Exasol

ANNUAL REPORT 2019

ASX: EXL, OTC: ELLXF  |  www.elixinolglobal.com

A

ANNUAL REPORT 2019ABOUT USCHAIRMAN AND CEO REPORTFY2019 FINANCIAL HIGHLIGHTSYEAR IN REVIEWFINANCIAL REPORTELIXINOL GLOBAL LIMITED

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Contents

About Us  

Our Philosophy: Seed to Self 

Letter from the Chairman  

CEO’s Report   

FY2019 Milestones   

Elixinol Rebrand   

Financial Report   

Corporate Directory   

2

3

4

6

8

10

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107

ANNUAL REPORT 2019

 
 
 
 
 
 
 
 
 
 
 
 
 
About Us

Elixinol Global 
develops, 
manufactures and 
sells Elixinol branded 
hemp derived 
CBD products via a 
streamlined business 
model that focuses 
on key activities 
in the following 
markets: 

•  The Americas: 
innovating, 
manufacturing 
and selling Elixinol 
branded hemp 
derived CBD 
products based in 
Colorado, USA 

•  Europe & UK: 
educating and 
selling Elixinol 
branded and co-
branded hemp 
derived CBD 
products based in 
Amsterdam, The 
Netherlands 

•  Rest of World: 
expanding 
distribution of 
Elixinol branded 
hemp derived 
CBD products 
through reputable 
distributors as key 
markets open

•  Australia: providing 
stronger unified 
planning and 
support across 
the group to 
enable the 
various regional 
offices to focus 
on operational 
strategy and 
execution 
through its Global 
Executive Office 
based in Sydney, 
Australia

Elixinol Global Limited (ASX:EXL; 
OTC:ELLXF) is a global leader in 
the hemp derived CBD industry.
See more at www.elixinolglobal.com

2

ELIXINOL GLOBAL LIMITED

Our Philosophy:
Seed to Self

Elixinol’s mission 
is very simple – 
improve the quality 
of people’s life 
through the power 
of cannabinoids. 
What differentiates 
us from the market 
is that we have the 
foundation to deliver.

•  We have a long 

•  We have global 

• 

heritage in hemp: 
For more than 25 
years, Elixinol has 
been a champion 
of hemp. And for 
the past five years 
Elixinol has been 
focused on the 
science, research 
and development 
of world-class 
cannabinoid 
products to create 
real wellness 
solutions for 
people in need.

reach: Our global 
footprint with 
operational hubs 
in key markets 
allows us to bring 
the highest quality 
Elixinol branded 
products to people 
across the world, 
while giving us 
a global view 
of the dynamic 
and rapidly 
evolving market.

•  We are ahead of 

the curve: Elixinol’s 
team is not only 
the leading experts 
in extraction, 
processing and 
formulation, 
but our ancillary 
resources are 
leading the way 
in the global 
understanding 
of cannabinoid 
wellness.

•  Quality first – 

always!: At Elixinol, 
we believe that by 
diligently working 
to create high 
quality Elixinol 
branded products 
that deliver real 
benefits to people, 
we can prove the 
worth of the hemp 
plant one convert 
at a time!

Integrity and 
transparency 
are in our DNA: 
Our customers 
rely on Elixinol 
branded products 
to improve their 
wellness and 
we take that job 
seriously. We 
answer every 
question, we 
research and 
publish every 
detail. We have 
always been clear 
about where are 
ingredients are 
sourced and have 
done our due 
diligence to ensure 
the partners 
we have share 
our values.

ANNUAL REPORT 2019

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Letter 
from the 
Chairman

FY2019 was about refocusing the 
business to take full advantage of 
the global market opportunity for 
hemp derived CBD products.”

Refocused resources  
on our largest business unit,
Elixinol

Reshaped the executive team 
to strengthen our operating 
performance

Expanded distribution of 
Elixinol branded and co-branded 
hemp derived CBD products in 
key markets globally

Reduced cash burn and 
cemented the foundations for 
positive cashflow and future 
growth

Dear Shareholders

On behalf of the Elixinol Global Board, I am 
pleased to present our Annual Report for 
Financial Year 2019 (FY2019). 

Following strong revenue growth in FY2018, 
both Elixinol Global and the CBD industry as a 
whole, faced significant challenges continuing 
this growth during FY2019. Specifically, in the 
USA, where our largest business operates, 
a lack of clarity from the Food and Drug 
Administration (FDA) combined with the 
introduction of competitors in a crowded and 
unregulated market made for difficult trading 
conditions as FY2019 progressed.

This resulted in a reset of our strategy late in 
FY2019, from one of preparing for high revenue 
growth immediately to a simplified business 
model focused on the market opportunity for 
hemp derived CBD products. Coupled with a 
sharp focus on reducing cash-burn and various 
working capital reduction initiatives, we have 
put in place the foundations for a clear path 
towards positive cashflow and future growth.

Refined strategic focus
As the emerging cannabis industry continued 
its evolution, it became clear that Elixinol 
Global’s original strategy of focusing on three 
distinct business units required review. We 
re-assessed our strategy and made the decision 
in late 2019 to focus our resources on our 
largest business unit, Elixinol, and divest both 
the Hemp Foods Australia (HFA) business and 
Nunyara assets. Elixinol Global was pleased to 
announce the sale of HFA in February 2020 as 
a result. Cash will now only be deployed into 
supporting the Elixinol business and driving 
forward growth priorities in the key markets of 
the US, Europe and the UK.

Compliance & risk
In October 2019, following an operations 
review, the Company established that non-
compliant hemp derived CBD products were 
being sold by Elixinol Japan. Elixinol Global 
takes its compliance with legal and regulatory 
obligations very seriously and conducted 
an immediate investigation. As part of the 
investigation, Elixinol Global assessed if there 
were any viable commercial alternatives for 
its Japanese business and ultimately decided 
there was not and to sell the Company’s 50.5% 
interest in Elixinol Japan. 

This decision, whilst a setback, demonstrates 
the Board’s zero tolerance approach to non-
compliance and its commitment to meet 
the highest standards in governance and 
compliance.

4

ELIXINOL GLOBAL LIMITEDReshaping the executive team
To strengthen our operating performance 
and to ensure we have the right global 
and regional leadership structures in 
place to focus on operational strategy and 
execution, we reshaped the executive team. 
The management restructure included the 
appointment of Stratos Karousos as Group 
CEO in July 2019.

Outlook
As I write we are dealing with the fast evolving 
Novel Coronavirus (COVID-19) pandemic and 
we have commenced implementing a range 
of precautionary measures in response to the 
potential impacts. Our focus is on maintaining 
the health and wellbeing of Elixinol personnel, 
our customers, clients, contractors and 
partners. 

Your Board and Management is confident we 
will create meaningful value for all shareholders 
by maintaining this medium to long-term view, 
and ensuring the Company is best positioned 
to take advantage of the expected future global 
growth in the hemp derived CBD market.

I believe that Elixinol Global, led by Stratos and 
the leadership team, has the right assets and 
capability to deliver strong shareholder value.

In a difficult environment, thank you for your 
continued support of Elixinol Global.

Yours sincerely, 

Andrew Duff
Non-Executive Chairman

Stratos’ appointment underpins Elixinol 
Global’s evolution from a founder-led company 
to a business focussed on building Elixinol into 
a dynamic and trusted global brand with the 
operational processes and people to underpin 
this. You can read more about the changes 
Stratos has made at the operational level and 
his plans for the future in the CEO’s Report on 
the following pages.

Growth in branded products despite 
challenging regulatory environment
Despite a prolonged uncertain regulatory 
environment, the Elixinol business has seen 
positive trends in growth in FY2019 in its 
branded products. Globally, the Company 
continues to focus on expanding distribution of 
Elixinol branded and co-branded hemp derived 
CBD products through reputable distributors 
as key markets open. 

This expansion will be underpinned by the 
launch of a refreshed and dynamic Elixinol 
brand across the major markets in the first half 
of 2020. The new brand will broaden the appeal 
of Elixinol products, along with the optimisation 
of our growing product range to ensure the 
best mix of offerings for our consumer and 
wholesale customers. 

Elixinol is fully compliant with the 2018 United 
States Farm Bill as it does not make any 
therapeutic claims on its products and it does 
not add CBD to food. Elixinol welcomes the 
FDA’s current focus on the hemp derived CBD 
market, which will benefit from considered 
regulation in this new and rapidly evolving 
industry. With such a long history and strong 
focus on quality control, Elixinol is very well 
positioned to benefit from a robust regulatory 
framework. 

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ANNUAL REPORT 2019 
 
 
 
 
 
 
 
 
 
 
 
 
CEO’s 
Report

Dear Fellow Shareholder,

Elixinol Global’s commitment to simplification, 
strong governance and capital discipline has 
resulted in a number of significant changes to 
the business since I took on the role of CEO in 
H2 FY2019, with the overarching goal of laying 
the foundations for a sustainable, long-term 
future for the Company.

My decision to move from a Board position to 
CEO in July 2019 was driven by a firm belief in 
the Company and the Board’s commitment to 
ensuring we were on the right path for continued 
growth and success. I undertook a critical review 
of the business and in close consultation with 
the Board, made the strategic decision to divest 
non-core assets and re-focus our efforts in order 
to prioritise areas with the greatest potential. 

Focusing on our core expertise
Our core capabilities have always been in the 
hemp derived CBD market and we have been 
leading the industry in this area for many years. 
Our unique experience, combined with strong 
growth of this sector globally, drove the decision 
to simplify our business model and focus closely 
on the Elixinol business. 

Elixinol’s refined strategy, focused on hemp 
derived CBD in the US, Europe & UK ensures 
we are well positioned to grow our high-
margin, branded products. Despite prolonged 
regulatory developments, we have a pathway to 
positive cashflows and will be able to capitalise 
on the expected global growth in the hemp 
derived CBD market in 2020 and beyond. 

Once this decision was made in H2 2019, we 
moved rapidly to divest Hemp Foods Australia 
and began the process of selling Nunyara’s 
assets. 

As outlined in the Letter from the Chairman, 
Elixinol Global also sold its 50.5% interest in 
Elixinol Japan after an internal investigation 
established that non-compliant hemp derived 
CBD products were being sold by the Japanese 
business.

Expanding global distribution
Elixinol has focused on establishing distribution 
arrangements in targeted locations across 
various channels to drive growth over the last 
six months and this has resulted in a number of 
agreements being secured. 

In October 2019, Elixinol Europe signed a non-
exclusive distribution agreement with Endo-
Cbox Limited and Gigaicon International Ltd for 
various retail channels (excluding pharmacies 

and para-pharmacies) in Germany for a period of 
two years. In November, Elixinol Europe signed 
a non-exclusive distribution agreement with 
Christoforatos I.K.E. for sales of Elixinol branded 
products across various retail channels in Greece 
for a period of two years. In December, Elixinol 
Europe signed a non-exclusive distribution 
agreement with CBDLOUNGE, SRL for sales of 
Elixinol branded products across various retail 
channels in Romania for a period of one year. 

Elixinol Europe also extended its distribution 
strategy into Asia. In October 2019, we signed 
a non-exclusive distribution agreement with 
Endo-Cbox Limited and Gigaicon International 
Ltd. for sales of Elixinol branded products 
in Laos, Vietnam, Thailand, Cambodia and 
Malaysia for a period of two years. In January 
2020, we signed an exclusive distribution 
agreement with Wellness Korea Limited for 
sales of Elixinol branded products across various 
retail channels in South Korea for a period of 
one year. In addition, Elixinol is currently in the 
process of securing Greater China distribution 
by appointing an exclusive licensee of Elixinol 
branded hemp derived CBD products in China, 
Hong Kong, Taiwan and Macau. 

Key pillars for growth
The Company’s strategic focus is now 
predicated on the following key pillars to support 
revenue growth and drive margin improvement: 
•  A total refresh of the Elixinol brand and 
products to ensure we are evolving with 
consumer trends and demands;

•  Innovative new product development, 

including expansion of the Elixinol skincare 
range in the USA and launch of the range into 
Europe and the UK in Q2 FY2020; 
•  Scaling Elixinol’s direct-to-consumer 

e-commerce platform to provide leading 
digital capabilities and strength in a rapidly 
expanding retail channel;

•  Maintaining the highest quality supply 

partners, particularly in the growing organic 
space; 

•  Leveraging the investment we made in 

production capacity (we doubled production 
capacity in the USA in 2019) and strategic 
partnerships to drive operating efficiencies 
and margin improvement;

•  Expanding our global distribution footprint 
by focusing on market opportunities, driving 
brand recognition and leveraging existing 
partnerships such as those with Pet Releaf, 
PharmaCare and MedVec

•  Tightening cost control and capital 

management in order to reduce cash burn, 
and;

•  Diligently investing capital to appropriately 
position the Company for future growth.

6

ELIXINOL GLOBAL LIMITEDProduct innovation and data-driven 
marketing
We commenced the process of launching 
Elixinol’s new breed of branded products in 
March 2020 following extensive customer-led 
research. Our new range focuses both on hemp 
derived CBD formats that consumers in our key 
markets recognise as supplements and on an 
innovative approach to skincare. 

Crafted by experts and designed for optimal 
effect, each of Elixinol’s new branded products 
combine high-quality hemp derived CBD with 
specific vitamins and minerals to target different 
areas of health and wellbeing. 

The formulations have been driven by customer 
demand at both enterprise and consumer 
level, and include tinctures, topicals, capsules, 
powders, gummies and CBD infused skincare / 
cosmetics. 

Underpinning the launch of Elixinol’s new 
branded products is a comprehensive sales 
and marketing strategy, including an updated 
eCommerce platform that provides leading 
digital capabilities in a rapidly expanding retail 
channel. The online platform also delivers 
educational support on the individual benefits 
of each of the products, while also providing 
the ability to monitor consumer trends and 
behaviour in real-time.

Innovation and technology remain at the 
forefront of Elixinol’s product development and 
I’m pleased to say that following this initial March 
launch, there is a pipeline of new and unique 
products to be unveiled throughout 2020. 

We will continue to lead the industry in the area 
of high-quality and effective hemp derived CBD 
products thanks to our world-class processing 
and extraction methods. 

FY2019 financial results
Group revenue for FY2019 was reported at $27.2 
million vs $32.5 million in FY2018, representing 
a 16% decline. This reduction in revenue was 
largely driven by the termination of low margin 
private label contracts and the fact that the 
bulk market has been flooded with cheap, poor 
quality product. Revenue from Elixinol branded 
products increased by 35% to $16.1m and now 
represents 59% of total revenue (up from 37% 
pcp).

Several significant, capital-intensive projects 
were completed during the reporting period, 
including expansion of production capacity, 
provisioning of a data-enabling enterprise 
resource planning system and deployment of an 
eCommerce system to support operations and 
marketing. 

Moving forward with a continued focus on 
cost control and the execution of various 

working capital reduction initiatives, our future 
quarterly cash burn rate is planned to be lower 
than historical run rates. In-house production 
commenced in Q4 FY2019 and this will produce 
ongoing cash savings and a significant reduction 
in product costs.

Our operating plan, which is not predicated 
upon regulatory development in the US and 
Europe and UK, provides a pathway towards 
positive cashflow and increased gross margins. 
We have adequate inventory on hand to support 
demand for CY2020 at a minimum, minimising 
raw material cash support needs and the ability 
to convert this material into cash if we need to. 

While revenues for FY2019 have been 
disappointing, as mentioned earlier, the Board 
has taken swift action to divest non-core assets 
and reset the business strategy. We have a 
strong balance sheet with net cash of $20.2m to 
drive global growth moving forward.

Outlook
Elixinol Global will continue to monitor the 
rapidly evolving impact of the Novel Coronavirus 
(COVID-19) on its people, its business 
operations and its customers. Regardless of 
the uncertainty surrounding both the duration 
and scale of the COVID-19 outbreak, Elixinol 
Global remains extremely positive about the 
market opportunity for hemp derived CBD 
and the Company’s ability to leverage its brand 
reputation to drive revenue growth and CBD 
market share. 

The refresh of Elixinol’s brand and product range 
that has been designed to appeal to broader 
consumer segments is well supported by our 
recent investments in people, infrastructure and 
production capacity. We move forward with a 
plan to leverage our scale and carve out a strong 
position in our key markets.

We have taken a very diligent approach to 
ensure the business is well positioned to take 
advantage of the growth potential in the CBD 
market, and the strategies we have set in place 
in FY2019 have laid strong foundations for an 
exciting future in 2020 and beyond.

These are unprecedented times that we 
now operate in and I would like to thank 
our shareholders, employees, partners and 
customers for your continued support in what 
has been a challenging but productive year.

Yours sincerely,

Stratos Karousos
CEO

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ANNUAL REPORT 2019 
 
 
 
 
 
 
 
 
 
 
 
 
FY2019  
Milestones

Revenue from Elixinol branded 
products increased by 35% to 
$16.1m and now represents 59% of 
total revenue (up from 37% PCP) 

$16.1m

 up 35%

Innovation & technology focussed 
company producing high quality, 
consistent CBD extraction and 
bioavailable ingredients such as 
micro-encapsulation 

Regulatory environment 
impacted sales across all channels 
resulting in asset impairments, 
outlook remains positive 

outlook

Strong balance sheet with $20.2m 
cash and $20.3m inventory to drive 
domestic and international growth

$20.2m

Strategic partnerships provide 
significant global expansion 
opportunities via existing 
distribution channels as well as 
supply chain integration 

Expanding global presence of Elixinol 
branded products via our sales teams 
in the Americas, Europe & UK 

SALES

Revenue growth in high margin Elixinol branded products 

Revenue by Channel

Branded / co-branded products  
(eCommerce, Retail, Europe & UK) 

•  35% growth in high margin branded and co-branded sales driven 

by retail penetration in the US and entry into Europe & UK: 
– FY2019 $16.1m vs FY2018 $11.9m 
–  Elixinol branded and co-branded products represent 59% of 

total sales (37% in FY2018) Bulk and Private label 

Bulk sales have declined 

•  34% due to influx of cheap, poor quality product  

(lack of product regulation): 
– FY2019 $5.7m vs FY2018 $8.2m 

A$ million, 31 December year end

$32.5m

35.0

30.0

25.0

20.0

15.0

$11.9m

10.0

5.0

0.0

35%
growth in
Elixinol
branded
sales

$27.2m

$16.1m

•  56% decline in private label sales due to termination of low margin 

contracts to allow Elixinol to focus on its branded products: 

•  FY2019 $5.5m vs FY2018 $12.4m

FY2018

FY2019

eCommerce
Private label

Retail
Bulk

Europe and UK

8

ELIXINOL GLOBAL LIMITED

 
 
 
Q1 FY2019
•  Elixinol enters New Zealand market, with products 
being available on a prescription basis via the  
www.elixinol.com e-commerce website

•  Elixinol Global expands into Europe driving 
international growth, with sales hubs in the 
Netherlands, Spain and United Kingdom 

•  Elixinol Global announces the purchase of property 

of an intended medical cannabis site for an integrated 
cultivation and manufacturing facility 

Q3 FY2019
•  Elixinol Global raises A$50m to accelerate expansion 

in the US

•  Elixinol Global announces Infusion Strategies, a 

strategic partnership increasing Elixinol’s exposure to 
the CBD-infused dietary supplement, nutraceutical, 
food and beverage industries

•  Elixinol signs an exclusive distribution agreement 
with MedVec International GmbH (Distributor) for 
pharmacy and para pharmacy channels in Germany

•  Stratos Karousos appointed as Chief Executive 

Officer of Elixinol Global 

•  The Company expanded its Global Executive Office 
in Sydney, Australia, to provide stronger unified 
planning and support across the Elixinol Global 
Group and to enable the various regional offices to 
focus on operational strategy and execution

•  Elixinol Global acquires the intellectual property 

rights over microencapsulated technology developed 
by Bionova, allowing the Company to exploit the 
microencapsulated technology globally

•  Elixinol partners with PharmaCare’s Naturopathica 

brand to create a co-branded CBD capsule range to 
be sold via Holland & Barrett, UK’s leading health and 
wellness retailer

•  Elixinol enters into an exclusive CBD manufacturing 

and supply agreement with Pet Releaf 

•  Elixinol signs an exclusive distribution agreement with 
Harmonia Life Oy for multiple channels in Finland

ANNUAL REPORT 2019

Q2 FY2019
•  Appointment of Greg Ellery to the Board of Elixinol 

Global - Greg brings extensive international 
Consumer Packaged Goods (CPG)/ Fast Moving 
Consumer Goods (FMCG) experience within 
multinational, publicly listed companies

•  Elixinol Global acquires 25.43% of Pet Releaf - 

the market leading US-based CBD pet products 
company  

•  Elixinol is officially granted a coveted CBD Processor 
Authorisation by the New York State Department of 
Agriculture Markets, providing Elixinol with the ability 
to scale operations and improve efficiency 

Q4 FY2019
•  Elixinol Global sells its 50.5% interest in Elixinol 

Japan to Mr Takeshi Sakurada, who is one of the other 
shareholders of Elixinol Japan 

•  Elixinol Global announces a simplification of its 
business model, with plans to review options for 
Hemp Foods Australia and Nunyara

•  Elixinol announces plans to refresh its brand and 
hemp derived CBD products following extensive 
customer and market research

•  Chief Innovation Officer and Company Founder 

Paul Benhaim resigns, continuing as a director of the 
Company in a non-executive capacity 

Q1 2020
•  Elixinol Global announces the sale of Hemp Foods 

Australia to Yunnan Lvxin Biological Pharmaceutical 
Company, a subsidiary of Shanghai Shunho New 
Materials Technology Co., Ltd. (Shunho) 

•  Shunho is appointed as its exclusive licensee to 

use various Elixinol trade marks and know how in 
connection with the manufacture and distribution 
of Elixinol branded hemp derived CBD products in 
China, Taiwan, Hong Kong and Macau 

•  Elixinol Global begins the process to sell the assets 

owned by Nunyara (including the land) and redeploy 
the cash proceeds to support its Elixinol CBD 
operations. 

•  Launch commences of carefully researched and 

highly targeted new Elixinol brand and product range

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Elixinol unveils a global 
rebrand and innovative 
new product line

As a global leader in the 
hemp derived CBD industry, 
Elixinol is taking a leadership 
approach and redefining how 
consumers can confidently 
look for high quality hemp 
derived CBD products to 
help address their health and 
wellness needs

10

Elixinol will continue to strengthen its 
reputation as a true pioneer in the CBD space 
in 2020 with a worldwide rebrand and the 
launch of a new innovative line of wellness 
products designed to build consumer trust 
and knowledge about hemp-derived CBD 
products. The rebrand and product refresh is 
also part of the Company’s refined strategy 
of focusing on high quality Elixinol branded 
products.

Officially launched in March 2020, Elixinol’s 
rebrand and new product line follows in-depth 
research to ensure a consumer-orientated 
approach by making it easier for people to find 
products that suit their specific needs. 

The refreshed product line includes 8 new 
SKUs to support different areas of health and 
wellness. Elixinol will also launch a new CBD 
skincare line later this year. The new products 
will be sold via Elixinol’s eCommerce platform 
and at over 2,600 natural, specialty and 
conventional supermarkets and pharmacies 
across the US.  

Made with full or broad-spectrum hemp 
extract at the core, Elixinol formulations are 
traceable and transparent so consumers know 
exactly what they receive with each product. 
The rebrand includes the new slogan “Kind of 
Amazing” to reflect Elixinol’s belief that simple 
ingredients with thoughtful formulation, crafted 
by experts and designed for optimal effect are 
capable of creating something special.

The brand’s focus on transparency comes at 
a time when there is a lot of confusion in the 
marketplace following the 2018 Farm Bill, which 
opened doors to a wave of quickly formed 
CBD brands. As a company whose creation 
predates the implementation of the 2014 Farm 
Bill that set up the nation’s first experimental 
hemp program, Elixinol is on a mission to bring 
the CBD industry to the next level by creating 
trusted partnerships with large retailers 
that go beyond the minimum compliance 
requirements. 

Elixinol’s new suite of products include:

ELIXINOL GLOBAL LIMITED•  Organic Balance Natural Tincture 

•  Stress Less Capsules  

These USDA Certified Organic tinctures are 
crafted with CBD in organic hemp extract 
and carefully blended with organic MCT 
coconut oil. By using full-spectrum hemp 
oil, these tinctures feature CBD and provide 
a range of complementary cannabinoids, 
flavonoids and terpenes.   

•  Daily Balance Broad-Spectrum Tincture 
Available in four sizes, these tinctures are 
crafted with CBD in broad-spectrum hemp 
extract and carefully blended with organic 
MCT coconut oil. Broad spectrum means 
that the THC has been reduced to a level not 
detectable by standard lab equipment. 

•  Broad Spectrum Sports Gel  

This hydrating, non-greasy gel for all 
skin types is a special blend of essential 
oils, including eucalyptus, peppermint, 
rosemary, grapefruit, chamomile and 
cassia bark extract, along with 1,000mg 
broad-spectrum hemp extract and a full 
profile of other cannabinoids, terpenes, and 
flavonoids.

•  Omega Turmeric Capsules  

Supporting healthy antioxidant activity, 
these capsules feature algae-derived DHA 
and Omega-3, which has a direct impact 
on the endocannabinoid system and can 
help support brain function and joint health. 
They’re made with full-spectrum hemp oil 
CBD and complementary components of 
the hemp plant.

•  Body Comfort Capsules  

 Made with full-spectrum hemp oil, this 
product supports joint health and normal 
range of motion. It is made with Boswellia, 
which has been shown to ease inflammation 
throughout the body following exercise.

Designed to help the mind and body cope 
with occasional stress, these capsules 
promote vitality and balanced mood. Made 
with ashwagandha and full-spectrum hemp 
oil with CBD as well as a wide range of 
complementary components.

•  Happy Belly Capsules  

Supporting optimal digestive health, these 
CBD capsules are made with BB536 B. 
longum – one of the preeminent probitic 
strains with more than 100 scientific studies 
(available Q2 2020). 

•  Good Night Capsules  

Promoting tranquil sleep and healthy sleep 
cycles, these capsules combine CBD with 
melatonin (available Q2 2020). 

With many new brands and products flooding 
the market, Elixinol will continue to differentiate 
itself with a stringent focus on quality and 
efficacy. All Elixinol products undergo rigorous 
third-party independent laboratory testing 
to ensure the absence of microbiological 
contamination, heavy metals and pesticides 
as well as the presence of Elixinol’s unique 
terpene profile. Every Elixinol product is crafted 
with whole plant extract at the base, ensuring 
each delivers an effective amount of CBD and a 
wide range of complementary cannabinoids.

Underpinning the refreshed brand and product 
range will be a targeted and tactical marketing 
and sales approach in 2020 and beyond. 
There will be a strong focus on educating and 
building relationships with the people who are 
influencing consumers at the decision point, 
including medical professionals, wellness 
influencers and the media. There will also 
be a much-improved eCommerce platform, 
targeted digital campaigns and more effective 
tools for our sales teams, with the overarching 
aim of helping people understand the benefits 
of Elixinol CBD products in their various 
formats and formulations.

You can find out more about the Elixinol brand 
and products at elixinol.com.

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1111

ANNUAL REPORT 2019ABOUT USCHAIRMAN AND CEO REPORTFY2019 FINANCIAL HIGHLIGHTSYEAR IN REVIEWFINANCIAL REPORT 
 
 
 
 
 
 
 
 
 
 
 
 
12
12

ELIXINOL GLOBAL LIMITED

ELIXINOL GLOBAL LIMITEDFinancial Report Contents

Directors’ report 

Auditor’s independence declaration 

Consolidated statement of profit or loss and  
other comprehensive income 

Consolidated statement of financial position 

Consolidated statement of changes in equity 

Consolidated statement of cash flows 

Notes to the consolidated financial statements 

Directors’ declaration 

Independent auditor’s report to the members  
of Elixinol Global Limited 

Shareholder information 

Corporate directory 

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13

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELF 
Directors’ 
Report 

The directors present their report, together with the financial statements, on the consolidated 
entity (referred to hereafter as the ‘Group’) consisting of Elixinol Global Limited (referred to 
hereafter as the ‘Company’ or ‘parent entity’) and the entities it controlled at the end of, or during, 
the year ended 31 December 2019.

DIRECTORS
The following persons were directors of Elixinol Global Limited during the whole of the financial 
year and up to the date of this report, unless otherwise stated:

Andrew Duff 
Stratos Karousos 

Paul Benhaim 

Greg Ellery 
Linda McLeod 

Non-Executive Chairman
Executive Director (appointed 16 July 2019)  
Chief Executive Officer (appointed 16 July 2019)  
Former Non-Executive Director (resigned 23 May 2019)
Non-Executive Director (effective 18 December 2019)  
Former Executive Director (prior to 18 December 2019)
Non-Executive Director (appointed 12 April 2019)
Managing Director (resigned 18 July 2019)

PRINCIPAL ACTIVITIES
The principal activities of the Company during the year relate to its operation as a holding 
company for each of Elixinol LLC (‘Elixinol’), Hemp Foods Australia Pty Ltd (‘Hemp Foods 
Australia’) and Nunyara Pharma Pty Ltd (‘Nunyara’).

The principal activities of the Group are:

Elixinol (hemp derived cannabidiol (‘CBD’) dietary supplements) 
Elixinol is based in Westminster, Colorado (USA) and was established in 2014 to specialise in the 
manufacturing and distribution of products made from premium quality, predominantly ‘whole 
plant’ CBD hemp oil which is extracted from organically grown industrial hemp.

Hemp Foods Australia (hemp derived foods and skincare products) 
Hemp Foods Australia was founded in 1999 and manufactures industrial hemp-derived food and 
skincare products in Australia. Hemp Foods Australia distributes mainly within Australia and will 
look to expand further into export markets.

Nunyara (medicinal cannabis)
Nunyara was established to participate in the emerging Australian medicinal cannabis market. 
Nunyara holds a manufacturing licence and its application for cultivation to the Office of Drug 
Control is currently pending approval.

DIVIDENDS
There were no dividends paid, recommended or declared during the current or previous 
financial year.

REVIEW OF OPERATIONS
Operating and Financial Review  
For the year ended to 31 December 2019, the Group reported a net loss from continuing 
operations after income tax of $65,997,000 (2018: $344,000 net profit).

For the year ended to 31 December 2019, the Group reported a net loss from discontinuing 
operations after income tax of $17,074,000 (2018: $1,204,000 net loss).

For the year ended to 31 December 2019, the Group reported total comprehensive loss after 
income tax of $82,928,000 (2018: $860,000 total comprehensive loss).

The Group’s revenues from continuing operations for the year ended 31 December 2019 were 
$27,183,000 (2018: $32,454,000).

14

ELEXINOL GLOBAL LIMITED

 
 
 
The Group’s earnings before interest, tax, depreciation and amortisation (‘EBITDA’) including share 
of associates’ net loss and excluding impairment from continuing operations for the year ended 
31 December 2019 was an Adjusted EBITDA loss of $22,851,000 (2018: Adjusted EBITDA profit 
of $1,007,000). A reconciliation of Adjusted EBITDA from continuing operations to statutory loss 
(2018: profit) is detailed below:

EBITDA from continuing operations

(Loss)/profit from continuing operations

Add back: Income tax benefit

Add back: Finance costs

Deduct: Interest revenue

Add back: Depreciation and amortisation

EBITDA from continuing operations

Add back: Impairment of goodwill

Add back: Impairment of assets

Adjusted EBITDA from continuing operations

2019 
$’000

(65,997)

(7,620)

121

(559)

2,451

(71,604)

38,270

10,483

(22,851)

Group 
2018 
$’000

344

492

-

(441)

612

1,007

-

-

1,007

The Group’s cash flow used in operations for the year ended 31 December 2019 was $51,066,000 
(2018: $5,252,000 used in operations). Cash flows have been invested in building working capital, 
particularly to ensure constant and consistent supply to customers and investing heavily in sales, 
marketing and advertising expenses predominantly during the first half of the year.

Acquisitions
Incorporation of 60% shareholding in Infusion Strategies LLC  
On 11 June 2019, Elixinol entered into a strategic partnership with RFITD Holdings, LLC, an 
affiliate of RFI, LLC (‘RFI’) via a newly incorporated Colorado based entity Infusion Strategies, 
LLC (‘Infusion Strategies’). The Group shareholding in Infusion Strategies is 60% and the 
investment will be consolidated into the Group results. Infusion Strategies will increase Elixinol’s 
exposure to the CBD-infused dietary supplement, food and beverage industries via distribution 
to RFI’s customers. Infusion Strategies will be managed by RFI with a focus on strengthening the 
organic supply chain for hemp derived CBD, obtaining quality genetics, implementing leading 
processing and extraction methods and advancing innovation and product development.

Equity Investment – Altmed Pets LLC (‘Pet Releaf’) 
On 24 April 2019, Elixinol acquired 25.43% of Altmed Pets LLC (‘Pet Releaf’). Pet Releaf are a 
leading brand in the high growth cannabidiol (CBD) pet products market. The investment is an 
extension of a long-standing relationship with Pet Releaf to which Elixinol has been the exclusive 
supplier of CBD extracts from Pet Releaf’s exclusive strains of hemp since inception and has 
shared its best in class manufacturing expertise to select Pet Releaf-branded products.

Elixinol Co. Ltd (‘Elixinol Japan’)  
On 28 May 2019, the Group obtained two additional board seats in Elixinol Japan gaining control 
in accordance with the Accounting Standards. As a result, the trading results of Elixinol Japan are 
consolidated from 29 May 2019.

Disposals
Elixinol Co. Ltd (‘Elixinol Japan’) 
On 2 December 2019, the Company sold its 50.5% interest in Elixinol Japan to one of Elixinol 
Japan’s other shareholders, Mr Takeshi Sakurada, for $13,500 (¥1,000,000) with a deferred cash 
payment of $362,715 multiplied by the ratio of the closing price of Elixinol shares on 8 January 
2020 divided by $1.09 (less Japanese taxes), which is payable by no later than 30 June 2020. Loss 
on disposal of the business was $2,304,000 reported within discontinued operations.

15

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFSegment results
Americas 
The Americas segment comprises the trading results of Elixinol LLC, (‘Elixinol’) and its 
investments including Infusion Strategies, Pet Releaf, Northern Colorado High Plains Producers 
and H&W Holdings.

Americas reported revenue of $24,915,000 for the year ended 31 December 2019 (2018: 
$32,400,000) and EBITDA loss of $13,593,000 for the year (2018: $4,494,000 EBITDA profit).

Elixinol continues to focus on increasing sales of high-quality Elixinol branded products by 
developing its eCommerce capabilities and gaining distribution through nationally recognised 
retail outlets. As growth in the CBD market in the USA continues, a lack of product regulation and 
quality standards creates a difficult environment for consumers to make informed choices and 
certain competitors are price discounting with low quality products. Elixinol continues to promote 
consumer education and the highest quality practices in anticipation of an impending Food 
and Drug Administration (FDA) regulatory framework creating appropriate barriers to entry and 
set standards which are likely to correct the market. To mitigate any future risk in the regulatory 
environment, Elixinol has entered strategic partnerships with RFI to better serve the global market 
for hemp derived CBD dietary supplements by strengthening the organic supply chain, obtaining 
quality genetics, implementing leading processing and extraction methods and advancing 
innovation and product development.

In anticipation of increasing consumer demand and regulatory driven catalysts, the Company 
significantly increased its inventories and placed sizeable deposits for raw material supply 
contracts in the USA which incurred operating cash outflows of $17,300,000 during 2019. Despite 
an anticipated significant increase in hemp farming acres across the USA, the Company has taken 
a strategic decision to mitigate the risk of typical first and second-year crop failures resulting in 
potential scarcity of premium quality high-yielding CBD hemp biomass. The Company has long 
standing relationships with reliable and well-established hemp farmers who use proper handling 
and agricultural practices. Risk of stock obsolescence is mitigated by extracting biomass into 
CBD oil which then has up to a 3-year shelf life.

The Company has made significant investments in preparation for a significant increase in global 
demand in the hemp derived CBD market. Increased levels of expenditure were incurred across 
the business with key focus on building sales distribution, growing brand awareness through 
marketing activities, as well as building an appropriate supporting infrastructure.

During 2019, the number of full-time equivalent employees increased from 56 to 98. Following 
the end of 2019 and early in 2020, the Company decided to complete a reduction in workforce 
and reduced the number of full-time equivalent employees to 72. In June 2019, Elixinol received 
a certificate of occupancy from the City of Louisville for its new production facility in Colorado. 
This new facility houses the latest technology in high yielding and highly efficient CO2 as well as a 
fully functional technology laboratory. The facility more than doubles the Company’s production 
capacity and is expected to yield substantial cost efficiencies leading to improved product margins 
and accelerated operating leverage.

Europe & UK 
Europe & UK (“Elixinol Europe”) including Elixinol BV and Elixinol Limited, reported revenue 
of $2,268,000 for the year ended 31 December 2019 (2018: $54,000) and EBITDA loss of 
$3,551,000 (2018: $487,000 EBTIDA loss).

New sales hubs were established by the Group in the Netherlands, Spain and the United Kingdom 
in late 2018. During 2019, the number of full-time equivalent employees increased from 12 to 15. 
Underlying these hubs are product fulfilment arrangements with local European-based contract 
manufacturers.

Products have been marketed by a direct sales force located across Europe, using an expanded 
and upgraded eCommerce site and infrastructure. These initiatives supported the Group to build 
a strong market position across Europe. The go-to-market strategy has seen the Group sell its 
products with the same successful multi-channel sales system used in the US selling direct to 
consumer via eCommerce as well as via distributors, wholesalers, pharmacies and national accounts.

Australia 
The Australia segment comprises the continuing trading results from Nunyara Pharma Pty Ltd 
(‘Nunyara’). Hemp Foods Australia Pty Ltd (“Hemp Foods Australia”) has been reallocated to 
discontinuing operations following the announcement the business has been sold and therefore is 
presented as an Asset Held for Sale in the consolidated financial statements.

16

ELEXINOL GLOBAL LIMITED

Australia reported revenue of $nil for the year ended 31 December 2019 (2018: $nil) and EBITDA 
loss of $404,000 (2018: $397,000 EBITDA loss).

During 2018, licence applications for Nunyara to participate in the Australian medicinal cannabis 
industry were submitted to the Australian Government’s Office of Drug Control.

In February 2019, the Group announced a property purchase of a unique 60-acre lot with the 
intention to build the first stage of its planned medicinal cannabis facility.

In July 2019, Nunyara was granted a licence to manufacture medicinal cannabis for extracts 
and tinctures of cannabis and cannabis resin, by the Australian Office of Drug Control. As at 
31 December 2019, Nunyara was still awaiting approval to receive its Medicinal Cannabis Licence 
which will allow the Company to cultivate and produce cannabis for medicinal purposes.

Subsequent to year end, after reviewing various options for the Nunyara business, the Group 
has decided to not pursue its application for a medical cannabis cultivation licence in Australia. 
The process to sell the assets owned by Nunyara (including the land) commenced and the cash 
proceeds will be redeployed to support the Group’s operations. 
As a result of this decision an impairment charge of the goodwill and other assets of $4,813,000 
has been recognised in the financial statements.

Discontinued Operations and Held-for-Sale
Discontinued Operations, which includes Hemp Foods Australia and Elixinol Co. (“Elixinol Japan”), 
reported revenue of $5,116,000 for the year ended 31 December 2019 (2018: $4,676,000) and 
EBITDA loss of $1,974,000 (2018: $1,162,000 EBITDA loss).

Hemp Foods Australia 
The Board resolved to dispose of the Group’s investment in Hemp Foods Australia Pty Ltd and 
negotiations with several interested parties have taken place. The disposal is consistent with the 
Group’s long-term policy to focus its activities on the Group’s other businesses. Subsequently, on 
31 January 2020, the Group entered into a sale agreement to dispose of Hemp Foods Australia Pty 
Ltd, subject to regulatory conditions and entering into a distribution agreement with Elixinol LLC. 
All of these conditions are expected to be settled within 12 months and therefore the subsidiary 
has been classified as a disposal group held for sale and presented separately in the statement of 
financial position. The proceeds of disposal are expected to be below the carrying amount of the 
related net assets and accordingly an impairment loss has been recognised on the classification of 
these operations as held for sale.

Elixinol Japan 
On 2 December 2019, the Company sold its 50.5% interest in Elixinol Japan to one of Elixinol 
Japan’s other shareholders, Mr Takeshi Sakurada.

Share of associates’ loss
Share of associates’ loss during the year ended 31 December 2019 was $1,624,000 
(2018: $698,000 loss).

Review of financial position
At 31 December 2019 the net assets of the Group were $111,382,000 which is $32,353,000 
lower than as at 31 December 2018. The key impact during the year was the operating losses of 
$83,071,000 offset by the additional capital raised of $47,171,000, net of issue costs.

Underlying drivers of performance
The Group operates across three geographical segments and different industries, each of which 
has their own underlying drivers of performance. These are summarised below:
•  overarching regulatory frameworks across various jurisdictions;
•  securing supply of raw materials for hemp and CBD products;
•  increasing production capacity to keep up with consumer-led demand;
•  developing high performance sales teams to sell into the Group’s core markets: North America 

and Europe & UK;

•  research and development into new products which delivery premium quality benefits to 

consumers;

•  education of consumers to fuel grow and demand for products to gain further market share; and
•  delivering high quality and ethical products to customers.

17

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFBusiness strategies and future prospects
Refined Strategic Focus 
The Group remains very positive on the market opportunity for hemp derived CBD and its 
ability to leverage its strong reputation for high quality hemp derived CBD products. Elixinol 
is ideally positioned in the US and Europe & UK markets given its recent investment in people, 
infrastructure and production capacity.

Despite a prolonged uncertain regulatory environment, the Group has refined its strategy to 
ensure it delivers both short-term and long-term success. The Group’s strategic focus is now 
predicated on the following key pillars to support revenue growth and margin improvement:
•  Simplifying its business model to focus on high-quality Elixinol branded hemp derived 

CBD products;

•  Building a dynamic Consumer Packaged Goods (‘CPG’) group as a trusted global brand;
•  Maintaining current high-quality supply partners particularly in the organic space;
•  Leveraging its investment in production capacity and strategic partnerships;
•  Tightening cost control and capital management; and
•  Diligently investing capital to appropriately position itself for future growth.

Simplified Business Model 
Considering the significant opportunity presented globally in the hemp derived CBD market, the 
Company has decided to focus its resources on the Elixinol CBD business unit moving forward 
with a view to optimising shareholder value.

Brand and Product Refresh 
Whilst Elixinol continues to be a leading brand in hemp derived CBD products, Elixinol recognises 
the requirement to continually assess its consumer proposition and branding in an extremely 
dynamic and developing market. Accordingly, Elixinol has completed a total brand and product 
refresh which will be released to the market in the back half of Q1 2020. This refresh is driven by 
the ongoing changes in the hemp derived CBD market as the market becomes more consumer 
focused. The brand and product refresh has been centred on the following core pillars:
•  Dynamic consumer driven offering;
•  Truly global;
•  Industry leading science and innovation; and
•  Heritage in hemp.

Moving forward, the Group will apply a data driven approach to its sales and marketing efforts with 
a rationalised range of core products including tinctures, capsules, powders and topicals. Driven by 
consumer feedback, Elixinol also plans to roll out new innovative products throughout 2020.

Investment in Operations and eCommerce 
The Group has continued to invest in its operational processes and systems throughout 2019 to 
achieve an improved level of operating efficiency. The majority of this work has been completed 
in 2019 and there are further improvements targeted for 2020 and beyond. Some of these key 
developments in 2019 included:
•  Implementing new ERP systems which will enable capturing more accurate data in relation to 

sourcing, manufacturing and distribution; and

•  Developing a new eCommerce platform to become a leading player in this segment of the 
industry. This work will also allow the Group to leverage a data driven approach to sales and 
marketing by utilising its newly implemented ERP systems.

Elixinol utilises a mix of cultivating its own raw materials and sourcing externally grown products. 
All raw materials used in Elixinol products have been cultivated using organic methods, including 
securing long term certified organic produce from experienced growers.

Elixinol is fully compliant with the 2018 United States Farm Bill, does not make therapeutic claims 
on any of its products and does not add CBD to food. Elixinol also welcomes the US Food and 
Drug Administration’s focus on the hemp derived CBD market which will benefit from considered 
regulation in this new and forming industry.

Globally, the Company is focused on expanding distribution of Elixinol branded and co-branded 
hemp derived CBD products through reputable distributors as key markets open.

18

ELEXINOL GLOBAL LIMITED

Cost Control and Capital Management
With a continued focus on cost control and the execution of various working capital reduction 
initiatives, the future quarterly cash burn rate is planned to be lower than historical run rates. 
Additionally, the Company’s operating budget, which is not predicated upon regulatory 
development in the US and Europe & UK, provides a pathway towards positive cashflow and 
increased gross margins.

Principal risks and uncertainties
The management of the business and the execution of the Group’s growth strategies are subject 
to a number of risks which could adversely affect the Group’s future development. The following 
is not an exhaustive list or explanation of all risks and uncertainties associated with the Group, but 
those considered by management to be the principal risks, which may impact the operations or 
results of the Group:

Agricultural risk and climate change risk: 
The Group is exposed to agricultural risk as the businesses are reliant on agricultural products with 
Elixinol reliant on ‘broadacre hemp cultivation’. As such, the businesses are subject to the risks 
inherent in the agriculture industry. These risks include insects, plant diseases, storm, fire, frost, 
flood, water availability, water salinity, pests, bird damage and force majeure events. Such risks 
are also the cause of climate change. These risks may impact the financial performance through 
increased costs (from low yields or increase prices from low supply) or lack of supply to address 
customer demands.

Supplier arrangements: 
The Group relies on several key supplier arrangements to supply raw materials. The failure to 
maintain long term contacts with these suppliers may impact the Group’s ability to maintain 
consistent production levels and met the customer demand having a financial impact.

Risk of adverse events, product liability or other safety issues: 
As with all medical or nutraceutical products, there is a risk that the products sold by the Group 
cause serious or unexpected side effects, including risk or injury to consumers. Should any of the 
Group’s products be associated with safety risks such as misuse or abuse, inadvertent mislabelling, 
tampering by unauthorised third parties or product contamination or spoilage, several materially 
adverse outcomes could occur, including:
•  Regulatory authorities may revoke any approvals that have been granted, impose more onerous 
facility standards or product labelling requirements or force the Group to conduct a product 
recall;

•  The Group could be subject to regulatory action or be sued and held liable for any harm caused 

to customers; or

•  The Group’s brands and reputation could be damaged.

These may all impact the financial performance and position of the Group.

Systems, security and data privacy:
While the Group has policies and procedures in place to address system security and data risks, 
there is a risk that these may not be adequate which could adversely affect the Group’s reputation 
and financial position. There is also a risk as the Group rapidly expands, its systems are not scalable 
or have the ability to leverage the synergies of the differences business across the Group. This may 
lead to a financial impact and loss in revenue and profitability.

Key management personnel and employees: 
The Group relies upon its ability to attract and retain experienced and high performing executives 
and other employees. The failure to achieve this may impact upon the Group’s ability to develop 
and meet its strategies and may lead to a loss in revenue and profitability.

These risks are managed on an ongoing basis. Mitigations and strategies to address them are 
maintained and regularly reviewed, including via regular reporting to the Board.

19

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFSignificant changes in the state of affairs
On 7 February 2019, the Group subsidiary, Nunyara Pharma Pty Ltd purchased a parcel of land in 
the Northern Rivers District of New South Wales of the sum of $2,585,000. The land was acquired 
for the purpose of building a cultivation and manufacturing facility subject to receiving the 
relevant manufacturing licence from the Office of Drug Control and the necessary development 
approvals from local council. The manufacturing licence was received from the Office of Drug 
Control in July 2019 and the DA approval from Byron Council in June 2019.

On 23 May 2019, the Company issued 921,444 performance rights under the Long-Term Incentive 
Plan.

On 28 May 2019, the Group obtained two additional board seats in Elixinol Japan gaining control 
in accordance with the Accounting Standards. As a result, the trading results of Elixinol Japan are 
consolidated from 29 May 2019.

On 5 June 2019, the Company issued 12,820,513 ordinary shares at $3.90 per share, raising 
$50,000,000 before transaction costs, representing an 8.7% discount to the last closing price 
on 3 June 2019. The placement represents  10.3% of the Company’s shares on issue prior to the 
placement.

On 16 July 2019, the Group appointed Stratos Karousos as Chief Executive Officer, replacing 
Paul Benhaim who was appointed Chief Innovation Officer at this date.

On 11 June 2019 the Group established Infusion Strategies LLC and on 24 April 2019 acquired a 
minority share in Altmed Pets LLC.

On 2 December 2019, the Company sold its 50.5% interest in Elixinol Japan to one of Elixinol 
Japan’s other shareholders, Mr Takeshi Sakurada, for $13,500 (¥1,000,000) with a deferred cash 
payment of $362,715 multiplied by the ratio of the closing price of Elixinol shares on 8 January 
2020 divided by $1.09 (less Japanese taxes), which is payable by no later than 30 June 2020.

There were no other significant changes in the state of affairs of the Group during the 
financial year.

Matters subsequent to the end of the financial year
The Novel Coronavirus (COVID-19) has been declared a pandemic in March 2020 by the World 
Health Organisation (WHO). Subsequent to the end of the FY2019 financial year there have been 
considerable economic impacts in Australia and globally arising from the outbreak of COVID-19 
and Government action to reduce the spread of the virus. The outbreak of COVID-19 and the 
subsequent quarantine measures imposed by the Australian and other governments as well as the 
travel and trade restrictions imposed by Australia and other countries in early 2020 have caused 
disruption to businesses and economic activity. The Group considers this to be a non-adjusting 
post balance sheet event.

COVID-19 has had an impact on the operations of the Group as core operations are located in 
USA, Australia and Europe. At present the Group continues to operate effectively but the level of 
on site personnel has been restricted to just those core to the production and shipping processes 
since mid March 2020 in an effort to contain the spread of the epidemic. 

Even though the Group are still operating, this is not at our planned or expected capacity levels 
due to the reduced number of personnel on site. At present the Group’s ability to ship and receive 
goods has not been impacted, but this could change as government requirements evolve.  

In addition, as the operations of substantially all of the Group’s customers, suppliers and associates 
are located primarily in USA, Europe and Australia, the outbreak of COVID-19 is expected to have 
a negative impact on these entities. This may in turn negatively affect the recoverability of Group’s 
investments, as well as financial assets and debtors which are subject to impairment or expected 
credit loss assessments as appropriate. 

Whilst the Group’s primary sales channels remain open (supermarkets, pharmacies and 
eCommerce) as at the date these financial statements were issued, the potential for increased 
levels of unemployment and a reduction in discretionary spending levels may effect the expected 
revenue of the Group. This could lead to the recoverability of the Group’s inventories also being 
negatively affected. 

20

ELEXINOL GLOBAL LIMITED

The Group has no external debt and as at the balance sheet date had in excess of $20m of cash available to the Group. 
The Group’s fixed cost base is relatively low, being primarily limited to rent, annual expenses (such as insurance, software 
licences) and utilities costs. Due to the nature of the operations and their location the Group has the ability to easily and 
without significant financial penalty, flex the workforce levels to reflect the required output and revenue of the Group, were 
COVID-19 and the related restrictions to remain for an extended period of time. 

As the situation remains fluid (due to continuing changes in government policy and evolving business and customer 
reactions thereto) as at the date these financial statements are authorised for issue, the directors of the Company 
considered that the financial effects of COVID-19 on the Group’s consolidated financial statements cannot be reasonably 
estimated. 

However, the directors do not consider the impact to likely compromise the ability of the entity to continue operating for the 
foreseeable future. No economic impacts resulting from COVID-19 have been included in the financial results for the year 
ended 31 December 2019. 

No other matter or circumstance has arisen since 31 December 2019 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.

Likely developments and expected results of operations
Elixinol remains very positive on the market opportunity for hemp derived CBD and its ability to leverage its strong 
reputation for high quality hemp derived CBD products. Elixinol is ideally positioned in the US and Europe and UK markets 
given its recent investment in people, infrastructure and production capacity. Despite a prolonged uncertain regulatory 
environment, Elixinol has refined its strategy to ensure it delivers both short and long term success. Elixinol’s strategic focus 
is now predicated on the following key pillars to support revenue growth and margin improvement:
•  Simplifying its business model to focus on high-quality Elixinol branded hemp derived CBD products;
•  Building Elixinol into a dynamic CPG group as a trusted global brand;
•  Maintaining current high quality supply partners particularly in the organic space;
•  Leveraging its investment in production capacity and strategic partnerships;
•  Tightening cost control and capital management; and
•  Diligently investing capital to appropriately position itself for future growth.

Also refer to ‘Business strategies and future prospects’ included under ‘Review of operations’ section above.

Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State/Territory 
laws.

21

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFInformation on Directors 

Qualifications: 

Chartered Accountant (‘CA’)

Experience and expertise:

Andrew Duff 
Non-Executive  
Chairman

Stratos Karousos
Executive Director and  
Chief Executive Officer

Andrew joined the Company in 2017. He has significant ASX-listed company experience, 
including as a director. He is also director of Dexus Wholesale Funds Limited. Andrew held 
the position of Chief Financial Officer and Finance Director of Primary Health Care which 
is now known as Healius Limited (ASX: HLS), an ASX 100 listed company. Prior to joining 
Primary Health Care, Andrew was Chief Accountant of Medical Defence of Australia from 
1995 to 1998, an insolvency manager from 1993 to 1995, and a Senior Audit Manager at 
Deloitte Touche  Tohmatsu.

Other current directorships: 

None 

Former directorships (last 3 years): 

None 

Special responsibilities: 

Chair of Audit and Risk Committee and Chair of Remuneration and Nomination Committee

Interests in shares:
25,000 ordinary shares

Interests in rights: 
675,000 performance rights

Qualifications: 

BA, LLB and MCom

Experience and expertise:

Stratos joined the Company as a director in 2017. He was appointed as the Chief Executive 
Officer in July 2019.  Stratos has over 20 years of executive management and leadership 
experience as a corporate advisor and lawyer in Australia, Asia and the USA. He has held 
senior roles in global organisations, including WiseTech Global Limited and Baker McKenzie 
where he advised ASX-listed companies in mergers and acquisitions, equity capital 
markets, corporate restructuring, private equity transactions, joint ventures, and corporate 
governance and specialised in the health, technology and agriculture sectors.

Other current directorships: 

None 

Former directorships (last 3 years): 

None 

Special responsibilities: 

Member of Remuneration and Nomination Committee

Interests in shares:
100,000 ordinary shares

Interests in rights: 
750,000 performance rights

22

ELEXINOL GLOBAL LIMITED

Experience and expertise:

Paul has over 25 years’ experience in the hemp industry and is the co-founder of Elixinol, 
Elixinol Australia and Hemp Foods Australia. Paul has been responsible for creating and 
developing each of the business plans for Elixinol, Elixinol Australia and Hemp Foods 
Australia and negotiating production, cultivation and distribution.

Paul Benhaim 
Non-Executive Director

Other current directorships: 

None 

Former directorships (last 3 years): 

None 

Special responsibilities: 

Member of Audit and Risk Committee

Interests in shares: 
54,623,008 ordinary shares

Interests in rights: 
None

Qualifications: 

FAICD 

Experience and expertise: 

Greg Ellery 
Non-Executive Director

Greg joined the company in April 2019. Greg has extensive international Consumer 
Packaged Goods (CPG) and Fast-Moving Consumer Goods (FMCG) experience within 
multinational, publicly listed companies across a number of sectors, including beverages, 
consumables, imaging products and apparel. Previously, Greg served as CEO of the Asia 
Pacific Division of beverages giant Asahi Premium Beverages for over five years and has 
held executive positions for several notable companies, including Spectrum Brands, 
Polaroid Corporation, Fosters Group and New Balance Athletics. Greg is a Fellow of the 
Australian Institute of Company Directors and also performs non-executive roles for private 
companies of which he is Chairman of Metro Food Co, Advisory Chairman of Rotkappchen-
Mumm Asia Pacific and Chairman of Sou-West Brewing.

Other current directorships: 

None 

Former directorships (last 3 years): 

None 

Special responsibilities: 

Member of Audit and Risk Committee and member of Remuneration and Nomination 
Committee

Interests in shares:
None

Interests in rights: 
None

‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships of all 
other types of entities, unless otherwise stated.

‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and 
excludes directorships of all other types of entities, unless otherwise stated.

23

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFCompany Secretary 

Qualifications: 

LLB BA GAICD FGIA

Experience and expertise:

Teresa Cleary
General Counsel and 
Company Secretary

Teresa joined the Company on 4 November 2019 and is an experienced corporate lawyer 
and governance professional with significant private practice and in-house experience 
which has included the role of Supervising Counsel at Telstra Corporation Limited and 
General Counsel & Company Secretary at the Australian Institute of Company Directors 
(‘AICD’). Teresa’s expertise includes managing legal and regulatory risk, corporate advisory, 
commercial negotiations, dispute resolution and commercial strategy. Teresa is a Fellow 
of the Governance Institute of Australia, a graduate of the AICD and she is an active 
member of the International Bar Association. Teresa is also a non-executive director of the 
Association of Corporate Counsel, Australia.

Chief Financial Officer

Qualifications:

BEc, MCom, FCPA

Experience and expertise:

Ron is a senior finance executive having held various financial leadership roles with ASX-
listed companies such as CSR Ltd (ASX: CSR) and Aristocrat Leisure Ltd (ASX: ALL). Ron 
has significant experience in regulated markets including being based in the USA for 9 
years, most recently as Chief Financial Officer for Aristocrat’s largest and most profitable 
division, responsible for developing and implementing strategies to improve profit margins, 
grow market share and creating a global shared services organisation. Ron joined the 
Company in 2017 with a focus on the administrative, financial, and risk management 
operations of the Group.

Ron Dufficy
Chief Financial Officer

MEETINGS OF DIRECTORS 
The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board committee held during the 
year ended 31 December 2019, and the number of meetings attended by each director were: 

A Duff

S Karousos*

P Benhaim

G Ellery

L McLeod**

Full Board

Remuneration and 
Nomination Committee

Audit and Risk 
Committee

Attended

Held

Attended

Held

Attended

Held

16

12

15

9

11

16

12

16

9

11

3

2

1

1

2

3

2

1

1

2

4

2

1

3

2

4

2

2

3

2

Held: represents the number of meetings held during the time the director held office or was a member of the relevant 
committee.

*  not a director between 23 May 2019 and 16 July 2019
**  resigned effective 18 July 2019

24

ELEXINOL GLOBAL LIMITED

REMUNERATION REPORT (AUDITED) 
The remuneration report details the key management personnel remuneration arrangements for the Group, in accordance 
with the requirements of the Corporations Act 2001 and its regulations.

The remuneration report is set out under the following main headings:

•  Key management personnel;
•  Principles used to determine the nature and amount of remuneration;
•  Linking remuneration and company performance;
•  Details of remuneration;
•  Service agreements;
•  Share-based compensation; and
•  Additional disclosures relating to key management personnel.

Key management personnel 
Key management personnel (‘KMP’) are those persons having authority and responsibility for planning, directing and 
controlling the activities of the entity, directly or indirectly, including all directors.

The key management personnel of the Group consisted of the following directors of Elixinol Global Limited:
•  Andrew Duff - Non-Executive Chairman
•  Stratos Karousos - Chief Executive Officer and Executive Director  (ceased as a Director at the close of the AGM on 

23 May 2019 and commenced as Chief Commercial and Legal Officer on 24 May 2019 in a non KMP role and became a 
KMP at the commencement of his role as the Chief Executive Officer on 16 July 2019)

•  Paul Benhaim – Non-Executive Director (ceased as an Executive Director  on 18 December 2019 and commenced as a 

Non-Executive Director from this date)

•  Greg Ellery - Non-Executive Director (appointed 12 April 2019)
•  Linda McLeod - Former Managing Director (resigned 18 July 2019)

And the following other key management personnel:
•  Ron Dufficy - Chief Financial Officer 
•  Gabriel Ettenson - President Elixinol LLC (ceased position as KMP effective 23 July 2019)

Except if noted, the named persons held their current position for the whole of the financial year and since the end of the 
financial year.

Principles used to determine the nature and amount of remuneration
An executive reward framework has been developed to ensure reward for performance is competitive and appropriate for 
the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation 
of value for shareholders and conforms to the market best practice and advice from independent external advisors for the 
delivery of reward. The Board of Directors (‘the Board’) has ensured that executive reward satisfies the following key criteria 
for good reward governance practices:
•  competitiveness and reasonableness;
•  acceptability to shareholders;
•  performance linkage/alignment of executive compensation; and
•  transparency.

The Remuneration and Nomination Committee is responsible for determining and reviewing remuneration arrangements 
for its directors and executives. The performance of the Group depends on the quality of its directors and executives. The 
remuneration philosophy is to attract, motivate and retain high performance and high-quality personnel.

The Remuneration and Nomination Committee ensures the structure of the executive remuneration framework is market 
competitive and complementary to the reward strategy of the Group.

The reward framework is designed to align executive reward to shareholders’ interests. The Board has considered that it 
enhances shareholders’ interests by:
•  having economic profit as a core component of plan design;
•  focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering 
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value; and

•  attracting and retaining high calibre executives.

25

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFAdditionally, the reward framework enhances executives’ interests by:
•  rewarding capability and experience;
•  reflecting competitive reward for contribution to growth in shareholder wealth; and
•  providing a clear structure for earning rewards.

Non-executive directors’ remuneration 
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors’ 
fees and payments are to be reviewed annually by the Remuneration and Nomination Committee. The Remuneration 
and Nomination Committee may, from time to time, receive advice from independent remuneration consultants to 
ensure non-executive directors’ fees and payments are appropriate and in line with the market. The chairman’s fees will be 
determined independently to the fees of other non-executive directors based on comparative roles in the external market. 
The chairman will not be present at any discussions relating to the determination of his own remuneration.

The Constitution provides that the Non-Executive Directors are entitled to total fixed remuneration not exceeding an 
aggregate maximum sum determined by the Company in general meeting. The current amount has been fixed at $350,000 
and was approved by shareholders at the Annual General Meeting (‘AGM’) held on 23 May 2019. Remuneration of directors 
may be provided as a contribution to a superannuation fund. Additionally, it is anticipated that Non-Executive Directors will 
participate in the Company’s long-term incentive plan.

Executive remuneration
The Group rewards executives based on their position and responsibility, with a level and mix of remuneration which has 
both fixed and variable components.

The executive remuneration and reward framework has three components:
•  fixed remuneration - to provide a fair and equitable fixed salary, which accurately reflects the skills and responsibilities of 

the role and the experience of the individual fulfilling the position;

•  short-term performance incentives - to encourage and reward for individual outperformance against annual key 

performance indicators during the financial year; and

•  long-term incentive share-based payments - to drive long-term sustainable growth and facilitate alignment between the 

senior executive team and the long-term interests of Shareholders.

The combination of these comprises the executive’s total remuneration.

Fixed remuneration
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, is reviewed annually by the 
Remuneration and Nomination Committee for market competitiveness to attract and retain talent, to consider individual 
and business unit performance as well as the overall performance of the Group.

Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle 
benefits) where it does not create any additional costs to the Group and provides additional value to the executive.

Short-Term Incentive Plan (‘STIP’)
The Company has adopted an STIP which will enable it to assist in the attraction, motivation and retention of the Directors, 
executive team and other selected employees of the Group and provide a direct link between remuneration and 
performance.

Its aim is to reward the executive and senior management of the Group for achieving a combination of clearly defined 
Group, business unit and individual targets.

The STIP is subject to annual review by the Remuneration and Nomination Committee. The structure, performance 
measures and weightings may therefore vary from year to year.

The STIP is weighted 60% to Group financial measures and 40% to individual measures for Executive KMPs.

STIP Opportunity (at target) is 25% (25% for 2020) of Total Fixed remuneration for Executive KMPs. The Board has the 
discretion to increase the STIP payable to 150% based on over-performance of targets.

Group financial measures are set out below:
•  Group net profit after tax (‘NPAT’) (60% of the STIP);
•  Group NPAT was chosen to align executive performance with the key drivers of shareholder value and reflect the 

short-term performance of the business. Group financial performance measures for future years will be determined 
annually; and

•  minimum threshold performance will be 100% of the on-target performance level of Group NPAT metrics

26

ELEXINOL GLOBAL LIMITED

Individual measures are set out below:
•  Executive KMPs are set individual objectives based on their specific area of responsibility. These objectives are directly 
aligned to the Board approved financial, operational and strategic objectives and include quantitative measures where 
appropriate; and

•  payouts are based on a minimum of 50% achievement.

Actual performance against Group financial and individual measures is assessed at the end of the financial year.

The Board determines the amount, if any, of the STIP to be paid to each Executive KMP, seeking recommendations from the 
Remuneration and Nomination Committee.

Where performance is below threshold, payment of any STIP amount will be at the sole discretion of the Board. Where 
performance is above the threshold, the Board may use its discretion to pay up to 150% of the target STIP amounts.

The STIP amount on-target will be paid in cash and will be subject to relevant local statutory and tax obligations.

Long-Term Incentive Plan (‘LTIP’)
The LTIP is an equity incentive plan used to align the Directors and Executive KMP’s remuneration to the returns generated 
for the Group’s shareholders. The key features of the LTIP are outlined below.

Performance rights over ordinary shares in the Company were issued to KMPs for nil consideration. The nature, timing and 
structure of the grant is detailed below.

Performance rights 
Performance rights are awarded based on the fixed amount to which the individual is entitled. Upon satisfaction of vesting 
and employment conditions, each performance right will, at the Company’s election, convert to a share on a one-for-one 
basis or entitle the participant to receive in cash to the value of a share at the Board’s discretion in lieu of an allocation of 
shares. Where the Board makes such an election, the amount payable will be as determined below:

Cash payable = (No. of Share Rights x VWAP) - Applicable Withholding Tax (if any) - Amounts paid to your superannuation fund

Where VWAP means the volume weighted average share price of the shares traded on the ASX in the 5 trading days 
immediately prior to the relevant vesting date.

LTIP opportunity (at target) 
LTIP opportunity has been determined by informed benchmarking.

Performance period 
For the grant made during 2018, the performance period of the grant is five financial years in four equal tranches from the 
financial year of granting. The performance period is from 20 March 2018 to 31 December 2022.

For the New Share Rights grant made during 2019, the performance period of the grant is four financial years in four equal 
tranches from the financial year of granting. The performance period is from 1 January 2019 to 31 December 2022.

For the Replacement Share Rights grant made during 2019, the performance period of the grant is five financial years in two 
equal tranches from the financial year of granting. The performance period is from 20 March 2018 to 31 December 2022.

Vesting dates

Tranche

Tranche 1

Tranche 2

Tranche 3

Tranche 4

Vesting date

Vesting date

Vesting date

New Share Rights 
made in 2018

New Share Rights 
made in 2019

Replacement Share 
Rights made in 2019

28 February 2020

28 February 2020

28 February 2020

28 February 2021

28 February 2021

28 February 2021

28 February 2022

28 February 2022

28 February 2022

28 February 2023

28 February 2023

28 February 2023

27

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFVesting conditions
Share rights which have not lapsed will vest and become exercisable on the date on which any vesting conditions (and any 
employment conditions) applicable to the share rights have been satisfied (or waived by the Board) or the date on which the 
share rights otherwise vest in accordance with the Plan rules.

The share rights are subject to the following vesting conditions, which are independent and will be tested separately:

•  performance gateway condition being the first sale of Elixinol product in the Australian medicinal cannabis market;
•  ●performance gateway condition being the achievement of a minimum cumulative annualised revenue growth 

(‘Revenue CAGR’);

•  satisfaction of absolute Total Shareholder Return (‘TSR’) performance hurdles for the relevant vesting period; and,
•  participant must be employed (or continue to be a Director) of the Company or one of its wholly owned subsidiaries at 

the time that audited financial statements are released to the ASX following the performance period.

The proportion of TSR share rights that will vest will be determined by reference to the absolute TSR of the Company during 
the relevant performance period, in accordance with the following vesting schedule:

Company’s TSR over the relevant vesting period

Percentage of TSR share rights vesting

Below 10%

0% of the TSR share rights will vest

Greater than 10% but less than 20%

40% to 100% of the TSR share rights will vest on a pro rata 
straight-line basis

Equal to or greater than 20%

100% of the TSR share rights will vest

Cessation of employment (Employment Conditions)
Subject to the Board determining otherwise (in its absolute discretion), should a participant cease to be an employee or 
Director of the Elixinol Group because of:

•  resignation or dismissal: all unvested rights or options lapse;
•  death, disability, bona fide redundancy, genuine retirement or another reason (with the exception of resignation or 

dismissal) a pro rata number of unvested rights or options will not lapse, and any vested right or option will not lapse. All 
other rights or options will lapse.

Disposal restrictions
When vesting occurs, restriction on disposal of shares will be subject to the Company’s Securities Trading Policy.

A participant may not enter into any arrangement for the purpose of hedging, or otherwise affecting their economic 
exposure to their performance rights.

Change of control
The Board in its absolute discretion may determine that all or some of a participants unvested options or rights vest where a 
Takeover Event or Control Event occurs.

Use of remuneration consultants
During the financial period ended 31 December 2019, the Board engaged Hewitt Associates Pty Ltd (AON) to conduct a 
remuneration benchmarking exercise for several Executive KMPs. AON has also been engaged to provide advice on the 
design for the future reward framework which will apply for future periods. To date, AON have been paid $15,400 for their 
advice.

Voting and comments made at the Company’s 23 May 2019 AGM 
At the 23 May 2019 AGM, 99.97% of the votes received supported the adoption of the remuneration report for the year 
ended 31 December 2018. The Company did not receive any specific feedback at the AGM regarding its remuneration 
practices.

28

ELEXINOL GLOBAL LIMITED

Linking remuneration to Company performance

Impact of the Group’s 2019 performance on remuneration
In 2019, the Group delivered numerous strategic objectives designed to position the Company for continued future growth 
across the business. Revenue growth and EBITDA targets however were not achieved and therefore no incentive payments 
for the financial year were granted.

The link between Executive KMP remuneration and Group financial performance is detailed below:

Revenue

Adjusted Group EBITDA

Net loss after tax

Basic loss per share (cents per share)

Diluted loss per share (cents per share)

Opening share price

Closing share price on 31 December

2019 
$’000

32,299

(24,825)

(83,071)

(62.71)

(62.71)

$2.50  

$0.57

Group 
2018 
$’000

37,131

(113)

(860)

(0.79)

(0.79)

$1.00

$2.50

There were no dividends declared or paid during the financial year.

Details of remuneration
Amounts of remuneration
Details of the remuneration of directors and other key management personnel of the Group are set out in the following tables.

Short-term benefits

Cash 
bonus

Other 
fees

Long-
term 
benefits
Long 
service 
leave

Termination 
payments

Cash 
salary 
and fees

$

2019

Non-Executive Directors:

A Duff

G Ellery(f)

Executive Directors:

S Karousos(a)

P Benhaim(c)

L McLeod(h)

90,822

44,936

210,073

314,861

157,625

Other Key Management Personnel:

R Dufficy(d)(e)

299,959

G Ettenson(e),(b) 

239,804 

1,358,080

$

-

-

-

-

-

-

- 

-

Post- 
employ-
ment  
benefits  
Super-  
annuation

$

8,628

4,269

15,530

25,358

13,642

$

-

-

-

-

-

$

-

-

-

168,750

-

-

-

190,177

25,000

8,468

-

198,645

92,427

168,750

Share-based payments

Equity- 
settled 
Perform- 
ance 
Rights (g)

$

Total

$

141,809

241,259

-

49,205

305,644

531,247

(169,674) 339,295

(169,674)

1,593

97,316

612,452

(75,410) 

172,862 

130,011

1,947,913

$

-

-

-

-

-

-

-

-

(a)  Non-Executive until 23 May 2019 and appointed CEO on 23 July 2019. Full year remuneration included in disclosure.
(b)  Ceased being a KMP on 23 July 2019, therefore remuneration only included until this date.
(c)  Resigned as Executive Director on 18 December 2019, continues on as Non-Executive Director.
(d)  Other fees include relocation costs, motor vehicle, housing, medical expenses and other.
(e)  Remuneration reported in AUD and was converted from USD at average rate of 0.695358.
(f)  Commenced as Non-Executive Director effective 12 April 2019.
(g)  LTIP value of equity includes negative amounts for options forfeited during the year (not included in % remuneration in the table above).
(h) Ceased being a KMP on 18 July 2019, therefore remuneration only included until this date.

29

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELF 
 
 
Short-term benefits

Post- 
employ-
ment 
benefits 
Super- 
annuation

Long- 
term 
benefits 
Long  
service  
leave

Cash 
bonus

Non-  
monetary

Cash 
salary  
and  
fees

$

2018

Non-Executive Directors:

A Duff

S Karousos

82,192

54,795

Executive Directors:

P Benhaim*

L McLeod*

247,500

65,400

263,850

69,324

Other Key Management Personnel:

R Dufficy*

205,000

55,200

G Ettenson**

236,130 

61,951 

1,089,467

251,875

*  Cash bonus represents above target STIP of 125%
**  Cash bonus represents above target STIP of 130%

$

-

-

$

-

-

-

-

-

11,274

11,274

$

7,808

5,205

25,000

25,000

25,000

88,013

$

-

-

-

-

-

-

Share-based payments

Equity- 
settled 
Perform- 
ance 
Rights

$

Total

$

89,359

179,359

39,716

99,716

169,674

507,574

169,674

527,848

169,674

454,874

75,410 

384,765 

713,507

2,154,136

Equity- 
settled 
Shares

$

-

-

-

-

-

-

The proportion of remuneration linked to performance and the fixed proportion are as follows:

Name

2019

2018

2019

2018

2019

2018

Fixed remuneration

At risk - STI

At risk - LTI

Non-Executive Directors:

A Duff

G Ellery

S Karousos

Executive Directors:

S Karousos

P Benhaim

L McLeod

41%

100%

-

42%

100%

100%

Other Key Management Personnel:

R Dufficy

G Ettenson

84%

100%

50%

-

60%

-

54%

55%

51%

64%

-

-

-

-

-

-

-

-

-

-

-

-

13%

13%

12%

16%

59%

-

-

58%

-

-

16%

-

50%

-

40%

-

33%

32%

37%

20%

There were no cash bonuses forfeited during the period.

Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. 
The total fixed remuneration (‘TFR’) is subject to annual review.

Details of these agreements effective from 1 January 2020 are as follows:

Stratos Karousos(b)

Ron Dufficy(b)

Fixed 
Remuneration 
$(a)

337,500

285,000

Target STI 
$

84,375

71,250

Notice Period 
by Executive 
months

Notice Period 
by Company 
months

Restraint 
Period 
months

6

6

6

6

12

12

(a)  Fixed remuneration comprises base cash remuneration, superannuation (superannuation equal to the minimum amount required to be paid to comply with 

the superannuation guarantee legislation) and other benefits which can be sacrificed for cash at the employee’s elections.

(b)  KMPs are entitled to participate in a long-term incentive plan, as discussed in this report.

30

ELEXINOL GLOBAL LIMITED

 
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.

Any payments on termination will be subject to the termination benefits cap under the Corporations Act.

Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year 
ended 31 December 2019.

Options
There were no options over ordinary shares issued to directors and other key management personnel as part of 
compensation that were outstanding as at 31 December 2019.

There were no options over ordinary shares granted to or vested in directors and other key management personnel as part of 
compensation during the year ended 31 December 2019.

Performance rights
The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of directors and 
other key management personnel in this financial year or future reporting years are as follows:

Name

A Duff

S Karousos

R Dufficy

S Karousos

Number 
of rights 
granted  Grant date

675,000 15 May 2018

300,000 15 May 2018

900,000 15 May 2018

600,000 23 May 2019

Vesting date  
and  
exercisable  
date

Various

Various

Various

Various

Expiry date

15 August 2023

15 August 2023

15 August 2023

23 August 2024

Fair value per 
right at grant 
date

$0.89

$0.89

$0.89

$2.21

Performance rights granted carry no dividend or voting rights.

Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key 
management personnel of the Group, including their personally related parties, is set out below:

Balance at  
the start of  
the year

Received as  
part of 
remuneration

Additions

Disposals/ 
other

Balance at  
the end of 
the year

Ordinary shares

A Duff

S Karousos

P Benhaim*

L McLeod***

R Dufficy

G Ettenson***

25,000

100,000

54,623,008

200,000

30,000

12,719,112

67,697,120

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

25,000

100,000

54,623,008

(200,000)

-

-

30,000

(12,719,112) 

- 

(12,919,112)

54,778,008

*  Held indirectly due to Paul Benhaim’s interest with the holder of the shares, Raw With Life Pty Ltd.
**  Held indirectly due to Gabriel Ettenson’s interest with the holder of the shares, D & G Health LLC.
***  Disposals/other represents no longer a key management personnel, not necessarily a disposal of holding.

31

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFPerformance rights holding
The number of performance rights over ordinary shares in the Company held during the financial year by each director and 
other members of key management personnel of the Group, including their personally related parties, is set out below:

Balance at  
the start of  
the year

Granted

Vested

Expired/ 
forfeited/  
other

Balance at  
the end of  
the year

Performance rights over ordinary shares

A Duff

S Karousos

P Benhaim

L McLeod

R Dufficy

G Ettenson

675,000

300,000

900,000

900,000

900,000

400,000

-

600,000

-

-

-

-

4,075,000

600,000

This concludes the remuneration report, which has been audited.

-

-

-

-

-

_

-

-

(150,000)

(900,000)

(900,000)

(225,000)

(400,000)

675,000

750,000

-

-

675,000

-

(2,575,000)

2,100,000

SHARES UNDER OPTION 
There were no unissued ordinary shares of Elixinol Global Limited under option outstanding at the date of this report.

SHARES UNDER PERFORMANCE RIGHTS 
Unissued ordinary shares of Elixinol Global Limited under performance rights at the date of this report are as follows:

Grant date

3 April 2018

15 May 2018

1 November 2018

23 May 2019

21 September 2019

Expiry date

3 July 2023

15 August 2023

1 February 2024

23 August 2024

21 December 2024

Number under 
rights

149,181

1,650,000

130,194

450,000

255,810

2,635,185

No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate 
in any share issue of the Company or of any other body corporate.

SHARES ISSUED ON THE EXERCISE OF OPTIONS 
There were no ordinary shares of Elixinol Global Limited issued on the exercise of options during the year ended 
31 December 2019 and up to the date of this report.

SHARES ISSUED ON THE EXERCISE OF PERFORMANCE RIGHTS 
There were no ordinary shares of Elixinol Global Limited issued on the exercise of performance rights during the year ended 
31 December 2019 and up to the date of this report.

INDEMNITY AND INSURANCE OF OFFICERS 
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director 
or executive, for which they may be held personally liable, except where there is a lack of good faith.

During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of 
the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits 
disclosure of the nature of the liability and the amount of the premium.

32

ELEXINOL GLOBAL LIMITED

INDEMNITY AND INSURANCE OF AUDITOR 
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the 
Company or any related entity against a liability incurred by the auditor.

During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the 
Company or any related entity.

PROCEEDINGS ON BEHALF OF THE COMPANY 
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf 
of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility 
on behalf of the Company for all or part of those proceedings.

NON-AUDIT SERVICES 
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor 
are outlined in note 30 to the financial statements.

The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another 
person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by the 
Corporations Act 2001.

The directors are of the opinion that the services as disclosed in note 30 to the financial statements do not compromise the 
external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:

•  all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of 

the auditor; and

•  none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code 
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including 
reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, 
acting as advocate for the Company or jointly sharing economic risks and rewards.

OFFICERS OF THE COMPANY WHO ARE FORMER PARTNERS OF DELOITTE TOUCHE 
TOHMATSU 
There are no officers of the Company who are former partners of Deloitte Touche Tohmatsu.

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.

AUDITOR 
Deloitte Touche Tohmatsu have expressed an interest to continue in office, in accordance with section 327 of the 
Corporations Act 2001, and their continuing appointment will be put forward to shareholders at the Group’s first Annual 
General Meeting.

This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act  2001.

On behalf of the directors

Stratos Karousos
Chief Executive Officer and Executive Director

30 March 2020 Sydney

33

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFElixinol Global Limited
Auditor’s independence declaration

Deloitte Touche Tohmatsu 
ABN 74 490 121 060 
Grosvenor Place 
225 George Street 
Sydney NSW 2000 
Australia 

Tel:  +61 (0) 2 9322 7000 
www.deloitte.com.au 

30 March 2020 

The Board of Directors 
Elixinol Global Limited  
Level 5 – 360 Kent Street 
Sydney NSW 2000 

Dear Board Members 

Elixinol Global Limited 

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following 
declaration of independence to the directors of Elixinol Global Limited. 

As lead audit partner for the audit of the financial statements of Elixinol Global Limited for the financial 
year ended 31 December 2019, I declare that to the best of my knowledge and belief, there have 
been no contraventions of: 

(i)  the  auditor  independence  requirements  of  the  Corporations  Act  2001  in  relation  to  the 

audit; and 

(ii)  any applicable code of professional conduct in relation to the audit. 

Yours faithfully 

DELOITTE TOUCHE TOHMATSU 

Helen Hamilton-James  
Partner 
Chartered Accountants 

Liability limited by a scheme approved under Professional Standards Legislation. 

Member of Deloitte Asia Pacific Limited and the Deloitte Network. 

34

ELEXINOL GLOBAL LIMITED

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated statement of profit or loss and other 
comprehensive income 
For the year ended 31 December 2019

Note

5

15

6

7

7

7

8

9

Revenue from continuing operations

Share of profits/(losses) of associates and joint ventures accounted for
using the equity method

Other income

Interest income calculated using the effective interest method

Expenses

Raw materials and consumables used and processing expenses

Employee benefits expenses and Directors' fees

Depreciation and amortisation expense

Impairment of goodwill

Impairment of assets

Professional services expenses

Sales and marketing expenses

Administrative expenses

Distribution costs

Finance costs

(Loss)/profit before income tax benefit/(expense) from  
continuing operations

Income tax benefit/(expense)

(Loss)/profit after income tax benefit/(expense) from continuing operations

Loss after income tax benefit/(expense) from discontinued operations

Loss after income tax benefit/(expense) for the year

Other comprehensive income

Items that may be reclassified subsequently to profit or loss

Foreign currency translation

Share of associate other comprehensive income

Other comprehensive income for the year, net of tax

Total comprehensive (loss)/income for the year

Loss for the year is attributable to:

Non-controlling interest

Owners of Elixinol Global Limited

2019 
$’000

27,183

(1,624)

88

559

(11,564)

(13,076)

(2,451)

(38,270)

(10,483)

(4,952)

(10,944)

(6,655)

(1,307)

(121)

(73,617)

7,620

(65,997)

(17,074)

(83,071)

1,908

(137)

1,771

(81,300)

(143)

(82,928) 

(83,071)

Group 
2018 
$’000

32,454

(698)

621

441

(14,054)

(5,724)

(612)

-

(20)

(1,483)

(5,962)

(3,224)

(903)

-

836

(492)

344

(1,204)

(860)

6,323

137 

6,460 

5,600 

-

(860)

(860)

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the 
accompanying notes

35

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELF 
 
Consolidated statement of profit or loss and other 
comprehensive income 
For the year ended 31 December 2019

Total comprehensive (loss)/income for the year is attributable to: 

Continuing operations

Discontinued operations

Non-controlling interest

Continuing operations

Discontinued operations

Owners of Elixinol Global Limited

Earnings per share for (loss)/profit from continuing operations 
attributable to the owners of Elixinol Global Limited

Basic (loss)/earnings per share

Diluted (loss)/earnings per share

Earnings per share for loss from discontinued operations attributable 
to the owners of Elixinol Global Limited

Basic loss per share

Diluted loss per share

Earnings per share for loss attributable to the owners of Elixinol Global 
Limited

Basic loss per share

Diluted loss per share

2019 
$’000

(31)

156 

125 

(64,351)

(17,074) 

(81,425) 

(81,300)

Group 
2018 
$’000

-

- 

- 

6,804

(1,204)

5,600 

5,600 

Cents

Cents

(49.91)

(49.91)

(12.91)

(12.91)

(62.71)

(62.71)

0.32

0.32

(1.11)

(1.11)

(0.79)

(0.79)

Note

39

39

39

39

39

39

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the 
accompanying notes

36

ELEXINOL GLOBAL LIMITED

Consolidated statement of financial position 
As at 31 December 2019

Note

2019 
$’000

Assets

Current assets

Cash and cash equivalents

Trade and other receivables

Contract assets

Inventories

Income tax refund due

Prepayments, deposits and other

Assets of disposal groups classified as held for sale

Total current assets

Non-current assets

Investments accounted for using the equity method

Property, plant and equipment

Right-of-use assets

Intangibles

Deferred tax

Total non-current assets

Total assets

Liabilities

Current liabilities

Trade and other payables

Contract liabilities

Lease liabilities

Income tax

Employee benefits

Accrued expenses

Liabilities directly associated with assets classified as held for sale

Total current liabilities

10

11

12

13

8

14

9

15

16

17

18

8

19

20

21

8

9

Group 
2018 
$’000

42,922

3,366

77

6,976

-

3,614

-

56,955

4,524

5,966

-

86,249

724

97,463

154,418

20,244

1,536

-

21,314

88

6,731 

1,444

51,357

8,403

12,685

4,323

39,994

4,307

69,712

121,069

2,992

5,865

157

989

-

86

843

944 

6,011 

720

-

98

147

368

- 

7,198 

The above consolidated statement of financial position should be read in conjunction with the accompanying notes

37

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFConsolidated statement of financial position 
For the year ended 31 December 2019

Non-current liabilities

Borrowings

Lease liabilities

Deferred tax

Total non-current liabilities

Total liabilities

Net assets

Equity

Issued capital

Reserves

Accumulated losses

Equity attributable to the owners of Elixinol Global Limited

Non-controlling interest

Total equity

Note

22

23

8

24

25

26

2019 
$’000

-

3,676

- 

3,676 

9,687

111,382

188,771

9,186

(86,544) 

Group 
2018 
$’000

250

90

3,145

3,485 

10,683 

143,735 

139,612

7,694

(3,571)

111,413

143,735

(31) 

- 

111,382

143,735 

The above consolidated statement of financial position should be read in conjunction with the accompanying notes

38

ELEXINOL GLOBAL LIMITED

Consolidated statement of changes in equity
For the year ended 31 December 2019

Foreign 
currency  
translation 
reserve 
$’000

Share- 
based  
payments  
reserve 
$’000

Issued  
capital 
$’000

Other  
reserve 
$’000

Accumu- 
lated 
losses  
$’000

Non-  
controlling 
interest  
$’000

Group

Balance at 1 January 2018

101,800

-

-

6,323 

6,323

-

-

-

37,812

-

-

-

-

-

-

-

-

1,234

-

-

137

137

-

-

Loss after income tax 
expense for the year

Other comprehensive 
income for the year, 
net of tax

Total comprehensive (loss)/
income for the year

Transactions with owners 
in their capacity as owners: 
Contributions of equity, 
net of transaction costs 
(note 24)

Share-based payments 
(note 40)

Balance at  
31 December 2018

139,612

6,323

1,234

137

(3,571)

(2,711)

(860)

-

-

Total  
equity  
$’000

99,089

(860)

6,460

(860)

-

5,600

-

-

-

-

-

37,812

1,234

143,735

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes

39

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFTotal  
equity  
$’000

143,735

(45)

143,690

-

–

-

Consolidated statement of changes in equity
For the year ended 31 December 2019

Foreign 
currency  
translation 
reserve 
$’000

Share- 
based  
payments  
reserve 
$’000

Issued  
capital 
$’000

Other  
reserve 
$’000

Accumu- 
lated 
losses  
$’000

Non-  
controlling 
interest  
$’000

Group

Balance at 1 January 2019

139,612

6,323

1,234

137

(3,571)

Adjustment for change in 
accounting policy (note 2)

Balance at 1 January 2019 - 
restated

Loss after income tax 
benefit for the year

Other comprehensive 
(loss)/income for the year, 
net of tax

Total comprehensive (loss)/
income for the year

Acquisition of non-
controlling interest

Elimination of Treasury 
shares

Disposal of non-controlling 
interest

Transactions with owners 
in their capacity as owners: 
Contributions of equity,  
net of transaction costs  
(note 24)

Share-based payments 
(note 40)

Balance at  
31 December 2019

139,612

6,323

1,234

137

(3,616)

(45)

-

-

-

-

(678)

-

49,837

-

-

1,908

1,908

-

-

-

-

-

-

-

-

-

-

-

-

(279) 

188,771

8,231

955

-

(82,928)

 (143)

(83,071)

(137)

-

-

1,771

(137)

(82,928)

(143)

(81,300)

-

-

-

-

-

-

-

-

-

-

-

2,149

2,149

-

(678)

(2,037)

(2,037)

-

-

49,837

(279)

(86,544)

(31)

111,382

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes

40

ELEXINOL GLOBAL LIMITED

Consolidated statement of cash flows 
For the year ended 31 December 2019

Cash flows from operating activities

Receipts from customers (inclusive of GST)

Payments to suppliers and employees (inclusive of GST)

Interest received

Interest and other finance costs paid

Income taxes paid

Note

2019 
$’000

Group 
2018 
$’000

33,179

36,147

(84,579)

(40,964)

679

(138)

(207) 

326

-

(761)

Net cash used in operating activities

38

(51,066)

(5,252)

Cash flows from investing activities

Net cash acquired on purchase of subsidiaries

Payments for equity accounted investments

Payments for property, plant and equipment

Payments for intangibles

Payments for security deposits

Proceeds from disposal of business

Proceeds from disposal of property, plant and equipment

Net cash used in investing activities

Cash flows from financing activities

Proceeds from issue of shares

Share issue transaction costs

Repayment of lease liabilities

Net cash from financing activities

18

24

24

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the financial year

Effects of exchange rate changes on cash and cash equivalents

Cash and cash equivalents at the end of the financial year

10

209

(7,157)

(9,943)

(1,203)

-

13

149

-

(3,593)

(4,733)

(174)

(13)

-

4

(17,932)

(8,509)

50,000

40,000

(2,827)

(729) 

(2,188)

(38)

46,444

37,774 

(22,554)

42,922

5 

20,373

24,013

18,834

75

42,922 

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes

41

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNotes to the consolidated financial statements
31 December 2019

Note 1.

General information

Note 2.

Significant accounting policies

Note 3.  Critical accounting judgements, estimates and assumptions

Note 4.  Operating segments

Note 5.  Revenue

Note 6.  Other income

Note 7. 

Expenses

Note 8. 

Income tax

Note 9.  Discontinued operations

Note 10. Current assets - cash and cash equivalents

Note 11.  Current assets - trade and other receivables

Note 12.  Current assets - contract assets

Note 13.  Current assets - inventories

Note 14.  Current assets - prepayments, deposits and other

Note 15.  Non-current assets - investments accounted for using the equity method

Note 16.  Non-current assets - property, plant and equipment

Note 17.  Non-current assets - right-of-use assets

Note 18.  Non-current assets - intangibles

Note 19.  Current liabilities - trade and other payables

Note 20.  Current liabilities - contract liabilities

Note 21.  Current liabilities - lease liabilities

Note 22.  Non-current liabilities - borrowings

Note 23.  Non-current liabilities - lease liabilities

Note 24.  Equity - issued capital

Note 25.  Equity - reserves

Note 26.  Equity - non-controlling interest

Note 27.  Equity - dividends

Note 28.  Financial instruments

Note 29.  Fair value measurement

Note 30.  Remuneration of auditors

Note 31.  Contingent liabilities

Note 32.  Commitments

Note 33.  Key management personnel disclosures

Note 34.  Related party transactions

Note 35.  Business combinations

Note 36. 

Interests in subsidiaries

Note 37.  Deed of cross guarantee

Note 38.  Cash flow information

Note 39.  Earnings per share

Note 40.  Share-based payments

Note 41.  Parent entity information

Note 42. 

Events after the reporting period

42

ELEXINOL GLOBAL LIMITED

43

43

55

56

59

59

60

61

63

66

67

68

68

69

69

72

74

75

78

78

78

79

79

79

80

81

81

81

83

84

84

84

85

85

86

87

88

90

91

93

94

95

Notes to the Consolidated Financial Statements
31 December 2019

NOTE 1 – GENERAL INFORMATION
The financial statements cover Elixinol Global Limited as a Group consisting of Elixinol Global 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 Global Limited’s functional and presentation currency.

Elixinol Global Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered 
office and principal place of business are:

Registered office

Level 12
680 George Street
Sydney NSW 2000

Principal place of business

Level 5
360 Kent Street
Sydney NSW 2000

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 30 March 2020. 
The directors have the power to amend and reissue the financial statements.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies 
have been consistently applied to all the years presented, 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 Group has made 
retrospective adjustments to comparatives as a result of adopting these accounting standards. Refer below for further 
details.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Initial adoption of AASB 16 ‘Leases’
The Group has adopted AASB 16 from 1 January 2019. The standard replaced AASB 117 ‘Leases’ and for lessees has 
eliminated the classifications of operating leases and finance leases. Subject to certain exceptions, a ‘right-of-use’ asset is 
capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments 
to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value 
assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a 
‘right-of-use’ asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the 
capitalised lease is also recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred 
and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition 
has been replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense 
on the recognised lease liability (included in finance costs). For classification within the statement of cash flows, the lease 
payments are separated into both a principal (financing activities) and interest (either operating or financing activities) 
component. For lessor accounting, the standard has not substantially changed how a lessor accounts for leases.

Practical expedients applied
In adopting AASB 16, the Group has used the following practical expedients permitted by the standard:

•  applied a single discount rate to a portfolio of leases with reasonably similar characteristics;
•  accounted for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short- term 

leases;

•  excluded initial direct costs for the measurement of the right-of-use asset at the date of initial application; and
•  used hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

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Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not been restated. The 
impact of adoption on opening retained profits as at 1 January 2019 was as follows:

Operating lease commitments as at 1 January 2019 (AASB 117)

Short-term leases not recognised as a right-of-use asset (AASB 16)

Discount based on the weighted average incremental borrowing rate of 3.46%

Extension and termination options reasonably certain to be exercised

Variable lease payments based on an index or a rate

Lease liabilities - recognised as at 1 January 2019

Right-of-use assets (AASB 16)

Lease liabilities - current (AASB 16)

Lease liabilities - non-current (AASB 16)

Increase in opening accumulated losses as at 1 January 2019

1 January
2019
$’000

1,326

 (117)

 1,209 

(247)

1,118

 19 

 2,099 

2,054

(321)

 (1,778)

 (45)

AASB Interpretation 23 Uncertainty over Income Tax Treatments
This interpretation is applicable to annual reporting periods beginning on or after 1 January 2019. The interpretation clarifies 
how to apply the recognition and measurement requirements of AASB 112 ‘Income Taxes’ in circumstances where uncertain 
tax treatments exist which will address the accounting diversity which currently exists in practice. An uncertain tax treatment 
is one where there is uncertainty over whether the relevant taxation authority will accept the entity’s tax treatment (i.e. as 
submitted in the entity’s income tax return) under tax law thereby potentially affecting an entity’s tax accounting which is 
based upon the derivation of taxable profits and losses, tax bases, unused tax losses, unused tax credits and tax rates 
(‘tax accounting elements’). The ‘unit of account’ to be adopted is determined based on the approach which better predicts 
the anticipated resolution of the uncertainties with the tax authority. The entity shall consider all issues that the tax authority 
might consider in making such assessment and must make a presumption that the tax authority will examine amounts that 
it has a right to examine and has obtained full knowledge of all facts as a consequence. If the entity concludes that it is 
probable that the taxation authority will accept its adopted position representing an uncertain tax treatment, then the entity 
determines its respective tax accounting elements consistently with the tax treatment included in its tax filings. If, however, 
the entity concludes that it is not probable that the taxation authority will accept an uncertain tax treatment, the entity shall 
reflect the effect of uncertainty in determining the related tax accounting elements. The Group adopted this interpretation 
from 1 January 2019 and there was no significant impact on adoption.

BASIS OF PREPARATION 
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards 
and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as 
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting 
Standards as issued by the International Accounting Standards Board (‘IASB’).

Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the 
revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other 
comprehensive income, investment properties, certain classes of property, plant and equipment and derivative financial 
instruments.

Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires 
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving 

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NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial 
statements, are disclosed in note 3.

PARENT ENTITY INFORMATION
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. 
Supplementary information about the parent entity is disclosed in note 41.

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Elixinol Global Limited as at 
31 December 2019 and the results of all subsidiaries for the period then ended.

Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed 
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its 
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to 
the Group. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. 
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. 
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by 
the Group.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, 
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration 
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity 
attributable to the parent.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and 
other comprehensive income, statement of financial position and statement of changes in equity of the Group. Losses 
incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance.

Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and 
non- controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The 
Group recognises the fair value of the consideration received and the fair value of any investment retained together with any 
gain or loss in profit or loss.

OPERATING SEGMENTS
Operating segments are presented using the ‘management approach’, where the information presented is on the same 
basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM is responsible for the 
allocation of resources to operating segments and assessing their performance. Refer to note 4.

FOREIGN CURRENCY TRANSLATION
Foreign currency transactions
Foreign currency transactions are translated into the individual entity’s functional currency using the exchange rates 
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such 
transactions and from the translation at financial period-end exchange rates of monetary assets and liabilities denominated 
in foreign currencies are recognised in profit or loss.

Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting 
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange 
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences 
are recognised in other comprehensive income through the foreign currency reserve in equity.

The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.

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REVENUE RECOGNITION
The Group recognises revenue as follows:

Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in 
exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the 
contract with a customer; identifies the performance obligations in the contract; determines the transaction price which 
takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the 
separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be 
delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer 
to the customer of the goods or services promised.

Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, 
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such 
estimates are determined using either the ‘expected value’ or ‘most likely amount’ method. The measurement of variable 
consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly 
probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement 
constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts 
received that are subject to the constraining principle are recognised as a refund liability.

Sale of goods - hemp products
Sale of goods revenue is recognised when its performance obligation to transfer control of the goods to the customer is 
satisfied which occurs either at the point of sale or when delivery is completed by way of shipping the product to the location 
specified by the customer and the ownership risks have therefore passed to the customer pursuant to the contract.

The Group sells a variety of hemp based products in the wholesale market. These sales relate to both the manufacture and 
distribution of hemp-derived finished products and hemp food based products manufactured by the Group. The Group 
does not act in the capacity as agent in any customer contracts. General invoices are issued to customers on delivery with 
30 day payment terms.

Government grants
Grants that compensate the Group for expenses incurred are recognised in profit or loss on a systematic basis in the period 
which the expenses are recognised.

Interest
Interest income is recognised as interest accrues using the effective interest method. This is a method of calculating the 
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest 
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to 
the net carrying amount of the financial asset.

Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.

RESEARCH ACTIVITIES
Expenditure on research activities is recognised as an expense in the period in which it is incurred.

INCOME TAX
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable 
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary 
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

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ELEXINOL GLOBAL LIMITED

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the 
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

•  When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a 

transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor 
taxable profits

•  When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the 

timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable 
future

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that 
future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred 
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for 
the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is 
probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against 
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on 
either the same taxable entity or different taxable entities which intend to settle simultaneously.

Elixinol Global Limited (the ‘head entity’) and its wholly-owned Australian subsidiaries have formed an income tax 
consolidated group under the tax consolidation regime. In addition, Elixinol Global Limited (the ‘head entity’) and its 
wholly- owned US subsidiaries have also formed an income tax consolidation group within the US jurisdiction. Therefore, the 
head entity and each subsidiary (in both Australian and the US) in each tax consolidated group continue to account for their 
own current and deferred tax amounts.

In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) 
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax 
consolidated groups.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts 
receivable from or payable to other entities in the tax consolidated groups. The tax funding arrangement ensures that the 
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a 
contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.

DISCONTINUED OPERATIONS
A discontinued operation is a component of the Group that has been disposed of or is classified as held for sale and that 
represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to 
dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results 
of discontinued operations are presented separately on the face of the statement of profit or loss and other comprehensive 
income.

CURRENT AND NON-CURRENT CLASSIFICATION
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group’s 
normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the 
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for 
at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the Group’s normal operating cycle; it is held 
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no 
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities 
are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

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CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly 
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and 
which are subject to an insignificant risk of changes in value.

TRADE AND OTHER RECEIVABLES
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective 
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 
30 days.

The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss 
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.

Other receivables are recognised at amortised cost, less any allowance for expected credit losses.

CONTRACT ASSETS
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group 
performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, 
a contract asset is recognised for the earned consideration that is conditional.

INVENTORIES
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value on a ‘first in first 
out’ basis. Cost comprises of direct materials and delivery costs, direct labour, import duties and other taxes, an appropriate 
proportion of variable and fixed overhead expenditure based on normal operating capacity. Costs of purchased inventory 
are determined after deducting rebates and discounts received or receivable.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion 
and the estimated costs necessary to make the sale.

NON-CURRENT ASSETS OR DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be recovered 
principally through a sale transaction rather than through continued use. They are measured at the lower of their carrying 
amount and fair value less costs of disposal. For non-current assets or assets of disposal groups to be classified as held for 
sale, they must be available for immediate sale in their present condition and their sale must be highly probable.

An impairment loss is recognised for any initial or subsequent write down of the non-current assets and assets of disposal 
groups to fair value less costs of disposal. A gain is recognised for any subsequent increases in fair value less costs of disposal 
of a non-current assets and assets of disposal groups, but not in excess of any cumulative impairment loss previously 
recognised.

Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses 
attributable to the liabilities of assets held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of disposal groups classified as held for sale are presented 
separately on the face of the statement of financial position, in current assets. The liabilities of disposal groups classified as 
held for sale are presented separately on the face of the statement of financial position, in current liabilities.

ASSOCIATES
Associates are entities over which the Group has significant influence but not control or joint control. Investments in 
associates are accounted for using the equity method. Under the equity method, the share of the profits or losses of the 
associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive 
income. Investments in associates are carried in the statement of financial position at cost plus post-acquisition changes in 
the Group’s share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the 
investment and is neither amortised nor individually tested for impairment. Dividends received or receivable from associates 
reduce the carrying amount of the investment.

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NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any unsecured 
long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on 
behalf of the associate.

The Group discontinues the use of the equity method upon the loss of significant influence over the associate and 
recognises any retained investment at its fair value. Any difference between the associate’s carrying amount, fair value of the 
retained investment and proceeds from disposal is recognised in profit or loss.

JOINT VENTURES
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the 
net assets of the arrangement. Investments in joint ventures are accounted for using the equity method. Under the equity 
method, the share of the profits or losses of the joint venture is recognised in profit or loss and the share of the movements 
in equity is recognised in other comprehensive income. Investments in joint ventures are carried in the statement of financial 
position at cost plus post-acquisition changes in the Group’s share of net assets of the joint venture. Goodwill relating to 
the joint venture is included in the carrying amount of the investment and is neither amortised nor individually tested for 
impairment. Income earned from joint venture entities reduce the carrying amount of the investment.

INVESTMENTS AND OTHER FINANCIAL ASSETS
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial 
measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either 
amortised cost or fair value depending on their classification. Classification is determined based on both the business model 
within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting 
mismatch is being avoided.

Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the 
Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of 
recovering part or all of a financial asset, it’s carrying value is written off.

Financial assets at amortised cost - loans and receivables
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business 
model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the 
financial asset represent contractual cash flows that are solely payments of principal and interest.

Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business 
model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the 
financial asset represent contractual cash flows that are solely payments of principal and interest.

Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised 
cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group’s 
assessment at the end of each reporting period as to whether the financial instrument’s credit risk has increased significantly 
since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to 
obtain.

Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected 
credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that is attributable 
to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it 
is determined that credit risk has increased significantly, the loss allowance is based on the asset’s lifetime expected credit 
losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of 
anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.

For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is 
recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss 
allowance reduces the asset’s carrying value with a corresponding expense through profit or loss.

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PROPERTY, PLANT AND EQUIPMENT
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes 
expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated using diminishing value bases, so as to write off the net cost over its expected useful life. The 
following bases are used in the calculation of depreciation:

Leasehold improvements
Furniture, fittings and equipment
Computer equipment
Machinery

over the unexpired period of the lease
12 to 30%
30 to 50%
20%

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets, 
whichever is shorter.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the 
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

RIGHT-OF-USE ASSETS (FROM 1 JANUARY 2019)
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which 
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the 
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in 
the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and 
restoring the site or asset.

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful 
life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the 
lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any 
remeasurement of lease liabilities.

The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with 
terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as 
incurred.

INTANGIBLE ASSETS
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value 
at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible 
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are 
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising 
from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying 
amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in 
the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or 
period.

Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for 
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at 
cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently 
reversed.

Website and software
Significant costs associated with the development of the revenue generating aspects of the website, including the capacity 
of placing orders, are deferred and amortised on a straight-line basis over the period of their expected benefit, being their 
finite useful life of 3 years.

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NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their 
expected benefit, being their finite life of 4 years.

Patents and trademarks
Significant costs associated with patents and trademarks are capitalised as an asset. These costs are not subsequently 
amortised as they are considered to be indefinite life assets because there is no foreseeable limit to the cash flows 
generated by them and they have no legal, contractual, regulatory, economic, or competitive limiting factors. Patents and 
trademarks are tested annually for impairment.

Customer relationships
Customer contracts acquired in a business combination are amortised on a straight-line basis over the period of their 
expected benefit, being their finite useful life of 5 years.

Brand names
Brand names acquired in a business combination are not amortised as they are considered to be indefinite life assets 
because there is no foreseeable limit to the cash flows generated by them and they have no legal, contractual, regulatory, 
economic, or competitive limiting factors. Brand names are tested annually for impairment.

IMPAIRMENT OF NON-FINANCIAL ASSETS
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested 
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. 
Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the 
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying 
amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the 
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or 
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to 
form a cash-generating unit.

TRADE AND OTHER PAYABLES
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and 
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts 
are unsecured and are usually paid within 30 days of recognition.

CONTRACT LIABILITIES
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received 
consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group 
transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is 
due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract.

BORROWINGS
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They 
are subsequently measured at amortised cost using the effective interest method.

LEASE LIABILITIES (FROM 1 JANUARY 2019)
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present 
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease 
or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Lease payments comprise of fixed 
payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected 
to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably 
certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a 
rate are expensed in the period in which they are incurred.

51

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if 
there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; 
lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment 
is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully 
written down.

FINANCE COSTS
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the 
period in which they are incurred.

EMPLOYEE BENEFITS
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be 
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities 
are settled.

Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

Share-based payments
Equity-settled share-based compensation benefits are provided to employees.

Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the 
rendering of services.

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined 
using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of 
the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the 
expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that 
do not determine whether the Group receives the services that entitle the employees to receive payment. No account is 
taken of any other vesting conditions.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the 
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the 
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount 
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already 
recognised in previous periods.

Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions 
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are 
satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An 
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of 
the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated 
as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting 
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense 
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award 
is treated as if they were a modification.

52

ELEXINOL GLOBAL LIMITED

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
FAIR VALUE MEASUREMENT
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the 
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction 
between market participants at the measurement date; and assumes that the transaction will take place either: in the 
principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming 
they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and 
best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to 
measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable 
inputs.

Assets and liabilities measured at fair value are classified into three levels using a fair value hierarchy that reflects the 
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and 
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair 
value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not 
available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and 
reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis 
is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where 
applicable, with external sources of data.

ISSUED CAPITAL
Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, 
from the proceeds.

BUSINESS COMBINATIONS
The acquisition method of accounting is used to account for business combinations regardless of whether equity 
instruments or other assets are acquired.

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments 
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest 
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value 
or at the proportionate share of the acquiree’s identifiable net assets. All acquisition costs are expensed as incurred to profit 
or loss.

On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate 
classification and designation in accordance with the contractual terms, economic conditions, the Group’s operating or 
accounting policies and other pertinent conditions in existence at the acquisition-date.

Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the 
acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is 
recognised in profit or loss.

Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent 
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. 
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within 
equity.

53

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling 
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment 
in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair 
value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a 
gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and 
measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred 
and the acquirer’s previously held equity interest in the acquirer.

Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional 
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new 
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends 
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information 
possible to determine fair value.

EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Elixinol Global Limited, excluding 
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding 
during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account 
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the 
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential 
ordinary shares.

GOODS AND SERVICES TAX (‘GST’) AND OTHER SIMILAR TAXES
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not 
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of 
the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST 
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of 
financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities 
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

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.

NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET MANDATORY OR 
EARLY ADOPTED
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, 
have not been early adopted by the Group for the annual reporting period ended 31 December 2019. The Group’s 
assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, 
are set out below.

54

ELEXINOL GLOBAL LIMITED

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
New Conceptual Framework for Financial Reporting
A revised Conceptual Framework for Financial Reporting has been issued by the AASB and is applicable for annual 
reporting periods beginning on or after 1 January 2020. This release impacts for-profit private sector entities that have 
public accountability that are required by legislation to comply with Australian Accounting Standards and other for-profit 
entities that voluntarily elect to apply the Conceptual Framework. Phase 2 of the framework is yet to be released which will 
impact for-profit private sector entities. The application of new definition and recognition criteria as well as new guidance 
on measurement will result in amendments to several accounting standards. The issue of AASB 2019-1 Amendments to 
Australian Accounting Standards – References to the Conceptual Framework, also applicable from 1 January 2020, includes 
such amendments. Where the Group has relied on the conceptual framework in determining its accounting policies for 
transactions, events or conditions that are not otherwise dealt with under Australian Accounting Standards, the Group may 
need to revisit such policies. The Group will apply the revised conceptual framework from 1 January 2020 and is yet to assess 
its impact.

Other amending accounting standards and interpretations
Other amending accounting standards and interpretations issued but not mandatory are not considered to have a 
significant impact on the financial statements of the company as they provide either clarification of existing accounting 
treatment or editorial amendments.

NOTE 3 – CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and assumptions that 
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in 
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and 
assumptions on historical experience and on other various factors, including expectations of future events, management 
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal 
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material 
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are 
discussed below.

Provision for impairment of inventories
The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the 
provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that 
affect inventory obsolescence.

Goodwill and other indefinite life intangible assets
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill 
and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in 
note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These 
calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and 
growth rates of the estimated future cash flows. Refer to note 18.

Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The Group assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each 
reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. If an 
impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or 
value-in-use calculations, which incorporate a number of key estimates and assumptions. Refer to note 18.

Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in 
determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary 
course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated 
tax audit issues based on the Group’s current understanding of the tax law. Where the final tax outcome of these matters 
is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in 
which such determination is made. Refer to note 8.

Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future 
taxable amounts will be available to utilise those temporary differences and losses. Refer to note 8.

55

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 4 – OPERATING SEGMENTS
Identification of reportable operating segments
The Group is organised into three operating segments: Americas, Europe & UK and Australia. There is one single business 
segment, being the sale of nutraceutical and related hemp products. These operating segments are based on the internal 
reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers 
(‘CODM’)) in assessing performance and in determining the allocation of resources. There is no aggregation of operating 
segments.

The CODM reviews Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation), adjusted for 
impairment. The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the 
financial statements.

The information reported to the CODM is on a monthly basis.

Types of products and services
The principal products and services of each of these operating segments are as follows:

Americas

Europe and UK

Australia

This includes the trading results of Elixinol LLC (‘Elixinol’) and its investments and joint ventures in 
the US through the manufacture and distribution of hemp-derived Cannabidiol (‘CBD’) products.

This includes the results from trading operations of Elixinol BV and Elixinol Ltd (together ‘Elixinol 
Europe’) and through the manufacture and distribution of hemp-derived Cannabidiol (‘CBD’) 
products.

This includes the results from the operations of Nunyara Pharma Pty Ltd (‘Nunyara’). This relates to 
the planning and application for licences in respect of the importation and cultivation of medicinal 
cannabis in Australia.

‘Unallocated’ represents corporate, being Elixinol Global Limited (head office).

Two operations were discontinued in the current year. ‘Discontinued operations’ represents the results from the trading 
operations of Hemp Foods Australia Pty Ltd (‘Hemp Foods Australia’) through the manufacture and distribution of 
hemp-based products shown as an Asset Held for Sale and Elixinol Co Ltd (‘Elixinol Japan’) through the manufacture and 
distribution of hemp-derived Cannabidiol (‘CBD’) products and hemp-based products from 28 May 2019 until 2 December 
2019 when the business was disposed. The segment information reported on the next pages does not include any amounts 
for these discontinued operations, which are described in more detail in note 9.

Intersegment transactions
Intersegment transactions were made at market rates. Intersegment transactions are eliminated on consolidation.

Intersegment receivables, payables and loans
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable 
that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are 
eliminated on consolidation.

Major customers
During the year ended 31 December 2019, 27% of sales were derived from three major customers (2018: 33% of sales were 
derived from three major customers).

56

ELEXINOL GLOBAL LIMITED

NOTE 4 – OPERATING SEGMENTS (continued)
Operating segment information - Continuing operations

Group - 2019

Revenue

Sales to external customers

Total revenue

Adjusted EBITDA

Depreciation and amortisation

Impairment of assets

Interest income

Finance costs

Loss before income tax benefit

Income tax benefit

Loss after income tax benefit

Assets

Segment assets

Unallocated assets:

Held-for-sale

Total assets

Liabilities

Segment liabilities

Unallocated liabilities:

Held-for-sale

Total liabilities

Americas
$’000

24,915

24,915

(13,593)

Europe
& UK
$’000

2,268

2,268

(3,551)

Australia
$’000

Unallocated
$’000

Total
$’000

-

-

-

-

(404)

(5,303)

27,183

27,183

(22,851)

(2,451)

(48,753)

559

(121)

(73,617)

7,620

(65,997)

93,188 

3,657 

2,639 

20,141

119,625

6,072 

777 

33 

1,861 

8,743

1,444

121,069

944

9,687

57

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 4 – OPERATING SEGMENTS (continued)
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not been restated. 
Therefore, the current and comparative EBITDA are not directly comparable.

Group - 2018

Revenue

Sales to external customers

Total revenue

Adjusted EBITDA

Depreciation and amortisation

Interest income

Profit before income tax expense

Income tax expense

Profit after income tax expense

Assets

Segment assets

Total assets

Liabilities

Segment liabilities

Total liabilities

Geographical information

Americas

Europe & UK

Australia

Unallocated

Americas
$’000

32,400 

32,400 

4,494 

Europe
& UK
$’000

54 

54 

(487) 

Australia
$’000

Unallocated
$’000

- 

- 

-

-

(397) 

(2,603)

91,541 

1,014 

4,555 

57,308

8,572 

203 

11 

1,897

Total
$’000

32,454

32,454

1,007

(612)

441

836

(492)

344

154,418

154,418

10,683

10,683

Sales to external customers

Geographical non-current assets*

2019
$’000

24,915

2,268

-

2018
$’000

32,400

54

-

2019
$’000

60,914

712

2,618

1,161 

2018
$’000

78,094

35

4,178

2,663 

27,183

32,454

65,405

84,970 

*  Geographical non-current assets exclude those relating to discontinued operations.

The geographical non-current assets above are exclusive of, where applicable, financial instruments, deferred tax assets, 
post-employment benefits assets and rights under insurance contracts.

58

ELEXINOL GLOBAL LIMITED

NOTE 5 – REVENUE

From continuing operations

Sale of goods

Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:

eCommerce
$’000

Retail
$’000

7,537

79

- 

7,616

6,474

1,977

- 

8,451

eCommerce
$’000

Retail
$’000

Bulk
$’000

5,446

212

- 

5,658

Bulk
$’000

Group - 2019

Geographical regions

Americas

Europe & UK

Australia

Group - 2018

Geographical regions

Americas

Europe & UK

Australia

2019
$’000

27,183

Private
label
$’000

5,458

-

- 

5,458

Private
label
$’000

Group 
2018
$’000

32,454 

Total
$’000

24,915

2,268

-

27,183

Total
$’000

7,140

54

-

7,194

4,710

8,162

12,388

32,400

-

-

-

-

-

-

54

-

4,710

8,162

12,388

32,454

Timing of revenue recognition
All revenue is recognised when goods are transferred at a point in time.

NOTE 6 – OTHER INCOME

Net foreign exchange (loss)/gain

Net gain on disposal of property, plant and equipment

Gain on step acquisition

Other

Other income

2019
$’000

(51)

-

-

139

88

Group
2018
$’000

338

4

339

(60)

621

59

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 7 – EXPENSES

(Loss)/profit before income tax from continuing operations includes the 
following specific expenses:

Depreciation

Leasehold improvements

Furniture, fittings and equipment

Motor vehicles

Computer equipment

Machinery

Buildings - right-of-use

Total depreciation

Amortisation

Website and software

Customer relationships

Total amortisation

Total depreciation and amortisation

Impairment of assets

Trade and other receivables

Inventory

Land

Furniture, fittings and equipment

Machinery

Patents and trademarks

Total impairment of assets

Finance costs

Interest and finance charges paid/payable on borrowings

Interest and finance charges paid/payable on lease liabilities

Finance costs expensed

Superannuation expense

Defined contribution superannuation expense

Share-based payments expense

Share-based payments expense

2019
$’000

432

21

14

237

441

798

1,943

84

424

508

2,451

-

9,476

114

518

372

3

10,483

6

115

121

62

124

Group
2018
$’000

39

7

9

35

105

-

195

-

417

417

612

20

-

-

-

-

-

20

-

-

-

132

831

60

ELEXINOL GLOBAL LIMITED

NOTE 8 – INCOME TAX

Income tax expense/(benefit)

Current tax

Deferred tax - origination and reversal of temporary differences

Adjustment recognised for prior periods

Aggregate income tax expense/(benefit)

Income tax expense/(benefit) is attributable to:

(Loss)/profit from continuing operations

Loss from discontinued operations

Aggregate income tax expense/(benefit)

Deferred tax included in income tax expense/(benefit) comprises:

Increase in deferred tax assets

Decrease in deferred tax liabilities

Deferred tax - origination and reversal of temporary differences

Numerical reconciliation of income tax expense/(benefit) and tax at the 
statutory rate

(Loss)/profit before income tax benefit/(expense) from continuing operations

Loss before income tax benefit/(expense) from discontinued operations

Tax at the statutory tax rate of 27.5% (2018: 30%)

Tax effect amounts which are not deductible/(taxable) in calculating taxable 
income:

Impairment of goodwill

Impairment of assets

Impact of tax consolidation

  Other non-deductible permanent differences

  Transfer pricing adjustment

  Sundry items

Adjustment recognised for prior periods

Current year tax losses not recognised

Current year temporary differences not recognised

Prior year temporary differences not recognised now recognised

Difference in overseas tax rates

Current year capital loss not recognised

Income tax expense/(benefit)

2019
$’000

17

(7,566)

20

(7,529)

(7,620)

91

(7,529)

(4,098)

(3,468)

(7,566)

(73,617)

(16,983)

(90,600)

(24,915)

13,057

365

-

171

(25)

-

(11,347)

20

1,920

34

-

1,317

527

(7,529)

Group
2018
$’000

672

(280)

(29)

363

492

(129)

363

(225)

(55)

(280)

836

(1,333)

(497)

(149)

-

-

283

60

-

8

202

(29)

340

-

(95)

(55)

-

363

61

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELF 
 
 
NOTE 8 – INCOME TAX (continued)

Amounts charged/(credited) directly to equity

Deferred tax assets

2019
$’000

Group
2018
$’000

639

(403)

As a consequence of the application of anti-inversion rules in the USA applying to the Group, the Group is treated as a 
resident of the USA for US tax purposes and a resident of Australia for Australian income tax purposes.

Tax losses not recognised
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available 
against which the losses can be utilised.

The Australian group has a $11,646,000 (2018: $6,476,000) of gross revenue losses and the remaining group $1,245,000 
(2018: $300,000) of gross revenue losses, which have not been brought to account at 31 December 2019.

Deferred tax asset

Deferred tax asset comprises temporary differences attributable to:

Amounts recognised in profit or loss:

  Tax losses

  Allowance for expected credit losses

  Employee benefits

  Leases

  Other provisions and accruals

  Share-based payments

  Unrealised foreign exchange

  Property, plant and equipment

Inventories

  Customer relationships

  Brand names

Deferred tax asset

Movements:

Opening balance

Credited to profit or loss

Credited/(charged) to equity

Credited/(charged) to discontinued operations

Foreign exchange

Tax rate change

Closing balance

62

ELEXINOL GLOBAL LIMITED

2019
$’000

4,402

240

-

82

95

116

23

(14)

2,235

(422)

(2,450)

4,307

724

4,098

(293)

(83)

(108)

(31)

4,307

Group
2018
$’000

-

210

24

-

105

618

(92)

(141)

-

-

-

724

83

225

403

-

13

-

724

 
NOTE 8 – INCOME TAX (continued)

Deferred tax liability

Deferred tax liability comprises temporary differences attributable to:

Amounts recognised in profit or loss:

  Customer relationships

  Brand names

Deferred tax liability

Movements:

Opening balance

Credited to profit or loss

Credited/(charged) to equity

Foreign exchange 

Tax rate change

Closing balance

2019
$’000

Group
2018
$’000

-

-

(3,145)

3,468

(346)

15 

8

-

518

2,627

3,145 

3,200

(55)

-

- 

- 

3,145 

Current year deferred tax assets (‘DTA’) and deferred tax liabilities (‘DTL’) are disclosed as net DTA as they arise within the 
same tax jurisdiction and follow the rules for netting off.

Income tax refund due

Income tax refund due

Provision for income tax

Provision for income tax

2019
$’000

Group
2018
$’000

88

- 

2019
$’000

Group
2018
$’000

-

98 

NOTE 9 – DISCONTINUED OPERATIONS
There are two discontinued operations in the period.

Elixinol Japan was incorporated into the Group from 28 May 2019. On 2 December 2019, the Company sold its 50.50% 
interest in Elixinol Japan to one of Elixinol Japan’s other shareholders, Mr Takeshi Sakurada for $13,500 (¥1,000,000) with a 
deferred cash payment of $362,715 multiplied by the ratio of the closing price of Elixinol shares on 8 January 2020 divided 
by $1.09 (less Japanese taxes), which is payable by no later than 31 March 2020.

Hemp Foods Australia is disclosed as held-for-sale and presented separately in the statement of financial position. In 
December 2019 the board resolved to dispose of the Group’s investment in Hemp Foods Australia Pty Ltd and negotiations 
with several interested parties have taken place. The disposal is consistent with the Group’s long-term policy to focus its 
activities on the Group’s other businesses. Subsequently, post balance sheet date on 31 January 2020, the Group entered 
into a sale agreement to dispose of Hemp Foods Australia Pty Ltd, subject to regulatory conditions and entering into a 
distribution agreement with Elixinol LLC. All of these conditions are expected to be settled within 12 months and therefore 
the subsidiary has been classified as a disposal group held for sale and presented separately in the statement of financial 
position. The proceeds of disposal are expected to be below the carrying amount of the related net assets and accordingly 
an impairment loss has been recognised on the classification of these operations as held for sale.

63

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 9 – DISCONTINUED OPERATIONS (continued)
Financial performance information

Sale of goods

Total revenue

Other income

Interest income

Total other income

Raw materials and consumables used and processing expenses

Employee benefits expenses and Directors' fees

Depreciation and amortisation expense

Impairment of goodwill

Impairment of assets

Professional services expenses

Sales and marketing expenses

Administrative expenses

Distribution costs

Other expenses

Finance costs

Total expenses

Loss before income tax benefit/(expense)

Income tax benefit/(expense)

Loss after income tax benefit/(expense)

Loss on disposal before income tax

Income tax expense

Loss on disposal after income tax expense

Loss after income tax benefit/(expense) from discontinued operations

Cash flow information

Net cash used in operating activities

Net cash from/(used in) investing activities

Net cash from financing activities

Net decrease in cash and cash equivalents from discontinued operations

2019
$’000

 5,116 

 5,116 

46

 8 

 54 

(3,568)

(1,615)

(393)

(9,209)

(3,094)

(406)

(790)

(659)

-

(98)

 (17)

 (19,849)

(14,679)

 (91)

 (14,770)

(2,304)

- 

(2,304) 

(17,074)

2019
$’000

(1,294)

31

1,238 

(25)

Group
2018
$’000

 4,676 

 4,676 

93

 - 

 93 

(3,121)

(1,396)

(212)

-

41

(448)

(426)

(418)

(122)

-

 - 

 (6,102)

(1,333)

 129 

 (1,204)

-

- 

- 

(1,204)

Group
2018
$’000

(1,879)

(341)

2,107

(113)

64

ELEXINOL GLOBAL LIMITED

NOTE 9 – DISCONTINUED OPERATIONS (continued)
Elixinol Japan
Carrying amounts of assets and liabilities disposed

Cash and cash equivalents

Trade and other receivables

Inventories

Other current assets

Investments

Intangibles

Total assets

Trade and other payables

Borrowings

Deferred tax

Other liabilities

Total liabilities

Net assets

Details of the disposal

Total sale consideration

Carrying amount of net assets disposed

Derecognition of non-controlling interest

Loss on disposal before income tax

Share of loss on Treasury shares

Loss on disposal after income tax

Hemp Foods Australia
Held for sale assets and liabilities

Assets of disposal groups classified as held for sale

Cash and cash equivalents

Trade and other receivables

Inventories

Other current assets

Property, plant and equipment

Right-of-use asset

Group
2019
$’000

1,005

318

730

44

698

 447 

 3,242 

173

22

100

 46 

 341 

 2,901 

Group
2019
$’000

220

(2,901)

 1,215 

(1,466)

 (838)

 (2,304)

Group
2019
$’000

129

364

427

210

127

 187 

 1,444 

65

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 9 – DISCONTINUED OPERATIONS (continued)

Liabilities directly associated with assets classified as held for sale

Trade payables

Other payables

Accrued expenses

Lease liability

Provisions

Reconciliations
Reconciliation of assets transferred to held-for-sale against year end values are as follows:

Transferred to
held-for-sale
$’000

Impairment
charge
$’000

Reconciliation of assets of disposal groups classified as 
held for sale

Cash and cash equivalents

Trade and other receivables

Inventories

Other current assets

Property, plant and equipment

Right-of-use asset

Intangibles

Deferred tax asset

129

364

1,538

210

456

308

18

83

3,106

NOTE 10 – CURRENT ASSETS - CASH AND CASH EQUIVALENTS

Cash on hand

Cash at bank

Cash on deposit

66

ELEXINOL GLOBAL LIMITED

Group
2019
$’000

270

62

150

296

 166 

 944 

Group
2019
$’000

129

364

427

210

127

187

-

-

-

-

(1,111)

-

(329)

(121)

(18)

(83)

(1,662)

1,444

2019
$’000

19

8,225

12,000 

20,244

Group
2018
$’000

30

12,892

30,000 

42,922 

NOTE 10 – CURRENT ASSETS - CASH AND CASH EQUIVALENTS (continued)
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial year as shown in the statement of 
cash flows as follows:

Balances as above

Cash and cash equivalents - classified as held for sale

Balance as per statement of cash flows

NOTE 11 – CURRENT ASSETS - TRADE AND OTHER RECEIVABLES

Trade receivables

Less: Allowance for expected credit losses

Other receivables

GST recoverable

Interest receivable

20,244

129 

20,373

2019
$’000

2,213

 (1,103) 

 1,110 

365

56

 5 

 1,536

42,922

-

42,922 

Group
2018
$’000

3,823

(878)

2,945 

136

168

117 

3,366 

Allowance for expected credit losses
The Group has recognised a loss of $nil (2018: $20,000) in profit or loss in respect of the expected credit losses for the year 
ended 31 December 2019.

The ageing of the receivables and allowance for expected credit losses provided for above are as follows:

Group

Not overdue

1 to 30 days overdue

31 to 60 days overdue

61 to 90 days overdue

Over 90 days overdue

Expected credit  
loss rate

Carrying amount

2019
%

1%

1%

2%

5%

83%

2018
%

1%

1%

1%

5%

64%

2019
$’000

527

205

27

146

1,308 

2,213

2018
$’000

1,886

415

132

60

1,330 

3,823

Movements in the allowance for expected credit losses are as follows:

Opening balance

Additional provisions recognised

Closing balance

Allowance for expected 
credit losses

2019
$’000

2018
$’000

3

2

1

7

1,090 

1,103

2019
$’000

878

225 

1,103

19

4

1

3

851 

878 

Group
2018
$’000

120

758 

878 

67

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 12 – CURRENT ASSETS - CONTRACT ASSETS

Contract assets

Reconciliation

Reconciliation of the written down values at the beginning and end of the current 
and previous financial year are set out below:

Opening balance

Additions

Transfer to trade receivables

Closing balance

NOTE 13 – CURRENT ASSETS - INVENTORIES

Raw materials - at cost

Less: Provision for impairment

Finished goods - at cost

Less: Provision for impairment

Stock in transit - at cost

2019
$’000

-

77

-

 (77) 

 -

2019
$’000

27,310

 (8,724) 

 18,586 

3,182

(642)

2,540

 188 

21,314

Group
2018
$’000

77 

-

195

(118)

77 

Group
2018
$’000

2,121

(52)

2,069 

4,317

(134)

4,183 

724 

6,976 

68

ELEXINOL GLOBAL LIMITED

NOTE 14 – CURRENT ASSETS - PREPAYMENTS, DEPOSITS AND OTHER

Prepayments

Deferred consideration

Security deposits

Other deposits

2019 
$’000

6,314

207

105

105 

6,731

Group 
2018 
$’000

3,578

-

36

- 

3,614 

NOTE 15 – NON-CURRENT ASSETS - INVESTMENTS ACCOUNTED FOR USING THE EQUITY 
METHOD

Investment in associate - Elixinol Co. Ltd*

Investment in associate - H&W Holdings LLC

Investment in associate - Altmed Pets LLC

Investment in joint venture - Northern Colorado High Plains Producers LLC

2019 
$’000

-

95

8,096

212 

8,403

Group 
2018 
$’000

2,650

- 

- 

1,874

4,524 

*  Disposed during the year (refer note 9)

Interests in associates
Interests in associates are accounted for using the equity method of accounting. Information relating to associates of the 
Group are set out below:

Name

Principal place of business/
Country of incorporation

Elixinol Co. Ltd*

Japan

H&W Holdings LLC**

United States of America

Altmed Pets LLC**

United States of America

*  Disposed during the year (refer note 9)
**  Holding through Elixinol LLC

Ownership interest

2019
%

-

19.88%

25.43%

2018
%

50.50%

19.88%

-

69

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 15 – NON-CURRENT ASSETS - INVESTMENTS ACCOUNTED FOR USING THE EQUITY 
METHOD (continued)
Summarised financial information

Elixinol Co. Ltd

2019
$’000

2018
$’000

H&W Holdings LLC
2018*
$’000

2019
$’000

Altmed Pets LLC

2019
$’000

2018
$’000

-

-

- 

-

- 

- 

-

-

- 

-

- 

-

-

-

-

-

-

-

-

-

- 

-

6,153

1,714 

7,867 

722

- 

722 

7,145

9,569

(9,616) 

(47)

- 

(47)

-

(11)

-

(679)

-

8,852

(105)

39

- 

8,096

-

- 

- 

- 

- 

- 

-

-

- 

- 

- 

-

-

-

-

-

-

-

-

-

- 

-

Summarised statement of financial position

Current assets

Non-current assets 

Total assets 

Current liabilities

Non-current liabilities 

Total liabilities

Net assets

 Summarised statement of profit or loss and other 
comprehensive income 
Revenue

Expenses 

(Loss)/profit before income tax

Other comprehensive income

Total comprehensive (loss)/income

Reconciliation of the Group’s carrying amount

Opening carrying amount

Share of (loss)/profit after income tax

Share of other comprehensive income

Treasury shares

Gain on step acquisition

Investment made

Related party eliminations

Foreign exchange

-

- 

- 

-

- 

- 

-

-

- 

-

- 

-

2,650

(9)

-

-

-

-

-

-

Consolidated on 29 May 2019 

(2,641) 

2,217

1,638 

3,855 

147

433 

580 

46

500 

546 

2

- 

2 

3,275

544

828

2,593

(959) 

(2,124) 

(131)

272 

141

-

(47)

137

-

374

2,157

-

29

- 

469

- 

469

-

93

-

-

-

-

-

2

- 

95

Closing carrying amount

-

2,650

* 

Investment was fully impaired in prior year.

70

ELEXINOL GLOBAL LIMITED

NOTE 15 – NON-CURRENT ASSETS - INVESTMENTS ACCOUNTED FOR USING THE EQUITY 
METHOD (continued)
Interests in joint ventures
Interests in joint ventures are accounted for using the equity method of accounting. Information relating to joint ventures 
that are material to the Group are set out below:

Name

Northern Colorado High Plains 
Producers LLC

Summarised financial information

Principal place of business/
Country of incorporation

Ownership interest
2019
%

2018
%

United States of America

50.00%

50.00%

Summarised statement of financial position 
Cash and cash equivalents

Current assets

Non-current assets

Total assets

Other current liabilities

Total liabilities

Net assets

Summarised statement of profit or loss and other comprehensive income

Revenue

Impairment of assets

Expenses 

Loss before income tax

Other comprehensive income

Total comprehensive loss

Reconciliation of the Group's carrying amount

Opening carrying amount

Investment made

Share of loss after income tax

Foreign exchange

Closing carrying amount

Northern Colorado High  
Plains Producers LLC

2019 
$’000

2018 
$’000

59

856

 71 

 986 

 563 

 563 

 423

627

(1,810)

(2,142) 

(3,325)

 - 

 (3,325)

1,874

-

(1,690)

 28 

 212

-

2,088

1,692 

3,780 

32 

32 

3,748 

-

-

(1,302)

(1,302)

- 

(1,302)

-

2,427

(651)

98 

1,874 

71

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 16 – NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT

Land - at cost 

Less: Impairment

Leasehold improvements - at cost

Less: Accumulated depreciation 

Furniture, fittings and equipment - at cost

Less: Accumulated depreciation 

Less: Impairment

Motor vehicles - at cost

Less: Accumulated depreciation 

Computer equipment - at cost

Less: Accumulated depreciation 

Machinery - at cost

Less: Accumulated depreciation

Less: Impairment 

2019 
$’000

3,139 

(114) 

3,025

3,524

(262) 

3,262

654

(26) 

(518) 

110 

69

(23) 

46 

741

(257) 

484 

6,690

(566)

(366) 

5,758 

12,685

Group 
2018 
$’000

411 

-

56 

253

(72)

181

72

(16)

-

56 

61

(9)

52 

249

(36)

213 

5,346

(293)

- 

5,053 

5,966 

72

ELEXINOL GLOBAL LIMITED

 
 
 
NOTE 16 – NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out 
below:

Lease hold
improve-
ments

Land

Furni ture,
fittings
and 
equip-
ment

Motor 
vehicles

Comp uter 
equip-

ment Machinery

Total

Group

$'000

$'000

$'000

$'000

$'000

$'000

$'000

Balance at 1 January 2018

Additions

Exchange differences

Depreciation expense 

Balance at 31 December 2018

Additions

Classified as held for sale

Disposals

Exchange differences

Impairment of assets

Transfers in/(out)

Depreciation expense 

-

411

-

- 

411

2,725

-

-

3

(114)

-

- 

187

65

-

5

67

-

(71) 

(16) 

181

3,610

(55)

(37)

9

-

-

(446) 

56

630

(25)

-

2

(518)

(3)

(32) 

110

Balance at 31 December 2019

3,025

3,262

Depreciation expenses includes continuing and non-continuing operations.

Impairment testing
Refer to note 18 for details of impairment testing.

-

58

3

(9) 

52

7

-

-

1

-

-

8

240

-

(35) 

213

503

-

-

2

-

3

864

4,474

(20)

(265) 

5,053

2,400

(376)

(423)

49

1,064

5,315

(17)

(396)

5,966

9,875

(456)

(460)

66

(372)

(1,004)

-

-

(14) 

46

(237) 

484

(573) 

(1,302)

5,758

12,685

73

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 17 – NON-CURRENT ASSETS - RIGHT-OF-USE ASSETS

Land and buildings - right-of-use

Less: Accumulated depreciation 

2019 
$’000

5,069

(746) 

4,323

Group 
2018 
$’000

-

- 

- 

The Group leases land and buildings for its offices, warehouses and retail outlets under agreements of between 2 to 5 years 
with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are 
renegotiated.

Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out 
below:

Group

Balance at 1 January 2018 

Balance at 31 December 2018

Addition on adoption of AASB 16 on 1 January 2019

Additions

Classified as held for sale

Disposals

Exchange differences

Depreciation expense 

Balance at 31 December 2019 

Land and buildings
$’000

- 

-

2,054

3,728

(308)

(155)

27

(1,023)

4,323 

74

ELEXINOL GLOBAL LIMITED

NOTE 18 – NON-CURRENT ASSETS - INTANGIBLES

Goodwill - at cost

Less: Impairment

Website and software - at cost

Less: Accumulated amortisation

Less: Impairment

Patents and trademarks - at cost

Less: Impairment

Customer relationships - at cost

Less: Accumulated amortisation

Less: Impairment

Brand names - at cost

Less: Impairment

2019 
$’000

75,705

(47,479)

 28,226 

1,118

(84)

 (41)

 993 

92

 (2)

 90 

2,458

(863)

 (32)

 1,563 

10,668

(1,546) 

9,122 

39,994

Group 
2018 
$’000

74,623

 - 

 74,623 

174

-

 - 

 174 

21

 - 

 21 

2,138

(440)

 - 

 1,698 

9,733

- 

9,733 

86,249 

75

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELF 
 
NOTE 18 – NON-CURRENT ASSETS - INTANGIBLES (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out 
below:

Website 
and
software

Patents 
and 
trademarks

Customer
relation-
ships

Goodwill

Group

$'000

$'000

$'000

Balance at 1 January 2018

Additions

Exchange differences

Amortisation expense

68,730

-

5,893

-

Balance at 31 December 2018

74,623

Additions

Classified as held for sale

Disposals

Exchange differences

Impairment of assets

Amortisation expense 

-

-

-

1,082

(47,479)

- 

Balance at 31 December 2019

28,226

-

174

-

-

174

933

-

(41)

11

-

(84) 

993

20

-

1

-

21

90

(18)

(1)

-

(2)

- 

90

$'000

2,125

-

1

(428) 

1,698

190

-

-

142

(32)

(435) 

1,563

Brand 
names

Total

$'000

$'000

9,733

80,608

-

-

- 

174

5,895

(428)

9,733

86,249

-

-

-

935

1,213

(18)

(42)

2,170

(1,546)

(49,059)

- 

(519)

9,122

39,994

Impairment testing of goodwill
Goodwill acquired through business combinations have been allocated to the following cash-generating units (‘CGUs’):

Elixinol LLC

Hemp Foods Australia Pty Ltd

Nunyara Pharma Pty Ltd

2019 
$’000

28,226

-

 - 

28,226

Group 
2018 
$’000

61,236

9,209

4,178 

74,623 

Determination of recoverable amount
The recoverable amount of the CGUs are determined based on value in use model using discounted cash flow projections 
based on financial forecasts covering a five-year period with a terminal growth rate applied thereafter. The Group performed 
its annual impairment test in December 2019.

The cash flow projections which are used in determining any impairment require management to make significant estimates 
and judgements. Key assumptions in preparing the cash flow projections are set out below. Each of the assumptions is 
subject to significant judgement about future economic conditions and the development of the rapid regulatory changes 
to the industries in which the CGU’s operate in. Management has applied their best estimates to each of these variables but 
cannot warrant their outcome. Management has determined that there has been an impairment for Elixinol, Hemp Foods 
Australia and Nunyara as at 31 December 2019. In determining the impairment required at 31 December 2019, Management 
also took into consideration that the market capitalisation of the Group was below the book value of its equity, however this 
was not the determining factor and at any particular point in time, the market capitalisation does not necessary determine 
the value of the CGU’s.

Sensitivity analysis was performed and is detailed below.

76

ELEXINOL GLOBAL LIMITED

NOTE 18 – NON-CURRENT ASSETS - INTANGIBLES (continued)
Key assumptions
Elixinol
The key assumptions on which management has based its cash flow projections when determining the value in calculations 
for Elixinol are set out below. These assumptions are considered to be consistent with industry market participant 
expectations.
•  ●the revenue growth reflects management’s expectation of growth in the short to medium term based on market growth 

expectations;

•  ●expenditure is assumed to stabilise in sales and marketing, decrease in working capital as inventory levels are reduced 

following the significant investment in 2019 and by operational efficiencies reducing cash burn;

•  ●Limited planned and committed capital expenditure to support production capabilities which include the building of a 
new facility that increased capacity to support expected growth is required following the investments made in 2019;

•  ●terminal growth rate of 2.0% after 5 years; and
•  ●the pre-tax discount rate applied to cash flow projections was 19.6% which represents management’s best estimate of the 
average of the rates of return required by providers of debt and equity capital to compensate for the time value of money 
and the perceived risk or uncertainty of the cash flows, weighted in proportion to the market value of the debt; and equity 
capital provided.

Sensitivity
Elixinol LLC
The estimated recoverable amounts of the Elixinol were below the carrying amounts of intangible and tangible assets of the 
CGU, therefore an impairment charge of $34,092,000 was recognised. In addition, any reasonable adverse change in key 
assumptions may to lead to a further impairment. An indication of key sensitivities is as follows:
•  ● an adverse movement in discount rate of 1.0% will, if occurring in isolation, result in an additional impairment 

of $5,813,000;

•  ● decrease in forecast EBITDA of 10% will, if occurring in isolation, result in an additional impairment of $7,542,000; and
•  ● decline in terminal growth rate of 1.0% will, if occurring in isolation, result in an additional impairment of $3,224,000.

Hemp Foods Australia Pty Ltd
The intangible assets of Hemp Foods Australia were fully impaired following the Board decision to dispose of the Group’s 
investment in Hemp Foods Australia. The disposal is consistent with the Group’s long-term policy to focus its activities on 
the Group’s other businesses. Subsequently, post balance sheet date on 31 January 2020, the Group entered into a sale 
agreement to dispose of Hemp Foods Australia Pty Ltd for a recoverable amount of $500,000. An impairment charge of 
$10,789,000 relating to Intangible Assets including Goodwill, brand names and trademarks was recognised.

Nunyara Pharma Pty Ltd
The goodwill of Nunyara was fully impaired following the decision to not pursue its application for a medical cannabis 
cultivation licence in Australia. This is consistent with the Group’s long-term policy to focus its activities on the Group’s other 
businesses. An impairment charge of $4,178,000 relating to Goodwill was recognised.

For the purpose of impairment testing, intangible assets with indefinite lives, including goodwill, brand names and 
trademarks, are allocated to the Group’s operating divisions which represent the lowest level within the Group at which the 
assets are monitored for internal management purposes.

77

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 19 – CURRENT LIABILITIES - TRADE AND OTHER PAYABLES

Trade payables

Payable to joint venture - Northern Colorado High Plains Producers LLC

GST and sales tax payable

Credit cards

Other payables 

Refer to note 28 for further information on financial instruments.

NOTE 20 – CURRENT LIABILITIES - CONTRACT LIABILITIES

Contract liabilities 

Reconciliation

Reconciliation of the written down values at the beginning and end of the 
current and previous financial year are set out below:

Opening balance

Payments received in advance

Transfer to revenue - included in the opening balance

Transfer to revenue - performance obligations satisfied in current years

Foreign exchange adjustments 

Closing balance 

2019 
$’000

1,787

-

504

51

650 

2,992

2019 
$’000

157

720

157

-

(720)

- 

157

Group 
2018 
$’000

3,598

991

13

288

975 

5,865 

Group 
2018 
$’000

720 

201

5,215

(4,801)

(83)

188 

720 

Unsatisfied performance obligations
The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end 
of the reporting period was $157,000 as at 31 December 2019 ($720,000 as at 31 December 2018) and is expected to be 
recognised as revenue in future periods as follows:

Within 6 months

6 to 12 months

NOTE 21 – CURRENT LIABILITIES - LEASE LIABILITIES

Lease liability 

Refer to note 28 for further information on financial instruments.

78

ELEXINOL GLOBAL LIMITED

2019 
$’000

157

- 

157

2019 
$’000

989

Group 
2018 
$’000

717

3 

720 

Group 
2018 
$’000

-

NOTE 22 – NON-CURRENT LIABILITIES - BORROWINGS

Related party loan from Raw With Life 

Refer to note 28 for further information on financial instruments.

2019 
$’000

-

Group 
2018 
$’000

250

Prior to its acquisition by Elixinol Global Limited, Hemp Foods Australia entered into a Shareholder Loan Deed with Raw 
With Life, an entity controlled by Paul Benhaim, whereby Raw With Life agreed to lend $250,000 to Hemp Foods Australia. 
The loan is made on an unsecured basis, with no interest currently payable. This is a related party agreement, as Raw With 
Life holds (as at the date of this report) approximately 43% of the shares in Elixinol Global Limited. The Group assessed the 
fair value of the loan at the reporting date and the amount is not expected to be repaid so has been fully provided for.

NOTE 23 – NON-CURRENT LIABILITIES - LEASE LIABILITIES

Lease liability

Lease make good provision 

Refer to note 28 for further information on financial instruments.

NOTE 24 – EQUITY - ISSUED CAPITAL

Ordinary shares - fully paid

 137,761,002

124,550,162

2019
Shares

2018 
Shares

2019 
$’000

3,641

35 

3,676

2019 
$’000

188,771

Movements in ordinary share capital

Details

Balance

Issue of shares

Date

Shares

Issue price

1 January 2018

102,928,540

4 October 2018

21,621,622

Share issue transaction costs

 - 

Balance

31 December 2018

124,550,162

Issue of shares as part consideration for 
acquisition of Altmed Pets LLC

24 April 2019

Treasury shares on acquisition of Altmed Pets LLC

24 April 2019

523,437

(133,110)

Issue of shares

23 May 2019

12,820,513

Share issue transaction costs

 - 

Balance

31 December 2019

  137,761,002 

$1.85

$0.00

$5.09

$5.09

$3.90

$0.00

Group 
2018 
$’000

-

90

90 

Group 
2018 
$’000

139,612 

$'000

101,800

40,000

 (2,188)

139,612

2,666

(678)

50,000

 (2,829)

 188,771 

Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in 
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the 
Company does not have a limited amount of authorised capital.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each 
share shall have one vote.

79

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 24 – EQUITY - ISSUED CAPITAL (continued)
Share buy-back
There is no current on-market share buy-back.

Treasury shares
Treasury shares are ordinary shares of the parent entity held by subsidiaries and/or associates.

Capital risk management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can 
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce 
the cost of capital.

Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated 
as total borrowings less cash and cash equivalents.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, 
return capital to shareholders, issue new shares or sell assets to reduce debt.

The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding 
relative to the current Company’s share price at the time of the investment. The Group is not actively pursuing additional 
investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.

The capital risk management policy remains unchanged from the 31 December 2018 Annual Report.

NOTE 25 – EQUITY - RESERVES

Foreign currency translation reserve

Share-based payments reserve

Other reserves

2019 
$’000

8,231

955

 - 

9,186

Group 
2018 
$’000

6,323

1,234

137 

7,694 

Foreign currency translation reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign 
operations to Australian dollars.

Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their 
remuneration, and other parties as part of their compensation for services.

Other reserves
The reserve is used to recognise the Group’s share of other comprehensive income of associates.

80

ELEXINOL GLOBAL LIMITED

NOTE 26 – EQUITY - NON-CONTROLLING INTEREST

Accumulated losses

2019 
$’000

(31) 

(31)

Group 
2018 
$’000

- 

-

NOTE 27 – EQUITY - DIVIDENDS
There were no dividends paid, recommended or declared during the current or previous financial year.

NOTE 28 – FINANCIAL INSTRUMENTS
Financial risk management objectives
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and 
interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability 
of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.

Risk management is carried out by senior finance executives (‘Finance’) under policies approved by the Board of 
Directors (‘the Board’). These policies include identification and analysis of the risk exposure of the Group and appropriate 
procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group’s operating 
units. Finance reports to the Board on a monthly basis.

Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through 
foreign exchange rate fluctuations.

Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities 
denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash 
flow forecasting.

In addition, the Group is exposed to non-financial instrument risk on the translation of foreign subsidiaries from their 
functional currency to the presentation currency. This presentation risk is separate to the foreign currency risk dealt with in 
this note.

The carrying amount of the Group’s foreign currency denominated financial assets and financial liabilities at the reporting 
date were as follows:

Group

US dollars

Euros

Pound Sterling

2019
$’000

-

-

103 

103

Assets  
2018 
$’000

105

-

- 

105

2019 
$’000

-

-

83 

83

Liabilities 
2018 
$’000

6

155

-

161

The Group had net assets denominated in foreign currencies of $20,000 (assets of $103,000 less liabilities of $83,000) 
as at 31 December 2019 (2018: net liabilities of $56,000 (assets of $105,000 less liabilities of $161,000)). Based on this 
exposure, had the Australian dollars weakened or strengthened against these foreign currencies with all other variables held 
constant, the Group’s profit before tax for the period would have been as follows.

The sensitivity analysis carried out by the Group considers the effects on its trade receivables and payables of 5% increase 
and decrease between the relevant foreign currency and the Australian dollar (reporting currency).

81

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 28 – FINANCIAL INSTRUMENTS (continued)

Group - 2019

US dollars

Euros

Pounds Sterling

Group - 2018

US dollars

Euros

Pounds Sterling

AUD strengthened

AUD weakened

Effect 
on profit 
before tax 
$’000

Effect on 
equity 
$’000

-

-

(1)

(1)

-

-

(1)

(1)

% change

5%

5%

5%

Effect 
on profit 
before tax 
$’000

Effect on 
equity 
$’000

-

-

1

1

-

-

1

1

% change

5%

5%

5%

AUD strengthened

AUD weakened

Effect 
on profit 
before tax 
$’000

Effect on 
equity 
$’000

(5)

8

-

3

(5)

8

-

3

Effect 
on profit 
before tax 
$’000

Effect on 
equity 
$’000

5

(8)

-

(3)

5

(8)

-

(3)

% change

(5%)

(5%)

-

% change

5%

5%

-

The percentage change is the expected overall volatility of the significant currencies, which is based on management’s 
assessment of reasonable possible fluctuations taking into consideration movements over the last year and the spot rate at 
the reporting date. A positive number indicates an increase in profit, a negative number indicates a decrease in profit. The 
actual foreign exchange loss for the year ended 31 December 2019 was $51,000 (2018: gain of $338,000).

Price risk
The Group is not exposed to any significant price risk.

Interest rate risk
The Group is not exposed to any significant interest rate risk.

Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the 
Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and 
setting appropriate credit limits. The maximum exposure to credit risk at the reporting date to recognised financial assets is 
the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position 
and notes to the financial statements. The Group does not hold any collateral.

The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through 
the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative 
across all customers of the Group based on recent sales experience, historical collection rates and forward- looking 
information that is available.

Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) 
to be able to pay debts as and when they become due and payable.

The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast 
cash flows and matching the maturity profiles of financial assets and liabilities.

82

ELEXINOL GLOBAL LIMITED

NOTE 28 – FINANCIAL INSTRUMENTS (continued)
Remaining contractual maturities
The following tables detail the Group’s remaining contractual maturity for its financial instrument liabilities. The tables have 
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial 
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual 
maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

Weighted
 average
 interest
 rate

1 year or 
less

Between
1 and 2
years

Between
2 and 5
years

Over 5 
years

Remaining
contractual
 maturities

%

$'000

$'000

$'000

$'000

$'000

Group - 2019

Non-derivatives

Non-interest bearing

Trade payables

Other payables

Interest-bearing - variable

Lease liability (Note 23)

3.45%

Total non-derivatives

-

-

1,787

701

989 

3,477

-

-

-

-

1,049 

1,049

2,231 

2,231

-

-

361 

361

1,787

701

4,630

7,118

Weighted
 average
 interest
 rate

1 year or 
less

Between
1 and 2
years

Between
2 and 5
years

Over 5 
years

Remaining
contractual
 maturities

%

$'000

$'000

$'000

$'000

$'000

-

-

-

-

3,598

1,263

991

-

5,852

-

-

-

-

-

-

-

-

250

250

-

-

-

-

-

3,598

1,263

991

250

6,102

Group - 2018

Non-derivatives

Non-interest bearing

Trade payables

Other payables

Payable to joint venture

Other loans

Total non-derivatives

The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed 
above.

NOTE 29 – FAIR VALUE MEASUREMENT
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair 
values due to their short-term nature.

The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market 
interest rate that is available for similar financial liabilities.

83

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 30 – REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu, the 
auditor of the Company, and its network firms:

Audit services - Deloitte Touche Tohmatsu

Audit or review of the financial statements

Other services - Deloitte Touche Tohmatsu

Taxation compliance services

Other services - network firms

Other advisory services

2019 
$

Group 
2018 
$

350,100 

236,000

43,000 

393,100

42,926

278,926

15,000

- 

NOTE 31 – CONTINGENT LIABILITIES 
On 4 December 2019, the Group became aware of a class-action suit having been filed against the Group’s subsidiary 
Elixinol LLC in the United States District Court for the Northern District of California. The suit alleges, amongst other 
allegations, that the Group products are mislabelled as dietary supplements or illegally contain CBD and that this may 
constitute misleading conduct. This class-action suit is part of an industry-wide approach by the same class of plaintiffs. 
Identical and/or similar claims by the same class of plaintiffs have been served on multiple CBD companies. The Group 
believes that its products are accurately labelled and that the claims are without merit. The Group is defending itself against 
any such suits and has filed a motion to dismiss. The information usually required by AASB 137 ‘Provisions, Contingent 
Liabilities and Contingent Assets’ is not disclosed on the grounds that it can be expected to seriously prejudice the outcome 
of the litigation. The directors are of the opinion that the claim can be successfully defended by the Company.

NOTE 32 – COMMITMENTS

Capital commitments

Committed at the reporting date but not recognised as liabilities, payable:

Property, plant and equipment - build costs

Inventory purchases under contract

Lease commitments - operating

Committed at the reporting date but not recognised as liabilities, payable:

Within one year

One to five years

2019 
$’000

-

3,679

3,679

Group 
2018 
$’000

3,387

-

3,387

Group 
2018 
$’000

451

875

1,326

AASB 16 was adopted using the modified retrospective approach and as such comparatives have not been restated. 
Therefore, the current commitments are included within assets and liabilities on the statement of financial position not in 
this section of the notes. 

84

ELEXINOL GLOBAL LIMITED

NOTE 33 – KEY MANAGEMENT PERSONNEL DISCLOSURES
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out 
below:

2019 
$

1,556,725

92,427

168,750

130,011

1,947,913

Group 
2018 
$

1,352,616

88,013

-

713,507

2,154,136

Short-term employee benefits

Post-employment benefits

Termination benefits

Share-based payments

NOTE 34 – RELATED PARTY TRANSACTIONS
Parent entity
Elixinol Global Limited is the parent entity. 

Subsidiaries
Interests in subsidiaries are set out in note 36. 

Associates and other investee
Interests in associates are set out in note 15. 

Joint ventures
Interests in joint ventures are set out in note 15. 

Key management personnel
Disclosures relating to key management personnel are set out in note 33 and the remuneration report included in the 
directors’ report.

Transactions between the parent company, its subsidiaries and joint operations are eliminated on consolidation and are not 
disclosed in this note.

Cash flow transactions with related parties
The following transactions occurred with related parties:

Sale of goods and services:

Sale of goods to associates

Sale of goods to joint venture

Payment for goods and services:

Purchase of goods from associates

2019 
$

5,244,889

16,166

Group 
2018 
$

189,449

-

1,942,954

942,498

85

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 34 – RELATED PARTY TRANSACTIONS (continued) 
Receivable from and payable to related parties

The following balances are outstanding at the reporting date in relation to transactions with related parties:

2019 
$

Group 
2018 
$

Current receivables:

Receivables from associates (net of provision)

331,885

110,501

Current payables:

Payables to associates

Payable to directors, Paul Benhaim

96,577

-

991,214

4,148

All transactions were made on normal commercial terms and conditions and at market rates.

Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:

2019 
$

Group 
2018 
$

Non-current borrowings:

Loan from Raw With Life, an entity controlled by Paul Benhaim, to Hemp Foods 
Australia Pty Ltd *

-

250,000

*  Prior to its acquisition by Elixinol Global Limited, Hemp Foods Australia entered into a Shareholder Loan Deed with Raw With Life, an entity controlled by 

Paul Benhaim, whereby Raw With Life agreed to lend $250,000 to Hemp Foods Australia. The loan is made on an unsecured, interest free basis.

Loan transactions were made on negotiated terms and conditions.

NOTE 35 – BUSINESS COMBINATIONS 
2019
Elixinol Co. Ltd (‘Elixinol Japan’)
On 2 November 2018, further investment was made into Elixinol Japan through additional issued shares to provide working 
capital to scale the business for anticipated growth in the hemp-derived CBD, foods and skincare channels. As a result, this 
increased the Group’s investment in Elixinol Japan to a 50.5% shareholding. This investment until 28 May 2019, in which the 
Group held significant influence, had been accounted for as an associate due to the Group holding only two of the five board 
seats of Elixinol Japan and therefore not having the power to directly affect the returns and activities of Elixinol Japan.

On 28 May 2019, the Group obtained an additional two board seats of Elixinol Japan therefore gaining the power to directly 
affect the returns and activities of Elixinol Japan. As a result, the investment is treated as a subsidiary and the trading results 
of Elixinol Japan are consolidated from 29 May 2019.

The goodwill balance of $447,000 represents the synergies expected to be obtained from the integration of the business 
into the Group. Goodwill is not deductible for tax purposes.

On 2 December 2019, the Company sold its 50.5% interest in Elixinol Japan to one of Elixinol Japan’s other shareholders, 
Mr Takeshi Sakurada, for $13,500 (¥1,000,000) with a deferred cash payment of $362,715 multiplied by the ratio of the 
closing price of Elixinol shares on 8 January 2020 divided by $1.09 (less Japanese taxes), which is payable by no later than 
30 June 2020.

As a result of the sale, the Company is no longer a subsidiary of Elixinol.

86

ELEXINOL GLOBAL LIMITED

NOTE 35 – BUSINESS COMBINATIONS (continued) 
Details of the acquisition are as follows:

Cash and cash equivalents

Trade and other receivables

Inventories

Other current assets

Investments

Trade and other payables

Other current liabilities

Deferred tax liability

Borrowings

Net assets acquired

Goodwill

Acquisition-date fair value of the total consideration transferred

Representing:

Deemed consideration from previously held investment

Non-controlling interest

Fair value 
$’000

1,214

368

923

24

3,124

(328)

(82)

(867)

(33)

4,343

447

4,790

2,641

2,149

4,790

The receivables acquired, which principally comprise trade receivables, and are shown at their fair value.

2018
There were no business combinations that occurred during the year ended 31 December 2018.

NOTE 36 – INTERESTS IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in 
accordance with the accounting policy described in note 2:

Name

Elixinol LLC

Principal place of business/
Country of incorporation

United States of America

EXL International Holdings LLC

United States of America

Nunyara Pharma Pty Ltd*

Hemp Foods Australia Pty Ltd**

Elixinol Investments Pty Ltd

Elixinol BV

Elixinol Ltd

Australia

Australia

Australia

Netherlands

United Kingdom

Infusion Strategies LLC

United States of America

*  previously known as Elixinol Pty Ltd
**  held-for-sale as at 31 December 2019

Ownership interest

2019
%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

60.00%

2018
%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

-

87

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 37 – DEED OF CROSS GUARANTEE
On 24 July 2018 the Board approved a resolution to enter into a deed of cross guarantee under which each Company 
guarantees the debts of the others. The following entities are party to this deed of cross guarantee:

Elixinol Global Limited 
Nunyara Pharma Pty Ltd 
Elixinol Investments Pty Ltd 
Hemp Foods Australia Pty Ltd 
Elixinol LLC

By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial 
statements and directors’ report under Corporations Instrument 2016/785 issued by the Australian Securities and 
Investments Commission.

The above companies represent a ‘Closed Group’ for the purposes of the Corporations Instrument, and as there are no 
other parties to the deed of cross guarantee that are controlled by Elixinol Global Limited, they also represent the ‘Extended 
Closed Group’.

Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of financial 
position of the ‘Closed Group’.

Statement of profit or loss and other comprehensive income

Revenue

Share of profits/(losses) of associates and joint ventures accounted for using the 
equity method

Other income

Interest income

Raw materials and consumables used and processing expenses

Employee benefits expenses and Directors' fees

Depreciation and amortisation expense

Impairment of goodwill

Impairment of assets

Professional services expenses

Sales and marketing expenses

Administrative expenses

Distribution costs

Other expenses

Finance costs

Loss before income tax benefit/(expense)

Income tax benefit/(expense)

Loss after income tax benefit/(expense)

Other comprehensive income for the year, net of tax

Total comprehensive loss for the year

Equity - accumulated losses

Accumulated losses at the beginning of the financial year

Loss after income tax benefit/(expense)

Accumulated losses at the end of the financial year

88

ELEXINOL GLOBAL LIMITED

2019 
$’000

28,066

(1,616)

23

564

(12,709)

(12,706)

(2,750)

(46,470)

(13,576)

(4,384)

(10,658)

(8,566)

(1,307)

(90)

(133)

(86,312)

7,474

(78,838)

-

(78,838)

2019 
$’000

(3,200)

(78,838)

(82,038)

2018 
$’000

37,077

(651)

484

441

(17,130)

(6,882)

(822)

-

21

(1,757)

(6,346)

(3,601)

(1,025)

-

-

(191)

(298)

(489)

-

(489)

2018 
$’000

(2,711)

(489)

(3,200)

NOTE 37 – DEED OF CROSS GUARANTEE (continued)
Statement of financial position

2019 
$’000

2018 
$’000

Current assets

Cash and cash equivalents

Trade and other receivables

Contract assets

Inventories

Income tax refund due

Prepayments, deposits and other

Assets of disposal groups classified as held for sale

Non-current assets

Receivables

Investments accounted for using the equity method

Property, plant and equipment

Right-of-use assets

Intangibles

Deferred tax

Total assets

Current liabilities

Trade and other payables

Contract liabilities

Lease liabilities

Income tax

Employee benefits

Accrued expenses

Liabilities directly associated with assets classified as held for sale

Non-current liabilities

Borrowings

Lease liabilities

Deferred tax

Employee benefits

Lease make good provision

Total liabilities

Net assets

Equity

Issued capital

Reserves

Accumulated losses

Total equity

20,083

929

-

19,209

90

6,112

1,444

47,867

6,871

8,402

12,636

4,019

39,902

4,664

76,474

124,341

2,697

157

854

-

86

619

944

5,357

-

3,473

-

-

35

3,508

8,865

115,476

188,771

8,743

(82,038)

115,476

42,604

3,310

77

6,862

-

3,123

-

55,976

3,639

1,874

5,932

-

86,249

724

98,418

154,394

5,663

720

-

98

147

366

-

6,994

250

-

3,081

90

-

3,421

10,415

143,979

139,612

7,567

(3,200)

143,979

89

ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 38 – CASH FLOW INFORMATION
Reconciliation of loss after income tax to net cash used in operating activities

Loss after income tax benefit/(expense) for the year

Adjustments for:

Depreciation and amortisation

Impairment of non-current assets

Impairment of goodwill

Net loss/(gain) on disposal of property, plant and equipment

Share of loss/(profit) - associates

Share of loss - joint ventures

Share-based payments

Gain on step acquisition

Allowance for credit losses

Deferred tax through equity

Unpaid joint venture investment

Loss from discontinued operations

Others

Change in operating assets and liabilities:

Decrease/(increase) in trade and other receivables

Decrease/(increase) in contract assets

Increase in inventories

Increase in deferred tax assets

Increase in prepayments, deposits and other

Increase/(decrease) in trade and other payables

Increase/(decrease) in contract liabilities

Decrease in provision for income tax

Decrease in deferred tax liabilities

Increase in other provisions

Increase/(decrease) in accrued expenses

Net cash used in operating activities

2019 
$’000

(83,071)

2,844

13,656

47,479

90

(81)

1,705

124

-

141

(639)

-

2,305

111

1,532

77

(25,354)

(3,666)

(3,328)

(1,773)

(563)

(186)

(3,145)

51

625

Group 
2018 
$’000

(860)

824

-

-

(4)

47

651

831

(374)

-

(406)

(991)

-

-

(2,155)

(77)

(4,506)

(641)

(2,795)

5,287

519

(108)

(55)

87

(526)

(51,066)

(5,252)

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ELEXINOL GLOBAL LIMITED

NOTE 38 – CASH FLOW INFORMATION (continued)
Changes in liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash 
changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified 
in the Group’s consolidated statement of cash flows as cash flows from financing activities.

Group

Balance at 1 January 2018

Net cash used in financing activities

Balance at 31 December 2018

Changes through discontinued operations (note 9)

Balance at 31 December 2019

NOTE 39 – EARNINGS PER SHARE

Loan with
Raw With Life 
$’000

Lease  
liabilities 
$’000

250

-

250

(250)

-

38

(38)

-

-

-

2019 
$’000

Total 
$’000

288

(38)

250

(250)

-

Group 
2018 
$’000

Earnings per share for (loss)/profit from continuing operations

(Loss)/profit after income tax attributable to the owners of Elixinol Global 
Limited

(65,997)

344

Number

Number

Weighted average number of ordinary shares used in calculating basic earnings 
per share

132,239,632

108,200,662

Weighted average number of ordinary shares used in calculating diluted 
earnings per share

132,239,632

108,200,662 

Basic (loss)/earnings per share

Diluted (loss)/earnings per share

Cents

(49.91)

(49.91)

2019 
$’000

Cents

0.32

0.32

Group 
2018 
$’000

Earnings per share for loss from discontinued operations

Loss after income tax attributable to the owners of Elixinol Global Limited

(17,074)

(1,204)

Weighted average number of ordinary shares used in calculating basic earnings 
per share

132,239,632

108,200,662

Weighted average number of ordinary shares used in calculating diluted 
earnings per share

132,239,632

108,200,662

Number

Number

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Basic loss per share

Diluted loss per share

Earnings per share for loss

Loss after income tax

Non-controlling interest

Loss after income tax attributable to the owners of Elixinol Global Limited

Cents

(12.91)

(12.91)

2019 
$’000

(83,071)

143 

(82,928)

Cents

(1.11)

(1.11)

Group 
2018 
$’000

(860)

- 

(860)

Weighted average number of ordinary shares used in calculating basic earnings 
per share

132,239,632

108,200,662

Weighted average number of ordinary shares used in calculating diluted 
earnings per share

132,239,632

108,200,662

Number

Number

Basic loss per share

Diluted loss per share

Cents

(62.71)

(62.71)

Cents

(0.79)

(0.79)

The outstanding performance rights held by directors and employees have not been included to calculate diluted earnings 
per share as their inclusion would be anti-dilutive. In addition the hurdles have not been met as at the reporting date.

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ELEXINOL GLOBAL LIMITED

NOTE 40 – SHARE-BASED PAYMENTS
The Group has established a long-term incentive share-based payment plan (‘LTIP’). Under the LTIP, the Board at is absolute 
discretion can issue options and performance rights over ordinary shares in the Company to directors, key management 
personnel and employees.

During the prior year 4,958,232 performance rights were issued for nil consideration and the share-based payment 
expensed in profit or loss was $831,000, deferred tax amounted to $403,000 and the equity movement was $1,234,000.

During the current year 931,444 performance rights were issued for nil consideration and the share-based payment 
expensed in profit or loss was $124,000, deferred tax from the prior year reversed of $403,000 and the net equity 
movement was $279,000 debit.

Performance rights are awarded based on the fixed amount to which the individual is entitled. Upon satisfaction of vesting and 
employment conditions, each performance right will, at the Company’s election, convert to a share on a one-for-one basis or 
entitle the participant to receive in cash to the value of a share at the Board’s discretion in lieu of an allocation of shares.

The performance period of the grant is five financial years in four equal tranches from the financial year of granting. For the 
grant made during 2018, the performance period is from 20 March 2018 to 31 December 2022.

The vesting dates are as follows:

Tranche

Tranche 1

Tranche 2

Tranche 3

Tranche 4

Vesting date

28 February 2020

28 February 2021

28 February 2022

28 February 2023

Grant dates and details
Set out below are summaries of performance rights granted under the plan:

2019

Grant date

Expiry date

Balance at 
the start of 
the year

Granted

Exercised

03/04/2018

03/07/2023

522,000

15/05/2018

15/08/2023

4,075,000

01/11/2018

01/02/2024

361,232

-

-

-

23/05/2019

23/08/2024

21/09/2019

21/12/2024

-

- 

4,958,232

600,000

321,444 

921,444

-

-

-

-

- 

-

Expired/ 
forfeited/
other

Balance at 
the end of 
the year

(372,819)

149,181

(2,425,000)

1,650,000

(231,038)

130,194

(150,000)

450,000

(65,634) 

255,810 

(3,244,491)

2,635,185

2018

Grant date

Expiry date

03/04/2018

03/07/2023

15/05/2018

15/08/2023

01/11/2018

01/02/2024

Balance at 
the start of 
the year

Granted

Exercised

-

-

- 

-

522,000

4,075,000

361,232 

4,958,232

-

-

- 

-

Expired/ 
forfeited/
other

-

-

- 

-

Balance at 
the end of 
the year

522,000

4,075,000

361,232 

4,958,232

The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was  
4.1 years (2018: 4.2 years).

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ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFNOTE 40 – SHARE-BASED PAYMENTS (continued)
For the performance rights granted during the current financial year, the valuation model inputs used to determine the fair 
value at the grant date, are as follows:

Grant date

Expiry date

23/05/2019

23/08/2024

21/09/2019

21/12/2024

Share price
at grant date

$5.13

$2.14

Expected
volatility

62.70%

62.60%

Dividend
yield

Risk-free
interest rate

Fair value
at grant date

-

-

1.06%

0.69%

$2.21

$1.30

NOTE 41 – PARENT ENTITY INFORMATION
Set out below is the supplementary information about the parent entity.

Statement of profit or loss and other comprehensive income

Loss after income tax

Total comprehensive loss

Statement of financial position

Total current assets

Total assets

Total current liabilities

Total liabilities

Equity

Issued capital

Share-based payments reserve

Accumulated losses

Total equity

2019
$’000

(87,465)

(87,465)

2019
$’000

19,358

Parent
2018
$’000

(2,185)

(2,185)

Parent
2018
$’000

40,196

100,210

136,649

1,266

2,126

563

1,063

189,450

139,611

955

831

(92,321)

(4,856)

98,084

135,586 

Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
Except for the deed of cross guarantee, as detailed in note 37, the parent entity had no other guarantees in relation to the 
debts of its subsidiaries as at 31 December 2019 and 31 December 2018.

Contingent liabilities
The parent entity had no contingent liabilities as at 31 December 2019 and 31 December 2018.

Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 December 2019 and 31 December 
2018.

Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the 
following:
•  ●Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity
•  ●Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an 

indicator of an impairment of the investment.

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ELEXINOL GLOBAL LIMITED

NOTE 42 – EVENTS AFTER THE REPORTING PERIOD
Sale of Hemp Foods Australia Pty Ltd
On 31 January 2020, the Group entered into a sale agreement to dispose of Hemp Foods Australia Pty Ltd, subject to, 
amongst other standard conditions, obtaining third party consents and entry into a licence agreement between the Group 
and the acquirer. All of these conditions are expected to be settled by 30 June 2020 and therefore the subsidiary has been 
classified as a disposal group held for sale and presented separately in the statement of financial position. 

Nunyara Pharma Pty Ltd
On 3 February 2020, the Group announced its intention not to pursue its application for a medical cannabis cultivation 
licence in Australia and dispose of the land held by Nunyara Pharma Pty Ltd. 

Novel Coronavirus (COVID-19)
The Novel Coronavirus (COVID-19) has been declared a pandemic in March 2020 by the World Health Organisation 
(WHO). Subsequent to the end of the FY2019 financial year there have been considerable economic impacts in Australia 
and globally arising from the outbreak of COVID-19 and Government action to reduce the spread of the virus. The outbreak 
of COVID-19 and the subsequent quarantine measures imposed by the Australian and other governments as well as the 
travel and trade restrictions imposed by Australia and other countries in early 2020 have caused disruption to businesses 
and economic activity. The Group considers this to be a non-adjusting post balance sheet event.

COVID-19 has had an impact on the operations of the Group as core operations are located in USA, Australia and Europe. At 
present the Group continues to operate effectively but the level of on site personnel has been restricted to just those core 
to the production and shipping processes since mid March 2020 in an effort to contain the spread of the epidemic. 

Even though the Group are still operating, this is not at our planned or expected capacity levels due to the reduced number 
of personnel on site. At present the Group’s ability to ship and receive goods has not been impacted, but this could change 
as government requirements evolve.  

In addition, as the operations of substantially all of the Group’s customers, suppliers and associates are located primarily in 
USA, Europe and Australia, the outbreak of COVID-19 is expected to have a negative impact on these entities. This may in 
turn negatively affect the recoverability of Group’s investments, as well as financial assets and debtors which are subject to 
impairment or expected credit loss assessments as appropriate. 

Whilst the Group’s primary sales channels remain open (supermarkets, pharmacies and eCommerce) as at the date these 
financial statements were issued, the potential for increased levels of unemployment and a reduction in discretionary 
spending levels may effect the expected revenue of the Group. This could lead to the recoverability of the Group’s 
inventories also being negatively affected. 

The Group has no external debt and as at the balance sheet date had in excess of $20m of cash available to the Group. 
The Group’s fixed cost base is relatively low, being primarily limited to rent, annual expenses (such as insurance, software 
licences) and utilities costs. Due to the nature of the operations and their location the Group has the ability to easily and 
without significant financial penalty, flex the workforce levels to reflect the required output and revenue of the Group, were 
COVID-19 and the related restrictions to remain for an extended period of time. 

As the situation remains fluid (due to continuing changes in government policy and evolving business and customer 
reactions thereto) as at the date these financial statements are authorised for issue, the directors of the Company 
considered that the financial effects of COVID-19 on the Group’s consolidated financial statements cannot be reasonably 
estimated. 

However, the directors do not consider the impact to likely compromise the ability of the entity to continue operating for the 
foreseeable future. No economic impacts resulting from COVID-19 have been included in the financial results for the year 
ended 31 December 2019. 

No other matter or circumstance has arisen since 31 December 2019 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.

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31 December 2019

In the directors’ opinion:
•  the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the 

Corporations Regulations 2001 and other mandatory professional reporting requirements

•  the attached financial statements and notes comply with International Financial Reporting Standards as issued by the 

International Accounting Standards Board as described in note 2 to the financial statements;

•  the attached financial statements and notes give a true and fair view of the Group’s financial position as at 31 December 

2019 and of its performance for the financial year ended on that date;

•  there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due 

and payable; and

•  at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group 
will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross 
guarantee described in note 37 to the financial statements.

The directors have been given the declarations required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. 

On behalf of the directors

Stratos Karousos 
Chief Executive Officer and Executive Director

30 March 2020

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ELEXINOL GLOBAL LIMITED

Independent Auditor’s Report to the Members of Elixinol 
Global Limited

Deloitte Touche Tohmatsu 
ABN 74 490 121 060 
Grosvenor Place 
225 George Street 
Sydney, NSW, 2000 
Australia 

Phone: +61 2 9322 7000 
www.deloitte.com.au 

Independent Auditor’s Report to the Members of 
Elixinol Global Limited 

Report on the Audit of the Financial Report  

Opinion  

We have audited the financial report of Elixinol Global Limited (the “Company”) and its subsidiaries (the 
“Group”) which comprises the consolidated statement of financial position as at 31 December 2019, the 
consolidated statement of profit or loss and other comprehensive income, the consolidated statement 
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes 
to the financial statements, including a summary of significant accounting policies and other explanatory 
information, and the directors’ declaration. 

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations 
Act 2001, including: 

(i)

giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its 
financial performance for the year then ended; and  

(ii)

complying with Australian Accounting Standards and the Corporations Regulations 2001.  

Basis for Opinion  

We  conducted  our  audit  in  accordance  with  Australian  Auditing  Standards.  Our  responsibilities  under 
those  standards  are  further  described  in  the  Auditor’s  Responsibilities  for  the  Audit  of  the  Financial 
Report  section  of  our  report.  We  are  independent  of  the  Group  in  accordance  with  the  auditor 
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting 
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the 
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other 
ethical responsibilities in accordance with the Code.  

We confirm that the independence declaration required by the Corporations Act 2001, which has been 
given to the directors of the Company, would be in the same terms if given to the directors as at the 
time of this auditor’s report.  

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 
our opinion.  

Liability limited by a scheme approved under Professional Standards Legislation. 

Member of Deloitte Asia Pacific Limited and the Deloitte Network.

97

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Key Audit Matters  

Key audit matters are those matters that, in our professional judgement, were of most significance in 
our audit of the financial report for the current period. These matters were addressed in the context of 
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide 
a separate opinion on these matters.  

Key Audit Matter 

How the scope of our audit responded to the 
Key Audit Matter 

Carrying Value of Goodwill and other 
Intangible Assets  

In conjunction with our valuation specialists, our 
procedures included, but were not limited to:  

As at 31 December 2019, after an impairment 
charge of A$34 million, A$28 million of goodwill 
and A$11 million of other intangible assets are 
attributable to Elixinol LLC, the USA subsidiary 
and EXU CGU as disclosed in Note 18.   

The determination of the net present value of 
future cashflows involves the exercise of 
significant judgement. For the EXU CGU, 
significant judgement was required in 
determining the assumptions to be used in the 
value in use discounted cash flow model including 
the discount rate, inflation rate, growth rate and 
forecast sales growth. 

In relation to EXU CGU’s management has 
specifically identified that a reasonably possible 
change in key assumptions used in the value in 
use impairment model could result in an increase 
in the impairment charge to goodwill.  

•

•

•

•

•

•

•

Evaluating the discounted cash flow model 
developed by management to assess the 
recoverable value of the EXU CGU. This 
included assessing the following key 
assumptions:  

o

o

o

discount rate – through comparison 
to an independently calculated 
discount rate;  
inflation rate - through comparison 
to external data; and  
forecast volumes and pricing of 
products with reference to historical 
performance and external data.   

Testing on a sample basis, the mathematical 
accuracy of the value in use model; 
Understanding and evaluating management’s 
process, including the design and 
implementation of controls in place, in 
respect of the preparation and review of 
forecasts;   
Comparison of the forecast EBITDA to the 
Board approved forecasts and post year end 
performance;  
Assessing the historical accuracy of 
management’s cash flow forecasts;  
Performing sensitivity analysis on a number 
of assumptions, in particular discount rates 
and expected sales growth; and   
Assessing the appropriateness of disclosures 
in the Notes to the financial statements. 

98

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ELEXINOL GLOBAL LIMITED

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Key Audit Matter 

How the scope of our audit responded to the Key 
Audit Matter 

Accuracy and occurrence of revenue 
recognised by Elixinol USA 

For the year ended 31 December 2019, A$24.9m 
of the Group’s revenue was generated by Elixinol 
LLC, the USA subsidiary.  

The accuracy and occurrence of amounts 
recorded as revenue in Elixinol USA represents a 
heightened risk as the processes and systems in 
place during the first nine months of the financial 
year were heavily reliant on systems operated 
with manual processes and controls over 
capturing and recording of transactions.  

Valuation of inventory 

At the year ended 31 December 2019, A$21.3 of 
the Group’s inventory resided in Elixinol LLC, the 
USA subsidiary.  

The valuation of amounts recorded as inventory 
in Elixinol USA represents a significant risk due 
to quantum and age of some of the inventory on 
hand. The ability to sell inventory in advance of 
inventory becoming obsolete has been assessed 
by management and resulted in a provision of 
A$9.4 being recorded against the inventory.   

The determination of the appropriate carrying 
value of inventory requires the use of significant 
judgement. For Elixinol LLC significant 
judgement was required in determining the 
quantum of sales expected of specific products, 
the expected average sales price and the useful 
life of products.   

Our procedures included, but were not limited to: 

•

•

•

•

•

•

Obtaining an understanding of key revenue 
streams and assessing the Group accounting 
policies set out in Note 2 to the financial 
statements; 
Understanding and evaluating management’s 
processes, including understanding the design 
and implementation of controls in respect of 
revenue recognition;   
Evaluating management’s reconciliation of the 
detailed sales invoice listing to reports obtained 
from merchant processors for the first nine 
months of the financial year; 
Testing on a sample basis, revenue transactions 
back to invoice, sales orders, shipping 
documents and cash (as applicable for each 
sample); 
Obtaining independent third party confirmations 
of the revenue generated by Elixinol LLC from a 
sample of major customers; and  
Assessing the appropriateness of disclosures in 
the Notes to the financial statements. 

Our procedures included, but were not limited to: 

Obtaining an understanding of Elixinol’s 
inventory on hand at 31 December and 
assessing the Group accounting policies set out 
in Note 2 to the financial statements; 
Understanding and evaluating management’s 
process, including understanding the design and 
implementation of controls in respect of the 
preparation and review of the inventory 
provision;   
Testing on a sample basis, evidence to support 
the recoverable value of products back to source 
documents (such as a recent sales invoice, price 
lists or independent market prices); 
Assessing the completeness of the inventory 
provision through consideration of: 

o

o

o

The rationale for any inventory lines not 
provided for;  
Assessing the expected use for potentially 
excess raw materials;  
The impact of the planned rebranding on 
existing finished goods inventory; and 
Ensuring assumptions are consistent with 
other audit procedures performed. 
Comparison of the forecast sales levels used in 
the provisioning calculation to the Board 
approved FY20 forecast; and 
Assessing the appropriateness of disclosures in 
the Notes to the financial statements. 

o

•

•

•

•

•

•

99

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Other Information  

The directors are responsible for the other information. The other information comprises the information 
included in the Group’s annual report for the year ended 31 December 2019 but does not include the 
financial report and our auditor’s report thereon.  

Our opinion on the financial report does not cover the other information and we do not express any form 
of assurance conclusion thereon.  

In connection with our audit of the financial report, our responsibility is to read the other information 
and,  in  doing  so,  consider  whether  the  other  information  is  materially  inconsistent  with  the  financial 
report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based 
on  the  work  we  have  performed,  we  conclude  that  there  is  a  material  misstatement  of  this  other 
information; we are required to report that fact. We have nothing to report in this regard.  

Responsibilities of the Directors for the Financial Report  

The directors of the Company are responsible for the preparation of the financial report that gives a true 
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and 
for such internal control as the directors determine is necessary to enable the preparation of the financial 
report that gives a true and fair view and is free from material misstatement, whether due to fraud or 
error.  

In  preparing  the  financial  report,  the  Directors  are  responsible  for  assessing  the  Group’s  ability  to 
continue as a going concern, disclosing, as applicable, matters related to going concern and using the 
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease 
operations, or have no realistic alternative but to do so.  

Auditor’s Responsibilities for the Audit of the Financial Report  

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free 
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes 
our  opinion.  Reasonable  assurance  is  a  high  level  of  assurance  but  is  not  a  guarantee  that  an  audit 
conducted  in  accordance  with  the  Australian  Auditing  Standards  will  always  detect  a  material 
misstatement when it exists. Misstatements can arise from fraud or error and are considered material 
if,  individually  or  in  the  aggregate,  they  could  reasonably  be  expected  to  influence  the  economic 
decisions of users taken on the basis of this financial report.  

As  part  of  an  audit  in  accordance  with  the  Australian  Auditing  Standards,  we  exercise  professional 
judgement and maintain professional scepticism throughout the audit. We also:  

•

•

Identify  and  assess  the  risks  of  material  misstatement  of  the  financial  report,  whether  due  to 
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit 
evidence  that  is  sufficient  and  appropriate  to  provide  a  basis  for  our  opinion.  The  risk  of  not 
detecting a material misstatement resulting from fraud is higher than for one resulting from error, 
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override 
of internal control. 

Obtain  an  understanding  of  internal  control  relevant  to  the  audit  in  order  to  design  audit 
procedures that are appropriate in the circumstances, but not for the purpose of expressing an 
opinion on the effectiveness of the Group’s internal control. 

100

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ELEXINOL GLOBAL LIMITED

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
•

•

•

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting 
estimates and related disclosures made by the directors. 

Conclude on the appropriateness of the directors’ use of the going concern basis of accounting 
and, based on the audit evidence obtained, whether a material uncertainty exists related to events 
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. 
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s 
report to the related disclosures in the financial report or, if such disclosures are inadequate, to 
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of 
our  auditor’s  report.  However,  future  events  or  conditions  may  cause  the  Group  to  cease  to 
continue as a going concern.  

Evaluate  the  overall  presentation,  structure  and  content  of  the  financial  report,  including  the 
disclosures, and whether the financial report represents the underlying transactions and events 
in a manner that achieves fair presentation.  

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or 
business  activities  within  the  Group  to  express  an  opinion  on  the  financial  report.  We  are 
responsible for the direction, supervision and performance of the Group’s audit. We remain solely 
responsible for our audit opinion.  

We communicate with the directors regarding, among other matters, the planned scope and timing of 
the audit and significant audit findings, including any significant deficiencies in internal control that we 
identify during our audit.  

We also provide the directors with a statement that we have complied with relevant ethical requirements 
regarding independence, and to communicate with them all relationships and other matters that may 
reasonably be thought to bear on our independence, and where applicable, related safeguards.  

From  the  matters  communicated  with  the  directors,  we  determine  those  matters  that  were  of  most 
significance  in  the  audit  of  the  financial  report  of  the  current  period  and  are  therefore  the  key  audit 
matters.  We  describe  these  matters  in  our  auditor’s  report  unless  law  or  regulation  precludes  public 
disclosure  about  the  matter  or  when,  in  extremely  rare  circumstances,  we  determine  that  a  matter 
should  not  be  communicated  in  our  report  because  the  adverse  consequences  of  doing  so  would 
reasonably be expected to outweigh the public interest benefits of such communication.  

Report on the Remuneration Report 

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages  25 to 32 of the Directors’ Report for 

the year ended 31 December 2019.

In our opinion,  the  Remuneration Report of  Elixinol  Global  Limited,  for  the year ended  31 December 
2019, complies with section 300A of the Corporations Act 2001.  

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ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELF 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Responsibilities  

The directors of the Company are responsible for the preparation and presentation of the Remuneration 
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express 
an opinion on the Remuneration Report, based on our  audit conducted in accordance with Australian 
Auditing Standards.  

DELOITTE TOUCHE TOHMATSU  

Helen James-Hamilton 
Partner 
Chartered Accountants 
Sydney, 30 March 2020 

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ELEXINOL GLOBAL LIMITED

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholder Information
31 December 2019

The shareholder information set out below was applicable as at 20 March 2020.

DISTRIBUTION OF EQUITABLE SECURITIES
Analysis of number of equitable security holders by size of holding:

1 to 1,000 4,903

1,001 to 5,000

5,001 to 10,000

10,001 to 100,000

100,001 and over

Total:

Number of holders of 
ordinary shares

4,903

2,990

756

780

52

Total
units

2,267,813

7,558,793

5,866,726

21,064,529

101,136,251

9,481

137,894,112

Holding less than a marketable parcel

6,572

4,994,206

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ANNUAL REPORT 2019LETTER FROM THE CHAIRMANCEO’S REPORTFY2019 MILESTONESELIXINOL REBRANDFINANCIAL REPORTCORPORATE DIRECTORYABOUT USOUR PHILOSOPHY: SEED TO SELFEQUITY SECURITY HOLDERS
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:

RAW WITH LIFE PTY LTD (BENHAIM TRADING A/C)

D & G HEALTH LLC

CITICORP NOMINEES PTY LIMITED

MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED

ROBOTEXPERT UG\C

BNP PARIBAS NOMS PTY LTD (DRP)

BNP PARIBAS NOMINEES PTY LTD (IB AU NOMS RETAILCLIENT DRP)

UBS NOMINEES PTY LTD

J P MORGAN NOMINEES AUSTRALIA PTY LIMITED

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

CS THIRD NOMINEES PTY LIMITED (HSBC CUST NOM AU LTD 13 A/C)

BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP

SEAVIEW GROUP (QLD) PTY LTD (SEAVIEW A/C)

MR ARTHUR PENDRAGON JAFFE

MR ERIC CHI KEUNG WONG

MR GREGORY JOHN STONE + MRS JENNIFER RUTH STONE (OCEAN STONE 
SUPER FUND A/C)

MR ROBERT KEITH BLANDEN + MS JOAN SYBIL BLANDEN (RK & JS BLANDEN 
S/F A/C)

MR PETER GREGORY BRAZEL

ALTMED PETS LLC

MR KESHAB CHAPAGAIN

Total:

Unquoted equity securities

Performance rights issued

Ordinary 
shares
% of total
shares issued

39.61

9.08

5.59

3.37

2.39

1.36

1.22

0.93

0.86

0.76

0.71

0.64

0.57

0.53

0.49

0.36

0.28

0.25

0.23

0.22

Number held

54,623,008

12,526,243

7,703,244

4,653,904

3,301,342

1,868,638

1,682,212

1,289,260

1,189,198

1,041,899

979,529

876,707

787,739

731,808

681,126

500,000

390,250

340,000

321,240

299,490

95,786,837

69.45

Number on
issue

2,635,185

Number
of holders

65

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ELEXINOL GLOBAL LIMITED

Shareholder Information
31 December 2019

There were no person that holds 20% or more of unquoted performance rights.

SUBSTANTIAL HOLDERS
Substantial holders in the Company are set out below:

RAW WITH LIFE PTY LTD (BENHAIM TRADING A/C)

D & G HEALTH LLC

CITICORP NOMINEES PTY LIMITED

VOTING RIGHTS
The voting rights attached to ordinary shares are set out below:

Ordinary 
shares
% of total
shares issued

39.61

9.08

5.59

Number held

54,623,008

12,526,243

7,703,244

Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each 
share shall have one vote.

There are no other classes of equity securities.

RESTRICTED SECURITIES

Class

Ordinary shares

Expiry date

8 January 2020

Number of shares

77,870,572

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ELEXINOL GLOBAL LIMITED

Corporate Directory

Directors

Company Secretary

Chief Financial Officer

Registered office

Principal place of business

Share register

Auditor

Solicitors

Stock exchange listing

Website

Business objectives

Corporate Governance Statement

Andrew Duff - Non-Executive Chairman
Stratos Karousos - Chief Executive Officer and Executive 
Director Paul Benhaim - Executive Director
Greg Ellery - Non-Executive Director

Teresa Cleary

Ron Dufficy

Level 12
680 George Street
Sydney NSW 2000
Tel: 02 4044 4585

Level 5
360 Kent Street
Sydney NSW 2000

Computershare Investor Services Pty Limited Level 4
60 Carrington Street
Sydney NSW 2000
Tel: 1300 787 272

Deloitte Touche Tohmatsu Grosvenor Place
225 George Street
Sydney NSW 2000

Gilbert + Tobin
Level 35, Tower 2
200 Barangaroo Avenue
Barangaroo NSW 2000

Elixinol Global Limited shares are listed on the Australian 
Securities Exchange (ASX code: EXL) and are traded on 
the American Over-The-Counter (‘OTC’) marketplace 
(OTC code: ELLXF).

www.elixinolglobal.com

Elixinol Global Limited has used cash and cash equivalents 
held at the time of listing, in a way consistent with its stated 
business objectives.

The Company’s directors and management are committed 
to conducting the Group’s business in an ethical manner 
and in accordance with the highest standards of corporate 
governance. The Company has adopted and substantially 
complies with the ASX Corporate Governance Principles 
and Recommendations (3rd Edition) (‘Recommendations’) 
to the extent appropriate to the size and nature of the 
Group’s operations.

The Company has prepared a Corporate Governance 
Statement which sets out the corporate governance 
practices that were in operation throughout the financial 
year, identifies any Recommendations that have not been 
followed, and provides reasons for not following such 
Recommendations.

The Company’s Corporate Governance Statement and 
policies, which is approved at the same time as the Annual 
Report, can be found on its website: https://elixinolglobal.
com/investor/investor-1/

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ELEXINOL GLOBAL LIMITED