ANNUAL
REPORT
2023
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ABOUT
ECOFIBRE
Ecofibre owns a portfolio of advanced manufacturing
businesses in the United States and Australia.
We operate three vertically integrated businesses focused
on sustainable polymers and natural materials, natural
health care, plant-based foods and seed genetics. In
addition, we own a majority interest in a pharmaceutical
business that is developing treatments for malignant and
non-malignant gynaecological diseases.
Hemp Black is an advanced manufacturing business with
specialist capabilities in performance yarn extrusion and
polymer compounding, sustainable materials and
bioplastics. See hempblack.com.
Ananda Health is a leading US manufacturer of cannabinoid-
based health products for human and pet consumption.
Our focus is on providing high-quality, research-backed
products in Australia and the USA, targeting conditions
including sleep, pain, anxiety, endometriosis, and other
gynaecological diseases. See anandaprofessional.com
and anandahemp.com.au.
EOF Bio LLC owns the rights to commercialise a portfolio of
patents for the treatment of gynaecological diseases and
continues to grow its portfolio of intellectual property
through an active research partnership with the University of
Newcastle in Australia.
Ananda Food owns one of the world's largest collections of
hemp seed genetics. It is a leading, low-cost manufacturer
of high-quality hemp food products in Australia, including
oil, seed, and proteins. The business is also a leading
supplier of seed genetics to the hemp fibre industry in the
US and Australia. See anandafood.com.
The Board of Directors
Operation of the Board
Corporate Responsibility
Diversity
Market Disclosure
Securities Trading
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6
8
10
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Risk Management and Financial Reporting
CONTENTS
1
2
3
4
5
6
OVERVIEW
Our purpose
Group structure and priorities
FY23 Highlights
Key metrics
Chairman’s message
Managing Director’s report
Leadership team
OPERATING + FINANCIAL REVIEW
Group overview
Hemp Black
Ananda Health
Ananda Food
Material business risks
DIRECTORS’ REPORT
Board of Directors
Directors’ report
Remuneration report
Auditor’s independence declaration
FINANCIAL STATEMENTS
Financial statements
Notes to the financial statements
SIGNED REPORTS
Directors’ declaration
Independent auditor’s report
SHAREHOLDER AND ASX INFORMATION
Five-year financial history
Shareholder information
Investor information
Corporate directory
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ECOFIBRE LIMITED ANNUAL REPORT 2023 1
1. OVERVIEW
eof
ananda
eof
1.
OVERVIEW
Our purpose
Seeding the solution
As a global leader in sustainable hemp solutions, Ecofibre, at its core, is an impact
company.
Our focus is to be the global leader in sustainable solutions that address health issues
and decarbonise a wide range of emission intensive industries around the world.
Group structure and priorities
Be a recognized leader in the
USA for sustainable, high-
performance polymers, yarns
and bio-plastics
Our Brands
Be the preferred provider to
practitioners and pharmacy
channels
Be the leading supplier of hemp
foods in Australia, and hemp
genetics in the USA and Australia
EOF
BLISS
Our Partners
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ECOFIBRE LIMITED
ANNUAL REPORT 2023
FY23 Highlights
Refocussed business
exited non-core operations
Reset cost base
27% reduction from 1st half to 2nd half
$11m annualised cost savings
$8.8m annualised cash cost savings
Grew revenue
8% overall
26% for Hemp Black business
Improved EBITDA*
st1 half: -$8.6m
nd2 half: -$4.6m
Added quality
global partners
Reset balance sheet &
reduced financial risk
EOF-Bio established
balance sheet adjusted
* Normalised result
ECOFIBRE LIMITED ANNUAL REPORT 2023 3
4
ECOFIBRE LIMITED
ANNUAL REPORT 2023
Key FY23 metrics
FY23 RESULT
FY23 RESULT
Normalised
BALANCE SHEET
& OTHER METRICS
Cash
$7.3m
Cash + IRS
credits & refund
$7.9m
Investment
(R&D)
$4.8m
Investment
(Capital)
$1.6m
NTA
per share
6.28cps
Revenue
up from $30.2m to
$32.5m
Gross Margin
down from 49% to
33%
Other Income
down from $2.1m to
-$2.4m
Operating Costs
down from $37.2m to
$35.4m
EBITDA
down from -$15.3m to
-$22.4m
Loss after Tax
up from $14.7m to
$39.9m
EPS
-11.89cps
Revenue
up from $30.2m to
$32.5m
Gross Margin
up from 49% to
53%
Other Income
up from $0.2m to
$0.4m
Operating Costs
down from $37.2m to
$35.4m
EBITDA
down from -$17.2m to
-$13.2m
Loss after Tax
up from $16.1m to
$19.4m
EPS
-5.78cps
ECOFIBRE LIMITED ANNUAL REPORT 2023 5
Chairman’s Message
Dear Shareholders
At last year's AGM, in November 2022, we announced a strategic review of the business. The objective was to set a path
for the business to return to cash positive operations and profitability in FY24 with an enhanced growth profile for the
business. The implementation of the review was largely completed by June 2023 impacting both the P&L and Balance
Sheet in FY23. By the second half of FY24 and beyond will see the full benefit of the cost and growth initiatives.
In FY23 Ecofibre reported a headline loss of $40m. While the size of the loss was obviously disappointing, it included
several one-off impairments and accounting adjustments that reflected a business in transition. Normalised EBITDA, an
indicator of the cash generating ability of the business, was a loss of $13.2m in FY23.
Costs were significantly reduced, several business product lines stopped, resources refocused on priority commercial
contracts and new profitable opportunities have been secured in Ecofibre's key areas of focus.
Due to these changes Ecofibre's underlying results were better year-on-year, and significantly so half-on-half with
normalised EBITDA improving from -$8.6m in 1H23 to -$4.6m in 2H23.
The Board and management team has balanced short term cash use and generation with continued investment in long
term priorities. We will keep looking through short term economic and market cycles and keep focussed on strategically
defensible growth markets where Ecofibre can offer customers differentiated capabilities and build long term value for
our shareholders.
Refocused business and reset cost base
Important decisions were made in FY23 to refocus the business.
Ananda Health delivered a significant reduction in costs to better align with current revenues. A new indication-based
product range was introduced as we continue to serve the professional market for CBD remedies in the US and Australia.
A separately funded vehicle, EOF-Bio, was also established to manage future investment in the clinical research portfolio
for gynaecological-related conditions and other diseases.
Hemp Black closed its apparel and 3D knitting businesses to hold costs flat amid ongoing investment in new
opportunities, and these investments are now beginning to convert into new commercial customer relationships.
Corporate overheads have been reduced, including the closure of Ecofibre's Brisbane office.
Overall, in addition to lower operating costs, these changes have aligned the company's balance sheet and reduced
financial risk. Eric elaborates further on the importance of these shifts in his Managing Director's letter below.
Growth opportunities
With a simpler business portfolio and tighter focus, Ecofibre can better leverage its differentiated capabilities and market
positioning, including its advanced manufacturing capabilities. Management time and resources have been released
for high priority commercial partnership opportunities that will deliver growth through FY24 and beyond.
Two recent examples of this are Hemp Black's manufacturing partnerships with Under Armour and Cruz Foam. Both
businesses are highly innovative, share our values and our commitment to sustainability, and have strong plans to grow
their business with Hemp Black. Under Armour is a household name and a tier-1 global customer, and this relationship is
testament to the world-class manufacturing capabilities that Jeff Bruner and his team have built in yarn extrusion and
sustainable polymers.
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ECOFIBRE LIMITED
ANNUAL REPORT 2023
Similarly, the pharmaceutical grade clinical research and manufacturing capability that's been developed in the Ananda
Health business in recent years has directly led to the commercialisation opportunity now before us in EOF-Bio.
Together with these successes the team also had setbacks during the year, including the loss of hemp fibre seed crops
that were planted to supply the US hemp fibre market. Transport, weather and harvest issues cost a combined $3m in
lost revenue – 10% of our total annual revenue in FY23 – which meant a poor financial result for Ananda Food in the year.
Delivering on our purpose
Last year I said that Ecofibre is, at its core, an impact company. As I look at recent initiatives this has never been truer.
The company's efforts are focussed on worthwhile and important products, from life-saving yarns for vascular grafts,
health and nutrition products, women's health treatments, recyclable polymers and compostable natural foams. The
Katlyn's Gift charity continues to provide financial support to children across Australia by providing their families access to
life-changing CBD.
OUR VALUES
S
R
E
M
O
T
S
U
C
R
U
O
OUR
CUSTOMERS
ARE OUR
MOST
VALUABLE
RESOURCE.
Y
N
A
P
M
O
C
R
U
O
WE WILL
ALWAYS
BE THE
MOST
RESPECTED
COMPANY.
S
E
V
L
E
S
R
U
O
A GREAT
COMPANY
HAS
ACCOUNTABLE
INDIVIDUALS.
WHEN YOU
LOVE WHAT
YOU DO,
IT WON’T
FEEL LIKE
YOU ARE
WORKING.
Y
R
T
S
U
D
N
I
R
U
O
Y
T
I
N
U
M
M
O
C
&
Y
L
I
M
A
F
R
U
O
WE ARE A
LEADER
IN OUR
INDUSTRY
WHICH
MEANS
BREAKING
AND
SETTING
THE RULES.
1
0
2
0
3
0
O U R
E N V I R O N M E N T
5
0
4
0
0
0
WE ALWAYS STRIVE TO LEAVE OUR
ENVIRONMENTS BETTER THAN HOW WE
FOUND THEM.
In addition to being an
industry leader, aiming to
influence the standards
and ensure the supply
chain is established
sustainably, we also put a
lot of credence in the
way we do business.
We consider our
customers, suppliers,
communities in which we
operate and our team
members in all decisions
we make to create
shareholder value.
Thank you
As Ecofibre has evolved the Board has also evolved in line with the business, with Mark Bayliss joining in September
2022 and Jon Meadmore retiring in February 2023. Jon was a Director and also Chair of Audit and Risk since October
2017; and helped guide the Company through its formative years including its ASX listing in February 2019. On behalf of
the Board, management and shareholders I'd like to thank Jon for his valuable contribution over this period.
Mark Bayliss joined in September 2022 and is the new Chair of Audit and Risk. Mark is an ACA and brings a wealth of
experience across several industrial businesses as a turnaround specialist. He is currently CEO of A2B and since joining
has already added significantly to the Board.
ECOFIBRE LIMITED ANNUAL REPORT 2023 7
As I mentioned in my opening comments, FY23 was a key transitional year for Ecofibre. For Eric and his team, it's been a
huge year as they managed existing operations and short-term challenges while keeping their focus on making
Ecofibre's long term opportunities a reality.
In FY24, the team are well positioned to deliver on opportunities that will define the company's future. They have proven
themselves resilient to get the tough stuff done and maintained an aspirational and external focus to work with and land
key new clients. I would like to particularly thank Eric for his leadership and commitment, and continuing to build a
business that has a positive impact on so many lives.
I look forward to this time next year when a lot of this great work will be evident in tangible results and more people know
about Ecofibre not just as a hemp business but also as an advanced manufacturing company that is:
- creating new treatment options for women's health
- giving customer choices to consider new, sustainable products
- building shareholder value
Vanessa Wallace
Chairman
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ECOFIBRE LIMITED
ANNUAL REPORT 2023
Managing Director’s report
Dear Shareholders,
FY23 marked an important year for Ecofibre, as we refocused the business and reset our cost base to target positive
operating cash flow in FY24 and EBITDA-positive operations in 2H24.
We closed several non-core business lines in the second half of the year, reduced our cost base by $11m on an
annualized basis ($8.8m lower cash costs), and restructured our balance sheet to reduce financial risk. These changes
freed resources and improved our flexibility to focus on the tremendous opportunities ahead of us in the near and mid-
term.
Overall, we achieved 8% revenue growth in FY23 while improving margins by 4% on a normalised basis and delivering a
27% reduction in operating costs in the year's second half.
Hemp Black
FY23 growth was underpinned by a 26% increase in Hemp Black revenues from our existing biomedical and turf yarns
businesses. Demand for turf yarn continues to exceed supply, and Jeff and his team have continued to improve the line
to increase production volumes and optimize product mix. The capacity and reliability of the bio-medical yarn also
improved significantly during the year, and FY23 volumes were particularly strong.
Our aim for Hemp Black is to create more businesses like biomedical and turf: production lines running at full capacity to
provide customized, high-end, and scalable manufacturing solutions for tier 1 customers.
Hemp Black has unique capabilities that position the business for solid growth in the coming years:
Ÿ Innovate: Jeff and the team have a well-earned reputation for customized, creative solutions in polymers,
sustainability, extrusion, and knit-ready yarns.
Ÿ Partner: Existing and new customers are leading players in their respective markets
Ÿ Scale: The business can take product concepts from R&D to full-scale production, including the design and
manufacture of the necessary production equipment
As a result, we have several growth levers in the business, and I'm glad our work with key customers over the last 12
months is coming to fruition. Our agreements with Under Armour and Cruz Foam are the result of hard work and
relationships that, in some cases, are new and in other cases, have been built over many decades.
Ananda Health
Our Ananda Health business delivered flat revenues despite headwinds in the US CBD market.
While the US market remains challenging, we are seeing shifts in the industry, which gives me cause for optimism. There
is early evidence that demand is returning in wholesale markets for hemp-derived CBD extracts, the raw material and
critical input to making CBD products. The US Food and Drug Administration (FDA) is also actively engaging with the US
Congress on a way forward for CBD regulation, which can only benefit well-established and high-quality producers like
Ananda Health.
The Australian market continues to grow strongly, and although we didn't get the result we hoped for or expected with the
S3 clinical trial with Southern Cross University, our Australian business did grow as we refocused our efforts on the S4/S8
CBD market.
The opportunity for Ananda Health is to leverage its manufacturing capacity and target new opportunities, including
condition-specific products that include CBD; expanding our traditional focus on independent pharmacies to include all
healthcare providers; increasing the regional presence of our sales force; and selectively targeting white-label
customers.
ECOFIBRE LIMITED ANNUAL REPORT 2023 9
Our facility in Georgetown is rated for pharmaceutical-grade manufacturing, including certification by Australia's
Therapeutic Goods Administration (TGA), and this allows us to target new, premium segments in the industry.
EOF-Bio
In late FY23, we established a new, separately funded entity to commercialise patents granted by the US Patent and
Trademark Office (USPTO) for the treatment of gynaecological and other diseases.
These patents came about from our collaboration with Newcastle University in Australia, and our team is excited to
accelerate these trials and, if successful, work with partners to develop drugs that have the potential to revolutionize
treatment options for women around the world.
Ecofibre wasn't founded as a pharmaceutical company, and it became clear that we need specialist skillsets and
separate funding to commercialise the opportunity and manage the risks associated with a drug development pipeline.
Importantly, Ecofibre shareholders retain a majority interest in EOF-Bio through the first fundraising phase and retain
significant upside exposure to this investment. Our work is attracting interest from the pharmaceutical industry, and I
look forward to providing a more detailed update to all shareholders in the near future.
From FY24, we will include EOF-Bio as a separate segment in our financial and operational reporting.
Ananda Food
The headline result for Ananda Food in FY23 was disappointing, mainly due to ~$3m lost revenues that we expected
from US fibre seed sales that did not eventuate due to issues that included severe weather in the US.
In the first half of FY24, we will launch a new hemp-based cat litter for Woolworths and look to re-establish our seed
propagation and sales pipeline.
Overall
As Vanessa mentioned, FY23 was a transformational year for Ecofibre. FY24 will be a watershed year, particularly for
Hemp Black, as it commissions new production lines and completes the build of some important growth levers to
provide long-term profitable growth. The establishment of EOF-Bio brings Ananda Health back to profitability as the core
operating business is no longer required to fund biotech research, and EOF-Bio is resourced to maximise the
opportunity ahead.
Sustainability and social impact are core to our business model
Ecofibre has always placed positive impact and environmental sustainability at the core of how we operate in our chosen
markets. The company has built commercial business models in attractive markets that positively impact society and the
environment: environmentally sustainable industrial products, natural health care, plant-based foods, and an emerging
pharmaceutical opportunity.
We make things that benefit people and the environment:
Ÿ Yarns for life-saving vascular grafts
Ÿ Yarns for turf that requires no watering, fertilizers, pesticides, or herbicides
Ÿ Foams and packaging that replace polystyrene and bio-degrades by 98% in 60 days
Ÿ New recyclable elastomeric polymers that replace non-recyclable polymers which are currently used globally
Ÿ Hemp-based cat litter that will replace less sustainable and extractive clay-based products
Ÿ Women's health products for a range of treatments with the potential to replace more toxic opioid-based solutions.
10
ECOFIBRE LIMITED
ANNUAL REPORT 2023
Thank you
I sincerely thank all our customers, business partners, and shareholders for your continued support of Ecofibre. We have
a strong and committed team across the business, and I want to acknowledge everyone's contribution in a year that has
set up the Company to become EBITDA positive in 2H24.
I want to thank my fellow directors for their expertise and support as the Company implemented its business reset during
the year and welcome Mark Bayliss who has provided great value to me and the business. I also wanted to echo
Vanessa's thanks to Jon Meadmore, who retired from the Board this year. Jon joined the Board when the Company was
only beginning to establish commercial business lines, and he was integral in helping us in our Initial Public Offering and
providing me counsel in navigating through the constant challenges of any early-stage business.
Finally, I would like to thank my staff and management team for their commitment and hard work in resetting the business
to deliver a cash flow-positive operation in FY24 and positive EBITDA in the second half this FY24.
Eric Wang
Managing Director
ECOFIBRE LIMITED ANNUAL REPORT 2023 11
Leadership Team
Eric Wang
Managing Director
Eric joined Ecofibre as CFO and
Director in December 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. He
then served as the Chief Operating
Officer of Perpetual Limited and
Director of the APO for AMP
Limited.
Alastair Bor
Chief Technology Officer
Alastair joined Ecofibre in July 2018
to drive scale, automation and
technical capability across Ecofibre.
Alastair is an experienced
executive, with a long track record
of delivering innovation in both
large private and public sector
organisations. Alastair oversees
both operational and information
technology across Ecofibre. Alastair
has an MBA from the Tuck School at
Dartmouth and previously worked at
Booz, Allen & Hamilton, Perpetual
Ltd and Transport for NSW in various
senior executive strategy,
technology and delivery roles.
Jonathan Brown
Chief Financial Officer and
Joint Company Secretary
Kieren Brown
Managing Director,
Ananda Foods
Jonathan joined Ecofibre in April
2016 and established the finance
and corporate functions of Ecofibre
ahead of the Company's ASX listing
in March 2019. Jonathan is a
Chartered Accountant with over 25
years 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.
Kieren became the MD of Ananda
Food in March 2018 with a remit to
grow the newly established
Australian food business. Kieren has
over 25 years' experience within the
UK, Spanish and Australian food
industries, specialising in the
operational and technical
disciplines in short shelf-life fresh
produce. Kieren's last role was with
Australia's largest supplier of pre-
packaged salads, where he
oversaw several hundred staff
across four sites with turnover of
over $230 million per annum. Prior
to that, Kieren worked overseas for
Heinz and has deep experience
with some of the largest retailers –
including Woolworths, Coles and
Marks and Spencer. Kieren holds a
BSC (Hons) in Microbiology from
University of Wales Aberystwyth.
12
ECOFIBRE LIMITED
ANNUAL REPORT 2023
Jeff Bruner
President, Hemp Black
Dr Alex Capano
Chief Science Officer
Jeff founded The Quantum Group,
Inc. in 1985 later transitioned into
Quantum Materials, LLC in 2017 and
then founded TexInnovate, Inc. in
2017 which was later sold to
Ecofibre. At Quantum Materials Jeff
was responsible for the
development and innovation of a
wide range of high-performance
textile applications across a range
of industries to include office
furniture, automotive seating, truck
tires, road construction fabrics,
filtration, composite yarns & fabrics,
medical implants, outdoor furniture
and many other highly engineered
yarns and fabrics. Jeff is a leading
textile engineer and inventor of
solutions to meet industry needs
for high specification applications.
Dr. Capano earned her DNP at
Thomas Jefferson University in
Philadelphia, Pennsylvania, where
she graduated Summa Cum Laude
and was awarded the Sandra Festa
Ryan award for Outstanding
Creativity and Innovation. She was
the first doctoral candidate of any
discipline who focused on
cannabinoid science under the
guidance of the Lambert Center for
the Study of Medicinal Cannabis
and Hemp. Dr. Capano also holds a
BSN and an MSN from the
University of Pennsylvania, and a BS
in neuroscience from the University
of Miami.
Neal Mercado
Chief Marketing Officer
Alex Nance
President, Ananda Health
Neal joined the Ecofibre team in
2022 and is responsible for the
development and implementation of
our global marketing and innovation
functions. Neal has over 25 years'
experience in in the global vitamin
and dietary supplements industry,
with an emphasis on strategic
marketing, new product
development and research. Prior to
joining Ecofibre, he was Chief
Marketing Officer at a leading
practitioner supplement brand in
the US. Neal has also held a number
of roles focused on portfolio
management and global product
development for multinational
corporations. Neal has a Bachelor's
degree in Marketing from Michigan
State University, is a graduate of the
Australian Institute of Company
Directors and holds a Certificate of
Western Herbal Therapies from
Nature Care College.
Alex joined Ananda Health in
September of 2017 and is
responsible for the overall
management and delivery of the
Ananda product range. He helped
to develop the current facility and is
also responsible for all aspects of
quality control and planning. Alex's
background is in toxicology and
chemical production. Prior to
joining Ananda he worked at Ethos
Laboratories as Laboratory
Production Manager and Dubois
Chemicals as a chemist. Alex holds
a Bachelor of Science in
Pharmaceutical Sciences from The
Ohio State University.
Robin Sheldon
General Counsel and Joint
Company Secretary
Robin has over 25 years'
experience in corporate law. Prior to
joining Ecofibre, Robin was
employed by Thomas Jefferson
University as Sr, VP of Jefferson
Strategic Ventures, VP of its
Innovation Pillar and Associate
Counsel. Prior to Jefferson, Robin
was a partner at Fox Rothschild, LP,
where she specialized in mergers &
acquisitions, private equity and
intellectual property issues,
especially in the biotech area. She
was the General Counsel of
Half.com, Inc. (acquired by eBay,
Inc.), Associate Counsel for
Sanchez Computers, and Counsel
for SEI Investments. Robin has
been an adjunct professor at
Temple University's Beasley School
of Law, and frequent lecturer on the
ethics of Intellectual Property.
ECOFIBRE LIMITED
ANNUAL REPORT 2023 13
1. OVERVIEW
2.
OPERATING +
OPERATING +
FINANCIAL
FINANCIAL
REVIEW
REVIEW
Group Overview
GROUP RESULT
AUDm
Revenue
Gross Margin*
Other Income (Expense)*
Operating Costs
EBITDA*
Investments:
Research & Development
Capital Expenditure
* normalised
1
FY23
FY22
32.5
53%
0.4
(35.4)
(13.2)
4.8
1.6
FY22
FY21
30.2
49%
0.2
(37.2)
(17.2)
%
%
+8%
+4%
+100%
-5%
-23%
6.3
3.0
-24%
-47%
1 In this report, normalised items exclude impairments of inventory and fixed and intangible assets, adjustments to the Deferred Tax Asset and
Contingent Consideration in 2H23, and any government grants and foreign exchange gains or losses in other income
14
ECOFIBRE LIMITED
ANNUAL REPORT 2023
Improved Underlying Business
In the year to 30 June 2023 ('FY23'), Ecofibre improved its underlying business with normalised EBITDA improving from
a loss of $17.2m in FY22 to a loss of $13.2m in FY23. The key drivers of this shift were higher revenues, higher gross
margins and lower operating costs.
The following graph shows the changes in normalised EBITDA from FY22 to FY23:
FY22
Normalised
EBITDA
+ higher
Revenue
+ lower
Direct Costs
- flat
Other
Income
+ lower
Operating
Costs
FY23
Normalised
EBITDA
2.3
0.3
1.4
-13.2
-17.2
Revenue, Direct Costs and Margin
Group revenue increased 8%, from $30.2m to $32.5m (+$2.3m):
Ÿ Hemp Black (FY23: $17.3m; FY22: $13.8m)
Hemp Black grew revenue by 26% in FY23. This growth includes higher production for core turf and biomedical yarn
extrusion lines, as well as higher average prices for turf yarn as the business began to shift some of its production
capacity toward higher value nylon polymers.
Ÿ Ananda Health (FY23: $13.0m; FY22: $12.9m)
Ananda Health's revenue increased by 1% in FY23, with improved sales in Australia (up $1.8m to $2.4m), partially
offset by lower US sales (down $1.7m to $10.6m), including the impact of ceasing to supply CVS.
Ÿ Ananda Food (FY23: $2.2m; FY22: $3.6m)
Ananda Food revenue declined in FY23, including the impact of $1.4m sales credits provided to US hemp seed
customers in 2H23 year following damage to planting seed in transit. Overall, the revenue lost from this issue, and
weather-related damage to US seed crops, totalled approximately $3m.
ECOFIBRE LIMITED
ANNUAL REPORT 2023 15
Review of Operations and Results (continued)
Normalised gross margin (excluding inventory impairments) for the Group increased from 49% to 53%. Within each
business segment:
Ÿ Hemp Black margin was higher (FY23: 50%; FY22: 44%)
Ÿ Ananda Health margin was higher (FY23: 70%; FY22: 61%)
Ÿ Ananda Food's margin was lower (FY23: -15%; FY22: 20%). FY23 margin was +32% if 2H23 crop losses are also
excluded.
Other Income
Normalised Other Income (excluding fixed and intangible asset impairments, FX income and losses and government
grants) increased from $0.2m to $0.4m. In the prior period, Other Income included the final benefit from the US Federal
Government ERC program which ceased effective 1 October 2021 ($1.4m).
Operating Expenses
Operating expenses reduced by 5%, from $37.2m to $35.4m (-$1.8m), which compares favourably to the increase in
both revenue and normalised gross margins, demonstrating the operational leverage inherent in Ecofibre's businesses.
The reduction in operating expenses from the first half ($20.4m) to the second half ($15.0m) was 27%. The primary
drivers of this reduction were lower costs for R&D, staff, legal expenses and depreciation.
By business segment, the half-on-half reduction in operating costs is split as follows: Ananda Health (-$3.6m), Hemp
Black (-$0.9m), Ananda Food (-$0.3m) and Corporate (-$0.7m).
Impairment Expense
AUDm
by Asset Type and Business Segment
Inventory
Ananda Health
Hemp Black
Ananda Food
Corporate
Total
16
ECOFIBRE LIMITED
ANNUAL REPORT 2023
Review of Operations and Results (continued)
Loss After Tax and Balance Sheet Adjustments
Ecofibre incurred a loss after tax of $39.9m (FY22 loss: $14.7m) in FY23. The result included several impairment charges
and adjustments as set out below:
1.
Pre-tax impairment charges against the carrying value of assets in Hemp Black and Ananda Health totalled $12.4m.
The impairments were recognised in the first half of the year ('1H23') and resulted from the Group's decision to close
the Hemp Black apparel and 3D knitting business, and to reflect the lower level of capacity utilisation required for
cannabinoid extraction at Ananda Health's production facility in Georgetown, Kentucky.
Impairment Expense
by Asset Type and Business Segment
AUDm
Inventory
Ananda Health
Hemp Black
Ananda Food
Corporate
Total
Property, Plant and Equipment
Ananda Health
Hemp Black
Ananda Food
Corporate
Total
Intangible Assets
Ananda Health
Hemp Black
Ananda Food
Corporate
Total
Total Impairment Expense
.
4.8
1 .7
0. 1
-
6.5
.
1 . 1
1 .0
-
-
2. 1
.
0.6
3. 1
-
0.1
3.7
12.4
Ananda Health cannabinoid extracts written down to
estimated market value if sold as is rather than
processed into finished goods, and Hemp Black
apparel and associated fabrics and yarns.
Ananda Health equipment written down to reflect
lower utilisation, such as cannabinoid extraction
equipment, and provisions against 3D knitting
equipment and pyrolysis equipment to be sold.
Hemp Black patents that had been intended to be
used as part of the apparel business, and website and
software development used variously for online
apparel sales and to support large Ananda Health
customers such as CVS.
2.
Pre-tax gain of $3.5m recognized following the extension of the earnout period for Contingent Consideration on the
August 2020 acquisition of the TexInnovate business from 5 to 7 years.
3.
Post-tax charge of $13.7m in relation to the balance of the Deferred Tax Asset which was no longer able to be
recognised pursuant to the requirements of AASB 112 Income Taxes.
Where noted, these impairments and adjustments, together with foreign exchange gains and losses in Other Income,
have been normalised and removed from the results shown in this Operating + Financial Review to provide a clearer
comparison of the underlying performance of the business in FY23 and FY22.
Income Tax
Ecofibre recognised a $13.7m reduction in the value of its Deferred Tax Asset during the period pursuant to the
requirements of AASB 112 Income Taxes.
ECOFIBRE LIMITED ANNUAL REPORT 2023 17
Review of Operations and Results (continued)
Cashflows and Balance Sheet
FY23 cash movements comprised
Ÿ $6.9m operating cash outflows, including $5.0m cash expenditure on R&D and $6.4m received in relation to US
government income tax refunds and Employee Retention Credits (ERC)
Ÿ $1.6m investing cash outflows, including $1.7m for plant and equipment and $0.4m for business acquisitions,
partially offset by $0.5m in equipment sales.
Ÿ $7.6m financing cash inflows, including $9.2m (USD 6.4m) secured loan funds received from Nubridge Capital,
$2.0m repaid on an unsecured loan and $0.9m received on the issue of preferred units to external investors in EOF-
Bio.
At year-end, the Group had $7.9m available to fund its operations and ongoing investments, including:
Ÿ Cash on hand, $7.3m
Ÿ The balance of the one-off ERC receivable from the US Federal Government, $0.6m
The Group remains focused on rapidly improving underlying operating cashflows whilst balancing the need to invest in
revenue growth and client development.
In addition to delivering savings in direct manufacturing costs and operating costs, the Group continues to use existing
inventory balances and other working capital wherever possible to improve cash operating margins. Trade Receivables
reduced by $1.2m during the period.
Non-current assets reduced by $15.8m during the period, from $112.9m to $97.1m.
Ÿ Property, Plant and Equipment reduced by $3.9m to $43.1, reflecting an increase in accumulated depreciation and
$2.1m in impairment charges.
Ÿ Intangible Assets reduced from $55.4m to $53.7m, reflecting impairments for patents and software costs.
The balance at 30 June 2023 mainly relates to Goodwill recognised on the acquisition of the business and assets of
TexInnovate in August 2020 ($53.1m).
The Group also has a corresponding liability from the TexInnovate acquisition that becomes payable in cash ($11.5m
Contingent Consideration liability) and equity ($14.3m Share Capital Reserve) if the acquired business delivers
Earnings before Interest and Tax of US6.0m in two consecutive annual periods within seven years from the date of
the acquisition.
The earnout period was extended from 5 years to 7 years during the year, and the present value of the Contingent
Consideration liability consequently reduced by $3.5m during the year.
Ÿ The value of the Group's Deferred Tax Asset which is recognized on the balance sheet was reduced from $9.7m to Nil
pursuant to the requirements of AASB 112 Income Taxes. Notwithstanding this adjustment all tax losses remain
available for future use.
Current liabilities total $6.5m, down from $8.1m at the beginning of the period. The FY23 balance includes $1.0m which
was due and paid to the James & Cordelia Thiele Trust Fund (J&CTTF) in July 2023.
Non-current liabilities total $37.6m, including the non-current portion of the J&CTTF term loan ($7.0m), Lambert Super
Fund loan ($3.5m), the NuBridge loan (USD 10.0m), and TexInnovate Contingent Consideration ($11.5m).
18
ECOFIBRE LIMITED
ANNUAL REPORT 2023
Review of Operations and Results (continued)
Overall, the Group's net assets reduced from $109.9m at 30 June 2022 to $74.6m during the period, and the number of
shares on issue increased slightly from 335.5m to 335.7m as 0.2m shares were issued to a supplier for the provision of
services. At the end of the period the Net Tangible Assets per share was 6.28 cps (30 June 2022: 13.23 cps).
The value of net assets, and the Consolidated Statement of Other Comprehensive Income, included a benefit of $3.0m
in FY23 because US dollar strengthened against the Australian dollar, and as a consequence the net assets of the
group's US entities were revalued.
ECOFIBRE LIMITED ANNUAL REPORT 2023 19
Review of Operations and Results (continued)
AUDm
Revenue
Gross Margin*
Other Income (Expense)*
Operating Costs
EBITDA*
Investments:
Research & Development
Capital Expenditure
* normalised
1
FY23
FY22
17.3
50%
-
(11.6)
(1.3)
1.8
0.9
FY22
FY21
13.7
44%
-
(11.5)
(3.6)
2.5
2.2
%
%
+26%
+6%
-%
1%
-64%
-28%
-59%
The core existing business lines for Hemp Black delivered strong growth during FY23 with new turf clients being
onboarded and operational improvements in both the turf and biomedical yarn extrusion businesses. These operational
improvements increase yields for these 24x7 manufacturing operations. Operating costs remained flat during the year
and reductions in R&D and Capital Expenditure were because of exiting non-core operations.
In FY24 two new long-term partners are being onboarded and these businesses will add incremental value to Hemp
Black's turf and biomedical yarn business lines.
Strategy overview
Hemp Black's strategy is focused on 5 core areas:
Bio-Plastics
Synthetic
Turf Yarns
Sustainable
Packaging
Medical
Device
Yarns
REN
T
R
A
P
OVAN
TE
NI
Performance
Apparel
Yarns
S
C
A
L
E
ADVANCED
MANUFACTURING
Long-term Clients (5 yrs)
Partnerships under
development
New Partnerships
1 In this report, normalised items exclude impairments of inventory and fixed and intangible assets, adjustments to the Deferred Tax Asset and
Contingent Consideration in 2H23, and any government grants and foreign exchange gains or losses in other income
20
ECOFIBRE LIMITED
ANNUAL REPORT 2023
Review of Operations and Results (continued)
Hemp Black is focussed on supplying existing customers and developing new customer relationships to operate in
scalable businesses that generate strong cash flows and / or have good growth profiles. The business' range of
operations include yarn extrusion (synthetic turf yarns, medical device yarns, performance apparel yarns) and polymer
compounding and other sustainable materials technologies (bio-plastics, sustainable packaging).
The business offers customers product development capabilities including small batch production and specialist testing
services, and the ability to rapidly scale production to commercial levels.
Hemp Black develops polymer compounds to suit a wide variety of customer specifications and applications. This
includes cooling, fluorescence, magnetic properties, EMF shielding, x-ray shielding, infrared reflection and natural pest
control, and other bio-content and customised solutions.
Hemp Black has developed patented technology to incorporate hemp products such as full and broad-spectrum hemp
oil extract and concentrated cannabidiol ('CBD oil'), and eco6 (pyrolized and micronized hemp stalk) into traditional
polymer yarns and plastics to provide a range of benefits, including natural anti-microbial, anti-odor and anti-fungal
properties, and conductive and anti-static properties.
TM
Synthetic turf yarns
Hemp Black supplies specialised, textured turf yarns to three of the largest synthetic turf manufacturers in the United
States. Two of the customers are long term clients, and a new customer, Tencate, was onboarded in 1H23 following
period of development using a new polymer with different physical properties and new colours.
As demand for turf yarn continues to expand in the US, production is running at capacity 24/7. Regular, incremental
improvements have been made to line speed throughout the year, and the ongoing focus is to maximise production
volumes and revenues.
Industry demand for artificial turf is driven by year-round use for customers, no requirement for watering, mowing,
pesticides, herbicides, or fertilizers, and lower maintenance costs. Opportunities may exist in the future to secure
additional production capacity in conjunction with a large customer.
Medical device yarns
Hemp Black operates a dedicated, ISO9001 production facility supplying yarn for vascular grafts to a long-term customer,
Intervascular SAS which is part of the Getinge AB group.
In the US the product and its manufacture are regulated by the US FDA, and barriers to entry for new suppliers are very
high due to the certification process for medical devices. The business operates 24x7 and the reliability and production
capacity of the line were substantially improved in FY23 to maximise revenue.
The business performed strongly in FY23. For FY24 Intervascular have advised that volumes for the six months of 1H24
will be very low as the customer has decided to reduce inventory levels due to greater supply chain certainty that now
exists. Normal production volumes and revenues are expected to resume in 2H24.
Performance apparel yarns
Hemp Black has signed a memorandum of understanding with Under Armour for a three-year supply partnership to
produce a new specialty yarn for apparel use. Hemp Black began installing new equipment for this production line at its
Greensboro facility in 1Q24, and expects to conclude the purchase of the equipment, an indirect supply agreement with
Under Armour, and supply agreements with Under Armour's mills in 2Q24. Once fully commissioned, the expected
annual revenue potential of the production line is approximately $9m.
Hemp Black will work with Under Armour on potential additional opportunities to expand yarn production beyond one
machine in the future.
ECOFIBRE LIMITED ANNUAL REPORT 2023 21
Review of Operations and Results (continued)
Hemp Black had previously developed and manufactured its own range of branded, high performance athleisure
clothing, and had also been developing a new clothing range exclusively for a leading US-based department store.
These businesses, including the company's 3D knitting production line, were closed in late 1H23.
Bio-plastics
Bio-plastic products are manufactured with a proportion (typically 25% or above) of bio-based material, providing an
advantage to customers looking to meet ESG (Environmental, Social and Governance) objectives.
Hemp Black has worked with supply chain partners to formulate and manufacture BioPallets that include a minimum of
25% bio-based content and has provided samples at commercial volumes which are currently being used in trials with
large potential customers.
Bio-pallets are an alternative to the traditional wood pallets utilised in the transport and logistics industry, particularly in
environments where pallet hygiene is important, for example in food and pharmaceuticals.
The company is also in active discussions with potential customers for other bio-based plastic solutions, including totes
for storage and transport of high value pharmaceutical goods.
Sustainable packaging
Hemp Black has entered into a three-year agreement with Cruz Foam to manufacture sustainable, bio-degradable
packaging foam products for Cruz Foam's customers. Hemp Black will operate the full production line for these products,
which is able to replace polystyrene in several different applications. For further details on Cruz Foam and its products,
see cruzfoam.com.
Manufacturing equipment and production materials will be supplied by Cruz Foam, with production
gradually increasing to full capacity at which time the estimated annual revenue of this business is
expected to be $3m.
Outlook
Hemp Black will experience continued growth with new core clients. We expect
the business to be profitable from 2H24 with the contribution from new supply
partnerships and the resumption of sales from the bio-medical business.
22
ECOFIBRE LIMITED
ANNUAL REPORT 2023
ECOFIBRE LIMITED ANNUAL REPORT 2023 23
Review of Operations and Results (continued)
AUDm
Revenue
Gross Margin*
Other Income (Expense)*
Operating Costs
EBITDA*
Investments:
Research & Development
Capital Expenditure
* normalised
1
FY23
FY22
13.0
70%
0.0
(14.8)
(3.8)
2.7
0.3
FY22
FY21
12.9
61%
0.1
(16.8)
(6.7)
3.5
0.3
%
%
+1%
+9%
-100%
-12%
-43%
-23%
-%
Ananda Health was able to maintain flat revenues despite challenging market conditions in the US CBD market where the
industry continues to see the dislocation of many smaller brands. During the year operating costs were substantially
reduced, and with the establishment of EOF Bio, most R&D costs will no longer exist in the core operating business.
Market overview
The CBD market in the US continues to be challenging, although the wholesale market for hemp-derived CBD extracts, a
key input for CBD products, appears to have stabilized with volume buyers beginning to return to the market.
The lack of regulatory classification from the FDA remains a barrier to sustainable growth in the industry. Despite hemp-
derived CBD being federally legal since December 2018, the FDA is still yet to approve these products as a dietary
supplement. The lack of a regulatory classification constrains growth by limiting financial transactions, hampering
demand generating activities, and enabling low-quality non-efficacious products to enter the market.
In January 2023, the FDA recognised that existing regulatory frameworks for foods and supplements are not appropriate
for CBD and that it would need to work with Congress to develop a new, tailored regulatory framework.
Market growth in Australia has been stronger, however mainly focused in high-THC segments (THC, or
Tetrahydrocannabinol, is the major psychoactive component in cannabis) and smokable flower formats. Ecofibre does
not participate in these markets.
1 In this report, normalised items exclude impairments of inventory and fixed and intangible assets, adjustments to the Deferred Tax Asset and
Contingent Consideration in 2H23, and any government grants and foreign exchange gains or losses in other income
24
ECOFIBRE LIMITED
ANNUAL REPORT 2023
Review of Operations and Results (continued)
Strategy overview
Ananda Health has responded to market conditions in the United States, its main market, by substantially reducing costs
and stabilizing revenues through product innovation and sales channel expansion.
Ananda Health’s strategy is focused on 5 core areas:
University of Colorado
Anshutz Medical Campus
US Clinical
Study
Support
DEIFIT
R
E
Ananda
Professional
C AGT
White
Label
Clients
ADVANCED
MANUFACTURING
EOF
EOF BIO
Australian
S4 /S8
D
E
R
E
T
S
IG
ER ADF
Supplement
Pharmaceutical
Under Development
US manufacturing and distribution
Ananda Health distributes most of its products in the US as Ananda Professional, the premium brand for US independent
pharmacies.
The business also targets selected white label clients, utilising the capabilities and capacity of its production facility in
Georgetown, Kentucky, and its research-backed product formulation capabilities.
Ananda Health can supply study material under FDA IND (Investigational New Drug) regulations to support phase 2
clinical studies in cannabinoid science. To date active and placebo products have been provided to four studies at
multiple locations across the US.
ECOFIBRE LIMITED ANNUAL REPORT 2023 25
Review of Operations and Results (continued)
Revenues in the US declined 14% in FY23, which was in line with results reported by major US competitors. The business
is positioned for growth due to new product formulas, format innovation, high quality standards and a continued
strategic focus on pharmacist and practitioner recommendations to generate demand.
Ÿ Pharmacist and Practitioner Recommendations: Ananda Health remains focused on the professional healthcare
market for CBD products, which it targets through high quality standards, research, and highly efficacious product
formulation.
This channel requires investment in education for both practitioners and their customers, and a focus on treatment
protocols and technical marketing initiatives. Practitioners have significant influence with their customers, and they
typically focus on customers with a high discretionary spend.
To support customer acquisition and growth in this channel, Ananda Health has restructured its salesforce in 4Q23 to
include more outside sales territory managers, adjusting the responsibilities of its call centre to service regional
customers and support onboarding, education and conversion of new practitioners.
Ÿ Condition-specific formulations: Ananda Health has introduced a range of condition-specific formulations that
include a range of 'minor' cannabinoids and terpene blends beyond CBD, as well as other well-known active
ingredients and supplements, to target specific health outcomes. These formulas use a new naming convention to
assist both practitioner recommendations and customer self-selection: SereniPlex for stress, SomniVive for sleep
and InflaEze for a healthy inflammatory response.
Ÿ Format Innovation: in addition to tinctures, Ananda Health has launched these same condition-specific
cannabinoid blends in a multi-active chewable, or 'gummy', formulation.
Gummy formats are driving growth in the dietary supplement market due to their ease of use compared to other
formats. The Ananda Professional gummy range follows the same benefit-driven naming convention described
above, and includes additional active ingredients that are supported by research at therapeutic doses.
Ananda Health has invested to create an internal gummy manufacturing capability, as quality gummy manufacturers
are still relatively scarce in the industry, and the internal capability provides the business with an important capability
to control quality, taste and product performance.
Ÿ Quality Standards: Ananda Health has been certified by the Australian TGA for Active Pharmaceutical Ingredient
(API) and full product manufacture of medicinal cannabis oil. The certification is a requirement for ongoing Australian
medicinal cannabis operations and is also globally recognized as one of the peak quality standards for
pharmaceutical manufacturing.
EOF Bio
On 23 May 2023 Ecofibre was granted two patents for the treatment for Ovarian Cancer and Endometriosis from the
USPTO. The Endometriosis patent also includes the therapeutic application of cannabinoids for Fibroids and
Dysmenorrhea (period pain). The USPTO also granted a third patent for Ecofibre's proprietary System and Method for
Producing Hemp Extracts.
Two remaining patent applications filed in October 2022 for the treatment of Head and Neck Cancer and Endometrial
Cancer remain under review by the USPTO.
In 4Q23, Ecofibre established EOF-BIO LLC to commercialize the patents and other intellectual property co-developed
with The University of Newcastle. The new entity raised $882,000 in June 2023 and aims to raise a total of USD10m from
external investors to progress to phase 2 clinical trials and further develop its IP portfolio. The establishment of EOF-BIO
will also ensure dedicated management focus and the establishment of key relationships with leaders in the
pharmaceutical and oncology industry.
The potential market opportunity to commercialise this intellectual property is significant. The commercialisation
approach is to separately finance future R&D costs while retaining the majority of upside through further developing and
selling or licensing technology, and through the capacity to manufacture pharmaceutical end products.
26
ECOFIBRE LIMITED
ANNUAL REPORT 2023
Review of Operations and Results (continued)
Patents Overview
Five patent applications involving the use of cannabinoids in treating patients in the following areas
Gynecological cancer
Accounts for over 15% of
cancers diagnosed in women
globally, some with five-year
survival rates ranging 17-39%
Endometriosis
Affects 11% of reproductive
age women globally, causing
severe pain and infertility –
often extends post menopause
Head and neck cancer
Accounts for ~4% of all cancer
diagnosis, and incidence
increasing in recent years
among younger people
US Patent
Application No.
USPTO/PCT
Application Date
US Patent
Number
Patent Status
Name of Patent
18/049,961
26 Oct 2022
11,654,171
Issued May 2023
Methods of Treating Ovarian Cancer with Hemp Extract
18/049,966
26 Oct 2022
Under Review
Methods of Treating Head and Neck Cancers with Hemp Extract
18/049,977
26 Oct 2022
Allowance granted
Systems and Methods for Producing Hemp Extracts and
Compositions
18/050,021
26 Oct 2022
Under Review
Methods of Treating Endometrial Cancer Using Hemp Extract
18/050,023
26 Oct 2022
11,654,172
Issued May 2023
Methods of Treating Endometriosis and Other Non-Cancer
Gynecological Disorders with Hemp Extract
These patents protect key methodology components such as pH range, dosage levels (composition), and delivery (oral, intravaginal, etc.)
OPPORTUNITY
TO SELL/
LICENSE IP
LARGE
MARKET
OPPORTUNITIES
IP
EOF BIO
- Tranche 1 funding is
complete. $30m USD
valuation.
- EOF majority shareholder
- Funds used to progress
phase 2 clinical
trials to eventually
sell/license IP
REDUCED COSTS
AND RISK WHILE
RETAINING
UPSIDE
ADDITIONAL
UPSIDE AS
MANUFACTURER
Indication
Market Size BN
USD
(2022-2023)
% CAGR
Future Market BN
USD
(2030)
1
2
Ovarian Cancer
Endometrial Cancer
Head & Neck Cancer
Endometriosis
Dysmenorrhea
2
4
3
2.2
28.3
0.6
3.2
3.8
23.7
4.9
11.7
6.9
8.2
9.7
41.0
1.2
5.1
6.6
Polaris Market Research , Research and Markets , Grandview Research , MRFR Database and Analyst review
2
3
1
4
ECOFIBRE LIMITED ANNUAL REPORT 2023 27
Review of Operations and Results (continued)
Australian S4 / S8
In Australia, Ananda Health imports CBD dominant (< 0.3% THC) products to Australia from its production facility in the US
and does not participate in the high-THC or dried flower market segments. Products are distributed through pharmacies
as medicinal cannabis under Schedule 4 and Schedule 8 (S4 and S8) regulations issued by the Australian TGA, via the
Special Access Scheme and via prescription through Authorised Prescribers.
Ecofibre undertook a Phase III Double-Blind, Randomised Placebo-Controlled clinical trial (Sleep Study) to support a
commercial objective of being the first provider of CBD for the Schedule 3 over-the-counter market. The Sleep Study
did not show statistically significant improvement vs placebo and Ecofibre has decided that it will not currently schedule
a follow-on crossover study to complete the clinical trial.
Outlook
Ananda Health expects to see growth in its US Independent Pharmacy and Functional Medicine Practitioner channel
through its new sales focus with the establishment of territory manager sales representatives. The business is on track
to become cash flow positive through sales growth and cost containment. Future FDA decisions to establish a clear
regulatory pathway for CBD sales in the US will determine growth potential, although the Ananda Professional brand is
well positioned as a CBD brand of choice for healthcare practitioners and pharmacists.
28
ECOFIBRE LIMITED
ANNUAL REPORT 2023
Review of Operations and Results (continued)
AUDm
FY23
FY22
FY22
FY21
Revenue
Gross Margin*
Other Income (Expense)*
Operating Costs
EBITDA*
Investments:
Research & Development
Capital Expenditure
* normalised
1
2.2
15%
-
(2.7)
(2.2)
0.2
0.4
%
%
-39%
-5%
-%
+23%
+175%
3.6
20%
-
(2.2)
(0.8)
0.1
0.2
+100%
+100%
Ananda Food's FY23 result was negatively impacted by the loss of hemp fibre seed and crops that were planted to
supply the US hemp fibre market, which resulted in $3m lost revenues and impacted gross margins as there were no
sales to offset production costs. The loss was caused by a combination of transport, weather and harvest issues, part of
which may be recoverable from the company's insurers in FY24.
Overview
Ananda Food operates two businesses in Australia and the United States. Each business is based on unique, registered
varieties of hemp genetics:
Ÿ Hemp foods: Ananda Food supplies 100% Australian hemp seed products that are rich in digestible protein, fibre,
omega 3 and omega 6 fatty acids, iron and other essential vitamins and minerals.
Ecofibre's hemp varieties enable high yields and progressive grain harvests in growing regions from Tasmania to
North Queensland. Varieties such as ECO-Excalibur produce reliable, high-yielding grain crops and are bred for
optimal performance in specific growing latitudes.
The business operates a highly efficient BRCGS and HACCP rated food processing facility in Beresfield, Australia.
This facility has the only processing capability in Australia that can produce all three major categories of hemp food:
de-hulled seed, oil and protein / fibre, as well as a pelletising line.
2
3
Ÿ Fibre planting seed: Ananda Food propagates and sells planting seed to hemp fibre growers in the United States and
Australia. Varieties such as ECO-MS77 produce a high biomass in a short growing season and are adaptable to a wide
range of growing conditions.
Hemp foods
The food business continues to focus on being the lowest cost producer through building scale as the white label and
wholesale partner-of-choice; and expanding the hemp food category in Australia through product innovation and brand.
The business has a quality customer base, including both the Coles and Woolworths supermarket chains. To expand
market demand and share and expand distribution with large customers, Ananda Food has developed new hemp
product formats to improve usability and use of by-products, and in 1H24 will launch a new cat litter product in
Woolworths that will replace existing, less sustainable, extractive clay-based products.
The facility has the only processing capability in Australia that can produce all three major categories of hemp food:
de-hulled seed, oil and protein, and also has a pelletising line.
Equine feed and other emerging pet markets are also a key area of focus.
In FY23 the business continued to invest in automation and processing efficiency to improve its cost position.
1 In this report, normalised items exclude impairments of inventory and fixed and intangible assets, adjustments to the Deferred Tax Asset and
Contingent Consideration in 2H23, and any government grants and foreign exchange gains or losses in other income
2 British Retail Consortium - Brand Reputation through Compliance of Global food safety Standards
3 Hazard Analysis and Critical Control Point
ECOFIBRE LIMITED ANNUAL REPORT 2023 29
Review of Operations and Results (continued)
Fibre planting seed
The US market for hemp fibre seed has been growing strongly as new industrial applications are developed for hemp
stalk (inner 'hurd' and exterior 'fibre') materials, and Ecofibre's ECO-MS77 is widely considered to be the best fibre
genetic in the US based on yield and ability to grow in all US latitudes.
Market demand continues to exceed supply, however FY23 was a disappointing year for the seed business as weather
and other issues contributed to ~$3m lost seed sales.
Outlook
The launch of the new cat litter product with Woolworths, and the re-establishment of fibre planting seed inventory and
sales, will be core to profitable growth.
30
ECOFIBRE LIMITED
ANNUAL REPORT 2023
Review of Operations and Results (continued)
Material Business Risks
Ecofibre's growth strategy across its business portfolio exposes the Group to various risks, which are fully or partially
mitigated in accordance with the Group's risk appetite and risk management framework. Risks and mitigating strategies
set out in this report include:
Ÿ Improvement of operating profits and cashflows across each of the Group's businesses through revenue growth, the
sale of surplus assets, and cost control, to deliver cash positive operations and profitability.
Ÿ Managing working capital, including through the improved profitability, to finance the operations of the business and
re-pay Group loans on agreed timeframes.
Ÿ Hemp Black's ongoing growth strategy and implementation, including filling existing production capacity and
commissioning new capacity for new market and product segments, such successful commissioning of production
equipment for Under Armour and Cruz Foam, signing final binding agreements with Under Armour, and successfully
establishing new product lines including bio-plastics. Continued revenue growth and consequent profits for Hemp
Black are necessary to support the carrying value of the Goodwill asset and the Contingent Consideration liability on
the Group's balance sheet.
Ÿ Implementing strategy to improve Ananda Health revenue growth, including the focus on professional healthcare
and independent pharmacies, and responding to high levels of competition in the US CBD market.
Ÿ US FDA position on CBD as a dietary supplement and managing ongoing regulatory change.
Ÿ Ananda Health executing on its strategy and growing revenues to return to profitability.
Ÿ Delivering a commercial return on the Group's investment in research and development, including Ananda Health's
clinical research program.
Ÿ Successful completion of EOF Bio's capital raising, the further outcomes of the research program with the University
of Newcastle, and the need to commercialise research outcomes including by securing access to new, specialist
skillsets in pharmaceutical drug development.
Ÿ Ananda Food's ongoing growth strategy and implementation, including growth of the overall hemp food category in
Australia, and retaining and building market share through key distribution relationships, and balancing the
production and sale of different outputs from seed processing including through new products such as cat litter
Ÿ Managing agricultural and yield risks in the fibre seed business as the business seeks to re-establish seed inventory
and its sales pipeline.
Ÿ Mitigating loss or damage to inventory and other assets, or the group being unable to sell any assets it identifies as
surplus to current needs at or higher than book value.
Ÿ Changes to key customer purchasing trends, preferences and intentions.
Ÿ Managing the impact of inflation on Group margins and operating costs.
Ÿ Mitigating key person risk and retention of critical staff.
Ÿ Global instability, including impacts on major customer strategies, supply chains and foreign exchange rates.
ECOFIBRE LIMITED ANNUAL REPORT 2023 31
1. OVERVIEW
Review of Operations and Results (continued)
Other portfolio risks include systems complexity and cyber risk. The Group's businesses are dependent on
sophisticated business processes and systems to operate effectively. If these systems do not operate as intended,
through cyber-attack or otherwise, the group's ability to operate its businesses would be significantly impacted.
Environmental, social and governance risks are considered material to the Group's business strategies and financial
prospects, particularly in relation to agricultural and yield risks. Any current risk from climate change may include
unpredictable high impact weather events such as tornados in the United States or rain and frost events impacting crops
which can cause significant damage in a short period, and the risk that any disaster recovery actions may not be
sufficient to mitigate consequent losses.
Ecofibre published its most recent Governance Report in September 2023.
32
ECOFIBRE LIMITED
ANNUAL REPORT 2023
3.
DIRECTORS’
REPORT
ECOFIBRE LIMITED ANNUAL REPORT 2023 33
Board of Directors
Your Board of Directors, as at the
date of this report, is profiled
adjacent.
Vanessa Wallace
Independent Chairman
Eric Wang
Managing Director & CEO
Experience and expertise:
Experience and expertise:
Vanessa has a long track record as a
director of listed and non-listed
companies including Wesfarmers Ltd,
SEEK Ltd, Doctor Care Anywhere PLC
and Palladium Global Holdings Inc. Her
executive career includes almost 30
years as a strategy management
consultant, where she focused on
financial services, health and consumer
product industries, including co-leading
the Booz & Company business in
Japan for 4 years. Earlier in her career
she was a Portfolio Manager with
investment bank Schroders. Vanessa is
an early-stage investor in the health
sector and the founding Chairman of
Australian digital health &
biotechnology business, Drop Bio Pty
Ltd.
Board Committee Memberships
Chairman of the Board
Member of the Audit, Risk and
Compliance Committee
Member of the Health and Government
Relations Committee
Member of the People and
Nominations Committee
Qualifications
BCom (UNSW), MBA (IMD, Switzerland)
Other current directorships
Wesfarmers Ltd and SEEK Ltd
Former directorships in last 3 years
Doctor Care Anywhere PLC
Eric joined Ecofibre as CFO and
Director in December 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. He then
served as the Chief Operating Officer of
Perpetual Limited and Director of the
APO for AMP Limited.
Board Committee Memberships
Member of the Health and Government
Relations Committee
Member of the Audit, Risk and
Compliance Committee
Qualifications
BS Engineering (WestPoint)
MBA (Tuck School, Dartmouth College,
USA)
Other Current directorships
None
Former directorships in last 3 years
None.
34
ECOFIBRE LIMITED
ANNUAL REPORT 2023
Professor Bruce Robinson
Independent
Non-Executive Director
Michele Anderson
Independent
Non-Executive Director
Mark Bayliss
Independent
Non-Executive Director
Experience and expertise:
Experience and expertise:
Experience and expertise:
Mark is a director and senior executive
with extensive experience in a variety of
roles across listed and private
companies, management buyouts,
private equity and turnarounds in
Australia, NZ, UK and US.
He has been the CEO of three listed
companies and one private company
and the Chairman of 3 companies and
2 not-for-profits. His industry
experience is broad including
eCommerce, Technology, Credit
Finance, Retail, FMCG, Media &
Publishing, Advertising & Marketing
Services and Manufacturing
Board Committee Memberships
Chairman of the Audit, Risk and
Compliance Committee (from 20
February 2023)
Qualifications
BSc Economics (LSE), ACA, MAICD
Other current directorships
A2B Australia Limited
Former directorships in last 3 years
None.
Prof. Robinson has over 25 years
leadership experience as a board
director, academic physician and
scientist across research, healthcare
and medicine, and tertiary education.
He has extensive experience covering
academia, government, public and
private health providers, research
institutes and philanthropic
organisations. He is currently a director
of Cochlear, an ASX listed global
hearing implants business;
MaynePharma, an ASX listed
pharmaceutical manufacturer; and
QBiotics, a drug development
company. Since 2015 Prof. Robinson
has also chaired the Australian
Government's National Health and
Medical Research Council, and the
Medical Benefits Schedule Review Task
Force.
Board Committee Memberships
Chairman of Health and Government
Relations Committee
Member of the Audit, Risk and
Compliance Committee (from 1 July
2023)
Member of the People and
Nominations Committee
Qualifications
MD (USyd), MSc (USyd), FRACP,
FAAHMS, FAIRCD
Other current directorships
Cochlear Limited, Mayne Pharma Group
Limited and Qbiotics
Michele's executive career spans 30
years as an operating business
executive, independent director and
founder working across the technology,
wine and professional services sectors.
Her leadership contributions and
passion lie in developing and
implementing growth strategy, scaling
brands and businesses, driving digital
growth and transformation, and
supporting positive environmental
impact and de-carbonisation. She
began her career in Australia as a
management consultant with Booz Allen
and Hamilton and then spent most of
her career to date working in the US,
including running Shutterfly's US$1B
revenue consumer ecommerce
business in Silicon Valley and Staples'
Print and Marketing Services business
across 1,200 US stores. Michele holds
bachelor's degrees in Commerce and
Law from UNSW, an MBA from Wharton,
and a Master of Wine.
Board Committee Memberships
Chair of the People and Nomination
Committee
Member of the Audit, Risk and
Compliance Committee (from 1 July
2023)
Member of the People and
Nominations Committee
Qualifications
BCom (UNSW), LLB (UNSW), MBA
(Wharton, University of Pennsylvania,
USA)
Former directorships in last 3 years
None.
Other current directorships
None
Former directorships in last 3 years
None.
ECOFIBRE LIMITED ANNUAL REPORT 2023 35
DIRECTORS’ REPORT
Directors’ report
Your directors present their report, together with the financial statements, on the consolidated entity consisting of
Ecofibre Limited (referred to hereafter as the 'Company') and the entities it contr olled at the end of, or during, the
year ended 30 June 2023.
Board of Directors
The following persons were directors of Ecofibre Limited during the whole of the financial year and up to the date of
this report, unless otherwise indicated:
Vanessa Wallace, Chairman
Eric Wang, Managing Director
Jon Meadmore (retired on 20 February 2023)
Prof. Bruce Robinson
Michele Anderson
Mark Bayliss (appointed 1 September 2022)
Company Secretaries
Jonathan Brown and Robin Sheldon are the joint company secretaries of the Company. Robin was appointed by the
board as a General Counsel and Joint Company Secretary of the Company with effect from 22 January 2021 to act
jointly with Jonathan who is the Company’ s Chief Financial Officer and has been the Company Secretary of the
Company since 18 June 2019.
Jonathan Brown is a Chartered Accountant with over 25 years’ commercial experience. He has a Bachelors Degree
in Accounting, Graduate Diploma in Advanced Accounting and a Graduate Diploma in Finance and Investment from
FINSIA.
Robin Sheldon has 29 years’ experience in corporate law. Prior to joining Ecofibre, Ms. Sheldon was employed by
Thomas Jefferson University as Sr, VP of Jefferson Strategic Ventures, VP of its Innovation Pillar and Associate
Counsel.
Principal activities
The principal continuing activities of the Group during the year were researching, producing, and selling sustainable
polymer-based industrial products and hemp derived nutraceuticals and foods.
Significant changes in the state of affairs in FY23
In July 2022, the Group received USD6.4m from NuBridge Commercial Lending LLC, being the balance of funds
due on a USD10m loan. The Group also repaid $2.0m due to the James & Cordelia Thiele Trust Fund (Thiele) in
July 2022.
On 1 September 2022, Director Mark Bayliss joined the Board of the Company as an independent, non-executive
director. Mr Bayliss assumed the role of Chair of the Audit, Risk & Compliance Committee.
In October 2022 Ecofibre lodged four Track 1 utility patent applications with the US Patent and Trademark Office
(USPTO) for endometriosis, gynaecological cancers, and other non-malignant gynaecological disorders.
Ecofibre's CANN-Sleep phase 3 clinical trial, conducted independently by the National Centre for Naturopathic
Medicine, Southern Cross University (SCU), was completed and initial results showed that whilst there was
improvement in sleep outcomes compared to baseline, the improvements did not reach statistical significance
compared to placebo. Ecofibre met with Therapeutic Goods Administration (TGA) officials to discuss the result
and has deferred any decision to undertake a follow-on study.
36 ECOFIBRE LIMITED ANNUAL REPORT 2023
DIRECTORS’ REPORT
Between December 2022 and February 2023, the Company undertook a strategic review of its business portfolio,
with a focus on prioritising nearer-term cash flow businesses and returning the Company to positive operating
cashflows.
As a result of the review, Ecofibre decided to close part of its Hemp Black knitting business, specifically the
garment business that use d Santoni machines for 3D and tubular knitting, and an impairment expense was
recognised in relation to fixed assets, intangible assets and inventory used in this business.
The Company also made the decision to write down the balance of fixed assets, inventory and intangible assets in
line with lower capacity utilisation at its production facility in Georgetown, Kentucky, and in line with lower market
costs for key inputs such as hemp extracts used to blend and manufacture cannabinoid-based nutraceuticals.
On 31 December 2022 Ecofibre renegot iated the terms of loans from the James & Cordelia Thiele Tr ust Fund
(Thiele) and the Lambert Superannuation Fund (LSF) to extend maturity from 15 July 2023 to 15 July 2025, except
for $1m payable to Thiele on 15 July 2023. Interest on the Thiele loan increased from 8% to 11%.
On 20 February 2023, Director Jon Meadmore retired.
Patents for the treatment of Ovarian cancer, and the treatment of Endometriosis, were issued on 23 May 2023. The
Endometriosis patent includes the therapeutic application of cannabinoids for Fibroids and Dysmenorrhea (period
pain). Two remaining patent applicat ions for the tr eatment of Head and Neck Cancer and Endometrial Cancer
remain under review by the USPTO.
Ecofibre subsequently established EOF B io LLC and raised initial funds totalling $ 882,000 in June 2023 to
commercialise the patents and other intellectual property co -developed by Ecofibre and the University of
Newcastle.
During the year 150,000 shares vested from the Employee Share Trust pursuant to the Group’s Employee Share
Scheme.
There were no other significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
The Group repaid $1.0m due to the James & Cordelia Thiele Trust Fund (Thiele) in July 2023.
Following the establishment of EOF Bio in June 2023, an additional USD0.5m has been received from external
investors to purchase preferred units in the entity.
The Ecofibre Group and the University of Newcastle finalis ed licensing arrangements with EOF Bio to enable
commercialisation of the intellectual property, which gives EOF Bio the exclusive, worldwide rights to commercialise
the intellectual property developed by Ecofibre and the University of Newcastle.
In late 1H23, Ecofibre exported 132 tonnes of hemp fibre planting seed from Australia to customers in the United
States. Subsequent crop germination rates were low, and the seed appeared to have been damaged in transit despite
the use of refrigerated containers. The issue remains under investigation with the transport company and Ecofibre’s
marine transit insurers, and net financial impact of the seed damage is expected to be $1m - 2m.
Hemp Black agreed a Memorandum of Understanding (MOU) with Under Armour Inc (Under Armour) to supply a
specialty yarn for apparel use. Equipment for production of the yarn began to be installed at Hemp Black’s facility in
Greensboro in 1Q24.
In August 2023 Ecofibre announced that it had agreed to extend the earnout period for contingent consideration
under the original agreement for the acquisition of the Hemp Black business from TexInnovate Inc from 5 years to 7
years.
In August 2023, Ecofibre completed a placement to institutional and sophisticated investors to raise $5m in new
equity capital, and up to a further $0.5m from directors and management subject to approval by shareholders at the
ECOFIBRE LIMITED ANNUAL REPORT 2023 37
2023 annual general meeting. The company also announced a share placement plan for retail and other investors
up to $30,000 per eligible investor.
No other matter or circumstance has arisen since 30 June 2023 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.
DIRECTORS’ REPORT
Likely developments
For further information about likely developments in the operations of the Group, refer to the Review of Operations
and Result section. The expected results from those operations in future financial years have not been included
because they depend on factors such as general economic conditions, the risks outlined and the success of the
Group strategies.
Environmental regulation
The Group is subject to and 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.
Ecofibre takes its ESG responsibilities seriously. At its core the business aims to have a positive impact on society
and on the environment.
Any current risk from climate change is not considered material, however 'random' high impact weather events such
as tornados or floods in the United States could cause significant damage in a short period. The Group's agricultural
risk is considered low, as it has a highly diversified growing strategy and maintains sufficient inventory to protect
against shortages of hemp inputs in each business.
Ecofibre published its most recent Governance Report, and a separate Sustainability Report, on the same date as
this annual report.
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 2023, and the number of meetings attended by each director, were:
Director
Board
ARCC
HGRC
PNC (RNC)
Vanessa Wallace
Eric Wang
Jon Meadmore *
Bruce Robinson
Michele Anderson
Mark Bayliss **
Attended
8
8
5
8
8
7
Held
8
8
5
8
8
7
Attended
5
5
4
4
4
3
Held
5
5
4
5
5
3
Attended
2
2
-
2
-
-
Held
2
2
1
2
-
-
Attended
3
3***
2
3
3
3***
Held
3
3***
2
3
3
3***
ARCC – Audit, Risk and Compliance Committee
HGRC – Health & Government Relations Committee
PNC – People and Nominations Committee (formerly known as Remuneration & Nomination Committee (RNC))
* until 20 February 2023
** from 1 September 2022
*** attended by invitation
Held: represents the number of meetings held during the time the director held office or was a member of the
relevant committee.
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.
38 ECOFIBRE LIMITED ANNUAL REPORT 2023
DIRECTORS’ REPORT
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.
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 (including Independence Standards) 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.
Dividend
No dividend was declared or paid during the year (FY22: Nil).
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.
ECOFIBRE LIMITED ANNUAL REPORT 2023 39
Auditor's independence declaration
The auditor’s independence declaration has been received and can be found on page 49 of the annual report.
DIRECTORS’ 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
_________________________________________
Vanessa Wallace
Director
_________________________________________
Eric Wang
Director
29 September 2023
Sydney
29 September 2023
Lexington
40 ECOFIBRE LIMITED ANNUAL REPORT 2023
REMUNERATION REPORT
Remuneration report
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.
KMP 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”.
The key management personnel of the consolidated entity in the period consisted of the directors, including the
managing Director, and the CFO of Ecofibre Limited:
Vanessa Wallace – Non Executive Director & Chairman
Eric Wang – Managing Director and CEO
Jon Meadmore – former Non-Executive Director
Prof. Bruce Robinson – Non-Executive Director
•
•
•
•
• Michele Anderson – Non-Executive Director
• Mark Bayliss – Non-Executive Director (appointed 1 September 2022)
•
Jonathan Brown – CFO and Joint Company Secretary
The remuneration report is set out under the following main headings:
●
Principles used to determine the nature and amount of remuneration
●
●
●
●
Details of remuneration
Service agreements
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.
Group performance, shareholders wealth and key management personnel remuneration
The Board is cognisant of the link between Directors’ and executives’ remuneration to the achievement of strategic
goals and performance of the Group. In setting the remuneration policy the Group seeks to align key management
personnel rewards with overall shareholder value creation. The Board review senior management remuneration on
a regular basis to ensure base remuneration and any performance payments are directly linked to the achievement
of profit contribution targets.
ECOFIBRE LIMITED ANNUAL REPORT 2023 41
Principles used to determine the nature and amount of remuneration (continued)
Details of shareholder returns are provided below:
REMUNERATION REPORT
Unit
2019
2020
2021
2022
2023
Share price at year end $/share
Quantity of shares
Market capitalisation
Revenue
Net profit/(loss) after
tax
Net assets
Qty
$’000
$’000
$’000
$’000
2.10
2.22
0.21
291,951,478 305,619,401 326,696,691 335,510,772 335,744,765
70,506
32,510
(39,913)
67,102
30,220
(14,670)
613,098
35,605
6,000
678,475
50,717
13,156
222,154
28,793
(6,986)
0.20
0.68
42,303
63,001
111,797
109,942
74,647
Non-executive director remuneration
ASX listing rules require the aggregate non -executive directors' remuneration be determined periodically by the
Company’s members in general meeting. 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. Any
changes to directors fees in FY23 are noted in the Details of Remuneration table on page 44.
Shareholders approved a maximum annual aggregate fee pool of $500,000 at the AGM in December 2017. No
increase in this pool has been sought since then.
Shareholders approved the issue of 3 year options over shares for directors at the AGM in November 2022. The
value of options over ordinary shares granted, exercised and lapsed for directors as part of compensation during
the year ended 30 June 2023 are set out below:
Option holder
Value of options
granted during the
year
Value of options
exercised during the year
$
$
Value of options
lapsed during the year
Jon Meadmore
Michele Anderson
Mark Bayliss
-
107,472
107,472
-
-
-
Post Jon Meadmore’s retirement on 20 February 2023, his 173,700 options lapsed.
The terms and conditions of each grant of options over ordinary shares to directors in this financial year of future
reporting years are as follows:
Option holder
Number
of
options
granted Grant date
Vesting date
and exercisable
date
Vanessa Wallace
Jon Meadmore
Bruce Robinson
Michele Anderson
Mark Bayliss
1 Dec 2021
386,001
1 Dec 2021
173,700
144,750
1 Dec 2021
628,491 1 Dec 2022
628,491 1 Dec 2022
1 Oct 2024
1 Oct 2024
1 Oct 2024
1 Oct 2025
1 Oct 2025
Expiry date
7 Oct 2024
7 Oct 2024
7 Oct 2024
7 Oct 2025
7 Oct 2025
Exercise
price
Fair value per
option at
grant date
$0.83
$0.83
$0.83
$0.22
$0.22
$0.2839
$0.2839
$0.2839
$0.1710
$0.1710
All options were granted over unissued fully paid ordinary shares in the company. Options granted carry no
dividend or voting rights. Options vest based on the provision of service over the vesting period whereby the
executive becomes beneficially entitled to the option on vesting date. Options are exercisable by the holder as
from the vesting date. There has not been any alteration to the terms or conditions of the grant since the grant
date. There are no amounts paid or payable by the recipient in relation to the granting of such options other than
on their potential exercise
42 ECOFIBRE LIMITED ANNUAL REPORT 2023
$
49,313
-
-
REMUNERATION REPORT
Principles used to determine the nature and amount of remuneration (continued)
Executive remuneration
The company 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, share-based payments, and other benefits such
as superannuation and health care which may be country and person specific. The combination of these comprises
the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, is 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.
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 in an Employee Share Trust (EST) once the executives meet time and
performance based vesting hurdles.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Managing Director & CEO:
Eric Wang
CFO:
Jonathan Brown
Fixed remuneration
2022
2023
At risk - LTI
2023
2022
42%
28%
58%
72%
78%
55%
22%
45%
ECOFIBRE LIMITED ANNUAL REPORT 2023 43
Details of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the tables below.
REMUNERATION REPORT
Short-term
benefits
Cash
salary and
fees
$
Post-employment
benefits
Super-
annuation
$
Long
service
leave
$
Share-based payments
Equity-
settled
shares
$
Equity-
settled
options
$
Total
$
35,101
3,510
131,944
76,875
59,375
63,438
-
-
-
-
24,512
2,451
305,071
-
-
-
-
-
-
-
-
-
-
-
-
-
-
792,768
-
38,611
22,410
154,354
10,084
-
8,404
-
-
86,959
59,375
71,842
26,963
1,097,839
200,000
896,316
20,000
25,961
8,823
8,823
179,244
972,012
-
40,898
408,067
1,944,010
150,000
-
49,018
56,250
69,570
61,969
340,881
-
-
7,305
-
-
-
-
-
-
-
-
-
-
-
-
-
38,417
188,417
(10,084)
14,406
21,977
38,934
70,656
98,852
21,977
83,946
473,988
-
814,869
231,730
959,418
5,654
12,959
8,663
8,663
72,984
546,972
-
86,693
319,031
1,614,705
2022
Non-Executive Directors:
Chairman:
Barry Lambert (retired 19 Nov 21)
Vanessa Wallace (Deputy Chair 1
Jul 21, Chair as of 19 Nov 21)
Directors:
Jon Meadmore
Kristi Woolrych (retired 31 May 22)
Bruce Robinson
Michele Anderson (appointed 14
March 22)
Managing Director & CEO:
Eric Wang
CFO:
Jonathan Brown
2023
Non-Executive Directors:
Chairman:
Vanessa Wallace
Directors:
Jon Meadmore (retired 20
February 2023)
Bruce Robinson
Michele Anderson
Mark Bayliss (appointed 1
September 2022)
Managing Director & CEO:
Eric Wang
CFO:
Jonathan Brown
44 ECOFIBRE LIMITED ANNUAL REPORT 2023
Service agreements
Remuneration and other terms of employment for executives are formalised in service agreements. Details of these
agreements are as follows:
REMUNERATION REPORT
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
LTI:
Eric Wang
Managing Director and Chief Executive Officer
8 December 2017
No fixed term
Base salary of US$220,000 per annum, 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. Eric is subject to a restraint of trade restricting competition with the
company for up to 24 months from termination of his employment.
7,200,000 shares are held by the ESS Trustee as potential LTI under the ESS and will
vest in tranches upon satisfaction of the following share price hurdles and earliest
vesting dates for each tranche:
Share
tranches
2,400,000
2,400,000
2,400,000
Share Price Hurdle
Share price on ASX of at least $1.50 based on
a rolling 30 day volume weighted average
price (VWAP) during the period between 1
January 2022 and 31 December 2024
Share price on ASX of at least $1.83 based on
a rolling 30 day VWAP during the period
between 1 January 2023 and 31 December
2024
Share price on ASX of at least $2.17 based on
a rolling 30 day VWAP during the period
between 1 January 2024 and 31 December
2024
Earliest Vesting
Date
30 June 2022
30 June 2023
30 June 2024
ECOFIBRE LIMITED ANNUAL REPORT 2023 45
REMUNERATION REPORT
Service agreements (continued)
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Jonathan Brown
CFO and Joint Company Secretary
8 December 2017
No fixed term
Base salary of US$165,760 per annum, 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. Jonathan is subject to a restraint of trade restricting competition with the
company for up to 24 months from termination of his employment.
LTI:
1,600,002 shares are held by the ESS Trustee as potential LTI under the ESS and will
vest in tranches upon satisfaction of the following share price hurdles and earliest
vesting dates for each tranche:
Share
tranches
800,001
Earliest Vesting
Date
31 July 2022
Share Price Hurdle
800,001
31 July 2024
Share price on ASX of at least $1.83 based
on a rolling 30 day VWAP during the period
between 1 January 2022 and 31 December
2024
Share price on ASX of at least $2.17 based
on a rolling 30 day VWAP during the period
between 1 January 2024 and 31 December
2024
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Additional disclosures relating to key management personnel
The Board believes that all Directors and KMP should think and act as owners of the business. As such we
promote the long-term ownership and accumulation of shares.
Directors’ interests in shares and options
As at 30 June 2023, the directors and other KMP held the following interests in shares and options:
46 ECOFIBRE LIMITED ANNUAL REPORT 2023
Additional disclosures relating to key management personnel (continued)
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:
REMUNERATION REPORT
Ordinary shares
Jon Meadmore*
Bruce Robinson
Eric Wang
Vanessa Wallace
Jonathan Brown
Balance at the
start of the year
Net purchased /
(sold)
Received on
exercising options
Balance at the end
of the year^
538,000
30,000
14,651,253
505,000
2,517,244
18,241,497
-
-
1,093,829
100,000
-
1,193,829
-
-
-
-
-
-
538,000
30,000
15,745,082
605,000
2,517,244
19,435,326
^ Where a director ceased to be a director throughout the year, “Balance at the end of the year” reflects the
balance of shares as at the date they ceased to be a director.
* Jon Meadmore retired from the Board and ceased to be a member of the KMP, effective 20 February 2023.
No shares were received as remuneration by the directors.
Option holding
The number of options over unissued ordinary 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:
Options over ordinary shares
Vanessa Wallace
Jon Meadmore
Bruce Robinson
Michele Anderson
Mark Bayliss
Balance at the
start of the
financial year
Granted as
compensation Expired/forfeited
Balance at the end
of the financial
year
386,001
173,700
144,750
-
-
704,451
-
-
-
628,491
628,491
1,256,982
-
(173,700)
-
-
-
(173,700)
386,001
-
144,750
628,491
628,491
1,787,733
Details of these options are as follows:
Grant date
1 Dec 2021
1 Dec 2022
Expiry date
7 Oct 2024
7 Oct 2025
Exercise price
$0.83
$0.22
Balance at the end of the year
530,751
1,256,982
There were no other options over unissued ordinary shares apart from the 1,787,733 held by directors. 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.
ECOFIBRE LIMITED ANNUAL REPORT 2023 47
REMUNERATION REPORT
Employee share scheme (ESS)
The Board believes that 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, and 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 shares 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. Profit-based hurdles – earned when Group or business unit profitability achieve
target levels.
c. Sales target hurdle– earned when achieving certain sales, gross margin or volume
targets.
d. 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 each offer document.
What happens if an
employee leaves?
If an employee resigns or is terminated for cause, any unvested LTI under the ESS are
typically 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 may receive 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).
This concludes the remuneration report, which has been audited.
48 ECOFIBRE LIMITED ANNUAL REPORT 2023
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF ECOFIBRE LIMITED
I declare that, to the best of my knowledge and belief during the year ended 30
June 2023 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
M J Monaghan
Director
Brisbane: 29 September 2023
ECOFIBRE LIMITED ANNUAL REPORT 2023 49
1. OVERVIEW
4.
FINANCIAL
STATEMENTS
50 ECOFIBRE LIMITED ANNUAL REPORT 2023
Consolidated Statement of Profit or Loss
For the year ended 30 June 2023
Revenue
Direct costs
Gross profit
Other (expenses) income
Other operating expenses
Interest expense
Profit (Loss) before income tax
Income tax (expense) benefit
Profit (Loss) after income tax
Note
4
5
4
5
6
2023
$’000
2022
$’000
32,510
30,220
(21,771)
(15,526)
10,739
14,694
(2,353)
2,144
(35,371)
(37,206)
(2,921)
(1,380)
(29,906)
(21,748)
(10,007)
7,078
(39,913)
(14,670)
Earnings (Loss) per share:
Basic earnings (loss) per share - cents
Diluted earnings (loss) per share - cents
30
30
(11.89)
(11.89)
(4.41)
(4.41)
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes
ECOFIBRE LIMITED ANNUAL REPORT 2023 51
Consolidated Statement of Other Comprehensive
Income
For the year ended 30 June 2023
Note
2023
$’000
2022
$’000
Profit (loss) after income tax
(39,913)
(14,670)
Other comprehensive profit (loss) for the year:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign controlled entities
33
2,967
6,907
Total comprehensive profit (loss) for the year
(36,946)
(7,763)
The above consolidated statement of other comprehensive income should be read in conjunction with the
accompanying notes
52 ECOFIBRE LIMITED ANNUAL REPORT 2023
Consolidated Statement of Financial Position
As at 30 June 2023
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Biological assets
Other current assets
Tax recoverable
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Intangible assets
Right-of-use assets
Property, plant and equipment
Deferred tax assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease liabilities
Tax payable
Borrowing
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities
Contingent consideration
Deferred tax liabilities
Borrowing
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Foreign currency translation reserve
Accumulated losses
Share capital reserve
Share-based payment reserve
Equity attributable to the members of the company
Non-controlling interest
TOTAL EQUITY
Note
7
8
9
10
11
12
13
14
15
16
13
17
13
32
18
17
20
33
29
24
2023
$’000
7,289
2,885
9,380
568
1,455
51
21,628
53,680
305
43,121
-
97,106
118,734
5,113
335
15
1,000
6,463
92
11,518
407
25,607
37,624
44,087
74,647
2022
$’000
7,251
4,126
15,702
579
5,086
3,943
36,687
55,368
838
46,991
9,670
112,867
149,554
5,560
467
31
2,012
8,070
463
13,996
318
16,765
31,542
39,612
109,942
116,538
4,777
(65,917)
14,300
4,932
74,630
17
74,647
115,347
1,810
(26,004)
14,300
4,489
109,942
-
109,942
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
ECOFIBRE LIMITED ANNUAL REPORT 2023 53
Consolidated Statement of Changes in Equity
For the year ended 30 June 2023
Note
Issued
capital
$'000
Share-
based
payment
reserve
$'000
Share
capital
reserve
$’000
Foreign
currency
translation
reserve
$'000
Accumulat
ed gains
(losses)
Non-
controlli
ng
interest
$'000 $'000
Consolidated
Balance 30 June 2021
108,132
5,796
14,300
(5,097)
(11,334)
Loss for the year
Other comprehensive income
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
-
-
-
-
-
-
Share Options exercised
20
6,344
(2,067)
Share-based payments
20
911
760
Share issue cost
(40)
-
-
-
-
-
-
-
-
(14,670)
6,907
-
6,907
(14,670)
-
-
-
-
-
-
Balance 30 June 2022
115,347
4,489
14,300
1,810 (26,004)
Total
$'000
111,797
(14,670)
6,907
(7,763)
-
-
-
-
-
4,277
-
-
-
-
-
1,671
(40)
109,942
(39,913)
2,967
Loss for the year
Other comprehensive income
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
-
-
-
Shares issued
Share Options exercised
Share-based payments
Share issue cost
24
20
20
20
865
-
346
(20)
-
-
-
-
-
443
-
-
-
-
-
-
-
-
-
(39,913)
2,967
-
2,967
(39,913)
-
(36,946)
-
-
-
-
-
-
-
-
17
882
-
-
-
-
789
(20)
Balance 30 June 2023
116,538
4,932
14,300
4,777
(65,917)
17
74,647
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes
54 ECOFIBRE LIMITED ANNUAL REPORT 2023
Consolidated Statement of Cash Flows
For the year ended 30 June 2023
Cash flows from operating activities
Receipts from customers
Government grants
Payments to suppliers and employees
Interest received
Interest paid
Income tax paid
Note
2023
$’000
2022
$’000
33,855
2,629
(45,012)
165
(2,355)
3,808
31,386
919
(41,957)
4
(966)
19
Net cash flows used in from operating activities
25
(6,910)
(10,595)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for business acquisition
Receipt from sale of property, plant and equipment
Other
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Proceeds from issue of shares
Net cash flows generated from financing activities
Net decrease in cash and cash equivalents held
Cash and cash equivalents at the beginning of the financial year
Effect of movement in exchange rates on cash held
17
17
13
(1,708)
(399)
495
32
(2,792)
(314)
119
(9)
(1,580)
(2,996)
9,170
(2,000)
(405)
871
8,725
(546)
4,277
7,636
12,456
(854)
(1,135)
7,251
892
8,620
(234)
Cash and cash equivalents at the end of the financial year
7
7,289
7,251
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
ECOFIBRE LIMITED ANNUAL REPORT 2023 55
Notes to the 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.
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.
56 ECOFIBRE LIMITED ANNUAL REPORT 2023
1.
Summary of significant accounting policies (continued)
b) Principles of consolidation
NOTES TO THE FINANCIAL STATEMENTS
The consolidated financial statements incorporate the results and assets and liabilities of all entities controlled
by Ecofibre Limited ("parent entity") as at 30 June 2023 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.
c) Foreign currency translation
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 or statement of 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 if the foreign operation or net investment is disposed.
ECOFIBRE LIMITED ANNUAL REPORT 2023 57
NOTES TO THE FINANCIAL STATEMENTS
1.
Summary of significant accounting policies (continued)
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.
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.
Bill-and-hold arrangements
Bill-and-hold arrangements occur when there is a sale to a customer and the customer requests the
consolidated entity to warehouse its products for a period of time until it can accept delivery or arrange transfer
of the products to third parties. Revenue from bill-and-hold arrangements is recognised when the customer
obtains title and acknowledges control of a product.
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.
Government grants
Government grants relating to costs are recognised in profit or loss over the period necessary to match them
with the costs that they are intended to compensate.
58 ECOFIBRE LIMITED ANNUAL REPORT 2023
1.
Summary of significant accounting policies (continued)
e)
Income Tax
NOTES TO THE FINANCIAL STATEMENTS
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) Business combination
The acquisition method of accounting is used to account for business combinations regardless of whether
equity instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity
instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of
any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the
acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets.
All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities
assumed for appropriate classification and designation in accordance with the contractual terms, economic
conditions, the consolidated entity's operating or accounting policies and other pertinent conditions in
existence at the acquisition-date.
ECOFIBRE LIMITED ANNUAL REPORT 2023 59
1.
Summary of significant accounting policies (continued)
f) Business combination (continued)
NOTES TO THE FINANCIAL STATEMENTS
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held
equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and
the previous carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value.
Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is
recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent
settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-
controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any
pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-
existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to
the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-
date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-
controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held
equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts
the provisional amounts recognised and also recognises additional assets or liabilities during the measurement
period, based on new information obtained about the facts and circumstances that existed at the acquisition-
date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or
(ii) when the acquirer receives all the information possible to determine fair value.
g) Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed
in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected
to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless
restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All
other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal
operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the
reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months
after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
60 ECOFIBRE LIMITED ANNUAL REPORT 2023
g) Summary of significant accounting policies (continued)
h) Trade and other receivables
NOTES TO THE FINANCIAL STATEMENTS
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 a standard 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 and at the end of each reporting period at their fair value
less costs to sell.
k)
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are
tested annually for impairment, or more frequently if events or changes in circumstances indicate that they
might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-
use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate
specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent
cash flows are grouped together to form a cash-generating unit.
ECOFIBRE LIMITED ANNUAL REPORT 2023 61
1.
Summary of significant accounting policies (continued)
l) Property, plant and equipment
NOTES TO THE FINANCIAL STATEMENTS
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 40 years.
m) Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at
cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives received, any initial direct costs incurred,
and, except where included in the cost of inventories, an estimate of costs expected to be incurred for
dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight -line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain
ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life.
Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these
assets are expensed to profit or loss as incurred.
n) Intangible assets
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually
for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and
is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss
and are not subsequently reversed.
o) Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction
costs. They are subsequently measured at amortised cost using the effective interest method.
62 ECOFIBRE LIMITED ANNUAL REPORT 2023
1.
Summary of significant accounting policies (continued)
p) Trade and other creditors
NOTES TO THE FINANCIAL STATEMENTS
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.
q) Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at
the present value of the lease payments to be made over the term of the lease, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental
borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease
payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees,
exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any
anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are
expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a
rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease
liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the
carrying amount of the right-of-use asset is fully written down.
r) 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.
ECOFIBRE LIMITED ANNUAL REPORT 2023 63
1.
Summary of significant accounting policies (continued)
r) Employee entitlements (continued)
NOTES TO THE FINANCIAL STATEMENTS
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity
over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value
of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the
vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at
each reporting date less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying
either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on
which the award was granted. The cumulative charge to profit or loss until settlement of the liability is calculated
as follows:
• during the vesting period, the liability at each reporting date is the fair value of the award at that date
•
multiplied by the expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability
at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the
cash paid to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met, provided
all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been
made. An additional expense is recognised, over the remaining vesting period, for any modification that
increases the total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy
the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or
employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over
the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any
remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled
award, the cancelled and new award is treated as if they were a modification.
64 ECOFIBRE LIMITED ANNUAL REPORT 2023
1. Summary of significant accounting policies (continued)
s) Cash and cash equivalents
NOTES TO THE FINANCIAL STATEMENTS
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.
t) Goods and services tax, sales and use tax
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.
u) 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.
v) 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 2023 65
NOTES TO THE FINANCIAL STATEMENTS
1.
Summary of significant accounting policies (continued)
w) 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 2023. The consolidated entity has assessed the impact of any new or amended Accounting Standards
and Interpretations, and concluded that they would not have any material impact.
2. Critical accounting estimates and judgements
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 Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments
were granted. The accounting estimates and assumptions relating to equity-settled share-based payments
would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period
but may impact profit or loss and equity.
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 or receivables for
anticipated tax issues based on estimates of whether additional taxes will be due or refundable. 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.
Deferred tax assets are recognised for deductible temporary differences and carried forward tax losses where
the consolidated entity considers it is probable that future taxable amounts will be available to utilise those
temporary differences and losses.
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 assumptions including cost per area (acre or hectare), total area planted and percentage of maturity
of the crops based on estimated harvest dates.
66 ECOFIBRE LIMITED ANNUAL REPORT 2023
NOTES TO THE FINANCIAL STATEMENTS
2. Critical accounting estimates and judgements (continued)
Goodwill
The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate
whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 1. The
recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These
calculations require the use of assumptions, including estimated discount rates based on the current cost of
capital and growth rates of the estimated future cash flows.
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 (Ananda Health), food (Ananda Food) and fibre (Hemp Black).
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.
Other segments represent the corporate headquarter functions and some of the research and development
activities of the Group.
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.
Types of products and services
The principal products and services of each of the operating segments are as follows:
Ananda Health
Production and sale of hemp related nutraceutical products in the United States and
Australia
Ananda Food
Production and sale of hemp related food products primarily in Australia
Hemp Black
Production and sale of innovative textile and hemp products primarily in the United
States
Ecofibre Corporate
Group corporate functions and some of the research and development activities
of the Group
Intersegment transactions
Intersegment transactions are made at arms-length market rates and are eliminated on consolidation.
Intersegment receivables and payables
Intersegment transactions are initially recognised at the consideration received. Intersegment receivables and
payables that earn or incur non-market interest are not adjusted to fair value based on market interest rates.
Intersegment receivables and payables are eliminated on consolidation.
ECOFIBRE LIMITED ANNUAL REPORT 2023 67
3. Operating segments (continued)
Operating segment information
a) Segment performance
Consolidated - 2023
Revenue
Sales to external customers
Intersegment sales
Total sales revenue
Government grant
Foreign exchange gain (loss)
Interest income
Other income
Total revenue and other income
Impairment loss – inventory
Impairment loss – equipment &
intangible assets
Other expenses
Intersegment purchases
Segment profit (loss) before
income tax
Intersegment eliminations
Profit (Loss) before income tax
Consolidated - 2022
Revenue
Sales to external customers
Intersegment sales
Total sales revenue
Government grant
Foreign exchange gain (loss)
Interest income
Other income
Total revenue and other income
Total expenses
Intersegment purchases
Segment profit (loss) before
income tax
Intersegment eliminations
Profit (Loss) before income tax
NOTES TO THE FINANCIAL STATEMENTS
Ananda
Health
$’000
12,991
-
12,991
-
(24)
20
27
13,014
(4,804)
(1,688)
(18,781)
-
Hemp
Black
$’000
17,333
-
17,333
-
(3)
-
20
17,350
(1,679)
Ananda
Food
$’000
Ecofibre
Corporate
$’000
2,186
99
2,285
103
9
-
15
2,412
(58)
-
-
-
-
(446)
141
3,603
3,298
-
(86)
(9,198)
-
(4,035)
(20,297)
-
(9)
(5,246)
(48)
(12,259)
(8,661)
(2,949)
(5,986)
12,922
-
12,922
498
(16)
-
73
13,477
(21,778)
-
13,744
-
13,744
867
(7)
-
29
14,633
(19,170)
-
3,554
78
3,632
10
(6)
-
6
3,642
(5,115)
(49)
-
-
-
-
568
1
121
690
(8,049)
-
(8,301)
(4,537)
(1,522)
(7,359)
Total
$’000
32,510
99
32,609
103
(464)
161
3,665
36,074
(6,541)
(5,818)
(53,522)
(48)
(29,855 )
(51)
(29,906)
30,220
78
30,298
1,375
539
1
229
32,442
(54,112)
(49)
(21,719)
(29)
(21,748)
68 ECOFIBRE LIMITED ANNUAL REPORT 2023
3. Operating segments (continued)
b) Segment assets and liabilities
Consolidated - 2023
Assets
Segment assets
Unallocated assets:
Cash and cash equivalents
Total assets
Liabilities
Segment liabilities
Unallocated liabilities:
Borrowings
Total liabilities
Consolidated - 2022
Assets
Segment assets
Unallocated assets:
Cash and cash equivalents
Total assets
Liabilities
Segment liabilities
Unallocated liabilities:
Related party loans and borrowings
Total liabilities
c) Geographical information
Australia
United States of America
* Excluding deferred tax assets.
NOTES TO THE FINANCIAL STATEMENTS
Ananda
Health
$’000
Hemp
Black
$’000
Ananda
Food
$’000
Ecofibre
Corporate
$’000
Total
$’000
7,138
67,957
2,801
33,549
111,445
7,289
118,734
1,413
2,142
1,415
12,510
17,480
26,607
44,087
16,824
82,296
5,374
37,809
142,303
7,251
149,554
1,509
15,560
1,331
2,487
20,887
18,725
39,612
Sales
to external customers
Geographical
non-current assets*
30 June 2023
$’000
3,117
29,393
32,510
30 June
2022
$’000
3,944
26,276
30,220
30 June 2023
$’000
30 June 2022
$’000
1,371
95,735
97,106
2,086
101,111
103,197
ECOFIBRE LIMITED ANNUAL REPORT 2023 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4. Revenue and other income
a) Revenue
Sales
b) Other income (expenses)
Government grant and tax incentives
Foreign exchange gain (loss)
Interest
Impairment loss – equipment & Intangible assets *
Contingent consideration earnout extension
Other income
* Breakdown of impairment loss
Property, plant and equipment (note 14)
Intangible assets (note 12)
2023
$'000
2022
$'000
32,510
30,220
103
(464)
161
(5,818)
3,484
181
(2,353)
2023
$'000
(2,106)
(3,712)
(5,818)
1,375
539
1
-
-
229
2,144
2022
$'000
-
-
-
During the year the Company decided to close part of its knitting business, specifically the garment business
that uses Santoni machines for 3D and tubular knitting, and a write off has been recognised in relation to
fixed assets and intangible assets used in this business.
The Company also made the decision to write down the balance of fixed assets, inventory and intangible
assets in line with lower capacity utilization at its production facility in Georgetown, Kentucky, and in line with
lower market costs for key inputs such as hemp extracts used to blend and manufacture cannabinoid-based
nutraceuticals.
5. Expenses
a) Direct costs
Costs of goods sold
Impairment loss – inventory*
Other inventory write downs
2023
$'000
14,834
6,541
396
21,771
2022
$'000
13,688
-
1,838
15,526
* a provision for impairment was recognised during the year to reduce inventories to their net realisable
value, particularly in the Ananda Health and Hemp Black businesses.
*
b) Other operating expenses
Employees and contractors
Share based payments (note 29)
Sales and marketing
Travel and accommodation
Equipment modification and maintenance
Short-term and low value lease payments
Legal fees and compliance
Accounting and audit
Depreciation and amortisation
Research and development
Bad and doubtful debts
Other
70 ECOFIBRE LIMITED ANNUAL REPORT 2023
15,357
681
1,318
647
1,268
394
2,000
433
4,739
4,751
16
3,767
35,371
14,095
1,671
2,260
742
982
235
1,790
437
5,073
6,285
67
3,569
37,206
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6.
Income tax
a) The aggregated amount of income tax attributable to the financial year differs from the prima facie amount
calculated on the operating profit. The difference is reconciled as follows:
Profit/ (loss) before income tax
Prima facie tax (benefit) / tax on (loss) / profit from ordinary activities
before income tax at 30% (2022: 30%)
Adjustment for foreign tax rates
Tax effect of permanent differences:
- Share based payments
- Research and development expenses
- COVID-19 government assistance
- Know-how amortisation
- Foreign witholding taxes
- Contingent consideration
- Tax effect of inter-entity eliminations
- Other
Change in opening deferred taxes resulting from change in tax rate
R & D tax rebate received
Currency conversion differences upon consolidation
Tax over provided in prior period
Deferred tax asset written off
Current year losses for which no DTA is recognised
Income tax (benefit)/ expense
b)
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Under/(over) provision from previous years
- Current tax
- Deferred tax
Aggregate income tax expense
(29,906)
(21,748)
(8,972)
317
(6,524)
510
26
570
-
(361)
29
(687)
5,548
156
-
(869)
-
(200)
14,450
-
10,007
2023
$'000
248
9,959
1
(201)
10,007
16
537
(24)
(345)
34
98
(56)
(118)
-
(759)
-
(454)
7
(7,078)
2022
$'000
(80)
(6,544)
(463)
9
(7,078)
c) Franking credits
c)
Franking credits available for the subsequent financial year amount to $nil (2022 - $nil). This represents
the balance of the franking account as at the end of the financial year adjusted for franking credits that
will arise from the payment of any income tax payable as at the end of the year.
7. Cash and cash equivalents
Cash at bank
Term deposits and other cash equivalents
2023
$'000
6,942
347
7,289
2022
$'000
7,046
205
7,251
ECOFIBRE LIMITED ANNUAL REPORT 2023 71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8. Trade and other receivables
Trade debtors
Allowance for expected credit losses
GST receivable
2,842
(87)
130
2,885
4,111
(119)
134
4,126
Allowance for expected credit losses
The consolidated entity has recognised a loss of $15,700 (2022: loss of $64,000) in the profit or loss in
respect of the expected credit losses for the year.
Movement in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Unused amounts reversed
Closing balance
9.
Inventories
Finished goods
Work in progress
Raw materials
Provision for impairment
2023
$'000
119
32
(48)
(16)
87
2,130
3,314
4,399
(463)
9,380
2022
$'000
148
115
(93)
(51)
119
2,048
9,050
5,219
(615)
15,702
*At 31 December 2022, $6,489k had been provided against the value of inventory, most of which was written
off against the cost of inventory as at 30 June 2023, leaving a residual provision of $463k at that date.
Summary of inventory by segment:
Ananda Health
Hemp Black
Ananda Food
10. Biological assets
Crops planted
2023
$'000
4,581
2,769
2,030
9,380
2022
$'000
9,703
3,844
2,155
15,702
2023
$'000
2022
$'000
568
579
The risk of crop failure due to weather conditions is managed through planting at different locations and times.
Reconciliation of biological assets:
Crops planted at 1 July
Harvested and transferred to raw material inventory
Crops planted
Balance at 30 June
2023
$'000
579
(579)
568
568
2022
$'000
1,350
(1,350)
579
579
72 ECOFIBRE LIMITED ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. Other current assets
Employee retention credit grant
Prepayments
Other
12. Intangible assets
Goodwill at 1 July
Foreign currency impact
Balance at 30 June 2023
Patents, customer list and trademarks – at cost
Less: Accumulated amortisation
Less: Impairment
Software – at cost
Less: Accumulated amortisation
Less: Impairment
Website development – at cost
Less: Accumulated amortisation
Less: Impairment
Total intangible assets
Less: Accumulated amortisation
Less: Impairment
2023
$'000
654
711
90
1,455
2023
$'000
51,093
1,973
53,066
4,039
(378)
(3,047)
614
320
(257)
(63)
-
1,129
(527)
(602)
-
58,554
(1,162)
(3,712)
53,680
2022
$'000
3,139
1,451
496
5,086
2022
$'000
46,766
4,327
51,093
3,789
(146)
-
3,643
320
(238)
-
82
905
(355)
-
550
56,107
(739)
-
55,368
ECOFIBRE LIMITED ANNUAL REPORT 2023 73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12.
Intangible assets (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year
are set out below:
Work in
progress
$’000
Patents,
customer list
Goodwill
$’000
and trademarks Software
$’000
$’000
Website
development
$’000
Balance at 1 July 2021
Transfer
Additions
Amortisation
Exchange difference
Balance at 1 July 2022
Transfer
Additions
Amortisation
Impairment
Exchange difference
Balance at 30 June 2023
30
(30)
-
-
-
-
-
-
-
-
-
-
46,766
-
-
-
4,327
51,093
-
-
-
-
1,973
53,066
3,247
-
536
(139)
(1)
3,643
-
250*
(243)
(3,047)
11
614
134
30
8
(90)
-
82
-
-
(18)
(63)
(1)
-
* Trademarks, customer lists and know-how acquired from ECS ($250k).
Goodwill impairment testing
465
-
348
(243)
(20)
550
-
224
(174)
(602)
2
-
Total
$’000
50,642
-
892
(472)
4,306
55,368
-
474
(435)
(3,712)
1,985
53,680
Goodwill acquired through business combinations have been allocated to the following cash-generating units:
Hemp Black (acquired business)
2023
$'000
2022
$'000
53,066
51,093
The recoverable amount of the consolidated entity's goodwill has been determined by a value-in-use
calculation using a discounted cash flow model based on a 5 year projection period and a terminal value.
Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most
sensitive.
The following key assumptions were used in the discounted cash flow model:
●• 15% pre-tax discount rate (FY22: 13.2%)
• 3% growth rate beyond the five-year forecast period
●• 58% projected revenue growth rate for FY24 and 24% growth per annum over the remainder of the
projected cash flow period to $64m by the FY28 financial year.
• As previously announced, Hemp Black is progressing several opportunities to fill its production capacity
and grow revenue, working with a strong pipeline of existing and new clients.
The pre-tax discount rate of 15% has been set using the estimated weighted average cost of capital to equate
the present value of future cashflows against the current carrying value of fixed and intangible assets.
Management believes the projected revenue growth rate is prudent and justified.
74 ECOFIBRE LIMITED ANNUAL REPORT 2023
12.
Intangible assets (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Management’s estimation of increased operating costs is based on estimated cost inflation and an effort by
the consolidated entity to contain costs.
There were no other key assumptions. Based on the above, the recoverable amount of Hemp Black (acquired
business) exceeded the carrying amount.
Sensitivity
The directors have made judgements and estimates in respect of impairment testing of goodwill. Should these
judgements and estimates not occur the resulting goodwill recoverable amount may decrease:
•
•
If revenue in years 2 to 5 grows by less than 24% then goodwill would need to be impaired, with all
other assumptions remaining constant.
The discount rate would be required to increase by 0.68% before goodwill would need to be impaired,
with all other assumptions remaining constant.
Management believes that other reasonable changes in the key assumptions on which the recoverable amount
of goodwill is based would not cause the cash-generating unit’s carrying amount to exceed its recoverable
amount.
13. Leases
The Group leases warehouse, factory and administrative facilities. The leases typically run for a period of 2 to 3
years with some leases having the option to renew the lease after that date. Lease terms are renegotiated upon
expiry of each lease to reflect market rentals. Some leases provide for additional rent payments that are based
on changes in local price indices.
The Group leases office equipment with contract terms of 5 years. These leases are for low-value items, and
the Group has elected not to recognise right-of-use assets and lease liabilities for these leases.
The weighted average incremental borrowing rate applied to lease liabilities at the date of initial application was
10% (2022: 10%).
Information about leases for which the Group is a lessee is presented below.
i. Right-of-use assets
Right-of-use assets relate to leased properties that do not meet the definition of investment property and are
presented as below:
2023
Balance at 1 July 2022
Disposals of right-of-use assets
Depreciation charge for the year
Exchange difference
Balance at 30 June 2023
2022
Balance at 1 July 2021
Additions to right-of-use assets
Depreciation charge for the year
Exchange difference
Balance at 30 June 2022
Buildings
Farming and
processing
equipment
$’000
835
(96)
(438)
4
305
900
505
(576)
6
835
$’000
3
-
(3)
-
-
11
-
(8)
-
3
Total
$’000
838
(96)
(441)
4
305
911
505
(584)
6
838
ECOFIBRE LIMITED ANNUAL REPORT 2023 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13. Leases (continued)
ii) Lease liabilities
The lease liabilities are presented as below:
Balance at 1 July
New leases during the period
Disposals during the period
Payments
Interest charges during the period
Exchange difference
Balance at 30 June
Lease liability recognised as at 30 June of which are:
Current lease liabilities
Non-current lease liabilities
iii) Amounts recognised in profit or loss
Interest on lease liabilities
Depreciation charge
iv) Amounts recognised in statement of cash flows
Cash outflow for leases:
Financing cash outflow
Operating cash outflow
v) Extension options
2023
$’000
930
-
(96)
(463)
60
(4)
427
335
92
427
60
441
405
60
2022
$’000
965
505
-
(621)
65
16
930
467
463
930
65
584
546
65
Some property leases contain extension options exercisable by the Group up to 2 to 3 years before the end of
the non-cancellable contract period. Where practicable, the Group seeks to include extension options in new
leases to provide operational flexibility. The extension options held are exercisable only by the Group and not
by the lessors. The Group assesses at lease commencement date whether it is reasonably certain to exercise
the extension options. The Group reassesses where it is reasonably certain to exercise the options if there is a
significant event or significant changes in circumstances within its control.
76 ECOFIBRE LIMITED ANNUAL REPORT 2023
NOTES TO THE FINANCIAL STATEMENTS
14. Property, plant, and equipment
Capital work in progress
Land
Building
Less: accumulated depreciation
Motor vehicles
Less: accumulated depreciation
Office equipment
Less: accumulated depreciation
Plant and machinery
Less: accumulated depreciation
Total property, plant and equipment
Less: accumulated depreciation
Capital
WIP
$’000 $’000
Land Building
$’000
2023
$'000
2022
$'000
3,583
6,294
3,001
2,900
32,116
(2,405)
29,711
294
(246)
48
1,586
(1,509)
77
16,259
(9,558)
6,701
56,839
(13,718)
43,121
31,856
(1,603)
30,253
522
(199)
323
1,555
(1,089)
466
13,719
(6,964)
6,755
56,846
(9,855)
46,991
Motor
vehicles
$’000
Office
equipment
$’000
Plant and
machinery
Total
$’000 $’000
2023 Movement Schedule
Carrying value 1 July 2022
Additions
Transfer
Disposals
Impairment
Depreciation
Exchange difference
Carrying value 30 June 2023
2022 Movement Schedule
Carrying value 1 July 2021
Additions
Transfer
Disposals
Depreciation
Exchange difference
Carrying value 30 June 2022
6,294 2,900
-
1,590
-
(3,805)
-
-
-
(730)
-
-
101
234
3,583 3,001
4,904 2,680
-
1,439
-
(497)
-
-
-
-
220
448
6,294 2,900
30,253
-
-
-
-
(802)
260
29,711
30,412
52
-
-
(789)
578
30,253
323
44
-
(282)
-
(47)
10
48
365
-
-
-
(66)
24
323
466
12
7
-
-
(420)
12
77
720
137
-
-
(440)
49
466
126
3,798
(77)
6,755 46,991
1,772
-
(359)
(1,376) (2,106)
(2,594) (3,863)
686
43,121
69
6,701
570
497
(116)
(2,722)
527
7,999 47,080
2,198
-
(116)
(4,017)
1,846
6,755 46,991
ECOFIBRE LIMITED ANNUAL REPORT 2023 77
NOTES TO THE FINANCIAL STATEMENTS
15. 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
Prepayments
R&D non-refundable offsets
Carried forward losses
Other
Deferred tax asset written off
Amounts recognised in equity:
Transaction costs on share issue
Deferred tax asset
Movements:
Opening balance
Credited to profit or loss
Credited to equity
Deferred tax asset written off
Closing balance
2023
$'000
2022
$'000
(1,057)
1,630
323
25
-
1,524
(73)
3,393
8,664
(68)
(14,450)
(89)
(2,307)
-
512
32
53
1,360
(117)
1,702
8,449
(103)
-
9,581
89
89
-
9,670
9,670
4,740
40
(14,450)
-
3,906
5,724
40
-
9,670
The Group has significant carried forward losses available in Australia and the United States which are able to be used to offset future taxable
income in both countries. Nevertheless the value of these losses and other timing difference are no longer recognised in the Consolidated
Statement of Financial Position as a Deferred Tax Asset pursuant to the requirements of AASB 112 Income Taxes.
The Group will continuously assess the Deferred Tax Asset and make any necessary adjustments based on changes in circumstances and tax
legislation.
The group has $19,022k of income tax losses to utilise in Australia and $11,305k of income tax losses to utilise in the USA. An asset has not
been recognised in respect of these tax losses at 30 June 2023.
16. Trade and other payables
Trade creditors
Employee entitlements
Other creditors and accruals
78 ECOFIBRE LIMITED ANNUAL REPORT 2023
2023
$'000
2,001
679
2,433
5,113
2022
$'000
2,154
614
2,792
5,560
17. Borrowings
Current
Unsecured term loan
Chattel mortgage
Non-current
Unsecured term loans
Secured term loan
Chattel mortgage
NOTES TO THE FINANCIAL STATEMENTS
2023
$'000
1,000
-
1,000
10,500
15,107
-
25,607
2022
$'000
2,000
12
2,012
11,500
5,225
40
16,765
Unsecured term loans
In June 2020, the Company obtained a $10m loan from James & Cordelia Thiele Trust Fund. On 15 July 2022,
$2m was repaid. In December 2022 the terms of the loan were renegotiated as follows: $1m repayable on 15
July 2023, $1m repayable on 15 July 2024 and $6m repayable on 15 July 2025 and the interest rate on the
loan was 11% p.a.
In March 2022, Ecofibre received a $3.5m loan from the Lambert Superannuation Fund. The interest rate on
the loan was 10% p.a. In December 2022, the term of the loan was extended, and the loan is now repayable
on 15 July 2025.
Secured term loan
In June 2022, the Group obtained a USD10m loan from Nubridge Commercial Lending LLC in the United States
for a period of 2 years. The interest rate on the loan was 8.49% p.a, and the origination fee was USD0.2m.
The loan is repayable on 1 July 2024. The Group’s interests in the following properties were pledged as security
for the loan: Corporate Boulevard, Georgetown, Kentucky; Cessna Drive, Greensboro, North Carolina; West
Market Street, Greensboro, North Carolina. USD3.6m loan funds were received on 30 June 2022, and the
balance of the loan funds were received in July 2022.
Reconciliation of proceeds from borrowings in 2023 as follows:
Secured term loan from Nubridge Commercial Lending LLC
Total proceeds from borrowings during the financial year
$'000
9,170
9,170
ECOFIBRE LIMITED ANNUAL REPORT 2023 79
NOTES TO THE FINANCIAL STATEMENTS
18. Deferred tax liabilities
Deferred tax liability comprises temporary difference attributable to:
Amounts recognized in profit or loss:
Property, plant and equipment
Accrued expenses
Employee share transactions
Prepayments
R&D non-refundable offsets
Carried forward losses
Others
Deferred tax liabilities
Movements:
Opening balance
(Credited) / debited to profit or loss
Closing balance
19. Employee share trust
2023
$'000
2022
$'000
2,081
2,007
-
-
-
-
-
-
-
-
(1,674)
(1,689)
-
407
318
89
407
-
318
1,278
(960)
318
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.
The movement of Ecofibre's shares held in the EST are as follows:
Balance at 1 July
Shares transferred to EST
Shares issued by the EST to employees as part of the ESS
Balance as at 30 June
2023
Number of
shares
13,469,786
150,000
(150,000)
13,469,786
2022
Number of
shares
14,319,286
-
(849,500)
13,469,786
80 ECOFIBRE LIMITED ANNUAL REPORT 2023
20. Issued Capital
Ordinary shares
Movement in ordinary shares
Opening balance 1 July
Shares issued for services rendered
EOF Bio preferred units issued*
Share options exercised
Shares issued by the EST
Shares transferred to EST
Share issue cost
Non-controlling interest
Closing balance 30 June
NOTES TO THE FINANCIAL STATEMENTS
2023
$'000
2022
$'000
2023
Quantity
2022
Quantity
116,538
115,347
335,744,765
335,510,772
115,347
108
882
-
238
-
(20)
(17)
116,538
108,132
-
-
6,344
911
-
(40)
-
115,347
335,510,772 326,696,691
-
-
7,964,581
849,500
-
-
-
335,510,772
233,993
-
-
150,000
(150,000)
-
-
335,744,765
*EOF Bio LLC has issued 584 Incentive Units for $882,275 contributed capital into the company. The
difference between consideration received and the amount of the non-controlling interest has been
recognised in equity attributable to the owner of the parent within issued capital.
349,214,551 total shares are on issue by the parent entity, which includes 335,744,765 consolidated shares on
issue plus shares held by the EST (13,469,786) 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 2021
Shares options exercised
Share based payment: shares issued as part of the ESS
Share issue cost
Balance at 30 June 2022
Shares issued for services rendered
Share based payment: shares issued as part of the ESS
EOF Bio preferred units issued
Share issue cost
Non-controlling interest
Balance at 30 June 2023
$’000
108,132
6,344
911
(40)
115,347
108
238
882
(20)
(17)
116,538
ECOFIBRE LIMITED ANNUAL REPORT 2023 81
21. Remuneration of auditors
NOTES TO THE FINANCIAL STATEMENTS
2023
$
2022
$
During the financial year the following fees were paid or payable for
services provided by William Buck (Qld), the auditor of the company,
its network firms and unrelated firms:
Audit services – William Buck (Qld)
- Annual audit
- Half year review
Audit and review of financial statements
Audit services – unrelated firms
- Annual audit
- Half year review
Total Audit Services
Other services – William Buck (Qld)
70,250
67,000
19,000
89,250
18,000
85,000
86,415
99,501
21,604
108,019
197,269
8,686
108,187
193,187
- Review of quarterly reporting and accounting assistance
12,500
32,275
Other services – network firms
- Preparation of income tax return and business advisory
- Transfer pricing review and tax advisory
Total Other Services
22. Contingent liabilities and commitments
i) Contingent liability
There are no contingent liabilities.
ii) Commitment for non-cancellable leases are as follows:
Less than one year
Between one and five years
Capital expenditure commitments not provided for in the financial
statements
19,495
40,895
72,890
18,425
24,350
75,050
2023
$’000
-
-
-
-
2022
$’000
142
-
142
138
82 ECOFIBRE LIMITED ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23. Interests in subsidiaries
The financial statements of the subsidiaries have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board. These financial statements also
comply with Australian Accounting Standards and interpretation issued by the Australian Accounting Standards
Board (AASB).
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)
Ecofibre Asia Pacific Pty Ltd (EAP)
Ecofibre USA Inc. (EUSA)
Ananda Hemp Inc. (AH)
Ecofibre Kentucky LLC (EK)
Hemp Black Inc. (HB)
Hemp Black Biomedical, LLC (HBB)
Hemp Black Polymer, LLC (HBP)
EOF Distribution Inc. (EOFD)
Ecofibre USA RE LLC (EUSARE)
Ecofibre Uruguay SA (EU)
EOF Bio LLC (BIO)
Ownership Interests
2023
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2022
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Australia
Australia
Australia
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
Uruguay
United States of America
98.1%
9
-
ES’s principal activity is the provision of group corporate functions and research and development services.
AF’s principal activity is the growing, processing and distribution of hemp food products.
EAP’s principal activity is sales and distribution of hemp products.
EUSA’s principal activity is an investment holding company.
AH's principal activity is the marketing and distribution of hemp nutraceutical products.
EK's principal activity is to support the manufacture of hemp nutraceutical products.
HB's principal activity is to develop and commercialise hemp fibre products.
HBB’s principal activity is manufacturing, and sale of customised polymer-based yarns used for internal medical
implants and applications.
HBP’s principal activity is to provide performance masterbatch and custom compounding to the plastics
industry for technical textiles.
EOFD is a special purpose sales and marketing entity for the Ananda Health business in the United States.
EUSARE is a special purpose entity for the securitisation of loans.
EU is a dormant entity.
BIO’s principal activity is to research and commercialise gynecological and other treatments using hemp
derived cannabinoids.
ECOFIBRE LIMITED ANNUAL REPORT 2023 85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. Non-controlling interest
Preference units issued
Held by Ecofibre USA Inc
Non-controlling interest
2023
$'000
882
865
98.1%
17
1.9%
2022
$'000
2023
Quantity
2022
Quantity
-
-
-
-
-
30,584
30,000
98.1%
584
1.9%
For the FY23 financial year 0% of the net loss after tax was attributable
to the non-controlling interest
25. Reconciliation of profit after income tax to net cash flows from
operating activities
Net profit (loss) after income tax
Depreciation and amortisation
Loss from disposal of fixed assets
Impairment of fixed and intangible assets
Provision for expected credit losses
Share-based payments
Movement in foreign exchange
Unrealised foreign exchange loss
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
Contingent consideration
Tax payable
Employee entitlements
Deferred tax liabilities
2023
$'000
(39,913)
4,739
(52)
5,818
(32)
681
173
(428)
4,164
740
6,322
11
9,670
3,892
(153)
(359)
157
(2,478)
(16)
65
89
-
-
-
-
-
2022
$'000
(14,670)
5,073
-
-
64
1,671
93
(76)
383
749
711
771
(5,764)
(659)
80
403
-
1,582
39
(85)
(960)
Net cash flows from operating activities
(6,910)
(10,595)
84 ECOFIBRE LIMITED ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26. Financial risk management objectives and policies
The Group’s principal financial instruments comprise receivables, payables 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 foreign exchange and interest rates
and assessments of market forecasts for foreign exchange and interest rates.
Risk exposures and responses
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 minimises 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
2023
$'000
2022
$'000
7,289
7,251
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 2023, 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)
2023
$'000
73
(36)
2022
$'000
73
(36)
Equity higher/ (lower)
2023
$'000
73
(36)
2022
$'000
73
(36)
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.
ECOFIBRE LIMITED ANNUAL REPORT 2023 85
NOTES TO THE FINANCIAL STATEMENTS
26. Financial risk management objectives and policies (continued)
Liquidity risk
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 are payable as follows:
Less than one year
Between one and five years
Later than five years
2023
$’000
6,463
37,624
-
44,087
2022
$’000
8,070
31,542
-
39,612
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.
The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial
liabilities at the reporting date were as follows:
Consolidated
US dollars
Assets
2023
$'000
2022
$'000
Liabilities
2023
$'000
2022
$'000
12,512
1,537
5,927
-
The consolidated entity had net assets denominated in foreign currencies of US$6,585,000 (assets of
US$12,512,000 less liabilities of $5,927,000) as at 30 June 2023 (2022: US$1,537,000). Based on this
exposure, had the Australian dollar weakened by 5%/strengthened by 5% against these foreign currencies
with all other variables held constant, the consolidated entity's profit before tax for the year would have been
$497,400 higher/lower (2022: $112,000 higher/lower). The percentage change is the expected overall
volatility of the significant currencies, which is based on management’s assessment of reasonable possible
fluctuations taking into consideration movements over the last 6 months each year and the spot rate at each
reporting date. The actual foreign exchange loss for the year ended 30 June 2023 was $464,000 (2022: gain
of $539,000).
Fair value
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.
86 ECOFIBRE LIMITED ANNUAL REPORT 2023
27. Key management personnel disclosures
Compensation
The aggregated compensation made to the key management personnel of the parent entity is set out below:
NOTES TO THE FINANCIAL STATEMENTS
Short-term employee benefits and directors fees
Share based payments
Post-employment benefits
28. Parent entity information
Set out below is the supplementary information about the parent entity.
Profit (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
Share capital reserve
Accumulated losses
Total equity
29. Share-based payments
2023
$
959,418
633,665
21,622
1,614,705
2022
$
896,316
1,012,910
34,784
1,944,010
2023
$’000
(8,762)
2022
$’000
(12,083)
(8,762)
(12,083)
17,773
163
122,004
120,029
3,887
1,173
21,358
11,486
115,673
4,932
14,300
(34,259)
115,347
4,489
14,300
(25,593)
100,646
108,543
Non-Executive Director (NED) share options
A share option plan has been established by the consolidated entity and approved by shareholders at a general
meeting, whereby the consolidated entity may grant options over ordinary shares in the company to the Non-
Executive Directors of the consolidated entity. The options are issued for nil consideration and are granted in
accordance with the Company’s Share and Option Plan, the terms of which were summarized in the Company’s
2019 IPO Prospectus.
Set out below are summaries of options granted under the plan:
Grant date
Expiry
date
Exercise
price
1 Dec 2021
1 Dec 2022
Weighted average exercise price
7 Oct 2024 $0.83
1 Oct 2025 $0.22
Balance at
the start of
the year
704,451
-
$0.83
Granted
Exercised Expired/
-
1,256,982
$0.22
-
-
$0.00
forfeited/
other
(173,700)
-
$0.83
Balance at
the end of
the year
530,751
1,256,982
$0.40
None of the options granted are exercisable at 30 June 2023.
ECOFIBRE LIMITED ANNUAL REPORT 2023 87
NOTES TO THE FINANCIAL STATEMENTS
Non-Executive Director (NED) share options (continued)
The weighted average remaining contractual life of options outstanding at the end of the financial year was
2.0 years.
For the options granted during the current financial year, the valuation model input used to determine the fair
value at the grant date, are as follows:
Grant date Expiry date
1 Dec 2022
1 Oct 2025
Share price
at grant
date
$0.22
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value at
grant date
$0.22
73%
-
3.4%
$0.1998
Expenses recognized during the year for NED share options
2023
$’000
87
2022
$’000
41
Employee shares
Employment agreements were signed 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 if certain
performance conditions are met.
The expenses recognised for employee services received during the year as part of the employee share
scheme are as follows:
Expenses from equity-settled share-based payment transactions
Share-based payment reserve
NED options
Employee shares
Total share-based payment reserve
2023
$’000
594
2022
$’000
1,630
2023
$’000
129
4,803
4,932
2022
$’000
41
4,448
4,489
The share-based payment reserve is used to record the cost of equity-settled transactions over the vesting
period.
Share-based payment expense
NED options
Employee shares
Total share-based payment expense
2023
$’000
87
594
681
2022
$’000
41
1,630
1,671
88 ECOFIBRE LIMITED ANNUAL REPORT 2023
NOTES TO THE FINANCIAL STATEMENTS
30. Earnings per share (EPS)
Loss used in the calculation of basic and diluted EPS ($’000)
Weighted average number of shares* outstanding during the period used in
the calculation of basic and diluted EPS:
Basic
Diluted**
2023
$’000
(39,912)
2022
$’000
(14,670)
335,670,317
335,670,317
332,533,170
332,533,170
* Weighted average number of shares exclude Treasury shares held in the EST.
** Options granted are not included in the diluted weighted average number of shares because they are
antidilutive. Adding these options would result in a lower loss per share.
31. Fair value measurement
Fair value hierarchy
The following tables detail the consolidated entity's assets and liabilities, measured or disclosed at fair value,
using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value
measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access
at the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly
Level 3: Unobservable inputs for the asset or liability
Consolidated - 2023
Assets
Biological assets
Liabilities
Contingent consideration
Consolidated - 2022
Assets
Biological assets
Liabilities
Contingent consideration
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
568
11,518
579
13,996
-
-
-
-
568
11,518
579
13,996
There were no transfers between levels during the financial year.
The fair value of biological assets is estimated based on the maturity of the plant, the potential output and the
estimated grower payments when the crops are harvested.
The fair value of contingent consideration is estimated based on the discounting of potential future cash outflow
to present value.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate
their fair values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current
market interest rate that is available for similar financial liabilities.
ECOFIBRE LIMITED ANNUAL REPORT 2023 89
32. Contingent consideration
NOTES TO THE FINANCIAL STATEMENTS
technical expertise and capabilities across a broad
On 21 August 2020, the Group completed the acquisition of TexInnovate, a portfolio of five businesses with
deep
textile
disciplines. TexInnovate was acquired to complete a key part of its supply chain for Hemp Black, accelerate
commercialisation of the business and underpin the future growth and success of Hemp Black.
range of high-performance
Total potential consideration for the businesses and operating assets is USD42.0m, including contingent
consideration with a value up to USD21.0m, is also payable subject to the acquired businesses delivering
USD6.0m earnings before interest and tax (EBIT) for two consecutive annual periods within seven years of
completion. The earliest that any such consideration may become due is in 3 equal tranches of USD7.0m on the
5th, 6th, and 7th anniversaries after completion, payable in equal proportions of cash and shares. 5,924,925
shares will be issued if the performance targets are met.
Reconciliation of acquisition date contingent consideration payable in cash, which is subject to the acquired
business achieving the EBIT target, to the balance at 30 June 2023:
Balance at 1 July fair value^
Fair value movement on contingent consideration during the period
Extension of earnout period*
Foreign currency impact
Balance at 30 June 2023
$'000
13,996
458
(3,484)
548
11,518
$'000
12,414
414
-
1,168
13,996
^ The fair value of the contingent consideration is determined based on the probability weighted cash flow
projections discounted at the incremental borrowing rate. The inputs used in the valuation falls under level 2 of
the fair value hierarchy (inputs other than quoted prices that are observable for the asset of liability, either
directly or indirectly).
* To reflect the 2 year interruption due to COVID and the post COVID momentum in the business the earnout
period has been extended by 2 years, from 5 years to 7 years.
33. Foreign currency translation reserve
Foreign currency translation reserve consists of exchange differences arising from translation of foreign
subsidiary’s financial statements, where the subsidiaries reporting currency differs from that of the
consolidated entity’s currency. The balance sheet is translated either at historical spot rates or the closing
rate at the end of the period. Profit and loss is translated at average rates.
The majority of the Company’s business is conducted in Australian and United States dollars. The closing
exchange rate for this currency pair changed by 4% during the year as the USD appreciated against the AUD
(2023: AUD1 for USD0.6619, 2022: AUD1 for USD0.6875).
The foreign currency translation reserve as at 30 June 2023 consists of the following exchange differences:
Balance sheet component
Rate used for translation
Rate
Investment in subsidiaries
Retained earnings
Total
Historical spot rate
Average rate
Movement in the foreign currency translation reserve:
Balance at 30 June 2022
Exchange differences on translation of foreign controlled entities
Balance at 30 June 2023
90 ECOFIBRE LIMITED ANNUAL REPORT 2023
$'000
5,821
(1,044)
4,777
$'000
1,810
2,967
4,777
NOTES TO THE FINANCIAL STATEMENTS
34. Events after the reporting period
The Group repaid $1.0m due to the James & Cordelia Thiele Trust Fund (Thiele) in July 2023.
Following the establishment of EOF Bio in June 2023, an additional USD0.5m has been received from external
investors to purchase preferred units in the entity.
The Ecofibre Group and the University of Newcastle finalised licensing arrangements with EOF Bio to enable
commercialisation of the intellectual property, which gives EOF Bio the exclusive, worldwide rights to
commercialise the intellectual property developed by Ecofibre and the University of Newcastle.
In late 1H23, Ecofibre exported 132 tonnes of hemp fibre planting seed from Australia to customers in the United
States. Subsequent crop germination rates were low, and the seed appeared to have been damaged in transit
despite the use of refrigerated containers. The issue remains under investigation with the transport company
and Ecofibre’s marine transit insurers, and net financial impact of the seed damage is expected to be $1m - 2m.
Hemp Black agreed a Memorandum of Understanding (MOU) with Under Armour Inc (Under Armour) to supply a
specialty yarn for apparel use. Equipment for production of the yarn began to be installed at Hemp Black’s
facility in Greensboro in 1Q24.
In August 2023 Ecofibre announced that it had agreed to extend the earnout period for contingent consideration
under the original agreement for the acquisition of the Hemp Black business from TexInnovate Inc from 5 years
to 7 years.
In August 2023, Ecofibre completed a placement to institutional and sophisticated investors to raise $5m in
new equity capital, and up to a further $0.5m from directors and management subject to approval by
shareholders at the 2023 annual general meeting. The company also announced a share placement plan for
retail and other investors up to $30,000 per eligible investors.
No other matter or circumstance has arisen since 30 June 2023 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 2023 91
1. OVERVIEW
5.
SIGNED
REPORTS
92 ECOFIBRE LIMITED ANNUAL REPORT 2023
NOTES TO THE FINANCIAL STATEMENTS
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 2023 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 from the CEO and CFO, 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
________________________________________
Vanessa Wallace
Director
29 September 2023
Sydney
ECOFIBRE LIMITED ANNUAL REPORT 2023 93
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
2023, 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 2023 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 (including Independence Standards) (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
94 ECOFIBRE LIMITED ANNUAL REPORT 2023
Key Audit Matters (continued)
Share-based Payments
Refer also to Remuneration Report, note 1(r) and
29
The Group issued share options to non-executive
Directors.
The Group also signed employment agreements with
key employees which entitled them to shares in the
Company 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
arrangements, and the evaluation of the fair
value of the share-based payment
arrangement as at the grant dates;
The evaluation of the share-based payment
expenses taken to the profit or loss 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:
— In determining the grant date, we evaluated
what was the most appropriate date based on
the terms and conditions of the share-based
payment arrangements;
— Evaluating the fair value of the share-based
payment arrangement by agreeing
assumptions to third party evidence;
— In evaluating the progress of the vesting of
share-based payments 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 the expensing of each share-
based payment tranche granted to the
arrangement’s beneficiary;
— 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 recalculated 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.
— Assessing the adequacy of disclosures in the
notes to the financial statements.
ECOFIBRE LIMITED ANNUAL REPORT 2023 95
Key Audit Matters (continued)
Deferred Tax Assets
Refer also to note 1(e) and 15
How our audit addressed it
In accordance with AASB 112 Income Taxes, when an
entity has a history of recent losses, the entity recognises a
deferred tax asset arising from unused tax losses or tax
credits only to the extent that the entity has sufficient
taxable temporary differences or there is convincing other
evidence that sufficient taxable profit will be available
against which the unused tax losses or unused tax credits
can be utilised by the entity.
Deferred tax assets amounting to $13.7million were fully
written off in the current financial year as there is no
convincing evidence that sufficient taxable profit will be
available in the near future to utilise this DTA.
This was assessed as a key audit matter as it involved
significant judgement in reaching a conclusion.
Our audit procedures included:
— Reviewing the Group’s profit forecast for the
2024 financial year. Evaluating
management’s judgement and assumptions
used in determining the profit forecast;
— Considering the recognition criteria against
the relevant Australian Accounting Standard;
— Testing the mathematical accuracy of the
deferred tax assets calculation;
— Evaluating the tax losses utilised and
accumulated in the current and previous
financial years;
— Assessing if convincing other evidence
exists where the DTA can be utilised by the
Group; and
— Assessing the adequacy of disclosures in
the notes to the financial statements.
Impairment Assessment of Intangible Assets Including Goodwill
Refer also to note 1(n) and note 12
How our audit addressed it
Included in the statement of financial position is an
intangible asset balance of $53.7 million as at 30 June
2023, which includes goodwill of $53.1 million.
In accordance with AASB 136 – Impairment of assets the
Group is required to, at least annually, perform an
impairment assessment of goodwill and intangible assets
that have an indefinite useful life. For intangible assets with
useful lives, the Group is required to review these for
impairment whenever events or changes in circumstances
indicate that their carrying amounts may not be
recoverable, and at least annually, review whether there is
any change in their expected useful lives.
All intangible assets including goodwill have been allocated
to cash generating units (“CGUs”). The recoverable amount
of the underlying CGUs are supported by value-in-use
calculations which are based on future discounted cash
flows models (“DCF Models”). DCF models contain
significant judgement and estimation in respect of future
cash flow forecasts, discount rate and terminal growth rate
assumptions. Changes in certain assumptions can lead to
significant changes in the assessment of the recoverable
amount.
As such this matter has been determined as a key area of
focus for our audit.
Our audit procedures included:
— A detailed evaluation of the Group’s
budgeting procedures upon which the
forecast is based and testing the principles
and integrity of the discounted future cash
flow models;
— Testing the accuracy of the calculation
derived from the forecast model and
assessing key inputs to the calculations
such as revenue growth, discount rates and
working capital assumptions;
— Evaluating whether the discount rate used in
the model appropriately reflected the risks of
the CGU, using the kills and know-how of
our inhouse specialists; and
— Reviewing the sensitivity analysis of the
calculations.
We also considered the adequacy of the
Group’s disclosures in the notes to the financial
statements.
96 ECOFIBRE LIMITED ANNUAL REPORT 2023
Key Audit Matters (continued)
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 2023, 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.
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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our independent auditor’s report.
ECOFIBRE LIMITED ANNUAL REPORT 2023 97
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2023.
In our opinion, the Remuneration Report of Ecofibre Limited, for the year ended 30 June 2023, 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
M J Monaghan
Director
Brisbane: 29 September 2023
98 ECOFIBRE LIMITED ANNUAL REPORT 2023
1. OVERVIEW
6.
SHAREHOLDER
AND ASX
INFORMATION
ECOFIBRE LIMITED ANNUAL REPORT 2023 99
Shareholder and ASX Information
Five-year financial history
Summarised income statement
Sales Revenue
Other income
Total revenue and other income
Operating profit (loss) before
depreciation and amortisation,
finance costs and income tax
Depreciation and amortisation
EBIT
Net finance costs
Income tax (expense) credit
Profit (Loss) after income tax
attributable to members of Ecofibre
Limited
Factors affecting total
shareholders return
Share price at financial year end ($)
Total dividends declared (cents per
share)
Basic earnings per share (cents per
share)
Financial position as at 30 June
Total assets
Total liabilities
Net assets
Net tangible asset per ordinary
share ($)
Net debt to equity (%)
Total liabilities / total assets (%)
2023
$’000
32,510
(2,353)
30,157
2022
$’000
30,220
2,144
32,364
2021
$’000
28,793
4,951
33,744
2020
$’000
50,717
6,482
57,199
2019
$’000
35,605
1,864
37,469
(22,407)
(15,296)
(4,580)
19,187
5,766
(4,739)
(27,146)
(2,760)
(10,007)
(5,073)
(20,369)
(1,379)
7,078
(4,290)
(8,870)
(1,173)
3,057
(2,049)
17,138
113
(4,095)
(958)
4,808
(223)
1,415
(39,913)
(14,670)
(6,986)
13,156
6,000
0.21
-
0.20
-
0.68
-
(11.89)
(4.41)
(2.16)
118,734
44,087
74,647
6.28
36%
37%
149,554
39,612
109,942
13.23
17%
26%
141,745
29,948
111,797
17.64
9%
21%
2.22
-
4.43
84,295
21,294
63,001
19.60
16%
25%
2.10
-
2.28
47,775
5,472
42,303
13.81
3%
11%
* Ecofibre was listed on ASX in March 2019.
100 ECOFIBRE LIMITED ANNUAL REPORT 2023
Shareholder information
The shareholder information set out below was applicable as at 5 September 2023.
Number of securityholders
There are 4,844 holders of ordinary shares, 4 holders of options (unquoted) over ordinary shares, 11 holders of
employee share rights (unquoted), 1 holder of performance rights (unquoted) and 5 holders of preferred units. There
were no other classes of equity securities on issue.
Fully paid ordinary shares
Distribution of ordinary shares
Size of shareholding
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Holding less than a marketable parcel
Number of
shareholders
1,877
1,556
460
789
162
4,844
2,861
Number of
shares
922,774
3,967,324
3,615,336
24,260,180
344,226,715
376,992,329
2,229,529
% of shares on
issue
0.24%
1.05%
0.96%
6.44%
91.31%
100.00%
Twenty largest holders of quoted ordinary shares
The names of the twenty largest holders of quoted ordinary shares are listed below:
Name
HSBC Custody Nominees (Australia) Limited
Barry Martin Lambert & Joy Wilma Lillian Lambert
Barjoy Pty Ltd
Phil Warner Pty Ltd
Kylie Warner Pty Ltd
Thomas Jefferson University
Citicorp Nominees Pty Limited
National Nominees Limited
Eric Wang
Pacific Custodians Pty Limited (Employee Securities TST Unallocated A/C)
Warner Research Institute Limited
Texsymmetry Inc
Pacific Custodians Pty Limited (Employee Securities TST A/C
UBS Nominees Pty Ltd
Jeffrey Bruner
Freshwater Superannuation Fund Pty Limited
Yarrawonga Holdings Pty Limited
BT Portfolio Services Ltd
Troncell Pty Ltd
Eric Wang + Christie Wang
Total
Number
61,144,094
39,555,556
37,688,454
32,306,381
16,340,072
12,178,259
12,056,522
11,062,539
8,644,158
7,200,000
6,648,700
6,595,959
6,269,786
5,459,688
4,814,148
4,017,830
3,048,553
2,929,730
2,922,078
2,574,423
283,456,930
% of quoted
ordinary shares
16.22%
10.49%
10.00%
8.57%
4.33%
3.23%
3.20%
2.93%
2.29%
1.91%
1.76%
1.75%
1.66%
1.45%
1.28%
1.07%
0.81%
0.78%
0.78%
0.68%
75.19%
Substantial holders
Substantial holders in the Company as disclosed in substantial holding notices given to the Company were as
follows:
Name of substantial holder
Barry Martin Lambert
Perennial Value Management Limited (PVM)
Philip & Kylie Warner
Number of shares over
which interest is held
77,244,010
61,144,094
55,295,153
% of issued
capital
23.57%
12.66%
14.67%
ECOFIBRE LIMITED ANNUAL REPORT 2023 101
SHAREHOLDER INFORMATION
Unquoted Options
There were 1,787,733 unquoted options over ordinary shares as follows:
Unquoted options – description
Non-executive director options expiring 7 October 2024
exercisable @ AU$0.83 per share
Non-executive director options expiring 1 October 2025
exercisable @ AU$0.22 per share
Total
Number of options
Number of holders
530,751
1,256,982
1,787,733
2
2
4
Unquoted Employee Share Rights
Distribution of Employee Share Rights
There are 11,260,002 unquoted performance rights on issue held by 11 holders as follows:
Size of holding
Number of holders
Number of Rights
1-1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and above
Total
-
-
-
2
9
11
Unquoted Performance Rights
There are 5,924,925 unquoted performance rights on issue as follows:
% of Rights on
issue
0.00%
0.00%
0.00%
1.20%
98.80%
-
-
-
135,000
11,125,002
11,260,002
100.00%
Unquoted performance rights – description
TexInnovate performance rights – contingent
consideration expiring 21 August 2025
Total
Preferred Units in EOF Bio at 5 September 2023
Number of rights
Number of holders
5,924,925
5,924,925
1
1
Ecofibre Ltd
Non-controlling interest
Total
Voting Rights
Number
29,400
1,184
30,584
%
96.13%
3.87%
100.00%
Ordinary shares carry voting rights on a one-for-one basis. Unquoted options, employee share rights, and
performance rights do not carry voting rights.
102 ECOFIBRE LIMITED ANNUAL REPORT 2023
Investor information
Shareholder services
Ecofibre’s share register is maintained by Link Market Services Limited. By visiting the Link Investor Centre,
shareholders can:
•
•
•
•
•
•
View their holding details
Register to receive Annual Reports electronically
Access and update information held by the Share Registry
View information relating to transaction history
Provide their Tax File Number or ABN
Download forms, change address details, update communication preferences and add or amend direct credit
details.
When you visit the Link Investor Centre, you will need your Security Reference Number (SRN) or Holder Identification
Number (HIN) to verify your identity. Your SRN/HIN is available on your holding/transaction and distribution
statements.
Recent legislative changes to the Corporations Act 2001 (Cth) mean there are new options for how Ecofibre
shareholders receive communications. Ecofibre will no longer send physical meeting documents unless a
shareholder requests a copy to be mailed.
Electronic communication has the added advantage of being timelier and more cost-effective, which benefits all
shareholders, and Ecofibre encourages all shareholders to provide an email address so we can communicate with
you electronically when shareholder notices become available online, for items such as meeting documents, dividend
statements, and annual reports.
Shareholders can still elect to receive some or all of their communications in physical or electronic form. To review
your communication preference or sign up to receive your shareholder communications via email, please update
your details at the Link Investor Centre.
For all other questions, please contact the Registry:
Link Market Services Limited
Level 21, 10 Eagle Street, BRISBANE, QLD, AUSTRALIA, 4000
Share registry telephone: 1300 554 474
registrars@linkmarketservices.com.au
linkmarketservices.com.au
ECOFIBRE LIMITED ANNUAL REPORT 2023 103
INVESTOR INFORMATION
Information on Ecofibre
Ecofibre website
Up-to-date information on the company can be obtained from the company’s website ecofibre.com.
Securities Exchange listing
Ecofibre shares are listed on the Australian Securities Exchange under the code EOF.
Share prices can be accessed from major Australian newspapers, on the Ecofibre website, or at asx.com.au.
Privacy
A copy of the Ecofibre Privacy Policy is available on the Ecofibre website.
Ecofibre Investor Relations department
Further information and publications about the company’s operations are available by contacting the Investor
Relations department via the Ecofibre website.
104 ECOFIBRE LIMITED ANNUAL REPORT 2023
Directors
Vanessa Wallace
Eric Wang
Prof. Bruce Robinson
Michele Anderson
Mark Bayliss
Company Secretary
Jonathan Brown
Robin Sheldon
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
ecofibre.com/investors/corporate/
ECOFIBRE LIMITED HALF-YEAR REPORT 2023 105
ANNUAL
REPORT
2023