Rua Bioscience Limited Analysis

Overview

Rua is a New Zealand pharmaceutical company that is aiming to be a leading producer of cannabinoid derived medicines. The Company was established in 2017 in part to support local economic development in the Tairāwhiti (East Coast) region, and is a pioneer in the New Zealand medicinal cannabis sector. It was the first company in New Zealand to obtain a licence to cultivate cannabis for research purposes and the Company’s co-founder was actively involved in both the establishment of the key industry association and the development of the regulatory framework that is now in place to govern the sector. Rua will operate in the research, cultivation, extraction and manufacturing parts of the medicinal cannabis supply chain.

Performance

The following information has been extracted from Rua Bioscience Limited's full year results, released on 29 August 2024:

Rua’s loss before tax for the year to 30 June 2024 was $13.72m (FY23 $5.96m). This loss is in line with expectations and is primarily because of one-off impairments to goodwill, supplier contracts and other assets, the majority of which was reported at the 31 December 2023 half-year report. This is non-cash in nature and does not affect the groups cash flows or operational liquidity. The loss before these impairments was $4.50m.

Revenue was recorded as $0.32m (FY23 $6.53m). FY23 revenue was significantly higher due to a $5.85m non-cash fair value gain as a result of a reduction in the payment liability to ex-Zalm shareholders. Revenue from customers was $86k (FY23 $358k). This reduction is a result of lack of sales in Germany for FY23 following the partial recall of product due to poor quality from suppliers, which has now been addressed.

Rua has released unaudited financial statements as the statements are still in the process of being audited. The delay in the release of audited financial statements is a result of the timing of the previously announced building sale process, the Boards review of the business’ cash requirements and ongoing discussions with major shareholders in regard to further funding. For further information and context please refer to the Going Concern Disclosure (Note 2(f)) in the Financial Statements. We will release audited financial statements within the Annual Report that is expected by the end of September.