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2023 ReportPeers and competitors of Little Green Pharma:
Neos Therapeutics, Inc.LITTLE GREEN PHARMA
ABN 44 615 586 215
ANNUAL
REPORT
YEAR ENDED 30 JUNE 2021
CONTENTS
1 Who we are
2
3
Chairman’s Letter
A message from the Managing Director
4 Strategy
5 Capability
Cultivation and Production
Manufacturing
Product Innovation
Education
Distribution
6
Environmental, Social, Governance
(ESG) - A World of Difference
7 Directors’ Report
8
Independent Auditor’s Report
9
Financial Report
10 Shareholder Information
Little Green Pharma:
a world of difference
CORPORATE DIRECTORY
Directors
Mr Michael Lynch-Bell
Dr Neale Fong
Ms Fleta Solomon
Mr Angus Caithness
Company Secretary
Mr Alistair Warren
Registered Office
Level 2, Suite 2, 66 Kings Park Road
West Perth, Western Australia 6005
Telephone: +61 8 6280 0050
Facsimile: +61 8 6323 4697
Email:
cosec@lgp.global
Website: www.littlegreenpharma.com
Notice of AGM
Auditor
Deloitte Touche Tohmatsu
Tower 2, Brookfield Place
123 St George’s Terrace
Perth, Western Australia 6000
Share Registry
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth, Western Australia 6000
Website: www.investorcentre.com/contact
Stock Exchange
Australian Securities Exchange Ltd
Central Park, 152-158 St Georges Terrace
Perth, Western Australia 6000
ASX Code: LGP
The Annual General Meeting of Little Green Pharma Ltd will be held at 2pm (AWST) on 5 November 2021.
LITTLE GREEN PHARMA ANNUAL REPORT 2021
1
WHO WE ARE
We are Little Green Pharma Ltd (Little Green Pharma, LGP, the Company
or Group): a leading global medicinal cannabis business with key
production assets in Australia and Europe.
To date, our success has been driven by our first-mover status – we were
the first Australian producer and exporter of cannabis medicines – and
our rapid, early entry into key global markets.
Today, our primary goal is to improve patient access
to GMP-grade cannabis medicines around the world.
We do this by operating across the supply chain, from cultivation,
manufacturing, distribution, and stakeholder engagement, which
allows us to navigate barriers to access and provide our distributors,
prescribers, and patients with a seamless end-to-end service for a broad
range of cannabis medicines.
Meanwhile, we continue clinical studies into the safety and efficacy
of our medicines while developing new and innovative medicinal
formulations for our patients.
We are proud to be Little Green Pharma, and making a world of difference.
For more information about Little Green Pharma visit:
www.littlegreenpharma.com
We're big on
changing lives.
We are passionate about transforming lives.
Our vision is to reimagine cannabis medicines
and do extraordinary things for our patients.
It’s at the heart of everything we do and
defines our culture. We are proud of what
we've done and where we're going.
We are Little Green Pharma.
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LITTLE GREEN PHARMA ANNUAL REPORT 2021
2
2
CHAIRMAN'S
LETTER
Dear Shareholders,
Financial year 2021 has been another
remarkable year for Little Green Pharma.
Our acquisition of one of Europe’s largest medicinal
Meanwhile, the Company continues to grow its R&D
cannabis production assets represented a step-change
capabilities and offerings. The QUEST Initiative, LGP’s
for LGP, giving the Group dramatically increased
hallmark observational study conducted by the University
capacity and proximity to markets in support of our
of Sydney, has now onboarded 120 prescribers and
early-mover strategy into the EU. That step change was
recruited 1,700 participants, with findings expected to
recognised by the calibre of institutional support for the
be peer-reviewed and published later in 2022. A clinical
transaction, which included Hancock Prospecting, one
investigation into the Company’s LGP Classic 10:10
of Australia’s largest mining and resources companies
with diversified interests across a range of industries.
In addition, the Company consolidated and expanded its
international sales pipeline into Europe, through significant
growth in orders from Demecan in Germany, its successful
selection as a primary supplier to the French medicinal
cannabis pilot, and its entry into an exclusive distribution
partnership in Poland with a subsidiary of Pelion, the largest
operator in the Polish and Lithuanian healthcare sectors.
In Australia, we had another impressive year of growth
in domestic sales, which together with international
sales resulted in revenue of $7 milllion, an increase of
217% from the previous financial year. The Company
also further enhanced its patient and prescriber offering,
including through its patient concierge service and a
prescriber education portal, which provide additional
support and resources specific to LGP’s product lines.
Since the release of our first cannabis medicines in
August 2017, more than 15,200 patients have now been
prescribed LGP medicinal cannabis products.
medicinal cannabis oil also concluded the medicine was
safe and effective for the treatment of chronic refractory
pain, with the Company now progressing a further clinical
trial investigating the efficacy of medicinal cannabis for
the treatment of symptoms associated with fibromyalgia.
Meanwhile, the Company’s ARISE project is moving
through the first of three phases, with the Company
optimising overall yield and carrier excipients before
moving to phase two.
The reporting period also saw the introduction of several
new products, including our popular Desert Flame
medicinal cannabis flower product, as well as our LGP
Classic 1:100 oil medicine and specific medicinal cannabis
oils formulated for the French trial. Post-reporting period,
the Company has also imported its first shipment of
Danish cannabis flower medicine into Australia.
Today, the Company is relentlessly focused on integrating
its Danish assets and growing its sales pipelines into
Australia and internationally, while completing the
expansion and consolidation of its production facilities
While COVID uncertainty presented operational difficulties
at home. With its significantly enhanced production
for the Company in early 2020, the Group has managed
platform, well-established distribution lines, and strong
to operate successfully throughout the reporting period,
in-market brand and global reputation, we believe the
including by optimising procurement, inventory and
Company is extremely well positioned for another year of
transportation lines to ensure minimal delays.
significant growth.
On behalf of the Board and Company, I would
like to thank you – our shareholders – for your
ongoing support of the Company.
Your sincerely
Michael Lynch-Bell
Independent Non-Executive Chair
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LITTLE GREEN PHARMA ANNUAL REPORT 2021
4
3
A MESSAGE FROM THE
MANAGING DIRECTOR
There is nothing little about the progress
Little Green Pharma has made in the last year.
Catalysed by the Covid-19 pandemic, the first half of
position the Little Green Pharma brand optimally for
financial year 2021 was a year of cash conservatism
both the German market as well as the future French
that resulted in the Company’s maiden half yearly
market that the Company anticipates will be catalysed
profit. To know we could batten down the hatches,
by the trial. The addition of strong distribution partners
ride out the pandemic, and grow organically was a
in Poland and Denmark have further consolidated
testament to our strong business model and team.
the Company's competitive position as the European
However, the opportunities for significant expansion
medicinal cannabis market continues to develop.
remained outside Australia, and required us to look
externally to international markets.
Domestically in Australia, we have experienced record
growth in underlying patient demand with 10,600 new
Recognising the need for a platform to capitalise
patients in financial year 2021, an increase of 130% in
on our early mover status and brand recognition in
new patients from last year.
Europe and Australia, we made the strategic decision to
acquire a world-class GMP-licensed medicinal cannabis
cultivation and manufacturing facility in Denmark (EU).
Formerly owned by Canopy Growth Corporation,
LGP’s Denmark Facility is one of the largest medicinal
cannabis production assets in Europe and capable of
producing more than 20 tonnes of GMP biomass per
annum. With the purchase we acquired immediate
access to an operational, world-class facility and
LGP also ended the financial year with a strong balance
sheet and $40.2 million cash at bank.
I remain incredibly grateful to our loyal shareholders –
both large and small, old and new. With your support and
belief, you have given us an exceptional advantage across
our operations.
To all the Little Green Team, this business is succeeding
thanks to your passion and commitment. On behalf of
top-quality team that complemented our Australian
LGP and our patients around the world, I am forever
operations perfectly.
grateful for your tireless contribution to advance our
In conjunction with the acquisition, the Company also
vision and purpose:
completed a successful $27.2 million Placement which
To do extraordinary things for patients and solve
received strong support from some of the biggest investor
real patient problems
names in Australia, including Hancock Prospecting.
Yours in Health,
Uniquely positioned, the Company now has a laser
focus on rapid market growth utilising its early mover
advantage in European markets. Our international
sales momentum continued as the company grew its
relationship with key distribution partner Demecan
in Germany, as well as being selected for the French
Fleta Solomon
Government’s medicinal cannabis pilot in France. These
Managing Director
217%
Revenue growth
130%+
Increase in
patient numbers
530+
Active Australian
prescribers
50+
Medical conditions
approved for
treatment with
LGP products
3
New medicinal
cannabis products
launched
$54.2
Million in new
capital raised
Our vision and purpose:
To do extraordinary things
for patients and solve real
patient problems.
5
LITTLE GREEN PHARMA ANNUAL REPORT 2021
6
4
5
CAPABILITY
Operating across the entire supply chain enables Little Green
Pharma to identify higher-margin opportunities as well as ways
to reduce costs for patients. LGP’s supply chain capabilities
support the Company’s strategy of achieving high-volume sales
in local and overseas markets as well as its goal of developing
unique, high-margin drug delivery systems.
STRATEGY
While continuing to operate a lean business model and drive
fiscal discipline within the Group, the Company’s strategy is
clearly focused on aggressively driving sales within Australia and
globally by fostering new and existing distribution pathways across
Australia, Europe and elsewhere.
LGP's acquisition of its Danish production facility armed the Group with the
necessary global production capacity and market proximity to help realise
this strategy. The Group continues to carefully develop its supply profile into
multiple markets as it negotiates and executes LGP-branded and white-label
supply arrangements with various distribution partners.
Meanwhile, the Company continues to focus on the development of unique,
high-margin drug delivery systems to further differentiate LGP in the market.
The Company’s growth strategy comprises three key pillars:
1
2
3
Patient acquisition
in Australia
Sales in Australia demonstrate
market validity and generate
immediate cashflow to
support development of
international pathways.
Clear pathway to
international sales
Early mover commercial
volumes in international
markets the primary
mechanism to secure and
grow offshore market share.
Product and drug
delivery innovations
Focus on developing
unique delivery systems
for patients in the future to
solve real patient problems
and differentiate LGP.
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LITTLE GREEN PHARMA ANNUAL REPORT 2021
8
MANUFACTURING
During financial year 2021, LGP completed construction of its WA
in-house manufacturing facility for post-harvest flower drying
and cannabis extraction on time and on budget, with the facility
subsequently granted a Therapeutic Goods Administration (TGA)
GMP certification to manufacture cannabis flower medicines and
cannabis extracts (oils), tinctures and APIs.
During the reporting period, LGP continued to make significant progress
scaling up its in-house manufacturing capacity and capability to meet
demand for quality Australian medicinal cannabis oil products as well
as producing its first finished medicinal cannabis flower products.
In June 2021, LGP also acquired its Denmark facility which added
4,000m2 of post-harvest GMP manufacturing capacity and included an
in-house GMP-certified testing laboratory.
5
CULTIVATION AND
PRODUCTION
During financial year 2021, high demand for LGP’s
cannabis flower medicines led LGP to ramp up
production to 100% at its state-of-the-art cultivation
facility in Australia within just six months.
The facility is currently producing 3 tonnes of dried
biomass per annum which is then processed for
Australian and overseas markets.
The Company’s acquisition of its Danish facility in June
2021 represented a step-change in the Group’s global
production capability, with the 21,500m2 cultivation site
capable of producing over 20 tonnes of biomass annually.
LGP is currently ramping up production to 50%, with the
additional footprint allowing the Company to further
expand its trials to maximise yields, optimise growing
techniques, investigate cannabinoid production, and
create a platform for creating high quality, cannabis
medicines.
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LITTLE GREEN PHARMA ANNUAL REPORT 2021
10
5
PRODUCT INNOVATION
A core strategy of LGP is to deliver innovative
pharmaceutical products specifically developed
to improve patient outcomes.
THIS STRATEGY INCLUDES:
launching an expanded range of medicinal
cannabis oil and flower products to meet
immediate patient demand in Australian
and overseas markets; and
developing innovative prescription
medicines, including novel delivery
systems and precisely formulated
cannabinoid products.
EXPANDED PRODUCT RANGE
During financial year 2021, LGP’s Australian product range
increased from four to six products with the introduction
of the CBD dominant LGP Classic 1:100 oil formulation
in February 2021 and the LGP Flower THC 22 – Desert
Flame whole flower formulation. The Desert Flame flower
product in particular performed strongly in the market,
quickly selling out due to unanticipated patient demand.
LGP also intends to expand its Australian flower range
in the first half of financial year 2022 having already
imported its first shipment of Billy Buttons THC-16
cannabis flower medicine from its Denmark facility
into Australia.
QUality-of-life, Evaluation STudy
Investigating the impact of medicinal cannabis
on patients with chronic conditions
RESEARCH AND DEVELOPMENT UPDATE
LGP’s hallmark quality of life QUEST study continues
its successful recruitment of patients by more than 130
prescribers (as at date of report) in centres across six
Australian states and territories.
The Company currently anticipates sufficient baseline
recruitment to conduct three month results analysis
before the end of financial year 2022, with analysis
findings expected to be peer-reviewed and published
later in calendar 2022.
Since successful completion of the clinical investigation
into the use of LGP Classic 10:10 for the treatment of
chronic refractory pain, the Company has also commenced
sponsorship of a clinical trial investigating the efficacy of
medicinal cannabis to treat symptoms associated with
fibromyalgia.
Meanwhile, the ARISE project has progressed through Phase
1 – a six month phase – and the first of three phases totalling
18 months. ARISE is a supercritical fluid anti-solvent extraction
technology which generates micron and sub-micron size
particles of active pharmaceutical agents.
Phase 1 involves identifying the ideal excipients for each of the targeted anatomical sites
of drug delivery. The Company has successfully applied cannabis to the ARISE process and is now
optimising the process to improve overall yield and confirm the best carrier excipients. It is expected
that the ARISE technology will form the basis of LGP’s prescription medication registration pipeline.
Optimisation of the Company’s liposomal delivery technology continues and is expected to be
finalised in financial year 2022. The Company also continues to investigate its proposed option to
formulate and register a Schedule 3 CBD cannabis medicine as a priority project for the Company.
LGP’s range of high-quality Australian medicines manufactured under TGA GMP conditions.
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LITTLE GREEN PHARMA ANNUAL REPORT 2021
12
5
EDUCATION
Healthcare practitioner education and outreach remains a critical
component of LGP’s commercial strategy. In financial year 2021, LGP
continued to engage with healthcare professionals to support their
education into the benefits of cannabinoid medicines.
The launch of LGP’s medical portal
has allowed subscribing healthcare
professionals to access extensive
resources on medicinal cannabis,
prescribing LGP medicines,
treatment and dosing guides, and
research on conditions treated
with medical cannabis; and to
view webinars and live events: see
littlegreenpharma.com/ medical-
portal/register
With easy-to-access digital education,
Due to travel and lockdown
LGP also offers an access portal for
restrictions LGP has continued to
patients and healthcare professionals
enhance its online offering through
located on its sponsored site,
additional online training courses,
GreenChoices.com.au. This allows
webinars, and virtual meetings
prescribers to access a range of
to engage with existing and new
resources to improve professional
healthcare professionals.
knowledge, and a directory that
connects patients to doctors familiar
with prescribing medicinal cannabis.
LGP has also expanded its medical
science liaison team to support the
education of doctors and now has
strong representation across both
east and west coasts of Australia.
www.littlegreenpharma.com/ medical-portal/register
www.greenchoices.com.au
Webinars
CLINICAL INVESTIGATIONS
LGP is involved in several clinical investigations, including two
open-label designed studies as well as a double-blind placebo-
controlled clinical trial run by a leading Australian research
organisation for palliative care and advanced cancer. These study
and trial outcomes will assist in informing the Company’s future
clinical trial plans and product development.
The Company was also selected as one of four primary suppliers
to the French Government's two year Pilot Program, which aims to
confirm the safety profile of medicinal cannabis in advance of the
potential legalisation of medicinal cannabis in France post-trial.
Supporting
healthcare
professionals to
make a world of
difference.
Patients
10,600+
To 30 June 2021 vs.
4,566 to 30 June 2020.
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LITTLE GREEN PHARMA ANNUAL REPORT 2021
14
5
Driven to improve
patient quality
of life.
DISTRIBUTION
During the reporting period, the Company
demonstrated strong sales growth in both
Australia and overseas with an increase in sales
revenue from $2.2 million to ~$7 million. The
Australian medical cannabis market continues
to grow with strong patient demand and almost
87,000 SAS B approvals granted via the TGA's
Special Access Scheme.
Total Australian
SAS B approvals
87,000
in financial
year 2021.
For SAS B medicinal
cannabis applications FY21.
FUNDRAISING
During the period, the
Company raised a total of
~$54 million from institutional
and retail investors, being a $22
million Placement and $5 million
Share Purchase Plan in February 2021,
and a $27.2 million Placement in June 2021
in connection with its acquisition of the LGP
Denmark facility, the latter including a $15 million
subscription by Hancock Prospecting.
During the year, LGP continued to grow its sales
in the German market, with its first medicinal oil
shipment to CC Pharma in November 2020 and
its first medicinal flower shipment to Demecan in
February 2020. The Company also delivered its first
shipment to the UK.
In January 2021, LGP was appointed as a primary
medicinal cannabis oil supplier for the national
French medicinal cannabis trial in partnership with
Intsel Chimos, a leading French pharmaceutical
distributor. Success of the trial is anticipated to
catalyse legalisation of a ~€4 billion French medicinal
cannabis market. The trial will be the sole pathway
for the supply of cannabis medicines into France until
the end of calendar year 2023, and is anticipated to
provide LGP with a significant first mover advantage
in any future French market.
In April 2021, LGP signed a five-year distribution
agreement with Denmark-based Balancial for the
supply of medicinal cannabis oil and flower products
and is actively pursuing agreements for the sale,
export, and/or distribution of LGP products into other
international markets, including opportunities in
South America and New Zealand.
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LITTLE GREEN PHARMA ANNUAL REPORT 2021
16
6
Environmental,
Social, Governance
(ESG)
A World of Difference
PATHWAY TO SUSTAINABILITY –
GREEN, ON BOTH SIDES OF
THE EQUATION
LGP’s core business of supplying cannabis medicines to patients
suffering a variety of medical conditions ensures the Company
already has a strong ESG profile.
To help close remaining gaps, the Company has established a Green Committee, with the clear objective
of identifying any remaining improvements and facilitating the Company’s ESG compliance journey.
The Committee focuses on assessing the Six Dimensions of Impact (modelled by the Boston Consulting
Group)1 that identify a holistic range of societal benefits capable of being generated by a business. By
adding a societal impact lens to our strategy, Little Green Pharma has begun creating a framework
to ensure its core business both contributes to society as well as ensuring a positive correlation with
financial performance.
We believe these efforts will create distinctive
competencies and create value for the benefit of
both shareholders and society.
The Green Committee explores environmental, social and governance issues relevant to the production
of cannabis-based medicines for the healthcare sector. Through the Six Dimensions of Impact, the
Committee works to identify likely ESG gaps and set credible ESG goals for the LGP Group. A significant
decision by the Company has been to move to 100% renewable power at its WA production facility.
The Company’s Danish facility also currently draws approximately 45% of its power consumption from
renewable sources, with the Company looking to increase this to 100% over the coming year.
The following table identifies the Six Dimensions of Impact as well as the Company’s current areas
of investigation and focus applicable to companies that produce and manufacture cannabis-based
medicines in the healthcare sector:
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LITTLE GREEN PHARMA ANNUAL REPORT 2021
18
6
ENVIRONMENTAL, SOCIAL, GOVERNANCE (ESG) - A WORLD OF DIFFERENCE
Impact dimension
Areas of focus
Status
Highlights
Impact dimension
Areas of focus
Status
Highlights
Economic
vitality
Meaningful
occupational purpose
Group employees are engaged in meaningful careers that contribute
significant economic benefits to broader society and stakeholders.
Ethical capacity
Compassionate access
Company offers a compassionate access program to eligible
patients.
Creating jobs across
supply chain (internal
& external)
Regional and
community
contribution
Environmental
sustainability
Energy consumption
and management
Pesticide and
contaminant
management
Group engages a broad and diverse workforce and contractor base
across entire supply chain, from cultivation through to distribution
and stakeholder engagement.
Group provides significant employment and recruitment
opportunities in regional WA and regional Denmark.
Group purchases 100% renewable power for its WA production
facilities and is currently investigating increasing its percentage of
renewable power consumption from ~45% to 100% at its Denmark
facility. Company also reviewing actions and activities required to
achieve carbon neutrality.
Denmark facility disposes of its organic waste to a local Danish
renewable power producer who in turn generates and supplies
waste heat to LGP’s Danish facility used to warm the facility and
reduce power consumption.
The Group uses organic, non-hazardous, non-dangerous
protectants as part of its integrated pest management regime.
Water and wastewater
management
The WA facility uses hydroponic watering systems that minimise
water loss and maximise application.
Lifetime
well-being
Waste & hazardous
materials
Improving quality of
life of patients and
employees
Provide benefits and
opportunities for
employee growth
Supplying reliable
medicines to patients
Product quality and
safety
The Denmark facility collects rain water from the rooftops of all
its facilities and uses this to water its crops. All excess water from
watering is collected in tanks and reused. The facility can store up
to 9,000 m3 of rainwater on site in closed basins.
Only wastewater from processing and cleaning in WA are disposed
via sewerage systems.
All organic waste is composted on site at WA facility, while LGP’s
Denmark facility currently provides its organic waste to a local
Danish renewable power producer who in turn generates and
supplies waste heat to LGP’s Danish facility used to warm the
facility and reduce power consumption.
Rockwool used in LGP’s Danish production facilities is redelivered
to producer and recycled.
In LGP’s WA facilities, ethanol is reclaimed and disposed of in
compliance with all regulatory requirements.
LGP’s products and services significantly and positively impact
patient quality of life.
A flat management structure, broad geographic reach and rapidly
growing Group provides broad and frequent opportunities for the
development and growth of LGP employees.
Company has consistently provided high-quality cannabis
medicines to the Australian and European markets since 2018.
All Company medicines meet all stringent regulatory requirements
for all applicable markets and Company’s pharmacovigilance
activities demonstrate a beneficial safety and risk / benefit profile
for its medicines.
Data security
Company utilises high security rated platforms and software in
connection with storage of any personal information and complies
with applicable privacy guidelines.
Board gender
and independent
governance structure
Company currently has 25% female Board representation and is
presently reviewing Board structure and composition, with view to
increasing number of Non-Executive Directors.
Strong leadership and
business ethics
Company enjoys high-performing leadership and management
culture with robust business ethics and practices.
Selling practices and
product labelling
Company has helped pioneer innovative and lawful sales and
marketing practices in restrictive regulatory environment.
Societal
enablement
Patient feedback
Customer service
Access & affordability
Company consistently receives positive feedback and testimonials
and its pharmacovigilance activities demonstrate a beneficial
safety and risk/benefit profile for its medicines.
Company provides excellent customer, prescriber and patient
service and frequently goes beyond the call to assist stakeholders.
Company provides significant support to prescribers and patients
seeking to access medicinal cannabis, including through various
product & educational platforms as well as medical science
liaison and customer support teams. Company also provides a
compassionate access program as well as access to reduced price
cannabis medicines through health insurance partnerships and
clinical studies.
Access and
inclusion
Employee health &
safety
Group has developed a robust safety culture and enjoys a positive
safety record since commencement of operations at all facilities.
Employee engagement
& inclusion
Group has strong employee engagement and inclusion practices,
including through internal communications, reward programs and
Company-sponsored activities and events. Company strives to
provide an inclusive workplace for a diverse workforce, including
flexible working practices.
Company outsources appropriate tasks to a local disability
employment provider at its WA production facility.
Workplace
transparency
Group generally provides transparent communications, updates
and feedback to workforce, with any deficiencies primarily
attributable to pace of Group growth and development.
Employee gender and
age diversity
Group has a workforce comprising 62% women, with an age range
of between 20 – 73 and an average age of 44.
1. Reference - Boston Consulting Group (April 2021), Young D and Gerard M, How to Tell if Your Business Model is Creating Environmental
and Societal Benefits.
Customer welfare
Company strives to address all prescriber and patient concerns and
has received consistently positive feedback and testimonials.
KEY
Achieved
Limited progress
On track
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LITTLE GREEN PHARMA ANNUAL REPORT 2021
20
7
Directors’
Report
The Directors present this report for the financial year ended 30 June 2021.
Directors
As at the date of this report, the Directors of the Company are:
Mr Michael Lynch-Bell
Independent
Non-Executive Chair
Dr Neale Fong
Independent
Non-Executive Director
Ms Fleta Solomon
Managing Director
Mr Angus Caithness
Executive Director
The Directors listed above held these positions throughout the financial year.
The Directors listed as Independent Directors have been independent throughout the financial year.
Information on Directors
Michael Lynch-Bell
Independent
Non-Executive Chair
Dr Neale Fong
Independent
Non-Executive Director
Fleta Solomon
Managing Director
Angus Caithness
Executive Director
Fleta drives the strategic
vision of the business and
as Managing Director of
Little Green Pharma has
grown the company from
a medicinal cannabis
startup to an industry-
leading medicinal
cannabis brand in
Australia and overseas.
Fleta has 20 years’
experience in corporate
and consumer health
markets and is a graduate
of the Australian Institute
of Company Directors
(GAICD), holds a Bachelor
of Science degree and an
MBA from the University of
Western Australia.
Neale is a registered
medical practitioner
with over 35 years in
senior leadership roles
in private hospitals, the
public health systems,
management consulting,
academia, health research,
aged care and not for
profit organisations.
Neale is currently CEO of
Bethesda Health Care and
formerly Director General
of the West Australian
Department of Health.
Neale is an experienced
ASX company director
including a former non-
executive Director of
Neurotech International
Limited (ASX:NTI) and
executive chair of Chrysalis
Resources Limited
(ASX:CYS) and has been
a Fellow of the Australian
Institute of Company
Directors for 17 years.
Neale is also Chair of the
Company’s Audit & Risk
Committee.
Michael is an experienced
corporate finance executive
and consultant. Michael
led Ernst & Young’s UK
IPO and Global Natural
Resources transaction
teams in the Transaction
Advisory practice and has
been involved advising
companies on fundraising,
re-organisations,
transactions, corporate
governance as well as
IPOs. Michael is a former
Chair of the Bureau
and current member of
UNECE’s Expert Group on
Resource Management
and a Non-Executive
Director of Barloworld
Limited (JSE:BAW), Senior
Independent Director and
Remuneration Committee
Chair of Gem Diamonds
Limited (LSE:GEMD),
Audit Committee Chair of
Lenta Limited (LSE:LNTA)
MCX:LNTA) and previously
Deputy Chair and
Nomination Committee
Chair of Kaz Minerals plc.
Michael is also Chair of the
Company’s Remuneration &
Nomination Committee.
Angus is an experienced
corporate finance
executive and consultant
in Australia and
international markets.
Angus has ASX experience
as a non-executive
Director of Lindian
Resources (ASX:LIN), CFO
of Hunnu Coal (ASX:HUN)
and Company Secretary
for the IPO of Haranga
Resources (ASX:HAR).
Following these roles,
Angus acted as CFO of
Tavan Tolgoi, the owner of
the world’s largest coking
coal deposit looking at a
US$10 billion dual listing
in London and Hong Kong
prior to the change in the
Mongolian government.
Angus was previously
an Executive Director at
Ernst & Young in London
and Australia specialising
in initial public offerings
of large cap mining
companies. Angus is a
Harvard Business School
alumnus, a Chartered
Accountant, has a Master
of Science and is a fellow
of the Financial Services
Institute of Australasia.
21
LITTLE GREEN PHARMA ANNUAL REPORT 2021
22
7
DIRECTORS’ REPORT
Board and Committees
The Directors held nine directors’ meetings, six Audit and Risk committee and four Remuneration and Nomination
committee meetings during the financial year:
Directors’
Meetings
Audit and Risk
Committee
Remuneration and
Nomination Committee
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Mr. Michael Lynch-Bell
Dr. Neale Fong
Ms. Fleta Solomon
Mr. Angus Caithness
9
9
9
9
9
9
9
9
6
6
-
6
6
6
-
6
4
4
4
-
4
4
4
-
In addition, 58 circular resolutions were passed.
Principal Activities
During the financial year the
principal activities of the
Company were:
the cultivation of medicinal
cannabis, procurement of raw
materials and the production of
medicinal cannabis medicines
the establishment and
continued development of
distribution pathways within
Australia, the EU and other
international jurisdictions
ongoing research and
development into new
medicinal cannabis products
and delivery technologies.
In the Directors’ view, there were no
significant changes to the principal
activities of the Company during
the financial year.
Review of operations
The operational review contained in both the Strategy section
at page 7 and the Capability section at page 8 forms part of this
Directors’ Report.
During the reporting period LGP generated over $7 million in
revenue with a profit after tax of $24,603,555, predominately
reflecting the impact of the bargain purchase of the Denmark
Facility (compared to the previous year’s loss of $9,315,435). During
this period, the Company experienced record growth in underlying
demand in Australia with a 130% increase in new patients for the
year. As at 30 June 2021, more than 15,000 patients have been
prescribed the Group’s medicinal cannabis products by more than
580 healthcare professionals in Australia alone.
Meanwhile, gross margin increased to 82% in the year ended 30
June 2021, up from 52% in the previous year, realised as a result of
increasing scale and greater operating efficiencies. When excluding
the gain on changes in fair value of biological assets, the gross
margin increased to 61% in the year ended 30 June 2021, up from
51% in the previous year.
As at 30 June 2021, the Group had a strong cash position of $40.2
million.
During the reporting period, the Group’s key focus has been on
expanding its WA production operations, acquiring additional
EU production capacity, further developing sales channels into
Europe and internationally, and educating healthcare professionals
in Australia. Meanwhile, the Group’s research and development
activities continue to be focussed on the development of new and
innovative drug delivery systems and products to meet current and
future market demand.
The Group had a number of key achievements during the
Given its impact on Australian interstate travel, COVID-19
reporting period, including:
the acquisition of a world-class GACP/GMP licensed
medicinal cannabis production facility in Denmark
(EU) capable of producing over 20 tonnes of
biomass per annum (including 12 tonnes per annum
of dried cannabis flower), for C$20 million;
the successful fundraising of ~$54 million of
capital pursuant to two placements and a Share
Purchase Plan, including a $15 million investment
by Hancock Prospecting;
the completion of the first stage expansion of the
Company's WA manufacturing facilities and the
also impacted the ability of the Company to progress its
ARISE Project, with any continued travel interruptions
likely to impact on the Project’s development plans in
the future. The pandemic also initially impacted on the
ability of Company to send key management personnel
to Denmark to support operational integration however
these regulatory restrictions have now largely been
successfully managed.
Company performance
against expectations
The Company's operations during the year performed
grant of a TGA GMP manufacturing licence for the
as expected in the opinion of the Directors.
manufacture of medicinal cannabis oil and flower
medicines;
sponsorship of the QUEST Initiative, a large-
scale observational quality of life study into the
treatment of chronic conditions with medicinal
cannabis, and successful completion of a clinical
investigation into the efficacy of LGP's Classic
10:10 medicinal cannabis oil in treating chronic
refractory pain;
the delivery of the Company's first medicinal
cannabis oil to the UK and Germany and its first
shipment of cannabis flower to Demecan, a key
distribution partner for the Company in Germany;
entry into new distribution agreements for
Denmark and Poland;
Significant changes in the
state of affairs
There were no significant changes in the nature or situation
of the Company that occurred during the financial year that
are not otherwise disclosed in this report.
After balance sheet date events
No matters or circumstances have arisen since the end
of the financial year which significantly affected, or may
significantly affect, the operations of the Company,
the results of those operations, or the state of affairs
of the Company in future financial years, other than
the acquisition of 16,000 m2 of land underlying the
Company’s WA production facilities as well as two
the award of one of four primary supplier roles to
adjoining properties for ~$6 million (with $4.2 million
supply cannabis medicines to the French national
paid in cash and balance in scrip).
medicinal cannabis Pilot Program;
the delivery of pathfinder shipments to New
Zealand and Brazil; and
Likely developments in the operations of the Company,
and the expected results of those operations in future
financial years, have not been included in this report as
the entry into a strategic partnership with Health
these are likely to result in unreasonable prejudice to
Insurance Fund (HIF) to support improved access
the Company.
to medicinal cannabis products, including through
the payment of a rebate to eligible HIF members.
COVID-19
During the reporting period, the Company’s
operations were not materially impacted by COVID-19,
(primarily due to advance preparation and inventory
management); although the pandemic did result in
increased costs and delays to imports, procurement and
Environmental issues
The Company’s operations are not regulated by any
significant environmental regulation under a law of the
Commonwealth or of a State or Territory.
Dividends
There were no dividends paid or declared in the
deliveries both within Australia and to and from the EU.
reporting period.
23
LITTLE GREEN PHARMA ANNUAL REPORT 2021
24
7
DIRECTORS’ REPORT
Remuneration report
The Remuneration Report detailed on pages 26 to 30 of
this Annual Report forms part of this Directors’ Report.
Directors’ shares and
performance rights
The Directors’ interests in shares and performance rights
Company out of the property of the Company against (a)
any liability incurred by that person in that capacity, (b)
legal costs incurred in connection with proceedings, or (c)
legal costs incurred in good faith in obtaining legal advice
on issues relevant to their performance of functions and
duties if approved in accordance with Company policy,
except where the Company is forbidden by law to indemnify
against such liability or costs or would be void under law.
are set out in the Remuneration Report. These remain
Each Director and Officer has also entered into a Deed
unchanged as at the date of that Remuneration Report.
of Indemnity, Access and Insurance that provides for
Performance rights
During the reporting period, the executives successfully
achieved the vesting conditions of the 3 million long-term
incentive performance rights issued to them prior to
the Company’s Initial Public Offering. The first 1 million
shares have been issued to the executives with the
vesting of the remaining 2 million performance rights
subject to the continued employment of the executives
between 12 and 24 months from the date of satisfaction
of the relevant share price milestone.
Otherwise, a total of 3 million performance rights were
approved by shareholders and issued to executives in
the post-reporting period. No performance rights were
issued to directors during the reporting period.
Auditor’s Independence
Declaration
The Auditor’s Independence Declaration set out on page 36
of this Annual Report forms part of this Directors’ Report.
Corporate Governance Statement
The Company’s Corporate Governance Statement can be
found at https://investor.littlegreenpharma.com/site/
investor-centre/corporate-governance-statement
Company Secretary
Mr. Alistair Warren (LLB. BA. Grad. Dip. Applied Econs.) is
General Counsel and Company Secretary for the Company.
Alistair was previously inhouse legal counsel at BHP
Group Ltd and a legal practitioner in private practice with
Freehills lawyers (now Herbert Smith Freehills).
Indemnification and insurance
of Directors and Officers
Under the Company’s constitution, the Company
indemnifies any current or former Director, Company
indemnity against liability as a Director or Officer,
except to the extent such liability is prohibited by the
Corporations Act 2001 or any applicable law or recovered
under a separate policy of insurance. Pursuant to the
Deed, Directors and Officers may also obtain independent
professional advice at the Company’s cost in connection
with any matter connected with the discharge of that
person’s responsibilities, subject to the Board’s written
consent, as well as advice in connection with any claim
prior to the Company assuming conduct for the claim or
with the Board’s consent.
The Deed also entitles the Director or Officer to access
Company documents and records, subject to undertakings
as to security and maintenance of privilege, and to receive
Directors’ and Officers’ insurance cover paid for by the
Company.
During or since the end of the financial period, the
Company has paid or agreed to pay a premium in respect
of a contract of insurance insuring the Directors and
Officers of the Company and its subsidiaries, against
certain liabilities incurred in that capacity. The terms of
that policy prohibit disclosure of the total amount of the
premiums paid for that contract of insurance.
Proceedings
The Company did not bring any proceedings against any
party or seek to intervene in any such proceedings during
the financial year. The Company was not a party to any
proceedings during the year.
Signed in accordance with a resolution of the Directors:
Michael Lynch-Bell
Independent
Non-Executive Chair
Fleta J Solomon
Managing Director
Secretary or Officer of the Company or a subsidiary of the
28 September 2021
Remuneration Report
The Remuneration Report sets out the Company’s remuneration strategy for
the financial year ended 30 June 2021 and provides detailed information on the
remuneration outcomes for the Key Management Personnel in accordance with the
requirements of the Corporations Act 2001 and its regulations.
Remuneration philosophy
Key Management Personnel
The Remuneration Committee is responsible for
The Remuneration Report details the performance
making remuneration recommendations to the
and remuneration of Key Management Personnel
Board for the Directors, Managing Director and Key
(KMP) for the financial year 2021. KMPs are defined
Management Personnel. In line with its Charter, the
as persons having authority and responsibility for
Remuneration Committee is responsible for:
directing and controlling the activities of an entity
reviewing and approving the executive
directly or indirectly. The KMP comprise:
remuneration policy to enable the Company to
Non-Executive Directors, being the Chair Mr Michael
attract and retain executives and directors who will
Lynch-Bell and non-executive director Dr Neale Fong;
create value for shareholders;
and
ensuring that the executive remuneration policy
demonstrates a clear relationship between key
director performance and remuneration; and
recommending to the Board the remuneration of
executive and non-executive directors;
fairly and responsibly rewarding executives having
regard to the performance of the Group, the
performance of the executive and the prevailing
remuneration expectations in the market; and
reviewing the Company's recruitment, retention
and termination policies and procedures for senior
management;
members of the executive team, being Ms Fleta
Solomon (Managing Director) and Mr Angus
Caithness (Executive Director). The executives are
accountable for managing operational activities,
financial control, and risk management of the
Company.
Components of remuneration –
Executive team
During the financial year 2021, remuneration was
structured according to the relevant employment
agreements and performance measures in place.
reviewing and approving the remuneration of direct
Each of the executive team’s employment agreements
reports to the Managing Director, and other senior
to 30 June 2021 consisted of fixed remuneration,
executives as appropriate; and
reviewing and approving any equity-based plans
and other incentive schemes.
Relationship between the
remuneration policy and
Company performance
The performance measures for the Company’s short-
term incentive plan (STI Plan) and long-term incentive
plan (LTI Plan) have been tailored to align with financial
and operational objectives which create value for
shareholders. The Remuneration Committee obtained
guidance and industry data from Mercer, a remuneration
car-parking benefits, an STI Plan and an LTI Plan. In
addition, during the reporting period the Managing
Director also received a cost-of-living allowance (COLA)
and relocation payment associated with her relocation
back to Perth in early 2021. No other bonuses or
skill-based payments were received by the executives
during the reporting period.
Fixed remuneration and associated benefits
The executives receive fixed remuneration plus
superannuation. This remuneration is reviewed annually
and there is no guarantee of increases to remuneration in
any contracts of employment.
The base salary for:
consultant, in order to design STI and LTI Plans to
the Managing Director between 30 June 2020 and
motivate, retain and reward executive performance
1 April 2021 was $295,000 plus superannuation,
aligned to the Company’s strategic objectives.
and $305,000 plus superannuation thereafter;
25
LITTLE GREEN PHARMA ANNUAL REPORT 2021
26
7
DIRECTORS’ REPORT
the Executive Director between 30 June 2020 and
with executives entitled to 50% of their base salary for
1 April 2021 was $260,000 plus superannuation,
achievement of milestones and up to 70% of their base
and $270,000 plus superannuation thereafter.
salary for exceedance of all milestones.
The Managing Director and Executive Director received car-
parking benefits of $3,500.
As part of the Company’s COVID-19 response, the
executives agreed to vary their fixed remuneration by
reducing the cash component of their salary in return
for receiving COVID-19 share rights issued under the
Employee Securities Incentive Plan (the Plan). Each share
right provides an entitlement to one ordinary share in the
Company and were escrowed until 1 April 2021.
Each of the executives agreed to receive share rights in
the Company in lieu of between 20% and 40% of their
base salaries during the reporting period, resulting in the
following issues:
Managing Director: 155,439 share rights
Executive Director: 187,298 share rights
Of these, all of the share rights held by the Managing
Director and Executive Director have been converted to
ordinary shares in the Company. Further details in relation
to each executive’s Service Contracts are provided below.
Variable Remuneration –
Short Term Incentive Plan
The STI Plan of each executive’s Service Contract is a
variable remuneration component and comprises an
annual cash incentive linked to the achievement of
specific performance milestones that are both financial
and non-financial in nature.
For the revised period 1 January 2021 to 30 June 2021,
the STI Plan set revenue, gross margin, cost control,
metrics related to QUEST and R&D progress; with
executives entitled to 50% of their base salary for
achievement of milestones and up to 70% of their base
salary for exceedance of all milestones.
The executives received the following short term incentive
payments and the Company has accrued the following
amounts for the financial year ending 30 June 2021:
Managing Director: STI payment of CHF73,278 for
calendar year 2020 and an accrued STI payment of
$54,000 for the period 1 January 2021 to 30 June
2021; and
Executive Director: STI payment of $93,600 for
calendar year 2020 and an accrued STI payment of
$47,000 for the period 1 January 2021 to 30 June 2021.
Variable Remuneration –
Long Term Incentive Plan
The LTI Plan is an equity incentive designed to create
sustainable growth and shareholder value.
The LTI Plan links a significant portion of at-risk
remuneration with the Company’s ongoing share price and
therefore aligns executive performance with the return to
shareholders over the performance period.
During the reporting period, the executives successfully
achieved the vesting conditions of the 3 million long-term
incentive performance rights issued to the executives prior
The performance milestones are clearly defined and
to the Company’s Initial Public Offering. The first 1 million
measurable and based on achievements that are
shares have been issued to the executives with the vesting
consistent with the Company’s strategic objectives and the
of the remaining 2 million performance rights subject to
goal of enhancing shareholder value. The Remuneration
the continued employment of the executives between 12
Committee assesses and approves the executive’s
and 24 months from the date of satisfaction of the relevant
performance against these milestones.
share price milestone.
The reporting period includes the executive’s STI Plan
Subsequent to the reporting period, Company
payments for calendar year 2020 as well as the first six
shareholders approved the issue of 3 million performance
months of the STI Plan for calendar year 2021. Following
rights as replacement long-term incentives to the
30 June 2021, the Board resolved to end the calendar year
executives on the following terms:
2021 STI Plan, assess the executives against the STI Plan
performance requirements as at 30 June 2021, and adopt
a revised STI Plan for the period 30 June 2021 – 30 June
2022, in order to align the executive’s STI Plan with the
Company’s financial year.
For the period 1 January 2020 to 31 December 2020,
the STI Plan set various revenue, new product, new
country, cost control and cost of production targets;
Class
Milestone
Milestone Period
Expiry Date
Number of Performance Rights
Managing Director
Executive Director
F
G
H
20 Day VWAP
equalling $0.95
20 Day VWAP
equalling $1.10
20 Day VWAP
equalling $1.25
3 years from issue
5 years from issue
500,000
500,000
3 years from issue
5 years from issue
500,000
500,000
3 years from issue
5 years from issue
500,000
500,000
Total
1,500,000
1,500,000
Upon satisfaction of the relevant milestone and subject to
During the reporting period a proportion of Ms Fleta
the executive remaining employed by the Company at the
Solomon’s cash salary was reduced and issued as shares
relevant vesting date, the performance rights will vest in equal
in lieu as described in section 'Fixed remuneration and
tranches:
• on satisfaction of the relevant milestone;
• 12 months after the date of the relevant milestone is
satisfied; and
• 24 months after the date of the relevant milestone is satisfied.
associated benefits' above. Ms Fleta Solomon is also
entitled to participate in the Company’s STI and LTI Plans.
Ms Fleta Solomon received a cost-of-living allowance for the
period 30 June 2020 to 4 February 2021, to meet increased
housing and related living expenses during her relocation
period to Switzerland, and a relocation allowance in relation
The performance rights will lapse if an executive’s
to her return to Australia.
employment is terminated for cause or poor performance,
or if the executive resigns. Early vesting of the
performance rights occurs on a change of control or is
permitted at the Board’s discretion including among
Express provisions in the agreement protect the Company’s
confidential information and intellectual property and
either Ms Fleta Solomon or the Company can terminate the
agreement by giving six months’ notice in writing to the
other things, termination of a participant’s employment,
other party.
engagement, or office with the Company due to death,
permanent incapacity, mental incapacity, redundancy,
resignation, retirement or any other circumstance in which
the Board may exercise its discretion. No dividends are
payable on performance rights.
Other performance rights and options
On 19 September 2020 the 1 million performance rights
held by the Executive Director (convertible upon Company
achieving $100 million market capitalisation) expired
without vesting. The Executive Director also holds 3.5
million options in the Company that were issued in
November 2017 and expire on 28 February 2022.
Service Contracts
Managing Director
The structure of the Managing Director’s remuneration
is in accordance with her employment agreement dated
1 December 2019. Ms Fleta Solomon was employed by
the Company’s Swiss subsidiary during her relocation to
Switzerland and is currently employed by the Company.
The Company may summarily terminate the agreement on the
grounds of, among other things, serious or persistent breaches
of the terms of the agreement, gross or wilful misconduct or if
Ms Fleta Solomon is found guilty of any conduct which results
in damage to the reputation or the business of the Company.
Executive Director
The structure of the Executive Director’s remuneration is
in accordance with his employment agreement dated 1
December 2019. Under that agreement, Mr Angus Caithness
is to receive a base salary of $260,000 plus superannuation
until 1 April 2021, and $270,000 plus superannuation from
1 April 2021. During the reporting period a proportion of Mr
Angus Caithness’s cash salary was reduced and issued as
shares in lieu as described in section 'Fixed remuneration and
associated benefits' above. Mr Angus Caithness is also entitled
to participate in the Company’s STI and LTI Plans.
Express provisions in the agreement protect the Company’s
confidential information and intellectual property, and either Mr
Angus Caithness or the Company can terminate the agreement
by giving six months’ notice in writing to the other party.
During the period 30 June 2020 to 4 February 2021, Ms
The Company may summarily terminate the agreement on
Fleta Solomon was entitled to receive a base salary of
the grounds of, among other things, serious or persistent
CHF217,662 including pension. From 4 February 2021 until
breaches of the terms of the agreement, gross or wilful
1 April 2021 she was entitled to a salary of A$295,000 plus
misconduct, or if Mr Angus Caithness is found guilty of any
superannuation per annum, and from 1 April 2021 her
conduct which results in damage to the reputation or the
salary was $305,000 plus superannuation per annum.
business of the Company.
27
LITTLE GREEN PHARMA ANNUAL REPORT 2021
28
7
DIRECTORS’ REPORT
Components of remuneration –
Non-Executive Directors
Lynch-Bell, which have all subsequently been converted to
ordinary shares in the Company, and 116,871 share rights
to Dr Neale Fong, of which 41,413 have subsequently been
As per the ASX Listing Rules the aggregate remuneration
converted to ordinary shares in the Company.
of Non-Executive Directors shall be determined by a
Presently no additional fee is paid to Non-Executive
resolution approved by shareholders at a general meeting.
Directors for being a member of any Board committees.
The aggregate remuneration threshold is currently set at
$300,000 per annum as approved by shareholders at a
General Meeting in November 2018.
In July 2021, shareholders approved the issue of 70,000
retention share rights to Mr Michael Lynch-Bell and 35,000
retention share rights to Dr Neale Fong. These retention share
Non-Executive Directors receive fixed remuneration plus
rights have now been issued and will vest on 20 February
superannuation for their services with Mr Michael Lynch-Bell
2024, subject to continued employment of the relevant
receiving $120,000 plus superannuation until 7 April 2021 and
Director until the date of vesting, and expire 2 years from their
$122,400 plus superannuation from 7 April 2021, and Dr Neale
vesting date. Each retention share right entitles the Director
Fong receiving $60,000 plus superannuation until 7 April 2021
to the issue of one ordinary share in the Company.
and $61,200 plus superannuation from 7 April 2021.
Both Non-Executive Directors had their base salary
reduced by 20% from 1 April 2020 to 1 July 2020 and
reduced by 100% from 1 July 2020 until 31 December 2021,
with such reductions in return for receiving share rights
in lieu as per the Company’s Covid-19 share rights plan as
The Non-Executive Directors also hold 300,000 and 150,000
retention share rights, respectively, which were issued prior
to the Company’s IPO and vest on the third anniversary of the
admission of the Company to the Official List of the ASX. Each
retention share right entitles the director to the issue of one
ordinary share in the Company.
discussed above. This issue of share rights in lieu of salary
No other bonuses or skill-based payments were received by
resulted in the issue of 233,743 share rights to Mr Michael
the Non-Executive Directors during the reporting period.
KMP STATUTORY AND SHARE BASED REPORTING
F. Solomon
A. Caithness
M. Lynch-Bell
N. Fong
FY2021
FY2020
FY2021
FY2020
FY2021
FY2020
FY2021
FY2020
Salary and fees1
224,958
163,761
204,000
174,663
44,457
58,922
32,300
31,966
Shares rights in lieu of salary2
44,726
14,909
63,510
13,140
86,421
6,570
43,463
3,032
Other benefits3
126,627
121,857
3,500
3,500
Post employment benefits
35,660
47,048
28,272
12,635
Short term incentive paid in year
107,927
50,000
93,600
50,000
Short term incentive accrued in year
54,000
-
47,000
-
IPO listing incentive
Share based payments prior to IPO4
Share based payments post IPO
-
-
100,000
-
124,271
-
-
-
100,000
240,062
124,271
-
-
-
-
-
-
-
-
-
-
5,303
3,069
3,037
-
-
-
75,000
16,603
-
-
-
-
-
-
-
-
37,500
8,301
SHARE BASED REPORTING
(500,000)
(155,438)
Instruments still to
vest at 30 June 2021
1,000,0005
Award date
Expiry date
Fair value of each
instrument
Vesting period years
Exercise price
Number of
instruments1
Instruments vested
prior to 30 June 2020
Instruments vested
financial year
30 June 2021
Instruments expired
financial year
30 June 20212
Instruments
exercised during
30 June 2020
Grant date fair
value of instruments
exercised
Exercise date fair
value of instruments
exercised
Instruments
exercised during
30 June 2021
Grant date fair
value of instruments
exercised
Exercise date fair
value of instruments
exercised
-
-
-
-
-
-
-
-
-
-
500,000
155,438
$211,500
$59,635
$320,000
$59,635
F. Solomon
Performance
Rights
Share
Rights
A. Caithness
M. Lynch-Bell
N. Fong
Options
Performance Rights
Share
Rights
Shares
Share
Rights
Shares
Share
Rights
16-01-20
26-11-20
19-11-17
19-11-17
16-01-20
26-11-20
16-01-20
26-11-20
16-01-20
26-11-20
16-01-25
25-11-22
19-09-22
19-09-20
19-01-25
25-11-22
20-02-23
25-11-22
20-02-23
25-11-22
$0.39
$0.38
$0.04
3.0
$0.12
$0.39
$0.41
$0.45
$0.40
$0.45
$0.40
3.0
-
3.0
-
-
$0.41
3.0
-
-
$0.40
3.0
-
-
$0.55
$0.38
$0.30
3.0
-
1,500,000
155,438
3,500,000
6,500,000
1,500,000
187,298
550,000
233,743
275,000
116,871
-
-
(3,500,000)
(5,500,000)
-
-
(250,000)
-
(125,000)
-
-
-
-
-
-
-
-
-
-
-
(500,000)
(187,298)
(1,000,000)
-
-
1,000,0005
5,500,000
$660,000
$2,475,000
-
-
-
-
-
-
-
-
-
-
300,0003, 5
250,000
$112,500
$112,500
(233,743)
-
-
-
-
-
-
-
150,0004, 5
125,000
$56,250
$56,250
(116,871)
-
-
-
-
-
-
-
-
500,000
187,298
$211,500
$76,650
$320,000
$76,650
-
-
-
233,743
$92,921
$92,921
-
-
-
41,413
$22,742
$22,742
1. Performance rights associated with the LTI Plan as detailed above.
2. The 1,000,000 performance rights relating to the Company achieving a market capitalisation in excess of $100m expired during the period.
3. 250,000 shares were issued to Mr Michael Lynch-Bell as part of the IPO, with a further 300,000 retention shares to be issued 3 years post IPO.
4. 125,000 shares were issued to Dr Neale Fong as part of the IPO, with a further 150,000 retention shares to be issued 3 years post IPO.
5. Post year end 500,000 Class F Performance Rights, 500,000 Class G Performance Rights and 500,000 Class H Performance Rights were issued to each of
Share based payments 30 June 20215
361,624
-
361,624
-
32,858
-
16,429
-
Ms Fleta Solomon and Mr Angus Caithness as approved at 19 July 2021 General Meeting.
Expense for year
955,522
621,846
801,506
718,271
163,736
162,398
95,261
83,836
Post year end 70,000 Director Retention Rights were issued to Mr Michael Lynch-Bell and 35,000 Director Retention Rights were issued to Dr Neale Fong
as approved at 19 July 2021 General Meeting.
Performance related
55%
44%
63%
72%
N/A
N/A
N/A
N/A
Directors interest in shares
20,255,439
19,600,000
6,410,942
5,677,491
833,743
600,000
1,012,567
925,000
1. As at 30 June 2021, annual leave entitlements were $13,701 for Ms Fleta Solomon and $31,554 for Mr Angus Caithness, and Long Service Leave
entitlements were $nil for Ms Fleta Solomon and $nil for Mr Angus Caithness.
2. Covid-19 Share Rights approved by shareholders.
3. Cost of living allowance and car parking for Ms Fleta Solomon in Switzerland; car parking for Mr Angus Caithness.
4. Accelerated vesting of performance rights and options for Mr Angus Caithness on IPO; Shares issued to Mr Michael Lynch-Bell and Dr Neale Fong on IPO.
5. Accrual of LTI plan for Ms Fleta Solomon and Mr Angus Caithness; retention incentive payable in shares to Mr Michael Lynch-Bell and Dr Neale Fong
due on 20 February 2023.
29
LITTLE GREEN PHARMA ANNUAL REPORT 2021
30
8
INDEPENDENT AUDITOR’S REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Deloitte Touche Tohmatsu
Deloitte Touche Tohmatsu
Deloitte Touche Tohmatsu
ABN 74 490 121 060
ABN 74 490 121 060
ABN 74 490 121 060
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
Tower 2, Brookfield Place
Tower 2, Brookfield Place
123 St Georges Terrace
123 St Georges Terrace
123 St Georges Terrace
Perth WA 6000
Perth WA 6000
Perth WA 6000
GPO Box A46
GPO Box A46
GPO Box A46
Perth WA 6837 Australia
Perth WA 6837 Australia
Perth WA 6837 Australia
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Tel: +61 8 9365 7000
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
Fax: +61 8 9365 7001
Fax: +61 8 9365 7001
www.deloitte.com.au
www.deloitte.com.au
www.deloitte.com.au
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ttoo tthhee MMeemmbbeerrss ooff LLiittttllee
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ttoo tthhee MMeemmbbeerrss ooff LLiittttllee
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ttoo tthhee MMeemmbbeerrss ooff LLiittttllee
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ttoo tthhee MMeemmbbeerrss ooff LLiittttllee
GGrreeeenn PPhhaarrmmaa LLttdd
GGrreeeenn PPhhaarrmmaa LLttdd
GGrreeeenn PPhhaarrmmaa LLttdd
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ttoo tthhee MMeemmbbeerrss ooff LLiittttllee
GGrreeeenn PPhhaarrmmaa LLttdd
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
Opinion
Opinion
Opinion
Opinion
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
We have audited the financial report of Little Green Pharma Ltd (the “Company”) and its subsidiaries (the
“Group”) which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated
statement of profit or loss and other comprehensive income, 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, in-
cluding a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
(i)
We have audited the financial report of Little Green Pharma Ltd (the “Company”) and its subsidiaries (the
We have audited the financial report of Little Green Pharma Ltd (the “Company”) and its subsidiaries (the
We have audited the financial report of Little Green Pharma Ltd (the “Company”) and its subsidiaries (the
“Group”) which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated
“Group”) which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated
“Group”) which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, in-
and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, in-
and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, in-
cluding a summary of significant accounting policies, and the directors’ declaration.
cluding a summary of significant accounting policies, and the directors’ declaration.
cluding a summary of significant accounting policies, and the directors’ declaration.
We have audited the financial report of Little Green Pharma Ltd (the “Company”) and its subsidiaries (the
“Group”) which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated
statement of profit or loss and other comprehensive income, 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, in-
cluding a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
including:
including:
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial
performance for the year then ended; and
performance for the year then ended; and
performance for the year then ended; and
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial
performance for the year then ended; and
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
(i)
(i)
(i)
(ii)
(ii)
(ii)
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
Basis for Opinion
Basis for Opinion
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 & 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
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
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
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
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
report. We are independent of the Group in accordance with the auditor independence requirements of the
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 & Ethical Standards Board’s
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
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
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
accordance with the Code.
accordance with the Code.
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 & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
report.
report.
report.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
Key Audit Matters
Key Audit Matters
Key Audit Matters
Key Audit Matters
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
opinion.
opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report for the current period. These matters were addressed in the context of our audit of the
of the financial report for the current period. These matters were addressed in the context of our audit of the
of the financial report for the current period. These matters were addressed in the context of our audit of the
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
of the financial report for the current period. These matters were addressed in the context of our audit of the
these matters.
these matters.
these matters.
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report for 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.
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
GGrreeeenn PPhhaarrmmaa LLttdd
Opinion
including:
(i)
Basis for Opinion
performance for the year then ended; and
accordance with the Code.
report.
opinion.
Key Audit Matters
these matters.
Key Audit Matter
RReevveennuuee RReeccooggnniittiioonn
How the scope of our audit responded to the Key Audit
Matter
Our procedures included, but were not limited to:
As disclosed in note 2 (h), Revenue recognised
totals
for the year-ended 30
June 2021
recognised at
$7,003,630. Revenue
the
is
transaction price, which
is the amount of
consideration to which the Group expects to be
entitled in exchange for transferring promised
goods to a customer.
Revenue is recognised by management after
assessing all factors relevant to each sale,
including:
•
•
•
•
Any variable consideration;
Contractually agreed terms of the sale;
Type of product being sold;
Historical amounts received, current
economic conditions and current
industry conditions; and
Timing of transfer of title of the goods.
•
•
•
•
Reviewing the revenue recognition accounting
policy and assessing against the criteria set by
the relevant accounting standard;
Assessing the operating effectiveness of the
company’s key internal controls;
agreeing all sales transactions for a specified
cut of period of 7 days pre and post year to the
sales invoice and related signed delivery
document and assessing whether the revenue
is recorded in the correct period based on
understanding when the risks and rewards
transferred.
We also assessed the appropriateness of the disclosures
in note 2 (h) to the financial statements.
AAccqquuiissiittiioonn ooff CCaannooppyy GGrroowwtthh DDeennmmaarrkk AAssPP
Our procedures included, but were not limited to:
Effective 21 June 2021, the Group acquired 100%
of the share capital of Canopy Growth Denmark
AsP as disclosed in note 15. Significant judgement
was required in assessing the appropriateness of
the allocation of consideration transferred to
certain identifiable assets acquired, and liabilities
assumed, including:
•
•
•
•
property, plant and equipment which
requires assessment of value allocation
between certain asset classes,
judgements relating to useful lives and
assumed residual values;
the valuation of biological assets and
finished goods on hand at the time of
acquisition;
consideration of the resulting bargain
purchase was appropriate given the
structure of the transaction; and
the impact of the transaction on
associated tax balances, including the
deferred tax impact on reset cost bases.
•
•
•
•
•
•
reviewing the acquisition agreement to
understand the nature of the acquisition and
the implied consideration;
obtaining a copy of management’s experts’
valuation report commissioned to determine
the fair values of the assets associated with the
acquisition;
assessing the independence, competence and
objectivity of management’s experts;
assessing, in conjunction with our valuations
specialists, the identification of assets acquired
and liabilities assumed and the appropriateness
of the methodologies and assumptions utilised
by management and their experts;
evaluating the resulting provisional bargain
purchase; and
assessing the calculation of deferred tax
balances on the transaction with assistance
from our tax specialists.
We also assessed the appropriateness of the disclosures
included in note 15 to the financial statements
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
31
32
8
INDEPENDENT AUDITOR’S REPORT
VVaalluuaattiioonn ooff BBiioollooggiiccaall aasssseettss
Our procedures included, but were not limited to:
Our procedures included, but were not limited to:
2
2
in
in
note
disclosed
disclosed
VVaalluuaattiioonn ooff BBiioollooggiiccaall aasssseettss
‘Significant
note
As
accounting estimates and judgements’ and note
As
‘Significant
4 ‘Biological assets’ as at 30 June 2021 the
accounting estimates and judgements’ and note
Group held $1.98 million of biological assets. This
4 ‘Biological assets’ as at 30 June 2021 the
balance relates to the value of the plants being
Group held $1.98 million of biological assets. This
cultivated carried at fair value less estimated
balance relates to the value of the plants being
fair
costs to sell. In order to determine
cultivated carried at fair value less estimated
the plants, management prepare
value of
fair
costs to sell. In order to determine
a fair value model which requires them to
value of
the plants, management prepare
exercise significant judgement in respect of:
a fair value model which requires them to
exercise significant judgement in respect of:
the
the
•
•
•
•
•
•
•
•
Plant waste;
Yield per plant;
Plant waste;
Cannabinoid yield per gram; and
Yield per plant;
Stage of plant growth.
Cannabinoid yield per gram; and
Stage of plant growth.
Other Information
•
•
•
•
•
•
•
•
Obtaining an understanding of the processes
and relevant controls over the key inputs and
Obtaining an understanding of the processes
assumptions used by management to
and relevant controls over the key inputs and
determine fair value;
assumptions used by management to
Assessing the appropriateness of the valuation
determine fair value;
methodology;
Assessing the appropriateness of the valuation
Assessing and challenging the key assumptions
methodology;
in the valuation model as follows:
Assessing and challenging the key assumptions
o Growth rates by comparing to
in the valuation model as follows:
historical trends;
o Growth rates by comparing to
Yield per plant based on historical
historical trends;
o
actuals;
Yield per plant based on historical
Average production cost per kilogram
actuals;
by comparing to historical trends and
Average production cost per kilogram
testing a sample of recent costs to
by comparing to historical trends and
external supporting evidence; and
testing a sample of recent costs to
Sales price by agreeing to different
external supporting evidence; and
types or revenue contracts; and
Sales price by agreeing to different
types or revenue contracts; and
Performing sensitivity analysis on the key
assumptions outlined above.
Performing sensitivity analysis on the key
assumptions outlined above.
o
o
o
o
o
We also assessed the appropriateness of the disclosures
in note 4 to the financial statements.
We also assessed the appropriateness of the disclosures
in note 4 to the financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report
The directors are responsible for the other information. The other information comprises the information
and our auditor’s report thereon.
included in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report
and our 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.
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
In connection with our audit of the financial report, our responsibility is to read the other information and, in
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have
doing so, consider whether the other information is materially inconsistent with the financial report or our
performed, we conclude that there is a material misstatement of this other information, we are required to report
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have
that fact. We have nothing to report in this regard.
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
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
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
and fair view and is free from material misstatement, whether due to fraud or error.
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
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue
of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
alternative but to do so.
of accounting unless the directors either intend to liquidate the Group or to cease operations, or has 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
•
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible for
the direction, supervision and performance of the Group’s audit. We remain solely responsible for our
audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
33
LITTLE GREEN PHARMA ANNUAL REPORT 2021
34
8
INDEPENDENT AUDITOR’S REPORT
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 26-30 of the Directors’ Report for the year ended
30 June 2021.
In our opinion, the Remuneration Report of Little Green Pharma Ltd, for the year ended 30 June 2021,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Ian Skelton
Partner
Chartered Accountants
Perth, 28 September 2021
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Tower 2, Brookfield Place,
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA Australia
DX: 206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
The Directors
Little Green Pharma Ltd
Level 2, 66 Kings Park Rd
WEST PERTH WA 6005
28 September 2021
Dear Directors
AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo LLiittttllee GGrreeeenn PPhhaarrmmaa LLttdd aanndd iittss ccoonnttrroolllleedd eennttiittyy
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Little Green Pharma Ltd.
As lead audit partner for the audit of the financial statements of Little Green Pharma Ltd for the year
ended 30 June 2021, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
IIaann SSkkeellttoonn
Partner
Chartered Accountant
35
36
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
9
Financial
Report
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
Note
30 June
2021
30 June
2020
Assets
Current assets
Cash and cash equivalents
Accounts receivable
Biological assets
Inventory
Prepaid expenses
Total current assets
Property, plant and equipment
Right-of-use assets
Refundable deposits
Intangible assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Loan note
Lease liability
Employee benefit obligations
Total current liabilities
Lease liability
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Share capital
Reserves
Accumulated profit/(deficit)
Total shareholders' equity
3
4
5
6
7
8
9
10
11
7
12
7
13
40,269,169
3,656,846
1,985,072
7,253,866
868,086
54,033,039
54,065,269
1,345,710
834,085
714,212
56,959,276
110,992,315
3,486,056
11,365,891
204,644
830,817
15,887,408
1,215,832
1,215,832
17,103,240
93,889,075
86,197,119
1,896,929
5,795,027
93,889,075
4,273,564
629,657
13,857
1,349,466
34,553
6,301,097
7,488,069
1,655,148
340,229
620,375
10,103,821
16,404,918
2,086,993
-
240,003
335,896
2,662,892
1,445,113
1,445,113
4,108,005
12,296,913
29,944,260
1,161,181
(18,808,528)
12,296,913
The accompanying notes form an integral part of these consolidated financial statements.
37
LITTLE GREEN PHARMA ANNUAL REPORT 2021
38
9
FINANCIAL REPORT
CONSOLIDATED STATEMENT
OF FINANCIAL PERFORMANCE
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
Revenue
Medicinal cannabis sales
Cost of sales
Cost of goods sold
Gain on changes in fair value of biological assets
Gross margin
Expenses
General and administrative
Sales and marketing
Education
Research and development
Licences, permits and compliance costs
Loss from operations
Interest income
Finance expense
Research and development incentive
Government grants
Gain on bargain purchase
Fair value change on convertible note
Net foreign exchange
Profit/(loss) before tax
Tax expense
Profit/(loss) after tax
Other comprehensive income
Note
Year Ended
30 June
2021
Year Ended
30 June
2020
7,003,630
2,204,021
(2,760,749)
1,532,891
5,775,772
(3,516,736)
(2,109,737)
(714,030)
(1,780,218)
(1,867,725)
(9,988,446)
(1,084,564)
33,513
1,152,970
(4,383,000)
(1,455,017)
(682,097)
(1,005,165)
(1,223,748)
(8,749,027)
(4,212,674)
(7,596,057)
39,287
(91,542)
3,379,527
520,777
24,979,733
47,061
(400,035)
600,258
320,081
-
-
(2,285,857)
(11,553)
24,603,555
-
(886)
(9,315,435)
-
24,603,555
(9,315,435)
14
15
16
Exchange fluctuations on translation of foreign operations
95,594
(47,943)
Total comprehensive profit/(loss) net of tax
24,699,149
(9,363,378)
Net profit/(loss) per share
Basic (cents)
Diluted (cents)
Weighted average number of shares outstanding
Basic
Diluted
16.01
14.84
(7.28)
(7.28)
153,720,092
127,945,514
165,763,095
127,945,514
The accompanying notes form an integral part of these consolidated financial statements.
Share capital
No. Shares
$
Share based
payment
reserve
Translation
reserve
Accumulated
profit
Total
As at 30 June 2019
69,579,336
7,317,514
895,581
(8,070)
(9,493,093)
(1,288,068)
Loss after tax
Translation reserve
Total comprehensive income
-
-
-
-
-
-
Initial public offering
22,222,222
10,000,000
Convertible notes converted
34,841,176
12,946,949
Capital raising costs
-
(1,314,370)
-
-
-
-
-
-
Share based payments
6,858,335
-
1,315,780
Transfer on vesting
-
994,167
(994,167)
-
(9,315,435)
(9,315,435)
(47,943)
-
(47,943)
(47,943)
(9,315,435)
(9,363,378)
-
-
-
-
-
-
-
-
-
-
10,000,000
12,946,949
(1,314,370)
1,315,780
-
As at 30 June 2020
133,501,069
29,944,260
1,217,194
(56,013)
(18,808,528)
12,296,913
Profit after tax
Translation reserve
Total comprehensive income
-
-
-
-
-
-
Share placements
87,025,586
54,300,000
Capital raising costs
-
(2,238,199)
Options exercised
6,850,000
2,055,000
-
-
-
-
-
-
Share based payments
-
-
1,615,389
Transfer on vesting
2,508,000
1,077,740
(1,077,740)
Shares in lieu of payments
Shares in lieu of salary
1,247,977
1,475,316
497,100
561,218
-
102,505
-
24,603,555
24,603,555
95,594
95,594
-
95,594
24,603,555
24,699,149
-
-
-
-
-
-
-
-
-
-
-
-
-
-
54,300,000
(2,238,199)
2,055,000
1,615,389
-
497,100
663,723
As at 30 June 2021
232,607,948
86,197,119
1,857,348
39,581
5,795,027
93,889,075
The accompanying notes form an integral part of these consolidated financial statements.
39
LITTLE GREEN PHARMA ANNUAL REPORT 2021
40
9
FINANCIAL REPORT
CONSOLIDATED STATEMENT
OF CASH FLOWS
Operating activities
Net profit/(loss) before tax
Items not involving cash
Changes in fair value of biological assets
Depreciation and amortisation
Share-based payments
Interest on borrowings
Interest expense on lease liabilities
Interest on convertible notes at amortised cost
Fair value changes on convertible note
Gain on bargain purchase
Income tax paid
Changes in non-cash operating working capital
Inventory and biological assets
Accounts receivable
Prepaid expenses
Accounts payable and accrued liabilities
Employee benefits obligations
Year Ended
30 June 2021
Year Ended
30 June 2020
24,603,555
(9,315,435)
(1,532,891)
685,266
2,823,093
(11,178)
72,173
-
-
(24,979,733)
-
(3,843,565)
(2,416,011)
(174,463)
(346,866)
(28,960)
(33,513)
380,370
1,433,861
-
72,666
317,589
2,285,857
-
-
(816,070)
(541,377)
(29,098)
47,527
149,056
Net cash flows from operating activities
(5,149,580)
(6,048,567)
Investing activities
Acquisition of subsidiary net of cash 13
(10,572,939)
Purchase of plant and equipment
Purchase of intangible assets
Loans advanced to other parties
Refundable deposits
Net cash flows from investing activities
Financing activities
Proceeds from issue of shares
Costs associated with the issue of shares
Convertible note issuance
Costs associated with the issue of convertible notes
Proceeds from borrowings
Repayment of borrowings
Payments for lease liabilities
Net cash flows from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Effect of changes in foreign exchange
Cash and cash equivalents, end of year
(898,912)
(162,534)
(600,000)
(500,000)
(12,734,385)
56,355,000
(2,238,199)
-
-
1,016,000
(1,016,000)
(245,822)
53,870,979
35,987,014
4,273,564
8,591
40,269,169
-
(6,325,877)
(484,645)
-
(269,532)
(7,080,054)
10,000,000
(1,314,370)
9,000,000
(524,812)
-
-
(228,035)
16,932,783
3,804,162
510,286
(40,884)
4,273,564
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND
BASIS OF PREPARATION
positive. The Directors consider the going concern basis
of preparation to be appropriate based on forecast cash
flows. The cash flow forecast is dependent on the Group
Little Green Pharma Ltd ACN 615 586 215 (the
"Company", “LGP”) was incorporated in Australia and
is a for profit company limited by shares. The financial
report covers LGP and its controlled entities (the
“Group”). The Company’s registered office is at Level 2,
66 Kings Park Road, West Perth, 6005 Western Australia.
a) Statement of Compliance
These consolidated general purpose financial statements
have been prepared in accordance with Australian
Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board and the
Corporations Act 2001 which ensures compliance with the
International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board.
The Company is a for-profit entity for the purpose of
preparing the financial statements which were authorised
for issue by the Board of Directors on 28 September 2021.
b) Basis of measurement
These consolidated financial statements have been
prepared on the going concern basis which assumes that
the Group will be able to realise its assets and discharge
its liabilities in the normal course of business for the
foreseeable future.
achieving forecast targets for revenue, costs of production
and overheads. Key to achieving forecast cash flows is the
Group’s ability to achieve assumptions for growth rates
in patients, market share in Australia and international
markets and gross margin. Whilst the Group was only
moderately impacted by COVID 19 on initial onset of the
virus in Australia, there remain the uncertain future impacts
of COVID 19 from subsequent waves of infection. Further
details are within note 25 Impacts and response to COVID 19.
At the date of this report and having considered the above
factors, the directors are of the opinion that the Group will
be able to continue as a going concern.
The consolidated financial statements do not include
any adjustments to the recoverability and classification
of recorded asset amounts and to the amount and
classification of liabilities that might be necessary should
the Group be unable to continue as a going concern.
c) Basis of consolidation
These consolidated financial statements include the accounts
of the Company and its subsidiaries. All intercompany
transactions and balances are eliminated on consolidation.
Subsidiaries are all entities over which the Company has
control. The Company controls an entity when the Company
is exposed to, or has rights to, variable returns from its
At 30 June 2021, the Group had $40 million in cash, a net
involvement with the entity and has the ability to affect those
working capital surplus of $38 million and after excluding
returns through its power over the entity.
share based payments, the gain on bargain purchase as well
as depreciation and amortisation the Group’s earnings were
The Company has the following subsidiaries:
1. c) Subsidiaries table
Name of Entity
Little Green Pharma AG
Country of
Incorporation
Germany
Little Green Pharma Switzerland GmbH
Switzerland
LGP Operations Pty Ltd*
LGP Holdings Pty Ltd*
LGP Alternative Therapies Pty Ltd*
Little Green Pharma Denmark ApS #
Australia
Australia
Australia
Denmark
Functional
Currency
Ownership
30 June 2021
30 June 2020
Euro
CHF
AUD
AUD
AUD
DKK
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
The accompanying notes form an integral part of these consolidated financial statements.
* Incorporated during the year; # Acquired during the year.
41
LITTLE GREEN PHARMA ANNUAL REPORT 2021
42
9
FINANCIAL REPORT
d) Functional and presentation currency
Depreciation for plant and equipment is recorded once the
iii. Fair value through profit or loss ("FVTPL")
h) Revenue recognition and gross margin
The Company’s functional currency is Australian dollars
and the Group’s presentation currency is also Australian
dollars. All amounts presented are in Australian dollars
unless otherwise specified.
2. ACCOUNTING POLICIES
asset is available for use.
An item of plant and equipment is derecognised
upon disposal or when no future economic benefits
are expected to arise from the continued use of the
asset. Any gain or loss arising on disposal of the asset,
determined as the difference between the net disposal
proceeds and the carrying amount of the asset, is
a) Cash and cash equivalents
recognised in profit or loss.
Cash and cash equivalents include cash and redeemable
Residual values and estimated useful lives are reviewed
short-term deposits with a maturity of less than three
annually.
months held at major financial institutions.
b) Biological assets
e) Financial instruments
i. Financial assets
The Group measures biological assets consisting of
cannabis plants at fair value less cost to sell up to the point
of harvest, which becomes the basis for the cost of work in
progress or finished goods inventories after harvest.
The Group classifies its financial assets initially at
fair value at the time of acquisition. Subsequently,
they are measured at amortised cost, at fair value
through other comprehensive income, or at fair
Gains or losses arising from changes in fair value less
value through profit or loss. Upon initial recognition,
cost to sell are included in the results of operations of
management determines the classification of its
the related period.
c) Inventory
Inventory which is classified as work in progress consists of
harvested or purchased cannabis intended to be processed
into oil or sold as flower and is valued at the lower of cost
and net realisable value. Harvested cannabis is transferred
from biological assets at its fair value at harvest less costs
to sell, which becomes deemed cost. Any subsequent post-
harvest costs are capitalised to work in progress. Inventory
financial assets based upon the purpose for which
the financial assets were acquired. Measurement
and classification of financial assets is determined
based on the entity’s business model for managing
the financial assets and the contractual cash flow
characteristics of the financial asset. Management
may, at initial recognition, irrevocably designate a
financial asset as measured at fair value through
profit or loss to prevent a measurement or
recognition inconsistency.
consisting of work in progress and finished goods is written
Financial assets are derecognised when they mature
down to its net realisable value if the carrying amount of
or are sold and substantially all the risks and rewards
inventory exceeds its estimated selling price less costs of
of ownership have been transferred. Expected credit
disposal. Any amount written down is recognised as part
losses on trade receivables is determined based on an
of cost of goods sold. Cost is determined using the average
individual assessment of each receivable taking into
cost basis.
d) Plant and equipment
Plant and equipment are carried at cost less accumulated
depreciation. Plant and equipment are depreciated over
their expected lives based on the following:
Leasehold improvements – units of production
Cultivation and production equipment – 5 to 10 years
straight line
Manufacturing and scientific equipment – 5 to 10 years
straight line
account the credit worthiness of the counterparty,
the days past due, general economic conditions and
any subsequent trading history. These losses are
recognised separately in the profit or loss.
ii. Amortised cost
This category includes financial assets that are held
within a business model with the objective to hold the
financial assets in order to collect contractual cash
flows that meet the solely principal and interest (SPPI)
criterion. Financial assets classified in this category
are measured at amortised cost using the effective
Office equipment – 2 to 5 years straight line
interest method.
This category includes quoted equity instruments
which the Company has not irrevocably elected, at
initial recognition or transition, to classify at fair value
through other comprehensive income. This category
would also include debt instruments whose cash flow
characteristics fail the SPPI criterion or are not held
within a business model whose objective is either
to collect contractual cash flows, or to both collect
contractual cash flows and sell. Financial assets in
this category are recorded at fair value with changes
recognised in profit or loss.
Revenue is recognised at the transaction price, which is
the amount of consideration to which the Group expects
to be entitled in exchange for transferring promised
goods to a customer.
The Group’s contracts with customers for the sales
of dried cannabis and cannabis oil consist of one
performance obligation being the delivery of that product
to the customer. Revenue is recognised at that date as
this represents the point in time when control has been
transferred to the customer with only the passage of
time required before payment is due. Payment terms are
iv. Financial liabilities
generally 30 days.
The Group initially recognises financial liabilities at fair
Cost of sales represents the deemed cost of inventory
value and are subsequently measured at amortised cost.
that arose from the fair value measurement of biological
f) Intangible Assets
Intangible assets are recorded at cost and amortised over
their estimated useful lives at the following annual rate:
Computer software – 2 to 5 years straight line
Patents – 20 years straight line
assets, subsequent post-harvest costs capitalised to
inventory, purchased dried cannabis, costs to produce
cannabis oils capitalised to inventory and packaging
costs.
i) Research and development
Research costs are expensed as incurred. Development
Pharmaceutical quality systems – 10 years straight line
expenditures are capitalised only if development costs can
Pharmaceutical quality systems are developed to provide
the policies, procedures and standards required for Good
Manufacturing Practice (GMP) with amortisation to be
recognised from the commencement of manufacturing
activities in the Company’s own facility.
be measured reliably, the product or process is technically
and commercially feasible, future economic benefits are
probable, and the Group intends to and has sufficient
resources to complete the development to use or sell the
assets. Other development expenditures are expensed as
incurred. Other than certain patent development costs, to
Estimated useful lives are reviewed annually.
date, no development costs have been capitalised.
g) Foreign currency translation
j) Employee benefits
Transactions in currencies other than the functional
Provision is made for employee benefits such as wages,
currency of the relevant entity are recorded at exchange
salaries and annual leave arising from services rendered
rates prevailing on the dates of the transactions. At the end
to the end of the reporting period. Employee benefits
of each reporting period, monetary assets and liabilities
which are expected to be wholly settled within one year
denominated in foreign currencies are translated at the
have been measured at the amounts expected to be
period-end exchange rate. Revenues and expenses are
paid when the liability is settled. Where an obligation
translated at the exchange rates approximating those
in respect of long term employee benefits arises, that
in effect on the date of the transactions. Exchange gains
benefit is discounted to determine its present value.
and losses arising on translation are included in net loss.
Re-measurements are recognised in the profit or loss in
For the purpose of presenting consolidated financial
the period in which they arise.
statements, assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing
on the reporting date. Income and expense items are
translated at the average exchange rate for the period.
k) Share-based payments
Equity settled transactions
Any exchange differences which arise are recognised in
The Company grants options and performance rights
other comprehensive income and accumulated in a foreign
to directors, officers and employees under the Group’s
exchange translation reserve.
Share Incentive Plan. The fair value of these instruments
43
LITTLE GREEN PHARMA ANNUAL REPORT 2021
44
9
FINANCIAL REPORT
are recognised as an expense over the vesting period
with a corresponding increase in equity. An individual is
classified as an employee when they are an employee
for legal or tax purposes (direct employee) or provide
services similar to those performed by a direct employee,
including directors of the Company. At each financial
position reporting date, the amount recognised as an
expense is adjusted to reflect the actual number of
instruments that are expected to vest. In situations where
equity instruments are issued to non-employees the fair
value of services is determined as the value of the share-
based payment.
No expense is recognised for awards that do not
ultimately vest except for equity-settled transactions
for which vesting is conditional upon a market or non-
vesting condition.
l) Goods and services tax
Revenue, expenses and assets are recognised net of the
amount of goods and services tax (GST), except where
the amount of GST incurred is not recoverable from the
Australian Taxation Office (ATO). Receivables and payable
are stated inclusive of GST. Cash flows in the statement
of cash flows are included on a gross basis and the GST
component of cash flows arising from investing and
financing activities which is recoverable from, or payable to,
the taxation authority is classified as operating cash flows.
m) Income taxes
Income tax expense comprises current and deferred
tax. Income tax is recognised in profit or loss except to
the extent that it relates to items recognised directly in
equity. Current tax expense is the expected tax payable
Instruments with a graded vesting schedule are accounted
on taxable income for the year, using tax rates enacted
for as separate grants with different vesting periods and
or substantively enacted at period end, adjusted for
fair values. The fair value is measured using the Black-
amendments to tax payable with regard to previous years.
Scholes option pricing model or other appropriate models
taking into account the terms and conditions upon which
the instruments were granted.
Where the terms of an equity settled award are modified,
the minimum expense recognised is the expense as if the
terms had not been modified. An additional expense is
recognised for any modification which increases the total
fair value of the share-based payment arrangement or is
otherwise beneficial to the employee as measured at the
date of modification. When an equity award is cancelled,
it is treated as if it vests on the date of the cancellation and
any expense not recognised for the award is recognised
immediately.
Deferred tax is recorded using the liability method,
providing for temporary differences, between the
carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation
purposes. Temporary differences are not provided for
the initial recognition of assets or liabilities that affect
neither accounting nor taxable loss, and differences
relating to investments in subsidiary to the extent
that they will probably not reverse in the foreseeable
future. The amount of deferred tax provided is based
on the expected manner of realisation or settlement of
the carrying amount of assets and liabilities, using tax
rates enacted or substantively enacted at the end of the
reporting period. A deferred tax asset is recognised only
Equity-settled share-based payment transactions with
to the extent that it is probable that future taxable profits
parties other than employees are measured at the fair
will be available against which the asset can be utilised.
value of the goods or services received, except where that
fair value cannot be estimated reliably, in which case they
are measured at the fair value of the equity instruments
granted, measured at the date the entity obtains the goods
or the counterparty renders the service.
Cash settled transactions
A liability is recognised for the fair value of cash settled
transactions. The fair value is measured initially and at
each reporting date up to and including the settlement
date, with changes in fair value recognised in employee
benefits expense. The fair value is expensed over the
period until the vesting date with recognition of a
Deferred tax assets are recognised for all deductible
temporary differences and unused tax losses to the extent
that it is probable that taxable profit will be available
against which the deductible temporary differences and
losses can be utilised.
A provision is recognised for those matters for which the tax
determination is uncertain, but it is considered probable
that there will be a future outflow of funds to a tax authority.
The provisions are measured at the best estimate of the
amount expected to become payable.
and development expenditure is recognised when there is
the amount expected to be payable by the lessee under
reasonable assurance that the Company will comply with
residual value guarantees; and
the required conditions for that incentive to be received.
Where refundable, the refund is treated as other income.
o) Government Grants
Government grants are not recognised until there is reasonable
assurance that the Company will comply with the conditions
attaching to them and that the grants will be received.
Government grants that are receivable as compensation
for expenses already incurred or for the purpose of
giving immediate financial support to the Group with
no future related costs are recognised in profit or loss
in the period in which they become receivable and are
recognised in other income on a gross basis.
p) Profit / (Loss) per share
the exercise of extension options which are reasonably
certain to be exercised.
The lease liability is presented as a separate line in the
consolidated statement of financial position.
The lease liability is subsequently measured by increasing
the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the
carrying amount to reflect the lease payments made.
Right-of-use assets are depreciated over the shorter
period of lease term and useful life of the underlying
asset. If a lease transfers ownership of the underlying
asset or the cost of the right-of-use asset reflects that
the Group expects to exercise a purchase option, the
related right-of-use asset is depreciated over the useful
life of the underlying asset. The depreciation starts at the
Basic loss per share is computed by dividing total net loss
commencement date of the lease.
attributable to the Group for the year by the weighted
average number of shares of the Group outstanding during
r) Impairment of long-lived assets
the year. When the Group is in a loss position, all potential
share issuances on the exercise of options or warrants is
anti-dilutive. In the event of a loss position, diluted loss
per share is the same a basic loss per share.
q) Leases
At the end of each reporting period, the Group’s assets are
reviewed to determine whether there is any indication that
those assets may be impaired. If such indication exists,
the recoverable amount of the asset is estimated in order
to determine the extent of the impairment, if any. The
recoverable amount is the higher of fair value less costs to
The Group assesses whether a contract is or contains a
sell and value in use. Fair value is determined as the amount
lease, at inception of the contract. The Group recognises
that would be obtained from the sale of the asset in an arm’s
a right-of-use asset and a corresponding lease liability
length transaction between knowledgeable and willing
with respect to all lease arrangements in which it is the
parties. In assessing value in use, the estimated future cash
lessee, except for short-term leases (defined as leases with
flows are discounted to their present value using a pre-tax
a lease term of 12 months or less) and leases of low value
discount rate that reflects current market assessments of
assets (such as tablets and personal computers, small
the time value of money and the risks specific to the asset.
items of office furniture and telephones). For these leases,
If the recoverable amount of an asset is estimated to be less
the Group recognises the lease payments as an operating
than its carrying amount, the carrying amount of the asset
expense on a straight-line basis over the term of the lease
is reduced to its recoverable amount and the impairment
unless another systematic basis is more representative
loss is recognised in profit or loss for the period. For an
of the time pattern in which economic benefits from the
asset that does not generate largely independent cash
leased assets are consumed.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
inflows, the recoverable amount is determined for the cash
generating unit to which the asset belongs.
Management considers both external and internal sources
commencement date, discounted by using the rate implicit
of information in determining if there are any indications
in the lease. If this rate cannot be readily determined, the
that the Group’s plant and equipment or intangible assets
Group uses its incremental borrowing rate.
Lease payments included in the measurement of the lease
are impaired. Management considers the market, economic,
and legal environment in which the Group operates that are
not within its control and affect the recoverable amount of
its plant and equipment and intangible assets. Management
n) Research and development incentives
liability comprise:
corresponding liability. The fair value is determined based
The research and development incentive which is received
fixed lease payments (including in-substance fixed
considers the manner in which the plant and equipment
on the expected value of cash to be settled for the liability.
annually based on the previous financial years research
payments), less any lease incentives receivable;
and intangible assets are being used or are expected to
45
LITTLE GREEN PHARMA ANNUAL REPORT 2021
46
9
FINANCIAL REPORT
be used, and indication of economic performance of the
Biological assets and inventory
assets. Where an impairment loss subsequently reverses,
the carrying amount of the asset is increased to the lesser
of the revised estimate of recoverable amount, and the
carrying amount that would have been recorded had no
impairment loss been recognised previously.
s) Segment reporting
A segment is a component of the Group that engages in
business activities in which revenues and expenses are
incurred, that has distinguishable financial information
available, and whose operating results are regularly
The Group measures biological assets consisting of
cannabis plants at fair value less cost to sell up to the point
of harvest. Calculating the value requires management
to estimate, among others, expected yield on harvest,
expected selling price and remaining costs to be incurred
up to the point of harvest.
The Group measures inventory at the lower of cost and net
realizable value and estimates selling price, the estimated
costs of completion and the estimated costs necessary to
make the sale.
3. ACCOUNTS RECEIVABLE
The Group's trade and other receivables is comprised of:
Trade receivables
Allowance for expected credit loss
Research and development incentive receivable
Goods and services tax receivable
Other receivables
30 June
2021
773,311
-
1,889,424
382,933
611,178
30 June
2020
629,657
-
-
-
-
3,656,846
629,657
reviewed by the chief operating decision maker. The nature
Share based compensation
Trade receivables are recognised and carried at original invoice value less any allowance for expected credit losses. They are non-
of products sold, cultivation and manufacturing processes
and customers have similar economic characteristics. The
nature of the regulatory environment is consistent in the
markets the Group operates in.
t) Business combinations
Acquisitions of businesses are accounted for using the
The fair value of share based compensation expense
is estimated using the Black-Scholes option pricing
model and relies on a number of estimated inputs,
such as the expected life of the option, the volatility
of the underlying share price, and the risk-free rate of
return. For share based compensation dependent upon
milestones, significant estimates are required as to the
acquisition method with the consideration being measured
probability of that milestone being achieved. Changes in
at fair value and any acquisition related costs being
the underlying estimated inputs may result in materially
expensed. At the acquisition date, the fair value of all
different results.
identifiable assets and liabilities are recognised, except that
deferred tax balances and any employee benefit obligations
Deferred income taxes
are recognised and measured in accordance with IAS 12
In assessing the probability of realising deferred income
and IAS 19 respectively. If the fair value of the assets and
tax assets, management makes estimates related to
liabilities which have been acquired is greater than the
expectations of future taxable income, expected timing of
consideration paid, the difference is recognised as a gain
reversals of existing temporary differences and the likelihood
on bargain purchase in the profit and loss. Initial estimates
are made on a provisional basis, with final fair values being
that tax positions taken will be sustained upon examination
by applicable tax authorities. In making its assessments,
determined within 12 months of the acquisition.
u) Significant accounting judgments
and estimates
management gives additional weight to positive and
negative evidence that can be objectively verified.
Business combinations
make certain estimates, judgments and assumptions that
all assets and liabilities acquired as well as determining
affect the reported amounts of assets and liabilities at the
their fair values. Management has used a third party
date of the financial statements and the reported revenues
valuation report to determine the fair value of the fixed
and expenses during the year. Actual results may differ
assets while all other fair values have been determined
from these estimates.
Significant estimates are evaluation and assumptions
about the future and other sources of estimation
uncertainty that management has made, that could result
using the judgements and estimates as detailed within this
“Significant accounting judgments and estimates” note.
interest bearing and generally on 45 to 60-day terms.
The Group has a limited number of counter parties who it trades with on a regular basis and as such does not expect to incur any
material credit losses.
The Company receives an annual research and development tax incentive from the Australian Government on eligible expenditure
incurred during the financial year. For the financial year ended 30 June 2021, eligible expenditure is expected to result in a rebate of
$1.889 million (2020: $1.485 million).
4. BIOLOGICAL ASSETS
The movement associated with the Group’s biological assets is as follows:
Opening balance
Costs incurred
Acquired as part of business combination
Transfer to inventory
Unrealised changes in fair value
30 June
2021
13,857
2,427,882
1,019,828
30 June
2020
142,953
880,320
-
(3,009,386)
(1,042,929)
1,532,891
1,985,072
33,513
13,857
Biological assets are classified as Level 3 on the fair value hierarchy with the following inputs and assumptions being subject to significant
volatility and uncontrollable factors, which could significantly affect the fair value of the biological assets in future periods:
• cannabinoid yield per gram – represents the weighted average cannabinoids expected to be obtained from a dry gram of cannabis,
based on historical yields;
• selling price, less costs to sell – based on estimated selling price per gram of dry cannabis based on historical sales and expected sales;
• percentage of costs incurred to date compared to the total costs to be incurred (to estimate the fair value of an in-process plant) –
represents estimated costs to bring a gram of cannabis from propagation to harvest; and
• stage of plant growth – represents the weighted average age in of the plant out of the average growing cycle as at period end date.
In the current period, the biological assets were approximately 34% complete (30 June 2020 - 5%) as to the next expected harvest date.
The preparation of financial statements in conformity with
assets and liabilities acquired is estimated on a provisional
• yield per plant – represents the weighted average grams of dry cannabis expected to be harvested from a cannabis plant, based on
Australian Accounting Standards requires management to
basis due to the inherent difficulties in both Identifying
historical yields;
When a business combination occurs, the fair value of the
• plant waste – wastage of plants based on various stages of growth;
Research and development incentive
The average number of days from the point of propagation to harvest is 98 days.
in a material adjustment to the carrying amounts of assets
The research and development incentive receivable is based
and liabilities. Significant estimates used in the preparation
on management’s best estimate of the nature and amount
of these consolidated financial statements include, but are
of expenditure incurred during the year that will meet the
A 20% increase or decrease in the estimated yield of cannabis per plant would result in an increase or decrease in the fair value of
biological assets of $140,000 at 30 June 2021 (30 June 2020 - $6,702). A 25% increase or decrease in the average selling price per gram
less cost to sell would result in an increase or decrease in the fair value of the biological assets of $175,000 at 30 June 2021 (30 June 2020 -
not limited to, the following:
required rebate criteria.
$2,771). At harvest, the estimated fair value of a gram of biomass is $4.00.
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FINANCIAL REPORT
5. INVENTORY
The Group's inventory is comprised of:
Supplies and consumables
Stock in transit
Work in progress
Finished goods
30 June
2021
320,473
-
5,817,760
1,115,633
30 June
2020
171,702
236,042
842,888
98,834
7,253,866
1,349,466
6. PROPERTY, PLANT AND EQUIPMENT
The Group’s plant and equipment comprised of:
Cost
As at 30 June 2019
Additions
As at 30 June 2020
Additions
Land &
Buildings
Leasehold im-
provements
Production
equipment
Office
equipment
Total
-
-
-
-
223,853
6,312,915
429,473
654,430
82,458
735,784
46,466
7,013,811
6,536,768
1,083,903
128,924
7,749,595
514,932
321,977
62,003
898,912
Acquisition of subsidiary
37,034,042
-
8,792,065
250,303
46,076,410
Transfers
Write-off asset
-
-
301,012
(274,956)
(26,056)
-
(143,575)
-
(53,201)
(196,776)
As at 30 June 2021
37,034,042
7,209,137
9,922,989
361,973
54,528,141
Accumulated depreciation
As at 30 June 2019
Depreciation
As at 30 June 2020
Depreciation
Transfers
Write-off asset
As at 30 June 2021
Carrying value
30 June 2020
30 June 2021
-
-
-
-
-
-
-
-
(46,709)
(23,090)
(56,368)
(126,167)
(29,469)
(72,844)
(33,046)
(135,359)
(76,178)
(95,934)
(89,414)
(261,526)
(293,172)
(88,368)
(16,582)
(398,122)
(69,936)
143,575
58,040
-
11,896
53,201
-
196,776
(295,711)
(126,262)
(40,899)
(462,872)
6,460,590
987,969
39,510
7,488,069
37,034,042
6,913,426
9,796,727
321,074
54,065,269
7. RIGHT-OF-USE ASSETS
The movement associated with the Group’s right-of-use assets is as follows:
As at 30 June 2019
Additions
Depreciation
As at 30 June 2020
Additions
Variations
Depreciation
As at 30 June 2021
The Group's lease liabilities are comprised of:
Current lease liability
Non-current lease liability
Right of use assets
91,797
1,786,028
(222,677)
1,655,148
18,740
(151,592)
(176,586)
1,345,710
30 June
2020
240,003
1,445,113
1,685,116
30 June
2021
204,644
1,215,832
1,420,476
During the year, the Group leased both its production facility and its head office. Post year end, the land on which
the production facility sits along with two adjacent properties were purchased for a total of $6 million, of which
$4.2 million was paid in cash and $1.8 million in scrip. For further details refer note 26 Events after the reporting
date. The head office lease is for a term of five years expiring 31 August 2024. During the year, the Company's head
office lease rent was reduced as a result of COVID-19.
8. REFUNDABLE DEPOSITS
The Group’s refundable deposits is comprised of:
Refundable deposits
Deposit associated with facility acquisition
30 June
2021
334,085
500,000
834,085
30 June
2020
340,229
-
340,229
In March 2021, the Company entered into a binding Heads of Agreement (Agreement) to acquire the freehold
properties underlying its Western Australian cultivation and manufacturing facilities as well as two adjacent freehold
properties. Under the terms of the Agreement, the Company paid the Vendors a deposit of $500,000. Post year end,
the properties were acquired for $4.2 million in cash (inclusive of deposit) and $1.8 million in scrip.
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LITTLE GREEN PHARMA ANNUAL REPORT 2021
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FINANCIAL REPORT
9. INTANGIBLE ASSETS
The Group’s intangible assets comprised of:
Patents &
trademarks
Computer
software
Pharmaceutical
Quality System
Cost
As at 30 June 2019
Additions
Write-off asset
As at 30 June 2020
Additions
As at 30 June 2021
Accumulated amortisation
As at 30 June 2019
Amortisation
Write-off of asset
As at 30 June 2020
Amortisation
As at 30 June 2021
Carrying value
30 June 2020
30 June 2021
122,627
-
(10,109)
112,518
7,807
120,325
(15,941)
(10,156)
10,109
(15,988)
(6,639)
(22,627)
96,530
97,698
Total
187,664
484,645
-
452,032
-
(10,109)
452,032
96,914
662,200
162,534
65,037
32,613
-
97,650
57,813
155,463
548,946
824,734
(13,659)
(12,178)
-
(25,837)
(26,624)
(52,461)
71,813
103,002
-
-
-
-
(35,434)
(29,600)
(22,334)
10,109
(41,825)
(68,697)
(35,434)
(110,522)
452,032
620,375
513,512
714,212
10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The Group's accounts payable and accrued liabilities is comprised of:
Trade and other payables
Accrued liabilities
Goods and services tax payable
Accrued salaries to be settled through issuance of shares
30 June
2021
30 June
2020
1,042,427
1,472,924
2,443,629
-
-
376,490
108,196
129,383
3,486,056
2,086,993
11. LOAN NOTE
The Group is a party to a Loan Note in relation to the Little Green Pharma Denmark ApS acquisition. The Loan Note
has an effective interest rate of 5% and an amortised cost of $11,365,891 and is due for repayment on 30 June 2022.
12. EMPLOYEE BENEFIT OBLIGATIONS
The Group's employee benefit obligation is comprised of:
Annual leave
Employee Benefits
13. SHARE CAPITAL
30 June
2021
620,997
209,820
830,817
30 June
2020
223,249
112,647
335,896
At 30 June 2021 a total of 232,607,948 ordinary shares had been issued (30 June 2020 - 133,501,069).
Non cash financing activities for the twelve months ended 30 June 2021 included issuing 2,723,293 ordinary shares
in lieu of cash for services at a weighted average issue price of $0.39 per share. Of this, 1,475,316 shares ($561,218)
were issued to directors and employees in lieu of their salaries based on the fortnightly VWAP over the period for
which salaries were foregone. The weighted average issue price was $0.38 per share. The remaining 1,247,977
shares were issued to service providers at a weighted average issue price of $0.40.
14. RESEARCH DEVELOPMENT INCENTIVE
At year end, the Company had accrued a receivable amount of $1,889,424 (30 June 2020: $Nil) in relation to the
expected rebate for expenditure incurred during the financial year ended 30 June 2021. During the year, the
Company also received a $1,490,103 rebate associated with its research and development expenditure in the
30 June 2020 period.
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FINANCIAL REPORT
15. BUSINESS COMBINATIONS
16. INCOME TAXES
Acquisition of Canopy Growth Denmark ApS (LGP Denmark ApS)
The reconciliation of income tax obtained by applying statutory rates to the profit/(loss) before income tax is
On 21 June 2021, the Company acquired 100% of the securities in Canopy Growth Denmark ApS (renamed to
LGP Denmark ApS) for C$20 million, with C$10 million being paid on completion and a loan note of C$10 million
due on 30 June 2022 to Canopy Growth Corporation remaining in LGP Denmark ApS. LGP Denmark ApS is a
world class cannabis GACP cultivation and EU-recognised GMP licensed cannabis manufacturing facility located
in Denmark (Denmark Facility) and qualifies as a business as defined in AASB 3 Business Combinations.
The amounts recognised in respect of the fair values of the assets and liabilities acquired are set out below:
Cash and cash equivalents
Biological assets
Inventory
Prepaid expenses
Property, plant and equipment
Accounts payable and accrued liabilities
Loan note to Canopy Growth Corporation
Employee benefits
Deferred tax assets/(liabilities)
Contingent liabilities
Fair value of assets and liabilities acquired
Gain on bargain purchase
Consideration
Consideration net of cash and adjustments
A$
605,337
1,019,828
1,479,331
659,070
46,076,410
(1,792,195)
(11,365,891)
(523,881)
-
-
36,158,009
(24,979,733)
11,178,276
10,572,939
As the acquisition was undertaken so close to the reporting date and the fair value of the assets and liabilities were
determined based on the unaudited management accounts of the acquiree, the above fair values are provisional
while the Company continues to review for other assets and liabilities, in particular any unrecorded or contingent
liabilities, any intangible assets and any tax assets or liabilities. The final fair values will be determined within 12
months of the acquisition.
The acquisition of Canopy Growth Denmark ApS likely resulted in a gain on bargain purchase due to Canopy Growth
Corporation divesting many of its noncore assets globally and being unwilling to sell the Denmark operation to a
large Canadian or United States competitor.
The fair value of the financial assets includes receivables of trade debtors with a fair value of $404,124 and a gross
contractual value of $404,124. The best estimate at acquisition date is that the contractual cash flows will be collected.
Acquisition-related costs (included in general and administrative expenses) amount to $310,227.
LGP Denmark ApS contributed no revenue and a loss of $13,200 to the Group’s net result for the period between the
date of acquisition and the reporting date.
as follows:
Profit/(loss) for the year before income taxes
Statutory tax rate
Add/(deduct)
- Share based payments
- Research and development expeniture net of offset
- Gain on bargain purchase
- Foreign losses not recognised
- Other
- Movement in deferred tax not recognised/(recognised)
30 June
2021
30 June
2020
24,603,555
(9,315,435)
26.0%
27.5%
6,396,924
(2,561,745)
734,004
250,634
(6,494,731)
168,780
(10,923)
(1,044,688)
370,922
(165,071)
-
-
(6,534)
2,362,428
Income tax (benefit)/expense
-
-
Total tax losses for which no deferred tax assets has been recognised is $3,886,266 (30 June 2020: $5,291,524) Utilisation
of carry forward tax losses is dependent upon the satisfaction of the requirements of the Income Tax Assessment Act
1936 and 1997 within Australia (continuity of ownership and same business test with no expiry if tests are achieved)
and the relevant loss recoupment provisions in subsidiaries in foreign jurisdictions. The Company has no material
uncertainties over income tax treatments in Australia. The Danish subsidiary has a statutory tax rate of 22% and historic
tax losses of the acquired company are not believed to be available for use by the Group.
Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Deferred tax (asset)/liability
- Biological assets
- Prepayments
- Plant and equipment
- Net lease liability
- Accounts payable and accrued liabilities
- Unrealised FX loss
- Undeducted capital expenditure
- Employee entitlements
Net deferred tax asset
Benefit of tax losses not recognised
Net deferred tax (asset)/liability recognised
30 June
2021
30 June
2020
(398,552)
(60,563)
(69,132)
19,439
179,594
2,234
265,249
61,731
-
-
-
(9,159)
(9,502)
(137,299)
8,241
-
-
-
92,371
(55,348)
55,348
-
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FINANCIAL REPORT
17. SHARE BASED PAYMENTS
The Board of Directors has the discretion to determine to whom options, performance rights and other equity
instruments will be granted, the number and exercise price as well as the terms and time frames in which they will
vest and be exercisable.
Options
Balance at 30 June 2019
Granted
Forfeited
Exercised
Balance at 30 June 2020
Granted
Forfeited
Exercised
All options outstanding had vested at 30 June 2021.
Performance rights
Balance at 30 June 2019
Granted
Forfeited
Exercised
Balance at 30 June 2020
Granted
Forfeited
Exercised
Balance at 30 June 2021
Number of
options
Weighted average
exercise price
Retention rights
10,850,000
4,073,536
-
-
14,923,536
-
(500,000)
(6,850,000)
0.30
0.45
-
-
0.34
-
0.30
0.30
On 16 June 2021, the Company announced that the Board had resolved to issue 4,500,000 performance rights, subject to
shareholder approval at the Extraordinary General Meeting on 19 July 2021. There are three classes of rights, each with 1,500,000
rights which entitles the holder to acquire one fully paid share for nil consideration.
Each class of share right has a price hurdle, being $0.95, $1.10 and $1.25 respectively. A hurdle needs to be satisfied within three
years of the grant date and if achieved, and the employee remains employed then they will receive a third of the performance
rights immediately, a third on the first anniversary of the milestone being achieved and the final third on the second anniversary.
If a vesting hurdle is not achieved within three years or the employee leaves, the unvested performance rights lapse.
Balance at 30 June 2019
Granted
Forfeited
Exercised
Balance at 30 June 2020
Granted
Forfeited
Exercised
Balance at 30 June 2021
Number of
rights
Weighted average
exercise price
-
-
-
-
-
1,200,000
-
-
1,200,000
-
-
-
-
-
-
-
-
-
Number of
rights
Weighted average
exercise price
During the year ended 30 June 2021, 1,200,000 performance rights were issued to employees and Non-executive Directors with
vesting occurring on the third anniversary of the IPO date (February 2023). Shareholder approval was obtained and these rights
were issued during the period. Each performance right has a nil exercise price and a fair value of $0.30.
7,233,335
6,000,000
-
(6,233,335)
7,000,000
-
(2,500,000)
(1,500,000)
3,000,000
0.13
0.40
-
0.13
0.36
-
0.29
0.42
$0.39
On 16 June 2021, the Company announced that the Board had resolved to issue 105,000 retention rights to Non-executive
Directors with vesting occurring on the fourth anniversary of the IPO date (February 2024), subject to approval at the Extraordinary
General Meeting held on 19 July 2021. Each retention right has a nil exercise price and a fair value of $0.70.
Employee share incentive plan
The Group's Managing Director determines each employee's allocation of shares under the employee share incentive plan based
on their performance for the period. For the period to 30 June 2021, 1,008,000 shares rights were issued with a nil exercise price
and a fair value of $0.44. Post year end, a further 1,183,000 rights were agreed to be issued in relation to the financial year 30 June
2021 with 620,000 vesting immediately, 281,500 vesting on 30 June 2022 and 281,500 vesting on 30 June 2023. These have a nil
exercise price and a fair value of $0.56 per share.
Balance at 30 June 2021
7,573,536
$0.38
At 30 June 2021, there were three classes of 1,000,000 performance rights each remaining, all of which have had their
share price hurdles achieved ($0.55, $0.65 and $0.75) and will vest equally on the first and second anniversary of
those hurdles being achieved.
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LITTLE GREEN PHARMA ANNUAL REPORT 2021
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FINANCIAL REPORT
18. FINANCIAL INSTRUMENTS
19. OPERATING SEGMENTS
The classification of the Group’s financial instruments, as well as their carrying amounts and fair values, are as follows:
The Group’s Managing Director who is the chief operating decision maker has historically managed the business,
made resource allocation decisions and assessed performance based on the operations as a whole and therefore
the consolidated financial statements represented the single operating segment. The acquisition of the Denmark
facility on 21 June 2021 has resulted in the company now operating in two segments, Australia and Europe.
Materially all revenue was earned in the Australian segment during the year.
30 June 2021
30 June 2020
Fair value
Carrying value
Fair value
Carrying value
Financial assets
Amortised Cost
Cash and cash equivalents
40,269,169
40,269,169
4,273,564
4,273,564
Accounts receivable
Refundable deposits
Financial liabilities
Amortised Cost
3,656,846
3,656,846
834,085
834,085
629,657
340,229
629,657
340,229
Total assets
Total liabilities
Net assets
Accounts payable and accrued liabilities
3,486,056
3,486,056
2,086,993
2,086,993
Loan note
11,365,891
11,365,891
-
-
20. COMMITMENTS
Australia
Europe
63,244,508
47,747,807
(3,678,369)
(13,424,871)
59,566,139
34,322,936
30 June
2021
30 June
2020
282,656
318,983
1,157,636
1,031,996
367,348
-
1,807,640
1,350,979
Leases recognised as a liability
Maturity analysis for capitalised leases
- Not later than 12 months
- Between 12 months and 5 years
- Greater than 5 years
To the end of 30 June 2021, the Group leased its production facility and its head office in Australia. Post year end, the
production facility and two adjacent properties were acquired (refer note 26 Events after the reporting date). This
extinguished commitments totalling $1,384,618.
21. CAPITAL MANAGEMENT
The Group’s objective when managing its capital is to ensure sufficient debt and equity financing to fund its planned
operations in a way that maximises the shareholder return given the assumed risks of its operations. Through the
ongoing management of its capital, the Company will modify the structure of its capital based on changing economic
conditions. In doing so, the Company may issue new shares or take on debt. Annual budgeting is the primary tool used
to manage the Group’s capital. Updates are made as necessary to both capital expenditure and operational budgets in
order to adapt to changes in risk factors, proposed expenditure programs and market conditions.
The carrying value of the cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities
approximate the fair value because of the short-term nature of these instruments. Refundable deposits also
approximate their fair value as they either accrue interest or relate to the purchase of the production facility in
Australia along with two adjacent properties. For further details refer note 26 Events after the reporting date.
The Group is exposed to varying degrees to a variety of financial instrument related risks:
Currency risk
Interest rate risk
The Company’s functional and presentation currency is the
Interest rate risk is the risk the fair value or future cash
Australian dollar and the majority of its assets, liabilities,
flows of a financial instrument will fluctuate because of
revenue and expenditures are Australian dollar denominated.
changes in market interest rates. Financial assets and
The Company's German subsidiary has a Euro functional
liabilities with variable interest rates expose the Group
currency and the majority of its assets, liabilities and
to cash flow interest rate risk. The Group does not hold
expenditures are Euro denominated, its Swiss subsidiary
any financial liabilities with variable interest rates. The
has a CHF functional currency and the majority of its assets,
Group does maintain bank accounts which earn interest
liabilities and expenditures are Swiss franc denominated and
at variable rates, but it does not believe it is currently
its Danish subsidiary has a DKK functional currency and the
subject to any significant interest rate risk.
majority of its assets, liabilities and expenditures are Danish
krone denominated other than the Loan note of $11,365,891
Liquidity risk
which is denominated in Canadian dollars.
Credit risk
Liquidity risk is the risk that the Group will not be able to
meet its obligations associated with financial liabilities.
The Group manages its liquidity risk by forecasting
Credit risk is the risk of an unexpected loss to the Group
cash flows from operations and anticipating any
if a customer or third-party to a financial instrument
investing and financing activities. Management and the
fails to meet its contractual obligations. The Group’s
Board of Directors are actively involved in the review,
maximum exposure to credit risk as at 30 June 2021 is
planning and approval of significant expenditures and
the carrying value of its financial assets. The Group’s cash
commitments. All liabilities other than lease liabilities
and refundable deposits are predominately held in large
and Loan note fall due within 6 months with the carrying
Australian financial institutions. With regard to receivables,
amount equalling total contractual cashflows other than
the Group’s exposure to credit risk is to a limited number
the Loan note which accrues interest at 5% per annum.
of counterparties who are provided credit in the normal
course of business. The Group has not experienced any
historical losses on receivables and hence the estimated
credit loss is immaterial.
57
LITTLE GREEN PHARMA ANNUAL REPORT 2021
58
9
FINANCIAL REPORT
22. PARENT ENTITY
Total current assets
Total non-current assets
Total assets
Current Liabilities
Non current liabilities
Total liabilities
Share capital
Reserves
Accumulated deficit
Total shareholder's equity
30 June
2021
47,638,974
26,894,922
74,533,896
(2,462,537)
(1,215,832)
(3,678,369)
86,197,119
1,857,348
(17,198,939)
70,855,528
30 June
2020
6,665,011
10,165,499
16,830,510
1,695,863
1,429,449
3,125,312
29,944,260
1,217,194
(17,456,256)
13,705,198
24. AUDITORS' REMUNERATION
The auditor of the Group is Deloitte Touche Tohmatsu.
Amounts received or due and receivable by Deloitte for:
Audit or review of financial reports
- Group
30 June
2021
30 June
2020
93,750
93,750
75,000
75,000
25. IMPACTS AND RESPONSE TO COVID-19
The Company has taken measures to protect the health and welfare of its staff, maintain cultivation and manufacturing
operations, review its cost base, manage cost exposure and counterparty risk, apply for cost relief and Government
assistance where available, secure supply chains of critical materials and consumables and defer non-essential
Net profit/(loss) and comprehensive income
257,317
(9,038,255)
research and development. In addition, from 1 April 2020 and 1 May 2020 respectively, executive and staff salaries were
reduced by up to 20% through to March 2021. A total of $264,500 (30 June 2020: $170,000) in Jobkeeper and Cash Flow
Boost payments were received from the Australian Federal Government as a result of COVID 19. These amounts were
recognised in other income.
26. EVENTS AFTER THE REPORTING DATE
No matters or circumstances have arisen since the end of the financial year which significantly affected, or may
significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the
Company in future financial years, other than the acquisition of 16,000 m2 of land underlying the Company’s Western
Australian production facilities as well as two adjoining properties for $6 million (with $4.2 million paid in cash and
balance in scrip).
The financial information for the parent entity, Little Green Pharma Ltd, has been prepared on the same basis as the
consolidated financial statements with the exception of its investment in its subsidiaries which have been accounted
for at cost.
23. RELATED PARTY TRANSACTIONS
Salaries and
Fees1
Short term
Incentive2
Post
employment
Share based
payments
Other3
Total
As at 30 June 2021
Directors
Michael Lynch-Bell
Dr Neale Fong
Fleta Solomon
Angus Caithness
As at 30 June 2020
Directors
Michael Lynch-Bell
Dr Neale Fong
Fleta Solomon
Angus Caithness
130,878
75,763
269,684
267,510
-
-
161,927
140,600
743,836
302,527
64,225
31,966
163,761
174,663
434,615
-
-
150,000
150,000
300,000
-
3,069
35,660
28,272
67,000
-
3,037
47,048
12,635
62,720
34,083
17,042
377,195
377,195
-
-
164,961
95,874
126,627
971,093
3,500
817,077
805,515
130,127
2,049,005
98,173
48,833
139,180
377,473
663,659
-
-
162,398
83,836
121,857
621,846
3,500
718,271
125,357
1,586,351
1. Salaries and fees includes share rights issued in lieu of salary.
2. Short term incentives include the 31 December 2020 short term incentive which was paid during the year as well
as the accrual for the 30 June 2021 half year for both Ms Fleta Solomon and Mr Angus Caithness.
3. Cost of living allowance for Ms Fleta Solomon in Switzerland; car parking for Mr Angus Caithness.
59
LITTLE GREEN PHARMA ANNUAL REPORT 2021
60
10
Shareholder
Information
9
FINANCIAL REPORT
DIRECTORS DECLARATION
The directors of the Company declare that:
1. The financial statements and notes for the period ended 30 June 2021 are in accordance with the Corporations Act
2001 and:
a. comply with Australian Accounting Standards, which, as stated in basis of preparation Note 1 to the financial
statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards
(IFRS); and
b. give a true and fair view of the financial position and performance of the Company;
2.
In the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Michael Lynch Bell
Chairman
Fleta Solomon
Managing Director
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LITTLE GREEN PHARMA ANNUAL REPORT 2021
62
10
SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this
report is as follows. The information is current as at 16 September 2021.
ORDINARY SHARE CAPITAL
235,941,749 fully paid ordinary shares are held by 10,405 individual shareholders. All issued ordinary shares carry
one vote per share and carry the rights to dividends.
TOP 20 SHAREHOLDERS (UNCONSOLIDATED) AS AT 16 SEPTEMBER 2021
NAME
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED1
ELIXXER LTD2
MS FLETA JENNIFER SOLOMON
UBS NOMINEES PTY LTD3
BARBRIGHT AUSTRALIA PTY LTD
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