Austin
Independent Chair (Appointed 30 August 2021)
P.11
ANNUAL FINANCIAL REPORT
INDEPENDENT CHAIR’S MESSAGE
FY2021
P.12
ANNUAL FINANCIAL REPORT
CEO’S MESSAGE
DEAR SHAREHOLDERS,
I would like to take this opportunity to update you on the Group’s
activities for the financial year ending 30 June 2021 and the
progress made in attaining our vision of being a leader in the
production and distribution of high-quality medicinal cannabis,
natural foods and cosmeceuticals.
Reflecting on what has been a difficult year for many I am
pleased to report that the Company’s loss in only our second
year since relisting has reduced so significantly over the prior
year. Whist revenue levels were not maintained as the business
was impacted by pandemic-related issues we were pleased
to progress towards commencing three additional revenue
streams from: Canntab’s CBD products, the premium hemp-based
skincare range, and the plant-funding business model operated
by Cann Global Thailand.
The long awaited Canntab CBD products were received in
Australia post 30 June and we are pleased that they are now
available for prescription through the Special Access Scheme B
and Authorised Prescriber schemes. We are delighted that initial
feedback from medical practitioners is positive and they particularly
like the unique uniform dosage. Import permits have been renewed
for additional Canntab products, Instacann CBD 25mg and
Instacann THC 5mg which are expected to arrive in Australia in
Q2 FY22.
The Company completed research, testing and a pilot production
run on the three premium hemp-based skincare products
containing Australian native ingredients enabling the soft
launch of the products to commence in October 2021. This will
be followed by commercial scale production later in FY22 with a
more fulsome launch to occur thereafter. Two more innovative
products are being developed to complete this range.
In Europe recent changes to legislation allow for cosmetics
containing CBD to be sold over the counter. A new range
of CBD-based skincare is being developed to accompany the
hemp-based range which will be marketed in Europe, further
driving opportunity for revenue growth.
Our 55% owned Cann Global Thailand has added a plant-funding
business model to its operations and has been testing seed
varieties for optimal growth in the Chiang Rai province. COVID-19
restrictions in Thailand have slowed operations however CGT
has since 30 June 2021, received the first two upfront payments
under the new plant-funding business model for a total of
$150,000 USD.
F21
Review
Reflecting on what has
been a difficult year for
many I am pleased to
report that the Company’s
loss in only our second
year since relisting has
reduced so significantly
over the prior year.”
10.6 MIL
1.4 MIL
in cash reserves as at
30 June 2021
in sales revenue
FY2021
F21
Review
Cann Global will focus
on direct to consumer,
and retail sales
channels where higher
product margins
can be achieved. To
assist in the delivery
of this goal we have
strengthened the sales
team and marketing
team in the last
quarter adding three
new managers with
solid supply chain,
sales and marketing
experience.”
CEO’S MESSAGE
The Company continues to pave the way for the trial of a unique
strain of medicinal cannabis in slowing the progression of Multiple
Sclerosis (MS) and other auto-immune diseases. During the year the
decision was made to continue the research in Australia where the
government offers significant support to Australian Companies for
Australian based medical research. Western Sydney University’s
research institute NICM was engaged and has developed a
draft protocol for the purpose of undertaking human clinical trials
in Australia on the efficacy of the chemovar in the identified strain.
Clinical data and results from trials conducted in Australia are
recognised worldwide due to the high standard of research.
To improve profitability of the food division and further drive revenue
an overview was undertaken late in the financial year to identify
areas where profitability and competitive viability could be improved.
This has resulted in a streamlined product and brand range and has
also identified opportunities to develop adjacent products taking
advantage of synergies and reduced costs. Cann Global will focus
on direct to consumer, and retail sales channels where higher product
margins can be achieved. To assist in the delivery of this goal we
have strengthened the sales team and marketing team in the last
quarter adding three new managers with solid supply chain, sales
and marketing experience. To complement these skills, we have also
engaged a specialist retail consultancy firm with a proven track record
of selling health food brands and products in Australia’s major
grocery retailers.
Two successful equity raisings during the year have allowed the
business to clear its liabilities and provides us with a strong balance
sheet to pursue our growth strategies. We are confident in the future
of the Company and while we acknowledge there is still much to do,
we have no doubt that measures put in place this year to improve
operations, reduce costs and innovate new products will see us deliver
value to our shareholders.
I would like to take this opportunity to sincerely thank the Cann Global team,
our partners and suppliers, and our shareholders for their continued
support in paving the way for Cann Global to become a leader in
the production and distribution of high-quality medicinal cannabis,
natural foods and cosmeceuticals.
I would also like to add my thanks to Mrs Pnina Feldman for her
services to Cann Global over the last 13 years with the Company and
welcome Mr David Austin as Independent Non-Executive Chairman.
Sholom Feldman
Chief Executive Officer
P.13
ANNUAL FINANCIAL REPORT
FY2021
P.14
Our
Business
INNOVATION IN PRODUCT
DEVELOPMENT
Innovation in product development to meet growing
demand for new products including in new markets.
LEVERAGE GLOBAL
PARTNERSHIPS
Leverage global partnership channels in Israel, South
East Asia, Europe and North America.
COST EFFICIENT CULTIVATION
AND PRODUCTION
Cost efficient cultivation, extraction and manufacturing
services for premium grade CBD oil products in Thailand
in an ideal growing environment.
STRENGTHEN
DISTRIBUTION CHANNELS
Strengthen existing distribution channels in Australia,
Israel, South East Asia, Europe and North America.
MEDICAL ADVANCEMENT
THROUGH RESEARCH
Continue to invest in research which will contribute to
medical advancement and innovation in new products.
ANNUAL FINANCIAL REPORT
Value creation through focus on our strategic priorities.
OUR STRATEGIC PRIORITIES
Our
Business
FY2021
ANNUAL FINANCIAL REPORT
P.15
Cann Global operates in the healthcare, medical and wellbeing
sectors which continue to experience growth, notwithstanding
the challenges in the current environment. The Group has
continued to expand its product lines in this sector in the 12
months to 30 June 2021 and has also expanded its hemp
cultivation division to include a highly scalable, “capital light”
plant funding program.
A range of premium, hemp-based skincare products has been
developed with our joint venture partner Pharmocann and a
soft launch is scheduled in France in October and in Australia
in November.
The Company’s first purchase order of Canntab’s cannabinoid
pharmaceutical grade hard pills was received post balance
date and sales can now commence via prescription under
the Special Access Scheme B and the Authorised Prescriber
Scheme.
With these new product launches and increased business
activity, we are continuing to grow the Cann Global team and
will look to add people to the team who have appropriate skills
and expertise to drive business success.
Clinical trials of Cannabis formulations to treat MS and other
autoimmune diseases are a step closer with the draft protocol
written for the study. The draft is being reviewed internally and
when approved will be submitted to the Human Research Ethics
Committee for approval.
A review of the food division was completed to streamline the
range and identify higher margin sales channels and products.
These changes when implemented in FY22 will improve
profitability of the food division.
A rights issue in July 2020 raised $4.2m and a further equity
placement in December raised $3.75m. Some of these funds
were used to clear liabilities leaving a healthy cash reserve of
$10.57m available to support new business initiatives.
Key business developments
The Company’s first
purchase order of
Canntab’s cannabinoid
pharmaceutical
grade hard pills was
received post balance
date and sales can
now commence via
prescription under
the Special Access
Scheme B and the
Authorised Prescriber
Scheme.”
BUSINESS OVERVIEW
The United Nations Commission on Narcotic Drugs (CND)
voted on 2 December 2020 to reclassify cannabis to the
least restrictive drug classification paving the way for the
relaxation of cannabis classifications in markets across
the world.
The Therapeutic Goods Administration (TGA) made
amendments to its Poisons Standard down scheduling
CBD preparations so that registered products on the
Australian Register of Therapeutic Goods (ARTG) may be
available over-the-counter at pharmacies.
On 30 December 2020 the Thailand government released
a regulatory framework for the cultivation, processing
and distribution of CBD hemp products. Previously hemp
licences were only obtainable by entities undertaking
research programs.
On 17 June 2021 the Narcotic Drugs Amendment (Medical
Cannabis) Bill 2021 passed the Federal Parliament and
received assent on 24 June 2021. The Amendment consolidates
the medicinal cannabis licensing structure into a single
licence framework streamlining the licensing process for
businesses and allows licenses to be granted for a period
of up to 5 years. The Amendment to the Narcotic Drugs
Act reaffirms the Australian government’s commitment
to patient access of medical cannabis products and the
change to the Act is welcomed by Cann Global.
Regulatory progress
BUSINESS OVERVIEW
The Therapeutic
Goods Administration
(TGA) made
amendments to its
Poisons Standard
down scheduling CBD
preparations so that
registered products on
the Australian Register
of Therapeutic
Goods (ARTG)
may be available
over-the-counter at
pharmacies.”
Our
Business
FY2021
ANNUAL FINANCIAL REPORT
P.16
DIVISIONAL
DEVELOPMENTS
Our
Business
FY2021
ANNUAL FINANCIAL REPORT
P.17
During the course of the year Cann Global has developed and launched new products. The company
received its first order from Costco for the newly launched Chia soft gel capsules with what we
believe to be the highest Omega 3 content of any plant-based product on the market. The
capsules are also sold as a white label product to a distributor. A chia and hemp-based equine
food product was also developed and sold as a white label product. To further meet consumer demand
product development has commenced on new products which are expected to be launched in
Q3 FY23. A pipeline of products under development has also identified further products for longer
term release.
As previously noted, our Vietnamese distribution partner Epco has been significantly impacted
by COVID-19 with many employees affected by restrictions and some employees in quarantine.
This has had an impact on our export sales. However, Cann Global is continuing to foster
the relationship, and is ready to provide Epco with additional marketing support and initiatives to
grow demand for the existing range and extend the geographical market for product sales, as
well as increase the product range for distribution when Epco returns to normal operations. Cann
Global is concurrently pursuing other opportunities to expand its reach in Asia and as previously
advised has engaged the services of a marketing agency specialised in distribution and sales
across South East Asia.
In the final quarter of FY21 the food division carried out a review of the product portfolio to
streamline the product range and identify higher margin sales channels and products. The
outcomes enable the Company to optimise channel marketing spend and focus on higher margin
products. A competitive analysis was also carried out and recommended retail pricing adjusted
to position for relevance and competitive viability. The process has resulted in a rationalised product
and brand portfolio which will be rolled out during the current financial year.
The food division is focused on reducing its operating expenses and improving its competitive
viability in order to drive not only revenue but a higher level of profitability in the year ahead. As
noted in our 31 August ASX update to shareholders, as these changes are implemented, we expect
more limited revenue growth from food sales in the short term until the launch of our new branded
health-food products.
The strength of the sales and marketing team was enhanced during the last quarter with the
addition of three new managers with solid supply chain, sales and marketing experience. The new
Sales Manager was employed to focus on driving sales for all of Cann Global’s products but also
to support the Company’s strategy of increasing sales direct to retailers where higher margins
can be achieved.
As the Company is focussing on the cost-effective model of contracting farmers to grow hemp
seeds, further investment in using the seed bank acquired from Medical Cannabis Limited has
been suspended. Should demand for hemp seeds increase significantly in the future, more research
and development could be expended to develop a successful hemp seed farming model in
Australia using the seed bank.
1. Food
DIVISIONAL
DEVELOPMENTS
Our
Business
FY2021
ANNUAL FINANCIAL REPORT
P.18
Cann Global Thailand (CGT) a 55% owned subsidiary provides
a full service offering to Thai clients in the business of hemp
cultivation and extraction. In January 2021 the Government
of Thailand released a regulatory framework allowing Thai
companies to secure commercial licenses for the cultivation,
processing and distribution of CBD hemp products. Prior to
the release of the regulatory framework hemp licenses were
only issued to those undertaking research programs.
CGT has expanded its business operations to take full
advantage of the regulatory change and has been assisting
AA Bio Co Ltd and Green Pharma Botanical with their
applications for a license and will operate the commercial
operations under these licenses. Post balance date Green
Pharma Botanical received their license and Cann Global
Thailand will operate the commercial license on their behalf.
During the year CGT also introduced a plant-funding business
where investors provide guaranteed funding on a per plant
basis with a fixed fee per plant returned to the investor after
successful cultivation and extraction by CGT. The plant funding
model is capital light and highly scalable. At this stage twenty
four seed varieties have been tested for optimal growth and
this testing has now narrowed to six varieties which will be
tested further when COVID-19 restrictions in Thailand permit.
Post balance date CGT received the first two payments from
a UK investor and expects to receive further payments under
this program before the end of the calendar year.
Cann Global Asia (55% owned) will no longer pursue production
of hemp seeds in Laos. Any disputes or claims against Cann
Global Asia have been dismissed.
2. Hemp cultivation & processing
DIVISIONAL
DEVELOPMENTS
Our
Business
FY2021
ANNUAL FINANCIAL REPORT
P.19
Cann Global has a 50/50 partnership agreement with one of
Israel’s leading Cannabis companies Pharmocann, to produce
and sell advanced cannabis-based formulations, dermatological
and cosmetic beauty products.
Research and testing were completed during the year on
the three premium hemp-based skincare products from the
cosmetics range that the Company will launch in Q2 FY22. The
products: an oil, serum and a cream product all contain hemp
seed oil as the primary active ingredient and Australian native
ingredients thereby offering consumers a unique innovative and
efficacious organic product.
A successful pilot production run was undertaken during the
year and the process for certifying the products as organic has
commenced. A series of other products under this new organic
hemp-based brand are already being developed to expand the
current range.
Go to market strategies for Australian sales have been identified
and mass production is on track for Q3 FY22. A soft launch is
scheduled for November 2021 at the virtual Hemp, Health and
Innovation Expo and the products will be available for direct
purchase via a newly established website for the skincare products.
In addition to the soft launch in Australia in November 2021, Cann
Global will also launch its premium hemp-based cosmetic range
in Europe at a B2B CBD Expo in Paris on 16-18 October, where it will
showcase its new range.
A specialist distribution consultancy was engaged to advance
export marketing strategies with South Korea, Japan and Thailand
being the initial focus of marketing efforts in Asia.
3. Skincare
DIVISIONAL
DEVELOPMENTS
FY2021
ANNUAL FINANCIAL REPORT
P.20
Cann Global entered into a 50/50 Joint Venture with Canntab Therapeutics in January 2018 to bring
their suite of hard pill cannabinoid formulations to Australia and Asia. These tablets have a distinct
advantage over competitors’ products as they represent a uniform dosage tablet produced to
pharmaceutical grade standards.
After some unexpected delays, the company received a shipment of two Canntab CBD products,
12.5mg and 25mg. Mandatory Australian laboratory testing was completed and these prescription
only products are now available through the Special Access Scheme B and Authorised Prescriber
Schemes. Our distribution partner Medcan will also make the products available through their
prescribing division ‘Cann I help’ and their link can be found on our website www.canngloballimited.
com/medical-cannabis/.
More Canntab products are expected to arrive in Australia before the end of the calendar year with
new import permits for those products having already been issued by the Office of Drug Control.
Authorised Prescribers are already showing interest in the Canntab tablets due to their regulated
dosage form.
A new Australian website for Canntab will launch in the coming weeks along with other go to market
activities to help support the sales of these innovative medical cannabis products.
As part of Cann Global’s effort to support the education of health care practitioners in the safe use
of medical cannabis products, the Company has agreed to sponsor the International College of
Cannabinoid Medicine (ICCM). Canntab’s products are featured in this online course designed for
Health Care Providers. As part of this sponsorship Cann Global will also participate in a podcast series
the ICCM will launch in Q2 FY22. This will help raise more awareness around medical cannabis and
help doctors familiarise themselves with Canntab’s innovative delivery system (www.iccm.co).
Cann Global has access to an existing network of approved freight partners allowing Australia wide
logistics, access to various networks of prescribing doctors and pharmacies and an online purchasing
portal allowing seamless transactions for pharmacies to order the Canntab products on receipt of a
customer prescription.
A draft protocol has been written by the NICM Health Research Institute for human clinical trials on the
Cannabis strain, identified in the research undertaken by Dr Dedi Meiri at the Technion, Israel Institute
of Technology, that was proven to assist, in vitro and in vivo, in the recovery of and in stopping the
progression of the auto immune disease Multiple Sclerosis. The commercial rights to the strain being
researched is owned by the joint venture with Pharmocann.
Once the draft protocol is approved by the Company work will commence on developing the protocol
to be submitted to the Human Research Ethics Committee for approval. The finalised Protocol will
include details such as budget, timeline, number and location of trial sites and resources required.
Cann Global has continued to work towards bringing Olivia’s Choice formula to the Australian market.
As part of this work the Company has found that it is presently unable to import some of the raw materials
required for the production of Olivia’s Choice formula under current legislation. The Company will
not be able to bring the product to the Australian market in the near future but will keep monitoring
changes in regulation.
4. Medicine
Our
Business
Mr Feldman has been Chief Executive
Officer of Cann Global since he co-founded
the company in 2007. Sholom was general
manager of the publicly listed Diamond Rose
NL between 1999 and 2005 and is a director
of several private companies.
He has extensive experience in general
commercial management, and has had
advisory and company secretarial roles
in a number of publicly listed and private
companies since 1999. Sholom studied an
International MBA at Bar Ilan University Israel
and has also completed courses with the
Chartered Institute of Company Secretaries.
SHOLOM FELDMAN
CHIEF EXECUTIVE OFFICER
Our
Business
FY2021
P.21
BOARD OF DIRECTORS
ANNUAL FINANCIAL REPORT
David is a solicitor practising in Sydney. He has
spent many years in the corporate world in the
computer, aerospace and heavy engineering
industries, and worked for the Northern
Territory Government in the 1980’s when he
was responsible for petroleum, energy, and
pipeline policy.
During a secondment, he reviewed the
Northern Territory Mineral Royalty Act and
devised a new mineral royalty regime which
encouraged the development of a number of
major mining projects.
DAVID AUSTIN
INDEPENDENT NON-EXECUTIVE
DIRECTOR - CHAIRMAN
John Easterling has extensive experience
developing
therapeutical
products
from
plants, including many years of experience in
medical cannabis cultivation and development
of products. He founded the Amazon Herb
Company in 1990 with his product formulations
generating over $100m in revenue worldwide.
John has bred a dozen new genetics from the
Cannabis plant and his focus is on formulating a
broad range of cannabinoid and terpene profiles
for therapeutic benefits. He married Olivia
Newton-John in 2008 and shares her passion in
supporting the continuing growth of the Olivia
Newton-John Cancer Wellness and Research
Centre in Melbourne. John is an advocate for
legislation reform in Australia to allow for wider
access for medical Cannabis.
JOHN EASTERLING
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Our
Business
FY2021
P.22
BOARD OF DIRECTORS
ANNUAL FINANCIAL REPORT
Jonathan is admitted to practise as a
barrister in the State of New South Wales,
He completed his Diploma of Law at Sydney
University, Legal Practitioners Admission
Board in 1998 and was admitted as a lawyer
in the Supreme Court of NSW in 1999.
He was admitted to the Bar in New South
Wales in 2007 and has practised continuously
as a barrister in NSW. He has also worked in
the ACT, Queensland, South Australia and
Victoria. He has a broad practice and works
amongst other things in the areas of criminal
and commercial law.
JONATHAN COHEN
INDEPENDENT
NON-EXECUTIVE DIRECTOR
Our
Business
FY2021
P.23
SENIOR MANAGEMENT
ANNUAL FINANCIAL REPORT
Mr Feldman has been CEO of
Cann Global since he co-founded
the company in 2007. As CEO,
Mr Feldman is responsible for
the
commercial
management
of
the
company,
developing
and
implementing
the
vision
and mision and ensuring the
organisation’s
operations
and
business are managed within the
parameters set by the board.
Mr Feldman thrives to create and
sustain a culture of innovation
and enablement, underpinned by
and expressing the values and
vision of the company. Sholom
completed an International MBA
at Bar Ilan University Israel and
has studied courses with the
Chartered Institute of Company
Secretaries.
As COO Mrs Lesaffre is responsible
for implementing the strategic
direction of the company, and
reviewing operational processes
to maximise growth and the
appropriate path to profitability.
Each of the divisional managers
report directly to Mrs Lesaffre and
she retains oversight of marketing
activities as well as finance and
accounting.
Mrs
Lesaffre
has
been
with
Cann Global for over 10 years
and is passionate about the
health and wellness industry.
She was the driving force behind
the
acquisition
of
Medicinal
Cannabis Limited in 2017 and the
expansion into plant based food
products via the acquisition of
T12, both of which were company
transformational
events.
Mrs
Lesaffre has a Masters Degree
in Clinical Psychology and an
Advanced Diploma in Western
Herbal Medicine.
Andrew is the founder and a
director
of
Medical
Cannabis
Limited. He is also secretary of the
Australian HEMP Party. Andrew
has had a long and in-depth
association with hemp growing
and the research of the therapeutic
properties of Cannabis.
In 2001/02, Andrew was the
only grower in Australia/NSW
permitted
to
cultivate
high
THC Cannabis for trials. The
trials led Andrew to publish his
research in 2004, Medical Uses
of Cannabis – Information for
Medical Practitioners. He is a
regular participant at numerous
Parliamentary
Inquiries
on
medical
and
other
Cannabis
related law reform issues.
SHOLOM FELDMAN
CHIEF EXECUTIVE OFFICER
MARION LESAFFRE
CHIEF OPERATING OFFICER
ANDREW KAVASILAS
DIRECTOR,
MEDICAL CANNBIS LIMITED
FY2021
P.24
Directors’
Report
ANNUAL FINANCIAL REPORT
The Directors present their report together with the consolidated
financial statements of the Group comprising Cann Global Limited
(“the Company” or “CGB”) and its subsidiaries, for the financial year
ended 30 June 2021 and the independent auditor’s report thereon.
DIRECTORS
The names and details of the Company’s Directors in office during the financial year and until
the date of this report are as follows. Directors were in office for this entire period unless
otherwise stated.
Names, qualifications, experience and individual responsibilities.
Mr Feldman has been on the board of Cann Global since he co-founded the company in 2007.
Sholom was a general manager of the publicly listed Diamond Rose NL between 1999 and
2005 and is a director of several private companies. He has extensive experience in general
commercial management, and has had advisory and company secretarial roles in a number of
publicly listed and private companies since 1999.
Other current directorships*: None
Former directorships * : None
Special responsibilities : On the Remuneration and Nomination Committee and
on the Audit & Risk committee.
SHOLOM FELDMAN
CEO
David is a legal practitioner based in Sydney with strength in commercial, estate and probate
litigation. He has extensive experience in the corporate world in the computer, aerospace and
heavy engineering industries.
Other current directorships*: None
Former directorships* : None
Special responsibilities : On the Remuneration and Nomination Committee and
on the Audit & Risk committee.
DAVID AUSTIN
NON-EXECUTIVE DIRECTOR (APPOINTED INDEPENDENT CHAIR 30 AUGUST 2021)
FY2021
P.25
ANNUAL FINANCIAL REPORT
Directors’
Report
DIRECTORS
Jonathan is admitted to practise as a barrister in the State of New South Wales since 1999
and was admitted to the Bar in New South Wales in 2007. He has practised continuously as a
barrister in NSW in the areas of commercial/equity law, criminal law and family law.
Other current directorships*: None
Former directorships* : None
on the Audit & Risk committee.
JONATHAN COHEN
NON-EXECUTIVE DIRECTOR
John Easterling has extensive experience developing therapeutical products from plants,
including many years of experience in medical cannabis cultivation and development of
products. He founded the Amazon Herb Company in 1990 with his product formulations
generating over $100m in revenue worldwide. John has bred a dozen new genetics from the
Cannabis plant and his focus is on formulating a broad range of cannabinoid and terpene
profiles for therapeutic benefits. He married Olivia Newton-John in 2008 and shares her passion
in supporting the continuing growth of the Olivia Newton-John Cancer Wellness and Research
Centre in Melbourne. John is an advocate for legislation reform in Australia to allow for wider
access for medical Cannabis.
Other current directorships*: None
Former directorships* : None
Special responsibilities : None
JOHN EASTERLING
NON-EXECUTIVE DIRECTOR
ALEXANDER NEULING
COMPANY SECRETARY
Executive Chair and CEO of ASX listed companies over the last 20 years Pnina is a well known
entrepreneur in the mining industry and has been instrumental in establishing, financing and
developing numerous publicly listed, publicly unlisted and private companies.
Other current directorships*: None
Former directorships* : None
Special responsibilities : None
PNINA FELDMAN
EXECUTIVE CHAIR (RETIRED 30 AUGUST 2021)
* Directorships of other listed companies only.
Special responsibilities : On the Remuneration and Nomination Committee and
Ordinary shares
Options
over ordinary
shares
Pnina Feldman (1), (2)
240,941,562
23,671,875
Sholom Feldman (1), (2)
240,941,562
23,671,875
David Austin
-
-
Jonathan Cohen
-
-
John Easterling
-
-
1. Pnina Feldman and Sholom Feldman are each directors of L’Hayyim Pty Ltd which holds 4,222,812 shares
in its capacity as trustee of the 770 Unit Trust.
2. Pnina Feldman and Sholom Feldman are each directors of Volcan Australia Corporation Pty Ltd which
holds 236,718,750 shares, and 23,671,875 options.
At the date of this report unissued ordinary shares of the Company under option are 807,329,241. (2020:
393,952,980)
These options do not entitle the holder to participate in any share issue of the Company or any other
body corporate.
Directors’
Report
FY2021
ANNUAL FINANCIAL REPORT
P.26
Unissued shares under options
INTERESTS IN THE SHARES &
OPTIONS OF THE COMPANY & RELATED
BODIES CORPORATE
SHARE OPTIONS
The relevant interest of each Director in the shares or options over shares of the Company and
any other related body corporate, as notified by the Directors to the Australian Securities Exchange
in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as follows:
Made up of:
Unquoted options
751,189,241
L1 Capital
31,140,000
Obsidian
25,000,000
Total
807,329,241
Directors’
Report
FY2021
ANNUAL FINANCIAL REPORT
P.27
During or since the end of the financial year, the Group issued 60,000 ordinary shares of the
Company, as a result of the exercise of options.
No dividends were paid or declared since the end of the previous financial year. The Directors
do not recommend a payment of a dividend in respect of the current financial year.
The number of meetings of Directors held during the year (including meetings of committees
of Directors) and the number of meetings attended by each Director were as follows:
Shares issued on exercise of options
Earnings per share
SHARE OPTIONS
DIVIDENDS
DIRECTORS’ MEETINGS
cents
Basic earnings (loss) per share
(0.10)
Diluted earnings (loss) per share
(0.10)
Attended
Held
Attended
Held
Attended
Held
Pnina Feldman
11
11
-
1
-
2
Sholom Feldman
11
11
1
1
2
2
Jonathan Cohen
11
11
1
1
2
2
David Austin
11
11
1
1
2
2
John Easterling
11
11
-
1
-
2
Full board
Remuneration and
Nomination Committee
Held: represents the number of meetings held during the time the Director held office.
Audit & Risk
Committee
Directors’
Report
FY2021
ANNUAL FINANCIAL REPORT
P.28
PRINCIPAL ACTIVITIES
OPERATING & FINANCIAL REVIEW
The principal activities of the Group during the year were legally developing, growing,
cultivating and producing hemp and medicinal cannabis products, and natural food
products in the health and wellness industry.
Cann Global Ltd (ASX:CGB) (“CGB” or “the company”) presents the following report on financial
performance and business activities for the year ending 30 June 2021.
Sales revenue for the year was $1.48m, a 16% decrease on the prior year (FY20 $1.78m). The food
division was the primary driver of revenue generation and sales were predominantly domestic.
The downturn in revenue this year can be attributed to lower export sales to Vietnam in the second half
of the year, and a lower revenue contribution from Cann Global Thailand Pty Ltd (CGT) (55% owned).
As a consequence of lower sales, cost of goods sold has decreased 11% to $1.16m (FY20: $1.31m). The
Group delivered a Gross Profit of $0.33m down 31% on the prior year (FY20: $0.47m).
Total expenses for the year were $5.76m ex finance costs, less than the last financial year (FY20: $6.6m)
when significant research investment costs were incurred.
The Group reported a total loss of $4.77m which is a significant improvement on the prior year of a
$8.05m loss. The loss was reduced by 41% over the period.
Research investment expenses during FY21 were significantly lower than the year prior but are
expected to increase in FY22 when the clinical trial commences which will test the efficacy of a strain
of cannabis on Multiple Sclerosis. Also as previously advised the Company is required to account for
the research and expenses related to the Canntab and Pharmocann joint ventures in the share of loss
in equity accounted investees.
Administrative and corporate expenses were higher than the prior year, with the increase largely due
to an increase in the group’s activities including the addition of new staff and the need for consultants
to support a number of projects launching at the same time. Advertising and marketing expenses also
increased alongside the focus on driving domestic sales over the period and are expected to remain
the same for FY22. As advised in the company’s quarterly activities reports released during the financial
year, marketing activities increased during the year in the food division supporting the launch of new
websites, social media strategies and other branding strategy work.
There were a number of impairments which needed to be taken this financial year.
Financial review: Progressing business and productivity
initiatives with a focus on profitability
Directors’
Report
FY2021
ANNUAL FINANCIAL REPORT
P.29
OPERATING & FINANCIAL REVIEW
Financial review: Progressing business and productivity
initiatives with a focus on profitability (continued)
The Group continues to hold bauxite assets in South Johnstone, Queensland. As outlined in the
HY21 results $0.3m has been written off as the exploration area has been reduced as per the
Department of Natural Resources’ requirement to relinquish some sub-blocks prior to renewing
the exploration permit. The area containing the resource has been retained and the mining
tenement has been renewed until 25 May 2022.
Given the ongoing global challenges presented by the pandemic, Cann Global’s joint venture
with South African company Koegas Medicinal Herb (Pty) Ltd will be dissolved. The investment of
$0.20m has therefore been impaired in the accounts.
Finance costs have decreased to nil (FY20: $2.01m). This is primarily as a result of having
converted L1 Capital and Obsidian convertible notes to shares, and repayment of other loans.
Cann Global is committed to maintaining little or no debt on balance sheet.
This also resulted in other financial liabilities reducing by 98% to $0.08m (FY20: $4.29m). In electing
to convert outstanding notes into equity, these investors showed a strong vote of confidence for
the company’s long-term prospects.
Net loss for the year is ($4.77m), an improvement of 41% over the previous period (FY20: $8.05 m).
The balance sheet remains strong with cash reserves of $10.57m up 43% on the prior year (FY20:
$7.42m) and total current assets of $11.37 million. The company’s cash reserves have increased
due to the rights issue that took place in July 2020 raising $4.2 million and a further placement
in December 2020 which raised $3.75 million. These funds will be used as and when required to
support new business initiatives.
Related party transactions amounted to $0.66m, which is a 49% reduction on the prior year (FY20:
$1.3m). The reduction on the prior year represents an unwinding of the Australian Gemstone
Mining Pty Ltd (AGMPL) structure for payment of staff salaries, a reduction in geologist’s fees and
marketing services which were previously charged via AGMPL. Geologist services provided during
the year were terminated as announced in the HY21 results and the geologist now works as a
salaried employee of Cann Global.
Post balance date the contract with AGMPL has been terminated and Sholom Feldman’s Director’s
fees are now paid directly by the Company. The Company’s contractual obligations to AGMPL are
to be met by issuance of 70m shares to Mrs Pnina Feldman instead of cash, pending shareholder
approval at the 2021 AGM in November. The contract with AGMPL will not be replaced as Cann
Global now employs its entire workforce in-house and there will be no further payments to AGMPL.
Directors’
Report
FY2021
ANNUAL FINANCIAL REPORT
P.30
OPERATING & FINANCIAL REVIEW
MATERIAL RISKS
Operational review: Significant progress in product
development setting up for new revenue streams
Product developments during the year or since year-end included Chia oil soft-gel
capsules, a new pet food product, and the importation of cannabinoid formulations
developed by venture partner CannTab Therapeutics to Australia.
Operational highlights include:
For a discussion of material risks which could impact on the Company’s ability to deliver its strategy set
out in the above Review of Operations, refer to pages 114-126 of the Prospectus dated 6 June 2019 (https://
cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02112928-6A933165?access_
token=83ff96335c2d45a094df02a206a39ff4).
For further information please visit the company’s website at www.cannglobal.com.au or contact:
Sholom Feldman CEO
E: sfeldman@cannglobal.com.au
Cann Global continues to seek appropriate regulatory approvals to facilitate distribution of new products
globally and supports research initiatives in medicinal cannabis in what remains an emerging market and
a significant opportunity.
For further detail on business activities please refer to the Executive Chair’s Message, CEO’s Message and
Business Overview Review which form part of this annual report.
Chia oil soft-gel capsules distributed by Costco
Canntab CBD hard pill cannabinoid formulations imported to Australia post-year end
Successful pilot production run of three premium hemp-based cosmetic products and readied for
soft launch in Q2 FY22
Establishment of a capital light, highly scalable, plant-funding business in Thailand
Increased marketing activities to increase brand and range awareness, and launch new products
Review of the food business which will see the business focus on growing revenue through direct to
consumer channels and the launch of rationalised brand and product portfolio in FY22
Draft Protocol written for the study of the efficacy of a cannabis strain on Multiple Sclerosis and other
autoimmune diseases
Enhanced sales and marketing team
Directors’
Report
FY2021
ANNUAL FINANCIAL REPORT
P.31
ABOUT CANN GLOBAL
OPERATING RESULTS
ENVIROMENTAL REGULATION
EVENTS SUBSEQUENT TO BALANCE DATE
SIGNIFICANT CHANGES IN
THE STATE OF AFFAIRS
Cann Global Limited operates in the hemp and medical Cannabis industries, with our
products and expertise stretching across industries and countries. With an innovative
approach to business development, our strength comes from our local professional
network, in addition to our global strategic partnerships with experts in Australia, Israel,
Asia, Canada and France. Cann Global Limited is working to ensure the future of medical
cannabis and natural foods in Australia will support medical practitioners, patients and
consumers to gain access to the right information, as well as the safest, most effective
and sustainable products.
The operating loss after tax for the year ended 30 June 2021 for the Group was $4.77m (FY2020: loss
$8.05m).
The Group is subject to and compliant with all aspects of environmental regulation in relation to its
activities. The Directors are not aware of any environmental law that is not being complied with.
Change to Board Structure
On the 30 August 2021, the company announced the retirement of Executive Chair, Pnina Feldman and
the appointment of independent, non-executive chair David Austin. The Board has granted Mrs Feldman
70,000,000 shares for her long term service, as per the terms of her contract. This share issuance,
as disclosed in the announcement to market dated 30th August 2021, will be subject to shareholder
approval and will be put to shareholders at the Annual General Meeting to be held in November 2021.
Concurrent with Mrs Feldman’s retirement, the Company has terminated its arrangements with Australian
Gemstone Mining Pty Ltd (AGMPL), a related party of Mrs Feldman.
During the period, there were no changes in the state of affairs of the Group other than those referred
to elsewhere in this report, or the financial statements or notes thereto.
Directors’
Report
FY2021
ANNUAL FINANCIAL REPORT
P.32
EVENTS SUBSEQUENT TO BALANCE DATE
LIKELY DEVELOPMENTS
CGT has received the first two payments from its UK investor in the plant-funding program.
Other than as disclosed in the Business Overview and in the Operating and Financial Review, further
information about likely developments in the operations of the Group in future years, the expected
results of those operations, the strategies of the Group and its prospects for future financial years has
not been included in this report, because disclosure of the information would be likely to result in
unreasonable prejudice to the Company.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and it is not practicable to estimate
the potential impact after the reporting date. The situation is rapidly changing and is dependent on
measures imposed by the Australian Government and other countries, such as maintaining social
distancing requirements, quarantine, travel restrictions and any economic stimulus that may be
provided.
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may
significantly affect the Group’s operations, the results of those operations or the Group’s state of affairs
in future financial years.
The Management Services Agreement with Australian Gemstone Mining Pty Limited was terminated
effective from 30 August 2021.
Plant-funding Program
Coronavirus (COVID-19) pandemic
Management Services Agreement
Having now received the results from the mandatory Australian laboratory testing on the two CBD
Canntab products imported, sales can now commence.
Canntab sales
Directors’
Report
FY2021
ANNUAL FINANCIAL REPORT
P.33
NON-AUDIT SERVICES
The Company’s auditor, Nexia Sydney Audit Pty Ltd was appointed
auditor of the Company at the 2020 AGM in replacement of Nexia
Sydney Partnership following a Nexia internal restructure.
Details of the amounts paid to the auditor of the Company, Nexia Sydney
Audit Pty Ltd, and its related practices for audit and non-audit services
provided during the year are set out in note 16 to the financial statements.
INDEMNIFICATION
AND INSURANCE OF
OFFICERS
During the financial year, the Company paid a premium in respect of a
contract insuring all the directors and officers of the Consolidated Entity
against liabilities incurred in their capacities as directors and officers
to the extent permitted by the Corporations Act 2001.
Disclosure of the nature of the liabilities covered and the amount
of the premium is prohibited by a confidentiality clause in the contract
of insurance.
The Company has not otherwise, during or since the financial year, except
to the extent permitted by law, indemnified or agreed to indemnify
an officer or an auditor of the Company or of any related body corporate
against a liability incurred as such officer or auditor.
FY2021
P.34
Remuneration Report
Audited
ANNUAL FINANCIAL REPORT
REMUNERATION POLICIES
FIXED REMUNERATION
PERFORMANCE LINKED REMUNERATION
The Board has adopted a framework for corporate governance, including policies dealing with
Board and Executive remuneration. Policies adopted by the Board reflect the relative stage of
development of the company, having regard for the size and structure of the organisation.
The Remuneration Committee is responsible for reviewing remuneration arrangements for its
Directors and executives and for making recommendations to the Board on remuneration policies.
Remuneration levels are competitively set to attract and retain appropriately qualified and experienced
Directors and Senior Executives. The remuneration packages of Executive Directors provide for a
fixed level of remuneration. other than as noted below executive remuneration packages do not
have guaranteed equity-based components or performance-based components.
The company’s remuneration policy is reviewed at least once a year and is subject to amendments
to ensure it reflects the best market practice.
Fixed remuneration consists of base remuneration (salary or consulting fees) including any FBT
charges as well as employer contributions to superannuation funds, where applicable. Remuneration
levels are reviewed annually by the board of Directors.
During the previous financial period, the Board of Directors completed a review of compensation
and benefit structures.
Long-term incentives are provided as options over ordinary shares of the company. There has been
no issue of shares or options to executive Directors as a form of remuneration in the current year.
Consequences of performance on shareholders wealth
in view of the relatively early stage of development of the company’s business and remuneration
policies, there is insufficient information to provide a meaningful quantitative analysis of the
relationship between remuneration and company performance.
FY2021
P.35
ANNUAL FINANCIAL REPORT
Remuneration Report
Audited
SERVICE AGREEMENTS
The company and Australian Gemstone Mining Pty Limited (AGMPL) were parties to a management
services agreement (Management Services Agreement) dated 1 July 2007, and the Variation Deed
signed 1 July 2017, for the provision by AGMPL of executive and corporate services, including geological
and technical expertise, to the company by the following executives:
In respect of each of these executives (Key Persons), AGMPL was paid a retainer for the period ended
30 June 2021. The retainer for geological services was terminated on 30 September 2020.
Each of Pnina Feldman, Dr Coenraads and Sholom Feldman has entered into an executive services
agreement with AGMPL. Each of these executive services agreements contains standard provisions
dealing with employment obligations and standard covenants dealing with general duties and the
protection of AGMPL’s interests and mirrors the Management Services Agreement in respect of
termination provisions.
The Management Service Agreement with AGMPL was terminated effective from 30 August 2021.
In the prior year, AGMPL also provided additional administrative services to the Company, such
as secretarial, accounting and office management services. These services were provided to the
Company by AGMPL on reasonable arm’s length terms as approved by the independent directors
which were discontinued from 1 July 2020.
AGMPL no longer provides fully serviced offices, effective from 26 September 2019. The Company’s
head office has been relocated to 133 Castlereagh Street, Sydney NSW 2000.
Pnina Feldman - Executive Director
Dr. Robert Coenraads - Principal Geologist, Exploration and Mining;
and Sholom Feldman - Chief Executive Officer
AGMPL is a company owned and controlled by Pnina Feldman.
AGMPL services
2021
$
2020
$
Rent
-
25,635
Management and secretarial
-
180,000
Geologist fees
36,000
198,000
Executive and corporate services (Directors
Fees)
624,000
624,000
Reimbursement of expenses
-
13,543
Marketing services
-
200,579
Administration services
-
54,000
Total
660,000
1,295,757
FY2021
P.36
ANNUAL FINANCIAL REPORT
Remuneration Report
Audited
DIRECTOR & EXECUTIVE DISCLOSURES
Details of Directors and other Key
Management Personnel
The remuneration report outlines the company’s remuneration strategy for the financial year
2021 and provides detailed information on the remuneration outcomes for the year for Directors
and other Key Management Personnel.
The directors present the Remuneration Report for the company and its subsidiaries for the
financial year ended 30 June 2021. This report forms part of the Directors’ Report and has been
prepared and audited in accordance with the requirements of the Corporations Act 2001.
Name
Title
Pnina Feldman
Executive Chair - Retired 30 August 2021
Sholom Feldman
Chief Executive Officer
John Easterling
Non-Executive Independent Director
Jonathan Cohen
Non-Executive Independent Director
David Austin
Non-Executive Independent Director - Appointed Chairman 30 August 2021
Marion Lesaffre
Chief Operating Officer
NON-EXECUTIVE DIRECTORS
Non-executive directors are paid up to $40,000 per annum directors fees.
FY2021
P.37
ANNUAL FINANCIAL REPORT
Remuneration Report
Audited
Financial
year
Salary
and fees
STI Cash
Bonus
Non-
Monetary
benefits
Super-
annuation
Termination
benefits
Shares
Options
Bonuses
$
$
$
$
$
$
$
$
$
$
Executive
Directors
Pnina Feldman
2021
312,000
-
-
-
-
-
-
-
312,000
2020
312,000
-
-
-
-
-
-
-
312,000
Sholom Feldman
2021
312,000
-
-
-
-
-
-
-
312,000
2020
312,000
-
-
-
-
-
-
-
312,000
Non-Executive
Directors
Jonathan Cohen
2021
37,397
-
-
2,603
-
-
-
-
40,000
2020
30,000
-
-
-
-
-
-
-
30,000
David Austin
2021
38,265
-
-
1,735
-
-
-
-
40,000
2020
30,000
-
-
-
-
-
-
-
30,000
John Easterling
2021
-
-
-
-
-
-
-
-
-
2020
-
-
-
-
-
-
-
-
-
Other KMPs
Marion Lesaffre
2021
190,163
-
-
23,475
-
50,000
-
-
263,638
2020
177,840
-
-
16,895
-
-
-
-
194,735
Total
compensation
Directors including
Key Management
Personnel
2021
889,825
-
-
27,813
-
50,000
-
-
967,638
2020
861,840
-
-
16,895
-
-
-
-
878,735
Short-term
employment benefits
Post-
employment
Share-based
payments
Other
Total
Remuneration of Directors & Other Key Management Personnel
Details of the remuneration of Directors and Other Key Management Personnel is set out in the table below:
DIRECTOR & EXECUTIVE DISCLOSURES
FY2021
P.38
ANNUAL FINANCIAL REPORT
Remuneration Report
Audited
Options and rights over equity instruments
granted as compensation
Details of options over ordinary shares in the company that were granted as compensation to each
key management person during the reporting period and details of options that were vested during
the reporting period are as follows. The options were issued free of charge. Each option entitles the
holder to subscribe for one fully paid ordinary share in the entity at the exercise price shown below:
DIRECTOR & EXECUTIVE DISCLOSURES
2021 Directors
Vested
Number
Granted
Number
Grant
Date
Value per
Option at
Grant Date
Exercise
Price
per Share
First
Exercise
Date
Last
Exercise
Date
Pnina Feldman
-
-
-
-
-
-
-
Sholom Feldman
-
-
-
-
-
-
-
Jonathan Cohen
-
-
-
-
-
-
-
David Austin
-
-
-
-
-
-
-
John Easterling
-
-
-
-
-
-
-
2020 Directors
Vested
Number
Granted
Number
Grant
Date
Value per
Option at
Grant Date
Exercise
Price
per Share
First
Exercise
Date
Last
Exercise
Date
Pnina Feldman
-
-
-
-
-
-
-
Sholom Feldman
-
-
-
-
-
-
-
Jonathan Cohen
-
-
-
-
-
-
-
David Austin
-
-
-
-
-
-
-
John Easterling
-
-
-
-
-
-
-
No options have been granted since the end of the financial year.
FY2021
P.39
ANNUAL FINANCIAL REPORT
Remuneration Report
Audited
Movements in shares
The movement during the reporting period in the number of ordinary shares in CGB held, directly,
indirectly or beneficially, by each key management person, including their related parties, is as follows:
DIRECTOR & EXECUTIVE DISCLOSURES
2021 Directors
Held at
1 July 2020
Acquired
Disposed
Held at 30
June 2021
Pnina Feldman (1)(2)
193,597,812
47,343,750
-
240,941,562
Sholom Feldman (1)(2)
193,597,812
47,343,750
-
240,941,562
Jonathan Cohen
-
-
-
-
David Austin
-
-
-
-
John Easterling
-
-
-
-
2020 Directors
Held at
1 July 2019
Acquired
Disposed
Held at
30 June 2020
Pnina Feldman (1)(2)
193,597,812
-
-
193,597,812
Sholom Feldman (1)(2)
193,597,812
-
-
193,597,812
Jonathan Cohen
-
-
-
-
David Austin
-
-
-
-
John Easterling
-
-
-
-
Meyer Gutnick (3)
1,748,304
-
1,748,304
-
(1) Pnina Feldman and Sholom Feldman are each directors of L’Hayyim Pty Ltd which currently
holds 4,222,812 Shares in its capacity as trustee of the 770 Unit Trust; and
(2) Pnina Feldman and Sholom Feldman are each directors of Volcan Australia Corporation Pty Ltd
which currently holds 236,218,750 shares.
(3) Ordinary shares disposed is not a disposal as such but represents the number of shares held at
date of resignation on 2 July 2019.
FY2021
P.40
ANNUAL FINANCIAL REPORT
Remuneration Report
Audited
Modification of terms of equity-settled share-based
payment transactions
No terms of equity-settled share-based payment transactions (including options and rights granted
as compensation to a key management person) have been altered or modified by the issuing entity
during the reporting period.
Exercise of options granted as compensation
During the period, there were no shares issued as a consequence of the exercise of options
previously granted as remuneration.
The lead auditor’s independence declaration is set out on page 41 and forms part of the directors’
report for the year ended 30 June 2021.
Signed in accordance with a resolution of the board of Directors:
Sholom Feldman, Managing Director
Dated this 30th September 2021
Analysis of share-based payments granted as compensation
2021
No shares were issued to non-executive Directors in lieu of Directors fees.
2020
No shares were issued to non-executive Directors in lieu of Directors fees.
End of audited remuneration report.
DIRECTOR & EXECUTIVE DISCLOSURES
LEAD AUDITOR’S INDEPENDENCE
DECLARATION UNDER SECTION 307 C
OF THE CORPORATIONS ACT 2001
41
The Board of Directors
Cann Global Limited
Level 21
133 Castlereagh Street
SYDNEY NSW 2000
Auditor’s Independence Declaration under section 307C of the Corporations Act 2001
As lead audit director for the audit of the financial statements of Cann Global Limited for the financial year
ended 30 June 2021, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(b)
any applicable code of professional conduct in relation to the audit.
Yours sincerely
Nexia Sydney Audit Pty Ltd
Stephen Fisher
Director
Date: 30 September 2021
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
Consolidated
Note
2021
$
2020
$
Revenue from sales
8
1,488,031
1,781,723
Operating Revenue
1,488,031
1,781,723
Cost of goods sold
9
(1,162,283)
(1,311,860)
Gross Profit
325,748
469,863
R&D Refund
8
-
23,281
Foreign currency exchange gain realised
8
671,287
7,313
Total Other Income
671,287
30,594
Administrative and corporate expenses
10
(2,568,026)
(1,673,403)
Advertising and marketing
(442,185)
(207,319)
Depreciation and amortisation
10
(155,018)
(79,138)
Loss on equity settled liabilities
(175,031)
(399,345)
Legal expenses
(88,253)
(171,085)
Directors fees CGB
(699,662)
(684,000)
Directors fees MCL
-
(120,000)
Occupancy expenses
10
(54,748)
(112,905)
Exploration written off
(308,604)
-
Impairment of receivables
(242,719)
79,258
Impairment of investment
25
(200,000)
-
Impairment of intangible asset
24
(138,000)
-
Research costs
(101,041)
(2,130,349)
Share of loss in equity-accounted investees – net of tax
(170,332)
-
Travelling expenses
(134,732)
(209,122)
Other expenses
(250,021)
(186,057)
Share based payments expense
(202,750)
(773,946)
Total expenses
(5,931,122)
(6,667,411)
Finance income
11
163,630
124,725
Finance costs
11
(27)
(2,008,579)
Net finance costs
163,603
(1,883,854)
Loss before income tax
(4,770,484)
(8,050,808)
Income tax expense
-
-
Loss after tax from continuing operations
(4,770,484)
(8,050,808)
Other comprehensive income, net of tax
-
-
Total comprehensive loss
(4,770,484)
(8,050,808)
Loss attributable to members of Cann Global Limited
(4,621,367)
(8,012,138)
Total comprehensive income attributable to members of Cann Global
Limited
(4,621,367)
(8,012,138)
Loss attributable to non-controlling interest
(149,116)
(38,670)
Total comprehensive income attributable to non-controlling interest
(149,116)
(38,670)
Basic (loss) per share (cents per share)
12
(0.10)
(0.25)
Diluted (loss) per share (cents per share)
12
(0.10)
(0.25)
FY2021
ANNUAL FINANCIAL REPORT
P.42
Financial Statements
For the year ended 30 June 2021
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
Consolidated
Note
2021
$
2020
$
Assets
Current assets
Cash and cash equivalents
18
10,573,053
7,417,095
Prepayments
63,012
154,591
Trade and other receivables
19
259,895
709,632
Inventories
20
474,018
489,475
Total current assets
11,369,978
8,770,793
Non-current assets
Exploration and evaluation
21
2,278,448
2,451,028
Plant and equipment
22
449,057
486,458
Right-of-use assets
23
60,273
138,416
Intangible assets
24
4,368,797
4,501,160
Investments
25
-
200,000
Equity-accounted investees
26
209,779
2
Total non-current assets
7,366,355
7,777,064
Total assets
18,736,333
16,547,857
Liabilities
Current liabilities
Trade and other payables
30
(1,960,964)
(2,067,980)
Current tax liability
(292,666)
(292,666)
Lease liability
(61,229)
(77,184)
Other financial liabilities
29
(77,515)
(4,290,747)
Total current liabilities
(2,392,375)
(6,728,577)
Non-current liabilities
Lease liability
-
(61,232)
Total non-current liabilities
-
(61,232)
Total liabilities
(2,392,375)
(6,789,809)
Net assets
16,343,959
9,758,048
Equity
Share capital
27
94,834,844
84,159,575
Option Reserve
28(ii)
477,925
-
Share based payments reserve
28(i)
6,230,068
6,027,318
Acquisition of NCI reserve
28(iii)
(42,498,259)
(42,498,259)
Accumulated losses
35
(42,491,911)
(37,870,544)
Total
16,552,667
9,818,090
Non-controlling interest
32
(208,708)
(60,042)
Total equity
16,343,959
9,758,048
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Financial Statements
ANNUAL FINANCIAL REPORT
P.43
As at 30 June 2021
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
FY2021
Consolidated
Note
Issued
Capital
$
Accumulated
Losses
$
Share Based
Payments
Reserve
$
Acquisition of
non-controlling
interest Reserve
$
Option
Reserve
$
Non– controlling
interests
$
Total
Equity
$
Balance at 1 July 2019
29,600,842
(29,858,406)
5,253,372
-
-
(2,108,811)
2,886,997
(Loss) for the year
-
(8,012,138)
-
-
-
(38,670)
(8,050,808)
Share-based payments
13
-
-
773,946
-
-
-
773,946
Acquisition of additional 45% interest in MCL
40,410,820
-
-
(42,498,259)
-
2,087,439
-
Shares issued during the year
14,147,913
-
-
-
-
-
14,147,913
Balance at 30 June 2020
84,159,575
(37,870,544)
6,027,318
(42,498,259)
-
(60,042)
9,758,048
Consolidated
Note
Issued
Capital
$
Loss for
the Year &
Accumulated
Losses
$
Share Based
Payments
Reserve
$
Acquisition of
non-controlling
interest Reserve
$
Option
Reserve
$
Non– controlling
interests
$
Total
Equity
$
Balance at 1 July 2020
84,159,575
(37,870,544)
6,027,318
(42,498,259)
-
(60,042)
9,758,048
(Loss) for the year
-
(4,621,367)
-
-
-
(149,116)
(4,770,484)
Share-based payments
13
-
-
202,750
-
477,925
-
680,675
Non-controlling interest in share capital raising
Cann Global Thailand Pty Ltd
-
-
-
-
-
450
450
Shares issued during the year
10,675,269
-
-
-
-
-
10,675,269
Balance at 30 June 2021
94,834,844
(42,491,911)
6,230,068
(42,498,259)
477,925
(208,708)
16,343,959
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Financial Statements
ANNUAL FINANCIAL REPORT
P.44
For the year ended 30 June 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FY2021
Consolidated
Note
2021
$
2020
$
Cash flows from operating activities
Receipts from customers
1,796,330
1,803,296
Payments to suppliers and employees
(4,697,776)
(6,727,564)
Interest received
163,630
124,725
R&D Refund
-
23,281
Interest paid
(5,182)
-
Net cash used in operating activities
34
(2,742,998)
(4,776,262)
Cash flows from investing activities
Investment in equity-accounted entity
(390,618)
-
Payments for plant and equipment
(7,206)
(16,834)
Loan repaid by Volcan Australia Corporation Pty Ltd
-
79,258
Payment for intangibles
(37,905)
(14,750)
Payment for exploration asset
(136,024)
(213,009)
Net cash used in investing activities
(571,754)
(165,335)
Cash flows from financing activities
Loan provided by other entity
3,468
-
Loan provided by/(to) related entity – Australian Gemstone Mining Pty Ltd
938
39,641
Loan repaid to related party - MCL Director
(111,113)
(482,908)
Loan provided (to)/by related party - CGB Director
-
(115,037)
Proceeds from convertible securities
-
2,833,200
Proceeds from share capital
6,654,603
6,618,560
Loans repaid to seed capital providers
-
(1,758,000)
Repayments of lease liability
(77,187)
-
Net cash from financing activities
6,470,710
7,693,760
Net increase in cash held
3,155,958
2,193,859
Cash at beginning of financial year
7,417,095
5,183,769
Cash aquired from HHC and T12 acquisition
-
39,467
Cash at end of financial year
18
10,573,053
7,417,095
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Financial Statements
ANNUAL FINANCIAL REPORT
P.45
For the year ended 30 June 2021
CONSOLIDATED STATEMENT
OF CASH FLOWS
FY2021
Note 1. Reporting Entity
Cann Global Limited (the ‘Company’) is a company domiciled in Australia. The address of the company’s registered
office is level 21, 133 Castlereagh Street, Sydney, NSW 2000. The consolidated financial statements of the Company
as at and for the year ended 30 June 2021 comprise the Company and its subsidiaries (together referred to as the
‘Group’ and individually as ‘Group entities’).
The Group is a for-profit entity and is primarily involved in the legal growing and cultivation of hemp and medicinal
cannabis products and the exploration for mineral deposits in Australia.
Note 2. Basis of preparation
a. Statement of compliance
The consolidated financial statements are general purpose financial statements which have been prepared in ac-
cordance with Australian Accounting Standards (‘AASBs’) adopted by the Australian Accounting Standards Board
(‘AASB’) and the Corporations Act 2001. The consolidated financial statements comply with International Financial
Reporting Standards (‘IFRSs’) adopted by the International Accounting Standards Board (‘IASB’).
The consolidated financial statements were authorised for issue by the Board of Directors on 30 September 2021.
The Board of Directors have the power to amend and reissue the financial statements.
b. Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for the following
material items in the statement of financial position:
i Investments
The methods used to measure fair values are discussed further in note 5.
ii Other non-derivative financial liabilities
The methods used to measure fair values are discussed further in note 5.
c. Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the Company’s functional
currency and the functional currency of the Group.
d. Use of estimates and judgements
The preparation of financial statements 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 ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.
e. Key estimates and judgements
IMPAIRMENT
The Group assesses impairment at the end of each reporting year by evaluation of conditions and events specific
to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed
using the higher of fair value less costs to sell and value-in-use calculations, which incorporate various key assumptions.
BUSINESS COMBINATIONS
Management uses valuation techniques in determining the fair values of the various elements of a business
combination.
GOODWILL
The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment,
whether goodwill and other intangible assets have suffered any impairment, in accordance with the accounting
policy stated in note 4g. The recoverable amounts of cash-generating units have been determined based on
value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates
based on the current cost of capital and growth rates of the estimated future cash flows. Refer to note 24 for further
information.
Financial Statements
ANNUAL FINANCIAL REPORT
P.46
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
CORONAVIRUS (COVID-19) PANDEMIC
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or
may have, on the company based on known information. This consideration extends to the nature of the products
and services offered, customers, supply chain, staffing and geographic regions in which the company operates.
Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon
the financial statements or any significant uncertainties with respect to events or conditions which may impact the
company unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
CONVERTIBLE SECURITIES
Management uses valuation techniques in determining the fair value of convertible securities (both host contract and
conversion features). Refer to Note 5 for the description of the fair value measurement of convertible securities.
SHARE-BASED PAYMENT TRANSACTIONS
The consolidated entity measures the cost of equity-settled transactions with consultants by reference to the fair
value of the equity instruments at the date at which they are granted. The fair value is determined by using either
the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were
granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no
impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit
or loss and equity. Refer to note 13 for further information.
Note 3: New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
Note 4. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated
financial statements and have been applied consistently by Group entities.
a. Basis of consolidation
i Business combinations
The Group applies the acquisition method in accounting for business combinations. The consideration transferred
by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition date fair value of assets
transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any
asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.
The Group recognises as identifiable assets acquired and liabilities assumed in a business combination regardless of
whether they have been previously recognised in the acquiree’s financial statements prior to the acquisition. Assets
acquired and liabilities assumed are measured at their acquisition date fair values.
Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum
of:
(a) fair value of consideration transferred
(b) the recognised amount of any non-controlling interest in the acquiree; and
(c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition date fair values of
identifiable net assets.
ii Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has a right to
variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date
that control commences until the date that control ceases.
Financial Statements
ANNUAL FINANCIAL REPORT
P.47
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
iii Non-controlling interests
Non-controlling interests are measured initially at their proportionate share of the acquiree’s identifiable net assets at the
date of acquisition.
iv Interests in equity-accounted investees
The Group’s interest in equity-accounted investees comprise interests in associates. Associates are those entities in which
the Group has significant influence, but not control or joint control, over the financial and operating policies.
Interests in associates are accounted for using the equity method. They are initially recognised at cost, which
includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the
Group’s share of the profit or loss and other comprehensive income of equity-accounted investees, until the date
on which significant influence ceases.
v Transactions eliminated on consolidation
Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in
preparing the consolidated financial statements.
b. Foreign currency
i Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies of Group companies at
the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies
are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and
liabilities that are measured at fair value in a foreign currency exchange are translated into the functional currency
at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical
cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign-currency
differences are generally recognised in profit or loss.
ii Foreign operations
The asset and liabilities of foreign operations are translated in $A at the exchange rates at the reporting date. The income
and expenses of foreign operations are translated into $A at the exchange rates at the dates of the transactions.
c. Financial instruments
i Non-derivative financial assets
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand and deposits held at call with financial institutions.
TRADE AND OTHER RECEIVABLES
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within
30 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days
overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
INVESTMENTS AND OTHER FINANCIAL ASSETS
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of
the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently
measured at either amortised cost or fair value depending on their classification. Classification is determined based
on both the business model within which such assets are held and the contractual cash flow characteristics of the
financial asset unless, an accounting mismatch is being avoided.
Financial Statements
ANNUAL FINANCIAL REPORT
P.48
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred
and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no
reasonable expectation of recovering part or all of a financial asset, its carrying value is written off.
ii Non-derivative financial liabilities
The Group initially recognizes debt securities issued on the date that they are originated. All other financial liabilities
are recognized initially on the trade date, which is the date that the Group becomes a party to the contractual provisions
of the instrument.
The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire.
The Group classifies the non-derivative financial liabilities into trade and other payables and other financial liabilities
categories. Such financial liabilities are recognized initially at fair value less any directly attributable transaction costs.
Subsequent to initial recognition, these financial liabilities are measured at amortised cost.
Other financial liabilities comprise trade and other payables, loans and convertible securities.
d. Share capital
ORDINARY SHARES
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and
share options are recognized as a deduction from equity, net of any tax effects.
e. Property, plant and equipment
i Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset. Purchased software that is
integral to the functionality of the related equipment is capitalised as part of that equipment.
When 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.
ii Subsequent costs
Subsequent expenditure is capitalized 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.
iii Depreciation
Items of property, plant and equipment are depreciated on a straight-line basis in profit and loss over the estimated
useful lives of each component. Items of property, plant and equipment are depreciated from the date that they are
installed and are ready for use.
The estimated useful lives for the current and comparative years of significant items of property, plant and equipment
are as follows:
Mining equipment 10 years
Plant and equipment
10 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
Financial Statements
ANNUAL FINANCIAL REPORT
P.49
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
f. Exploration and evaluation expenditure
Exploration and evaluation expenditure, including the costs of acquiring the licences, are capitalised as exploration
and evaluation assets on an area of interest basis. Costs incurred before the Company has obtained the legal rights to
explore an area are recognised in the statement of profit or loss and other comprehensive income.
Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either:
Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical
feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds
the recoverable amount. For the purposes of impairment testing, exploration and evaluation assets are allocated
to cash- generating units to which the exploration activity relates. The cash generating unit shall not be larger than
the area of interest.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are
finalised, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then
reclassified to mining property and development assets within property, plant and equipment.
When an area of interest is abandoned or the directors decide that it is not commercial, any accumulated costs in respect
of that area are written off in the financial period the decision is made.
g. Goodwill
Goodwill represents the future economic benefits arising from a business combination that are not individually
identified and separately recognised. Goodwill is carried at cost less accumulated impairment losses. Refer note 4a
for information on how goodwill is initially determined. Refer to Note 4i for a description of impairment assessment
procedures.
h. Other intangible assets
ACQUIRED INTANGIBLE ASSETS
Seedbank and plant genetics acquired in a business combination that qualify for separate recognition are recognised
as intangible assets at their fair values.
SUBSEQUENT MEASUREMENT
All intangible assets are accounted for using the cost model whereby capitalised costs are amortised on a
straight- line basis over their estimated useful lives as these assets are considered finite. Residual values and
useful lives are reviewed at each reporting date. In addition, they are subject to impairment testing.
Amortisation of seedbank and plant genetics and the intellectual property (website) is calculated to write-off the cost
of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives,
and is recognised in the profit and loss.
The following useful lives are applied:
Seedbank and plant genetics 10 years
Intellectual property – website 2 years
The expenditures are expected to be recouped through successful development and exploitation or from sale of the
area of interest; or
Activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves, and active and significant
operations in, or in relation to, the area of interest are continuing.
Financial Statements
ANNUAL FINANCIAL REPORT
P.50
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
i. Impairment
i Non-derivative financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance
depends upon the consolidated entity’s assessment at the end of each reporting period as to whether the financial
instrument’s credit risk has increased significantly since initial recognition, based on reasonable and supportable
information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that is
attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit
impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the
asset’s lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of
the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the
original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised
within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss.
ii Non-financial assets
The carrying amounts of the Group’s non-financial assets 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 if the carrying amount of an asset or its related cash-generating unit exceeds its
recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that
largely are independent from other assets and groups.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs
to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
IMPAIRMENT LOSSES ARE RECOGNIZED IN PROFIT OR LOSS
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 amortization, if no impairment loss had been recognised.
j. Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first in
first out principle. In the case of manufactured inventories, cost includes an appropriate share production overhead
based on normal operating capacity.
k. Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost,
which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or
before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except
where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing
the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated
useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are
subject to impairment or adjusted for any remeasurement of lease liabilities.
Financial Statements
ANNUAL FINANCIAL REPORT
P.51
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
l. Lease liabilities
A lease liability is recognised at the commencement date of a lease.
The lease liability is initially recognised at the present value of the lease payments to be made over the term of
the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined,
the consolidated entity’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease
incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid
under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably
certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an
index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate
used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability
is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying
amount of the right-of-use asset is fully written down.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets
are expensed to profit or loss as incurred.
m. Revenue
The consolidated entity recognises revenue as follows:
REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected
to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer,
the consolidated entity: identifies the contract with a customer; identifies the performance obligations in the
contract; determines the transaction price which takes into account estimates of variable consideration and the
time value of money; allocates the transaction price to the separate performance obligations on the basis of the
relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when
or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods
or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as
discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events.
Such estimates are determined using either the ‘expected value’ or ‘most likely amount’ method. The measurement of
variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent
that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur.
The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently
resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability.
SALE OF GOODS
Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods,
which is generally at the time of delivery.
RENDERING OF SERVICES
Revenue from a contract to provide services is recognised over time as the services are rendered based on either
a fixed price or an hourly rate.
INTEREST REVENUE
Revenue is recognised as interest accrues using the effective interest method. The effective interest method uses the
effective interest rate which is the rate that exactly discounts the estimated future cash receipts over the expected life
of the financial asset.
Financial Statements
ANNUAL FINANCIAL REPORT
P.52
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
n. Research and development
Expenditure on research activities is recognised in profit and loss as incurred.
o. Finance income and finance costs
Finance income comprises interest income on funds invested. Interest income is recognised as it accrues, using the
effective interest method.
Finance costs comprise interest expense and other costs of borrowings. All finance costs are recognised in profit or loss
using the effective interest method.
p. Income tax
Tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit or loss except to the
extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income 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 amount 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.
A deferred tax asset is recognised for unused tax losses 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.
The Company and its wholly-owned Australian resident entities are part of a tax-consolidated group. As a
consequence, all members of the tax-consolidated group are taxed as a single entity. The head entity within the
tax- consolidated group is Cann Global Limited.
q. Goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the
amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised
as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or
payable to, the ATO is included as a current asset or liability in the statement of financial position.
Cash flows are included in the cash flow statement on a gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash
flows.
r. Share-based payments
Equity-settled share-based payments are provided to certain vendors and suppliers in exchange for the acquisition of
businesses or rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date of the businesses acquired or services
received if reasonably measurable. Otherwise, fair value is measured at the quoted market price of the Company’s
ordinary shares on grant date, adjusted where applicable to take into account the terms and conditions upon which
the shares were granted.
Financial Statements
ANNUAL FINANCIAL REPORT
P.53
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
s. Going concern basis of accounting
Notwithstanding the loss for the year of $4,770,484, negative cash flows from operations of $2,742,998 and historical
financial performance, the financial report has been prepared on a going concern basis. This assessment is based
on a cash at bank balance at balance date of $10,573,053, and the directors’ understanding of expected net cash
outflows in the coming financial year.
Note 5. Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and
non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based
on the following methods. When applicable, further information about the assumptions made in determining fair values is
disclosed in the notes specific to that asset or liability.
INVESTMENTS
Investments are measured at fair value, at initial recognition and for disclosure purposes, at each annual reporting
date. Fair value is calculated based on the market value of the ASX publicly listed share price.
OTHER NON-DERIVATIVE FINANCIAL LIABILITIES
Other non-derivative financial liabilities are measured at fair value, at initial recognition and for disclosure purposes,
at each annual reporting date. Fair value is calculated based on the present value of future principal and interest
cash flows, discounted at the market rate of interest at the measurement date. In respect of the liability component
of convertible notes, the market rate of interest is determined with reference to similar liabilities that do not have a
conversion option.
Note 6. Financial risk management
a. Overview
The Company and Group have exposure to the following risks from their use of financial instruments:
liquidity risk
market risk
interest rate risk
foreign currency risk
credit risk; and
price risk.
This note presents information about the Company’s and Group’s exposure to each of the above risks, their objectives,
policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout this
financial report.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management
framework.
Risk management policies are established to identify and analyse the risks faced by the Company and Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Company’s and Group’s activities. The Company and
Group, through their training and management standards and procedures, aim to develop a disciplined and constructive
control environment in which all employees understand their roles and obligations.
b. Financial risk management
The Group’s financial instruments consist mainly of deposits with banks, trade and other receivables, trade and other
payables and other financial liabilities.
The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign currency
fluctuation risk and liquidity risk.
Financial Statements
ANNUAL FINANCIAL REPORT
P.54
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
INTEREST RATE RISK
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result in
changes in market interest rates, arises mainly from bank deposits accounts.
FOREIGN CURRENCY RISK
The Group was marginally exposed to fluctuations in foreign currencies during the reporting period.
CREDIT RISK
Neither the Group or the Company have any material credit or other risk exposure to any single receivable or group of
receivables or payables under financial instruments entered into by the Group.
LIQUIDITY RISK
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset.
The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash reserves or
unutilised borrowings are maintained.
The following are the remaining contractual maturities at the end of the reporting period of financial liabilities, including
estimated interest payments:
30 June 2021 -
Contractual Cash Flows
Carrying
amount
$
Total
$
Less than
12 months
$
1-2 Years
$
2-5 years
$
More than
5 years
$
Non derivative financial liabilities
Loan – other
77,515
77,515
77,515
-
-
-
Trade and other payables
1,960,964
1,960,964
1,960,964
-
-
-
30 June 2021 – Contractual cash flows
30 June 2020 -
Contractual Cash Flows
Carrying
amount
$
Total
$
Less than
12 months
$
1-2 Years
$
2-5 years
$
More than
5 years
$
Non derivative financial liabilities
Obsidian
3,903,889
4,203,889
4,203,889
-
-
-
L1 Capital Global
85,200
85,200
85,200
-
-
-
Loan - A Kavasilas
211,113
211,113
211,113
-
-
-
Loan – other
90,545
90,545
90,545
-
-
-
Trade and other payables
2,067,980
2,067,980
2,067,980
-
-
-
30 June 2020 – Contractual cash flows
Financial Statements
ANNUAL FINANCIAL REPORT
P.55
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
PRICE RISK
The Group’s anticipated value of the South Johnstone Bauxite project is affected by the price of bauxite and shipping.
Any rise or fall of the price of bauxite or shipping costs may affect the project’s value accordingly. Similarly for the various
market prices of cannabis products produced by the Company.
MARKET RISK
Market risk is the risk that changes in market prices will affect the Group, for example changes in interest rates, and
changes in share price for investments at FVTPL.
c. Financial Instrument interest rate risk
The tables below disclose the contractual interest rates applicable for financial statements and a sensitivity analysis of
movements in variable interest rates.
2021
%
2020
%
2021
$
2020
$
2021
$
2020
$
2021
$
2020
$
2021
$
2020
$
Financial Assets:
Cash and cash equivalents
1.98%
-
-
10,572,953
7,416,995
100
100
10,573,053
7,417,095
Trade and other
receivables
-
-
-
-
-
-
259,895
709,632
259,895
709,632
Financial Liabilities:
Trade and other payables
-
-
-
-
-
-
1,960,964
2,067,980
1,960,964
2,067,980
Current tax liability
-
-
-
-
-
-
292,666
292,666
292,666
292,666
Other financial liabilities
38.10%
-
-
-
-
77,515
4,290,747
77,515
4,290,747
Consolidated Entity
Weighted
average effective
interest rate
Interest
bearing fixed
Interest
bearing - floating
Non-interest
bearing
Total
INTEREST RATE SENSITIVITY ANALYSIS
At 30 June 2021, the effect on profit and equity as a result of changes in the interest rate, with all other variables
remaining constant would be as follows:
2021
$
2020
$
Increase in interest rate by 1%
105,730
74,170
Decrease in interest rate by 1%
(105,730)
(74,170)
Financial Statements
ANNUAL FINANCIAL REPORT
P.56
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
d. Fair values vs carrying amounts
The fair values of financial assets and liabilities, together with carrying amounts shown on the statement of financial position,
are as follows:
Total
carrying
amount
Fair value
Total
carrying
amount
Fair value
2021
$
2021
$
2020
$
2020
$
Financial Assets
Cash and cash equivalents
10,573,053
10,573,053
7,417,095
7,417,095
Trade and other receivables
259,895
259,895
709,632
709,632
Financial Liabilities
Trade and other payables
1,960,964
1,960,964
2,067,980
2,067,980
Current tax liability
292,666
292,666
292,666
292,666
Other financial liabilities
77,515
77,515
4,290,747
4,290,747
Financial Statements
ANNUAL FINANCIAL REPORT
P.57
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 7. Operating segments
a. Basis for segmentation
The Group has three reportable segments; hemp and medical cannabis products, mining exploration and evaluation
and corporate. The corporate segment includes all of our initiatives in corporate growth activities and provides
administrative, technical and financial support.
b. Information about reportable segments
Information related to each reportable segment is set out below.
Consolidated 30 June 2021
Cannabis
Mining Exploration
and Evaluation
Corporate
Total
Segment revenues
1,488,031
-
-
1,488,031
Revenues
1,488,031
-
-
1,488,031
Interest Income
-
-
163,630
163,630
Depreciation
(41,932)
(2,674)
-
(44,606)
Amortisation
(110,412)
-
-
(110,412)
Impairment of intangible assets
(138,000)
-
-
(138,000)
Impairment of receivables
-
-
(242,719)
(242,719)
Exploration expenditure written off
-
(308,604)
-
(308,604)
Finance costs
-
-
(99,520)
(99,520)
Other costs
(1,840,242)
-
(3,638,042)
(5,478,284)
Loss before tax
(642,555)
(311,278)
(3,816,651)
(4,770,484)
Income tax expense
-
-
-
-
Loss after tax
(642,555)
(311,278)
(3,816,651)
(4,770,484)
Capital expenditures
45,111
-
-
45,111
Total assets
5,799,969
2,288,948
10,647,416
18,736,333
Total liabilities
435,110
-
1,957,265
2,392,375
Financial Statements
ANNUAL FINANCIAL REPORT
P.58
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 7. Operating segments (continued)
Consolidated – 2020
Cannabis
Mining Exploration
and Evaluation
Corporate
Total
Revenue
Segment revenues
1,805,004
-
-
1,805,004
Less: Intersegment revenues
-
-
-
-
Total revenue
1,805,004
-
-
1,805,004
Interest income
-
-
124,725
124,725
Depreciation
(40,961)
(4,603)
-
(45,564)
Amortisation
(33,574)
-
-
(33,574)
Impairment of receivables
-
79,258
79,258
Finance costs
-
-
(2,008,579)
(2,008,579)
Other costs
(3,798,649)
-
(4,173,429)
(7,972,078)
Loss before income tax expense
(2,068,180)
(4,603)
(5,978,025)
(8,050,808)
Income tax expense
-
-
-
-
Loss after income tax expense
(2,068,180)
(4,603)
(5,978,025)
(8,050,808)
Capital Expenditures
16,834
214,727
-
231,561
Total assets
6,497,774
2,471,882
7,578,201
16,547,857
Total liabilities
797,740
-
5,992,069
6,789,809
Financial Statements
ANNUAL FINANCIAL REPORT
P.59
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 7. Operating segments (continued)
Major product lines
Hemp food
products
2021
$
Chia food
products
2021
$
Other
revenue
2021
$
hemp food
products
2020
$
Chia food
products
2020
$
Seed
305,815
381,550
-
1,594,394
-
Oil
291,758
23,721
-
26,187
-
Bi-Products
57,157
-
-
1,746
-
Protein
129,439
-
-
58,194
-
Flour
10,922
15,668
-
23,278
-
Capsules
133,221
6,104
-
10,475
-
Smooties Blends
1,658
-
-
7,856
-
Other
-
-
131,019
59,593
-
Total
929,969
427,043
131,019
1,781,723
-
Geographical regions
Australia
849,787
156,365
117,190
1,050,192
-
Rest of the World
80,182
270,678
13,829
731,531
-
Total
929,969
427,043
131,019
1,781,723
-
Timing of revenue recognition
Goods transferred at a point in time
929,969
427,043
65,843
1,630,532
-
Services transferred at a point in time
-
-
65,176
151,191
-
Total
929,969
427,043
131,019
1,781,723
-
c. Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
(i) Includes an amount of $594,292 in respect of the translation of US dollar denominated convertible securities into
Australian dollars at the time of their conversion to ordinary shares
Note 8. Revenue and other income
Consolidated
2021
$
2020
$
Revenue from sale of goods
1,422,855
1,630,532
Revenue from services
15,163
151,191
Management fees recharges
50,013
-
Other income
Foreign currency exchange gain realised (i)
671,287
7,313
Research & Development Grant for Fy18
-
23,281
Total
2,159,318
1,812,317
Financial Statements
ANNUAL FINANCIAL REPORT
P.60
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 10. Expenses
Consolidated
2021
$
2020
$
Administrative & Corporate expenses
Salaries and consulting fees corporate
(1,043,279)
(576,390)
Salaries and consulting fees Food Division
(452,453)
(577,398)
Salaries and consulting fees Cultivation Division
(60,000)
-
Salaries and consulting fees Medical Cannabis Division
(198,867)
-
Audit fees
(137,604)
(95,906)
Accountancy fees
(217,593)
(248,743)
Shareholders' services
(342,870)
(141,296)
Other administrative expenses
(115,359)
(36,670)
Total
(2,568,026)
(1,673,403)
Occupancy expenses
Warehouse Food Division1
(31,177)
(107,202)
Headquarter offices corporate
(23,751)
(5,703)
Total
(54,748)
(112,905)
Depreciation and amortization
Depreciation of property, plant and equipment
(44,607)
(45,564)
Depreciation of right-of-use asset
(78,143)
-
Amortisation of Intangible assets
(32,268)
(33,574)
Total
(155,018)
(79,138)
Note 9. Cost of goods sold
Consolidated
2021
$
2020
$
Seed and other related product cost
817,701
871,677
Product packaging
33,843
71,236
Shipping & Freight Outward
120,370
155,765
Other cost of goods sold
26,300
96,315
Salaries and consulting fees
164,068
116,867
Total
1,162,283
1,311,860
1 The company adopted AASB 16: Leases as at July 2019, which changed the accounting treatment of occupancy expenses where
qualifying lease agreements are entered into. The occupancy expenses of the warehouse in the prior year were not incurred
under a qualifying lease agreement and so continued to be classified as occupancy expense. At 30 June 2020 a new warehouse
lease agreement was executed, whereby the lease payments are allocated between lease liability principal and interest expense.
Only lease outgoings continue to be classified as occupancy expense. As a result the occupancy expense appears lower than
the prior year even though the total payments remain similar.
Financial Statements
ANNUAL FINANCIAL REPORT
P.61
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 12. Earnings per share
Consolidated
2021
$
2020
$
Basic Earnings per Share
a. Basic loss per share (cents)
(0.10)
(0.25)
Loss attributable to ordinary shareholders
(4,770,484)
(8,012,138)
Earnings used to calculate basic EPS ($)
-
-
b. Issued ordinary shares at 1 July
3,339,989,043
1,612,435,425
Effect of shares issued during the year
5,657,766,970
1,530,967,451
Weighted average number of ordinary shares at 30 June
4,909,331,066
3,143,402,876
Diluted Earnings per Share
a. Diluted loss per share (cents)
(0.10)
(0.25)
Loss attributable to ordinary shareholders ($)
(4,770,484)
(8,012,138)
Earnings used to calculate diluted EPS ($)
(4,770,484)
(8,012,138)
b. Weighted average number of ordinary shares (basic)
4,909,331,066
3,143,402,876
Weighted average number of ordinary shares (diluted) at 30 June
4,909,331,066
3,143,402,876
As at 30 June 2021, 807,321,241 options (2020: 56,140,000) and 50,000,000 performance shares (2020: 50,000,000) were
excluded from the diluted weighted-average number of ordinary shares calculation because their effect would have
been anti-dilutive.
The average market value of the Company’s shares for the purpose of calculating the dilutive effect of share options
was based on quoted market prices for the year.
Note 11. Net Finance Costs
Consolidated
2021
$
2020
$
Interest income on cash at bank
163,630
124,725
Finance Income
163,630
124,725
Financial liabilities measured at amortised cost – interest expense
(27)
(2,008,579)
Finance Costs
(27)
(2,008,579)
Net Finance Costs
163,603
(1,883,854)
Financial Statements
ANNUAL FINANCIAL REPORT
P.62
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 13. Share based payment arrangement
Description of the share based payment arrangements.
The following share based payment arrangements exist as at 30 June 2021.
ORDINARY SHARES GRANTED
On 6 August 2020, the Company issued 8,887,086 shares to Medcan Australia as consideration for facilitation services.
The number of shares allotted was determined using a VWAP calculation of $ 0.005992 per share, resulting in
consideration for facilitation services of $53,250.
On 15 October 2020, the Company issued 18,591,013 shares to Medcan Australia as consideration for facilitation services.
The number of shares allotted was determined using a VWAP calculation of $ 0.004478 per share, resulting in
consideration for facilitation services of $83,250.
On 15 December 2020, the Company issued 8,000,000 shares to contractors as consideration for consulting fees. The
share price at the grant date was $0.005 per share, resulting in consideration for consulting services of $40,000.
On 2 February 2021, the Company issued 2,916,667 shares to Franc Zvonar as consideration for consulting fees. The
share price at the grant date was $0.009 per share, resulting in consideration for consulting services of $26,250.
OPTIONS GRANTED
On 15 March 2021, 15,000,000 options were granted as consideration for brokerage fee. Options were valued at $0.0089,
resulting in consideration for broker services of $13,350.
The following share based payment arrangements exist as at 30 June 2020.
ORDINARY SHARES GRANTED
On 19 July 2019 the Company issued 5,405,405 shares to Sebastian and Samuel Edwards as consideration for T12
management fees. The share price at the grant date was $0.035 per share, resulting in consideration for consulting
services of $189,189.
On 19 July 2019, the Company issued 2,250,000 shares to Medcan Australia as consideration for facilitation services. The
share price at grant date was $0.035 per share, resulting in consideration for facilitation services of $78,750.
On 15 November 2019, the Company issued 10,250,295 shares to consultants as consideration for consulting services.
The share price grant date was $0.025, resulting in consideration for consulting services of $256,257.
On 26 November 2019, the Company issued 3,330,000 shares to Medcan Australia as consideration for facilitation
services. The share price at the grant date was $0.025 per share, resulting in consideration for facilitation services of
$83,250.
On 5 February 2020, the Company issued 1,956,054 shares to Neil Sweeny as consideration for consulting fees.
The share price at the grant date was $0.015 per share, resulting in consideration for consulting services of
$30,000.
On 8 April 2020, the Company issued 13,512,779 shares to Medcan Australia as consideration for facilitation services. The
share price at the grant date was $0.01 per share, resulting in consideration for facilitation services of $136,500.
Financial Statements
ANNUAL FINANCIAL REPORT
P.63
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Reconciliation of outstanding share options
Expenses recognised in Profit & Loss
There were 60,000 options exercised during the year ended 30 June 2021 (2020: Nil) in respect of share-based
payment arrangements.
2021
2021
2020
2020
Number of
options
Weighted
Average
Exercise price
Number of
options
Weighted
Average
Exercise price
Outstanding at the beginning of the year
56,140,000
0.039
31,140,000
0.05
Granted
751,249,241
0.012
25,000,000
0.025
Forfeited
-
-
-
-
Exercised
(60,000)
0.012
-
-
Expired
-
-
-
-
Outstanding at year-end
807,329,241
0.01
56,140,000
0.039
Exercisable at year-end
807,329,241
0.014
56,140,000
0.039
Note 13. Share based payment arrangement (continued)
Consolidated Entity
2021
$
2020
$
Equity settled share based payment transactions
Consulting fees – ordinary shares granted
202,750
773,946
202,750
773,946
Financial Statements
ANNUAL FINANCIAL REPORT
P.64
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
SHORT TERM EMPLOYEE BENEFITS
These amounts include fees and benefits paid to non-executive directors as well as salary, paid leave benefits, fringe
benefits and cash bonuses awarded to the executive Chairperson, executive directors and other KMP.
POST-EMPLOYMENT BENEFITS
These amounts are the current-year’s costs of providing for superannuation contributions under the Australian
Government’s superannuation guarantee scheme.
OTHER LONG-TERM BENEFITS
These amounts represent long service leave benefits accruing during the year, long-term disability benefits and
deferred bonus payments.
SHARE BASED PAYMENT EXPENSE
These amounts represent the expense related to the participation of specified executives in equity-settled benefit
schemes as measured by the fair value of the shares granted on grant date.
Consolidated
2021
$
2020
$
Short-term employee benefits
917,638
878,735
Post-employment benefits
-
-
Long-term benefits
-
-
Share-based payments
50,000
-
967,638
878,735
b. The aggregate compensation made to directors and other members of key management personnel of the
consolidated entity is set out below:
Note 14. Key Management Personnel Disclosure
Key Management Person
Position
Pnina Feldman
Executive Chairperson
Sholom Feldman
Executive Director
John Easterling
Non-Executive Director
David Austin
Non-Executive Director
Jonathan Cohen
Non-Executive Director
Marion Lesaffre
Chief Operating Officer
a. Names and positions held of economic and parent entity key management personnel in office at any time during
the financial year are:
Financial Statements
ANNUAL FINANCIAL REPORT
P.65
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 15. Income Tax
Consolidated
2021
$
2020
$
Major components of income tax expense
a. Income tax benefit
(4,770,484)
(8,050,808)
Prima facie tax benefit on the loss from ordinary activities before income tax at 26%
(2020: 27.5%) differs from the income tax provided in the financial statements as follows:
(1,240,326)
(2,213,973)
Tax benefit at 26% (2020: 27.5%)
Add/(Less) tax effect
- Non-deductible expenses
287,723
807,274
- Exploration expenditure capitalised
(35,366)
(59,050)
- Deferred tax asset not brought to account
986,695
1,465,749
Income tax expense attributable to operating loss
-
-
b. Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following item:
Add/(Less) tax effect
- Tax losses – income at 25% (2020: 26%)
7,431,114
6,741,664
- Tax losses – capital at 25% (2020: 26%)
122,797
127,708
The deductible temporary differences and tax losses do not expire under current tax legislation.
Deferred tax assets have not been recognised in respect of these items because it is not probable that future
taxable profit will be available against which the Group can utilise the benefits there from.
Note 16. Auditors’ Remuneration
2021
$
2020
$
Remuneration of the auditor of the parent entity for:
Remuneration of the auditor of the parent entity for:
An audit or review of the financial report of the Company
An audit or review of the financial report of the Company
- Current year
90,604
57,556
- Half-year
47,000
38,350
Other Services
-
-
Financial Statements
ANNUAL FINANCIAL REPORT
P.66
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 17. Related Party Transactions
Identity of related parties
The Group has related party relationships with its subsidiaries, its associate entity, its key management personnel, and
companies related due to common directorships of Pnina Feldman and Sholom Feldman, being directors of both Cann
Global Limited and the director related companies.
Related party transactions with Australian Gemstone Mining Pty Limited
The Company and Australian Gemstone Mining Pty Limited (AGMPL) were parties to a management services agreement
(Management Services Agreement) dated 1 July 2007, and the variation deed dated 1 July 2017, for the provision by
AGMPL of executive and corporate services, including geological and technical expertise, to the Group by the following
executives:
• Pnina Feldman – Executive Director
• Dr Robert Coenraads – Head Geologist, Exploration and Mining; and
• Sholom Feldman – Chief Executive Officer and Managing Director.
AGMPL is a company owned and controlled by Pnina Feldman. Each of Pnina Feldman, Dr Robert Coenraads and
Sholom Feldman has entered into an executive services agreement with AGMPL. Each of these executive services
agreements contains standard provisions dealing with employment obligations and standard covenants dealing
with general duties and the protection of AGMPL’s interests and mirrors the Management Services Agreement in respect
of termination provisions.
In respect of each of these executives (Key Management Personnel), AGMPL was paid a retainer for the period ended 30
June 2020. The Company was also reimbursed for all reasonable expenses incurred by or on behalf of the Key Persons.
These payments and expense reimbursements ceased from 1 July 2020 except for geological and technical expertise
services.
Until 26 September 2019, AGMPL also provided suitable fully serviced offices to the Company , which includes use
of office space, the board room, kitchen, daily cleaning, and essential office infrastructure, including telephones, fax,
printer, broadband internet connections and suitable office furniture. AGMPL also provided additional administrative
services to the Company, such as secretarial.
The provision by AGMPL of geological and technical expertise services was terminated during the half-year ended 31
December 2020.
The Management Services Agreement with AGMPL was terminated effective from 30 August 2021.
AGMPL services
2021
$
2020
$
Rent
-
25,635
Management and secretarial
-
180,000
Geologist fees
36,000
198,000
Executive and corporate services (Directors Fees)
624,000
624,000
Reimbursement of expenses
-
13,543
Marketing services (note i)
-
200,579
Administration services
-
54,000
Total
660,000
1,295,757
Financial Statements
ANNUAL FINANCIAL REPORT
P.67
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
i. Included in marketing services for FY2020 of $200,579 is a payment of $120,579 to the Sydney Talmudical College Association, an entity of
which Sholom Feldman is a Director. This was for services provided by Elimelech Levy (a close relative of Pnina and Sholom Feldman) for
marketing and sales work and project development. Also included is an additional $60,000 paid to AGMPL for Elimelech Levy’s services.
FY2021
Loans advanced to director related companies
2021
$
2020
$
NON-CURRENT
Volcan Australia Corporation Pty Ltd
1,200,000
1,200,000
Expected credit loss recognised as at 30 June 2021
(1,200,000)
(1,200,000)
Due for repayment on 14 December 20121
Note 17. Related Party Transactions (continued)
1 The loan to Volcan Australia Corporation Pty Ltd (VAC) was not a cash loan from CGB to VAC, but the amount that was to be
paid by VAC in consideration for the transfer to Volcan Australia Corporation Pty Ltd of a sapphire mining project ML1492 from the
company pursuant to the transactions completed on 14th December 2010 as approved at the time by shareholders at an EGM.
VAC was to have invested in the development of that asset and monetised that asset within that time period, and pay CGB the
above amount. This amount was unsecured, due for payment in cash on 14th December 2012 from the proceeds of the mine,
and there was no interest payable on the amount due. Following the transactions in 2010, although VAC did invest in the asset
as contemplated, the markets for sapphires worsened and VAC was not able to monetise the asset prior to 14th December 2012.
The directors have agreed that it is in CGB’s interest to allow VAC further time to endeavour to monetise the asset to make the
agreed payment from that asset. As the timing of this payment is at present uncertain, it is considered prudent for this amount
to be impaired in the accounts until the payment is able to be made.
The above loan is unsecured, interest free and there is no fixed date for repayment.
Loans provided by director
2021
$
2020
$
Andrew Kavasilas (MCL Director)
-
211,113
Note 18. Cash and cash equivalent
Consolidated
2021
$
2020
$
Cash on hand
Cash on hand
100
100
Cash at bank
Cash at bank
10,572,953
7,416,995
Cash and cash equivalents in the statement of cash flows
10,573,053
7,417,095
Financial Statements
ANNUAL FINANCIAL REPORT
P.68
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Other transactions with related parties
The Company paid directors’ fees of $40,000 (2020: $30,000) for the non-executive director, Jonathan Cohen, during
the year ended 30 June 2021.
The Company paid directors’ fees of $40,000 (2020: $30,000) to the non-executive director, David Austin, during the
year ended 30 June 2021.
Related party transactions with Kavasil Pty Ltd
Directors fees NIL (2020: $120,000) for the Medical Cannabis Limited Director Andrew Kavasilas, were paid to his director
related entity - Kavasil Pty Ltd.
FY2021
Note 20. Inventories
CURRENT
2021
$
2020
$
Seeds and crops in progress – at cost
-
12,675
Stock Deposit
88,956
140,996
Finished goods – at cost
385,062
335,804
Balance as at 30 June
Balance as at 30 June
474,018
489,475
Financial Statements
ANNUAL FINANCIAL REPORT
P.69
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Note 19. Trade and other receivables
Consolidated
2021
$
2020
$
Current
Trade receivables
Trade receivables
236,542
554,968
Other receivables
23,353
154,664
Balance as at 30 June
Balance as at 30 June
259,895
709,632
Allowance for expected credit losses
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated
2021
%
2020
%
2021
$
2020
$
2021
$
2020
$
Not overdue
Not overdue
0%
0%
132,028
219,673
-
-
0 to 3 months overdue
0 to 3 months overdue
0%
0%
36,628
296,439
-
-
3 to 6 months overdue
0%
0%
20,110
33,092
-
-
Over 6 months overdue
0%
0%
47,776
5,764
-
-
Total
Total
-
-
236,542
554,968
-
-
carrying
amount
Allowance for
expected credit losses
expected credit
loss rate
FY2021
Financial Statements
ANNUAL FINANCIAL REPORT
P.70
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Note 22. Plant and equipment
Consolidated
2021
$
2020
$
NON-CURRENT
Mining Equipment
At cost
202,632
195,426
Accumulated depreciation
(194,106)
(187,366)
Total
8,526
8,060
Plant and Equipment
At cost
At cost
564,658
564,659
Accumulated depreciation
Accumulated depreciation
(124,127)
(86,261)
Total
Total
440,531
478,398
Total written down amount
449,057
486,458
Note 21. Exploration and Evaluation
2021
$
2020
$
NON-CURRENT
EPM 18463
Balance as at 1 July
2,451,028
2,238,019
Mining permits, tenement acquisition and administration and geologist expenses
136,024
213,009
Exploration written off
(308,604)
-
Balance as at 30 June
Balance as at 30 June
2,278,448
2,451,028
The Exploration and Evaluation asset of $2,278,448, relates to the South Johnstone Project, Queensland, mining
tenement EPM 18463. This mining tenement was renewed until 25 May 2022. As per the renewal guidelines, the company
had to relinquish some units and as a result the company has written off exploration expenditure that had been
previously capitalised, relating to drilling work that had been undertaken on those units. Those units contained no
bauxite resource.
FY2021
Financial Statements
ANNUAL FINANCIAL REPORT
P.71
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Note 22. Plant and equipment (continued)
Movements in carrying amounts
Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of
the current financial year.
Plant and
Equipment
$
Mining
Equipment
$
Total
$
Carrying amount year ended 30 June 2019
60,741
12,662
73,403
Additions
Additions
16,834
-
16,834
Acquisition of Hemp Hulling Co
441,785
-
441,785
Depreciation expense
(40,962)
(4,602)
(45,564)
Carrying amount year ended 30 June 2020
478,398
8,060
486,458
Additions
Additions
-
7,206
7,206
Depreciation expense
Depreciation expense
(37,867)
(6,740)
(44,607)
Carrying amount year ended 30 June 2021
440,531
8,526
449,057
Note 23. Right-of-use assets
Consolidated
2021
$
2020
$
NON-CURRENT
Land and buildings - right-of-use
138,416
138,416
Less: Accumulated depreciation
Less: Accumulated depreciation
(78,143)
-
Balance as at 30 June
60,273
138,416
Additions to the right-of-use assets during the prior year were $138,416 upon initial adoption of AASB 16 Leases.
The Group leases land and buildings for its factory under agreements of two years. On renewal, the terms of the leases
are renegotiated. There is no renewal option held by the Group on these leases.
FY2021
Financial Statements
ANNUAL FINANCIAL REPORT
P.72
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Consolidated
Intellectual
property
Website
$
Seedbank
and plant
genetics
$
Goodwill
$
Trademark
$
Total
$
Carrying amount at 30 June 2019
Carrying amount at 30 June 2019
9,050
9,050
184,000
184,000
1,726,261
1,726,261
-
1,919,311
1,919,311
Additions
13,500
13,500
-
2,595,755
2,595,755
1,250
1,250
2,610,505
2,610,505
Acquisition of T12 Holdings Pty Ltd
4,918
4,918
-
-
-
4,918
4,918
Accumulated amortisation
(10,574)
(10,574)
(23,000)
(23,000)
-
-
(33,574)
(33,574)
Carrying amount at 30 June 2020
Carrying amount at 30 June 2020
16,894
161,000
4,322,016
1,250
4,501,160
Additions
37,905
-
-
-
37,905
Amortisation
(9,268)
(23,000)
-
-
(32,268)
Impairment seedbank
-
(138,000)
-
-
(138,000)
Carrying amount at 30 June 2021
45,531
-
4,322,016
1,250
4,368,797
IMPAIRMENT TESTING
The recoverable amount of goodwill is based on the Directors’ estimate of value in use of the cash generating unit to
which it relates. Medical Cannabis Ltd is considered to be one cash generating unit (CGU), Hemp Hulling Co (QLD) Pty
Ltd and T12 Holdings Pty Ltd are combined considered to be another CGU. The recoverable amount of the consolidated
entity’s goodwill has been determined by a value-in-use calculation using a discounted cash flow model, based on
a 1 year projection period approved by management and extrapolated for a further 4 years using a steady rate,
together with a terminal value. The resulting value in use is compared to the carrying value for the CGU at balance
date and in the event that the carrying value exceeds the recoverable amount, an impairment loss is recognised.
No reasonable change in assumptions would result in the recoverable amount of the CGU’s being materially less
than the carrying values.
Movements in carrying amounts
Movement in the carrying amounts for each class of intangible assets between the beginning and the end of the
current financial year.
Note 24. Intangible assets
Consolidated
2021
$
2020
$
Seedbank and plant genetics
Seedbank and plant genetics
230,000
230,000
Accumulated amortisation
Accumulated amortisation
(92,000)
(69,000)
Impairment of intangible assets
Impairment of intangible assets
(138,000)
-
Goodwill
4,322,016
4,322,016
Intellectual property – website at cost
Intellectual property – website at cost
82,005
44,100
Accumulated amortisation
Accumulated amortisation
(36,474)
(27,206)
Tradermark
1,250
1,250
Total intangible assets
4,368,797
4,501,160
FY2021
Financial Statements
ANNUAL FINANCIAL REPORT
P.73
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Note 24. Intangible assets (continued)
Key assumptions are those to which the recoverable amount of an asset or cash-generating unit (CGU) is most
sensitive. Medical Cannabis Ltd is considered its own CGU (Medical Division) and Hemp Hulling Co (QLD) Pty Ltd and
T12 Pty Ltd are considered to be a combined CGU (Food Division).
The following key assumptions were used in the discounted cash flow model for the Food Division:
•
6.55% pre-tax discount rate;
•
25% per annum projected revenue growth rate from FY23;
•
5% per annum increase in material operating costs and overheads.
The discount rate of 6.55% pre-tax reflects the consolidated entity’s weighted average cost of capital, the risk-free
rate and the volatility of the share price relative to market movements.
Management believes the projected revenue growth rate is reasonable and justified, based on the growth in the
sector and new product due to launch to the market during the forecast period. Compared to prior years, management
has increased their estimation in operating costs and overheads, due to the increased sales and marketing efforts
required to support growth. Management has however undertaken a rationalisation and consolidation of personnel
to better utilise resources across the combined CGU, representing growth in profit margins.
Based on the above, there is no impairment required to the carrying value of the goodwill in this CGU.
The following key assumptions were used in the discounted cash flow model for the Medical Division:
•
6.55% pre-tax discount rate;
•
5% market share in year two following launch of product;
•
1% annual growth in market share;
•
2% per annum increase in operating costs and overheads;
•
5% per annum increase in staff costs;
•
one off capitalised R&D costs.
Management believes the projected revenue growth rate is reasonable and justified, based on the launch of a key
new product to market with only one genuine competitor. This division utilises a distributor model which factors
in most outsourced overhead expenses into the profit margins. Marketing and advertising are also limited in this
sector due to government regulations.
Based on the above, there is no impairment required to the carrying value of the goodwill in this CGU.
Note 25. Investments
Consolidated
2021
$
2020
$
Investment in Koegas Medicinal Herb (Pty) Ltd (Note i)
Investment in Koegas Medicinal Herb (Pty) Ltd (Note i)
200,000
200,000
Investment written off
Investment written off
(200,00)
-
Total
-
-
i. On 19 December 2019, Cann Global entered into a Heads of Agreement with South African Company Koegas
Medicinal Herb (Pty ) Ltd to establish a Joint Venture entity. The JV entity was going to operate in Medicinal Cannabis
Production and Distribution in Africa. Due to COVID-19 delays Cann Global was not able to progress this JV. At this
time it is no longer being pursued. Should Cann Global wish to revisit this opportunity, it would need to restart discussions.
Accordingly, Cann Global has written-off the existing carrying value of this investment, represented by a now expired
option fee for exclusivity on further due diligence.
FY2021
Note 26. Equity accounted investee
2021
$
2020
$
Pharmocann Global Pty Ltd (Note i)
140,559
-
Canntab Therapeutics Australia (Note ii)
69,220
2
Total
209,779
2
i. On 1 July 2020, the Group acquired a 50% equity interest in the associate Pharmocann Global Pty Ltd. The 50%
owned joint venture with Pharmocann is developing a premium range of 100% plant-based skincare products.
2021
$
2020
$
Equity interest held
50%
-
Current assets
6,025
-
Non-current assets
25,000
-
Current liabilities
(3,519)
-
Non-current liabilities
(249,614)
-
Net liabilities
(222,108)
-
Group’s share of net liabilities (50%)
(111,054)
-
Revenue
-
-
Loss from continuing operations
(268,108)
-
Other comprehensive income
-
-
Total comprehensive income
(268,108)
-
Group’s share of total comprehensive income (50%)
(134,054)
-
Reconciliation of carrying value of investment
2021
$
2020
$
Share of net liabilities of associate
(111,054)
-
Other amounts invested
251,613
-
Carrying value of investment in associate
140,559
-
Financial Statements
ANNUAL FINANCIAL REPORT
P.74
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 27. Share Capital
2021
$
2020
$
Share capital on issue
5,707,766,970 (30 June 2020: 3,389,989,043) fully paid ordinary shares (no par value)
94,084,844
83,409,575
50,000,000 (2020: 50,000,000) performance shares (no par value)
750,000
750,000
94,834,844
84,159,575
a) Shares on Issue
Note 26. Equity accounted investee (continued)
2021
$
2020
$
Equity interest held
50%
50%
Current assets
43,697
-
Non-current assets
-
-
Current liabilities
-
-
Non-current liabilities
(116,253)
-
Net liabilities
(72,556)
-
Group’s share of net liabilities (50%)
(36,278)
-
Revenue
-
-
Loss from continuing operations
(72,556)
-
Other comprehensive income
-
-
Total comprehensive income
(72,556)
-
Group’s share of total comprehensive income (50%)
(36,278)
-
Reconciliation of carrying value of investment
2021
$
2020
$
Share of net liabilities of associate
(36,278)
-
Other amounts invested
105,498
2
Carrying value of investment in associate
69,220
2
ii. On 27 December 2017, the Group entered a 50:50 joint venture arrangement with Canntab Therapeutics Ltd, named
Canntab Therapeutics Australia (JV). The JV is involved in preparatory activities for the future distribution of
pharmaceutical grade medicinal cannabis tablets. The JV did not trade prior to 1 July 2020. Refer to Note 33 for disclosure
of future expenditure commitments to the JV at 30 June 2021.
Financial Statements
ANNUAL FINANCIAL REPORT
P.75
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 27. Share Capital (continued)
2021
Number
2021
$
2020
Number
2020
$
Ordinary shares
At the beginning of reporting period
3,389,989,043
83,409,575
1,612,435,425
28,850,842
Share based payments
38,394,766
-
36,704,533
-
Capital raising
1,565,498,480
7,827,492
170,000,000
5,950,000
Acquisition MCL 45%
-
-
1,154,250,000
40,398,750
Acquisition HHC 30%
-
-
40,540,541
1,418,919
Acquisition T12 100%
-
-
21,621,621
756,757
Investment in Cann Global South Africa
-
-
10,000,000
200,000
Collateral shares - L1 Capital
-
-
35,000,000
-
Share placement
-
-
59,000,000
668,560
Conversion of convertible securities into ordinary shares – L1 Capital
-
-
142,218,947
2,390,145
Collateral shares - Obsidian
-
-
25,000,000
-
Conversion of seed loans into ordinary shares
-
-
76,932,262
2,692,629
Conversion of loan into ordinary shares
32,000,000
160,000
6,285,714
176,000
Conversion of convertible securities into ordinary shares – L1 & Obsidian
681,824,681
3,394,798
-
-
Loss on equity conversion
-
175,031
-
-
Less: Cost of capital raising
-
(404,847)
-
93,028
Option reserve1
-
(477,925)
-
-
Options exercised
60,000
720
-
-
At reporting date
5,707,766,970
94,084,844
3,389,989,043
83,409,575
Performance shares
At the beginning of reporting period
50,000,000
750,000
50,000,000
750,000
At reporting date
50,000,000
750,000
50,000,000
750,000
5,757,766,970
94,834,844
3,439,989,043
84,159,575
Terms and Conditions of Issued Capital
ORDINARY SHARES
Ordinary shares have the right to receive dividends as declared by the board and, in the event of winding up the Company,
to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on
shares held. Ordinary shares entitle the holder to one vote either in person or by proxy at a meeting of the Company.
PERFORMANCE SHARES
Performance shares do not have the right to receive dividends as declared by the board and, in the event of winding up the
Company, do not participate in the proceeds from the sale of any surplus assets. Performance shares do not entitle the holder
to a vote either in person or by proxy at a meeting of the Company.
1 Fair value of free options attaching to capital raised during the year and recognised in a separate reserve.
Financial Statements
ANNUAL FINANCIAL REPORT
P.76
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 28. Reserves
(i) Share based payment reserve.
The share-based payments reserve records items recognised as expenses on share-based payments.
2021
$
2020
$
Balance as at 1 July
6,027,318
5,253,372
Equity settled share based payment – consulting fees
202,750
773,946
Balance as at 30 June
6,230,068
6,027,318
2021
$
2020
$
Balance as at 1 July
Fair value of free attaching options to capital raisings
477,925
-
Balance as at 30 June
477,925
-
(ii) Option reserve
The option reserve records the fair value of free attaching options issued to subscribers under the participation
terms of certain ordinary share capital issues.
Financial Statements
ANNUAL FINANCIAL REPORT
P.77
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
2021
N°
2020
N°
Description
At the beginning of reporting period
56,140,000
31,140,000
Granted
751,249,241
25,000,000
Forfeited
-
-
Exercised
(60,000)
-
Expired
-
-
Outstanding at the end of the reporting period
807,329,241
56,140,000
Exercisable at the end of the reporting period
807,329,241
56,140,000
b) Options on Issue
Note 27. Share Capital (continued)
(iii) Acquisition of Non-Controlling Interest Reserve
Additional acquisition of remaining 45% shares in Medical Cannabis Limited in accordance with the Replacement
Prospectus Transaction approved by shareholders’ meeting held on 2 July 2019. As MCL was already a controlled
entity of CGB at the time of the acquisition of the additional 45%, the additional equity consideration is recognised
directly in equity as a negative reserve as follows:
FY2021
Note 30. Trade and other payables
2021
$
2020
$
Current
Unsecured Liabilities
Other creditors
3,090
3,025
Unearned revenue
3,699
65,000
Trade payables
1,759,193
1,959,065
Provisions
124,982
-
Accrued expenses
70,000
40,890
1,960,964
2,067,980
Note 29. Other financial liabilities
2021
$
2020
$
CURRENT
Loan from MCL Director – unsecured (Notes 31d and 33)
-
211,113
Loan from other party – unsecured (Note 31d)
77,515
90,545
Convertible securities - L1 Capital pursuant to the financing agreement – secured (i)(iii)
-
85,200
Convertible securities - Obsidian pursuant to the financing agreement – secured (ii)(iii)
-
3,903,889
77,515
4,290,747
Financial Statements
ANNUAL FINANCIAL REPORT
P.78
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Note 28. Reserves (continued)
$
Fair value of shares issued as consideration for the acquisition
40,398,750
Add: NCI negative carrying value at acquisition date
2,099,509
Balance of Acquisition of NCI Reserve
42,498,259
(i) As per the amended agreement dated 4 April 2019, the L1 Capital convertible securities have a face value of $1.20,
inclusive of a $0.20 premium, and a maturity date of 15 November 2019. The convertible securities can be converted to
CGB shares at the amount of 85% of the average daily volume weighted average price (VWAP) of CGB shares during
the five actual trading days prior to the conversion notice date or otherwise settled in cash at the face value upon maturity.
Total options issued as a result of the agreement were 31,140,000. These options have an exercise price of $0.05
and an expiry date of 2 September 2022.
(ii) As per the agreement dated 9 March 2020, the Obsidian convertible securities have a face value of $1.15, inclusive
of a $0.10 premium, and a maturity date of 9 November 2020. The convertible securities can be converted to CGB
shares at the amount of 85% of the average daily volume weighted average price (VWAP) of CGB shares during the five
actual trading days prior to the conversion notice date or otherwise settled in cash at the face value upon maturity.
Total options issued as a result of the agreement were 25,000,000. These options have an exercise price of $0.025 and
an expiry date of 9 March 2023.
(iii) The convertible securities were converted into ordinary shares during the financial year. Refer also Notes 27 and 34(c).
FY2021
Note 31. Controlled entities
Country of
incorporation
2021
$
2020
$
Controlled entities consolidated
Parent entity:
Cann Global Limited
Australia
100%
100%
Subsidiaries of Cann Global Limited
South Johnstone Bauxite Pty Ltd
Australia
100%
100%
Volcan Queensland Bauxite Pty Ltd
Australia
100%
100%
Medical Cannabis Limited
Australia
100%
100%
Medical Cannabis Research Group Pty Ltd
Australia
100%
100%
Vitahemp Pty Ltd
Australia
95%
95%
Vitaseeds Pty Ltd
Australia
100%
100%
Vitacann Pty Ltd
Australia
100%
100%
T12 Holdings Pty Ltd
Australia
100%
100%
Hemp Hulling Co (QLD) Pty Ltd
Australia
55%
55%
Cann Global Asia Pty Ltd
Australia
55%
55%
Cann Global Thailand Pty Ltd
Australia
55%
55%
Medical Cannabis (Cambodia) Co., Ltd
Cambodia
51%
51%
Percentage owned (%)
Note 32. Non-controlling interest
2021
$
2020
$
Non-controlling interest in equity – Balance as at 1 July
(60,042)
(2,108,811)
Non-controlling interest in share capital raising – Medical Cannabis Limited
-
2,087,439
Non-controlling interest in share capital raising – Cann Global Thailand Pty Ltd
450
-
Transfer from accumulated losses to non-controlling interest
-
-
(Loss) attributable to non-controlling interest
(149,116)
(38,670)
Total non-controlling interests balance as at 30 June
(208,708)
(60,042)
Financial Statements
ANNUAL FINANCIAL REPORT
P.79
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 33. Commitment for expenditure
2021
$
2020
$
Exploration and evaluation (Note i)
– not later than 1 year
214,400
135,780
– later than 1 year but no later than 5 years
-
145,780
Research and development
Canntab therapeutics (Note ii)
– not later than 1 year
-
-
– later than 1 year but no later than 5 years
1,191,869
1,297,365
TRDF Israel Research (Note iii)
– not later than 1 year
-
900,000
– later than 1 year but no later than 5 years
-
285,714
i. This relates to exploration and evaluation activity for mining tenement EPM18463.
ii. On 27 December 2017 CGB entered into a joint venture agreement with Canntab Therapeutics Ltd. Under the
agreement, each party will contribute $1.4 million (USD$1 million).
iii. On 16 February 2018 Medical Cannabis Research Group and The Research Development Foundation entered into
a research funding agreement. Under the agreement, MCRG is required to pay $4.1 million (USD$2.87 million) over
a four-year period. During the half-year Cann Global has chosen to continue research and trials for medicinal
cannabis use for Multiple Sclerosis in Australia and has terminated its research agreement with TRDF early reducing
its commitment for expenditure.
Financial Statements
ANNUAL FINANCIAL REPORT
P.80
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 34. Cash flow information
2021
$
2020
$
a. Reconciliation of cash flows from operating activities
Loss for the year
(4,770,484)
(8,050,808)
Non-cash flows in loss
Share of loss of equity-accounted investee - net of tax
170,332
-
Depreciation and amortisation
155,018
79,138
Impairment of seedbank
138,000
-
Impairment of Investment
200,000
-
Exploration written off
308,604
-
Security deposit
(1,362)
(500)
Share based payments expense
202,750
773,946
Impairment of receivables
242,719
(79,258)
Finance cost
99,495
2,008,575
Consultancy fees
238,350
-
Advertising expense
145,375
-
Legal fees
394,838
-
(Gain/loss) on equity settled liabilities
(518,755)
399,345
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries
Decrease in other receivables
4,968
-
Decrease/(increase) in trade debtors
167,751
(156,098)
Decrease/(increase) in prepayments
91,579
(146,729)
(Increase) in rental bond
(6,358)
-
Decrease in GST receivable
36,193
238,105
Decrease/(increase) in inventory
15,457
(198,057)
(Decrease)/increase in trade payables, accruals and other creditors
3,835
291,079
(Decrease)/increase in unearned revenue
(61,301)
65,000
Net cash used in operating activities
(2,742,998)
(4,776,262)
b. Non-cash investing and financing activities
2021
$
2020
$
Conversion of convertible notes and loans into ordinary shares - refer note 27 and 29
3,729,829
5,258,775
Option exercised - refer note 27
720
-
Consulting fees – ordinary shares granted - refer note 13
202,750
773,846
Financial Statements
ANNUAL FINANCIAL REPORT
P.81
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 34. Cash flow information (continued)
c. Changes in liabilities arising from
financing activities
Seed
capital loans
$
Andrew
Kavasilas
$
L1
Capital
$
Meyer
Gutnick
$
Other
loan
$
Obsidian
$
Total
$
Balance at 30 June 2019
3,638,575
694,021
1,804,035
115,037
153,333
-
6,405,001
Cash movements
Net cash provided by financing activities:
Convertible securities Issued
-
-
2,833,200
-
-
-
2,833,200
Loans repaid
(1,758,000)
(482,908)
-
(115,037)
-
-
(2,355,945)
Other loan advanced
-
-
-
-
90,545
-
90,545
Non-cash movements::
Assignment to Obsidian
-
-
(3,772,000)
-
-
3,772,000
-
Finance cost recognised
762,055
-
1,091,968
-
22,667
131,889
2,008,579
Loss on equity settled liability
-
-
399,345
-
-
-
399,345
Conversion to shares
(2,692,630)
-
(2,390,145)
-
(176,000)
-
(5,258,775)
Other
50,000
-
118,797
-
-
-
168,797
Balance at 30 June 2020
-
211,113
85,200
-
90,545
3,903,889
4,290,747
Non-cash movements:
Foreign exchange gain on conversion of
convertible notes
-
-
-
-
-
(594,292)
(594,292)
Conversion to shares
-
(160,000)
(85,200)
-
-
(3,309,597)
(3,554,797)
Cash movements:
Loans repaid
-
(51,113)
-
-
(16,817)
-
(67,930)
Other loan advanced
-
-
-
-
3,787
-
3,787
Balance at 30 June 2021
-
-
-
-
77,515
-
77,515
Note 35. Accumulated losses
2021
$
2020
$
Balance as at 1 July
(37,870,544)
(29,858,406)
Loss for the year
(4,770,484)
(8,050,808)
Non-controlling interest in operating loss
149,116
38,670
Balance as at 30 June
(42,491,911)
(37,870,544)
Financial Statements
ANNUAL FINANCIAL REPORT
P.82
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 36. Parent entity disclosures
As at and throughout the financial year ending 30 June 2021 the parent entity of the Group was Cann Global Limited.
Note 37. Company details
The registered office of the Company and principal place of business is:
Cann Global Limited
Level 21, 133 Castlereagh Street
SYDNEY NSW 2000
Financial Position of parent entity at year end
2021
$
2020
$
Assets
Current assets
10,608,407
7,559,344
Non-current assets
150,885
209,311
Total assets
10,759,292
7,768,655
Liabilities
Current liabilities
629,358
646,762
Non-current liabilities
-
3,989,089
Total liabilities
629,358
4,635,851
Total equity of the parent entity comprising of
Issued capital
94,834,844
84,159,575
Share based payment reserve
6,257,876
5,577,201
Accumulated losses
(90,962,786)
(86,603,972)
Total equity
10,129,934
3,132,804
Financial performance
Loss for the year
(4,358,814)
(58,083,842)
Other comprehensive income
-
-
Total comprehensive loss for the year
(4,358,814)
(58,083,842)
Financial Statements
ANNUAL FINANCIAL REPORT
P.83
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Note 38. Capital Management Policies
Note 39. Subsequent Events
The Group’s capital management objectives are to ensure the Group’s ability to continue as a going concern. The
Group monitors capital on the basis of the carrying amount of equity. In order to maintain or adjust the capital, the
Group may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.
The amounts managed as capital by the Group for the reporting periods under review are summarised as follows:
Change to Board Structure
On the 30 August 2021, the company announced the retirement of Executive Chair, Pnina Feldman and the appointment
of independent, non-executive chair David Austin. The Board has granted Mrs Feldman 70,000,000 shares for her long term
service, as per the terms of her contract. This share issuance, as disclosed in the announcement to market dated 30th
August 2021, will be subject to shareholder approval and will be put to shareholders at the Annual General Meeting to be
held in November 2021. Concurrent with Mrs Feldman’s retirement, the Company has terminated its arrangements with
Australian Gemstone Mining Pty Ltd (AGMPL), a related party of Mrs Feldman.
Management service agreement
The Management Service Agreement with Australian Gemstone Mining Pty Limited was terminated effective from
30 August 2021.
Coronavirus (COVID-19) pandemic
The impact of the Coronavirus (COVID-19) pandemic is ongoing and it is not practicable to estimate the potential impact
after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian
Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any
economic stimulus that may be provided.
Canntab sales
Having now received the results from the mandatory Australian laboratory testing on the two CBD Canntab prod-
ucts imported, sales can now commence.
Plant-funding program
CGT has received the first two payments from its UK investor in the plant-funding program. No other matter or
circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the Group’s
operations, the results of those operations or the Group’s state of affairs in future financial years.
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly
affect the Group’s operations, the results of those operations or the Group’s state of affairs in future financial years.
2021
$
2020
$
Total equity
16,343,959
9,758,048
Capital
16,343,959
9,758,048
Financial Statements
ANNUAL FINANCIAL REPORT
P.84
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FY2021
Financial Statements
In the directors’ opinion:
1. the financial statements and accompanying notes set out on pages 42 to 84 , and the Remuneration Report
on pages 34 to 40 of the Directors’ Report, are in accordance with the Corporations Act 2001 and:
a) comply with Accounting Standards and the Corporations Regulations 2001; and
b) give a true and fair view of the Group’s financial position as at 30 June 2021 and of its performance for the
financial year ended on that date;
2. the financial statements and notes also comply with International Financial Reporting Standards, as disclosed
in Note 2(a) to the financial statements;
3. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
The directors have been given the declarations by the chief executive officer and chief financial officer required
by Section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors. On behalf of the directors:
Sholom Feldman, Managing Director
Dated this 30th September 2021
For the year ended 30 June 2021
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Directors’ declaration
FY2021
ANNUAL FINANCIAL REPORT
P.85
86
Independent Auditor’s Report to the Members of Cann Global Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Cann Global Limited (the Company and its subsidiaries (the Group)),
which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated
statement of profit or loss and other comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
i)
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial
performance for the year then ended; and
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the ‘auditor’s responsibilities for the audit of the financial report’ section
of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the
ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit
of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the Directors of the Company, would be in the same terms if given to the Directors as at the time of this
auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
87
Key audit matter
How our audit addressed the key audit matter
Impairment of Goodwill
Refer to note 2e Basis of preparation - Key
estimates
and
judgements
and
note
24
Intangible assets.
As at 30 June 2021, the Group has goodwill of
$4.3m as a consequence of past acquisitions as
disclosed in note 24.
The recoverable amount of goodwill is based on
the Directors’ estimate of value in use of the cash
generating units (CGU's) to which it relates.
Medical Cannabis Ltd (MCL) is considered to be
one CGU, Hemp Hulling Co (QLD) Pty Ltd and
T12 Holdings Pty Ltd (HHC&T12) are combined
considered to be the other CGU.
In determining the recoverable amount of these
CGUs, the Group has adopted a value-in-use
calculation using a discounted cash flow model,
based on a 1 year projection period approved by
management and extrapolated for a further 4
years using a steady rate, together with a
terminal value.
As set out in Note 2e and note 24, the
assessment of the recoverable amount of
goodwill requires significant judgements. Key
assumptions included:
future growth rates applied
expected gross margin;
future operating costs and overheads; and
discount rate applied.
Our procedures included, amongst others:
We assessed the Group's categorisation of the
CGU's and the allocation of goodwill to the
carrying value of the CGU's;
We assessed the cash flow forecasts and
assumptions used by management based on
our understanding of the entity by:
i)
For HHC&T12, comparing the budget
approved by management for FY22
with actual results in the current year to
determine the reasonableness of the
budget;
ii)
Assessing key assumptions by vouching
them to supporting documentation and
comparing them with expectations
developed by audit;
iii)
Testing the mathematical accuracy of
application of those key assumptions in
the impairment models; and
iv)
Performing sensitivity analysis on the
growth and discount rates.
We assessed the appropriateness of the
disclosure in note 24 to the financial
statements.
Other Financial Liabilities - Convertible
Securities
Refer to note 27(a) - Share capital, note 29 -
Other financial liabilities, note 8 - Foreign
currency exchange gain realised, note 34(b) -
Non-cash investing and financing activities and
note 34(c) - Changes in liabilities arising from
financial activities.
During the year ended 30 June 2021, the Group
has fully converted the convertible securities
carried forward from FY20 of $4m. Convertible
securities are considered to be a key audit matter
due to:
Our procedures included, amongst others:
We reviewed the amount of share capital
resulting from the conversion to ensure its
compliance with underlying agreements for the
convertible securities;
We verified the quantity of ordinary shares
issued from the conversion with the share
registry;
We recalculated loss on conversion expense of
all convertible securities and realised foreign
exchange gain upon translation of US dollar
denominated convertible securities at their
conversion time in accordance with underlying
agreements to ensure the accuracy of these
amounts recorded; and
88
Key audit matter
How our audit addressed the key audit matter
the materiality of the transactions and
carrying values involving convertible
securities; and
complexities involved in the recognition
and measurement of convertible security
conversions to equity.
We assessed the appropriateness of the
disclosure in notes 27(a), 29, 34(b) & 34(c) to
the financial statements.
Other information
The Directors are responsible for the other information. The other information comprises the information
in Cann Global Limited’s annual report for the year ended 30 June 2021, but does not include the financial
report and the auditor’s report thereon. Our opinion on the financial report does not cover the other
information and we do not express any form of assurance conclusion thereon. In connection with our
audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the other
information we are required to report that fact. We have nothing to report in this regard.
Directors’ responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the Directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, 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 responsibility for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is 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 the Australian Auditing Standards 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 this financial report.
A further description of our responsibilities for the audit of the financial report is located at The Australian
Auditing and Assurance Standards Board website at:
www.auasb.gov.au/admin/file/content102/c3/ar2_2020.pdf. This description forms part of our auditor’s
report.
89
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 34 to 40 of the Directors’ Report for the year
ended 30 June 2021.
In our opinion, the Remuneration Report of Cann Global Limited for the year ended 30 June 2021, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
Nexia Sydney Audit Pty Ltd
Stephen Fisher
Director
Dated: 30 September 2021
The number of holders holding less than a marketable parcel of fully paid ordinary shares as 17 september
2021 is 6,943.
1 – 1,000
1,001 –
5,000
5,001 –
10,000
10,001 –
100,000
100,00
1 and
over
Total
Fully Paid Ordinary Shares (CGB)
153
64
859
5,374
5.615
12,065
Additional
Information
SHAREHOLDER INFORMATION
AS AT 16 SEPTEMBER 2021
Additional information required by the asx Limited Listing rules and not disclosed elsewhere in this report is
set out below:
Distribution schedule and number of holders of equity securities
As at 16 September 2021
FY2021
P.90
ANNUAL FINANCIAL REPORT
SHAREHOLDER INFORMATION
AS AT 16 SEPTEMBER 2021
Additional
Information
FY2021
P.91
ANNUAL FINANCIAL REPORT
N°
%
1.
LBT CORP PTY LTD
279,358,358
4.88
2.
VOLCAN AUSTRALIA CORPORATION
236,718,750
4.13
3.
FIRST STATE PTY LIMITED
232,731,081
4.06
4.
TRANSGLOBAL CAPITAL PTY LTD
146,934,652
2.57
5.
020428 PTY LTD
85,000,000
1.48
6.
MR CRAIG ALEXANDER PURVES COCHRAN
51,101,088
0.89
7.
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
43,069,457
0.75
8.
MR ANDREW KAVASILAS
39,360,124
0.69
9.
GVC INTERNATIONAL INVESTMENT PTY LTD
39,200,000
0.68
10.
MR MICHAEL ROBERT HODGETTS
23,842,858
0.42
11.
MARTIN PLACE SECURITIES NOMINEES PTY LTD
22,217,726
0.39
12.
BNP PARIBAS NOMINEES PTY LTD
20,691,340
0.36
13.
MR JONATHAN BRETT ISAACS
20,025,267
0.35
14.
SUPERHERO NOMINEES PTY LTD
19,247,060
0.34
15.
GEOULA PTY LTD
19,000,000
0.33
16.
MR KEVIN BRUCE WYBRON + MS HALINA MARGARET WYBRON
18,195,488
0.32
17.
MR PRAMOD ADHIKARI
17,000,000
0.30
18.
MR KARL BAARDA
15,982,000
0.28
19.
MR JACKY CHANG
15,850,000
0.28
20.
MR LEI XU
15,110,000
0.26
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
1,360,635,249
24.03
Total Remaining Holders Balance
4,364,851,536
75.97
20 largest holders of quoted equity securities
As at 16 September 2021
Additional
Information
FY2021
P.92
ANNUAL FINANCIAL REPORT
Substantial shareholders
Substantial shareholders in Cann Global Limited and the number of equity securities over which the
substantial shareholder has a relevant interest as disclosed in substantial holding notices given to the
company are listed below:
There are no shareholders with over 5% interest in the Company.
Unquoted Securities
Unquoted securities on issue as at 16 september 2021:
Names of persons holding more than 20% of a given class of
unquoted securities (other than employee options)
As at 16 September 2021
Unquoted Securities
N° on issue
Exercise Price
Expiry Date
Unquoted Options
751,189,241
$0.012
31/01/2022
Unquoted Options
31,140,000
$0.050
19/07/2022
Unquoted Options
25,000,000
$0.025
24/03/2023
Performance shares
50,000,000
-
30/05/2022
Security
Name
Number of Securities
Unquoted Options
L1 Capital
56,140,000
Performance shares
Andrew Kavasilas
50,000,000
SHAREHOLDER INFORMATION
AS AT 16 SEPTEMBER 2021
Restricted Securities
As at 16 September 2021
Shares subject to asx-imposed escrow restrictions:
Nil ordinary shares currently on issue are subject to escrow.
Voting Rights
All fully paid ordinary shares carry one vote per ordinary share without restriction. unlisted options have
no voting rights.
Schedule of Mineral Tenements
As at 16 September 2021
Project Name
Project number
Status
Interest Held
%
Expiry date
Eastern Australia Bauxite Projects
South Johnstone
EPM18463
Granted
100%
25/05/2022
South Johnstone
MDL2004
Granted
100%
31/10/2021
Additional
Information
FY2021
P.93
ANNUAL FINANCIAL REPORT
SHAREHOLDER INFORMATION
AS AT 16 SEPTEMBER 2021
DIRECTORS
David Austin, Independent Chair
Sholom Feldman, Managing Director
Jonathan Cohen, Non Executive Director
John Easterling, Non Executive Director
COMPANY SECRETARY
Alexander Neuling
REGISTERED OFFICE
Level 21, 133 Castlereagh Street
SYDNEY, NSW 2000
Telephone: (02) 8379 1832
Email: sfeldman@cannglobal.com.au
AUDITOR
Nexia Sydney Audit Pty Ltd
Level 16, 1 Market Street
SYDNEY, NSW 2000
Telephone: (02) 9251 4600
SHARE REGISTRY
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
PERTH, WA 6000
Telephone: (08) 9323 2000
BANKERS
Bank of Western Australia
SYDNEY, NSW 2000
National Australia Bank
SYDNEY, NSW 2000
STOCK EXCHANGE LISTING
The Company is listed on the Australian Securities
Exchange Ltd (ASX)
AUSTRALIAN SECURITY
EXCHANGE CODE
CGB
WEBSITE
www.cannglobal.com.au
FY2021
P.94
ANNUAL FINANCIAL REPORT
Corporate
Directory
ANNUAL FINANCIAL REPORT FY2021
Phone : (02) 8379 1832
Address :
Level 21, 133 Castlereagh Street
Sydney, NSW 2000
Email : info@cannglobal.com.au
Web : www.cannglobal.com.au
CONTACT :