ANNUAL REPORT 2019
CONTENTS
1
Financial
Highlights
4
6
Chairman’s
Letter
30
Financial
Report 2019
Managing Director’s
Letter
77
Independent
Auditor’s Report
10
Operating +
Financial Review
81
Shareholders
Information
85
Corporate
Directory
AGM Details
The Company’s 2019 Annual
General Meeting (AGM) will be
held at 2:00pm on Thursday
14 November 2019 at the
offices of Colin Biggers &
Paisley, level 42, 2 Park Street,
Sydney.
About Ecofibre
Ecofibre is a provider of hemp products in the United States and
Australia. Visit us at
ecofibre.com
.
In the United States, we produce hemp nutraceutical products for
human and pet consumption, as well as topical creams and salves:
anandahemp.com, anandaprofessional.com
.
In Australia, we produce 100% Australian grown and processed
hemp food products including protein powders, dehulled hemp
seed and hemp seed oil:
anandafood.com
.
We are also developing innovative hemp-based products in textile
and composite materials in partnership with Thomas Jefferson
University (TJU) in the United States:
hempblack.com
.
The Company owns or controls key parts of the value chain in each
business, from breeding, growing and production to sales and
marketing. Our value proposition to customers is built on strong
brands and quality products.
FINANCIAL HIGHLIGHTS
Revenue
up 519% from $5.7m to
$35.6m
NPAT
up 170% from $8.6m loss to
+ $6.0m
Fully diluted EPS
up 158% from 3.7 cps loss to
+ 2.2 CPS
Net Assets
up from $1.6m to
$
m42.3
US independent pharmacies
up 510% from 525 to
3,200
Channel mix
Branded channel sales
84%
Gross Margin
for H2 FY2019
77%
EBITDA margin
for H2 FY2019
25%
ECOFIBRE LIMITED
ANNUAL REPORT 2019 1
OUR VISION
Ecofibre’s vision is to become a global
leader in hemp applications by providing
innovative solutions that address emerging
health and resource issues.”
2
ECOFIBRE LIMITED
ANNUAL REPORT 2019 3
CHAIRMAN’S LETTER
Dear Shareholders
Ecofibre’s business model and management are both
new and focused on the future.
On behalf of the Directors it
is my pleasure to welcome
you to our first annual report
as a listed company. You will
note the sharp turnaround in
our financial performance set
out later in this report.
My family’s interest in hemp extract and Ecofibre arose
because of our grand-daughter Katelyn’s severe
Epilepsy condition - Dravet Syndrome, which is not
controlled by traditional medicines but is very well
(cannabis)
controlled by hemp
Eric Wang to join Ecofibre to look after our and your
investment. Eric became a Director in November 2015
and formally became the Managing Director / CEO in
December 2017. I became a Director and Chairman in
October 2017.
extracts. I encouraged
We are very fortunate to have Eric Wang as our CEO.
Eric was born in the United States and is a graduate of
the US Army’s West Point Military Academy and the
Tuck School of Business at Dartmouth College - he is
now an Australian citizen. His challenging job takes him
to the USA on a frequent basis. Most of our sales and
staff are in the USA where, unlike Australia, hemp
extract is both federally legal and not a controlled
substance ie. it can be bought over the counter without
prescription. This is the reason our Ananda Health
business is US based and why medicinal cannabis is
unaffordable in Australia.
Whilst we expect our strong profit turnaround will
continue, the business is still in its rapid ‘early growth’
stage development and therefore it is not possible to
give ‘detailed’ profit guidance. We will however, until
the growth and profits become more predictable, give
a quarterly business update to keep all shareholders
informed.
The diverse nature of our business (Health (USA), Food
(Australia) and Technology - Hemp Black (USA)) will over
time smooth the returns from our very differing
businesses. At this time Ananda Health is the dominant
business. There is a ‘land grab’ taking place in the USA
thanks to the 2018 Hemp provisions which make Hemp
Federally legal and no longer a controlled substance.
Marijuana in the USA remains Federally illegal but legal
in some states.
4
The difference between Hemp and Marijuana industries is not well understood so I have given a brief
explanation below.
Hemp is Cannabis with less than 0.3% Tetrahydrocannabinol (THC) the cannabinoid that gives a high. ‘Street’
Marijuana could have in excess of 20% THC, 50 - 75 TIMES stronger than Hemp Extract. The major cannabinoid
in Hemp Extract is cannabidiol (CBD) commonly referred to as CBD oil. Ecofibre is NOT involved in the
Marijuana industry. Your company only grows and processes Hemp oil (mostly CBD).
As mentioned, we currently have three Divisions. Ananda Health is our largest and most profitable business.
Ananda Health is wholly US based even though we are an Australian company. The rules around ‘Medicinal
Cannabis’ in Australia are such that we don’t believe we could build a viable business here. This is because of
the uncommercial rules around growing and processing the plant along with the lack of demand caused by the
regulations which make it unaffordable to almost all Australians.
We do not see Australian rules changing in the near future.
Personally, I am very engaged in this humanitarian issue which is causing untold permanent health damage to
young Australians. My actions on behalf of defenceless young Australians should not be linked to my position
as Chairman of Ecofibre.
All businesses face risks and especially those in new high growth industries where legislation and regulations
are being developed whilst at the same time explosive and sometimes unprofessional competition is raging.
We are mindful of the risks, both known and emerging, and manage them to the best of our ability in keeping
with our desire to produce high quality and affordable products. Our growth, and the No 1 ranking of Ananda
Health in US Pharmacies, is evidence of both our quality and professional market appeal.
We highly value all our stakeholders including:
! the people who buy and repeatedly use our products;
! the Pharmacy Professionals and other retailers who stock and sell our products;
! our auditors, legal and other professional advisers, including research
and business partners, and of course;
! our dedicated staff and their families and our farmers that
assist us to produce quality products for the benefit our
of all
users including my family; and
! last, but not least, YOU the shareholders who
funded the company to reach profitability.
Thank You
Barry Lambert
Chairman
ECOFIBRE LIMITED
ANNUAL REPORT 2019 5
MANAGING DIRECTOR’S LETTER
Dear Fellow Shareholders,
I would like to join Barry in thanking you for your support of Ecofibre and
extend a special welcome to new investors who joined the share register
following the Company's recent IPO.
As this is our first annual report as a listed company, I thought it would be
useful to share some insight into our business philosophy and culture, and my
approach to running the business.
S
R
E
M
O
T
S
U
C
R
U
O
OUR
CUSTOMERS
ARE OUR
MOST
VALUABLE
RESOURCE.
THEY ARE THE REASON
WE EXIST AS A
COMPANY. WE MUST
NEVER TAKE THEM
FOR GRANTED. OUR
PRODUCTS MUST
ALWAYS HELP THEM
LIVE THEIR BEST LIVES.
Y
N
A
P
M
O
C
R
U
O
WE WILL
ALWAYS BE
THE MOST
RESPECTED
COMPANY.
OUR PROFESSIONAL
AND PERSONAL BRAND
MUST ALWAYS BE
PROTECTED. TO DO SO,
WE MUST ALWAYS TAKE
FULL ACCOUNTABILITY
TO RESOLVE ISSUES.
WALKING AWAY FROM
TOUGH PROBLEMS IS
NOT SOMETHING
WE DO.
S
E
V
L
E
S
R
U
O
Y
T
I
N
U
M
M
O
C
&
Y
L
I
M
A
F
R
U
O
A GREAT
COMPANY HAS
ACCOUNTABLE
INDIVIDUALS.
YOU SHOULD ALWAYS BE
THE MOST RESPONSIBLE
PERSON IN THE ROOM.
THERE IS A SIMPLE RULE
TO FOLLOW - IF IT
DOESN’T FEEL RIGHT, IT
ISN’T. WE DON’T NEED
TO DEFINE RIGHT AND
WRONG WITH A LONG
SET OF RULES -
EVERYONE WE HIRE
KNOWS RIGHT FROM
WRONG.
WHEN YOU
LOVE WHAT
YOU DO,
IT WON’T
FEEL LIKE
YOU ARE
WORKING.
THIS IS SOMETHING
EACH OF US SHOULD
STRIVE FOR. IF YOU
DON’T LOVE WHAT
YOU ARE DOING FOR
OUR CUSTOMERS,
OUR COMPANY AND
YOURSELF, YOU ARE
IN THE WRONG JOB.
Y
R
T
S
U
D
N
I
R
U
O
WE ARE A
LEADER IN
OUR INDUSTRY
WHICH MEANS
BREAKING
AND SETTING
THE RULES.
WE WILL BE INNOVATIVE
AND DISRUPTIVE IN THE
RIGHT PLACES AT THE
RIGHT TIME. THIS MEANS
WE WILL TAKE CHANCES
AND GROW RESPONSIBLY.
5
0
2
0
4
0
3
0
O U R E N V I R O N M E N T
0
0
WE ALWAYS STRIVE TO LEAVE OUR ENVIRONMENTS
BETTER THAN HOW WE FOUND THEM.
ALL FACETS OF OUR OPERATIONS ARE DEPENDENT ON THE ENVIRONMENTS WITH WHICH
WE INTERACT, WHETHER ON A MICRO OR MACRO SCALE AND AS SUCH WE WILL ALWAYS
TREAT THESE ENVIRONMENTS WITH THE UTMOST RESPECT.
1
0
6
Business philosophy and culture
Our culture is embodied in key values oriented around six stakeholder groups.
Our values are on prominent display at every one of our offices and play a very
large part in informing our day-to-day decisions and actions.
As a participant in the industrial hemp industry, we find ourselves in the privileged
position of being in an industry that can create a significant benefit to people and
our environment. Given this opportunity, Ecofibre has a deep commitment to
ensuring that we leave our environments in a better condition than how we found
them. This focus on improving the lives of our customers and environment is
something that easily forms the basis for any successful business.
Given this privileged position, our teams have a very clear understanding that their
role is to take care of our Customers, our Company, Ourselves, our Family,
Communities and our Industry. There is no confusion on these priorities and this
clarity leads to clear decision making at all levels across Ecofibre.
As a shareholder, you will notice that you are conspicuously absent from the above
list. Whilst my executive team and staff understand the importance of creating
shareholder value, this accountability is not delegated. I take personal and full
responsibility to deliver a return on your investment.
In many cases the term “shareholders’ best interests” is used in a way that can
cause confusion at all levels. At its worst, customers are de-prioritised and long
term value and brand equity is destroyed. At its best, the right framework can
deliver strong alignment between customers and long-term shareholder value.
My team understands that they have the most critical task of looking after our
customers, our communities and each other. My role is to translate their hard
work into long term value for you.
The key measure I use to anchor strategic and financial decisions is sustained
growth in diluted earnings per share (diluted EPS). As I manage to this outcome,
the operating decisions that I personally own are: capital allocation to support
growth across our businesses; product pricing; and the terms and conditions for
major client contracts.
If the right decisions are made, this approach should create strong alignment
between value for our customers and value for our shareholders.
ECOFIBRE LIMITED
ANNUAL REPORT 2019 7
Strategic approach to allocation of shareholder funds
Managing and allocating shareholder funds is a privilege that I, and all Directors, take very seriously. As
shareholders you will be aware that our business operates in highly competitive new industries, with significant
growth potential and a fluid regulatory environment across multiple geographies.
We have employed a very strict set of principles in managing capital and prioritising how it is deployed.
1) Aligned to mission: we only enter markets where we believe our products can improve the lives and well-
being of people and the sustainability of our planet
2) Focused early: we target customers and segments that our capabilities and values are aligned to:
!
!
!
Quality, safety and transparency
Education
Sustainability
3) Designed to last: our business models must be profitable, sustainable and provide flexibility as we operate in
a highly fluid industry
4) Executed with conviction: when the business model decision is made we properly invest in infrastructure
and brand.
2019 results
The team and I are pleased that Ecofibre has been able to report a quality financial results for 2019.
The business reached an inflection point during the year with strong revenue growth, margin expansion and
strategic cost management making the company now profitable.
We have successfully transitioned from an R&D focus to a commercial focus over the past year. The portfolio
approach we use across our three businesses has shown early success as we progressively focus management
resources and capital on each business in line with its stage of growth and maturity. Specifically:
!
!
!
Ananda Health was at full commercial operations in FY19 and the entire team has delivered a quality
outcome. We are now the market leaders for hemp-derived CBD in our target market - the US retail
pharmacy segment.
Ananda Food is prepared for full scale commercial operations in FY20 and we are pleased to have Australia’s
largest grocery retailer as a foundation client.
Hemp Black has completed R&D after two years of work in the US and we are now beginning to see early
commercial activity as we complete our infrastructure in FY20.
Ecofibre has the cashflow and balance sheet strength to continue investing for the future whilst continuing its
focus on delivering profitable growth. As we look to the future, the management team is confident we have the
right strategy and execution focus to be successful.
8
From left to right: Jonathan Brown (Chief Financial Officer), John Ryan (Chief Operating Officer),
Kieren Brown (Managing Director, Ananda Food), Eric Wang (Managing Director), Alex Capano (Chief Science Officer),
Barry Lambert (Chairman of the Board), Chuck Schneider (Chief Revenue Officer), Alastair Bor (Chief Technology Officer),
Kalie Borsato (Director, Sales Operations), Adam Cantwell (Vice President, Global Operations), Jerry Barnett (Staff Pharmacist),
Jon Meadmore (Director).
Thank you again to our customers, staff, business partners and shareholders for building this business, and for
being part of Ecofibre's future. As shareholders, we are all fortunate to have a highly talented and committed
team across all of our businesses.
My personal thanks to Barry and Jon, my fellow directors, who have been invaluable to the growth and
development of our Company.
Eric Wang
Managing Director
ECOFIBRE LIMITED
ANNUAL REPORT 2019 9
OPERATING + FINANCIAL REVIEW
STRATEGIC HIGHLIGHTS
! first full year of commercialisation
! business model in place
! beginning to achieve scale
! strong capabilities across all businesses
FINANCIAL HIGHLIGHTS
! quality revenue growth
! margin expansion
! focused cost management
! positive cash from operations
! strong balance sheet
10
Group Strategy
Ecofibre’s vision is to become a global leader in hemp applications by
providing innovative solutions that address emerging health and
resource issues.
Focused execution in a rapidly changing industry
The global market for hemp continues to grow quickly.
We see significant opportunity across multiple segments and
geographies, and we have made the necessary strategic choices to
focus the company’s business portfolio:
!
!
!
!
!
!
!
!
Ecofibre is purpose driven - we make premium quality products that
help people live their best lives.
Our 'Ananda' retail brands are positioned for the health and
wellbeing segment, and Hemp Black will improve the functionality
and sustainability of a range of industrial-use products.
We do not produce or sell medicinal or recreational marijuana.
Recreational marijuana is legal nationally in only two countries,
Canada and Uruguay. Other countries have decriminalised
recreational marijuana, and in many US states recreational marijuana
products are widely available.
Unlike marijuana, hemp is a versatile and US federally legal product.
Ecofibre believes that hemp offers the best opportunity for
scalable growth.
Our focus is on the most attractive markets, including the United
States (Ananda Health) and Australia (Ananda Food) and in some
cases global categories (Hemp Black)
Product innovation is a core capability across the business,
supported by strong agricultural capabilities in hemp
We invest in strong brands to build customer awareness and loyalty
We prioritise relationships with strong, reputable and aligned
business partners
We build scale in selected parts of the value chain, and operational
excellence and productivity improvement is an ongoing focus
We value sustainability in all its forms – commercial, environmental
and social
ECOFIBRE LIMITED
ANNUAL REPORT 2019 11
Strong Portfolio
Opportunity
We manage our businesses as a
portfolio.
The strategic, operational and
financial dynamics of each business
are unique, notwithstanding that the
feedstock for each is sourced from
the hemp plant.
Our investment of management time
and financial capital is phased across
the portfolio according to market
opportunity and execution risk.
Ananda Health is the group's most
mature business - profitable,
cashflow positive and beginning
to achieve scale.
Ananda Food and Hemp Black
were both recipients of net cash
investment during the year.
Ananda Food has a fully
commissioned supply chain and is
now able to increase its focus on
sales and marketing operations.
Hemp Black is in a product
development and pre-commercial
phase and beginning to commission
its supply chain.
THE CANNABIS PLANT
hemp v marijuana
Hemp and marijuana both belong to
the plant genus Cannabis sativa L.
The female flower of both plants
contains resinous glands known as
trichomes, which in turn contain high
concentrations of naturally occurring
compounds called cannabinoids.
There are over 120 types of
cannabinoids including cannabidiol
(CBD) and Delta-9-
tetrahydrocannabinol (THC).
Despite their similarities the plants
are genetically distinct and
distinguished by both chemical
makeup and use.
Marijuana contains high
concentrations of THC and has a
psychoactive effect.
Hemp is naturally high in CBD,
typically contains less than 0.3%
THC, and has no psychoactive effect.
12
Group Financial Results
FY2019
Revenue
$35.6m
519%
on FY18, focus
on quality
revenues
FY2019
Sales by channel
%
84% of sales
from Ananda
branded
products
FY2019
NPAT
$6.0m
170%
on FY18, first
full year profit
3,200
35.6
FY2019
US Independent
Pharmacies (#)
3,200
510%
on FY18
5.7
0.6
5.7
-
2017
2018
2019
2017
2018
2019
FY2019
Profit before tax
$4.6m
156%
on FY18,
business model
strength now
evident
78%
wholesale
16%
white label, bulk and other
6%
b2c digital
6.0
FY2019
Diluted EPS
2.17cps
158%
on FY18
4.6
-8.5
-8.2
2017
2018
2019
2.17
-8.6
-8.6
-4.01
-3.71
2017
2018
2019
2017
2018
2019
1 Diluted EPS for 2017 and 2018 adjusted for 3:1 share split implemented on 6 February 2019
ECOFIBRE LIMITED
ANNUAL REPORT 2019 13
Group Financial Results
Ecofibre delivered an inaugural full year profit after tax of $6.0m in FY19 (H1 FY19 loss: $0.4m; H2 FY19 profit:
$6.4m).
Group revenue increased 519% to $35.6m (FY18: $5.7m), driven by the Ananda Health business and demand for
hemp-derived CBD in the United States.
Gross profit increased to $25.8m (FY18: $2.0m), and gross margins for the year were strong (FY19: 72%, FY18:
34%).
Operating cost growth was moderate in comparison to the growth in revenue and margins, up 72% to $22.7m
(FY18: $13.2m).
The operating leverage inherent in our business model is now evident in our EBITDA margin, which reached 25%
in the second half of FY19.
The profit result included the impact of IPO costs ($0.8m pre-tax expense) and first-time recognition of a
deferred tax asset ($2.0m) partially offset by a deferred tax liability ($0.4m).
Adjusting for these items, underlying EBITDA for FY19 was $6.7m (FY18: $7.3m loss) and underlying NPAT was
$5.1m (FY18: $8.6m loss).
2019 Inflection Point
Overall we are pleased with the strength of the group’s financial results.
Our 2019 profit was an outcome of significant, ongoing investment over the last three years to commercialise
Ecofibre's capabilities.
Sales growth has been consistently strong, rising from $6.0m in the first quarter of the year to $12.3m in the last
quarter. The primary driver of growth has been the continued increase in the number of US independent
pharmacies that stock Ananda Health products. This channel account for approximately 70% of revenue. We also
have a diverse and resilient customer base, and no single distributor or customer accounts for more than 4% of
revenue across the Ecofibre group.
Our businesses are capital efficient and have the operating leverage to produce good margins. There has been
moderate investment in fixed and working capital in comparison to sales; and at a group level our return on
assets is strong and improving
Operating cashflows are now positive and our balance sheet is strong, with significant cash reserves and low
debt. We expect the remainder of the group's long-term debt to be retired in September 2019.
As a result, Ecofibre has the ability to fund continued investment in the growth of its businesses, and the
flexibility to pursue opportunities as they arise.
14
In FY2019 we reshaped our cost base to align with
strategy. Thematically our objectives were:
!
increase the proportion of financial resources
focused on front-end capability such as production
capacity and
marketing.
efficiency, as well as sales and
! sales and marketing expenditure remains highly
focused on wholesale rather than retail markets.
!
!
!
increase our investment in technology, including
digital customer channels, enterprise resource
planning and cybersecurity
increase focus and reduce pay-back times for our
research and development portfolio
tightly manage overhead costs
We will continue to invest in the development and
growth of our businesses in FY2020, both through
capital and operating expenditure.
Operating costs per unit reduced throughout FY2019
as the business began to achieve scale, while rapid
learning and decision making enabled continuous
productivity improvements. For example:
! farming - higher yield hemp flower input with
better CBD:THC ratios, better storage and just-in-
time sourcing of material
! processing - lower consumable costs, better
calibration of production processes with input
materials, introduction of in-house blending and
bottling
Shareholder outcomes
In FY2019, fully diluted earnings per share was 2.2cps.
In FY2020 we will continue to prioritise shareholder
outcomes as we manage the Group’s financial
performance.
ECOFIBRE LIMITED
ANNUAL REPORT 2019 15
Ananda Health
1
Ananda Health produces and sells hemp-derived CBD products in the USA, the world's largest market.
US research provider Brightfield Group forecasts that the US CBD market will grow to US $22bn by 2022.
2
Key brands are Ananda Hemp, Ananda Professional, Ananda Touch and Ananda Pets. The business also
selectively supplies strategic white label and bulk customers.
The business sells nutraceuticals, not pharmaceuticals, which provides a quicker and more capital efficient path
to the largest market segments. Our brands target the professional health and wellbeing segment - customers
using our products are typically seeking help with sleep, anxiety or pain.
Hemp-derived CBD products are now widely available in the US, but the product is not yet mainstream. There is
significant education required in the market and the Company’s full spectrum products, which include a range of
cannabinoids including CBD, are in the Company’s view, the highest quality products available. The industry
structure is still immature, characterised by a large number of small growers, processors and marketing
businesses targeting on-line or regional sales.
Our go-to-market strategy focuses on well-regulated and reputable distribution channels and emphasises high
quality training and advice.
Milestones
The business posted a number of milestones during the year:
!
!
!
!
!
3,200 independent pharmacies now stock Ananda Professional (December 2018: 1,540)
approximately 400 non-pharmacy wholesale customers
a number of new products were launched, including Ananda Pets, Ananda Touch and Ananda Hemp roll-on
cream
our Kentucky processing facility was extended to increase extraction capacity and to incorporate blending
and packaging of finished goods
we partnered with Tracegains, a leading supplier of quality management solutions for the food, beverage and
supplement industry, to give large wholesale businesses transparency on our supply chain. Over time this will
benefit mainstream food manufacturers and nutraceutical distributors, who will have access to a familiar data
source as they manage hemp inputs into their supply chain.
Vertically integrated supply chain
In 2014 Ananda Health was the first company to legally import hemp seed into the US for over 50 years.
Since then we have partnered with farmers in Kentucky to source, grow and process over 1,500 acres of hemp
crops. Broad acre farming, and farming methods adapted from other established crops such as tobacco, provide
significant advantages for US-based hemp farmers.
CBD and other cannabinoids are extracted from dried hemp flowers. Products are then blended and bottled on
site at our facility near Cynthiana, Kentucky.
1 Hemp Business Journal, The Global State of Hemp: 2019 Industry Outlook
2 Brightfield Group, Hemp-Derived CBD, 2018 Market Overview & Analysis
16
Strategic
Intent:
be the preferred
provider in the US
practitioner and
pharmacy channels by
providing federally
legal, safe, high quality
products. We have a
strong believe that
hemp-derived CBD
products have an
important role to play
in the future of
healthcare.
ECOFIBRE LIMITED
ANNUAL REPORT 2019 17
Our product range includes:
!
!
!
full spectrum (<0.3% THC) and broad spectrum (0.0% THC)
a range of formats, including ingestible (tinctures, gel caps) and topical (salves, creams)
a range of sizes and concentrations, from 15mg gel caps to 2,000 mg tinctures
Safety, quality and consistency are the key focus areas for all Ananda Health products. Plant material is tested
before extraction, and each product batch is independently tested by external ISO 17025 certified laboratories
for cannabinoid profile, and for potential contaminants such as pesticides, heavy metals, solvents and microbials
prior to shipment.
The US Retail Pharmacy Market
Ananda Health is focused on the US retail pharmacy channel, particularly independent pharmacies, which have
led innovation in hemp-derived CBD.
# of US Retail
1
Pharmacies
22,000
Independents
2
22,700
Retail,chains
(e.g. Walgreens, CVS)
6,600
Supermarkets
(e.g. Krogers)
5,100
Mass Merchant
(e.g. Walmart)
1,500
Other
1 does not include hospital pharmacies, veterinarians, and practitioners
2 includes distributor affiliated (e.g. AmerisourceBergan Good Neighbor
Pharmacy [4,800], McKesson Health Mart [4,800])
Independent pharmacies are one of the
largest segments in the US retail pharmacy
market.
As local community pharmacists,
independent pharmacies are part of the
civic, social and economic fabric of the
communities they serve.
They dispense prescription medicines and
over-the-counter health products.
Independent pharmacies have the freedom
and autonomy to innovate and improve the
health of the patients and communities
they serve. They have been early adopters
of hemp-based CBD products.
Customers trust their local community pharmacy to provide the right products and the right advice, and those
pharmacies trust Ananda Health to provide them with the highest quality, compliant and traceable products.
Through its exclusive Ananda Professional brand, Ananda Health has developed tailored training programs,
before and after sales support, observational studies and distribution arrangements to support pharmacy
owners.
As a result Ananda Health is now the clear market share leader for hemp-extracted CBD products across all US
3
retail pharmacies as measured by sales.
3 Information Resources Inc
18
INDEPENDENT
PHARMACIES
Independent pharmacies
have the freedom and
autonomy to be early
adopters to improve the
health of the patients and
communities they serve.
National Community
Pharmacists Association
2018 Digest
ECOFIBRE LIMITED
ANNUAL REPORT 2019 19
Regulatory environment continues to mature
In September 2017 the World Anti-doping Agency removed CBD from its list of prohibited substances, and the
World Health Organisation Expert Committee on Drug Dependence preliminary report found that CBD is safe
4
and non-addictive.
The regulatory environment for hemp nutraceuticals in Australia remains restrictive. Hemp derived CBD is still
classified as a Schedule 4 prescription medicine and the entire value chain - growing, processing and distribution
- is heavily regulated. The number of prescriptions written under the federal government's Special Access
Scheme and Authorised Prescriber Scheme is increasing but overall the market remains small.
5
Regulatory environments in European and Asian markets remain diverse, and in South America regulations are
typically more advanced and consistent.
In the United States, hemp became a federally legal agricultural commodity under the 2018 Farm Bill. As a
consequence, hemp and hemp products are no longer a controlled substance , and hemp is now regulated as an
agricultural commodity by the US Department of Agriculture (Food & Drug Administration, FDA) rather than the
US Justice Department (Drug Enforcement Administration, DEA).
6
The fifty US states still have varying regulations in relation to hemp-derived CBD. Only three still prohibit hemp
products.
Cropping of hemp has increased strongly, and national retailers have begun to stock hemp-derived CBD
products for the first time in calendar 2019, initially only on a trial basis for topical creams. More recently
ingestible products are now also being stocked in selected stores. Specialty food and beverage manufacturers
are incorporating hemp-derived CBD into their products, but large established brands are yet to participate
pending clarity from the FDA.
To date the FDA has approved only one cannabis-derived prescription medicine in the US for limited indications:
treatment of two rare and severe forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome.
The FDA recently held public hearings on the regulation of CBD in dietary supplements, food and drinks, and is
reviewing its regulatory framework for non-drug uses. For Ananda Health, the importance of safety compliance
cannot be overstated. Businesses that are not 100% compliant are potentially committing a felony and place
their customers at risk. This is particularly important in the highly regulated pharmacy segment, which is
regulated by state-based pharmacy boards and also the DEA.
Overall, regulatory trends in the US are encouraging, with strong bipartisan support from Republican and
Democratic representatives.
In particular, Senate Majority Leader Mitch McConnell from Kentucky was instrumental in the passing of the
hemp provisions in the 2018 Farm Bill and continues to provide strong leadership and support to the industry in
Kentucky and nationally.
4 World Health Organisation Expert Committee on Drug Dependence, Cannabidiol (CBD) Pre-Review Report, 10 November 2017
5 Australian Therapeutic Goods Act 1989, Therapeutic Goods Regulations 1990, Poisons Standard
6 US Controlled Substances Act
20
CANNABIS IS BECOMING A
HUGE JOB CREATOR
Discussions about job growth in the U.S. tend to focus on industries such as
technology and health care. But the biggest boom may be happening in cannabis.
Our burgeoning industry is among the fastest-growing job markets in America.
According to cannabis information hub Leafly’s 2019 Cannabis Jobs Count, cannabis
directly employs more than 211,000 full-time workers in the U.S. Add indirect jobs
and the total number of full-time workers dependent on the legal cannabis industry
hits nearly 300,000.
Forbes Magazine, 20 May 2019
ECOFIBRE LIMITED
ANNUAL REPORT 2019 21
Strategic
Intent:
be the leading
hemp food
supplier in
Australia and
Asia.
Ananda Food
Ananda Food’s current business is focused on the production
and sale of hemp foods primarily in Australia. Products are sold
to wholesalers and distributors, including bulk, white-label and
branded products.
We sell products made from 100% Australian grown seed to
ensure the best food quality, safety and tracability. Importers
into Australia are not able to import live whole seed for domestic
processing, but must rely on importing finished goods,
intermediate processed products or denatured seed.
Ananda Food is focused on working with wholesale customers to
improve consumer awareness and education, emphasising the
importance of quality and freshness, as well as dietary education
and recipe development.
Milestones
Key milestones for Ananda Food in FY2019 include:
!
!
!
!
During the year Ananda Food planted 705 hectares of
commercial food crops across three states, Tasmania, New
South Wales and Queensland.
This represents and increase of nearly 50% on the prior year,
reflecting the business’ strong grower relationships and
genetics.
In November 2018 Ananda Food commissioned a production
facility in Beresfield, New South Wales (NSW), which now
produces de-hulled seed protein and fibre powders.
An oil pressing production line is also currently being
commissioned.
Well known author and chef Michael Moore from O Bar and
Dining in Sydney is working with Ananda Food to develop
and promote hemp food products.
Ananda Food received its first orders to supply white label
product for Woolworths’ Macro brand.
22
HEMP SEED
Nature’s superfood
With a perfect balance of essential omega acids 3 & 6,
iron, vitamin E and all of the essential amino acids,
hemp seeds are one of the most nutritionally complete
foods in the world.
Hemp is a protein powerhouse. Hemp is also a “gentle
protein provider” and tolerated well by people with
sensitive stomachs. Two of the main proteins in hemp
are Edestin and Albumin. They are readily digestible
and boost the immune system.
Hemp contains 20 amino acids, including 9 essential
and 2 semi-essential amino acids that our bodies can’t
produce.
Hemp is also rich in fibre - a plant-based carbohydrate
that can’t be broken down into sugar molecules and is
only found in plant-based sources. Fibre promotes
good heart health, reducing the risk of certain types of
cancer and aids healthy digestion.
Hemp seeds are a great source of magnesium as well as
other minerals including iron, phosphorus and zinc.
Magnesium is required for over 300 important
processes in the body. Increased stress, poor diets, low
soil quality and digestive challenges are contributing to
our increasing risk of magnesium deficiency.
ECOFIBRE LIMITED
ANNUAL REPORT 2019 23
Vertically integrated supply chain
Ananda Food has a unique capability in Australia to grow broad-
acre, high yield hemp seed crops across multiple latitudes.
Capabilities in hemp genetics and farming are particularly
important in the food industry. The productivity and cost-per-
tonne of hemp seed is a key determinant of product margins,
and the ability to grow crops from Tasmania to Queensland
provides an extended growing season and an ability to better
match supply and demand throughout the year.
Despite severe drought conditions in New South Wales, no crops
were lost during the year.
The business has approximately 900 tonnes of hemp seed
available to support the growth of the business.
The Beresfield facility is licensed by the NSW Department of
Health and Department of Primary Industries and has third party
certification from
Critical Control Points (HACCP)
requirements. This is critical to
demonstrate a robust food safety system across all areas of our
operations.
HACCP Australia under Hazard Analysis and
The facility passed its first HACCP audit with 100% conformance.
The supply chain is now able to scale to support multiple, large
wholesale customers, including future export markets in Asia.
Growing demand for vegan proteins
Ecofibre believes that plant-based proteins will play an important
role in future healthy diets.
Plant based foods are more sustainable, lower cost, and often
healthier sources of proteins and other nutrients. Over time,
hemp and other plant based proteins will be incorporated into a
wider variety of everyday foods.
Feeding the world of tomorrow can only be done by relying
more on plant-based proteins as they are more scalable and less
harmful for the environment.
7 metric tonnes per annum
24
As consumer demand for plant-
based products accelerates,
ingredient manufacturers are
seeking points of
differentiation. Plant based
food and beverage sales in 2018
exceeded $3.7bn in the United
States, rising 17% over 2017,
according to the Good Food
Institute, Washington, and there
are few signs the pace of
category growth is going to
decelerate
Food Business News, 9 April 2019
ECOFIBRE LIMITED
ANNUAL REPORT 2019 25
Hemp Black
Hemp Black is Ecofibre’s industrial products business.
Hemp has a number of well known properties that make it ideally suited to a wide range of industrial uses.
Hemp is naturally sustainable, anti-odor, anti-microbial - and in the form of carbon, it's capable of conducting
electrical current.
Ecofibre partnered with Jefferson University in 2017 to begin exploring these properties and develop
commercial applications using patented process technologies. To-date the business has filed seven provisional
patent applications.
8
As a result of ongoing development work we have identified five core products suitable for commercialisation:
!
!
!
!
!
Hemp Black – carbon infused high-performance fibre and intelligent textile
Hemp Black Ink – carbon infused conductive water-based ink
Hemp Black Hide – Ananda full spectrum extract vegan leather
Hemp Black Element – Ananda full spectrum extract infused polymer fibre
Hemp Black Nano – Ananda full spectrum extract nano-film
The core inputs to each product are Ananda Health hemp-derived full spectrum CBD extract, and carbon made
from the hemp plant.
Hemp Black Hide, Element and Nano are already able to be produced in commercial quantities through our
partners, leading high-technology textile manufacturers Texinnovate and Triad Polymers.
In-house testing protocols have been developed and independently validated where no industry standards
currently exist, for example, the anti-microbial effectiveness of CBD infused fabrics.
The equipment required to produce Hemp Black and Hemp Black ink has been ordered and in some cases has
already been manufactured to Ecofibre's proprietary specification.
Ecofibre is in active discussions with potential customers across a range of industries. Our current focus is to
understand customer requirements and position Hemp Black products so they can be incorporated into existing
supply chains.
Milestones
Key milestones for Hemp Black in FY19 included:
!
Construction of the new Hemp Black manufacturing facility commenced in Georgetown, Kentucky in
June 2019
The building will also serve as Ecofibre's new US headquarters, and provide additional storage and
manufacturing space for Ananda Health.
It will be a showcase for Hemp Black and Ananda products, and has been designed to meet the highest
standards of sustainability.
! Hemp Black is on track to begin early commercialisation of its products in FY20.
8 patents are filed and owned by Thomas Jefferson University, and Ecofibre has exclusive, global rights to commercialise these technologies
26
Strategic
Intent:
be the recognised
global leader in
sustainable high
tech hemp
applications.
ECOFIBRE LIMITED
ANNUAL REPORT 2019 27
Building a sustainable future
The hemp industry has long been synonymous with sustainability, and since its inception Ecofibre has
recognised the importance of a sustainable future.
As each of Ecofibre's businesses grow we are mindful that we have a responsibility to protect the wellbeing of
our people, planet, partners, and our communities.
We aspire to be ‘zero harm’, and to show leadership by working in a responsible, sustainable manner across all
our businesses.
As set out in our Governance Statement, we have taken a number of steps to emphasise sustainability in our
business culture:
!
!
!
Board commitment - the Board has adopted policies that make it clear to all our people that our company
values sustainability
Management focus and resources - during the year we employed a dedicated sustainability professional to
build the tools and culture to progress sustainable business practices across the group
Brand promise - each of our brands embody our commitment to sustainability
In time we will introduce measurable sustainability benchmarks and targets.
For example, we already know that through our FY19 growing operations Ecofibre has sequestrated significant
volumes of CO in hemp plants. A core part of the Hemp Black value proposition will be the sustainability
embedded into each product. Hemp Black has received and is targeting a range of sustainability certifications
that will enable us to work with leading manufacturers and distributors of textile-based products.
2
We are careful to manage energy and water usage across the group. For example, in Australia we minimised
cropping in New South Wales in drought-declared areas in favour of Tasmania where water supplies were
relatively plentiful, and we installed significant solar capacity at one of our sites.
During the year we also undertook further practical steps toward sustainable outcomes:
!
LEED certification - our new Kentucky facility has been designed to achieve the highest green building
rating, LEED Platinum.
LEED (Leadership in Energy and Environmental Design) is the most widely used green building rating system
globally, and provides a framework to create healthy, efficient buildings. The LEED rating system considers
impact across seven categories: location and transportation, sustainable sites, water efficiency, energy and
atmosphere, materials and resources, indoor environmental quality, and innovation.
9
Through the use of sustainable materials, green infrastructure, daylighting principles, and the harvesting of
renewable energy, our new facility will reduce its energy need and water consumption while providing a safe
and healthy working environment.
9 See new.usgbc.org/leed
28
!
!
B Corporation commitment -
Certified B Corporations
represent a new kind of
business that balances purpose
and profit. B Corporations
legally commit to consider the
impact of their decisions on
their workers, customers,
suppliers, community, and the
environment.
Black business led this initiative
and has already secured a B
Corporation Pending Certificate,
and we are now seeking B
Corporation accreditation for all
our operations.
Our Hemp
10
Cradle to Cradle - Many leading
product manufacturers now
require their suppliers to be
cradle-to-cradle certified. To
receive certification, products
are assessed for environmental
and social performance across
five critical sustainability
categories: material health,
material reuse, renewable
energy and carbon
management, water
stewardship, and social fairness.
SUSTAINABILITY
CERTIFICATIONS
Targeting LEED
Platinum for new
US facility
B-Corp pending
certification
Certified
Corporation
PENDING
Pursuing full C2C
certification once
new facility
complete
to
cradle cradle
M a t e r i a l
H e a l t h
P L AT I N I U M
First carbon black
to receive platinum
recommendation
by MBDC
! MBDC is an organisation that was instrumental in
the creation of the cradle-to-cradle design framework.
Outlook
Each of our businesses are well positioned in attractive, growing markets.
In the US Nutraceutical market, larger vertically integrated businesses with strong brands are
becoming well established, and Ananda Health is well positioned with leading market share in a key channel. In
FY20 the hemp-derived CBD market will be increasingly ‘professionalised’ and the benefits of scale and
experience will become apparent.
In the Australian Food market, customer education and the use of hemp foods in everyday staples will be
catalysts for long term growth. Ananda Food’s production capability allow it to explore the potential for bulk
and white label distribution in Asia where Australian food has a strong reputation for safety and quality.
Hemp Black will complete key parts of its supply chain in FY20 and will begin to commercialise its technologies.
Our customers, staff, business partners and shareholders have built the company this far, and it is these people
who will determine our success into the future.
10
See bcorporation.net
ECOFIBRE LIMITED
ANNUAL REPORT 2019 29
FINANCIAL REPORT 2019
31
Directors’ Report
41
Auditor’s
Independence
Declaration
34
Remuneration
Report
42
Director’s
Declaration
44
Consolidated
Statement of
Profit or Loss
45
46
47
48
Consolidated
Statement of Other
Comprehensive Income
Consolidated
Statement of
Financial Position
Consolidated
Statement of
Cash Flows
Consolidated
Statement of
Changes in Equity
49
Notes to the
Financial Statements
30
Directors' Report
The directors present their report, together with the financial statements, on the consolidated entity (referred to
hereafter as the ‘Group’) consisting of Ecofibre Limited (referred to hereafter as the 'company' or 'parent entity') and
the entities it controlled at the end of, or during, the year ended 30 June 2019.
Directors
The following persons were directors of Ecofibre Limited during the whole of the financial year and up to the date of
this report:
Barry Lambert
Jon Meadmore
Eric Wang
Principal activities
The principal continuing activities of the Group during the financial year were breeding, growing, processing and
distributing hemp products.
Significant changes in the state of affairs
Ecofibre Industries Operations Ltd changed its name to Ecofibre Limited on 19 November 2018.
On 6 February 2019 the shares of the company then on issue were proportionally increased (split) in a ratio of 3:1.
Ecofibre Limited issued 20,000,000 new shares and raised $20m when it completed its initial public offering (IPO) on
the Australian Securities Exchange (ASX) on 29 March 2019. Earlier in the financial year, the Company had also
raised $7.3m pre-IPO funding.
There were no other significant changes in the state of affairs of the consolidated entity during the financial year.
Review of operations and results
The profit from ordinary activities for the Group after providing for income tax amounted to $6.0m (30 June 2018:
loss of $8.6m). The result includes a tax credit of $1.4m, which reflects first time recognition of a deferred tax asset
of $2.0m partially offset by a deferred tax liability of $0.4m.
The net assets of the Group are $42.3m as at 30 June 2019 (2018: $1.6m).
During the current year no dividend was paid (2018: Nil).
Matters subsequent to the end of the financial year
No matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future
financial years.
ECOFIBRE LIMITED ANNUAL REPORT 2019
31
DIRECTORS’ REPORT
Likely developments and expected results of operations
Ecofibre expects to complete construction of its new US headquarters and Hemp Black/Ananda Health production
facility by Q4 FY20. Production capabilities will be commissioned at the new site following completion of the building.
Ananda Health will continue to prioritise sales and marketing of hemp-derived CBD products in the US market,
particularly the independent pharmacy, and broaden retail pharmacy markets.
Ananda Food will leverage the investment in its HACCP – certified hemp production facility to supply large wholesale
customers.
Hemp Black will complete key parts of its supply chain in FY20 and begin to commercialise its technologies and
capabilities in one or more industrial markets.
At a group level, Ecofibre is investing in its organisational IT capabilities, including implementing an Enterprise Resource
Planning (ERP) system and upgrading its customer facing systems.
Environmental regulation
The Group is subject to and is compliant with all aspects of environmental regulations for its business activities. The
directors are not aware of any environmental law that is not being complied with.
Information on directors
Name:
Title:
Experience and expertise:
Barry Lambert
Non-Executive Chairman
Barry founded ASX listed company, Count Limited, a financial services business, in
1980. Count was one of the largest independent advice providers in Australia and
was acquired by Commonwealth Bank in 2011.
Barry was also asked to serve as Chairman of Class Limited and subsequently took
Class through to listing on the ASX. Barry also served as Chairman of ASX listed
Count Plus. In 2016 and 2017, Barry and Joy Lambert made significant donations to
establish the Lambert Initiative at Sydney University and Lambert Center at Thomas
Jefferson University, respectively. Both of these entities are focused on the research
and education of medicinal cannabis and hemp.
In 2017, Barry resigned as Chairman of Class Limited and Count Plus to focus on his
role as Chairman of Ecofibre.
Special responsibilities:
Member of the Audit, Risk and Compliance Committee
Name:
Title:
Experience and expertise:
Eric Wang
Chief Executive Officer and Managing Director
Eric joined Ecofibre as the CFO and Director in November 2015. He was appointed
CEO and Managing Director in December 2017. Eric has over 25 years of leadership
and executive management experience, both as an officer in the United States Army
and as a financial services executive in Australia. Prior to joining Ecofibre, Eric served
as Captain and Apache pilot in the US Army for eight years in a range of roles,
including Troop Commander, Operations Officer, Executive Officer and Personnel
Officer in the United States and Europe.
After leaving the military, Eric moved to Australia to work for the global management
consulting firm, Bain & Company, where he specialized in the financial services
industry in Australia and Asia. More recently, he served as the Chief Operating Officer
of Perpetual Limited and Director of the APO for AMP Limited.
Special responsibilities:
None
32
DIRECTORS’ REPORT
Information on directors (continued)
Name:
Title:
Experience and expertise:
Jon Meadmore
Non- Executive Director
Jon is a Brisbane-based partner of law firm, Colin Biggers & Paisley. He is the joint
leader of the corporate group, having practiced law for over 25 years. Jon holds a
Bachelor of Business (Accounting) in addition to his law degree.
Special responsibilities:
Chairman of Audit, Risk and Compliance Committee
Company secretary
Jonathan Brown is the company's Chief Financial Officer and has held the role of Company Secretary since 18 June
2018. He is a Chartered Accountant with 25 years of commercial experience. Jonathan has a Bachelor of Business
(Accounting), a Graduate Diploma in Advanced Accounting, and a Graduate Diploma in Finance and Investment.
Prior to joining Ecofibre in 2016, Jonathan worked for AMP, the London Stock Exchange and Ferrier Hodgson in a
variety of roles including corporate strategy, M&A, senior finance roles and insolvency & reconstruction.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held during
the year ended 30 June 2019, and the number of meetings attended by each director were:
Director
Attended
Held
Attended
Held
Board
Audit, Risk and Compliance
Committee
Barry Lambert
Eric Wang
Jon Meadmore
8
8
8
8
8
8
3
3
3
3
3
3
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
ECOFIBRE LIMITED ANNUAL REPORT 2019
33
DIRECTORS’ REPORT
Remuneration report (audited)
The remuneration report details the key management personnel (KMP) remuneration arrangements for the
consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations. It also
details the Company’s Employee Share Scheme (ESS) available to all employees in the Group.
KMPs are those persons having authority and responsibility for planning, directing and controlling the activities of
the entity, directly or indirectly, including all directors. Throughout this Remuneration report, the members of the
executive KMP are collectively referred to as “executives”.
Principles used to determine the nature and amount of remuneration
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Details of remuneration
Service agreements
Share-based compensation
Additional disclosures relating to key management personnel
Employee share scheme
Principles used to determine the nature and amount of remuneration
The Board is responsible for determining and reviewing remuneration arrangements for its directors and executives.
The performance of the consolidated entity depends on the quality of its directors and executives. The remuneration
philosophy is to attract, motivate and retain high performance and high quality personnel.
The Board has structured an executive remuneration framework that is market competitive and complementary to
the reward strategy of the consolidated entity.
The reward framework is designed to align executive reward to shareholders' interests by:
●
●
●
having total shareholder return as a core component of plan design;
focusing on sustained growth in shareholder wealth, particularly growth in share price; and
attracting and retaining high calibre executives.
Remuneration for executive and non-executive directors is structured separately.
34
DIRECTORS’ REPORT
Principles used to determine the nature and amount of remuneration (continued)
Non-executive director's remuneration
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a
general meeting. The most recent determination was at the Annual General Meeting held on 8 December 2017,
where the shareholders approved a maximum annual aggregate remuneration of $500,000.
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors' fees and payments are reviewed annually by the Board. The chairman's fees are determined
independently to the fees of other non-executive directors based on comparative roles in the external market. Non-
executive directors do not receive share options or other incentives.
Executive remuneration
The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components.
The executive remuneration and reward framework covers base pay, including superannuation, share-based
payments, and other benefits such as health care. The combination of these comprises the executive's total
remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed periodically
by the Board based on individual and business performance, the overall performance of the consolidated entity and
comparable market remuneration.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor
vehicle benefits) where it does not create any additional costs to the consolidated entity and provides additional
value to the executives.
The long-term incentives ('LTI') include share-based payments and any long service leave. Shares are awarded to
executives from shares already held by the ESS once the executives meet time and performance based vesting
hurdles.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following
tables.
The key management personnel of the consolidated entity consisted of the directors and CFO of Ecofibre Limited:
●
●
●
●
Barry Lambert – Non-Executive Chairman
Eric Wang – Managing Director and CEO
Jon Meadmore – Non-Executive Director
Jonathan Brown – CFO and Company Secretary
ECOFIBRE LIMITED ANNUAL REPORT 2019
35
DIRECTORS’ REPORT
Short-term benefits
Post-employment
benefits
Share-based
payments
Cash salary
and fees
$’000
Super-
annuation
$’000
Equity-settled
shares
$’000
Total
$’000
91
90
280
200
661
25
25
280
200
530
9
-
25
20
54
-
-
25
20
45
-
-
100
90
1,222
1,527
606
1,828
826
2,543
-
-
25
25
859
1,164
429
1,288
649
1,863
2019
Non-Executive Directors:
Barry Lambert (Chairman)
Jon Meadmore
Executive Director:
Eric Wang
Other Key Management Personnel:
Jonathan Brown
2018
Non-Executive Directors:
Barry Lambert (Chairman)
Jon Meadmore
Executive Director:
Eric Wang
Other Key Management Personnel:
Jonathan Brown
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Barry Lambert (Chairman)
Jon Meadmore
Executive Directors:
Eric Wang
Other Key Management Personnel:
Jonathan Brown
Fixed remuneration
At risk - LTI
2019
2018
2019
2018
100%
100%
20%
27%
100%
100%
-
-
-
-
26%
80%
74%
34%
73%
66%
Service agreements
Remuneration and other terms of employment for executives are formalised in service agreements. Details of these
agreements are as follows:
36
DIRECTORS’ REPORT
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Eric Wang
Managing Director and Chief Executive Officer
8 December 2017
No fixed term
Base salary of $280,000 per annum plus superannuation, to be reviewed every 12
months from the date of commencement. Either party may terminate the employment
upon 6 months written notice. No notice is required by the Company upon limited
events akin to misconduct or incapacity. Mr Wang is subject to a restraint of trade
restricting competition with the company for up to 24 months from termination of his
employment.
2,400,000 shares were issued on 28 December 2018 upon fulfillment of a time-based
vesting hurdle.
LTI:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Jonathan Brown
CFO and Company Secretary
8 December 2017
No fixed term
Base salary of $200,000 per annum plus superannuation, to be reviewed every 12
months from the date of commencement. Either party may terminate the employment
upon 3 months written notice. No notice is required by the Company upon limited
events akin to misconduct or incapacity. Mr Brown is subject to a restraint of trade
restricting competition with the company for up to 24 months from termination of his
employment
LTI:
1,200,000 shares were issued on 28 December 2018 upon fulfillment of a time-based
vesting hurdle.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
Details of shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2019 are set out below:
Name
Date
Shares
Issue price
$’000
Eric Wang
Jonathan Brown
28 December 2018
28 December 2018
2,400,000
1,200,000
$0.537
$0.537
1,288
644
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at
the start of
the year
20,108,480
-
3,768,845
530,143
24,407,468
Ordinary shares
Barry Lambert
Jon Meadmore
Eric Wang
Jonathan Brown
Received as
part of
remuneration Additions Disposals
Share split
166,000
- 2,425,000 (600,000)
-
-
- (135,094)
800,000
(46,061)
-
400,000
43,866,960
332,000
8,867,502
1,768,164
1,200,000 2,591,000 (781,155) 54,834,626
Additions
after share
split
7,057,296
40,000
-
-
7,097,296
Disposals
after split
(150,000)
(150,000)
Balance at
the end of
the year
72,857,736
538,000
13,301,253
2,502,246
89,199,235
ECOFIBRE LIMITED ANNUAL REPORT 2019 37
DIRECTORS’ REPORT
Employee share scheme
The Board believes that all employees should be given the opportunity to become shareholders in our business,
and that the share scheme helps engage, retain and motivate employees over the long term. Ecofibre’s share
scheme is therefore part of its standard remuneration practice, to encourage alignment with the performance of the
Group.
The employee share scheme is an LTI designed to help the Group attract and retain the best staff as we deliver our
long-term strategy. These shares will be issued to employees from shares already held by the Employee Share Trust
(EST) if employees meet time-based, performance based or time and performance based, vesting hurdles. The time-
based hurdles are 1, 2, 3 or 4 years, typically depending on the seniority of the employee.
Key terms of the ESS are:
How is it paid?
Employees are eligible to receive share if they meet certain time-based, performance-
based or time and performance-based vesting hurdles.
How can employees
earn and how is
performance
measured?
Different vesting conditions are offered to various employees. The conditions include:
a. Share price hurdles – earned when share price exceeds a certain level on a 30 days
volume weighted average price (VWAP) basis within a certain period.
b. Sales target hurdle– earned when achieving certain sales or gross margin targets.
c. Time-based hurdles – earned when employee remains with the Group within 1 to 4
years.
When is performance
measured?
The performance measures are tested at the date specific in the offer document. Vested
shares will be issue in subsequent periods.
What happens if an
employee leaves?
If an employee resigns or is terminated for cause, any unvested LTI under the ESS are
forfeited, unless otherwise determined by the Board.
If an employee ceases employment during the performance period by reason of
redundancy, ill health, death, or other circumstances approved by the Board, the
employee will generally be entitled to a pro-rata number of unvested shares based on
achievement of the vesting conditions over the performance period up to the date of
ceasing employment (subject to Board discretion).
The treatment of vested LTI will be determined by the Board with reference to the
circumstances of cessation.
This concludes the remuneration report, which has been audited.
38
DIRECTORS’ REPORT
Shares under option
Unissued ordinary shares of Ecofibre Limited under option at the date of this report are as follows:
Option holder
Grant date
Expiry date
Exercise
price
Number
under option
Thomas Jefferson University
1 July 2017
31 May 2023
$0.537
12,178,260
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share
issue of the company or of any other body corporate.
None of the options granted are exercisable at 30 June 2019.
Shares under convertible loan
Unissued ordinary shares of Ecofibre Limited under convertible loan at the date of this report are as follows:
Grant date
Expiry date
Exercise
price
Number
under convertible loan
7 January 2017
6 January 2021
$0.257
5,148,223
No person entitled to exercise the convertible loan had or has any right by virtue of the convertible loan to participate in
any share issue of the company or of any other body corporate.
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives
of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance
prohibits disclosure of the full details of the cover and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of
the company or any related entity against a liability incurred by the auditor.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking
responsibility on behalf of the company for all or part of those proceedings.
The company was not party to any such proceedings during the year.
ECOFIBRE LIMITED ANNUAL REPORT 2019 39
DIRECTORS’ REPORT
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
auditor are outlined in note 21 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by
another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 21 to the financial statements do not compromise
the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board,
including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for
the company, acting as advocate for the company or jointly sharing economic risks and rewards.
●
Rounding of amounts
In accordance with ASIC Corporations (Rounding in Financials/ Directors’ Report) Instrument 2016/191, the amounts
in this report are rounded off to the nearest thousand dollars unless otherwise indicated.
Auditor's independence declaration
The auditor’s independence declaration has been received and can be found on page 41 of the annual report.
Auditor
William Buck (Qld) continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the directors
Barry Lambert
Director
14 August 2019
Sydney
40
4
Eric Wang
Director
14 August 2019
Sydney
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE MEMBERS OF ECOFIBRE LIMITED
I declare that, to the best of my knowledge and belief during the year ended 30
June 2019 there have been:
— no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to
the audit.
William Buck (Qld)
ABN 21 559 713 106
Junaide Latif
Director
Brisbane: 14 August 2019
CHARTERED ACCOUNTANTS
& ADVISORS
Level 21, 307 Queen Street
Brisbane QLD 4000
GPO Box 563
Brisbane QLD 4001
Telephone: +61 7 3229 5100
Williambuck.com
William Buck is an association of firms, each trading under the name o f William Buck across Australia
New Zealand with affiliated offices worldwide. Liability limited by a scheme approved under Professional
Standards Legislation other than for acts or omissions of financial services licensees.
and
ECOFIBRE LIMITED
ANNUAL REPORT 2019 41
Directors’ Declaration
In the directors’ opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards,
the Corporations Regulations 2001 and other mandatory professional reporting requirements
the attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group’s financial position as at 30 June
2019 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable; and
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Barry Lambert
Director
14 August 2019
Sydney
42
ECOFIBRE LIMITED
ANNUAL REPORT 2019 43
Consolidated Statement of Profit or Loss
For the year ended 30 June 2019
Revenue
Direct costs
Gross profit
Other income
Other operating expenses
Interest expense
Profit/ (loss) before income tax
Note
4(a)
5(a)
4(b)
5(b)
2019
$’000
2018
$’000
35,605
5,749
(9,833)
(3,783)
25,772
1,966
1,864
3,557
(22,679)
(13,190)
(372)
(547)
4,585
(8,214)
Income tax benefit/ (expense)
6
1,415
(413)
Profit/ (loss) after income tax attributable to the members of the
company
Earnings/ (loss) per share:
Basic earnings/ (loss) per share - cents
Diluted earnings/ (loss) per share - cents
6,000
(8,627)
2.28
2.17
(3.71)
(3.71)
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes
44
Consolidated Statement of Other Comprehensive Income
For the year ended 30 June 2019
Profit/ (Loss) after income tax attributable to the members of the
company
Other comprehensive income for the year:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign controlled entities
Total comprehensive income for the year attributable to the members
of the company
2019
$’000
2018
$’000
6,000
(8,627)
391
(72)
6,391
(8,699)
The above consolidated statement of other comprehensive income should be read in conjunction with the accompanying
notes
ECOFIBRE LIMITED ANNUAL REPORT 2019 45
Consolidated Statement of Financial Position
As at 30 June 2019
Note
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Biological assets
Tax recoverable
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Intangible assets
Property, plant and equipment
Deferred tax assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Related party loans
Tax payable
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Related party loans
Borrowings
Deferred tax liability
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Foreign currency translation reserve
Accumulated losses
Convertible loan reserve
Share-based payment reserve
TOTAL EQUITY
7
8
9
10
11
12
13
14
15
16
16
17
18
20
16
29
2019
$’000
25,740
2,808
6,573
2,405
251
969
2018
$’000
2,756
990
2,719
955
-
794
38,746
8,214
340
6,655
2,034
340
2,714
-
9,029
3,054
47,775
11,268
3,740
1,340
-
3,561
939
80
5,080
4,580
-
-
392
4,452
676
-
392
5,128
5,472
9,708
42,303
1,560
56,189
250
(17,504)
139
3,229
22,536
(141)
(23,504)
524
2,145
42,303
1,560
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
46
Consolidated Statement of Changes in Equity
For the year ended 30 June 2019
Note
Share-based
payment
reserve
$'000
Issued
capital
$'000
Convertible
loan reserve
$'000
Foreign
currency
translation
reserve
$'000
Accumulated
gains/ (losses)
$'000
Total
$'000
Consolidated
Balance 30 June 2017
13,635
Total comprehensive
income for the year
Shares issued
Share-based payments
20
24
-
8,901
-
2,145
524
(69)
(14,877)
(787)
-
-
-
(72)
(8,627)
(8,699)
-
-
-
-
8,901
2,145
Balance 30 June 2018
22,536
2,145
524
(141)
(23,504)
1,560
Total comprehensive
income for the year
-
Shares issued
20
27,323
Share issue cost
Share-based payments
Convertible loan conversion
to shares
20
20
20
(207)
2,687
1,084
3,850
-
(385)
-
-
-
-
391
6,000
6,391
-
-
-
-
-
-
-
-
27,323
(207)
3,771
3,465
-
-
-
-
-
-
Balance 30 June 2019
56,189
3,229
139
250
(17,504)
42,303
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
(cid:3)
ECOFIBRE LIMITED ANNUAL REPORT 2019 47
Consolidated Statement of Cash Flows
For the year ended 30 June 2019
Cash flows from operating activities
Receipts from customers
R & D tax rebate
Payments to suppliers and employees
Interest received
Interest paid
Income tax paid
Note
2019
$’000
2018
$’000
33,835
1,476
(32,013)
111
(493)
(479)
4,960
3,113
(13,965)
15
(375)
(333)
Net cash flows generated from / (used in) operating activities
24
2,437
(6,585)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Receipt from sale of property, plant and equipment
Others
Net cash flows used in investing activities
Cash flows from financing activities
Repayment of borrowings
Proceeds from issue of shares
Transaction costs related to issues of shares
Net cash flows generated from financing activities
Net increase in cash and cash equivalents held
(4,833)
(340)
238
248
(2,136)
-
127
-
(4,687)
(2,009)
(1,173)
27,323
(1,040)
-
8,901
-
25,110
8,901
22,860
307
Cash and cash equivalents at the beginning of the financial year
2,756
2,449
Effect of movement in exchange rates on cash held
124
-
Cash and cash equivalents at the end of the financial year
7
25,740
2,756
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
48
Notes to the Consolidated Financial Statements
1. Summary of significant accounting policies
Ecofibre Limited ('the Company' or ‘Ecofibre’) is a for profit company limited by shares incorporated in Australia.
The nature of the operations and principal activities of the Group are described in the Directors’ Report.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting
period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 9 Financial Instruments
The consolidated entity has adopted AASB 9 from 1 July 2018. The standard introduced new classification and
measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within
a business model whose objective is to hold assets in order to collect contractual cash flows which arise on
specified dates and that are solely principal and interest. A debt investment shall be measured at fair value
through other comprehensive income if it is held within a business model whose objective is to both hold assets
in order to collect contractual cash flows which arise on specified dates are solely principal and interest as well
as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair
value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains
and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a
business combination) in other comprehensive income (‘OCI’). Despite these requirements, a financial asset
may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or
eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the
standard requires the portion of the change in fair value that relates to the entity’s own credit risk to be
presented in OCI (unless it would create an accounting mismatch).
New simpler hedge accounting requirements are intended to more closely align the accounting treatment with
the risk management activities of the entity. New impairment requirements use an 'expected credit loss'('ECL')
model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk
on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL
method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime
expected loss allowance is available.
AASB 15 Revenue from Contracts with Customers
The consolidated entity has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive
model for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to
depict the transfer of promised goods or services to customers at an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new
contract-based revenue recognition model with a measurement approach that is based on an allocation of the
transaction price. This is described further in the accounting policies below. Credit risk is presented separately
as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's
statement of financial position as a contract liability, a contract asset, or a receivable, depending on the
relationship between the entity's performance and the customer's payment. Customer acquisition costs and
costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract
period.
ECOFIBRE LIMITED ANNUAL REPORT 2019 49
1. Summary of significant accounting policies (continued)
New or amended Accounting Standards and Interpretations adopted (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The impact on the financial performance and position of the consolidated entity from the adoption of these
Accounting Standards is minimal.
Basis of preparation
The financial statements are general purpose financial statements which have been prepared in accordance
with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in
financial statements containing relevant and reliable information about transactions, events and conditions.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply
with International Financial Reporting Standards. The following is a summary of the material accounting policies
adopted by the Group in the preparation of the financial statements. The accounting policies have been
consistently applied, unless otherwise stated.
The financial statements have been prepared on an accruals basis and are based on historical costs modified
by the revaluation of selected non-current assets, financial assets, financial liabilities and biological assets for
which fair value basis of accounting has been applied.
The financial statements are presented in Australian dollars and all values are rounded to the nearest thousand
dollars in accordance with ASIC Corporation Instrument 2016/191 unless otherwise stated.
a) 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 28.
b) Principles of consolidation
The consolidated financial statements incorporate the results and assets and liabilities of all entities controlled
by Ecofibre Limited ("parent entity") as at 30 June 2019 and results of all controlled entities for the year then
ended. The parent entity and its controlled entities together are referred to in the financial statements as "the
consolidated entity" or "the Group". Subsidiaries are all those entities over which the parent entity has control.
The parent entity controls an entity when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through the power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the parent entity.
Where controlled entities have entered the group during the year, the financial performance of those entities
is included only for the period of the year that they were controlled.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated
entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of
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.
50
1. Summary of significant accounting policies (continued)
c) Foreign currency translation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The financial statements are presented in Australian dollars, which is Ecofibre's functional and presentation
currency.
Foreign currency transactions and balances
Foreign currency transactions are translated into Australian dollars 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 financial year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in profit or loss.
Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured
at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items
measured at fair value are reported at the exchange rate at the date when fair value was determined.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the
extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in
the statement of profit or loss and other comprehensive income.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at
the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using
the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All
resulting foreign exchange differences are recognised in other comprehensive income through the foreign
currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is
disposed of.
d) Revenue recognition
The consolidated entity recognised revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected
to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer,
the consolidated entity: identifies the contract with a customer; identifies the performance obligations in the
contract; determines the transaction price which takes into account estimates of variable consideration and the
time value of money; allocates the transaction price to the separate performance obligations on the basis of the
relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when
or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods
or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as
discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent
events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The
measurement of variable consideration is subject to a constraining principle whereby revenue will only be
recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue
recognised will not occur. The measurement constraint continues until the uncertainty associated with the
variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle
are recognised as a refund liability.
ECOFIBRE LIMITED ANNUAL REPORT 2019
51
1. Summary of significant accounting policies (continued)
d) Revenue recognition (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Sale of goods
Sale of goods revenue is recognised at the point of sale, which is where the customer has taken delivery of the
goods, the risks and rewards are transferred to the customer and there is a valid sales contract. Amounts
disclosed as revenue are net of sales rebates, returns and trade discounts.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant period
using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
e) Income Tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on
the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities
attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where
applicable.
A charge for current income tax expense is recognised based on the profit for the year adjusted for any non-
assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively
enacted throughout the reporting period.
Deferred tax is accounted for using the liability method in respect of temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax
will be recognised from the initial recognition of an asset or liability, excluding a business combination, where
there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or
liability is settled. Deferred tax is credited in the statement of profit or loss and other comprehensive income
except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted
directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be
available against which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption
that no adverse change will occur in income taxation legislation and the anticipation that the company and
consolidated entity will derive sufficient future assessable income to enable the benefit to be realised and comply
with the conditions of deductibility imposed by the law.
f) Acquisition of assets
The cost method of accounting is used for all acquisitions of assets regardless of whether equity instruments or
other assets are acquired. Cost is measured as the fair value of the assets given up at the date of acquisition
plus incidental costs directly attributable to the acquisition.
52
1. Summary of significant accounting policies (continued)
g) Current and non-current classification
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
h) Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for
settlement within 60 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a
lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped
based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
i)
Inventories
Inventories and agricultural produce are valued at the lower of cost and net realisable value on an average cost
basis. Cost comprises of direct materials and delivery costs, direct labour, 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.
j) Biological assets
Biological assets are measured on initial recognition at their fair value less costs to sell.
ECOFIBRE LIMITED ANNUAL REPORT 2019
53
1. Summary of significant accounting policies (continued)
k) Impairment of assets
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At the end of each reporting period, the company and consolidated entity review the carrying values of their
tangible and intangible assets to determine whether there is any indication that those assets have been impaired.
If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less
costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value
over its recoverable amount is expensed to the statement of profit or loss and other comprehensive income.
Where it is not possible to estimate the recoverable amount of an individual asset, the company and
consolidated entity estimate the recoverable amount of the cash-generating unit to which the asset belongs.
l) Property, plant and equipment
Plant and equipment
Plant and equipment is measured on the cost basis less accumulated depreciation and impairment losses.
The carrying value of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net
cash flows that will be received from the assets' employment and subsequent disposal. The expected net cash
flows have been discounted to their net present values in determining recoverable amounts.
Depreciation
Depreciation is calculated on the basis of writing off the net cost of each item of property, plant and equipment
over its expected useful life to the entity. Estimates of remaining useful lives are made on a regular basis for all
assets, with annual reassessments for major items. The expected useful lives vary from 3 to 7 years.
m) Financial instruments
Recognition
Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the
related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured
as set out below:
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market and are stated at amortised cost using the effective interest rate method.
Financial liabilities
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt, less principal
repayments and amortisation.
54
1. Summary of significant accounting policies (continued)
m) Financial instruments (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Impairment
At the end of each reporting period, the consolidated entity assesses whether there is objective evidence that a
financial instrument has been impaired. Impairment losses are recognised in the statement of profit or loss and
other comprehensive income.
Convertible notes
The debt and equity components of the convertible loan is separately recognised. At the date of recognition of
the convertible loan, the debt and equity components of the facility are separated according to their fair values.
n) Trade and other creditors
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end
of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of
recognition.
o) Employee entitlements
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 on the basis of when the benefit is expected to be settled.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to 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.
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.
ECOFIBRE LIMITED ANNUAL REPORT 2019
55
1. Summary of significant accounting policies (continued)
o) Employee entitlements (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
p) Cash and cash equivalents
For purposes of the statement of cash flows, cash includes deposits at call with financial institutions and other
highly liquid investments with short periods to maturity which are readily convertible to cash on hand and are
subject to an insignificant risk of changes in value, net of outstanding bank overdrafts.
56
1. Summary of significant accounting policies (continued)
q) Goods and service tax, sales and use tax
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST) and sales and
use tax (SUT) except where the amount of GST or SUT incurred is not recoverable. In these circumstances the
GST or SUT is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables are stated with the amount of GST or SUT included. The net amount of GST or SUT
recoverable or payable is included as a current asset or liability in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST or SUT components of cash
flows arising from investing and financing activities which are recoverable or payable are classified as operating
cash flows.
r) Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date and assumes that the transaction
will take place either in the principal market or in the absence of a principal market, in the most advantageous
market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming they act in their economic best interest. For non-financial assets, the fair value measurement
is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for
which sufficient data is available to measure fair value, are used, maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.
s) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Ecofibre Limited,
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
financial year.
Diluted earnings per share
Diluted earnings per share adjusts 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 shares assumed to have been issued for no consideration
in relation to dilutive potential ordinary shares.
ECOFIBRE LIMITED ANNUAL REPORT 2019
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of significant accounting policies (continued)
t) New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30
June 2019. The consolidated entity's assessment of the impact of these new or amended Accounting Standards
and Interpretations, most relevant to the consolidated entity, are set out below.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard
replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance
leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position,
measured at the present value of the unavoidable future lease payments to be made over the lease term.
The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal
computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use'
asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the
capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct
costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating
lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating
costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods
of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation)
results will be improved as the operating expense is replaced by interest expense and depreciation in profit or
loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated
into both a principal (financing activities) and interest (either operating or financing activities) component. For
lessor accounting, the standard does not substantially change how a lessor accounts for leases.
The consolidated entity will adopt this standard from 1 July 2019. Applying AASB 16 to the Group's current
operating leases would result in approximately $1.3 million right-of-use asset and lease liability to be
recognised in the statement of financial position at 30 June 2019.
AASB Interpretation 23 (Interpretation 23) Uncertainty over Income Tax Treatments
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. Interpretation 23
clarifies the application of the recognition and measurement criteria in AASB 112 Income Taxes (AASB 112)
where there is uncertainty over income tax treatments, and requires an assessment of each uncertain tax position
as to whether it is probable that a taxation authority will accept the position. Where it is not probable, the effect
of the uncertainty will be reflected in determining the relevant taxable profit or loss, tax bases, unused tax losses
and unused tax credits or tax rates. The amount will be determined as either the single most likely amount or
the sum of the probability weighted amounts in a range of possible outcomes, whichever better predicts the
resolution of the uncertainty. Judgements will be reassessed as and when new facts and circumstances are
presented. Adoption of this standard is not expected to have a material impact on the consolidated entity.
58
2. Critical accounting estimates and judgements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 (refer to the respective notes) within the next financial year are discussed
below.
Share-based payment transactions
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 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.
Provision for impairment of inventories
The provision for impairment of inventories requires a degree of estimation and judgement. The level of the
provision is assessed by taking into account recent and expected future sales experience, production
requirements, the age of inventories and other factors that affect inventory obsolescence.
Taxation
There are many transactions and calculations undertaken during the ordinary course of business for which the
ultimate tax determination is uncertain. The consolidated entity recognises liabilities for anticipated tax issues
based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is
different from the amounts that were actually recorded, such differences will impact the current and deferred
tax positions in the period in which such determination is made.
Biological assets
Biological assets, in the form of planted hemp crops, are accounted for under AASB 141 Agriculture, which
requires that the assets be measured at fair value less costs to sell. Fair value is determined using a range of
judgemental assumption including cost per area (acre or hectare), total area planted and percentage of maturity
of the crops based on estimated harvest date.
3. Operating segments
Identification of reportable operating segments
The consolidated entity is organised into three operating segments based on differences in products and
services provided: nutraceuticals, food and fibre. These operating segments are based on the internal reports
that are reviewed and used by the Board of Directors (BOD) in assessing performance and in determining the
allocation of resources. There is no aggregation of operating segments.
Other segments represent the research and development and corporate headquarter activities of the
consolidated entity.
The BOD reviews the profit or loss before income tax for each segment. The accounting policies adopted
for internal reporting to the BOD are consistent with those adopted in the financial statements.
ECOFIBRE LIMITED ANNUAL REPORT 2019
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3. Operating segments (continued)
Types of products and services
The principal products and services of each of these operating segments are as follows:
Ananda Health
Production and sale of hemp related nutraceutical products focused on the
United States;
Ananda Food
Production and sale of hemp related food products in Australia;
Hemp Black
Development of innovative hemp related fibre products globally; and
Ecofibre Corporate
Plant research and development and group corporate functions.
Intersegment transactions
Intersegment transactions were made at market rates. Intersegment transactions are eliminated on
consolidation.
Intersegment receivables, payables and loans
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and
loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest
rates. Intersegment loans are eliminated on consolidation.
Operating segment information
a) Segment performance
Consolidated - 2019
Revenue
Sales to external customers
Intersegment sales
Total sales revenue
R&D tax rebate
Interest income
Other income
Total segment revenue
Total expenses
Intersegment purchases
Segment profit/ (loss) before
income tax
Intersegment eliminations
Profit/ (Loss) before income tax
Ananda
Health
$’000
34,241
-
34,241
-
33
109
34,383
(21,639)
-
Ananda
Food
$’000
1,364
111
1,475
-
-
146
1,621
(2,557)
(38)
Hemp
Black
$’000
Ecofibre
Corporate
$’000
-
-
-
-
-
15
15
(2,692)
-
-
-
-
1,476
116
(31)
1,561
(5,996)
-
12,744
(974)
(2,677)
(4,435)
Total
$’000
35,605
111
35,716
1,476
149
239
37,580
(32,884)
(38)
4,658
(73)
4,585
60
3. Operating segments (continued)
a) Segment performance (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated - 2018
Revenue
Sales to external customers
Intersegment sales
Total sales revenue
R&D tax rebate
Interest income
Other income
Total segment revenue
Total expenses
Intersegment purchases
Segment (loss) before income tax
Intersegment eliminations
Profit/ (Loss) before income tax
b) Segment assets and liabilities
Consolidated - 2019
Assets
Segment assets
Unallocated assets:
Cash and cash equivalents
Total assets
Liabilities
Segment liabilities
Unallocated liabilities:
Related party loans and borrowings
Total liabilities
Consolidated - 2018
Assets
Segment assets
Unallocated assets:
Cash and cash equivalents
Total assets
Liabilities
Segment liabilities
Unallocated liabilities:
Related party loans and borrowings
Total liabilities
Ananda
Health
$’000
Ananda
Food
$’000
Hemp
Black
$’000
Ecofibre
Corporate
$’000
4,617
-
4,617
-
-
(37)
4,580
(9,261)
-
(4,681)
1,069
-
1,069
-
-
35
1,104
(1,807)
-
(703)
-
-
-
-
-
-
-
(1,370)
-
(1,370)
63
-
63
3,113
15
431
3,622
(5,082)
-
(1,460)
Total
$’000
5,749
-
5,749
3,113
15
429
9,306
(17,520)
-
(8,214)
-
(8,214)
12,501 4,818 2,221
2,495
22,035
25,740
47,775
2,184
931
24
993
4,132
1,340
5,472
5,032
2,479
340
661
8,512
2,756
11,268
1,063
894
-
1,684
3,641
6,067
9,708
ECOFIBRE LIMITED ANNUAL REPORT 2019
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2019
$'000
2018
$'000
35,605
5,749
1,476
149
239
1,864
3,113
15
429
3,557
9,801
32
-
9,833
10,537
3,752
1,645
671
422
702
1,756
233
-
958
2,003
22,679
4,486
-
(703)
3,783
5,901
2,292
1,208
623
609
451
321
135
(10)
344
1,316
13,190
4. Revenue and other income
a) Revenue
Sales
b) Other income
Research and development tax rebate
Interest
Other income
5. Expenses
a) Direct costs
Costs of goods sold
Write down of inventory
Reversal of inventory provision
b) Other operating expenses
Employees and contractors
Share based payments (note 29)
Sales and marketing
Travel and accommodation
Equipment modification and maintenance
Rent
Legal fees and compliance
Accounting and audit
Make good provision
Depreciation
Other
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6.
Income tax
a) The aggregated amount of income tax attributable to the financial year
differs from the amount calculated on the operating profit. The
difference is reconciled as follows:
2019
$'000
2018
$'000
Profit/ (loss) before income tax
4,585
(8,214)
Prima facie tax/ (tax benefit) on profit/ (loss) from ordinary activities
before income tax at 27.5%
Adjustment for foreign tax rates
Tax effect of permanent differences:
- Share based payments
- R & D tax rebate received
- Research and development expenses
- Other
Currency conversion differences upon consolidation
Timing differences not brought to account
Recognition of deferred tax with respect to prior year tax losses
Tax losses utilised
Tax not provided in prior period
Timing differences not previously recognised
Current year losses for which no deferred tax asset is recognized
Other
Income tax (benefit) / expense
b) Unrecognised deferred tax assets
Unused tax losses
Potential tax effect at 27.5%
7. Cash and cash equivalents
Cash at bank
Call deposits
Term deposits and other cash equivalents
8. Trade and other receivables
Trade debtors
Allowance for doubtful debts
GST receivable
9.
Inventories
Finished goods
Raw materials
1,261
29
(2,259)
14
180
(406)
233
131
59
-
(751)
(908)
-
(1,276)
-
33
(1,415)
630
(856)
933
-
-
(131)
-
-
337
-
1,659
86
413
2,730
6,033
751
1,659
2,305
859
22,576
25,740
2,737
(152)
223
2,808
682
5,891
6,573
2,393
-
363
2,756
968
(105)
127
990
1,213
1,506
2,719
ECOFIBRE LIMITED ANNUAL REPORT 2019
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2019
$'000
2018
$'000
2,405
955
920
49
969
340
-
340
2,795
159
(79)
80
124
(104)
20
4,976
(1,216)
3,760
8,054
(1,399)
6,655
531
263
794
340
-
340
767
243
(77)
166
44
(43)
1
2,212
(432)
1,780
3,266
(552)
2,714
10. Biological assets
Crops planted
11. Other current assets
Prepayments
Loan receivable
12. Intangible assets
Patents and trademarks – at cost
Less: Accumulated amortisation
13. Property, plant and equipment
Capital work in progress
Motor vehicles
Less: accumulated depreciation
Office equipment
Less: accumulated depreciation
Farming and processing equipment
Less: accumulated depreciation
Total property, plant and equipment
Less: accumulated depreciation
64
13. Property, plant and equipment (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Capital
WIP
$’000
Motor
vehicles
$’000
Office
equipment
$’000
Farming and
processing
equipment
$’000
2019 Movement Schedule
Carrying value 1 July 2018
Additions
Transfer
Disposals
Depreciation
Carrying value 30 June 2019
2018 Movement Schedule
Carrying value 1 July 2017
Additions
Transfer
Disposals
Depreciation
Carrying value 30 June 2018
767
2,795
(767)
-
-
2,795
8
767
-
(8)
-
767
166
-
-
(60)
(26)
80
80
113
-
-
(27)
166
14. Deferred tax assets
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Property, plant and equipment
Inventory
Accrued expenses
Allowance for expected credit losses
Blackhole expenditure
Employee share transactions
Carried forward losses
Amounts recognised in equity:
Transaction costs on share issue
Deferred tax asset
Movements:
Opening balance
Credited to profit or loss
Credited to equity
Closing balance
Total
$’000
2,714
4,977
-
(78)
(958)
1,780
2,102
767
(18)
(871)
3,760
6,655
891
1,235
-
(49)
(297)
979
2,136
-
(57)
(344)
1
80
-
-
(61)
20
-
21
-
-
(20)
1
1,780
2,714
2019
$'000
2018
$'000
74
33
449
42
166
440
751
1,955
79
2,034
-
1,955
79
2,034
-
-
-
-
-
-
-
-
-
-
-
-
-
-
ECOFIBRE LIMITED ANNUAL REPORT 2019
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15. Trade and other payables
Trade creditors
Employee entitlements
Other creditors and accruals
Accrual for cash settled share-based payment
Accrual for intangible assets purchased
16. Related party loans
Current
Loan – P&K Warner (USD) ^
Loan – P&K Warner (AUD) ^
Loan – Warneroo Pty Ltd ^
Convertible loan – Lambert Superannuation Fund *
Net related party loans
Non-current
Convertible loan – Lambert Superannuation Fund *
2019
$'000
799
402
2,539
-
-
3,740
-
-
-
1,340
1,340
2018
$'000
405
286
2,383
147
340
3,561
187
285
92
375
939
-
-
4,452
4,452
^ These loans were unsecured, incurred interest at 5% per annum and repaid in October 2018.
* The convertible loan is payable to Lambert Superannuation Fund (a related party of Barry Lambert). In the
current year, $3,678,623 convertible loan was converted into 14,332,296 shares in Ecofibre Limited at $0.257
per share.
The original terms of the convertible loan are as follows:
Agreement date:
Principal balance:
Interest rate:
Repayment term:
Conversion right:
7 January 2017
$5,000,000
7.5% per annum (fixed)
4 years from the agreement date.
The Lender has the right but not the obligation to convert part or the whole of the
loan into ordinary shares in Ecofibre Limited at $0.77 per share (price to be adjusted
to reflect any share split or consolidation that occurs after 7 January 2017 but before
the earlier of the repayment date or the conversion).
The loan may be repaid by Ecofibre Limited earlier than 4 years without penalty.
Early repayment:
The convertible loan is presented in the statement of financial position as follows:
Related party loans
Convertible loan reserve
2019
$'000
1,340
139
1,479
2018
$'000
4,827
524
5,351
The remaining balance of the convertible loan from the Lambert Superannuation Fund will be converted into
5,148,223 shares in September 2019 at $0.257 per share.
66
17. Borrowings
Non-current payable
Loan **
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2019
$'000
2018
$'000
-
-
676
676
** These loans were unsecured, incurred interest at 5% per annum and fully repaid in April 2019.
18. Deferred tax liability
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Property, plant and equipment
Accrued expenses
Deferred tax liability
Movements:
Opening balance
Debited to profit or loss
Closing balance
19. Employee share trust
517
(125)
392
-
392
392
-
-
-
-
-
-
On 29 June 2018, the Company entered into an Employee Securities Trust Deed with Pacific Custodians Pty
Limited (PCPL) to set up an employee share trust (EST). PCPL is the trustee for the EST.
In August 2018 and September 2018, Ecofibre Limited issued a total of 7,355,659 shares into the Employee
Share Trust as part of Ecofibre's employee share scheme (ESS).
The movement of Ecofibre's shares held in the EST are as follows:
Opening balance as at 30 June 2018
Shares issued by the Company to the EST
Shares issued by the EST to employees as part of the ESS – pre split
Balance pre share split
Share split – 3:1
Shares issued by the EST to employees as part of the ESS – post split
Balance as at 30 June 2019
Number of shares
-
7,355,659
(1,356,449)
5,999,210
11,998,420
(599,957)
17,397,673
ECOFIBRE LIMITED ANNUAL REPORT 2019
67
20. Issued Capital
21.
Ordinary shares
Movement in ordinary shares
Opening balance 1 July
Shares issued at $1.61 per share
Shares issued at $1.95 per share
First conversion of convertible loan
Shares issued as part of the ESS
Total prior to share split
Share split 3:1
Shares issued from initial public offering at
$1.00 per share
Second conversion of convertible loan
Shares issued as part of the ESS
Share issue cost
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2019
$'000
2018
$'000
2019
Quantity
2018
Quantity
56,189
22,536
291,951,478
80,195,441
22,536
3,127
4,196
1,941
2,229
34,029
-
20,000
1,909
458
(207)
13,635
8,901
-
-
-
22,536
-
-
-
-
-
80,195,441
1,942,582
2,151,630
2,425,000
1,383,422
88,098,075
176,196,150
20,000,000
7,057,296
599,957
-
74,648,953
5,546,488
-
-
-
80,195,441
-
-
-
-
-
Closing balance 30 June
56,189
22,536
291,951,478
80,195,441
309,349,151 total shares on issue by the parent entity, which includes 291,951,478 consolidated shares on issue
plus shares held by the EST (17,397,673) which have been issued by the parent entity and are eliminated on
consolidation.
Reconciliation to the Consolidated Statement of Changes in Equity:
Balance at 30 June 2017
Shares issued
Balance at 30 June 2018
Shares issued
Share based payment: shares issued as part of the ESS
Convertible loan conversion to shares
Share issue cost
Balance at 30 June 2019
$’000
13,635
8,901
22,536
27,323
2,687
3,850
(207)
56,189
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
21. Remuneration of auditors
Amount received or due and receivable by the auditors of the
company in respect of services to the group:
Audit and review of financial statements
- Annual audit
- Half year review
Other services
- Tax advisory
- Initial Public Offering - Investigating Accountant
- Initial Public Offering - Tax Due Diligence
- Accounting assistance
22. Contingent liabilities and commitments
There are no contingent liabilities
Commitment for non-cancellable leases are as follows:
Less than one year
Between one and five years
Later than five years
Capital expenditure commitments not provided for in the financial
statements
23. Interests in subsidiaries
2019
$'000
2018
$'000
100
20
120
18
67
29
20
134
705
610
-
47
-
47
6
-
-
-
6
616
878
-
1,315
1,494
4,945
608
The Group completed a restructure of its subsidiaries, including the incorporation of Ecofibre Services Pty Ltd
and Ecofibre USA Inc.
The financial statements of the subsidiaries have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board.
ECOFIBRE LIMITED ANNUAL REPORT 2019 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23. Interests in subsidiaries (continued)
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned
subsidiaries:
Name
Principal place of business / Country
of Incorporation
Ecofibre Services Pty Ltd (ES)
Ananda Food Pty Ltd (AF) (formerly Hemp
Australia Pty Ltd)
Ecofibre USA Inc. (EUSA)
Ananda Hemp Inc. (AH) (formerly United Life
Science Inc.)
Ecofibre Kentucky LLC (EK)
Australia
Australia
United States of America
United States of America
United States of America
Hemp Black Inc. (HB) (formerly Satival Inc.) United States of America
Ecofibre Uruguay SA (EU)
Uruguay
Ownership Interests
2019
%
100%
100%
100%
100%
100%
100%
100%
2018
%
-
100%
-
100%
100%
100%
100%
ES’s principal activity is the provision of group corporate functions and plant research and development services.
ES was incorporated on 28 September 2018.
AF’s principal activity is the growing, processing and distribution of hemp food products.
EUSA’s principal activity is an investment holding company. EUSA was incorporated on 16 October 2018.
AH's principal activity is the marketing and distribution of hemp nutraceutical products.
EK's principal activity is the manufacture of hemp nutraceutical products.
HB's principal activity is to develop and commercialise hemp fibre products.
EU is a dormant entity.
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. Reconciliation of loss after income tax to net cash flows from
operating activities
Net profit/ (loss) after income tax
Depreciation and amortisation
(Gain)/ Loss from disposal of fixed assets
Provision for doubtful debt
Share-based payments
Transaction costs related to IPO
Fair value adjustments for convertible loan
Movement in foreign exchange translation reserve
Unrealised foreign exchange gain
Interest paid for related party loan
Change in operating assets and liabilities
Decrease (increase) in assets
Trade and other debtors
Prepayments
Inventories
Biological assets
Deferred tax assets
Tax recoverable
Increase (decrease) in liabilities
Trade creditors
Other creditors and accruals
Interest payable
Provisions
Tax payable
Employee entitlements
Deferred tax liabilities
2019
$'000
6,000
958
(160)
47
3,752
754
(23)
391
(151)
(67)
(1,865)
(389)
(3,854)
(1,450)
(1,955)
(251)
251
21
-
-
(80)
116
392
2018
$'000
(8,627)
344
(191)
86
2,292
-
120
(72)
-
-
(765)
(567)
(1,052)
(390)
-
-
238
1,664
52
(10)
80
213
-
Net cash flows from operating activities
2,437
(6,585)
25. Financial risk management objectives and policies
The Group’s principal financial instruments comprise receivables, payables, convertible loans and cash and cash
equivalents.
The main risks arising from the Group’s financial instruments are credit risk, interest rate risk, foreign exchange risk
and liquidity risk. The Group uses different methods to measure and manage different types of risks to which it is
exposed. These include monitoring the levels of exposure to interest rates and assessments of market forecast for
interest rates.
ECOFIBRE LIMITED ANNUAL REPORT 2019 71
25. Financial risk management objectives and policies (continued)
Risk exposures and responses
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and trade and
other receivables. The Group’s maximum exposures to credit risk at the end of the reporting period in relation to
each class of recognised financial assets is the carrying amount of those assets as indicated in the Statement of
Financial Position. The Group minimizes concentrations of credit risk in relation to trade receivables by having
payment terms of 60 days and receivable balances are monitored on an ongoing basis.
Interest rate risk
The Group’s exposure to market interest rates relates primarily to the Group’s funds held on term deposits. All
interest-bearing liabilities are at fixed interest rates. At the end of the reporting period the Group had the following
financial assets exposed to interest rate risk.
Financial Assets
Cash and cash equivalents
2019
$'000
2018
$'000
25,740
2,756
The Group’s policy is to place funds in interest-bearing accounts and term deposit where the funds are surplus to
immediate requirements. The Group’s interest rate exposure is reviewed near the maturity date of term deposits,
to assess whether more attractive rates are available without increasing risk.
The following sensitivity analysis is based on the interest rate exposures in existence at the end of the reporting
period. At 30 June 2019, if interest rates had moved, as illustrated in the table below, with all other variables held
constant, profit after tax and equity would have been affected as follows:
Consolidated
+ 1% (100 basis points)
- 0.5 % (50 points)
Profit after tax higher/
(lower)
Equity Higher/ (lower)
2019
$'000
257
(129)
2018
$'000
28
(14)
2019
$'000
257
(129)
2018
$'000
28
(14)
The movements in profits is due to higher/ (lower) interest income from cash balances. There is no impact
on equity other than impact on accumulated losses.
72
25. Financial risk management objectives and policies (continued)
(cid:3)
Liquidity risk
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Group’s objective is to maintain sufficient funds to finance its current operations and additional funds to
ensure its long-term survival. The Group will rely on increasing sales and operating cashflows to finance ongoing
operations, together with government incentives. Liquidity risk is monitored through rolling cash flow forecasts
that are tabled and reviewed by the Board. Total liabilities is payable as follows:
Less than one year
Between one and five years
Later than five years
2019
$’000
5,080
392
-
5,472
2018
$’000
4,580
5,128
-
9,708
Foreign currency risk
The Group is exposed to fluctuations in foreign currencies on product sales and purchases of goods and services
in currencies other than the Group’s functional currency. The group manages this risk by monitoring the level of
exposure to foreign currency transactions and forecasting currency requirements through rolling cash flow
forecasts.
Fair value
Except for the convertible loan (refer note 16), the carrying amount of all other recognised financial assets and
financial liabilities are considered a reasonable approximation of their fair value due to their short-term nature.
26. Key management personnel disclosures
Compensation
The aggregated compensation made to the key management personnel of the parent entity is set out below:
Short-term employee benefits and directors fees
Share based payments
Post-employment benefits
See also Note 27 for other related party transactions
2019
$’000
661
1,828
54
2,543
2018
$’000
530
1,288
45
1,863
ECOFIBRE LIMITED ANNUAL REPORT 2019 73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27. Related party transactions
Transactions with related parties
The following transactions occurred with related parties:
Interest expense for line of credit with Barry Lambert *
Interest expense for convertible loan with Lambert Superannuation Fund
2019
$’000
31
307
338
2018
$’000
-
495
495
* In October 2018, Barry Lambert agreed to provide $6.5 million line of credit to Ecofibre Limited. This facility is
unsecured and incurs interest at 7.5% per annum. This facility expired on 12 April 2019. As at 30 June 2019, the
balance of loan drawn from this line of credit is nil.
Receivable and payable to related parties
The receivables from and payables to related parties are disclosed in note 16.
28. Parent entity information
Set out below is the supplementary information about the parent entity.
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share based payment reserve
Convertible loan reserve
Retained profits
Total equity
2019
$’000
(887)
2018
$’000
(8,429)
(887)
(8,429)
31,646
8,132
36,908
11,477
1,735
3,700
1,735
9,769
56,189
3,229
139
(24,384)
22,536
2,145
524
(23,497)
35,173
1,708
Future operating leases not provided for in the financial statements
170
309
74
29. Share-based payments
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Share options
Ecofibre has entered into an agreement with Thomas Jefferson University (TJU) to provide research services to
Ecofibre over 5 years, commencing 1 July 2017. Ecofibre has granted TJU an option to subscribe for fully paid
ordinary shares within 6 months of the end of the research.
Set out below are summaries of options granted under the plan:
Grant date
Expiry date
Exercise
price
1 Jul 2017
31 Dec 2022
$0.537
Balance at
the start of
the year
-
No of
options
granted
12,178,260
Exercised
-
Expired/
forfeited/
other
-
Balance at
the end of
the year
12,178,260
None of the option granted are exercisable at 30 June 2019.
For the options granted, the valuation model inputs used to determine the fair value at the grant date are as
follows:
Grant date
Expiry date
1 Jul 2017
30 Jun 2022
Share price
at grant
date
$0.537
Exercise
price
Expected
volatility
Dividend
yield
$0.537
54%
-
Risk-free
interest
rate
2.21%
Fair value
at grant
date
$0.26
Expenses recognised for share options granted during the year
2019
$’000
632
2018
$’000
632
Employee shares
During the year, the Group signed employment agreements with key employees who have an impact on the
Group's performance. The agreements include clauses which entitled the employees to payment in shares of the
Company or cash if certain performance conditions are met.
The expenses recognised for employee services received during the year as part of the employee bonus scheme
are as follows:
Expenses from equity-settled share-based payment transactions
Expense from cash settled share-based payment transactions
Total expense from employee share-based payment transactions
2019
$’000
2,985
135
3,120
2018
$’000
1,513
147
1,660
ECOFIBRE LIMITED ANNUAL REPORT 2019 75
29. Share-based payments (continued)
Share-based payment reserve
Share options
Employee shares
Total share-based payment reserve
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2019
$’000
1,264
1,965
3,229
2018
$’000
632
1,513
2,145
Share-based payment reserve is used to record the cost of equity-settled transactions over the vesting period.
Share-based payment expense
Share options
Employee shares
Total share-based payment expense
30. Earnings per share (EPS)
Earnings used in the calculation of basic and diluted EPS ($'000)
Weighted average number of shares* outstanding during the period used in
the calculation of basic and diluted EPS:
2019
$’000
632
3,120
3,752
2019
$’000
6,000
2018
$’000
632
1,660
2,292
2018
$’000
(8,627)
Basic
Diluted
262,703,027
276,186,752
232,292,966
232,292,966
* Weighted average number of shares exclude Treasury shares held in the EST.
31. Events after the reporting period
No matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect
the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in
future financial years.
76
Ecofibre Limited
Independent auditor’s report to the members
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Ecofibre Limited (the Company and its
subsidiaries (the Group)), which comprises the consolidated statement of financial
position as at 30 June 2019, the consolidated statement of profit or loss, the
consolidated statement of 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 other explanatory information, 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 30 June
2019 and of its financial performance for the year ended on that date; 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.
CHARTERED ACCOUNTANTS
& ADVISORS
Level 21, 307 Queen Street
Brisbane QLD 4000
GPO Box 563
Brisbane QLD 4001
Telephone: +61 7 3229 5100
Williambuck.com
William Buck is an association of firms, each trading under the name of William Buck across Australia
New Zealand with affiliated offices worldwide. Liability limited by a scheme approved under Professional
Standards Legislation other than for acts or omissions of financial services licensees.
and
1
ECOFIBRE LIMITED
ANNUAL REPORT 2019 77
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.
Share-based Payments
Area of focus
Refer also to Remuneration Report and note 29
The Group entered into share-based payment
arrangements in relation to the issue of share
options to Thomas Jefferson University who provides
research services to the Group.
The Group also signed employment agreements with
key employees which entitled them to payment in
shares of the Company or cash if certain
performance or service conditions are met.
The valuation of share-based payment arrangements
required significant judgement and estimation by
management, including the following:
- The evaluation of the grant date of the
arrangement, and the evaluation of the fair
value of the underlying share price of the
company as at the grant date;
- The evaluation of the vesting charge taken to
the profit or less in respect of the accrual of
service and performance conditions attached
to the share-based payments; and
- The evaluation of key inputs into the
valuation model.
How our audit addressed it
Our audit procedures included:
— Evaluating the fair value of the share-
based payment arrangement by agreeing
assumptions to third party evidence;
— In determining the grant date, we
evaluated what was the most appropriate
date based on the terms and conditions of
the share-based payment arrangement;
— In evaluating the progress of the vesting of
share-based payment with performance
milestones, we evaluated the directors’
assessment of the likely success or failure
of achieving those milestones;
— In assessing the vesting of service
conditions, we considered that the
expensing of each share-based payment
tranche granted to the arrangement’s
beneficiary, evenly over the term of the
tranche to be the most appropriate;
— For specific application of the Black-
Scholes Model in the valuation of share
options, we retested some of the
assumptions used in the model and
recalculate those fair values using the skill
and know-how of our in-house specialists.
We considered that the forecast volatility
applied in the model to be appropriately
reasonable and within industry norms; and
— We also reconciled the vesting of share-
based payment arrangement to
disclosures made in the Remuneration
Report and financial statements.
78
Key Audit Matters (continued)
Valuation of Inventories and Biological Assets
Area of focus
Refer also to note 9 and 10
The Group held biological assets of $2.4 million at 30
June 2019. The Group’s biological assets consist of
planted hemp crop. The biological assets are
measured at fair value less costs to sell or, in the
absence of a fair value, at cost less impairment. The
valuation uses a range of judgemental assumptions.
Key assumptions include:
- Total number of acres or hectares planted;
- Percentage of maturity of the plant based on
estimated harvest date; and
- Costs per acre, hectare or yield paid or
payable to the farmers.
How our audit addressed it
Our audit procedures included:
— Considering the valuation methodology
against the relevant Australian Accounting
Standard;
— Testing the mathematical accuracy of the
calculation;
— Test ing the assumptions used based on
farming contracts;
— Assessing management’s standard costing
model and inputs;
Upon harvest, the value of biological assets are
transferred to inventory. Its fair value form part of the
standard cost for the inventory valuation.
— Evaluating management’s judgement and
assumptions used in determining the
inventory provision; and
The group inventory of $6.6 million is significant to
the financial statements and has increased by $3.9
million from prior year.
— Assessing the adequacy of the Group’s
disclosures in relation to inventories and
biological assets in the Notes to the
financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2019, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of 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.
ECOFIBRE LIMITED
ANNUAL REPORT 2019 79
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 these financial statements is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our independent auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 34 to 38 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Ecofibre Limited, for the year ended 30 June 2019,
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.
William Buck (Qld)
ABN 21 559 713 106
Junaide Latif
Director
Brisbane: 14 August 2019
80
Shareholder Information
The shareholder information set out below was applicable as at 13 August 2019.
Ordinary share capital
309,349,151 fully paid ordinary shares are held by 2,919 shareholders.
All issued ordinary shares carry one vote per share, and are entitled to participate in dividends.
There is no current on-market buy-back.
Distribution of equitable securities
Analysis of number of equitable security holders by size holding:
Spread of holdings
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 50,000
50,001 to 100,000
100,001 and over
Total
Holding less than a marketable parcel
Number of ordinary
shareholders
1,056
902
332
433
60
98
2,881
100
Total units
549,275
2,521,123
2,775,803
11,244,369
4,616,090
95,239,176
116,945,836
13,041
Twenty largest holders of quoted equity securities
The names of the twenty largest security holders of quoted equity securities (excludes shares in escrow) as at 13
August 2019 are listed below:
Fully paid ordinary shareholders
HSBC Custody Nominees
Pacific Custodians Pty Limited
John Ryan
Barry Martin Lambert & Joy Wilmi Lillian Lambert
Texsymmetry Inc
Profitous Pty Ltd
Barjoy Pty Ltd
BT Portfolio Services Limited
Troncell Pty Ltd
Brian Furnish & Amy Furnish
Phildew Pty Ltd
Citicorp Nominees Pty Limited
BT Portfolio Services Limited
William David Furnish
Yarrawonga Holdings Pty Ltd
Yarrawonga Holdings Pty Limited
BT Portfolio Services Limited
E G Enterprises Pty Ltd
Sayya Investments Pty Ltd
Mr Roderick Kibble & Mrs Michelle Kibble
Total
Number % of total shares
issued
4.36%
3.26%
2.01%
1.69%
1.36%
1.35%
1.29%
0.95%
0.94%
0.83%
0.63%
0.60%
0.58%
0.53%
0.52%
0.52%
0.47%
0.37%
0.36%
0.33%
22.93%
13,472,218
10,089,673
6,206,459
5,218,975
4,195,678
4,173,570
3,994,976
2,929,730
2,922,078
2,553,216
1,948,053
1,841,417
1,800,000
1,634,086
1,616,606
1,601,494
1,443,475
1,145,364
1,116,886
1,024,028
70,927,982
ECOFIBRE LIMITED ANNUAL REPORT 2019 81
SHAREHOLDER INFORMATION
Restricted securities
Class
Ordinary shares
Ordinary shares
Ordinary shares
Convertible note
Options
Class
Ordinary shares
Expiry date
29 March 2021
31 December 2019
4 February 2020
29 March 2021
Number of shares
186,759,521
2,259,212
3,384,582
1
Expiry date
31 December 2022
Number of shares
12,178,260
82
ECOFIBRE LIMITED
ANNUAL REPORT 2019 83
84
Directors
Barry Lambert
Jon Meadmore
Eric Wang
Company secretary
Jonathan Brown
CORPORATE
DIRECTORY
Registered Office
Level 12, 680 George Street
Sydney NSW 2000
Principal place of business
Level 12, 680 George Street
Sydney NSW 2000
Share Registry
Link Market Services
Level 21
10 Eagle Street
Brisbane QLD 4000
Auditor
William Buck (Qld)
Level 21, 307 Queen Street,
Brisbane QLD 4000
Solicitor
Colin Biggers & Paisley Lawyers
Level 35, 1 Eagle Street
Brisbane QLD 4000
www.cbp.com.au
Banker
Commonwealth Bank of Australia
240 Queen Street
Brisbane QLD 4000
Stock exchange listing
Ecofibre Limited shares are listed on the
Australian Securities Exchange (ASX code:
EOF
)
Corporate Governance Statement
https://ecofibre.com/investors/corporate/
Notice of annual general meeting
The details of the annual general meeting of
Ecofibre Limited are:
Level 42
2 Park Street
Sydney NSW 2000
starting at 2:00pm on Thursday 14 November 2019
www.ecofibre.com
ECOFIBRE LIMITED
ANNUAL REPORT 2019 85
171
ANNUAL REPORT 2019