A n n u a l R e p o r t 2 0 1 6
ABN 30 116 800 269
MGC Pharmaceuticals Limited
C O R P O R A T E D I R E C T O R Y
Directors
Brett Mitchell
Executive Chairman
Roby Zomer
appointed 15/02/2016
Executive Director and CTO
Nativ Segev
appointed 15/02/2016
Managing Director
Ross Walker
appointed 15/02/2016
Non-Executive Director
Company Secretary
Rachel Kerr
Registered Office and Principal Place of Business
Level 7, 1008 Hay Street, Perth WA 6000
Tel: +61 8 9389 2000
Fax: +61 8 9389 2099
Solicitors
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street, Perth WA 6000
Auditors
PKF Mack
Level 4,
35 Havelock Street, West Perth WA 6005
Securities Exchange Listing
MGC Pharmaceuticals Ltd securities are listed on
the Australian Securities Exchange (ASX)
ASX Code ‘MXC’ for Ordinary Shares and ‘MXCOD’ for Listed Options
Share Registrar
Computershare Investor Services Pty Limited
Level 11
172 St Georges Terrace, Perth WA 6000
Website
www.mgcpharma.com.au
Contents
Managing Director’s Letter to Shareholders
Review of Operations
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report to Members
Shareholder Information
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MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORT Managing Director’s
Letter to Shareholders
MXC Board of Directors (from left to right) Dr Ross Walker, Mr Brett Mitchell, Mr Nativ Segev and Mr Roby Zomer
Dear Shareholders,
On behalf of the Board, I would like to take the opportunity to thank you for all your support during the
2016 Financial Year. Ushering in a new and exciting phase for shareholders, the year has been one of
substantial transformation for the Company starting with our acquisition of MGC Pharmaceuticals and
relisting on the Australian Securities Exchange under the code “MXC”. Since the acquisition, our Company
has taken significant strides forward in its strategy to become a market leader in the medical cannabis
industry.
The medical cannabis market is growing rapidly and in recognition of our ability of become leaders in the
field, we received tremendous support from our investors. This has given us a great start to life as a public
Company, having raised AUD$7.5 million via a Placement and a Priority Offer to execute our growth
objectives during the year. Having such strong support from our investors has allowed us to undertake a
number of key initiatives. These include completing the construction of our Slovenian CBD production
facilities and the funding of our genetics and research operations.
A key achievement during the year was the rollout of our MGC Derma anti-aging line of 15 cosmetics
products. Building on its initial success, we are currently developing our full product line of up to 50 CBD
cosmetics items. We also launched our online shop to sell our medical cannabis cosmetics products
directly to consumers with our initial product range. These cosmetics products have already received
approval from regulatory bodies globally, including in Canada and Europe.
Importantly, we received our first revenues from our online store as well as having received the first
revenues from our Californian distribution deal. Early revenue generation is an important milestone and
key differentiating factor for our medical cannabis offering compared to many of our competitors.
Another highlight this financial year was the launch of Australia’s first ever White Paper on the medicinal
cannabis industry, published in conjunction with the University of Sydney Business School. The White
Paper positioned MGC Pharmaceuticals as a thought leader in the emerging medical cannabis space
domestically, as well as raising interest internationally. The White Paper highlighted the potential of
medical cannabis to helps patients suffering from a wide range of medical conditions. In an Australian first,
it also estimated that size of the Australian medical cannabis market currently worth over $150 million per
annum.
Working on the white paper helped highlight certain actions that we feel will long-term benefit for MGC
as a company, and for the burgeoning Medical Cannabis Industry as a whole, such as developing
relationships with patient and medical groups. This will allow MGC to a point of engagement for patients
and medical professionals alike, giving us unique access to the very demographics we serve. MGC has
entered into a MOU with Epilepsy Action Australia which will facilitate these efforts in 2017.
MGC is engaging with Universities, research facilities and various other stakeholders to have clinical trials
running in both Australia and Europe in 2017, all with pipelines to commercialisation and revenue, with
the intention of having several of our proprietary formulations reaching patients as prescribable
medications at the trials completions.
Legislative changes across Australian Federal and State Governments have been very favourable to
medical cannabis in recent times. The Federal Government amended the Narcotics Drugs Act 1967 to
provide patients suffering from chronic conditions access to medical cannabis. Also of great benefit to the
medical cannabis patients, Victoria and New South Wales facilitated the possibility of clinical trials in
medical cannabis.
Our medical cannabis growing operations have progressed well throughout the financial year and we
planted our first test CBD crops in our growing operations in Slovenia during 2016. This gives us the
opportunity to test the best soil and growing conditions for use in future MGC Pharmaceuticals medical
cannabis material.
With a year of high activity now behind us, we look forward to another busy year ahead. Our CBD skin
care formula is progressing through its testing phases having successfully completed Phase 1 testing.
This will allow MGC to release Dermatological Tested products to the market in the near future.
We are looking forward to progressing our strategy to become a leader in the Australian medicinal
cannabis market. Key to this will be the progress we are making towards clinical research relating to
epilepsy, post chemotherapy nausea, severe pain and palliative care. In time MGC Pharmaceuticals aims
to move towards producing pharmaceutical grade products to provide treatment for people suffering
from a variety of chronic conditions across the globe.
With legislation and support for medical cannabis changing rapidly across the globe, this is an exciting
time to be involved in the medical cannabis industry and once again I thank Shareholders for their
continued support.
Yours sincerely,
Nativ Segev
Managing Director
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MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORT
M G C P H A R M A C E U T I C A L S L I M I T E D 2 0 1 6 A N N U A L R E P O R T
Review of
Operations
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During the 2015/16 financial year, the acquisition of MGC
Pharma (UK) Ltd and the ASX listing was completed,
diversifying the Company into the growing medical
cannabis market
Completion of capital raisings in May 2016, raising a total
of $7.5 million via a Placement to sophisticated investors
and a Priority Offer to existing shareholders, funding the
Company’s growth initiatives
MGC Pharmaceuticals planted its first test crop of
Cannabis Sativa L at its Slovenian growing farm in
June 2016
Launch of MGC Derma’s CBD cosmetics range and initial
distribution through newly launched online shop and the
first USA and European distribution deals
Company received first revenues from operations in June
2016, including 10% deposit of €30,000 from first
€300,000 order from Californian distribution deal
Approval from European Commission’s Cosmetics
Products Notification Portal (CPNP) and compliance with
FDA and Canada requirements for products, enabling the
Company to sell cosmetics products in those regions
Binding Heads of Agreement signed for the acquisition of
Czech Republic based medical cannabis company PANAX,
significantly enhancing genetics and breeding capabilities
and allowing MGC Pharmaceuticals to develop new
strains of medicinal cannabis - due diligence processes
well advanced
Australian Federal and State legislation changes,
favourable towards the establishment of a medicinal
cannabis industry in Australia and accelerating the
Company’s Australian strategy
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MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORT R E V I E W O F O P E R A T I O N S
R E V I E W O F O P E R A T I O N S
CORPO RATE
Acquisition of MGC Pharma (UK) Ltd and Listing on ASX
During the financial year, the Company successfully completed its relisting on the Australian Securities Exchange
(ASX) following the acquisition of MGC Pharma (UK) Ltd. The Company commenced trading on the ASX in
February 2016 under the ticker code MXC.
$7.5m Placement and Priority Offer to MXC shareholders
MGC Pharmaceuticals completed a Placement of 113,636,364 ordinary shares at 4.4c, raising $5 million during
May 2016. The Placement was oversubscribed by sophisticated and professional investors. On the same terms,
the Company also offered a Priority Offer to existing eligible shareholders that received a very strong response
and was closed early, raising the maximum amount of $2.5 million.
The total $7.5m of new funds raised before costs will allow the Company to execute its business plan and
growth initiatives, including completing the construction of its Slovenian CBD growing facility, as well as funding
its genetics and breeding research operations. It also allows MGC Pharma to complete the roll-out its MGC
Derma cosmetics product line of approximately 50 products, including psoriasis and acne skin care products.
Acquisition of PANAX Pharma
The Company entered a Binding Heads of Agreement to acquire PANAX Pharma s.r.o (Panax), a Czech Republic
based medical cannabis company during the year. The acquisition strengthens MGC Pharmaceuticals’ genetics
credentials by providing access to new strains of medicinal cannabis. Under the agreement, MGC Pharmaceuticals
will be issued a 25% equity holding in Panax upfront and will be issued a further 55% equity for funding Panax’s
operational costs next year, up to a maximum of €700,000. MGC Pharmaceuticals holds the rights through an
option to acquire the final 20% of Panax for €800,000 in MGC Pharmaceuticals ordinary shares, based on a
20-day volume weighted average price (VWAP) immediately prior to the issue date.
This acquisition is expected to complete in Q4 2016, following the conclusion of the Company’s due diligence
processes in the Czech Republic, which have been significantly advanced during the June and September
quarters.
OPER ATI ONAL
Growing Operations
The Company received licenses in 2016 from the Slovenian Government, allowing MGC Pharmaceuticals to
grow industrial cannabis in an outdoor farm near Ljubljana, Slovenia. These licenses are issued and renewed
on an annual basis.
The Company successfully planted its first test crops in the Company’s growing farm operation in Slovenia,
during June 2016. The test crop will be used to evaluate the best soil and growing conditions needed for high
CBD Cannabis Sativa L cultivation and production, for use by MGC Pharmaceuticals as future cosmetics and
medicinal cannabis raw materials.
The Company remains on track to deliver its first full-scale European CBD harvest in 2017, with its first
commercial CBD extract production to follow. The Company is now planning to commence the construction of
its GMP/GLP CBD extraction facility for production of API in Slovenia in the December quarter.
In addition, the Company’s pending acquisition of Czech Republic based Panax will be strategic for its European
CBD operations. The acquisition of Panax gives the Company access to breeding licence agreements to
conduct research regarding multiple medical cannabis strains, as well as access to world-leading genetics,
breeding, growing and research facilities.
Face & Neck
BODY - white
LID - metallic, col-
oured
Hand & Body
BODY - full colour
LID - metallic silver
New MGC Derma Product Lines
Product Development
Cosmetic Products
The Company is able to sell its cosmetics within the USA, Canada, furthermore the Company has received
approval from the European Commission’s Cosmetic Products Notification Portal (CPNP) allowing the sale of its
MGC Derma cosmetics products Europe.
During the financial year, the Company also launched its MGC Derma cosmetics product range, as well as
launching an online shop in mid-April that allows consumers to directly purchase its cosmetics product range
from the website. The initial range of 15 cosmetic products, including facial serums and creams, eye serums,
soaps and toners is now available on the website, with the development of the full range of approximately 50
CBD based cosmetic products currently underway.
The Company has already received its first revenues from the www.mgcderma.com website and from its
European and Californian exclusive distribution deals.
The Company received a 10% deposit of €30,000 from its first €300,000 order under its new Californian
distribution deal. The Californian distribution deal’s first-year contract is worth approximately €1.2m and the
Company expects further revenue uplift in the year ahead.
In October 2015, MGC Pharmaceuticals completed Phase 1 testing of its CBD skin care formula demonstrating
excellent results for patients with Psoriasis. The CBD skin care formula proved to be an effective relief for skin
suffering from dryness, redness and flaking. The testing has progressed to Phase 2 and Phase 3, the success of
these tests will allow MGC to release Dermatological Tested products to the market.
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Directors’ Report
Planting first CBD crop in Slovenia in June 2016
Australian Operations
MGC Pharmaceuticals, together with the University of Sydney Business School, published Australia’s first ever
White Paper on the medicinal cannabis industry, following changes to legislation by the Australian Government
that facilitates the cultivation of cannabis in Australia for medical and scientific purposes. This landmark White
Paper highlighted the commercial potential of the Australian medicinal cannabis raw material market, estimated
to be worth $100 – $1501 million per annum currently. Also highlighted was the potential to help tens of
thousands of patients suffering from a wide range of medical conditions such as multiple sclerosis, epilepsy,
cancer and chronic pain.
With the Australian Federal Government introducing new legislation to allow for the supply and cultivation of
medical cannabis by amending the Narcotics Drugs Act 1967 to provide patients suffering from painful and
chronic conditions access to the drug, MGC Pharmaceuticals is well positioned to be a first mover and market
leader in the Australian market. Additionally, legislative changes in Victoria and New South Wales have
facilitated the possibility of clinical trials with medicinal cannabis, which the Company intends to pursue in the
coming financial year.
During the financial year, the Company appointed renowned cardiologist and media commentator Dr Ross
Walker as Non-Executive Director and head of its Strategic Advisory Board. Dr Walker is leading the evaluation
and research into the commercial opportunities for medicinal cannabis in Australia.
In addition to the appointment with Dr Ross Walker, the Company appointed leading Israeli Paediatric
Neurology and Paediatric Epilepsy Expert, Professor Uri Kramer, to the Strategic Advisory Board. Professor
Kramer will direct the development of clinical trial programs in Australia and Europe.
The Directors present their report on MGC Pharmaceuticals Limited (“the Company”) and its controlled entities
(“group”) for the financial year ended 30 June 2016.
DIRECTORS
The names of Directors in office at any time during or since the end of the year are:
DIRECTOR
TITLE
APPOINTMENT DATE
RESIGNATION DATE
Brett Mitchell
Executive Chairman
4 April 2013
Nativ Segev
Roby Zomer
Ross Walker
Managing Director
15 February 2016
Executive Director & CTO
15 February 2016
Non-Executive Director
15 February 2016
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Nick Castleden
Non-Executive Director
12 May 2014
24 June 2016
Nick Poll
Non-Executive Director
4 April 2013
15 February 2016
Directors have been in office since the start of the financial year to the date of this report.
COMPANY SECRETARY
Rachel Kerr held the position of Company Secretary for the full financial year.
PRINCIPAL ACTIV ITIES
The Company is a European based specialist medical cannabis company with many years of technical and
commercial experience in the medical cannabis industry. The Company’s founders were key figures in the Israeli
medical cannabis industry and the core business strategy is to develop and supply high quality non-psychoactive
Cannabidiol (CBD) resin extract to the growing demand in cosmetics and medical markets in Europe, North
America and Australasia. The Company is also developing strategic joint ventures in these key value add
industries, as demonstrated with MGC Derma CBD cosmetics.
OPERATING RESULTS
The consolidated loss of the group amounted to $6,230,063 (2015: $3,797,791).
DIVIDE NDS PAID OR RECOMM END ED
No dividends have been paid or declared for payment during, or since, the end of the financial year.
SIGNIFICANT CH ANG ES IN STATE OF AFFAIRS
During the financial year the Company undertook significant corporate and asset restructuring as a result of the
agreement to acquire MGC Pharma (UK) Ltd as detailed in the review of operations. Through this transition the
Company became a medicinal cannabis company.
AFTER REPORTING DATE EVENTS
On 13 July 2016, the Company announced Professor Uri Kramer, a highly regarded expert in the field of
Paediatric Neurology and Paediatric Epilepsy, joined the Company as a key technical medical consultant and
also joined the Strategic Advisory Board.
The Company announced on 11 August 2016 that it executed a binding agreement to sell all its interests in, and
exploration data relating to the exploration work completed on its Bouroubourou and Lingokoto exploration
permits in Senegal. The Company executed this binding agreement with its joint venture project partner
Afrigem SL, for total cash consideration of AU$500,000. These funds have now been received by the Company.
On 12 August 2016, the Company announced the issue of 321,849 ordinary shares to Australian consultants
Saki Partners in lieu of cash for services provided to the Company.
1 The White Paper
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D I R E C T O R S ’ R E P O R T
C HANGE I N NATUR E AN D SCALE OF O PER ATI ONS
Following the completion of the successful acquisition of MGC Pharma (UK) Ltd, the Company became a
medicinal cannabis company.
ENVIR ONMENTAL ISSUE S
The group’s operations are subject to various environmental laws and regulations under the relevant
Governments’ legislation. Full compliance with these laws and regulations is regarded as a minimum
standard for all operations to achieve. There have been no significant known breaches by the group during
the financial year.
FUTUR E DEVELOPMENT S, PR OSPE CTS AND BU SI NESS ST RAT EGI ES
The Company will continue to pursue its policy of enhancing the prospect of greater returns to its investors
through further strategic investments during the next financial year. Further information about likely
developments in the operations of the group and the expected results of those operations in future financial
years has not been included in this report, because disclosure of the information would be likely to result in
unreasonable prejudice to the group.
INFORMATION ON DIR E CTORS AND SECR ETARY
Names, qualifications experience, and special responsibilities of current directors and company secretary as at
30 September 2016:
BRETT MITCHELL, BEc
EXECUTIVE CHAIRMAN
Qualifications and
Experience
Interest in Shares and
Options
Mr Mitchell is a corporate finance executive with over 25 years of experience
primarily in the finance, capital markets and resources industries. He has been
involved in the founding, financing and management of early stage resources
and technology companies and currently holds executive roles on MGC
Pharmaceuticals Ltd (ASX:MXC) and Sky and Space Global Ltd (ASX:SAS).
Mr Mitchell holds a Bachelor of Economics from the University of Western
Australia and is also a member of the Australian Institute of Company
Directors (AICD).
Brett and Michelle Mitchell
9,458,889 Ordinary Shares
1,500,000 Unlisted Options exercisable at $0.025 each
on or before 30 June 2017
1,500,000 Unlisted Options exercisable at $0.04 each
on or before 30 June 2017
800,000 Unlisted Options exercisable at $0.20 each
on or before 30 June 2017
Brett and Michelle Mitchell
1,735,005 Ordinary Shares
1,000,000 Unlisted Options exercisable at $0.025 each
on or before 30 June 2017
1,000,000 Unlisted Options exercisable at $0.04 each
on or before 30 June 2017
NATIV SEGEV
MANAGING DIRECTOR
Qualifications and
Experience
Mr Segev was previously CEO of Israel’s second largest licensed Medical
Cannabis company, Cann Pharmaceuticals with vast industry experience.
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Mr. Segev founded MGC Pharmaceuticals to expand into the huge worldwide
market for cannabinoids in the pharmaceuticals and cosmetic industry.
Interest in Shares and
Options
40,000,000 Ordinary Shares
20,000,000 Performance Shares
Directorships held in other
listed entities within the
past three year
Nil
ROBY ZOMER
EXECUTIVE DIRECTOR AND CTO
Qualifications and
Experience
Mr. Zomer brings a wealth of BioTech and AgroTech experience to MGC, with
over nine years of executive experience in the field of Eco Sustainable
Projects. As the Founder and CEO of Green City Urban Recycling Ltd.
Mr. Zomer was consultant and representative for the biofuels industry to the
government of Israel, giving him experience in dealing with government and
business adopting new industries.
Additionally, as CTO, Mr. Zomer brings a wealth of scientific knowledge and
contacts at the highest levels of academia and production, facilitating MGC’s
vision of operating at the cutting edge of technology and research.
Interest In Shares and
Options
20,000,000 Ordinary Shares
10,000,000 Performance Shares
Directorships held in other
listed entities within the
past three years
Nil
ROSS WALKER, MBBS
(Hons), FRACP, FCSANZ
NON-EXECUTIVE DIRECTOR
AND CHAIRMAN OF STRATEGIC ADVISORY BOARD
Qualifications and
Experience
Dr Ross Walker is an eminent practicing cardiologist with over 35 years
experience as a clinician. For the past 20 years, he has been focusing on
preventative cardiology and is one of Australia’s leading preventative
health experts.
Dr Ross is considered one of the world’s best keynote speakers and life
coaches, he is the author of seven best-selling books, a health presenter in the
Australian Media, including regular appearances on the Nine Network’s ‘Today
Show’ and ‘A Current Affair’, and Sky News, Switzer Business. He also has a
weekly radio show on Sydney’s 2UE/ 4BC &2CC with other regular segments
on 2UE, 6PR, 4BC and 3AW.
Directorships held in other
listed entities within the
past three years
Sky and Space Global Ltd (12 May 2016 – current)
Acacia Coal Limited (18 December 2015 – 2 August 2016)
Digital CC Limited (5 September 2014 – 24 July 2016)
Citation Resources Ltd (24 November 2011 – 1 December 2015)
Tamaska Oil and Gas Ltd (1 August 2011 – 1 February 2015)
Wildhorse Energy Ltd (22 April 2009 – 29 August 2014)
Interest In Shares and
Options
Directorships held in other
listed entities within the
past three years
Nil
Nil
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D I R E C T O R S ’ R E P O R T
NICK CASTLEDEN,
BSC (Hons)
NON-EXECUTIVE DIRECTOR
RESIGNED 24 JUNE 2016
Qualifications and
Experience
Mr Castleden is a geologist with over 20 years of experience in the mineral
exploration and development industry. He has worked with Australian mining
companies including Mt Isa Mines, Perilya Mines, MPI Mines, LionOre and
Breakaway Resources in various exploration, geological and management
capacities and has had operational experience in Africa, North and South America
and across Australia.
Mr Castleden has specific experience in the gold, nickel and base metal
exploration business and has participated in the discovery and delineation of new
gold and nickel sulphide systems that have progressed through feasibility studies
to successful mining.
NICK POLL, BSc
(Hons), MSc (Geol),
MSc (Bus)
NON-EXECUTIVE DIRECTOR
RESIGNED 15 FEBRUARY 2016
Qualifications and
Experience
Mr Poll is a geologist with over 25 years of experience in the geological and
business development of mining projects.
Mr Poll has a BSc (Hons) from the University of Western Australia, an MSc in
geology from the Colorado School of Mines and an MSc in business from the
London Business School. He speaks fluent French and Portuguese and is a member
of the Australian Institute of Mining and Metallurgy (AIMM) and the Australian
Institute of Company Directors (AICD).
RACHEL KERR
COMPANY SECRETARY
Qualifications and
Experience
Mrs Kerr has 7 years experience as a Company Secretary on both private and
public companies, working on acquisitions, capital raisings, listing of companies on
ASX, due diligence reviews and compliance of public companies. Mrs Kerr is also
Company Secretary of Sky and Space Global Ltd, and Acacia Coal Limited.
REMUNER ATION R EP ORT (AU DIT ED)
REMUNERATION REPORT (CON TINUED)
The Board’s policy for determining the nature and amount of remuneration for key management personnel of
the group is as follows:
•
The remuneration policy, setting the terms and conditions for the key management personnel, was
developed and approved by the Board.
• All key management personnel receive a base salary (which is based on factors such as length of service
and experience), superannuation, fringe benefits, options and performance incentives.
•
The Board reviews key management personnel packages annually by reference to the consolidated group’s
performance, executive performance and comparable information from industry sectors.
The performance of key management personnel is measured against criteria agreed annually with each
executive and is based predominantly on the forecast growth of the group’s profits and shareholders’ value. All
bonuses and incentives must be linked to predetermined performance criteria. The Board may, however,
exercise its discretion in relation to approving incentives, bonuses and options. Any changes must be justified
by reference to measurable performance criteria. The policy is designed to attract the highest calibre of
executives and reward them for performance that results in long-term growth in shareholder wealth.
Key management personnel are also entitled to participate in the employee share and option arrangements.
The key management personnel receive a superannuation guarantee contribution required by the government,
which is currently 9.5% (financial year 2015: 9.5%) and do not receive any other retirement benefits. Some
individuals, however, have chosen to sacrifice part of their salary to increase payments towards superannuation.
All remuneration paid to key management personnel is valued at the cost to the Company and expensed.
Shares given to key management personnel are valued as the difference between the market price of those
shares and the amount paid by key management personnel. Options are valued using the Black-Scholes
methodology.
The Board policy is to remunerate Non-Executive Directors at market rates for time, commitment and
responsibilities. The Board determines payments to the Non-Executive Directors and reviews their remuneration
annually, based on market practice, duties and accountability. Independent external advice is sought when
required. The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to
approval by shareholders at the Annual General Meeting. Fees for Non-Executive Directors are not linked to
the performance of the consolidated group. However, to align directors’ interests with shareholder interests,
the Directors are encouraged to hold shares in the Company and are able to participate in the employee
option plan.
This report details the nature and amount of remuneration for each key management person of MGC
Pharmaceuticals Limited, and for the executives receiving the highest remuneration.
Performance-based Remuneration
Remuneration Policy
The remuneration policy of MGC Pharmaceuticals Limited has been designed to align key management
personnel objectives with shareholder and business objectives by providing a fixed remuneration component
and offering specific long-term incentives based on key performance areas affecting the consolidated group’s
financial results. The Board of MGC Pharmaceuticals Limited believes the remuneration policy to be appropriate
and effective in its ability to attract and retain the best key management personnel to run and manage the
group, as well as create goal congruence between directors, executives and shareholders.
As part of each member of the key management personnel’s remuneration package there is a performance-
based component, consisting of key performance indicators (KPIs). The intention of this program is to facilitate
goal congruence between key management personnel with that of the business and shareholders. The KPIs are
set annually, with a certain level of consultation with key management personnel to ensure buy-in. The measures
are specifically tailored to the areas each key management personnel are involved in and have a level of control
over. The KPIs target areas the Board believes hold greater potential for group expansion and profit, covering
financial and non-financial as well as short- and long-term goals. The level set for each KPI is based on budgeted
figures for the group and respective industry standards.
Performance in relation to the KPIs is assessed annually, with bonuses being awarded depending on the number
and deemed difficulty of the KPIs achieved. Following the assessment, the KPIs are reviewed by the Board in
light of the desired and actual outcomes, and their efficiency is assessed in relation to the group’s goals and
shareholder wealth, before the KPIs are set for the following year.
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D I R E C T O R S ’ R E P O R T
D I R E C T O R S ’ R E P O R T
REMUNERATION REPORT (CON TI NU ED )
REMUNERATION REPORT (CON TINUED)
Company Performance, Shareholder Wealth and Director and Executive Remuneration
Dr Ross Walker, Non-Executive Director and Chairman of Strategic Advisory Board
Key Management Personnel Remuneration Policy
The Board’s policy for determining the nature and amount of remuneration of key management for the group
is as follows:
The remuneration structure for key management personnel is based on a number of factors, including length
of service, particular experience of the individual concerned, and overall performance of the Company. The
contracts for service between the Company and key management personnel are on a continuing basis, the
terms of which are not expected to change in the immediate future. Upon retirement key management
personnel are paid employee benefit entitlements accrued to date of retirement.
All Directors had contracts in place with the Company during the financial year as detailed below:
Current Directors
Mr Brett Mitchell, Executive Chairman
• Director Letter of Appointment dated 20 February 2016, no termination date or payment on termination;
• MGC Pharmaceuticals Ltd Executive Services Agreement was implemented on 20 February 2016, this
agreement continues for 3 years unless terminated prior and will thereafter automatically renew every
12 months;
•
• A termination fee is payable is dependent upon the Company terminating the services contract at its
election, unless terminated by a just cause, and the payment would range between €192,000-576,000
subject to the length of service provided to the Company
Fees of A$15,000 per month;
• MGC Pharma (UK) Ltd Non-Executive Director Agreement commenced 30 June 2016; no termination date
or payment on termination;
•
Fees of £910 per month
Mr Nativ Segev, Managing Director
• MGC Pharmaceuticals Ltd Executive Services Agreement was implemented on 20 February 2016, this
agreement continues for 3 years unless terminated prior and will thereafter automatically renew every
12 months;
•
• A termination fee is payable is dependent upon the Company terminating the services contract at its
Fees of €12,500 per month plus benefits;
election, unless terminated by a just cause, with a termination fee of up to €800,000 payable.
• MGC Pharma (UK) Ltd Non-Executive Director Agreement commenced 30 June 2016; no termination date
or payment on termination;
•
Fees of £910 per month
Mr Roby Zomer, Executive Director
• MGC Pharmaceuticals Ltd Executive Services Agreement was implemented on 20 February 2016, this
agreement continues for 3 years unless terminated prior and will thereafter automatically renew every
12 months;
•
• A termination fee is payable is dependent upon the Company terminating the services contract at its
election, unless terminated by a just cause, and the payment would range between €192,000-576,000
subject to the length of service provided to the Company
Fees of €10,000 per month plus benefits;
• MGC Pharma (UK) Ltd Non-Executive Director Agreement commenced 30 June 2016; no termination date
or payment on termination;
•
Fees of £910 per month
• MGC Pharmaceuticals Ltd Director Letter of Appointment was implemented on 20 October 2015, no
termination date;
• Non-Executive Director fees of $3,000 per month and fees for Chairman of Strategic Advisory Board of
$2,000 per month;
There will be no payment upon termination.
•
Resigned Directors
Mr Nicholas Castleden, Non-Executive Director
• Agreement commenced 12 May 2014, no termination date;
• Annual Directors’ fees of $25,000 per annum
• Consultancy fees of $36,000 per annum, with an additional $2,000 per annum for demanding months.
•
There was no termination payment made.
Mr Nicholas Poll, Non-Executive Director
• Agreement commenced 1 January 2014, no termination date;
• Annual Directors’ fees of $25,000 per annum
There was no termination payment made.
•
Details of Remuneration
Compensation of Key Management Personnel Remuneration
Short-term Benefits
Post-employment Benefits
Cash, Salary
and
Commissions
Other
Superannuation
Termination
Benefits
Equity
Share
Based
Payment
Options
Directors
2016
Brett Mitchell
157,883
40,000
Nativ Segev
Roby Zomer
Ross Walker
Nick Castleden
Nick Poll
Total
2015
Brett Mitchell
Nick Castleden
Nick Poll
Total
158,503
17,731
128,199
17,731
22,500
22,600
15,625
-
-
-
505,310
75,462
25,000
115,000
24,833
25,000
-
-
74,833
115,000
All Directors have contracts with the Company.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
197,883
176,234
145,930
22,500
22,600
15,625
580,772
-
-
-
-
-
-
-
38,500
178,500
53,900
15,400
78,733
40,400
107,800
297,633
14
14
15
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORT D I R E C T O R S ’ R E P O R T
D I R E C T O R S ’ R E P O R T
REMUNERATION REPORT (CON TI NU ED )
Options Holdings of Key Management Personnel
REMUNERATION REPORT (CON TINUED)
Performance Shareholdings of Key Management Personnel
Details of options and rights held directly, indirectly or beneficially by KMP and their related parties are as
follows:
Details of performance shareholdings and rights held directly, indirectly or beneficially by KMP and their
related parties are as follows:
2016 - As at 30 June 2016, no director held Listed Options exercisable at $0.02 expiring 30 June 2015, due to
the options expiring.
2015 - Listed Options exercisable at $0.02 expiring 30 June 2015
Opening Balance
1-Jul-14
Granted/
Purchased
Exercised
Closing Balance
30-Jun-15
Unlisted Options exercisable at $0.025, $0.04 and $0.20 all expiring 30 June 2017
Opening Balance
Granted/
Purchased
Exercised
Directors
Brett Mitchell
Nick Castleden
Nick Poll
Total
Directors
2016
Brett Mitchell
Nativ Segev
Roby Zomer
Ross Walker
Nick Castleden1
Nick Poll1
Total
2015
Brett Mitchell
Nick Castleden
Nick Poll
Total
1 Closing balance is as at resignation date
3,177,558
280,035
-
3,457,593
-
-
-
-
5,800,000
-
-
-
7,000,000
2,000,000
14,800,000
800,000
-
-
-
-
-
-
-
-
5,000,000
7,000,000
2,000,000
800,000
14,000,000
-
-
-
-
-
-
-
-
3,177,558
280,035
-
3,457,593
Closing Balance
5,800,000
-
-
-
3,500,000
-
3,500,000
2,000,000
3,500,000
11,300,000
-
-
-
-
5,800,000
7,000,000
2,000,000
14,800,000
Directors
Brett Mitchell
Nativ Segev
Roby Zomer
Ross Walker
Nick Castleden
Nick Poll
Total
Opening Balance
1-Jul-15
Granted as
Compensation
Options
Exercised
Net Other
Changes
Closing Balance
30-Jun-16
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,000,000 i
10,000,000 ii
-
20,000,000 i
10,000,000 ii
-
-
-
-
-
-
30,000,000
30,000,000
i & ii the Performance Shares were issued as part consideration for the acquisition of MGC Pharma (UK) Ltd
Shareholdings of Key Management Personnel
Details of equity instruments (other than options and rights) held directly, indirectly or beneficially by KMP and
their parties are as follows:
Shareholdings
Directors
2016
Brett Mitchell
Nativ Segev
Roby Zomer
Ross Walker
Nick Castleden
Nick Poll
Total
2015
Brett Mitchell
Nick Castleden
Nick Poll
Total
Opening Balance
Granted as
Compensation
Options
Exercised
Net Other
Changes
Closing Balance
9,943,894
-
-
-
1,185,148
-
11,129,042
9,943,894
1,185,148
-
11,129,042
-
-
-
-
-
-
-
-
-
-
-
1,250,000
-
-
-
3,500,000
-
40,000,000i
20,000,000II
-
(1,500,000)iii
-
-
11,193,894
40,000,000
20,000,000
-
3,185,148iv
-
4,750,000
58,500,000
74,379,042
-
-
-
-
-
-
-
-
9,943,894
1,185,148
-
11,129,042
i & ii the Shares were issued as part consideration for the acquisition of MGC Pharma (UK) Ltd
iii on market share sale
iv closing balance is as at resignation date
16
16
17
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORT D I R E C T O R S ’ R E P O R T
D I R E C T O R S ’ R E P O R T
REMUNERATION REPORT (CON TI NU ED )
Share-based Compensation
Value of Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of Directors and
other Key Management Personnel in this financial year or future reporting years are as follows:
Directors
Grant
Date
Vesting date
and exercisable
date
Expiry
Date
Exercise
Price
Fair value
per option at
grant date
Brett Mitchell
17/09/2014
17/09/2014
30/06/2017
Nick Castleden
17/09/2014
17/09/2014
30/06/2017
Nick Poll
17/09/2014
17/09/2014
30/06/2017
$0.025
$0.04
$0.025
$0.04
$0.025
$0.04
$0.0082
$0.0072
$0.0082
$0.0072
$0.0082
$0.0072
Options granted carry no dividend or voting rights. No other Directors hold options other than those above.
The number of options over ordinary shares granted to and vested by Directors and other Key Management
Personnel as part of compensation during the year ended 30 June 2016 are set out below:
Directors
Brett Mitchell
Nick Castleden
Nick Poll
Number of options granted
during the year
Number of options vested
during the year
2016
2015
2016
2015
-
-
-
5,000,000
7,000,000
2,000,000
-
-
-
5,000,000
7,000,000
2,000,000
Value of options
granted during the
year
Value of options
exercised during
the year
Value of options
lapsed during the
year
Remuneration
consisting of
options for the year
$
$
$
%
-
-
-
38,500
53,900
15,400
-
87,500
-
-
-
-
-
-
-
-
-
-
-
-
-
21.57
68.46
38.12
Directors
2016
Brett Mitchell
Nick Castleden
Nick Poll
2015
Brett Mitchell
Nick Castleden
Nick Poll
REMUNERATION REPORT (CON TINUED)
Transactions with Director related entities
Directors and Officers, or their personally-related entities, hold positions in other entities that result in them
having controls or significant influence over the financial or operating policies of those entities.
Details of the transactions including amounts accrued but unpaid at the end of the year are as follows:
Entity
Relationship
Verona Capital Pty Ltd
(i)
Verona Capital Pty Ltd
Sibella Capital Pty Ltd
(i)
(ii)
Sky and Space Global Ltd
(iii)
Citation Resources Ltd
(v)
Digital X Ltd
(vi)
CONSOLIDATED GROUP
Transactions
Balances
Nature of
Transactions
Full Year
30-Jun-16
$
Full Year
30-Jun-15
$
Full Year
30-Jun-16
$
Full Year
30-Jun-15
$
(Re-charges to)/
reimbursement
from Verona for
technical support
and corporate
administration costs
and re-charges
Repayment of Erin
acquisition loan
(note 20)
(Re-charges to)/
reimbursement from
Sibella for corporate
administration costs
(Re-charges to)/
reimbursement from
SAS for corporate
administration costs
(Re-charges to)/
reimbursement
from Brighght
HK for corporate
administration costs
(Re-charges to)/
reimbursement from
CTR for corporate
administration costs
(Re-charges to)/
reimbursement from
DCC for corporate
administration costs
-
(1,500)
31,025
31,025
195,000
-
-
-
(5,036)
(1,067)
6,713
1,173
(41,506)
(477)
-
-
4,008
477
-
-
-
(6,490)
-
966
(547)
-
427
-
(i) Verona Capital Pty Ltd, a company controlled 20% by Brett Mitchell.
(ii) Sibella Capital Pty Ltd is a company associated with Mr Brett Mitchell.
(iii) Sky and Space Global Ltd (SAS) is a company associated with Mr Brett Mitchell who is currently a Director of SAS.
(iv) Brighght HK Ltd is a company associated with Mr Nativ Segev.
(v) Citation Resources Ltd (CTR) is a company associated with Mr Brett Mitchell up to 1 December 2015, when he resigned as Director.
(vi) Digital X Ltd (DCC) is a company associated with Mr Brett Mitchell; subsequent to year end he resigned as Director on 24 July 2016.
End of Remuneration Report
Values of options over ordinary shares granted, exercised and lapsed for Directors and other Key Management
Personnel as part of compensation are set out below:
Brighght HK Ltd
(iv)
18
18
19
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORT
D I R E C T O R S ’ R E P O R T
D I R E C T O R S ’ R E P O R T
MEETINGS O F DIRECTOR S
The Directors attendances at Board meetings held during the year were:
Brett Mitchell
Nativ Segev
Roby Zomer
Ross Walker
Nick Castleden
Nick Poll
Number Eligible to Attend
Number Attended
Board Meetings
5
3
3
1
3
2
5
3
3
3
3
2
The Company does not have any remuneration, nomination or audit committees, these functions are performed
by the Board.
OPTI ONS
As at the date 30 September 2016 the unissued ordinary shares of MGC Pharmaceuticals Limited under option
are as follows:
Date of Expiry
Exercise Price
Number Under Option
Issue Date
14 September 2012
23 January 2013
23 January 2013
23 January 2013
30 June 2017
23 January 2018
23 January 2018
23 January 2018
22 July 2014, 17 September 2014 30 June 2017
22 July 2014, 17 September 2014 30 June 2017
Total
INDEMNI FYI NG OFFICER S OR AUDITOR
$0.20
$0.30
$0.35
$0.40
$0.025
$0.04
4,000,000
1,000,000
500,000
500,000
4,000,000
8,750,000
18,750,000
NON-AUDIT SERV ICES
The Board of Directors is satisfied that the provision of non-audit services during the year is compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are
satisfied that the services disclosed below did not compromise the external auditor’s independence for the
following reasons:
• All non-audit services are reviewed and approved by the Board of Directors prior to commencement to
ensure they do not adversely affect the integrity and objectivity of the auditor; and
•
The nature of the service provided do not compromise the general principles relating to auditor
independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the
Accounting Professional and Ethical Standards Board.
During the year, there were no fees paid or payable for non-audit services by PKF Mack and its related practices.
CORPORATE GOVER NANCE
The Company’s Corporate Governance Statement and ASX Appendix 4G are released to ASX on the same
day the Annual Report is released. MGC Pharmaceuticals Limited’s Corporate Governance Statement, and
the Company’s Policies, Charters and Procedures, can be all found on the Company’s website at
https://mgcpharma.com.au/investors/corporate-governance/
AUDITOR’S INDEPENDENCE D ECLAR ATION
The lead auditor’s independence declaration for the year ended 30 June 2016 has been received and can be
found on page 22 of the annual report.
This report is made in accordance with a resolution of Directors. These financial statements were authorised for
issue by circular resolution dated 26 August 2016 by the Directors of the Company.
Brett Mitchell
Executive Chairman
Dated 29 August 2016
During or since the end of the financial year, the Company has given an indemnity or entered into an agreement
to indemnify, or paid or agreed to pay insurance premiums as follows:
The Company has paid premiums to insure all of the Directors of the Company as named above, the Company
Secretary and all Executive Officers of the Company against any liability incurred as such by a Director, Secretary
or Executive Officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the notice of the liability and the amount of the premium.
The Company has not indemnified the auditor or paid any insurance premium on behalf of the auditor.
PRO CEED INGS ON BE HALF OF COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company
for all or any part of those proceedings. The Company was not a party to any such proceedings during the year.
20
20
21
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORT
A U D I T O R ’ S I N D E P E N D E N C E D E C L A R A T I O N
C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R
L O S S A N D O T H E R C O M P R E H E N S I V E I N C O M E
Accounting, Financial and Business Advisory
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF MGC PHARMACEUTICALS LTD
In relation to our audit of the financial report of MGC Pharmaceuticals Ltd for the year ended 30 June 2016, to
the best of my knowledge and belief, there have been no contraventions of the auditor independence
requirements of the Corporations Act 2001 or any applicable code of professional conduct.
PKF MACK
SIMON FERMANIS
PARTNER
29 August 2016
WEST PERTH,
WESTERN AUSTRALIA
PKF Mack
ABN 64 591 268 274
Liability limited by a scheme
approved under Professional
Standards Legislation.
www.pkfmack.com.au
Perth
Level 4, 35 Havelock St
West Perth WA 6005 Australia
PO Box 609 West Perth WA 6872
p
f
+61 8 9426 8999
+61 8 9426 8900
PKF Mack is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or
liability for the actions or inactions of any individual member or correspondent firm or firms.
For the year ended 30 June 2016
Sales revenue
Cost of goods sold
Gross profit
Other income
Corporate costs
Professional and consultancy fees
Directors’ fees
Employee benefit expenses
Share based payment expense
Travel expenses
Marketing expenses
Depreciation
Due diligence expenditure
Office and administrative expenses
Finance costs
Impairment provision expense
Loss on re-measurement of performance shares
Other expenses
Loss before income tax
Income tax benefit
Note
5
6
5
7
7
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
2,197
(15,011)
(12,814)
46,033
(309,573)
(785,415)
(442,888)
(178,463)
-
(254,697)
(240,261)
(16,579)
(158,534)
(61,735)
(120,006)
$
-
-
-
5,886
(49,199)
(99,859)
(164,833)
(127,318)
(174,747)
(61,234)
(77,129)
-
(166,075)
(43,188)
(6,746)
14b)
(1,755,891)
(2,777,367)
(1,780,000)
(159,240)
-
(55,982)
(6,230,063)
(3,797,791)
8
-
-
Loss after income tax from continuing operations
(6,230,063)
(3,797,791)
Loss after income tax benefit for the year attributable to:
Members of the parent entity
Non-controlling interest
Other comprehensive income for the year
Items that may be reclassified subsequently to profit or loss
Exchange differences on the translation of foreign operations
Other comprehensive income (net of tax) for the year
Total comprehensive loss for the year
Total comprehensive loss attributable to:
Members of the parent entity
Non-controlling interest
Earnings per share for loss attributable to the ordinary equity
holders of the parent:
From continuing and discontinued operations
(6,157,144)
(3,797,791)
(72,919)
-
(6,230,063)
(3,797,791)
(2,459)
(2,459)
1,410
1,410
(6,232,522)
(3,796,381)
(6,155,619)
(3,796,381)
(76,903)
-
(6,232,522)
(3,796,381)
Basic loss per share (cents)
Diluted loss per share (cents)
10
10
(1.03)
(1.03)
(1.34)
(1.34)
22
22
The accompanying notes form part of these financial statements
23
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORT
C O N S O L I D A T E D S T A T E M E N T O F
F I N A N C I A L P O S I T I O N
C O N S O L I D A T E D S T A T E M E N T O F
C H A N G E S I N E Q U I T Y
As at 30 June 2016
For the year ended 30 June 2016
CURRENT ASSETS
Cash and cash equivalents
Inventory
Trade and other receivables
Assets held for sale
Total Current Assets
NON-CURRENT ASSETS
Plant and equipment
Intangible asset
Exploration and evaluation expenditure
Other asset
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Contingent consideration
Borrowings
Total Current Liabilities
NON-CURRENT LIABILITIES
Loans to third parties
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Share based payment reserve
Foreign currency translation reserve
Retained earnings
Equity attributable to equity holders of the parent
Non-controlling interest
TOTAL EQUITY
Note
11
12
13
14a)
15
16
14b)
18
19
20
20
21
22a)
22b)
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
$
7,895,539
157,035
477,372
500,000
9,029,946
211,074
7,083,665
-
36,167
7,330,906
16,360,852
456,369
3,080,000
1,075,228
4,611,597
20,393
20,393
4,631,990
11,728,862
436,985
-
83,618
-
520,603
-
-
2,000,000
-
2,000,000
2,520,603
398,791
-
-
398,791
195,000
195,000
593,791
1,926,812
32,343,143
1,079,564
26,448
16,501,303
883,083
24,923
(21,639,641)
(15,482,497)
11,809,514
(80,652)
11,728,862
1,926,812
-
1,926,812
The accompanying notes form part of these financial statements
Contributed
Equity
Share Based
Payment
Reserve
Foreign
Currency
Translation
Reserve
Retained
Earnings
Non-
Controlling
Interest
$
$
$
$
$
15,701,181
509,148
23,513 (11,684,706)
-
-
1,410
(3,797,791)
800,122
373,935
-
-
16,501,303
883,083
24,923 (15,482,497)
16,501,303
883,083
24,923 (15,482,497)
-
-
-
-
-
Total
$
4,549,136
(3,796,381)
1,174,057
1,926,812
1,926,812
-
-
-
15,841,840
-
-
-
-
-
-
196,481
-
1,525
-
(3,984)
(2,459)
-
(6,157,144)
(72,919)
(6,230,063)
1,525
(6,157,144)
(76,903)
(6,232,522)
-
-
-
-
-
-
-
-
15,841,840
196,481
(3,749)
(3,749)
32,343,143
1,079,564
26,448 (21,639,641)
(80,652)
11,728,862
CONSOLIDATED
GROUP
Balance at
1 July 2014
Total comprehensive
loss attributable to
members of
parent entity
Shares issued during
the year (net of share
issue costs)
Balance at
30 June 2015
Balance at
1 July 2015
Other comprehensive
income
Loss after income
tax expense
Total comprehensive
loss for the year
Shares issued during
the year (net of share
issue costs)
Share based payment
Recognition of non-
controlling interest
Balance at
30 June 2016
The accompanying notes form part of these financial statements
24
24
25
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORT
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
For the year ended 30 June 2016
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Due diligence costs
Net cash used in operating activities
Cash flows from investing activities
Note
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
3,252
$
-
(3,096,009)
(500,868)
46,090
(11,776)
(162,058)
30
(3,220,501)
Cash acquired through asset acquisition
26b)
Purchase of plant and equipment
Payments for exploration assets
Payments to acquire financial assets
Cash advances to MGC Pharma (UK) Group pre-acquisition
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from issue of shares and options
Capital raising costs
Net cash provided by financing activities
Net (increase) / decrease in cash and cash equivalents held
Cash and cash equivalents at beginning of year
Foreign exchange movement in cash
Cash and cash equivalents at end of year
20
20
11
142,571
(88,517)
(159,403)
(33,423)
(512,171)
(650,943)
1,000,000
(195,000)
11,125,283
(597,188)
11,333,095
7,461,651
436,985
(3,097)
7,895,539
The accompanying notes form part of these financial statements
5,886
-
(122,725)
(617,707)
-
-
(316,396)
-
-
(316,396)
-
-
797,135
(20,574)
776,561
(157,542)
595,088
(561)
436,985
1. CORPORATE INF OR MATION
The financial statements of MGC Pharmaceuticals Limited for the year ended 30 June 2016 were authorised for
issue in accordance with a resolution of Directors on 26 August 2016. These consolidated financial statements
and notes represent those of MGC Pharmaceuticals Limited (the “Company”) and Controlled Entities (the
“consolidated group” or “group”).
2. SIGNIFICANT ACCOUNTING PO LICIES
a) Statement of Compliance
The financial statements are general purpose financial statements that have been prepared in accordance with
Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of
the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001 as appropriate for ‘for-
profit’ orientated entities.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in
financial statements containing relevant and reliable information about transactions, events and conditions.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply
with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standard
Board (“IASB”). Material accounting policies adopted in the preparation of these financial statements are
presented below and they have been consistently applied unless otherwise stated.
b) Basis of Preparation
The financial statements have been prepared on an accruals basis and are based on historical costs, modified,
where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial
liabilities.
The preparation of the financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the consolidated group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements are disclosed in note 3.
Financial report prepared on a going concern basis
The financial statements have been prepared on the going concern basis of accounting, which assumes the
continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary
course of business.
During the year ended 30 June 2016 the consolidated group incurred a loss from continuing operations of
$6,230,063 (2015: $3,797,791) and net operating cash outflows of $3,220,501 (2015: $617,707) and year-end
cash and cash equivalents balance of $7,895,539 (2015: $436,985). Net losses include one-off non-cash
adjustments of $3.54m relating to the re-measurement of performance shares issued on completion of the
acquisition of MGC UK (note 26b) of $1.78m (2015: nil) and an impairment provision on the exploration and
evaluation assets of $1.76m (2015: $2.78m).
The Company’s cashflow forecasts for the 12 months ending 30 September 2017 indicate that the Company will
be in a position to meet its committed operational and administrative expenditure and thus continue to operate
as a going concern.
In the Directors’ opinion there are therefore reasonable grounds to believe that the consolidated group will be
able to pay its debts as and when they become due and payable.
If the Company and group are unable to continue as a going concern, then assets and liabilities will not be
discharged in the normal course of business and at values specified in the financial report.
c) Principles of Consolidation
The consolidated financial statements comprise the financial statements of MGC Pharmaceuticals Ltd and its
subsidiaries as at 30 June 2016 (“the Group”).
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MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
2. SIGN IFICANT ACCOUNTIN G P OL I CI ES (CON TI N U ED )
2. SIGNIFICA NT ACCOUNT IN G POLICIES (CON TINUED)
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee. Specifically, the Group
controls an investee if and only if the Group has:
•
•
•
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of
the investee);
Exposure, or rights, to variable returns from its involvement with the investee; and
The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether it has power over an investee, including:
•
•
•
The contractual arrangement with the other vote holders of the investee;
Rights arising from other contractual arrangements; and
The Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities,
income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of
comprehensive income from the date the Group gains control until the date the Group ceases to control the
subsidiary.
Profit or loss and each component of other comprehensive income (“OCI”) are attributed to the equity holders
of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests
having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and
liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are
eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary it, de-recognises the assets (including goodwill) and
liabilities of the subsidiary; de-recognises the carrying amount of any non-controlling interests; de-recognises
the cumulative translation differences recorded in equity; recognises the fair value of the consideration
received; recognises the fair value of any investment retained; recognises any surplus or deficit in profit or loss;
and reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained
earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or
liabilities.
d) Business Combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured
as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any
non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure
the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s
identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative
expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by
the acquiree.
If the business combination is achieved in stages, any previously held equity interest is re-measured at its
acquisition date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in
the determination of goodwill.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the
acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and
within the scope of AASB 139 Financial Instruments: Recognition and Measurement, is measured at fair value
with changes in fair value recognised either in profit or loss or as a change to OCI. If the contingent
consideration is not within the scope of AASB 139, it is measured in accordance with the appropriate AASB.
Contingent consideration that is classified as equity is not re-measured and subsequent settlement is
accounted for within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and
the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable
assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate
consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and
all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the
acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the
aggregate consideration transferred, then the gain is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose
of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to
each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of
whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill has been
allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill
associated with the disposed operation is included in the carrying amount of the operation when determining
the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values
of the disposed operation and the portion of the cash-generating unit retained.
e)
Investments in Associates and Joint Ventures
An associate is an entity over which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee, but is not control or joint control over
those policies.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement
have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of
an arrangement, which exists only when decisions about the relevant activities require unanimous consent of
the parties sharing control.
The considerations made in determining significant influence, or joint control, are similar to those necessary to
determine control over subsidiaries.
The Group’s investments in joint ventures are accounted for using the equity method. Under the equity method,
the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the
investment is adjusted to recognise changes in the Group’s share of net assets of the associate or joint venture
since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount
of the investment and is neither amortised nor individually tested for impairment.
The statement of profit or loss reflects the Group’s share of the results of operations of the associate or joint
venture. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there
has been a change recognised directly in the equity of the associate or joint venture, the Group recognises its
share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses
resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of
the interest in the associate or joint venture.
The aggregate of the Group’s share of profit or loss of an associate and a joint venture is shown on the face of
the statement of profit or loss outside operating profit and represents profit or loss after tax and non-controlling
interests in the subsidiaries of the associate or joint venture.
The financial statements of the associate or joint venture are prepared for the same reporting period as the
Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.
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MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORT N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
2. SIGN IFICANT ACCOUNTIN G P OL I CI ES (CON TI N U ED )
2. SIGNIFICA NT ACCOUNT IN G POLICIES (CON TINUED)
After application of the equity method, the Group determines whether it is necessary to recognise an impairment
loss on its investment in its associate or joint venture. At each reporting date, the Group determines whether
there is objective evidence that the investment in the associate or joint venture is impaired. If there is such
evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of
the associate or joint venture and its carrying value, then recognises the loss as ‘Share of profit of an associate
and a joint venture’ in the statement of profit or loss.
Upon loss of significant influence over the associate or joint control over the joint venture, the Group measures
and recognises any retained investment at its fair value. Any difference between the carrying amount of the
associate or joint venture upon loss of significant influence or joint control and the fair value of the retained
investment and proceeds from disposal is recognised in profit or loss.
f)
Intangible Assets
Intangible assets acquired as part of a business combination or asset acquisition, other than goodwill, are
initially measured at their fair value at the date of acquisition. Intangible assets acquired separately are initially
recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost
less any impairment. The gains and losses recognised in profit or loss arising from the derecognition of
intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the
intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in
the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation
method or period.
Licenses/permit costs
Costs associated with the acquisition of a license or permit to cultivate hemp are considered to be indefinite life
identifiable intangible assets and are subject to regular impairment testing.
g) Current and Non-Current Classification
The group presents assets and liabilities in the statement of financial position based on current/non-current
classification. An asset is current when it is:
•
Expected to be realised or intended to be sold or consumed in the normal operating cycle;
• Held primarily for the purpose of trading;
•
Expected to be realised within twelve months after the reporting period; or
• A cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.
All other assets are classified as non-current. A liability is current when it is:
•
Expected to be settled in normal operating cycle;
• Held primarily for the purpose of trading;
•
•
It is due to be settled within twelve months after the reporting period; or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period.
The group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
h)
Income Tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income
based on the applicable income tax rate for each jurisdiction adjusted by changes in the deferred tax assets and
liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the company’s subsidiaries and associates operate and
generate taxable income.
Deferred income tax is provided on all temporary differences at the statement of financial position date, arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial
statements, and are recognised for all taxable temporary differences,
•
•
Except where the deferred income tax liability arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
In respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, except where the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax
assets and unused tax losses can be utilised:
•
•
Except where the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor the taxable profit or loss; and
In respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests and joint ventures, deferred tax assets are only recognised to the extent that it is probable that the
temporary differences will reverse in the foreseeable future extent that it is probable that the temporary
differences can be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the statement of financial position date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement
of profit or loss and other comprehensive income.
Tax Consolidation
The Company and its wholly-owned Australian subsidiaries have formed an income tax consolidated group
under the tax consolidated legislation. Each entity in the group recognises its own current and deferred tax
assets and liabilities. Such taxes are measured using the ‘stand-alone taxpayer’ approach to allocation. The
group notified the Australian Taxation Office that it had formed an income tax consolidated group to apply from
21 October 2005. The tax consolidated group has entered a tax funding agreement whereby each company in
the group contributes to the income tax payable by the group in proportion to their contributions to the group’s
taxable income.
i)
Impairment of Non-Financial Assets
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine
whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable
amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to
the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to
the statement of profit or loss.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
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MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORT 2. SIGN IFICANT ACCOUNTIN G P OL I CI ES (CON TI N U ED )
2. SIGNIFICA NT ACCOUNT IN G POLICIES (CON TINUED)
When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to
individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units
for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful
lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever
there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. 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 for which the estimates
of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is
reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the
relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation
decrease (refer 2x)). When an impairment loss subsequently reverses, the carrying amount of the asset (or cash
generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is
recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case
the reversal of the impairment loss is treated as a revaluation increase (refer 2x)).
j) Employee Benefits
A provision is made for the Group’s liability for employee benefits arising from services rendered by employees
to reporting date. Employee benefits that are expected to be settled within one year have been measured at
the amounts expected to be paid when the liability is settled, plus related on-costs.
k) Foreign Currency Translation
Functional and Presentation Currency
Items included in the financial statements of each of the group’s entities are measured using the currency of the
primary economic environment in which the entity operates (“the functional currency”). The consolidated
financial statements are presented in Australian dollars, which is the Company’s functional and presentation
currency.
Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the statement of profit and loss and other comprehensive
income, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment
hedges or are attributable to part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the statement of comprehensive
income, within finance costs. All other foreign exchange gains and losses are presented in the statement of
profit or loss on a net basis within other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined. Transaction differences on assets and liabilities carried at fair
value are reported as part of the fair value gain or loss.
Group companies
On consolidation, the assets and liabilities of foreign operations are translated into Australian dollars at the rate
of exchange prevailing at the reporting date and their statements of profit or loss are translated at exchange
rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation
purposes are recognised in other comprehensive income. On disposal of a foreign operation, the component
of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying
amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign
operation and translated at the spot rate of exchange at the reporting date.
l)
Segment Reporting
An operating segment is a component of the consolidated group that engages in business activities from which
it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any
of the consolidated group’s other components.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Board of Directors.
Specifically, the Group’s reportable segments under AASB 8 are currently based on its geographic location,
being the Australian and Slovenian operations.
m) Cash and Cash Equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on
hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in
current liabilities in the statement of financial position.
n) Revenue
Revenue is measured at the fair value of the consideration received or receivable. The group recognises
revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will
flow to the entity and specific criteria have been met for each type of revenue as described below.
Sale of goods
Revenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which
time all the following conditions are satisfied:
•
•
•
•
•
the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
the Group retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the Group; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Interest income
Interest income is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
o) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part
of the cost of acquisition of the asset, or as part of an item of the expense. Receivables and payables in the
statement of financial position are shown inclusive of GST.
Cash flows are presented in the consolidated statement of cash flows on a gross basis, except for the GST
component of investing and financing activities, which are disclosed as operating cash flows.
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MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS 2. SIGN IFICANT ACCOUNTIN G P OL I CI ES (CON TI N U ED )
2. SIGNIFICA NT ACCOUNT IN G POLICIES (CON TINUED)
p) Rounding of Amounts
The Company is a kind referred to in class order 98/100 issued by the Australian Securities and Investment
Commission, relating to the “rounding off” of amounts in the financial statements. Amounts in the financial
statements have been rounded off in accordance with that class order to the nearest dollar.
Accumulated costs in relation to an abandoned area are written off in full against profit/loss in the year in which the
decision to abandon the area is made.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest.
q) Contributed Equity
v) Plant and Equipment
Issued and paid up capital is recognised at the fair value of the consideration received by the group. Any
transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the
proceeds received.
r) Share Based Payments
Share based compensation relating to share options are recognised at fair value.
The fair value of the options is recognised as an employee benefit expense in the statement of profit or loss and
other comprehensive income, with a corresponding increase in equity. The total amount to be expensed is
determined by reference to the fair value of the options granted, which includes any market performance
conditions and the impact of any non-vesting conditions, but excludes the impact of any service and non-market
performance vesting conditions.
The total expense is recognised over the vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied.
Upon exercise of share options, the proceeds received net of any directly attributable transaction costs are
allocated to share capital.
s) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the group prior to the end of the
financial year, which remain unpaid at year end. The amounts are unsecured and are usually paid within 60 days
of recognition. They are recognised at fair value on initial recognition and subsequently at amortised cost, using
the effective interest rate method.
t) Trade and Other Receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost,
using the effective interest rate method, less a provision for impairment. Trade receivables are generally due for
settlement between thirty (30) and ninety (90) days from the date of recognition. They are presented as current
assets unless collection is not expected for more than 12 months after reporting date.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators
that the trade receivable is impaired.
The amount of the impairment allowance is the difference between the asset’s carrying amount and the present
value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to
short-term receivables are not discounted if the effect of discounting is immaterial. The amount of the
impairment loss is recognised in the profit or loss within other expenses. When a trade receivable for which an
impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off
against the allowance account. Subsequent recoveries of amounts previously written off are credited against
other expenses in the profit or loss.
u) Exploration, Evaluation and Development Expenditure
Exploration, evaluation and development expenditure incurred is either written off as incurred or accumulated in
respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected
to be recouped through the successful development of the area or where activities in the area have not yet reached
a stage which permits reasonable assessment of the existence of economically recoverable reserves.
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of plant and equipment
over their expected useful lives as follows:
Plant and equipment
3-5 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic
benefit to the group. Gains and losses between the carrying amount and the disposal proceeds are taken to
profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained
profits.
w)
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a
first-in-first-out basis. Net realisable value represents the estimated selling price for inventories less all estimated
costs of completion and costs necessary to make the sale.
x)
Investments and Other Financial Assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part
of the initial measurement, except for financial assets at fair value through profit or loss. They are subsequently
measured at either amortised cost or fair value depending on their classification. Classification is determined
based on the purpose of the acquisition and subsequent reclassification to other categories is restricted. The
fair values of quoted investments are based on current bid prices. For unlisted investments, the group
establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions,
reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing
models. Financial assets are derecognised when the rights to receive cash flows from the financial assets have
expired or have been transferred and the group has transferred substantially all the risks and rewards of
ownership.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are either: i) held for trading, where they are acquired for the
purpose of selling in the short-term with an intention of making a profit; or ii) designated as such upon initial
recognition, where they are managed on a fair value basis or to eliminate or significantly reduce an accounting
mismatch. Except for effective hedging instruments, derivatives are also categorised as fair value through the
statement of profit or loss. Fair value movements are recognised in the profit or loss.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets, principally equity securities that are either
designated as available-for-sale or not classified as any other category. After initial recognition, fair value
movements are recognised in other comprehensive income through the available-for-sale reserve in equity.
Cumulative gain or loss previously reported in the available-for-sale reserve is recognised in the profit or loss
when the asset is derecognised or impaired.
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MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS 2. SIGN IFICANT ACCOUNTIN G P OL I CI ES (CON TI N U ED )
2. SIGNIFICA NT ACCOUNT IN G POLICIES (CON TINUED)
Impairment of financial assets
The group assesses at the end of each reporting period whether there is any objective evidence that a financial
asset or group of financial assets is impaired. Objective evidence includes significant financial difficulty of the
issuer or obligor; a breach of contract such as default or delinquency in payments; the lender granting to a
borrower concessions due to economic or legal reasons that the lender would not otherwise do; it becomes
probable that the borrower will enter bankruptcy or other financial reorganisation; the disappearance of an
active market for the financial asset; or observable data indicating that there is a measurable decrease in
estimated future cash flows.
The amount of the impairment allowance for financial assets carried at cost is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the current market rate of
return for similar financial assets.
De-recognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is
transferred to another party whereby the entity no longer has any significant continuing involvement in the risks
and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are
discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished
or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets
or liabilities assumed, is recognised in profit or loss.
Available-for-sale financial assets are considered impaired when there has been a significant or prolonged
decline in value below initial cost. Subsequent increments in value are recognised in other comprehensive
income through the available-for-sale reserve.
y)
Borrowings
All loans and borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and
the redemption amount is recognised in profit or loss over the period of the loans and borrowings using the
effective interest method.
All borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement
of the liability for at least 12 months after the end of the reporting period.
z) Fair value measurement
The group measures financial instruments and non-financial assets at fair value at each reporting date. Fair value
is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either:
•
•
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair
value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
The group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair
value measurement as a whole:
•
•
•
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the group
determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each
reporting period.
For the purpose of fair value disclosures, the group has determined classes of assets and liabilities on the basis
of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained
above.
aa) Earnings per Share
Basic earnings per share
Basic earnings per share is calculated by dividing the net profit or loss after income tax attributable to equity
holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted
average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary share and the weighted average number of shares assumed to have been issued for no consideration
in relation to dilutive potential ordinary shares.
bb) Parent entity financial information
The financial information for the parent entity, MGC Pharmaceuticals Limited, disclosed in note 33 has been
prepared on the same basis as the consolidated financial statements, except as set out below:
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial
statements of MGC Pharmaceuticals Limited. Dividends received from associates are recognised in the parent
entity’s statement of profit or loss when its right to receive the dividend is established.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDG EMENTS
The Directors evaluate estimates and judgements incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events
and are based on current trends and economic data, obtained both externally and within the group.
36
36
37
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS 3. CRITICAL ACCOUNTING E STI MAT ES AN D JUD GE ME N TS (CONT I N UE D )
4. APPLICATION OF NE W A ND REV ISED ACCOUNTI NG STAN DARDS (CONTINU ED)
a) Estimated Impairment
Accounting standards issued but not yet effective.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
effective and have not been adopted by the group for the annual reporting period ending 30 June 2016, are
set out below.
Reference
Title
Summary
The group tests annually whether exploration and evaluation expenditure have suffered any impairment, in
accordance with the accounting policy stated in note 1u). The recoverable amounts of cash generating units
have been determined based on value-in-use calculations. These calculations require the use of assumptions
like commodity price and production quantity. Some of these assumptions may be amended in the future and
this may lead to the subsequent impairment of the assets concerned.
b) Capitalisation of exploration and evaluation expenditure
The group has capitalised significant exploration and evaluation expenditure on the basis that this is either
expected to be recouped through future successful development (or alternatively sale) of the areas of interest
concerned, or on the basis that it is not yet possible to assess whether it will be recouped. Management are
required to make certain judgements in relation to the assessment of whether the areas of interest are
commercially viable; where costs are capitalised and are subsequently considered unsuccessful, the capitalised
amounts are written off to the statement of profit or loss.
c)
Income Taxes
The group expects to have carried forward tax losses which have not been recognised as deferred tax assets as
it is not considered sufficiently probable that these losses will be recouped by means of future profits taxable in
the relevant jurisdictions.
d) Share Based Payments
The assessed fair value at grant date of share based payments granted during the period was determined using
a binomial option pricing model that takes into account the exercise price, the price of the underlying share at
grant date, the life of the option, the volatility of the underlying share, the risk free rate and expected dividend
payout and any applicable vesting conditions.
Management was required to make assumptions and estimates in order to determine the inputs into the
binomial option pricing model.
e) Contingent liabilities
A contingent consideration liability arose from the acquisition of MGC Pharma (UK) Limited, where Performance
Shares can be converted into fully paid ordinary shares at a rate of one ordinary share for every Performance
Share that converts.
The determination of the fair value is based on a probability weighted payout approach, where key assumptions
take into consideration the probability of meeting each milestone and any future development may require
further revisions to the estimate.
Financial
Instruments
AASB 9,
AASB 2014-7,
AASB 2014-8
Amendments arising
to Australian
Accounting
Standards arising
from AASB 9
Revenue from
Contracts with
Customers
AASB 15,
AASB 2014-5
Amendments arising
from AASB 15,
AASB 2015-8
Amendments to
Australian
Accounting
Standards – Effective
Date of AASB 15
Application date
for reporting
periods
beginning
or after
Application date
for Company in
financial year
end
1 January 2018
30 June 2019
1 January 2018
30 June 2019
1 January 2016
1 July 2016
The objective of this Standard is to establish
principles for the financial reporting of
financial assets and financial liabilities that
will present relevant and useful information
to users of financial statements for their
assessment of the amounts, timing and
uncertainty of an entity’s future cash flows.
These requirements improve and simplify
the approach for classification and
measurement of financial assets compared
with the requirements of AASB 139.
AASB 15 outlines a single comprehensive
model for entities to use in accounting for
revenue arising from contracts with
customers; and replaces AASB 111
Construction Contracts, AASB 118 Revenue,
Interpretation 13 Customer Loyalty
Progzzrammes, Interpretation 15
Agreements for the Construction of Real
Estate, Interpretation 18 Transfers of Assets
from Customers, and Interpretation 131
Revenue-Barter Transactions Involving
Advertising Services. The core principle is
that an entity recognises revenue to depict
the transfer of promised goods or services
to customers in an amount that reflects the
consideration to which the entity expects to
be entitled in exchange for those goods or
services.
This Standard lists the application
paragraphs for each other Standard (and
Interpretation), grouped where they are the
same. Accordingly, paragraphs 5 and 22
respectively specify the application
paragraphs for Standards and
Interpretations in general. Differing
application paragraphs are set out for
individual Standards and Interpretations or
grouped where possible.
The application paragraphs do not affect
requirements in other Standards that specify
that certain paragraphs apply only to certain
types of entities.
4. APPLICATION OF NEW AND R E VI SE D ACCOUNTI NG STANDARD S
AASB 1057
a) Changes in accounting policy, accounting standards and interpretations
The accounting policies adopted are consistent with those of the previous financial year except as follows:
New and amended standards and interpretations
The Group has adopted the following new and amended Australian Accounting Standards and AASB
Interpretations as of 1 July 2015:
• AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031
Materiality - completes the withdrawal of references to AASB 1031 in all Australian Accounting Standards
and Interpretations, allowing that Standard to effectively be withdrawn. The application of this amendment
does not have any material impact on the disclosures or the amounts recognised in the Group’s consolidated
financial statements.
Application of
Australian
Accounting
Standards
38
38
39
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS 4. AP PLICATIO N O F NE W AND R EV I SE D ACCOU NT I N G STAN DARD S (CON TI N UE D )
4. APPLICATION OF NE W A ND REV ISED ACCOUNTI NG STAN DARDS (CONTINU ED)
Reference
Title
Summary
AASB 2014-4
Clarification of
Acceptable
Methods of
Depreciation &
Amortisation
(Amendments
to AASB 116
and AASB 138)
AASB 2014-6
Agriculture:
Bearer Plants
AASB 116 Property Plant and Equipment
and AASB 138 Intangible Assets both
establish the principle for the basis of
depreciation and amortisation as being the
expected pattern of consumption of the
future economic benefits of an asset.
The IASB has clarified that the use of
revenue-based methods to calculate the
depreciation of an asset is not appropriate
because revenue generated by an activity
that includes the use of an asset generally
reflects factors other than the consumption
of the economic benefits embodied in the
asset.
The amendment also clarified that revenue
is generally presumed to be an
inappropriate basis for measuring the
consumption of the economic benefits
embodied in an intangible asset. This
presumption, however, can be rebutted in
certain limited circumstances.
Specify biological assets that meet the
definition of a bearer plant to be accounted
for as property, plant and equipment in
accordance with AASB 116 Property, Plant,
and Equipment, instead of AASB 141
Agriculture.
Application date
for reporting
periods
beginning
or after
Application date
for Company in
financial year
end
1 January 2016
1 July 2016
1 January 2016
30 June 2017
AASB 2014-9
Equity Method
in Separate
Financial
Statements
Amends AASB 127 Separate Financial
Statements, to allow an entity to account for
investments in subsidiaries, joint ventures
and associates in its separate financial
statements:
1 January 2016
30 June 2017
• at cost;
• in accordance with AASB 9 Financial
Instruments; or
• using the equity method as described in
AASB 128 Investments in Associates and
Joint Ventures.
The accounting policy option must be
applied for each category of investment.
40
40
The following new or amended standards, applicable for annual reporting periods beginning after 1 January
2016 (unless otherwise stated), are not expected to have a significant impact on the Group’s consolidated
financial statements:
• AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for acquisitions of interests in
joint operations
• AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of acceptable methods of
depreciation and amortisation (Amendments to AASB 116 and AASB 138)
• AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture, AASB 2015-10 Amendments to Australian Accounting Standards
– Effective Sate of Amendments to AASB 10 and AASB 128 (applicable 1 January 2018)
• AASB 2015-1 Amendments to Australian Accounting Standards – Annual improvements to Australian
Accounting Standards 2012-2014 cycle
• AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to
AASB 101
• AASB 2015-5 Amendments to Australian Accounting Standards – Investment Entities: Applying the
Consolidation Exception
• AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for
Unrealised Losses (applicable 1 January 2017)
• AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to
AASB 107
At the date of authorisation of the financial statements, the following IASB Standards and IFRIC Interpretations
(for which Australian equivalent Standards and Interpretations have not yet been issued) were in issue but not
yet effective:
• Clarifications to IFRS 15 ‘Revenue from Contracts with Customers’ – effective 1 January 2018, applicable for
financial year ending 30 June 2019
•
IFRS 2 (Amendments) ‘Classification and Measurement of Share-based Payment Transactions – effective 1
January 2018, applicable for the year ending 30 June 2019.
5. REV ENUE AND OTHER INCOME
Interest income
Other income
6. COST OF GOODS SOLD
Interest income
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
2,197
46,033
48,230
$
-
5,886
5,886
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
15,011
15,011
$
-
-
41
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS 7. EMPLOY EE BE NEFIT EXPENSE S
9. AUDITOR’S REM UNERATION
Wages and salaries
Employee share option expense (note 28c)
Other employee costs
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
178,431
-
32
$
127,318
174,747
-
178,463
302,065
Remuneration of the auditors of the group:
Audit fees and review of financial reports - PKF Mack
Preparation of Investigating Accountants Report – PKF Mack
8. IN COME TAX B ENE FIT
10. EARNINGS PER SHARE
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
$
29,200
12,500
41,700
22,500
-
22,500
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
(1.03)
(1.03)
$
(1.34)
(1.34)
Basic loss per share (cents)
Diluted loss per share (cents)
Reconciliation of earnings to profit or loss
(Loss) used in calculating basic and diluted EPS
(6,230,063)
(3,797,791)
Weighted average number of ordinary shares and
potential ordinary shares
Weighted average number of ordinary shares used in
calculating basic and diluted EPS
11. CASH AND CASH EQUIVALENTS
Cash at bank
Number
Number
603,562,754
282,809,495
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
7,895,539
7,895,539
$
436,985
436,985
a) The components of income tax expense comprise:
Current tax
Deferred tax
DTA not recognised (losses)
DTA not recognised (temporary)
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
$
(721,021)
(227,472)
821,619
(100,598)
-
257,469
(29,997)
-
b) The prima facie tax on Profit/(loss) from continuing operations and
discontinued operations before income tax is reconciled to the income
tax as follows:
Prima facie tax payable on (loss)/profit from continuing operations and
discontinued operations before income tax at 30%
(1,869,019)
(1,127,239)
Add:
Tax effect of:
other non-allowable items
Other assessable items
Less:
Tax effect of:
Non-assessable items
Loss of discontinued operations
DTA not recognised (losses)
DTA not recognised (temporary)
Income tax expense/(benefit)
Deferred Tax Assets Not Brought to Account, the benefits of which will
only be realised if the conditions for deductibility set out in Note (1h)
occur
Tax Losses
Temporary Differences
Total
1,147,998
899,767
821,619
(100,598)
-
257,469
(29,997)
-
2,078,497
1,453,042
266,734
157,162
2,345,231
1,610,204
42
42
43
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
12. I NVEN TO RY
At Cost
Opening balance at 1 July
Inventory on acquisition of subsidiary (note 26b)
Additions
Foreign currency translation reserve
13. TRADE AND OTH ER RE CEIVAB LES
Current
Other receivables
GST receivable
Prepayments
Short term loan to third party
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
-
14,536
146,986
(4,487)
157,035
$
-
-
-
-
-
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
$
131,629
54,433
117,170
174,140
477,372
39,071
18,987
25,560
-
83,618
Other receivables are non-interest bearing and are generally on terms of 30 days.
14. EXPLORAT ION AND E VALUATION EX PENDITURE (CONT IN UED )
b) Reconciliation of exploration and evaluation expenditure
Costs brought forward
Additions during the year
Impairment provision expense during the year
Amortisation of share based payments (note 28c)
Transfer to assets held for sale (note 14a)
Foreign currency movement
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
$
2,000,000
4,315,040
50,902
261,146
(1,755,891)
(2,777,367)
196,483
(500,000)
8,506
199,188
-
1,993
-
2,000,000
30 June 2016
The Directors reviewed the carrying value of the exploration and evaluation assets at year end, and in conclusion
recognised an impairment provision to reduce its value to its recoverable amount of $500,000.
As per note 14a the Group has sold two of their permits to their joint venture partner, Afrigem SL for a
consideration of $500,000, and has reclassified the exploration asset as held for sale.
30 June 2015
During the year ended 30 June 2015 the Directors reduced the carrying value of exploration expenditure to its
recoverable amount being the direct costs capitalised on each area of interest; indirect expenditure that cannot
specifically be allocated to an area of interest has been expensed through the profit or loss.
The Wassadou North and South, and Balakonko tenements were relinquished during the year and their carrying
values reduced to nil; the group however successfully acquired a new tenement, Youboubou on 20 May 2015.
14. EXPLO RATION AN D E VALUATI ON E XPENDITU RE – ASS ETS HELD FOR S AL E
15. PLANT AND EQUIPMENT
a) Assets classified as held for sale
Exploration and evaluation asset – carrying value
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
500,000
500,000
$
-
-
Plant and equipment
- at cost
- accumulated depreciation
The Group entered into a Binding Term Sheet on 10 August 2016 to sell its Bouroubourou and Lingokoto
permits to its joint venture partner Afrigem SL for $500,000; the Company subsequently completed the sale
following receipt of the funds on 15 August 2016.
Plant and equipment movement
Opening balance at 1 July
Plant and equipment on acquisition of subsidiary (note 26)
Additions
Depreciation
Foreign currency translation reserve
44
44
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
$
235,483
(24,409)
211,074
$
-
28,933
198,218
(16,579)
502
211,074
8,332
(8,332)
-
$
-
-
-
-
-
-
45
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
16. I NTANGIB LE ASSETS
19. CONTINGENT CONSIDER ATION
Intangible assets
- at fair value on acquisition (note 26b)
- foreign currency translation reserve
17. CONTROLLED ENTIT IE S
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
7,096,990
(13,325)
7,083,665
$
-
-
-
Percentage Owned (%)*
Country of
incorporation
30-Jun-16
30-Jun-15
Parent entity:
MGC Pharmaceuticals Limited
Subsidiaries of MGC Pharmaceuticals Limited
Erin Mineral Resources Limited
MGC Pharma (UK) Limited1
MGC Pharma (Aust) Pty Ltd2
Subsidiaries of Erin Mineral Resources Limited:
Erin Minerals Pty Limited
Erin Senegal S.A.U
Subsidiaries of MGC Pharma (UK) Limited:
MGC Pharmaceuticals d.o.o
MGC Derma d.o.o
Australia
Australia
UK
Australia
Australia
Senegal
Slovenia
Slovenia
* Percentage of voting power in proportion to ownership transactions to report at financial year end.
18. TRADE AND OTH ER PAYAB LES
100
100
100
100
100
100
51
100
-
-
100
100
-
-
Current
Trade payables
Accruals
Other payables
Refer to note 31 for details on management of financial risk.
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
$
145,280
262,838
48,251
456,369
368,893
29,898
-
398,791
Opening balance at 1 July
Contingent consideration arising on asset acquisition
Unrealised fair value movement recognised in profit or loss
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
-
1,300,000
1,780,000
3,080,000
$
-
-
-
-
The contingent consideration liability arose from the acquisition of MGC Pharma (UK) Limited (note 26b).
The performance shares meet the definition of a financial liability where a variable amount of performance
shares convert, contingent upon meeting the milestone (note 26b), into fully paid ordinary shares at a rate of
one ordinary share for every performance share that converts or consolidates into one performance share and
converts to one ordinary share if no conversion occurs on or before the expiry date (3 years from completion of
acquisition).
The determination of the fair value is based on a probability weighted payout approach. The key assumptions
take into consideration the probability of meeting the performance targets. As part of accounting for the
acquisition of MGC UK, the contingent consideration was initially measured at acquisition with a probability of
50%, at which date the share price was $0.026. Following review by the Board as at 30 June 2016, it was
determined that the probability of meeting the targets was highly probable and the weighted outcome had
increased to 75%, and as at that date the share price was $0.044. The increase in value of $1,780,000 was taken
to the consolidated statement of profit or loss and other comprehensive income. Future developments may
require further revisions to the estimate.
20. B ORROWINGS
Current liabilities
Borrowings
Non-current liabilities
Loan payable to third party
Borrowings
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
1,075,228
1,075,228
$
-
-
20,393
20,393
195,000
195,000
In line with the Group’s re-compliance and ASX relisting following the acquisition of MGC UK (refer note 26b),
the Group entered a facility agreement with a third party for a working capital loan of $1 million on 11 February
2016. The loan is repayable on 10 February 2018 and incurs interest at a rate of 10% per annum.
On 11 July 2016 the loan principal, facilitation fee and all incurred interests were repaid in full.
Loan payable to third party
30 June 2016
The loan payable of $195,000, as described below, was fully repaid prior to the year end.
46
46
47
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
20. BOR ROWINGS (CONTINUED)
30 June 2015
The loan payable to Verona Capital Pty Ltd relates to the original acquisition terms of Erin Mineral Resources Pty
Ltd and is disclosed as per the prospectus dated 26 July 2012; the amounts are unsecured and interest free,
and repaid based on future capital raisings or asset sales.
Refer to note 31 for details on management of financial risk.
21. CON TRIBUTE D E QUITY
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
30-Jun-16
30-Jun-15
NUMBER
NUMBER
$
$
Ordinary shares on issue, fully paid
905,638,006
359,134,917
32,343,143
16,501,303
VHL shares (note 28a)
13,000,000
13,000,000
-
-
918,638,006
372,134,917
32,343,143
16,501,303
a) Reconciliation of movement in share capital
30 June 2016
Opening balance at 1 July 2015
Exercise of listed options – 9 July 20151
Options raising – 14 July 20152
Placement – 15 February 20163
Share issue – 15 February 20163
Share issue – 15 February 20164
Share issue – 15 February 20165
Exercise of unlisted options – 11 May 20166
Share issue – 11 May 20167
Placement – 11 May 20168
Priority Offer – 31 May 20169
Exercise of unlisted options – 23 June 2016
Exercise of unlisted options – 23 June 2016
CONSOLIDATED GROUP
No. of Shares
Issue Price
Amount
372,134,917
16,501,303
12,032,711
123,418,924
140,000,000
60,000,000
3,346,700
500,000
29,750,000
2,000,000
113,636,384
56,818,370
2,500,000
2,500,000
0.020
0.020
0.026
0.026
0.026
0.026
0.025
0.048
0.044
0.044
0.025
0.040
240,654
2,468,378
3,640,000
1,560,000
87,014
13,000
743,750
96,000
5,000,000
2,500,000
62,500
100,000
(669,456)
32,343,143
Less: costs of issue
Closing balance at 30 June 2016
918,638,006
21. CONTRIBUTED EQUITY (CONTINUED)
30 June 2015
Opening balance at 1 July 2014
No. of Shares
Issue Price
Amount
257,707,934
15,701,181
Capital raising
Capital raising
Less: costs of issue
64,426,983
50,000,000
0.005
0.010
322,135
500,000
(22,013)
16,501,303
Closing balance at 30 June 2015
372,134,917
1 The Company performed a conversion of listed options by option holders; pursuant to its announcement dated 23 June 2015 the
Company issued 12,032,711 fully paid ordinary shares at an exercise price of $0.02 totalling $240,654.
2 The Company performed an underwritten options raising, as announced on 30 June 2015; pursuant to the underwriting agreement with
Merchant Corporate Finance Pty Ltd and relevant sub-underwriting agreements the Company issued 123,418,924 fully paid ordinary
shares at an issue price of $0.02 to raise $2,468,378 before share issue costs.
3 On completion of the acquisition of MGC UK, the Company issued 200m consideration shares as per the Share Sale and Purchase
Agreement (refer note 26).
4 Subsequent to the acquisition of MGC UK, 3,346,700 shares were issued to Media and Capital Partners for services provided.
5 Pursuant to the Prospectus dated 18 December 2015, the Company issued 500,000 Prospectus shares.
6 The Company performed a conversion of 29,750,000 unlisted options by option holders, exercisable at $0.025 per option.
7 In lieu of cash, 2,000,000 shares were issued for services performed by Stocks Digital at $0.048 per share.
8 Pursuant to the Prospectus dated 4 May 2016, the Company completed and allotted its Placement shares for $5,000,000.
9 Pursuant to the Prospectus dated 16 May 2016, the Company completed its Priority Offer for $2,500,000.
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to
the number of shares held.
At the shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each
shareholder has one vote on a show of hands. Ordinary shares have no par value.
b) Capital risk management
The group’s objective when managing capital is to safeguard their ability to continue as a going concern, so that
they can continue to provide returns to shareholders and benefits to other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure the group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the group manages its capital by assessing the group’s financial risk and
adjusts its capital structure in response to changes in these risks and in the market. These responses include the
management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the group since
the prior year.
The group is not subject to any externally imposed capital requirements.
48
48
49
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS 22. RESERVES
(a) Share based payment reserve
Balance at 1 July
Share based payment movement during the year
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
883,083
196,481
1,079,564
$
509,148
373,935
883,083
This comprises the amortised position of the share based payment expense (refer note 28c).
(b) Foreign currency translation
Balance at 1 July
Currency translation differences arising during the year
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
24,923
1,525
26,448
$
23,513
1,410
24,923
Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency
translation reserve as described in note 1k). The reserve is recognised in profit and loss when the net investment
is disposed of.
23. CO NTI NGENT LIAB ILITI ES AND CONTI NG ENT ASSETS
The Company currently has contingent liabilities of $100,054 that are related to, and dependent upon, material
events occurring in relation to its Senegalese gold projects.
24. COMMI TMENTS
Following the Company entering into a Collaboration Agreement with SipNose Ltd, an Israeli-based therapeutics
company, the Company are obligated to pay a total of USD$50,000 in support of SipNose’s work to be
performed under the agreement. An initial instalment of USD$25,000 was completed on 8 March 2016.
On the execution of a Heads of Agreement with Natura Laboratories d.o.o (‘Natura’), the Company entered into
an obligation to provide Natura with a minimum 300kg of CBD resin per annum, in accordance with the
demands of the end buyers, at an agreed price of €55,000/Kg of 100% purity CBD resin where price is directly
dependent on the purity of the product. Where the Company have to purchase CBD from other producers, the
selling price is based on ‘cost + 5%’.
25. RELAT ED PARTY T R ANSACTIO NS
a) Key Management Personnel Remuneration
Disclosures relating to key management personnel are out in the Directors Report.
b) Transactions with Director related entities
Directors and Officers, or their personally-related entities, hold positions in other entities that result in them
having controls or significant influence over the financial or operating policies of those entities.
25. RELATED PARTY TRANSACTIONS (CON TI NUE D)
Details of the transactions including amounts accrued but unpaid at the end of the year are as follows:
Entity
Relationship
Verona Capital Pty Ltd
(i)
Verona Capital Pty Ltd
Sibella Capital Pty Ltd
(i)
(ii)
Sky and Space Global Ltd
(iii)
Brighght HK Ltd
(iv)
Citation Resources Ltd
(v)
Digital X Ltd
(vi)
CONSOLIDATED GROUP
Transactions
Balances
Nature of
Transactions
Full Year
30-Jun-16
$
Full Year
30-Jun-15
$
Full Year
30-Jun-16
$
Full Year
30-Jun-
15$
(Re-charges to)/
reimbursement
from Verona for
technical support
and corporate
administration costs
and re-charges
Repayment of Erin
acquisition loan
(note 20)
(Re-charges to)/
reimbursement from
Sibella for corporate
administration costs
(Re-charges to)/
reimbursement from
SAS for corporate
administration costs
(Re-charges to)/
reimbursement
from Brighght
HK for corporate
administration costs
(Re-charges to)/
reimbursement from
CTR for corporate
administration costs
(Re-charges to)/
reimbursement from
DCC for corporate
administration costs
-
(1,500)
31,025
31,025
195,000
-
-
-
(5,036)
(1,067)
6,713
1,173
(41,506)
(477)
-
-
4,008
477
-
-
(6,490)
(547)
-
-
-
-
966
427
(i) Verona Capital Pty Ltd, a company controlled 20% by Mr Brett Mitchell.
(ii) Sibella Capital Pty Ltd is a company associated with Mr Brett Mitchell.
(iii) Sky and Space Global Ltd (SAS) is a company associated with Mr Brett Mitchell who is currently a Director of SAS.
(iv) Brighght HK Ltd is a company associated with Mr Nativ Segev.
(v) Citation Resources Ltd (CTR) is a company associated with Mr Brett Mitchell up to 1 December 2015, when he resigned as Director.
(vi) Digital X Ltd (DCC) is a company associated with Mr Brett Mitchell; subsequent to year end he resigned as Director on 24 July 2016.
c) Other related party transactions
There were no other related party transactions.
50
50
51
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
26. ASSET ACQUISITION
a) Subsidiaries acquired
Principal
activity
Date of
acquisition
Proportion of
shares acquired
%
Total
Consideration
$
MGC Pharma (UK) Ltd Opportunities to acquire businesses
15-Feb-16
100
6,951,475
and companies focused in the
medicinal cannabis sector
Subsidiaries of MGC Pharma (UK) Ltd:
MGC Pharmaceuticals
d.o.o
Licensing for growing and selling
of cannabidiol products for use on
medicinal cannabis products
15-Feb-16
100
105,358
MGC Derma d.o.o
Sale of medicinal cannabis products
15-Feb-16
51
40,157
b) Acquisition of MGC Pharma (UK) Ltd
Following the Company exercising its right to acquire 100% of the issued capital of the medicinal cosmetic
cannabis company, MGC Pharma (UK) Ltd (“MGC UK”), the Company then entered into a Share Sale and
Purchase Agreement with MGC UK and subsequently completed its acquisition on 15 February 2016 through
the issue of 200,000,000 shares and 100,000,000 performance shares.
MGC UK holds interests in MGC Slovenia d.o.o (“MGC Slovenia”) and MGC Derma d.o.o (“MGC Derma”) of
100% and 51% respectively.
MGC UK is a privately held entity, that does not consist of inputs, nor processes that generate outputs, and
therefore does not meet the definition of a business. Where a transaction does not meet the definition of a
business, and therefore not within the scope of IFRS 3 Business Combinations, the transaction is that of an asset
acquisition and is therefore a share based payment transaction under AASB 2 Share Based Payments.
This transaction was accounted for as an asset acquisition that principally involved the acquisition of the
growing licences held under MGC Slovenia for growing of cannabis for medicinal and cosmetic purposes; MGC
Derma being the cosmetics sale entity.
Under asset acquisition accounting the acquirer identifies and recognises the individual assets acquired
(including those assets that meet the definition of, and recognition criteria for, intangible assets in IAS 38) and
liabilities assumed; and allocates the cost of the group of assets and liabilities to the individual identifiable
assets and liabilities on the basis of their relative fair values at the date of purchase.
The principal terms of the acquisition are as follows:
MGC Pharma
(UK) Ltd
MGC
Pharmaceuticals
d.o.o
MGC
Derma
d.o.o
YTD Foreign
currency
translation reserve
Fair value of consideration
equity instruments
$
6,500,000
$
-
$
-
Cash acquired on acquisition
-
79,559
63,012
$
-
-
Total
$
6,500,000
142,571
Excess of net liabilities over
consideration
6,951,475
25,799
(22,855)
(13,325) 6,941,094
Initial consideration
determined at aquisition date
6,951,475
105,358
40,157
(13,325)
7,083,665
26. ASSET ACQUISITION (CON TIN UE D)
The securities issued as consideration for the acquisition are:
(i) 200,000,000 fully paid ordinary shares in MGC; and
(ii) 100,000,000 performance shares.
The Company issued 200,000,000 ordinary shares for 100% interest in the MGC UK Group. The fair value of the
shares is calculated with reference to the quoted price of the shares of the Company at the date of acquisition,
which was $0.026 per share. The fair value on consideration given was therefore $5,200,000.
The 100,000,000 performance shares issued by the Company to the Vendors are convertible to ordinary shares
(on a one for one basis) upon the Company securing an off-take agreement to sell CBD oil that contains a
minimum purity of 50% CBD and/or MGC products, and achieving revenue of €1 million from the supply of CBD
oil and /or other MGC products under that off-take agreement.
The determination of the fair value is based on a probability weighted payout approach. The key assumptions
take into consideration the probability of meeting the performance target (as detailed above). As part of
accounting for the acquisition of MGC UK, the estimated fair value of the performance shares of $1,300,0000
are recognised on acquisition based on a probability weighting of 50% that the target would be met, at which
date the underlying share price was $0.026.
Consideration
Paid consideration
Fully paid ordinary shares in the Company
• 200,000,000 shares at $0.026 per share
Contingent consideration
• 100,000,000 performance shares at $0.026 per share at 50% (refer note 19)
Total consideration
There were no disposals during the year.
30 June 2015
There were no disposals or acquisitions during the financial year ended 30 June 2015.
27. NON-CONTROLLING INTEREST
Acquisition
consideration
$
5,200,000
1,300,000
6,500,000
Opening balance at 1 July
Non-Controlling interest arising on the acquisition of MGC Derma d.o.o
Share of total comprehensive income for the year
30-Jun-16
30-Jun-15
$
-
(3,749)
(76,903)
(80,652)
$
-
-
-
-
28. SHARE BASED PAYM ENTS
The fair value for all share options, as detailed below, are determined using a binomial option pricing method
that takes into account the exercise price, the term of the option, the probability of exercise, the share price at
grant date and expected volatility of the underlying share, the expected dividend yield and the risk free interest
rate for the term of the option.
52
52
53
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
28. SHA RE BAS ED PAYMENT S (CO N TI N UE D)
28. SHARE BASED PAYM ENTS (CONT INUED)
The inputs used for the valuations are tabled below for each class of option issued.
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns
that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future
trends, which may also not necessarily be the actual outcome. The probability of the performance conditions
occurring, where applicable are included in determining the fair value of the options.
a) Valuation of the Voluntary Holding Lock shares
As part of the acquisition of Erin Mineral Resources Limited (EMRL), Voluntary Holding Lock shares were issued
to the EMRL shareholders.
The Voluntary Holding Lock shares (VHL Shares) may only be released from their holding lock upon the earlier
of the following being satisfied:
(i) a change in control of the Company; or
(ii) the Company achieving an enterprise value of at least $25 million for ten consecutive trading days.
The VHL Shares will be fully paid ordinary shares that will rank equally with all existing shares on issue.
If, within 5 years from the date of issue of the VHL shares, the milestone is not reached and there is no change
of control event, in relation to MGC, the VHL Shares will be cancelled by way of selective capital reduction or
share buyback at a price of $0.000001 per share.
The VHL shares are included in the acquisition fair value of exploration and evaluation expenditure, and
amortised over a period of 5 years.
Number of VHL shares issued
Fair value per share1
Total value of the issue
Amortisation expense during the year
13,000,000
$0.07
$906,588
$185,091
1The shares have been valued based on the probability of the events occurring, using the volatility and the share price on the date of acquisition.
The following table lists the inputs to the model used for valuation of options:
Valuation date
Dividend yield (%)
Expected volatility (%)
Share price at grant date ($)
Probability (%)
b) Valuation of options issued
(i) 4 million unlisted options
17 August-12
Nil
71.75%
$0.25
27.8%
In part consideration for the provision of corporate advisory services to the Company, the Company issued
4,000,000 unlisted options (post consolidation) to Verona Capital Pty Ltd. The options have an exercise price of
$0.20 each expiring on or before 30 June 2017. The options will only vest and become exercisable upon the
voluntary holding lock in respect of the VHL Shares being released.
The options are amortised over their expected life, being 5 years, and included in the fair value acquisition cost
of exploration and evaluation expenditure.
Number of options
Fair value per option
Total value of the issue
Amortisation expense (based on 5 years)
4,000,000
$0.01
$55,790
$11,390
The following table lists the inputs to the model used for valuation of options:
Valuation date
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Option exercise price ($)
Share price at grant date ($)
Expiry date
Performance conditions
Valuation of option
(ii) 2 million unlisted options
17 August-12
Nil
71.75%
3.09%
5
$0.20
$0.25
30 June 2017
As above
$0.0051
On 23 January 2013, a total of 2 million unlisted share options were issued to Mr Paul Cranney in consideration for
geological consultancy services provided to the Company. The options were issued in three tranches and have an
expiry date of 23 January 2018.
The options are amortised over their vesting date, and are expensed accordingly.
Number of options
Fair value per option
Total value of the issue
Amortisation expense (based on 5 years)
Tranche 1
Tranche 2
Tranche 3
Total
1,000,000
$0.034
$34,000
-
500,000
$0.032
$16,000
-
500,000
2,000,000
$0.030
$15,000
$1,497
-
$65,000
$1,497
The following table lists the inputs to the model used for valuation of options:
Valuation date
Vesting Date
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Option exercise price ($)
Share price at grant date ($)
Expiry date
Performance conditions
Tranche 1
23 January-13
23 January-13
Tranche 2
Tranche 3
23 January-13
23 January-13
27 August-13
27 August-14
Nil
81%
3.29%
5
$0.30
$0.08
Nil
81%
3.29%
5
$0.35
$0.08
Nil
81%
3.29%
5
$0.40
$0.08
23 Jan 2018
As above
23 Jan 2018
As above
23 Jan 2018
As above
54
54
55
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS 28. SHA RE BAS ED PAYMENT S (CO N TI N UE D)
(iii) 15 million listed options
On 16 May 2014, the Company issued 15 million listed options to external consultants in lieu of cash payment
for services provided to the Company. The options are exercisable at $0.02 each on or before 30 June 2015.
The following table lists the inputs to the model used for valuation of options:
28. SHARE BASED PAYM ENTS (CONT INUED)
c) Reconciliation of share based payment expense
Valuation date
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Option exercise price ($)
Share price at grant date ($)
Expiry date
Performance conditions
Valuation of option
Total value of option
(iv) 3.5 million unlisted options
18 June 2014
Nil
125%
2.68%
1.1
$0.02
$0.013
30 June 2015
As above
$0.0051
$76,500
On 22 July 2014, 3.5 million unlisted options in two tranches of 1,750,000 were issued to Key Personnel for their
past and ongoing services to the Company.
Number of options
Fair value per option
Total value of the issue
Tranche 1
1,750,000
$0.0082
$14,350
Tranche 2
Total
1,750,000
3,500,000
$0.0072
$12,600
-
$26,950
The following table lists the inputs to the model used for valuation of options:
Valuation date
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Option exercise price ($)
Share price at grant date ($)
Expiry date
Tranche 2
Tranche 3
18 July 2014
18 July 2014
Nil
125%
2.79%
3
$0.025
$0.01
Nil
125%
2.79%
3
$0.04
$0.01
30 June 2017
30 June 2017
56
56
Unlisted options issued @ $0.20 (note 28bi)
-
14/09/13
0.014
As at 30 June 2016
Opening balance:
VHL shares issued
Movement during the year
Amortisation expense
Total VHL share (note 28a)
Opening balance:
Unlisted option issued
Movement during the year:
Options expired
Total unlisted options
Total share based payment reserve
As at 30 June 2015
Opening balance:
VHL shares issued
Movement during the year
Amortisation expense
Total VHL share
Opening balance:
Unlisted option issued
Movement during the year:
Number of
VHL Shares /
Unlisted
Options
Vesting
Date
Value
$
Share Based
Payment at
30 June
2016
$
13,000,000
0.069
535,387
-
13,000,000
43,500,000
(19,750,000)
23,750,000
36,750,000
Number of
VHL Shares
/ Unlisted
Options
-
13,000,000
21,000,000
Vesting
Date
Value
$
Share Based
Payment at
30 June
2015
$
13,000,000
0.069
347,746
185,091
720,478
347,696
-
11,390
359,086
1,079,564
187,641
535,387
161,402
11,547
1,497
14,350
12,600
77,900
68,400
347,696
883,083
57
Unlisted options issued @ $0.20 (note 28bi)
Unlisted options issued @ $0.40 (Tranche 3) (note 28bii)
-
-
14/09/13
0.014
27/08/14
0.030
Unlisted options issued @ $0.025 (Tranche 1) (note 28biv)
1,750,000
22/07/14
0.008
Unlisted options issued @ $0.04 (Tranche 2) (note 28biv)
1,750,000
22/07/14
0.007
Unlisted options issued @ $0.025 (Tranche 1) (note 28bv)
9,500,000
17/09/14
0.008
Unlisted options issued @ $0.04 (Tranche 2) (note 28bv)
9,500,000
17/09/14
0.007
Total unlisted options
Total share based payment reserve
43,500,000
56,500,000
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
29. SEGMENT REPORTI NG
For management purposes, the Group is organised into business units based on its geographical locations and
it was determined that there are two reportable segments:
• Australia – corporate and administrative function
•
Slovenia – production and supply of medicinal cannabis products
The Slovenia operations relate to MGC Slovenia and MGC Derma which, based on their level of activities for the
year ended 30 June 2016, have been aggregated as one reportable operating segment as each company
exhibit similar economic characteristics in respect of their inputs, processes, outputs and their regulatory
environments, being that of the production and sale of medicinal cannabis for pharmaceutical and cosmetic
purposes.
30 June 2016
Total assets
Total liabilities
Sales revenues
Slovenia
30-Jun-16
$
1,849,526
2,680,634
Australia
30-Jun-16
Consolidated Group
30-Jun-16
$
16,922,928
4,362,958
$
18,772,454
7,043,592
2,197
-
2,197
Loss for the year:
Members of the parent entity
Non-controlling interest
(1,018,377)
(5,137,242)
(76,903)
-
Total comprehensive loss for the year
(1,095,280)
(5,137,242)
(6,155,619)
(76,903)
(6,232,522)
30. CA SH FLOW INFORM ATION
Reconciliation of Cash Flow from Operations with Loss after Income Tax
(Loss) after income tax
Cash flows excluded from loss attributable to operating activities
Non-cash flows in loss
Depreciation and amortisation
Impairment expense
Exploration, evaluation and development expenditure
Share based payment expense
CONSOLIDATED GROUP
30-Jun-16
$
(6,232,522)
30-Jun-15
$
(3,796,381)
16,579
-
1,755,891
2,777,367
-
-
77,379
174,747
Loss on re-measurement of financial liability
1,780,000
Changes in assets and liabilities, net of the effects of purchase of
subsidiaries
-
-
(15,316)
164,497
(157,035)
(393,754)
10,340
(3,220,501)
(617,707)
(Increase) in inventory
(Increase) in trade and other receivables
Increase in trade payables and accruals
Cash flow from operations
58
58
31. FINANCIAL RISK MANAGEM ENT
The group’s financial instruments consist mainly of cash at bank, payables and receivables.
The group has not formulated any specific management objectives and policies in respect to debt financing,
derivatives or hedging activity. As a result, the group has not formulated any specific management objectives
and policies in respect to these types of financial instruments. Should the group change its position in the
future, a considered summary of these policies will be disclosed at that time.
The Group’s current exposure to the risk of changes in the market is managed by the Board of Directors.
Market Risks
The Group is exposed to a variety of financial risks through its financial instruments for example, interest rate
risk, liquidity risk and credit risk, as well as foreign currency risk.
Interest Rate Risk
At reporting date, the Group does not have long term borrowings and its exposure to interest rate risk is
assessed as low. The risk monitors its interest rate risk through sensitivity analysis, as outlined below.
The consolidated group’s exposure to interest rate risk which is the risk that a financial instrument’s value will
fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on
classes of financial assets of the group are summarised in the following tables:
CONSOLIDATED GROUP
Floating
Interest
Rate
$
1 Year
or Less
$
Over
1 to 5
Years
$
Non-
interest
Bearing
Remaining
Contractual
Maturities
Weighted
Average
Interest Rate
$
$
%
7,890,519
7,890,519
-
-
7,890,519
7,890,519
-
-
1,075,228
1,075,228
-
-
1,075,228
1,075,228
-
-
-
-
-
-
-
5,020
7,895,539
0.58%
174,140
174,140
179,160
8,069,679
456,369
456,369
-
1,075,228
10.00%
20,393
20,393
476,762
1,551,990
CONSOLIDATED GROUP
Floating
Interest
Rate
$
1 Year
or Less
$
Over
1 to 5
Years
$
Non-
interest
Bearing
Remaining
Contractual
Maturities
Weighted
Average
Interest Rate
$
$
%
30 June 2016
Financial assets
Cash and cash equivalents
Other receivables
Financial liabilities
Sundry accruals
Borrowings
Loans payable
30 June 2015
Financial assets
Cash and cash equivalents
427,133
427,133
Other receivables
Financial liabilities
Other payables and
sundry accruals
Loans payable
-
-
427,133
427,133
-
-
-
-
-
-
-
-
-
-
-
-
9,852
83,618
93,470
436,985
83,618
520,603
1.35%
398,792
398,792
195,000
593,792
195,000
593,792
59
MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS 31. FINA NC IAL R ISK MA NAGE MEN T (CON T I NU ED )
31. FINANCIAL RISK MA NAGEME NT (CONT INUED)
At 30 June 2016, if interest rates had changed by -/+100 basis points from the year-end rates with all other
variables held constant, post-tax profit for the year would have been $68,153 lower/higher (2015: $4,271).
A 10% increase or decrease in value of Australia dollar against the above currencies at 30 June would have the
following effect:
Liquidity Risk
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The
group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient cash
to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the group’s reputation. The group monitors forecast cash flows on regular basis to
manage its liquidity risk.
Credit Risk
Management has assessed the credit risk exposure as minimal at reporting date. Credit risk arises from exposure
to customers and deposits with banks. Management monitors its exposure to ensure recovery and repayment
of outstanding amounts. Cash deposits are only made with reputable banking institutions.
Foreign currency risk
The group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the Senegal currency (CFA Franc (XOF)), GBP (£), Euro (€) and United States
Dollars (USD).
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the entity’s functional currency. The risk is measured using cash flow
forecasting.
The consolidated entity has not entered into any derivative financial instruments to hedge such transactions and
anticipated future receipts or payments that are denominated in a foreign currency. The board manages the
purchase of foreign currency to meet operational requirements.
The consolidate entity’s exposure to foreign currency risk at the reporting date was as follows:
Trade payables in denomination currency
Trade payables - EUR
Cash and cash equivalents held in denomination currency
Cash and cash equivalents - EUR
Cash and cash equivalents - XOF
Consolidated entity sensitivity
Exchange rates per AUD as at 30 June
EUR
XOF
CONSOLIDATED GROUP
30-Jun-16
30-Jun-15
$
18,595
924,634
1,606
$
-
-
8,801
0.6701
441.62
0.6901
453.69
Euro (€)
CFA Franc (XOF)
30-Jun-16
$
30-Jun-15
$
Profit/(loss)
Profit/(loss)
Profit/(loss)
Profit/(loss)
10% increase
10% decrease
10% increase 10% decrease
(92,463)
(161)
(92,624)
92,463
161
92,624
-
(880)
(880)
-
880
880
32. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRU MENTS
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised
within the fair value hierarchy, as described at note 1z).
The following table presents the Group’s financial assets and liabilities measured and recognised at fair value.
Level 1
Level 2
Level 3
30 June 2016
Financial assets
Available for sale assets
$
Exploration and evaluation asset
Closing balance at 30 June 2016
500,000
500,000
Financial liabilities
Financial liabilities designated at fair
value through profit or loss:
Contingent consideration
Fair value on initial recognition
Fair value movement in the period
Closing balance at 30 June 2016
-
-
-
$
-
-
-
-
-
Total
$
500,000
500,000
$
-
-
1,300,000
1,780,000
1,300,000
1,780,000
3,080,000
3,080,000
a) Valuation techniques used to derive Level 1 fair values
The fair value of financial instruments recognised under Level 1 are measured based on the active market value,
determined in this case by the value a third party is willing to pay for the assets (refer note 14a).
b) Valuation techniques used to derive Level 3 fair values
The fair value of financial instruments that are not traded in an active market are determined using valuation
techniques. These valuation techniques maximise the use of observable market data where it is available and
rely as little as possible on entity specific estimates.
If one or more of the significant inputs is not based on observable market data, the instrument is included in
level 3.
The contingent consideration was valued by applying the probability weighted payout approach as described
in note 19, and is reviewed on a six monthly basis.
60
60
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MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS 32. FAIR VA LUE MEA SUREMEN T O F FI N AN CI AL I NSTR UME NT S (CON TI N UE D )
34. EVE NTS AFTER TH E REPORTING DATE
On 13 July 2016, the Company announced Professor Uri Kramer, a highly regarded expert in the field of
Paediatric Neurology and Paediatric Epilepsy, joined the Company as a key technical medical consultant and
also joined the Strategic Advisory Board.
The Company also announced on 11 August 2016 that it executed a binding agreement to sell all its interests
in, and exploration data relating to, the exploration work completed on its Senegal Bouroubourou and
Lingokoto exploration permits. The Company executed this binding agreement with its joint venture project
partner Afrigem SL, for total cash consideration of $500,000. These funds have now been received by the
Company. (refer note 14a).
On 12 August 2016, the Company announced the issue of 321,849 ordinary shares to consultants in lieu of cash
for services provided to the Company.
Apart from the above, no other matters or circumstances have arisen since 30 June 2016 that has significantly
affected, or may significantly affect the group’s operations, the results of those operations, or the group’s state
of affairs in future financial years.
35. DIVIDENDS
No dividends have been paid or provided during the year.
A 10% increase or decrease in the probability applied, or MGC’s share price, would result in the following
movements:
30-Jun-16
$’000
30-Jun-15
$’000
Profit/(loss)
Profit/(loss)
Profit/(loss)
Profit/(loss)
10% increase
10% decrease
10% increase 10% decrease
(440)
(308)
440
308
-
-
-
-
Probability
Share price
c) Fair value of other financial instruments
The group also has a number of financial instruments that are not measured at fair value in the balance sheet.
The carrying value of cash, trade receivables and payables is a reasonable approximation of their fair values due
to their short-term nature.
33. PAR ENT COMPAN Y DI SCLOSUR ES
a) Summary of financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Current assets
Non-current assets
Total Assets
Current liabilities
Non-current liabilities
Total Liabilities
Contributed equity
Share based payment reserve
Accumulated losses
Total Equity
Loss for the year
Total comprehensive loss for the year
30-Jun-16
30-Jun-15
$
$
7,057,774
511,364
10,771,453
1,415,038
17,829,227
1,926,402
4,355,818
-
4,355,818
297,412
195,000
492,412
32,343,143
16,501,303
1,079,564
883,083
(19,949,298)
(15,950,396)
13,473,409
1,433,990
(3,998,902)
(3,815,396)
(3,998,902)
(3,815,396)
b) Commitments and contingent liabilities of the parent
The parent entity did not have any contingent liabilities or commitments, as at 30 June 2016 (30 June 2015: nil).
c) Guarantees entered into the parent entity
There were no guarantees entered into by the parent entity.
62
62
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MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS D I R E C T O R S ’ D E C L A R A T I O N
I N D E P E N D E N T A U D I T O R ’ S R E P O R T T O M E M B E R S
The Directors’ of the Company declare that in their opinion:
1. The financial statements and notes, as set out in pages 23 to 63, are in accordance with the Corporations Act
2001 and:
(a) comply with Accounting Standards and the Corporations Regulations 2001;
(b) are in accordance with International Financial Reporting Standards, as stated in note 2a to the financial
statements; and
(c) give a true and fair view of the Company’s and consolidated group’s financial position as at 30 June 2016
and their performance for the year ended on that date.
2. The Directors have been given the declaration required by section 295A of the Corporations Act 2001.
3. The remuneration disclosures contained in the Remuneration Report comply with s300A of the Corporations
Act 2001.
4. In the Directors opinion there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Brett Mitchell
Executive Chairman
Dated 29 August 2016
Accounting, Financial and Business Advisory
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
MGC PHARMACEUTICALS LTD
Report on the Financial Report
We have audited the accompanying financial report of MGC Pharmaceuticals Ltd (the company) and its controlled
entities (the consolidated entity), which comprises the consolidated statement of financial position as at 30 June 2016,
the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes
in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration of the company and
the consolidated entity. The consolidated entity comprises the company and the entities it controlled at the year’s end
or from time to time during the financial year.
Directors’ Responsibility 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 Note 1, the directors also state, in accordance
with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with
International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about
whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the company’s preparation of the financial report that gives a true and fair view
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
PKF Mack
ABN 64 591 268 274
Liability limited by a scheme
approved under Professional
Standards Legislation.
www.pkfmack.com.au
Perth
Level 4, 35 Havelock St
West Perth WA 6005 Australia
PO Box 609 West Perth WA 6872
p
f
+61 8 9426 8999
+61 8 9426 8900
PKF Mack is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or
liability for the actions or inactions of any individual member or correspondent firm or firms.
64
64
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MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORT
I N D E P E N D E N T A U D I T O R ’ S R E P O R T T O M E M B E R S
S H A R E H O L D E R I N F O R M A T I O N
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Accounting, Financial and Business Advisory
Opinion
In our opinion:
(a)
the financial report of MGC Pharmaceuticals Ltd is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and their
performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2016. 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.
Opinion
In our opinion, the Remuneration Report of MGC Pharmaceuticals Ltd for the year ended 30 June 2016, complies with
section 300A of the Corporations Act 2001.
PKF MACK
SIMON FERMANIS
PARTNER
29 August 2016
WEST PERTH,
WESTERN AUSTRALIA
EXCHANG E LISTING
MGC Pharmaceuticals Ltd shares are listed on the Australian Securities Exchange. The Company’s ASX code
is MXC for Ordinary Shares and MXCOD for Listed Options.
SUB STANTIAL SHAREHOLDE RS (HOLDING NOT LE SS THAN 5%)
As at 30 September 2016 the Company did not have any shareholder holding not less than 5%.
CLASS OF SH AR ES AND VOTING R IGHTS
At 30 September 2016 there were 5,497 holders of 918,959,855 ordinary fully paid shares of the Company. The
voting rights attaching to the ordinary shares are in accordance with the Company’s Constitution being that:
a. each Shareholder entitled to vote may vote in person or by proxy, attorney or Representative;
b. on a show of hands, every person present who is a Shareholder or a proxy, attorney or Representative of a
shareholder has one vote; and
c. on a poll, every person present who is a shareholder or a proxy, attorney or Representative of a shareholder
shall, in respect of each fully paid Share held by him, or in respect of which he is appointed a proxy, attorney
or Representative, have one vote for the Share, but in respect of partly paid Shares, shall, have such number
of votes as bears the proportion which the paid amount (not credited) is of the total amounts paid and
payable (excluding amounts credited).
The number of shareholders holding less than a marketable parcel is 1,029.
UNLISTED OPTIONS AND PERF ORMA NCE SHARES A S AT 30 SEPTEM BER 2016
Number of
Securities
on Issue
Number
of
Holders
Name of Holders Holding
more than 20%
Verona Capital Pty Ltd
Number
Held
4,000,000
Securities
Options exercisable
at $0.20 on or before
30 June 2017
Options exercisable
at $0.30 on or before
23 January 2018
Options exercisable
at $0.35 on or before
23 January 2018
Options exercisable
at $0.40 on or before
23 January 2018
Options exercisable
at $0.025 on or before
30 June 2017
Options exercisable
at $0.04 on or before
30 June 2017
4,000,000
1,000,000
500,000
500,000
4,000,000
8,750,000
Performance Shares
100,000,000
3
1
1
1
3
6
7
Mr Paul Cranney
1,000,000
Mr Paul Cranney
Mr Paul Cranney
500,000
500,000
Mr Brett Mitchell and Mrs Michelle Mitchell
2,500,000
Mr Nicholas Poll and Mrs Claire Poll
1,000,000
Mr David Nicholas Castleden
3,500,000
Mr Brett Mitchell and Mrs Michelle Mitchell
2,500,000
Nativ Segev
Elad Segev
20,000,000
20,000,000
66
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MGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORTMGC PHARMACEUTICALS LIMITED 2016 ANNUAL REPORT
M G C P H A R M A C E U T I C A L S L I M I T E D 2 0 1 6 A N N U A L R E P O R T
M G C P H A R M A C E U T I C A L S L I M I T E D 2 0 1 6 A N N U A L R E P O R T
S H A R E H O L D E R I N F O R M A T I O N
S H A R E H O L D E R I N F O R M A T I O N
ESC RO WED SECUR ITIES
The Company currently has 13,000,000 VHL Ordinary Shares subject to voluntary imposed escrow and the
following securities subject to ASX imposed escrow:
63,346,700 Ordinary Shares escrowed until 15 February 2018
140,000,000 Ordinary Shares escrowed until 15 February 2017
30,000,000 Performance Shares escrowed until 15 February 2018
70,000,000 Performance Shares escrowed until 15 February 2017
CASH USAGE
Since the time of listing on ASX, the entity has used its cash and assets in a form readily converted to cash that it
had at the time of admission to the official list of ASX in a manner which is consistent with its business objectives.
TOP 2 0 SHA REHOLDER S AS AT 30 SEPTEMBER 201 6
Holder
1 Elad Segev
2 Nativ Segev
3 Thor's Hammer Limited
4 Mr Brett Clifford Lawrence
5 Chitta LU Limited
6 Lancaster Equity Pty Ltd
7 Exploration Capital Partners 2009 Limited Partnership
8 Mr Ross Henry Smith
9 Citicorp Nominees Pty Limited
10
Mr Garry Noel Bungey + Mrs Vivienne Alice Nola Bungey
11 Fadco Investments Limited
12 Mr Gregory Peter Wilson
13 Mr Garry Arnephy
14 Mr Archibald Geoffrey Loudon
15 Helmet Nominees Pty Ltd
16 Mr Michael Hoay-Chew Lim + Mrs Catherine Mae Lim
17 Mr Brett Mitchell + Mrs Michelle Mitchell
18 Jacob's Ladder Investments Pty Ltd
19 Exploration Capital Partners 2009 Limited Partnership
20 Mr Brett Mitchell + Mrs Michelle Mitchell
Total
Securities
Percentage
(%)
40,000,000
40,000,000
35,000,000
30,000,000
20,000,000
20,000,000
15,050,252
15,000,000
8,078,858
7,022,728
6,772,613
6,440,910
6,199,967
6,187,391
5,500,000
5,500,000
5,385,972
4,979,546
4,166,667
4,072,917
4.35
4.35
3.81
3.26
2.18
2.18
1.64
1.63
0.88
0.76
0.74
0.70
0.67
0.67
0.60
0.60
0.59
0.54
0.45
0.44
Total
285,357,821
31.05
RANGE O F OR DINARY S HAR E S
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Total
Total Holders
Units
% of Issued Capital
342
108
420
3,337
1,290
5,497
133,330
271,003
3,827,593
140,652,825
774,075,104
918,959,855
0.01
0.03
0.42
15.31
84.23
100.00
TOP 20 LISTED OPTIONHOLDERS AS AT 6 OCTOBER 2016
Holder
1 HSBC Custody Nominees (Australia) Limited - A/C 3
2 The Trust Company (Australia) Limited
3 Westbourne Asset Management Pty Ltd
4 Haydos Corporation Pty Ltd
5 Hirsch Financial Pty Ltd
6 TKPJ Pty Ltd
7 Mr Bin Liu
8 Magaurite Pty Ltd
9 Zero Nominees Pty Ltd
10 Demasiado Pty Ltd
11 DRM Technologies Pty Ltd
12
Mr Garry Noel Bungey & Mrs Vivienne Alice Nola Bungey
13 HC Investment Holdings Pty Ltd
14 Aviemore Capital Pty Ltd
15 Conrul Pty Ltd
16 MGL Corp Pty Ltd
17 Bluemax Investments Pty Limited
18 BNP Paribas Nominees Pty Ltd
19 Bellaire Capital Pty Ltd
20 Helmet Nominees Pty Ltd
Total
Securities
Percentage
(%)
4,172,940
3,787,879
1,384,849
1,366,667
1,033,334
1,000,000
993,340
984,849
890,000
762,418
758,334
757,576
742,425
738,661
621,735
454,569
454,546
454,546
442,425
423,334
7.34
6.67
2.44
2.41
1.82
1.76
1.75
1.73
1.57
1.34
1.33
1.33
1.31
1.30
1.09
0.80
0.80
0.80
0.78
0.75
Total
22,224,427
39.12
RANGE OF LISTED OPTIONS
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Total
Total Holders
Units
% of Issued Capital
1
0
2
272
144
419
7
0
16,668
12,792,119
44,009,586
56,818,380
0.00
0.00
0.03
22.51
77.46
100.00
68 68
69
MGC Pharmaceuticals Limited
Level 7, 1008 Hay Street Perth WA 6000
PO Box 7209 Cloisters Square Perth WA 6850
Office: +61 8 9389 2000 Facsimile: +61 8 9389 2099
Email: info@mgcpharma.com.au Web: www.mgcpharma.com.au
ABN 30 116 800 269
MGC Pharmaceuticals Limited