F Y 2 3 A N N U A L R E P O R T Pure Foods Tasmania Limited (ASX : PFT) and Controlled Entities For the financial year ended 30 June 2023 Contents Corporate Directory 2 About Us 3 Chairman’s Report 5 Managing Director’s Report 7 Business & Financial Summary 9 Awards 10 Employee Spotlight 11 Community Events 12 New Products 14 Focus on Sustainable Packaging 15 Directors’ Report 17 Remuneration Report 21 Auditor’s Independence Declaration 23 Financial Statements 24 Consolidated Statement of Profit or Loss and Other Comprehensive Income 24 Consolidated Statement of Financial Position 25 Consolidated Statement of Changes in Equity 26 Statement of Cash Flows 27 Notes to the Financial Statements 29 Directors’ Declaration 49 Independent Audit Report 51 Shareholder Information 55 Operating costs were reduced by 44% in FY23, and productivity and efficiency gains were achieved through a substantial $1.4m capital investment plan. Malcolm McAully, Chairman Annual Report for the Financial Year ending 30 June 2023 1 Corporate Directory Postal Address 100-104 Mornington Road Mornington, Tasmania 7018 Australia Registered Office 2/179 Murray Street Hobart, Tasmania 7000 Australia Corporate Office 100-104 Mornington Road Mornington, Tasmania 7018 Tel: +61 (3) 6231 4233 Bankers National Australia Bank Commonwealth Bank of Australia Stock Exchange Listing Pure Foods Tasmania Limited shares are listed on the Australian Securities Exchange, code PFT. Share Registry Automic Registry Services Level 2, 267 St Georges Terrace Perth, Western Australia 6000 Australia Board of Directors Malcolm McAully Non-Executive Chairman Michael Cooper Managing Director and CEO Ken Fleming Non-Executive Director Justin Hill Company Secretary Solicitors Page Seager 2/179 Murray Street Hobart, Tasmania 7000 Australia Auditor Wise Lord & Ferguson 160 Collins Street Hobart, Tasmania 7000 Australia Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 2 About Us Pure Foods Tasmania Pty Ltd (PFT) was formed in 2015 with the aim to enhance and promote Tasmania’s food and beverage businesses. PFT’s strategy is to develop new products within its existing brands and in the plant-based food market, to acquire complementary brands and businesses and to increase its market penetration and distribution for its suite of brands and products globally. PFT’s stable of brands and businesses include Woodbridge Smokehouse, Tasmanian Pate, Daly Potato Co, Lauds Plant-Based Foods, and The Cashew Creamery. Strategy PFT’s growth strategy encompasses several key themes: 1. organically grow its existing brands; 2. improve margins and capacity via automation of its production as products and brands reach scale; 3. secure key assets; and 4. grow via the acquisition of complementary/scalable products/ brands/businesses to exploit product expansion opportunities. PFT brands are targeted at the “conscious consumer”, offering convenience and indulgent home entertaining products with a uniquely Tasmanian focus. Organic growth will be achieved through increased penetration of existing markets, entry into new markets and new product development. Annual Report for the Financial Year ending 30 June 2023 3 Our people have demonstrated resilience and a focus on safety while maintaining consistent delivery of our quality products and service to our customers. Malcolm McAully Chairman Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 4 Chairman’s Report I am pleased to present the Pure Foods Tasmania Financial Report for the financial year ended 30 June 2023. This year PFT implemented a strategy to address operating costs and efficiencies in the wake of a challenging economic environment. PFT had grown quickly since its listing on the ASX and acquired three new businesses which saw compound annual sales growth of 266% between 2019 and 2022. To manage this growth, it also added new staff, enhanced reporting, and operating systems as well as improved logistics. In addition, it faced the new challenges with COVID-19, including supply chain issues and key staff shortages. In that period, PFT achieved and met all its strategic milestones (including navigating COVID-19) but the change in the economic climate required a different response. It was agreed at the outset of the 2023 financial year (“FY23”), that topline growth was not the immediate priority and PFT needed to align its operations to face a different trading environment. Staff and management met that challenge head on, and operating costs were reduced by $1.8m (44%) in FY23; and productivity and efficiency gains were achieved through a substantial $1.4m capital investment plan. As part of the strategic review, we implemented a key initiative to delete a number of SKU’s (product lines) at Woodbridge Smokehouse to return the business to sustainable profitability. This resulted in a reduction in revenue as unprofitable SKU’s were deleted to achieve a positive bottom line. During this period, PFT was confident that new product development and collaboration with our major customers would lead to strong organic growth in future years, through several key product initiatives including Daly’s Potato & Gravy and frozen ready to eat meal trays. Potato and Gravy sales accelerated in the second half of FY23 with Coles and then followed by Woolworths and our first order of frozen ready to eat meal trays to be shipped in August 2023 which will represent the largest one-day sales achievement for PFT. We have remained committed to our long-term strategy to grow organically and through acquisition. To assist PFT achieve the latter goal, in May 2023 we appointed financial and strategic advisers Kidder Williams. The Board has continued to ensure PFT is well funded and has the flexibility to react to organic growth and acquisition opportunities as they arise and to this end, we undertook a number of capital restructuring initiatives in FY23: Ħ In September 2022, PFT raised (“Offer”) a total of $5.7m (after costs) from new and existing shareholders. This was facilitated by a Placement to sophisticated investors and Entitlement Offer to existing shareholders. The Offer was oversubscribed with funds raised to be used for working capital, expansion and automation of plant and equipment, along with exploring product growth opportunities. Ħ On 31st October 2022, PFT announced the redemption (“Redemption”) of up to $3.5m of the $4.7m of Convertible Notes. The funds were provided by a bank loan of $2.5m and funds on hand of $1.0m which PFT held prior to the September capital raise. Noteholders were also encouraged to convert their Notes and of the $4.7m of Notes that were held, $3.5m were redeemed and $0.7m converted to ordinary shares, bringing the total conversion of notes to ordinary shares to $1.4m. As at 30 June 2023, there was just $0.1m of Notes outstanding and they will be converted or redeemed by October 2023 (the original Convertible Note issue was for $5.3m). Under the strong leadership of our Managing Director, Michael Cooper, I am proud of the senior management team for their willingness and flexibility to remain focused on our priorities. Our people have demonstrated resilience and a focus on safety while maintaining consistent delivery of our quality products and service to our customers. I thank the PFT staff for this dedication and belief in PFT. Your Board is confident that appropriate strategies are in place, supported by a strong company culture, to drive the right outcomes for customers, community, and our shareholders over the long-term. On behalf of my fellow Directors, I would like to thank our shareholders for their continued support for PFT. I look forward to seeing as many of you as possible at our Annual General Meeting either in person or online. Malcolm McAully Non-Executive Chairman 23 August 2023 Annual Report for the Financial Year ending 30 June 2023 5 Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 6 Managing Director’s Report The 2023 financial year (“FY23”) has been another busy year for the Group, and we have seen the availability of our brands continue to increase through further distribution to over 3,500 active customers at 30 June 2023. Highlights Daly Potato Co launched Potato & Gravy into IGA, Woolworths & Coles stores in a number of states, both on the mainland and in Tasmania. We also recently announced the ranging of Daly frozen ready to eat meal trays into 850 Woolworth stores from September 2023. Both these products (Potato & Gravy and frozen meal trays) have been under R&D for the majority of FY23, and we are very happy to finally have them available to all consumers. Tasmanian Pate was also able to launch four new products along with Cashew Creamery adding 1lt Tub Ice Cream to its portfolio. Lauds Plant based foods also launched new products with grated shreds and a new improved feta product. We took a decision to delete several Woodbridge Smokehouse products that were not profitable and although this impacted revenue in FY23, the outcome was that we were able to deliver positive earnings versus a large loss in the 2022 financial year (“FY22”). This business is now starting to grow strongly again and from a profitable base. As a business, we continue to execute against the strategic objectives we set out on listing. We have been able to organically grow our core business via new product ranges and expanded distribution. Tasmanian Pate continues to deliver strong growth, mainly driven by the Homestead Pate brand. Woodbridge Smokehouse has maintained its solid export base, notwithstanding the large increase in raw material costs. Lauds Plant-Based Foods and Cashew Creamery have also launched new products and attracted new customers. Overall, in FY23, the Group delivered total revenue of $9.7m, which was down $0.4m (4.5%) versus FY22. The largest impact to revenue in FY23 was Woodbridge Smokehouse, with sales down by 44%. As noted above, the substantial revenue growth in FY22 for Woodbridge came at a high price to the bottom line, and it was critical that this was redressed in FY23. The business also experienced very high salmon prices versus FY22. Offsetting this, we recorded strong sales at Daly and Tasmanian Pate. FY23 EBIDTA was ($1.4m), a substantial improvement of over ($1.3m), versus FY22 which was ($2.7m). Other highlights include: Ħ Reduction in operating expenses by $1.0m in FY23, driven by a strong focus on cost reduction across all parts of the business; Ħ An increase in packaging costs was experienced in FY23 of approximately 15%, the bulk of which was passed onto our customers with three price increases. And significantly, it is refreshing to note we have seen price pressure easing in the first two months of the 2024 financial year (“FY24”); and Ħ We experienced increased labour pressures to support new product development although notably a portion of this cost was recoverable via our Research & Development Tax incentive claim. We have been able to organically grow our core business via new product ranges and expanded distribution. Annual Report for the Financial Year ending 30 June 2023 7 Continued Investment Our commitment to investment to create efficiencies and improved margins continued throughout FY23. The extension of our automation and capacity improvement program in FY23 required a capital investment of $1.4m. This was critical to provide scale and productivity benefits for new and existing products and reduce potential labour pressures, as we manage the expected runway of strong sales growth this year and beyond. We completed three major installations at our Mornington facility, including the turnkey ice cream line, and automated sealing and new sleeving equipment for Tasmanian Pate. All these projects will improve efficiencies, increase margins and capacity, enhance product quality and flexibility. However, there were unplanned disruptions that were outside our control and due largely to international shipping delays. Nonetheless and significantly, we will see the benefits from this automation in FY24. Our People I want to recognise the significant contribution of all our employees over the year as we worked through new product development, installations of new equipment and securing new distribution points for our great brands. Without the dedicated efforts of our team, our business would not be in the position it is today, I would also like to thank the Board, for its contributions over the year and very much look forward to working with my fellow Directors again in FY24. Well Positioned for Growth in the 2024 Financial Year and Beyond We recently appointed Kidder Williams to support the Group in delivering on its growth strategy. The Group remains well positioned to continue to grow via product innovation and acquisition and FY24 is looking to be another exciting year with new ranging, new automation, and customers, all supporting our growth and delivering shareholder value.. Michael Cooper Managing Director 23 August 2023 277T POTATOES 8.3T CASHEWS 24.9T CREAM CHEESE 46.5T CABBAGES 130T CHICKEN LIVERS 11.1T CARROTS 74.6T SALMON 4.0T SPRING ONIONS 3.0T BROCCOLI 2% from FY22 6% from FY22 28% from FY22 10% from FY22 9% from FY22 6% from FY22 This business is now starting to grow strongly again and from a profitable base… Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 8 Managing Director’s Report Revenue by Customer Segment Sales Volume by Production Group NSW 14% QLD 14% TAS 23% VIC 37% SA 3% WA 4% Asia 5% Revenue by Region Revenue by Brand Business & Financial Summary Growth Markers 11.5T GRAVY PRODUCED 21,500L CASHEW ICE CREAM PRODUCED Export 5% Food Service 1% Major Retail 60% Distributor 18% Retail & Independents 17% Tasmanian Pate 44% Daly Potato Co 29% Woodbridge Smokehouse 18% The Cashew Creamery 4% Lauds Plant-Based Foods 4% 3rd Party Distribution 0.2% Active Customers Australia Wide New SKUs Launched in FY23 Tonnes 0 50 100 150 200 250 300 350 LDS TCC WBS TPC DPC Annual Report for the Financial Year ending 30 June 2023 9 Awards SILVER MEDAL 2023 Cashew Creamery Strawberry Ice Cream BRONZE MEDAL 2023 Cashew Creamery Raspberry Ripple Ice Cream BRONZE MEDAL 2023 Cashew Creamery Mint Choc Chip Ice Cream Royal Tasmanian Fine Food Awards Established in 1995, the annual Royal Tasmanian Fine Food Awards are one of the most respected and longest running food awards in Australia. Promoting and encouraging excellence from Australia’s fine food producers to compete against their contemporaries for bronze, silver, gold, champion and reserve champion awards in their given categories. Pure Foods Tasmania was successfully awarded across all Cashew Ice Cream flavours, most notably with Gold awards for its Vanilla and Chocolate varieties. GOLD MEDAL 2023 Cashew Creamery Chocolate Ice Cream GOLD MEDAL 2023 Cashew Creamery Vanilla Ice Cream Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 10 Employee Spotlight Fiona Walsh Fiona has been a dedicated member of PFT since October 2020, bringing with her a background in corporate banking and FMCG accounting. As PFT's Group Accountant, she plays a vital role in the finance and accounting functions of the business. Fiona's first 7 months were particularly exciting and busy, as she was involved in three business acquisitions, requiring extensive project work to set up new inventory and accounting software. She finds great satisfaction in getting to know new businesses and collaborating with her team to find innovative solutions and improve processes. During her free time, you'll find Fiona playing underwater hockey or enjoying bush walks with her family. Tony Palmer Tony has been a dedicated member of Tasmanian Pate and Pure Foods Tasmania for a remarkable 20 years. Previously, he worked as a trade assistant and laborer at Incat. In his current role with the Tasmanian Pate team, Tony serves as the main pate cleaner. He ensures that the pates are properly cooled, cleans the trays, and labels the finished product. Despite performing the same role for two decades, Tony still greatly enjoys his work and appreciates the camaraderie among his team. In his leisure time, you'll find him kayaking and fishing. Living near the water allows for easy access to his kayak for impromptu adventures on the water. Ganga Soti Ganga has been working for Pure Foods Tasmania since last year and is a part of The Cashew Creamery team. Previously she has worked in aged care as an assistant nurse, and has experience in cherry and raspberry picking. At The Cashew Creamery, Ganga mixes and makes cashew ice cream, following the delicious recipes to create the indulgent treat so many people love. It’s a very delicious job! She enjoys that everyone is helpful, and that it is a great team to work with. In her spare time, find Ganga watching TV and movies or travelling the state, or cycling! Andres Gonzalez Andres is a valuable member of the PFT Plant-Based Foods team, joining in 2021. With previous experience as a quality manager and a food technologist, Andres brings extensive knowledge and skills to his role. Currently working as a Production Assistant at The Cashew Creamery and Lauds, he is responsible for creating delicious plant- based products, packing, and creating batch notes. Andres plays a crucial role in recipe formulation, production, and fermenting. He enjoys the challenges his role presents and the opportunity to learn something new every day. In his free time, Andres enjoys studying, listening to music, and has a strong desire to explore Tasmania and travel. Jane Lees Jane is a valued member of the PFT team, currently working at Woodbridge Smokehouse. With previous experience in various roles such as seafood and abalone factory work, cherry picking, and garlic picking, Jane brings a diverse skill set to her position. At Woodbridge Smokehouse, she is responsible for a range of tasks including trimming, weighing fish, packing, and sealing products. Jane takes pride in ensuring that the end product is of the highest quality. She enjoys working with her colleagues and appreciates the convenience of living just 10 minutes away from the smokehouse. Outside of work, Jane indulges in her creative side through painting, macrame, sewing, and crafting glass bead jewelry. Annual Report for the Financial Year ending 30 June 2023 11 Agfest 2023 PFT once again joined the fun at Tasmania’s celebrated annual agricultural show “Agfest” in May 2023 to showcase The Daly Potato Co’s Hot Potato and Gravy product, alongside the Daly Farm which supplies the Tassie grown spuds that go into this delicious product. The product was really well received by patrons young and old. Many noted it tastes just like mum used to make – it really is a good old fashioned mashed potato made from real potato! Sales Manager Tim Kroustalis is pictured here with young Matthew who had never had mashed potato and gravy before. He loved it so much he was back for seconds! Community Events Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 12 Point to Pinnacle 2022 In support of the runners who took on the world’s hardest half marathon, Hobart’s “Point to Pinnacle”, there was plenty of Cashew Creamery ice cream to go round for everyone who crossed the finish line. Talk about a sweet way to cool down after a mountainous run! Annual Report for the Financial Year ending 30 June 2023 13 Community Events New Products 1L Cashew Creamery Range In March 2023, after another significant period of R&D, we finally launched our five flavour 1L tub ice cream variety to the market. On the back of our successful ice cream sticks, our dairy, soy and gluten free all natural flavoured offering in a larger tub has been met with enormous consumer support. Ongoing R&D is happening with our ice cream range, with other premium flavours being tried and tested for a hopeful future launch. Daly Potato Co Frozen Range PFT recently announced the launch of our frozen vegetable range into Woolworths nationally, in the form of ready to heat meal trays. Production stock building of over 11,000 cartons has commenced to fill the largest sales order that PFT has seen to date. With these products having spent significant time in R&D for FY23, we are very proud to finally have them available to our loyal consumers from September 2023. Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 14 Focus on Sustainable Packaging Tasmanian Pate Packaging We are pleased to report that we have taken positive steps towards this goal in FY23 with the unveiling of our new look packaging for our Tasmanian Pate products converting all packaging from PVC to RPET (100% recycled PET). Daly Potato & Gravy Bowl and Lid Our new Daly Potato & Gravy bowls and lids contain no plastic, and are made from responsibly sourced, FSC certified paper. So they are 100% recyclable and compostable. PFT is committed to improving our environmental footprint by improving our product packaging and using innovative materials to help reduce waste. 100% RECYCLABLE RESPONSIBLY SOURCED PAPER COMPOSTABLE Annual Report for the Financial Year ending 30 June 2023 15 Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 16 Your Directors present their report on the consolidated entity (referred to herein as the Group) consisting of Pure Foods Tasmania Limited and its controlled entities for the financial year ended 30 June 2023. The information in the preceding operating and financial review forms part of this Directors’ report for the financial year ended 30 June 2023 and is to be read in conjunction with the following information: General Information Directors The following persons were Directors of the Group during or since the end of the financial year up to the date of this report: Malcolm McAully Non-executive Chairman Michael Cooper Managing Director Ken Fleming Non-executive Director Dividends Paid or Recommended No dividends were paid or declared during the financial year. Indemnifying Officers or Auditor During the financial year, the consolidated entity paid a premium in respect of a contract insuring the Directors of the Group, the Group Secretary and all Executive Officers of the entity and any related body corporate against a liability incurred as a Director, Secretary or Executive Officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Group has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the Group or of any related corporate against a liability incurred as an officer or auditor. Proceedings on Behalf of the Group No person has applied for leave of court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings. The Group 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. The following fees were paid or payable to WLF Accounting & Advisory for non-audit services provided during the year ended 30 June 2023: Details $ Advisory taxation services 23,310 Accounting assistance 4,400 27,710 Auditor’s Independence Declaration The lead auditor’s independence declaration for the year ended 30 June 2023 has been received and can be found on page 21 of the financial report. Directors’ Report Pure Foods Tasmania Limited and its controlled entities. Annual Report for the Financial Year ending 30 June 2023 17 Options and Convertible Notes At the date of this report there are no unissued ordinary shares of the Group under option as detailed in the following table: Grant Date 28 April 2020 Date of Expiry 30 April 2023 Exercise Price $0.40 Number forfeited during year 2,800,000 Option holders do not have any right to participate in any issues of shares or other interests of the Group or any other entity. There have been no options granted over unissued shares or interests of any controlled entity within the Group during or since the end of the reporting period. For details of options issued to Directors and executives as remuneration, refer to the "Remuneration Report" on page 21. During the year ended 30 June 2023, no ordinary shares of the Group were issued on the exercise of options granted. No further shares have been issued since year- end. No amounts are unpaid on any of the shares. No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate. The Group announced on 7 October 2021 that sophisticated and professional investors had agreed to subscribe for 5,300,000 unsecured convertible notes at a price of $5.3m (before costs of the offer) a pursuant to a convertible note deed poll (Deed Poll). The convertible notes have a two-year term (with the C1ompany able to elect to extend to 3 years), 7.5% per annum interest rate and a conversions price based on the lower of: a) 90% (or 80% if there is an extension of the maturity date) of the 10-day trading VWAP prior to conversion; or b) $0.50 per share. During the financial year ending 30 June 2023, 3,450,000 convertible notes were redeemed for $3.5m in accordance with the Deed Poll and 1,710,000 notes were converted into 11,652,754 shares. The average conversion price of convertible notes converted was $0.1458. As at 30 June 2023, a total of 140,000 convertible notes remained outstanding. For illustrative purposes only, if the remaining 140,000 convertible notes had been converted on 30 June 2023 the Conversion Price would have been $0.1157 and 1,210,067 ordinary shares would have been issued. A noteholder may elect to convert all or an amount equal to or greater than $25,000 at any time. Conversion of the notes by PFT can occur at any time prior to Maturity Date, if a “Material Transaction” occurs. A Material Transaction means (a) “Change of Control Event”; (b) PFT enters into an agreement for an acquisition where the consideration payable by PFT is more than $10m; or (c) PFT raises more than $10m (in aggregate) through the issue of shares during the period between the issue date of the convertible notes and the maturity date of the convertible notes. On a Material Transaction, PFT may elect to Convert all the Convertible Notes then outstanding into such number of Shares as is determined by dividing the Outstanding Total Amount by the Conversion Price. Directors’ Report Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 18 Information Relating to Directors and Group Secretary Malcolm McAully Non-Executive Chairman Michael Cooper Managing Director Malcolm McAully is an experienced Company Director having held roles over a diverse range of industry backgrounds including financial services, energy generation, waste management, agribusiness, technology manufacturing, human resource management, property development and food manufacturing. Malcolm was the Chairman of ASX Listed Pinnacle VRB (ASX: PCE) from 2004 to 2005 and remained Chairman when the company (following an acquisition) changed its name to Cougar Energy Limited (ASX: CXY) until 2013 when he resigned. Malcolm is also Chairman of Chaucer Energy Limited and several privately owned companies. Malcolm has held various executive management positions including National Manager of MLC Life when owned by the Lend Lease Group. He holds an MBA and qualifications in accounting, business management, mediation, turn around management and GAICD.s. Michael Cooper is the Managing Director of PFT. Michael has over 29 years’ experience in senior executive roles in the food and beverage industry. He was the CEO and later Managing Director of Juicy Isle Pty Ltd (JI) and sold his family interest to Myer Family Investments. JI was the largest supplier of organic juice in Australia to Woolworths, Coles, and Costco. He was also a director (2012 – 2017) of Ausfec Ltd, a $550m revenue business. Ausfec was the major route to market distribution channel for global brands such as Cadbury, Nestle, Mars, Wrigley, Smith and SBA Snack Foods, Red Bull, and V Energy drinks. Michael is also a Director of Brand Tasmania, a Tasmanian State Authority created under the Brand Tasmania Act 2018. Michael joined the PFT Board in February 2017 and was appointed Managing Director on a part time basis in October 2018 and full time from April 2019. Ken Fleming Non-Executive Director Justin Hill Company Secretary Ken Fleming has extensive experience in capital markets and has held senior roles at Deutsche Bank (including Director; Global Co-ordinator – Telecommunications Technology), James Capel Australia and Tricom (Head of Research). He has also worked in the Australian public service (Canberra) and at KPMG (Melbourne). He is a Director of Castray Capital Pty Ltd and holds an Honours Degree in Economics and post graduate qualifications in economics and finance and is also a Fellow of the Financial Services Institute of Australia (FFIN). Justin is a Principal at Page Seager Lawyers – the largest law firm in Tasmania. Justin advises clients in a number of key industry sectors, including agribusiness, financial services, energy, and the not-for-profit sector. He specialises in mergers and acquisitions, governance and corporate structures and restructures. Justin also has significant experience in finance (including derivative transactions) and advising on raising capital for companies by way of equity and debt. He also assists with preparing contracts of employment and provides employment advice on transfer of businesses. Justin has a first-class honours degree in Commerce, a Master’s in Law from the University of Melbourne and a Graduate Diploma in Applied Finance and Investment. Before joining Page Seager as a Partner/ Principal, Justin worked as in-house counsel for the investment banking division of Deutsche Bank in Sydney. Prior to working with Deutsche Bank, Justin was principal counsel in the institutional markets and investment division of National Australia Bank. Justin also practised for a number of years in the mergers and acquisitions team of Mallesons Stephen Jaques (now King & Wood Mallesons). Directors’ Report Annual Report for the Financial Year ending 30 June 2023 19 Meetings of Directors During the financial year, 12 meetings of Directors (including committees of Directors) were held. Attendance by each Director during the year was as follows: Directors’ Meetings Eligible Attended Malcolm McAully 12 12 Michael Cooper 12 12 Ken Fleming 12 11 Remuneration of Directors and Senior Management Information about the remuneration of Directors and senior management is set out in the Remuneration Report. Review of Operations and Principal Activities The Group's principal activities at the commence of the financial year are outlined in the Chairman's report and listed in the Events Subsequent to Balance Date. Operating Results The loss after tax of the Group for the financial year attributable to the members of Pure Foods Tasmania Limited was ($1.8m) (2022: ($3.3m)). State of Affairs and Likely Developments In the opinion of the Directors there were no significant changes in the state of affairs of the Group and its controlled entities that occurred during the financial year under review not otherwise disclosed in this report or the accompanying financial report. Reference should be made to the subsequent events note for changes in the state of affairs after balance date. Events Subsequent to Balance Date There were no matters or circumstances arising since the end of the reporting period that have significantly affected or may significantly affect the operations of the Group and the results of those operations or the state of the affairs of the Group in the financial period subsequent to 30 June 2023. On behalf of the Directors Michael Cooper Managing Director 23 August 2023 Directors’ Report Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 20 Remuneration Report Remuneration Policy TThe remuneration policy of the Group has been designed to align key management personnel (KMP) 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 the Group believes the remuneration policy to be appropriate and effective in its ability to attract and retain high-quality KMP to run and manage the Consolidated 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 KMP of the Group is based on the following: Ħ The remuneration policy is to be developed by the Board after professional advice is sought from independent external consultants. Ħ All KMP receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits, options, and performance incentives. Ħ Performance incentives are generally only paid once predetermined key performance indicators (KPIs) have been met. Ħ Incentives paid in the form of options or rights are intended to align the interests of the Directors and Group with those of the shareholders. In this regard, KMP are prohibited from limiting risk attached to those instruments by use of derivatives or other means. Ħ The Board reviews KMP packages annually by reference to the Consolidated Group’s performance, executive performance, and comparable information from industry sectors. The performance of KMP is measured against criteria agreed biannually with each executive and is based predominantly on the forecast growth of the Consolidated 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 change must be justified by reference to measurable performance criteria. The policy is designed to attract the highest calibre of executives and reward them for performance results leading to long- term growth in shareholder wealth. KMP receive, at a minimum, a superannuation guarantee contribution required by the government, which is currently 11.0% of the individual’s average weekly ordinary time earnings (AWOTE). Some individuals, however, have chosen to sacrifice part of their salary to increase payments towards superannuation. All remuneration paid to KMP is valued at the cost to the Group and expensed. Performance-based Remuneration KPIs are set annually, with a certain level of consultation with KMP. The measures are specifically tailored to the area each individual is involved in and has a level of control over. The KPIs target areas the Board believes hold greater potential for Group expansion and profit, covering financial and non- financial as well as short and long-term goals. The level set for each KPI is based on budgeted figures for the Group and respective industry standards. Performance Conditions Linked to Remuneration The Group seeks to emphasise reward incentives for results and continued commitment to the Group through the provision of various cash bonus reward schemes, specifically the incorporation of incentive payments based on the achievement of revenue targets, return on equity ratios and continued employment with the Group. Employment Details of Members of Key Management Personnel The term Key Management Personnel refers to those persons having the authority and responsibility for planning, directing, and controlling activities of the Group, directly or indirectly, and includes any Director of the Group (whether executive or otherwise). The KMP of the Group for the year ended 30 June 2023 were: Appointment Date Malcolm McAully Non-Executive Chairman 1 September 2017 Michael Cooper Managing Director 1 February 2017 Ken Fleming Non-Executive Director 29 July 2015 Charles Hughes Chief Financial Officer (resigned 21 Apr 2023) 14 April 2022 Phillip Excell Chief Financial Officer 20 March 2023 Remuneration Report Annual Report for the Financial Year ending 30 June 2023 21 Remuneration Expense Details for the Year Ended 30 June 2023 Executive Short-term benefits Post- employment benefits Long-term benefits Equity-settled share-based payments Cash-settled share-based payments Termination benefits Total Salary, fees, and leave Profit share and bonuses Non-monetary Pension and superannuation Other Incentive plans LSL Shares/ Options/ rights $ $ $ $ $ $ $ $ $ $ $ $ Malcolm McAully 2023 50,000 - - 5,250 - - - - - - - 55,250 2022 50,000 - - 5,000 - - - - - - - 54,750 Michael Cooper 2023 300,771 - - 31,499 - - - - - - - 332,270 2022 262,609 30,000 - 26,183 - - - - - - - 318,792 Ken Fleming 2023 36,000 - - 3,780 - - - - - - - 39,780 2022 36,000 - - 3,600 - - - - - - - 39,600 Charles Hughes (resigned 21 Apr 2023) 2023 174,270 - - 17,779 - - - - - - - 192,049 2022 38,974 - - 3,897 - - - - - - - 42,871 Phillip Excell (from 20 Mar 2023) 2023 57,842 - - 6,057 - - - - - - - 63,899 2022 - - - - - - - - - - - - Alexander Beard (resigned 1 May 2022) 2023 - - - - - - - - - - - - 2022 30,000 - - 3,000 - - - - - - - 33,000 Total KMP 2023 618,883 30,000 - 64,365 - - - - - - - 683,248 2022 423,583 - - 42,280 - - - - - - - 495,863 Securities Received that Are Not Performance-Related No members of KMP are entitled to receive securities that are not performance-based as part of their remuneration package. Cash Bonuses, Performance-related Bonuses and Share-based Payments The terms and conditions relating to options and bonuses granted as remuneration during the year to KMP are as follows: Grant date Number granted Percentage vested/paid during the year Percentage forfeited during the year Percentage remaining as unvested Number forfeited during the year Malcolm McAully 28/04/2020 500,000 - 100% 0% 500,000 Michael Cooper 28/04/2020 1,300,000 - 100% 0% 1,300,000 Alexander Beard 28/04/2020 500,000 - 100% 0% 500,000 Ken Fleming 28/04/2020 500,000 - 100% 100% 500,000 Charles Hughes - - - - - - Phillip Excell - - - - - - Total 2,800,000 2,800,000 Remuneration Report Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 22 KMP Shareholdings The number of ordinary shares held by each KMP of the Group during the financial year is as follows: Balance at beginning of year Granted as remuneration during the year Issued on exercise of options during the year Purchases During the Year Balance at end of year Malcolm McAully* 1,949,639 - 649,879 - 2,599,518 Michael Cooper* 3,093,893 - 1,310,789 - 4,404,682 Ken Fleming* 2,003,225 - 665,750 - 2,668,975 Charles Hughes* 12,000 - - 370,882 382,882 Phillip Excell - - - - - * Includes indirect shareholdings. Other Equity-Related KMP Transactions There have been no other transactions involving equity instruments apart from those described in the tables above relating to options, rights, and shareholdings. Other Transactions with KMP and/or their Related Parties There were no other transactions conducted between the Group and KMP or their related parties, apart from those disclosed above relating to equity, compensation, and loans, that were conducted other than in accordance with normal employee, customer, or supplier relationships on terms no more favourable than those reasonably expected under arm’s length dealings with unrelated persons. This Directors’ report, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of Directors: On behalf of the Directors Michael Cooper Managing Director 23 August 2023 Auditor’s Independence Declaration In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the Directors of Pure Foods Tasmania Limited. As the lead audit partner for the audit of the financial report of Pure Foods Tasmania Limited for the year ended 30 June 2023, I declare that, to the best of my knowledge and belief, there have been no contraventions of: i. the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and ii. any applicable code of professional conduct in relation to the audit. Wise Lord & Ferguson Nick Carter Partner Wise Lord & Ferguson 23 August 2023 Remuneration Report Annual Report for the Financial Year ending 30 June 2023 23 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2023 Note 2023 2022 $ $ Revenue Revenue from operations 5 8,748,338 9,924,813 Other income 5 979,190 245,772 Total Revenue 9,727,528 10,170,585 Expenses Cost of goods sold 6 7,701,421 9,121,549 Employment expenses 1,670,135 2,172,214 Occupancy, electricity, and telephone costs 187,896 185,869 Bad debts 16,983 1,132 Depreciation and amortisation 752,918 588,531 ASX listing fees and expenses 45,425 51,407 Finance costs 317,173 348,117 Insurance 165,731 211,834 Legal and professional fees 245,804 347,445 Marketing expenses 85,916 334,170 Motor vehicle expenses 44,323 55,861 Repairs and maintenance 209,271 241,016 Research, development and quality 95,480 191,774 Other expenses 426,502 575,010 Total Expenses 11,964,978 14,425,929 Net Profit/(Loss) Before Income Tax (2,237,450) (4,255,344) Income tax benefit/(expense) 7 410,117 917,029 Net Profit/(Loss) After Tax for the Year (1,827,333) (3,338,315) Other Comprehensive Income Other comprehensive loss net of tax - - Total Comprehensive Income (1,827,333) (3,338,315) Net profit for the period attributable to: Non-controlling interest - - Owners of Pure Foods Tasmania Limited (1,827,333) (3,338,315) (1,827,333) (3,338,315) Total comprehensive income for the year is attributable to: Non-controlling interest - - Owners of Pure Foods Tasmania Limited (1,827,333) (3,338,315) (1,827,333) (3,338,315) Basic loss per share (cents per share) 3 (0.018) (0.054) Diluted loss per share (cents per share) 3 (0.018) (0.040) The above statement should be read in conjunction with the accompanying notes. Financial Statements Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 24 Consolidated Statement of Financial Position As at 30 June 2023 Note 2023 2022 $ $ Current Assets Cash and cash equivalents 17 3,468,766 2,486,256 Trade and other receivables 8 1,854,127 1,263,014 Inventories 9 1,535,255 1,325,307 Other assets 154,922 227,579 Total Current Assets 7,013,070 5,302,156 Non-Current Assets Property, plant and equipment 10 6,697,785 5,826,296 Right of use assets 11 486,251 474,476 Intangible assets 12 2,515,207 2,544,178 Deferred tax assets 7 3,019,811 2,536,151 Total Non-Current Assets 12,719,054 11,381,101 Total Assets 19,732,124 16,683,257 Current Liabilities Trade and other payables 13 1,715,853 1,737,570 Lease liabilities 11 270,234 165,604 Provisions 14 219,817 232,833 Borrowings 15 2,913,779 270,184 Total Current Liabilities 5,119,683 2,406,191 Non-Current Liabilities Lease liabilities 11 229,199 337,755 Provisions 14 - 17,992 Borrowings 15 1,019,779 975,948 Deferred tax liabilities 7 1,220,004 1,189,203 Total Non-Current Liabilities 2,468,982 2,520,898 Total Liabilities 7,588,665 4,927,089 Net Assets 12,143,459 11,756,168 Equity Contributed equity 16 18,857,783 16,643,159 Accumulated profits/(losses) (6,714,324) (4,886,991) Total Equity 12,143,459 11,756,168 The above statement should be read in conjunction with the accompanying notes. Financial Statements Annual Report for the Financial Year ending 30 June 2023 25 Financial Statements Consolidated Statement of Changes in Equity For the year ended 30 June 2023 Note Contributed Equity Accumulated Profits/(Losses) Total $ $ $ Balance at 1 July 2021 9,402,889 (1,548,676) 7,854,213 Loss for the year - (3,338,315) (3,338,315) Other comprehensive income - - - Total comprehensive income for the year 9,402,889 (4,886,991) 4,515,898 Issue of shares 7,597,399 - 7,597,399 Convertible notes redemption - - - Share issue costs (357,129) - (357,129) Balance at 30 June 2022 16,643,159 (4,886,991) 11,756,168 Balance at 1 July 2022 16,643,159 (4,886,991) 11,756,168 Loss for the year - (1,827,333) (1,827,333) Other comprehensive income - - - Total comprehensive income for the year 16,643,159 (6,714,324) 9,928,835 Issue of shares 5,926,721 - 5,926,721 Convertible notes redemption (3,450,000) - (3,450,000) Share issue costs (262,097) - (262,097) Balance at 30 June 2023 18,857,783 (6,714,324) 12,143,459 The above statement should be read in conjunction with the accompanying notes. Financial Statements Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 26 Financial Statements Statement of Cash Flows For the year ended 30 June 2023 Note 2023 2022 $ $ Cash Flows from Operating Activities Receipts from customers 9,054,464 9,981,182 Payments to suppliers and employees (11,356,122) (14,024,889) Interest received 64,968 24,429 Income taxes paid (42,742) - Net Cash Flows Used in Operating Activities 17 (2,279,432) (4,019,278) Cash Flows from Investing Activities Payments for property, plant and equipment (1,400,735) (1,682,443) Payments for business acquisitions and intangibles - (97,076) Net Cash Flows Used in Investing Activities (1,400,735) (1,779,519) Cash Flows from Financing Activities Proceeds from issue of shares 2,214,624 7,213,615 Proceeds/(payments) of borrowings 2,687,426 (349,974) Principle elements for lease payments (239,373) (202,918) Net Cash Flows from Financing Activities 4,662,677 6,660,937 Net (decrease)/increase in cash held 982,510 862,140 Cash and cash equivalents at the beginning of the year 2,486,256 1,624,116 Cash and Cash Equivalents at the End of the Year 17 3,468,766 2,486,256 The above statement should be read in conjunction with the accompanying notes. Financial Statements Annual Report for the Financial Year ending 30 June 2023 27 Financial Statements Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 28 Notes to the Financial Statements For the year ended 30 June 2023 Note 1: Summary of Accounting Policies (A) General Information The consolidated financial statements and notes represent those of Pure Foods Tasmania Limited and its Controlled Entities. Pure Foods Tasmania is a company incorporated in Australia, and whose shares are publicly traded on the Australian Securities Exchange (ASX). (B) Going Concern These financial statements have been prepared on the basis that the Group is a going concern. For the year ended 30 June 2023 the Group incurred losses of $2.0m after tax (2022: ($3.3m)) and incurred net cash outflows from operations of $2.3m (2022: $4.0m). As at 30 June 2023, the Group had $3.5m (2022: $2.5m) in cash and cash equivalents and had external borrowings of $3.9m (2022: $1.45m). During the 2023 financial year there have been a number of strategic initiatives that have been implemented. The following is a summary of the activities that have been delivered during 2023 financial year: Ħ In September 2022, the Group raised a total of $5.65m (after costs) from new and existing shareholders with the purpose of the funds raised to be used for working capital, expansion and automation of plant and equipment, securing key assets and exploring product growth opportunities. Ħ On 31 October 2022, the Group announced the redemption of up to $3.50m of the $4.65m of notes that were outstanding held by noteholders. The funds were provided by a bank loan of $2.50m and funds on hand of $1.0m; and Ħ $2.8m option expired 30 April 2023. The Directors have also approved a budget for 2024 financial year that includes: Ħ Reduced capital expenditure from $1.4m to $0.8m; Ħ Continuation of focus on growing gross margin through automation, site consolidation and improvements and contract supply agreements for key raw material and packaging inputs; Ħ Implementation of Potato and Gravy production improvements that will provide an enhanced texture and taste, impressive raw material and labour cost reductions and an externally validated shelf life extension; and Ħ Launch of the frozen meal tray range into Woolworths nationally from September 2023. Considering the ongoing success of Potato and Gravy and the introduction of the Daly frozen meal tray range into Woolworths, the Directors are of the opinion that the Group are well positioned to not only grow revenue but achieve profitable margin. Accordingly, the consolidated annual report is prepared on a going concern basis. (C) Basis of Preparation These financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations and the Corporations Act 2001, as appropriate for-profit oriented entities. The financial statements cover the Group and its controlled entities as a group for the financial year ended 30 June 2023. The Company is a company limited by shares, incorporated, and domiciled in Australia. Separate financial statements for the Company as an individual entity are no longer presented as a consequence of a change to the Corporations Act 2001, however limited financial information for the Company as an individual entity is included in "Note 20" on page 46. The following is a summary of material accounting policies adopted by the Group in the preparation and presentation of the financial statements not elsewhere disclosed. The accounting policies have been consistently applied, unless otherwise stated. (D) Compliance with IFRS The financial statements comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). (E) Historical Cost Convention The financial statements have been prepared under the historical cost convention. All amounts are presented in Australian dollars unless otherwise noted. (F) Principles of Consolidation The consolidated financial statements are those of the Group, comprising the parent entity and its controlled entities as defined in Accounting Standard AASB 10 Consolidated Financial Statements. Control is achieved when the Group: Ħ is exposed, or has rights, to variable returns from its involvement with the investee; and Ħ has the ability to use its power to affect its returns. Annual Report for the Financial Year ending 30 June 2023 29 The Group reassess 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 listed above. Details of the controlled entities are contained in "Note 21" on page 47. Financial statements for controlled entities are prepared for the same reporting period as the parent entity. Controlled entities are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Adjustments are made to bring into line any dissimilar accounting policies, which may exist. All inter-company balances and transactions, including any unrealised profits or losses have been eliminated on consolidation. Non-controlling interests in the equity and results of the entities that are controlled are shown separately in the consolidated financial statements. The preparation of the financial statements of the Group requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Group’s accounting policies. Areas within the financial report which contain a higher degree of judgement or complexity, and items which are more likely to be materially adjusted due to estimates and assumptions turning out to be incorrect. Detailed information about each of these estimates and judgements are included in the notes to the financial statements together with the basis of calculation. The area involving significant estimates or judgements is the estimated value in use calculations for the assessment of the recoverable amount of goodwill. Estimates and judgements are continually evaluated. They are based on historical experience, information, and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. (G) Comparatives Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures. (h) New Standards and Interpretations Not Yet Adopted Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2023 reporting periods and have not yet been adopted by the Group. There are no standards that are not yet effective and that would be expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions. Note 2: Segment Information The operating segments are based upon the units identified in the operating reports reviewed by the Board and executive management, and are used to make strategic decisions, in conjunction with the quantitative thresholds established by AASB 8 Operating Segments. During the financial year the Board and executive management restructured the reporting framework of the Group. This resulted in the core reporting nature being from a consolidated group viewpoint, as opposed to an individual brand/company perspective. The key driver behind this has been the recent expansion of the number of brands within the Group. As such, there are two identifiable and reportable segments: Ħ Pure Foods Tasmania Products – which incorporates all brands of the Group; and Ħ Corporate - which comprises corporate costs that are not directly attributable to the operational business units. Management measures the performance of the segments identified at the ‘net profit before tax’ level. Note 1: Summary of Accounting Policies continued… Notes to the Financial Statements Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 30 Note 2: Segment Information continued… Food Corporate and Other Total $ $ $ 30 June 2023 Total sales 8,748,338 - 8,748,338 Other income 408,833 570,357 979,190 Profit/(loss) (1,673,204) (564,246) (2,237,450) Profit/(loss) before income tax (2,237,450) Income tax benefit/(expense) 410,117 Profit/(loss) after income tax (1,827,333) Assets Assets 15,797,411 3,934,713 19,732,124 Total Assets 15,797,411 3,934,713 19,732,124 Liabilities Liabilities 6,282,060 1,306,605 7,588,665 Total Liabilities 6,282,060 1,306,605 7,588,665 Food Corporate and Other Total $ $ $ 30 June 2022 Total sales 9,924,813 - 9,924,813 Other income 8,496 237,276 245,772 Profit/(loss) (3,505,381) (749,963) (4,255,344) Profit/(loss) before income tax (4,255,344) Income tax benefit/(expense) 917,029 Profit/(loss) after income tax (3,338,315) Assets Assets 5,025,586 11,657,671 16,683,257 Total Assets 5,025,586 11,657,671 16,683,257 Liabilities Liabilities 3,401,667 1,525,412 4,927,089 Total Liabilities 3,401,667 1,525,412 4,927,089 Notes to the Financial Statements Annual Report for the Financial Year ending 30 June 2023 31 Note 3: Earnings Per Share 2023 2022 $ $ Basic earnings per share (0.018) (0.054) Diluted earnings per share (0.018) (0.054) Basic Weighted average number of ordinary shares outstanding during the period used in the calculation of basic earnings per share. 101,462,214 61,816,470 Diluted Weighted average number of ordinary shares and convertible redeemable preference shares outstanding and performance rights during the period used in the calculation of basic earnings per share 102,672,281 61,816,470 Note 4: Dividends to Shareholders No dividends have been paid or declared during the year ended 30 June 2023 (30 June 2022: nil). Note 5: Revenue 2023 2022 $ $ Revenue from Continuing Operations Sales 8,748,338 9,924,813 Total Revenue from Continuing Operations 8,748,338 9,924,813 Other Income Interest received 133,037 24,429 Sundry income 846,153 217,371 Subsidies and grants - 3,972 Total Other Income 979,190 245,772 Total Revenue 9,727,528 10,170,585 Recognition and Measurement The sale of goods is measured at the fair value of the consideration received net of any trade discounts and volume rebates allowed. The sale of goods represents a single performance obligation and accordingly, revenue is recognised in respect of these sales of goods at the point in time when control over the corresponding goods is transferred to the customer (i.e., at a point in time for sale of goods when the goods are delivered to the customer or transferred to the freight forwarder). Delivery occurs when the products have been shipped to the customer, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products, the acceptance provisions have lapsed, or the Group has objective evidence that all the criteria for acceptance have been satisfied. All revenue is stated net of the amount of goods and services tax (GST) where applicable. Interest Revenue Interest revenue is recognised on a proportional basis using the effective interest rate method. Notes to the Financial Statements Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 32 Note 6: Expenses 2023 2022 $ $ Profit before income tax expense includes the following expenses: Cost of goods sold 7,701,421 9,121,549 Salaries and wages 1,544,554 1,648,908 Total Expenses 9,245,975 10,770,457 Note 7: Income Tax Expense 2023 2022 $ $ Income tax recognised in profit or loss: Tax expense/(benefit) comprises: Current tax expense/(benefit) - 5,705 Deferred tax movements (410,117) (922,734) (410,117) (917,029) Deferred income tax expense/(benefit) included in income tax expense comprises: (Increase)/decrease in deferred tax assets (440,918) (1,269,525) Increase/(decrease) in deferred tax liabilities 30,801 346,791 (410,117) (922,734) Reconciliation of income tax expenses to prima facie tax on accounting profit: Profit/(loss) before income tax expense (2,237,450) (4,255,344) Tax at 25.0% tax rate (2022: 25.0%) (559,363) (1,063,836) Tax effect of amounts which are not deductable 81,162 49,567 Under/overs in respect of prior year 68,084 85,071 Reset cost bases due to consolidation - (49) Change in tax rate impact to deferred taxes - 12,218 (410,117) (917,029) Reconciliation of Deferred Tax Assets Opening Balance Charged to Income Charged to Equity Closing Balance $ $ $ $ Deferred Tax Gross Deferred Tax Assets Provisions 62,707 (7,752) - 54,955 Trade and other payables 90,327 (32,999) - 57,328 Right-of-use assets 7,221 (3,925) - 3,296 Share issue expenses 21,899 (5,768) - 16,131 Tax losses 2,353,997 491,362 42,742 2,888,101 2,536,151 440,918 42,742 3,019,811 Note 7: Income Tax Expense continued… Notes to the Financial Statements Annual Report for the Financial Year ending 30 June 2023 33 Reconciliation of Deferred Tax Liabilities Opening Balance Charged to Income Charged to Equity Closing Balance $ $ $ $ Deferred Tax Gross Deferred Tax Assets Prepayments 20,470 (231) - 20,239 Fixed assets 1,030,299 49,657 - 1,079,956 Trading stock 32,876 (10,635) - 22,241 Goodwill and trademarks 86,834 - - 86,834 Business acquisition costs 18,645 (7,990) - 10,655 Product development 79 - - 79 1,189,203 30,081 - 1,220,004 Note 7: Income Tax Expense continued… The income tax expense (income) for the year comprises current income tax expense (income) and deferred tax expense (income). Current income tax expense charged to profit or loss is the tax payable on taxable income for the current period. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses. Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss or arising from a business combination. A deferred tax liability shall be recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from: a. the initial recognition of goodwill; or b. the initial recognition of an asset or liability in a transaction which: i. is not a business combination; and ii. at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised, or the liability is settled, and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. With respect to non-depreciable items of property, plant and equipment measured at fair value and items of investment property measured at fair value, the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of the asset will be recovered entirely through sale. When an investment property that is depreciable is held by the entity in a business model whose objective is to consume substantially all of the economic benefits embodied in the property through use over time (rather than through sale), the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of such property will be recovered entirely through use. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised, unless the deferred tax asset relating to temporary differences arises from the initial recognition of an asset or liability in a transaction that: Ħ is not a business combination; and Ħ at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). Where temporary differences exist in relation to investments in subsidiaries, branches, associates and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled, and it is not probable that the reversal will occur in the foreseeable future. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists, and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: a. a legally enforceable right of set-off exists; and b. the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. Notes to the Financial Statements Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 34 Tax Consolidation The Company and its wholly owned Australian resident entities have formed a tax-consolidated Group and are therefore taxed as a single entity from that date. The head entity within the tax-consolidated Group is PFT Limited. Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated Group are recognised in the separate financial statements of the members of the tax-consolidated Group using the “separate taxpayer within group” approach by reference to the carrying amounts in the separate financial statements of each entity and the tax values applying under tax consolidation. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and relevant tax credits of the members of the tax-consolidated Group are recognised by the Company (as head entity in the tax-consolidated Group). Due to the existence of a tax funding arrangement between the entities in the tax- consolidated Group, amounts are recognised as payable to or receivable by the Company and each member of the Group in relation to the tax contribution amounts paid or payable between the Parent Entity and the other members of the tax-consolidated Group in accordance with the arrangement. Note 7: Income Tax Expense continued… Note 8: Trade and Other Receivables 2023 2022 $ $ Trade receivables 1,338,074 932,504 Less loss allowance - - Other receivables 516,053 330,510 Total Trade and Other Receivables 1,854,127 1,263,014 Loss Allowance Movements in loss allowance are as follows: Carrying value at beginning of the year - - Increase/(decrease) in loss allowance 16,983 1,132 Receivables written off as unrecoverable (16,983) (1,132) Unused amounts reversed - - Total Loss Allowance - - 2023 2022 $ $ Trade receivables past due but not impaired Under one month 1,091,894 700,992 One to three months 246,180 177,945 Over three months - 53,567 Total trade receivables past due but not impaired 1,338,074 932,504 Recognition and Measurement The Group applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits the use of the lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. Notes to the Financial Statements Annual Report for the Financial Year ending 30 June 2023 35 The “receivables written off as unrecoverable” are all due to customers declaring bankruptcy, or term receivables that have now become unrecoverable. Current 30 Days 60 Days 90+ Days Total 30 June 2023 Expected loss rate (%) 0.0% 0.0% 0.0% 0.0% 0.0% Trade receivables gross carrying amount ($) 1,091,894 171,639 74,541 - 1,338,074 Loss allowance ($) - - - - - 30 June 2022 Expected loss rate (%) 0.0% 0.0% 0.0% 0.0% 0.0% Trade receivables gross carrying amount ($) 700,992 177,264 681 53,567 932,504 Loss allowance ($) - - - - - Note 8: Trade and Other Receivables continued… Fair Value of Trade and Other Receivables Due to the short-term nature of the current receivables, their carrying amount is approximate to fair value. Credit Risk The Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties other than those receivables specifically provided for and mentioned within the loss allowance. The class of assets described as “trade and other receivables” is considered to be the main source of credit risk related to the Group. On a geographical basis, the Group has significant credit risk exposures in Australia. The Group always measures the loss allowance for trade receivables at an amount equal to lifetime expected credit loss. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtor, general economic conditions of the industry in which the debtor operates and an assessment of both the current and the forecast direction of conditions at the reporting date. There has been no change in the estimation techniques used or significant assumptions made during the current reporting period. The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery; for example, when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or when the trade receivables are over two years past due, whichever occurs earlier. None of the trade receivables that have been written off are subject to enforcement activities. Note 9: Inventories 2023 2022 $ $ Stock on hand 1,535,255 1,325,307 Total Inventories 1,535,255 1,325,307 Recognition and Measurement Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct materials, direct labour, and an appropriate proportion of variable and fixed overheads. Notes to the Financial Statements Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 36 Note 10: Property, Plant and Equipment 2023 2022 $ $ Buildings Building at cost 1,827,237 1,809,448 Less: accumulated depreciation (160,985) (115,190) Total Buildings 1,666,252 1,694,258 Plant and Equipment Plant and equipment at cost 6,592,749 5,209,803 Less: accumulated depreciation (1,561,216) (1,077,765) Total Plant and Equipment 5,031,533 4,132,038 Total Property, Plant and Equipment 6,697,785 5,826,296 Reconciliations Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the financial year set out below: Carrying Value Building at Cost Plant and Equipment Total $ $ $ As at 1 July 2021 1,658,138 2,872,396 4,530,534 Additions 80,631 1,601,812 1,682,443 Disposals - (1,047) (1,047) Depreciation expense (44,511) (341,123) (385,634) Balance at 30 June 2022 1,694,258 4,132,038 5,826,296 As at 1 July 2022 1,694,258 4,132,038 5,826,296 Additions 17,789 1,382,946 1,400,735 Disposals - - - Depreciation expense (45,795) (483,451) (529,246) Balance at 30 June 2023 1,666,252 5,031,533 6,697,785 Note 8: Trade and Other Receivables continued… Recognition and Measurement Each class of plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised in profit or loss. A formal assessment of recoverable amount is made when impairment indicators are present. The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. Depreciation The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, is depreciated on a straight-line basis over the asset’s useful life to the Consolidated Group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciation rates used for each class of depreciable assets are: Class of Fixed Assets Depreciation Rate Buildings 2.0% Plant and Equipment 5.0% - 33.0% Notes to the Financial Statements Annual Report for the Financial Year ending 30 June 2023 37 The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are recognised in profit or loss in the period in which they arise. Gains shall not be classified as revenue. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained earnings. Note 11: Right-of-use Assets and Lease Liabilities 2023 2022 $ $ Right-of-use Assets Buildings 1,148,388 912,941 Less: accumulated amortisation (662,137) (438,465) Total Right-of-use Assets 486,251 474,476 Set out below are the carrying amounts of the Group’s right-of-use assets and the movements during the period: Carrying Value Buildings Total $ $ As at 1 July 2022 474,476 474,476 Additions - - Lease modifications 235,447 235,447 Amortisation expense (223,672) (223,672) Balance as at 30 June 2023 486,251 486,251 Lease Liabilities Current 270,234 165,604 Non-current 229,199 337,755 Total Lease Liabilities 499,433 503,359 At inception of a contract, the Group assesses if the contract contains or is a lease. If there is a lease present, a right-of-use asset and a corresponding lease liability is recognised by the Group where the Group is a lessee. However, all contracts that are classified as short-term leases (lease with remaining lease term of 12 months or less) and leases of low value assets are recognised as an operating expense on a straight-line basis over the term of the lease. Initially the lease liability is measured at the present value of the lease payments still to be paid at commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses the incremental borrowing rate. Lease payments included in the measurement of the lease liability are as follows: Ħ fixed lease payments less any lease incentives; Ħ variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; Ħ the amount expected to be payable by the lessee under residual value guarantees; Ħ the exercise price of purchase options if the lessee is reasonably certain to exercise the options; Ħ lease payments under extension options if lessee is reasonably certain to exercise the options; and Ħ payments of penalties for terminating the lease if the lease term reflects the exercise of an option to terminate the lease. The right-of-use assets comprise the initial measurement of the corresponding lease liability as mentioned above, any lease payments made at or before the commencement date as well as any initial direct costs. The subsequent measurement of the right-of-use assets is at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the lease term or useful life of the underlying asset whichever is the shortest. Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group anticipates exercising a purchase option, the specific asset is depreciated over the useful life of the underlying asset. Note 10: Property, Plant and Equipment continued… Notes to the Financial Statements Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 38 Note 12: Intangible Assets 2023 2022 $ $ Intangibles 2,515,207 2,544,178 Total Intangible Assets 2,515,207 2,544,178 Intangibles Total $ $ Carrying Value As at 1 July 2022 2,544,178 2,544,178 Additions - - Disposals (28,971) (28,971) Balance as at 30 June 2023 2,515,207 2,515,207 Goodwill relates to the acquisition of Tasmanian Pate, Daly Potato Co, The Cashew Creamery and Lauds Plant-Based Foods. (A) Recognition and Measurement Goodwill Goodwill is not amortised but is tested annually for impairment or more frequently if events or changes in circumstances indicate that it might be impaired. Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the sum of: Ħ the consideration transferred at fair value; Ħ any non-controlling interest (determined under either the fair value or proportionate interest method); and Ħ the acquisition date fair value of any previously held equity interest over the acquisition date fair value of any identifiable assets acquired and liabilities assumed. The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements. Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Group. When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between: i. the aggregate of the fair value of the consideration received and the fair value of any retained interest; and ii. the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e., reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable Accounting Standards). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under AASB 139: Financial Instruments: Recognition and Measurement, when applicable, the cost on initial recognition of an investment in an associate or a joint venture. Goodwill is tested for impairment annually and is allocated to the Group’s cash-generating units (CGU) or groups of cash-generating units, representing the lowest level at which goodwill is monitored and not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity disposed of. Impairment losses for goodwill are not subsequently reversed. During the financial year, the Board and management reviewed the internal reporting and the CGU’s of the Group. Given the expansion in brands and products, the management of CGU’s by individual brand was not aligned with the reporting of the Group. As such, a single CGU has created title ‘Pure Foods Tasmania Products’ which encompasses all brands of the business as they are intrinsically linked under the PFT brand. This aligns with the reporting to the Board at Group level. Recoverable Amount of Goodwill Impairment testing has been undertaken at 30 June 2023 for the CGU for goodwill or where there is an indication of impairment. The Group has 1 CGU for which impairment testing has been completed for goodwill – Pure Foods Tasmania Products. The recoverable amount for the CGU has been determined based on a value-in-use calculation which uses cash flow projections based on financial budgets and forecasts approved by management. Notes to the Financial Statements Annual Report for the Financial Year ending 30 June 2023 39 Key assumptions used in the value-is-use calculations for the CGU is: Pure Foods Tasmania Products Sales Growth Rate (CAGR 6 Years) 19.2% Production Costs Growth Rate (CAGR 6 Years) 14.1% Indirect Costs Growth Rate (CAGR 6 Years) 6.9% Long-Term Growth Rate 2.0% Pre-Tax Discount Rate 11.2% Management has based the value-in-use calculations on budgets. These budgets use historical weighted average growth rates to project revenue. Costs are calculated considering historical gross margins as well as estimated weighted average inflation rates over the period, which are consistent with inflation rates applicable to the locations in which the CGU operate. Discount rates are pre-tax and are adjusted to incorporate risks associated with a particular segment. Changes to key inputs within the value in use calculations: Ħ Sales growth rate: Sales growth rates were increased as at 30 June 2023 to reflect market growth rates, the strategic initiatives adopted by the Board and product price increases. Ħ Production costs: Production costs as a percentage of revenue are forecast to increase over the forecast period which is reflective gross margin improvement through a focus on value chain profitability and management of input costs. Ħ Long-term growth rate: Reduced to 2.0% which is in line with Reserve Bank of Australia’s economic outlook. Ħ Pre-tax discount rate: The discount rate represents the current market assessment of the risks relating to the relevant CGU. In performing the value in use calculations for the CGU, the Group has applied a pre-tax discount rate of 11.2% (11.1% post tax). (B) Review Outcome In completing the impairment review based on the aforementioned, the value in use of the Pure Foods Tasmania Products business exceeded its carrying value. (C) Other Intangible Assets Intangible assets acquired separately are capitalised at cost. Following initial recognition, the cost model is applied to the class of intangible assets. The useful lives of these intangible assets are assessed to be either finite or indefinite. Where amortisation is charged on assets with finite lives, this expense is taken to the statement of comprehensive income. Intangible assets, excluding development costs, created within the business are not capitalised and expenditure is charged against profits in the year in which the expenditure is incurred. Intangible assets are tested for impairment where an indicator of impairment exists, and in the case of indefinite lived intangibles annually, either individually or at the cash generating unit level. Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis. (D) Research and Development Costs Research costs are expensed as incurred. Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably be regarded as assured. An entity shall assess whether the useful life of an intangible asset is finite or indefinite and, if finite, the length of, or number of production or similar units constituting, that useful life. An intangible asset shall be regarded by the entity as having an indefinite useful life when, based on the analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity. The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use, or more frequently when an indicator of impairment arises during the reporting year indicating that the carrying value may not be recoverable. Note 12: Intangible Assets continued… Note 13: Trade and Other Payables 2023 2022 $ $ Trade and other payables 1,715,853 1,737,570 Total Trade and Other Payables 1,715,853 1,737,570 Recognition and Measurement Trade and other payables represent liabilities for goods and services received by the Group which remain unpaid at the end of the reporting period. The balance is recognised as a current liability with amounts paid in accordance with supplier trading terms. Due to the short-term nature of trade and other payables, the carrying value is reflective of fair value. Notes to the Financial Statements Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 40 Note 14: Provisions 2023 2022 $ $ Current Employee benefits 219,817 232,833 Total Current Provisions 219,817 232,833 Non-current Employee benefits - 17,992 Total Non-Current Provisions - 17,992 Total Provisions 219,817 250,825 Recognition and Measurement Provision is made for the Group’s obligation for short- term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries, and sick leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled. The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as part of current trade and other payables in the statement of financial position. The Group’s obligations for employees’ annual leave and long service leave entitlements are recognised as provisions in the statement of financial position. Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service. Other long-term employee benefits are measured at the present value of the expected future payments to be made to employees. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are discounted at rates determined by reference to market yields at the end of the reporting period on government bonds that have maturity dates that approximate the terms of the obligations. Any remeasurements for changes in assumptions of obligations for other long-term employee benefits are recognised in profit or loss in the periods in which the changes occur. The Group’s obligations for long-term employee benefits are presented as non-current provisions in its statement of financial position, except where the Group does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented as current provisions. Note 15: Borrowings 2023 2022 $ $ Current Hire purchase liabilities - 6,550 Bank loan facility 2,913,779 263,634 Total Current Borrowings 2,913,779 270,184 Non-Current Hire purchase liabilities - 8,480 Bank loan facility 1,019,779 967,468 Total Non-Current Borrowings 1,019,779 975,948 Total Borrowings 3,933,558 1,246,132 Notes to the Financial Statements Annual Report for the Financial Year ending 30 June 2023 41 Recognition and Measurement 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 the consolidated income statement over the period of the borrowings using the effective interest method. Borrowings are removed from the balance sheet of the Group when the terms and obligations specified in the contract are discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party, and the consideration paid is recognised in the consolidated income statement as other income or finance costs. 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 reporting period. Borrowing costs, including transaction fees, are recognised in the consolidated income statement in the period in which they are incurred. Secured liabilities and assets pledged as security The Group has entered into finance facilities with the Commonwealth Bank of Australia (CBA) and National Australia Bank these include: Ħ $2.50 million market rate loan for 12 months that is secured against a $2.50 million deposit facility with CBA; Ħ $1.61 million asset finance facilities which are secured over specific assets ranging with maturity dates from December 2024 to August 2026 with CBA; and Ħ $0.01 million asset finance facility with a maturity date of September 2024 with NAB. Financial Covenants There were no financial covenants over borrowings in place as at 30 June 2023. Note 15: Borrowings continued… Note 16: Issued Capital 2023 2022 No. of Shares $ No. of Shares $ Fully paid ordinary shares (post- consolidation) 109,739,914 18,857,783 61,816,470 16,643,159 (A) Movement in Ordinary Capital Number of Shares Value No. $ 1 July 2022 Balance at beginning of period 61,819,470 16,643,159 Shares issued 47,920,444 5,926,721 Notes redeemed (net of costs) - (3,450,000) Issue costs - (262,097) Balance at end of period 109,739,914 18,857,783 In September 2022, the Group raised a total of $5.7m (net of costs) from new and existing shareholders. This was facilitated by a placement to sophisticated investors and an entitlement offer to existing shareholders. On 31 October 2022, the Group announced the redemption of up to $3.5m of the $4.7m of notes that were outstanding held by noteholders. The funds were provided by a bank loan of $2.5m and funds on hand of $1.0m. (B) Terms and Conditions of Issued Capital Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion to the number of shares held. (C) Share Options and Performance Rights Share options and performance rights do not entitle the holder to participate in dividends and the proceeds on winding up the Group. The holder is not entitled to vote at General Meetings. 2,800,000 share options were forfeited on 30 April 2023 (2022: 2,800,000). Notes to the Financial Statements Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 42 2023 2022 No. No. Movement in Options Balance at beginning of the year 2,800,000 7,674,096 Options granted to raise capital - - Options redeemed/lapsed (2,800,000) (4,874,096) Balance at End of the Year - 2,800,000 Recognition and Measurement Ordinary shares are classified as equity, with ordinary share capital being recognised at 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 share proceeds received. Note 17: Cash Flow Reconciliation 2023 2022 $ $ Cash and Cash Equivalents Cash and cash equivalents 3,468,766 2,486,256 Total Cash and Cash Equivalents 3,468,766 2,486,256 Recognition and Measurement Cash and cash equivalents include cash on hand and at banks and short-term deposits with an original maturity of three months or less held at call with financial institutions. Reconciliation of Cash and Cash Equivalents to the Statement of Cash Flows For the purposes of the statement of cash flows, cash and cash equivalents includes cash on hand and in banks and short-term deposits at call, net of outstanding bank overdrafts. Cash and cash equivalents as at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: Note 16: Issued Capital continued… 2023 2022 $ $ Profit/(loss) after income tax (1,827,333) (3,338,315) Adjustments for Non-Cash Items: Depreciation and amortisation 752,918 588,531 Bad debts 16,983 1,132 Intangible asset write-offs 28,971 - (Gain)/loss on lease modifications - (214) (Gain)/loss on disposal of assets - (70) Changes in Assets/Liabilities: (Increase)/decrease in trade and other receivables (535,439) (52,436) (Increase)/decrease in inventories (209,948) (325,204) (Increase)/decrease in deferred taxes (452,859) (922,734) Increase/(decrease) in trade and other payables (21,717) (31,909) Increase/(decrease) in provisions (31,008) 61,941 Net Cash Provided by/(Used in) Operating Activities (2,279,432) (4,019,278) Notes to the Financial Statements Annual Report for the Financial Year ending 30 June 2023 43 Note 18: Financial Risk Management The Group’s principal financial instruments comprise receivables, payables, cash, and short-term deposits. The Group manages its exposure to key financial risks in accordance with the Group’s financial risk management policy. The objective of the policy is to support the delivery of the Group’s financial targets whilst protecting future financial security. The main risks arising from the Group’s financial instruments are price risk, credit risk and liquidity risk. The Group uses different methods to measure and manage different types of risk to which it is exposed. These include monitoring levels of exposure to interest rate and foreign exchange risk and assessments of market forecasts for commodity prices. Ageing analyses and monitoring of specific credit allowances are undertaken to manage credit risk, liquidity risk is monitored through the development of future rolling cash flow forecasts. The Board reviews and agrees policies for managing each of these risks as summarised in the following. Primary responsibility for identification and control of financial risks rests with the Managing Director under the authority of the Board. The Board reviews and agrees policies for managing each of the risks identified below, including, interest rate risk, credit allowances, and future cash flow forecast projections. The carrying amounts of the Group’s financial assets and liabilities at balance date were equal to their fair value. (A) Recognition and Measurement Classification The Group classifies its financial instruments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to- maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its financial instruments at the time of initial recognition. Financial Assets at Fair Value through Profit or Loss Upon initial recognition a financial asset or financial liability is designated as at fair value through profit or loss when: a. An entire contract containing one or more embedded derivatives is designated as a financial asset or financial liability at fair value through profit and loss. b. Doing so results in more relevant information, because either: i. It eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognising gains or losses on them on different bases. ii. A group of financial assets, financial liabilities or both is managed, and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the Group is provided internally on that basis to key management personnel. Investments in equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured are not designated as at fair value through profit or loss. Present investment strategy is to keep assets in a highly liquid state and almost all of the investment assets are held in cash. A gain or loss arising from a change in the fair value of a financial asset or financial liability classified as at fair value through profit or loss is recognised in the consolidated statement of profit or loss and other comprehensive income. Non-listed investments, for which fair value cannot be reliably measured, are carried at cost, and tested for impairment. Loans and Receivables Loan and receivables are measured at fair value at inception and subsequently at amortised cost using the effective interest rate method. Financial Liabilities Financial liabilities include trade payables, other creditors, and loans from third parties including inter- company balances and loans from / or other amounts due to Director-related entities. Non-derivative financial liabilities are recognised at amortised cost, comprising original debt, less principal payments, and amortisation. Notes to the Financial Statements Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 44 (B) Risk Exposures and Responses Interest Rate Risk The Group’s exposure to market interest rates is related primarily to the Group’s cash deposits. At balance sheet date, the Group had the following mix of financial assets exposed to Australian and variable interest rate risks that are not designated as cash flow hedges: 2023 2022 $ $ Financial assets 1,844,318 1,263,014 Cash and cash equivalents 3,468,766 2,486,256 Net Exposure 5,313,084 3,749,270 The Group regularly analyses its interest rate opportunity and exposure. Within this analysis consideration is given to existing positions and alternative arrangements for its deposits. The following sensitivity analysis is based on the interest rate opportunity/risk relating to cash deposits at balance date. At 30 June 2023, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post-tax profit/(loss) and equity would have been affected as follows: 2023 2022 $ $ Judgements of reasonably possible movements: + 0.5% (50 basis points) 26,565 18,746 - 0.5% (50 basis points) (26,565) (18,746) Liquidity Risk Liquidity Risk is the risk that the Group, although balance sheet solvent, cannot meet or generate sufficient cash resources to meet its payment obligations in full as they fall due, or can only do so at materially disadvantageous terms. Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group’s short, medium, and long- term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. All current liabilities fall due within normal trade terms, which are generally 30 days. Credit Risk Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and trade and other receivables. The Group’s exposure to credit risk arises from potential default of the counter party, with maximum exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicable note. The Group does not hold any credit derivatives to offset its credit exposure. The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to securitise its trade and other receivables. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an assessment of their independent credit rating, financial position, past experience and industry reputation. The risks are regularly monitored. The Group applies the AASB 9 simplified approach to measuring expected credit losses as disclosed in "Note 8" on page 35. Receivables balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. (C) Fair Value The method for estimating fair value is outlined in the relevant notes to the financial statements. All financial assets held at fair value are valued based on the principles outlined in AASB 7 in relation to Level 1 of the hierarchy of fair values, being quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Note 18: Financial Risk Management continued… Notes to the Financial Statements Annual Report for the Financial Year ending 30 June 2023 45 Note 19: Capital Management When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the Group. Management is constantly adjusting the capital structure to take advantage of favourable costs of capital or high returns on assets. As the market is constantly changing, the Board may change the amount of dividends to be paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. 2023 2022 $ $ Debt Borrowings 3,933,558 1,246,132 Trade and other payables 1,715,853 1,737,570 Total Debt 5,649,411 2,983,702 Less cash and cash equivalents 3,468,766 2,486,256 Net (Cash)/Debt 2,180,645 497,446 Total Equity 12,143,459 11,756,168 Total Capital 18,857,783 16,643,159 Gearing ratio (total debt / total equity) 48.1% 24.9% Note 20: Parent Entity Information 2023 2022 $ $ Financial Position Assets Current assets 1,031,687 180,633 Non-current assets 17,226,626 15,312,438 Total Assets 18,258,313 15,493,071 Liabilities Current liabilities 6,159 69,610 Non-current liabilities 1,220,004 1,189,203 Total Liabilities 1,226,163 1,258,813 Net Assets 17,032,150 14,234,258 Contributed equity 17,032,150 14,234,258 Financial Performance Total revenue 570,357 182,529 Profit/(Loss) for the Period 560,155 821,439 Notes to the Financial Statements Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 46 Note 21: Subsidiaries Equity holding 2023 2022 Entity Country of Incorporation % % PFT Holdings Pty Ltd Australia 100 100 PFT No 1 Pty Ltd Australia 100 100 PFT No 2 Pty Ltd Australia 100 100 PFT No 3 Pty Ltd Australia 100 100 The Cashew Creamery Pty Ltd Australia 100 100 New Pastures Plant-Based Foods Pty Ltd Australia 100 100 Note 22: Contingent Liabilities and Assets There are no matters which the Group consider would result in a contingent liability or asset as at the date of this report. Note 23: Commitments for Expenditure 2023 2022 $ $ Capital Commitments – Capital Expenditure Projects Payable: Not longer than one year - 517,073 Longer than one year but no longer than five years - - Longer than five years - - Total Capital Commitments – Capital Expenditure Projects - 517,073 Other Commitments – Operating Expenditure Operating expenditure contracted but not included in the financial statements: Payable: Not longer than one year - - Longer than one year but no longer than five years - - Longer than five years - - Total Other Commitments – Operating Expenditure - - Note 24: Events Occurring After Balance Date The Board is not aware of any matter or circumstance not otherwise dealt within these financial statements that has significantly or may significantly affect the operation of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years. Notes to the Financial Statements Annual Report for the Financial Year ending 30 June 2023 47 Note 25: Related Party Transactions 2023 2022 $ $ Key Management Personnel Compensation The aggregate compensation of the key management personnel of the Group is set out below: Short-term benefits 491,759 416,906 Post-employment benefits 51,030 38,553 Share-based payments - - Total Key Management Personnel Compensation 542,789 455,459 Transactions with Related Parties The group acquired the following goods and services as follows: Ken Fleming for consulting services 26,119 25,369 Total Transactions with Related Parties 26,119 25,369 Note 26: Auditor’s Remuneration 2023 2022 $ $ Auditors of the parent entity 42,000 42,000 Other assurance services - - Total Auditor’s Remuneration 42,000 42,000 Note 27: Employee Securities Incentive Plan During the year the employee securities incentive plan that was in place was ceased. There presently isn't an employee securities incentive plan in place. The following table details the share options in place at 30 June 2023. Share Options Granted Share options outstanding at 30 June 2023 are as follows: Grant Date 28/04/2020 Expiry Date 30/04/2023 Exercise Price $0.40 Balance at Start of Year - Expired 2,800,000 Balance at End of Year - Notes to the Financial Statements Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 48 Directors’ Declaration For the Year Ended 30 June 2023 In accordance with a resolution of the Directors of Pure Foods Tasmania Limited, the Directors of the Group declare that: 1. The financial statements and notes, as set out on pages 24 to 48 are in accordance with the Corporations Act 2001 and: a. Comply with Australian Accounting Standards applicable to the Consolidated Group, which, as stated in the accounting policies to the financial statements, constitutes compliance with International Financial Reporting Standards; and a. Give a true and fair view of the financial position as at 30 June 2023 and of the performance for the year ended on that date of the Consolidated Group; 2. In the Directors’ opinion there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable; and 3. The Directors have been given the declaration required by section 295A of the Corporations Act 2001 from the Chief Executive Officer for the financial year ended 30 June 2023. Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Directors. Michael Cooper Managing Director 23 August 2023 Directors’ Declaration Annual Report for the Financial Year ending 30 June 2023 49 Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 50 Independent Audit Report For the year ended 30 June 2023 Independent Auditor’s Report to the Members of Pure Foods Tasmania Limited Opinion We have audited the financial report of Pure Foods Tasmania Limited (the Company and its controlled entities (the Group)), which comprises the Consolidated Statement of Financial Position as at 30 June 2023, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the Directors’ Declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: i giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023 and of its consolidated financial performance for the year then ended on that date; and ii complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the Directors of the Group, would be in the same terms if given to the Directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Going Concern Assumption We draw attention to Note 1 in the financial report, which indicates that the Group incurred a net loss of $1.83m and a net cash outflow from operations of $2.3m during the year ended 30 June 2023. These conditions, along with other matters set forth in Note 1, provide the reasoning for the assessment of the financial statements being prepared as a going concern. Our opinion is not modified in respect of this matter. Annual Report for the Financial Year ending 30 June 2023 51 Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of the most significance in our audit of the financial report for the year ended 30 June 2023. These matters were addressed in the context of our audit of the financial report as a whole, and forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How our audit addressed the Key Audit Matter Valuation of Goodwill Refer to Note 12 in the Financial Report The Group holds intangible assets totalling $2.5m as at 30 June 2023, of which $1.9m relates to goodwill. Under Australian Accounting Standards, the Group is required to assess goodwill for impairment at least annually. The Group performed an impairment assessment for the Pure Foods Tasmania Products cash generating unit (CGU), calculating the value in use of the net assets in the CGU. The valuation model used by the Group to perform the impairment assessment is based on budget forecasts. The Group did not identify any impairment for the CGU. We assessed whether the Group’s determination of CGU was consistent with our understanding of the nature of the Group’s operations and internal Group reporting. We assessed management’s conclusions around allocating Pure Foods Tasmania Products as a CGU. We tested the mathematical accuracy and integrity of the calculation in the model. To evaluate the model, we performed the following procedures, amongst others: Ħ Compared model inputs to the 2023 financial year budget; Ħ Assessed historical performance of the CGU; and Ħ Assessed forecast growth assumptions. We assessed the discount rate used in the impairment assessment by comparing to comparable companies. We performed sensitivity analysis which highlighted that the CGU’s are sensitivity to changes in key assumptions. We recalculated the change in growth rates and discount rates which would result in an impairment and also evaluated the adequacy of the disclosures in Note 12 in light of the requirements of Australian Accounting Standards. Other Information The Directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2023 but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The Directors of the Group are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Independent Audit Report Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 52 Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Ħ Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Ħ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control. Ħ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Ħ Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Entity to cease to continue as a going concern. Ħ Evaluate the overall presentation, structure, and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. Ħ Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision, and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Report on the Remuneration Report We have audited the Remuneration Report included in pages 14 to 20 of the Directors’ Report for the year ended 30 June 2023. In our opinion, the Remuneration Report of Pure Foods Tasmania Limited for the year ended 30 June 2023 complies with s 300A of the Corporations Act 2001. Responsibilities The Directors of the Group are responsible for the preparation and presentation of the Remuneration Report in accordance with s 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Wise Lord & Ferguson Nick Carter Partner Wise Lord & Ferguson 23 August 2023 Independent Audit Report Annual Report for the Financial Year ending 30 June 2023 53 Shareholder Information As at 30 August 2023 1. Distribution of Equity Securities Analysis of numbers of equity security holders by size of holding: Holding Range Holders Total Units % Issued Share Capital Above 0 up to and including 1,000 525 248,825 0.23 Above 1,000 up to and including 5,000 678 1,817,328 1.66 Above 5,000 up to and including 10,000 274 2,130,686 1.94 Above 10,000 up to and including 100,000 451 15,154,265 13.81 Above 100,000 131 90,388,810 82.37 Total 2,059 109,739,914 100.00 2. Equity Security Holders Twenty Largest Quoted Equity Security Holders. The names of the twenty largest holders of quoted equity securities, as at 30 June 2023, are listed below (some are grouped where the holdings are deemed to be controlled by the same entity): Rank Holder Name Holdings % Issued Share Capital 1 HSBC Custody Nominees (Australia) Limited - A/C 2 7,200,801 6.56% 2 "Ilwella Pty Ltd" 5,900,000 5.38% 3 Quality Life Pty Ltd 5,546,921 5.05% 4 Willar Pty Ltd 4,404,682 4.01% 5 Jaf Capital Pty Ltd 4,007,500 3.65% 6 "Mr Timothy Tulloch Brock Lewis & Mrs Catherine Anne Lewis " 3,082,646 2.81% 7 Krisami Investments Pty Ltd 3,000,000 2.73% 8 Rottcodd Pty Ltd 2,668,975 2.43% 9 HSBC Custody Nominees (Australia) Limited 2,605,825 2.37% 10 BFADM Pty Ltd 2,599,518 2.37% 11 "MSG Pty Ltd " 2,566,021 2.34% 12 Twomaccas Pty Ltd 2,343,333 2.14% 13 Daly Potato Company Pty Ltd 2,279,608 2.08% 14 "Glenlore Super Pty Ltd " 2,012,158 1.83% 15 Bensam Investments Pty Ltd 1,527,341 1.39% 16 Edlou Investments Pty Limited 1,490,000 1.36% 17 Mr Timothy Bird 1,405,137 1.28% 18 "Mr Craig Mccourtie " 1,334,602 1.22% 19 "Savoir Superannuation Pty Ltd " 1,285,185 1.17% 20 Clement Holdings Pty Ltd 1,256,513 1.15% Total 58,516,766 53.32% Total issued capital - selected security class(es) 109,739,914 100.00% Pure Foods Tasmania Limited ACN 112 682 158 ASX: PFT 54 There are 109,739,914 fully paid ordinary shares, held by 2,059 individual holders. 3. Voting Rights The voting rights attached to ordinary shares are set out below: On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. 4. Use Of Cash Cash and assets readily convertible to cash held by the Group for the reporting period were used in a way consistent with its business strategy and objectives. Annual Report for the Financial Year ending 30 June 2023 55 Pure Foods Tasmania Pty Ltd Level 2 / 179 Murray Street, Hobart, Tasmania 7000 Phone: +61 (3) 6231 4233 Email: office@purefoodstas.com www.purefoodstas.com