LITTLE GREEN PHARMA
ABN 44 615 586 215
Annual
Report 2023
FOR THE YEAR ENDED
31 MARCH 2023
A world of difference
Contents
1 Who we are
2 Chairman’s letter
3 Message from the Chief Executive Officer
4 Update from the Chief Operations Officer
5 Little Green Pharma snapshot
6 Strategy
7 Cultivation and manufacturing
8 Sales and distribution
9 Health practitioner engagement
and customer care
10 Research and innovation
11 Psychedelics
12 Environmental, Social, Governance (ESG)
13 Directors’ report
14 Remuneration report
15 Appendix 1 – Material risks
16 Independent auditor’s report
17 Financial report
18 ASX additional information
Auditor
BDO Audit (WA) Pty Ltd
Level 9, Mia Yellagonga Tower 2
5 Spring Street
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
Securities Exchange
Australian Securities Exchange Limited
Central Park, 152-158 St Georges Terrace
Perth, Western Australia 6000
ASX Code: LGP
ABN: 44 615 586 215
Notice of AGM
The Annual General Meeting of Little Green
Pharma Ltd will be held at 3:30pm (WST) on
Tuesday 29th August 2023. This meeting will be
held via Zoom webinar unless otherwise advised.
Corporate
Directory
Directors
Mr Michael D Lynch-Bell
Independent Non-Executive Chair
Dr Neale Fong
Independent Non-Executive Director
Ms Beatriz Vicén Banzo
Independent Non-Executive Director
Ms Fleta Solomon
Chief Executive Officer
Mr Angus Caithness
Executive Director
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
1
Who we are
Little Green Pharma
LGP is more than just an Australian medicinal cannabis company.
It sits across a number of businesses, operating across several
global markets.
While our peers might focus on one or two segments of the value chain, LGP covers the field:
• We are a multi-national GMP medicinal cannabis manufacturer operating one of
the largest cultivation and manufacturing facilities outside of North America with
production assets in Denmark (EU) and Western Australia. These facilities are the
foundation of our Australian and European medicinal cannabis businesses
• We are an Australian medicinal cannabis business with a broad distribution partner
portfolio, strong in-market brand, and long-standing trusted reputation
• We are a European medicinal cannabis business with a distribution footprint across
nine separate EU jurisdictions, making LGP one of the most diversified cannabis
suppliers globally
• We are a cannabis research & development business, with ethics approvals for its
Schedule 3 CBD product trials, several new concept products in development, and
sponsor of one of the world’s largest observational studies into medicinal cannabis
• We are a leading global psychedelics business, with an ethics-approved clinical trial
into psychotherapy assisted psilocybin treatment and installed psilocybin mushroom
production facilities
• We have a GMP testing lab capable of serving third parties
We have spent the last seven-years embedding wide-scale institutional expertise on
herbal and cannabis manufacture and markets across a wide range of domains. LGP is
all of these businesses because we use this expertise to identify opportunities early, and
then implement rapidly.
People ask how Little Green Pharma is different from its competitors. This is how.
We are different because no-one else does all that we do.
1
We're big on changing lives.
We are passionate about transforming lives.
Our vision is to reimagine herbal 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.
2
LITTLE GREEN PHARMA Annual Report 2023 2
Chairman's
letter
Dear Shareholders,
OVERVIEW OF FINANCIAL YEAR 2023
Welcome to Little Green Pharma’s
Annual Report for financial year
2023. This year, we want to share
the Company’s results with
you, but also do things a little
differently.
With that said, I’d like to turn the discussion to
financial year 2023. It’s been another busy year for
LGP, with plenty of interesting developments for
both the Company and the medicinal cannabis and
psychedelics markets in general. I propose to touch
on a few key matters that affected LGP for financial
year 2023 and leave the detailed discussions around
strategy and operations to Fleta and Paul.
Historically, the Company has devoted its
energies to executing its business strategy in a
rapidly changing market. It has not spent much
Finance
During the financial year, the Company grew its
time telling stakeholders who we are, what
revenue against the previous 9-month financial
our business looks like, how it operates, our
period by 89%, to $19.9 million and also recognised
successes and our failures, the environment
other income in the form of research and
we work in, or our vision for the future. We
development rebates of $5.1 million while at the
want to change this. We want our stakeholders
same time improving its gross margin before fair
to get to know us and our team better and get a
value uplift from 40% to 51%.
strong understanding of what goes on behind
the scenes at Little Green Pharma.
During the reporting period, the Company
comprehensively right sized its operations, including
For these reasons, I’d invite you to read the
its overheads which were down by nearly 10% from
Company snapshot starting on page 11, which
the prior period even though the financial year was
provides a broad overview of LGP’s history
3-months longer; a good result for the year. The
and current operational environment as
Company continues to review additional cost saving
well as our views on recent events affecting
measures across the Group, including measures
the Company’s share price, as well as the
to reduce power and transportation costs at the
letter from our Chief Executive Officer Fleta
Company’s assets.
Solomon, starting on page 5 and an update
from our Chief Operating Officer, Paul Long,
starting on page 7.
Between November 2022 and January 2023, the
Company successfully raised $5.1 million via a
Placement and Share Placement Plan (SPP) and
It’s easy to forget, amidst all the hum and
in March 2023, the Company raised a further
energy of our operations, that our shareholders
$5.0 million via Placement from professional and
don’t have a crystal ball that sees everything
institutional investors, including a cornerstone
we do. Our goal for financial year 2024 is to do
investment from the Thorney Investment Group,
things differently, and significantly change this.
who became the Company’s largest shareholder at
3
11.2%. These Placement funds were used to provide
working capital and repay the outstanding loan
amount to Canopy Growth Corporation (Canopy)
post-year end, leaving the Company with only long-
dated loans over its Australian production facilities
and freeing up its Danish Facility for potential debt
financing if required in the future.
Opening of the Australian
psychedelics market
In February 2023, the Australian psychedelics
market was unofficially launched with the surprise
announcement that psilocybin and MDMA would
be down scheduled to Schedule 8, in very limited
circumstances, for the treatment of refractory
As ever, we remain grateful for the faith of
chronic depression and PTSD. A world leading
our shareholders, both retail and institutional,
development, the down scheduling means that
particularly for their support in our two placements
from 1 July 2023, qualified psychiatrists able to
and SPP. We know there are other great investments
demonstrate suitable qualifications and experience
out there and are pleased you chose us.
and supported by qualified psychotherapy teams,
After 12-months of significant sales growth, various
capital raisings, and our R&D financing and ongoing
cost management, the Company finished its
financial year with $12.4 million cash in bank, with
the final Canopy loan payment of $4.1 million being
paid in early April 2023.
TGA infringement notices
The reporting period was marred heavily by the
will be lawfully able to prescribe psilocybin and
MDMA to eligible patients. The qualification
criteria for this treatment are strict and the bar for
approval high, with psychiatrists required to obtain
both formal ethics approval and TGA authorised
prescriber status prior to prescribing. Following a
review of the requirements, the Company’s view is
that these regulatory requirements fall only slightly
short of clinical trial registration requirements,
giving Reset Mind Science’s current ethics
receipt of infringement notices from the Therapeutic
approved clinical trial procedures and processes a
Goods Administration (TGA) for alleged unlawful
significant edge in the market.
advertising.
LGP regards prescriber, patient, investor and
stakeholder trust in LGP as a cornerstone value of
the Company, and the fines were received with a
mixture of disappointment and disbelief, particularly
given the conduct alleged included third party posts
on LGP’s social media channels and electronic
copies of LGP’s consumer medicines information for
patients who had lost their paper originals.
The Company spent several months appealing the
infringement notices with the TGA, however given
the threshold for what constitutes the ‘advertising’
of therapeutic goods (comparable with the current
threshold for advertising cigarettes in Australia), the
uncertainty of potential litigation, and the potentially
adverse impact on LGP’s relationship with its
primary regulator, in January 2023 the Company
agreed to accept the infringement notices subject
Pathway to profitability
Shareholder feedback has been clear: the
Company’s immediate priorities for financial year
2024 must be to achieve cash flow break-even and
subsequently profitability. Moving forward, these
priorities will be the primary lens through which the
Company evaluates its strategic and operational
activities and decisions, with the intention of
achieving these goals as quickly as possible. We
shall continue to report on both until achieved.
Finally, I'd like to thank the entire LGP team,
personally, for their hard work and dedication
throughout the year and to the Board for their
dedication and support. And on behalf of the Board
and the Company I'd also like to thank you, our
shareholders and stakeholders, for the support you
continue to show us over our journey.
to a payment plan until late July 2023. The Company
Your sincerely
also undertook a substantial review of its regulatory
and compliance review processes to ensure all
public-facing communications meet the relevant
requirements in future.
Further details on these infringement notices can
Michael D Lynch-Bell
be found in the Directors’ Report.
Independent Non-Executive Chair
Little Green Pharma Annual Report 2023
4
LITTLE GREEN PHARMA Annual Report 2023 3
Message from the
Chief Executive Officer
Dear shareholders,
It’s been another transformational year as we
short term, we have strategically focused on our
execute on our strategy and move closer to our
geographical stronghold and building brand equity
vision to advance the medicinal cannabis industry
in the Australian and European markets through
and make a significant impact on the lives of
patient acquisition as we edge closer to cash flow
patients worldwide. Our mission has always
break-even. To achieve this, we leverage our deep
been to do extraordinary things for patients by
knowledge of jurisdiction legislations to establish
providing high-quality cannabis medicines and
strategic partnerships and efficient distribution
addressing real problems in healthcare. We have a
networks. This approach allows us to navigate
clear strategic pathway to achieve this vision and
the complex regulatory landscape effectively and
highlight our commitment to differentiation through
position ourselves as trusted providers of cannabis
unique drug delivery solutions in the long term as
medicines in these key markets.
well as our short term focus on brand recognition,
strategic geographical positioning and revenue
generation in the Australian and European markets
as we set our sights on cash flow break-even and
the profitability pathway.
One of LGP's strengths lies in our power of
knowledge and our ability to be a first mover in
emerging areas. Our ability to spot and seize
opportunities before others has become a hallmark
of LGP's success. We have demonstrated this
In the long term, LGP aims to set itself apart from its
with the Danish cannabis production facility we
peers by offering innovative drug delivery solutions
acquired where we foresaw the increase in demand
that enhance patient outcomes. We recognise
for flower as well as the potential to service the
the importance of tailored and efficient delivery
blossoming European medicinal cannabis market.
methods in maximising the therapeutic potential
By capitalising on our foresight and staying ahead
of cannabis medicines. By investing in research
of the curve, we have positioned ourselves as
and development, we aim to develop proprietary
pioneers in this field with one of the most trusted
formulations and drug delivery technologies that
brands and continue to make significant progress.
address specific patient needs. Our commitment
to differentiation will ensure that LGP remains
at the forefront of the industry and opens new
opportunities for growth and success.
LGP has a rich history of leading the cannabis
industry. We were the first company in Australia
to produce cannabis medicines for patients and
also the first to export these products. Operating
However, we also understand the need for
across the entire cannabis supply chain to ensure
immediate results and revenue generation. In the
self-sufficiency and capture maximum value has
5
been incredibly insightful giving us an edge over
our peers who typically operate with a single
focus. We believe these verticals will be the
eventual business model as consolidation occurs
and again we are at the forefront of this.
I believe that this diversification makes LGP an
undervalued gem, as we possess the expertise
and capabilities to excel in multiple areas
simultaneously, making us a stronger and more
reliable investment choice. By focusing on drug
delivery solutions in the long term and obtaining
brand recognition in the Australian and European
markets in the short term, we are poised for
Thank you to the Little Green
Pharma Board and team for
your efforts throughout the
year, and thank you to our
shareholders for your continued
support on this exciting journey.
Together, we can achieve
extraordinary things.
success. With our leadership position, expertise,
Yours in Health,
foresight and commitment to research and
development, we are confident in our ability
to deliver exceptional value to our patients,
shareholders, and the broader community.
All this said however, right now, our primary focus is
Fleta Solomon
achieving cash flow break-even and subsequently
Chief Executive Officer
profitability to ensure we can sustain operations
without relying on external financing while
continuing to create value for our shareholders.
We remain devoted to pursuing long term goals
that contribute to the betterment of human
lives. Through continuous innovation and the
dedication of our talented team, we aim to push
the boundaries of what is possible in the herbal
medicine field.
Little Green Pharma Annual Report 2023
6
LITTLE GREEN PHARMA Annual Report 2023 4
Update from the
Chief Operations Officer
Dear shareholders,
As Michael and Fleta have observed, it’s been another
busy year for LGP, with a range of developments for
both the Company and the medicinal cannabis and
psychedelics markets in general.
Australian business
the Company has swiftly expanded its range of
flower offerings and is actively pursuing emerging
During the year the West Australian production site
continued to improve its operational efficiencies
product trends.
and to refine the company’s product offering,
In positive regulatory news for the company the
achieving a stable operational rhythm capable of
Therapeutic Goods Administration (TGA) introduced
accommodating fluctuations in demand and the
changes to the Therapeutic Goods (Standard
for Medicinal Cannabis) (TGO 93) Order 2017. As
per the updated changes, starting from the 1 July
2023, imported medicinal cannabis products will
be required to adhere to quality standards that
closely align with those applied to Australian Good
Manufacturing Practice (GMP) manufactured
goods. These changes effectively establish a more
uniform set of GMP manufacturing requirements
for imported medicinal cannabis products entering
expansion of both Australian and global markets.
In addition, the Australian business experienced
growth in its export-oriented ventures through
existing pathways and by establishing further
partnerships in the UK.
To date, the Australian business has already
supplied medicinal cannabis products into Australia,
Germany, France and the UK and has further supply
or distribution agreements with distribution partners
in Poland and Portugal which it expects to deliver
into during this financial year.
In late calendar year 2022, the Company achieved
remarkable export success, receiving accolades
in both the WA State and the 60th National
Export Awards. Notably, it was recognised in the
International Health category, highlighting its
outstanding contributions as a leader in the field.
In November 2022, the Company received its first
delivery of three new flower products from its
Danish Facility, which were then introduced into the
Australian market. These products have garnered
substantial success and in response to this positive
reception and in order to adapt to evolving trends,
7
the Australian market. Consequently, long-standing
placing the relevant cannabis strain under a second
suppliers who have not met the GMP standards
supply agreement with Cannamedical.
are anticipated to face market impacts due to this
regulatory shift.
In December 2022, the Danish Facility accomplished
a significant milestone by successfully delivering its
Post financial year, the Company was re-appointed
inaugural shipment to its trusted distribution partner,
as a primary CBD oil manufacturer of its 1:20 CBD oil
Demecan, in Germany just after its first shipment
for the third year of the extended French medicinal
of three new medicinal cannabis flower strains into
cannabis trial alongside two other global cannabis
the Australian markets as mentioned above. Getting
suppliers. The success will mean the Company
these shipments to market is no simple matter,
will obtain unique insights and influence over the
and I want to express my utmost appreciation to
development of the future medicinal cannabis
our dedicated Danish and German teams for their
statutory framework in France, including its
exceptional contributions in this regard.
reimbursement status. The Company will also be
compensated €14 per unit for medicines supplied
during the extension period.
European business
LGP remains committed to its established strategy of
capitalising on the immense potential of European
markets for long term growth and diversification.
Financial year 2023 was a solid year for the
Company’s European business, with its Danish
Facility entering into new distribution agreements
with German, United Kingdom and Nordic
distributors, including Demecan, Cannamedical, Illios
During the reporting period, LGP’s Danish facility
invested heavily in new strain and cultivar
development. A comprehensive evaluation of over
1,000 different phenotypes was conducted, resulting
in the selection and ongoing development of more
than twenty new cannabis strains tailored for the
Australian and German markets. Encouragingly, the
initial three developed strains have already gained
significant popularity and success in both markets.
As with the Australian facility, the European business
has now also established a reliable supply cadence
for these products into the Australian market, with
the capacity to expand as much as the Company
Santé, Sana Life Science, Nordic Range and Hilltop
Leaf. During the period, the Company also parted
requires.
ways with Four 20 Pharma after the regulatory
All of this came against a background of significant
conditions precedent were not satisfied in time
power price volatility in the Danish and European
under the Agreement, with the Company instead
markets, with the Danish facility recording an
Little Green Pharma Annual Report 2023
8
LITTLE GREEN PHARMA Annual Report 2023 4 UPDATE FROM THE CHIEF OPERATIONS OFFICER
increase of 68% in the average power price between
the 2022 financial period and the 2023 financial year,
before retreating in recent months to approximately
half of the 2023 financial year average. Despite
these challenging circumstances, the Danish facility
responded to the situation with an effective power
consumption and optimisation strategy to offset the
Also in March 2023, the Company signed a
worst effects, resulting in an almost 50% reduction in
strategic alliance agreement with Health Insurance
power usage for the financial year.
Fund of Australia (HIF) to establish a proof-of-
Psychedelics business
Since 2021, the Company’s psychedelics business,
owned and operated by subsidiary Reset Mind
Sciences, has been diligently establishing a solid,
market-leading business in psychedelics, and
particularly psilocybin. This has included over
18-months developing and implementing a Phase II
clinical trial into the use of psilocybin assisted therapy
to treat refractory chronic depression (for which
concept mental health treatment facility. This
facility will benefit from the use of a modified
version of the Company’s ethics approved
treatment protocols, with capability to deliver
psychedelic assisted psychotherapy to eligible
patients and deliver real-world treatment data to
help HIF potentially develop a psychedelics product
for members. As a part of the strategic alliance HIF
will fund $250,000 towards clinic establishment
and the parties have agreed to a period of
ethics approval was received in March 2023), as well
exclusivity to negotiate the joint development
as an 18-month process designing and constructing
of further treatment centres based on the initial
a purpose-built GACP mushroom cultivation facility
treatment facility concept.
to enable the production of psilocybin active
pharmaceutical ingredients, which was delivered to
LGP’s production facilities in March 2023.
9
Post financial year, the Company installed and
commissioned its GACP psilocybin mushroom
cultivation facilities at the Company’s South-West
production operations and commenced cultivation
of psilocybin mushrooms.
Combined with the opening of the Australian
psychedelics market in July 2023 these market
developments have given further impetus to the
LGP Group’s plans to demerge the Reset Mind
Sciences business as soon as possible.
Research & innovation business
During the year, the Company successfully
completed its full 12-month assessment of
patients under its QUEST Initiative following a very
encouraging 3-month interim analysis. LGP has also
successfully been granted ethics approval for a
further clinical study called QUEST – Global Initiative,
which will focus on the health economic impact of
medicinal cannabis on patients with chronic disease
and commenced Australian recruitment in the first
quarter of financial year 2024.
LGP and Curtin University also successfully
achieved the second milestone of LGP’s novel
drug obesity trial, which supports progression
to the third, chronic phase involving longer term
investigation in diet-induced obese mice. The trial
examines the ability of selected phyto-and endo-
cannabinoids to induce secretion of a powerful
hormonal mediator known to induce satiety, slow
down digestion, lower blood sugar and ultimately
promote weight loss.
In November 2022, the Company received ethics
approval to begin a clinical trial (SleepWell Study)
for the registration of its Schedule 3 CBD product
for stress reduction and improved quality of sleep.
The Company is now considering various funding
and partnering options to progress the SleepWell
Study and Schedule 3 product registration.
The Company also continued to supply products
to clinical trials with Southern Cross University,
who is trialling LGP 10:10 oil for the treatment of
fibromyalgia, and Centre Hospitalier Regional
d'Órleans, who are evaluating the impact of LGP’s
CBD products on the symptoms and inflammation
of adults living with HIV.
Shareholder communications
A recent internal review by LGP has revealed 70%
of our shareholders receive their shareholder
communications by post, meaning the Company
spends thousands of dollars a year sending out
these communications. We would request that
shareholders take 60 seconds to help us reduce
costs and paper waste by opting to receive all
shareholder communications by email:
www.computershare.com.au/easyupdate/lgp
Thank you to the LGP team
Spanning across the globe, with presence in
Denmark, Germany, Perth, and both Eastern and
Western Australia, our passionate LGP team
triumphs over the barriers of time zones and
geographic distances. They overcome these
challenges through unwavering dedication,
fostering a culture of trust amongst team
members. The close-knit connections between
the team form the bedrock of collaboration,
ensuring highly effective coordination and aligned
efforts. These strong relationships fuel the team's
drive and enable them to navigate any obstacle
that comes their way, fostering a sense of unity
and shared purpose throughout the organisation.
As I reflect on another big year, encompassing
the usual highs and lows amidst the demanding
landscape of global cannabis markets, I want to
express my heartfelt thank you to each member
of the LGP group. Your unwavering commitment,
tireless efforts, and dedication have been
instrumental in overcoming the challenges we
faced this year. Through it all, we have remained
focussed in our pursuit of excellence and
quality, propelled by our collective expertise,
professionalism, and passion. Financial year 2023
once again reaffirmed our belief in having the most
knowledgeable, skilled, and committed team in
the industry. I extend my deepest appreciation
to everyone for their exceptional contributions.
Thank you all for your remarkable work.
In addition, a review of our internal shareholder
Warm Regards,
email communications database has shown many
shareholders and subscribers are not receiving all
of our email and other electronic communications.
We are working to rectify this as soon as possible
however we would welcome you to re-subscribe to
ensure you get all the latest information from LGP as
Paul Long
part of our expanded communications endeavours.
Chief Operations Officer
Little Green Pharma Annual Report 2023
10
LITTLE GREEN PHARMA Annual Report 2023 5
Little Green Pharma
A snapshot
Little Green Pharma started its life early in 2017 with limited
ambitions: as a way to make medicines for a girl debilitated by
epileptic seizures. However very quickly our CEO, Fleta Solomon,
saw the potential to both supply a much larger group of Australian
patients, and to expand the Company’s operations into European
markets where Australian manufacturers were uniquely positioned.
At this point she changed the Company’s mission
to bringing medicinal cannabis products to
all Australian patients, and to bring Australian
medicinal cannabis to Europe. She also brought in
many of the key employees who remain with the
Company today.
Since its relatively humble origins, the Company has
changed dramatically. It went from private, to public,
to ASX listed in three short years. It has gone from
3 employees, to over 100. From 20 shareholders to
over 13,000. From 1,600 units a year, to over 160,000.
From an installed production capacity of 100kg, to
well over 30 tonnes of biomass per annum. From
supplying into a single market, to supplying more
markets than almost any other producer globally.
From a small medicinal cannabis operation to a large
global medicinal cannabis supplier combined with a
rapidly growing psychedelics business.
However, the Company has not communicated
its business advantages by way of comparison
to its peers in the Australian and global markets.
The Company intends to more regularly release
presentations to close that gap, and you will see
more discussion around these themes over the
coming months. In short, LGP regards itself as
11
an amalgam of the various offerings of multiple
unnecessary bureaucracy. The Company runs a
medicinal cannabis and psychedelics companies
lean ship compared to its competitors, with many
operating in Australia, with frequently comparable
employees holding multiple roles and additional
or preferable product and services to companies
responsibilities, allowing effective communication
who operate solely in a discrete supply chain silo.
and information sharing across silos.
In addition, the Company’s history demonstrates
it is a consistent first mover in identifying new
value propositions within existing or brand new
herbal GMP industries and can monetise these
opportunities rapidly. LGP regards these skills as
essential to its continued success in the global
cannabis markets.
Today, the LGP team is spread across the world,
with employees in Perth, the South-West of
Western Australia, East Coast Australia, Denmark,
UK and Germany, including our most recent Board
appointee, Ms Beatriz Vicén Banzo in Spain. The
Company prides itself on diversity, with a board
that is 40% female and a team which consists of
over 65% women and an age range of 23 to 75.
Day to day, the Company operates across multiple
verticals and multiple time-zones. At any given
time, the LGP team can be found identifying new
strategies and commercial opportunities in global
GMP medicinal herbals markets; negotiating deals
with Australian distributors and pharmacies;
liaising with new and existing European wholesalers
and distributors; cultivating and manufacturing
products through the production cycle; developing
new products and optimising market engagement
strategies; reviewing operating structures with
a view to further reducing costs; engaging with
regulators in numerous jurisdictions in relation to
emerging issues or national supply arrangements;
arranging domestic and international shipments;
tendering for new supply items; sharing know-how
The Company also prides itself on being
between assets and gaining global market insights;
nimble, with a small executive and production
educating prescribers through Medical Science
responsibilities devolved to the Asset managers,
Liaison teams and online platforms; and managing
allowing it to pivot quickly and make rapid
external enquiries and its pharmacovigilance
commercial and strategic decisions without
responsibilities.
Little Green Pharma Annual Report 2023
12
LITTLE GREEN PHARMA Annual Report 2023 The result of all of this has been a lot of successes
That said, the fines spurred the Company to
– the Company was Australia’s first medicinal
undertake a detailed review of its compliance and
cannabis producer and exporter; it successfully
review processes to ensure all current and future
acquired one of the largest GMP cannabis
communications with patients and the public fall
manufacturing facilities in Europe for C$20 million
within the strict boundaries on the prohibitions of
after the previous owner had spent C$115 million
the advertising of therapeutic goods.
setting it up, and in just two-years has turned it
around operationally; it supplies medicinal cannabis
into more markets than any Australian company
and nearly all other global producers as well; it has
successfully positioned itself for the opening of
the Australian psychedelics market in July 2023; it
has won and been short-listed for several industry,
export and customer excellence awards; and it
has continued to scale and refine its high-quality
production facilities back home.
The Company has also had its share of
disappointments: it was unable to complete its
preliminary plans to list on a European exchange
in 2019, it overestimated the experience and
capabilities of the previous owners of the Danish
facility and as such has taken longer and cost more
to turn it around than expected, and most of all its
receipt of the 2022 TGA infringements for alleged
unlawful advertising.
LGP has continued to deliver on its growth strategy
in the Australian medicinal cannabis market and
has successfully used this to springboard into high-
value markets in Europe as they have opened up.
This strategy continues to pay off and we believe is
key to the Company’s future success.
The Australian medicinal cannabis market today
in particular is tough. The decision to permit
non-GMP cannabis medicines into the Australian
market for the last five-years has meant serious
competition from lower-cost, lower-quality
international producers, and the legislative
changes in July won’t necessarily stem the tide.
Meanwhile, the Australian and European medicinal
cannabis markets continue to evolve rapidly.
Initially, given the TGA’s earlier view on combustible
products, the Company focused primarily on
cannabis oil products and worked to become the
LGP regards prescriber, patient, investor and
number one supplier in Australia. However, over
stakeholder trust in LGP as a cornerstone value
time, the market changed and from an initially very
of the Company, and the TGA fines in particular
low market share, today medicinal cannabis flower
were received with shock and disappointment
products make up the majority of the Australian
given LGP’s long-standing focus on compliance.
and German markets, while medicinal cannabis
13
oil sales grow at a slower, more linear rate and the
2023, a significant proportion of their remaining
CBD Schedule 3 market future remains uncertain.
shares were purchased off-market by LGP’s now-
Given their recent history, it is therefore likely
biggest shareholder, Thorney Investment Group,
these markets will continue to evolve rapidly until
which has eased this downward pressure. As at
maturity.
As a result, we expect the future Australian and
European medicinal cannabis markets to have
their share of casualties and consolidation, as the
industry matures and those unable to compete
fall by the wayside. But as with all challenges there
will be rewards, with the prize going to those who
survive: being those with the capability to meet
the continuing demand for high quality products at
reasonable prices.
LGP will be one of those companies.
late April, Elixxer held ~2.6 million shares (0.88%)
in the Company.
Another factor has been the C$10.0 million
deferred payment due to Canopy Growth
Corporation in relation to the Company’s
purchase of its Danish facility in 2021. To resolve
this, with the funds from the March 2023
Placement the Company fully extinguished the
remainder of this deferred payment in early April.
As above, in a capital constrained environment,
the confidence of professional and institutional
shareholders in the Company was appreciated.
It’s also crucial that we address our share price
With these issues successfully managed, the
at this time. It’s been a challenging period for
Company is now entirely focused on reaching cash
small cap companies, especially those who have
not yet achieved profitability. Capital is scarce,
flow break-even, at which point LGP expects its
share price to properly reflect its achievements to
and allocation scrutinised very closely. The listed
date.
Australian medicinal cannabis industry has
generally experienced relatively significant declines
across the Board, as investors moved their money
into more traditional, conservative stocks.
However, LGP’s share price has been under
pressure over the past 12-months for other
reasons, too. The first has been the ongoing,
on-market divestment by a former major
shareholder, Elixxer Ltd since early 2022. In March
Little Green Pharma Annual Report 2023
14
LITTLE GREEN PHARMA Annual Report 2023 6
Strategy
LGP’s core strategy remains unchanged: build sales in operating
jurisdictions, leverage the resulting manufacturing expertise and
capacity to unlock other high-value markets, and continue to
develop new and innovative products to gain short term market
share and facilitate long term growth.
This strategy has led LGP into many directions:
2018
2019
2020
2021
2022
2023
We developed the first locally produced medicinal cannabis
product in Australia.
After recognising the potential of the German market for Australian
suppliers, We made preliminary plans to list on a European
exchange and developed a wide range of oil products.
We successfully listed on the ASX and exported our first products
to Europe.
We acquired one of the largest GMP cannabis flower manufacturing
facilities in Europe from the world’s largest cannabis company,
embarked on the world’s largest clinical study into medicinal
cannabis for the treatment of chronic conditions, began
supplying into the French national cannabis trial, and started our
psychedelics business.
We built our EU market foundations with key distributors, obtained
ethics approvals for our schedule 3 CBD product, optimised our
production assets in Denmark and Australia, and developed a
broad genetics bank for our Danish facility.
We started delivering new Danish flower products into Australia
and Europe, obtained ethics approval for our psilocybin clinical trial,
and signed our strategic psychedelics partnership with a private
health insurer.
15
The Company’s growth strategy comprises three key pillars:
1
Patient acquisition in
operating jurisdictions
Sales in Australia and Denmark
demonstrate market validity
and generate immediate cash
flow to support development of
international pathways.
2
Clear pathway to
international sales
Early mover commercial volumes
in international markets are the
primary mechanism to secure
and grow offshore market share.
3
Product and drug
delivery innovations
Develop unique delivery
systems for patients in the
future to solve real patient
problems and differentiate LGP.
One opportunity has typically led to another. Our
and reputation in Australia and Europe, and a
attempt to list on the German DAX opened the door
market-leading psychedelics business. We have
to our key distribution partners in Germany, which in
a team of experienced veterans, many of whom
turn presented the opportunity to acquire our Danish
have been here since the beginning, with broad
facility from Canopy and turn it around. We’ve also
expertise across the corporate, sales, cultivation,
learned the value of a broad product portfolio, and of
manufacturing, regulatory, and quality domains. Our
trusted partnerships.
strategy has led us in many directions, and while
we move faster than anybody else, it is never fast
Today we have a secure, expandable portfolio
enough for us. Today we hold a unique position in the
of cannabis products, excellent distribution
Australian and European cannabis markets, ready to
partnerships across Australia and Europe, various
capitalise on whatever the global environment and
R&D growth opportunities, an excellent brand
cannabis markets may bring.
Little Green Pharma Annual Report 2023
16
LITTLE GREEN PHARMA Annual Report 2023 7
Cultivation and manufacturing
During the year both the Australian and Danish facilities continued their
right-sizing programmes to optimise production and cut production costs.
In Denmark, the Company substantially completed
of customer audits during the year and delivered
its genetics programme, with the Company
the first of its newly developed flower products into
continuing to pheno-hunt to ensure its product
Germany, Australia and the United Kingdom.
offerings remain relevant to the Australian and
European markets. LGP Denmark also switched
In Australia, the Company completed commissioning
over its last operational grow rooms to LED lighting
of its third phase expansion of its manufacturing
to minimise power consumption during the ongoing
facilities, which allows the simultaneous
period of high Danish electricity prices due to the war
in the Ukraine, which when combined with optimised
ventilation, has further improved plant yield by
>20%. Today, the aggregate yield on plants is
over double from the date LGP acquired the
Danish facility. The Danish facility
also successfully passed a number
completion of multiple oil production processes
and accommodation of full capacity GMP flower
manufacturing from the Company’s cultivation
facilities. LGP’s Australian facilities have also
implemented various cost-reduction initiatives
around transportation and power
throughout the year.
9 Health practitioner engagement
and customer care
During the financial year, LGP's practitioner engagement team continued to engage
with healthcare professionals to support their education into the benefits of
cannabinoid medicines, including:
• online training courses, webinars, virtual and face-to-face meetings typically provided by independent
medical practitioners and frequently with specialised content around particular conditions
• support of practitioners with education and assistance to navigate the
TGA application process, with strong medical science liaison representation
across both east and west coasts
• portals for patients and healthcare professionals to access a range of
resources to improve professional knowledge, as well as the
Greenchoices.com.au directory that connects patients to doctors
familiar with prescribing medicinal cannabis.
17
8
Sales and distribution
During the financial year, LGP achieved $19.9 million in sales
revenue, up from the $10.5 million for the prior 9-month
period ended 31 March 2022 with Cannabis flower products
continuing to be the preferred dosing formulation for the
Australian and European markets.
Australia
Europe
During the financial year:
• LGP launched three new high-THC flower
products from its Danish facility into the
Australian market, with all three seeing
strong demand and growth
• LGP’s oil product sales continued to
grow at over 50% for the financial year
compared to the 9-month prior period
LGP also engaged two new wholesalers
to improve access to LGP products for
pharmacies across Australia.
In Europe, the Company continued to build out
its distribution platform, entering into supply and
distribution agreements with Demecan, Sana,
Illios Santé, Cannamedical, Hilltop Leaf and
Nordic Range.
LGP is now a clear leader in Europe, having
supplied products into Germany, France,
Denmark, the United Kingdom, Italy and Belgium,
with additional distribution agreements in
Sweden and Poland into which the Company
expects to deliver in the coming year.
In December 2022, LGP’s export success was
recognised by its victories at the 60th Australian
Export Awards and 2022 Western Australian
Export Awards in the International Health
category.
LGP also launched a new online booking service for
patients, LGP Connect. This service is managed by
our Customer Care Team who connect thousands
of patients with independent and experienced
prescribers of cannabis medicines.
LGP’s Customer Care Team is responsible for
supporting patients throughout their medicinal
cannabis journey, from finding practitioners familiar
with medicinal cannabis prescribing, to supporting
patients with clinic, prescriber and pharmacy
engagement. LGP's Customer Care Team has
emerged as the industry's most trusted and effective
customer support service and has become a key
distinguishing feature from the services provided
by other medicinal cannabis sponsors in Australia.
In recognition of its efforts, LGP’s Customer Care
Team was a finalist in the 2022 Australian Service
Excellence Awards.
18
LITTLE GREEN PHARMA Annual Report 2023 10
Research and
innovation
A key component of LGP's strategy
is the development of innovative
pharmaceutical products specifically
designed to improve patient outcomes.
This includes launching an expanded
range of medicinal cannabis oil and
flower products to meet immediate
patient demand in Australian and
overseas markets; scientific validation
of these medicines through real-world
clinical studies; and the development
of innovative prescription medicines,
including novel delivery systems and
precisely formulated cannabinoid
products.
Product development
LGP and Curtin University have now achieved the
second milestone of LGP’s novel drug obesity trial.
This trial examines the ability of selected phyto-
and endo-cannabinoids to induce secretion of
a powerful hormonal mediator known to induce
satiety, slow down digestion, lower blood sugar and
ultimately promote weight loss. These outcomes
supported progression to the chronic phase
involving longer term investigation in diet-induced
obese mice, with these final formulations to be
tested to confirm reversal of obesity in these
murine models.
19
Clinical studies and investigations
French trial
During the financial year, LGP's hallmark quality of life
In January 2021, alongside three other companies,
study, the QUEST Initiative, successfully completed
the Company and its French distribution partner
its full 12-month assessment of patients in March
were awarded a primary supplier role for two of
2023. The findings of the 3-month interim analysis
LGP’s CBD oil products into a two-year French
were very encouraging and have been submitted for
medicinal cannabis trial (Trial) conducted by the
publication in a peer-reviewed scientific journal.
French national medicines regulator, the ANSM.
LGP has also successfully been granted ethics
Since that time, the Company has become the
approval and has signed a research services
largest single supplier to the Trial, with over 85% of
agreement for a further clinical study called QUEST
the 3,000 Trial participants starting their treatment
– Global Initiative, which will focus on the health
with LGP products, leading to the delivery of
economic impact of medicinal cannabis on patients
almost 60,000 units of its cannabis oils to date.
with chronic disease, which commenced Australian
This has resulted in the Company becoming a well-
recruitment in the first quarter of financial year 2024.
recognised supplier in France and developing strong
The QUEST studies provide significant real-world
relationships with the ANSM and French Health
evidence in support of LGP's medicines as well as
directorate, the DGS.
increased prescriber and patient confidence, with
the costs of these studies fully funded from patient
participation fees.
The Trial has already shown consistently beneficial
clinical outcomes over its first two-years, with 91%
of the current 1,453 patients reporting positive
LGP has previously partnered with Southern
results and various expert reports on the Trial
Cross University to undertake a double-blinded,
interim results all providing positive feedback. The
randomised placebo-controlled, phase-2 clinical
resulting Trial study will also comprise one of the
trial involving 30 participants administered LGP
largest European data collections on cannabis, with
Classic 10:10 for symptom relief of fibromyalgia
the success of the Trial already generating calls by
(CANN-RELIEF Trial). The clinical trial has now
patient associations for the legalisation of medicinal
received full ethics approval with recruitment to
cannabis as soon as possible.
begin immenently.
In September 2022, the French health regulator
LGP has also partnered with internationally
confirmed the extension of the French medicinal
renowned infectious disease expert Dr Thierry
cannabis trial for a further year, until March 2024 with
Prazuck and his team at the Centre Hospitalier
the Company being awarded the primary supplier
Regional d Órleans in France to conduct a clinical
role for its 1:20 cannabis oil for the additional year at
trial evaluating the impact of CBD intake on
a reimbursement rate of €14 per unit.
symptoms and inflammation in adults living with HIV,
using LGP's CBD50 medicine. During the year, full
participant recruitment was completed, and the final
patient blood-samples were collected by February
2023. Detailed information on inflammatory
responses and related biomarkers will be evaluated
with over 32,000 individual tests planned. Research
partnerships such as this solidify the Company's
brand presence and scientific strength in France, a
significant emerging medicinal cannabis market.
LGP’s continuing participation as an ongoing
supplier to the Trial will consolidate the Company’s
reputation in the French market, as well as giving
the Company unique insight and influence over
the development of a future medicinal cannabis
statutory and economic framework in France,
including its reimbursement status.
LGP believes its success in the trial continues to
confirm the advantages of developing a robust,
export-led sales strategy as well as its status as a
significant global exporter of medicinal cannabis.
If medicinal cannabis is subsequently legalised in
France, LGP believes the limited number of trial
suppliers will give LGP a rare first mover opportunity
to capitalise on one of the largest potential
medicinal cannabis markets in Europe.
20
LITTLE GREEN PHARMA Annual Report 2023 11
Psychedelics
During the year, LGP’s psychedelics
subsidiary, Reset Mind Sciences (Reset),
focused on the development and
construction of its custom designed
mushroom cultivation facility and
development and implementation of its
clinical trial using psilocybin.
In early 2023, the TGA announced it would allow
psychiatrists, under strictly defined parameters,
to prescribe psilocybin for treatment resistant
depression and MDMA for PTSD under its
Authorised Prescriber scheme from 1 July 2023.
Given the significant body of work undertaken
over the last two-years, Reset is now in an ideal
position to bring forward its commercialisation
Construction of Reset’s mushroom cultivation
plans to capitalise on this regulatory change.
facility continued throughout 2022 and was
installed and commissioned in early 2023, with
cultivation commencing in May 2023.
During the year, Reset finalised the design and
protocols for its clinical trial using psilocybin
assisted therapy for patients with treatment
resistant major depressive disorder. The trial
subsequently received final ethics approval in
February 2023 and is expected to commence
patient recruitment in the near term.
21
12
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
means the Company already has a strong ESG profile.
In particular, LGP's product and service offerings mean the Company
automatically scores very strongly across three of the Six Dimensions of
Impact, being economic vitality, lifetime well-being, and societal enablement.
Meanwhile, LGP's Green Committee focuses on the Group's performance against
the remaining Six Dimensions of Impact with the goal of identifying any remaining
deficiencies and facilitating the Company’s ESG compliance journey.
We believe these efforts will create distinctive competencies and
create value for the benefit of both shareholders and society.
The following table sets out the Six Dimensions of Impact including the Company’s current
performance and areas of focus:
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.
Creating jobs across
supply chain (internal
& external)
Group engages a broad and diverse workforce and
contractor base across entire supply chain, from cultivation
through to distribution and stakeholder engagement.
Regional and
community
contribution
Group provides significant employment and recruitment
opportunities in regional WA and regional Denmark.
LITTLE GREEN PHARMA Annual Report 2023
22
12
ENVIRONMENTAL, SOCIAL, GOVERNANCE (ESG) A World of Difference
Impact dimension
Areas of focus
Status
Highlights
Environmental
sustainability
Energy consumption
and management
Pesticide and
contaminant
management
Water and wastewater
management
LGP purchases 50% renewable power for its Danish
operations. Given the high power prices due to the Ukraine
War, LGP's Danish facility conducted power consumption
reduction projects throughout the year including replacing
the HPS lighting with LED in its operational rooms. The
facility also disposes of its organic waste to a local Danish
renewable power producer who in turn generates and
supplies waste heat to LGP's facility which is used to warm
the facility and reduce power consumption.
During the year, LGP had a 100% renewable power supply
agreement for its West Australian facilities, including its
indoor cultivation facilities, however due to transmission
equipment limitations at the Company's manufacturing site
the Company was required to rent generating equipment to
supply some of the site's power requirements. The Company
continues to resolve the transmission limitation issue
and in the interim has significantly reduced its reliance on
generator power by dividing its usage to enable access to
grid supplies. The Company is also investigating installing
solar capability at site to reduce reliance on the grid.
The Group uses organic, non-hazardous, non-dangerous
protectants as part of its integrated pest management
regime.
The WA facility uses hydroponic watering systems that
minimise water loss and maximise application.
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 9,000m3 of rainwater
on site in closed basins.
Little Green Pharma Annual Report 2022
Only wastewater from processing and cleaning in WA are
disposed via sewerage systems.
Waste and hazardous
materials
Lifetime
well-being
Improving quality of
life of patients and
employees
Provide benefits and
opportunities for
employee growth
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. The Danish facility has
also introduced a waste management recycling programme
covering its paper, plastic, metal and biological waste outputs.
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.
Supplying reliable
medicines to patients
Company has consistently provided high-quality cannabis
medicines to the Australian and European markets since 2018.
Product quality and
safety
Customer welfare
All Company medicines meet stringent regulatory
requirements for all applicable markets and Company’s
pharmacovigilance activities demonstrate a beneficial safety
and risk / benefit profile for its medicines.
Company strives to address all prescriber and patient
concerns and has received consistently positive feedback
and testimonials.
23
Impact dimension
Areas of focus
Status
Highlights
Ethical
capacity
Compassionate
access
Company offers a compassionate access programme to
eligible patients.
Data security
Board gender
and independent
governance
structure
Strong leadership
and business ethics
Company utilises high security rated platforms and software
in connection with storage of any personal information and
complies with applicable privacy guidelines.
Company currently has 40% female Board representation
including one female non-executive director and one female
executive director, as well as a majority of independent
non-executive directors.
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 a restrictive regulatory environment.
Societal
enablement
Patient feedback
Customer service
Access and
affordability
Access and
inclusion
Employee health &
safety
Employee
engagement &
inclusion
Workplace
transparency
Company to comply with all enhanced TGA product labelling
requirements post 1 July 2023.
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 and educational platforms as well as
medical science liaison and customer care teams. Company
also provides a compassionate access programme as well as
access to reduced price cannabis medicines through health
insurance partnerships and clinical studies.
Group assets have a robust safety culture at all assets and
enjoys a positive safety record since commencement of
operations at all facilities. Company continues to refine safety
culture, processes and training to reflect safety profile of
each asset.
Group has strong employee engagement and inclusion
practices, including through internal communications, reward
programmes 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.
Company generally provides transparent communications,
updates and feedback to workforce, with general
improvement throughout financial year. Company to move
towards expanding internal communications in line with
expanded external communications strategy.
Employee gender
and age diversity
Group has a workforce comprising of over 65% women, with
an age range of between 23 – 75 and an average age of 43.
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.
KEY
Achieved
Limited progress
On track
24
LITTLE GREEN PHARMA Annual Report 2023 13
Directors' report
The Directors present this report for
the year ended 31 March 2023.
Directors
As at the date of this report, the Directors of the Company are:
Mr Michael D Lynch-Bell, Independent Non-Executive Chair
Dr Neale Fong, Independent Non-Executive Director
Ms Beatriz Vicén Banzo, Independent Non-Executive Director
Ms Fleta Solomon, Chief Executive Officer
Mr Angus Caithness, Executive Director
The Directors listed above held these positions throughout the financial
year with the exception of Ms Beatriz Vicén Banzo who was appointed
on 7 July 2022 and held that position for the balance of the financial year.
The Directors listed as Independent Directors have been
independent throughout the financial year.
Information on Directors
Michael D Lynch-Bell
Independent Non-Executive Chair
Michael is an experienced corporate finance executive
and consultant. Michael was appointed on 13 November
2018. His early Ernst & Young career was focused on
auditing clients within the oil and gas sectors and
later added mining to his portfolio. Michael also led
Ernst & Young’s UK IPO and Global Natural Resources
transaction teams in the Transaction Advisory practice.
He 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, non-executive Chair of Serabi Gold
plc (SRB.L), and Senior Independent Director and
Remuneration Committee Chair of Gem Diamonds
Limited (LSE:GEMD). Michael is also Chair of the
Company's Remuneration and Nomination Committee.
25
Dr Neale Fong
Independent Non-Executive Director
Beatriz Vicén Banzo
Independent Non-Executive Director
Neale is a registered medical practitioner with
With over 30 years working in the European
over 35 years in senior leadership roles in private
pharmaceutical industry, Beatriz is a highly experienced
hospitals, the public health systems, management
and decorated expert in European pharmaceutical
consulting, academia, health research, aged care
regulatory and quality assurance matters. Prior to
and not for profit organisations. Neale is currently
joining LGP, Beatriz was the Director of Public Affairs
CEO of Bethesda Health Care and formerly
(Market Access and Patient Advocacy), Regulatory
was Director General of the West Australian
and Quality Assurance for Bayer Pharmaceuticals and
Department of Health. Neale is an experienced ASX
Consumer Health in Spain, Head of Regulatory Affairs
company director and is currently independent
and Permanent Executive Committee Guest at Novartis
chair of Intelicare (ASX:ICR). He is a former non-
Pharmaceutical Company. Beatriz holds a Degree in
executive director of Neurotech International
Pharmacy and MBA from the University of Barcelona,
Limited (ASX:NTI) and executive chair of Chrysalis
a Masters in European Regulatory Procedures from
Resources Limited (ASX:CYS), and has been a
Autonomous University (Barcelona) and a second MBA
Fellow of the Australian Institute of Company
from ESADE Business School. Since 2015, Beatriz has
Directors since 2001. Neale is also Chair of the
also lectured the Masters programme at the Madrid-
Company’s Audit and Risk Committee.
based Professional College Talento Farmacéutico and
is fluent in four languages. Beatriz was appointed to
Little Green Pharma in July 2022.
Fleta Solomon
Chief Executive Officer
Angus Caithness
Executive Director
Fleta drives the strategic vision of the business
Angus is an experienced corporate finance executive
and as Chief Executive Officer of Little Green
and consultant in Australia and international markets.
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, is a graduate of
the Australian Institute of Company Directors
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
(GAICD) and holds a Bachelor of Science and an
billion dual listing in London and Hong Kong prior to the
MBA from the University of Western Australia.
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.
LITTLE GREEN PHARMA Annual Report 2022
26
13
DIRECTORS' REPORT
Board and Committee meetings
The Directors held fifteen Directors’ meetings, five Audit & Risk Committee meetings and three 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
15
15
9
15
15
15
15
9
15
15
5
5
5
-
-
5
5
5
1*
5*
3
3
-
3
-
3
3
-
3
3*
Mr Michael D Lynch-Bell
Dr Neale Fong
Ms Beatriz Vicén Banzo
Ms Fleta Solomon
Mr Angus Caithness
* Invited as guest
In addition, 51 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
• the ongoing development of a psychedelics business including the facilitation of a clinical trial into the
treatment of refractory depression with psilocybin assisted therapy and construction of a psilocybin
mushroom cultivation facility.
In the Directors’ view, there were no significant changes to the principal activities of the Company during
the financial year other than the development of its psychedelics business.
27
Review of operations
The operational review contained in both the Strategy section at page 15 and the operational review
sections at pages 28 to 34 forms part of this Directors’ Report.
Summary of key events:
Operational performance:
Key events from the Company’s 2023 financial year
included:
• capital raisings of $10,114,000 and payment
of $9,102,000 to Canopy Growth Corporation
(Canopy) which related to LGP’s acquisition of
the Danish facility in 2021, with the remaining
$4,110,000 million repaid post-year end
• finalisation of the Danish facility optimisation
project including development of LGP’s genetics
portfolio and significant reductions in operating
costs, resulting in the first deliveries of LGP’s
three best-selling cannabis flower strains to
Australia in November, and its first deliveries
of white-label products to key distributors in
Germany in January 2023
• in February 2023, the TGA announcement
of the scheduling changes to psilocybin
and MDMA to permit MDMA and psilocybin
assisted psychotherapy for the treatment of
PTSD and refractory depression, respectively,
under certain restricted conditions from 1 July
2023; while in March 2023, Reset was granted
ethics approval for its phase 2 clinical trial into
the treatment of refractory depression using
psilocybin-assisted psychotherapy (PAP); and
• the receipt of infringement notices totalling
$373,000 by the TGA for unlawful advertising.
Further commentary around these infringement
notices is contained at page 31.
During the financial year, LGP:
• generated $19,859,000 in revenue, up 89% from
$10,530,000 in the previous period of 9-months
• reduced its loss after tax by $9,081,000, from
$18,286,000 to $9,205,000
• improved its gross margin excluding fair value
adjustments from 40% to 51%
• paid $9,102,000 to Canopy with the balance of
the deferred payment for the Danish facility being
made in early April (refer below)
LGP finished its financial year with $12,400,000 cash in
bank with the Company paying the $4,110,000 balance
of its Canopy loan in early April 2023.
Costs:
Consistent with its focus on achieving cash flow
break-even, the Company improved its gross margin
and continued to reduce its other costs, including its
overhead costs which were reduced by nearly 10%
from $24,661,000 to $22,401,000 in a financial year
3-months longer than the previous reporting period.
Capital:
The Company raised $10,114,000 during the year
from two placements and a share purchase plan.
This enabled the Company to repay Canopy
$9,102,000 during the year, with the remaining
$4,110,000 being repaid post-year end, leaving the
asset available for future financing if required. After
corner-stoning the second placement in March
2023, Thorney Investment Group also became the
largest shareholder in the Company with a total
shareholding of 11.2%.
Sales:
During the year, the Company increased its cannabis
sales by 90% compared to its previous 9-month
reporting period, with flower sales increasing
by over 160% and oil sales by over 50%. Sales in
Australia increased nearly 85%, from $8,448,000 to
$15,665,000, while sales into Europe increased by
over 115%, from $1,792,000 to $3,913,000.
28
LITTLE GREEN PHARMA Annual Report 2023 13
DIRECTORS' REPORT
During financial year 2023, the Company’s Danish
facility agreed an EXW exclusive flower purchase
agreement with long-time German distribution
partner Demecan; entered into two exclusive
EXW white-label flower supply agreements with
German distribution partner Cannamedical, with
the second supply agreement for the same flower
as the terminated supply agreement with Four 20
Pharma; agreed an EXW cannabis flower supply
agreement with German distribution partner Ilios
Santé; won an Italian government tender for the
supply of cannabis flower into Italy; agreed two
EXW distribution agreements with distributors
Sana Life Science and Hilltop Leaf in the United
Kingdom and a further EXW agreement with
Swedish distributor Nordic Range; and continued
to progress product registration of its cannabis
flower products in Portugal and Poland, with its
Polish flower Market Authorisation anticipated in
the second half of calendar year 2023.
The Hon Patrick Gorman MP and Ms Fleta Solomon,
Little Green Pharma, Chief Executive Officer
In late 2022, in recognition of its export strategy and
LGP has now supplied into seven jurisdictions, being
achievements, the Company won the International
Australia, Germany, Italy, France, the UK, Denmark
Health category of the 60th Australian National
and Belgium with further supply agreements into
Export Awards and the West Australian Export
Spain, Portugal and Poland. This gives LGP access
Awards. The National Export Awards are designed to
to over 75% of EU and UK citizens and makes it the
honour the achievements of remarkable Australian
most prolific Australian medicinal cannabis supplier
exporters, see https://www.exportawards.gov.au/ for
in Europe.
more details.
Reset psychedelics business:
During the financial year, LGP’s psychedelics focused subsidiary Reset Mind
Sciences completed the 18-month design, construction, and installation process
of its specialised GACP psilocybin mushroom cultivation facility at the Company’s
operations in Western Australia. Reset has completed commissioning and is
currently cultivating its first psilocybin mushrooms.
In March 2023, Reset also received ethics approval
for its phase 2 clinical trial into the treatment of
refractory depression using Psychedelic Assisted
Psychotherapy (PAP) and is currently finalising
governance approvals, with patient recruitment
expected to commence shortly thereafter.
Leveraging its expertise from development of its
psilocybin clinical trial, in March 2023 Reset also
entered into a strategic psychedelics partnership
with Australian health insurance fund, HIF, to
establish a proof-of-concept mental health
treatment facility with capability to deliver PAP to
eligible patients outside of clinical trials. Under the
partnership LGP will receive a $250,000 contribution
29
to setting up the facility, with the parties also
agreeing to a period of exclusivity to negotiate joint
development of further treatment centres based on
the initial concept.
In early 2023, the TGA announced it would allow
psychiatrists, under strictly defined parameters,
to prescribe psilocybin for treatment resistant
depression and MDMA for PTSD under its Authorised
Prescriber scheme from 1 July 2023. With these
changes, Reset believes its approved clinical trial and
strategic partnership with HIF will give it a significant
first mover advantage in the emerging Australian
psychedelics treatment industry, with the Company
proposing to demerge Reset as a matter of priority
subject to prevailing market conditions.
Research and Innovation:
Obesity trial:
In March 2023, the Company achieved its second
milestone of its novel drug obesity trial with
Curtin University. This trial examines the ability of
selected phyto-and endo-cannabinoids to induce
secretion of a powerful hormonal mediator known
to induce satiety, slow down digestion, lower
blood sugar and ultimately promote weight loss.
LGP expects the third milestone of its obesity trial
to be completed in July 2023.
French trial:
In September 2022, the French health regulator
confirmed the extension of the French medicinal
cannabis trial for a further year, until March 2024.
The Company has supplied its CBD cannabis oils
to the trial for two-years and in May 2023 was
awarded the primary supplier role for its 1:20
cannabis oil for the additional year.
LGP believes its success in the trial continues to
confirm the advantages of developing a robust,
export-led sales strategy as well as its status as a
significant global exporter of medicinal cannabis.
If medicinal cannabis is subsequently legalised
in France, LGP believes the limited number of
trial suppliers will give LGP a rare first mover
opportunity to capitalise on one of the largest
potential medicinal cannabis markets in Europe.
QUEST:
During the year the Company completed the
full 12-month assessment of patients under its
hallmark quality of life study, the QUEST Initiative,
and received very encouraging results from its
3-month interim analysis. LGP has also been
granted ethics approval for the QUEST Global
Initiative, a second clinical study focusing on the
health economic impact of medicinal cannabis
on patients with chronic disease commenced
recruitment in June 2023. The QUEST studies
provide significant real-world evidence as well
as increased prescriber and patient confidence
in support of LGP's medicines, with the costs
of these studies fully funded from patient
participation fees.
30
LITTLE GREEN PHARMA Annual Report 2023 13
DIRECTORS' REPORT
Schedule 3 CBD product:
reflecting the relatively low-level nature of the
In November 2022, LGP received ethics approval of
offences, and totalled $373,000. The Company
its phase III clinical trial in support of its proposed
was surprised and disappointed at receiving the
Australian Schedule 3 CBD product registration
fines however undertook a comprehensive review
for stress reduction and improved quality of sleep.
of its regulatory review processes to ensure
The Company continues to review its clinical trial
structure as well as various funding and partnering
options.
Clinical investigations:
The Company continued with its product support
for a range of clinical investigations to help produce
independent, clinically validated findings to inform
the Company’s future clinical trial plans and product
development pipeline, including its partnership
with Southern Cross University in a phase 2 clinical
trial into symptom relief of fibromyalgia, and with
Hospitalier Regional d Órleans in a clinical trial
evaluating the impact of CBD intake on symptoms
and inflammation in adults living with HIV, with the
latter expected to also solidify the Company’s brand
presence and reputation in France.
Prescriber and customer care:
Healthcare practitioner education and outreach
remains a critical component of LGP’s strategy,
with LGP continuing to provide comprehensive
support and education to healthcare professionals
including online training courses, webinars,
and face-to-face and virtual meetings hosted
by specialist independent practitioners. The
Company also assisted with the development of an
accredited medicinal cannabis educational course
for pharmacists and website resources for patients
and practitioners.
In October 2022, LGP’s customer care team was a
finalist in the Customer Service Team of the Year –
Small in the Australian Service Excellence Awards.
The Company’s Customer Care team remains a
clear leader in the service it provides to Australian
prescribers and customers and the Board is proud
strict compliance with TGA and other regulatory
requirements going forward. In January 2023,
following a robust exchange of appeal submissions
with the TGA, and considering the uncertainty of
appeal prospects given the threshold for conduct
constituting advertising in the pharmaceutical
space (which are similar to the prohibitions against
advertisements for smoking), the Company agreed
to accept the fines in accordance with a payment
plan payable through to July 2023.
Material Risks
The material risks affecting the Company are set
out in Appendix 1 to this Directors’ Report.
Corporate governance update
In July 2022, the Company appointed Ms Beatriz
Vicén Banzo to its Board and Audit and Risk
Committee. With the appointments the
Company closed its prior two departures from
the ASX Corporate Governance Principles and
recommendations – 4th Edition.
Impacts and response to
conflict and COVID-19
The ongoing war in Ukraine has negatively impacted
European power prices with significant increases
across all EU countries including Denmark.
The Company has applied for cost relief and
Government assistance where available. To date
the war has not resulted in any material impact on
obtaining critical materials and consumables.
to have its team recognised for this prestigious
As an essential goods provider the Company has
national award.
TGA infringement notices:
In September 2022, the Company received a
number of infringement notices from the TGA
in relation to certain text and images on its
LGP website and social media channels. These
infringement notices were for each for the lowest
available fines for corporations (being $13,320),
continued to operate throughout the COVID-19
pandemic. 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
research and development.
31
Environmental issues and climate change
The Company’s operations are not regulated by any significant environmental regulation under a law of the
Commonwealth or of a State or Territory.
Meanwhile, the Company believes it is relatively well-positioned to manage the effects of climate change
compared to its peers and other industries.
Changing weather patterns:
Regulatory changes:
Currently, the Company cultivates and manufactures
The risk of climate change may result in
its cannabis flowers in indoor and glasshouse
cultivation facilities. These facilities are self-
contained and rely primarily on electric LED lights
and external water supplies and are not materially
dependent on external climatic conditions, in
contrast to outdoor and solar-dependent cultivation
operations which are heavily influenced by both
weather and temperature conditions. This also
means these facilities are not subject to risks of
additional regulatory changes, including changes
requiring mandatory carbon offsets for all non-
renewable electricity supplies or restrictions
on use of non-renewable electricity. In addition,
changing environmental standards may result
in water rationing and recycling and mandatory
sustainable waste management practices. The
Company purchased renewable power at both
of its production facilities during the year and
while the Company does not anticipate material
lower plant productivity and yield or increased
regulatory changes in the short term, it is currently
incidences of pest and diseases otherwise
investigating capital works to include additional
associated with climate change. The Company
solar power production at its Australian facilities,
believes it is relatively well placed to respond to
any future market shortages driven by the effect of
climate change on third party outdoor and solar-
dependent greenhouse cultivation operations.
while its Danish site supplies organic waste under
an exchange agreement with a local biomass power
station. The Company’s sites both operate within
high-rainfall areas which limits the potential for
future water rationing, with the Company already
recycling around 75% of its total water usage while
both the Australian and Danish facilities use purified
rainwater recovered from their facilities in their
production cycle. Both of the Company’s facilities
also undertake sustainable waste management
programmes including recycling various waste
products, including organic waste, ethanol and
growing mediums.
32
LITTLE GREEN PHARMA Annual Report 2023 13
DIRECTORS' REPORT
Company performance
against expectations
Performance securities
and options
The Company's operations during the year performed
During the financial year the following events
as expected in the opinion of the Directors.
and milestones occurred in respect of existing
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 repayment of
the balance of $4,110,000 to Canopy Growth
(discussed further above) to fully discharge the
debt and the receipt of $1,878,000 in relation to the
Danish research and development rebate.
Likely future developments
The Company expects to continue the manufacturing
and production of medicinal cannabis products while
increasing the volumes distributed. The Company
also expects to spin out psychedelics company Reset
Mind Sciences in the near term.
Dividends
securities held by, and new securities subscribed
for by, the KMPs, with remuneration-related
securities issued to the KMPs detailed in the
Remuneration Report:
•
•
In February 2023, 450,000 share rights
previously issued to non-executive Directors in
connection with the Company’s Initial Public
Offering vested and were converted to shares.
Executives also exercised the remaining
1.5 million performance rights which were
issued to them prior to the Company’s Initial
Public Offering and which had all vested upon
achievement of the share price milestones
In February 2023, the KMPs were issued
with 875,000 Placement shares and 875,000
Placement options with an exercise price
of $0.25 which were previously approved by
shareholders and subscribed for on the same
terms and conditions as the November 2022
placement as other investors
• On 1 April 2023, 68,000 share rights approved
by shareholders and issued to the executive
KMPs relating to the Company’s financial year
2022 ESIP programme vested and were issued
as shares to the executive KMPs. The executive
KMPs hold a further 68,000 share rights issued
under the financial year 2022 ESIP programme
which vest on 1 April 2024 subject to continued
employment at the date of vesting
•
In the previous financial year, shareholders
approved the issue of 3.0 million performance
There were no dividends paid or declared in the
rights to the executive KMPs which vest
reporting period.
Remuneration report
The Remuneration Report detailed on pages 35
to 39 of this Annual Report forms part of this
Directors’ Report.
Directors’ securities
upon the Company achieving share price
milestones of $0.95, $1.10, and $1.25 subject to
the executive KMP remaining an employee at
the date of vesting. To date, these share price
milestone conditions have not been achieved;
and
•
In the previous financial year, shareholders
approved the issue of 105,000 retention rights
with a vesting date of 20 February 2024 to
The Directors’ interests in securities are set out in the
the non-executive KMPs subject to the non-
section “Performance securities and options” and
executive KMPs remaining a Director of the
the Remuneration Report.
Company at the date of vesting.
33
Auditor’s Independence
Declaration
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 Auditor’s Independence Declaration set out
The Deed also entitles the Director or Officer to
on page 49 of this Annual Report forms part of this
access Company documents and records, subject
Directors’ Report.
Corporate Governance
Statement
The Company’s Corporate Governance Statement
can be found at https://investor.littlegreenpharma.
com/site/investor-centre/corporate-
governancestatement-2023
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 Secretary or Officer of the Company or
a subsidiary of the Company out of the property
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.
Non-audit services
The Directors confirm no non-audit services were
provided by the auditor (or by another person or firm
on the auditor’s behalf) during the financial year.
Signed in accordance with a resolution of the
of the Company against (a) any liability incurred
Directors:
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.
Each Director and Officer has also entered into
a Deed of Indemnity, Access and Insurance that
provides for 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
Michael D Lynch-Bell
Independent Non-Executive Chair
Fleta Solomon
Chief Executive Officer
29 June 2023
34
LITTLE GREEN PHARMA Annual Report 2023 14
Remuneration
report
The remuneration report sets
out the Company’s remuneration
strategy for the financial year
ended 31 March 2023 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.
35
Remuneration philosophy
The Remuneration Committee is responsible for making
remuneration recommendations to the Board for the
Directors and Key Management Personnel. In line with its
Charter, the Remuneration Committee is responsible for:
• reviewing and approving the executive remuneration
policy to enable the Company to attract and retain
executives and directors who will create value for
shareholders
• 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
• reviewing and approving the remuneration of direct
reports to the Chief Executive Officer, and other senior
executives as appropriate; and
• reviewing and approving any equity-based plans and
other incentive schemes.
Remuneration Report for
financial year 2022
The Company’s Remuneration Report for financial
year 2022 was adopted by shareholders in August
2022.
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 has designed the STI and LTI Plans to
motivate, retain, and reward executive performance
aligned to the Company’s strategic objectives.
Facility integration following the acquisition of the
Danish facility in 2021, new product development
and R&D metrics, towards predominantly financial
metrics focusing on achieving cash flow break-
even and profitability. The Company expects that
the executive KPIs STI Plan targets for financial
year 2024 will continue to emphasise this focus
on financial targets with a goal to increasing share
price and rewarding long term investors.
Key Management Personnel
The Remuneration Report details the performance
and remuneration of Key Management Personnel
(KMP) for the financial year 2023. KMPs are defined
as persons having authority and responsibility for
directing and controlling the activities of an entity
directly or indirectly. The KMPs comprise:
• Non-Executive Directors, being the Chair Mr
Michael D Lynch-Bell and non-executive directors
Since inception, the Company’s STI Plan and LTI
Dr Neale Fong and Ms Beatriz Vicén Banzo; and
Plan have been designed to align executive KMP
performance with the profile of a start-up Australian
medicinal cannabis company and, over the past
two-years, as an Australian medicinal cannabis
company seeking to achieve cash flow break-even
and profitability.
• two members of the executive team, being
Ms Fleta Solomon (Chief Executive Officer)
and Mr Angus Caithness (Executive Director).
The executives are accountable for managing
operational activities, financial control, and risk
management of the Company.
In the years prior to its ASX listing in February
2020, executive KMP remuneration was structured
such that KMP cash salaries were well below
market rates and reward aligned predominantly
with Company market performance under
the Company’s LTI Plan, which predominantly
comprised equity and options for the executives,
Components of remuneration
– Executive team
The executive KMP remuneration framework
comprises:
• base salary, superannuation, and non-monetary
and retention rights for the non-executive KMPs.
benefits
In the years subsequent to listing, the Company’s
KMP remuneration packages continued to
focus on the growth of long term shareholder
value, with LTI Plan incentives for the executives
comprising performance rights with target share
• short term performance incentives
•
long term performance incentives
During financial year 2023, executive KMP
remuneration was structured according to the
price milestones and packages of retention rights
relevant employment agreements and performance
for the non-executive KMPs. Post listing on the
measures in place. Each of the executive KMP’s
ASX, in addition to base salary the executive KMP
employment agreements to 31 March 2023
remuneration packages have included STI Plan
consisted of fixed remuneration, an STI Plan, and
cash remuneration focused on the achievement of
an LTI Plan. In addition, the Chief Executive Officer
key development targets for the Company in that
received car-parking benefits. No other bonuses
year. Over time, these targets have transitioned
or skill-based payments were received by the
from focusing on EU market expansion, new
executives during the reporting period.
36
LITTLE GREEN PHARMA Annual Report 2023 14
REMUNERATION REPORT
Service contracts
Chief Executive Officer
Executive Director
The structure of the Chief Executive Officer’s
The structure of the Executive Director’s
remuneration is in accordance with her employment
remuneration is in accordance with his employment
agreement dated 1 December 2019. Ms Fleta
Solomon is entitled to receive a base salary plus
superannuation and is also entitled to participate in
the Company’s STI and LTI Plans. This remuneration
is reviewed annually and there is no guarantee of
increases to remuneration.
Express provisions in the agreement protect the
Company’s confidential information and intellectual
property and either Ms Fleta Solomon or the
agreement dated 1 December 2019. Under that
agreement, Mr Angus Caithness is entitled to
receive a base salary plus superannuation and is
also entitled to participate in the Company’s STI and
LTI Plans. This remuneration is reviewed annually and
there is no guarantee of increases to remuneration.
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
Company can terminate the agreement by giving
months’ notice in writing to the other party.
six months’ notice in writing to the other party.
The Company may summarily terminate the
The Company may summarily terminate the agreement
agreement on the grounds of, among other things,
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.
serious or persistent breaches of the terms of the
agreement, gross or wilful misconduct, or if Mr
Angus Caithness is found guilty of any conduct
which results in damage to the reputation or the
business of the Company.
Base salary and non-monetary benefits
Under their service contracts, the base salary for:
• the Chief Executive Officer for the period 1 April 2022 to 31 March 2023 was $305,000 plus 10.5%
superannuation, subject to the superannuation cap amount
• the Executive Director for the period 1 April 2022 to 31 March 2023 was $270,000 plus 10.5%
superannuation, subject to the superannuation cap amount
Following shareholder approval in August 2022, the Executive Director agreed to receive a proportion of his
salary for period July 2022 to March 2023 in ordinary shares based on the fortnightly VWAP over that period,
with the Executive Director receiving $220,475 in salary and 228,629 shares together with a further 11,870
shares accrued for the financial year. The Chief Executive Officer also agreed to reduce her working hours
to four days a week to preserve cash and received $251,039 in salary during the year as well as car-parking
benefits of $3,500.
37
Variable Remuneration – Short Term Incentive Plan
The STI Plan of each executive KMP’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.
The performance milestones are clearly defined and measurable and based on achievements that are
consistent with the Company’s strategic objectives and the goal of enhancing shareholder value. The
Remuneration Committee assesses and approves the executive’s performance against these milestones.
For the 2023 financial year, the STI Plan set predominantly financial metrics, being revenue, total cash costs,
free cash flow, R&D and personal performance metrics each with an allocation of 20% to total award. The
performance goals were divided into threshold, target and stretch goals, with executives entitled to 40% of their
base salary for achievement of all the target goals and up to 100% of their base salary for achieving the stretch
goals across all metrics.
According to the Board’s assessment, the Executive’s achievements against the above metrics rated an STIP
award of 50% of base salary. However, the Board determined that given the share price performance and TGA
fines a lower STIP award of 30% of base salary was more appropriate. Accordingly, the executive KMPs received
the following short term incentive payments and the Company has accrued the following amounts for the
financial year ending 31 March 2023:
• Chief Executive Officer: $75,300; and
• Executive Director: $81,000.
The executive KMPs received the following short term incentive payments for the 2022 financial year as follows:
• Chief Executive Officer: $84,500; and
• Executive Director: $68,951.
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.
Financial year 2022 LTI Plan
In September 2022, following approval by shareholders the executive KMPs were issued with the following
shares and share rights in connection with the Company’s financial year 2022 ESIP programme:
KMP
Shares
Share rights
vesting
1 April 2023
Share rights
vesting
1 April 2024
Grant date
Value of
securities
granted*
Chief Executive Officer
18,000
36,000
36,000
1 July 2021
$79,200
Executive Director
16,000
32,000
32,000
1 July 2021
$70,400
* Value calculated by multiplying share price at grant date ($0.88) by total number of securities issued
The share rights vesting 1 April 2023 vested and were issued as shares to the Chief Executive Officer and
Executive Director in late April 2023. The remaining share rights vesting 1 April 2024 will vest on 1 April 2024
subject to the holder’s continued service with the Company until that date.
38
LITTLE GREEN PHARMA Annual Report 2023 14
REMUNERATION REPORT
Financial year 2023 LTI Plan
In February 2023, following shareholder approval the KMP executives were issued the following performance
rights under the LTI Plan:
Class
Milestone
Milestone
Period
Expiry Date
Number of Performance Rights
Chief Executive
Officer
Executive
Director
Fair value of
securities*
I
J
K
20 Day VWAP
equalling $0.50
3 years from
issue
20 Day VWAP
equalling $0.60
3 years from
issue
20 Day VWAP
equalling $0.75
3 years from
issue
5 years
from issue
5 years
from issue
5 years
from issue
500,000
500,000
$0.1288
500,000
500,000
$0.1147
500,000
500,000
$0.0974
Total
1,500,000
1,500,000
* The rights were valued with reference to a Hoadley Trading & Investment Tools Parisian Barrier Trinomial up-and-in valuation model.
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. The inputs into
the Hoadley Trading & Investment Tools Parisian Barrier Trinomial model and a trinomial up-and-in valuation
model were as follows:
Weighted average share price
Weighted average exercise price
Expected future volatility
Expected life
Risk free rate
Expected dividend yields
Fair value per security
Class I
$0.20
Nil
75%
Class J
$0.20
Nil
75%
Class K
$0.20
Nil
75%
5 years
5 years
5 years
3.17%
Nil
3.17%
Nil
$0.1288
$0.1147
3.17%
Nil
$0.0974
$97,400
Total fair value of securities
$128,800
$114,700
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the
previous years as well as historical volatility of a basket of comparable companies over recent trading periods. The
expected life and service conditions used in the model has been adjusted, based on management’s best estimate,
for the effects of non-transferability, exercise restrictions, and behavioural considerations where appropriate.
The performance rights will lapse if an executive’s 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 other things, termination of a participant’s employment, 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, subject to applicable laws
and ASX requirements. No dividends are payable on performance rights.
In March 2023, the Board has also approved the issue 1 million retention rights to each of the KMP executives
subject to shareholder approval if the KMP executives remain with the Company for a further three-years. The
Company will determine the fair value of this proposed issue of securities when seeking the relevant shareholder
approval at the next General Meeting.
39
Components of remuneration – Non-Executive Directors
As per the ASX Listing Rules the aggregate remuneration of Non-Executive Directors shall be determined by a
resolution approved by shareholders at a general meeting. The aggregate remuneration threshold is currently
set at $500,000 per annum as approved by shareholders at a General Meeting in November 2021.
Non-Executive Directors receive fixed remuneration plus superannuation for their services.
During the financial year, Mr Michael D Lynch-Bell’s annual Director fees were $122,400 plus superannuation, while
Dr Neale Fong and Ms Beatriz Vicén Banzo’s annual Director fees were $61,200 plus superannuation. Following
shareholder approval in August 2022, Mr Michael D Lynch-Bell and Dr Neale Fong agreed to receive a proportion
of their Director’s fees for the period July 2022 to March 2023 in shares based on the fortnightly VWAP over
that period, with Mr Michael D Lynch-Bell receiving $66,679 in fees and 286,248 shares together with a further
18,459 shares accrued, and Dr Neale Fong receiving $30,434 in fees and 143,453 shares together with a further
9,251 shares accrued. Since her appointment in July 2022, Ms Beatriz Vicén Banzo has received $44,700 in fees.
Presently no additional fees are paid to Non-Executive Directors for being a member of any Board committees.
During the financial year, Mr Michael D Lynch-Bell received 70,000 retention rights and Dr Neale Fong received
35,000 retention rights each with a value of $0.32 per retention right and vesting on 20 February 2025, and on
20 July 2022 Ms Beatriz Vicén Banzo received 50,000 shares with a value of $15,000 and 150,000 retention
rights with a value of $0.30 per retention right vesting on 7 July 2025. The retention rights and shares were
valued at the prevailing share price at the date of grant.
No other bonuses or skill-based payments were received by the Non-Executive Directors during the reporting
period.
KMP statutory and share based reporting
Current year 31 March 2023
F. Solomon
A. Caithness
M. Lynch-Bell
N. Fong
B. Vicéz
FY2023
(12 months)
FY2022
(9 months)
FY2023
(12 months)
FY2022
(9 months)
FY2023
(12 months)
FY2022
(9 months)
FY2023
(12 months)
FY2022
(9 months)
FY2023
(12 months)
FY2022
(9 months)
Salary and fees
251,039
234,615
220,475
209,885
66,679
100,521
30,434
45,900
44,700
Shares rights in lieu of salary
-
-
57,375
-
67,808
Other non cash benefits1
19,913
18,655
17,545
(4,280)
Post employment benefits
24,506
16,834
19,616
16,834
Short term incentive - cash
75,300
84,500
81,000
68,951
Long term incentive - shares
with milestone achieved2,4
Long term incentive - shares
with milestone outstanding3,4
Long term incentive -
retention shares4
78,946
160,124
75,446
156,260
262,327
148,214
260,545
148,214
-
-
-
-
-
-
33,982
-
-
-
-
15,000
3,120
4,590
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,278
33,947
28,139
16,973
11,250
Expense for year
712,031
662,942
732,002
595,864
190,765
134,468
95,675
67,463
70,950
Performance related
59%
59%
57%
63%
N/A
N/A
N/A
N/A
N/A
N/A
Director interest in shares
21,559,439 20,255,439 11,437,571
10,410,942 1,669,991
833,743
1,506,478 1,088,025
50,000
-
1. Other non-cash benefits represent car parking paid for by the company as well as movements in the annual leave and long service leave provisions as well
as 50,000 fully paid ordinary shares to Ms Vicén Banzo at $0.30 per share totalling $15,000.
2. Performance rights for which hurdles have been met, but service condition outstanding.
3. Two sets of Performance rights for which neither the performance hurdles and/or the service conditions have been met: First set is made up of 3 Tranches
of 500,000 performance rights each for Ms Fleta Solomon and Mr Angus Caithness with share price hurdles of $0.95, $1.10 and $1.25 with vesting
conditions detailed on page 38 of this Annual Report. Second set is made up of 3 Tranches of 500,000 performance rights each for Ms Fleta Solomon and
Mr Angus Caithness with share price hurdles of $0.50, $0.60 and $0.75 with vesting conditions detailed on page 38 of this Annual Report.
4. This is an equity settled share based payment (SBP) arrangement.
The Company received 98% ‘yes’ votes on its remuneration report for the 2022 financial year.
40
-
-
-
-
-
-
-
-
-
LITTLE GREEN PHARMA Annual Report 2023 Options
The table below shows a reconciliation of options held by each KMP from the beginning to the end of the financial year.
All options were vested and exercisable.
All options granted shown below were issued on 27 February 2023 for nil consideration, being free attaching to
placement shares which were subscribed for as part of a capital raising by the Company. These options were not
issued as part of KMP remuneration.
Name
Ms Fleta Solomon
Mr Michael D Lynch-Bell
Dr Neale Fong
Mr Angus Caithness
Ms Beatriz Vicén Banzo
Performance Rights
Balance at the
start of the year
Number granted
Other changes
Balance at the
end of the year
-
-
-
-
-
250,000
250,000
125,000
250,000
-
-
-
-
-
-
250,000
250,000
125,000
250,000
-
The table below shows a reconciliation of performance rights held by each KMP from the beginning to the end of the
financial year, including how many performance rights were granted, vested and converted during the year.
Name
Performance rights
Balance at
the start of
the year
Number
granted
Vested and
converted
Balance at the
end of the year
Forfeited
Unvested
Vested
Ms Fleta Solomon
2,500,000
1,500,000
(1,000,000)
Mr Michael D Lynch-Bell
Dr Neale Fong
-
-
-
-
-
-
Mr Angus Caithness
2,000,000
1,500,000
(500,000)
Ms Beatriz Vicén Banzo
-
-
-
-
-
-
-
-
3,000,000
-
-
3,000,000
-
-
-
-
-
-
Share Rights
The table below shows a reconciliation of share rights held by each KMP from the beginning to the end of the financial
year, including how many share rights were granted, vested and converted during the year.
Name
Share rights
Balance at
the start of
the year
Number
granted
Vested and
converted
Balance at the
end of the year
Forfeited
Unvested
Vested
Ms Fleta Solomon
-
72,000
-
Mr Michael D Lynch-Bell
Dr Neale Fong
Mr Angus Caithness
Ms Beatriz Vicén Banzo
370,000
185,000
-
-
70,000
(300,000)
35,000
64,000
150,000
(150,000)
-
-
-
-
-
-
-
72,000
140,000
70,000
64,000
150,000
-
-
-
-
-
Shares
The table below shows a reconciliation of shares held by each KMP from the beginning to the end of the financial year.
Name
Balance at the
start of the year
Number granted
Acquired on
exercise of
convertible
securities
Other changes**
Balance at the
end of the year
Ms Fleta Solomon
20,255,439
18,000
1,000,000
250,000
21,523,439
Mr Michael D Lynch-Bell
833,743
Dr Neale Fong
Mr Angus Caithness
1,088,025
10,410,942
Ms Beatriz Vicén Banzo
-
-
-
16,000
50,000
300,000
150,000
500,000
-
250,000
125,000
250,000
-
1,383,743
1,363,025
11,176,942
50,000
**Shares issued on 27 February 2023 subscribed for as part of a capital raising by the Company. These shares were not issued as part of
KMP remuneration.
41
15
Appendix 1
Material risks
This section is prepared in connection with section 299A(1) of the Corporations
Act and summarises the material risks that the Company considers could
impede the achievement of its future operational and financial success.
Further information in relation to the Company’s risk management processes are contained in the
Company’s Risk Management Policy, which can be found at:
https://investor.littlegreenpharma.com/site/about/corporate-governance .
1. ADDITIONAL REQUIREMENTS FOR CAPITAL
Any future capital requirements of the Company
Any additional equity financing may be dilutive to
will depend on many factors, including the pace
shareholders, may be undertaken at lower prices
and magnitude of the development of its business
than the current market price or may involve
and sales, and the Company may need to raise
restrictive covenants which limit the Company's
additional funds from time to time to finance the
operations and business strategy. Debt financing,
ongoing development and commercialisation of
if available, may involve restrictions on financing
its products and to meet its other longer term
and operating activities.
objectives. In addition, the risks and uncertainties
associated with producing cannabis products,
including future regulatory changes and
developments in the industry more generally, means
the Company is unable to accurately predict when,
or if, it will be able to achieve profitability.
Although the Directors believe that additional
capital can be obtained, no assurances can
be made that appropriate capital or funding,
if and when needed, will be available on terms
favourable to the Company or at all. If the
Company is unable to obtain additional financing
Even if profitability is achieved in the future, it
as needed, the Company may be required to
may not be sustained for subsequent periods
reduce the scope of its activities, which could
potentially affecting the market price of shares and
have a material adverse effect on the Company's
the Company’s ability to raise capital, expand its
activities and could affect the Company's ability to
business or continue its operations.
continue as a going concern.
42
LITTLE GREEN PHARMA Annual Report 2023 15
APPENDIX 1 – MATERIAL RISKS
2) LEGISLATIVE CHANGE IN
GERMANY AND FRANCE
The Company is reliant on its counterparties’ ability
to comply with their obligations under existing
and future contractual arrangements. The ability
The Company’s ability to expand its business and
of LGP or its counterparties to comply with their
achieve its growth strategy is also dependent on
obligations under such arrangements may also be
LGP being able to successfully export its medicinal
contingent on external factors, including but not
cannabis products internationally from Denmark and
limited to the uncertainties and changes associated
Australia. LGP has large volume supply agreements
with medical cannabis legislative regimes in the
of medicinal grade cannabis with German
relevant jurisdictions. If any of the Company’s existing
distributors. In parallel with its existing medicinal
arrangements are terminated or the counterparties
cannabis market, there is a growing domestic
breach or fail to carry out their obligations under such
and international expectation that Germany will
arrangements or otherwise cease to be able to meet
introduce a new supply pathway for cannabis into
their commitments and obligations to the Company,
Germany. The scope of this new pathway is still
including due to insolvency, loss of key licences,
being finalised, with decisions pending in relation
unwillingness to pay, change in home market
to manufacturing standards, product safety
conditions or alternative product prices, certifications
guarantees, taxation, and distribution There is a
or permits or any other reason, this could have a
risk that the proposed amendments to the current
material adverse effect on the Company’s business,
supply pathways does not permit LGP to supply into
financial condition, and prospects.
the new pathway, or allows more suppliers to enter
into the market, or both, potentially eroding demand
for existing medicinal cannabis product supplied by
the Company into the German market.
Most global medicinal cannabis markets are still
relatively immature meaning pricing, products
and market conditions are still being established.
This relative immaturity and uncertainty in relation
The Company also intends to grow its business
to market evolution can result in inconsistent
through supply into the nascent French medicinal
market expectations, norms and precedent that
cannabis market, which is currently the subject of a
increases the risk that counterparties may behave
trial programme in which the Company participates
in a less predictable and potentially unethical or
as a primary supplier at low cost to French patients.
unprofessional way in order to maximise their
If the terms of access to the French market restrict
probabilities of success in growing markets. This
the Company’s ability to supply into this market,
may result in higher than expected numbers of
including by preventing any further supply at all, or
defaults or transactional costs.
if the French market does not open on terms or
within the timeline expected by the Company, or at
all, then this could have a material adverse effect on
the Company’s business, financial condition, and
prospects.
3) RELIANCE ON KEY
RELATIONSHIPS AND
CUSTOMERS
The Company relies on various key customer
and supplier relationships in certain parts of its
business. The loss or impairment of any of these
The Company’s supply and purchase agreements
may be governed by foreign laws or be subject
to foreign jurisdiction or arbitration forums that
mean the award and enforcement of judgment
against counterparties, including for non-payment,
under its contract portfolio, may be expensive,
time consuming or impracticable in certain
circumstances. In addition, the inherent uncertainty
associated with litigation, mediation or arbitration
may impact the Company’s willingness to engage
in direct dispute resolution or negatively affect the
probability of its success in such actions.
relationships could have a material adverse effect on
The goodwill of LGP is also necessary for the referral
LGP’s results of operations, financial condition and
of distribution opportunities to LGP and for LGP’s
prospects, at least until alternative arrangements
entry into distribution opportunities with distributors
can be implemented. In some instances, however,
in key jurisdictions. A loss of this goodwill could
alternative arrangements may not be available
result in fewer, or no new, opportunities from
or may be less financially advantageous than the
distributors to distributor LGP products in various
current arrangements.
jurisdictions being offered to or agreed with LGP.
43
4) IMPACT OF THE
LEGISLATIVE REGIME IN
THE UNITED STATES
While the use and possession of cannabis has
been legalised in various states in the United
States for either adult use or medicinal use,
the use and possession of cannabis containing
THC in the United States is illegal under federal
law. The illegality of cannabis containing THC at
a federal level in the United States means that
many US based cannabis entities are precluded
from accessing capital and certain financial
services needed to effectively scale their
businesses. In the event that the United States
legalised cannabis containing THC at a federal
6) THREATS FROM
NEW PRODUCTS, NEW
TECHNOLOGIES, AND
CHANGES IN MARKET
PREFERENCES
The Company currently offers a product portfolio
of cannabis oil and flower products, including
its Schedule 4 CBD oils. There is a risk that the
introduction of new products and dosage forms in
the market, including the introduction of Schedule
3 over-the-counter CBD products in pharmacies,
may adversely impact the Company’s current
Schedule 4 CBD oil sales, resulting in negative
financial consequences for the Company. In
addition, several of the Company’s key markets,
level, these barriers to scale would fall away,
including Australia and Germany, are weighted
allowing US entities to more readily scale their
towards cannabis flower products. Changes in this
businesses, which has the potential to increase
current market preference for cannabis flower in
supply of cannabis in the global market and
these jurisdictions, including towards other dosage
adversely affect non-US operators, such as the
forms which the Company does not also offer,
Company.
5) INPUT COST AND PRICE
RISKS
Currently, transportation, irradiation, clinical
testing and electrical power costs in both
Denmark and Australia represent significant
input costs in the Company’s manufacture of
medicinal cannabis.
If these costs were to continue to rise, this
may impact the Company’s pathway to
profitability.
In addition, rising interest rates are
contributing to rising inflationary pressures
on the global and domestic economies. This
may have impacts on financial markets or
economic stability and could adversely affect
the financial position and performance of the
Company.
Further, the Company operates in an
environment where it is primarily a price-taker.
As such, there is a risk that the wholesale and
retail prices for products may fall over time,
including at or below the Company’s cost of
may result in a shift away from the preference for
cannabis flower products, which could adversely
impact the financial position and performance of
the Company.
The Company also operates in an industry that
may potentially be disrupted by key technological
changes or disruption, including superior and
cheaper growing or production technologies or
superior distribution and customer / prescriber
engagement or management technologies that
could result in a loss of market share and adversely
affect the financial performance of the Company.
7) OCCUPATIONAL HEALTH
AND SAFETY
Site safety and occupational health and safety
outcomes are a critical element in the reputation of
the Company.
While the Company has a strong commitment
to achieving a safe performance on site and a
strong record in achieving safety performance, a
serious site safety incident or an incident arising
from driving to or from the site could impact upon
the reputation and financial performance of the
Company.
production or input acquisition. This could
Additionally, laws and regulations concerning
adversely affect the financial position and
occupational health and safety may become
performance of the Company.
more complex and stringent or the subject of
LITTLE GREEN PHARMA Annual Report 2023
44
15
APPENDIX 1 – MATERIAL RISKS
increasingly strict interpretation and enforcement.
the Company may not be able to import starting
Failure to comply with applicable regulations or
materials into Australia or Denmark or continue
requirements may result in significant liabilities,
producing or distributing medicinal cannabis
suspended operations and increased costs.
in Australia or Denmark or export medicinal
Industrial accidents may occur in relation to
cannabis outside of Australia and Denmark.
the performance of the Company's services.
Accidents, particularly where a fatality or serious
injury occurs, or a series of accidents, may
have operational and financial implications for
the Company, which may negatively impact the
financial performance and future potential of the
Company.
8) MAINTAINING AND
EXPANDING LICENCES AND
REGULATORY RISK
The successful execution of the Company’s
medicinal cannabis business objectives is
contingent upon compliance with all applicable
laws and regulatory requirements in Australia,
Denmark and other jurisdictions and obtaining
all other required regulatory approvals for the
import of starting materials and the production,
sale, import and export of its medicinal cannabis
products.
From time to time, there may be additional
licences and permits that will be required, or
existing licences or permits that require variation,
to execute the business strategy or enter new
territories. There is no guarantee that the
Company is able to obtain these additional or
varied licences and permits or obtain them in a
timely manner.
The Company and its supply chain partners are
also subject to a variety of complex and often
unsettled or inadequate, uncertain or incomplete
laws, regulations, and guidelines, authorisations
and pharmaceutical quality requirements in
both Australia, Denmark and the other countries
that may be subject to differing interpretation
or application. Non-compliance risk may be
exacerbated where operators are unable to
comply with conflicting or evolving interpretations
or laws, and the Company cannot guarantee its
pharmaceutical and compliance management
systems will be adequate to understand all
LGP’s ability to execute its business model and
cannabis regulations or prevent or discover
undertake its growth strategy is dependent on
breaches of laws and regulations and to identify,
LGP’s ability to maintain its medicinal cannabis
evaluate and take appropriate countermeasures
licences and permits and GMP manufacturing
against relevant risks in a timely manner or at all.
licences in both Australia and Denmark.
The Company may also suffer a significant
While LGP intends to submit renewal and variation
diversion or theft event (including the unlawful
applications of its licences and permits by the
requisite dates, and is not aware of any reason
why the relevant regulators would refuse to renew
or vary the relevant licences and permits, LGP
cannot guarantee that the licences or permits will
be renewed or varied in a timely manner or at all.
Should the licenses not be renewed, this could
have a material adverse effect on LGP’s results
of operations, financial condition and prospects,
particularly if LGP is unable to secure appropriate
replacement products and supply lines.
theft of one or more significant shipments of
products) that may have substantial financial
consequences for the Company and with the
potential to cause reputational damage with
regulators or potentially adversely impact LGP’s
ability to cultivate, manufacture or supply under
its medicinal cannabis licences and permits.
9) FORCE MAJEURE AND
UNINSURABLE EVENTS
Adverse changes or developments affecting
Existing licenses and any new licenses obtained
cultivation, production, supply chains, the
in the future in Australia, Denmark or other
availability and price of electricity, and
jurisdictions may also be revoked or restricted
processing facilities, including, but not limited
at any time should the Company fail to comply
to war, disease, mould or infestation of crops,
with the applicable regulatory requirements
fire, explosions, power failures, international
or with conditions set out under the licenses.
sanctions, flood, storms or natural disasters,
Should the licenses be revoked or not renewed,
or material failures of the Company’s security
45
infrastructure, could reduce or require the
Company to entirely suspend its production of
medicinal cannabis in either one or both of its
11) CHANGE IN AND
COMPLIANCE WITH LAWS
operations. These factors can also impact grow
The Company’s operations are subject to various
times, the number of harvests and expected
laws, regulations and guidelines in Australia and
production yields.
In particular, the war in Ukraine continues to
impact Danish power prices, with significantly
higher prices that pre-war prices continuing to
impact the Danish facility. The Company is unable
to predict when or if these power prices will fall or
return to pre-war levels, and for so long as these
power prices remain elevated, the Company’s
financial position and performance may be
negatively affected. Further, the current instability
affecting the international political environment
could result in further conflicts or wars,
particularly in the Northern hemisphere, which
could result in input price increases, including
power, or the inability to source pharmaceutical
Denmark and territories the Company proposes
to operate in, or to export to, including laws and
regulations relating to health and safety, conduct
of operations and the production, management,
transportation, storage and disposal of products
and of certain material used in operations.
Compliance with these laws and regulations
requires compliance with complex national, state
and local laws. These laws change frequently and
may be difficult to interpret and apply. Compliance
with these laws and regulations requires the
investment of significant financial and managerial
resources, and a determination that LGP is not in
compliance with these laws and regulations could
harm the Company’s brand image and business.
grade inputs from current suppliers.
Changes to these laws or regulations could
The Company may also be unable to adequately
insure or obtain any insurance coverage at all
against certain Force Majeure events including
war, sanctions, pandemics, and events
affecting living crops such as fire, pestilence,
contamination, or disease. If such events affect
the Company’s operations then the Company’s
financial position and ability to produce cannabis
products may be negatively affected.
10) PANDEMICS
negatively affect the Company’s competitive
position within the industry and the markets in
which it operates, and there is no assurance that
various levels of government in the jurisdictions
in which the Company operates will not pass
legislation or regulation that adversely impacts the
business.
The effect of the administration, application
and enforcement of the regimes established on
the business in Australia and overseas, or the
administration, application and enforcement of
the laws of other countries by the appropriate
A pandemic, including new waves or variants of
regulators in those countries, may significantly
COVID-19, may prevent the Company, its suppliers,
delay or impact the Company’s ability to
customers, and other business partners from
participate in the global market.
conducting business activities for an indefinite
period of time, including due to shutdowns that
may be requested or mandated by governmental
authorities. Such measures taken in response to
a pandemic may adversely impact the Company’s
operations and are likely to be beyond the control of
the Company.
The Directors have considered the impact of
COVID-19 on the Company’s business and financial
performance. In compliance with its continuous
disclosure obligations, the Company will continue to
update the market regarding the impact of COVID-19
on its revenue channels and any other material
adverse impacts on the Company if they arise.
The Company operates in markets where the laws
and rules relating to medicinal cannabis may be
unclear or not widely or appropriately enforced by
regulators. Where LGP competes in these markets,
it may find its competitive position and market
share eroded by third party actors and competitors
who operate unlawfully or unethically to grow
market share, including by both traditional black
market and licensed operators.
LITTLE GREEN PHARMA Annual Report 2023
46
15
APPENDIX 1 – MATERIAL RISKS
12) CYBER RISKS, SYSTEMS, PRIVACY
IP BREACH RISK AND FRAUD
Breaches of cyber security is a growing global risk
The Company may also collect personal or
as the volume and sophistication of threats has
sensitive information from individuals in
increased, partially from the broad-based working
connection with the conduct of its operations,
both from individuals in Australia and from
jurisdictions outside Australia. The Company or
its employees may intentionally or inadvertently
collect or disclose personal or sensitive
information or use such information contrary to
applicable laws, which could result in significant
loss or damage, including reputational damage,
to the Company. In addition, the risks described
above could also result in breaches of data
security, loss of critical data, and the release,
misuse, or misappropriation of sensitive or
personal information, potentially leading to claims
for loss or damage from third parties affected by,
or civil or criminal claims from regulators arising
from, such breach, loss, or release.
While the Company uses all reasonable measures
to prevent or mitigate the risk of fraud or theft, the
Company may be the subject of internal or external
fraud or theft including non-electronic based fraud
or theft. Depending on the scale or extent of such
fraud or theft, the Company’s financial position and
reputation may be materially adversely affected.
from home reality. Risks include:
• unauthorised access to data/information
leading to reputational damage and/or risk of
litigation;
• malicious attacks that result in outages and
service and revenue disruption;
• ransom demands with direct financial
consequence to the business;
• failure to comply with regulatory standards
risks financial fines or restrictions to conduct
business; and
• business interruption and availability of
systems following a breach.
The Company and the Company’s agents and
distributors already rely and will increasingly rely
on information technology platforms and software
including enterprise resource planning systems to
manage many or all aspects of their operations.
These systems are potentially susceptible to
malfunction, network failures, maintenance issues,
outages, wilful or accidental or mistaken use
or data entry, hijacking or fraudulently directing
supplier payments, theft or misuse, social
engineering, attacks acts of vandalism, hacking,
sabotage, viruses, phishing, and ransomware
attacks. The Company is aware that the rise of
phishing, social engineering attacks, and hacking
activities targeting a broad range of companies
in Australia pose an elevated level of threat to
its operations. The occurrence of one or more
of these events or attacks could significantly
comprise the Company’s operations and result
in delays to production, export, imports or sales
resulting in loss or damage to the Company.
47
13) PRODUCT LIABILITY AND
UNINSURED RISKS
There is a risk that the products sold by the
A product liability claim or regulatory action
Company may not have been produced or
against the Company could result in increased
manufactured in accordance with all applicable
costs and could adversely affect its reputation
laws or pharmaceutical requirements or could
and goodwill with the Company’s patients,
cause serious or unexpected side effects,
distributors and consumers generally. There can
including risk or injury to consumers in both the
be no assurance that the Company will be able to
short term and the longer term, including the risk
maintain product liability insurance on acceptable
of developing schizophrenia, bi-polar disorder
terms or with adequate coverage against potential
and other psychoses and side effects. Previously
liabilities. Such insurance is expensive and may
unknown adverse reactions resulting from
not be available in the future on acceptable terms,
consumption of cannabis products alone or in
or at all. The inability to obtain sufficient insurance
combination with other medications or substances
coverage on reasonable terms or to otherwise
could also occur, including in relation to relatively
protect against potential product liability claims
new dosage forms such as medicinal cannabis
could result in the Company becoming subject to
vape cartridges. The Company may not be entitled
significant liabilities that are uninsured and also
to or be able to procure appropriate insurance
could adversely affect commercial arrangements
cover to meet these potential risks or claims.
with third parties. There is also a risk that the
In addition, the Company may face governmental,
social or consumer pressure in relation to the
supply of certain dosage forms of medicinal
cannabis, including vaping cartridges or medicinal
cannabis edible products, that may result in the
Company choosing to withdraw products from one
or more markets.
Although the Company has procedures in place
for testing finished cannabis products, there
can be no assurance that any quality, potency
or contamination problems will be detected in
time to avoid product recalls, regulatory action or
lawsuits. Should any of the Company’s products
be associated with safety risks such as misuse
or abuse, inadvertent mislabelling, tampering
by unauthorised third parties or product
contamination or spoilage, a number of materially
adverse outcomes could impact on the Company.
insurer could disclaim coverage on some claims
or the insurance is not comprehensive enough for
large claims or that insurers could reduce or cease
coverage for medicinal cannabis products more
generally.
14) ADULT USE MARKETS
The evolution of cannabis markets globally appear
to support a trend towards the legalisation of
cannabis (“adult use markets”) alongside markets
for the supply of cannabis supplied for medicinal
purposes. Where such legalisation occurs, there is a
risk that competition from non-medicinal cannabis
products may partially displace or reduce demand
for the Company’s medicinal cannabis products.
In addition, if the Company were to in future seek
to participate in adult use markets, the Company
may find that its present GMP manufacturing quality
standards are too costly to compete effectively with
Any of the above adverse outcomes include
other adult use market products manufactured to
the risk that regulatory authorities may revoke
lower food-grade or other lower manufacturing
approvals that have been granted to the Company,
standards, requiring the Company to implement new
impose more onerous facility standards or product
processes and procedures and potentially expend
labelling requirements or force the Company to
additional capex in order to compete with these
conduct a product recall. The Company could also
lower-grade products. Such developments could
be subject to regulatory action or be sued and held
adversely affect the Company’s market share in its
liable for any harm caused to customers in those
existing and future markets as well as materially
circumstances.
adversely affect its financial position.
LITTLE GREEN PHARMA Annual Report 2023
48
16
Independent
Auditor’s Report
49
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth, WA 6000
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Little Green Pharma Ltd
Report on the Audit of the Financial Report
Opinion
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
31 March 2023, 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 report, including a summary of significant
accounting policies and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 31 March 2023 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of
the Financial Report section of our report. We are independent of the Group in accordance
with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and
Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including
Independence Standards) (the Code) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of the Company, would be in the same terms if given to the
directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are
members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation.
50
LITTLE GREEN PHARMA Annual Report 2023
Basis of preparation of the financial report
Key audit matter
How the matter was addressed in our audit
The financial statements have been
prepared by the Group on a going
concern basis, which contemplates that
the Group will continue to meet its
commitments, realise its assets and
settle its liabilities in the normal course
of business.
The Group relies on continued sales
growth and the management of costs and
production in line with forecast to
continue as a going concern.
Assessing the appropriateness of the
basis of preparation for the Group’s
financial report was a key audit matter
due to its importance to the financial
report and the judgement involved in
forecasting future cash flows for a period
of at least 12 months from the date of
the financial report.
Note 1 c) of the financial report discloses
the basis of preparation of the financial
report and the Directors assessment of
the going concern assumption.
Our audit procedures included, but were not limited to
the following:
• Agreeing the proceeds from capital raising
activities undertaken during the year to third
party bank support;
•
•
Evaluating the appropriateness of the Group’s
assessment of its ability to continue as a going
concern, including whether the period covered is
at least 12 months from the date of the financial
report and that relevant information of which we
are aware as a result of the audit is included;
Inquiring with management and the Directors
whether they are aware of any events or
conditions, including beyond the period of
assessment, that may cast significant doubt on
the Group’s ability to continue as a going concern;
• Comparing the key underlying data and
assumptions in the Group’s cash flow forecast to
approved budgets and historical cash flows;
• Developing an understanding of what forecast
expenditure in the cash flow forecast is
committed and what could be considered
discretionary;
• Assessing management’s historical accuracy of
cash flow forecasting by comparing actual results
to prior period forecasts; and
• Assessing the adequacy of the related disclosure
in Note 1 c) of the financial report.
51
Valuation of biological assets and inventory
Key audit matter
How the matter was addressed in our audit
AASB 141 Agriculture requires biological
assets to be measured at fair value less
cost to sell or, in the absence of a fair
value, at cost less impairment.
Inventories of harvested cannabis are
transferred from biological assets at their
fair value less costs to sell up to the
point of harvest, which becomes the
initial deemed cost.
Valuation of biological assets and
inventory was a key audit matter due to
the complexity of the valuation model
and the extent of management estimates
and judgements involved in determining
appropriate inputs to the valuation
model.
Notes 2 b), 2 c) and 3 i) of the financial
report disclose a description of the
accounting policy and significant
estimates and judgements applied to the
Group’s biological assets and inventory
balances.
Our procedures included, but were not limited to the
following:
• Obtaining management’s valuation model and
considering whether the inputs are reasonable and
the model is mathematically accurate;
•
Evaluating management’s judgements and
assumptions used in the valuation model as
follows:
o Yield per plant based on historic actuals;
o Cannabinoid yield per gram based on
historical actuals;
o Average production cost per gram by
comparing to historical trends and testing
a sample of recent costs to external
supporting evidence; and
o Sales price less cost to sell by agreeing to
different types of revenue contracts; and
• Testing whether inventory is held at the lower of
cost and net realisable value by comparing unit
cost to recent sales prices achieved;
• Assessing whether product used in or destined for
use in research and development purposes has
been adequately provided for; and
• Reviewing disclosures in Notes 2 b), 2 c) and 3 i)
of the financial report and ensuring compliance
with the accounting standard.
52
LITTLE GREEN PHARMA Annual Report 2023
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 31 March 2023, but does not
include the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this
regard.
Other matter
The financial report of Little Green Pharma Ltd for the period ended 31 March 2022 was audited
by another auditor who expressed an unmodified opinion on that report on 30 June 2022.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the
group to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or 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.
53
Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms
part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 35 to 41 of the directors’ report
for the year ended 31 March 2023.
In our opinion, the Remuneration Report of Little Green Pharma Ltd, for the year ended 31
March 2023, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Ashleigh Woodley
Director
Perth
29 June 2023
54
LITTLE GREEN PHARMA Annual Report 2023
17
Financial
report
55
Consolidated Statement of Profit and Loss
and Other Comprehensive Income
For the year ended 31 March 2023
Note
Year ended
31 March 2023
(12 months)
Period ended
31 March 2022
(9 months)
Revenue
Medicinal cannabis sales
Commercial rent
Total revenue
Cost of sales
Gross margin before fair value adjustment
Fair value adjustment of inventory sold
Gain on fair value of biological assets
Gross margin
Expenses
General and administrative
Sales and marketing
Education
Research and development
Commissioning costs
Insurance
Licences, permits and compliance costs
Loss from operations
Other income
Interest income
Finance expense
Research and development incentive
Government grants
Net foreign exchange
Loss before tax from continuing operations
Tax expense
Loss after tax from continuing operations
Loss for the year from discontinued operations
Loss after tax
Other comprehensive income
4
9
6
8
7
11
19,567,858
291,265
19,859,123
10,279,593
250,354
10,529,947
(9,729,415)
(6,328,756)
10,129,708
(2,179,129)
2,139,169
10,089,748
(4,661,519)
(3,511,524)
(768,367)
(6,594,837)
(4,844,327)
(633,222)
(1,386,967)
4,201,191
(818,296)
2,132,993
5,515,888
(4,257,423)
(3,626,459)
(790,297)
(5,415,119)
(8,616,331)
(543,725)
(1,411,630)
(22,400,763)
(24,660,984)
(12,311,015)
(19,145,096)
-
48,918
(928,839)
5,129,030
63,880
(558,625)
63,078
31,487
(543,528)
2,368,174
184,228
(1,010,103)
(8,556,651)
(18,051,760)
-
-
(8,556,651)
(18,051,760)
(648,778)
(234,489)
(9,205,429)
(18,286,249)
Exchange fluctuations on translation of foreign operations
4,515,026
(2,306,128)
Total comprehensive loss net of tax
(4,690,403)
(20,592,377)
Net loss per share
From continuing operations
Basic and diluted (cents)
From continuing and discontinued operations
Basic and diluted (cents)
Weighted average number of shares outstanding
(3.42)
(3.68)
(7.65)
(7.75)
Basic and diluted
249,835,340
235,922,394
The accompanying notes form an integral part of these condensed consolidated financial statements.
56
LITTLE GREEN PHARMA Annual Report 2023
17
FINANCIAL REPORT
Consolidated Statement of Financial Position
As at 31 March 2023
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Biological assets
Inventory
Assets held for sale
Prepaid expenses
Total current assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Refundable deposits
Other financial assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Deferred payment
External borrowings
Liabilities associated with assets held for sale
Lease liability
Employee benefit obligations
Total current liabilities
External borrowings
Lease liability
Employee benefit obligations
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Share capital
Reserves
Accumulated deficit
Total shareholders' equity
Note
31 March
2023
31 March
2022
12,400,319
20,086,504
8
9
10
11
12
13
14
15
16
11
17
16
17
7,381,795
1,492,199
8,909,108
539,152
423,254
31,145,827
63,280,305
3,638,639
125,527
386,185
43,284
67,473,940
98,619,767
3,355,075
4,109,512
2,351,603
57,971
95,315
1,069,046
11,038,522
5,284,454
27,100
41,385
5,352,939
16,391,461
5,599,794
1,076,173
7,109,242
997,347
578,301
35,447,361
59,394,347
674,686
190,196
197,839
40,753
60,497,821
95,945,182
3,199,094
11,876,669
-
241,424
98,495
1,133,445
16,549,127
3,783,719
114,882
18,399
3,917,000
20,466,127
82,228,306
75,479,055
18
101,183,206
90,254,064
5,129,788
104,250
(24,084,688)
(14,879,259)
82,228,306
75,479,055
The accompanying notes form an integral part of these condensed consolidated financial statements.
57
Consolidated Statement of Changes in Equity
For the year ended 31 March 2023
Share capital
No. Shares
$
Share based
payment
reserve
Translation
reserve
Accumulated
(deficit)/profit
Total
As at 30 June 2021
232,607,948
86,197,119
1,857,348
39,580
3,406,990
91,501,037
Loss after tax
Translation reserve
Total comprehensive income
-
-
-
-
-
-
Share placements
2,713,801
1,799,250
-
-
-
-
Share based payments
-
-
1,618,639
Employee share plan
620,000
350,300
(350,300)
Transfer on vesting
500,000
153,730
(153,730)
Options exercised
3,500,000
1,651,159
(498,653)
Shares in lieu of salary
269,465
102,506
(102,506)
-
(18,286,249)
(18,286,249)
(2,306,128)
-
(2,306,128)
(2,306,128)
(18,286,249)
(20,592,377)
-
-
-
-
-
-
-
-
-
-
-
-
1,799,250
1,618,639
-
-
1,152,506
-
As at 31 March 2022
240,211,214
90,254,064
2,370,798
(2,266,548)
(14,879,259)
75,479,055
Loss after tax
Translation reserve
Total comprehensive income
-
-
-
-
-
-
Share placements
53,315,278
9,274,759
-
-
-
-
Share based payments
-
-
1,017,650
Transfer on exercise
3,700,000
1,364,269
(1,364,269)
Employee share plan
604,000
263,864
596,251
Shares in lieu of services
55,555
25,000
260,880
Options exercised
5,000
1,250
-
-
(9,205,429)
(9,205,429)
4,515,026
-
4,515,026
4,515,026
(9,205,429)
(4,690,403)
-
-
-
-
-
-
-
-
-
-
-
-
9,274,759
1,017,650
-
860,115
285,880
1,250
As at 31 March 2023
297,891,047
101,183,206
2,881,310
2,248,478
(24,084,688)
82,228,306
The accompanying notes form an integral part of these condensed consolidated financial statements.
58
LITTLE GREEN PHARMA Annual Report 2023
17
FINANCIAL REPORT
Consolidated Statement of Cash Flows
For the year ended 31 March 2023
Operating activities
Net loss before tax
Items not involving cash
Changes in fair value of biological assets
Depreciation and amortisation
Share-based payments
Finance expense
Unrealised foreign exchange differences
Gain on derecognition of lease asset
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
31 March
2023
(12 months)
Period ended
31 March
2022
(9 months)
(9,205,429)
(18,286,249)
(2,139,169)
2,984,494
2,326,981
928,839
176,016
-
(76,723)
(1,897,102)
137,839
(134,503)
(41,413)
(2,132,993)
1,004,135
1,753,877
471,964
966,320
(50,446)
700,130
(1,740,141)
289,785
(465,625)
321,027
Net cash flows used in operating activities
(6,940,170)
(17,168,216)
Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Payment of deferred consideration
(1,816,997)
(3,111,651)
(9,102,404)
(7,630,904)
(29,475)
-
Net cash flows used in investing activities
(14,031,052)
(7,660,379)
Financing activities
Proceeds from issue of shares
Costs associated with the issue of shares
Cash inflow from borrowings
Cash outflow from borrowings
Payment for lease liabilities
Net cash flows from financing activities
10,113,750
(837,741)
5,812,488
(1,971,484)
(83,429)
13,033,584
1,050,000
-
3,770,000
-
(94,315)
4,725,685
Net change in cash and cash equivalents
(7,937,638)
(20,102,911)
Cash and cash equivalents, beginning of period
20,086,504
40,269,169
Effect of changes in foreign exchange
251,453
(79,754)
Cash and cash equivalents, end of period
12,400,319
20,086,504
The accompanying notes form an integral part of these condensed consolidated financial statements.
59
Notes to the Financial Statements
For the year ended 31 March 2023
1. NATURE OF OPERATIONS AND BASIS OF PREPARATION
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.
On 15 February 2022 the Company resolved to change its financial year to 31 March. The comparative
reporting period is for the 9-month period ended 31 March 2022.
a) Statement of compliance
c) Going concern
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
29 June 2023.
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.
At 31 March 2023, the Group had incurred a loss
after tax of $9,205,429 (2022: $18,286,249) and
operating cash outflows of $6,923,326 (2022:
$17,168,216). Whilst the Group was only moderately
impacted by COVID 19 on initial onset of the virus,
there remains uncertainty with regard to future
impacts from it as well as the war in Ukraine.
Notwithstanding these events and conditions, the
Directors believe that the entity will continue as a
The financial statements have been prepared on the
going concern and that it is appropriate to adopt
historical cost basis, except for certain assets that
the going concern basis in the preparation of the
are measured at revalued amounts or fair value, as
financial report based on forecast cash flows which
explained in the accounting polices below. These
indicates that the Group will have sufficient cash
accounting policies are consistent with Australian
flows to meet all commitments and working capital
Accounting Standards and with International
requirements. The cash flow forecast is dependent
Financial Reporting Standards. The classification
on the Group achieving forecast targets for revenue,
of comparative figures has been changed where
costs of production and overheads as well as
the change improves the understandability of the
receiving its Research & Development rebates which
financial information.
have been classified as receivables and demerging
Reset Mind Sciences in the near term. 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.
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.
60
LITTLE GREEN PHARMA Annual Report 2023 17
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
d) 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 involvement with the entity and has the ability
to affect those returns through its power over the entity.
The Company has the following subsidiaries:
Name of Entity
Country of
Incorporation
Functional
Currency
Ownership
31 March 2023
31 March 2022
Little Green Pharma AG
Germany
Little Green Pharma Switzerland GmbH
Switzerland
LGP Operations Pty Ltd
LGP Holdings Pty Ltd
Reset Mind Sciences Ltd
Little Green Pharma ApS
Lab Services Denmark ApS
Australia
Australia
Australia
Denmark
Denmark
Euro
CHF
AUD
AUD
AUD
DKK
DKK
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
e) Functional and presentation
g) New standards and interpretations
currency
not yet adopted
The Company’s functional currency is Australian
Certain new accounting standards, amendments
dollars and the Group’s presentation currency is
to accounting standards and interpretations have
also Australian dollars. All amounts presented are in
been published that are not mandatory for the
Australian dollars unless otherwise specified.
31 March 2023 reporting period and have not been
early adopted by the Group. These standards,
amendments or interpretations are not expected
to have a material impact on the entity in the current
or future reporting periods and on foreseeable
future transactions.
f) New and revised Australian
Accounting Standards
In the current year, the Company has applied all new
and revised standards and interpretations issued by
the Australian Accounting Standards Board that are
relevant to its operations or effective for accounting
periods starting on or after 1 April 2022. The Group
did not have to change its accounting policies or
make retrospective adjustments as a result of
adopting these standards.
61
2. ACCOUNTING POLICIES
a) Cash and cash equivalents
d) Property, plant and equipment
Cash and cash equivalents include cash and
Property, plant and equipment is carried at cost less
redeemable short term deposits with a maturity
accumulated depreciation. Historically the assets'
of less than three months held at major financial
useful life for deprecation was determined using a
institutions.
b) Biological 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.
Gains or losses arising from changes in fair value
less cost to sell are included in the results of
operations of 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 consisting of work
in progress and finished goods is written down to
its net realisable value if the carrying amount of
units of production method, however in the current
year this was changed to a straight line basis as
follows:
• Land – not depreciated.
• Buildings – 40 years straight line
• Greenhouses – 20 years straight line
• Production equipment – 15 years straight line
• Office leasehold improvements – life of the lease
• Office equipment – 5 years straight line
Depreciation for plant and equipment is recorded
once the asset is available for use. The residual
values, useful lives and depreciation methods are
reviewed, and adjusted if appropriate, at each
reporting date. During the financial year there was a
change in the accounting estimate of depreciation
of buildings, greenhouses and production
equipment. The change is to reflect the life of the
asset rather than being based on unit of production.
The change from a units of production method to
that of a useful life assessment has been made to
align the expected benefits of these assets with its
own individual expected asset life. The effect of the
change in depreciation method has not resulted in a
inventory exceeds its estimated selling price less
material difference.
costs of disposal. Cost is determined using the
average cost basis.
Residual values and estimated useful lives are
reviewed annually.
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 recognised in profit or loss.
62
LITTLE GREEN PHARMA Annual Report 2023 17
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
e) Financial instruments
i. Financial assets
ii. Amortised cost
The Group classifies its financial assets initially at
This category includes financial assets that are
fair value at the time of acquisition. Subsequently,
held within a business model with the objective
they are measured at amortised cost, at fair value
to hold the financial assets in order to collect
through other comprehensive income, or at fair
value through profit or loss. Upon initial recognition,
management determines the classification of its
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.
Financial assets are derecognised when they
mature or are sold and substantially all the risks
and rewards of ownership have been transferred.
Expected credit losses on trade receivables is
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 interest method.
iii. Fair value through profit or loss ("FVTPL")
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.
determined based on an individual assessment
iv. Financial liabilities
of each receivable taking into 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.
The Group initially recognises financial liabilities
at fair value and are subsequently measured at
amortised cost.
f) External borrowings
g) Intangible Assets
External borrowings are initially recognised at
Intangible assets are recorded at cost and amortised
fair value, net of transaction costs incurred.
over their estimated useful lives at the following
External borrowings are subsequently measured
at amortised cost. Any difference between the
proceeds (net of transaction costs) and the
redemption amount is recognised in profit or
loss over the period of the borrowings using the
annual rate:
• Computer software – 2 to 5 years straight line
• Patents – 20 years straight line
• Pharmaceutical quality systems – 10 years
effective interest method.
straight line
External borrowings are classified as current
• Product development costs – 5 years straight line
liabilities unless the group has an unconditional
Pharmaceutical quality systems are developed to
right to defer settlement of the liability for at least
provide the policies, procedures and standards
12-months after the reporting period.
63
required for Good Manufacturing Practice (GMP)
with amortisation to be recognised from the
commencement of manufacturing activities in the
Company’s own facility.
Residual values and estimated useful lives are
reviewed annually.
h) Foreign currency translation
j) Research and development
Transactions in currencies other than the functional
Research costs are expensed as incurred.
currency of the relevant entity are recorded at
Development expenditures are capitalised only if
exchange rates prevailing on the dates of the
development costs can be measured reliably, the
transactions. At the end of each reporting period,
product or process is technically and commercially
monetary assets and liabilities denominated in
feasible, future economic benefits are probable, and
foreign currencies are translated at the period-
the Group intends to and has sufficient resources to
end exchange rate. Revenues and expenses are
complete the development to use or sell the assets.
translated at the exchange rates approximating
those in effect on the date of the transactions.
Exchange gains and losses arising on translation are
included in net loss. For the purpose of presenting
consolidated financial 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. Any exchange differences which arise are
recognised in other comprehensive income and
accumulated in a foreign exchange translation
reserve.
i) Revenue recognition and gross
margin
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
k) Employee benefits
Provision is made for employee benefits such as
wages, salaries and annual leave arising from services
rendered to the end of the reporting period. Employee
benefits which are expected to be wholly settled
within one-year have been measured at the amounts
expected to be paid when the liability is settled. Where
an obligation in respect of long term employee benefits
arises, that benefit is discounted to determine its
present value. Re-measurements are recognised in
the profit or loss in the period in which they arise.
l) Share-based payments
i. Equity settled transactions
The Company grants options and performance
rights to directors, officers and employees
under the Group’s Share Incentive Plan. The
fair value of these instruments are recognised
as an expense over the vesting period with a
corresponding increase in equity. An individual
sales of dried cannabis flower and cannabis oil
is classified as an employee when they are
consist of one performance obligation being the
an employee for legal or tax purposes (direct
delivery of that product to the customer. Revenue is
employee) or provide services similar to those
recognised at that date as this represents the point
performed by a direct employee, including
in time when control has been transferred to the
directors of the Company. At each financial
customer with only the passage of time required
position reporting date, the amount recognised
before payment is due. Payment terms are generally
as an expense is adjusted to reflect the actual
30 days.
number of instruments that are expected to vest.
Cost of sales represents the deemed cost
of inventory that arose from the fair value
No expense is recognised for awards that do
not ultimately vest except for equity-settled
measurement of biological assets, subsequent post-
transactions for which vesting is conditional
harvest costs capitalised to inventory, purchased
upon a market or non-vesting condition.
dried cannabis, costs to produce cannabis oils
capitalised to inventory, and packaging costs.
Instruments with a graded vesting schedule are
accounted for as separate grants with different
vesting periods and fair values. The fair value is
measured using the Black-Scholes option pricing
model or other appropriate models taking into
account the terms and conditions upon which
the instruments were granted.
64
LITTLE GREEN PHARMA Annual Report 2023 17
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
Where the terms of an equity settled award are
not provided for the initial recognition of assets or
modified, the minimum expense recognised
liabilities that affect neither accounting nor taxable
is the expense as if the terms had not been
loss, and differences relating to investments in
modified. An additional expense is recognised
subsidiaries to the extent that they will probably
for any modification which increases the
not reverse in the foreseeable future. The amount
total fair value of the share-based payment
of deferred tax provided is based on the expected
arrangement or is otherwise beneficial to
the employee as measured at the date of
manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates
modification. When an equity award is cancelled,
enacted or substantively enacted at the end of the
it is treated as if it vests on the date of the
cancellation and any expense not recognised for
the award is recognised immediately.
reporting period. A deferred tax asset is recognised
only to the extent that it is probable that future
taxable profits will be available against which the
asset can be utilised.
Equity-settled share-based payment transactions
with parties other than employees are measured
at the fair 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.
m) Value added taxes
Revenue, expenses and assets are recognised net
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
of the amount of value added tax, except where
expected to become payable.
the amount of tax incurred is not recoverable from
the tax authority. Receivables and payables are
stated inclusive of value added tax. Cash flows in
the statement of cash flows are included on a gross
basis and the value added tax 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.
n) Income taxes
o) Research and development
incentives
The research and development incentive which is
received annually based on the previous financial
year's research and development expenditure is
recognised when there is reasonable assurance
that the Company will comply with the required
conditions for that incentive to be received. Where
refundable, the refund is treated as other income.
Income tax expense comprises current and
deferred tax. Income tax is recognised in profit or
p) Government Grants
loss except to the extent that it relates to items
Government grants are not recognised until there is
recognised directly in equity. Current tax expense
reasonable assurance that the Company will comply
is the expected tax payable on taxable income for
with the conditions attaching to them and that the
the year, using tax rates enacted or substantively
grants will be received.
enacted at period end, adjusted for amendments to
tax payable with regard to previous years.
Government grants that are receivable as
compensation for expenses already incurred or for
Deferred tax is recorded using the liability method,
the purpose of giving immediate financial support
providing for temporary differences between
to the Group with no future related costs are
the carrying amounts of assets and liabilities for
recognised in profit or loss in the period in which
financial reporting purposes and the amounts used
they become receivable and are recognised in other
for taxation purposes. Temporary differences are
income on a gross basis.
65
q) Profit / (Loss) per share
Basic loss per share is computed by dividing total
net loss attributable to the Group for the year by the
weighted average number of shares of the Group
outstanding during 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.
r) Leases
The Group assesses whether a contract is or contains
a lease, at inception of the contract. The Group
recognises a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements
in which it is the lessee, except for short term leases
(defined as leases with a lease term of 12-months
or less) and leases of low value assets (such as
tablets and personal computers, small items of office
furniture and telephones). For these leases, the Group
recognises the lease payments as an operating
expense on a straight-line basis over the term of
the lease unless another systematic basis is more
representative of the time pattern in which economic
benefits from the leased assets are consumed.
The lease liability is initially measured at the present
value of the lease payments that are not paid at
the commencement date, discounted by using
the rate implicit in the lease. If this rate cannot be
readily determined, the Group uses its incremental
borrowing rate.
Lease payments included in the measurement of the
lease liability comprise:
• fixed lease payments (including in-substance
fixed payments), less any lease incentives
receivable;
• the amount expected to be payable by the lessee
under residual value guarantees; and
• 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.
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
commencement date of the lease.
s) Impairment of long-lived assets
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 sell and value in use.
Fair value is determined as the amount that would
be obtained from the sale of the asset in an arm’s
length transaction between knowledgeable and willing
parties. In assessing value in use, the estimated future
cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset. If the recoverable amount
of an asset is estimated to be less than its carrying
amount, the carrying amount of the asset is reduced
to its recoverable amount and the impairment loss
is recognised in profit or loss for the period. For an
asset that does not generate largely independent cash
inflows, the recoverable amount is determined for the
cash generating unit to which the asset belongs.
Management considers both external and internal
sources of information in determining if there
are any indications that the Group’s plant and
equipment or intangible assets 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 considers the manner in which
the plant and equipment and intangible assets are
being used or are expected to be used, and indication
of economic performance of the assets. Where an
The lease liability is subsequently measured by
impairment loss subsequently reverses, the carrying
increasing the carrying amount to reflect interest
amount of the asset is increased to the lesser of the
on the lease liability (using the effective interest
revised estimate of recoverable amount, and the
method) and by reducing the carrying amount to
carrying amount that would have been recorded had
reflect the lease payments made.
no impairment loss been recognised previously.
66
LITTLE GREEN PHARMA Annual Report 2023 17
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
t) 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 reviewed by
the chief operating decision maker. The nature
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.
u) Business combinations
Acquisitions of businesses are accounted for using
the acquisition method with the consideration
being measured at fair value and any acquisition
related costs being expensed. At the acquisition
date, the fair value of all identifiable assets and
liabilities are recognised, except that deferred tax
balances and any employee benefit obligations
are recognised and measured in accordance with
AASB 112 and AASB 119 respectively. If the fair
value of the assets and liabilities which have been
acquired is greater than the consideration paid,
the difference is recognised as a gain on bargain
line of business or geographical area of operations,
is part of a single co-ordinated plan to dispose of
such a line of business or area of operations, or is a
subsidiary acquired exclusively with a view to resale.
The results of discontinued operations are presented
separately in the statement of profit or loss.
3) Significant accounting
judgments and estimates
The preparation of financial statements in
conformity with Australian Accounting Standards
requires management to make certain estimates,
judgments and assumptions that affect the reported
amounts of assets and liabilities at the date of the
financial statements and the reported revenues and
expenses during the year. Actual results may differ
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 in a material adjustment
to the carrying amounts of assets and liabilities.
Significant estimates used in the preparation of
these consolidated financial statements include,
but are not limited to, the following:
purchase in the profit and loss. Initial estimates
i. Biological assets and inventory
are made on a provisional basis, with final fair
values being determined within 12-months of the
acquisition.
v) Non-current asset held for sale
Non-current assets (or disposal groups) are
classified as held for sale if their carrying amount
will be recovered principally through a sale
transaction rather than through continuing use
and a sale is considered highly probable. They are
measured at the lower of their carrying amount
and fair value less costs to sell.
Non-current assets classified as held for sale and
the assets of a disposal group classified as held for
sale are presented separately from the other assets
in the balance sheet. The liabilities of a disposal
group classified as held for sale are presented
separately from other liabilities in the balance sheet.
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, stage of growth,
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 realisable value and
estimates selling price, the estimated costs
of completion and the estimated costs
necessary to make the sale.
ii. Share based compensation
The fair value of share based compensation
expense is estimated using the Black-Scholes
option pricing model or other similar models
and relies on a number of estimated inputs, such
A discontinued operation is a component of the
as the expected life of the option, the volatility
entity that has been disposed of or is classified as
of the underlying share price, and the risk-free
held for sale and that represents a separate major
rate of return. For share based compensation
67
dependent upon milestones, significant
that may lead to impairment. If an impairment
estimates are required as to the probability
trigger exists, the recoverable amount of the
of that milestone being achieved, along with
asset is determined. This involves fair value less
estimates of each employee satisfying the
costs of disposal or value-in-use calculations,
required service condition. Changes in the
underlying estimated inputs may result in
materially different results.
which incorporate a number of key estimates
and assumptions.
vii. Estimation of useful lives of assets
The Group determines the estimated useful
lives and related depreciation and amortisation
charges for its property, plant and equipment
and finite life intangible assets. The useful
lives could change significantly as a result of
technical innovations or some other event.
The depreciation and amortisation charge
will increase where the useful lives are less
than previously estimated lives, or technically
obsolete or non-strategic assets that have been
abandoned or sold will be written off or written
down.
iii. Deferred income taxes
Carry forward tax losses have not been
recognised as an asset because it is not
clear when the losses will be recovered. The
cumulative future income tax, which has not
been recognised as an asset, will only be
obtained if the Group derives future assessable
income of a nature and an amount sufficient
to enable the benefit to be realised; the Group
continues to comply with the conditions for
deductibility imposed by law; and no changes in
tax legislation adversely affecting the Company
realising the benefit.
iv. Research and development incentive
The research and development incentive
receivable is based on management’s
best estimate of the nature and amount of
expenditure incurred during the year that will
meet the required rebate criteria.
v. Development costs
The Group capitalises costs for product
development projects. Initial capitalisation of
costs is based on management’s judgement
that technological and economic feasibility is
confirmed, usually when a product development
project has reached a defined milestone
according to an established project management
model. In determining the amounts to be
capitalised, management makes assumptions
regarding the expected future cash generation of
the project, discount rates to be applied and the
expected period of benefits.
vi. Impairment of non-financial assets other
than goodwill and other indefinite life
intangible assets
The Group assesses impairment of non-
financial assets other than goodwill and other
indefinite life intangible assets at each reporting
date by evaluating conditions specific to the
consolidated entity and to the particular asset
LITTLE GREEN PHARMA Annual Report 2023
68
17
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
4. MEDICINAL CANNABIS SALES
Set out below is the disaggregation of the Group's revenue from contracts with customers:
Type of goods
Oil products
Flower products
Total revenue from contracts with customers
Geographical markets
Australia
Europe
Total revenue from contracts with customers
31 March
2023
(12 months)
31 March
2022
( 9 months)
10,380,605
6,779,227
9,187,253
3,500,366
19,567,858
10,279,593
15,654,922
8,487,702
3,912,936
1,791,891
19,567,858
10,279,593
Revenue is recognised when control of the goods has transferred to the customer, being when the goods
have been shipped to the customer's specific location (delivery). A receivable is recognised by the Group
when the goods are delivered to the customer as this represents the point in time at which the right to
consideration becomes unconditional. One customer comprises of more than 10% of revenue recognised in
the current financial year.
5. PAYROLL COSTS
The Group's payroll costs are comprised of:
Salaries and wages
Short term incentives
Post employment benefits
Share based payments
31 March
2023
(12 months)
31 March
2022
(9 months)
11,437,809
9,081,000
322,051
881,600
135,236
438,607
2,326,981
1,655,608
14,968,441
11,310,451
Included in salaries and wages is annual leave and long service leave employee benefit costs incurred in the period.
6. FINANCE EXPENSE
The Group's finance expenses are comprised of:
Interest on secured external borrowings
Interest on deferred payment
Interest on obligations under leases
69
31 March
2023
(12 months)
472,327
448,979
7,533
928,839
31 March
2022
(9 months)
59,152
469,372
15,004
543,528
7. INCOME TAX NOTE
The reconciliation of income tax obtained by applying statutory rates to the loss before income tax is as follows:
Loss before income taxes from continuing operations
(8,556,651)
(18,051,760)
Loss before income taxes from discontinuing operations
(648,778)
(234,489)
31 March
2023
(12 months)
31 March
2022
(9 months)
Statutory tax rate
Add/(deduct)
• Share based payments
• Research and development incentive
• Fines and penalties
• Foreign losses not recognised
25%
25%
(2,301,357)
(4,571,562)
543,764
960,833
93,240
438,469
806,054
-
1,658,244
3,008,805
• Movement in Australia deferred tax not recognised/(recognised)
(954,724)
318,234
Income tax (benefit)/expense
-
-
Total tax losses in Australia for which no deferred tax assets has been recognised is $1,843,729 (31 March 2022:
$7,608,247). 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.
Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Deferred tax asset/(liability)
• Biological assets
• Prepayments
• Property, plant and equipment
• Net lease liability
• Accounts payable and accrued liabilities
• Unrealised Foreign Exchange loss
• 40-880 tax balance
Employee entitlements
Net deferred tax asset/(liabilities)
Benefit of tax losses not recognised
Net deferred tax asset/(liability) recognised
31 March
2023
(12 months)
31 March
2022
(9 months)
(1,347,309)
(812,517)
(70,562)
(231,699)
(778)
244,014
(12,062)
(68,451)
(72,944)
5,795
345,316
41,907
374,227
394,262
170,947
166,632
(873,222)
873,222
-
-
-
-
70
LITTLE GREEN PHARMA Annual Report 2023 17
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
8. TRADE AND OTHER RECEIVABLES
The Group's trade and other receivables is comprised of:
Trade receivables
Allowance for expected credit loss
Research and development incentive receivable
Other receivables
31 March
2023
31 March
2022
1,549,849
1,849,909
(10,855)
-
5,129,030
2,368,174
713,771
1,381,711
7,381,795
5,599,794
Classification of trade and other receivables
If collection of the amount is expected in one-year or less, they are classified as current assets. Trade receivables
are generally due for settlement within 30 days and therefore are all classified as current.
Fair value of trade and other receivables
Trade receivables are recognised and carried at original invoice value less any allowance for expected credit losses.
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have
been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based
on historical loss rates, adjusted to reflect current and forward looking information on macroeconomic factors
affecting the ability of the customers to settle the receivables.
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 31 March 2023, eligible
expenditure is expected to result in a rebate of $3,251,163 (31 March 2022: $2,368,174). The Company also expects
to receive a research and development rebate relating to historical research and development expenditure in
Denmark of $1,877,867.
71
9. BIOLOGICAL ASSETS
The Group's trade and other receivables is comprised of:
Opening balance
Costs incurred
Transfer to inventory
Gain on changes in fair value
31 March
2023
1,076,173
4,666,107
31 March
2022
965,244
5,483,958
(6,389,250)
(7,506,022)
2,139,169
1,492,199
2,132,993
1,076,173
Biological assets are classified as Level 3 on the fair value
hierarchy and are determined using the most recent
market transaction price. The following inputs and
assumptions being subject to significant volatility 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.
uncontrollable factors, which could significantly affect
In the current period, the biological assets were
the fair value of the biological assets in future periods:
• plant waste – wastage of plants based on various
stages of growth;
• yield per plant – represents the weighted
average grams of dry cannabis expected to
be harvested from a cannabis plant, based on
historical yields;
• 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
approximately 49% complete (31 March 2022 - 69%) as
to the next expected harvest date. The average number
of days from the point of propagation to harvest is 91
days. The weighted average grams of dry cannabis
expected to be harvested from a cannabis plant in
Australia is 216 grams (31 March 2022 – 224 grams). The
weighted average grams of dry cannabis expected to be
harvested from a cannabis plant in Denmark is 78 grams
(31 March 2022 – 78 grams).
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
$298,440 at 31 March 2023 (31 March 2022 - $215,234).
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
$375,050 at 31 March 2023 (31 March 2022 - $269,043).
At harvest, the estimated fair value of a gram of
biomass in Australia is $3.50 (31 March 2022 - $3.50).
10. INVENTORY
The Group's inventory is comprised of:
Finished goods
Work in progress
Supplies and consumables
31 March
2023
1,315,961
31 March
2022
992,573
7,268,471
5,996,982
324,676
119,687
8,909,108
7,109,242
Cost of inventories sold to customers amounting to $11,908,544 was recognised as an expense during the year
(9-month period ended 31 March 2022: $7,147,052).
In the current period, $96,890 (31 March 2022: $67,944) was recognised as an expense for inventories carried at net
realisable value.
72
LITTLE GREEN PHARMA Annual Report 2023
17
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
11. ASSETS AND LIABILITIES HELD FOR SALE
In the prior period, the Company had a letter of intent from a third party to purchase Lab Services Denmark
ApS. This transaction did not eventuate and therefore Lab Services Denmark ApS is not classified as a disposal
group held for sale in the current reporting period as the intention is no longer to sell it. Reset Mind Sciences
Ltd, which is expected to be demerged within 12-months, has been classified as a disposal group held for sale
and presented separately in the statement of financial position.
The major classes of assets and liabilities comprising the operations classified as held for sale are as follows:
Results of assets held for sale
Effect on statement of profit or loss and other comprehensive income
Revenue
General and administrative
Sales and marketing
Research and development
Insurance
Licences, permits and compliance costs
Interest income
Research and development incentive
Net foreign exchange
Loss before tax from disposal group
Attributable tax expense
Loss after tax from disposal group
Cashflow from discontinued operations
Cashflow from financing activities
Effect on the financial position of the Group as at 31 March
Current Assets
Cash and cash equivalents
Accounts receivable
Prepaid expense
Non-current Assets
Property, plant and equipment
Refundable deposit
Assets to be disposed of
Current Liabilities
Accounts payable and accrued liabilities
Liabilities to be disposed of
31 March
2023
31 March
2022
-
(108,028)
(2,843)
(612,165)
(3,442)
(39,670)
10
117,844
(484)
-
(48,781)
-
(152,340)
-
(33,318)
-
-
(50)
(648,778)
(234,489)
-
-
(648,778)
(234,489)
-
-
100
157,808
17,208
323,123
40,913
539,152
57,971
57,971
8,075
271,966
-
717,306
-
997,347
241,424
241,424
Net assets to be disposed of
481,181
755,923
73
12. PROPERTY, PLANT AND EQUIPMENT
The Group’s plant and equipment comprised of:
Land &
buildings
Leasehold
improvements
Production
equipment
Office
equipment
Assets under
construction
Total
Cost
As at 30 June 2021
37,034,042
7,209,137
9,922,989
361,973
-
54,528,141
Additions
6,833,149
3,660
1,056,489
122,726
1,722,464
9,738,488
Assets moved to held for sale
-
-
(477,005)
Transfers
7,177,768
(7,177,768)
-
Write-off asset
(33,421)
(2,270)
(47,710)
-
-
-
Foreign exchange movements
(2,106,383)
-
(148,232)
(1,934)
(255,686)
(732,691)
-
-
-
-
(83,401)
(2,256,549)
As at 31 March 2022
48,905,155
32,759
10,306,531
482,765
1,466,778
61,193,988
Additions
Transfers
1,053,824
2,085,994
Assets moved to held for sale
-
Foreign exchange movements
4,060,252
-
-
-
-
483,475
26,727
619,216
2,183,242
-
394,183
-
-
1,172,489
64,128
(2,085,994)
-
-
-
394,183
5,296,869
As at 31 March 2023
56,105,225
32,759
12,356,678
573,620
- 69,068,282
Accumulated depreciation
As at 30 June 2021
-
(295,711)
(126,262)
(40,899)
Depreciation
Transfers
(356,271)
(137,743)
(136,458)
(130,657)
(419,969)
419,969
Write-off asset
3,595
2,270
Assets moved to held for sale
-
Foreign exchange movements
(353,218)
-
-
-
77,536
15,386
-
-
-
(269,546)
(51,663)
As at 31 March 2022
(1,125,863)
(11,215)
(439,344)
(223,219)
(1,802,921)
(6,558)
(983,398)
(43,919)
Depreciation
Transfers
Assets move from held for sale
-
-
Foreign exchange movements
(630,989)
-
-
-
-
(15,386)
-
-
(442,298)
(62,867)
As at 31 March 2023
(3,559,773)
(17,773)
(1,880,426)
(330,005)
-
-
-
-
-
-
-
-
-
-
-
-
(462,872)
(761,129)
-
83,401
15,386
(674,427)
(1,799,641)
(2,836,796)
-
(15,386)
(1,136,154)
(5,787,977)
Carrying value
As at 31 March 2022
47,779,292
21,544
9,867,187
259,546
1,466,778
59,394,347
As at 31 March 2023
52,571,056
14,986
10,450,648
243,615
-
63,280,305
74
LITTLE GREEN PHARMA Annual Report 2023 17
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
13. INTANGIBLE ASSETS
The Group’s intangible assets comprised of:
Patents &
trademarks
Computer
software
Pharmaceutical
quality system
Product
development
costs
Cost
As at 30 June 2021
120,325
155,463
548,946
Additions
-
29,475
-
As at 31 March 2022
120,325
184,938
548,946
-
-
-
Total
824,734
29,475
854,209
Additions
1,464
33,437
-
3,076,750
3,111,651
As at 31 March 2023
121,789
218,375
548,946
3,076,750
3,965,860
Accumulated amortisation
As at 30 June 2021
(22,627)
(52,461)
(35,434)
Amortisation
(4,513)
(23,313)
(41,175)
As at 31 March 2022
(27,140)
(75,774)
(76,609)
-
-
-
(110,522)
(69,001)
(179,523)
Amortisation
(5,837)
(33,476)
(54,770)
(53,615)
(147,698)
As at 31 March 2023
(32,977)
(109,250)
(131,379)
(53,615)
(327,221)
Carrying value
As at 31 March 2022
93,185
109,164
472,337
-
674,686
As at 31 March 2023
88,812
109,125
417,567
3,023,135
3,638,639
14. 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 payable
31 March
2023
31 March
2022
1,847,676
1,545,352
1,473,569
1,653,742
33,830
-
3,355,075
3,199,094
The carrying amounts of trade and other payables are considered to be the same as their fair values,
due to their short term nature.
75
15. DEFERRED PAYMENT
The Group was party to a Loan Note to Canopy Growth Corporation in relation to the Little Green Pharma
Denmark ApS acquisition on 21 June 2021. A total of $8,557,736 was repaid on 5 July 2022. A further $544,668 was
repaid on 3 January 2023. The remaining $4,109,512 million was repaid post year end on 3 April 2023. The Loan
Note incurred interest of $448,979 (31 March 2022: $469,372). The unfavourable net foreign exchange movement
on the loan was $886,268 (31 March 2022: $845,244).
16. EXTERNAL BORROWINGS
At year end the Group had debtor financing of $1,950,000 in relation to its expected Australian Research and
Development tax incentive rebate (refer to note 8). The debtor financing has an effective interest rate of 15% and an
amortised cost of $1,951,603 with a maturity date of 31 July 2023.
In addition, the Group has two principal bank loans:
• A long term secured loan of $3,770,000 (31 March 2022: $3,770,000) from National Australia Bank. The
loan was taken out on 24 February 2022. Repayment is due 31 December 2024. The loan is secured over
the land and buildings held by LGP Holdings Pty Ltd. These assets are classified as property, plant and
equipment whose carrying value is $6,179,452 (31 March 2022: $6,300,286). The loan carries a variable
interest rate. The current weighted average effective interest rate on the loan is 5.45% and has an
amortised cost of $3,817,848.
• A secured revolving credit facility of $2,000,000 (31 March 2022: $nil) from National Australia Bank. The
loan was taken out on 30 November 2022. Repayments commenced 31 December 2022 and will continue
until 30 November 2027. The revolving credit is secured by a chattel mortgage over the underlying
equipment held by LGP. The bank loan carries a fixed interest rate at 7.68% and an amortised cost of
$1,866,667.
The Group has complied with the financial covenants of its borrowing facilities during the 2023 and 2022
reporting period.
For the majority of the borrowings, the fair values are not materially different to their carrying amounts, since
the interest payable on those borrowings is either close to current market rates or the borrowings are of a
short term nature.
17. EMPLOYEE BENEFIT OBLIGATIONS
The Group's employee benefit obligation is comprised of:
Current liabilities
Annual leave
Employee Benefits
Non-current liabilities
Long service leave
31 March
2023
31 March
2022
674,375
394,671
41,385
1,110,431
777,581
355,864
18,399
1,151,844
76
LITTLE GREEN PHARMA Annual Report 2023 17
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
18. SHARE CAPITAL
At 31 March 2023 a total of 297,891,047 ordinary shares had been issued (31 March 2022 - 240,211,214).
Cash financing activities for the year ended 31 March 2023 included two successful share placements. The first
placement on 9 November 2022 included the issuance of 20,000,000 ordinary shares at $0.20 per share with a
free attaching option with an exercise price of $0.25 to raise a total of $4,000,000. In conjunction with this, a Share
Purchase Plan under the same terms raised $897,500 (4,487,500 ordinary shares and options) and post shareholder
approval the Board and Executive members also subscribed for 1,000,000 ordinary shares and options under the same
terms raising $200,000.
The second placement on 30 March 2023 included the issuance of 27,777,778 ordinary shares at $0.18 to raise
$5,000,000.
Non cash financing activities for the year ended 31 March 2023 included issuing, 55,000 ordinary shares in lieu of
cash for services to service providers at a weighted average price of $0.45 per share totalling $25,000, 604,000
ordinary shares to employees at a weighted average price of $0.41 per share totalling $246,125, 2,500,000 ordinary
shares on conversion of performance rights to the Executive at a weighted average issue price of $0.40 per share
and 1,200,000 ordinary shares on the conversion of retention rights to the Non-Executive Directors and certain other
employees at a weighted average issue price of $0.30 per share. The Group appointed non-executive Director, Ms
Beatriz Vicén Banzo on 8 July 2022 and agreed to issue incentive securities to Ms Beatriz Vicén Banzo prior to her
appointment as Director, which included 50,000 fully paid ordinary shares at $0.30 per share totalling $15,000.
19. 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 as at 30 June 2021
Granted
Forfeited
Exercised
Balance as at 31 March 2022
Granted
Forfeited
Exercised
Balance as at 31 March 2023
Number of
options
7,573,536
-
-
(3,500,000)
4,073,536
-
(4,073,536)
-
-
Weighted average
exercise price
0.38
-
-
0.30
0.45
-
0.45
-
-
Under the placement referred to in note 18, a total of 25,487,500 options with an exercise price of $0.25
and a term of 18-months were issued. Exercise of the options will entitle the holder to one ordinary share
in the Company.
During the reporting period, 4,073,536 options expired without exercise or conversion. A further 5,000
options were exercised with an average weighted exercise price of $0.25.
77
19. SHARE BASED PAYMENTS CONTINUED
Performance rights
Balance as at 30 June 2021
Granted
Forfeited
Exercised
Balance as at 31 March 2022
Granted
Forfeited
Exercised
Balance as at 31 March 2023
Number of
rights
3,000,000
4,500,000
-
(500,000)
7,000,000
6,000,000
-
(2,500,000)
10,500,000
Weighted
average value
0.39
0.82
-
0.40
0.66
0.11
-
0.40
0.41
Each class of share right has a price hurdle, being $0.50, $0.60 and $0.75 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. The inputs into the
Trinomial Up and In model with a Parisian Barrier were as follows:
Weighted average share price
Weighted average exercise price
Expected future volatility
Expected life
Risk free rate
Expected dividend yields
Class I
Class J
Class K
$0.20
Nil
75%
$0.20
$0.20
Nil
75%
Nil
75%
5 years
5 years
5 years
3.17%
Nil
3.17%
Nil
3.17%
Nil
Fair value per security
$0.1288
$0.1147
$0.0974
Total fair value of securities
$257,600
$229,400
$194,800
78
LITTLE GREEN PHARMA Annual Report 2023 17
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
19. SHARE BASED PAYMENTS CONTINUED
Retention rights
Balance as at 30 June 2021
Granted
Forfeited
Exercised
Balance as at 31 March 2022
Granted
Forfeited
Exercised
Balance as at 31 March 2023
Number of
rights
1,200,000
105,000
-
-
1,305,000
255,000
-
(1,200,000)
360,000
Weighted
average value
0.30
0.84
-
-
0.34
0.31
-
0.30
0.46
During the reporting period, the following retention rights were issued to Non-executive Directors: 150,000
retention rights were issued to Ms Beatriz Banzo with a grant date value of $0.30 per retention right. The
retention rights have a grant date of 6 July 2022 and a vesting date of 7 July 2025. 70,000 and 35,000 retention
rights were issued to Mr Michael David Lynch-Bell and Dr Neale Fong respectively. The retention rights have
a grant date value of $0.32 per retention right. The retention rights have a grant date of 29 August 2022 and
a vesting date of 20 February 2025. The expense has been vested over the service condition period. The
retention rights were approved at the Annual General meeting, with further shareholder approval obtained.
Employee share incentive plan
During the reporting period the Company issued 359,000 shares and 514,000 share rights under the
Employee Share Incentive Plan relating to the financial year ended 31 March 2022. The equity instruments
had a fair value of $0.88 at grant date. The share rights have a nil exercise price and vest evenly in two
tranches on 31 March 2023 and 31 March 2024 assuming the recipient remains employed by LGP.
On 29 August 2022, at the Annual General Meeting it was resolved to issue ordinary shares in lieu of salary
to the following Directors; Mr Angus Caithness, Mr Michael D Lynch-Bell and Dr Neale Fong during the
reporting period. The number of shares was determined using the volume weighted average market price
of the Company's Shares during the salary reduction period. An amount of $159,166 has been recognised
in the equity-settled employee benefits reserve during the period.
In addition, the Company intends to issue approximately 1.2 million share rights under the Employee Share
Incentive Plan relating to the period ended 31 March 2023. The share rights will have a nil exercise price
and vest in three tranches on 31 March 2023, 31 March 2024 and 31 March 2025 assuming the recipient
remains employed by LGP.
79
20. FINANCIAL INSTRUMENTS
The classification of the Group’s financial instruments, as well as their carrying amounts and fair values, are
as follows:
Financial assets
Amortised Cost
31 March 2023
31 March 2022
Fair value
Carrying value
Fair value
Carrying value
Cash and cash equivalents
12,400,319
12,400,319
20,086,504
20,086,504
Trade and other receivables
7,381,795
7,381,795
5,599,794
5,599,794
Refundable deposits
386,185
386,185
197,839
197,839
FVPTL
Other financial assets
43,284
43,284
40,753
40,753
Financial liabilities
Amortised Cost
Accounts payable and accrued liabilities
3,355,075
3,355,075
3,199,094
3,199,094
Deferred payment
External borrowings
Lease liability
4,109,512
4,109,512
11,876,669
11,876,669
7,636,057
7,636,057
3,783,719
3,783,719
122,415
122,415
213,377
213,377
The carrying value of the cash and cash equivalents, trade and other receivables, refundable deposits, accounts
payable and accrued liabilities approximate the fair value because of the short term nature. The carrying value of
the deferred payment and external borrowings approximate the fair value because of the short term nature and/or
the loans are market rate interest-bearing loans.
The Company holds an investment in a non-listed entity. The non-listed shares are not actively traded. As quoted
prices in active markets are unavailable, consideration is given to precedent transactions involving the sale of the
company’s shares, as a basis to assess the value of the equity investment.
80
LITTLE GREEN PHARMA Annual Report 2023 17
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
21. FINANCIAL RISK MANAGEMENT
The Board has the overall responsibility for the establishment and oversight of the risk management framework.
The Audit and Risk Management Committee is responsible for developing and monitoring risk management
policies. The Committee reports regularly to the Board on its activities.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate
risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its
training and management standards and procedures, aims to develop a disciplined and constructive control
environment in which all employees understand their roles and obligations.
The Group’s Audit and Risk Management Committee oversees how management monitors compliance with the
Group’s risk management policies and procedures and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group.
a) Market risk
i) Foreign exchange risk
The Company’s functional and presentation currency is the Australian dollar and the majority of its assets,
liabilities, revenue and expenditures are Australian dollar denominated. The Company's German subsidiary has
a Euro functional currency and the majority of its assets, liabilities and expenditures are Euro denominated, its
Swiss subsidiary has a CHF functional currency and the majority of its assets, liabilities and expenditures are
Swiss franc denominated and its Danish subsidiaries have a DKK functional currency and the majority of its
assets, liabilities and expenditures are Danish krone denominated other than the deferred payment which is
denominated in Canadian dollars. The Group operates internationally and is exposed to foreign exchange risk
arising from foreign currency transactions, primarily with respect to Europe. Foreign exchange risk arises from
future commercial transactions and recognised assets and liabilities denominated in a currency that is not the
functional currency of the relevant entity.
The carrying value of financial instruments that are held in a currency other than the entities functional
currency are as follows (expressed in Australian dollars).
Financial Assets - EUR
Cash and cash equivalents
Financial Liabilities - CAD
Deferred payment
31 March
2023
31 March
2022
1,136,458
1,250,458
4,109,512
11,876,669
ii) Cash flow and fair value interest rate risk
The Group is exposed to the risk of future changes in market interest rates. The Group is exposed to interest
rate risk through its longer term borrowings comprising a $3,770,000 secured loan, with a variable rate
maturing 31 December 2024. The Group does not hold any other material financial liabilities with variable
interest rates. Holding all other variables constant, the impact on post tax profit of a 1 percent increase/
decrease in the current weighted average effective interest rate on the $3,770,000 loan would be a decrease/
increase of $37,700.
The Group's asset financing arrangement has a fixed interest rate and is therefore not subject to interest rate
risk. The value of secured asset finance borrowings with a fixed rate of interest is $1,866,667.
81
b) Credit risk
Credit risk refers to the risk that a counter party will default on its contractual obligation resulting in a financial loss to
the Group. Credit risk arises from cash and cash equivalents and credit exposures to sales counterparties and financial
counterparties.
i) Risk management
The Group has adopted the policy of dealing with creditworthy counterparties as a means of mitigating the
risk of financial loss from defaults. Cash is deposited only with institutions approved by the Board, with all bank
and short term deposits being with AA or A rated banks. The Group does not have any other significant credit
risk exposure to a single counterparty or any group of counterparties having similar characteristics.
ii) Credit quality
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference
to external credit ratings (if available) or to historical information about counterparty default rates. All trade
receivables are with counterparties with no external credit rating but for which there have been no default in
the past.
iii) Impaired trade receivables
In determining the recoverability of trade and other receivables, the Group performs a risk analysis
considering the type and age of the outstanding receivable and the creditworthiness of the counterparty.
If appropriate, an impairment loss will be recognised in profit or loss. The Group does not have any impaired
trade and other receivables as at 31 March 2023 (31 March 2022: nil). An expected credit losses has been
recognised of $10,855 (31 March 2022: Nil).
c) Liquidity risk
The Group manages liquidity risk by monitoring immediate and forecasted cash requirements and ensures
adequate cash reserves are maintained to pay debts as and when they fall due.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the
availability of funding through an adequate amount of committed credit facilities to meet obligations when due.
At the end of the reporting period, the Group held a short term on-demand cash balance of $12,400,319
(31 March 2022: $20,086,504) that was available for managing liquidity risk.
Management monitors rolling forecasts of the Group's available cash reserves on the basis of expected cash
flows. The Group's liquidity management policy seeks a target to maintain available cash (comprising cash on
hand, deposits at call and available undrawn debt) of approximately three months of total recurring operational
and corporate expenditure.
Refer to note 16 for full details of financing facilities available to the Group.
82
LITTLE GREEN PHARMA Annual Report 2023 17
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
21. FINANCIAL RISK MANAGEMENT CONTINUED
i) Maturities of financial liabilities
The table below analyses the Group's financial liabilities based on their contractual maturities.
The amounts are the contractual undiscounted cash flows with balances due within 12-months being equal to
their carrying value as the impact of discounting is not significant.
At 31 March 2023
up to 1 year
Between 1
and 5 years
Total
contractual
cash flows
Carrying
amount
liabilities
Accounts payable and accrued liabilities
3,355,075
-
3,355,075
3,355,075
Lease liability
External borrowings
Deferred payment
95,315
38,397
133,712
122,415
2,351,603
5,965,923
8,317,526
7,636,057
4,109,512
-
4,109,512
4,109,512
Total non-derivatives
9,911,505
6,004,320
15,915,825
15,223,059
At 31 March 2022
Accounts payable and accrued liabilities
3,199,094
-
3,199,094
3,199,094
Lease liability
External borrowings
Deferred payment
98,495
130,549
229,044
213,377
-
4,195,045
4,195,045
3,783,719
11,876,669
-
11,876,669
11,876,669
Total non-derivatives
15,174,258
4,325,594
19,499,852
19,072,859
22. 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
programmes and market conditions.
83
23. OPERATING SEGMENTS
The Group’s chief operating decision maker examines the group’s performance both from a product and
geographic perspective and has identified two reportable segments of its business. These are defined
as Australia and Europe: cultivation, production and distribution of cannabis flower and oil products to
Australian and International customers.
The segment information below does not include notional writedowns of intercompany loans or investments.
The following is an analysis of the Group’s reportable operating segments:
Consolidated 31 March 2023
Australia
Europe
Intersegment
eliminations
Total
Revenue
Loss after tax
Assets
Current assets
19,044,049
3,392,650
(2,577,576)
19,859,123
(2,103,816)
(6,946,472)
(155,141)
(9,205,429)
25,420,571
5,780,950
(55,694)
31,145,827
Non-current assets
94,300,640
48,587,162
(75,413,862)
67,473,940
Total assets
119,721,211
54,368,112
(75,469,556)
98,619,767
Liabilities
Current liabilities
(5,186,874)
(5,907,342)
55,694
(11,038,522)
Non-current liabilities
(13,160,236)
(35,585,387)
43,392,684
(5,352,939)
Total liabilities
(18,347,110)
(41,492,729)
43,448,378
(16,391,461)
Consolidated 31 March 2022
Australia
Europe
Intersegment
eliminations
Total
Revenue
Loss after tax
Assets
Current assets
10,387,095
618,123
(475,271)
10,529,947
(6,002,644)
(12,056,721)
(226,884)
(18,286,249)
33,522,582
2,173,166
(248,387)
35,447,361
Non-current assets
71,994,464
44,115,866
(55,612,509)
60,497,821
Total assets
105,517,046
46,289,032
(55,860,896)
95,945,182
Liabilities
Current liabilities
(3,371,608)
(13,177,519)
-
(16,549,127)
Non-current liabilities
(10,690,391)
(13,920,637)
20,694,028
(3,917,000)
Total liabilities
(14,061,999)
(27,098,156)
20,694,028
(20,466,127)
84
LITTLE GREEN PHARMA Annual Report 2023
17
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
24. PARENT ENTITY
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Share capital
Reserves
Accumulated deficit
Total shareholder's equity
31 March
2023
31 March
2022
24,444,335
32,480,278
68,229,274
50,059,962
92,673,609
82,540,240
(5,092,364)
(3,144,185)
(5,352,939)
(3,917,000)
(10,445,303)
(7,061,185)
101,183,206
90,254,064
2,866,223
2,370,798
(21,821,123)
(17,145,807)
82,228,306
75,479,055
Net loss and comprehensive income
(4,675,316)
(20,592,377)
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.
25. RELATED PARTY TRANSACTIONS
Salaries and fees1
Short term incentive - cash
Post employment benefits
Share based payments
31 March
2023
824,950
156,300
47,242
772,932
31 March
2022
605,296
153,451
38,258
663,732
1,801,423
1,460,737
(1) Salaries and fees in 31 March 2023 include share rights issued in lieu of salary, movements in the annual leave
and long service leave provisions, shares issued as part of compensation to Ms Beatriz Vicén Banzo, as well as
car parking paid for by the company.
(2) The short term incentive for the period ending 31 March 2022 has been updated for the finalisation of the
outcome of the short incentive.
26. AUDITORS' REMUNERATION
The auditor of the Group for the current year was BDO Audit Pty Ltd and Deloitte Touché Tohmatsu Limited for the
prior reporting period
Amounts received or due and receivable for:
Audit or review of financial reports
• Group
• Subsidiaries
Total remuneration for audit and other assurance services
85
31 March
2023
31 March
2022
129,805
43,335
173,140
211,991
47,500
259,491
27. IMPACTS AND RESPONSE TO CONFLICT AND COVID - 19
The ongoing war in Ukraine has negatively impacted European power prices with significant increases
across all EU countries including Denmark. The Company has applied for cost relief and Government
assistance where available. To date the war has not resulted in any material impact on obtaining critical
materials and consumables.
As an essential goods provider the Company continued to operate throughout the COVID-19 pandemic.
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 research and development.
28. EVENTS AFTER THE REPORTING DATE
On 3 April 2023, the Company fully settled the amount owing to Canopy Growth Inc as per note 15.
On 11 April 2023, the Company received the research and development rebate of $1,877,867 in relation to
historical research and development expenditure in Denmark.
No other matters or circumstances have arisen since the end of the financial year that have significantly
affected, or may significantly affect the operations, results of operations or state of affairs of the Group in
subsequent financial years.
86
LITTLE GREEN PHARMA Annual Report 2023 17
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
DIRECTOR'S DECLARATION
The directors of the Company declare that:
1. The financial statements and notes for the year ended 31 March 2023 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 consolidated entity;
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.
3. The Directors have been given the declarations by the Managing Director & Chief Executive Officer and the
Chief Financial Officer required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors.
Michael D Lynch-Bell
Independent Non-Executive Chair
Fleta Solomon
Chief Executive Officer
87
88
LITTLE GREEN PHARMA Annual Report 2023 18
ASX additional
information
89
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 15 May 2023.
ORDINARY SHARE CAPITAL
297,891,049 fully paid ordinary shares are held by 12,211 individual shareholders.
All issued ordinary shares carry one vote per share and carry the rights to dividends.
TOP 20 SHAREHOLDERS (CONSOLIDATED) AS AT 15 MAY 2023
NAME
UNITS
% UNITS
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
UBS NOMINEES PTY LTD
MS FLETA JENNIFER SOLOMON
BARBRIGHT AUSTRALIA PTY LTD
BANQUO CONSULTING PTY LTD
BNP PARIBAS NOMS PTY LTD
CG NOMINEES (AUSTRALIA) PTY LTD
SUPERHERO SECURITIES LIMITED
BENONI PTY LTD
CITICORP NOMINEES PTY LIMITED
PAUL FREDERICK LONG
MR ANGUS CAITHNESS
MS JENNY LORRAINE MCKAY
1,858,639
JASFORCE PTY LTD
MICHAEL D LYNCH-BELL
MR SEAN EDWARD REID + MS LOUISE JANE PILKINGTON
BNP PARIBAS NOMINEES PTY LTD
JENSEN JARRAH PTY LTD
MS MARY BERNADETTE DAVIS
TOTAL
1,705,556
1,669,991
1,552,600
1,406,174
1,369,231
1,240,000
12.69
10.79
7.2
4.82
3.02
2.50
1.39
1.25
1.20
0.85
0.79
0.75
0.75
0.62
0.57
0.56
0.52
0.47
0.46
0.41
154,057,967
51.54%
The number of shareholders, by size of holding, in each class are:
RANGE
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
TOTAL
TOTAL HOLDERS
UNITS
% UNITS
2,515
5,478
1,808
2,201
213
1,869,034
13,743,808
13,643,402
60,991,585
208,622,000
12,215
298,869,829
0.63
4.60
4.56
20.41
69.80
100.00
There are 6,010 holdings less than a marketable parcel.
90
LITTLE GREEN PHARMA Annual Report 2023 10
SHAREHOLDER INFORMATION
SUBSTANTIAL SHAREHOLDERS AS AT 15 MAY 2023
NAME
THORNEY INVESTMENTS
HANCOCK PROSPECTING
MS FLETA J SOLOMON
OPTION HOLDINGS
UNITS
% UNITS
33,312,402
26,739,029
21,559,439
11.15%
8.95%
7.2%
25,472,500 options are held by 206 individual option holders.
The Company has the following classes of options on issue as at 15 May 2023 as detailed below.
Options do not carry any rights to vote.
CLASS
TERMS
NO. OF OPTIONS
LGPOPT1
UNLISTED OPTIONS
Exercisable at $0.25 expiring on or before 19 July 2024
25,472,500
25,472,500
OPTIONS RANGE
UNLISTED OPTIONS
NO. OF HOLDERS
NO. OF OPTIONS
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
-
-
1
153
152
206
-
-
7,500
4,439,356
21,025,644
25,472,500
No Option holders hold more than 20% of a particular class of the Company’s Unlisted Options.
CONSISTENCY WITH BUSINESS OBJECTIVES – ASX LISTING RULE 4.10.19
The Company has used the cash and cash equivalents it had at the time of admission in a way consistent
with its business objectives.
ESCROW SECURITIES
The following securities are subject to voluntary escrow:
CLASS
ESCROW TERM
Fully paid ordinary shares
30 June 2023
UNITS
1,000,000
91
SHARE RIGHTS AND PERFORMANCE RIGHTS
As at 15 May 2023 the Company has the following share rights and performance rights on issue
which vest and are convertible (on a 1 to 1 basis) to fully paid ordinary shares upon satisfaction of
the relevant Milestone, as follows:
SECURITY
NUMBER
EXPIRY
MILESTONE
VESTING CONDITIONS
Performance Rights
(Class F)
1,000,000
17 August 2026
Performance Rights
(Class G)
1,000,000
17 August 2026
Performance Rights
(Class H)
1,000,000
17 August 2026
Company's 20-day share
price volume weighted
average price equals at
least $0.95 before
17 August 2024.
Company's 20-day share
price volume weighted
average price equals at
least $1.10 before
17 August 2024.
500,000 rights vest 12-months after
satisfaction of Milestone
500,000 rights vest 24-months after
satisfaction of Milestone
Holder must be employee at date of vesting.
500,000 rights vest 12-months after
satisfaction of Milestone
500,000 rights vest 24-months after
satisfaction of Milestone
Holder must be employee at date of vesting.
Company's 20-day share
price volume weighted
average price equals at
least $1.25 before
17 August 2024.
500,000 rights vest 12-months after
satisfaction of Milestone
500,000 rights vest 24-months after
satisfaction of Milestone
Holder must be employee at date of vesting.
Performance Rights
(Class I)
Performance Rights
(Class J)
Performance Rights
(Class K)
Share Rights
(Non-Executive Director
Retention) – Tranche 1
Share Rights
(Non-Executive Director
Retention) – Tranche 2
Share Rights
(Non-Executive Director
Retention) – Tranche 3
1,000,000
27 February 2028 Company's 20-day share
price volume weighted
average price equals at
least $0.50 before
27 February 2026.
1,000,000
27 February 2028 Company's 20-day share
price volume weighted
average price equals at
least $0.60 before
27 February 2026.
1,000,000
27 February 2028 Company's 20-day share
price volume weighted
average price equals at
least $0.75 before
27 February 2026.
500,000 rights vest 12-months after
satisfaction of Milestone
500,000 rights vest 24-months after
satisfaction of Milestone
Holder must be employee at date of vesting.
500,000 rights vest 12-months after
satisfaction of Milestone
500,000 rights vest 24-months after
satisfaction of Milestone
Holder must be employee at date of vesting.
500,000 rights vest 12-months after
satisfaction of Milestone
500,000 rights vest 24-months after
satisfaction of Milestone
Holder must be employee at date of vesting.
105,000
20 February 2026
Continued employment
until date of vesting
Rights vest on 20 February 2024
150,000
7 July 2027
Continued employment
until date of vesting
Rights vest on 7 July 2025
105,000
20 February 2027
Continued employment
until date of vesting
Rights vest on 20 February 2025
Share Rights
(Employee Retention)
2,000,000
31 March 2028
Continued employment
until date of vesting
Rights vest on 31 March 2026
Share Rights (Employees) –
ESIP Tranche 2
222,500
14 July 2023
Continued employment
until date of vesting
Rights vest on 1 July 2023
All vested rights automatically convert to fully
paid ordinary shares on 14 July 2023
Share Rights
(Executive Directors) –
FY2022 ESIP Tranche 2
68,000
14 April 2024
Continued employment
until date of vesting
Rights vest on 1 April 2024
Share Rights (Employees) –
FY2022 ESIP Tranche 2
179,000
14 April 2024
Continued employment
until date of vesting
Rights vest on 1 April 2024
92
LITTLE GREEN PHARMA Annual Report 2023 About Little Green Pharma
Little Green Pharma was founded in 2016 with a simple dream
– to make affordable, quality-manufactured cannabis medicines
for patients in WA.
And we wanted to be different, to distinguish ourselves from
“Big” Pharma. Hence our name: Little Green Pharma.
In the beginning, this was only a small dream. But sometimes
dreams need to grow.
Today, we’re no longer quite so little. But our dream hasn’t
changed: it’s just grown with us.
Today, our mission is to transform the accessibility of medicinal
cannabis for patients and prescribers globally.
Today, each decision is underpinned by a single question –
will this ultimately help patients and prescribers better access
high-quality medicinal cannabis.
We’ve achieved so much over the past seven-years.
We helped pioneer the Australian medicinal cannabis industry,
and in the process became a leading global herbal medicine
supplier.
We’re rightly proud of what we’ve become, and where we’re going.
But mostly, we’re proud of what we do for our patients. And as an
investor and supporter of Little Green Pharma, we hope you feel
proud too.
Phone:
+61 8 6280 0050
Email:
cosec@lgp.global
Website: www.littlegreenpharma.com
PO Box 690, West Perth WA 6872