ASX Announcement
th
28
February, 2017
Highlights
Full-Year Results Report
•
•
:
Significant progress with development and commercialisation plans for the
first human health and animal health nutraceutical products, putting Creso in
a strong position to achieve its targets in FY2017.
Several binding letters of intent (LOIs) and collaborative agreements secured
with various partners for both the human and animal health products.
• Product development for the human health product moved to pilot
production; regulatory strategy is established and regulatory filings are being
prepared.
•
• Following the end of the financial year, Creso obtained the first-ever EU
registration for two CBD-based animal feed nutraceutical products for
commercialisation in the global companion animal market.
In February, Creso expanded its Australian presence, securing an Australian
LOI with pharmaceutical group Health House International Pty Ltd (Health
House International) for the import and sale of Canadian cannabis products in
the Australian market.
Creso Pharma Limited
year ending 31 December 2016.
(ASX:CPH, the “Company”) is pleased to provide its financial results for the full
Creso officially started trading on the Australian Securities Exchange under the ticker “CPH” in October
2016, following a successful A$5 million capital raising that was significantly oversubscribed.
Operational Overview
During FY2016, Creso Pharma made significant progress with its development and commercialisation
plans for its first human health and animal health nutraceutical products, putting it in a strong position to
achieve further key milestones in FY2017.
In February, Creso expanded its Australian presence, securing an Australian letter of intent (LOI) with
pharmaceutical group Health House International Pty Ltd (Health House International) for the import and
sale of Canadian cannabis products in the Australian market.
Health House International will initially conduct a trial importation of cannabis oil products from
Canadian-based third-parties introduced by Creso. Following success of the trial in accordance with all
Australian Laws and regulations, the parties agree to enter into an agreement for an initial two-year term
(with an option of extension), subject to Health House International purchasing and importing the agreed
minimum quantities of product.
Creso will act as the exclusive facilitator for the import of the products into Australia and earn a
facilitation fee on each Health House International import.
Animal health products
Post the reporting period, Creso and its commercialisation partner, Greveling Holding BV (Greveling)
obtained the first-ever and unique EU registration for two proprietary formulation animal feed CBD-based
nutraceutical products for commercialisation in the global companion animal market.
The registration paves the way for Creso to sell the two nutraceutical products globally and the first-
mover advantage will help Creso capture a leading share of the global companion animal market and a
leading market share of the hemp-derived animal health market worldwide. Creso aims to launch the
products in July 2017.
This followed Creso securing a binding LOI in November with Greveling and Swiss animal health company
A&H Health Switzerland, to develop and commercialise Creso’s innovative cannabidiol (CBD)-rich hemp-
derived nutraceutical products for the global pet care market.
The veterinary health market represents an attractive opportunity for Creso with the market estimated
1
to be worth $US39.7 billion by 2021
. Currently, the number of treatment options available to
veterinarians are limited and available treatments are often human therapeutics that are poorly adapted
to animals.
For the animal health product, Creso also initiated observational field studies in Switzerland and the
Netherlands to gather data which will be used to support the company’s development and
commercialisation efforts.
Human health products
Product development for the first human health nutraceutical product has moved to pilot production, and
Creso is preparing the relevant regulatory filings. Also during the year, formulation development and
analytical tests were successfully concluded.
As well as in the animal health products, the Company also made good progress towards
commercialisation preparation of the human health products, with several letters of intent (LOIs) already
signed and various others being prepared for partners in Switzerland, Europe and Latin America.
Creso also initiated collaboration with patient organisations for its human health products for anxiety and
stress, which are progressing significantly in line with a 2018 commercial availability timeline. The
patient organisations will play a key role in supporting the treatment rationale for the products.
1
Source: Mordon Intelligence, https://www.mordorintelligence.com/industry-reports/global-veterinary-animal-healthcare-market-
industry?gclid=Cj0KEQjwhbzABRDHw_i4q6fXoLIBEiQANZKGW4D-M9PWyi7pnUEiajZ9YB0ZbK-f90LaU9pfumyAl8caArjj8P8HAQ.
Hemp-Industries’ second shipment
Also during the year, Creso’s subsidiary, Hemp-Industries, successfully delivered its second shipment
of hemp protein to one of the largest bakeries in Slovakia, Pekárne Liptovský Hrádok, s.r.o. (PLH).
Hemp Industries is anticipating growing demand for its product from PLH due to increasing public
awareness of the health benefits of hemp seeds, which are regarded as the next big thing in the
“superfood” industry for its high content of amino acids, omega acids, protein and other beneficial
substances. The hemp protein is used by PLH to produce several top-quality protein bar products, which
are sold in leading grocery chains like Tesco, Kaufland and others.
Corporate and Financials
non-cash cost
of $1.8 million for the share based payment expenses associated with options and performance rights issued
The Company’s net loss for the full year to 31 December 2016 was $4,584,239 (including a
during the year).
The net loss of the previous corresponding period of $11,572. Total revenues for the
period were $8,022 up 100% from the previous corresponding period.
The Appendix 4E report attached to this report contains the Company’s full financial results for FY2016.
Outlook
The achievements made during FY2016 put Creso in a strong position in terms of its development and
commercialisation efforts and the Company expects to achieve further key milestones in FY2017.
In terms of its animal health products, the award of EU registration for Creso’s two cannabidiol (CBD)-
based proprietary formulation animal feed nutraceutical products gives the company a first-mover
advantage in the growing veterinary health market.
Creso is also making further solid progress towards commercialisation preparation of both its human
health and animal health products.
“The success achieved during this year in our development and commercialisation preparations for both
our human and animal nutraceutical products makes us very confident of further success in the 2017
financial year. We expect to achieve further significant progress over the months ahead, both in terms of
product development and additional commercialisation agreements,” said Creso Pharma Group CEO and
Co-Founder, Dr. Miriam Halperin Wernli.
---END---
Investor Enquiries:
Media Enquiries:
Gabriella Hold
M: 0411 364 382
E: gabriella.hold@mcpartners.com.au
Corporate Queries:
Harrison Polites
M: 0409 623 618
E: harrison.polites@mcpartners.com.au
EverBlu Capital
Level 39, Aurora Place
88 Phillip Street, Sydney, NSW 2000
E: info@everblucapital.com
P: +61 2 8249 4371
About Creso Pharma
Creso Pharma brings pharmaceutical expertise and methodological rigour to the world of medical
cannabis and strives for the highest quality in its products. It is the leader in cannabidiol (CBD)
innovation and develops cannabis- and hemp-derived therapeutic-grade CBD nutraceuticals and medical
cannabis products with wide patient reach for human and animal health. Creso uses GMP development
and manufacturing standards for its products as a reference of quality excellence with initial product
registrations in Switzerland. It has worldwide rights for a number of unique and proprietary innovative
delivery technologies which enhance the bioavailability and absorption of cannabinoids. The Company is
already generating revenues via its subsidiary, Hemp-Industries.
CRESO PHARMA LIMITED
APPENDIX 4E – PRELIMINARY FINANCIAL REPORT
FOR THE YEAR ENDED 31 DECEMBER 2016
ASX APPENDIX 4E
CRESO PHARMA LIMITED
ABN: 89 609 406 911
RESULTS FOR ANNOUNCEMENT TO THE MARKET
FOR THE YEAR ENDED 31 DECEMBER 2016
(Previous corresponding period is the year ended 31 December 2015)
KEY INFORMATION
31-Dec-16
31-Dec-15
$
$
% Change
Revenue from ordinary activities
8,022
-
100%
Loss from ordinary activities after tax attributable to
members
Net loss attributable to members
(4,584,239)
(4,584,239)
(11,572)
(11,572)
395%
395%
DIVIDEND INFORMATION
No dividend has been proposed or declared.
NET TANGIBLE ASSETS PER SECURITY
31-Dec-16
31-Dec-15
Net tangible assets per security
0.07
-
EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
31-Dec-16
31-Dec-15
Cents
Cents
(14.42)
(14.42)
(1.28)
(1.28)
CONTROL GAINED OR LOST OVER ENTITIES IN THE PERIOD
During the year, the Group acquired Hemp-Industries s.r.o. Hemp-Industries owns an existing hemp growing
operation, outsourced CBD extraction and CBD product sales activities. The Hemp-Industries grow operation
has been in existence for 3 years and is run by a professional team.
This report is based on, and should be read in conjunction with, the attached financial report for the year
ended 31 December 2016 for Creso Pharma Limited, which has been audited by RSM Australia Pty Ltd.
CRESO PHARMA LIMITED
ACN 609 406 911
Annual Report for the
Year Ended 31 December 2016
Annual Report
For the year ended 31 December 2016
Contents
Creso Pharma Limited – Annual Report 2016
Contents
CORPORATE DIRECTORY ..................................................................................................................................................... 3
CHAIRMAN'S REPORT…………………………………………………………………………………………………………………………………………………….4
CEO'S REPORT……………………………………………………………………………………………………………………………………………………………….6
DIRECTORS’ REPORT ........................................................................................................................................................... 8
AUDITOR’S INDEPENDENCE DECLARATION ...................................................................................................................... 22
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ............................................ 23
CONSOLIDATED STATEMENT OF FINANCIAL POSITION .................................................................................................... 24
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ..................................................................................................... 25
CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................................................................. 26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ............................................................................................... 27
DIRECTORS’ DECLARATION ............................................................................................................................................... 52
INDEPENDENT AUDITOR’S REPORT ................................................................................................................................ ..53
CORPORATE GOVERNANCE STATEMENT .......................................................................................................................... 56
ASX ADDITIONAL INFORMATION .................................................................................................................................... ..57
2 | P a g e
Corporate Directory
Board of Directors
Mr Boaz Wachtel
Dr Miriam Halperin Wernli
Mr Adam Blumenthal
Mr James Ellingford
Mr Simon Buckingham
(Executive Chairman)
(Managing Director)
(Non-Executive Director)
(Non-Executive Director)
(Non-Executive Director)
Secretary
Ms Sarah Smith
Registered Office
C:\ Mirador Corporate Pty Ltd
Suite 4, Level 1
11 Ventnor Avenue
West Perth WA 6005
Telephone: 08 6381 0054
Facsimile: 08 9481 4950
Website: www.cresopharma.com
Stock Exchange Listing
Listed on the Australian Securities Exchange (ASX Code: CPH)
Auditors
RSM Australia Partners
8 St Georges Terrace
Perth WA 6000
Solicitors
Steinepreis Paganin
Level 4, Next Building
16 Milligan Street
Perth WA 6000
Bankers
Westpac Banking Corporation
Level 13, 109 St Georges Terrace
Perth WA 6000
Share Registry
Automic Share Registry
Level 1, 7 Ventnor Avenue
West Perth WA 6872
Telephone: 08 9324 2099
Facsimile: 08 9321 2337
Creso Pharma Limited – Annual Report 2016
Corporate Directory
3 | P a g e
Chairman’s Report
Dear Shareholders,
Creso Pharma Limited – Annual Report 2016
Chairman’s Letter
On behalf of the Creso Pharma Board, it is with great pleasure that I present this inaugural Annual Report to our
investors.
Our Company brings a unique point of difference to the world of medical cannabis, bringing both pharmaceutical
expertise and methodological rigour to the field. We leverage both science and research in order to develop, register
and commercialise innovative therapeutic approaches targeting the endocannabinoid system.
This important system regulates a number of physiological processes in both humans and animals such as
cardiovascular, digestive, immune and nervous system functions. The health of individuals and animals is dependent on
it functioning at optimum levels.
Creso is leading the development of cannabidiol (CBD) – one of the active cannabinoids found in the cannabis plant –
to assist with the optimum functioning of the endocannabinoid system. Unlike its rivals, the Company uses full plant
extracts with full spectrum cannabinoid blends for improved safety and efficacy. These products include a number of
cannabis- and hemp-derived therapeutic-grade nutraceuticals and medical cannabis products with a broad range of
applications in both human and animal health.
The market potential and range of applications for our products is vast. Medical conditions that we aim to treat include
pain and anxiety disorders, metabolic disorders and inflammatory disorders in both humans and companion animals.
Our innovative CBD fully plant-based nutraceutical products are also non-psychoactive, as they contain only trace
amounts of THC, the psychoactive component of the cannabis plant.
Another point of difference in our treatments is that we are focusing on unique and innovative product delivery systems.
These delivery systems, which include buccal absorption (through the lining of the cheek) and sublingual absorption
(under the lining of the tongue), greatly enhance the bioavailability and absorption of cannabinoids. We have exclusive
worldwide licences to cutting-edge Swiss and German drug delivery technologies from global pharmaceutical companies
for these delivery methods.
Our products are also manufactured to the highest Good Manufacturing Practice (GMP) standards and Creso is
committed to maintaining the highest levels of compliance across its supply chain. Furthermore, our standardised
dosage forms are specifically designed and adapted for human health and animal health.
This year saw our Company achieve a major milestone in terms of its corporate development, namely our listing on the
Australian Securities Exchange in October 2016 following our significantly oversubscribed $5 million capital raising. The
funds raised from the initial public offer have put us in a strong financial position to further develop and commercialise
our nutraceutical product ranges for both humans and animals.
We have made substantial progress in the few short months since our listing in both our development and
commercialisation plans for our first human and animal health nutraceutical products, putting our Company in a strong
position to achieve our targets over the coming financial year.
Since listing, we have secured a number of binding letters of intent (LOIs) and collaborative agreements with various
partners for both the human and animal health products.
Product development for the human health product has also moved to pilot batch production and regulatory procedures
are in place. For our animal health product, we also obtained the first-ever EU registration for two CBD-based animal
feed nutraceutical products for commercialisation in the global companion animal market.
Creso also successfully expanded its Australian presence, securing an Australian LOI for the import and sale of Canadian
cannabis products in the Australian market.
I would like to thank our Chief Executive Officer and fellow Co-Founder, Dr. Miriam Halperin Wernli, my fellow Board
members and the executive management team for their hard work and dedication over the financial year and especially
over the past few months following our public listing.
4 | P a g e
Creso has a highly-experienced Board and management team with the right expertise and skill set to take the Company
forward as we continue to progress our commericalisation efforts for our unique and innovative products.
Finally, on behalf of the Board, we would like to thank our shareholders for your ongoing support and backing of Creso’s
vision. I look forward to updating you on our progress and achievements in the months ahead.
Creso Pharma Limited – Annual Report 2016
Chairman’s Letter
Yours sincerely,
Boaz Wachtel
Chairman
5 | P a g e
CEO’s Report
Creso Pharma Limited – Annual Report 2016
CEO’s Report
I am extremely pleased to report on Creso’s activities for the 2016 financial year, especially over the past few months
since we successfully listed on the Australian Securities Exchange in October 2016.
The listing was a significant milestone for our Company with the funds raised from the initial public offer allowing us to
advance the development of our innovative CBD hemp full-plant extract nutraceutical products for both human and
animal health.
In just a few short months, we have made significant progress towards the development, registration and eventual
commercialisation of these unique products, which puts us in a strong position to achieve our targets in the 2017
financial year.
Several LOIs and collaborative agreements are being developed with various potential commercialisation partners in
Switzerland, Europe and Latin America for both our human and animal health nutraceutical products which target a
range of medical conditions, including pain and anxiety disorders and metabolic and inflammatory conditions.
Human health products
During FY2016, product development for the first human health product moved to pilot production after we successfully
concluded formulation development and analytical tests.
This first CBD hemp full-plant extract nutraceutical product will provide people with nutritional support to their
endocannabinoid system to manage situations of everyday anxiety and stress, with the body of evidence supporting
CBD as an effective treatment for anxiety being particularly strong. Existing CBD-based products are sub-optimal as they
are not pharmaceutical grade and there is a lack of proper standardisation both in terms of dosage and formulation,
while alternative pharmacological synthetic treatments are mainly benzodiazepines, which have a problematic safety
profile.
Following pilot production, Creso plans stability testing in July 2017 before moving into full-scale production and
regulatory submission to health authorities. We have developed a strong branding and marketing plan ahead of our
expected commercial launch of the product in the first half of 2018. The initial launch will be in Switzerland, followed
by key European and Latin American countries.
Over the financial year, we also made good progress towards commercialisation preparations of the human health
product, with several letters of intent (LOIs) already signed and various others being prepared for partners in
Switzerland, Europe and Latin America.
Animal health products
In January this year, Creso and its commercialisation partner, Greveling Holding BV obtained the first-ever and unique
EU registration for two proprietary formulation animal-feed CBD-based nutraceutical products for commercialisation in
the global companion animal market.
This milestone gives Creso a first-mover advantage and paves the way for Creso to sell these products globally and
capture a leading share of the companion animal market and the hemp-derived animal health market worldwide.
The veterinary health market represents an attractive opportunity for Creso. The number of treatment options available
are limited and are often human therapeutics that are poorly adapted to animals. Creso’s products provide a strong
alternative to existing therapies for behavioural disorders, pain, arthritis and inflammation, and contain very low THC
(the psychoactive component of cannabis) at levels below legal thresholds.
The registration followed Creso securing a binding LOI in November with Greveling and Swiss animal health company
A&H Health Switzerland, to develop and commercialise these innovative products.
6 | P a g e
Creso Pharma Limited – Annual Report 2016
CEO’s Report
Hemp‐Industries’ second shipment
Also during the financial year, Creso’s subsidiary, Hemp-Industries, successfully delivered its second shipment of hemp
protein to one of the largest bakeries in Slovakia, Pekárne Liptovský Hrádok, s.r.o. (PLH).
Hemp Industries is anticipating growing demand for its product from PLH due to increasing public awareness of the
health benefits of hemp seeds, which are regarded as the next big thing in the “superfood” industry for its high content
of amino acids, omega acids, protein and other beneficial substances. The hemp protein is used by PLH to produce
several top-quality protein bar products, which are sold in leading grocery chains like Tesco, Kaufland and others.
Financial results
The financial results of the Group for the year ended 31 December 2016 are:
Cash and cash equivalents
Net Assets/(Liabilities)
Revenue
Net loss after tax
31‐Dec‐16
$
3,046,054
3,239,851
8,022
(4,584,239)
The financial result for the year ended 31 December 2016 is a net loss after tax of $4,584,239 (2015: $11,572). The net
loss after tax figure includes a non-cash cost of $1.8 million for the share based payment expenses associated with
options and performance rights issued during the year (refer to Note 18). As at 31 December 2016, the Group had a net
cash balance of $3,046,054 (2015: $1) and net assets of $3,239,851 (2015: net liabilities of $10,771).
Outlook
Thanks to the achievements over the financial year, Creso is in a strong position in terms of its development and
commercialisation efforts, and expects to achieve further key milestones in FY2017.
The success achieved during this year in our development and commercialisation preparations for both our human and
animal nutraceutical products makes us very confident of further success in the 2017 financial year. We expect to
achieve further significant progress over the months ahead, both in terms of product development and additional
commercialisation agreements, and I look forward to updating you on our efforts.
I would like to thank my fellow Board members and management team for their exceptional work and dedication to the
important and innovative products that we are developing.
Creso is uniquely positioned in the world of medical cannabis and our efforts to produce safe and standardised,
cannabis- and hemp- derived therapeutic products for humans and pets promise to create better overall health
worldwide.
It is with the hard work and tremendous efforts of our team and the support of our shareholders that is helping us make
this aim a reality.
I thank our shareholders for our continued support and invite you to read the full Annual Report.
Dr. Miriam Halperin Wernli
Group CEO and Co‐Founder
7 | P a g e
Creso Pharma Limited – Annual Report 2016
Director’s Report
Directors’ Report
The Directors of Creso Pharma Limited (“Creso” or “the Company”) present their report, together with the financial
statements on the consolidated entity consisting of Creso Pharma Limited and its controlled entities (the “Group”) for
the financial year ended 31 December 2016.
DIRECTORS
The names and particulars of the Company’s directors in office during the financial year and at the date of this report
are as follows. Directors held office for this entire period unless otherwise stated.
Boaz Wachtel | Executive Chairman
(Appointed 20 November 2015)
Mr Wachtel is a certified clinical research manager and holds an MA in Management and Marketing from the University
of Maryland. Co-Founder and former Managing Director of MMJ-Phytotech Ltd, Australia's first publically traded
Medical Cannabis Company. Co-founder of IMCPC – International Medical Cannabis Patient Coalition. He is an Israeli
medical cannabis pioneer/activist, who formulated and assisted the Ministry of Health with the implementation of the
National Medical Cannabis Program – one of only four national programs in the world. He is a frequent lecturer and
adviser to governments, national committees, business and NGO's on medical cannabis program formulation, grow
operations, international laws and UN drug convention compliance, as well as the founder and former chairman of the
Green Leaf Party – a political party for cannabis legalisation/medicalisation, human rights and ecology.
Mr Wachtel does not hold, and has not over the last 3 years held, a directorship in any other public listed company.
Dr. Miriam Halperin Wernli | Managing Director & Co-Founder, PhD, MBA
(Appointed 20 November 2015)
Dr. Halperin Wernli is a senior pharmaceutical and biomedical executive with over 25 years of strategic and operational
leadership in the biopharmaceutical industry and a deep understanding of drug and product development.
Dr. Halperin Wernli has held worldwide senior leadership positions in product development, R&D and Strategic
Marketing throughout Switzerland and in the US (Merck, Sharp and Dohme, Roche and Actelion pharmaceuticals).
Her extensive pharmaceutical industry and biomed research and development experience covers the full spectrum of
areas and activities from Preclinical to Clinical Development and Strategy, to Drug Registration and Launch, across
several Therapeutic Areas.
Dr. Halperin Wernli is an experienced Pharmaceutical leader with skills and broad expertise in Drug Development,
Regulatory Affairs, Project & Portfolio Management, Development Finance & Controlling, and Corporate Strategy and
Governance.
Miri's depth of experience in Pharma drug development as well as her leadership roles in complex highly regulated
health environments in Europe and the US make her ideally qualified to lead Creso Pharma through this critical initial
period of multiple product developments and rapid growth.
Dr Halperin Wernli does not hold, and has not over the last 3 years held, a directorship in any other public listed
company.
8 | P a g e
Directors’ Report
Adam Blumenthal | Non-Executive Director
(Appointed 20 November 2015)
Creso Pharma Limited – Annual Report 2016
Director’s Report
Adam Blumenthal has 10 years’ experience in Investment Banking and Corporate Finance. He has deep exposure to
Australian and International markets, having provided capital raising and financing solutions to an extensive number of
unlisted and listed companies. Adam has played a lead role in advising and supporting multiple organisations across a
broad spectrum of industries, using his experience and extensive network of international contacts to provide corporate
advisory and capital markets input. He has successfully brought to market several Medical Marijuana companies
spanning Israel, Canada, Switzerland and Australia. He has also been actively involved in Mining, Cyber Security, Health
Care and IT sectors.
Outside of his formal business activities, Adam has lectured at a leading Sydney University covering corporate
governance, corporate social responsibility and ASX listings - both at an undergraduate and postgraduate level.
Adam holds a Bachelor of Commerce, Master of International Relations (MIR) and Master of Business Administration
(MBA) degrees.
Adam is a strong supporter of Israeli innovation and has previously lived in Israel, Adam is a member of the Israel
Business Club Sydney (IBCS).
Adam is also a consultant with EverBlu Capital Pty Ltd, the Lead Manager to the Offer.
During the past three (3) years Mr Blumenthal has held directorships in the following other listed entities:
Company
Burrabulla Corporation Limited
Appointed
January 2016
Resigned
Current
James Ellingford | Non-Executive Director
(Appointed 20 November 2015)
Dr Ellingford’s professional life culminated in being President of an international publicly listed billion dollar business
with its headquarters in Geneva, Switzerland and New York, USA. He has vast experience in the international arena and
has successfully developed close ties with both financial institutions as well as governments throughout the world.
Dr Ellingford holds a Post Graduate in Corporate Management, a Masters in Business Administration as well as a
Doctorate in Management. Dr Ellingford also lecturers MBA students in Corporate Governance at a leading Sydney
University and has a keen interest in ethics and governance.
During the past three (3) years Mr Ellingford has held directorships in the following other listed entities:
Company
Victory Mines Limited
Appointed
January 2016
Resigned
Current
Zyber Holdings Limited
January 2014
February 2016
Capital Mining Limited
January 2013
August 2015
9 | P a g e
Directors’ Report
Simon Buckingham | Non-Executive Director
(Appointed 24 May 2016)
Creso Pharma Limited – Annual Report 2016
Director’s Report
Dr Buckingham has over 25 years’ experience in the global pharmaceutical industry across a range of functions and a
variety of therapeutic areas. Now based in Sydney, he is currently a Senior Global Advisor / Consultant to Actelion, one
of the world’s leading biopharmaceutical companies, and is a Director of Actelion Australia.
Dr Buckingham was President, Global Corporate and Business Development at Actelion from 2005-2011, a position
which spanned licensing, M&A, alliance management and corporate strategic planning. He served as President, North
America and Asia-Pacific at Actelion from 2000-2005, with responsibility for all commercial operations in the region. He
was the founding President of Actelion Pharmaceuticals US. From 1998-2000 he worked in sales and marketing for
Parke-Davis (now part of Pfizer) in the US and prior to that served in roles in sales, marketing and development at Roche,
both in Switzerland and Australia, for 9 years.
Dr Buckingham is currently a non-executive director of Pharmaxis, an ASX listed pharmaceutical R&D company focused
on inflammation and fibrosis; Vaxxilon, a European based start-up dedicated to the discovery, development and
commercialisation of innovative synthetic carbohydrate vaccines; and Can Too Foundation, a non-profit organisation
raising funds for cancer research and promoting fitness, health and well-being.
He holds a Bachelor of Veterinary Science degree from the University of Sydney (1984), a PhD from the University of
Melbourne (1988), a Graduate Management Qualification from the AGSM, University of NSW (1990) and is a Graduate
of the Australian Institute of Company Directors.
During the past three (3) years Mr Buckingham has held directorships in the following other listed entities:
Company
Pharmaxis Ltd
Appointed
July 2012
Resigned
Current
COMPANY SECRETARY
Sarah Smith
(Appointed 20 November 2015)
Ms Smith specialises in corporate advisory, company secretarial and financial management services. Ms Smith’s
experience includes company secretarial and financial management services for ASX listed companies, capital raisings
and IPOs, due diligence reviews and ASX and ASIC compliance. Ms Smith is a Chartered Accountant and has acted as the
Company Secretary for a number of ASX listed companies.
INTERESTS IN SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE
The following table sets out each current Director’s relevant interest in shares, options and performance rights of the
Company or a related body corporate as at the date of this report.
Director
Mr Boaz Wachtel
Dr Miriam Halperin Wernli
Mr Adam Blumenthal
Mr James Ellingford
Mr Simon Buckingham
Total
Ordinary
Shares
Unlisted Share
Options
Performance
Rights
2,300,000
3,000,000
1,750,001
250,000
-
7,300,001
-
-
-
-
250,000
250,000
6,000,000
7,000,000
3,000,000
1,000,000
400,000
17,400,000
10 | P a g e
Directors’ Report
PRINCIPAL ACTIVITIES
Creso Pharma Limited – Annual Report 2016
Director’s Report
The principal activity of the Group during the year was to develop, register and commercialise pharmaceutical-grade
cannabis and hemp-based nutraceutical products and treatments.
REVIEW AND RESULTS OF OPERATIONS
Overview
Creso Pharma Limited was incorporated on 20 November 2015 and is a leading medicinal cannabis manufacturer. On
20 October 2016, the Company commenced trading the Australian Stock Exchange under the ticker code CPH, following
a successful Initial Public Offer (“IPO”) that raised $5 million.
On 9 April 2016, the Company entered into a Heads of Agreement to acquire 100% of the issued share capital of Hemp-
Industries s.r.o (“Hemp-Industries”). Hemp-Industries owns an existing hemp growing operation, outsourced CBD
extraction and CBD product sales activities. The Hemp-Industries grow operation has been in existence for 3 years and
is run by a professional team.
During FY2016, Creso Pharma made significant progress with its development and commercialisation plans for its first
human health and animal health nutraceutical products, putting it in a strong position to achieve further key milestones
in FY2017.
In February, Creso expanded its Australian presence, securing an Australian letter of intent (LOI) with pharmaceutical
group Health House International Pty Ltd (Health House International) for the import and sale of Canadian cannabis
products in the Australian market.
Health House International will initially conduct a trial importation of cannabis oil products from Canadian-based third-
parties introduced by Creso. Following success of the trial in accordance with all Australian Laws and regulations, the
parties agree to enter into an agreement for an initial two-year term (with an option of extension), subject to Health
House International purchasing and importing the agreed minimum quantities of product.
Creso will act as the exclusive facilitator for the import of the products into Australia and earn a facilitation fee on each
Health House International import.
Animal health products
Post the reporting period, Creso and its commercialisation partner, Greveling Holding BV (Greveling) obtained the first-
ever and unique EU registration for two proprietary formulation animal feed CBD-based nutraceutical products for
commercialisation in the global companion animal market.
The registration paves the way for Creso to sell the two nutraceutical products globally and the first-mover advantage
will help Creso capture a leading share of the global companion animal market and a leading market share of the hemp-
derived animal health market worldwide. Creso aims to launch the products in July 2017.
This followed Creso securing a binding LOI in November with Greveling and Swiss animal health company A&H Health
Switzerland, to develop and commercialise Creso’s innovative cannabidiol (CBD)-rich hemp-derived nutraceutical
products for the global pet care market.
The veterinary health market represents an attractive opportunity for Creso with the market estimated to be worth
$US39.7 billion by 2021. Currently, the number of treatment options available to veterinarians are limited and available
treatments are often human therapeutics that are poorly adapted to animals.
For the animal health product, Creso also initiated observational field studies in Switzerland and the Netherlands to
gather data which will be used to support the company’s development and commercialisation efforts.
11 | P a g e
Human health products
Creso Pharma Limited – Annual Report 2016
Director’s Report
Product development for the first human health nutraceutical product has moved to pilot production, and Creso is
preparing the relevant regulatory filings. Also during the year, formulation development and analytical tests were
successfully concluded.
As well as in the animal health products, the Company also made good progress towards commercialisation preparation
of the human health products, with several letters of intent (LOIs) already signed and various others being prepared for
partners in Switzerland, Europe and Latin America.
Creso also initiated collaboration with patient organisations for its human health products for anxiety and stress, which
are progressing significantly in line with a 2018 commercial availability timeline. The patient organisations will play a
key role in supporting the treatment rationale for the products.
Hemp-Industries’ second shipment
Also during the year, Creso’s subsidiary, Hemp-Industries, successfully delivered its second shipment of hemp protein
to one of the largest bakeries in Slovakia, Pekárne Liptovský Hrádok, s.r.o. (PLH).
Hemp Industries is anticipating growing demand for its product from PLH due to increasing public awareness of the
health benefits of hemp seeds, which are regarded as the next big thing in the “superfood” industry for its high content
of amino acids, omega acids, protein and other beneficial substances. The hemp protein is used by PLH to produce
several top-quality protein bar products, which are sold in leading grocery chains like Tesco, Kaufland and others.
Financial Performance
The financial results of the Group for the year ended 31 December 2016 are:
Cash and cash equivalents
Net Assets/(Liabilities)
Revenue
Net loss after tax
31‐Dec‐16
$
3,046,054
3,239,851
8,022
(4,584,239)
31-Dec-15
$
1
(10,771)
-
(11,572)
The financial result for the year ended 31 December 2016 is a net loss after tax of $4,584,239 (2015: $11,572). The net
loss after tax figure includes a non-cash cost of $1.8 million for the share based payment expenses associated with
options and performance rights issued during the year (refer to Note 18). As at 31 December 2016, the Group had a net
cash balance of $3,046,054 (2015: $1) and net assets of $3,239,851 (2015: net liabilities of $10,771).
DIVIDENDS
No dividends have been paid or declared by the Group since the end of the previous financial year.
No dividend is recommended in respect of the current financial year.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The significant changes in state of affairs during and subsequent to the end of the financial year include:
Acquisition of Hemp‐Industries s.r.o.
On 9 April 2016, the Company entered into a Heads of Agreement to acquire 100% of the issued share capital of Hemp-
Industries s.r.o (“Hemp-Industries”). Hemp-Industries owns an existing hemp growing operation, outsourced CBD
extraction and CBD product sales activities. The Hemp-Industries grow operation has been in existence for 3 years and
is run by a professional team.
12 | P a g e
Creso Pharma Limited – Annual Report 2016
Director’s Report
Directors’ Report
Capital Raising and Successful Listing
On 20 October 2016, the Company commenced trading the Australian Stock Exchange under the ticker code CPH,
following a successful Initial Public Offer (“IPO”) that raised $5 million. This capital raising provided the funding for the
integration of cannabinoids with advanced delivery technologies and the commercialisation of end products.
MATTERS SUBSEQUENT TO THE REPORTING PERIOD
On 24 January 2017, the Company issued 300,000 unlisted options for nil consideration. Options are exercisable at $0.50
on or before 23 January 2021.
There has not been no other matter or circumstance that has arisen since the end of the financial year that has
significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the
state of affairs of the Group.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The achievements made during FY2016 put Creso in a strong position in terms of its development and commercialisation
efforts and the Company expects to achieve further key milestones in FY2017.
In terms of its animal health products, the award of EU registration for Creso’s two cannabidiol (CBD)-based proprietary
formulation animal feed nutraceutical products gives the company a first-mover advantage in the growing veterinary
health market.
Creso is also making further solid progress towards commercialisation preparation of both its human health and animal
health products.
DIRECTORS’ MEETINGS
The number of Directors’ meetings held during the financial year and the number of meetings attended by each Director
during the time the Direct held office are:
Director
Mr Boaz Wachtel
Dr Miriam Halperin Wernli
Mr Adam Blumenthal
Mr James Ellingford
Mr Simon Buckingham
Number Eligible
to Attend
3
3
3
3
3
Number
Attended
3
3
3
3
3
In addition to the scheduled Board meetings, Directors regularly communicate by telephone, email or other electronic
means, and where necessary, circular resolutions are executed to effect decisions.
Due to the size and scale of the Company, there is no Remuneration and Nomination Committee or Audit Committee at
present. Matters typically dealt with by these Committees are, for the time being, managed by the Board. For details of
the function of the Board, please refer to the Corporate Governance Statement.
13 | P a g e
Directors’ Report
REMUNERATION REPORT (AUDITED)
Creso Pharma Limited – Annual Report 2016
Director’s Report
This remuneration report for the year ended 31 December 2016 outlines the remuneration arrangements of the Group
in accordance with the requirements of the Corporations Act 2001 (“the Act”) and its regulations. This information has
been audited as required by section 308(3C) of the Act.
The Remuneration Report details the remuneration arrangements for Key Management Personnel (“KMP”) who are
defined as those persons having authority and responsibility for planning, directing and controlling the major activities
of the Group, directly or indirectly, including any Director (whether executive or otherwise) of the Parent company.
a) Key Management Personnel Disclosed in this Report
Key Management Personnel of the Group during or since the end of the financial year were:
Executive Chairman
Mr Boaz Wachtel
Dr Miriam Halperin Wernli Managing Director
Mr Adam Blumenthal
Mr James Ellingford
Mr Simon Buckingham
Non-Executive Director
Non-Executive Director
Non-Executive Director
There have been no other changes after reporting date and up to the date that the financial report was authorised for
issue.
The Remuneration Report is set out under the following main headings:
A
B
C
D
E
F
G
H
I
Remuneration Philosophy
Remuneration Governance, Structure and Approvals
Remuneration and Performance
Details of Remuneration
Service Agreements
Share-based Compensation
Equity Instruments Issued on Exercise of Remuneration Options
Loans with KMP
Other Transactions with KMP
A
Remuneration Philosophy
KMP have authority and responsibility for planning, directing and controlling the activities of the Group. KMP of the
Group comprise of the Board of Directors.
The Group’s broad remuneration policy is to ensure the remuneration package properly reflects the person’s duties and
responsibilities and that remuneration is competitive in attracting, retaining and motivating people of the highest
quality.
No remuneration consultants were employed during the financial year.
B
Remuneration Governance, Structure and Approvals
Remuneration of Directors is currently set by the Board of Directors. The Board has not established a separate
Remuneration Committee at this point in the Group’s development, nor has the Board engaged the services of an
external remuneration consultant. It is considered that the size of the Board along with the level of activity of the Group
renders this impractical. The Board is primarily responsible for:
The over-arching executive remuneration framework;
•
• Operation of the incentive plans which apply to executive directors and senior executives, including key
performance indicators and performance hurdles;
• Remuneration levels of executives; and
• Non-Executive Director fees.
14 | P a g e
Creso Pharma Limited – Annual Report 2016
Director’s Report
Their objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the long-
term interests of the Company.
Non‐Executive Remuneration Structure
The remuneration of Non-Executive Directors consists of Directors’ fees, payable in arrears. The total aggregate fixed
sum per annum to be paid to Non-Executive Directors in accordance with the Company’s Constitution shall initially be
no more than A$300,000 and may be varied by ordinary resolution of the Shareholders in a General Meeting.
Remuneration of Non-Executive Directors is based on fees approved by the Board of Directors and is set at levels to
reflect market conditions and encourage the continued services of the Directors. In accordance with the Company’s
Constitution, the Directors may at any time, subject to the Listing Rules, adopt any scheme or plan which they consider
to be in the interests of the Company and which is designed to provide superannuation benefits for both present and
future Non-Executive Directors, and they may from time to time vary this scheme or plan.
The remuneration of Non-Executive is detailed in Table 1 and their contractual arrangements are disclosed in “Section
E – Service Agreements”.
Remuneration may also include an invitation to participate in share-based incentive programmes in accordance with
Company policy.
The nature and amount of remuneration is collectively considered by the Board of Directors with reference to relevant
employment conditions and fees commensurate to a company of similar size and level of activity, with the overall
objective of ensuring maximum stakeholder benefit from the retention of high performing Directors.
Executive Remuneration Structure
The nature and amount of remuneration of executives are assessed on a periodic basis with the overall objective of
ensuring maximum stakeholder benefit from the retention of high performance Directors.
The main objectives sought when reviewing executive remuneration is that the Company has:
Coherent remuneration policies and practices to attract and retain Executives;
Executives who will create value for shareholders;
Competitive remuneration offered benchmarked against the external market; and
Fair and responsible rewards to Executives having regard to the performance of the Group, the performance
of the Executives and the general pay environment.
•
•
•
•
The remuneration of Executives is detailed in Table 1 and their contractual arrangements are disclosed in “Section E –
Service Agreements”.
Executive Remuneration Approvals
The Company aims to reward Executives with a level and mix of remuneration commensurate with their position and
responsibilities within the Company and aligned with market practice. Executive contracts are reviewed annually by the
Board, in the absence of a Remuneration Committee, for their approval. The process consists of a review of company,
business unit and individual performance, relevant comparative remuneration internally and externally and where
appropriate, external advice independent of management.
Executive remuneration and incentive policies and practices must be aligned with the Company’s vision, values and
overall business objectives. Executive remuneration and incentive policies and practices must be designed to motivate
management to pursue the Company’s long-term growth and success and demonstrate a clear relationship between
the Company’s overall performance and performance of the executives.
C
Remuneration and Performance
The following table shows the gross revenue, losses, earnings per share (“EPS”) and share price of the Group as at 31
December 2016. Given the Company listed during the financial year, no comparative information is available.
Revenue ($)
Net loss after tax ($)
EPS ($)
Share price
31‐Dec‐16
8,022
(4,584,239)
(0.14)
0.24
15 | P a g e
Creso Pharma Limited – Annual Report 2016
Director’s Report
Relationship between Remuneration and Company Performance
Given the recent listing of the Company and the current phase of the Company’s development, the Board does not
consider earnings during the current and previous financial year when determining, and in relation to, the nature and
amount of remuneration of KMP.
The pay and reward framework for key management personnel may consist of the following areas:
a) Fixed Remuneration – base salary
b) Variable Short Term Incentives
c) Variable Long Term Incentives
The combination of these would comprise the key management personnel’s total remuneration.
a)
Fixed Remuneration – Base Salary
The fixed remuneration for each senior executive is influenced by the nature and responsibilities of each role
and knowledge, skills and experience required for each position. Fixed remuneration provides a base level of
remuneration which is market competitive and comprises a base salary inclusive of statutory superannuation. It
is structured as a total employment cost package.
b)
c)
Key management personnel are offered a competitive base salary that comprises the fixed component of pay
and rewards. External remuneration consultants may provide analysis and advice to ensure base pay is set to
reflect the market for a comparable role. No external advice was taken this year. Base salary for key management
personnel is reviewed annually to ensure the executives’ pay is competitive with the market. The pay of key
management personnel is also reviewed on promotion. There is no guaranteed pay increase included in any key
management personnel’s contract.
Variable Remuneration – Short Term Incentives (STI)
Discretionary cash bonuses may be paid to senior executives annually, subject to the requisite Board and
shareholder approvals where applicable. No bonus payments were made during the financial year.
Variable Remuneration – Long Term Incentives (LTI)
The Company adopted an Incentive Option Scheme during the year ended 31 December 2016. The Scheme allows
eligible participants to be granted Options to acquire Shares in the Company. The Board may grant Options to
any Director, full or part time employee, or casual employee or contractor who falls within the definition of an
Eligible Participant as defined in ASIC Class Order 14/1000. Each Option granted under the Scheme will be granted
for nil or nominal consideration. Each Option is exercisable into one Share in the Company and the exercise price
and expiry date for Options granted under the Scheme will be determined by the Board prior to the grant of the
Options.
The Options granted may be subject to conditions on exercise as may be fixed by the Directors prior to grant of
the Options. The Options will not be quoted on ASX.
16 | P a g e
Creso Pharma Limited – Annual Report 2016
Director’s Report
D
Details of Remuneration
Details of the nature and amount of each major element of the remuneration of each KMP of the Group during the
financial year are:
Table 1 – Remuneration of KMP of the Group for the year ended 31 December 2016 is set out below:
Short‐term Employee Benefits
Salary & fees Non‐monetary
Other
benefits
Post‐
Employment
Superannuation
$
$
$
$
Share Based
Payments
Performance
Rights / Options
(iv)
$
Total
$
31 December 2016
Directors
Boaz Wachtel
43,003(i)
Miriam Halperin Wernli
86,244(ii)
Adam Blumenthal
James Ellingford
Simon Buckingham
28,800
28,800
19,134
205,981
-
-
-
-
-
‐
20,000 (iii)
20,000 (iii)
20,000 (iii)
-
-
-
-
2,736
2,736
525,366
588,369
612,928
719,172
262,684
314,220
87,562
119,098
1,818
22,714
43,666
60,000
7,290
1,511,254
1,784,525
Total
(i)
(ii)
(iii)
(iv)
An amount of $43,003 has been paid/is payable to International Water and Energy Savers Ltd relating to
Boaz Wachtel’s Directors Fees.
An amount of $86,244 has been paid/is payable to WHP Management Consulting GmbH relating to
Miriam Halperin Wernli Directors Fees.
During the year, additional fees of $20,000 were paid to Boaz Wachtel, Miriam Halperin Wernli and
Adam Blumenthal as consideration for the significant amount of work completed during the Company’s
pre-IPO period from 20 November 2015 to 20 October 2016.
Share-based payments are the options and performance rights expensed over the vesting period (refer
to Note 18 for further details).
Short‐term Employee Benefits
Salary & fees Non‐monetary
Other
benefits
Post‐
Employment
Superannuation
$
$
$
$
Share Based
Payments
Performance
Rights / Options
(iv)
$
2,762
2,762
2,762
2,762
11,048
-
-
-
-
‐
-
-
-
-
‐
-
-
262
262
524
-
-
-
-
‐
Total
$
2,762
2,762
3,024
3,024
11,572
31 December 2015
Directors
Boaz Wachtel
Miriam Halperin Wernli
Adam Blumenthal
James Ellingford
Total
The following table shows the relative proportions of remuneration that are linked to performance and those that are
fixed, based on the amounts disclosed as statutory remuneration expense in the tables above:
Table 2 – Relative proportion of fixed vs variable remuneration expense
Name
Directors
Boaz Wachtel
Miriam Halperin Wernli
Adam Blumenthal
James Ellingford
Simon Buckingham
Fixed Remuneration
2015
2016
At Risk – STI (%)
At Risk – LTI (%)
2016
2015
2016
2015
8%
12%
10%
26%
48%
100%
100%
100%
100%
-
3%
3%
6%
‐
‐
-
-
-
-
-
89%
85%
84%
74%
52%
-
-
-
-
-
17 | P a g e
Table 3 – Shareholdings of KMP (direct and indirect holdings)
Granted as
Remuneration
Balance at
01/01/2016
Creso Pharma Limited – Annual Report 2016
Director’s Report
On Exercise of
Options
Net Change –
Other
Balance at
31/12/2016
31 December 2016
Directors
Boaz Wachtel
Miriam Halperin Wernli
Adam Blumenthal
James Ellingford
Simon Buckingham
Total
‐
‐
‐
‐
‐
‐
2,300,000
3,000,000
1,750,001
250,000
‐
7,300,001
Table 4 – Option holdings of KMP (direct and indirect holdings)
31 December 2016
Directors
Boaz Wachtel
Miriam Halperin Wernli
Adam Blumenthal
James Ellingford
Simon Buckingham
Total
Balance at
01/01/2016
Granted as
Remuneration
Exercised
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
250,000
250,000
Table 5 – Performance rights holdings of KMP (direct and indirect holdings)
Balance at
01/01/2016
Granted as
Remuneration
Vested
31 December 2016
Directors
Boaz Wachtel
Miriam Halperin Wernli
Adam Blumenthal
James Ellingford
Simon Buckingham
Total
‐
‐
‐
‐
‐
‐
6,000,000
7,000,000
3,000,000
1,000,000
400,000
17,400,000
‐
‐
-
‐
‐
‐
‐
‐
‐
‐
-
‐
-
-
-
-
‐
‐
‐
‐
-
‐
‐
‐
2,300,000
3,000,000
1,750,001
250,000
‐
7,300,001
Balance at
31/12/2016
Vested &
Exercisable
‐
‐
‐
‐
250,000
250,000
‐
‐
‐
‐
250,000
250,000
Lapsed
Balance at
31/12/2016
-
-
-
-
‐
‐
6,000,000
7,000,000
3,000,000
1,000,000
400,000
17,400,000
E
Service Agreements
Mr Boaz Wachtel – Executive Chairman
Contract: Commenced on 18 October 2016.
-
- Director’s Fee: $10,000 per month.
-
- Notice Period: 12 months.
-
Term: 3 years or as extended per the Consultant Agreement.
Performance Based Bonus: Mr Wachtel is entitled to a bonus equal to 50% of the Fee on an annual basis,
subject to meeting performance criteria agreed to with the Board each year.
Miriam Halperin Wernli – Managing Director
Contract: Commenced on 18 October 2016.
-
- Director’s Fee: US$20,833.33 per month.
-
- Notice Period: 12 months.
-
Term: 3 years or as extended per the Consultant Agreement.
Performance Based Bonus: Dr Halperin Wernli is entitled to a bonus equal to 50% of the Fee on an annual
basis, subject to meeting performance criteria agreed to with the Board each year.
Adam Blumenthal – Non‐Executive Director
Contract: Commenced on 20 November 2015.
-
- Director’s Fee: $4,000 per month (plus superannuation entitlements).
-
Term: No fixed term.
Contract: Commenced on 20 November 2015.
James Ellingford – Non‐Executive Director
-
- Director’s Fee: $4,000 per month (plus superannuation entitlements).
-
Term: No fixed term.
18 | P a g e
Contract: Commenced on 24 May 2016.
Simon Buckingham – Non‐Executive Director
-
- Director’s Fee: $4,000 per month (plus superannuation entitlements).
-
Term: No fixed term.
Creso Pharma Limited – Annual Report 2016
Director’s Report
F
Share‐based Compensation
The Company rewards Directors for their performance and aligns their remuneration with the creation of shareholder
wealth by issuing share options and/or performance rights. Share-based compensation is at the discretion of the Board
and no individual has a contractual right to receive any guaranteed benefits.
Options
During the current financial year, the Company issued 250,000 options to Simon Buckingham, exercisable at $0.40 on
or before the date which is two (2) years from the date the Company is admitted to the official list of the ASX.
At the date of this report, the unissued ordinary shares of the Company under option carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary share of the Company.
Performance Rights
The performance rights are expensed over the performance period to which is consistent with the period over which
the services have been performed.
The terms and conditions of each grant of performance rights affecting remuneration in the current or future reporting
period are as follows:
Tranche
Grant Date
Vesting date
Performance period
20 October 2016
20 October 2017
20 October 2016 – 20 October 2017
Tranche 1
Tranche 2
20 October 2016
20 October 2018
Tranche 3
20 October 2016
20 October 2019
Tranche 4
20 October 2016
20 October 2020
20 October 2016 – 20 October
2018
20 October 2016 – 20 October
2019
20 October 2016 – 20 October
2020
Value per
Performance Right at
Grant Date
% Vested
$0.163
$0.164
$0.20
$0.20
-
-
-
-
The Performance Rights were issued for $0.0001 each and no consideration will be payable upon the vesting of the
Performance Rights.
Rights granted under the Performance Rights Plan carry no dividend or voting rights.
Details of Performance Rights provided as part of remuneration to key management personnel are shown below.
Further information on the performance rights is set out in Note 18 to the financial statements.
19 | P a g e
Name
Grant Date
Vesting Date
Boaz Wachtel
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Miriam Halperin
Werni
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Adam Blumenthal
Tranche 1
Tranche 2
Tranche 3
Tranche 4
James Ellingford
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Simon Buckingham
Tranche 3
Tranche 4
20 October 2016
20 October 2016
20 October 2016
20 October 2016
20 October 2017
20 October 2018
20 October 2019
20 October 2020
20 October 2016
20 October 2016
20 October 2016
20 October 2016
20 October 2017
20 October 2018
20 October 2019
20 October 2020
20 October 2016
20 October 2016
20 October 2016
20 October 2016
20 October 2017
20 October 2018
20 October 2019
20 October 2020
20 October 2016
20 October 2016
20 October 2016
20 October 2016
20 October 2017
20 October 2018
20 October 2019
20 October 2020
20 October 2016
20 October 2016
20 October 2019
20 October 2020
Creso Pharma Limited – Annual Report 2016
Director’s Report
Number of
Performance
Rights Granted
Value of the
Performance
Rights at Grant
Date
Number of
Performance
Rights vested
Vested %
1,500,000
1,500,000
1,500,000
1,500,000
1,750,000
1,750,000
1,750,000
1,750,000
750,000
750,000
750,000
750,000
250,000
250,000
250,000
250,000
200,000
200,000
$244,470
$246,555
$300,000
$300,000
$285,215
$287,648
$350,000
$350,000
$122,235
$123,278
$150,000
$150,000
$40,745
$41,093
$50,000
$50,000
$40,000
$40,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The assessed fair value at grant date of Performance Rights granted to the individuals is allocated equally over the period
from grant date to vesting date, and the amount is included in the remuneration tables above.
Fair values at grant date are independently determined using a standard binomial pricing model that takes into account
the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk-
free interest rate for the term of the Performance Right.
G
Equity Instruments Issued on Exercise of Remuneration Options
No remuneration options were exercised during the financial year.
H
Loans with KMP
There were no loans made to any KMP during the year ended 31 December 2016.
There were no loans from any KMP during the year ended 31 December 2016.
I
Other Transactions with KMP
There were no other transactions with KMP during the year ended 31 December 2016.
J
Additional Information
The earnings of the consolidated entity for the five years to 31 December 2016 are summarised below:
Sales Revenue
EBITDA
EBIT
Loss after income tax
Share Price
Basic EPS ($)
Diluted EPS ($)
2016
$
8,022
(4,207,963)
(4,546,170)
(4,584,239)
0.24
(0.14)
(0.14)
2015
$
-
(11,572)
(11,572)
(11,572)
-
(0.0128)
(0.0128)
No further historical information is shown above as the company was only incorporated in November 2015 and listed
in October 2016.
End of Audited Remuneration Report.
20 | P a g e
Directors’ Report
INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS
Creso Pharma Limited – Annual Report 2016
Directors’ Report
During the year ended 31 December 2016, the Company paid premiums in respect of a contract insuring the directors
and officers of the Company against liabilities incurred as directors or officers to the extent permitted by the
Corporations Act 2001.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the officers in their capacity as officers of entities in the consolidated entity, and any other payments arising
from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that
arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position
or of information to gain advantage for them or someone else or to cause detriment to the Company. It is not possible
to apportion the premium between amounts relating to the insurance against legal costs and those relating to other
liabilities.
AUDITOR
RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001.
OFFICERS OF THE COMPANY WHO ARE FORMER PARTNERS OF RSM AUSTRALIA PARTNERS
There are no officers of the company who are former partners RSM Australia Partners.
AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 31 December 2016 has been received and included
within these financial statements.
NON‐AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the
auditor’s expertise and experience with the Company and/or the group are important.
Details of the amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are
outline in Note 22 to the financial statements.
The Board of Directors has considered the position and is satisfied that the provision of the non-audit services is
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The
Directors are satisfied that the provision of non-audit services by the auditors, as set out below, did not compromise
the auditor independent requirements of the Corporations Act 2001 for the following reasons:
•
•
all non-audit services have been reviewed by the Board of Directors to ensure they do not impact the
impartiality and objectivity of the auditor; and
None of the services undermine the general principles relating to the auditor independence as set out in APES
110 Code of Ethics for Professional Accountants.
This report is signed in accordance with a resolution of Board of Directors.
Boaz Wachtel
EXECUTIVE CHAIRMAN
28 February 2017
21 | P a g e
RSM Australia Partners
8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Creso Pharma Limited for the year ended 31 December
2016, I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 28 February 2017
TUTU PHONG
Partner
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in an y jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Financial Year Ended 31 December 2016
Creso Pharma Limited – Annual Report 2016
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Revenue from continuing operations
Revenue from products
Cost of sales
Gross loss
Other income
Interest income
Expenses
Administrative expenses
Compliance and regulatory expenses
Consultancy and legal expenses
Depreciation and amortisation expense
Employee benefit expenses
Finance costs
Impairment of intangible assets
Marketing and investor relations
Occupancy expenses
Share-based payment expense
Research expense
Other expenses
Foreign exchange losses
Loss from continuing operations before income tax
Income tax expense
Loss from continuing operations after income tax
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive income for the year/period, net of tax
Note
4
4
5(a)
5(b)
5(c)
18
6
Group
2016
$
Company
20 November to
31 December
2015
$
8,022
(32,828)
(24,806)
6,498
(463,727)
(114,925)
(724,207)
(1,318)
(294,457)
(36,751)
(344,705)
(238,225)
(8,944)
(1,783,447)
(488,978)
(39,539)
(26,708)
(4,584,239)
‐
(4,584,239)
-
-
-
-
-
-
-
-
(11,572)
-
-
-
-
-
-
-
-
(11,572)
-
(11,572)
60,894
60,894
-
-
Total comprehensive loss attributable to the members of Creso
Pharma Limited
(4,523,345)
(11,572)
Loss per share for the year attributable to the members of Creso
Pharma Limited:
Basic loss per share (cents)
Diluted loss per share (cents)
7
7
(14.42)
(14.42)
(1.28)
(1.28)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be
read in conjunction with the notes to the financial statements.
23 | P a g e
Consolidated Statement of Financial Position
As at 31 December 2016
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non‐current assets
Plant and equipment
Total non‐current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Total liabilities
Net assets/(liabilities)
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
Creso Pharma Limited – Annual Report 2016
Consolidated Statement of Financial Position
Note
Group
2016
$
Company
2015
$
8
9
10
11
12
13
14
15
3,046,054
701,826
2,519
3,750,399
17,474
17,474
3,767,873
525,828
2,194
528,022
528,022
1
800
-
801
-
-
801
11,572
-
11,572
11,572
3,239,851
(10,771)
5,479,612
2,356,050
(4,595,811)
3,239,851
801
-
(11,572)
(10,771)
The Consolidated Statement of Financial Position should be
read in conjunction with the notes to the financial statements.
24 | P a g e
Consolidated Statement of Changes in Equity
For the Financial Year Ended 31 December 2016
Creso Pharma Limited – Annual Report 2016
Consolidated Statement of Changes in Equity
Group
At 1 January 2016
Loss for the year
Other comprehensive income
Total comprehensive income/(loss)
for the year after tax
Transactions with owners in their
capacity as owners:
Issue of share capital
Share issue costs
Share-based payments
Issued
Capital
$
Share‐based
Payment
Reserve
$
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
$
Total
$
801
‐
‐
‐
‐
‐
‐
‐
‐
(11,572)
(10,771)
‐
60,894
(4,584,239)
‐
(4,584,239)
60,894
60,894
(4,584,239)
(4,523,345)
6,205,500
(726,689)
‐
‐
‐
2,295,156
‐
‐
‐
‐
‐
‐
6,205,500
(726,689)
2,295,156
At 31 December 2016
5,479,612
2,295,156
60,894
(4,595,811)
3,239,851
Company
At 20 November 2015 (date of
incorporation)
Loss for the period
Other comprehensive income
Total comprehensive income/(loss)
for the period after tax
Transactions with owners in their
capacity as owners:
Issue of share capital
At 31 December 2015
-
-
-
-
801
801
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(11,572)
-
(11,572)
-
(11,572)
(11,572)
-
801
(11,572)
(10,771)
The Consolidated Statement of Changes in Equity should be read
in conjunction with the notes to the financial statements.
25 | P a g e
Consolidated Statement of Cash Flows
For the Financial Year ended 31 December 2016
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Payments for research expense
Interest received
Interest paid and other finance costs
Net cash used in operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Cash acquired from business acquisition
Net cash from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payment of share issue costs
Net cash from financing activities
Note
8(a)
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
8
Creso Pharma Limited – Annual Report 2016
Consolidated Statement of Cash Flows
Group
2016
$
8,022
(2,325,346)
(216,384)
5,333
(36,751)
(2,565,126)
(5,496)
26,155
20,659
6,005,500
(414,980)
5,590,520
3,046,053
1
3,046,054
Company
2015
$
-
-
-
-
-
-
-
-
-
1
-
1
1
-
1
The Consolidated Statement of Cash Flows should be
read in conjunction with the notes to the financial statements.
26 | P a g e
Creso Pharma Limited – Annual Report 2016
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Reporting Entity
Creso Pharma Limited (referred to as “Creso” or the “Company”) is a company domiciled in Australia. The address
of the Company’s registered office and principal place of business is disclosed in the Corporate Directory of the
Annual Report. The consolidated financial statements of the Company as at and for the year ended 31 December
2016 comprise the Company and its subsidiaries (together referred to as the “consolidated entity” or the
“Group”). The Group is primarily involved in developing pharmaceutical-grade cannabis and hemp-based
nutraceutical products and treatments.
(b)
Basis of Preparation
Statement of compliance
The consolidated financial statements are general purpose financial statements which have been prepared in
accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting
Standards Board (“AASB”) and the Corporations Act 2001. The consolidated financial statements comply with
International Financial Reporting Standards (“IFRS”) adopted by the International Accounting Standards Board
(“IASB”). Creso Pharma Limited is a for-profit entity for the purpose of preparing the financial statements.
The annual report was authorised for issue by the Board of Directors on 28 February 2017.
Basis of measurement
The consolidated financial statements have been prepared on a going concern basis in accordance with the
historical cost convention, unless otherwise stated.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated
entity only. Supplementary information about the parent entity is disclosed in note 24.
New, revised or amended standards and interpretations adopted by the Group
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board (“AASB”) that are mandatory for the current reporting period.
None of the new standards and amendments to standards that are mandatory for the first time for the financial
year beginning 1 January 2016 affected any of the amounts recognised in the current period or any prior period
and are not likely to affect future periods.
New standards and interpretations not yet mandatory or early adopted
The Australian Accounting Standards and Interpretations that have recently been issued or amended but are not
yet mandatory, have not been early adopted by the Group for the annual reporting period ended 31 December
2016. The Group intends to adopt these standards and interpretations, if applicable, when they become
effective.
27 | P a g e
Notes to the Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(b)
Basis of Preparation (cont.)
Reference
and Title
AASB 9 –
Financial
Instruments
AASB 15 –
Revenue from
Contracts
with
Customers
AASB 16
(issued
February
2016) Leases
Summary
AASB 9 (December 2014) is a new Principal standard which
replaces AASB 139. This new Principal version supersedes AASB 9
issued in December 2009 (as amended) and AASB 9 (issued in
December 2010) and includes a model for classification and
loss’
measurement, a simple,
impairment model and a substantially-reformed approach to
hedge accounting.
forward-looking
‘expected
AASB 9 is effect for annual periods beginning on or after 1 January
2018. However, the Standard is available for early application.
An entity will recognise revenue to depict the transfer of
promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be
entitled in exchanged for those goods or services. This means that
revenue will be recognised when control of foods or services is
transferred, rather than on transfer of risks and rewards as is
current the case under IAS 18 Revenue.
AASB 16 eliminates the operating and finance lease classifications
for lessees current accounted for under AASB 117 Leases. It
instead requires an entity to bring most leases onto its balance
sheet in a similar way to how existing finance leases are treated
under AASB 117. An tntity will be required to recognise a lease
liability and a right of use asset in its balance sheet for most
leases.
There are some optional exemptions for leases with a period of
12 months or less and for low value leases.
Lessor accounting remains largely unchanged from AASB 117.
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Application Date
of Standard
Annual reporting
periods
commencing on or
after 1
January
2018.
Impact on Creso Pharma
Limited Financial
Statements
When this standard is first
adopted from 1 January
2018, there will be no
impact on transactions and
balances recognised in the
financial statements.
Annual reporting
periods
commencing on or
after 1
January
2018.
Annual reporting
periods
commencing on or
after 1
January
2019.
When this standard is first
adopted from 1 January
2018, this standard will not
significantly
impact
transactions and balances
recognised in the financial
statements.
When this standard is first
adopted from 1 January
2019, there will be minimal
impact on transactions and
balances recognised in the
financial statements.
Significant Judgements and Estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity’s accounting policies.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements are disclosed in Note 2.
(c)
Comparatives
Comparative balances for the Company are for the financial period 20 November 2015 (date of incorporation) to
31 December 2015.
(d)
Principles of Consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Creso Pharma
Limited (‘Company’ or ‘parent entity’) as at 31 December 2016 and the results of all subsidiaries for the year then
ended. Creso Pharma Limited and its subsidiaries together are referred to in this financial report as the
consolidated entity.
Subsidiaries are all entities (including special purpose entities) over which the consolidated entity has the power
to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of
the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible
are considered when assessing whether the consolidated entity controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They
are de-consolidated from the date that control ceases.
28 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(d)
Principles of Consolidation (cont.)
Intercompany transactions, balances and unrealised gains on transactions between consolidated entity
companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the consolidated entity.
The acquisition method of accounting is used to account for business combinations by the consolidated entity.
A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the
difference between the consideration transferred and the book value of the share of the non-controlling interest
acquired is recognised directly in equity attributable to the parent.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
statement of profit or loss and other comprehensive income, statement of changes in equity and statement of
financial position respectively.
(e)
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Board. Management has
determined that based on the report reviewed by the Board and used to make strategic decisions, that the
consolidated entity has three reportable segments.
(f)
Foreign Currency Translation
Functional and presentation currency
Items included in the financial statements of each of the consolidated entity’s entities are measured using the
currency of the primary economic environment in which the entity operates (“functional currency”). The
consolidated financial statements are presented in Australian dollars, which is Creso Pharma Limited’s functional
and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in profit or loss.
Consolidated entity companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
• Assets and liabilities for each statement of financial position account presented are translated at the closing
•
rate at the date of that statement of financial position;
Income and expenses for each statement of profit or loss and other comprehensive income account are
translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates
of the transactions); and
• All resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment
are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
29 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(g)
Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable to the extent that it is probably
that economic benefits will flow to the consolidated entity and the revenue can be reliably measured.
Sale of goods
Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of
significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods.
Interest revenue
Interest revenue is recognised as it accrues, using the effective interest method.
(h)
Income Tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income
based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences and to unused tax losses.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income
tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than
a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by
the end of the reporting period and are expected to apply when the related deferred income tax asset is realised
or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount
and tax bases of investments in foreign operations where the Company is able to control the timing of the
reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable
future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a
net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
(i)
Business Combination
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity
instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any
non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the
acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets.
All acquisition costs are expensed as incurred to profit or loss.
30 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(i)
Business Combination (cont.)
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities
assumed for appropriate classification and designation in accordance with the contractual terms, economic
conditions, the consolidated entity's operating or accounting policies and other pertinent conditions in existence
at the acquisition-date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held
equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and
the previous carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value.
Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised
in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is
accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-
controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any
pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-
existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to
the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-
date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-
controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity
interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement
period, based on new information obtained about the facts and circumstances that existed at the acquisition-
date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii)
when the acquirer receives all the information possible to determine fair value.
(j)
Cash and Cash Equivalents
Cash on hand and in bank and short-term deposits are stated at nominal value. For the purpose of the statement
of cash flows, cash includes cash on hand and in bank, and bank securities readily convertible to cash, net of
outstanding bank overdrafts.
(k)
Trade and Other Receivables
Trade and other receivables include amounts due from customers for goods sold and services performed in the
ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting
period are classified as current assets. All other receivables are classified as non-current assets.
(l)
Inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value on a
weighted average basis. Cost comprises direct materials and delivery costs, direct labour and import duties and
other taxes. Costs of purchased inventory are determined after deducting rebates and discounts received or
receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
31 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(m)
Plant and Equipment
Plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Depreciation is calculated using the straight-line method to allocate their cost over their estimated useful lives
to estimate residual value. The following estimated useful lives are used in the calculation of depreciation:
Plant and equipment
Furniture and equipment
5 years
3 - 10 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included
in profit or loss. When revalued assets are sold, it is consolidated entity policy to transfer any amounts included
in other reserves in respect of those assets to retained earnings.
(n)
Intangible Assets Other than Goodwill
Other intangible assets that are acquired by the Group and have finite useful lives are measured at costs less
accumulated amortisation and accumulated impairment losses.
(o)
Impairment of Assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment.
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is
the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are separately identifiable cash flows. Where an
impairment loss subsequently reverses, the carrying amount of the asset, other than goodwill, is increased to
the revised estimate of its recoverable amount, but only to the extent the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised in prior
years. A reversal of an impairment loss is recognised immediately in profit or loss.
(p)
Trade and Other Payables
Liabilities are recognised for amounts to be paid in the future for goods and services received whether or not
billed to the Group. Trade payables are usually settled within 30 days of recognition.
(q)
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees
paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down
occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down,
the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which
it relates.
32 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(r)
Provisions
Provisions are recognised when the consolidated entity has a present legal or constructive obligation as a result
of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount
has been reliably estimated.
Provisions are measured at the present value of management’s best estimate of the expenditure required to
settle the present obligation at the end of the reporting period. The discount rate used to determine the present
value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
to the liability.
(s)
Employee Benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected
to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees'
services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are
settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting
date are recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the
liability. The liability is measured as the present value of expected future payments to be made in respect of
services provided by employees up to the reporting date using the projected unit credit method. Consideration
is given to the expected future wage and salary levels, experience of employee departures and periods of service.
Expected future payments are discounted using market yields at the reporting date on national government
bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
(t)
Research and Development Expenditure
Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it
probable that the project will be a success considering its commercial and technical feasibility, the Group is able
to use or sell the asset, the Group has sufficient resources, and intent to complete the development and its costs
can be measured reliably. Capitalised development costs are amortised on a straight-line basis over the period
of their expected benefit.
Patents and trademarks
Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over
the period of their expected benefit.
(u)
Share‐based Payments
Equity-settled and cash-settled share-based compensation benefits are provided to Key Management Personnel
and employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in
exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services,
where the amount of cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently
determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of
the underlying share, the expected dividend yield and the risk free interest rate for the term of the option,
together with non-vesting conditions that do not determine whether the consolidated entity receives the
services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
33 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(u)
Share‐based Payments (cont.)
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over
the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the
award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting
period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each
reporting date less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying
either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on
which the award was granted. The cumulative charge to profit or loss until settlement of the liability is calculated
as follows:
• During the vesting period, the liability at each reporting date is the fair value of the award at that date
•
multiplied by the expired portion of the vesting period.
From the end of the vesting period until settlement of the award, the liability is the full fair value of the
liability at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the
cash paid to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to
market conditions are considered to vest irrespective of whether or not that market condition has been met,
provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been
made. An additional expense is recognised, over the remaining vesting period, for any modification that increases
the total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the
condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or
employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over
the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any
remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award,
the cancelled and new award is treated as if they were a modification.
(v)
Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for
the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.
If the entity reacquires its own equity instruments, for example as a result of a share buy-back, those instruments
are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or
loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is
recognised directly in equity.
34 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(w)
Earnings Per Share
Basic earnings per share
Basic earnings per share are calculated by dividing:
•
The profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary
shares
• By the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and excluding treasury shares.
Diluted earnings per share
Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into
account:
•
•
The after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares, and
The weighted average number of additional ordinary shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.
(x)
Goods and Services Tax (“GST”)
Revenue, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is
not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the
asset or as part of the expense.
Receivables and payables area stated inclusive of the amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the taxation authority is included as a current asset or liability in the
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing and financing
activities which are recoverable from, or payable to, the taxation authority, are presented as operating cash
flows.
(y)
Current and Non‐Current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in
the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to
be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted
from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other
assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal
operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the
reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months
after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
(z)
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
35 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 2
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its
judgements, estimates and assumptions on historical experience and on other various factors, including expectations
of future events management believes to be reasonable under the circumstances. The resulting accounting judgements
and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are discussed below.
Share based payments
The consolidated entity measures the cost of equity-settled transactions with employees 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 a hybrid
Monte Carlo or the 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.
Income taxes
The consolidated entity is subject to income taxes in Australia and jurisdictions where it has foreign operations.
Significant judgement is required in determining the worldwide provision for income taxes. There are certain
transactions and calculations undertaken during the ordinary course of business for which the ultimate tax
determination is uncertain. The consolidated entity estimates its tax liabilities based on the consolidated entity’s
understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in
which such determination is made.
NOTE 3
SEGMENT INFORMATION
The Group require operating segments to be identified on the basis of internal reports about components of the Group
that are regularly reviewed by the chief operating decision maker (“CODM”) in order to allocate resources to the
segments and to assess their performance. On this basis, the Group’s reportable segments under AASB 8 are as follows:
• Hemp-Industries s.r.o. (“Hemp-Industries”) which includes hemp growing operations, outsourced CBD extraction
and CBD product sales activities.
• Creso Pharma Switzerland GmbH (“Switzerland”) which includes the development and commercialisation of its
therapeutic products.
• Creso Pharma Limited (“Creso”) which includes the Group’s corporate administration.
36 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 3
SEGMENT INFORMATION (CONT.)
Such structural organisation is determined by the nature of risks and returns associated with each business segment and
define the management structure as well as the internal reporting system. It represents the basis on which the group
reports its primary segment information to the Board.
The operating segment analysis presented in these financial statements reflects operations analysis by business. It best
describes the way the group is managed and provides a meaningful insight into the business activities of the group.
The following table presents details of revenue and operating profit by business segment as well as reconciliation between
the information disclosed for reportable segments and the aggregated information in the financial statements. The
information disclosed in the table below is derived directly from the internal financial reporting system used by the Board
of Directors to monitor and evaluate the performance of our operating segments separately.
Year ended 31 December 2016
Revenue from products
Other revenue
Total segment revenue
Loss before income tax expense
Total Segment assets
Total Segment liabilities
Australia
$
Slovakia
$
Switzerland
$
Total
$
‐
4,269
4,269
(3,857,456)
2,128,189
107,735
8,022
2,229
10,251
(102,540)
743,396
123,580
‐
‐
‐
8,022
6,498
14,520
(624,243)
896,288
296,707
(4,584,239)
3,767,873
528,022
Period ended 31 December 2015
Revenue from products
Other revenue
Total segment revenue
Loss before income tax expense
Total Segment assets
Total Segment liabilities
NOTE 4
REVENUE AND OTHER INCOME
Revenue from continuing operations
Revenue from services
Revenue from sale of products
Other income
Interest received
Australia
$
Slovakia
$
Switzerland
$
Total
$
-
-
-
(11,572)
801
11,572
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(11,572)
801
11,572
2016
$
2015
$
538
7,484
8,022
6,498
-
-
-
-
37 | P a g e
Notes to the Consolidated Financial Statements
NOTE 5 EXPENSES
(a) Administrative expenses
Accounting and company secretarial fees
Travel costs
General and administration expenses
(b) Consultancy and legal expenses
Consulting fees
Legal fees
(c) Employee benefit expenses
Wages and salaries
Superannuation
NOTE 6
INCOME TAX
(a) The components of tax expense comprise:
Current tax
Deferred tax
Income tax expense reported in the of profit or loss and other
comprehensive income
(b) The prima facie tax on loss from ordinary activities before income tax is
reconciled to the income tax as follows:
Loss before income tax expense
Prima facie tax benefit on loss before income tax at 28.5% (2015:
28.5%)
Tax effect of:
Tax effect on different tax rate of overseas subsidiaries
Share based payments
Travel expenses
Legal expenses
Others
Tax losses not recognised
Total
(c)
Deferred tax assets not brought to account are:
Carried forward losses
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
2016
$
2015
$
151,600
210,642
101,485
463,727
269,814
454,393
724,207
-
-
-
-
-
-
-
287,079
7,378
294,457
11,048
524
11,572
-
-
-
-
-
-
(4,584,239)
(11,572)
(1,306,508)
(3,298)
200,455
508,282
49,774
122,739
52,871
372,387
‐
-
-
-
-
-
3,298
‐
303,642
3,298
The benefit for tax losses will only be obtained if:
The Group derives future assessable income of a nature and of an amount sufficient to enable the benefit
from the deductions for the losses to be realised; and
The losses are transferred to an eligible entity in the Group; and
The Group continues to comply with the conditions for deductibility imposed by tax legislation; and
No changes in tax legislation adversely affect the consolidated in realising the benefit from the deduction
for the losses.
38 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 7
LOSS PER SHARE
Basic loss per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of
the Company by the weighted average number of ordinary shares outstanding during the year.
Diluted loss per share amounts are calculated by dividing the net loss attributable to ordinary equity holders of the
Company by the weighted average number of ordinary shares outstanding during the year plus the weighted average
number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into
ordinary shares.
2016
$
2015
$
Net loss for the year/period
(4,584,239)
(11,572)
Weighted average number of ordinary shares for basic and diluted loss per share.
31,790,206
898,630
Options on issue are not considered dilutive to the earnings per share as the Company is in a loss-making position.
Continuing operations
- Basic and diluted loss per share (cents)
NOTE 8
CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
(14.42)
(1.28)
1,046,054
2,000,000
3,046,054
1
-
1
Cash at bank earns interest at floating rates based on daily deposit rates. Short-term deposits are made in varying periods
between one day and three months, depending on the immediate cash requirements of the Group and earn interest at
the respective short-term deposit rates.
The Group’s exposure to interest rate and credit risks is disclosed in Note 16.
39 | P a g e
Notes to the Consolidated Financial Statements
NOTE 8 CASH AND CASH EQUIVALENTS (CONT.)
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
2016
$
2015
$
(a) Reconciliation of net loss after tax to net cash flows from operations
Loss for the financial year/period
(4,584,239)
(11,572)
Adjustments for:
Depreciation
Impairment of asset
Foreign exchange loss
Share based payments
Changes in assets and liabilities
Receivables
Inventories
Trade and other payables
Provisions
Net cash used in operating activities
Non‐cash investing and financing activities
1,318
344,705
60,894
1,783,447
(293,165)
(2,519)
136,531
(12,098)
(2,565,126)
-
-
-
-
-
-
11,572
-
-
Issue of shares for acquisition of subsidiary
200,000
-
NOTE 9
TRADE AND OTHER RECEIVABLES
Trade debtors
GST receivable
Other deposits and receivables
(a) Allowance for impairment loss
326,652
104,169
271,005
701,826
-
-
800
800
Receivables past due but not considered impaired are nil (2015: Nil). Other receivables are non-interesting bearing
and are generally on terms of 30 days.
NOTE 10
INVENTORIES
Inventory – Finished goods
2,519
2,519
-
-
40 | P a g e
Notes to the Consolidated Financial Statements
NOTE 11 PLANT AND EQUIPMENT
Year ended 31 December
Opening net book amount
Additions
Depreciation charge
Closing net book amount
At 31 December
Cost
Accumulated depreciation
Net book amount
NOTE 12
TRADE AND OTHER PAYABLES
Trade payables (i)
Accrued expenses
Other payables
(i) Trade payables are non-interest bearing and are normally settled on 60 day terms.
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
2016
$
2015
$
‐
18,792
(1,318)
17,474
18,792
(1,318)
17,474
-
-
-
-
-
-
-
61,900
46,938
416,990
525,828
-
11,572
-
11,572
2,194
2,194
-
-
NOTE 13
PROVISIONS
Employee provisions
NOTE 14
CONTRIBUTED EQUITY
(a)
Issued and fully paid
2016
2015
$
No.
$
No.
Ordinary shares
5,479,612
57,725,001
801
8,000,001
Ordinary shares entitle the holder to participate in dividends and the proposed winding up of the company in
proportion to the number and amount paid on the share hold.
41 | P a g e
Notes to the Consolidated Financial Statements
NOTE 14 CONTRIBUTED EQUITY (CONT.)
(b) Movement reconciliation
Number
$
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
At 20 November 2015 (date of incorporation)
Share issued- Founder shares
At 31 December 2015
At 1 January 2016
Seed capital escrowed to 19/01/17
Seed capital escrowed to 22/02/17
Seed capital escrowed to 13/04/17
Seed capital escrowed to 21/06/17
Seed capital escrowed to 14/07/17
Seed capital escrowed to 18/07/17
Issued as consideration for acquisition
Shares issued - capital raising
Less equity raising costs
At 31 December 2016
NOTE 15
RESERVES
-
8,000,001
8,000,001
8,000,001
6,750,000
6,000,000
7,237,500
2,325,000
1,187,500
225,000
1,000,000
25,000,000
‐
57,725,001
-
801
801
801
67,500
60,000
579,000
186,000
95,000
18,000
200,000
5,000,000
(726,689)
5,479,612
2016
$
2015
$
Share-based payments
Foreign currency translation reserve
Movement reconciliation
Share‐based payments reserve
Balance at the beginning of the year
Equity settled share-based payment transactions (Note 18)
Balance at the end of the year
Foreign currency translation reserve
Balance at the beginning of the year
Effect of translation of foreign currency operations to group presentation
Balance at the end of the year
2,295,156
60,894
2,356,050
‐
2,295,156
2,295,156
‐
60,894
60,894
-
-
-
-
-
-
-
-
-
Share‐based payment reserve
The share-based payment reserve is used to record the value of share-based payments provided to outside parties, and
share-based remuneration provided to employees and directors.
Foreign currency translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial
statements of foreign operations where their functional currency is different to the presentation currency of the
reporting entity.
42 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 16
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest
rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability
of the financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The
Group uses different methods to measure and manage different types of risks to which it is exposed. These include
monitoring levels of exposure to interest rate and foreign exchange risk and assessments of market forecasts for interest
rate and foreign exchange prices. Ageing analysis and monitoring of specific credit allowances are undertaken to manage
credit risk. Liquidity risk is monitored through the development of future cash flow forecasts.
Risk management is carried out by Management and overseen by the Board of Directors with assistance from suitably
qualified external advisors.
The main risks arising for the Group are foreign exchange risk, interest rate risk, credit risk and liquidity risk. The Board
reviews and agrees policies for managing each of these risks and they are summarised below.
The carrying values of the Group’s financial instruments are as follows:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
2016
$
2015
$
3,046,054
701,826
3,747,880
525,828
525,828
1
800
801
11,572
11,572
Foreign exchange risk
(a) Market risk
(i)
The Group operates internationally and is exposed to foreign currency risk arising from various currency exposures,
primarily with respect to the Euro and Swiss Franc.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a
currency that is not the Group’s functional currency. The risk is measured using sensitivity analysis and cash flow
forecasting.
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars was as
follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
2016
2015
EUR
€
154,843
326,652
121,386
CHF
Fr.
868,316
‐
296,707
EUR
€
CHF
Fr.
-
-
-
-
-
-
43 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 16
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT.)
Interest rate risk
(ii)
The Group is exposed to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result
of changes in the market interest rates on interest bearing financial instruments. The Group’s exposure to this risk
relates primarily to the Group’s cash and any cash on deposit. The Group does not use derivatives to mitigate these
exposures. The Group manages its exposure to interest rate risk by holding certain amounts of cash in fixed and floating
interest rate facilities. At the reporting date, the interest rate profile of the Group’s interest-bearing financial
instruments was:
Cash and cash equivalents
2016
2015
Weighted
average
interest rate (i)
0.61%
Balance
$
3,046,054
Weighted
average interest
rate
-
Balance
$
1
(i) This interest rate represents the average interest rate for the period.
Sensitivity
Within the analysis, consideration is given to potential renewals of existing positions and the mix of fixed and variable
interest rates. The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting
date. The 1% increase and 1% decrease in rates is based on reasonably expected possible changes over a financial year,
using the observed range of historical rates for the preceding five-year period.
At 31 December 2016, if interest rates had moved, as illustrated in the table below, with all other variables held
constant, post-tax losses and equity would have been affected as follows:
Judgements of reasonably possible
movements:
+ 1.0% (100 basis points)
- 1.0% (100 basis points)
Post‐tax profit higher/(lower)
2016
$
21,322
(21,322)
2015
$
Other comprehensive
higher/(lower)
2016
$
2015
$
-
-
‐
‐
-
-
Credit risk
(b)
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other
receivables and other financial assets. The Group’s exposure to credit risk arises from potential default of the
counterparty, with maximum exposure equal to the carrying amount of the financial assets.
The Group’s policy is to trade only with recognised, creditworthy third parties. It is the Group’s policy that all customers
who wish to trade on credit terms will be subject to credit verification procedures.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad
debts is not significant. There are no significant concentrations of credit risk within the Group except for cash and cash
equivalents and other financial assets held in reputable major banks in Switzerland and Slovakia.
44 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 16
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT.)
Liquidity risk
(c)
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to its reputation.
The Group manages liquidity risk by maintaining adequate cash reserves from funds raised in the market and by
continuously monitoring forecast and actual cash flows. The Group does not have any external borrowings.
The following are the contractual maturities of financial liabilities:
2016
Trade and other payables
2015
Trade and other payables
(d)
Capital risk management
6 months
$
525,828
11,572
6‐12 months
$
1‐5 years
$
> 5 years
$
‐
-
‐
-
Total
$
525,828
11,572
‐
-
The Group’s objectives when managing capital are to:
• Safeguard their ability to continue as a going concern, so that it can continue to provide returns for shareholders
and benefits for other stakeholders; and
• Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the number of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
Given the stage of the Company’s development there are no formal targets set for return on capital. There were no
changes to the Company’s approach to capital management during the year. The Company is not subject to externally
imposed capital requirements. The net equity of the Company is equivalent to capital. Net capital is obtained through
capital raisings on the Australian Securities Exchange (“ASX”).
(e)
Fair values
The management assessed that the carrying amount of financial assets and financial liabilities recorded in the financial
statements represents their respective fair values largely due to the short-term maturities of these instruments. The
carrying amounts are determined in accordance with accounting policies disclosed in Note 1.
AASB 13 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
(i) Level 1 – the instrument has quoted prices (unadjusted) in active markets for identical assets and liabilities;
(ii) Level 2 – a valuation technique using inputs other than quoted prices within Level 1 that are observable for the
financial instrument, either directly (i.e. prices), or indirectly (i.e. derived from prices); or
(iii) Level 3 – a valuation technique using inputs that are not based on observable market data (unobservable
inputs).
As at 31 December 2016 and 31 December 2015, the Group did not have financial liabilities measured and recognised
at fair value. Due to their short-term nature, the carrying amount of the current receivables and payables is assumed to
approximate their fair value.
The Group does not have any level 2 or 3 assets or liabilities.
45 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 17
RELATED PARTY DISCLOSURE
(a)
Key Management Personnel Compensation
Details relating to key management personnel, including remuneration paid, are below.
Short-term benefits
Post-employment benefits
Share-based payments
2016
$
2015
$
265,981
7,290
1,511,254
1,784,525
11,048
524
‐
11,572
Information regarding individual Directors compensation and some equity instruments disclosures as required by
Corporations Regulation 2M.3.03 is provided in the Remuneration Report section of the Directors’ Report.
NOTE 18
SHARE‐BASED PAYMENTS
(a)
Recognised share‐based payment transactions
Options issued to Director (i)
Options issued for consideration of services (ii)
Performance rights issued
Performance shares issued as consideration for acquisition (Note 19)
Reconciliation:
Recognised as share based payment expenses in statement of profit
and loss and other comprehensive income
Recognised as shares issue cost in equity
Recognised as investment of subsidiary
2016
$
2015
$
18,135
321,220
1,755,801
200,000
2,295,156
1,783,447
311,709
200,000
2,295,156
-
-
-
-
-
-
-
-
-
(i) Options issued to Director
The Company issued Mr Simon Buckingham 250,000 unlisted options prior to the Company’s admission to the official
list of the ASX as part of his remuneration package. The fair value of these shares was treated as a share-based
payment expense in the statement of profit or loss and other comprehensive income. The fair value per option was
calculated using the Black-Scholes Option Pricing Model. The total value of the options issued was $18,135.
(ii) Options issued for consideration of services
In connection with the IPO, Everblu Capital Pty Ltd were issued 2,500,000 unlisted options at an exercise price of
A$0.20 per share, expiring on the three-year anniversary of completion. Everblu Capital Pty Ltd acted as the lead
manager for the October 2016 IPO. The share-based payment expense of $311,709 has been recognised as a share
issue cost in the statement of changes in equity.
46 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 18
SHARE‐BASED PAYMENTS (CONT.)
(b)
Summary of options granted during the year
Options
Issue Date
Date of
Expiry
Exercise
Price
Balance at
the start of
the year
Granted
during the
year
Exercised
during the
year
Expired
during the
year
Balance at the
end of the
year
Consultant
Broker
Consultant
Director
Consultant
27-06-16
13-10-16
13-10-16
14-10-16
06-12-16
27-06-20
13-10-19
13-10-20
14-10-18
27-06-20
Weighted average exercise price
$0.40
$0.20
$0.20
$0.40
$0.40
$0.23
-
-
-
-
-
-
400,000
2,500,000
2,886,250
250,000
200,000
6,236,250
-
-
-
-
-
-
-
-
-
-
-
-
400,000
2,500,000
2,886,250
250,000
200,000
6,236,250
The options issued to consultants, Simon Buckingham and Everblu Capital Pty Ltd have been valued using the Black-
Scholes model. The model and assumptions are shown in the table below:
Black‐Scholes Option Pricing Model
Grant Date
Vesting Date
Strike (Exercise) Price
Underlying Share Price (at date of
issue)
Risk-free Rate (at date of issue)
Volatility
Number of Options Issued
Dividend Yield
Probability
Black-Scholes Valuation
Total Fair Value of Options
Consultant
Broker
Consultant
27-06-16
27-06-19
$0.40
$0.20
1.61%
100%
400,000
0%
100%
$0.115
$46,144
13-10-16
Immediately
$0.20
$0.20
1.72%
100%
2,500,000
0%
100%
$0.125
$311,709
13-10-16
13-10-20
$0.20
$0.20
1.78%
100%
2,886,250
0%
5%
$0.139
$20,032
Director
14-10-16
Immediately
$0.40
$0.20
1.73%
100%
250,000
0%
100%
$0.073
$18,135
Consultant
06-12-16
27-06-19
$0.40
$0.20
2.09%
100%
200,000
0%
100%
$0.138
$27,644
(c)
Summary of performance rights granted during the year
During the year, the Company issued performance rights to various nominees. These performance rights will convert
upon satisfaction of the vesting conditions for each tranche.
In relation to the performance rights in Tranche 1 and Tranche 2, the fair value at grant date is determined using a
Monte Carlo model with the following factors relevant:
Share Price at Grant Date
Exercise Price
Volatility (up to date of issue)
Grant Date
Vesting Date
Risk-free Rate
Number of Rights Granted
Value per Right
Total Fair Value of Rights
Tranche 1
Tranche 2
$0.20
N/A
100%
20-10-16
Immediately
1.50%
5,000,000
$0.163
$814,900
$0.20
N/A
100%
20-10-16
Immediately
1.50%
5,000,000
$0.164
$821,850
In relation to the Tranche 3 and Tranche 4 performance rights, these rights are straight-forward, non-market based
performance rights, with no consideration upon achievement. Accordingly, the fair value of the performance rights
is by director reference to the share price on grant date ($0.20).
47 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Tranche 3
Tranche 4
$0.20
N/A
N/A
20-10-16
20-10-19
N/A
5,200,000
$0.20
$1,040,000
$0.20
N/A
N/A
20-10-16
20-10-20
N/A
5,200,000
$0.20
$1,040,000
Notes to the Consolidated Financial Statements
NOTE 18
SHARE‐BASED PAYMENTS (CONT.)
Share Price at Grant Date
Exercise Price
Volatility (up to date of issue)
Grant Date
Vesting Date
Risk-free Rate
Number of Rights Granted
Value per Right
Total Fair Value of Rights
NOTE 19
BUSINESS COMBINATIONS
(a)
Summary of acquisition
On 20 October 2016, the Company acquired 100% of the share capital of Hemp-Industries s.r.o. (“Hemp-Industries” or
“HI”), a company based in Slovakia.
Hemp-Industries owns an existing hemp growing operation and has been operating for three years in Slovakia. HI
has also outsourced CBD extraction and CBD product sales activities. They also currently sell its CBDium products to
the European market and seek to expand into other markets where CBD products have been legalised.
(b)
Purchase consideration and net assets acquired
Details of the purchase consideration and the net assets acquired are as follows:
Cash paid (i)
Shares issued (ii)
Contingent consideration – Performance Shares (iii)
$
47,066
200,000
200,000
447,066
(i) Cash payment of EUR30,000 converted to AUD47,066 on date of payment.
(ii) 1,000,000 shares issued at $0.20 per share.
(iii) 1,000,000 performance shares issued at $0.20 per share. The performance shares issued to the shareholders
of Hemp-Industries will convert upon satisfaction of Hemp Industries generating gross revenue in excess of
$1,000,000 in aggregate over any rolling 12 month period within three years from Settlement (20 October
2016). The performance shares issued are straight forward non-market performance shares, with no
consideration upon achievement. Accordingly, the fair value of the performance shares is by direct reference
to the share price on grant date (listing price $0.20).
The total fair value of the share-based payment is $200,000.
48 | P a g e
Notes to the Consolidated Financial Statements
NOTE 19
BUSINESS COMBINATIONS (CONT.)
Details of the acquisition are as follows:
Cash
Trade and other receivables
Other receivables
Intangible assets
Property, plant and equipment
Total assets
Trade and other payables
Provisions
Other current liabilities
Tax liabilities
Borrowings
Total liabilities
Net identifiable assets of Hemp‐Industries acquired
(c)
Purchase consideration ‐ cash inflow/(outflow)
Cash acquired
Less: Cash consideration
Inflow of cash – investing activities
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Fair Value
$
73,221
321,561
88,445
344,705
13,296
841,228
(13,161)
(14,291)
(154,757)
(293)
(211,660)
(394,162)
447,066
$
73,221
(47,066)
26,155
The acquired business contributed revenues of $8,022 and loss after tax of $102,540 to the consolidated entity for the
period from 21 October 2016 to 31 December 2016. If the acquisition occurred on 1 January 2016, the full year
contributions would have been revenues of $308,880 and loss after tax of $29,253. The values identified in relation to
the acquisition of HI are final as at 31 December 2016.
49 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Notes to the Consolidated Financial Statements
NOTE 20
COMMITMENTS
There are no commitments as at 31 December 2016 (2015: nil).
NOTE 21
CONTINGENCIES
There are no contingent assets or contingent liabilities as at 31 December 2016 (2015: nil).
NOTE 22
AUDITOR’S REMUNERATION
Amounts received or due and receivable by RSM Australia Partners
for:
Audit and review of the annual and half-year financial report
Other services - RSM Australia Corporate Finance Pty Ltd for:
– Independent Accountant’s Report
NOTE 23
INVESTMENT IN CONTROLLED ENTITIES
2016
$
30,000
15,950
45,950
Principal Activities
Country of
Incorporation
Ownership interest
Hemp-Industries s.r.o. (i)
Creso Pharma Switzerland GmbH (ii)
Hemp growing
operations
Development of
therapeutic products
(i) Acquired on 20 October 2016 (refer to Note 19).
(ii) Incorporated in April 2016.
2016
%
100
Slovakia
Switzerland
100
2015
%
-
-
50 | P a g e
Notes to the Consolidated Financial Statements
NOTE 24
PARENT ENTITY
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Loss for the year
Other comprehensive income
Total comprehensive loss
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
2016
$
2015
$
2,230,550
1,117,036
3,347,586
801
-
801
107,735
107,735
11,572
11,572
5,479,612
2,295,156
(4,534,917)
3,239,851
(4,523,345)
‐
(4,523,345)
801
-
(11,572)
(10,771)
(11,572)
-
(11,572)
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation
for the current financial year.
Other Commitments and Contingencies
The Parent has no commitments to acquire property, plant and equipment, and has no contingent liabilities.
NOTE 25
EVENTS AFTER THE REPORTING DATE
On 24 January 2017, the Company issued 300,000 unlisted options exercisable at $0.50 on or before 23 January 2021.
There has not been no other matter or circumstance that has arisen since the end of the financial year that has significantly
affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of
the Group.
51 | P a g e
Creso Pharma Limited – Annual Report 2016
Directors’ Declaration
Directors’ Declaration
In the Directors’ opinion:
a)
b)
c)
The financial statements and accompanying notes are in accordance with the Corporations Act 2001, including:
i)
complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
ii) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2016 and of its
performance for the year ended on that date.
The financial statements and notes comply with International Financial Reporting Standards.
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 required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the
Directors by:
BOAZ WACHTEL
Executive Chairman
28 February 2017
52 | P a g e
RSM Australia Partners
8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
CRESO PHARMA LIMITED
Opinion
We have audited the financial report of Creso Pharma Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 31 December 2016, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and
the 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)
(ii)
Giving a true and fair view of the Group's financial position as at 31 December 2016 and of its financial
performance for the year then ended; and
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 auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (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.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each memb er of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not i tself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
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.
Key Audit Matter
How our audit addressed this matter
Acquisition of Subsidiary
Refer to Note 19 in the financial statements
During the year, the Group acquired 100% interest of
Hemp-Industries s.r.o. (Hemp-Industries)
the
purchase consideration of $447,066.
for
Our audit procedures in relation to the acquisition of
Hemp-Industries included:
The accounting for this acquisition is considered to be
a Key Audit Matter because it involved the exercise of
judgment in relation to the fair value of acquired assets
and liabilities. The accounting for the acquisition is
significant to our audit as Hemp-Industries is a
material component to the Group.
Reviewing the sale and purchase agreement to
understand key terms and conditions;
Evaluating the assumptions and methodology in
management’s determination of the fair value
assets and liabilities acquired;
Reviewing
the component auditor’s working
papers on Hemp-Industries’ statement of financial
position at the acquisition date as part of the fair
value determination;
Assessing management’s determination of the
fair value of consideration paid; and
Assessing the appropriateness of the Group’s
disclosures in respect of the acquisition.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 31 December 2016, 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 accordingly 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 this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors 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 ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the 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 Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/Pronouncements/Australian-Auditing-
Standards/Auditors-Responsibilities.aspx. This description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors' report for the year ended 31 December
2016.
In our opinion, the Remuneration Report of Creso Pharma Limited, for the year ended 31 December 2016,
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.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 28 February 2017
TUTU PHONG
Partner
Corporate Governance Statement
The Company’s Corporate Governance Statement can be found at the following URL:
http://www.cresopharma.com/profile/corporate-governance/
Creso Pharma Limited – Annual Report 2016
Corporate Governance Statement
56 | P a g e
Additional information required by the Australian Securities Exchange and not shown elsewhere in this Annual Report
is as follows. The information is current as of 24 February 2017.
TWENTY LARGEST SHAREHOLDERS
Creso Pharma Limited – Annual Report 2016
ASX Additional Information
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
SUBURBAN HOLDINGS PTY LTD
PHEAKES PTY LTD
WHP MANAGEMENT CONSULTING GMBH
GOLDEN DAWN LIMITED
INTERNATIONAL WATER ENERGY SAVERS LTD
MR TEIK TATT OH
ANGLO AUSTRALASIA HOLDINGS PTY LTD
STOCK ASSIST GROUP PTY LTD
MR VOLODYMYR YATSYNA
SUBURBAN HOLDINGS PTY LTD
SUBURBAN HOLDINGS PTY LIMITED
R A H (STC) PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
MR PHILLIP FREDERICK CUTTING
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
A & J TANNOUS NOMINEES PTY LTD
MICHAL MASEK
ROSS SMITH
CHIFLEY INVESTOR GROUP PTY LTD
ROMAN STRECHAJ
Total: Top 20 holders of ORDINARY FULLY PAID SHARES
LARGEST LISTED OPTIONHOLDERS
1.
2.
3.
4.
5.
6.
7.
8.
BIOLINGUS IP GMBH
AUSTRALIAN SHARE NOMINEES PTY LTD
GBTPHARMA LTD
MR SIMON BUCKINGHAM
JP SECURITY HOLDING PTY LTD
PROF FELIX GUTZWILLER
SARA RAQUEL PEYRAUBE BARQUI
MR ISAAC KOBRIN
Total: Top holders of UNLISTED OPTIONS
Number
Held
4,000,000
3,375,000
3,000,000
2,650,000
2,300,000
2,000,000
1,750,000
1,323,783
1,264,480
1,250,000
1,250,000
1,000,000
921,083
700,000
632,561
525,000
500,000
500,000
500,000
500,000
34,071,628
Number
Held
2,886,250
2,250,000
300,000
250,000
250,000
200,000
200,000
200,000
6,536,250
Percentage
6.93%
5.85%
5.20%
4.59%
3.98%
3.46%
3.03%
2.29%
2.19%
2.17%
2.17%
1.73%
1.60%
1.21%
1.10%
0.91%
0.87%
0.87%
0.87%
0.87%
59.02%
Percentage
44.16%
34.42%
4.59%
3.82%
3.82%
3.06%
3.06%
3.06%
100.00%
DISTRIBUTION OF EQUITY SECURITIES
(i) Ordinary share capital
57,725,001 fully paid shares held by 1,245 individual shareholders. All issued ordinary shares carry one vote
per share and carry the rights to dividends.
57 | P a g e
DISTRIBUTION OF EQUITY SECURITIES (CONTINUED)
The number of shareholders, by size of holding, is:
Creso Pharma Limited – Annual Report 2016
ASX Additional Information
Range
Total holders
Units
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Total
66
479
247
377
76
1,245
5,960
1,488,744
2,047,409
12,755,975
41,426,916
57,725,001
% of Issued
Capital
0.01%
2.58%
3.55%
22.10%
71.77%
100.00%
(ii) Unlisted Options
250,000 unquoted options with an exercise price of $0.40 and an expiry date of 14 October 2018.
600,000 unquoted options with an exercise price of $0.40 and an expiry of 27 June 2020.
2,886,250 unquoted options with an exercise price of $0.20 and an expiry of 13 October 2020.
2,500,000 unquoted options with an exercise price of $0.20 and an expiry of 13 October 2019.
300,000 unquoted options with an exercise price of $0.50 and an expiry of 23 January 2021.
SUBSTANTIAL SHAREHOLDERS
The names of substantial shareholders who have notified the Company in accordance with section 671B of the
Corporations Act 2001 are:
SUBURBAN HOLDINGS PTY LTD
PHEAKES PTY LTD
WHP MANAGEMENT CONSULTING GMBH
ON‐MARKET BUY‐BACK
There is no current on-market buy-back.
Holding
Balance
% of Issued
Capital
4,000,000
3,375,000
3,000,000
6.93%
5.85%
5.20%
ACQUISITION OF VOTING SHARES
No issues of securities have been approved for the purposes of Item 7 of Section 611 of the Corporations Act 2001.
TAX STATUS
The Company is treated as a public company for taxation purposes.
FRANKING CREDITS
The Company has no franking credits.
58 | P a g e