A N N U A L
R E P O R T
2 0 1 8
MGC Pharmaceuticals Limited
ABN 30 116 800 269
1
C o r p o r a t e D i r e c t o r y
Corporate
Directory
Joint Company Secretaries
Rachel Kerr & Kate Sainty
Registered Office and
Principal Place of Business
1202 Hay Street,
West Perth WA 6005
Tel: +61 8 6382 3390
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 Registry
Computershare Investor Services Pty
Limited
Level 11, 172 St Georges Terrace,
Perth WA 6000
Ross Walker
Non-Executive Director
Brett Mitchell
Executive Chairman
Nativ Segev
Executive Director
Roby Zomer
Managing Director
C o n t e n t s 2
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3
5
13
19
26
27
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31
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Welcome
to our 2018
Annual Report
Corporate Directory
Executive Chairman’s Letter to Shareholders
Review of Operations
Directors’ Report
Remuneration Report (Audited)
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
ASX Additional Information
mgcpharma.com.au 3
E x e c u t i v e C h a i r m a n ’s L e t t e r t o S h a r e h o l d e r s
Executive
Chairman’s
Letter to
Shareholders
2 6 O c t o b e r 2 0 1 8
Dear Shareholders,
The Board and I are pleased to report the 2018 financial year
delivered excellent progress across all divisions as the Company
achieved a number of significant operational milestones.
The Company’s development has been supported by changes at the
Board level with Roby Zomer stepping into the role of Managing
Director of MXC to focus on execution of the Board’s strategy and
Nativ Segev remaining a Director and appointed Head of Business
Strategy, in charge of driving sales and new business including the
MGC Derma transaction recently announced with CannaGlobal.
With the guidance of an expert management team, the Company
has focused on driving growth and commercialisation by
leveraging its relationships, IP and expert knowledge in the
development of pharmaceutical grade medicinal cannabis
products. This pharmaceutical focus is underpinned by multiple
research programmes underway with prestigious universities
| Annual Report 2018 E x e c u t i v e C h a i r m a n ’s L e t t e r t o S h a r e h o l d e r s
4
– Melbourne’s RMIT and the University of Ljubljana and the
Company’s ongoing plans to expand its cultivation of raw
materials, production and manufacturing capabilities.
The completion of the transaction will enable Management
to focus on its core business, to become one of the leading
Bio-Pharma operators in Europe.
Management continues to focus its team and resources into the
development of MXC’s European operations and has a clear strategy
for commercialisation to target the strong growth in demand for
medicinal cannabis products globally.
Subsequent to the year end, the Company achieved a significant
milestone as CannEpilTM became available for supply in Australia,
following receipt of Human Research Ethics Committee
endorsement from St Vincent Hospital Melbourne. This means the
drug resistant epilepsy medicine can now be prescribed to patients
by registered doctors under the TGA’s Authorised prescriber
Scheme, which will generate MXC’s first material revenues from it’s
Bio-Pharma operations.
CannEpilTM is expected to be available for supply in Australia
by December 2018 and represents a landmark reached for the
Company as it signifies progress made towards becoming a
Bio-Pharma company.
Oh behalf of the MGC Pharmaceuticals’ Board, I would like to take
this opportunity to thank all of our shareholders for their continued
and unwavering support throughout the 2018 financial year and I
look forward to another year of strong operational progress as we
revolutionise the global medicinal cannabis industry.
MGC Pharmaceuticals’ vision remains to become a leading
Bio-Pharma company with operations in Europe and Australia.
Having made great strides to achieve this, the Company has focused
heavily on European development and here, the Pharma division’s
progress has been exponential.
The Company was recently awarded a full Good Manufacturing
Practice (GMP) licence for its European Production and
Manufacturing facility in Slovenia, following production of its first
commercial batch of epilepsy medicine, CannEpil™. Receipt of this
certification has advanced MGC Pharma towards the final stages
for commercialisation which will follow the completion of final tests,
CannEpilTM becoming available for supply in Australia under the
Authorised Prescriber Scheme by the TGA, and its final validation.
In a European milestone, MGC Pharmaceuticals’ delivered on its
core seed-to-pharma strategy and was one of the first companies
to be awarded approval from the Maltese Government to establish
its second production and manufacturing facility, in Malta. The
Company was then granted a 4000m2 plot of land on which to
construct the facility, by Maltese Enterprise. This followed recent
legislative changes on the production of cannabis for medical use and
has significantly advanced the project.
During 2017, the first crop was planted at the Company’s Czech
Republic facility and flowers from this crop were harvested and
processed with cannabidiol (CBD) was successfully extracted. This
cannabidiol is used within the Company’s premium Nutraceuticals
and Derma product ranges symbolising the Company’s growing
seed-to-sale capabilities.
Subsequent to the year-end, the Company signed a binding term
sheet to sell 100% of MGC Derma to a Canadian private cannabis
investment company. This is a transformational commercial
transaction for the Company, which has built the MGC Derma CBD
brand to be a leader in its market.
mgcpharma.com.au
5
R e v i e w o f O p e r a t i o n s
Review of
Operations
Corporate
• Roby Zomer appointed Managing Director to implement
the Board’s strategy across the Pharma, Botanic and
Derma divisions. Nativ Segev remains a Director and
becomes Head of Business Strategy to drive sales and
secure additional distribution pipelines for MXC
• $5m raised via oversubscribed share placement
to sophisticated and professional investors and
strategic funds, to help establish the Company’s
Maltese medical cannabis production and cultivation
facility and for general working capital
Pharma division
• Research projects with RMIT advanced, with library
of cannabinoids established and the research team
expanded to explore the properties and uses of
medical cannabis in real-life applications
Botanic division
• Czech Republic’s first crop achieves major milestone as
cannabidiol is successfully extracted from harvested flowers
for use in the production of the Nutraceuticals and Derma
ranges, demonstrating the Company’s seed-to-sale operations
• The second Czech Republic crop planted in
early Q2 2018 and has reached vegetation
stage, with harvest expected in Q3 2018
• Full Good Manufacturing Practice (GMP) Certification
• Genetic research programme at the University of Ljubljana
and manufacturing licence received for MXC’s European
production and manufacturing facility in Slovenia,
representing a landmark for the Company which now
has one of the most advanced facilities in Europe
• First batch of CannEpilTM completed and to
undergo one final assessment before commercial
sales and distribution can commence
• Malta Enterprise Corporation granted approval and a
contract to establish a medical cannabis facility on the
4000m2 of land designated to MXC which demonstrates
the agenda of seed-to-pharma operations
• Supply agreements signed with specialist pharmaceutical
distributors - HL Pharma in Australia, MW Pharma
in New Zealand and Lenis in Europe, paving the
way for high revenue generation and expedited
distribution of MXC’s pharmaceutical products
delivers positive results as MXC successfully produces flowers
of specific genders and varying levels of CBD and THC content
Derma division
• Two new research backed and scientifically
engineered products launched; the CBD Herbal
Replenish Cream and CBD Herbal Repair Cream both
targeting oily, itchy, flaky and acne prone skin
• First significant MGC Derma supply agreements signed
with leading retailers Cult Beauty and Harvey Nichols
to sell MXC’s MGC Derma and Derma Plus ranges
internationally, strengthening the brands exposure
R e v i e w o f O p e r a t i o n s 6
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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 8
MGC
Pharma
Division
A number of major milestones in the MGC Pharma division
were delivered in FY18 significantly progressing the Company’s
seed-to-pharma operations.
Good Manufacturing Practice (GMP) Certificate and
Manufacturing Licence
During FY18, the MGC Pharma division achieved a major milestone
with full GMP certification and manufacturing licence awarded for
its European production and a manufacturing facility. Receipt of
this licence enables the commercial scale production of GMP-grade
medical cannabis pharmaceutical products and makes MXC one of
the most advanced facilities of its kind within Europe.
The Company’s facility in Slovenia was awarded GMP status
following the completion of production of its first batch of drug-
resistant epilepsy medication – CannEpil™ in March 2018.
Malta - Awarded First Binding LOI & Designation of Land
Additionally, MXC was provided a Letter of Intent, granting approval
and a contract by Malta Enterprise Corporation to establish a state-
of-the-art full medical cannabis production and cultivation facility
in Malta and on the 4,000m2 of land designated to MXC by Malta
Enterprise in April 2018. MXC was the very first to sign a binding
Letter of Intent with the Maltese Authorities for a cultivation
operation in March 2018.
This represents a major milestone in the process of obtaining a
formal contract to commence construction of the facility, which
will house a research hub and, once approved, a GMP certified
production and manufacturing facility. This supports MXC’s plan
of a fully vertically integrated commercial medical cannabis
seed to-pharma operation.
Supply & Distribution Agreements
The Company signed a supply agreement with specialist
Australian pharmaceutical distributor HL Pharma and a five year
supply and distribution agreement with European pharmaceutical
distributor Lenis farmacevtika d.o.o. (Lenis) during the period.
Under the terms of the agreements, HL Pharma and Lenis will
distribute CannEpilTM and future MGC pharmaceutical products
to the European and Australian markets respectively.
The definitive agreements provide a clear pathway for the
delivery of the first MXC medical cannabis products to Australian
and European epilepsy patients in particular and cements the
Company’s growth in those markets.
Mabsut sales continue to reach the obligations on the supply
agreement, with more products being developed by the MGC
R&D team for Mabsut’s future product range.
Research Projects Advanced with RMIT
MXC’s research and development teams received approval
from RMIT to construct a state-of-the-art facility on the
grounds of the University. Construction of the facility has
commenced and will house innovative research teams
focussing on breeding and pre-clinical research into
melanoma and prostate cancers using medicinal cannabis.
A systematic review of the use of cannabinoids to treat
melanoma and prostate cancers is currently underway
and early results have been encouraging.
During the financial year, the Company also delivered the world’s
first library focussed on researching, compiling and analysing
information on cannabinoids. Back end and user interface
development was completed in late 2017 and the team has now
been expanded with the addition of a further two specialist
PhD students in FY19 focussing on software development,
data retrieval and analytical solutions of the library.
The team are currently working to refine the original prototype
database by creating algorithms that can retrieve data
from public sources. Once completed, the library will be an
internationally recognised must-have tool in research into
medicinal cannabis safety, efficacy and the development of
personalised medications to drive better patient outcomes.
Further to this, discussions have significantly advanced between
MXC, RMIT and a leading university, based in Israel, to establish
a Medicinal Cannabis Innovation Hub – a collaborative project
focussing on innovative research into the benefits of cannabis as
a treatment. Researchers from leading universities worldwide
are expected to join to provide the centre with a vibrant and
collaborative atmosphere for developing innovative healthcare
solutions using medical cannabis.
MGC Nutraceuticals
The Pharma division also recently launched its Nutraceuticals
range targeted at retail customers. The new product line is
available for purchase at www.mgcnutraceuticals.com and is
made up of CBD and hemp-enhanced products. The premium
range of vegan and gluten-free products are engineered
for daily use containing high-grade phytocannabinoids,
proteins and vitamins, and is manufactured using CBD
from the plants grown in the Czech Republic.
The use of MXC’s Hemp proteins and cannabidiol across its other
divisions demonstrates the Company’s seed-to-sale, seed-to-
pharma operations and a fully vertically integrated supply chain.
mgcpharma.com.au 9
R e v i e w o f O p e r a t i o n s
MGC
Botanic
Division
The first crop at MXC’s Czech Republic facility has reached its
first milestone with cannabidiol successfully extracted from the
facility’s first harvest. The cannabidiol extracted from the flowers
of the first crop are being used to produce the Nutraceuticals and
Derma ranges - demonstrating MXC’s seed-to-sale capabilities.
The seedlings for the first crop were planted in 2017
and harvested following the transfer of the crop
into MXC’s larger 1,100m2 glasshouse facility.
The second crop at the facility was planted during Q2
2018 and has reached the vegetation stage which is
expected to be ready for harvest in late 2018.
Under the Botanic division’s partnership with the University of
Ljubljana in Slovenia, medicinal cannabis seeds were planted
in June 2017 for use in the genetic research program.
The flowers harvested were examined under phase two of the
program that focuses on the implementation and optimisation of
molecular markers for sex determination and distinction between
strains. The research aims to create genetic strains with high
levels of CBD and new strains with high tetrahydrocannabinol
(THC) levels for the treatment of specific disease symptoms.
Following the phase two examination and using MXC genetics,
the mother plants of three selected breeding lines were
further analysed and evaluated based on their cannabinoid
content and 23 were selected for cross-pollination.
The 23 cross-pollinated flowers were successfully induced
to produce female and male plants and the resulting flowers
will be further analysed for CBD and THC content. Due to
their pharmaceutical grade quality, going forward, plants
of adequate quality will be selected for development of a
high CBD – low THC seed propagated hemp variety and
used to further research into new pharmaceutical products
for the treatment of a range of medical conditions.
| Annual Report 2018 R e v i e w o f O p e r a t i o n s 10
mgcpharma.com.au 11
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
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Derma Plus Collection
During the period, MGC Derma launched two new
products into the Derma Plus collection.
The MGC Derma Plus CBD Herbal Replenish Cream, launched
in May 2018 specifically developed for external skin care and
relief from inflammatory skin conditions. A study independently
assessed the cream on 24 volunteers over a 30 day period
and concluded that the following calculated values presented
percentage improvement in skin condition on day 301; Dry
skin; 71% improvement, flaking skin; 65% improvement,
itching skin; 86% improvement. Due to the results, 92% of
patients said they would continue using the tested cream.1
The MGC Derma Plus CBD Herbal Repair Cream launched
in January provides daily relief of mild forms of psoriasis.
Independent tests to assess the impact on skin irritation,
itchiness, flaking and severe dryness concluded that there
was a 69% improvement in the skin condition.2 Psoriasis
symptoms were successfully treated through independent
tests completed to date include effective reduction of
skin irritation (by 69 % after 4 weeks of evaluation), and
treatment of skin itchiness, flaking and severe dryness.
MGC
Derma
Division
This year, the MGC Derma division achieved several
milestones, signing a number of transformational supply
agreements supporting the strategy of creating a global
leading cannabidiol (CBD) cosmetic brand and launching
two new products into the Derma Plus collection. The MGC
Derma division is a 51:49 joint venture with well-credentialed
cosmetic manufacturer, Dr. M. Burstein Ltd, of which MGC
Pharmaceuticals owns 51% and holds management control.
Sales and Distribution Agreements
MXC signed two additional landmark sales and
distribution agreements during the year.
The first with leading online beauty retailer Cult
Beauty, in February 2018 for the launch of 15 of
MGC’s cannabidiol cosmetic products and its Derma
Plus skin care range via Cult Beauty’s platform.
The launch was supported by strong customer
interest and sales were driven by a six month exclusive
marketing campaign led by Cult Beauty.
Under the second agreement with leading UK retailer
Harvey Nichols, 18 premium CBD products from the MGC
Derma and Derma Plus collections began sale at Harvey
Nichols Knightsbridge flagship store on 29 June 2018. The
products are available to consumers in store and online
internationally, where legally permitted, and the launch was
supported by a marketing campaign led by Harvey Nichols.
Agreements with retail partners of this calibre provide
MGC Derma an excellent opportunity to immediately
increase its revenue and build strategic brand awareness
in the high-end retail skincare and cosmetics market.
1 Independent study sponsored by MGC Pharmaceuticals
2 Independent study sponsored by MGC Pharmaceuticals
mgcpharma.com.au 13
D i r e c t o r s R e p o r t
Director’s
Report
D i r e c t o r s R e p o r t 14
The Directors present their report on MGC Pharmaceuticals
Limited (“the Company”) and its controlled entities (“the Group”)
for the financial year ended 30 June 2018.
Directors
The names of Directors in office at any time during
or since the end of the year are:
Directors have been in office since the start of the financial year
to the date of this report.
Joint Company Secretaries
Rachel Kerr held the position of Company Secretary for the full
financial year. On 1 January 2018, Kate Sainty was appointed
Joint Company Secretary & both retain their role as Joint
Company Secretary to the date of this report.
Principal Activities
The Company is a European based BioPharma company
with many years of technical, clinical and commercial
experience in the medical cannabis industry. The Company’s
founders are key figures in the global medical cannabis
industry, and the core business strategy is to develop and
supply high quality Cannbinoids based pharmaceutical
products for the growing demand in the medical
markets in Europe, Australasia and North America.
Operating Results
The consolidated loss of the Group from continued operations
amounted to $8,990,470 (2017: $8,502,025).
Dividends Paid or Recommended
No dividends have been paid or declared for payment during, or
since, the end of the financial year.
Significant Changes in State of Affairs
In the opinion of the directors, there have been no significant
changes to the state of affairs of the Group during the year other
than those disclosed elsewhere in the financial report or the
notes thereto.
mgcpharma.com.au 15
D i r e c t o r s R e p o r t
After Reporting
Date Events
13 July 2018
GMP Certification and Manufacturing Licence Awarded to MXC’s European Facility
The Company’s European medicinal cannabis compounding and manufacturing facility is now fully
GMP certified, and has also been awarded the manufacturing licence for the production of GMP
grade medicinal cannabis based medicines, signifying a major milestone for the Company.
Receipt of formal licence demonstrates the facility complies with strict European production
quality standards during the production process of pharmaceutical grade medicinal cannabis. The
immediate production of pharmaceutical grade medicinal cannabis medicines can now commence.
31 July 2018
Neurology & Epilepsy Expert Joins MXC Medical Advisory Board
Associate Professor Wendyl D’Souza has joined the MXC Medical Advisory Board to lead research
and development into medicinal cannabis treatments for Epilepsy and other neurological disorders.
Associate Professor D’Souza is an Authorised Prescriber of Medicinal cannabis and treats over
3,000 patients with drug-resistant epilepsy from currently available treatments in Australia.
8 August 2018
Harvey Nichols Expands MGC Derma Distribution into Two New UK Stores
27 August 2018
Harvey Nichols has extended sales of the MGC Derma and Derma Plus collections to an additional
two UK stores, tripling the total number of stores and is expected to increase sales accordingly.
Three MGC Derma Anti-Aging creams have also been short-listed for
the Notebook Anti-Aging Beauty Awards providing strong validation of
the products’ efficacy and booting the products’ recognition.
Ethics Approval received for Australian Phase II Clinical Trial into Dementia
In partnership with the Institute for Health Research at the Univertsity of Notre Dame, the
Company has received Human Research Ethics Committee approval to conduct a Phase
II clinical trial into the benefits of CogniCannTM in Dementia and Alzheimer patients.
CogniCann™ is one of MXC’s medical cannabis pharmaceutical products with a THC:CBD
ratio specifically formulated for the treatment of key Dementia symptoms and improving
specific cognitive functions. The WA based trial is expected to commence in early 2019.
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly
affect the operations of the Group or the results of those operations of the Group in future financial years.
| Annual Report 2018 D i r e c t o r s R e p o r t 16
Environmental Issues
Future Developments, Prospects and Business Strategies
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.
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.
mgcpharma.com.au 17
D i r e c t o r s R e p o r t
Information on Directors and Secretary
Names, special responsibilities, qualifications and
experience of current directors and company secretaries:
Brett Mitchell, BEc
Qualifications and Experience
Interest in Shares and Options
Directorships held in other listed entities
in the past three years
Roby Zomer
Qualifications and Experience
Interest in Shares and Options
Executive Chairman
Mr Mitchell is a corporate finance executive with over 25 years of experience in
the venture capital, capital markets, tech and resources industries.
He has been involved in the founding, financing and management of both
private and publicly-listed companies, including the second listed medical
cannabis company on the ASX – MGC Pharmaceuticals Ltd (MXC).
Brett is also founder and director of Chieftain Securities Pty Ltd, a Perth
based Corporate Advisory & Venture Capital firm and founder and
shareholder of Graft Polymer (UK) Ltd.
Brett and Michelle Mitchell
20,458,889 Ordinary Shares
Brett and Michelle Mitchell
5,735,005 Ordinary Shares
Sky and Space Global Ltd (12 May 2016 – current)
TNT Mines Limited (27 June 2017 – current)
Acacia Coal Limited (18 December 2015 – 2 August 2016)
Digital CC Limited (5 September 2014 – 24 July 2016)
Managing Director
Mr Zomer joined Mr Segev as co-founder of MGC Pharma and then as the
Executive Director & CTO, following 10 years of experience in the BioTech
and AgroTech sectors, alongside running large scale projects. Mr Zomer
brings his extensive list of business contacts and scientific and engineering
expertise to ensure MXC is positioned as a leader in research and development,
in addition to guaranteeing top performance from global operations.
Mr Zomer’s recent appointment to Managing Director follows successful
implementation of MXC’s pipelines for pharmaceuticals in Europe and
Australia, and indicates MXC’s commitment to scientific leadership.
Chitta Lu Limited
10,000,000 Performance Shares
HSBC Custody Nominees (Australia) Limited
30,000,000 Ordinary Shares
Directorships held in other listed entities
in the past three years
Nil
| Annual Report 2018 D i r e c t o r s R e p o r t 18
Brett Mitchell, BEc
Executive Chairman
Nativ Segev
Executive Director and Head of Business Strategy
Qualifications and Experience
Mr Mitchell is a corporate finance executive with over 25 years of experience in
Qualifications and Experience
Mr Segev founded MGC Pharma in 2014 with a goal to expand into
international markets and raise the quality of medicinal Phytocannabinoid
products, in addition to making them accessible to patients all over the
world. Prior to establishing MGC Pharma, Mr. Segev was a leader in the
Medical Cannabis industry with a sizeable patient-base.
He has over 10 years of experience in implementation, legislation and
lobbying in the global Medical Cannabis industry, combined with over 15
years of experience in diverse executive roles.
Interest in Shares and Options
Brett and Michelle Mitchell
Interest in Shares and Options
20,000,000 Performance Shares
Directorships held in other listed entities
in the past three years
Nil
HSBC Custody Nominees (Australia) Limited
52,500,000 Ordinary Shares
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 Walker 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.
Interest in Shares and Options
4,000,000 Ordinary Shares
Directorships held in other listed entities
in the past three years
Nil
Rachel Kerr
Qualifications and Experience
Kate Sainty
Qualifications and Experience
Joint Company Secretary
Mrs Kerr has 9 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 Joint Company Secretary of Sky and Space Global.
Joint Company Secretary
Mrs Sainty is a Chartered Accountant and Chartered Secretary. Mrs
Sainty was appointed to the position of Joint Company Secretary on 1
January 2018 and is an employee of Grange Consulting Group providing
a unique range of corporate and financial services to listed and unlisted
companies. Mrs Sainty is also Joint Company Secretary of Syntonic Limited.
Directorships held in other listed entities
Sky and Space Global Ltd (12 May 2016 – current)
in the past three years
TNT Mines Limited (27 June 2017 – current)
Acacia Coal Limited (18 December 2015 – 2 August 2016)
Digital CC Limited (5 September 2014 – 24 July 2016)
Roby Zomer
Qualifications and Experience
Managing Director
the venture capital, capital markets, tech and resources industries.
He has been involved in the founding, financing and management of both
private and publicly-listed companies, including the second listed medical
cannabis company on the ASX – MGC Pharmaceuticals Ltd (MXC).
Brett is also founder and director of Chieftain Securities Pty Ltd, a Perth
based Corporate Advisory & Venture Capital firm and founder and
shareholder of Graft Polymer (UK) Ltd.
20,458,889 Ordinary Shares
Brett and Michelle Mitchell
5,735,005 Ordinary Shares
Mr Zomer joined Mr Segev as co-founder of MGC Pharma and then as the
Executive Director & CTO, following 10 years of experience in the BioTech
and AgroTech sectors, alongside running large scale projects. Mr Zomer
brings his extensive list of business contacts and scientific and engineering
expertise to ensure MXC is positioned as a leader in research and development,
in addition to guaranteeing top performance from global operations.
Mr Zomer’s recent appointment to Managing Director follows successful
implementation of MXC’s pipelines for pharmaceuticals in Europe and
Australia, and indicates MXC’s commitment to scientific leadership.
Chitta Lu Limited
10,000,000 Performance Shares
HSBC Custody Nominees (Australia) Limited
30,000,000 Ordinary Shares
Interest in Shares and Options
Directorships held in other listed entities
Nil
in the past three years
mgcpharma.com.au 19
R e m u n e r a t i o n R e p o r t ( A u d i t e d )
Remuneration
Report
(Audited)
This report details the nature and amount of remuneration for
each key management person of MGC Pharmaceuticals Ltd, and
for the executives receiving the highest remuneration.
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.
Remuneration Policy
The remuneration policy of MGC Pharmaceuticals Ltd 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 Ltd 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.
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.
Key management personnel are also entitled to participate in the
employee share and option arrangements.
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.
Performance-based Remuneration
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.
| Annual Report 2018 R e m u n e r a t i o n R e p o r t ( A u d i t e d ) 20
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.
Company Performance, Shareholder Wealth and Director and
Executive Remuneration
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;
- Fees of A$15,000 per month; as of 1 April 2017 the Board
resolved to increase this to A$25,000 per month
Mr Roby Zomer, 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;
- Fees of €10,000 per month plus benefits; as of
1 April 2017 the Board resolved to increase this
to £15,000 per month plus benefits
- A termination fee is payable and 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
• 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, Executive Director & Head of Business Strategy
• 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;
- Fees of €12,500 per month plus benefits; as of
1 April 2017 the Board resolved to increase this
to £17,000 per month plus benefits
- A termination fee is payable and is dependent upon the
Company terminating the services contract at its 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;
- A termination fee is payable and is dependent upon the
- Fees of £910 per month
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
• MGC Pharma (UK) Ltd Non-Executive Director
agreement commenced 30 June 2016; no termination
date or payment on termination;
- Fees of £910 per month
Dr Ross Walker, Non-Executive Director and Chairman of
Strategic Advisory Board
• MGC Pharmaceuticals Ltd Director Letter of Appointment
was implemented on 20 October 2015, no termination date
and no payment upon termination;
- Non-Executive Director fees of $3,000 per month and fees for
Chairman of Strategic Advisory Board of $2,000 per month
mgcpharma.com.au 21
R e m u n e r a t i o n R e p o r t ( A u d i t e d )
Details of Remuneration
Compensation of Key Management Personnel Remuneration
All Directors have contracts with the Company.
Option Holdings of Key Management Personnel
There were no Unlisted Options held by the Board or Key Management Personnel during the 2018 financial year.
Details of options and rights held directly, indirectly or beneficially by KMP and their related parties are as follows:
Unlisted Options exercisable at $0.025, $0.04 and $0.20 all expired 30 June 2017
| Annual Report 2018 R e m u n e r a t i o n R e p o r t ( A u d i t e d ) 22
Performance Shares held by Key Management Personnel
Details of performance shareholdings held directly, indirectly or beneficially by KMP and their related parties are as follows:
Performance Rights held by of Key Management Personnel
Details of performance rights held directly, indirectly or beneficially by KMP and their related parties are as follows:
1 Net other changes are as a result of rights allotted on right issues and other
movement due to changes in directors and directors’ related entities.
mgcpharma.com.au 23
D i r e c t o r s R e p o r t
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
Share-based Compensation
Value of Options
There were no 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 2018.
Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel
in financial year 2017 as part of compensation are set out below:
End of Remuneration Report
| Annual Report 2018 D i r e c t o r s R e p o r t 24
Meetings of Directors
The Directors attendances at Board meetings held during the year were:
The Company does not have any remuneration, nomination or audit committees, these functions are performed by the Board as a whole.
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of MGC Pharmaceuticals
Ltd support and have adhered to the principles of sound corporate governance. The Board recognises the recommendations of the
Australian Securities Exchange Corporate Governance Council, and considers that the Company is in compliance with many of those
guidelines which are of importance to the commercial operation of the Company. During the financial year, shareholders continued
to receive the benefit of an efficient and cost-effective corporate governance policy for the Company. The Company’s Corporate
Governance Policy is available for review on the Company’s website www.mgcpharma.com.au
Options
At the date of this report the unissued ordinary shares of MGC Pharmaceuticals Ltd under option are as follows:
mgcpharma.com.au 25
D i r e c t o r s R e p o r t
Indemnifying Officers or Auditor
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.
Proceedings on behalf 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.
Non-audit Services
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.
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the year ended 30 June 2018 has been
received and can be found on page 26 of the financial report.
This report is made in accordance with a resolution of Directors. These financial statements
were authorised for issue in accordance with a resolution by the Directors of the Company on 31 August 2018.
Brett Mitchell
Executive Chariman
Dated 31 August 2018
| Annual Report 2018 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
26
mgcpharma.com.au 27 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
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2018
| Annual Report 2018 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
28
The accompanying notes form part of these financial statements
The accompanying notes form part of these financial statements.
mgcpharma.com.au 29 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
Consolidated Statement of Financial Position
As at 30 June 2018
| Annual Report 2018 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
30
The accompanying notes form part of these financial statements.
mgcpharma.com.au 31 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
Consolidated Statement of Changes in Equity
For the year ended 30 June 2018
The accompanying notes form part of these financial statements.
| Annual Report 2018 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
32
Consolidated Statement of Cash Flows
For the year ended 30 June 2018
The accompanying notes form part of these financial statements.
mgcpharma.com.au 33 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
Notes to the
Financial
Statements
1. CORPORATE INFORMATION
The financial statements of MGC Pharmaceuticals Limited
for the year ended 30 June 2018 were authorised for issue in
accordance with a resolution of Directors on 31 August 2018.
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 POLICIES
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 2018 the consolidated group
incurred a loss from continuing operations of $8,990,470 (2017:
$8,502,025), net operating cash outflows of $5,886,790 (2017:
$4,655,863) and year-end cash and cash equivalents balance of
$9,858,977 (2017: $11,363,902). Net losses include one-off non-
cash adjustments of $1,900,000 (2017: $1,290,000) relating to
the re-measurement of performance shares (note 19) and a share
based payment expense of $1,072,681 (2017: $2,052,053).
The consolidated group cashflow forecasts for the 12 months
ending 31 August 2019 indicate that the consolidated group
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 consolidated 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 2018 (“the Group”).
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.
| Annual Report 2018 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
34
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.
mgcpharma.com.au 35 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
The considerations made in determining significant influence,
or joint control, are similar to those necessary to determine control
over subsidiaries.
are reviewed annually. Changes in the expected pattern of
consumption or useful life are accounted for prospectively by
changing the amortisation method or period.
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. 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
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) Plant and Equipment
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.
h) 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.
i) 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.
| Annual Report 2018 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
36
Financial assets at fair value through profit or loss
j) Impairment of Non-Financial Assets
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
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.
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.
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.
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.
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 2i)). 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 2i)).
k) 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.
mgcpharma.com.au 37 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
l) 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.
m) 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.
n) 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.
o) 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 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.
p) 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;
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38
• Expected to be realised within twelve months after
• In respect of taxable temporary differences associated with
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
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.
• There is no unconditional right to defer the settlement of the
liability for at least twelve months after the reporting period.
Tax Consolidation
The group classifies all other liabilities as non-current. Deferred tax
assets and liabilities are classified as non-current assets and liabilities.
q) 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
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.
r) Employee Benefits
Liabilities for wages and salaries, including non-monetary
benefits, annual leave and accumulating sick leave expected to
be settled within 12 months after the period end in which the
employees render the related service are recognised in respect
of employees’ services up to the end of the reporting period and are
measured at the amounts expected to be paid when the liabilities
are settled. The liability for annual leave and accumulating sick
leave is recognised in the provision for employee benefits. All other
short-term employee benefit obligations are presented as payables.
s) Contributed Equity
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.
t) 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.
mgcpharma.com.au 39 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
Transactions and Balances
v) Revenue
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.
u) 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.
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.
w) Government Grants
Government grants are recognised when there is a reasonable
assurance that the grant will be received and all attached
conditions will be compiled with. When the grant relates to
an expense item, it is recognised as income on a systematic
basis over the periods that the costs, which it is intended to
compensate, are expensed. When the grant relates to an asset,
it is recognised as income in equal amounts over the expected
useful life of the related asset.
x) 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.
Specifically, the Group’s reportable segments under AASB 8 are
currently based on its geographic location, being the Australian
and Slovenian operations.
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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40
y) Rounding of Amounts
Investments in subsidiaries, associates and joint venture entities
The Company is a kind referred to in Legislative Instrument
2016/191 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.
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.
z) Share Based Payments
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
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.
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 post 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 31 has been prepared
on the same basis as the consolidated financial statements,
except as set out below:
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.
a) 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.
b) 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.
c) 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.
d) Estimations and judgements on Intangible Assets
The intangible asset of the Group relates to a license to grow
industrial cannabis in Slovenia. The Group tests the intangible
asset for indications of impairment at each reporting period, in
line with accounting policies. The intangible asset is a key asset
and is recognized as an intangible asset with an indefinite useful
life as only a simple renewal process is required annually.
mgcpharma.com.au 41 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
The intangible asset is an integral part of the Slovenian operations
becoming the Group’s main cash generating unit (CGU),
being established as its first fully operational, producing and
manufacturing unit, with GMP certification issued to produce API
grade products. Accordingly for impairment testing purposes the
Slovenian Operation is considered to be the CGU.
The intangible asset was tested for impairment at reporting date
using a value in use model and following this assessment it was
determined that the recoverable amount of the intangible asset was
in excess of its carrying value. In making this assessment significant
assumptions, estimates and judgements were made in relation to
the growth of the three revenue streams being botanical, cosmetic
and medicinal pertaining to the CGU. A conservative discount rate
of 10% was applied to net cashflows which is in excess of the Group’s
current cost of capital. In addition to the forecast generation of
revenues from contracted agreements as reflected in the Group’s
cashflow forecast, other matters were considered, including the
Group’s net asset position in comparison to its market capitalization
and the ability of the Group to continue to raise capital.
The impairment assessment also included a sensitivity analysis. The
Directors believe the forecast net cashflows are achievable from
current, contracted distribution agreements in place and the expected
market share of medicinal products, in line with announced market data.
4. APPLICATION OF NEW AND REVISED ACCOUNTING
STANDARDS
a) New or revised standards and interpretations that are first
effective in the current reporting period
The Group has adopted all of the new, revised or amending Accounting
Standards and Interpretations issued by the Australian Accounting
Standards Board (“AASB”) that are mandatory for the current
reporting period. The adoption of these Accounting Standards and
Interpretations did not have any significant impact on the financial
performance or position of the Group during the financial year.Any new,
revised or amending Accounting Standards or Interpretations that are
not yet mandatory have not been early adopted.
b) 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 2018, are set out below.
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42
The group has applied the following standards and amendment for the first time for
their annual reporting period commencing 1 January 2018:
• AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses
• AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107
• AASB 2017-2 Amendments to Australian Accounting Standards – Further Annual Improvements 2014-2016 Cycle
• AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based
payment transactions
•
IFRIC 22 Foreign Currency Transactions and Advance Consideration
The adoption of these amendments did not have any impact on the amounts recognised in prior periods and will also
not affect the current period or future periods.
43 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
5. REVENUE AND OTHER INCOME
6. COST OF GOODS SOLD
7. EMPLOYEE EXPENSES
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44
8. INCOME TAX BENEFIT
9. AUDITOR’S REMUNERATION
mgcpharma.com.au 45 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
10. EARNINGS PER SHARE
11. CASH AND CASH EQUIVALENTS
12. INVENTORY
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46
13. TRADE AND OTHER RECEIVABLES
Other receivables are non-interest bearing and are generally on terms of 30 days.
14. EXPLORATION AND EVALUATION EXPENDITURE – ASSETS HELD FOR SALE
a) Assets classified as held for sale
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, and completed the sale following receipt of the funds on 15 August 2016.
b) Reconciliation of exploration and
evaluation expenditure
mgcpharma.com.au 47 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
15. PLANT AND EQUIPMENT
16. INTANGIBLE ASSETS
Refer to note 3d) for detail on estimates and judgements pertaining to intangible assets.
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48
17. CONTROLLED ENTITIES
The consolidated financial statements of the Group include:
18. TRADE AND OTHER PAYABLES
Refer to note 30 for details on management of financial risk.
mgcpharma.com.au 49
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
19. CONTINGENT CONSIDERATION
The contingent consideration liability arose from the equity consideration issued by the Company to the vendors as part of the deal
terms for the acquisition of MGC Pharma (UK) Limited in the previous financial year.
The performance shares meet the definition of a financial liability where a variable amount of performance shares, contingent upon
meeting the milestone, convert 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.
30 June 2018
As at 30 June 2018 the share price as at that date was $0.066, and the probability of 95% was consistent with prior year; the increase
in value of $1,900,000 (2017: $1,290,000) was taken to the consolidated statement of profit or loss and other comprehensive income
Future developments may require further revisions to the estimate.
20. BORROWINGS
21. CONTRIBUTED EQUITY
| Annual Report 2018 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 50
a) Reconciliation of movement in share capital
51
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
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.
22. RESERVES
This comprises the amortised position of the share based payment expense (refer note 27d).
Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve as
described in note 1t). The reserve is recognised in profit and loss when the net investment is disposed of.
23. CONTINGENT LIABILITIES AND COMMITMENTS
Commitments
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52
Commitments mainly relate to Research and Development Agreements held with Royal Melbourne Institute
of Technology, for both the Breeding and Pre-Clinical Research and the Library of Cannabinoids Project, in addition
to the Biotechnical Faculty of the University of Ljubljana.
During the financial year a Letter of Intent was entered into with the Malta Enterprise for the allocation of industrial space to setup a
business in Malta for the growing and production of medical cannabis. Contingent on the allocation of a site, the Group are to invest
circa €4,300,000 in improvements to site, plant, machinery and equipment, to be implemented within three years from the date of
allocation of the site. As at the date of this report the formal allocation of the site is yet to be confirmed.
There were no further commitments nor contingent liabilities other than those disclosed as at 30 June 2018.
24. RELATED PARTY TRANSACTIONS
a) Key Management Personnel Remuneration
Disclosures relating to key management personnel are 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.Details of the transactions including amounts accrued
but unpaid at the end of the year are as follows:
for capital raising fees and
administrative costs
mgcpharma.com.au 53
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
(i) Mr Brett Mitchell is a Director of the Company.
(ii) Brighght HK Ltd is a company associated with Mr Nativ Segev.
(iii) Chieftain Securities Pty Ltd is a company associated with Mr Brett Mitchell.
(iv) Chitta Lu Ltd is a company associated with Mr Roby Zomer.
(v) Regeneration Pharma Pty Ltd is a company associated with Mr Brett Mitchell.
(vi) Sibella Capital Pty Ltd is a company associated with Mr Brett Mitchell.
(vii) Sky and Space Global Ltd (SAS) is a company associated with Mr Brett Mitchel who is currently a Director of SAS.
(viii) Sputnik Enterprises Ltd is a company associated with Mr Brett Mitchell and Mr Roby Zomer, both of whom are Directors.
(ix) Graft Polymer Ltd is a company associated with Mr Roby Zomer who is a Director and Mr Brett Mitchell who is a founder and shareholder.
(x) TNT Mines Limited (TNT) is a company associated with Mr Brett Mitchell who is currently a Director of TNT.
c) Transactions with related subsidiaries
At the end of the period the following loans were owed by wholly owned subsidiaries of the Company:
Details of interests in wholly owned controlled entities are set out in note 17.
Loans between entities in the wholly owned group are denominated in AUD($) and Euro(€), they are non-interest bearing (with the
exception of the loan with MGC Derma d.o.o which incurs interest of 10%), unsecured and are repayable upon reasonable notice
having regard to the financial stability of the Company.
d) Other related party transactions
There were no other related party transactions.
| Annual Report 2018 (i) Mr Brett Mitchell is a Director of the Company.
(ii) Brighght HK Ltd is a company associated with Mr Nativ Segev.
(iii) Chieftain Securities Pty Ltd is a company associated with Mr Brett Mitchell.
(iv) Chitta Lu Ltd is a company associated with Mr Roby Zomer.
(v) Regeneration Pharma Pty Ltd is a company associated with Mr Brett Mitchell.
(vi) Sibella Capital Pty Ltd is a company associated with Mr Brett Mitchell.
(vii) Sky and Space Global Ltd (SAS) is a company associated with Mr Brett Mitchel who is currently a Director of SAS.
(viii) Sputnik Enterprises Ltd is a company associated with Mr Brett Mitchell and Mr Roby Zomer, both of whom are Directors.
(ix) Graft Polymer Ltd is a company associated with Mr Roby Zomer who is a Director and Mr Brett Mitchell who is a founder and shareholder.
(x) TNT Mines Limited (TNT) is a company associated with Mr Brett Mitchell who is currently a Director of TNT.
c) Transactions with related subsidiaries
At the end of the period the following loans were owed by wholly owned subsidiaries of the Company:
25. BUSINESS COMBINATIONS
a) Acquisition of Subsidiary
30 June 2018
There were no subsidiaries acquired in the year ended 30 June 2018.
30 June 2017
Acquisition of Panax Pharma s.r.o
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 54
During the year, through its subsidiary MGC Pharma (UK) Ltd, the Group completed its 80% acquisition of the equity
of Panax Pharma s.r.o (“Panax”), a company incorporated in Czech Republic, as follows:
(i) 25% equity in Panax issued;
(ii) 55% equity in Panax issued for the Group’s commitment to fund the first 12 months operating costs (capped at €700,000); and
An option (exercisable within 3 years following the end of the 12-month funding period) to acquire the final 20% equity in Panax at the
Group’s election for €600,000 of the Group’s ordinary shares to be issued on a 20-day VWAP at the date of option exercise. As at 30
June 2018 this option has not been exercised.
The acquisition is considered to be an asset acquisition as Panax does not constitute a ‘business’ under relevant standards.
b) Disposal of Subsidiary
On 12 July 2017 (“completion date”) the Group completed the disposal of its Erin Mineral Resources Pty Limited (“EMRPL”) subsidiary,
and the entities EMRPL controls which hold the remaining Senegal gold assets, to Chesser Resources Ltd (“CHZ”).
On completion CHZ issued the following as Consideration:
•
•
•
•
•
1,214,286 fully paid ordinary shares;
95,000 unlisted options, exercisable at $0.06 per share with an expiry date of 31 December 2019;
95,000 unlisted options exercisable at $0.06 per share with an expiry date of 31 December 2020;
5,714,286 Class A Performance Shares to convert into fully paid ordinary shares upon certification by an independent Competent
Person of a JORC Mineral Resource of 0.5Moz Au with an average grade of at least 2.0g/t gold in relation to the Projects; and
5,714,286 Class B Performance Shares to convert into fully paid ordinary shares upon certification by an independent Competent
Person of a JORC Mineral Resource of 1.5Moz Au with an average grade of at least 2.0g/t gold in relation to the Projects.
In line with relevant standards, the consideration is fair valued as at the date of disposal at which point the effective share price of the
CHZ shares was $0.042 per share.
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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
The Performance Shares are contingent on the completion of certain milestones. The directors currently assess the likelihood
of these milestones being achieved at nil and therefore no value is assigned to these performance shares.
Assets, liabilities, financial performance and cash flow information for the EMRPL Group were considered immaterial.
The gain on disposal of subsidiary includes a deconsolidation adjustment totalling $33,167.
26. NON-CONTROLLING INTEREST
27. SHARE BASED PAYMENTS
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.
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 consideration of Erin Mineral Resources Limited (EMRL), Voluntary Holding Lock shares were issued to the
EMRL shareholders as performance based consideration relating to the EMRL assets.
The Voluntary Holding Lock shares (VHL Shares) may only be released from their holding lock upon the earlier of the following being satisfied:
a) a change in control of the Company; or
b) 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 by the EMRL assets 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 were included in the acquisition fair value of exploration and evaluation expenditure, and amortised over a period of 5
years. Amounts are written off in line with treatment of exploration and evaluation expenditure.
As at 30 June 2017 the shares were fully amortised.
| Annual Report 2018 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 56
b) Valuation of options issued
Unlisted options
(i) 4 million unlisted options
In part consideration for the provision of corporate advisory services to the Company, the Company issued 4,000,000 unlisted options
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, and are therefore written off in line with the treatment of exploration and evaluation expenditure.
As at 30 June 2017 these options expired.
(ii) 3.5 million unlisted options
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.
These options expired on 30 June 2017.
(iii) 2 million unlisted options
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.
These options were fully expired as at 30 June 2018.
The following table lists the inputs to the model used for valuation of options:
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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
(iv) 19 million unlisted options
On 17 September 2014, 19 million unlisted options were issued in tranches of 9.5 million
to Directors (and a past director) for their services to the Company.
These options expired on 30 June 2017.
(v) 20.5 million unlisted options
Following shareholder approval on 22 November 2017, 20.5m unlisted options were issued to employees subject
to the following terms and conditions:
The following milestones are also applied to tranches 1 and 2 above:
Tranche 3 are not subject to any vesting conditions and vest immediately on issue
The following table lists the inputs to the model used for valuation of options:
| Annual Report 2018 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 58
(vi) 10m unlisted options
10m unlisted options were issued for lead advisory services following the $5m placement completed on 17 April 2018.
The options are exercisable at $0.15 on or before 30 June 2021.
The following table lists the inputs to the model used for valuation of options:
These costs are included in costs of capital for the year ended 30 June 2018.
Listed options
(vii) 56 million listed options
Pursuant to the capital raising, completed on 12 May 2016, the Company issued 56,818,380 listed options as free attaching options at
one for every three shares issued, on 6 October 2016.
(viii) 35 million listed options
On 10 November 2016, 35 million listed options were issued to consultants and advisors of the Company as detailed in the Notice of
General Meeting issued on 26 August 2016, and as approved by shareholders on 27 September 2016. The options are exercisable at
$0.065 each expiring on or before 30 June 2019.
The following table lists the inputs to the model used for valuation of options:
(c) Issue of Performance Rights
(i) 32.5 million and 4 million Performance Rights
Following shareholder approval at the General Meeting held on 27 September 2016, 32.5 million unlisted Performance Rights were
issued to Directors on 17 October 2016 and a further 4 million were issued on 23 December 2016 as approved at the Annual General
Meeting on 29 November 2016.
The principal terms and conditions of the Performance Rights include, continuous service in their capacity as Director or Executive to
the Company, or as otherwise agreed and are subject to vesting milestones as detailed below.
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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
(ii) 22.2 million Performance Rights
Following shareholder approval at the General Meeting held on 27 September 2016, 22.2 million unlisted Performance Rights were
issued to relevant employees of the Company on 23 December 2016.
The principal terms and conditions of the Performance Rights include, continuous service to the Company in their capacity as a full-time
employee and permanent part-time employee, within set milestones as detailed below.
d) Reconciliation of share based payment expense
| Annual Report 2018 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 60
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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
| Annual Report 2018 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 62
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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
28. SEGMENT REPORTING
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
•
Europe – production and supply of medicinal cannabis products
The Europe operations relate to MGC Slovenia, MGC Derma and Panax which, based on their level of activities for the year ended
30 June 2018, 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.
| Annual Report 2018 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
64
29. CASH FLOW INFORMATION
Changes in assets and liabilities, net of the effects of
purchase of subsidiaries
(Increase) in inventory
(Increase) in trade and other receivables
Increase in trade payables and accruals
Cash flow from operations
30. FINANCIAL RISK MANAGEMENT
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:
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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
At 30 June 2018, 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 $98,575 lower/higher (2017: $113,619).
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.
| Annual Report 2018 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 66
Foreign currency risk
The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with
respect to the GBP (£), Euro (€) and CZK (K
).
č
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:
A 10% increase or decrease in value of Australia dollar against the above currencies at 30 June would have an immaterial effect.
FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
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 1o).
The following table presents the Group’s financial assets and liabilities measured and recognised at fair value.
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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
i) 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).
ii) 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.
| Annual Report 2018 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 68
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.
A 5% increase or decrease in the probability applied, or MGC’s share price, would result in the following movements:
iii) 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.
31. PARENT COMPANY DISCLOSURES
i) Summary of financial information
The individual financial statements for the parent entity show the following aggregate amounts:
ii) Commitments and contingent liabilities of the parent
The parent entity did not have any contingent liabilities or commitments, as at 30 June 2018 (30 June 2017: nil) other than as disclosed
at note 23.
iii) Guarantees entered into the parent entity
There were no guarantees entered into by the parent entity.
69
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
32. EVENTS AFTER THE REPORTING DATE
33. DIVIDENDS
No dividends have been paid or provided during the year.
| Annual Report 2018 Directors’
Declaration
D i r e c t o r ’s D e c l a r a t i o n 70
The Directors’ of the Company declare that in their opinion:
1. The financial statements and notes, as set out in pages 27 to
69, 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 2018
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
31 August 2018
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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
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 72
73
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
| Annual Report 2018 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 74
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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
| Annual Report 2018 A S X A d d i t i o n a l I n f o r m a t i o n
76
ASX Aditional Information
EXCHANGE 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.
SUBSTANTIAL SHAREHOLDERS (HOLDING NOT LESS THAN 5%)
As at 30 September 2018 the Company did not have any shareholder holding not less than 5%.
CLASS OF SHARES AND VOTING RIGHTS
At 30 September 2018 there were 13,808 holders of 1,212,830,412 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;
c) and 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).
At 30 September 2018, the number of shareholders holding less than a marketable parcel is 4,428.
UNLISTED OPTIONS AND PERFORMANCE SHARES
ESCROWED SECURITIES
The Company currently has 12,652,458 VHL Ordinary Shares subject to voluntary imposed escrow.
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.
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A S X A d d i t i o n a l I n f o r m a t i o n
TOP 20 LISTED OPTION HOLDERS AS AT 30 SEPTEMBER 2018
OPTIONS ARE EXERCISABLE AT $0.065 EXPIRING 30 JUNE 2019
MR MARK ANDREW LINNEY
MBM CORPORATION
PTY LTD
MR MICHAEL RODNEY BARRETT
MR EDWARD BRIDGMAN
MR PHILLIP NOEL HARRIS + MRS PRUNELLA SUSAN
HARRIS
MR PETER WALLIS JAMES KING
MRS JOSEPHINE RYAN
2,837,959
3.11
1,803,355
1,800,000
1,500,000
1,440,540
1,250,000
1.98
1.97
1.64
1.58
1.37
37,823,674
53,462,415
41,43
58,57
A S X A d d i t i o n a l I n f o r m a t i o n
78
RANGE OF LISTED OPTION HOLDERS AS AT 30 SEPTEMBER 2018
4
276
8,943
12,389,406
78,798,786
RANGE OF ORDINARY SHARES AS AT 30 SEPTEMBER 2018
504
884
2,965
7,647
1,831
160,500
3,880,166
24,286,002
288,801,425
895,702,319
0.01
13.57
86.3
0.01
0.32
2.00
23.81
73.85
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A S X A d d i t i o n a l I n f o r m a t i o n
TOP 20 SHAREHOLDERS AS AT 30 SEPTEMBER 2018
126,158,774
37,002,890
10.40
3.05
6,772,613
5,735,005
5,385,972
5,046,936
4,893,782
4,408,400
0.56
0.47
0.44
0.42
0.40
0.36
3,700,832
0.31
3,000,000
0.25
281,006,622
931,823,790
23.17
76.83
| Annual Report 2018 MGC Pharmaceuticals Limited
1202 Hay Street,
West Perth WA 6005
Tel: +61 8 6382 3390
Email: info@mgcpharma.com.au
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