Announcement PDF Elixinol Wellness Limited Appendix 4D Half-year report 1. Company details Name of entity: ABN: Reporting period: Previous period: Elixinol Wellness Limited 34 621 479 794 For the half-year ended 30 June 2024 For the half-year ended 30 June 2023 2. Results for announcement to the market The directors present this Appendix 4D on the consolidated entity (referred to as the 'Group') consisting of Elixinol Wellness Limited (referred to as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the half-year ended 30 June 2024. $'000 Revenues from ordinary activities up 96.0% to 6,772 Loss from ordinary activities after tax attributable to the owners of Elixinol Wellness Limited down 18.8% to (2,756) Loss for the half-year attributable to the owners of Elixinol Wellness Limited down 18.8% to (2,756) 30 Jun 2024 Cents 30 Jun 2023 Cents (0.28) (0.28) (0.94) (0.94) Reporting period Cents Previous period Cents 0.39 1.89 30 Jun 2024 $'000 Group 30 Jun 2023 $'000 Net assets Less: Right-of-use assets Less: Intangibles Add: Lease liabilities Net tangible assets 7,434 (136) (2,470) 299 5,127 8,315 (523) (153) 991 8,630 Total shares issued (no.) 1,321,242,325 456,858,258 Basic loss per share Diluted loss per share Dividends There were no dividends paid, recommended or declared during the current financial period. Comments The loss for the Group after providing for income tax amounted to $2,756,000 (30 June 2023: $3,396,000). 3. Net tangible assets Net tangible assets per ordinary security Calculated as follows: Elixinol Wellness Limited Appendix 4D Half-year report 4. Control gained over entities Name of entities (or group of entities) Ananda Food Pty Ltd Date control gained 28 March 2024 $'000 Contribution of such entities to the reporting entity's profit/(loss) from ordinary activities before income tax during the period (where material) (75) Profit/(loss) from ordinary activities before income tax of the controlled entity (or group of entities) for the whole of the previous period (where material) - 5. Loss of control over entities Not applicable. 6. Dividends Current period There were no dividends paid, recommended or declared during the current financial period. Previous period There were no dividends paid, recommended or declared during the previous financial period. 7. Dividend reinvestment plans Not applicable. 8. Details of associates and joint venture entities Reporting entity's percentage holding Name of associate / joint venture Associate: - Altmed Pets LLC ('Pet Releaf') Group's aggregate share of associates and joint venture entities' profit/(loss) (where material) Profit/(loss) from ordinary activities before income tax Contribution to profit/(loss) (where material) Reporting period % Previous period % Reporting period $'000 Previous period $'000 - 25.43% - 139 - 139 Elixinol Wellness Limited Appendix 4D Half-year report 9. Foreign entities Details of origin of accounting standards used in compiling the report: Not applicable. 10. Audit qualification or review Details of audit/review dispute or qualification (if any): The financial statements were subject to a review by the auditors and the review report is attached as part of the Interim Report. The review report contains a paragraph that draws attention to the use of the going concern basis for the preparation of the financial statements. 11. Attachments Details of attachments (if any): The Interim Report of Elixinol Wellness Limited for the half-year ended 30 June 2024 is attached. 12. Signed Authorised for release by the Board of Directors 29 August 2024 Elixinol Wellness Limited ABN 34 621 479 794 Interim Report - 30 June 2024 Elixinol Wellness Limited Contents 30 June 2024 Directors' report 2 Auditor's independence declaration 6 Consolidated statement of profit or loss and other comprehensive income 7 Consolidated statement of financial position 8 Consolidated statement of changes in equity 9 Consolidated statement of cash flows 10 Notes to the consolidated financial statements 11 Note 1. General information 11 Note 2. Material accounting policy information 11 Note 3. Critical accounting judgements, estimates and assumptions 13 Note 4. Operating segments 13 Note 5. Revenue 16 Note 6. Other income 17 Note 7. Cash and cash equivalents 17 Note 8. Property, plant and equipment 17 Note 9. Right-of-use assets 18 Note 10. Intangibles 19 Note 11. Issued capital 19 Note 12. Contingent liabilities 20 Note 13. Commitments 20 Note 14. Business combinations 21 Note 15. Earnings per share 22 Note 16. Share-based payments 23 Note 17. Events after the reporting period 23 Directors' declaration 24 Independent auditor's review report to the members of Elixinol Wellness Limited 25 Corporate directory 29 1 Elixinol Wellness Limited Directors' report 30 June 2024 The Directors of Elixinol Wellness Limited ('Elixinol Wellness' or the 'Company') present this report, together with the financial statements of the Company and its controlled entities ('Consolidated Entity' or 'Group') for the half-year ended 30 June 2024 ('H1 FY24'). Directors The Directors of the Company in office during the financial half-year and up to the date of this report are as follows: David Fenlon Pauline Gately Natalie Butler Ronald Dufficy Independent Non-Executive Chair Non-Executive Director Executive Director and Head of Marketing (appointed 28 March 2024) Managing Director and Group Chief Executive Officer (resigned 28 March 2024) The Directors were in office for the entire period unless otherwise stated. Principal activities The principal activities of the Company during the half-year relate to its operation as a holding company for each of Elixinol LLC ('Elixinol Americas'), Elixinol Wellness (Byron Bay) Pty Ltd, The Sustainable Nutrition Group Pty Ltd, The Sustainable Nutrition Group (Australia) Pty Ltd, and recently acquired Ananda Food Pty Ltd (together 'Australia') as well as Elixinol BV and Elixinol Limited (together 'Elixinol Europe'). The principal activities of the Group are: Australia Elixinol's Australian operations encompass a vertically integrated business that produces, manufactures, and distributes a range of highly complementary products across four verticals – human nutrition, human wellness, pet wellness and superfood ingredients. These products are sold under brands including Hemp Foods Australia, Mt Elephant, Ananda Food, Soul Foods and Field Day and are distributed through grocery, wholesale, and e-commerce channels. The Australian Superfood Co also supplies Australian native ingredients to white label customers as well as food, beverage, and beauty manufacturers. Elixinol Americas Established in 2014, Elixinol Americas is based in the United States and specialises in marketing and distributing products made from premium quality, predominantly 'whole plant' full spectrum CBD. During FY24, the Company transitioned exclusively to an e-commerce business model. Rest of World Established in 2018, Rest of World comprises Elixinol Europe specialising in the development, sourcing, marketing and distribution of hemp-derived CBD products, including skincare. Having moved to a licensing business model several years ago, this segment now makes a limited contribution to Elixinol's revenue. Operating and financial review The Group made significant strides in improving its financial performance, reflecting management’s commitment to strategic growth and operational efficiency. Strong revenue growth Group revenue from continuing operations surged to $6.8 million during H1 FY24, nearly double H1 FY23 revenue of $3.5 million. Robust revenue growth during the period was underpinned by contributions from the Company’s acquisitions (The Sustainable Nutrition Group Ltd and 3 months of Ananda Food Pty Ltd) as well as organic growth in Hemp Foods Australia. The Company’s expanded market reach and enhanced product offerings in key growth segments are expected to bolster further revenue gains in H2 FY24. Narrowing losses While the Group continued to report losses in H1 FY24, net loss after tax fell by $0.6 million compared with the same period last year (H1 FY24 $2.8 million, H1 FY23 $3.4 million). This improvement highlights the early benefits of the Group’s cost optimisation and efficiency enhancements on financial performance. 2 Elixinol Wellness Limited Directors' report 30 June 2024 Substantial Improvement in EBITDA Earnings before interest, tax, depreciation and amortisation (‘EBITDA’) from continuing operations including share of associates’ net loss and excluding impairment and share-based payments for the period ended 30 June 2024. EBITDA and Adjusted EBITDA are not prescribed by Australian Accounting Standards (‘AAS’) and represent the Group’s statutory result under AAS, adjusted for certain items, Elixinol directors view these metrics as a reliable indicator of the Group’s core earnings. Notably, adjusted EBITDA loss from continuing operations, excluding non-recurring items and other adjustments, improved significantly to $1.5 million, compared with a loss of $2.6 million in H1 FY23. This substantial narrowing of the Group’s EBITDA loss reflects management’s focus on core business operations and its disciplined approach to managing costs. Cash Flow and Financial Position While the Group utilised $2.1 million of operating cash during the period up from $0.6 million in H1 FY23, this included $450,000 of non-recurring costs. Notwithstanding this significantly larger cash burn operational improvements and strategic investments during the latter part of H1 FY24 are expected to yield significant long-term benefits, positioning the Group for profitability during H2 FY24. Impairment and Strategic Adjustments Recognition of a non-cash impairment of amounting to $77,000 also represents a significant reduction from $280,000 in H1 FY23. This reduced impairment, primarily related to inventory, is a testament to improved inventory management and the Company’s strategic focus on high-demand products. Looking Ahead As we move forward, the Group remains focused on building upon these positive trends. Our strong revenue growth and significant improvements in EBITDA signal a turning point in our financial performance. We are committed to further enhancing shareholder value through continued operational improvements and strategic expansion in high-growth markets. Reconciliation of Adjusted EBITDA from continuing operations to statutory loss Loss after income tax Add back/(deduct): Income tax expense Finance costs Interest income Depreciation and amortisation EBITDA Add back/(deduct): Impairment of other assets Share-based payments One-off transactions Adjusted EBITDA Group 30 Jun 2024 30 Jun 2023 $'000 $'000 (2,756) (3,396) 1 66 (23) 537 2 28 (140) 264 (2,175) (3,242) 77 239 343 280 366 - (1,516) (2,596) Segment results Australia Elixinol’s Australian business comprises Elixinol Wellness (Byron Bay) Pty Ltd, The Sustainable Nutrition Group Pty Ltd, The Sustainable Nutrition Group (Australia) Pty Ltd and Ananda Food Pty Ltd (from 28 March 2024). Record Australian revenue of $5.8 million during H1 FY24 represents a 276% increase on H1 FY23 sales of $2.1 million. Elixinol’s acquisitions over the last 12 months -The Sustainable Nutrition Group Ltd (TSN) and Ananda Food Pty Ltd (AF)- made significant contributions to sales performance during H1. 3 Elixinol Wellness Limited Directors' report 30 June 2024 Correspondingly, the Company’s expanded house of brands encompassing Hemp Foods Australia, Mt Elephant, Field Day, Soul Seeds, Ananda Food and The Australian Superfood Co reported a solid performance during the period. Promotional activity in Costco and the continued success of Hemp Foods Australia (HFA)’s functional seed mix range in Coles were the main drivers of HFA’s strong performance during the period. The launch of new functional hot chocolate and chai mixes and functional broths in June should bolster sales performance in H2. The Group also secured ranging of several Mt Elephant products in Coles Supermarket during the period with 4 Mt Elephant SKUs ranged from April 2024. Early signs are encouraging with brand loyalty tracking above the category average in grocery to 41.8% by the end of June 2024. Overall, the Mt Elephant brand reported sales of $0.8 million. Towards the end of H1, the Company proactively recalled 3 Mt. Elephant SKUs based on a predicted cross contamination of an allergen. The financial impact of this is estimated around $170,000 and is included in the half year results. Americas The Americas segment comprised the trading results of Elixinol LLC and the Group’s investment in Pet Releaf ('Elixinol Americas'). A binding agreement to dispose of its investment in Pet Releaf was executed in late February 2024 and the sale was finalised in early May with proceeds of US$1.5 million received on 13 May 2024. Elixinol Americas reported revenue of $1million during the period, representing a 25% decline from w H1 FY23 of $13 million). However, Elixinol USA’s transition to an e-commerce business model significantly reduced costs resulting in a positive contribution ($86,000) to EBITDA in H1. Despite challenges relating to Shopify platform updates and some temporary out-of-stocks during H1, US sales are also improving with online store sessions up 17% in Q2 FY24 compared with the first quarter. Both order value and returning customer rates exhibited significant improvement towards the end of H1. Wholesale orders surged by an impressive 189%. These favourable indicators provide a strong foundation for better sales performance in H2 FY24, and a corresponding increased contribution to Group EBITDA. Share of associates’ loss Share of associates loss during in the period ended 30 June 2024 was $nil (30 June 2023: $nil). The investment sale was finalised on 13 May 2024. Review of financial position As at 30 June 2024, Group net assets of $7.4 million including $1.6 million of cash and cash equivalents culminating in a total comprehensive loss of $2.7 million. As a result of the loss incurred for the half-year ended 30 June 2024 and the liquidity at the reporting date, there is a material uncertainty on whether the Group can continue as a going concern. The Directors consider that the Group will continue as a going concern, as explained in note 2 to the financial statements. Significant changes in the state of affairs During H1 FY24, the Company was proactive in driving growth through its strategic acquisition of Ananda Food and capital initiatives to divest its non-core investment in Pet Releaf. To this end, on 12 February 2024, Elixinol Wellness entered into a Share Purchase Agreement with Ecofibre Limited (ASX: EOF) to acquire wholly owned subsidiary Ananda Food Pty Ltd. The acquisition cements Elixinol‘s position as a leader in Australia’s hemp industry. To fund this strategic acquisition, Elixinol launched a fully underwritten non-renounceable rights issue to raise $3.16 million to complete the Ananda Food acquisition, enhance the Company’s marketing efforts, and support expanded operations. On 20 February 2024, Elixinol also entered into a binding purchase agreement to divest its minority interest in Altmed Pets, LLC. This transaction generated approximately $2.3 million in cash, which has been reinvested to accelerate growth opportunities in H2 FY24. There were no other significant changes in the state of affairs of the Group during the financial half-year. 4 Elixinol Wellness Limited Directors' report 30 June 2024 Matters subsequent to the end of the financial half-year On 1 July 2024, the Company announced the appointment of Ms Melanie Leydin and Mr Tai Phan of Vistra (Australia) Pty Ltd as Joint Company Secretaries. Ms Sarah Prince and Ms Josephine Lorenz resigned as Joint Company Secretaries, effective 1 July 2024. No other matter or circumstance has arisen since 30 June 2024 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. Rounding of amounts The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar. Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this Directors' report. This report is made in accordance with a resolution of Directors, pursuant to section 306(3)(a) of the Corporations Act 2001. On behalf of the Directors ___________________________ David Fenlon Independent Non-Executive Director and Chair 29 August 2024 5 Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret Street Sydney NSW 2000 Australia DECLARATION OF INDEPENDENCE BY LEAH RUSSELL TO THE DIRECTORS OF ELIXINOL WELLNESS LIMITED As lead auditor for the review of Elixinol Wellness Limited for the half-year ended 30 June 2024, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and 2. No contraventions of any applicable code of professional conduct in relation to the review. This declaration is in respect of Elixinol Wellness Limited and the entities it controlled during the period. Leah Russell Director BDO Audit Pty Ltd Sydney, 29 August 2024 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 6 Elixinol Wellness Limited Consolidated statement of profit or loss and other comprehensive income For the half-year ended 30 June 2024 Note Group 30 Jun 2024 30 Jun 2023 $'000 $'000 Revenue 5 6,772 3,455 Other income Interest income calculated using the effective interest method 6 210 23 311 140 Expenses Raw materials and consumables used and processing expenses Employee benefits expenses and Directors' fees Share-based payments Depreciation and amortisation expense Impairment of other assets Professional services expenses Sales and marketing expenses Administrative expenses Distribution costs Other expenses Finance costs (4,356) (1,751) (239) (537) (77) (558) (478) (884) (471) (343) (66) (1,903) (2,055) (366) (264) (280) (727) (522) (805) (350) (28) Loss before income tax expense (2,755) (3,394) (1) (2) (2,756) (3,396) Items that may be reclassified subsequently to profit or loss Foreign currency translation 40 136 Other comprehensive income for the half-year, net of tax 40 136 (2,716) (3,260) Cents Cents (0.28) (0.28) (0.94) (0.94) Income tax expense Loss after income tax expense for the half-year attributable to the owners of Elixinol Wellness Limited Other comprehensive income Total comprehensive loss for the half-year attributable to the owners of Elixinol Wellness Limited Basic loss per share Diluted loss per share 15 15 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 7 Elixinol Wellness Limited Consolidated statement of financial position As at 30 June 2024 Note Group 30 Jun 2024 31 Dec 2023 $'000 $'000 Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Income tax refund due Prepayments, deposits and other 7 1,577 2,002 4,065 14 576 8,234 8,234 708 1,706 3,664 13 558 6,649 1,526 8,175 33 1,351 136 2,470 11 4,001 903 282 2,297 54 3,536 12,235 11,711 Current liabilities Trade and other payables Contract liabilities Borrowings Lease liabilities Employee benefits Accrued expenses Total current liabilities 2,079 95 737 284 371 973 4,539 2,128 522 525 545 289 979 4,988 Non-current liabilities Borrowings Lease liabilities Employee benefits Total non-current liabilities 146 15 101 262 178 14 69 261 Total liabilities 4,801 5,249 Net assets 7,434 6,462 226,496 9,847 (228,909) 222,573 10,042 (226,153) 7,434 6,462 Non-current assets classified as held for sale Total current assets Non-current assets Trade and other receivables Property, plant and equipment Right-of-use assets Intangibles Prepayments, deposits and other Total non-current assets 8 9 10 Total assets Liabilities Equity Issued capital Reserves Accumulated losses 11 Total equity The above consolidated statement of financial position should be read in conjunction with the accompanying notes 8 Elixinol Wellness Limited Consolidated statement of changes in equity For the half-year ended 30 June 2024 Issued capital $'000 Foreign currency translation reserve $'000 Share-based payments reserve $'000 Accumulated losses $'000 Total equity $'000 218,122 9,086 596 (218,646) 9,158 Loss after income tax expense for the half-year Other comprehensive income for the half-year, net of tax - - - (3,396) (3,396) - 136 - - 136 Total comprehensive income/(loss) for the half-year - 136 - (3,396) (3,260) 2,288 - - 129 - 2,288 129 220,410 9,222 725 (222,042) 8,315 Issued capital $'000 Foreign currency translation reserve $'000 Share-based payments reserve $'000 Accumulated losses $'000 Total equity $'000 222,573 9,156 886 (226,153) 6,462 Loss after income tax expense for the half-year Other comprehensive income for the half-year, net of tax - - - (2,756) (2,756) - 40 - - 40 Total comprehensive income/(loss) for the half-year - 40 - (2,756) (2,716) 3,449 474 - 239 (474) - 3,449 239 - 226,496 9,196 651 (228,909) 7,434 Group Balance at 1 January 2023 Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Share-based payments (note 16) Balance at 30 June 2023 Group Balance at 1 January 2024 Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 11) Share-based payments (note 16) Vesting of share-based payments Balance at 30 June 2024 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes 9 Elixinol Wellness Limited Consolidated statement of cash flows For the half-year ended 30 June 2024 Note Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Government grants Interest received Interest and other finance costs paid Income taxes refunded Income taxes paid 6 Net cash used in operating activities Cash flows from investing activities Payment for purchase of business, net of cash acquired Payments for property, plant and equipment Payments for loans in other entities Proceeds from disposal of investments 14 Net cash from/(used in) investing activities Cash flows from financing activities Proceeds from issue of shares Share issue transaction costs Repayment of lease liabilities 11 11 Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial half-year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial half-year Group 30 Jun 2024 30 Jun 2023 $'000 $'000 6,646 (8,745) 23 (66) (3) 3,595 (5,672) 1,404 39 (28) 48 - (2,145) (614) (1,800) (45) 2,265 (1) (952) - 420 (953) 3,164 (395) (172) 2,250 (199) (343) 2,597 1,708 872 708 (3) 141 2,864 38 1,577 3,043 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes 10 Elixinol Wellness Limited Notes to the consolidated financial statements 30 June 2024 Note 1. General information The financial statements cover Elixinol Wellness Limited as a group consisting of Elixinol Wellness Limited ('Company' or 'parent entity') and the entities it controlled at the end of, or during, the period ('Group'). The financial statements are presented in Australian dollars, which is Elixinol Wellness Limited's functional and presentation currency. Elixinol Wellness Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office is: Level 4 100 Albert Road South Melbourne VIC 3205 A description of the nature of the Group's operations and its principal activities are included in the Directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of Directors, on 29 August 2024. The Directors have the power to amend and reissue the financial statements. Note 2. Material accounting policy information These general purpose financial statements for the interim half-year reporting period ended 30 June 2024 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'. These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 31 December 2023 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group during the financial half-year ended 30 June 2024 and are not expected to have a significant impact for the full financial year ending 31 December 2024. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following Accounting Standards and Interpretations adopted during the half-year are most relevant to the Group: AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current and AASB 2022-6 Amendments to Australian Accounting Standards - Non-current Liabilities with Covenants AASB 2020-1 was issued in March 2020 and is applicable to annual periods beginning on or after 1 January 2024, as extended by AASB 2020-6. Early adoption is permitted. AASB 2022-6 was issued in December 2022 and is applicable to annual periods beginning on or after 1 January 2024. Early adoption is permitted where AASB 2020-1 is also early adopted. 11 Elixinol Wellness Limited Notes to the consolidated financial statements 30 June 2024 Note 2. Material accounting policy information (continued) These standards amend AASB 101 ‘Presentation of Financial Statements’ to clarify requirements for the presentation of liabilities in the statement of financial position as current or non-current. The amendments clarify that a liability is classified as non-current if an entity has the right at the end of the reporting period to defer settlement of the liability for at least 12 months after the reporting period. If the deferral right is subject to the entity complying with covenants in the loan arrangement based on information up to and including reporting date, the deferral right will exist where the entity is able to comply with the covenant on or before the end of the reporting date even if compliance is assessed after the reporting date. The deferral right will be deemed to exist at reporting date if the entity is required to comply with the covenant only after the reporting date based on post-reporting date information. Additional disclosure is required about loan arrangements classified as non-current liabilities in such circumstances which enables users of financial statements to understand the risk that the liabilities could become repayable within twelve months after the reporting period. Classification of a liability as non-current is unaffected by the likelihood that the entity will exercise its right to defer settlement of the liability for at least 12 months after the reporting date or even if the entity settles the liability prior to issue of the financial statements. The meaning of settlement of a liability is also clarified. AASB 2022-5 Amendments to Australian Accounting Standards - Lease Liability in a Sale and Leaseback AASB 2023-1 was issued in June 2023 and is applicable for annual reporting periods beginning on or after 1 January 2024. Early adoption is permitted. This standard makes amendments to AASB 7 ‘Financial Instruments: Disclosures’ and AASB 107 ‘Statement of Cash Flows’ to require an entity to provide additional disclosures about its supplier finance arrangements. The additional information will enable users of financial statements to assess how supplier finance arra