Wide Open Agriculture
Annual Report 2018

Plain-text annual report

WIDE OPEN AGRICULTURE LIMITED ABN 86 604 913 822 CONSOLIDATED FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2018 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 CONTENTS Corporate Directory Director's Report Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Director's Declaration Independent Auditor’s Declaration Independent Auditor’s Report Additional ASX Information 1 2 17 18 19 20 21 46 47 48 51 CORPORATE DIRECTORY DIRECTORS Mr Anthony Maslin (Non-Executive Chairman) Dr Ben Cole (Managing Director) Mr Stuart McAlpine (Non-Executive Director) Dr James Mackintosh (Non-Executive Director) SOLICITORS Fairweather Corporate Lawyers 595 Stirling Highway Cottesloe, Western Australia, 6011 ALTERNATE DIRECTOR Mr Hans Schut (Alternate Director for Dr James Mackintosh) AUDITORS Stantons International Securities Pty Ltd Level 2, 1 Walker Avenue West Perth, Western Australia, 6005 SHARE REGISTRY Link Market Services Limited Level 4, 152 St Georges Terrace Perth, Western Australia, 6000 Telephone: 1800 502 355 (within Australia) STOCK EXCHANGE Australian Securities Exchange Central Park 152-158 St Georges Terrace Perth Western Australia 6000 ASX CODE: WOA JOINT COMPANY SECRETARIES Mr Sam Wright Ms Lydia Fee BUSINESS OFFICE 5 Brooking Street Williams, Western Australia, 6391 Email: info@wideopenagriculture.com.au REGISTERED OFFICE Suite 39, 1 Freshwater Parade Claremont, Western Australia, 6010 Telephone: +61 8 6161 7412 WEBSITE www.wideopenagriculture.com.au 1 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT Your directors present this report on Wide Open Agriculture Limited (the “Company” or “WOA”) and its subsidiaries (“Consolidated Entity” or “Group”) for the year ended 30 June 2018. DIRECTORS The name of the directors in office at any time during, or since the end of the year are: Ben Cole – Managing Director (appointed on 23 March 2015) B.Env.Sc (Hons) Phd With a PhD in environmental engineering, Ben is a social enterprise expert who has extensive international experience as a Grant Manager of market-based, water supply and sanitation projects, totalling up to $30 million. Between 2008 and 2013 he founded, managed and sold a profitable, social enterprise – Karibon - in Vietnam. A genuine start-up from invention through to sales, Ben gained valuable experience in business development and management. Anthony Maslin – Non-Executive Chairman (appointed on 23 March 2015) BBus (Fin and Ent) Anthony started as a stockbroker 25 years ago managing capital raisings and providing ethical investment advice. In 1998 he founded Solar Energy Systems Ltd (now Solco Ltd), which became the first solar energy company to list on the ASX. Since then he has consulted to and managed various listed companies, including five years as Managing Director of Buxton Resources Ltd. Anthony also co-founded community art hub the Artspace Collective and the Mo, Evie and Otis Maslin Foundation, which focuses on early intervention for dyslexia. James Mackintosh – Non Executive Director (appointed 24 July 2015) James has more than 10 years experience as a corporate finance professional in New Zealand, the UK and the Netherlands. James was formerly a Director at KPMG Deal Advisory in Amsterdam where he also co-led KPMG’s financial modelling practice in the Netherlands. James holds a PhD in chemistry and co-owns an Australian based wine company. James is the Managing Director of 4 Returns Projects B.V, the 100% subsidiary of WOA shareholder Commonland Foundation and represents Commonland on the WOA Board. Johannes Schut – Non-Executive Director (appointed 23 July 2015) - alternate Director for James Mackintosh Johannes operates a consultancy firm called BDFC which supports organisations such as Commonland and Triodos Bank with business development and financing advice. He is a Chairman of the Supervisory Board of DE-on, a provincial renewable energy fund in the Netherlands. Hans worked with industrial companies (Vredestein and DRU in the Netherlands) and a Dutch energy utility (NUON) for 16 years, before embarking on a career as a banker and investor at the European Triodos Bank for 17 years. As a former managing director of Triodos Investment Management, the impact-investing arm of Triodos Bank, he has developed and managed various impact investment funds with activities in Europe and emerging markets. He holds a degree in Industrial Design Engineering from Delft Technical University in the Netherlands. 2 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT Stuart McAlpine – Non-Executive Director (appointed 30 March 2016) Stuart is a Wheatbelt farmer with over 35 years’ experience in agriculture who is committed to the environmental and social restoration of his region. He was co-founder of the Liebe Group and inaugural President. He instigated the Regional Repopulation Plan with the Wheatbelt’s Dalwallinu Shire and Chaired the Regional Repopulation Advisory Committee. Directors have been in office since the start of the year to the date of this report unless otherwise stated. COMPANY SECRETARY The name of the Company Secretaries in office at any time during, or since the end of the year are: Sam Wright (appointed on 28 September 2016) Lydia Fee (appointed on 28 September 2016) REVIEW OF OPERATIONS The loss of the Group for the financial year after providing for income tax amounted to $1,296,319 (2017: loss of $901,692). Significant changes and events affecting the Group during the financial year have been: The Company currently has three subsidiaries and continues to develop these business streams: a) Protected Cropping Holdings – Protected cropping and associated open field operations to grow premium vegetables; b) Food for Reasons ™- Food brand to market and distribute food produce and c) Land for Reasons – a regenerative farmland management business Protected Cropping Holdings From October 2017 to March 2018, the Group completed its second growing period of horticultural activities in the retractable roof protected cropping system of 5,186m2 in Arthur River near Wagin, Western Australia. To date, the Group has focused on growing grape and roma tomatoes. The protected cropping operations work in conjunction with the ‘Food for Reasons’ food brand by supplying premium vegetables and produce to the food brand operations. Food for Reasons ™ The Group has established distribution and marketing channels in Western Australia through its Food for Reasons brand. Sales of the fresh premium produce began in April 2017 through online, retail and wholesale avenues. Retail sales include branded and packaged Grape, Roma and Medley tomato boxes, supplying directly to restaurants and supermarkets located in Perth. 3 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT Land for Reasons The strategy for the regenerative farmland management business is for the Group to manage West Australian Wheatbelt farmland that will be farmed by experienced farmers applying regenerative farming practices and based on the ‘4 returns’ framework. The Group has established the East Kulinbah Project on land of 310 hectares, it has entered into a land purchase and lease agreement. Subsequent to this, the Group has signed a land management agreement on a separate property (refer to Events Subsequent to the End of the Reporting Period - page 4). OTHER SIGNIFICANT CHANGES On 12 April 2018 the Group submitted their Initial Prospectus Offer (IPO) to ASIC. The Group entered into various agreements with a substantial shareholder, Commonland Foundation and its subsidiary 4 Returns Projects B.V. This includes an interest free loan for $305,000 on 8 January 2018 and an IPO contingency loan of $100,000 on 22 February 2018. Post reporting period the Group repaid the $100,000 IPO contingency loan. An agreement for additional funding of $325,000 was provided by Commonland Foundation on 20 April 2018 however there is no requirement to repayment this amount. The amount is included in the income in the current financial year (note 2). PRINCIPAL ACTIVITIES The principal activities of the Group during the financial year were the establishment and undertaking of diversified, regenerative farming practices in the Wheatbelt of Western Australia; in particular, horticultural activities. EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD The following matters or circumstances have arisen since the end of the financial year which significantly affect or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years: Successful Listing of Wide Open Agriculture on ASX On 6 July 2018, the Group was pleased to announce that following its oversubscribed IPO raising of $5 million, it commenced trading on the Australian Stock Exchange under ASX code “WOA”. Following listing, the Group is now in a position to develop and expand operations to include a network of farms and protected cropping systems across Western Australia’s Wheatbelt. Funds raised will be used to assist WOA to reach its goal of vertical integration from production through to distribution of premium produce and food products throughout Australia and ultimately, into Asia through our food brand, Food for Reasons™. 4 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT Wide Open Agriculture signs Farmland Management Agreement on $4.35M property On 20 August 2018, the Group announced that that it has entered into a 10-year Farmland Management Agreement (Agreement) with Netherlands-based investors Handover B.V. and Wheatbelt-based regenerative farmers. Under the Agreement, WOA through 100%-owned subsidiary Land for Reasons Pty Ltd (LFR), will provide the 1,787 hectare property in Western Australia’s Shire of Kojonup with financial reporting, monitoring and administration of the 4 Returns* in return for a 20% profit share and 20% capital appreciation over the 10-year life of the Agreement. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS Likely developments in the operations of the Group and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Group. ENVIRONMENTAL REGULATION The Group's operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a state or territory. DIVIDENDS No dividends were paid during the year and no recommendation is made as to the dividends. The directors do not recommend the payment of a dividend. OPTIONS On 16 February 2018 at a General Meeting of Shareholder it was approved to issue 3,750,000 unlisted options, exercisable at $0.30, expiring on 30 June 2021. On 22 February 2018 the directors approved to issue brokers and promoters with options in relation to the IPO. 5,000,000 unlisted options were issued with an exercise price of $0.30. 5 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT The terms and conditions of the options granted to directors are as follows: Director Grant Number Granted Date Exercise Price Fair Value Expiry Date Vesting Hurdle Anthony Maslin 16/02/2018 1,500,000 30 cents $87,330 30/06/2021 Ben Cole 16/02/2018 750,000 30 cents $43,665 30/06/2021 Stuart McAlpine 16/02/2018 750,000 30 cents $43,665 30/06/2021 Johannes Schut 16/02/2018 750,000 30 cents $43,665 30/06/2021 Nil Nil Nil Nil 3,750,000 $218,325 The terms and conditions of the options granted to brokers and promoters are as follows: Director Grant Number Granted Date Exercise Price Fair Value Expiry Date Vesting Hurdle Sam Wright Lydia Fee 22/02/2018 500,000 30 cents $29,000 30/06/2021 22/02/2018 500,000 30 cents $29,000 30/06/2021 Mac Equity Partners 22/02/2018 2,000,000 30 cents $164,000 31/12/2021 Euroz Limited 22/02/2018 1,000,000 30 cents $82,000 31/12/2021 Oracle Capital 22/02/2018 1,000,000 30 cents $82,000 31/12/2021 Nil Nil Nil Nil Nil 5,000,000 $386,000 The fair value of these options as shown in the above are based on the Black Scholes options pricing model and the following: Share price at date granted Risk free rate Volatility factor Dividend Yield 12 cents 2.12% 100% Nil DIRECTORS’ ATTENDANCE AT BOARD AND COMMITTEE MEETINGS DURING THE YEAR Name Ben Cole Anthony Maslin James Mackintosh Stuart McAlpine Johannes Schut Board of Directors’ Meetings No. attended 10 9 9 10 7 6 No. eligible to attend 10 10 10 10 10 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT INDEMNIFICATION OF OFFICERS No indemnities have been given or insurance premiums paid, during or since the end of the financial year, for any person who is or has been an officer or auditor of the Group. REMUNERATION REPORT (AUDITED) The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. The remuneration report is set out under the following main headings: ● Principles used to determine the nature and amount of remuneration ● Details of remuneration ● Service agreements ● Share-based compensation ● Additional disclosures relating to key management personnel Principles used to determine the nature and amount of remuneration The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices: ● ● ● ● competitiveness and reasonableness acceptability to shareholders performance linkage / alignment of executive compensation transparency The reward framework is designed to promote superior performance and long-term commitment to the Group. The main principles of the policy are: ● Remuneration is reasonable and fair, taking into account the Group’s obligations at law, the competitive ● market in which the Group operates and the relative size and scale of the Group’s business; Individual reward should be linked to clearly specified performance targets which should be aligned to the Group’s short term and long-term performance objectives; and ● Executives should be rewarded for both financial and non-financial performance In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate. 7 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT Non-executive directors remuneration Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non- executive directors' fees and payments are reviewed annually by the Remuneration Committee. The Remuneration Committee may, from time to time, receive advice from independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line with the market. The chairman's fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of his own remuneration. Non-executive directors do not receive share options or other incentives. ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general meeting. The most recent determination was at the Annual General Meeting held on 14 February 2017, where the shareholders approved a maximum annual aggregate remuneration of $300,000. Executive remuneration The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components. The executive remuneration and reward framework has four components: ● ● ● ● base pay and non-monetary benefits short-term performance incentives share-based payments other remuneration such as superannuation and long service leave The combination of these comprises the executive's total remuneration. Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the Remuneration Committee based on individual and business unit performance, the overall performance of the consolidated entity and comparable market remunerations. Executives may receive their fixed remuneration in the form of cash, payable monthly. The short-term incentives ('STI') program is designed to align the targets of the business units with the performance hurdles of executives. Executives are eligible to participate in a profit participation plan if deemed appropriate. The long-term incentives ('LTI') include long service leave and share-based payments. Executives may participate in share option schemes with the prior approval of the shareholders. Use of remuneration consultants During the financial year ended 30 June 2018, no remuneration consultants were engaged. Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables. 8 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT The key management personnel of the consolidated entity consisted of the following directors of Wide Open Agriculture Limited: ● Anthony Maslin - Non-Executive Chairman ● Ben Cole - Managing Director ● ● ● Stuart McAlpine – Non-Executive Johannes Schut - Non-Executive Director James Mackintosh – Non-Executive Director There have been no changes in the composition of the key management personnel since the end of the reporting period. 9 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT 2018 Non-Executive Directors: Anthony Maslin1 Johannes Schut James Mackintosh Stuart McAlpine Executive Directors: Ben Cole2 Short-term benefits Post-employment benefits Long-term benefits Share-based payments Cash salary Cash and fees bonus $ $ Non- monetary $ Super- Long service Equity- settled Equity- settled annuation $ leave $ shares options $ $ Total $ - - - - 87,611 87,611 - - - - - - - - - - - - 3,648 - - - 10,070 13,718 - - - - - - - - - - - - 87,330 43,665 - 43,665 90,978 43,665 - 43,665 43,665 141,346 218,325 319,654 1During the period Anthony Maslin forfeited amounts owing to him under his contract of $38,400 2 During the period Ben Cole forfeited amounts owing to him under his contract of $21,200 10 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT 2017 Non-Executive Directors: Anthony Maslin Johannes Schut James Mackintosh Stuart McAlpine Executive Directors: Ben Cole Short-term benefits Post-employment benefits Long-term benefits Share-based payments Cash salary Cash and fees bonus $ $ Non- monetary $ Super- Long service Equity- settled Equity- settled annuation $ leave $ shares options $ $ Total $ - - - - 79,466 79,466 - - - - - - 38,400 - - - 22,367 60,767 - - - - 9,339 9,339 - - - - - - 41,600 - - - 20,000 61,600 - - - - - - 80,000 - - - 131,172 211,172 11 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT Proportion of remuneration performance based Value of share-based payments as a proportion of remuneration 2018 2017 2018 2017 - - - - - - - - - - 96 100 - 100 52 - - - 31 15 Non-Executive Directors: Anthony Maslin Johannes Schut James Mackintosh Stuart McAlpine Executive Directors: Ben Cole Service agreements Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows: Name: Title: Agreement commenced: Term of agreement: Details: Ben Cole Managing Director 6 July 2018 Until terminated by either party Base salary $165,000 plus superannuation, to be reviewed annually by the Board of directors. 6 month termination notice by either party, LTI arrangements from time to time on terms to be decided by the Board and approved by shareholders. Key management personnel have no entitlement to termination payments in the event of removal for misconduct. 12 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT Share-based compensation Issue of shares No shares were issued to directors and other key management personnel as part of compensation during the year ended 30 June 2018. Options The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Name Anthony Maslin Ben Cole Stuart McAlpine Johannes Schut Number of options granted 1,500,000 750,000 750,000 750,000 3,750,000 Grant date Expiry date Exercise price Fair value 16/02/2018 16/02/2018 16/02/2018 16/02/2018 30/06/2021 30/06/2021 30/06/2021 30/06/2021 30 cents 30 cents 30 cents 30 cents $87,330 $43,665 $43,665 $43,665 $218,325 Vesting Hurdle Nil Nil Nil Nil Options granted carry no dividend or voting rights. The fair value of these options as shown in the above are based on the Black Scholes options pricing model and the following: Share price at date granted Risk free rate Volatility factor Dividend Yield 12 cents 2.12% 100% Nil 13 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel as part of compensation during the year ended 30 June 2018 are set out below: Value of Value of Value of options granted during the options exercised during the Remuneration consisting of options options lapsed during the for the Name Anthony Maslin Ben Cole Stuart McAlpine Johannes Schut year $ year $ year $ year % 87,330 43,665 43,665 43,665 - - - - - - - - 96% 31% 100% 100% Additional disclosures relating to key management personnel Shareholding The number of shares in the Company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Balance at Received the start of as part of the year remuneration Additions Disposals/ other Balance at the end of the year 7,566,668 7,816,668 515,000 - - - - (500,000) - 2,000,000 (500,000) 17,898,336 Ordinary shares Ben Cole Anthony Maslin Johannes Schut James Mackintosh Stuart McAlpine 7,566,668 7,766,668 500,000 500,000 2,000,000 18,333,336 - - - - - - - 50,000 15,000 - - 65,000 14 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT Option holding The number of options over ordinary shares in the Company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Options over ordinary shares Ben Cole Anthony Maslin Johannes Schut James Mackintosh Stuart McAlpine Balance at the start of the year Granted Expired/ forfeited/ Balance at the end of Exercised other the year - - - - - - 750,000 1,500,000 750,0000 - 750,000 3,750,000 - - - - - - - - - - - - 750,000 1,500,000 750,0000 - 750,000 3,750,000 Other transactions with key management personnel and their related parties During the financial year, the Group recognised rental income of $13,500 during the period for the lease of farm land to McAlpine Farms and interest expense of $18,259 relating to the purchase of Kulinbah East Block (refer to note 18). McAlpine Farms is owned by Stuart McAlpine, a current Director of the Group. All transactions were made on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. The Group entered into various agreements with a substantial shareholder, Commonland Foundation and its subsidiary 4 Returns Projects B.V. James Mackintosh is the Managing Director of 4 Returns Projects B.V as well as a Director of the Group. Johannes Schut is an alternate Director for James Mackintosh. The Group received $353,250 (EUR 225,000) from Commonland Foundation as a shareholder loan during the period. Additionally, the Group entered into a loan agreement with 4 Returns Projects B.V., during the period. The total loan funding made available by 4 Returns Projects B.V. to, and received by, the Group per the agreement was $305,000. No interest is payable on these loans and are payable in single lump sum amounts 5 years after the respective dates of the execution of the loans. In addition, the Group entered into an IPO contingency loan arrangement with Commonland Foundation of $100,000 on 22 February 2018. Post reporting period the Group repaid the $100,000 IPO contingency loan. The total loan balance as at 30 June 2018 is $917,295 (2017: $246,806). Commonland Foundation also reimbursed the Group for $137,474 of expenditure incurred directly related to Commonland Foundation’s activities. A further $325,000 non-refundable amount was received and included in income. This concludes the remuneration report, which has been audited. 15 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTOR'S REPORT 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. CORPORATE GOVERNANCE The Consolidated Group’s corporate governance policies and practices are available on the website http://www.wideopenagriculture.com.au NON-AUDIT SERVICES Stantons International Audit & Consulting Pty Ltd, was appointed to prepare an investigating accountants report for the prospectus. Refer to note 15 for auditor’s remuneration. Stantons International Audit & Consulting Pty Ltd were paid $10,139 excluding GST for these services. The board has established, subsequent to year-end, certain procedures to ensure that the provision of non- audit services are compatible with, and do not compromise, the auditor independence requirements of the Corporations Act 2001. These procedures include: • • Non-audit services are subject to the corporate governance procedures adopted by the Group and will be reviewed by the audit committee to ensure they do not impact the integrity and objectivity of the auditor; and Ensuring non-audit services do not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the consolidated Group, acting as an advocate for the Consolidated Group or jointly sharing risks and rewards. AUDITOR’S INDEPENDENCE DECLARATION The lead auditor’s independence declaration for the year ended 30 June 2018 has been received and can be found on page 47. Signed for and on behalf of the board in accordance with a resolution of the directors: Director: _________________________________________________________ Dr Ben Cole Dated this 28th September 2018 16 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2018 Note 2018 $ 2017 $ Revenue and other Income Cost of goods sold Auditor’s remuneration Consultancy Fees Depreciation Expense Employee Benefits Cost Share Based Payments Other administration expenses Loss for the year before income tax expense Income tax expense Loss after tax from continuing operations Other comprehensive income: Items that will not be reclassified to profit or loss 2 15 14 Items that may be reclassified subsequently to profit or loss Total other comprehensive income for the year Total comprehensive loss for the year Total comprehensive loss attributable to members of the entity Basic loss per share (cents) 20 Diluted loss per share (cents) 552,577 (63,249) (26,524) (209,786) (173,707) (540,959) (218,325) (616,346) (1,296,319) - (1,296,319) - - - 66,256 (52,481) (8,000) (125,207) (74,873) (510,321) - (197,066) (901,692) - (901,692) - - - (1,296,319) (901,692) (1,296,319) (901,692) (2.86) (2.67) (2.2) (2.2) The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 17 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018 Note 2018 $ 2017 $ ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property Plant and Equipment Other non-current assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Provisions Borrowings and other financial liabilities TOTAL CURRENT LIABILITIES NET ASSETS EQUITY Issued capital Options reserve Accumulated losses TOTAL EQUITY 3 4 5 4 6 7 8 9 10 11 5,125,512 22,016 5,147,528 680,802 175,000 855,802 335,878 161,461 497,339 800,799 - 800,799 6,003,330 1,298,138 361,806 41,242 941,295 1,344,343 152,575 21,384 301,405 475,364 4,658,987 822,774 6,666,094 604,325 (2,611,432) 4,658,987 2,137,887 - (1,315,113) 822,774 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 18 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018 2018 Issued Capital $ As at the beginning of the year 2,137,887 Loss for the year Other comprehensive income Total comprehensive loss for the year Shares issued Capital raising costs Options reserve At 30 June 2018 - - - 5,036,000 (507,793) Attributable to equity holders of the Group Options Reserve Accumulated Losses Total Equity $ - - - - $ $ (1,315,113) (1,296,319) - 822,774 (1,296,319) - (1,296,319) (1,296,319) - - - 5,036,000 (507,793) 604,325 - 604,325 6,666,094 604,325 (2,611,432) 4,658,987 2017 Issued Capital $ As at the beginning of the year 647,128 Loss for the year Other comprehensive income Total comprehensive loss for the year - - - Contributions of equity At 30 June 2017 1,490,759 2,137,887 Attributable to equity holders of the Group Total Equity Options Reserve Accumulated Losses $ - - - - - - $ $ (413,421) (901,692) - 233,707 (901,692) - (901,692) (901,692) - 1,490,759 (1,315,113) 822,774 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 19 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018 Cash Flows from Operating Activities Payments to suppliers Receipts from customers Funds received from Commonland Interest received Note 2018 $ (1,086,379) 261,851 325,000 102 2017 $ (810,090) 24,759 - 327 Net cash flows used in operating activities 13 (499,426) (785,005) Cash Flows from Investing Activities Payments for acquisition of PPE Net cash used in investing activities Cash Flows from Financing Activities (104,378) (104,378) (760,470) (760,470) Proceeds from issue of securities (net of issue costs) 4,823,480 1,335,409 Proceeds from borrowings Grant received 485,889 84,070 174,625 42,000 Net cash flows generated from financing activities 5,393,439 1,552,034 Net increase in cash and cash equivalents 4,789,634 6,559 Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 335,878 329,319 3 5,125,512 335,878 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 20 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 1 Statement of Significant Accounting Policies The financial statements cover Wide Open Agriculture Limited and its subsidiaries as a consolidated Group. Wide Open Agriculture Limited is a company limited by shares, incorporated and domiciled in Australia. a. Basis of Preparation The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards (including Australian Accounting Interpretations) of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The company is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise. The financial statements, except for the cash flow information, have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The amounts presented in the financial statements have been rounded to the nearest dollar. The financial statements were authorised for issue on 28th September 2018 by the directors of the Group. Accounting Policies The Group has consistently applied the following accounting policies to all periods presented in the financial statements. The Group has considered the implications of new and amended Accounting Standards applicable for annual reporting periods beginning after 1 January 2017 but determined that their application to the financial statements is either not relevant or material. b. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Company as at 30 June 2018 and the results of all subsidiaries for the year then ended. The Company and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'. Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. 21 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Accounting Policies continued Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance. Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. c. Going Concern The consolidated financial statements of the Group have been prepared on a going concern basis which anticipates the ability of the entity to meet its obligations in the normal course of business. At 30 June 2018, the Group had net assets of $4,658,987, cash and cash equivalents of $5,125,512 and net working capital of $3,803,185. The Group had incurred a loss for the year ended 30 June 2018 of $1,296,319. The ability of the Group to continue as a going concern and meet its planned operational, administration and other commitments is dependent upon the Group raising further working capital and/or successfully operating its greenhouse. In the event that the Group is not successful in raising further equity or operating its greenhouse, the Group may not be able to meet its liabilities as and when they fall due and the realisable value of the Group’s non-current assets may be significantly less than book values. 22 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Accounting Policies continued d. Foreign Currency Translation The financial statements are presented in Australian dollars, which is the Group’s functional and presentation currency. Foreign currency transactions Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of. e. Financial Instruments (i) Non-derivative financial assets The Group initially recognises loans and receivables on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group has the following non-derivative financial assets: loans and receivables, and cash and cash equivalents. Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables comprise trade and other receivables. 23 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Accounting Policies continued Cash and cash equivalents Cash and cash equivalents comprise cash balances and deposits with original maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments. (ii) Non-derivative financial liabilities The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest rate method. Other financial liabilities comprise trade and other payables and borrowings and other financial liabilities. (iii) Share capital Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. f. Property, plant & equipment Land and buildings are shown at historical cost, unless stated otherwise, less subsequent depreciation and impairment for buildings. The cost of self-constructed assets includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads. Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a diminishing value basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives. Items valued at cost under $1,000 are immediately deducted. 24 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Accounting Policies continued The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter. An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits. Capital expenditure on assets under construction and not yet ready for use by the Group is reflected as a distinct item in capital works in progress until the period of completion. Upon completion, the asset is reclassified and shown as distinct item in fixed assets. g. Impairment of Assets At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The assessment will include considering external and internal sources of information, including dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use to the asset's carrying amount. Any excess of the asset's carrying amount over its recoverable amount is recognised immediately in profit or loss unless the asset is carried at a revalued amount in accordance with another Standard (e.g. in accordance with the revaluation model in AASB 116). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that Standard. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. 25 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Accounting Policies continued h. Trade and Other Receivables Trade receivables are recognised initially at the transaction price (i.e. cost) and are subsequently measured at cost less provision for impairment. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receivables are classified as non-current assets. At the end of each reporting period, the carrying amount of trade and other receivables are reviewed to determine whether there is any objective evidence that the amounts are not recoverable. If so, an impairment loss is recognised immediately in statement of comprehensive income. i. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position. j. Revenue and Other Income Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. For this purpose, deferred consideration is not discounted to present values when recognising revenue. I. Sale of goods Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery of the goods to the customer. Interest revenue is recognised when received. II. All revenue is stated net of the amount of goods and services tax (GST). III. Grant revenue is recognised when received. All revenue is stated net of the amount of goods and services tax (GST). k. Trade and Other Payables Trade and other payables represent the liabilities at the end of the reporting period for goods and services received by the Group that remain unpaid. Trade payables are recognised at their transaction price. Trade payables are obligations on the basis of normal credit terms. 26 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Accounting Policies continued l. Borrowings Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. m. Provisions Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost. n. Employee benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Other long-term employee benefits The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Defined contribution superannuation expense Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred. 27 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Accounting Policies continued o. Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position. p. Income Tax The income tax expense for the period is the tax payable on the current period's taxable income based on the income tax rate applicable in Australia adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted in Australia. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose on goodwill or in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against tax liabilities and the deferred tax liabilities relate to the same taxable entity and the same taxation authority. 28 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Accounting Policies continued q. Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial period. r. Segment Reporting The Group operates in the agriculture industry in Australia. For management purposes, the Group is organised into one main operating segment which involves horticulture activities in Australia. All of the Group’s activities are interrelated and discrete financial information is reported to the Board (Chief Operating Decision Maker) as a single segment. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole. s. Share Based Payments The Group makes payments to selected suppliers in the form of equity settled share based payments, where shares are issued in exchange for goods or services, the amounts of which are determined by reference to the value of the underlying goods or services exchanged. t. Financial Risk Management The Group’s activities expose it to a variety of financial risks; market risk, credit risk, liquidity risk and cash flow interest risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. (i) Market risk Currently the Group is not exposed to any significant market risk. (ii) Credit risk The Group currently has no significant concentrations of credit risk. (iii) Liquidity risk The Group manages its liquidity risk by monitoring its cash reserves and forecast spending. Management is cognisant of the future demands for liquid finance resources to finance the Group’s current and future operations. (iv) Cash flow interest risk The Group is not exposed to any significant interest risk. The shareholders loan is interest free with no fixed term of repayment. 29 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Accounting Policies continued (v) Foreign currency risk The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. u. Critical Accounting Estimates and Judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances. (i) Accounting for share based payments The Group’s accounting policy is stated in note s. The values of these share based payments are based on the market values of the goods or services acquired by the share based payments. (ii) Recoverability of Deferred Tax Assets Judgement is required in determining whether deferred tax assets are recognised on the statement of financial position. Deferred tax assets, including those arising from un-utilised tax losses require management to assess the likelihood that the Group will generate taxable earnings in future periods, in order to utilise recognised deferred tax assets. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in Australia. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Group to realise the net deferred tax assets recorded at the reporting date could be impacted. At balance date the net deferred tax assets are not recognised on the statement of financial position. Additionally, future changes in tax laws in Australia could limit the ability of the Group to obtain tax deductions in future periods. v. New accounting standards for application in future periods Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together with an assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are discussed below: 30 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Accounting Policies continued AASB 9: Financial Instruments and associated Amending Standards (applicable for annual reporting period commencing 1 January 2018) The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes revised requirements for the classification and measurement of financial instruments, revised recognition and derecognition requirements for financial instruments and simplified requirements for hedge accounting. The key changes that may affect the Group on initial application include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-financial items. Should the entity elect to change its hedge policies in line with the new hedge accounting requirements of the Standard, the application of such accounting would be largely prospective. The directors anticipate that the adoption of AASB 9 will not have a material impact on the Group’s financial instruments. AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods commencing on or after 1 January 2018). When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-based model. Apart from a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to customers and potential customers. The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides the following five-step process: - - - - - identify the contract(s) with a customer; identify the performance obligations in the contract(s); determine the transaction price; allocate the transaction price to the performance obligations in the contract(s); and recognise revenue when (or as) the performance obligations are satisfied. This Standard will require retrospective restatement, as well as enhanced disclosures regarding revenue. 31 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Accounting Policies continued The directors anticipate that the adoption of AASB 15 will not have a material impact on the Group’s revenue recognition and disclosures). AASB 16: Leases (applicable to annual reporting periods commencing on or after 1 January 2019). When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as either operating leases or finance leases. Lessor accounting remains similar to current practice. The main changes introduced by the new Standard are as follows: - - - - - recognition of the right-to-use asset and liability for all leases (excluding short term leases with less than 12 months of tenure and leases relating to low value assets); depreciating the right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components; inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease liability using the index or rate at the commencement date; application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead account for all components as a lease; and additional disclosure requirements. ▪ ▪ The transitional provisions of AASB 16 allow a lease to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity at the date of initial application. Although the directors anticipate that the adoption of AASB 16 may have an impact on the Group's financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact. w. Issued Capital Ordinary shares are classified as equity. Issued and paid up capital is recognised at the fair value of the consideration received by the Group. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. 32 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Accounting Policies continued x. Agricultural produce and consumables on hand Agricultural produce, such as harvested produce, is recognised on harvest and is stated at the lower of cost (determined on application of AASB 141 Agriculture) and net realisable value. Consumables such as unspread fertiliser and other farming implements on hand at balance date are recognised at the lower of cost or net realisable value. y. Biological assets Recognition and Measurement Biological assets are measured at their face value less costs to sell at each reporting date. The fair value is determined as the net present value of cashflows expected to be generated by these crops (including a risk adjustment factor). Where fair value cannot be measured reliably, biological assets are measured at cost. Net increments and decrements in the fair value of the growing assets are recognised as income or expense in the statement of profit/loss and other comprehensive income determined as: - The difference between the total fair value of the biological assets recognised at the beginning of the reporting period and the total fair value of the biological assets recognised at reporting date. - Costs incurred in maintaining or enhancing the biological assets recognised at the beginning of the reporting period and the total fair value of the biological assets recognised at the reporting date. - The market value of the produce picked during the reporting period is measured at their fair value less estimated costs to be incurred up until the time of picking. Market price is determined based on underlying market prices of the product. All cost incurred in relation to the development of biological assets in the current financial year have been expensed to the Statement of profit and loss and other comprehensive income as the Group has not yet commercialised its operations. 33 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 2 Revenue and Other Income Horticulture revenues Rent received1 Grants received Interest received Other Revenue2 Total Revenue 2018 $ 34,590 13,500 105,070 102 399,315 552,577 2017 $ 29,629 15,300 21,000 327 - 66,256 1 Rent received is from McAlpine Farms which is co-owned by Stuart McAlpine (note 18). 2 Other revenue comprises funds received from Commonland Foundation with no obligation to repay, treated as income. 3 Cash and Cash Equivalents Cash at bank Cash on deposit 4 Trade and Other Receivables Current Accounts receivable GST receivable Prepayments Loans to Employees & Associates Initial Equity issue Deposit for purchase of Kulinbah East Block, Buntine WA First Right of Refusal to purchase Kulinbah West, and Cooinda Properties, Buntine WA Non-Current Deposit 4,470,623 654,889 5,125,512 8,166 3,273 10,475 99 3 - - 22,016 175,000 175,000 335,878 - 335,878 64,286 21,230 942 - 3 50,000 25,000 161,461 - - At the reporting date none of the receivables were past due and impaired. The unpaid share capital does not have specific repayments terms and is interest free. 34 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 5 Property, Plant and Equipment 2018 Net book value At beginning of the year Additions Disposal Reclassification Depreciation for the year At 30 June 2018 2017 Net book value At beginning of the year Additions Disposal Reclassification Depreciation for the year At 30 June 2017 Plant and equipment $ Capital works in progress $ 147,965 23,919 (531) - (40,392) 130,961 - 9,479 - (9,479) - - Land and Buildings $ 652,834 20,843 - 9,479 (133,315) 549,841 Plant and equipment $ Capital works in progress $ Land and Buildings $ 6,482 163,742 (5,500) - (16,759) 147,965 58,054 532,379 - (590,433) - - - 120,515 - 590,433 (58,114) 652,834 6 Trade and Other Payables Current Trade creditors Accruals Employee liabilities Share applications refundable 2018 $ 138,770 190,253 12,823 19,960 361,806 Total $ 800,799 54,241 (531) - (173,707) 680,802 Total $ 64,536 816,636 (5,500) - (74,873) 800,799 2017 $ 68,752 39,045 44,776 - 152,573 At the reporting date none of the payables were past due. The normal credit terms from suppliers is 14 days. 35 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 7 Provisions Current Annual Leave 8 Borrowings and other financial liabilities Shareholder loan Insurance Premium Funding Unexpended Grant Amounts received for share subscriptions 2018 $ 41,242 41,242 917,295 - - 24,000 941,295 2017 $ 21,384 21,384 246,806 3,899 21,000 29,700 301,405 The shareholder loan comprises various loans of which one is interest free and repayable upon successfully listing. Refer note 18 for further details. 9 Issued Capital Fully Paid Ordinary Shares: 70,579,249 (2017: 45,279,249) Capital Raising Costs There are no externally imposed capital requirements. (a) Issued and Paid up capital Issued Capital Ordinary shares (opening) Fully paid issued shares Less transaction costs Total issued capital 7,173,887 2,137,887 (507,793) 6,666,094 - 2,137,887 2018 Number 45,279,249 25,300,000 - 70,579,249 2018 $ 2,137,887 5,036,000 (507,793) 6,666,094 36 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 9 Issued Capital (cont.) (b) Movement in Ordinary shares on issue Opening Balance as at 1 July 2017 IPO Shares Issued Share Issue (in lieu of services) Less: Transaction Costs Balance as at 30 June 2018 Opening Balance as at 1 July 2016 Share Issue Share Issue Balance as at 30 June 2017 10 Option Reserve Balance at beginning of year Options issued Balance at end of year No. Of shares Issue Price $ 45,279,249 25,000,000 300,000 - 70,579,249 31,902,505 1,635,000 11,741,744 45,279,249 0.20 0.12 0.05 0.12 2018 $ - 604,325 604,325 Total $ 2,137,887 5,000,000 36,000 (507,793) 6,666,094 647,128 81,750 1,409,009 2,137,887 2017 $ - - - The Share option reserve represents the fair value of share options granted. The estimate of fair value of the services received is based on the Black-Scholes model. The calculated fair value is based on parameters as set out in the Directors report. 11 Accumulated Losses Accumulated losses at the beginning of the financial year Net loss attributable to members of the Group Accumulated losses at the end of the financial year 2018 $ (1,315,113) (1,296,319) (2,611,432) 2017 $ (413,421) (901,692) (1,315,113) 37 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 12 Financial Risk Management The Group's financial instruments consist mainly of deposits with banks, accounts receivable and payable and borrowings. The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements are as follows: Financial Instruments 2018 Financial Assets Cash and cash equivalents Trade and other receivables Total financial assets Weighted average interest rate for the year Financial Liabilities Trade and other payables Borrowings & other financial liabilities Total financial liabilities Floating Interest Rate $ Fixed Interest Rate $ Non-interest bearing $ Total $ 5,125,512 - 5,125,512 - - - - - - - - - - 5,125,512 11,541 11,541 11,541 5,137,053 361,806 361,806 941,295 941,295 1,303,101 1,303,101 38 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 12 Financial Risk Management (cont.) Financial Instruments 2017 Financial Assets Cash and cash equivalents Trade and other receivables Total financial assets Weighted average interest rate for the year Financial liabilities Borrowings & other financial liabilities Trade and other payables Total financial liabilities Floating Interest Rate $ Fixed Interest Rate $ Non-interest bearing $ Total $ 335,878 - 335,878 - - - - - - - - - - 335,878 160,519 160,519 160,519 496,397 301,405 301,405 152,575 152,575 453,980 453,980 Financial Risk Management Policies The director's overall risk management strategy seeks to assist the Group in meeting its financial targets, whilst minimising potential adverse effects on financial performance. Risk management policies are approved and reviewed by the Board of Directors on a regular basis. These included the credit risk policies and future cash flow requirements. The main purpose of non-derivative financial instruments is to raise finance for Group operations. The Group does not have any derivative instruments at 30 June 2018. 39 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 13 Reconciliation of Loss after Tax to Net Cash Outflow from Operating Activities Loss after income tax Grants received Share Based Payments Share Based Payments – Secretarial Fees Depreciation Changes in assets and liabilities Decrease / (Increase) in operating receivables Increase in operating payables Increase in provisions Net cash inflows / (outflows) from operating activities 14 Income Tax Expense Reconciliation between tax expense and pre-tax loss: Accounting Profit/(Loss) before income tax Tax at the domestic income tax rate of 27.5% (2017: 27.5%) Temporary differences Permanent differences Income tax benefit not recognised Recoupment of Prior period tax losses Income tax expenses/(benefit) Unrecognised temporary differences Unused tax losses for which no deferred tax asset recognised Temporary difference Total Potential benefit at 27.5% 2018 $ (1,296,319) (105,070) 218,325 90,727 173,707 139,445 259,901 19,858 2017 $ (901,692) (21,000) 72,650 - 74,873 (76,166) 50,901 15,429 (499,426) (785,005) (1,296,319) (901,692) (356,488) (247,965) 19,576 122,460 214,452 - - 1,594,789 71,184 1,665,973 458,142 - 4,275 243,690 - - 956,519 (70,373) 886,146 243,690 40 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 15 Remuneration of Auditors Audit Services Stantons International – Audit of financial report Non-Audit Services Stantons International – Investigating accountants report 2018 $ 16,385 10,139 26,524 2017 $ 8,000 - 8,000 16 Commitments for expenditure and contingencies On 29 July 2016, the Group entered into a contract to acquire land from Buntine Holdings Pty Ltd with a deferred consideration element. The details are: - Price of the land was $323,879.13 - Deposit of $50,000 paid on 29 July 2016 in the form of 1,000,000 shares at 0.05c each - Partial payment of $150,000 was made on 13 August 2018 - Remaining consideration to be paid in full no later than 8 years from 23 March 2016 - Interest to be paid on this outstanding amount of $273,879 at the annual rate of the RBA base rate plus 2.5%. This has been treated as operational expense as Right of access and use. - The land has not been accounted for in fixed assets Not longer than one year Longer than one year, but not longer than five years Longer than five years 2018 $ 141,668 477,703 148,879 768,250 2017 $ 17,635 - 273,879 291,514 Operating Lease Commitment - - Commitments for expenditure in 2018 within one year represent remaining funds due for the greenhouse purchased on 24 June 2016, being 10% of purchase price of $121,680 USD. Exchange rate used $0.73AUD:$1USD. (Exchange rate June 2017 $0.69AUD:$1USD) Commitments for expenditure in 2018 over five years represent deferred consideration of purchase of Kulinbah East Block from Buntine Holdings Pty Ltd. Other than the interests disclosed above there were no further contingencies as at 30 June 2018. 41 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 17 Key Management Personnel Remuneration 2018 Anthony Maslin1 Ben Cole James Mackintosh Stuart McAlpine Johannes Schut Cash $ - 87,611 - - - 87,611 Equity $ 87,330 43,665 - 43,665 43,665 218,325 Total $ 87,330 131,276 - 43,665 43,665 305,936 1During the period Anthony Maslin forfeited amounts owing to him under his contract of $38,400 2017 Anthony Maslin Ben Cole Stuart McAlpine Johannes Schut James Mackintosh Cash $ - 79,466 - - - Equity $ 41,600 20,000 - - - Total $ 41,600 99,466 - - - 79,466 61,600 141,066 42 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 18 Related Party Transactions Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. The Group recognised rental income of $13,500 (2017: $15,300) during the period for the lease of farm land to McAlpine Farms and interest expense of $18,259 relating to the purchase of Kulinbah East Block. McAlpine Farms is owned by Stuart McAlpine, a current Director of the Group. The Group received $353,250 (EUR 225,000) from Commonland Foundation as a shareholder loan during the period. Additionally, the Group entered into a loan agreement with 4 Returns Projects B.V., a subsidiary of Commonland Foundation, during the period. The total loan funding made available by 4 Returns Projects B.V. to, and received by, the Group per the agreement was $305,000. No interest is payable on these loans and are payable in single lump sum amounts 5 years after the respective dates of the execution of the loans. In addition, the Group entered into an IPO contingency loan arrangement with Commonland Foundation of $100,000 on 22 February 2018. Post reporting period the Group repaid the $100,000 IPO contingency loan. The total loan balance as at 30 June 2018 is $917,295 (2017: $246,806). Commonland Foundation also reimbursed the Group for $137,474 of expenditure incurred directly related to Commonland Foundation’s activities. A further $325,000 non- refundable amount was received and included in income. Commonland Foundation are a substantial shareholder of the Group and have appointed James Mackintosh as their representative Director and Johannes Schut as an alternate Director for James Mackintosh. 43 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 19 Equity Instruments Disclosure - Key Management Personnel The Number of shares held by Directors and Key Management Personnel of the Group during the year ended 30 June 2018, including their personally related parties, is set out below: 2018 Name Balance at 1 July 2017 Granted as compensation Issued as repayment of loan Bought & (Sold) Balance at 30 June 2018 Ben Cole 7,566,668 Anthony Maslin 7,766,668 James Mackintosh Johannes Schut 500,000 500,000 Stuart McAlpine 2,000,000 Total 18,333,336 - - - - - - - - - - - - - 7,566,668 50,000 7,816,668 (500,000) - 15,000 515,000 - 2,000,000 (435,000) 17,898,336 The Number of shares held by Directors and Key Management Personnel of the Group during the year ended 30 June 2017, including their personally related parties, is set out below: 2017 Name Balance at 1 July 2016 Granted as compensation Issued as land consideration Bought & (Sold) Balance at 30 June 2017 7,400,001 Ben Cole 7,320,001 Anthony Maslin 500,000 James Mackintosh 500,000 Johannes Schut Stuart McAlpine 2,000,000 17,720,002 Total 166,667 346,667 - - - 513,334 - - - - - - - 100,000 - - - 7,566,668 7,766,668 500,000 500,000 2,000,000 100,000 18,333,336 44 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 20 Basic and Diluted Earning/(Loss) per Share Basic loss per share (cents) Diluted loss per share (cents) Loss attributable to members of Wide Open Agriculture Ltd Weighted average number of shares outstanding Weighted average number of shares & options outstanding 2018 $ (2.86) (2.67) 2017 $ (2.23) (2.23) (1,296,319) 45,348,564 (901,692) 40,468,483 48,478,701 40,468,483 The Group has no ordinary share capital in respect of potential ordinary shares which would lead to diluted earnings per share that shows an inferior view of the earnings per share. For this reason, the diluted earning/(loss) per share for the year ended 30 June 2018 is the same as basic earning/(loss) per share. 21 Significant Events After the Reporting Date There have been various events which have arisen since 30 June 2018 which will significantly affect the operations of the Group and the state of affairs of the Group in subsequent financial years. Successful Listing of Wide Open Agriculture on ASX On 6 July 2018, the Group was pleased to announce that following its oversubscribed IPO raising $5 million, it commenced trading on the Australian Stock Exchange under ASX code “WOA”. Wide Open Agriculture signs Farmland Management Agreement on $4.35M property On 20 August 2018, the Group announced that that it has entered into a 10-year Farmland Management Agreement (Agreement) with Netherlands-based investors Handover B.V. and Wheatbelt-based regenerative farmers. Under the Agreement, WOA through 100%-owned subsidiary Land for Reasons Pty Ltd (LFR) - will provide the 1,787 hectare property in Western Australia’s Shire of Kojonup with financial reporting, monitoring and administration of the 4 Returns* in return for a 20% profit share and 20% capital appreciation over the 10-year life of the Agreement. 45 WIDE OPEN AGRICULTURE LIMITED ABN 866 049 138 22 DIRECTORS’ DECLARATION The directors of the Group declare that: (a) (b) 1. 2. 3. The consolidated financial statements and notes, as set out on pages 17 to 45, are in accordance with the Corporations Act 2001 and: comply with Accounting Standards; and give a true and fair view of the Group’s financial position as at 30 June 2018 and its performance for the year ended on that date; In the director's 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. The consolidated financial report also complies with International Reporting Standards. This declaration is made in accordance with a resolution of the directors. Director: ____________________ Dr Ben Cole Dated this 28th day of September 2018 46 Stantons International Audit and Consulting Pty Ltd trading as Chartered Accountants and Consultants 28 September 2018 Board of Directors Wide Open Agriculture Limited Suite 39,1 Freshwater Parade, CLAREMONT, WA 6010 Dear Directors PO Box 1908 West Perth WA 6872 Australia Level 2, 1 Walker Avenue West Perth WA 6005 Australia Tel: +61 8 9481 3188 Fax: +61 8 9321 1204 ABN: 84 144 581 519 www.stantons.com.au RE: WIDE OPEN AGRICULTURE LIMITED In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Wide Open Agriculture Limited. As Audit Director for the audit of the financial statements of Wide Open Agriculture Limited for the year ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. Yours sincerely STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LIMITED (Trading as Stantons International) (An Authorised Audit Company) Samir Tirodkar Director Liability limited by a scheme approved under Professional Standards Legislation Stantons International Audit and Consulting Pty Ltd trading as Chartered Accountants and Consultants PO Box 1908 West Perth WA 6872 Australia Level 2, 1 Walker Avenue West Perth WA 6005 Australia Tel: +61 8 9481 3188 Fax: +61 8 9321 1204 ABN: 84 144 581 519 www.stantons.com.au INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WIDE OPEN AGRICULTURE LIMITED Report on the Financial Report Opinion We have audited the accompanying financial report of Wide Open Agriculture Limited (the Company), which comprises the statement of financial position as at 30 June 2018, and the statement of profit or loss and other comprehensive income, statement of changes in equity and the statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration. In our opinion: (a) the financial report of Wide Open Agriculture Limited is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Company’s financial position as at 30 June 2018 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and (b) the financial report of the Company also complies with International Financial Reporting Standards as disclosed in note 1(a). 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined that there were no key audit matters in relation to this audit 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 2018, 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 opinion thereon. Liability limited by a scheme approved under Professional Standards Legislation 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 Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report. We conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. We 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. We 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 communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in Internal control that we identify during our audit. The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements. 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. From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report We have audited the Remuneration Report included in pages 7 to 15 of the directors’ report for the year ended 30 June 2018. The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards Opinion on the Remuneration Report In our opinion, the Remuneration Report of Wide Open Agriculture Limited for the year ended 30 June 2018 complies with section 300A of the Corporations Act 2001. STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International) (An Authorised Audit Company) Samir Tirodkar Director West Perth, Western Australia 28 September 2018 SHAREHOLDER INFORMATION Additional information required by the Australian Stock Exchange and not shown elsewhere in this report is as follows. The information is current as at 25 September 2018: a) Distribution of Securities b) Substantial holders The names of substantial shareholders in accordance with section 671B of the Corporations Act 2001 are: Holder Number of Shares FANJA PON & HANS RAVE COMMONLAND FOUNDATION ANTHONY MASLIN BEN COLE 12,419,037 12,000,000 7,666,668 7,566,668 % 17.60 17.00 10.86 10.72 51 c) Twenty largest shareholders (ASX:WOA) The name of the twenty largest holders of securities are: 52 

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