Aurora Cannabis Announces Fiscal Fourth Quarter 2020 Results

    --  Continued Adjusted EBITDA Improvement Due to Strong Gross Margins and
        Reduced SG&A
    --  Debt Levels and CapEx Spend Down Substantially in Q4 2020
    --  Provides Guidance for Q1 2021

NYSE | TSX: ACB

EDMONTON, AB, Sept. 22, 2020 /PRNewswire/ - Aurora Cannabis Inc. (the "Company" or "Aurora") (NYSE | TSX: ACB), the Canadian company defining the future of cannabinoids worldwide, today announced its financial and operational results for the fourth quarter of fiscal 2020 ended June 30, 2020.

"As reported in our September 8, 2020 business update, our Q4 demonstrated progress in rationalization of SG&A and cash burn along with continued leadership in both Canadian and international medical. However, Aurora has slipped from its top position in Canadian consumer, a market that continues to support material growth and opportunity," stated Miguel Martin, recently appointed Chief Executive Officer of Aurora. "My focus is therefore to re-position the Canadian consumer business immediately. We look to expand beyond the value flower segment, leverage our capabilities in science and product innovation and put our effort on a finite number of emerging growth formats. This entails prioritizing our San Rafael, Aurora and Whistler premium brands in flower, pre-rolls and vapor, which will be shortly followed by strategic marketing and innovation efforts in concentrates and edibles."

"I accepted the CEO role because I see an opportunity to utilize my skill set in regulated CPG brand development. I am fortunate to have stepped into a Company built with a dedication to science and a compliance first approach. Through successful execution, I believe what we build in Canada will be very portable to other larger global cannabinoid markets. Having now spent four months at Aurora, I have seen the talent and industry knowledge that makes this Company innovative and agile. I want Aurora to be a leader in cannabinoids when the largest markets open up globally and my job is to make sure we can deliver on that plan."

Fourth Quarter 2020 Highlights

(Unless otherwise stated, comparisons are made between fiscal Q4 2020 and Q3 2020 results and are in Canadian dollars. Certain key metrics in prior quarters have been restated to reflect accounting policy changes for inventory costing and the allocation of production staff salaries. See Change in Accounting Policy section below)

Q4 2020 total net revenue was $72.1 million, a 5% decrease from the prior quarter. Cannabis net revenue(1) was $67.5 million in Q4 2020, a 3% decrease from the prior quarter. Adjusted gross margin, before FV adjustments, on cannabis net revenue(1) was 50%, up from 43% in Q3.

Consumer cannabis:

    --  Consumer cannabis net revenue(1) was $35.3 million, a decrease of 9%
        over the previous quarter. Total volume of dried consumer cannabis sold
        increased by 36%, but was offset by a 30% decrease in the average net
        selling price per gram of consumer cannabis(1) as the Company's value
        segment brand, Daily Special, accounted for a greater percentage of
        consumer cannabis net revenue, at 62% of flower revenue compared to 35%
        in the prior quarter. Consumer cannabis extract net revenue decreased by
        $1.5 million as compared to the prior quarter driven primarily by a loss
        of market share for vaporizer products.
    --  Adjusted gross margin, before fair value adjustments on consumer
        cannabis net revenue(1) was 35% in Q4 2020, versus the 29% in the prior
        quarter. Despite the pressure on average selling price ("ASP") in this
        segment, continued per-unit reductions in production costs supported a
        healthy average margin.

Medical cannabis:

    --  Medical cannabis net revenue(1) was $32.2 million, a 4% increase from
        the prior quarter. The increase was primarily attributable to a
        sustainable and profitable Canadian medical business growing by 2% and
        strong traction in Europe growing by 14% quarter over quarter.
    --  Adjusted gross margin, before fair value adjustments of medical cannabis
        net revenue(1) was 67% in Q4 2020, versus the 60% in the prior quarter.
        The medical cannabis segment continues to benefit from the Company's
        leading share of the Canadian and European medical markets, with strong
        average net selling price of medical cannabis(1) and continued per unit
        production cost reductions.

Selling, General and Administrative ("SG&A") and Adjusted EBITDA:

    --  SG&A, including Research and Development ("R&D"), was $67.7 million in
        Q4 2020, down $11.2 million from the prior quarter as a result of the
        Company's Business Transformation Plan. Included in SG&A is $3.9 million
        of costs related to divested businesses, R&D termination costs and
        severance and benefit costs associated with the Business Transformation
        Plan. Excluding these impacts, Q4 SG&A was $63.8 million.
    --  Adjusted EBITDA(1) in Q4 2020 was a loss of $34.6 million, an
        improvement of $15.8 million from the prior quarter Adjusted EBITDA loss
        of $50.4 million. Excluding severance costs, R&D termination costs and
        divested business results, Q4 Adjusted EBITDA was a loss of $30.7
        million.

Additional Highlights:

    --  Production volume in Q4 2020 was 44,406 kilograms, a 23% increase from
        the prior quarter, contributing to a 27% decrease in cash cost to
        produce per gram of dried cannabis sold(1) quarter over quarter.


    --  Capital Expenditures ("CapEx") were approximately $16.4 million in Q4
        2020, a significant decline from the $73.7 million reported in Q3 2020,
        as the Company's business transformation continued to deliver concrete
        results. This includes additions to intangible assets and excludes the
        impact of capitalized borrowing costs and share based compensation.
    --  Aurora recorded a number of balance sheet adjustments in Q4 2020 to
        recognize market realities and position the Company for future
        performance. These adjustments include fixed asset impairment charges of
        $86.5 million due to production facility rationalization, and a charge
        of $135.1 million in the carrying value of certain inventory,
        predominantly trim, in order to align inventory on hand with near term
        expectations for demand. Of the $135.1 million inventory impairment,
        $105.5 million is recognized through cost of sales and $29.6 million is
        recognized through changes in fair value of inventory sold on the
        statements of comprehensive loss. Finally, the Company recognized a
        non-cash write-down of goodwill and intangible assets of $1.6 billion.




            
              (1)            These terms are non-GAAP measures,
                                         see "Non-GAAP Measures" below.

Fiscal Q4 2020 Cash Use:

Significant Reduction in CapEx levels and Adjusted EBITDA Loss. Term Debt Paid Down Substantially.

Cash use in Q4 2020 was similar to the prior quarter, however the mix within the use showed significant positive progress. In Q4 2020, Aurora used $53.3 million cash to pay down term debt and lease obligations, and following further paydowns subsequent to the quarter end, term debt stands at $110.5 million as of September 21, 2020. Cash used for capital expenditures was $32.8 million, which includes invoices paid related for work done in Q3, and was $51.2 million lower than in Q3. Cash used in operations was $63.9 million, excluding the $105.5 million of non-cash inventory impairment in cost of sales (see "Additional Highlights" above).

Given the Company's continued strength in adjusted gross margins before fair value adjustments on cannabis net revenue and further reductions in SG&A expense and capital expenditures as described above, management expects cash use in fiscal Q1 2021 to further decrease.

The main components of cash source and use in Q4 2020 were as follows:



              
                ($ thousands)                   Q4 2020  Q3 2020 (2)  
              
                
                  First Half
                
                 2021 Expectations

    ---




              
                Cash Flow

    ---


              
                Cash, Opening                  $230,208      $156,334





              Cash used in operations                    ($63,912)    ($54,763)  
              Positive Adjusted EBITDA targeted for Q2 2021, and inventory build
                                                                                  expected to reduce over next 2 - 3 quarters



              Capital expenditures                       ($32,768)    ($83,938)  
              Less than $10 million quarterly average for currently planned 2021 projects



              Debt and interest payments                 ($53,287)    ($15,887)  
              Term debt declining / Convertible debt payments only at six month points
                                                                                  (Q1, 2021, Q3 2021, etc)

    ---


              Cash use                                  ($149,967)   ($154,588)





              Proceeds raised through debt            
             $-      $22,000



              Proceeds raised from sale of marketable      $33,673 
              $-
    securities and investments in associates



              Proceeds raised through equity issuance      $48,265      $206,462   
              Access to capital in an uncertain environment is paramount but cost control
                                                                                  and healthy net revenue growth are primary levers. Equity capital to be
                                                                                  available as backstop or for near-term positive NPV investments.

    ---


              Cash raised                                  $81,938      $228,462





              
                Cash, Ending                   $162,179      $230,208

    ---


              (1)              Refer to "Consolidated Statement of
                                  Cash Flows" prepared in accordance
                                  with IAS 7 - Statement of Cash Flows
                                  below.





              (2)              April 1, 2020, the Company changed
                                  its accounting policy for inventory
                                  costing relating to by-products,
                                  and the allocation of production
                                  management staff salaries,
                                  previously charged to G&A, and now
                                  charged to inventory and cost of
                                  sales. Management applied the change
                                  in accounting policy
                                  retrospectively. Previously reported
                                  metrics have been restated to
                                  reflect adjustments made as a result
                                  of these changes in accounting
                                  policy.

Q4 2020 Key Financial and Operational Metrics



       
                ($ thousands, except Operational Results)                                                                                                             
     
        Q4 2020 Q3 2020 (1)  
     
       $ Change   % Change

    ---


       
                Financial Results

    ---


       Total net revenue (2)                                                                                                                                                     $72,114      $75,520         ($3,406)       (5)%



       Cannabis net revenue (2)(3a)                                                                                                                                              $67,492      $69,637         ($2,145)       (3)%



       Medical cannabis net revenue (3a)                                                                                                                                         $32,226      $31,086           $1,140          4%



       Consumer cannabis net revenue (3a)                                                                                                                                        $35,266      $38,551         ($3,285)       (9)%



       Adjusted gross margin before FV adjustments on cannabis net revenue (3b)                                                                                                      50%         43%             N/A         7%



       Adjusted gross margin before FV adjustments on medical cannabis net revenue (3b)                                                                                              67%         60%             N/A         7%


                                                                                     
       Adjusted gross margin before FV adjustments on consumer cannabis net revenue (3b)            35%         29%             N/A         6%



       SG&A expense (4)                                                                                                                                                          $60,088      $73,289        ($13,201)      (18)%



       R&D expense                                                                                                                                                                $7,646       $5,601           $2,045         37%



       Adjusted EBITDA (3c)(7)                                                                                                                                                 ($34,606)   ($50,427)         $15,821         31%





       
                Balance Sheet

    ---


       Working capital                                                                                                                                                          $147,933     $429,293       ($281,360)      (66)%



       Cannabis inventory and biological assets (5)                                                                                                                             $139,198     $225,966        ($86,768)      (38)%



       Total assets                                                                                                                                                           $2,783,695   $4,699,137     ($1,915,442)      (41)%





       
                Operational Results - Cannabis

    ---


       Cash cost to produce per gram of dried cannabis sold (3d)                                                                                                                   $0.89        $1.22          ($0.33)      (27)%



       Average net selling price of dried cannabis (3)                                                                                                                             $3.60        $4.64          ($1.04)      (22)%



       Kilograms produced                                                                                                                                                         44,406       36,207            8,199         23%



       Kilograms sold (6)                                                                                                                                                         16,748       12,729            4,019         32%

    ---


     
     (1)   Certain previously reported amounts have been restated to exclude the results related to
                discontinued operations and change in accounting policy for inventory costing relating to by-
                products and the allocation of production management staff salaries. For further detail,
                refer to "Change in Accounting Policies" section below.



     
     (2)   Includes the impact of actual and expected product returns and price adjustments (three and
                twelve months ended June 30, 2020 -$1.9 million and $15.3 million; three and twelve months
                ended June 30, 2019 -nil and nil).



     
     (3)   These terms are defined in the "Non-GAAP Measures" below. Refer to the following sections for
                reconciliation of the non-GAAP measures to the IFRS equivalent measure


                                                                                                              
     
     a. Refer to the "Net Revenue" section for a reconciliation to the IFRS equivalent.


                                                                                                              
     
     b. Refer to the "AdjustedGross Margin" section for reconciliation to the IFRS equivalent.


                                                                                                              
     
     c. Refer to the "Adjusted EBITDA" section for reconciliation to the IFRS equivalent.


                                                                                                              
     
     d. Refer to the "Cash Cost to Produce Dried Cannabis Sold" section for reconciliation to the IFRS equivalent.



     
     (4)   Includes costs from divested businesses and severance and benefit costs associated with our
                business transformation plan of $2.1 million and $1.0 million, respectively (Q3 2020 -$1.0
                million and $5.0 million, respectively).



     
     (5)   Represents total biological assets and cannabis inventory, exclusive of merchandise,
                accessories, supplies and consumables.



     
     (6) 
     The kilograms sold is offset by the grams returned.



     
     (7)   Included in Q4 2020, are $3.1 million SG&A costs relating to divested businesses and severance
                and benefit costs associated with our business transformation plan, and $0.8 million R&D
                termination costs. Excluding these expenses, Adjusted EBITDA loss would have been $30.7
                million.

Events Subsequent to Quarter End

    --  Miguel Martin was appointed Chief Executive Officer, effective September
        8, 2020. With deep, diverse experience in consumer packaged goods,
        highly regulated industries and the U.S. cannabinoid industry, Miguel is
        well-positioned to execute the next phase of Aurora's business
        transformation, with a focus on commercial strategy. Michael Singer, who
        served as Interim CEO beginning February 2020, stepped down from his
        temporary role and remains Executive Chairman.


    --  In a press release on September 8, 2020, Aurora provided a business
        update, including the following announcements:


        --  The Company is now operating at its quarterly SG&A run-rate in the
            low $40 million range, and expects operational cost reductions from
            facility closures up to $10 million per quarter starting in the
            second half of fiscal 2021. With a tailwind of growth in the
            Canadian recreational market, the Company is better positioned for
            its next phase focused on profitability.


        --  Aurora and the UFC have agreed to mutually terminate their
            partnership. For the Company, this decision reflects the evolution
            of the realities of the cannabis market and a focus on near term
            profit pools. In connection with this decision, the Company expects
            to make a one-time payment of US$30 million to terminate the
            contract in Q1 2021, which is expected to avoid more than $150
            million in fees, research costs, and marketing activation expenses
            over the next five years.


        --  Aurora reached an agreement with its syndicate of banks regarding
            amendments to its secured credit agreement. These amendments have
            provided additional flexibility during the Company's Business
            Transformation Plan.
        --  Effective immediately, Dr. Jason Dyck has elected to step down from
            the Board of Directors in order to pursue other opportunities.

Subsequent to June 30, 2020, the Company raised US$36.6 million gross proceeds under its ATM program, with approximately US$183 million of remaining available room under the ATM and approximately US$60.0 million of remaining available room under the Shelf Prospectus for future financings or issuances of securities.

Guidance

Following the divestiture of non-core subsidiaries during fiscal 2020, net revenue in Q1 2021 is expected to be comprised exclusively of cannabis net revenue. Cannabis net revenue is expected to be between $60 million and $64 million, compared to $67.5 million in Q4 2020. The Company expects adjusted gross margin before fair value adjustments on cannabis net revenue to be within a range of 46%-50% and SG&A costs (including R&D) in the low $40 million range.

As a reminder, the Company expects to achieve positive Adjusted EBITDA in Q2 2021.

Conference Call

Aurora will host a conference call today, September 22, 2020, to discuss these results. Miguel Martin, Chief Executive Officer, and Glen Ibbott, Chief Financial Officer, will host the call starting at 5:00 p.m. Eastern time. A question and answer session will follow management's presentation.



     DATE:       
     Tuesday, September 22, 2020



     TIME:       
     5:00 p.m. Eastern Time | 3:00 p.m. Mountain Time


      WEBCAST:    
     
                http://public.viavid.com/index.php?id=141462


      REPLAY:     
     (844) 512-2921 or (412) 317-6671

                  
     Available until 11:59 p.m. Eastern Time Tuesday, October 6, 2020


      PIN NUMBER:                                                                    13710020

About Aurora

Aurora is a global leader in the cannabis industry serving both the medical and consumer markets. Headquartered in Edmonton, Alberta, Aurora is a pioneer in global cannabis dedicated to helping people improve their lives. The Company's brand portfolio includes Aurora, Aurora Drift, San Rafael '71, Daily Special, AltaVie, MedReleaf, CanniMed, Whistler, and Reliva. Providing customers with innovative, high-quality cannabis and hemp products, Aurora's brands continue to break through as industry leaders in the medical, performance, wellness and recreational markets wherever they are launched. For more information, please visit our website at www.auroramj.com.

Aurora's Common Shares trade on the TSX and NYSE under the symbol "ACB", and is a constituent of the S&P/TSX Composite Index.

Forward Looking Statements

This news release includes certain statements which may constitute "forward-looking information" and "forward-looking statements" within the meaning of Canadian securities law requirements (collectively, "forward-looking statements" or "FLS"). These forward-looking statements are made as of the date of this press release and the Company does not intend, and does not assume any obligation, to update these FLS, except as required under applicable securities legislation. FLS relate to future events or future performance and reflect Company management's expectations or beliefs regarding future events. In certain cases, FLS can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. In this document, certain forward-looking statements are identified by words including "may", "future", "expected", "intends" and "estimates". By their very nature FLS involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the FLS. The Company provides no assurance that FLS will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on FLS. Certain FLS in this press release include, but are not limited to the following:

    --  pro forma measures including revenue, adjusted gross margin before fair
        value adjustments, and expected SG&A run-rates, and grams produced;
    --  the completion of construction of production facilities, associated
        costs, and receipt of licenses from Health Canada to produce and sell
        cannabis and cannabis related products from these facilities;
    --  strategic investments and capital expenditures, and related benefits;
    --  future strategic plans;
    --  growth in the global consumer use cannabis market;
    --  expectations regarding production capacity, costs and yields;
    --  product sales expectations and corresponding forecasted increases in net
        revenue; and
    --  the impact of the COVID-19 pandemic on the Company's business,
        operations, capital resources and/or financial results.

The above and other aspects of the Company's anticipated future operations are forward-looking in nature and, as a result, are subject to certain risks and uncertainties. Although the Company believes that the expectations reflected in these FLS are reasonable, undue reliance should not be placed on them as actual results may differ materially from the forward-looking statements. Such FLS are estimates reflecting the Company's best judgment based upon current information and involve a number of risks and uncertainties, and there can be no assurance that other factors will not affect the accuracy of such forward-looking statements. These risks include, but are not limited to, the ability to retain key personnel, the ability to continue investing in infrastructure to support growth, the ability to obtain financing on acceptable terms, the continued quality of our products, customer experience and retention, the development of third party government and non-government consumer sales channels, management's estimates of consumer demand in Canada and in jurisdictions where the Company exports, expectations of future results and expenses, the availability of additional capital to complete construction projects and facilities improvements, the risk of successful integration of acquired business and operations, management's estimation that SG&A will grow only in proportion of revenue growth, the ability to expand and maintain distribution capabilities, the impact of competition, the general impact of financial market conditions, the yield from cannabis growing operations, product demand, changes in prices of required commodities, competition, and the possibility for changes in laws, rules, and regulations in the industry, epidemics, pandemics or other public health crises, including the current outbreak of COVID-19. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such information.

Should one or more of these risks or uncertainties materialize, or should underlying factors or assumptions prove incorrect, actual results may vary materially from those described in forward looking statements. Material factors or assumptions involved in developing forward-looking statements include, without limitation, publicly available information from governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which the Company believes to be reasonable.

Although the Company believes that the expectations conveyed by the forward-looking statements are reasonable based on the information available to the Company on the date hereof, no assurance can be given as to future results, approvals or achievements. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement. The Company disclaims any duty to update any of the forward-looking statements after the date of this Annual Information form except as otherwise required by applicable law.

Non-GAAP Measures

The Company uses certain financial performance measures that are not recognized or defined under IFRS (termed "Non-GAAP Measures"). As a result, this data may not be comparable to data presented by other licensed producers of cannabis and cannabis companies. For an explanation of these measures to related comparable financial information presented in the consolidated financial statements prepared in accordance with IFRS, refer to the discussion below. The Company believes that these Non-GAAP Measures are useful indicators of operating performance and are specifically used by management to assess the financial and operational performance of the Company. These Non-GAAP Measures include, but are not limited, to the following:

    --  Cash cost to produce dried cannabis sold is calculated by taking the
        cost of sales, excluding the effect of changes in the FV of biological
        assets and inventory, and deducting non-cash production costs, cannabis
        extract conversion costs, cost of accessories, cost of products
        purchased from other Licensed Producers that were sold, cost of sales
        from non-cannabis producing subsidiaries, inventory impairments, and
        packaging costs (i.e. post-production costs). Cash cost to produce per
        gram of dried cannabis sold is calculated by taking cash cost to produce
        dried cannabis sold divided by total grams of dried cannabis sold in the
        period that was produced by Aurora. Management believes these measures
        provide useful information about the efficiency of our production of
        cannabis.
    --  Cannabis net revenue represents revenue from the sale of cannabis
        products, excluding excise taxes and net revenue from patient counseling
        services, design, engineering and construction services, sale of hemp
        products, and analytical testing services. Cannabis net revenue is
        further broken down as follows:
        --  Medical cannabis net revenue represents Canadian and international
            cannabis net revenue for medical cannabis sales only, excluding
            wholesale bulk cannabis net revenue.
        --  Consumer cannabis net revenue represents cannabis net revenue for
            consumer cannabis sales only.

Management believes the cannabis net revenue measures provide more specific information about the net revenue purely generated from our core cannabis business and by market type.

    --  Average net selling price per gram and gram equivalent is calculated by
        taking cannabis net revenue divided by total grams and grams equivalent
        of cannabis sold in the period. Average net selling price per gram and
        gram equivalent is further broken down as follows:
        --  Average net selling price per gram of dried cannabis represents the
            average net selling price per gram for dried cannabis sales only,
            excluding wholesale bulk cannabis sold in the period.
        --  Average net selling price per gram and gram equivalent of consumer
            cannabis represents the average net selling price per gram and gram
            equivalent for dried cannabis and cannabis extracts sold in the
            consumer market.

Management believes the average net selling price per gram or gram equivalent measures provide more specific information about the pricing trends over time by product and market type.

    --  Adjusted gross profit before FV adjustments on cannabis net revenue
        represents cash gross profit and gross margin on cannabis net revenue
        and is calculated by subtracting from total cannabis net revenue (i)
        cost of sales, before the effects of changes in FV of biological assets
        and inventory; (ii) cost of sales from non-cannabis auxiliary support
        functions; and removing (iii) depreciation in cost of sales; and (iv)
        cannabis inventory impairment. Adjusted gross margin before FV
        adjustments on cannabis net revenue is calculated by dividing adjusted
        gross profit before FV adjustments on cannabis net revenue divided by
        cannabis net revenue. Adjusted gross profit and gross margin before FV
        adjustments on cannabis net revenue is further broken down as follows:
        --  Adjusted gross profit and gross margin before FV adjustments on
            medical cannabis net revenue represents adjusted gross profit and
            gross margin before FV adjustments on sales generated in the medical
            market only.
        --  Adjusted gross profit and gross margin before FV adjustments on
            consumer cannabis net revenue represents adjusted gross profit and
            gross margin before FV adjustments on sales generated in the
            consumer market only.

Management believes that these measures provide useful information to assess the profitability of our cannabis operations as it represents the cash gross profit and margin generated from cannabis operations and excludes the effects of non-cash FV adjustments on inventory and biological assets, which are required by IFRS.

    --  Adjusted EBITDA is calculated as net (loss) income excluding interest
        income (expense), accretion, income taxes, depreciation, amortization,
        changes in fair value of inventory sold, changes in fair value of
        biological assets, share-based compensation, acquisition costs, foreign
        exchange, changes in fair value of financial instruments, gains and
        losses on deemed disposal, and non-cash impairment of intangibles,
        goodwill, inventory, property, plant and equipment and other assets.
        Adjusted EBITDA is intended to provide a proxy for the Company's
        operating cash flow and is widely used by industry analysts to compare
        Aurora to its competitors, and derive expectations of future financial
        performance for Aurora. Adjusted EBITDA increases comparability between
        comparative companies by eliminating variability resulting from
        differences in capital structures, management decisions related to
        resource allocation, and the impact of FV adjustments on biological
        assets and inventory and financial instruments, which may be volatile
        and fluctuate significantly from period to period.

Non-GAAP measures should be considered together with other data prepared accordance with IFRS to enable investors to evaluate the Company's operating results, underlying performance and prospects in a manner similar to Aurora's management. Accordingly, these non-GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Consolidated Statements of Financial Position
(Amounts reflected in thousands of Canadian dollars, unaudited)


                                                                         
     
       Restated (1)


                                                         
     June 30, 2020    
     June 30, 2019



                                                            
              $       
              $



       
                Assets



       Current



       Cash and cash equivalents                                162,179             172,727



       Restricted cash                                                              46,066



       Accounts receivable                                       54,110             103,493



       Income taxes receivable                                                       8,833



       Marketable securities                                      7,066             143,248



       Derivatives                                               11,791



       Biological assets                                         35,435              50,567



       Inventory                                                121,827             111,321



       Prepaids and other current assets                         22,137              24,323



       Assets held for sale                                       6,194

    ---

                                                                 420,739             660,578





       Property, plant and equipment                            946,380             765,567



       Derivatives                                               41,791              86,409



       Deposits                                                  12,329               6,926



       Loan receivable                                            3,643



       Investments in associates and joint ventures              18,114             118,845



       Intangible assets                                        412,267             688,366



       Goodwill                                                 928,432           3,172,550



       Total assets                                           2,783,695           5,499,241

    ---




       
                Liabilities



       Current



       Accounts payable and accrued liabilities                  95,574             152,884



       Deferred revenue                                           3,505                 749



       Convertible debentures                                    32,110             235,909



       Loans and borrowings                                     120,508              13,758



       Contingent consideration payable                          19,604              28,137



       Deferred gain on derivatives                                  20                 728



       Provisions                                                 1,485               4,200


                                                                 272,806             436,365





       Convertible debentures                                   294,928             267,672



       Loans and borrowings                                      83,701             127,486



       Derivative liability                                       1,827             177,395



       Other long-term liability                                     37              11,979



       Deferred tax liability                                     3,946              90,970

    ---


       Total liabilities                                        657,245           1,111,867

    ---




       
                Shareholders' equity



       Share capital                                          5,785,395           4,673,118



       Reserves                                                 145,395             139,327



       Accumulated other comprehensive loss                   (187,197)          (143,170)



       Deficit                                              (3,592,787)          (286,311)

    ---


       Total equity attributable to Aurora shareholders       2,150,806           4,382,964



       Non-controlling interests                               (24,356)              4,410

    ---


       Total equity                                           2,126,450           4,387,374

    ---


       Total liabilities and equity                           2,783,695           5,499,241

    ---


              (1)              Effective April 1, 2020, the Company
                                  changed its accounting policy for
                                  inventory costing relating to by-
                                  products, and the allocation of
                                  production management staff
                                  salaries, previously charged to G&A,
                                  and now charged to inventory and
                                  cost of sales. Management applied
                                  the change in accounting policy
                                  retrospectively. Previously reported
                                  metrics have been restated to
                                  reflect adjustments made as a result
                                  of these changes in accounting
                                  policy.

Consolidated Statements of Profit and Loss
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts, unaudited)


                                                                      Years ended June 30,





                                                                                           Restated (1)


                                                                                      2020          2019



                                                                              
              $ 
              $



       Revenue from sale of goods                                                 323,201       271,105



       Revenue from provision of services                                           5,002         7,589



       Excise taxes                                                              (49,297)     (33,158)

    ---


       Net revenue                                                                278,906       245,536



       Cost of sales                                                              277,234       123,778

    ---


       Gross profit before fair value adjustments                                   1,672       121,758





       Changes in fair value of inventory sold                                     91,825        71,821



       Unrealized gain on changes in fair value of biological assets             (56,614)     (92,503)

    ---




       Gross (loss) profit                                                       (33,539)      142,440





       Expense



       General and administration                                                 205,276       159,069



       Sales and marketing                                                         91,271        99,272



       Acquisition costs                                                            6,493        17,217



       Research and development                                                    26,070        14,778



       Depreciation and amortization                                               68,414        63,343



       Share-based compensation                                                    59,899       107,039


                                                                                   457,423       460,718






       Loss from operations                                                     (490,962)    (318,278)





       Other (expense) income



       Interest and other income                                                    4,990         3,679



       Finance and other costs                                                   (77,538)     (39,409)



       Foreign exchange ("FX") loss                                              (12,779)      (5,147)



       Other (losses) gains                                                      (28,643)      110,797



       Restructuring charges                                                      (1,947)



       Impairment of property, plant and equipment                              (157,838)



       Impairment of investment in associates                                    (75,035)     (73,289)



       Impairment of intangible assets and goodwill                           (2,544,144)      (9,002)


                                                                               (2,892,934)     (12,371)






       Loss from operations before taxes and discontinued operations          (3,383,896)    (330,649)





       Income tax recovery



       Current                                                                      5,100         6,000



       Deferred, net                                                               78,303        23,909

    ---

                                                                                    83,403        29,909






       Net loss from continuing operations                                    (3,300,493)    (300,740)



       Net (loss) income from discontinued operations, net of tax                 (9,844)          144

    ---


       Net loss                                                               (3,310,337)    (300,596)

    ---




       Net loss per share - basic and diluted



       Continuing operations                                                     ($33.84)      ($3.66)



       Discontinued operations                                                    ($0.10)        $0.00



       Total operations                                                          ($33.94)      ($3.66)

    ---


              (1)              Effective April 1, 2020, the Company
                                  changed its accounting policy for
                                  inventory costing relating to by-
                                  products, and the allocation of
                                  production management staff
                                  salaries, previously charged to G&A,
                                  and now charged to inventory and
                                  cost of sales. Management applied
                                  the change in accounting policy
                                  retrospectively. Previously reported
                                  metrics have been restated to
                                  reflect adjustments made as a result
                                  of these changes in accounting
                                  policy.

Consolidated Statements of Cash Flows
(Amounts reflected in thousands of Canadian dollars, unaudited)


                                                                           Year ended June 30,



                                                                                               Restated (1)


                                                                                          2020          2019



                                                                                  
              $ 
              $



       
                Operating activities



       Net loss from continuing operations                                        (3,300,493)    (300,740)



       Adjustments for non-cash items:



       Unrealized gain on changes in fair value of biological assets                 (56,614)     (92,503)



       Changes in fair value included in inventory sold                                91,825        71,821



       Depreciation of property, plant and equipment                                   74,314        45,362



       Amortization of intangible assets                                               40,577        42,893



       Share-based compensation                                                        59,899       107,039



       Non-cash acquisition costs                                                                    4,243



       Impairment of property, plant and equipment                                    157,838



       Impairment of investment in associate                                           75,035        73,289



       Impairment of intangible assets and goodwill                                 2,544,144         9,002



       Accrued interest and accretion expense                                          18,591        22,798



       Interest and other income                                                      (4,835)        (265)



       Deferred tax expense (recovery)                                               (78,303)     (23,909)



       Other (losses) gains, net                                                       28,643     (109,464)



       Foreign exchange loss                                                           12,779       (3,814)



       Changes in non-cash working capital                                              7,643      (37,285)



       Net cash used in operating activities from discontinued operations             (8,995)        (712)

    ---


       Net cash used in operating activities                                        (337,952)    (192,245)

    ---




       
                Investing activities



       Marketable securities and derivative investments                               (2,000)     (50,584)



       Proceeds from disposal of marketable securities and derivatives                 90,843        46,975



       Purchase of property, plant and equipment, and intangible assets             (355,006)    (414,190)



       Disposal of property, plant and equipment                                        3,739



       Acquisition of businesses, net of cash acquired                                    280       114,213



       Payment of contingent consideration                                            (1,993)      (4,112)



       Loan receivable                                                                (3,643)



       Dividends received                                                                              828



       Deposits                                                                      (17,744)      (5,452)



       Proceeds from disposal of investment in associates                              27,600           134



       Net cash used in investing activities from discontinued operations               8,441         (109)

    ---


       Net cash used in investing activities                                        (249,483)    (312,297)

    ---




       
                Financing activities



       Proceeds from long-term loans                                                   86,394       605,104



       Repayment of long-term loans                                                 (115,130)     (21,126)



       Repayment of short-term loans                                                                 (238)



       Repayment of convertible debenture                                             (2,306)



       Payments of principal portion of lease liabilities                             (7,788)



       Proceeds from lease inducements                                                  1,746



       Restricted cash                                                                 46,066      (32,668)



       Financing fees                                                                 (1,789)     (18,709)



       Shares issued for cash, net of share issue costs                               575,506        59,331



       Capital contribution from non-controlling interest                                            5,854



       Net cash used in financing activities from discontinued operations               (137)

    ---


       Net cash provided by financing activities                                      582,562       597,548



       Effect of foreign exchange on cash and cash equivalents                        (5,675)        2,936

    ---


       Increase (decrease) in cash and cash equivalents                              (10,548)       95,942



       Cash and cash equivalents, beginning of year                                   172,727        76,785

    ---


       Cash and cash equivalents, end of year                                         162,179       172,727

    ---


              (1)              Effective April 1, 2020, the Company
                                  changed its accounting policy for
                                  inventory costing relating to by-
                                  products, and the allocation of
                                  production management staff
                                  salaries, previously charged to G&A,
                                  and now charged to inventory and
                                  cost of sales. Management applied
                                  the change in accounting policy
                                  retrospectively. Previously reported
                                  metrics have been restated to
                                  reflect adjustments made as a result
                                  of these changes in accounting
                                  policy.

Change in Accounting Policy

Effective April 1, 2020, the Company elected to change its accounting policy for inventory costing of by-products. The process of growing and harvesting dried cannabis produces trim, which is now considered to be a by-product. Inventories of harvested cannabis, which now excludes trim, are transferred from biological assets to inventory at fair value less costs to sell at the point of harvest, which becomes the deemed cost. Historically, the Company pro-rated this deemed cost of inventory based on the total grams harvested. The Company now measures by-products at their net realizable value at point of harvest and deducts this value from the total deemed cost to derive a net cost for the main product. Additionally, the Company has elected to change its accounting policy with respect to the allocation of production management staff salaries, previously charged to general administrative expense, and now charged to inventory and cost of sales. The Company now allocates and capitalizes a portion of these salaries to inventory as opposed to expensing them directly in sales and marketing, and general and administrative expenses. The Company believes that the revised policies and presentation provides more accurate and relevant financial information to users of the consolidated financial statements. See Note 9 for the Company's revised accounting policy on inventory costing.

Management has applied the change in accounting policy retrospectively. The consolidated financial statements for the year ended June 30, 2019 have been restated to reflect adjustments made as a result of this change in accounting policy. The following is a summary of the impacts to the statement of financial position, the statement of comprehensive loss, and the statement of cash flows for the year ended June 30, 2019:



       Unaudited                                                             
              June 30, 2019 
       Inventory  
     Discontinued 
       June 30, 2019
                                                                                                         Adjustments      Operations
                                                                            
       As previously reported                                 
          Restated




       
                
             Consolidated Statement of Financial Position



       Biological assets                                                                       51,836        (1,269)                            50,567



       Inventory                                                                              113,641        (2,320)                           111,321



       Deferred tax liability                                                                  91,886          (916)                            90,970



       Deficit                                                                              (283,639)       (2,672)                         (286,311)

    ---



       Unaudited                                                                     
              Year ended 
       Inventory  
       Discontinued    
          Year ended
                                                                                                              Adjustments        Operations
                                                                                   
              June 30, 2019                                  
         June 30, 2019

                                                                                 
       As previously reported                                      
          Restated




       
                
                  Consolidated Statement of Comprehensive Loss



       Cost of sales                                                                               112,526         11,252                                 123,778



       Gross profit before fair value adjustments                                                  135,413       (11,252)           (2,403)              121,758





       Changes in fair value of inventory sold                                                      72,129          (308)                                 71,821



       Unrealized gain on changes in fair value of biological assets                              (96,531)         4,028                                (92,503)



       Gross profit                                                                                159,815       (14,972)           (2,403)              142,440





       General and administration                                                                  172,365       (11,384)           (1,912)              159,069





       Deferred tax (recovery) expense                                                            (23,257)         (916)               264              (23,909)





       Net loss from continuing operations                                                       (297,924)       (2,672)             (144)            (300,740)



       Net loss attributable to Aurora shareholders                                              (290,837)       (2,672)                              (293,509)



       Loss per share (basic and diluted)                                                           (3.63)        (0.03)    
              n/a               (3.66)

    ---



       Unaudited                                                             
              Year ended 
       Inventory  
     Discontinued   
          Year ended
                                                                                                      Adjustments      Operations
                                                                           
              June 30, 2019                               
         June 30, 2019

                                                                         
       As previously reported                                   
          Restated




       
                
                  Consolidated Statement of Cash Flows



       Unrealized gain on changes in fair value of biological assets                      (96,531)         4,028                             (92,503)



       Changes in fair value of inventory sold                                              72,129          (308)                              71,821



       Deferred tax expense (recovery)                                                    (23,257)         (916)             264             (23,909)



       Changes in non-cash working capital                                                (37,952)         (211)             878             (37,285)



       Net cash used in operating activities                                             (192,245)                                         (192,245)

    ---

Reconciliation of Non-GAAP Measures

Net Revenue


                                      Three months ended


                                           June 30, 2020 
     
     March 31, 2020




       Medical cannabis net revenue              32,226              31,086



       Consumer cannabis net revenue             35,266              38,551



       Total cannabis net revenue                67,492              69,637



       Ancillary net revenue                      4,622               5,883

    ---


       Total net revenue                         72,114              75,520

    ---

Adjusted Gross Margin


                                                                       Medical  Consumer  Ancillary       Total

                                                                      Cannabis  Cannabis




       
                
                  Three months ended June 30, 2020



       Net revenue                                                     32,226     35,266       4,622       72,114



       Cost of sales                                                 (32,118) (100,266)   (19,585)   (151,969)

    ---


       Gross margin before FV adjustments                                 108   (65,000)   (14,963)    (79,855)



       Depreciation in cost of sales                                    3,073      4,703                   7,776



       Inventory impairment in cost of sales                           18,260     72,749      14,479      105,488

    ---


       Adjusted gross profit                                           21,441     12,452       (484)      33,409



       Adjusted gross margin                                              67%       35%      (10)%         46%

    ---



                                    Three months ended March 31, 2020



       Net revenue                                                     31,086     38,551       5,883       75,520



       Cost of sales                                                 (15,422)  (32,115)    (4,975)    (52,512)

    ---


       Gross margin before FV adjustments                              15,664      6,436         908       23,008



       Depreciation in cost of sales                                    2,887      4,703                   7,590



       Adjusted gross profit                                           18,551     11,139         908       30,598



       Adjusted gross margin                                              60%       29%        15%         41%

    ---


     
     (1) Effective April 1, 2020, the Company
              changed its accounting policy for
              inventory costing relating to by-
              products, and the allocation of
              production management staff
              salaries, previously charged to G&A,
              and now charged to inventory and
              cost of sales. Management applied
              the change in accounting policy
              retrospectively. Previously reported
              metrics have been restated to
              reflect adjustments made as a result
              of these changes in accounting
              policy.



     
     (2) Previously reported amounts have been
              restated to exclude results related
              to discontinued operations.

Adjusted EBITDA


                                                                           Three months ended


                                                                                June 30, 2020 
     
     March 31, 2020




       Net loss from continuing operations                                       (1,860,027)          (136,132)



       Finance costs                                                                  29,120               6,662



       Interest income                                                                   376             (2,195)



       Income tax (expense) recovery                                                (67,581)           (11,769)



       Depreciation and amortization                                                  22,565              22,263

    ---


       
                EBITDA                                                       (1,875,547)          (121,171)



       Changes in fair value of inventory sold                                        43,153              14,144



       Unrealized gain on changes in fair value of biological assets                (11,879)           (10,904)



       Share-based compensation                                                        5,975               9,204



       Acquisition costs                                                               2,170               1,300



       Foreign exchange (gain) loss                                                  (3,613)             11,684



       Share of loss from investment in associates                                     2,601               4,611



       Gain on loss of control of subsidiary                                                              (500)



       (Gain) loss on financial instruments                                          (3,265)            (6,416)



       Gain on deemed disposal of significant influence investment                  (11,955)



       Restructuring charges                                                           1,947



       Impairment of inventory, investment in associates, property, plant



       and equipment, intangibles, and goodwill                                    1,815,807              47,621

    ---


       
                Adjusted EBITDA                                                 (34,606)           (50,427)

    ---


     
     (1) Effective April 1, 2020, the Company
              changed its accounting policy for
              inventory costing relating to by-
              products, and the allocation of
              production management staff
              salaries, previously charged to G&A,
              and now charged to inventory and
              cost of sales. Management applied
              the change in accounting policy
              retrospectively. Previously reported
              metrics have been restated to
              reflect adjustments made as a result
              of these changes in accounting
              policy.



     
     (2) Previously reported amounts have been
              restated to exclude results related
              to discontinued operations.

Cash Cost to Produce Dried Cannabis Sold





       
                ($ thousands)                                                         Three months ended

    ---

                                                                          June 30, 2020 March 31, 2020

                                                                                    ---                             ---


       Total consolidated cost of sales                                                       151,969       52,512



       
                Adjustments:



       Non-cannabis segment and non-cannabis cost of sales                                   (19,585)     (5,759)



       Cannabis inventory impairment                                                         (91,009)



       Cash cost of sales for cannabis extracts                                              (10,647)    (13,471)



       Cost of cannabis purchased from other licensed producers                                  (97)       (434)



       Depreciation                                                                           (7,776)     (7,590)



       Packaging costs                                                                        (7,717)     (9,064)

    ---


       Cash cost to produce dried cannabis sold                                                15,138       16,194



       Kilogram equivalents of cannabis sold produced by Aurora                                16,960       13,239

    ---


       
                Cash cost to produce per gram of dried cannabis sold                        $0.89        $1.22

    ---


     
     (1) Effective April 1, 2020, the Company
              changed its accounting policy for
              inventory costing relating to by-
              products, and the allocation of
              production management staff
              salaries, previously charged to G&A,
              and now charged to inventory and
              cost of sales. Management applied
              the change in accounting policy
              retrospectively. Previously reported
              metrics have been restated to
              reflect adjustments made as a result
              of these changes in accounting
              policy.

View original content to download multimedia:http://www.prnewswire.com/news-releases/aurora-cannabis-announces-fiscal-fourth-quarter-2020-results-301136105.html

SOURCE Aurora Cannabis Inc.