Exasol Annual Report 2020

FY2020 Annual Report · Exasol
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ASX: EXL, OTCQB: ELLXF

ANNUAL REPORT 2020

Elixinol Global (ASX: EXL; OTCQB: ELLXF) 
is a global leader in the hemp industry, 
innovating, marketing and selling hemp 
derived nutraceutical, cosmetic and food 
products. The Company’s operations 
span the Americas, Europe and Australia.

www.elixinolglobal.com 

Elixinol Global Limited | Annual Report 2020

Contents

About Us  ............................................................................................................................................................................................................................... 2

Operations & Financials Overview ........................................................................................................................................................................... 3

Letter from Chair and Global CEO........................................................................................................................................................................... 4

FY2020 Milestones ......................................................................................................................................................................................................... 8

Delivering on Strategic Priorities .............................................................................................................................................................................10

Market Outlook & Regulatory Environment ...................................................................................................................................................... 12

Financial Report .............................................................................................................................................................................................................. 13

Directors’ Report ........................................................................................................................................................................................................ 14

Auditor’s Independence Declaration .............................................................................................................................................................. 35

Consolidated Statement of Proﬁt or Loss and Other Comprehensive Income ..........................................................................37

Consolidated Statement of Financial Position ........................................................................................................................................... 38

Consolidated Statement of Changes in Equity ..........................................................................................................................................40

Consolidated Statement of Cash Flows .......................................................................................................................................................... 41

Notes to the Consolidated Financial Statements ..................................................................................................................................... 42

Directors’ Declaration ............................................................................................................................................................................................. 93

Independent Auditor’s Report ........................................................................................................................................................................... 94

Shareholder Information ............................................................................................................................................................................................ 98

Corporate Directory .................................................................................................................................................................................................. 100

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1

 
 
 
 
 
 
 
 
 
 
C O M PA N Y OV E R V I E W

About Us

OUR VISION: 

Building a global, hemp derived, health and wellness 
consumer products business.

OUR MISSION:

Making a positive contribution to people’s health, wellness 
and the planet through the power of hemp products. 

OUR PHILISOPHY:

S
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Heritage
Champions in 
hemp for 25 years

Global knowledge
Our global footprint delivers 
highest quality products

Quality & transparency
Our products are science  
& evidence backed

Compliance focus
We maintain a strict compliance 
focus in a dynamic landscape

Strong global 
brand presence 
Building our brands 
in Americas, Europe, 
ASIA, ANZ

Winning in 
e-commerce 
and Pharmacy
Creating best in class  
e-commerce capability 
and global pharmacy 
distribution

A proﬁtable CPG model 
Mature systems and 
capabilities with a well-
managed supply chain 

Sustainable growth 
through innovation
Continuous NPD & 
innovation drive

2

Elixinol Global Limited | Annual Report 2020

 
Operations & Financials Overview

C O M PA N Y OV E R V I E W

Revenue by Channel
A$ million, 31 December year end

30.8

19.6 
(64%)

15.0

13.5 
(90%)

FY2019

FY2020

Hemp Foods Australia

Elixinol e-commerce

Elixinol retail

Bulk

Private label

Adjusted EBITDA by Half
A$ million, 31 December year end

H1 FY2019

H2 FY2019

H1 FY2020

H2 FY2020

Revenue 
by channel
Divested low margin business to 
focus on higher margin Elixinol 
branded products. 

Driving margin improvement as 
business mix shifts towards branded 
consumer goods channels.

Adjusted EBITDA*
Improved signiﬁcantly between 
H1 and H2, despite lower revenues 
with a reduced cost base 
supporting a simpliﬁed strategy.

(11.1)1)
(11.

(13.5)

(14.8)
(14.8)

Corporate

Europe

Australia

Americas

(8.1)

Cost reduction program and 
higher margin business driving 
performance improvements.

35

30

25

20

151515

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-4

-6

-8

-10

-12

-14

-16

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Annualised 
cost base

45%

Substantial operational and 
corporate cost reduction program 
completed in June 2020.

Excluding non-cash impairments

* 
**  Cash and cash equivalents at the end of the ﬁnancial year

Well funded**
Cash reserves boosted 
by heavily oversubscribed 
capital raise provides new 
funding of $20.5m.

$27.7m

vs $20.2m in FY2019

37%

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3

 
 
 
 
 
 
 
 
 
 
C O M PA N Y OV E R V I E W

Letter from Chair and Global CEO

It is our mission to make a positive 
contribution to people’s health, 
wellness and the planet through 
the power of hemp products. 
This purpose is at the heart of 
our business as we pursue our 
vision of building a global, hemp 
derived, health and wellness 
consumer products business.

Dear Fellow Shareholders 

2020 has been an unprecedented time for 
global markets. The COVID-19 pandemic 
has brought unforeseen challenges to many 
sectors, including our own. But it’s times like 
this that drive Boards to really hone-in on how 
to achieve quality outcomes through every 
challenge and opportunity.

Following a reset of the Board and 
management team in FY2020, which saw our 
leadership capabilities strengthened and our 
strategic, commercial and governance skillsets 
augmented, your Board has held a stable 
focus on driving shareholder value. We are 
writing at a turning point in this process – EXL 
stands positioned to become a sustainable, 
wellness business with a broad portfolio and 
a diversiﬁed global footprint. 

Image top: 
Helen Wiseman – Chair

Image bottom: 
Oliver Horn – Global CEO

4

Elixinol Global Limited | Annual Report 2020

We must recognise and thank our 
predecessors, former Non-Executive 
Chairman Andrew Duff and former 
CEO Stratos Karousos, for the solid 
groundwork they laid in refocusing 
the business strategy two years ago 
towards a leaner, branded consumer 
goods company. Throughout 2020 
we’ve accelerated this strategy and 
have made great strides forward 
in our pursuit of top-line growth 
and improved capital efficiency, 
which is starting to materialise in an 
improving bottom-line performance. 
Importantly, we’ve also made 
selective investment decisions in 
both team capability as well as new 
product initiatives thus creating 
new catalysts for growth.

Since joining the Company in April 
2020, we have been working with the 
Board and global leadership team 
to cement Elixinol’s position as one 
of the leading global hemp derived 
nutraceutical and food product 
companies whilst also creating a 
much leaner cost base. As we move 
further into FY2021, we look back 
upon the solid progress we have 
made towards achieving this goal. 

While we can’t discount the impact 
COVID-19 has had on the business, 
we are now in a secure ﬁnancial 
position, buoyed by an increasingly 
positive regulatory environment in 
our operating markets, and we have 
an exciting pipeline of innovative 
consumer-led products, which is 
building traction with consumers 
and customers alike.

SMART CHOICES TO 
CREATE A STABLE YET 
AGILE BUSINESS
Behind every challenge lies 
opportunity and that is how we have 
viewed the impact of the global 
pandemic. We have used this time 
to evaluate the best path forward. 
We have been extremely deliberate 
with our choices which have led to a 
stable, yet agile business - a business 
focused on quality and longevity.

C O M PA N Y OV E R V I E W

As briefly mentioned, we made signiﬁcant 
efforts throughout FY2020 to streamline 
the business in all markets, focusing on those 
channels that would be most COVID-19 
resilient, divesting low-margin business and 
driving higher margins through a number of 
efficiency improvements across our processes 
and channels. These efforts saw us right-size 
the business – resulting in an operating cost 
reduction of close to 50%. This brought our 
net quarterly cash outflow down to $3.8m in 
the December quarter (Q4 FY2020) versus 
$10.9m in the prior corresponding period of 
Q4 FY2019.

We also made smart choices, investing in 
repositioning the Elixinol brand, product 
innovation, portfolio expansion and in our 
new e-commerce platforms. 

BRAND LAUNCH AND 
PRODUCT INNOVATION
The launch of the new Elixinol brand in 
FY2020 enabled us to leverage our CBD 
capabilities into the much bigger and more 
widely understood nutraceuticals and 
supplements categories. We achieved this by 
blending Elixinol CBD with other ingredients 
with proven health beneﬁts – such as turmeric 
and melatonin, thus making it easier for 
consumers to adopt the still relatively new 
CBD category. We also introduced new 
customer and consumer-led ranges, including 
a new range of water-soluble products and 
our Good Mood CBD Gummies which 
have received strong early feedback. As a 
direct result of our brand relaunch and new 
product innovation, we’ve seen greater retail 
acceptance and growth in our distribution 
partners, including new listings with Well 
Pharmacy, leading TV home shopping 
channels and Superdrug in the UK.

Also, at the heart of our product innovation 
in FY2020 was the launch of our new 
comprehensive elixinolSkin CBD skincare 
range. This opened new growth channels, 
including Boots Ireland, with whom we 
launched the product as our ﬁrst-to-market 
partner. 

While at the time of writing, COVID-19 related 
lockdowns remained in place across many 
parts of the UK and US, hampering footfall 
into all bricks & mortar channels, we feel 
positive that we are well positioned to leverage 
our strong customer relationships and existing 
broad distribution as soon as conditions ease.

BRANDED PRODUCTS 

contributed

90% 

of Group revenue 
in FY2020 
(vs 64% in FY2019)

CASH USED  
IN OPERATIONS

reduced by

51%

from $15.2m in H1 FY2020 
to $7.4m in H2 FY2020

ADJUSTED EBITDA 
LOSSES 

improved to

$8.1m

in H2 FY2020 from 
$14.8m in H1 FY2020

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5

 
 
 
 
 
 
 
 
 
 
C O M PA N Y OV E R V I E W

Letter from Chair and Global CEO
continued

CHANNEL GROWTH IN 
E-COMMERCE
2020 has also seen a shift in strategy towards 
‘digital first’. Having a direct consumer 
relationship has become an essential 
attribute to generating value and improving 
profitability. Our focus on building our 
e-commerce capabilities has been rewarded, 
with this channel contributing 30% of overall 
Group revenues in FY2020, up from 25% 
in FY2019.

During the year, Elixinol bedded down 
the Magento e-commerce platform and 
progressed its transition to an integrated 
in-house, web services and digital marketing 
team. This has enabled us to reduce external 
agency costs and provide the ongoing agility 
needed to successfully compete in a digital 
environment. Importantly, we have gained 
a wealth of new consumer insights, allowing 
us to become more relevant and targeted 
in our marketing whilst improving return 
on marketing investment. These changes 
couldn’t have come at a better time given 
COVID-19’s effects on consumer buying 
behaviour, and they were beginning to 
positively impact e-commerce customer 
acquisition and online purchases at the 
time of writing. 

HEMP FOODS AUSTRALIA 
PERFORMS ABOVE EXPECTATIONS
Hemp Foods Australia has been a category 
leader and strong consumer wellness brand 
since it was founded over 20 years ago. 
Despite the earlier decision having been made 
to divest Hemp Foods Australia, after renewed 
business appraisal and a rapidly accelerating 
trend towards plant based super foods, the 
Board made a decision during the reporting 
period to retain this business within the Group. 
This strategy shift was carefully considered 
as your Board saw in HFA further potential to 
improve profitability via improving business 
fundamentals and to leverage its operations 
to support an Australasian strategy for Elixinol 
CBD products.

HFA achieved strong growth in FY2020 and 
now, with leaner operations and improved 
margins, accounts for one third of group 
revenue. It is the largest and one of the 
most recognisable hemp food brands in 
Australia and we look forward to seeing the 
business continue to improve into FY2021. 

6

Elixinol Global Limited | Annual Report 2020A SHIFTING REGULATORY ENVIRONMENT
The regulatory environment for cannabis and hemp 
shifted positively in FY2020, driven by the United 
Nations, the World Health Organisation and the US 
Federal Government election. 

In December 2020, The United Nations Commission 
on Narcotic Drugs (CND) accepted a World Health 
Organisation (WHO) recommendation to remove 
cannabis and cannabis resin from Schedule IV of the 
1961 Single Convention on Narcotic Drugs. This down-
scheduling is expected to lead to a novel foods regime 
for CBD being implemented across Europe. A novel food 
application to support Elixinol’s product range has already 
been submitted to the Food Standards Agency in the UK. 

The CND vote recognises CBD’s potential and this 
improving regulatory environment makes Europe a very 
attractive growth market. Due to Elixinol’s strong balance 
sheet, we are now in prime position to evaluate new 
organic and inorganic opportunities to accelerate our 
global expansion. 

In the US, we see the new democratic government 
driving a more favourable agenda when it comes to hemp 
derived CBD products. While nobody can predict timing, 
we feel conﬁdent that much needed regulatory certainty 
for the industry will be accelerated and this will have a 
positive impact on our Elixinol business.

In Australia, the Therapeutic Goods Administration 
conﬁrmed the de-scheduling of CBD from Schedule 
4 to Schedule 3, thus enabling CBD products that are 
registered with the TGA to be widely distributed across 
pharmacies. It is our current view that the pre-existing 
Special Access Scheme offers a more immediate 
opportunity for Elixinol products. We are leveraging the 
knowledge and skillset of our local HFA team to develop 
bespoke products to meet the needs of healthcare 
practitioners. 

LOOKING AFTER OUR PEOPLE AND CULTURE
A sustainable business is built on engaged and high-
performing teams. A high growth wellness industry is 
naturally attractive to employees but cost reduction 
measures coupled with severe impacts and limitations 
due to COVID-19 restrictions led to a challenging working 
environment for so many people around the world. Add 
to this a challenging economic environment and the 
pressure to not only perform, but also maintain a well-
balanced life was unprecedented in FY2020.

We are grateful to, and proud of our teams across the 
Group who worked tirelessly throughout the year, 
ﬁnding opportunities to innovate around challenges, and 
adapting to changes at the macro level whilst navigating 
very demanding situations in their personal lives. 

C O M PA N Y OV E R V I E W

In recognition of the importance to invest in people’s 
wellbeing at work, and the fact that there has been a 
lot of discretionary effort to drive the business forward, 
we put new initiatives in place to not only retain our 
people but support them in becoming the best version 
of themselves. We introduced non-ﬁnancial incentive 
structures that align with our company ethos of helping 
to improve people’s wellbeing, designed to ultimately 
improve employee engagement. We are pleased to have 
had strong feedback on these improvements to date, 
indicating that we are retaining and attracting talent. 

LOOKING AHEAD
Elixinol’s FY2021 priorities will continue to reflect our 
transformation into a leading global hemp derived 
nutraceutical and food products company, with a strong 
reputation for quality and innovation.

The year ahead will be one of further portfolio 
development and product innovation, as we increase 
our emphasis on developing differentiated consumer 
products that support the overall health and wellbeing 
of our customers.

We are now in an incredible advantageous position to 
complete our transformation; we have the team, product 
portfolio, ﬁnancial stability, systems & processes and a 
favourable regulatory outlook to create a sustainable 
and proﬁtable wellness business. 

Our long-term funding position has been substantially 
strengthened through an oversubscribed capital 
raise, providing the funding headroom to withstand 
further short-term impacts from the COVID-19 trading 
environment. We sincerely thank all those investors 
who supported the recent raise and are supporting 
the Company more generally.

DELIVERING VALUE FOR OUR 
STAKEHOLDERS
Our well-considered and concerted efforts throughout 
2020 have placed Elixinol Global on solid footing. 
We will continue to work hard to convert these strong 
foundations into the delivery of sustainable returns 
for all our shareholders. We are committed to having a 
long-term positive impact on all stakeholders connected 
to our business, including our valued employees, our 
customers and our business partners.

In closing, we would like to thank our incredible teams 
around the world for all their efforts, resilience, energy and 
enthusiasm. We would also like to offer gratitude to our 
shareholders who backed our business transformation 
through FY2020 with continued support and conﬁdence. 

Yours sincerely

Helen Wiseman 
Chair  

Oliver Horn
Global CEO

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7

 
 
 
 
 
 
 
 
 
 
 
 
F Y 2 0 2 0  M I L E S TO N E S

FY2020 Milestones

Q1 FY2020

Q2 FY2020

Elixinol Global announces a simpliﬁed 
business strategy to focus on hemp derived 
CBD products

Successfully global relaunch of new Elixinol 
brand along with innovative new, consumer-
led product range

Oliver Horn is appointed Non-Executive 
Board Director of Elixinol Global

Chairman and Non-Executive Director 
Andrew Duff and Non-Executive Director 
Greg Ellery resign from the Board 

Stratos Karousos ceased as CEO and 
Oliver Horn is appointed Global CEO 
of Elixinol Global

Helen Wiseman joins the Board as  
a Non-Executive Director

Sales channels adapted in response 
to COVID-19 environment to service 
e-commerce and in-home shopping 
more extensively 

Elixinol-branded CBD nutraceuticals 
consumer strategy becomes key revenue 
channel focus, with a more focused branded 
business model geared towards margin 
accretion 

Focus on improving e-commerce platform 
with the introduction of Magento in order to 
become a digitally led consumer business in 
the US, Europe and UK

Elixinol Global announces capital raise to 
support operating cash flow, consumer 
brand building and expand distribution

Sale of the land owned by Nunyara Pharma 
Pty Ltd in order to redeploy the cash 
proceeds to support Elixinol’s branded 
CBD nutraceuticals strategy 

Completes capital raise, raising ~$11m with 
support from institutional and retail investors 

8

Elixinol Global Limited | Annual Report 2020

F Y 2 0 2 0 M I L E S TO N E S

Q3 FY2020

Q4 FY2020

Elixinol announces an agreement with 
PharmaCann to sell cannabidiol (CBD) 
products in the Australian market through 
the Therapeutic Goods Administration’s 
(TGA’s) Special Access Scheme (SAS)

Distribution with Well Pharmacy 
commenced, with 8 Elixinol branded 
products selling in more than 500 stores 
across the UK

Elixinol’s skincare range, “elixinolSkin” 
launches in Boots Pharmacy’s throughout 
Ireland

Hemp Foods Australia performance and 
growth improvement continues, contributing 
25% of total revenue in Q3 FY2020 

Signs an exclusive Trademark and Know-
How License Agreement with Elixinol Japan, 
ensuring Elixinol can continue to build on its 
market leadership position in Japan 

Helen Wiseman appointed Chair of Elixinol 
Global, bringing strong governance and 
leadership skillset; Paul Benhaim moves 
to Non-Executive Director role

Elixinol launches its new Good Mood CBD 
Gummies range

Successful Placement raising $8.2 million, 
with strong support from new and existing 
institutional and sophisticated investors 

Heavily oversubscribed capital raise 
provides new funding of $20.5m

COVID-19 impacting retail channels in 
key markets

Hemp Foods Australia delivers above 
expectations, contributing revenue of 
$1.1m in Q4 FY2020

Advancements in marketing and web 
services improved e-commerce customer 
acquisition with a 10% increase in new site 
users and 20% higher conversion rate

First Elixinol product shipped under new 
product listing with SuperDrug, UK’s second 
largest health and beauty retailer

Pet Releaf supply agreement terminated but 
Elixinol continues to be major shareholder

First Hemp Foods Australia product shipped 
under new product listing with global retailer 
and warehouse hub Costco

United Nations’ Commission on Narcotic 
Drugs (CND) votes to accept the World 
Health Organisation’s recommendation to 
down-schedule cannabis – this is expected 
to have a substantial, positive impact on 
Elixinol’s ability to drive product sales in 
Europe and other countries influenced 
by UN decision-making 

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9

 
 
 
 
 
 
 
 
 
 
S T R AT EG Y  A N D   M A R K E T  U P DAT E

Delivering on Strategic Priorities

“ We are excited about what lies ahead in 2021, Elixinol Global 
is reenergised, the regulatory environment is better than ever 
and, with a strong balance sheet, we are ready to capture the 
incredible opportunities in front of us.” 

Oliver Horn, Global CEO

FY2020

FY2021

REENERGISE
Think – Learn – Adapt

GROW
Act – Drive

Conﬁrmed new group leadership 

Renewed board

Grew operational efficiencies

Substantial operational and corporate cost 
reduction program

Prompt COVID-19 response 

Implemented sophisticated e-commerce 
channels 

Strategically utilise well capitalised, strong 
balance sheet to accelerate journey to 
proﬁtability

Continued tight cost controls

Grow e-commerce channels

Use positively shifting regulatory 
environment for cannabis and hemp to grow 
in UK and prepare for likely change in US

Accelerate Hemp Foods Australia’s success

Improved balance sheet, oversubscribed 
capital raising

Expand European footprint and enter 
a new global market of scale

Successful relaunch of the Elixinol brand 
along with a new global product line-up

Step change R&D and innovation agenda 
to drive new growth

Developed key new listings in pharmacy and 
TV shopping channels

Establish Elixinol as authority in CBD 
& hemp education

Strategy review completed on Hemp Foods 
Australia

Expand of hemp foods product offering 
to new categories

Strategy to respond to a changing global 
regulatory environment

Continued global brand building investment

Expand CBD skincare reach

Elixiniol CBD market entry into Australia

Optimise supply chain to reduce COGS/ 
improve service levels

10

Elixinol Global Limited | Annual Report 2020

Elixinol CBD

elixinolSkin CBD

S T R AT EG Y A N D M A R K E T U P DAT E

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Hemp Foods Australia

NEW
HEMP GOLDTM 
RANGE

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11

 
 
 
 
 
 
 
 
 
 
S T R AT EG Y  A N D   M A R K E T  U P DAT E

Market Outlook & Regulatory Environment

Strong market opportunity across US and Europe

US CBD Market Size & Forecast (2019–2025)
In Billions

16.8

14.8

12.4

9.7

4.2

4.7

6.1

2019

2020

2021

2022

2023

2024

2025

Total European CBD Market (USD)
In Billions

20

15

10

5

0

2.5

2.0

1.5

1.0

0.5

0.0

2018

2019

2020

2021

2022

2023

2024

2025

According to 
Brightﬁeld Group:

US CBD MARKET1:
 – US$4.2B in 2019 expected to 
grow to US$16.8B by 2025
 – Forecast growth 2020-2025 

CAGR of 26%

EUROPEAN CBD MARKET2:
 – US$0.6B in 2020 expected to 
grow to US$2.3B by 2025
 – Forecast growth 2021-2025 

CAGR of 33%

1. 

2. 

 Source: Brightﬁeld Group: Navigating 
Seismic Shifts July 2020 US CBD Report; 
 Source: Brightﬁeld Group: European 
CBD, January 2021 Report

Regulation differs across key markets

The United Nations Commission on Narcotic Drugs (UN) accepted the WHO’s 
recommendation to reschedule cannabis to schedule 1, recognising its medicinal 
value and opening the pathway towards global relaxation of CBD legislation.

US REGULATORY FRAMEWORK UNCERTAIN: 
 – Highly competitive market with varied state 

regulations. Following election of democratic 
government, movement expected towards further 
legalisation, increased industry support and the 
classiﬁcation of CBD as a dietary supplement.

EUROPEAN NOVEL FOODS APPLICATION:  
 – European regulators are expected to resume their 
review of the novel food authorisation application 
process for CBD products after the European 
Commission reversed its previous preliminary ruling 
that classiﬁed CBD as a narcotic, thus conﬁrming the 
pathway to classify CBD as a food.

 – UK Food Standards Agency (FSA) requires that those 
looking to market ingestible CBD products will have 
to submit an application for novel foods to keep 
products on shelves beyond 31 March 2021.  

EXPLORING FAST DEVELOPING 
AUSTRALIAN MARKET: 
 – On 15 Dec 2020, the TGA announced a ﬁnal decision 
to down-schedule CBD to schedule 3 in early 2021 
allowing for certain registered TGA-approved low 
dose CBD products to be supplied over-the-counter 
by a pharmacist, without a prescription. 

 – Elixinol can separately enter the market under the 

TGA’s Special Access Scheme.

12

Elixinol Global Limited | Annual Report 2020

Financial Report

Directors’ Report............................................................................................................................................................................................................. 14

Auditor’s Independence Declaration .................................................................................................................................................................. 35

Consolidated Statement of Proﬁt or Loss and Other Comprehensive Income ...............................................................................37

Consolidated Statement of Financial Position ................................................................................................................................................ 38

Consolidated Statement of Changes in Equity ...............................................................................................................................................40

Consolidated Statement of Cash Flows .............................................................................................................................................................. 41

Notes to the Consolidated Financial Statements .......................................................................................................................................... 42

Directors’ Declaration .................................................................................................................................................................................................. 93

Independent Auditor’s Report ................................................................................................................................................................................ 94

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F I N A N C I A L R E P O R T

Directors’ Report

The directors present their report, together with the ﬁnancial statements, on the consolidated entity (referred to hereafter 
as the ‘Group’ or ‘Elixinol’) 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 2020.

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:

Helen Wiseman

Non-Executive Chair (appointed Chair 10 September 2020)

Non-Executive Director (appointed 21 April 2020)

Paul Benhaim

Non-Executive Director

Former Non-Executive Chair (appointed Chair 6 April 2020, ceased 10 September 2020)

Oliver Horn

Global Chief Executive Officer and Executive Director (appointed 21 April 2020)

Executive Director (appointed 21 April 2020)

Former Non-Executive Director (appointed 6 April 2020)

Stratos Karousos

Former Group Chief Executive Officer (ceased 21 April 2020)

Former Executive Director (ceased 21 April 2020)

Andrew Duff

Former Non-Executive Chair (ceased 6 April 2020)

Greg Ellery

Former Non-Executive Director (ceased 6 April 2020)

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

The principal activities of the Group are:

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

Elixinol Europe (hemp derived cannabidiol (‘CBD’) food and cosmetics)
Elixinol Europe is based in Utrecht, The Netherlands, and London, United Kingdom, and was established in 2018 to 
specialise in the development, sourcing, marketing and distribution of hemp derived cannabidiol ‘CBD’ products 
including skincare.

Hemp Foods Australia (hemp derived foods and skincare products)
Hemp Foods Australia is based in New South Wales Australia, was founded in 1999 and manufacture, market and 
distribute hemp derived food, supplements and skincare products in Australia. Hemp Foods Australia distributes mainly 
within Australia but also supplies to export markets.

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 31 December 2020, the Group reported a net loss from continuing operations after income tax 
of $104,478,000 (2019: $80,512,000 net loss).

For the year ended 31 December 2020, the Group reported a net loss from discontinuing operations after income tax 
of nil (2019: $2,559,000 net loss).

For the year ended 31 December 2020, the Group reported total comprehensive loss after income tax of $104,506,000 
(2019: $82,928,000 total comprehensive loss).

The Group’s revenues from continuing operations for the year ended 31 December 2020 were $15,010,000 (2019: 
$30,714,000).

14

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

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 2020 was an Adjusted EBITDA 
loss of $22,930,000 (2019: Adjusted EBITDA loss of $24,632,000). A reconciliation of Adjusted EBITDA from continuing 
operations to statutory loss is detailed below:

EBITDA from continuing operations

(Loss)/profit from continuing operations

Add back: Finance costs

Deduct: Interest income

Deduct/(add back): Income tax

Add back: Depreciation and amortisation

EBITDA from continuing operations

Add back: Impairment of intangibles

Add back: Impairment of assets

Adjusted EBITDA from continuing operations

Group

2020 
$’000

2019 
$’000

(104,478)

(80,512)

49 

(100)

4,200

3 , 2 1 3 

(97,116)

3 9, 1 7 8 

35,008

133 

(564)

(7,537)

2,795 

(85,685)

49,059 

11,994 

(22,930)

(24,632)

The Group’s cash flow used in operations for the year ended 31 December 2020 was $22,621,000 (2019: $51,066,000).

The Group recognised non-cash impairments of intangibles (including goodwill) of $39,178,000 for the year ended 
31 December 2020 relating to the Elixinol Americas CGU. The Group performed its annual impairment test at 
31 December 2019, however as a result of trading performance from the reduction in revenues from the COVID-19 
pandemic, indicators of impairment existed for Elixinol Americas as at 30 June 2020. Key assumptions in preparing the 
cash flow projections are subject to signiﬁcant judgement about future economic conditions and the rapidly changing 
regulatory in which the CGU’s operate in and uncertainty of the future impact of COVID-19. As a result, impairment 
testing was performed at 30 June 2020 and this resulted in a full impairment of intangible assets, including goodwill and 
customer relationships from private and bulk customers of the Elixionol America CGU. The assumptions were reviewed 
at the year end and remain consistent with the impairment review performed at the half year.

The Group recognised non-cash impairments of assets of $35,008,000 for the year ended 31 December 2020 relating 
to inventory, ﬁxed assets and equity investments (31 December 2019: $11,994,000, 30 June 2020: $29,787,000).

Segment results

Americas
The Americas segment comprises the trading results of Elixinol LLC (‘Elixinol Americas’) and its investments including 
Pet Releaf, NCHPP and H&W Holdings.

Americas reported revenue of $8,510,000 for the year ended 31 December 2020 (2019: $24,915,000) and EBITDA 
of $14,170,000 loss for the year (2019: $13,593,000 EBITDA loss).

In the US, the regulatory environment remains dynamic and varies from state to state but with a heightened expectation 
that the Food and Drug Administration (‘FDA’) will progress its rulemaking process regarding marketing of CBD products 
as dietary supplements. The current CBD market continues to be oversupplied posing a challenging environment for 
the industry. Additionally, COVID-19 factors continued to negatively impact sales, in particular in traditional retail / bricks 
and mortar channels. 

To lead the US business transformation, a new leadership team was put in place in March 2020 led by a new Americas 
CEO. Throughout the year, the full-time equivalent (‘FTE’) head count was reduced from 98 to 39 and thus contributing 
materially to the Company’s overall reduction in quarterly cash outflows of $10.9 million comparing Q4 FY2020 to 
Q4 FY2019.

As a result of the increased need for online shopping in the COVID-19 environment, online sales now represent 
approximately 50% of US revenues. During Q4 FY2020, Elixinol Americas progressed its transition towards an 
integrated in-house, web services and digital marketing team. This enables the Company to reduce external agency 
costs and provides the agility needed to successfully compete in a digital environment with rapid content creation.

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F I N A N C I A L R E P O R T

Directors’ Report
continued

These advancements in marketing and web services improved e-commerce customer acquisition, highlighted by 
a 10% increase in new website users and a 12% increase to the customer database from the prior quarter. Continued 
improvements to the Magento website platform have produced 25% longer user sessions, 42% higher page views and 
a 20% higher conversion to purchase rate driving continued growth in reported online sales.

A total of 500 affiliates, third party websites who promote Elixinol products under a referral agreement and receive 
a commission on sales, have now been onboarded to support Elixinol product sales through the e-commerce channel. 
Approximately 20% of the affiliate portfolio contributes recurring monthly sales, while the Company continues increased 
engagement and conversion with the newer affiliate members. This strategy provides much broader e-commerce 
distribution and consumer reach.

To further optimise the business and adjust to a COVID-19 environment, Elixinol also expanded its out-bound calling and 
tele-marketing capability providing a cost effective way to service retailers.

Elixinol branded capsules and tinctures continue to be Elixinol Americas top selling products with Daily Balance being 
the best-selling capsule product. Bricks and mortar retail channel revenue for Elixinol Americas declined during the 
quarter, impacted by COVID-19, due to signiﬁcantly reduced footfall.

Operations have continued to move towards a capital light model using readily available third-party manufacturing 
capacity thus further reducing operating cost.

On 11 May 2020, it was announced that a class action against Elixinol, LLC, had been dismissed. The withdrawal of the 
class-action suit was vindication of the Company’s position that its products are accurately labelled and that the plaintiffs’ 
misleading conduct claims were without merit.

Europe
The European segment includes Elixinol BV and Elixinol Limited (‘Elixinol Europe’), reported revenue of $2,344,000 
for the year ended 31 December 2020 (2019: $2,268,000) and EBITDA loss of $4,470,000 (2019: $3,551,000).

According to Brightﬁelds January 2021 CBD report, Europe’s CBD market reached US$554 million in 2020 and is 
expected to grow to nearly US$2.6 billion by 2025, with a ﬁve-year compound annual growth rate (‘CAGR’) of 33.2%.

The largest CBD markets in Europe today are those of the United Kingdom and Germany, each of which was estimated 
to be a $100 million market in 2019.

During the fourth quarter, the United Nations (‘UN’) Commission on Narcotic Drugs (‘CND’) accepted a World Health 
Organization (WHO) recommendation to remove cannabis and cannabis resin from Schedule IV of the 1961 Single 
Convention on Narcotic Drugs. Late in 2020 the European Commission backed away from its preliminary stance that 
CBD should be treated as a narcotic and can now be regulated as food. These positive changes from the UN, WHO and 
the European Commission will positively impact the Company’s ability to conduct business in its key regions. Over the 
last two years Elixinol has built a substantial base in Europe which has contributed signiﬁcantly to our recent performance 
improvement, and from which new value will be unlocked over the coming year. Given the signiﬁcant influence of the UN, 
we also expect positive follow-on effects into other countries where we operate.

Both the European and UK Food Standards Agency announced on 13 February 2020 that those looking to market 
ingestible CBD products will be required to submit an application for novel foods to keep products on shelves beyond 
31 March 2021. Elixinol is conﬁdent its product range will be supported by a novel food application across all of Europe. 
Under its membership with the European Industrial Hemp Association (‘EIHA’) its application to the Food Standards 
Agency has now been submitted in the UK.

The improving regulatory environment makes Europe a very attractive growth market and due to Elixinol’s strong balance 
sheet, the Company is now in a position to evaluate new organic and inorganic opportunities to accelerate its global expansion.

Hard lockdowns in Ireland and the UK severely impacted footfall into pharmacy stores, providing challenging trading 
conditions for Elixinol’s new product launches in these regions, thus further reinforcing the continued investment in 
direct sales channels such as e-commerce and TV shopping.

Australia
The Australian segment comprises the continuing trading results from Elixinol Australia Pty Ltd (formerly Nunyara Pharma 
Pty Ltd) (‘Elixinol Australia’) and Hemp Foods Australia Pty Ltd (‘HFA’). Australia reported revenue of $4,156,000 for the 
year ended 31 December 2020 (2019: $3,531,000) and EBITDA loss of $283,000 (2019: $1,553,000 EBITDA loss).

On 25 May 2020, the Company announced that the share purchase agreement (SPA) for the sale of HFA was terminated 
by the buyer due to non-satisfaction of a condition precedent in the SPA, citing COVID-19 impacts. At the time the 
SPA termination was announced, the Company said it would continue to operate HFA pending an evaluation of all 
opportunities to capitalise on HFA’s established position as one of Australia’s leading hemp foods brands.

16

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

Given the improving ﬁnancial performance of HFA and market dynamics, on 20 July 2020 the Group announced that 
it had decided to continue the HFA operations, whilst exploring potential to leverage the cost base and skillset in HFA 
to support opportunities emerging from the changing Australian CBD regulations.

On 7 May 2020, the Group announced that it had sold the land owned by Nunyara for $2.6 million. The cash proceeds 
from the sale are being redeployed to support Elixinol’s branded CBD nutraceuticals strategy.

HFA grew revenue by 10% during Q4 FY2020, leading it to be break-even on an operating cash basis for the second 
consecutive quarter. Continued margin improvement was also achieved as a result of improved operational efficiencies 
and portfolio optimisation. Initial pipe-ﬁll and replenishment orders of HFA’s Essential Hemp branded seeds were shipped 
throughout the period under a recent Australian national listing with global retailer and warehouse club, Costco. Further 
promotions are scheduled for the current quarter.

The Therapeutic Goods Administration (‘TGA’) conﬁrmed the descheduling of CBD from Schedule 4 to Schedule 3, thus 
enabling CBD products that are registered with the TGA to be widely distributed across pharmacies. However, Elixinol 
considers the existing special access scheme Schedule 4 and 8 environment a more immediate opportunity and is 
developing bespoke products for healthcare practitioners.

Share of associates’ loss 
Share of associates loss during the year ended 31 December 2020 was $1,076,000 (2019: $1,624,000 loss).

Review of ﬁnancial position
At 31 December 2020 the net assets of the Group were $35,651,000 which included $27,743,000 of cash and cash 
equivalents. The key impact during the period was loss of $104,478,000 offset by the additional net capital raised 
of $28,959,000, net of issue costs (refer Note 22).

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:
 – Creating strong consumer brands and improving marketing capability to drive brand equity;
 – Innovating and developing new functional products to increase consumer adoption and drive category growth;
 – A varied global regulatory framework which is improving in our favour of CBD and hemp products;
 – Securing high quality supply of raw materials and manufacturing relationships at competitive prices for hemp and 

CBD products;

 – Consumer and customer education on the power of hemp and CBD to increase penetration & understanding;
 – Delivering high quality, ethical and sustainable products to consumers;
 – Continued investment in digital and e-commerce capability to own the consumer relationship; and
 – Optimising and reducing cost base to create a ﬁt for purpose and agile business.

Business strategies and future prospects

Reﬁned strategic focus
Under new group leadership and with a renewed board, in H1 FY2020, Elixinol’s business was aggressively repositioned 
towards as branded consumer goods business leading to improved fundamentals with substantial cost reductions and 
improved cash-flows. Key initiatives included:
 – Extensive leadership changes at Board and operational level, bringing new strategic, commercial, digital marketing, 

supply and governance disciplines;

 – Substantial operational and corporate cost reduction program completed in June 2020, leading to an annualised cost 

base which is approximately 45% lower than 2019;

 – Implementation of a sophisticated e-commerce platform to drive higher margin sales and improve scaleability;
 – Pursuing an omni-channel sales strategy to reduce dependency on bricks & mortar channels and improve in-home 

shopping product availability via e-commerce and TV shopping;

 – European efforts focused on UK as priority market prioritising pharmacy, home shopping TV and e-commerce;
 – Embedding and optimisation of new ERP system to improve business reporting, controls and commercial decision 

making;

 – Successful relaunch and repositioning the Elixinol brand with a new product portfolio towards a comprehensive 

nutraceuticals consumer products offering; and

 – Cessation of low value business activities such as bulk and private label services to improve proﬁtability.

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F I N A N C I A L R E P O R T

Directors’ Report
continued

Vision and mission
During the year, the Company vision and mission were deﬁned by the leadership.

Company Vision: Building a global, hemp derived, health and wellness consumer products business.

Company Mission: Making a positive contribution to people’s health, wellness and the planet through the power of hemp 
products.

Key strategic objectives identiﬁed
The Group remains very positive on the market opportunity for hemp derived food and CBD and its ability to leverage 
its strong consumer brands and reputation for high quality products. The Group has repositioned its strategy towards a 
branded consumer goods nutraceutical and food business aimed at delivering sustainable growth. The Group’s strategic 
focus is now predicated on the following key pillars to support revenue growth and margin improvement:
 – Global diversiﬁcation: Expanding global footprint into scaleable CBD and hemp markets within Europe and other 

markets of scale; 

 – Continued investment in building global brands - the new and rebranded Elixinol range is ideally positioned to 

participate in the global growth of nutraceutical wellness products; 

 – Relentless focus on improving capital efficiency - long term focus on improving cash flow, driving margin accretion 

and tightly controlling expenditures;

 – Establishment of a category leading R&D and innovation capability to drive category growth;
 – Seeking new opportunities to increase scale of US business to leverage existing cost base;
 – Agile COVID-19 response: Win in home shopping channels and leverage increased consumer need for natural 

wellness products;

 – Expansion of hemp foods product offering to participate in more healthy plant based food consumer occasions;
 – Expanding into high growth CBD skincare - our new elixinolSkin CBD skincare range opens new growth channels 

with fewer regulatory constraints;

 – Invest in the attracting and retaining talent through improved employee value proposition; and
 – Development of an Environmental Social Governance agenda to support our purpose of ‘doing good to people 

and the planet through the power of hemp’.

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:

Coronavirus (COVID-19)
The ongoing COVID-19 pandemic has had a signiﬁcant impact on the global economy and the ability of individuals, 
businesses, and governments to operate. Across the globe, travel, trade, business, working arrangements and 
consumption have been materially impacted by the pandemic. There continues to be considerable uncertainty as to the 
duration of and further impact of COVID-19 including in relation to government, regulatory or health authority actions, 
work stoppages, lockdowns, quarantines and supply restrictions.

The impact of some or all of these factors could cause an adverse impact to the Group’s ﬁnancial performance even 
though we operate an essential business. Furthermore, as an international business supplying products to various markets 
globally, the pandemic and associated impacts could necessitate further capital requirements / support (either on a 
standalone basis or concurrently), which creates additional challenges and risks for the ﬁnancial position of the Group.

Furthermore, the Group’s ﬁnancial position may be adversely impacted if suppliers (including its counterparties, suppliers 
of IT services, and other suppliers of products and services) are unable to successfully implement business continuity 
plans in the current environment or if any such suppliers are unable to continue as going concerns as a result of the 
economic impact of COVID-19.

The spread of COVID-19 has already resulted in governmental authorities in Australia, the United States, Europe and 
other countries around the world imposing a variety of measures restricting day-to-day life, including quarantines and 
travel restrictions of varying scope. This has resulted in signiﬁcant disruptions in the global economy and the economies 
of particular countries, including health systems and manufacturing supply chains, consumption and overall economic 
output, which in turn has caused reduced consumer conﬁdence and discretionary spending and signiﬁcant volatility in 
global ﬁnancial markets.

However, the extent of the impact on our business, results of operations, ﬁnancial condition, liquidity and cash flows 
is largely dependent on future developments, which are highly uncertain and not predictable, including the scale of 

18

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

COVID-19 and actions taken to address its impact. Moreover, changes in interest rates, reduced liquidity or a continued 
slowdown in Australia, the United States and Europe or global economic conditions may also adversely affect our 
business, ﬁnancial condition, results of operations, liquidity or prospects. Further, extreme market volatility may leave 
us unable to react to market events in a prudent manner.

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 contracts 
with these suppliers may impact the Group’s ability to maintain consistent production levels and meet 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.

Change to laws or regulations
Elixinol’s operations are highly regulated and Elixinol could be adversely affected by changes in laws, regulations or 
regulatory policy. The operations and proposed operations of Elixinol are subject to a variety of laws, regulations and 
guidelines. The hemp derived CBD industry is evolving globally, including in the USA and in Europe & the UK. It is likely 
that governments worldwide will continue to explore the beneﬁts, risks and operations of companies involved in the 
hemp sector.

Elixinol’s business, prospects, reputation, performance and ﬁnancial condition could all be affected by changes to law 
and regulation, changes to policies and changes in the supervisory activities and expectations of its regulators across 
all of the jurisdictions in which it operates. In particular, the regulation of hemp is developing and, as a result, a change 
in government or increase in political lobbying may result in a change in government policy and an amendment of 
legislation and/or regulation. For example, there is a risk that the allowable levels of THC in hemp products sold in the US 
changes. This could potentially result in additional processing costs for the Group and impact the Company’s ﬁnancial 
performance. There is a further risk that the FDA may seek to change the laws and regulations governing the marketing 
of CBD products in the US (following a public statement on 5 March 2020 that it intends to engage with stakeholders in 
relation to this issue). In the US, given that many of the applicable laws and regulations are determined at the State-level, 
there is a risk that the regulatory regime governing the Group’s US operations and distribution network becomes 
fragmented and difficult to comply with. The introduction of new legislation or amendments to existing legislation by 
governments, or the respective interpretation of the legal requirements in any of the legal jurisdictions which governs 
the operations or contractual obligations of Elixinol, could impact adversely on the assets, operations, and the ﬁnancial 
performance of the Group and the industry in general.

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F I N A N C I A L R E P O R T

Directors’ Report
continued

In the UK, the Food Standards Agency (FSA) announced on 21 February 2020 that it has set a deadline of 31 March 2021 
for CBD businesses such as Elixinol to submit valid novel food authorisation applications to permit Elixinol to continue to 
sell its CBD food supplements in the UK. The application for the novel food authorisation has now been submitted in the 
UK. The failure to secure novel food authorisations for its CBD food supplement products would have a materially adverse 
impact on the Company’s UK operations – ingestible products make up a large proportion of its business in the UK (with 
the balance being topically applied products such as cosmetics).

Regulatory compliance and the management of regulatory change are an important part of Elixinol’s planning processes. 
Elixinol expects that it will continue to invest in compliance and the management and implementation of regulatory 
change and, at the same time, signiﬁcant management attention and resources will be required to update existing or 
implement new processes to comply with new regulations (such as obligations to provide certain data and information 
to regulators) or new interpretations of existing laws or regulations. The failure of Elixinol to appropriately manage and 
implement regulatory change, including by failing to implement effective processes to comply with new regulations has 
in the past, and could in the future result in Elixinol failing to meet a compliance obligation.

To the extent possible, these risks are managed on an ongoing basis. Mitigation measures and strategies to address 
the risks are maintained and regularly reviewed, including via regular reporting to the Board.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

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. On 25 May 2020, the Company announced that the share purchase agreement (‘SPA’) 
for the sale was terminated by the buyer due to non-satisfaction of a condition precedent in the SPA, citing COVID-19 
impacts. Subsequently, the Company evaluated the opportunities of Hemp Foods Australia and decided to continue 
the operations as part of the Group. As a result, the subsidiary has been reclassiﬁed from a discontinued operation and 
held-for-sale at 31 December 2019, and included in the continuing operations in the 31 December 2020 results.

Elixinol Australia Pty Ltd (formerly 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 Elixinol Australia Pty Ltd (formerly Nunyara Pharma Pty Ltd). The land 
held by the subsidiary was sold for $2.6 million and settled in June 2020.

Corporate structure changes
On 6 April 2020, Founder and Non-Executive Director Mr Paul Benhaim became Chair of the Board and Mr Oliver 
Horn, former MD/CEO of Swisse Wellness ANZ and North America, was appointed Non-Executive Director. Chair and 
Non-Executive Director Mr Andrew Duff and Non-Executive Director Mr Greg Ellery resigned from the Board.

On 21 April 2020, Elixinol appointed Mr Oliver Horn as Global CEO. Mr Horn has extensive global industry experience, 
leadership credentials and passion for wellbeing. Mr Horn replaced former Group CEO Mr Stratos Karousos. In 
addition, the Group announced on 21 April 2020 the appointment of Ms Helen Wiseman to the Elixinol Global Board as 
Non-Executive Director. Ms Wiseman has extensive international experience in food, pharmaceutical, natural healthcare, 
professional services, energy, natural resources and manufacturing industries. Ms Wiseman is an audit committee 
specialist for listed companies. As former partner of KPMG, and previously named as one of the 2014 Australian Financial 
Review and Westpac 100 ‘Women of Influence’, she brings diversity and seasoned governance skills to the board.

On 10 September 2020, the Company appointed Ms Helen Wiseman as Chair of the Board, and Mr Paul Benhaim 
continued as a Non-Executive Director.

Class action dismissed
On 11 May 2020, the Company announced that the plaintiffs in the class-action suit ﬁled against Elixinol LLC in the 
United States District Court for the Northern District of California, ﬁled a Notice of Voluntary Dismissal (Notice). The 
withdrawal of the class-action suit was vindication of the Company’s position that its products are accurately labelled 
and that the plaintiffs’ misleading conduct claims were without merit.

Capital raise
During May 2020, the Company completed an accelerated non-renounceable pro-rata entitlement offer raising 
$11 million before transactions costs. The entitlement offer was completed in two stages with the Institutional entitlement 
offer completing on 5 May 2020 raising $5.3 million before transaction costs issuing 26,712,850 ordinary shares at $0.20 
per share. On 26 May 2020, the Retail Entitlement Offer completed, and the Company issued 28,230,102 ordinary 
shares at $0.20 per share, raising $5.6 million before transaction costs. The placements together represented 40% of the 
Company’s shares on issue prior to the placements.

20

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

Performance share rights
On 30 July 2020, the Group issued 2,465,043 Performance Share Rights under an employee incentive scheme. On 
16 October 2020, the Group issued a further 1,234,177 Performance Share Rights under an employee incentive scheme.

Capital raise
On 16 November 2020, the Company completed a placement raising $8.2 million before transactions costs. The 
placement was supported by both existing and new sophisticated and institutional shareholders issuing 48,209,265 
ordinary shares at $0.17 per share. At the same time, the Company announced it would undertake a share purchase 
plan (SPP) to eligible existing shareholders. On 16 December 2020, the Company announced the SPP was signiﬁcantly 
oversubscribed and increased the size of the expected SPP to $12.3 million before transaction costs for the issue of 
72,313,898 ordinary shares at $0.17 per share. A total of $20.5 million before transaction costs was raised over these two 
placements. The placements together represented 63% of the Company’s shares on issue prior to the placements.

Coronavirus (COVID-19)
The coronavirus (‘COVID-19’) was declared a pandemic in March 2020 by the World Health Organisation (‘WHO’). 
During H1 FY2020 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 2020 have caused disruption to businesses and economic activity.

While COVID-19 related lockdowns have clearly impacted the ability to get the Group’s CBD products to customers in 
some physical retail environments, positive trends are emerging in the pharmacy channel as consumers seek ways of 
better protecting their health. In parallel, healthy on-going baseline performance continues via TV shopping channels in 
Germany and the UK.

The Group’s nutraceutical CBD product portfolio is well positioned to aid and support wellbeing during COVID-19 times. 
Products such as Good Night, Stress Less and Immune Booster are becoming increasingly relevant in this time and the 
Group’s primary sales channels remain open.

The operations of substantially all of the Group’s customers, suppliers and associates are located primarily in the USA, 
Europe, UK and Australia. The outbreak of COVID-19 is expected to continue to have an impact on these entities. This in 
turn has negatively affected the recoverability of the Group’s investments, as well as ﬁnancial assets and other assets due 
from third parties such as debtors, prepayments and advances to suppliers which have been subject to impairment or 
expected credit loss assessments as appropriate.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
No matter or circumstance has arisen since 31 December 2020 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 food products and its ability to 
leverage its strong reputation for high quality products. 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:
 – Global diversiﬁcation - expanding global footprint into scaleable CBD and hemp markets within Europe;
 – Seeking new opportunities to increase scale of US business to leverage existing cost base;
 – Expansion of hemp foods product offering to participate in more healthy plant based food occasions;
 – Relentless focus on improving capital efficiency - long term focus on improving cash flow, driving margin accretion 

and tightly controlling expenditures;

 – Building critical new competencies in digital marketing, R&D, omni-channel sales;
 – Agile COVID-19 response - embrace in-home shopping channels and leverage increased consumer desire for natural 

wellness products;

 – Continued investment in building global brand – the new and rebranded Elixinol range is ideally positioned to 
participate in the global growth of nutraceutical wellness products. UK distribution gains in pharmacy lay the 
foundation for growth;

 – Expanding into high growth CBD skincare - our new elixinolSkin CBD skincare range opens new growth channels 

with fewer regulatory constraints;

 – Becoming a digitally led global business with revenues from e-commerce accounting becoming key revenue and 

proﬁt driver; and

 – Supply chain optimisation - seeking new opportunities to shorten supply chain and reduce cost of goods.

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

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F I N A N C I A L R E P O R T

Directors’ Report
continued

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

INFORMATION ON DIRECTORS

Helen Wiseman
Non-Executive Chair and Non-Executive Director

Qualiﬁcations:

Experience and expertise:

Chartered Accountants Australia and New Zealand – Fellow, Graduate of the Australian 
Institute of Company Directors, Certiﬁed Director, INSEAD International Directors 
Programme
Helen Wiseman is a Non-Executive Director and audit committee specialist with extensive 
international experience in food, pharmaceutical, natural healthcare, professional services, 
energy and natural resources and manufacturing industries. Helen is a former KPMG 
partner and brings extensive ﬁnancial and commercial acumen, strategic risk oversight 
and seasoned global governance skills to the board. Helen was previously named as 
one of the 2014 Australian Financial Review and Westpac 100 Women of Influence.

Other current directorships: Bid Corporation (JSE: BID)
Former directorships 
(last 3 years):
Special responsibilities:

WPG Resources Limited

Interests in shares:
Interests in rights:

Chair of Audit and Risk Committee and Member of Remuneration and Nomination 
Committee
168,132 ordinary shares
62,271 performance rights

Paul Benhaim
Non-Executive Director

Experience and expertise:

Paul has over 26 years’ experience in the hemp industry and is the co-founder of Elixinol, 
Elixinol Australia and Hemp Foods Australia. Paul is considered an expert in the industrial 
hemp industry and frequently presents at industry conferences globally. He has also 
played a role in shaping regulation around cannabis laws.

Other current directorships: None
None
Former directorships 
(last 3 years):
Special responsibilities:
Interests in shares:
Interests in rights:

Member of Audit and Risk Committee
29,523,008 ordinary shares
None

22

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

Oliver Horn
Global Chief Executive Officer and Executive Director

Qualiﬁcations:
Experience and expertise: Oliver Horn was most recently MD/CEO of Swisse Wellness for Australia and New Zealand 

BSc degree, GAICD

(ANZ) and North America. Oliver has previously held senior operational leadership 
positions at Treasury Wine Estates across ANZ, Europe, Middle East and Africa. With an 
established track record for exponential growth in established and emerging markets, 
Oliver has extensive experience in building premium global consumer brands, a deep 
knowledge of the vitamins, minerals and supplements (VMS) category, a track record of 
premium brand building and a passion for creating businesses with a positive and thriving 
workplace culture.

Other current directorships: None
Former directorships 
(last 3 years):
Special responsibilities:

Interests in shares:
Interests in rights:

Non-Executive Director of Aumake Ltd (ASX: AUK) (Nov 2019 - Oct 2020)

Member of Audit and Risk Committee and Member of Remuneration and Nomination 
Committee
735,221 ordinary shares
830,472 performance rights

‘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.

CHIEF FINANCIAL OFFICER

Qualiﬁcations:
Experience and expertise:

Ron Dufficy
Global Chief Financial Officer

BEc, MCom, FCPA
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.

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F I N A N C I A L R E P O R T

Directors’ Report
continued

COMPANY SECRETARY

Qualiﬁcations:
Experience and expertise:

Teresa Cleary
General Counsel and Company Secretary

LLB BA GAICD FGIA
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.

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 2020, and the number of meetings attended by each director were:

Full Board

Remuneration and 
Nomination Committee

Audit and Risk Committee

Attended

Held

Attended

Held

Attended

Held

13

17

14

5

4

4

13

17

14

5

4

4

3

3

3

1

1

1

3

3

3

1

1

1

2

3

2

1

1

1

2

3

2

1

1

1

H Wiseman

P Benhaim

O Horn

S Karousos

A Duff

G Ellery

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

24

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

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 major 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:
 – ±Helen Wiseman - Non-Executive Chair (appointed 10 September 2020) and Non-Executive Director (appointed 

21 April 2020);

 – Paul Benhaim – Non-Executive Director and Former Non-Executive Chair (appointed Chair 6 April 2020, ceased 

10 September 2020);

 – Oliver Horn - Global Chief Executive Officer and Executive Director (appointed 21 April 2020) and Former 

Non-Executive Director (appointed 6 April 2020);

 – Stratos Karousos - Former Group Chief Executive Officer and Former Executive Director (ceased 21 April 2020);
 – Andrew Duff - Former Non-Executive Chair (ceased 6 April 2020); and
 – Greg Ellery - Former Non-Executive Director (ceased 6 April 2020)

And the following executive of Elixinol Global Limited:
 – Ron Dufficy - Global Chief Financial Officer.

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.

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F I N A N C I A L R E P O R T

Directors’ Report
continued

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 chair’s 
fees will be determined independently to the fees of other Non-Executive Directors based on comparative roles in the 
external market. The chair will not be present at any discussions relating to the determination of their 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 a 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 management of the Group for achieving a combination of clearly deﬁned Group, 
regional 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 50% (60% in 2020) to Group ﬁnancial measures and 50% (40% in 2020) to individual measures for 
Executive KMPs.

STIP Opportunity (at target) is 25-40% (25% for 2020) of Total Fixed remuneration for Executive KMPs.

Group ﬁnancial measures are set out below:
 – Group net proﬁt after tax (‘NPAT’) (50% 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 80% of the on-target performance level of Group NPAT metrics.

26

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

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 or equity and will be subject to relevant local statutory and tax obligations. 
The Board at its discretion, may elect to grant equity in lieu of payments in cash.

STIP payments granted as equity include the following conditions:
 – Any STIP outcome deferred into equity cannot be traded until after they have vested;
 – Any unvested share rights may be forfeited if the Executive ceases to be an employee before the vesting date; and
 – Share rights which have vested can only be traded in accordance with the Company’s Securities Trading Policy.

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 as superannuation

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

For the 2020 Share Rights grant made during 2020, the performance period of the grant is three ﬁnancial years in one 
tranche following the performance period. The performance period is from 1 January 2020 to 31 December 2023.

Vesting dates

Tranche

Vesting date 

Vesting date

Vesting date 

Share Rights granted in 2018

Share Rights granted in 2019

Share Rights granted in 2020

Tranche 1

Tranche 2

Tranche 3

Tranche 4

28 February 2020 (lapsed)

28 February 2021 (lapsed)

28 February 2023

28 February 2021 (lapsed)

28 February 2022

28 February 2022

28 February 2023

28 February 2023

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F I N A N C I A L R E P O R T

Directors’ Report
continued

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:
 – 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 performance period

Percentage of TSR share rights vesting

Below 10%

Greater than 10% but less than 20%

Equal to or greater than 20%

0% of the TSR share rights will vest

40% of the TSR share rights will vest

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 2020, the Board has consulted remuneration advisors for benchmarking 
of executive remuneration. In the prior year, the Board engaged Hewitt Associates Pty Ltd (AON) to conduct a 
remuneration benchmarking exercise for several Executive KMPs. AON was also engaged to provide advice on the 
design for the future reward framework which applies to future periods including 2020.

Voting and comments made at the Company’s 30 July 2020 AGM
At the 30 July 2020 AGM, 97.71% of the votes received supported the adoption of the remuneration report for the year 
ended 31 December 2019. The Company did not receive any speciﬁc feedback at the AGM regarding its remuneration 
practices.

Linking remuneration to Company performance

Impact of the Group’s 2020 performance on remuneration
A challenging COVID-19 environment during 2020 contributed signiﬁcantly towards revenue growth and EBITDA targets 
not being achieved. However, the Group delivered numerous strategic objectives designed to position the Company for 
future growth across the business. The business has been successfully repositioned with a signiﬁcantly reduced cost base 
and moves forward with a strong balance sheet. The Board, at its discretion, elected to grant deferred equity in lieu of cash 
as a partial payment of the individual component of the STI program.

28

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

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

Revenue

Adjusted EBITDA from continuing operations

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

2020 
$’000

15,010

(22,930)

(104,478)

(58.25)

(58.25)

$0.570 

$0.175 

2019 
$’000
Restated

30,714

(24,632)

(83,071)

(62.71)

(62.71)

$2.500 

$0.570 

2018 
$’000

37,131

(114)

(860)

0.79

0.79

$1.000 

$2.500 

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 KMP of the Group are set out in the following tables.

Short-term benefits

Post-employment 
benefits

Long-term 
benefits

Cash salary 
and fees 
$

Cash 
bonus 
$

Other 
fees 
$

Super- 
annuation 
$

Termination 
payments 
$

Deferred 
STI (c) 
$

Share-
based 
payments

Equity-
settled 
Perform- 
ance 
Rights 
$

Total 
$

65,684

106,963

31,123

20,700

263,899

112,581

260,000

860,950

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

6,240

10,162

2,957

1,967

15,386

10,501

-

-

127,000

85,000

-

-

-

-

936

72,860

-

117,125

(231,168)

(70,088)

-

107,667

-

15,931

123,187

418,403

251,562

-

(345,360)

29,284

25,000

-

13,221

132,339

430,560

72,213

463,562

29,152 (320,066)

1,105,811

2020

Non-Executive Directors:

H Wiseman(b)

P Benhaim

A Duff(a)

G Ellery(a)

Executive Directors:

O Horn(b)

S Karousos(a)

Other Key Management 
Personnel:

R Dufficy

(a)  Remuneration is from 1 January 2020 to date of ceasement of directorship

(b)  Remuneration is from date of appointment as a Director to 31 December 2020

(c) 

 Deferred STI relates to STI awarded in relation to the ﬁnancial year but deferred subject to continuity of employment until 28 August 2021. 60.5% of the deferred 
bonus was recognised in the ﬁnancial year based on the vesting period.

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F I N A N C I A L R E P O R T

Directors’ Report
continued

Short-term benefits

Post-employment 
benefits

Long-term 
benefits

Cash salary 
and fees 
$

Cash 
bonus 
$

Other 
fees 
$

Super- 
annuation 
$

Termination 
payments 
$

Long 
service
leave
$

Share-
based 
payments

Equity-
settled 
Perform- 
ance 
Rights (g) 
$

Total 
$

90,822

44,936

210,073

314,861

157,625

299,959

239,804

1,358,080

–

–

–

–

–

–

–

–

–

–

–

–

–

8,628

4,269

15,530

–

–

–

25,358

168,750

13,642

–

–

–

190,177

25,000

8,468

–

198,645

92,427

168,750

–

–

–

–

–

–

–

–

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

2019

Non-Executive Directors:

A Duff

G Ellery(f)

Executive Directors:

S Karousos(a)

P Benhaim(c)

L McLeod(h)

Other Key Management 
Personnel:

R Dufficy(d) (e)

G Ettenson(e) (b)

(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.

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

Name

2020

2019

2020

2019

2020

2019

Fixed remuneration

At risk - STI

At risk - LTI

Non-Executive Directors:

H Wiseman

P Benhaim

A Duff

G Ellery

Executive Directors:

O Horn

S Karousos

P Benhaim

L McLeod

Other Key Management 
Personnel:

R Dufficy

G Ettenson

99% 

100% 

100% 

100% 

67% 

100% 

–

–

–

–

41% 

100% 

–

42% 

100% 

100% 

67% 

–

84% 

100% 

–

–

–

–

4% 

–

–

–

3% 

–

–

–

–

–

–

–

–

–

–

–

1% 

–

–

–

29% 

–

–

–

30% 

–

–

–

59% 

–

–

58% 

–

–

16% 

–

There were no cash bonuses payable or forfeited during the period.

30

Elixinol Global Limited | Annual Report 2020

 
 
 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Service agreements
Remuneration and other terms of employment for KMP are formalised in service agreements. 

The total ﬁxed remuneration (‘TFR’) is subject to annual review.

Details of these agreements effective from 1 January 2021 are as follows:

Oliver Horn(b)

Ron Dufficy(b)

Fixed 
Remuneration  
$ (a)

Target STI 
 $

Notice Period  
 by Executive 
months

Notice Period  
by Company 
months

Restraint 
 Period  
months

395,000

158,000

285,000

99,750

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.

KMP 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 KMP as part of compensation during the year ended 
31 December 2020.

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

 Name

R Dufficy

O Horn

O Horn

O Horn

R Dufficy

H Wiseman

R Dufficy

Number of 
rights 

granted Grant date

Vesting date and 
exercisable date

Expiry date

Fair value 
per right 
at grant date

900,000 15 May 2018

Various

15 August 2023

468,750 30 July 2020

30 January 2021

30 October 2025

468,750 30 July 2020

21 October 2021

30 October 2025

361,722

30 July 2020

28 February 2023

30 October 2025

208,791

30 July 2020

28 February 2023

30 October 2025

62,271

30 July 2020

28 February 2024

30 October 2025

854,430 16 October 2020 28 February 2021

16 January 2026

$0.890 

$0.185 

$0.185 

$0.092 

$0.092 

$0.092 

$0.158 

Performance rights granted carry no dividend or voting rights.

Other than outlined above, there were no other performance rights or options over ordinary shares granted to or vested in 
Directors and other KMP as part of compensation during the year ended 31 December 2020.

Shares issued in the past ﬁnancial year were approved under section 10.14 of the ASX Listing Rules.

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31

 
 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Directors’ Report
continued

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 KMP 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

H Wiseman

P Benhaim*

A Duff

G Ellery

O Horn

S Karousos

R Dufficy

–

54,623,008

25,000

–

–

100,000

30,000

54,778,008

–

–

–

–

–

–

–

–

168,132

–

168,132

(25,100,000) 29,523,008

–

–

–

266,471

(25,000)

–

–

–

(100,000)

–

–

266,471

–

239,471

–

269,471

674,074 (25,225,000) 30,227,082

* 

 Held indirectly due to Paul Benhaim’s interest with the holder of the shares, Raw With Life Pty Ltd. Included as disposals are 13,000,000 shares which were 
transferred to Equities First Holdings LLC (Equities First) under a margin loan facility (Loan Facility) are included as disposals. The term of the Loan Facility is 
three years. Under the terms of the Loan Facility, Mr Benhaim transferred the Secured Shares to Equities First and procures registration of the Secured Shares 
in the name of Equities First by way of transfer to an account nominated by Equities First. Equities First may, during the term of the loan, deal with the Secured 
Shares. Shares provided as security must be returned to Mr Benhaim on repayment of the loan, in accordance with the terms of the Loan Facility.

**  Disposals/other includes holdings of personnel who are no longer a KMP, not necessarily a disposal of holding.

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 KMP of the Group, including their personally related parties, is set out below:

Granted

Vested

Expired/  
forfeited/  
other

Balance at  
the end of  
the year

Performance rights over ordinary shares

H Wiseman

P Benhaim

A Duff

G Ellery

O Horn

S Karousos

R Dufficy

Balance at  
the start of  
the year

–

–

675,000

–

–

62,271

–

–

–

1,299,222

750,000

–

675,000

1,063,221

2,100,000

2,424,714

–

–

–

–

–

–

–

–

–

–

(675,000)

–

–

62,271

–

–

–

1,299,222

(750,000)

–

(225,000)

1,513,221

(1,650,000)

2,874,714

Loans to key management personnel and their related parties
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 Mr 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 payable. Hemp Foods Australia undertakes to repay 
the loan subject to achievement of predeﬁned performance milestones. This is a related party agreement, as Raw With 
Life holds (as at the date of this report) approximately 9.4% 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 materially different from its carrying value.

This concludes the remuneration report, which has been audited.

32

Elixinol Global Limited | Annual Report 2020

 
 
F I N A N C I A L R E P O R T

Shares under option or performance rights
Unissued ordinary shares of Elixinol Global Limited under option or performance rights which have not yet vested at the 
date of this report are as follows:

 Grant date

3 April 2018

15 May 2018

21 September 2019

30 July 2020

16 October 2020

Expiry date

3 July 2023

15 August 2023

21 December 2024

30 October 2025

16 January 2026

Number  
under rights

60,224

450,000

35,166

1,825,673

1,234,177

3,605,240

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

Shares issued on the exercise of options or performance rights
There were no ordinary shares of Elixinol Global Limited issued on the exercise of options or performance rights during 
the year ended 31 December 2020. On 30 January 2021, 468,750 performance rights vested and converted to ordinary 
shares of Elixinol Global.

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.

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.

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F I N A N C I A L R E P O R T

Directors’ Report
continued

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 28 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 28 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 BDO Audit Pty Ltd
There are no officers of the Company who are former partners of BDO Audit Pty Ltd.

Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and 
Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with 
that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is 
set out immediately after this directors’ report.

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

On behalf of the directors

Oliver Horn 
Global Chief Executive Officer and Executive Director

25 February 2021 
Sydney

34

Elixinol Global Limited | Annual Report 2020

 
Auditor’s Independence Declaration

F I N A N C I A L R E P O R T

Tel: +61 2 9251 4100 
Fax: +61 2 9240 9821 
www.bdo.com.au 

Level 11, 1 Margaret St  
Sydney NSW 2000 
Australia 

DECLARATION OF INDEPENDENCE BY LEAH RUSSELL TO THE DIRECTORS OF ELIXINOL GLOBAL 
LIMITED 

As lead auditor of Elixinol Global Limited for the year ended 31 December 2020, I declare that, to the 
best of my knowledge and belief, there have been: 

1.  No contraventions of the auditor independence requirements of the Corporations Act 2001 in 

relation to the audit; and 

2.  No contraventions of any applicable code of professional conduct in relation to the audit. 

This declaration is in respect of Elixinol Global Limited and the entities it controlled during the period. 

Leah Russell 
Director 

BDO Audit Pty Ltd 

Sydney, 25 February 2021 

BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited 
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional 
Standards Legislation. 

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35

  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Consolidated Statement of Proﬁt or Loss 
and Other Comprehensive Income
for the year ended 31 December 2020

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 intangibles

Impairment of assets

Professional services expenses

Sales and marketing expenses

Administrative expenses

Distribution costs

Finance costs

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

Income tax benefit/(expense)

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

Loss after income tax 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 for the year

Loss for the year is attributable to:

Non-controlling interest

Owners of Elixinol Global Limited

Group

Note

2020
$’000

2019
$’000
Restated

5

14

6

7

7

7

7

8

9

15,010 

30,714

(1,076)

(1,624)

260 

100 

25 

564 

(8,344)

(13,036)

(3,213)

(14,370)

(14,292)

(2,795)

(39,178)

(49,059)

(35,008)

(4,068)

(6,602)

(4,504)

(570)

(49)

(11,994)

(5,279)

(11,513)

(6,986)

(1,307)

(133)

(100,278)

(88,049)

(4,200)

7,537 

(104,478)

(80,512)

–

(2,559)

(104,478)

(83,071)

80

–

80

1,908 

(137)

1,771 

(104,398)

(81,300)

28 

(104,506)

(104,478)

(143)

(82,928)

(83,071)

36

Elixinol Global Limited | Annual Report 2020

Consolidated Statement of Proﬁt or Loss 
and Other Comprehensive Income
continued

Total comprehensive loss 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 from continuing operations attributable 
to the owners of Elixinol Global Limited

Basic loss per share

Diluted loss 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

F I N A N C I A L R E P O R T

Group

Note

2020
$’000

2019
$’000
Restated

31 

–

31 

(31)

156 

125 

(104,429)

(78,866)

–

(104,429)

(2,559)

(81,425)

(104,398)

(81,300)

Note

Cents

Cents 
Restated

37

37

37

37

37

37

(58.23)

(58.23)

(60.88)

(60.88)

–

–

(1.94)

(1.94)

(58.25)

(58.25)

(62.71)

(62.71)

Comparative ﬁgures have been restated due to a prior year discontinued operation being reclassiﬁed as a continuing 
operation. Refer Note 9.

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

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37

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Consolidated Statement of Financial Position
as at 31 December 2020

Assets

Current assets

Cash and cash equivalents

Trade and other receivables

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

Group

Note

2020
$’000

2019
$’000

10

11

12

8

13

14

15

16

17

8

18

19

21

8

27,743 

20,244 

1,191 

4,735 

509 

1,176 

35,354 

–

35,354 

2,316 

2,471 

1,412 

917 

– 

7,116

1,536 

21,314 

88 

6,731 

49,913 

1,444

51,357

8,403 

12,685 

4,323 

39,994 

4,307 

69,712

42,470 

121,069

2,795 

2,992 

89 

920 

29 

344 

818

4,995 

– 

4,995 

157 

989 

– 

86

843

5,067 

944 

6,011 

38

Elixinol Global Limited | Annual Report 2020

 
 
 
 
Consolidated Statement of Financial Position
continued

F I N A N C I A L R E P O R T

Non-current liabilities

Borrowings

Lease liabilities

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

Group

Note

2020
$’000

2019
$’000

20

21

22

23

24

250 

1,574 

1,824 

6,819 

– 

3,676 

3,676 

9,687 

35,651 

111,382 

217,730 

188,771 

8,971 

9,186 

(191,050)

(86,544)

35,651 

111,413 

– 

(31)

35,651 

111,382 

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

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39

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Consolidated Statement of Changes in Equity
for the year ended 31 December 2020

Group

Foreign 
currency 
translation
reserve
$’000

Share–
based 
payments
reserve
$’000

Issued
capital
$’000

Other
reserve
$’000

Accumu–
lated
losses
$’000

Non–
controlling
interest
$’000

Total 
equity
$’000

Balance at 1 January 2019 

139,612

6,323

1,234

137

(3,616)

–

143,690

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

(678)

Disposal of non-controlling 
interest

Share-based payments (Note 38)

Transactions with owners in their 
capacity as owners:

Contributions of equity, net of 
transaction costs (Note 22)

Balance at 31 December 2019

–

–

49,837

188,771

–

1,908

1,908

–

–

–

–

–

8,231

–

–

–

–

–

–

(279)

–

955

–

(82,928)

(143)

(83,071)

(137)

–

–

1,771

(137)

(82,928)

(143)

(81,300)

–

–

–

–

–

–

–

–

–

–

–

(86,544)

2,149

–

2,149

(678)

(2,037)

(2,037)

–

(279)

–

(31)

49,837

111,382

Group

Foreign 
currency 
translation
reserve
$’000

Share–
based 
payments
reserve
$’000

Issued
capital
$’000

Other
reserve
$’000

Accumu–
lated
losses
$’000

Non–
controlling
interest
$’000

Total 
equity
$’000

Balance at 1 January 2020

188,771

8,231

955

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

Other comprehensive income for 
the year, net of tax

Total comprehensive (loss)/
income for the year

Share-based payments (Note 38)

Transactions with owners in their 
capacity as owners:

Contributions of equity, net of 
transaction costs (Note 22)

–

–

–

–

–

77

77

–

28,959

–

Balance at 31 December 2020

217,730

8,308

–

–

–

(292)

–

663

–

–

–

–

–

–

–

(86,544)

(31)

111,382

(104,506)

28

(104,478)

–

(104,506)

–

–

(191,050)

3

31

–

–

–

80

(104,398)

(292)

28,959

35,651

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

40

Elixinol Global Limited | Annual Report 2020

Consolidated Statement of Cash Flows
for the year ended 31 December 2020

Cash flows from operating activities

Receipts from customers (inclusive of GST)

Payments to suppliers and employees (inclusive of GST)

Government grants

Interest received

Interest and other finance costs paid

Income taxes paid

Net cash used in operating activities

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

Proceeds from disposal of business

Proceeds from disposal of property, plant and equipment

Net cash from/(used in) investing activities

Cash flows from financing activities 

Proceeds from issue of shares

Share issue transaction costs

Repayment of lease liabilities

Net cash from financing activities

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

F I N A N C I A L R E P O R T

Group

Note

2020
$’000

2019
$’000

6

14,095 

33,179 

(37,120)

(84,579)

365 

100 

(15)

(46)

– 

679 

(138)

(207)

36

(22,621)

(51,066)

– 

– 

(295)

(33)

230 

2,652 

2,554 

209 

(7,157)

(9,943)

(1,203)

13 

149

(17,932)

31,478 

50,000 

(2,519)

(1,414)

(2,827)

(729)

27,545 

46,444 

7,478 

(22,554)

20,373 

42,922 

(108)

5 

22

22

Cash and cash equivalents at the end of the financial year

10

27,743 

20,373 

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

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41

 
 
 
 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

Note 1:  General information ................................................................................................................................................................................ 43

Note 2:  Signiﬁcant accounting policies .......................................................................................................................................................... 43

Note 3:  Critical accounting judgements, estimates and assumptions ............................................................................................ 54

Note 4:  Operating segments ............................................................................................................................................................................... 54

Note 5:  Revenue .........................................................................................................................................................................................................57

Note 6:  Other income ...............................................................................................................................................................................................57

Note 7:  Expenses ....................................................................................................................................................................................................... 58

Note 8: 

Income tax ....................................................................................................................................................................................................60

Note 9:  Discontinued operations ........................................................................................................................................................................62

Note 10:  Cash and cash equivalents ................................................................................................................................................................... 65

Note 11:  Trade and other receivables ................................................................................................................................................................ 65

Note 12: 

Inventories .................................................................................................................................................................................................... 66

Note 13:  Prepayments, deposits and other ......................................................................................................................................................67

Note 14:  Investments accounted for using the equity method ..............................................................................................................67

Note 15:  Property, plant and equipment .......................................................................................................................................................... 70

Note 16:  Right-of-use assets ...................................................................................................................................................................................72

Note 17: 

Intangibles .....................................................................................................................................................................................................73

Note 18:  Trade and other payables .......................................................................................................................................................................74

Note 19:  Contract liabilities......................................................................................................................................................................................75

Note 20:  Borrowings ....................................................................................................................................................................................................75

Note 21:  Lease liabilities ............................................................................................................................................................................................76

Note 22:  Issued capital ...............................................................................................................................................................................................76

Note 23:  Reserves .........................................................................................................................................................................................................77

Note 24:  Non-controlling interest .........................................................................................................................................................................77

Note 25:  Dividends .......................................................................................................................................................................................................77

Note 26:  Financial instruments ..............................................................................................................................................................................77

Note 27:  Fair value measurement ........................................................................................................................................................................80

Note 28:   Remuneration of auditors ....................................................................................................................................................................80

Note 29:  Contingent liabilities ...............................................................................................................................................................................80

Note 30:  Commitments ............................................................................................................................................................................................. 81

Note 31:  Key management personnel disclosures ....................................................................................................................................... 81

Note 32:  Related party transactions .................................................................................................................................................................... 81

Note 33:  Business combinations .......................................................................................................................................................................... 83

Note 34:  Interests in subsidiaries .......................................................................................................................................................................... 84

Note 35:  Deed of cross guarantee ....................................................................................................................................................................... 84

Note 36:  Cash flow information ..............................................................................................................................................................................87

Note 37:  Earnings per share .................................................................................................................................................................................... 88

Note 38.  Share-based payments .......................................................................................................................................................................... 89

Note 39:  Parent entity information ....................................................................................................................................................................... 91

Note 40:  Events after the reporting period ..................................................................................................................................................... 92

42

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

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 is:

Level 12 
680 George 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 25 February 2021. 
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.

Note 16:  Right-of-use assets ...................................................................................................................................................................................72

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

The following Accounting Standards and Interpretations are most relevant to the Group:

Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020 and 
early adoption is permitted. The Conceptual Framework contains new deﬁnition and recognition criteria as well as new 
guidance on measurement that affects several Accounting Standards. The application of the Conceptual Framework did 
not have a material impact on the Group’s ﬁnancial statements.

Going concern
The annual ﬁnancial statements have been prepared on a going concern basis, which contemplates the continuation of 
normal business operations and the realisation of assets and settlement of liabilities in the normal course of business.

During the year ended 31 December 2020, the Group incurred a net loss before tax of $100.3 million with $85.6 million 
of this loss recognised in the ﬁrst half of the year. During the year net cash outflows from operating activities were $22.6 
million with $15.2 million occurring in the ﬁrst half of the year.

The coronavirus (‘COVID-19’) was declared a pandemic on 11 March 2020 by the World Health Organisation (‘WHO’). 
During the year ended 31 December 2020 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 in 2020 have caused disruption to businesses and economic activity.

COVID-19 has had an impact on the operations of the Group as core operations are located in USA, Australia, Europe 
and the United Kingdom. All businesses within the Group have continued to operate, however, due to the reduced retail 
demand in the markets and the Group’s current inventory holdings, particularly in USA, the Group has decided to cease 
production activities and transition to an outsourced capital light operations model. At present the Group’s ability to ship 
and receive goods has not been impacted.

As at 31 December 2020, the Group has net assets of $35.7 million including cash of $27.7 million. The Directors regularly 
monitor the Company’s cash position on an ongoing basis and the Group has demonstrated a successful track record 
of raising capital and funding when required, included completing two capital raises totalling $28.9 million during the 
pandemic. In addition, the net loss before tax has been reduced in H2 FY2020 from that recorded in H1 FY2020 and the 
net cash outflow from operating activities reduced to $7.4 million for H2 FY2020 as expenditure was reduced and the 
scale of the business operations was reset. The current cash flow forecasts support the business as a going concern and 
the Group has the capacity, if necessary, to defer discretionary expenditure in the current cash flow forecast period to take 
steps to moderate the cash outflows of the business as needed. 

Note 1:  General information ................................................................................................................................................................................ 43

Note 2:  Signiﬁcant accounting policies .......................................................................................................................................................... 43

Note 3:  Critical accounting judgements, estimates and assumptions ............................................................................................ 54

Note 4:  Operating segments ............................................................................................................................................................................... 54

Note 5:  Revenue .........................................................................................................................................................................................................57

Note 6:  Other income ...............................................................................................................................................................................................57

Note 7:  Expenses ....................................................................................................................................................................................................... 58

Note 8: 

Income tax ....................................................................................................................................................................................................60

Note 9:  Discontinued operations ........................................................................................................................................................................62

Note 10:  Cash and cash equivalents ................................................................................................................................................................... 65

Note 11:  Trade and other receivables ................................................................................................................................................................ 65

Note 12: 

Inventories .................................................................................................................................................................................................... 66

Note 13:  Prepayments, deposits and other ......................................................................................................................................................67

Note 14:  Investments accounted for using the equity method ..............................................................................................................67

Note 15:  Property, plant and equipment .......................................................................................................................................................... 70

Note 17: 

Intangibles .....................................................................................................................................................................................................73

Note 18:  Trade and other payables .......................................................................................................................................................................74

Note 19:  Contract liabilities......................................................................................................................................................................................75

Note 20:  Borrowings ....................................................................................................................................................................................................75

Note 21:  Lease liabilities ............................................................................................................................................................................................76

Note 22:  Issued capital ...............................................................................................................................................................................................76

Note 23:  Reserves .........................................................................................................................................................................................................77

Note 24:  Non-controlling interest .........................................................................................................................................................................77

Note 25:  Dividends .......................................................................................................................................................................................................77

Note 26:  Financial instruments ..............................................................................................................................................................................77

Note 27:  Fair value measurement ........................................................................................................................................................................80

Note 28:   Remuneration of auditors ....................................................................................................................................................................80

Note 29:  Contingent liabilities ...............................................................................................................................................................................80

Note 30:  Commitments ............................................................................................................................................................................................. 81

Note 31:  Key management personnel disclosures ....................................................................................................................................... 81

Note 32:  Related party transactions .................................................................................................................................................................... 81

Note 33:  Business combinations .......................................................................................................................................................................... 83

Note 34:  Interests in subsidiaries .......................................................................................................................................................................... 84

Note 35:  Deed of cross guarantee ....................................................................................................................................................................... 84

Note 36:  Cash flow information ..............................................................................................................................................................................87

Note 37:  Earnings per share .................................................................................................................................................................................... 88

Note 38.  Share-based payments .......................................................................................................................................................................... 89

Note 39:  Parent entity information ....................................................................................................................................................................... 91

Note 40:  Events after the reporting period ..................................................................................................................................................... 92

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43

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 2:  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 
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 39.

Principles of consolidation
The consolidated ﬁnancial statements incorporate the assets and liabilities of all subsidiaries of Elixinol Global Limited 
as at 31 December 2020 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.

44

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

NOTE 2:  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

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.

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F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 2:  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Government grants
Grants from the government are recognised at their fair value when there is reasonable assurance that the grant will be 
received and the consolidated entity will comply with all attached conditions. Government grants relating to costs are 
deferred and recognised in proﬁt or loss as other income over the periods necessary to match them with the costs that 
they are intended to compensate.

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.

An income tax beneﬁt will arise for the ﬁnancial year where an income tax loss is incurred and, where permitted to do so, 
is carried-back against a qualifying prior period’s tax payable to generate a refundable tax offset.

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.

46

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NOTE 2:  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.

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.

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit 
losses. The provision rates are based on days past due for groupings of various customers with similar loss patterns 
(i.e. by product type, country). The calculation reflects the probability-weighted outcome, the time value of money and 
reasonable and supportable information that is available at the reporting date about past events, current conditions and 
forecasts of future economic conditions. Generally, trade receivables are written-off if past due for more than 90 days 
and are not subject to enforcement activity.

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

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.

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47

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 2:  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

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.

48

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

NOTE 2:  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

The Group applies the AASB 9 simpliﬁed approach to measuring expected credit losses which uses a lifetime expected 
loss allowance for all trade receivables and contract assets.

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.

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 

 20%

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

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
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.

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49

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 2:  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.

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. 

50

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

NOTE 2:  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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
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.

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 the Monte Carlo 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.

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F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 2:  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.

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.

52

Elixinol Global Limited | Annual Report 2020

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NOTE 2:  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.

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 2020. 
The Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.

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53

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

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 17.

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 17.

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.

NOTE 4:  OPERATING SEGMENTS

Identiﬁcation of reportable operating segments
The Group is organised into three operating segments: Americas, Europe 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.

54

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

NOTE 4:  OPERATING SEGMENTS (CONTINUED)

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

Americas

Europe

Australia

This includes the trading results of Elixinol LLC (‘Elixinol’) and its investments and joint ventures in 
the US (‘Elixinol Americas’) 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 Hemp Foods Australia Pty Ltd (‘HFA’) and Elixinol 
Australia Pty Ltd (formerly Nunyara Pharma Pty Ltd) (‘Elixinol Australia’).

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

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 2020, 9% of sales were derived from three major customers (2019: 27% of sales were 
derived from three major customers).

Operating segment information - Continuing operations

Group - 2020

Revenue

Sales to external customers

Total revenue

Adjusted EBITDA

Depreciation and amortisation

Impairment of intangibles

Impairment of assets

Interest income

Finance costs

Loss before income tax expense

Income tax expense

Loss after income tax expense

Assets

Segment assets

Total assets

Liabilities

Segment liabilities

Total liabilities

Americas 
$’000

Europe 
$’000

Australia 
$’000

Unallocated 
$’000

Total 
$’000

8,510

8,510

2,344

2,344

4,156

4,156

–

–

15,010

15,010

(14,170)

(4,470)

(283)

(4,007)

(22,930)

(3,213)

(39,178)

(35,008)

100

(49)

(100,278)

(4,200)

(104,478)

42,470

42,470

6,819

6,819

11,565

2,469

1,533

26,903

3,243

946

1,107

1,523

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55

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 4:  OPERATING SEGMENTS (CONTINUED)

Group – 2019 Restated

Revenue

Sales to external customers

Total revenue

Adjusted EBITDA

Depreciation and amortisation

Impairment of intangibles

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

Geographical information

Americas

Europe

Australia

Unallocated

Americas 
$’000

Europe 
$’000

Australia 
$’000

Unallocated 
$’000

Total 
$’000

24,915

24,915

2,268

2,268

3,531

3,531

–

–

30,714

30,714

(13,593)

(3,551)

(1,553)

(5,935)

(24,632)

(2,795)

(49,059)

(11,994)

564

(133)

(88,049)

7,537

(80,512)

93,188

3,657

2,639

20,141

119,625

1,444

121,069

6,072

777

33

1,861

8,743

944

9,687

Sales to 
external 
customers

Geographical 
non-current 
assets*

2020 
$’000

8,510

2,344

4,156

–

2019 
$’000

Restated

24,915

2,268

3,531

–

2020 
$’000

2019 
$’000

6,476

60,914

416

76

148

712

2,618

1,161

15,010

30,714

7,116

65,405

* 

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.

56

Elixinol Global Limited | Annual Report 2020

NOTE 5:  REVENUE

From continuing operations 

Sale of goods

F I N A N C I A L R E P O R T

Group

2020 
$’000

2019 
$’000

Restated

15,010 

30,714 

Comparative ﬁgures have been restated due to a prior year discontinued operation being reclassiﬁed as a continuing 
operation (refer Note 9).

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

e-Commerce 
$’000

Retail 
$’000

Bulk 
$’000

Private 
label 
$’000

Total 
$’000

2,944

1,882

2,876

7,702

6,474

1,977

2,496

Group – 2020

Geographical regions

Americas

Europe

Australia

Group – 2019 Restated

Geographical regions

Americas

Europe

Australia

4,236

320

345

4,901

7,537

79

250

7,866

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

Government grants (COVID-19)

Other

Other income

802

142

935

1,879

528

–

–

8,510

2,344

4,156

528

15,010

5,446

5,458

212

785

–

–

24,915

2,268

3,531

30,714

10,947

6,443

5,458

Group

2020 
$’000

2019 
$’000

Restated

(67)

(262)

365 

224 

260 

(33)

(90)

–

148 

25 

Comparative ﬁgures have been restated due to a prior year discontinued operation being reclassiﬁed as a continuing 
operation. Refer Note 9.

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57

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 6:  OTHER INCOME (CONTINUED)

Government grants (COVID-19)
During the year the Group received payments from the Australian Government amounting to $200,000 as part of its 
‘Boosting Cash Flow for Employers’ scheme in response to the coronavirus (‘COVID-19’) pandemic. Eligible employers 
with aggregated annual turnover of less than $50,000,000 are eligible to receive payments of between $20,000 and 
$100,000 which are credited against amounts owed on an activity statement and based on Pay As You Go (‘PAYG’) 
withheld on employee’s salary and wages for the period March to September 2020. Such amounts have been treated as 
government grants in the ﬁnancial statements, are non-taxable, and are recognised as income once there is reasonable 
assurance that the Group will comply with any required conditions which is practically at the time that a liability for PAYG 
withholding tax is incurred and salaries are paid.

During the period, the Group has received JobKeeper support payments from the Australian Government which are 
passed on to eligible employees. These have been recognised as government grants in the ﬁnancial statements and 
recorded as other income over the periods in which the related employee beneﬁts are recognised as an expense. These 
grants are taxable.

NOTE 7:  EXPENSES

Loss 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

Group

2020 
$’000

2019 
$’000

Restated

308 

52 

14 

322 

799 

1,181 

446 

32 

14 

237 

573 

974 

2,676 

2,276 

286 

251 

537 

84 

435 

519 

3,213 

2,795 

58

Elixinol Global Limited | Annual Report 2020

NOTE 7:  EXPENSES (CONTINUED)

Impairment of intangibles

Goodwill

Patents and trademarks

Customer relationships

Brand names

Total impairment of intangibles

Impairment of assets

Inventory

Land

Leasehold improvements

Furniture, fittings and equipment

Machinery

Land and buildings - right-of-use

Impairment of assets previously part of a disposal group classified as held for sale

Prepayments, deposits and other

Investments accounted for using the equity method

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

F I N A N C I A L R E P O R T

Group

2020 
$’000

2019 
$’000

Restated

28,712 

47,479 

– 

1,187 

9,279 

39,178 

2 

32 

1,546 

49,059 

18,853 

9,660 

–

2,937 

– 

3,079

704 

– 

4,701 

4,734 

114 

– 

518 

372 

– 

1,330 

– 

– 

35,008

11,994 

– 

49 

49 

101 

(292)

6 

127 

133 

62 

124 

Comparative ﬁgures have been restated due to a prior year discontinued operation being reclassiﬁed as a continuing 
operation. Refer Note 9.

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59

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

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 from continuing operations

Loss from discontinued operations

Aggregate income tax expense/(benefit)

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

Decrease/(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 before income tax benefit/(expense) from continuing operations

Loss before income tax expense from discontinued operations

Tax at the statutory tax rate of 26% (2019: 27.5%)

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

Impairment of goodwill

Impairment of assets

  Other non-deductible permanent differences

  Transfer pricing adjustment

Adjustment recognised for prior periods

Current year tax losses not recognised

Current year temporary differences not recognised

Prior year tax losses recognised now written off

Prior year temporary differences recognised now written off

Difference in overseas tax rates

Current year capital loss not recognised

Income tax expense/(benefit)

Amounts charged directly to equity

Deferred tax assets

Group

2020 
$’000

2019 
$’000

(435)

4,626 

9 

28 

(7,577)

20 

4,200 

(7,529)

4,200 

(7,537)

– 

8 

4,200 

(7,529)

4,626 

–

4,626 

(3,577)

(4,000)

(7,577)

(100,278)

(88,049)

–

(2,551)

(100,278)

(90,600)

(26,072)

(24,915)

10,186

13,057

(312)

35 

54 

365 

171 

(25)

(16,109)

(11,347)

9 

8,489

5,250

4,402 

(95) 

2,254

– 

20 

1,920 

34 

–

–

1,317 

527 

4,200 

(7,529)

Group

2020 
$’000

2019 
$’000

– 

116

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.

60

Elixinol Global Limited | Annual Report 2020

 
 
F I N A N C I A L R E P O R T

NOTE 8:  INCOME TAX (CONTINUED)

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 Group has $14,664,000 (2019: $3,545,000) of tax effected revenue losses which have not been brought to account 
at 31 December 2020.

Deferred tax asset

Deferred tax asset comprises temporary differences attributable to:

Amounts recognised in profit or loss:

  Tax losses

  Allowance for expected credit losses

  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/(charged) to profit or loss

Charged to equity

Foreign exchange

Tax rate change

Closing balance

Deferred tax liability

Movements:

Opening balance

Credited to profit or loss

Additions through business combinations (Note 33)

Foreign exchange

Closing balance

Group

2020 
$’000

2019 
$’000

– 

– 

– 

–

– 

–

– 

– 

– 

– 

– 

4,307 

(4,626)

–

319 

–

–

4,402 

240 

82 

84 

120 

30 

(14)

2,235 

(422)

(2,450)

4,307 

724 

3,577 

(116)

100 

22 

4,307 

Group

2020 
$’000

2019 
$’000

– 

– 

– 

– 

– 

3,145 

(4,000)

867 

(12)

– 

Prior 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.

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F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 8:  INCOME TAX (CONTINUED)

Income tax refund due

Income tax refund due

Provision for income tax
Provision for income tax

Group

2020 
$’000

2019 
$’000

509

88 

Group

2020 
$’000

2019 
$’000

29 

– 

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

Elixinol Japan was incorporated into the Group from 29 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 was disclosed as held-for-sale and presented separately in the statement of ﬁnancial position. At 
31 December 2019, the Board had resolved to dispose of the Group’s investment in Hemp Foods Australia Pty Ltd and 
negotiations with several interested parties had taken place. On 31 January 2020, the Group entered into a sale agreement to 
dispose of Hemp Foods Australia and as a result at 31 December 2019 disclosed Hemp Foods Australia as held-for-sale and 
presented separately in the statement of ﬁnancial position. On 25 May 2020, the Company announced that the share purchase 
agreement (‘SPA’) for the sale was terminated by the buyer due to non-satisfaction of a condition precedent in the SPA, citing 
COVID-19 impacts. 

Subsequently, the Company evaluated the opportunities of Hemp Foods Australia and decided to continue the 
operations as part of the Group. As a result, the subsidiary is not longer classiﬁed as held for sale and is included in 
the continuing operations in the 31 December 2020 results. 

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

Professional services expenses

Sales and marketing expenses

Administrative expenses

Other expenses

62

Elixinol Global Limited | Annual Report 2020

Group

2020 
$’000

–

–

–

–

–

–

–

–

–

–

–

–

2019 
$’000

1,586

1,586

18

4

22

(711)

(399)

(50)

(78)

(226)

(377)

(9)

NOTE 9:  DISCONTINUED OPERATIONS (CONTINUED)

Finance costs

Total expenses

Loss before income tax expense
Income tax expense

Loss after income tax expense

Loss on disposal before income tax

Income tax expense

Loss on disposal after income tax expense

Loss after income tax expense from discontinued operations

Cash flow information

Net cash used in operating activities

Net cash from investing activities

Net cash from financing activities

Net decrease in cash and cash equivalents from discontinued operations

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

F I N A N C I A L R E P O R T

Group

2020 
$’000

–

–

–

–

–

–

–

–

–

Group

2020 
$’000

– 

– 

– 

– 

Group

2020 
$’000

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

2019 
$’000

(5)

(1,855)

(247)

(8)

(255)

(2,304)

–

(2,304)

(2,559)

2019 
$’000

(1,294)

31 

1,238 

(25)

2019 
$’000

1,005 

318 

730 

44 

698 

447 

3,242 

173 

22 

100 

46 

341 

2,901 

C
o
m
p
a
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y
O
v
e
r
v
e
w

i

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Y
2
0
2
0
M

i
l

e
s
t
o
n
e
s

S
t
r
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t
e
g
y
a
n
d
M
a
r
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t

U
p
d
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t
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i

F
n
a
n
c
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l

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p
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S
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l

I

n
f
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r
m
a
t
i
o
n

63

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 9:  DISCONTINUED OPERATIONS (CONTINUED)

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

Liabilities directly associated with assets classified as held for sale

Trade payables

Other payables

Accrued expenses

Lease liability

Provisions

64

Elixinol Global Limited | Annual Report 2020

Group

2020 
$’000

– 

– 

– 

–

– 

– 

2019 
$’000

220 

(2,901)

1,215 

(1,466)

(838)

(2,304)

Group

2020 
$’000

2019 
$’000

– 

– 

– 

– 

– 

– 

– 

129 

364 

427 

210 

127 

187 

1,444 

Group

2020 
$’000

2019 
$’000

– 

– 

– 

– 

– 

– 

270 

62 

150 

296 

166 

944 

NOTE 10:  CASH AND CASH EQUIVALENTS

Current assets

Cash on hand

Cash at bank

Cash on deposit

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:  TRADE AND OTHER RECEIVABLES

Current assets

Trade receivables

Less: Allowance for expected credit losses

Other receivables

GST recoverable

Interest receivable

F I N A N C I A L R E P O R T

Group

2020 
$’000

2019 
$’000

41 

27,702 

– 

27,743 

19 

8,225 

12,000 

20,244 

27,743 

20,244 

–

129 

27,743 

20,373 

Group

2020 
$’000

2019 
$’000

2,245

(1,249)

996

65

126

4

1,191

2,213

(1,103)

1,110

365

56

5

1,536

C
o
m
p
a
n
y
O
v
e
r
v
e
w

i

F
Y
2
0
2
0
M

i
l

e
s
t
o
n
e
s

S
t
r
a
t
e
g
y
a
n
d
M
a
r
k
e
t

U
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d
a
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e

i

F
n
a
n
c
a

i

Allowance for expected credit losses
The Group has recognised a loss of $855,000 (2019: $240,000) in proﬁt or loss in respect of the expected credit losses for 
the year ended 31 December 2020.

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

2020 
%

2019 
%

2020 
$’000

1%

1%

6%

8%

1%

1%

2%

5%

95%

83%

378

339

185

50

1,293

2,245

2019 
$’000

527

205

27

146

1,308

2,213

Allowance for expected credit 
losses

2020 
$’000

2019 
$’000

4

5

11

4

3

2

1

7

1,225

1,249

1,090

1,103

l

R
e
p
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t

S
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a
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I

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f
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m
a
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i
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65

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 11:  TRADE AND OTHER RECEIVABLES (CONTINUED)
Movements in the allowance for expected credit losses are as follows:

Opening balance

Additional provisions recognised

Receivables written off during the year as uncollectable

Closing balance

NOTE 12:  INVENTORIES

Current assets

Raw materials - at cost

Less: Provision for impairment

Work in progress - at cost

Less: Provision for impairment

Finished goods - at cost

Less: Provision for impairment

Stock in transit - at cost

Group

2020 
$’000

1,103 

855 

(709)

1,249 

2019 
$’000

878 

240 

(15)

1,103 

Group

2020 
$’000

2019 
$’000

18,216

(16,269)

1,947

1,977

(1,338)

639

5,025

(3,226)

1,799

350

4,735

23,094

(8,190)

14,904

4,216

(534)

3,682

3,182

(642)

2,540

188

21,314

Raw materials, work in progress and ﬁnished goods are stated at the lower of cost and net realisable value. Net realisable 
values have been reviewed taking into account estimated future demand of ﬁnished goods, expiration dates on inventory 
and current market prices.

Since COVID-19 was declared a pandemic by the World Health Organisation in March 2020, the Company has observed 
a signiﬁcant reduction in consumer demand particularly in bricks and mortar retail distribution channels. This reduction 
in demand has resulted in the Company reassessing how much on hand inventory is estimated to be consumed in 
the production and sale of Elixinol branded products prior to inventory approaching its shelf life. To the extent that 
inventory is considered excess to its core strategy, the Company has then considered the net realisable value of excess 
inventory with reference to the current commodities market for hemp biomass, extracts and distillates. Lower overall 
consumer demand for hemp commodities in conjunction with oversupply in the market has led to a signiﬁcant decrease 
in net realisable values and an impairment and write-off of inventories of $18,853,000 which has been recognised in 
the ﬁnancial statements. In addition, there has been an impairment of Other Current Assets relating to prepayment 
of inventory of $4,701,000.

66

Elixinol Global Limited | Annual Report 2020

NOTE 13:  PREPAYMENTS, DEPOSITS AND OTHER

Current assets

Prepayments

Deferred consideration

Security deposits

Other deposits

NOTE 14:  INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Non-current assets

Investment in associate - H&W Holdings LLC

Investment in associate - Altmed Pets LLC

Investment in joint venture - Northern Colorado High Plains Producers LLC*

F I N A N C I A L R E P O R T

Group

2020 
$’000

2019 
$’000

893

–

198 

85 

1,176 

6,314 

207 

105 

105 

6,731 

Group

2020 
$’000

2019 
$’000

–

2,316 

–

2,316 

95 

8,096 

212 

8,403 

*  On 31 December 2020, the Company dissolved its interest in NCHPP.

The investments in H&W Holdings LLC and Altmed Pets LLC were impaired during the year totalling $4,734,000.

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

H&W Holdings LLC*

Altmed Pets LLC*

* 

Holding through Elixinol LLC

Principal place of business / Country 
of incorporation

United States of America

United States of America

Ownership interest

2020 
%

19.88% 

25.43% 

2019 
%

19.88% 

25.43% 

C
o
m
p
a
n
y
O
v
e
r
v
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w

i

F
Y
2
0
2
0
M

i
l

e
s
t
o
n
e
s

S
t
r
a
t
e
g
y
a
n
d
M
a
r
k
e
t

U
p
d
a
t
e

i

F
n
a
n
c
a

i

l

R
e
p
o
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t

S
h
a
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h
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l

I

n
f
o
r
m
a
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67

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 14:  INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)

Summarised ﬁnancial information

Elixinol Co. Ltd

H&W Holdings LLC

Altmed Pets LLC

2020 
$’000

2019 
$’000

2020 
$’000

2019 
$’000

2020 
$’000

2019 
 $’000

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

Treasury shares

Investment made

Impairment of investment

Related party eliminations

Foreign exchange 

De-consolidated on 29 May 
2019

Closing carrying amount

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

2,650

95

(9)

(132)

–

–

–

–

–

(2,641)

–

–

–

–

–

37

–

–

46

500

546

2

–

2

544

2,593

(2,124)

469

–

469

–

93

–

–

–

–

2

–

95

3,890

130

4,020

1,788

704

2,492

1,528

12,180

(15,495)

(3,315)

–

(3,315)

6,153

1,714

7,867

722

–

722

7,145

9,569

(9,616)

(47)

–

(47)

8,095

–

(795)

–

–

(4,734)

–

(250)

–

2,316

(11)

(679)

8,852

–

(105)

38

–

8,095

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

Principal place of business / Country 
of incorporation

2020 
%

2019 
%

Northern Colorado High Plains Producers LLC*

United States of America

–

50.00% 

*  On 31 December 2020, the Company dissolved its interest in NCHPP.

Ownership interest

68

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

NOTE 14:  INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)

Summarised ﬁnancial information

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

Share of loss after income tax

Foreign exchange

Closing carrying amount

Northern Colorado 
High Plains Producers

2020 
$’000

2019 
 $’000

–

–

–

–

–

–

–

–

–

–

–

–

–

212

(149)

(63)

–

59

856

71

986

563

563

423

627

(1,810)

(2,142)

(3,325)

–

(3,325)

1,874

(1,690)

28

212

C
o
m
p
a
n
y
O
v
e
r
v
e
w

i

F
Y
2
0
2
0
M

i
l

e
s
t
o
n
e
s

S
t
r
a
t
e
g
y
a
n
d
M
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t

U
p
d
a
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e

i

F
n
a
n
c
a

i

l

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p
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t

S
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I

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f
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a
t
i
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69

 
 
 
 
 
 
 
 
 
 
Group

2020 
$’000

2019 
$’000

376 

–

376 

360 

(116)

(165)

79 

174 

(102)

–

72 

63 

(34)

29 

737 

(523)

214 

5,711 

(1,039)

(2,971)

1,701 

2,471 

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 

F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 15:  PROPERTY, PLANT AND EQUIPMENT

Non-current assets

Land - at cost

Less: Impairment

Leasehold improvements - at cost

Less: Accumulated depreciation

Less: Impairment

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

70

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

NOTE 15:  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:

Leasehold 
improve-
ments 
$’000

Furniture, 
fittings and
equipment 
$’000

Motor
vehicles 
$’000

Computer
equipment 
$’000

Machinery 
$’000

Total 
$’000

181

3,610

(55)

(37)

9

–

–

(446)

–

–

13

49

(2,937)

56

630

(25)

–

2

(518)

(3)

(32)

110

1

(8)

25

(4)

–

52

7

–

–

1

–

–

(14)

46

–

–

–

(3)

–

213

503

–

–

2

–

3

5,053

2,400

(376)

(423)

5,966

9,875

(456)

(460)

49

66

(372)

(1,004)

–

–

(237)

(573)

(1,302)

484

56

–

–

(4)

–

5,758

12,685

204

(284)

261

(2,903)

88

126

(187)

(187)

(3,079)

(6,016)

(308)

(52)

(14)

(322)

(799)

(1,495)

Land 
$’000

411

2,725

–

–

3

(114)

–

–

–

(2,611)

–

(38)

–

–

3,025

3,262

Group

Balance at 
1 January 2019

Additions

Classified as held 
for sale 

Disposals

Exchange 
differences

Impairment of 
assets

Transfers in/(out)

Depreciation 
expense

Balance at 
31 December 2019

Additions

Disposals

De-classified as 
held-for-sale

Exchange 
differences

Impairment of 
assets

Depreciation 
expense

Balance at 
31 December 
2020

376

79

72

29

214

1,701

2,471

During the year, the Company disposed of the land held by Nunyara for $2,560,000. Property, plant and equipment 
includes impairment for assets based on the net realisable value and future expected use.

C
o
m
p
a
n
y
O
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r
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w

i

F
Y
2
0
2
0
M

i
l

e
s
t
o
n
e
s

S
t
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a
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e
g
y
a
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M
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e
t

U
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i

F
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S
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a
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l

I

n
f
o
r
m
a
t
i
o
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71

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 16:  RIGHT-OF-USE ASSETS

Non-current assets

Land and buildings - right-of-use

Less: Accumulated depreciation

Less: Impairment

Group

2020 
$’000

2019 
$’000

4,540 

(2,424)

(704)

1,412 

5,069 

(746)

– 

4,323 

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 2019

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

Disposals

De-classified as held for sale

Exchange differences

Impairment of assets

Depreciation expense

Balance at 31 December 2020

For other AASB 16 and lease related disclosures refer to the following:

 – ±Refer to Note 7 for interest on lease liabilities and other lease payments;
 – ±Refer to Note 21 for lease liabilities at 31 December 2020;
 – ±Refer to Note 26 for maturity analysis of lease liabilities; and
 – ±Refer to the consolidated statement of cash flows for repayment of lease liabilities.

Land and 
buildings - 
right- 
of-use 
$’000

–

2,054

3,728

(308)

(155)

(22)

(974)

4,323

(1,007)

187

(206)

(704)

(1,181)

1,412

72

Elixinol Global Limited | Annual Report 2020

NOTE 17:  INTANGIBLES

Non-current assets

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

F I N A N C I A L R E P O R T

Group

2020 
$’000

2019 
$’000

76,191 

(76,191)

– 

1,068 

(370)

(41)

657 

125 

(2)

123 

2,470 

(1,114)

(1,219)

137 

10,668 

(10,668)

– 

917 

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

C
o
m
p
a
n
y
O
v
e
r
v
e
w

i

F
Y
2
0
2
0
M

i
l

e
s
t
o
n
e
s

S
t
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a
t
e
g
y
a
n
d
M
a
r
k
e
t

U
p
d
a
t
e

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 2019

Additions

Classified as held for sale 

Disposals

Exchange differences

Impairment of assets

Amortisation expense

Balance at 31 December 2019

Additions

Exchange differences

Impairment of assets*

Amortisation expense

Balance at 31 December 2020

Goodwill
$’000

74,623

–

–

–

1,082

(47,479)

–

28,226

–

486

(28,712)

–

–

* 

All impairment in 2020 relates to the Americas CGU segment.

Website 
and
software
$’000

Patents 
and
trademarks
$’000

Customer 
relation-
ships
$’000

Brand
names
$’000

Total
$’000

9,733

86,249

–

–

–

1,213

(18)

(42)

935

2,170

(1,546)

(49,059)

–

(519)

9,122

39,994

–

157

33

605

1,698

190

–

–

142

(32)

(435)

1,563

–

12

(1,187)

(9,279)

(39,178)

(251)

137

–

–

(537)

917

174

933

–

(41)

11

–

(84)

993

–

(50)

–

(286)

657

21

90

(18)

(1)

–

(2)

–

90

33

–

–

–

123

i

F
n
a
n
c
a

i

l

R
e
p
o
r
t

S
h
a
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e
h
o
d
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l

I

n
f
o
r
m
a
t
i
o
n

73

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 17:  INTANGIBLES (CONTINUED)

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

Elixinol LLC

Group

2020 
$’000

2019 
$’000

–

28,226 

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, however as a result of trading performance during H1 FY2020 
from the COVID-19 pandemic, indicators of impairment existed for Elixinol LLC as at half-year balance sheet date. 
Therefore, impairment testing was performed in June 2020.

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 and uncertainty of the future impact of COVID-19. 
Management has applied their best estimates to each of these variables but cannot warrant their outcome. Management 
has determined that there had been an impairment for Elixinol LLC as at 30 June 2020. In determining the impairment 
required at 30 June 2020, 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.

Key assumptions

Elixinol LLC
The key assumptions on which management has based its cash flow projections when determining the value in 
calculations for Elixinol LLC 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 decrease in sales and marketing and employee beneﬁts expense, decrease in working 

capital as inventory levels are reduced and by operational efficiencies reducing cash burn;

 – limited planned and committed capital expenditure to support production capabilities; 
 – 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; and

 – terminal growth rate of 2.0% after 5 years.

The estimated recoverable amounts of Elixinol LLC were below the carrying amounts of intangible and tangible assets 
of the CGU, therefore an impairment charge of $39,178,000 was recognised.

NOTE 18:  TRADE AND OTHER PAYABLES

Current liabilities

Trade payables

GST and sales tax payable

Credit cards

Other payables

Refer to Note 26 for further information on ﬁnancial instruments.

74

Elixinol Global Limited | Annual Report 2020

Group

2020 
$’000

2019 
$’000

1,818 

128 

144 

705 

2,795 

1,787 

504 

51 

650 

2,992 

NOTE 19:  CONTRACT LIABILITIES

Current 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 - performance obligations satisfied in previous periods

Closing balance

F I N A N C I A L R E P O R T

Group

2020 
$’000

2019 
$’000

89 

157 

157 

89 

(157)

89 

720 

157 

(720)

157 

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 $89,000 as at 31 December 2020 ($157,000 as at 31 December 2019) and is expected to be 
recognised as revenue in future periods as follows:

Within 6 months

NOTE 20: BORROWINGS

Non-current liabilities

Related party loan from Raw With Life

Group

2020 
$’000

89 

2019 
$’000

157 

Group

2020 
$’000

2019 
$’000

250 

–

Refer to Note 26 for further information on ﬁnancial instruments.

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 Mr 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. Hemp Foods Australia undertakes 
to repay the loan subject to achievement of predeﬁned performance milestones. This is a related party agreement, as 
Raw With Life holds (as at the date of this report) approximately 9.4% 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 materially different from its carrying value.

At 31 December 2019, the related party loan was impaired to nil as part of a condition connected to the potential Hemp 
Foods Australia sale. Following the termination of the sale, as at 31 December 2020 the loan has been re-instated.

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F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 21:  LEASE LIABILITIES

Current liabilities

Lease liability

Non-current liabilities

Lease liability

Lease make good provision

Group

2020 
$’000

2019 
$’000

920

989

1,482

92

1,574

3,641

35

3,676

Refer to Note 26 for further information on ﬁnancial instruments.

NOTE 22: ISSUED CAPITAL

Group

2020
Shares

2019
Shares

2020
$’000

2019
$’000

Ordinary shares - fully paid

313,227,117

137,761,002

217,730 

188,771 

Movements in ordinary share capital

Details

Balance

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

Treasury shares on acquisition of Altmed Pets 
LLC

Issue of shares

Share issue transaction costs

Balance

Institutional Entitlement Offer

Retail Entitlement Offer

Issue of Shares

Share Purchase Plan Offer

Share issue transaction costs

Balance

Date

Shares

Issue price

$'000

1 January 2019

124,550,162

139,612

24 April 2019

523,437

$5.090

2,666

24 April 2019

23 May 2019

(133,110)

12,820,513

$5.090

$3.900

31 December 2019

14 May 2020

2 June 2020

20 November 2020

18 December 2020

137,761,002

26,712,850

28,230,102

48,209,265

72,313,898

$0.200

$0.200

$0.170

$0.170

31 December 2020

313,227,117

(678)

50,000

(2,829)

188,771

5,343

5,646

8,196

12,293

(2,519)

217,730

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.

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.

76

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

NOTE 22: ISSUED CAPITAL (CONTINUED)

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.

NOTE 23: RESERVES

Foreign currency translation reserve

Share-based payments reserve

Group

2020 
$’000

8,308 

663 

8,971 

2019 
$’000

8,231 

955 

9,186 

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.

NOTE 24: NON-CONTROLLING INTEREST

Accumulated losses

Group

2020 
$’000

–

2019 
$’000

(31)

NOTE 25: DIVIDENDS
There were no dividends paid, recommended or declared during the current or previous ﬁnancial year.

NOTE 26: 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.

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F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 26: FINANCIAL INSTRUMENTS (CONTINUED)

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

Assets

Liabilities

2020 
$’000

2019 
$’000

2020 
$’000

2019 
$’000

43

30

53

126

–

–

103

103

405

43

20

468

–

–

83

83

The Group had net liabilities denominated in foreign currencies of $342,000 (assets of $126,000 less liabilities of 
$468,000) as at 31 December 2020 (2019: net assets of $20,000 (assets of $103,000 less liabilities of $83,000)). Based 
on this exposure, had the Australian dollar 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).

Group - 2020

US dollars

Euros

Pounds Sterling

Group - 2019

US dollars

Euros

Pounds Sterling

AUD strengthened

Effect on 
profit before 
tax
$’000

Effect on 
equity
$’000

% change

5% 

5% 

5% 

17

1

(2)

16

17

1

(2)

16

AUD strengthened

Effect on 
profit before 
tax
$’000

Effect on 
equity
$’000

% change

5% 

5% 

5% 

–

–

(1)

(1)

–

–

(1)

(1)

AUD weakened

Effect on 
profit before 
tax
$’000

(17)

(1)

2

(16)

AUD weakened

Effect on 
profit before 
tax
$’000

–

–

1

1

% change

5% 

5% 

5% 

% change

5% 

5% 

5% 

Effect on 
equity
$’000

(17)

(1)

2

(16)

Effect on 
equity
$’000

–

–

1

1

78

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

NOTE 26: FINANCIAL INSTRUMENTS (CONTINUED)

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 2020 was $32,000 (2019: loss of $51,000).

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.

Consistent with our credit procedures we categorise our receivables based on days past due and we adjust our expected 
credit losses in relation to those receivables as and when there is a change in days past due in expected receivables.

Expected credit loss is initially recognised in respect to a receivable when it is 30 days past due.

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.

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.

Group - 2020

Non-derivatives

Non-interest bearing

Trade payables

Other payables

Interest-bearing - variable

Lease liability

Total non-derivatives

Weighted 
average 
interest rate
%

1 year or less
$’000

Between  
1 and 2 years
$’000

Between 2 
and 5 years
$’000

Over 5 years
$’000

Remaining 
contractual 
maturities
$’000

–

–

3.18%

1,818

849

920

3,587

–

–

615

615

–

–

867

867

–

–

–

–

1,818

849

2,402

5,069

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F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 26: FINANCIAL INSTRUMENTS (CONTINUED)

Group - 2019

Non-derivatives

Non-interest bearing

Trade payables

Other payables

Interest-bearing - variable

Lease liability

Total non-derivatives

Weighted 
average 
interest rate
%

1 year or less
$’000

Between  
1 and 2 years
$’000

Between 2 
and 5 years
$’000

Over 5 years
$’000

Remaining 
contractual 
maturities
$’000

–

–

3.45%

1,787

701

989

3,477

–

–

1,049

1,049

–

–

2,231

2,231

–

–

361

361

1,787

701

4,630

7,118

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

NOTE 27:  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.

NOTE 28:  REMUNERATION OF AUDITORS
During the ﬁnancial year the following fees were paid or payable for services provided by BDO Audit Pty Ltd, the auditor 
of the Company, and its network ﬁrms:

Group

2020 
$

2019 
$

Audit services - BDO Audit Pty Ltd (2019: Deloitte Touche Tohmatsu)

Audit or review of the financial statements

252,119 

350,100 

Other services - BDO Audit Pty Ltd (2019: Deloitte Touche Tohmatsu)

Taxation compliance services

Other services - network firms

Other advisory services

18,733 

43,000 

270,852 

393,100 

19,813 

15,000 

NOTE 29: 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 alleged, amongst other 
allegations, that the Group’s products are mislabelled as dietary supplements or illegally contain CBD and that this may 
constitute misleading conduct. On 11 May 2020, the Company announced that the plaintiffs in the class-action suit ﬁled 
against Elixinol LLC in the United States District Court for the Northern District of California, ﬁled a Notice of Voluntary 
Dismissal (Notice). The withdrawal of the class-action suit is vindication of the Company’s position that its products are 
accurately labelled and that the plaintiffs’ misleading conduct claims were without merit.

The Group had no contingent liabilities at 31 December 2020.

80

Elixinol Global Limited | Annual Report 2020

NOTE 30: COMMITMENTS

F I N A N C I A L R E P O R T

Group

2020 
$’000

2019 
$’000

Capital commitments

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

Inventory purchases under contract

243 

3,679 

NOTE 31:  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:

Group

2020 
$

2019 
$

860,950

1,556,725

72,213

29,152

463,562

(320,066)

92,427

–

168,750

130,011

1,105,811

1,947,913

Short-term employee benefits

Post-employment benefits

Long-term benefits

Termination benefits

Share-based payments

NOTE 32: RELATED PARTY TRANSACTIONS

Parent entity
Elixinol Global Limited is the parent entity.

Subsidiaries
Interests in subsidiaries are set out in Note 34.

Associates and other investee
Interests in associates are set out in Note 14.

Joint ventures
Interests in joint ventures are set out in Note 14.

Key management personnel
Disclosures relating to key management personnel are set out in Note 31 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.

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F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 32: RELATED PARTY TRANSACTIONS (CONTINUED)

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

Group

2020 
$

2019 
$

20,128

5,244,889

–

16,166

4,316

1,942,954

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

Current receivables:

Receivables from associates (net of provision)

Current payables:

Payables to associates

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:

Group

2020 
$

2019 
$

– 

– 

331,885 

96,577 

Group

2020 
$

2019 
$

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 Mr 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. Hemp Foods Australia undertakes 
to repay the loan subject to achievement of predeﬁned performance milestones. This is a related party agreement, as 
Raw With Life holds (as at the date of this report) approximately 9.4% 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 materially different from its carrying value. 
At 31 December 2019, the related party loan was impaired to nil as part of a condition connected to the potential Hemp 
Foods Australia sale. Following the termination of the sale, as at 31 December 2020 the loan has been re-instated.

Loan transactions were made on negotiated terms and conditions.

82

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

NOTE 33: BUSINESS COMBINATIONS

2020
There were no business combinations that occurred during the year ended 31 December 2020.

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 was no longer a subsidiary of Elixinol from 2 December 2019.

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

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

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

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83

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 34: 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

Elixinol Australia 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 Nunyara Pharma Pty Ltd (2020) and Elixinol Pty Ltd (2019)

Infusion Strategies LLC was dissolved in April 2020

***  Elixinol Investment Pty Ltd was dissolved subsequent to year end on 11 February 2021

Ownership interest

2020 
%

2019 
%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

–

60.00%

NOTE 35: 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
Elixinol Australia 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’.

The Board has resolved to incorporate the following entities into the Deed of Cross Company Guarantee dated 24 July 
2018 as amended by a Revocation Deed dated 25 October 2019: EXL International Holdings LLC, Elixinol BV and Elixinol 
Limited. The Company is in the process of implementing this including lodging appropriate registrations with ASIC. 

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

84

Elixinol Global Limited | Annual Report 2020

NOTE 35: DEED OF CROSS GUARANTEE (CONTINUED)

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 intangibles

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

F I N A N C I A L R E P O R T

2020
$’000

2019
$’000

12,666

28,066

(1,076)

(1,616)

326

100

23

564

(6,754)

(12,709)

(10,305)

(12,706)

(2,962)

(2,750)

(39,178)

(46,470)

(33,572)

(3,494)

(5,063)

(4,104)

(570)

5

(47)

(13,576)

(4,384)

(10,658)

(8,566)

(1,307)

(90)

(133)

(94,028)

(86,312)

(4,143)

(98,171)

–

7,474

(78,838)

–

(98,171)

(78,838)

2020 
$’000

2019 
$’000

(82,038)

(3,200)

(98,171)

(180,209)

(78,838)

(82,038)

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85

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 35: DEED OF CROSS GUARANTEE (CONTINUED)

Statement of ﬁnancial position

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Income tax refund due

Prepayments, deposits and other

Assets of disposal groups classified as held for sale

Non-current assets

Trade and other 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

Employee benefits

Accrued expenses

Liabilities directly associated with assets classified as held for sale

Non-current liabilities

Borrowings

Lease liabilities

Provisions

Total liabilities

Net assets

Equity

Issued capital

Reserves

Accumulated losses

Total equity

86

Elixinol Global Limited | Annual Report 2020

2020
$’000

2019
$’000

27,546

20,083

678

3,529

509

1,027

–

929

19,209

90

6,112

1,444

33,289

47,867

12,103

2,316

2,445

1,286

388

–

18,538

51,827

6,871

8,402

12,636

4,019

39,902

4,644

76,474

124,341

2,198

2,697

67

832

315

673

–

157

854

86

619

944

4,085

5,357

250

1,445

92

1,787

5,872

–

3,473

35

3,508

8,865

45,955

115,476

217,729

188,771

8,435

8,743

(180,209)

(82,038)

45,955

115,476

NOTE 36: CASH FLOW INFORMATION

Reconciliation of loss after income tax to net cash used in operating activities

F I N A N C I A L R E P O R T

Group

2020 
$’000

2019 
$’000

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

(104,478)

(83,071)

Adjustments for:

Depreciation and amortisation

Impairment of assets

Impairment of intangibles

Net loss on disposal of property, plant and equipment

Share of loss/(profit) - associates

Share of loss - joint ventures

Share-based payments

Doubtful debt

Deferred tax through equity

Loss from discontinued operations

Others

Change in operating assets and liabilities:

   Decrease in trade and other receivables

   Decrease in contract assets

   Increase in inventories

   Increase in income tax refund due

   Decrease/(increase) in deferred tax assets

   Decrease/(increase) in prepayments, deposits and other

   Decrease in trade and other payables

   Decrease in contract liabilities

   Increase/(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

3,213

35,008

39,178

262

927

149

(293)

146

–

–

115

709

–

(2,155)

(509)

4,307 

1,119 

(435)

(68)

117 

–

92

(25)

2,844

12,076

49,059

90

(81)

1,705

124

141

(863)

2,305

111

1,532

77

(25,354)

–

(3,666)

(3,328)

(1,549)

(563)

(186)

(3,145)

51

625

(22,621)

(51,066)

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87

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 36: 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 2019

Net cash used in financing activities

Recognised as lease liabilities on first-time adoption of AASB 16

Acquisition of leases

Changes through discontinued operations (Note 9)

Exchange differences

Balance at 31 December 2019

Net cash used in financing activities

Disposals

Changes through discontinued operations (Note 9)

Exchange differences

Balance at 31 December 2020

NOTE 37:  EARNINGS PER SHARE

Loan with 
Raw With Life
$’000

Lease 
liabilities
$’000

250

–

–

–

(250)

–

–

–

–

250

–

250

–

(729)

2,099

3,278

–

17

4,665

(1,414)

(704)

–

(53)

2,494

Total
$’000

250

(729)

2,099

3,278

(250)

17

4,665

(1,414)

(704)

250

(53)

2,744

Group

2020 
$’000

2019 
$’000

Earnings per share for loss from continuing operations

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

(104,478)

(80,512)

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

179,421,047

132,239,632

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

179,421,047

132,239,632

Number

Number

Basic loss per share

Diluted loss per share

Cents

Cents

(58.23)

(58.23)

(60.88)

(60.88)

Group

2020 
$’000

2019 
$’000

Earnings per share for loss from discontinued operations

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

– 

(2,559)

88

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

NOTE 37:  EARNINGS PER SHARE (CONTINUED)

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

179,421,047

132,239,632

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

179,421,047

132,239,632

Number

Number

Basic loss per share

Diluted loss per share

Earnings per share for loss

Loss after income tax

Non-controlling interest

Cents

Cents

(1.94)

(1.94)

–

–

Group

2020 
$’000

2019 
$’000

(104,478)

(83,071)

(28)

143 

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

(104,506)

(82,928)

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

179,421,047

132,239,632

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

179,421,047

132,239,632

Number

Number

Basic loss per share

Diluted loss per share

Cents

Cents

(58.25)

(58.25)

(62.71)

(62.71)

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.

NOTE 38. SHARE-BASED PAYMENTS
The Group has established a long-term incentive share-based payment plan (‘LTIP’). Under the LTIP, the Board at its 
absolute discretion can issue options and performance rights over ordinary shares in the Company to directors, key 
management personnel and employees.

During the current year 3,699,220 performance rights were issued for nil consideration and the share-based payment was 
credited in the proﬁt or loss was $292,000 and the equity movement was $292,000 debit.

During the prior 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 previous year reversed of $403,000 and the 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. 

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89

 
 
 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 38: SHARE-BASED PAYMENTS (CONTINUED)
The performance period of share rights granted in 2020 is from 1 January 2020 to 31 December 2022. The performance 
period of the grant made in 2019 is three ﬁnancial years in three 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 
Share Rights granted in 2018

Vesting date 
Share Rights granted in 2019

Vesting date 
Share Rights granted in 2020

28 February 2020 (lapsed)

28 February 2021 (lapsed)

28 February 2023

28 February 2021 (lapsed)

28 February 2022

28 February 2022

28 February 2023

28 February 2023

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

2020

Grant date

Expiry date

03/07/2023

15/08/2023

01/02/2024

23/08/2024

21/12/2024

30/10/2025

30/10/2025

02/01/2026

03/04/2018

15/05/2018

01/11/2018

23/05/2019

21/09/2019

30/07/2020

30/07/2020

16/10/2020

2019

Grant date

Expiry date

03/04/2018

15/05/2018

01/11/2018

23/05/2019

21/09/2019

03/07/2023

15/08/2023

01/02/2024

23/08/2024

21/12/2024

Granted

Exercised

Expired/ 
forfeited/
 other

Balance at 
the end of 
the year

Balance at 
the start of 
the year

149,181

1,650,000

130,194

450,000

255,810

Balance at 
the start of 
the year

522,000

4,075,000

361,232

–

–

–

937,500

1,527,543

1,234,177

2,635,185

3,699,220

–

–

–

–

–

–

–

–

–

–

600,000

321,444

4,958,232

921,444

–

–

–

–

–

–

–

–

–

(88,957)

60,224

(1,200,000)

450,000

(130,194)

(450,000)

–

–

(220,644)

35,166

–

937,500

(170,620)

1,356,923

–

1,234,177

(2,260,415)

4,073,990

–

–

–

–

–

–

(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

Granted

Exercised

Expired/ 
forfeited/
 other

Balance at 
the end of 
the year

The weighted average remaining contractual life of performance rights outstanding at the end of the ﬁnancial year was 
3.97 years (2019: 4.1 years).

90

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

NOTE 38: 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

Share price
at grant date

Expected
volatility*

Dividend
yield

Risk-free
interest rate*

Fair value
at grant date

30/07/2020

30/07/2020

16/10/2020

17/12/2020

30/10/2025

30/10/2025

02/01/2026

17/03/2026

$0.185 

$0.185 

$0.158 

$0.182 

–

96.10% 

–

–

–

–

–

–

–

0.21% 

–

–

$0.185 

$0.092 

$0.158 

$0.182 

*  Where no % is stated there are no market vesting conditions attached to the performance rights and vesting condition includes continuity of service.

Volatilities, betas and correlations (all using the equally weighted model) are calculated using the Stambaugh method, 
which handles assets with short price histories (eg newly listed stocks) without truncating the histories of all the assets to 
match the number of prices for the assets with the shortest history.

NOTE 39: 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

Parent

2020 
$’000

2019 
$’000

(90,270)

(90,270)

(87,465)

(87,465)

Parent

2020 
$’000

2019 
$’000

26,744 

19,358 

38,000

100,210 

863 

1,520 

1,266 

2,126 

218,408 

189,450 

663 

(182,591)

36,480 

955 

(92,321)

98,084 

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F I N A N C I A L R E P O R T

Notes to the Consolidated Financial Statements
for the year ended 31 December 2020

NOTE 39: PARENT ENTITY INFORMATION (CONTINUED)

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 35, the parent entity had no other guarantees in relation 
to the debts of its subsidiaries as at 31 December 2020 and 31 December 2019.

Contingent liabilities
The parent entity had no contingent liabilities as at 31 December 2020 and 31 December 2019.

Capital commitments - property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 December 2020 and 
31 December 2019.

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

NOTE 40: EVENTS AFTER THE REPORTING PERIOD
No matter or circumstance has arisen since 31 December 2020 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.

92

Elixinol Global Limited | Annual Report 2020

F I N A N C I A L R E P O R T

Directors’ Declaration
31 December 2020

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 2020 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 35 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

Oliver Horn 
Global Chief Executive Officer and Executive Director

25 February 2021 
Sydney

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93

 
 
 
 
 
 
 
 
 
 
Independent Auditor’s Report

Tel: +61 2 9251 4100 
Fax: +61 2 9240 9821 
www.bdo.com.au 

Level 11, 1 Margaret St  
Sydney NSW 2000 
Australia 

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 2020, 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 report, including a summary of significant accounting policies 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 2020 and of its 
financial performance for the year ended on that date; 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 Corporations 
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s 
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (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.  

BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO 
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of 
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member 
firms. Liability limited by a scheme approved under Professional Standards Legislation. 

94

FINANCIAL REPORTElixinol Global Limited | Annual Report 2020 
 
 
 
 
 
 
 
F I N A N C I A L R E P O R T

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 of 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.  

Impairment and recoverability of intangible non-current assets 

Key audit matter  

How the matter was addressed in our audit 

There is a risk that the carrying value of the 
assets held by the Group might be impaired if 
they are unlikely to produce economic benefits in 
excess of their book value. For the Group’s 
American cash generating unit (‘CGU’), as a 
result of the COVID-19 outbreak and other 
factors, there has been a decline in demand and 
sales value. Based on these factors, it was 
identified that impairment indicators exist. 

The determination of the value in use model, 
which relies on forecasted cash flows, involves 
significant judgement. As disclosed in note 17, 
for the Group’s American CGU, significant 
judgement was required in determining the 
assumptions used in the value in use model 
including forecasted cash flows, discount rate, 
inflation rate, growth rate and forecasted sales 
growth. 

The recoverable value as determined by the 
value in use model was less than the carrying 
value and an impairment of $39m recognised for 
the American CGU for the year ended 31 
December 2019. 

Our procedures included but were not limited to: 

•  Evaluating and analysing the Group’s value-in-use cash 
flow models to support the carrying value and assessed 
the model. This included assessing the following key 
assumptions: 

•  Discount rate through comparison to independently 
calculated discount rate and considering with the 
assumed growth in revenue; 

• 

Inflation rate through comparison to external data; 
and  

•  Forecasted financial performance with reference to 
historical performance, stabilised costs ongoing 
costs and external data. 

•  Performing procedures on the forecasts and discounted 
cash flow models, including validation of the inputs 
and forecasts, in order to test the impairment analysis; 

•  Comparing the group’s financial performance for the 

period subsequent to the financial year end; 

•  Enquiring with management, corroborating 

assumptions with audit evidence and assessed the 
judgements made in respect of CGU impairment 
assessment prepared by the Group;  

•  Considering the appropriateness and completeness of 
the allocation of corporate head office assets and 
liabilities to CGUs; 

•  Performing sensitivity analysis on key assumptions 
including discount rates, projected expenses and 
expected sales growth; and 

•  Assessing the appropriateness of disclosures in the 

Notes to the financial statements.  

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95

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Independent Auditor’s Report
continued

Inventory Valuation 

Key audit matter  

How the matter was addressed in our audit 

As disclosed in note 12, the Group has recognised 
$4.7m of inventory for the year ended 31 
December 2020 and an impairment expense of 
$18.9m. The determination of the appropriate 
carrying value of inventory requires the use of 
significant judgement. 

Given the complexity of the market and demand 
for the Group’s product mix, there is an additional 
risk in the valuation of inventory, including that 
the inventory held may be obsolete or impaired. 

This is compounded by the impacts of COVID-19, 
and negative market conditions and decreased 
selling prices particularly in the United States. 

Our procedures included, but were not limited to 

•  Considered the shelf life of items on hand at period 

end and the reasonable expected turnaround of those 
items on a sample basis; 

•  Obtained the inventory listing and obtain support for 

expected sale value to ensure that inventory is carried 
at lower of cost and net realisable value and that 
provision for obsolescence are considered complete 
and reasonable. This was completed on a sample basis; 

•  Reviewed the inventory provision provided by 

management to consider expected recoverable 
amounts for inventory and reasonableness of 
methodology; and 

Other information  

The directors are responsible for the other information.  The other information comprises the 
information in the Group’s annual report for the year ended 31 December 2020, but does not include 
the financial report and the 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 ability of the group 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 has no realistic alternative but to do so.  

96

FINANCIAL REPORTElixinol Global Limited | Annual Report 2020 
 
 
F I N A N C I A L R E P O R T

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.  

A further description of our responsibilities for the audit of the financial report is located at the 
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: 
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf 

This description forms part of our auditor’s report. 

Report on the Remuneration Report 

Opinion on the Remuneration Report  

We have audited the Remuneration Report included in the directors’ report for the year ended 31 
December 2020. 

In our opinion, the Remuneration Report of Elixinol Global Limited, for the year ended 31 December 
2020, complies with section 300A of the Corporations Act 2001.  

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.  

BDO Audit Pty Ltd 

Leah Russell 
Director 

Sydney, 25 February 2021 

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97

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SHA R EHOL DER  I NFO RMATIO N

Shareholder Information
31 December 2020

The shareholder information set out below was applicable as at 15 February 2021. 

Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:

1 to 1,000

1,001 to 5,000

5,001 to 10,000

10,001 to 100,000

100,001 and over

Holding less than a marketable parcel

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)

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

CITICORP NOMINEES PTY LIMITED

MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED

D & G HEALTH LLC

UBS NOMINEES PTY LTD

J P MORGAN NOMINEES AUSTRALIA PTY LIMITED

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

BNP PARIBAS NOMS PTY LTD (DRP)

CS FOURTH NOMINEES PTY LIMITED (HSBC CUST NOM AU LTD 11 A/C)

COMSEC NOMINEES PTY LIMITED

BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD (DRP A/C)

JAMPLAT PTY LTD

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

PANTHER TRADING PTY LTD (PANTHER A/C)

JETONIAN PTY LTD (JENTA FAMILY A/C)

SLT CAPITAL MANAGEMENT PTY LTD

G CORP CAPITAL PTY LTD

MR ERIC CHI KEUNG WONG

ASJEP PTY LTD (ASJEP SUPER FUND A/C)

Ordinary shares

Number
of holders

3,619

3,330

1,504

2,963

394

11,810

4,818

% of total
shares
issued

0.50

2.93

3.81

26.78

65.98

100.00

1.11%

Ordinary shares

Number held

29,523,008

26,945,082

11,751,331

7,893,229

6,761,049

6,000,000

5,437,689

4,848,898

3,638,794

3,544,977

2,959,715

2,598,161

1,900,000

1,800,235

1,576,471

1,286,769

1,176,471

1,144,292

1,142,507

1,098,218

123,026,896

% of total 
shares
issued

9.41

8.59

3.74

2.52

2.15

1.91

1.73

1.55

1.16

1.13

0.94

0.83

0.61

0.57

0.50

0.41

0.37

0.36

0.36

0.35

39.19

98

Elixinol Global Limited | Annual Report 2020

 
 
Unquoted equity securities

Performance rights issued

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)

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

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

SHAREHOLDER I NFORMATIO N

Number
on issue

Number
of holders

3,605,240

21

Ordinary shares

Number held

29,523,008

26,945,082

% of total 
shares
issued

9.41

8.59

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.

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99

 
 
 
 
 
 
 
 
 
 
SHA R EHOL DER  I NFO RMATIO N

Corporate Directory

Directors
Helen Wiseman - Non-Executive Chair and Non-Executive Director 
Paul Benhaim - Non-Executive Director 
Oliver Horn - Global Chief Executive Officer and Executive Director

Chief Financial Officer 
Ron Dufficy - Global Chief Financial Officer 

Company Secretary 
Teresa Cleary - General Counsel and Company Secretary

Registered office 
Level 12, 680 George Street 
Sydney NSW 2000

Tel:  
Tel:  

(02) 4044 4585 (within Australia) 
+61 (0) 2 4044 4585 (outside Australia)

Share register  
Automic Pty Ltd

Level 5, 126 Phillip Street 
Sydney NSW 2000

Tel:  
Tel:  

1300 288 664 (within Australia) 
+61 (0) 2 9698 5414 (outside Australia)

Auditor 
BDO Audit Pty Ltd

Level 11 
1 Margaret Street 
Sydney NSW 2000

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

Website 
www.elixinolglobal.com

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

Corporate Governance Statement 
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 (4th 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/

100

Elixinol Global Limited | Annual Report 2020

 
 
 
 
 
 
 
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www.elixinolglobal.com