y) Rounding of Amounts
The Company is a kind referred to in Legislative Instrument
2016/191 issued by the Australian Securities and Investment
Commission, relating to the “rounding off” of amounts in the nancial
statements. Amounts in the nancial statements have been rounded
off in accordance with that class order to the nearest dollar.
z) Share Based Payments
Share based compensation relating to share options
are recognised at fair value.
The fair value of the options is recognised as an employee
benet expense in the statement of prot or loss and other
comprehensive income, with a corresponding increase in equity.
The total amount to be expensed is determined by reference to
the fair value of the options granted, which includes any market
performance conditions and the impact of any non-vesting
conditions, but excludes the impact of any service and non-
market performance vesting conditions.
The total expense is recognised over the vesting period,
which is the period over which all of the specied vesting
conditions are to be satised.
Upon exercise of share options, the proceeds received net of any
directly attributable transaction costs are allocated to share capital.
aa) Earnings per Share
Basic earnings per share
Basic earnings per share is calculated by dividing the net prot
or loss after income tax attributable to equity holders of the
Company, excluding any costs of servicing equity other than
ordinary shares, by the weighted average number of ordinary
shares outstanding during the nancial year, adjusted for bonus
elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the gures used in the
determination of basic earnings per share to take into account
the post income tax effect of interest and other nancing
costs associated with dilutive potential ordinary share and the
weighted average number of shares assumed to have been issued for
no consideration in relation to dilutive potential ordinary shares.
bb) Parent entity nancial information
The nancial information for the parent entity, MGC
Pharmaceuticals Limited, disclosed in note 31 has been prepared
on the same basis as the consolidated nancial statements,
except as set out below:
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities
are accounted for at cost in the nancial statements of MGC
Pharmaceuticals Limited. Dividends received from associates are
recognised in the parent entity’s statement of prot or loss when
its right to receive the dividend is established.
The Directors evaluate estimates and judgements incorporated
into the nancial report based on historical knowledge and best
available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and
economic data, obtained both externally and within the group.
a) Income Taxes
The group expects to have carried forward tax losses which have
not been recognised as deferred tax assets as it is not considered
sufciently probable that these losses will be recouped by means
of future prots taxable in the relevant jurisdictions.
b) Share Based Payments
The assessed fair value at grant date of share based payments
granted during the period was determined using a binomial
option pricing model that takes into account the exercise price,
the price of the underlying share at grant date, the life of the
option, the volatility of the underlying share, the risk-free
rate and expected dividend payout and any applicable vesting
conditions. Management was required to make assumptions
and estimates in order to determine the inputs into the binomial
option pricing model.
c) Contingent Liabilities
A contingent consideration liability arose from the acquisition of
MGC Pharma (UK) Limited, where Performance Shares can be
converted into fully paid ordinary shares at a rate of one ordinary
share for every Performance Share that converts.
The determination of the fair value is based on a probability
weighted payout approach, where key assumptions take into
consideration the probability of meeting each milestone and any
future development may require further revisions to the estimate.
d) Estimations and judgements on Intangible Assets
The intangible asset of the Group relates to a license to grow
industrial cannabis in Slovenia. The Group tests the intangible
asset for indications of impairment at each reporting period, in
line with accounting policies. The intangible asset is a key asset
and is recognized as an intangible asset with an indenite useful
life as only a simple renewal process is required annually.
Notes to the Financial Statements