Exasol Annual Report 2021

FY2021 Annual Report · Exasol
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ASX: EXL

ANNUAL REPORT 2021

Marty McConnon, 
one of Hemp Foods 
Australia’s trusted 
Tasmanian hemp 
harvesters.

Elixinol Wellness Limited | Annual Report 2021

Elixinol Wellness (ASX: EXL) is a 
global leader in the hemp industry, 
innovating, marketing and selling 
hemp derived nutraceutical and 
food products. 

www.elixinolwellness.com

Contents

Business Overview .......................................................................................................................................................2

Our Brands.......................................................................................................................................................................3

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

Financial Highlights .....................................................................................................................................................9

Key Achievements and Milestones...................................................................................................................10

Financial Report ..................................................................................................................................... 12

Directors’ Report ...................................................................................................................................................12

Auditor’s Independence Declaration..........................................................................................................32

Consolidated Statement of Proﬁt or Loss and Other Comprehensive Income .....................33

Consolidated Statement of Financial Position .......................................................................................34

Consolidated Statement of Changes in Equity ......................................................................................35

Consolidated Statement of Cash Flows.....................................................................................................36

Notes to the Consolidated Financial Statements .................................................................................37

Directors’ Declaration .........................................................................................................................................76

Independent Auditor’s Report .......................................................................................................................77

Shareholder Information........................................................................................................................................81

Corporate Directory.................................................................................................................................................83

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1

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

Business Overview

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

VISION

To create a healthier everyday life through the power 
of hemp and plant-based products

AMBITION

Building a global, hemp-centric wellness 
consumer products company 

PURPOSE

Changing lives naturally! 

2

Elixinol Wellness Limited | Annual Report 2021

Our Brands

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

A global consumer wellness business built 
on the goodness of hemp.

Elixinol CBD Brand (Digestible & Topical Products)

One of the most established & trusted US CBD brands. Human and 
pet wellness products. Capital light outsourced branded consumer 
goods model based in Colorado, USA.

Hemp Foods Australia (Foods, Supplements & Skincare)

Australia’s #1 hemp foods company. Extensive range of foods, 
skincare and supplements. Bulk and ﬁnished goods provider with 
integrated manufacturing. Based near Byron Bay, NSW, Australia. 

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3

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

Letter from Chair and Global CEO

Helen Wiseman
Chair

Oliver Horn
Global CEO

Our strategy has been to transform Elixinol Wellness to a lower 
cost, higher margin, consumer led wellness company with improved 
proﬁtability. All whilst caring for and investing in the wellbeing of 
our teams across the world throughout the pandemic.

Dear Fellow Shareholders,

On behalf of the Elixinol Wellness Board, we present 
our Annual Report for Financial Year 2021 (FY21). 

FY21 was another signiﬁcantly challenging period with 
COVID-19 having a sustained impact on the global 
retail environment. The CBD industry experienced 
far less growth in 2021 than was initially forecasted. 
This was due in part to the pandemic, but also a lack in 
regulatory clarity in many of the major CBD markets, 
and a saturated industry which resulted in an over-
supply of product and reduced pricing.

Given the continuation of these unstable market 
conditions, our FY21 focus remained on further building 
the foundations laid in FY20 to transform Elixinol 
Wellness to a lower cost, higher margin, consumer-
led wellness company. As a Board and management 
team we worked hard to reduce the cost of doing 
business and to enhance product margins, while at 
the same time making well considered and selective 
investment decisions to support brand building, 
product innovation and e-commerce initiatives. 

Our strategy has been to control what was controllable 
and optimise the business for current conditions, while 
ensuring the wellbeing of our team and our partners 
throughout the pandemic. 

Overall, we are pleased with our transformation progress 
in FY21. We have created a well-funded and leaner 
consumer products wellness company with leading 
brands that are strongly positioned in long-term 
growth categories especially once the US CBD market 
conditions improve and the current oversupply has cycled 
through. Importantly, we have more cost efficiencies 
identiﬁed for FY22 that will signiﬁcantly support our 
path to proﬁtability.

EVOLVING OUR REGIONAL 
STRATEGIC FOCUS
In the US we continued to transform our business model 
throughout FY21 by fully outsourcing our supply chain 
and a continued shift towards e-commerce. These 
activities delivered strong margin improvement and 
wide-ranging cost reductions, translating to $8.7m 
Adjusted EBITDA improvement ending the year at a 
$5.5m Adjusted EBITDA loss for the Americas segment 
(FY20 $14.2m loss). 

4

Elixinol Wellness Limited | Annual Report 2021

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

HEALTHY CASH 
BALANCE 

of

$12.6m 

and an additional $2.1m 
expected to be received under 
US COVID relief measures

CASH USED 
IN OPERATIONS

reduced by

38%

in FY21 
compared to FY20

ADJUSTED EBITDA 
IMPROVEMENTS 

of

$11.7m

from -$23.2m in FY20 
to -$11.5m in FY21

Our global expansion strategy evolved in FY21. The 
objective was to cement our already strong brand reach 
by partnering with the most credentialed in-market 
partners to establish licensing agreements. This gave 
us a lower cost access to the market while ensuring we 
beneﬁted from established local expertise. 

As a result of an uncertain regulatory environment and 
an economy that was heavily impacted by COVID-19 and 
Brexit, we made the difficult decision to close our own 
European operations and transition to a licensing model 
in the region. Subsequently, we were delighted to secure a 
three-year exclusive Trademark and Know-how Licensing 
Agreement with the UK’s largest CBD manufacturer and 
distributor, BRITISH CANNABIS¤, at the end of last year. 
The deal enables BRITISH CANNABIS¤ to manufacture, 
market and sell Elixinol CBD products across the 
UK, ensuring our brand continues to be distributed 
in this market while realising signiﬁcant cost savings 
for the Group.

In addition to this new agreement with BRITISH 
CANNABIS¤ in the UK, we also signed licensing and 
distribution agreements in Mexico, Malaysia and South 
Africa to create a foothold in emerging CBD markets that 
have a positive regulatory outlook. Elixinol has long been 
an established brand in South Africa where CBD has 
been legal for some time. Mexico only recently passed 
legislation to legalise CBD whereas Malaysia is expected 
to legalise CBD in the near term. 

Our decision to withdraw from the proposed acquisition 
of CannaCare Health GmbH in Germany in June last year 
was another carefully considered decision, based on a 
well-founded view that moving ahead with the acquisition 
was not in the best interest of our shareholders. 
Closing due diligence revealed a changed German 
market outlook with rapidly intensifying competition 
in the region. These factors led us to conclude that the 
acquisition, and the investments that would have been 
required to generate proﬁtable returns, exceeded our risk 
appetite. This has proven to be a very wise decision given 
how quickly the German market dynamics shifted in the 
second half of last year.

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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

The business successfully launched the new organic 
Hemp Gold protein and oil range, which has gained quick 
traction in the market, exceeding $1m in revenue and 
accounting for one quarter of all HFA sales for the year.

During Q4 FY21, HFA also started supplying its new 
hemp-paste product to food manufacturers for use in 
products such as ice cream and plant-based milks. This is 
an exciting avenue for the Company as demand of hemp 
food products continues to grow at a rapid rate.

REGULATORY PROGRESS SLOW
The large-scale positive regulatory progress expected 
last year following the United Nations Commission 
on Narcotic Drugs (CND) accepting a World Health 
Organisation (WHO) recommendation to remove 
cannabis and cannabis resin from Schedule IV of the 1961 
Single Convention on Narcotic Drugs, unfortunately did 
not materialise.

One of the largest obstacles to expanded CBD growth 
in the US has been the continued lack of regulatory 
clarity from the FDA and its failure to provide full 
regulatory approval to permit CBD to be used as a dietary 
supplement and food additive. 

When hemp derived CBD became legal following the 
2018 Farm Bill in the US, excitement was high as the FDA 
was anticipated to regulate the market in a timely fashion 
in order to ensure consumer safety. Continued inaction 
on the part of the FDA has taken some of the wind out 
of the sails of the industry and hindered its growth by 
limiting retail access for a wide array of products, as 
many mainstream retailers continue to wait for federal 
regulatory clarity in order to ensure full compliance.

However, the US regulatory environment is evolving 
favourably, and we have seen some positive progress 
at state level more recently. In October 2021 California 
passed Assembly Bill 45, formally permitting the sale 
of hemp derived CBD products. This Bill is expected to 
create new trade opportunities between Elixinol Americas 
and major retailers, as it has established a comprehensive 
regulatory framework for the manufacture and retail 
sale of products in California containing hemp derived 
CBD, including dietary supplements, topicals, over-the-
counter, and pet products, among others. In addition to 
the California bill, two Congressional Bills have strong bi-
partisan support (H.R. 841 and S. 1698), with one expected 
to pass in 2022. 

In the UK, wide-reaching positive change was expected 
following the Food Safety Authority’s adoption of the 
Novel Food regime, however its inability to process 
applications during the course of 2021 left the market 
uncertain as to which products were compliant. This 
effectively put a pause on any new product launches and 
made retailers reluctant to invest in the CBD category, 
prompting our decision to restructure our European 
operations and enter a licensing agreement with 
BRITISH CANNABISTM.

Following our exclusive License Agreement with Elixinol 
Japan in FY20 to manufacture and sell Elixinol branded 
CBD nutraceuticals products across the country, 
very strong progress has been made this past year in 
relaunching the brand. We are now seeing the benefits 
and have just received our first licence payment. Given 
Japan is one of Asia’s largest CBD markets and Elixinol 
Japan is firmly focused on market leadership, we are 
confident the payments will continue through FY22.

HEMP FOODS AUSTRALIA CONTINUES 
TO IMPROVE PROFITABILITY 
Hemp Foods Australia (HFA) has further strengthened 
its market position through wider national distribution as 
hemp-based food products continued to move further 
into the mainstream of consumer diets. 

HFA’s revenue in FY21 was in line with FY20, helped by 
new national distribution deals with Woolworths and 
Costco, and strong gains in our direct-to-consumer 
e-commerce strategy, but off-set through deliberate 
efforts to exit low profitability products. 

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Elixinol Wellness Limited | Annual Report 2021C O M PA N Y OV E R V I E W

A STRATEGIC REVIEW OF THE BUSINESS
Our priorities for FY22 reflect our focus on delivering 
value to our shareholders. We are taking the natural next 
step to improve shareholder returns by commencing 
a strategic review, which will include consideration of 
merger, sale or other options for the Company as a whole 
or as business units. 

We believe the Company is well positioned with strong 
brands in long-term consumer growth categories. The 
outlook for the CBD industry globally remains positive 
and our Elixinol range, with strong brand equity, and 
established relationships with distribution and/or 
licensing agreements in many parts of the world, is well 
placed to capitalise on the opportunities in the global 
market. Equally, Hemp Foods Australia enjoys a strong 
position built upon over 20 years of operations in the high 
growth plant based food category and operates already 
at near proﬁtable levels.

While the strategic review is being undertaken, we 
remain focused on driving performance in the Australian 
and US markets where we have a strong competitive 
position. We will continue to accelerate our e-commerce 
growth and bring exciting new products to consumers 
and customers, while continuing to improve proﬁtability 
and reducing cost.

LOOKING AHEAD…
2022 will be a deﬁning year for all of us at Elixinol 
Wellness. We have laid the growth foundations across 
the Group, with new and innovative products hitting the 
market in the coming months, our business costs further 
reducing and the expectation that the regulatory and 
market environment will shift positively. 

In addition to this improving outlook, we will be able to 
seize new opportunities that enhance shareholder value 
following our strategic review. 

Special recognition must go to all our teams around the 
globe, who have been champions of change and have 
demonstrated incredible resilience in the face of some of 
the most challenging times in history. We are incredibly 
proud of, impressed by and grateful for their discretionary 
efforts and positive attitudes.

In closing, we would also like to thank our shareholders for 
your continued support as we navigate these challenging 
times and the transformation of our business.

Yours sincerely

Helen Wiseman
Chair 

Oliver Horn
Global CEO

While there was limited progress in 2021, we do believe 
the long-term outlook for positive CBD regulatory 
progress remains strong and consumer demand 
continues to grow as more and more people adopt CBD 
products in their wellness routines. 

E-COMMERCE INVESTMENT FUELS 
SALES GROWTH
Our shift to being ‘digital-ﬁrst’ and investment in 
e-commerce continues to be rewarded. In the last quarter 
of FY21, Elixinol Americas successfully transitioned to 
the Shopify e-commerce platform as it offers a better 
user experience while yielding signiﬁcant cost savings. 
Since launch in October, the e-commerce site has 
demonstrated strong performance improvements, with 
72% growth in user sessions and 25% transaction growth 
versus the prior quarter, and is set to provide a welcome 
growth platform for 2022.

As previously mentioned, HFA also realised signiﬁcant 
improvements in online sales in FY21, with both 
e-commerce revenue and transactions up 47%, and 
conversion rates up by 27% on the previous ﬁnancial year.

INNOVATION IS AT THE CORE 
OF OUR BUSINESS
One of our most signiﬁcant investments during the FY21 
was the creation of a Global R&D and Innovation team. 
The team is focused on developing next generation 
nutraceuticals and health food products, and we are very 
pleased with the fast progress already made. In FY21 we 
launched a number of new products that are already 
driving revenue growth, including an Elixinol CBD pet 
range and Hemp Foods Australia’s hemp paste.

A comprehensive new product pipeline will continue 
to roll out in H1 FY22, ensuring Elixinol Wellness leads 
the industry for innovation and product development in 
both the CBD and hemp foods space. One example is 
our newly launched Elixinol Sleep product range which 
includes gummies, liposomes and tinctures which have 
become best sellers within a short period of time.

FY21 FINANCIAL RESULTS
The result of our business transformation initiatives led to 
50% EBITDA improvement for FY21 compared to FY20. 
In addition, Elixinol Wellness’ average margins improved 
by 7% and quarterly cash outflows reduced to $3m in Q4 
FY21 vs $3.8m in the same period prior year. We achieved 
an overall reduction in OPEX of $10.3m, driven by $7.0m 
savings in the US following transition to the capital light 
model through which we outsourced production and 
supply chain function, and a $2.7m OPEX reduction 
following closure of the European business. 

While we did not achieve our revenue growth budgets 
for 2021, largely due to conditions described earlier, our 
relentless focus on improving margins and reducing cost 
meant we ﬁnished the year well-funded and with $14.7m 
of ﬁnancing available.

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F Y 2 0 2 1 H I G H L I G H T S

8

Elixinol Wellness Limited | Annual Report 2021

Financial Highlights

F Y 2 0 2 1 H I G H L I G H T S

With a strong cash position Elixinol Wellness is in 
the best EBITDA it has been over recent periods.

Revenue by Channel
A$ million, 31 December year end

15.015.0

9.39.3

11.4
75%

8.6
92%

FY20

FY21

Hemp Foods Australia

Elixinol e-Commerce

Elixinol Retail

Europe & UK

rivate label
CBD Bulk/Private label

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

H1 FY20

H2 FY20

H1 FY21
H1 FY21

H2 FY21

(4.4)
(4.4)

(8.0)

(7.1)

(15.2)
(15.2)

Hemp Foods Australia

Elixinol Americas

Corporate
Corporate

Europe & UK

16

14

12

10

8

6

4

2

0

0

-2

-4

-6

-8

-10

-12

-14

-16

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

Driving margin improvement 
as business mix shifts towards 
e-commerce and branded consumer 
goods channels.

Key markets impacted by COVID-19 
through the period.

Adjusted EBITDA*
Improved signiﬁcantly between FY21 
and FY20, despite lower revenues 
with a reduced cost base supporting 
a simpliﬁed strategy.

Cost reduction program and higher 
margin business driving performance 
improvements.

H2 FY21 includes $1.6m non-recurring 
income from US Employee Retention 
Credit program.

Cost base 
reduction

35%

Operational and corporate cost 
reduction initiatives have signiﬁcantly 
reduced operating expenses FY21 
compared with FY20.

Well funded**
With improving cash 
flow, approximately ﬁve 
quarters of funding based 
on latest quarter.

$14.7m

vs $27.7m in FY20

5

Quarters

* 
** 

Excluding non-cash impairments and share-based payments. 
 $12.6m Cash and cash equivalents at the end of the reporting period plus $2.1m expected to be received from one-off US COVID-19 relief 
measures ($1.6m from ERC program plus $0.5m refund of taxes paid in prior ﬁnancial years).

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K E Y  A C H I E V E M E N T S  A N D  M I L E S TO N E S

Key Achievements and Milestones

March 2021 
March 2021 
Elixinol Global 
announces it has signed 
a binding agreement 
to acquire CannaCare 
Health GmbH, owner 
of Canobo, one of 
Germany’s leading 
CBD brands

May 2021
May 2021
May 2021
Elixinol Wellness 
appoints Rob 
Hasselman as 
President Americas 
and Beata Silber as 
Global Head of R&D 
and Innovation 

July 2021
July 2021
Hemp Foods Australia’s 
Hemp Gold Protein is 
being sold in all Costco 
stores across Australia 
and online

March 2021 
Elixinol, under its European 
Industrial Hemp Association 
(EIHA) Novel Food 
consortium membership, 
successfully submits its 
Novel Food Application 
allowing products to remain 
in distribution whilst the UK 
Food Safety Authority (FSA) 
processes applications. 

May 2021
Elixinol Global Limited 
changes its name to 
Elixinol Wellness Limited, 
representing the evolution 
of the Company to 
a natural health and 
wellness consumer 
products business 

June 2021
Elixinol Wellness 
announces the 
termination of the 
proposed acquisition of 
CannaCare Health GmbH 
due to a changing German 
market outlook and 
increased competition

September 2021
Elixinol Americas 
enters pet CBD 
wellness category 
with dedicated 
product range

September 2021
Hemp Foods Australia 
launches hemp paste 
as a versatile food 
ingredient, and is 
initially available as 
part of a dairy free ice 
cream range

October 2021
Elixinol US launches 
a new Shopify 
e-commerce site for 
better user experience 
at a lower cost

September 2021
Hemp Food Australia’s 
Hemp Seed Oil available 
in 104 Woolworths 
supermarket stores 
nation wide 

October 2021
The state of California in 
the US passes Assembly 
Bill 45, formally 
permitting the sale of 
hemp derived CBD 
products

December 2021
Elixinol Wellness transitions 
European operations to 
licensing model and enters 
into a three-year exclusive 
Trademark and Know-How 
Licensing Agreement with 
BRITISH CANNABISTM¤ to 
manufacture, market and sell 
CBD products across the UK

10

Elixinol Wellness Limited | Annual Report 2021

K E Y A C H I E V E M E N T S A N D M I L E S TO N E S

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11

 
 
 
 
 
 
 
 
 
 
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 Wellness’) consisting of Elixinol Wellness 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 2021.

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

Helen Wiseman

Non-Executive Director and Chair

Paul Benhaim

Non-Executive Director

Oliver Horn

Executive Director and Global Chief Executive Officer

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

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, which is extracted 
from organically grown industrial hemp.

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

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 CBD products including skincare.

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

REVIEW OF OPERATIONS

Operating and Financial Review
The loss for the Group after providing for income tax and non-controlling interest amounted to $17,025,000
(31 December 2020: $104,478,000 loss).

The Group’s revenues from continuing operations for the year ended 31 December 2021 were $9,338,000 (31 December 
2020: $15,010,000).

The Group’s earnings before interest, tax, depreciation and amortisation (‘EBITDA’) from continuing operations, including 
share of associates’ net loss and excluding impairments and share-based payments, for the year ended 31 December 
2021 was an Adjusted EBITDA loss of $11,496,000 (31 December 2020: Adjusted EBITDA loss of $23,223,000). EBITDA 
and Adjusted EBITDA are ﬁnancial measures which are not prescribed by Australian Accounting Standards (‘AAS’) and 
represents the statutory result under AAS adjusted for certain items. The directors consider EBITDA and Adjusted 
EBITDA reflect the core earnings of the Group.

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A reconciliation of Adjusted EBITDA from continuing operations to statutory loss is detailed below:

Loss for the year

Add back/(deduct):

Income tax (benefit)/expense

Finance costs

Interest revenue

Depreciation and amortisation

EBITDA

Add back/(deduct):

Impairment of intangibles

Impairment of other assets

Share-based payments

Adjusted EBITDA

Group

2021
$’000

2020
$’000

(17,025)

(104,478)

(65)

92 

(47)

1,490

4,200 

49 

(100)

3,213 

(15,555)

(97,116)

186 

3,679 

194 

39,178 

35,008 

(293)

(11,496)

(23,223)

The Group’s cash flow used in operations for the year ended 31 December 2021 was $14,071,000 (31 December 2020: 
$22,621,000 used in operations), which included $1,596,000 non-recurring transaction and severance costs.

The Group recognised non-cash impairments of intangibles (including goodwill) of $186,000 (31 December 2020: 
$39,178,000) for the year ended 31 December 2021.

The Group recognised non-cash impairments of other assets of $3,679,000 (31 December 2020: $35,008,000) for the 
year ended 31 December 2021 relating to inventory and ﬁxed assets.

Segment assets

Americas
The Americas segment comprises the trading results of Elixinol LLC (‘Elixinol Americas’) and its investment in Altmed Pets 
LLC (trading as Pet Releaf).

Americas reported revenue of $4,783,000 for the year ended 31 December 2021 (2020: $8,510,000) and EBITDA loss of 
$5,492,000 for the year (2020: $14,170,000 EBITDA loss).

Throughout 2021, Elixinol Americas implemented an aggressive transformation agenda focused on improving proﬁtability 
driven by an accelerated move towards an outsourced capital light model, reduction in operating expenditures and 
further shift towards higher margin consumer channels such as e-commerce. 

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.

A new leadership team was put in place in May 2021 led by a new Americas President. Throughout the year, the full-time 
equivalent (‘FTE’) head count was reduced from 39 to 29, thus contributing materially to the Company’s overall reduction 
in quarterly cash outflows of $0.8 million comparing Q4 FY2021 to Q4 FY2020.

As a result of the Group’s strategy to focus on higher margin e-commerce channels and the increased demand for online 
shopping in the COVID-19 environment, online sales now represent approximately 63% (2020: 50%) of US revenues.

In October 2021, Elixinol Americas successfully transitioned to Shopify, a more consumer friendly, lower cost and 
better performing e-commerce platform. The new e-commerce site showed strong performance improvements, with 
72% growth in user sessions and transaction growth of 25% versus the prior quarter. Q4 FY2021 also saw the launch 
of a subscription model, which accounted for 12% of quarterly revenues and the launch of a loyalty points scheme to 
strengthen recurring revenues.

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Directors’ Report

continued

The transition to a fully outsourced supply chain neared completion in Q4 FY2021 with inhouse warehousing and 
fulﬁlment on track to move to a third-party model in Q1 FY2022. This will result in further enduring operating cost 
efficiencies.

During the year, Elixinol Americas lodged an application for refundable tax credits which were made available under the 
Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The value of the credits calculated through to
31 December 2021 totals approximately $1.6m (US$1.2m). Under additional COVID-19 relief measures, Elixinol Americas 
is also expecting a refund of taxes paid in prior years of $0.5m (US$0.3m). Due to an extensive processing backlog at 
the Internal Revenue Service (IRS) no cash has yet been received and the total $2.1m is now expected to be received in 
FY2022.

Australia
The Australian segment comprises the continuing trading results from Elixinol Wellness (Corporate Services) Pty Ltd 
(formerly Elixinol Australia Pty Ltd) (‘Elixinol Australia’) and Elixinol Wellness (Byron Bay) Pty Ltd trading as Hemp Foods 
Australia (‘Hemp Foods Australia’). Australia reported revenue of $4,086,000 for the year ended 31 December 2021 
(31 December 2020: $4,156,000) and EBITDA loss of $203,000 (31 December 2020: $283,000 EBITDA loss).

Q4 FY2021 was Hemp Foods Australia’s strongest quarter for the year, with gains led by recent distribution growth in 
Woolworths and Costco. Hemp Foods Australia also ﬁnished FY2021 with signiﬁcant gross margin improvement following 
continued portfolio optimisation and the discontinuation of several unproﬁtable product lines at the end of FY2020. The 
focus on margin accretion through shifting to higher margin branded consumer goods and continued growth in Hemp 
Foods Australia’s direct to consumer e-commerce business resulted in the stronger gross margins, which ended FY2021 
at 34% (up from 27% in FY2020).

The business successfully launched the new organic Hemp Gold protein and oil range early in the year, which has quickly 
gained traction in the market, exceeding $1m in revenue and accounting for approximately one quarter of all Hemp Foods 
Australia sales for the year.

Throughout FY2021 Hemp Foods Australia also consolidated its distributor network to fewer partners and developed and 
commercialised a unique hemp paste to be used as a versatile and healthy ingredient in the food service industry.

Europe
The European segment comprising Elixinol BV and Elixinol Limited (‘Elixinol Europe’) reported revenue of $469,000 
for the year ended 31 December 2021 (31 December 2020: $2,344,000) and Adjusted EBITDA loss of $2,321,000 
(31 December 2020: $4,470,000 EBITDA loss).

As a result of an uncertain regulatory environment and an economy that was heavily impacted by COVID-19 and Brexit, 
revenues were challenged during the year. The difficult decision to close our own European operations and transition to 
a licensing model in the region was successfully made. Subsequently Elixinol Wellness secured a three-year exclusive 
Trademark and Know-how Licensing Agreement with the UK’s largest CBD manufacturer and distributor, BRITISH 
CANNABIS™, at the end of 2021. The deal enables BRITISH CANNABIS™ to manufacture, market and sell Elixinol CBD 
products across the UK, ensuring our brand continues to be distributed in the market while realising signiﬁcant cost 
savings for the Group.

Share of associates’ loss 
Share of associates loss during the year ended 31 December 2021 was $nil (31 December 2020: $1,076,000 loss).

Review of ﬁnancial position
At 31 December 2021 the net assets of the Group were $19,077,000, which included $12,649,000 of cash and cash 
equivalents. The key impact during the period was total comprehensive loss of $16,658,000.

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 products to increase consumer adoption and drive category growth;
– A varied global regulatory framework of CBD and hemp products;
– Securing high quality supply of ﬁnished goods 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;

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Elixinol Wellness Limited | Annual Report 2021

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

– 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 more agile business.

Business strategies and future prospects

Reﬁned strategic focus
The Company has been aggressively repositioned towards a branded consumer goods business over the last two years, 
leading to improved fundamentals with substantial cost reductions and improved cash-flows. Key initiatives included:
– Extensive leadership changes, bringing new strategic, commercial, digital marketing, supply and strong governance 

disciplines;

– An ongoing substantial operational and corporate cost reduction program, leading to an annualised cost base which is 

approximately 50% lower than 2020;

– Simpliﬁcation of our e-commerce backbone via Shopify to drive higher margin sales and cost savings;
– Pursuing an omni-channel sales strategy to reduce dependency on bricks & mortar channels, and improve in-home 

shopping product availability via e-commerce;

– Embedding and optimisation of the ERP system to improve business reporting, controls and commercial decision 

making; and

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

Vision and mission
The Company’s vision, ambition, and purpose are the cornerstone of its strategy, which is underpinned by the following:

Company Vision: To create a healthier everyday life through the power of hemp, plant-based and natural products.

Ambition: Building a global, hemp centric wellness consumer products company.

Purpose: Changing lives naturally.

Key strategic objectives identiﬁed
The Group remains positive about the market opportunity for hemp derived food and CBD products, and its ability to 
leverage its strong 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 proﬁtable growth. The Group’s strategic 
focus is predicated on the following key pillars to support revenue growth and margin improvement:
– Delivery of the strategic review project to identify new in-organic opportunities for shareholder value creation;
– Further optimisation of corporate cost base;
– Continue Elixinol America’s transition to a lean and capital light business model; 
– Bringing to market an extensive new product development pipeline;
– Expand hemp foods product offering to participate in more healthy plant based food consumer occasions;
– Relentless focus on improving capital efficiency - long term focus on improving cash flow, driving margin accretion 

and tightly controlling expenditures; and

– 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.

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 chain challenges. In particular, supply chain risks may including 
shipping container shortages and extended transits times due to labour shortages.

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.

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

Directors’ Report

continued

In addition, 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.

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 
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 result in us 
being 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. 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. These risks may impact the ﬁnancial 
performance through increased costs (from low yields or increased 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 and manufacturers of out-sourced ﬁnished 
goods products. The failure to maintain long term contracts with these suppliers may impact the Group’s ability to 
maintain consistent supply levels and meet the customer demand, thereby having a ﬁnancial impact.

Risk of adverse events, product liability or other safety issues
As with all food or nutraceutical products, there is a risk that the products sold by the Group could 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 that 
systems are not scalable or have the ability to leverage the synergies of the different businesses 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 Wellness’ operations are highly regulated and the Group could be adversely affected by changes in laws, 
regulations or regulatory policy in the jurisdictions in which it operates. The operations and proposed operations of 
Elixinol Wellness are subject to a variety of laws, regulations and guidelines related to the retail sale of hemp derived 
products. The hemp derived CBD industry is evolving globally, including in the USA and in Europe and 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 Wellness’ 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 

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Elixinol Wellness Limited | Annual Report 2021

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

may change. This could potentially result in additional processing costs for the Group and impact the Company’s overall 
ﬁnancial performance.

There is a further risk that the US Food and Drug Administration (‘FDA’), the regulator which regulates ingestible and 
topical products including CBD products, may seek to change the laws and regulations governing the manufacturing 
and marketing of CBD products in the US. This could include current good manufacturing practice (‘CGMPs’) regulation, 
nutrition and allergen labelling, and label claim regulations and safety requirements including, as applicable, new dietary 
ingredient (‘NDI’) and generally recognised as safe (‘GRAS’) regulations. In the US, given that many of the applicable laws 
and regulations are determined at the State-level, there is also a risk that the regulatory regime governing the Group’s 
US operations and distribution network becomes further 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 Wellness, 
could impact adversely on the assets, operations, and the ﬁnancial performance of the Group and the industry in general.

The Group is well positioned to capitalise on favourable long-term trends in the hemp-based wellness products segment 
and as the regulatory environment in which the Group operates continues to evolve, the Group may explore strategic 
opportunities including product expansion beyond the Group’s traditional hemp-based, CBD wellness products.

Regulatory compliance and the management of regulatory change are an important part of Elixinol Wellness’ planning 
processes. Elixinol Wellness 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 Wellness to appropriately manage 
and implement regulatory change, including failing to implement effective processes to comply with new regulations, 
could in the future result in Elixinol Wellness 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
On 17 May 2021, with approval of the shareholders at the Annual General Meeting, the company changed its name from 
Elixinol Global Limited to Elixinol Wellness Limited.

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

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
The Board of Elixinol Wellness has commenced a strategic review to maximise shareholder value which will include 
consideration of merger, sale or other options for the Company as a whole or its business units. There is no certainty that 
the strategic review will lead to any particular outcome or transaction. 

No further matter or circumstance has arisen since 31 December 2021 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 Wellness remains positive on the long term market opportunity for hemp derived CBD and food products and its 
ability to leverage its strong reputation for high quality products. Throughout a prolonged period of regulatory change 
and uncertainty, Elixinol Wellness has reﬁned its strategy to ensure it operates efficiently and effectively in the current 
market and regulatory environment as well as anticipating and pursuing longer term opportunities. Elixinol Wellness’ 
strategic focus is now predicated on the following key pillars to support revenue growth and margin improvement:
– Signiﬁcant reduction of corporate and head office expenses;
– Further optimisation of Elixinol Americas operations to reduce cost;
– Seeking new opportunities to increase scale of the US business whilst continuing to lower its cost base;
– Expansion of hemp foods product offering to participate in healthy plant based food occasions;
– Relentless focus on improving capital efficiency with a long term focus on improving cash flow, driving margin 

accretion and tightly controlling expenditures;

– Continued investment in building global consumer wellness brands;
– Continued shift towards a digitally led global business with revenues from e-commerce representing a growing 

proportion of overall sales;

– Bringing to market an extensive new product pipeline to generate growth at premium margins;
– Supply chain optimisation - seeking new opportunities to shorten supply chain and reduce cost of goods; and
– As part of a strategic review process, identifying new opportunities, including merger and divestments of the 

Company as a whole or its parts, to improve shareholder value.

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:

None

Interests in shares:
Interests in rights:

Chair of Audit and Risk Committee and Member of Remuneration and Nomination 
Committee
280,132 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:

Chair of Remuneration and Nomination Committee and Member of the Audit and Risk 
Committee
29,209,217 ordinary shares
None

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Elixinol Wellness Limited | Annual Report 2021

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

Qualiﬁcations:
Experience and expertise:

Oliver Horn
Global Chief Executive Officer and Executive Director

BSc degree, GAICD
Oliver Horn was most recently MD/CEO of Swisse Wellness for Australia and New Zealand 
(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
1,203,971 ordinary shares
361,722 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.

GLOBAL 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 
share 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 SECRETARIES

Qualiﬁcations:
Experience and expertise:

Teresa Cleary
General Counsel and Joint 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.

Kim Bradley-Ware
Joint Company Secretary

Qualiﬁcations:
Experience and expertise:

BCom, CPA, LLB
Kim has over 20 years’ ﬁnance and governance experience in various listed and private 
companies, as well as in private practice. Prior to joining Company Matters, Kim worked 
with Pan Paciﬁc Petroleum (an ASX and NZX listed entity) since 2001, most recently as 
CFO and Company Secretary. Prior to that Kim held various roles in accounting across a 
variety of different industries including credit reporting, telecommunications and media.

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 2021, 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

H Wiseman

P Benhaim

O Horn

13

13

13

13

13

13

2

2

2

2

2

2

3

3

3

3

3

3

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

20

Elixinol Wellness Limited | Annual Report 2021

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 KMP of the Group consisted of the following directors of Elixinol Wellness Limited:
– »Helen Wiseman - Non-Executive Chair and Non-Executive Director;
– Paul Benhaim – Non-Executive Director; and
– Oliver Horn - Executive Director and Global Chief Executive Officer.

And the following executive of Elixinol Wellness 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 and revenue growth 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.

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.

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

Directors’ Report

continued

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 
$500,000 and was approved by shareholders at the Annual General Meeting (‘AGM’) held on 17 May 2021. 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 65% (50% in 2021) to Group ﬁnancial measures and 35% (50% in 2021) to individual measures for 
Executive KMPs.

STIP Opportunity (at target) is 25-40% (25%-40% for 2021) of Total Fixed remuneration for Executive KMPs.

Group ﬁnancial measures are set out below:
– Group net proﬁt after tax (‘NPAT’) (25% of the STIP) and Group revenue (‘Revenue’) (40% of the STIP);
– Group NPAT and Revenue 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.

22

Elixinol Wellness Limited | Annual Report 2021

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 80% achievement (50% for 2021).

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, up to 150% of the target STIP amounts are payable.

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.

If a takeover or change of control event occurs or in the case of death, disability, bona ﬁde redundancy or genuine 
retirement or another reason (with the exception of resignation or dismissal), the Board at its discretion, may elect to pay 
pro rata STIP amounts.

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 2022.

For the 2021 Share Rights grant made during 2021, the performance period of the grant is three ﬁnancial years in one 
tranche following the performance period. The performance period is from 1 January 2021 to 31 December 2023.

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

Directors’ Report

continued

Vesting dates

Tranche

Vesting date

Vesting date

Vesting date

Vesting date

Share Rights granted in 
2018

Share Rights granted in 
2019

Share Rights granted in 
2020

Share Rights granted in 
2021

Tranche 1

Tranche 2

Tranche 3

28 February 2020 
(lapsed)

28 February 2021 
(lapsed)

28 February 2022 
(lapsed)

28 February 2021 
(lapsed)

28 February 2022 
(lapsed)

28 February 2023

Tranche 4

28 February 2023

28 February 2023

28 February 2024

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 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 2021, the Board did not consult or did not engage 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 2021.

24

Elixinol Wellness Limited | Annual Report 2021

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

Voting and comments made at the Company’s 17 May 2021 AGM
At the 17 May 2021 AGM, 98.27% of the votes received supported the adoption of the remuneration report for the year ended 
31 December 2020. The Company did not receive any speciﬁc feedback at the AGM regarding its remuneration practices.

Linking remuneration and company performance

Impact of the Group’s 2021 performance on remuneration
A challenging COVID-19 environment and a lack of regulatory development across key markets contributed signiﬁcantly 
towards revenue growth targets not being achieved during 2021. However, due to a focus on cost reduction and margin 
improvement the Group delivered on its EBITDA targets. The Group also 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 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

2021
$’000

2020
$’000

9,338

(11,496)

(17,025)

(5.41)

(5.41)

$0.175 

$0.072 

15,010

(23,223)

(104,478)

(58.25)

(58.25)

$0.570 

$0.175 

2019
Restated
$’000

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
$

Share-
based 
payments

Equity-
settled
Perform-
ance
Rights
$

Total
$

108,702

98,734

–

–

372,715

74,260

260,716

56,883

840,867 131,141

–

–

–

–

–

10,578

9,599

22,285

24,284

66,746

–

–

–

–

–

–

–

–

–

–

7,464

4,487

126,744

112,820

99,819

569,079

(75,678)

266,205

36,092 1,074,848

2021

Non-Executive Directors:

H Wiseman

P Benhaim

Executive Directors:

O Horn(a)

Other KMP:

R Dufficy(b)

(a) 

 On 7 July 2021, the Company granted Oliver Horn 868,132 performance rights over ordinary shares with an exercise price of $0.00 and a vesting date of 
28 February 2024 with their issue subject to shareholder approval at the next shareholder meeting. Shareholder approval will be sought at the Company’s annual 
general meeting in May 2022. The amount recognised in this ﬁnancial year ($99,819) is a representation of the performance period.

(b) 

 LTIP value of equity includes negative amounts for options forfeited during the year (not included in % remuneration in the table below).

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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
$

Deferred
STI(a)
$

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

–

–

127,000

85,000

–

–

–

–

936

72,860

–

117,125

(231,168)

(70,088)

–

107,667

15,386

–

15,931

123,187

418,403

10,501

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(c)

P Benhaim

A Duff(b)

G Ellery(b)

Executive Directors:

O Horn(c)

S Karousos(b)

Other KMP:

R Dufficy

(a) 

 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.

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

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

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

Name

2021

2020

2021

2020

2021

2020

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

Other KMP:

R Dufficy

94%

96%

–

–

70%

–

99%

100%

100%

100%

67%

100%

–

–

–

–

13%

–

83%

67%

17%

–

–

–

–

4%

–

3%

6%

4%

–

–

17%

–

–

1%

–

–

–

29%

–

30%

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Elixinol Wellness Limited | Annual Report 2021

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

The proportion of the cash bonus paid/payable or forfeited is as follows:

Name

Executive Directors:

O Horn

Other KMP:

R Dufficy

Cash bonus paid/payable

Cash bonus forfeited

2021

2020

2021

2020

47%

57%

–

–

53%

100%

43%

100%

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)

395,000

285,000

Target STI
 $

158,000

99,750

Notice Period 
 by Executive
months

Notice Period 
by Company
months

Restraint
 Period 
months

6

6

6

6

12

12

(a) 

 Fixed remuneration comprises base cash remuneration, superannuation (superannuation equal to the minimum amount required to be paid to comply with the 
superannuation guarantee legislation) and other beneﬁts which can be sacriﬁced for cash at the employee’s elections.

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

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
Details of shares issued to directors and other KMP as part of compensation during the year ended 31 December 2021 are 
set out below:

Name

O Horn

O Horn

R Dufficy

Date

Shares

30 January 2021

468,750

21 October 2021

468,750

28 February 2021

854,430

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

Directors’ Report

continued

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

R Dufficy

H Wiseman

O Horn

R Dufficy

R Dufficy

P Benhaim

H Wiseman

O Horn

R Dufficy

O Horn

H Wiseman

P Benhaim

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

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

144,689

7 July 2021*

31 August 2021

7 October 2026

156,593

7 July 2021

28 February 2022

7 October 2026

548,077

7 July 2021

28 February 2024

7 October 2026

186,813

7 July 2021*

28 February 2025

7 October 2026

280,879

7 July 2021*

28 February 2025

7 October 2026

868,132

7 July 2021*

28 February 2024

7 October 2026

1,366,438

21 January 2022

28 February 2025

21 April 2027

2,164,384

21 January 2022* 28 February 2025

21 April 2027

700,274

21 January 2022* 28 February 2026

21 April 2027

465,753

21 January 2022* 28 February 2026

21 April 2027

$0.890 

$0.092 

$0.092 

$0.092 

$0.182 

$0.182 

$0.076 

$0.083 

$0.083 

$0.076 

$0.115 

$0.115 

$0.141 

$0.141 

*

Subject to shareholder approval

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 2021.

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

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:

Ordinary shares

H Wiseman

P Benhaim(a)

O Horn

R Dufficy

Balance at 
the start of 
the year

Received 
as part of 
remuneration

Additions

Disposals/ 
other

Balance at 
the end of 
the year

168,132

29,523,008

266,471

269,471

–

–

937,500

854,430

112,000

–

280,132

–

–

–

(313,791)

29,209,217

–

1,203,971

(500,000)

623,901

30,227,082

1,791,930

112,000

(813,791) 31,317,221

(a) 

 Held indirectly due to Paul Benhaim’s interest with the holder of the shares, Raw With Life Pty Ltd. Included as disposals are 313,791 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.

28

Elixinol Wellness Limited | Annual Report 2021

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

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:

Performance rights over ordinary shares

H Wiseman(a)

P Benhaim(b)

O Horn(c)

R Dufficy

Balance at 
the start of 
the year

62,271

–

1,299,222

Granted

Vested

Expired/ 
forfeited/ 
other

Balance at 
the end of 
the year

–

–

–

–

–

(937,500)

–

–

–

62,271

–

361,722

1,513,221

704,670

(854,430)

(225,000)

1,138,461

2,874,714

704,670

(1,791,930)

(225,000)

1,562,454

(a) 

(b) 

(c) 

 On 7 July 2021 the company granted two tranches to Helen Wiseman performance rights over ordinary shares with their issue subject to shareholder approval 
at the next shareholder meeting. 280,879 performance rights were granted with a vesting date of 28 February 2025. Shareholder approval will be sought at the 
company’s annual general meeting in 2022 and as such the options have not been included in the table above.

 On 7 July 2021 the company granted two tranches to Paul Benhaim performance rights over ordinary shares with their issue subject to shareholder approval 
at the next shareholder meeting. 186,813 performance rights were granted with a vesting date of 28 February 2025. Shareholder approval will be sought at the 
company’s annual general meeting in 2022 and as such the options have not been included in the table above.

 On 7 July 2021 the company granted two tranches to Oliver Horn performance rights over ordinary shares with their issue subject to shareholder approval at the 
next shareholder meeting. 144,689 performance rights were granted with a vesting date of 31 August 2021 and 868,132 performance rights were granted with a 
vesting date of 28 February 2024. Shareholder approval will be sought at the company’s annual general meeting in 2022 and as such the options have not been 
included in the table above.

Loans to key management personnel and their related parties
Prior to its acquisition by Elixinol Wellness 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 9.25% of the shares in Elixinol Wellness 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.

Shares under option or performance rights
Unissued ordinary shares of Elixinol Wellness 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

7 July 2021

7 July 2021*

21 January 2021

21 January 2021*

Expiry date

3 July 2023

15 August 2023

21 December 2024

30 October 2025

16 January 2026

7 October 2026

7 October 2026

21 April 2027

21 April 2027

Number 
under rights

30,112

225,000

9,598

877,564

33,090

3,479,376

1,480,513

11,523,034

3,330,411

20,988,698

*

Performance rights to Directors subject to shareholder approval

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.

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29

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

Directors’ Report

continued

Shares issued on the exercise of options or performance rights
The following ordinary shares of Elixinol Wellness Limited were issued during the year ended 31 December 2021 and up to 
the date of this report on the exercise of performance rights granted:

Date performance rights granted

30 January 2021

28 February 2021

31 May 2021

31 August 2021

21 October 2021

Exercise 

price

$0.000

$0.000

$0.000

$0.000

$0.000

Number of 
shares issued

468,750

854,430

379,747

379,272

468,750

2,550,949

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.

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 26 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 26 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 (including Independence Standards) 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.

30

Elixinol Wellness Limited | Annual Report 2021

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

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

25 February 2022
Sydney

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31

 
 
 
 
 
 
 
 
 
 
Auditor’s Independence Declaration

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 WELLNESS 
LIMITED 

As lead auditor of Elixinol Wellness Limited for the year ended 31 December 2021, 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 Company Name and the entities it controlled during the period. 

Leah Russell 
Director 

BDO Audit Pty Ltd 

Sydney 

25 February 2022 

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. 

32

FINANCIAL REPORTElixinol Wellness Limited | Annual Report 2021  
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Statement of Proﬁt or Loss 
and Other Comprehensive Income

for the year ended 31 December 2021

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

Revenue

Share of 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

Share-based payments

Depreciation and amortisation expense

Impairment of intangibles

Impairment of other assets

Professional services expenses

Sales and marketing expenses

Administrative expenses

Distribution costs

Finance costs

Loss before income tax benefit/(expense)

Income tax benefit/(expense)

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

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 Wellness Limited

Total comprehensive loss for the year is attributable to:

Non-controlling interest

Owners of Elixinol Wellness Limited

Basic loss per share

Diluted loss per share

Group

Note

2021
$’000

2020
$’000

5

6

7

7

7

7

8

35

35

9,338

15,010

– 

(1,076)

2,429

47

(4,442)

(9,661)

(194)

(1,490)

(186)

(3,679)

(2,379)

(3,062)

(3,099)

(620)

(92)

260

100

(8,344)

(13,329)

293

(3,213)

(39,178)

(35,008)

(4,068)

(6,602)

(4,504)

(570)

(49)

(17,090)

(100,278)

65

(4,200)

(17,025)

(104,478)

367

367

80

80

(16,658)

(104,398)

–

28

(17,025)

(104,506)

(17,025)

(104,478)

–

31 

(16,658)

(104,429)

(16,658)

(104,398)

Cents

(5.41)

(5.41)

Cents

(58.25)

(58.25)

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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33

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

Consolidated Statement of Financial Position

as at 31 December 2021

Assets

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Income tax refund due

Prepayments, deposits and other

Total current assets

Non-current assets

Trade and other receivables

Investments accounted for using the equity method

Property, plant and equipment

Right-of-use assets

Intangibles

Total non-current assets

Total assets

Liabilities

Current liabilities

Trade and other payables

Contract liabilities

Borrowings

Lease liabilities

Income tax

Employee benefits

Accrued expenses

Total current liabilities

Non-current liabilities

Borrowings

Lease liabilities

Total non-current liabilities

Total liabilities

Net assets

Equity

Issued capital

Reserves

Accumulated losses

Total equity

Group

Note

2021
$’000

2020
$’000

9

10

11

8

12

10

13

14

15

16

17

18

19

20

8

19

20

12,649

27,743

2,970

2,201

541

1,227

1,191

4,735

509

1,176

19,588

35,354

183

2,617

1,308

1,173

463

5,744

–

2,316

2,471

1,412

917

7,116

25,332

42,470

2,208

2,795

94

428

747

–

229

1,009

4,715

250

1,290

1,540

6,255

89

–

920

29

344

818

4,995

250

1,574

1,824

6,819

19,077

35,651

21

22

218,058

217,730

9,094

8,971

(208,075)

(191,050)

19,077

35,651

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

34

Elixinol Wellness Limited | Annual Report 2021

Consolidated Statement of Changes in Equity

for the year ended 31 December 2021

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

Group

Foreign 
currency 
translation
reserve
$’000

Issued
capital
$’000

Share-based 
payments
reserve
$’000

Accumulated
losses
$’000

Non-
controlling
interest
$’000

Total equity

$’000

Balance at 1 January 2020

188,771

8,231

955

(86,544)

(31)

111,382

(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 36)

Transactions with owners in their 
capacity as owners:

Contributions of equity, net of 
transaction costs (Note 21)

Balance at 31 December 2020

–

–

–

–

–

77

77

–

–

–

–

(292)

28,959

217,730

–

8,308

–

663

(104,506)

28

(104,478)

–

(104,506)

–

–

(191,050)

3

31

–

–

–

80

(104,398)

(292)

28,959

35,651

Group

Foreign 
currency 
translation
reserve
$’000

Issued
capital
$’000

Share-based 
payments
reserve
$’000

Accumulated
losses
$’000

Non-
controlling
interest
$’000

Balance at 1 January 2021

217,730

8,308

663

(191,050)

Loss after income tax benefit for 
the year

Other comprehensive income 
for the year, net of tax

Total comprehensive (loss)/
income for the year

Transactions with owners in their 
capacity as owners:

Share-based payments (Note 36)

Share issue transaction costs 
(Note 21)

–

–

–

438

(110)

–

367

367

–

–

–

–

–

(17,025)

–

(17,025)

(244)

–

–

–

Balance at 31 December 2021

218,058

8,675

419

(208,075)

–

–

–

–

–

–

–

Total equity
$’000

35,651

(17,025)

367

(16,658)

194

(110)

19,077

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

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

Consolidated Statement of Cash Flows

for the year ended 31 December 2021

Cash flows from operating activities

Receipts from customers (inclusive of GST)

Payments to suppliers and employees (inclusive of GST)

Government grants

Interest received

Interest and other finance costs paid

Income taxes refunded

Income taxes paid

Group

Note

2021
$’000

2020
$’000

9,650

14,095

(24,070)

(37,120)

354

51

(92)

36

–

365

100

(15)

–

(46)

Net cash used in operating activities

34

(14,071)

(22,621)

Cash flows from investing activities

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 investing activities

Cash flows from financing activities

Proceeds from issue of shares

Share issue transaction costs

Repayment of lease liabilities

Net cash (used in)/from financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the financial year

(160)

(132)

–

464

172

(295)

(33)

230

2,652

2,554

21

21

–

31,478

(110)

(1,047)

(1,157)

(15,056)

27,743

(2,519)

(1,414)

27,545

7,478

20,373

Effects of exchange rate changes on cash and cash equivalents

(38)

(108)

Cash and cash equivalents at the end of the financial year

9

12,649

27,743

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

36

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

Note 1: General information ................................................................................................................................................................................ 38

Note 2:

Signiﬁcant accounting policies .......................................................................................................................................................... 38

Note 3: Critical accounting judgements, estimates and assumptions ............................................................................................ 46

Note 4: Operating segments ................................................................................................................................................................................47

Note 5: Revenue ........................................................................................................................................................................................................50

Note 6: Other income..............................................................................................................................................................................................50

Note 7: Expenses........................................................................................................................................................................................................ 51

Note 8:

Income tax.................................................................................................................................................................................................... 53

Note 9: Cash and cash equivalents................................................................................................................................................................... 54

Note 10: Trade and other receivables ................................................................................................................................................................ 54

Note 11.

Inventories.................................................................................................................................................................................................... 55

Note 12: Prepayments, deposits and other..................................................................................................................................................... 56

Note 13:

Investments accounted for using the equity method............................................................................................................. 56

Note 14: Property, plant and equipment...........................................................................................................................................................57

Note 15: Right-of-use assets .................................................................................................................................................................................. 58

Note 16:

Intangibles....................................................................................................................................................................................................60

Note 17: Trade and other payables........................................................................................................................................................................61

Note 18: Contract liabilities......................................................................................................................................................................................62

Note 19: Borrowings ....................................................................................................................................................................................................62

Note 20: Lease liabilities ........................................................................................................................................................................................... 63

Note 21:

Issued capital .............................................................................................................................................................................................. 63

Note 22: Reserves........................................................................................................................................................................................................ 64

Note 23: Dividends...................................................................................................................................................................................................... 64

Note 24: Financial instruments ............................................................................................................................................................................. 64

Note 25: Fair value measurement .........................................................................................................................................................................67

Note 26:

 Remuneration of auditors.....................................................................................................................................................................67

Note 27: Contingent liabilities ................................................................................................................................................................................67

Note 28:  Commitments ............................................................................................................................................................................................ 68

Note 29:  Key management personnel disclosures ...................................................................................................................................... 68

Note 30:  Related party transactions ................................................................................................................................................................... 68

Note 31:  Parent entity information...................................................................................................................................................................... 69

Note 32:  Interests in subsidiaries............................................................................................................................................................................71

Note 33: Deed of cross guarantee .........................................................................................................................................................................71

Note 34: Cash flow information..............................................................................................................................................................................72

Note 35: Earnings per share.....................................................................................................................................................................................73

Note 36:  Share-based payments...........................................................................................................................................................................74

Note 37: Events after the reporting period ......................................................................................................................................................75

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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 2021

NOTE 1: GENERAL INFORMATION
The ﬁnancial statements cover Elixinol Wellness Limited as a Group consisting of Elixinol Wellness Limited (‘Company’ 
or ‘parent entity’) and the entities it controlled at the end of, or during, the period (‘Group’). The ﬁnancial statements are 
presented in Australian dollars, which is Elixinol Wellness Limited’s functional and presentation currency.

On 17 May 2021, with approval of the shareholders at the Annual General Meeting, the company changed its name from 
Elixinol Global Limited to Elixinol Wellness Limited.

Elixinol Wellness Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its 
registered office and principal place of business 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 2022. 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.

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

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 2021, the Group incurred a net loss before tax of $17,025,000 (31 December 2020: 
$104,478,000 loss). During the year, net cash outflows from operating activities were $14,071,000 (31 December 2020: 
$22,621,000).

The year was another signiﬁcantly challenging period for the Group with COVID-19 having a sustained impact on the 
global retail environment. The CBD industry experienced far less growth in FY2021 than was generally expected. This 
was due in part to the pandemic, but also a lack in regulatory clarity in many of the major CBD markets, and a saturated 
industry which resulted in an over-supply of product and reduced pricing.

Not withstanding these conditions, the Directors believe that it is reasonably forseeable that the Group will continue as a 
going concern, and that it is appropriate to adopt the going concern basis in the preparation of the ﬁnancial report, after 
consideration of the factors noted within this report.

As at 31 December 2021, the Group has net assets of $19,077,000 including cash of $12,649,000. The Directors regularly 
monitor the Company’s cash position on an ongoing basis and the Group has demonstrated a track record of raising 
capital and funding as and when required, including completing two capital raises totalling $31,477,000 FY2020. In 
addition, the net loss before tax of $17,090,000 has been signiﬁcantly reduced in FY2021 from that recorded in FY2020 
of $100,278,000 and the net cash outflow from operating activities reduced to $2,898,000 (excluding $322,000 non-
recurring transaction and severance costs) in Q4 FY2021 from $3,820,000 in Q4 FY2020 as expenditure was reduced 
and the scale of the business operations was reset.

In addition, ongoing cash outflow savings of $2.5m per year will be realised through the restructure of the European 
operations as the business transitioned to a licensing model during Q4 FY2021. Elixinol Wellness secured a three-year 
exclusive Trademark and Know-how Licensing Agreement with the UK’s largest CBD manufacturer and distributor, 
BRITISH CANNABIS™, at the end of 2021. The deal enables BRITISH CANNABIS™ to manufacture, market and sell Elixinol 
CBD products across the UK, ensuring our brand continues to be distributed in the market while realising signiﬁcant 
cost savings for the Group. In addition, ongoing cash outflow savings will also be realised in the Americas, through 
the transition to a fully outsourced supply chain that also near complete in Q4 FY2021 with inhouse warehousing and 
fulﬁlment on track to move to a third-party model in Q1 FY2022. 

38

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Also, Elixinol Americas lodged an application for refundable tax credits which were made available under the Coronavirus 
Aid, Relief, and Economic Security Act (CARES Act). The value of the credits calculated through to 31 December 2021 
totals approximately $1.6m (US$1.2m) and are expected to be received from the IRS in FY2022, to further boost the Group 
cash reserves.

The current cash flow forecasts support the business as a going concern and the Group has the capacity, if necessary, 
to defer discretionary expenditure including reducing headcount and corporate costs in the current cash flow forecast 
period to take steps to moderate the cash outflows of the business as needed.

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.

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 31.

Principles of consolidation
The consolidated ﬁnancial statements incorporate the assets and liabilities of all subsidiaries of Elixinol Wellness Limited 
as at 31 December 2021 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.

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

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

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39

 
 
 
 
 
 
 
 
 
 
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 2021

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

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.

40

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

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

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

Current and non-current classiﬁcation
Assets and liabilities are presented in the statement of ﬁnancial position based on current and non-current classiﬁcation.

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

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

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

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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 2021

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 - 45 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.

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.

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.

42

Elixinol Wellness Limited | Annual Report 2021

 
 
 
 
 
 
 
Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.

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. 

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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 2021

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

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

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

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

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

Lease liabilities
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.

44

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

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.

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.

Earnings per share

Basic earnings per share
Basic earnings per share is calculated by dividing the proﬁt attributable to the owners of Elixinol Wellness 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.

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45

 
 
 
 
 
 
 
 
 
 
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 2021

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 2021. The 
Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.

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.

Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering all the possible ﬁnancial effects and impacts that the COVID-19 pandemic 
has had, or may have, on the Group based on known information and how this impacts the measurement, presentation 
and disclosure in the Group year report. This consideration extends to the nature of the products and services offered, 
customers, supply chain, staffing and geographic regions in which the Group operates.

Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the 
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected 
credit loss rate for each group. These assumptions include recent sales experience, historical collection rates, the impact 
of the COVID-19 pandemic and forward-looking information that is available. The allowance for expected credit losses is 
calculated based on the information available at the time of preparation. The actual credit losses in future years may be 
higher or lower.

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.

46

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

NOTE 3: CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED)

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 assessing 
the value of the asset at fair value less costs of disposal and using value-in-use models which incorporate a number of key 
estimates and assumptions. Refer to Note 16.

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, Australia and Europe. 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 and share-based payments. The accounting policies adopted for internal reporting to the CODM are 
consistent with those adopted in the ﬁnancial statements.

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

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

Americas

Australia

Europe

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

This includes the results from the operations of Elixinol Wellness (Byron Bay) Pty Ltd (formerly known 
as Hemp Foods Australia Pty Ltd) (‘Hemp Foods Australia’).

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 CBD products.

‘Unallocated’ represents corporate, being Elixinol Wellness Limited (corporate).

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 2021, 17% of sales were derived from three major customers (31 December 2020: 9% 
of sales were derived from three major customers).

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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 2021

NOTE 4: OPERATING SEGMENTS (CONTINUED)

Operating segment information - Continuing operations

Group - 2021

Revenue

Sales to external customers

Total revenue

Adjusted EBITDA

Depreciation and amortisation

Impairment of intangibles

Impairment of assets

Interest income

Finance costs

Share-based payments

Loss before income tax benefit

Income tax benefit

Loss after income tax benefit

Assets

Segment assets

Total assets

Liabilities

Segment liabilities

Total liabilities

Americas
$’000

Australia
$’000

Europe
$’000

Unallocated
$’000

Total
$’000

4,783

4,783

4,086

4,086

469

469

–

–

9,338

9,338

(5,492)

(203)

(2,321)

(3,480)

(11,496)

(1,490)

(186)

(3,679)

47

(92)

(194)

(17,090)

65

(17,025)

25,332

25,332

6,255

6,255

8,981

2,960

793

12,598

2,599

1,502

335

1,819

48

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

NOTE 4: OPERATING SEGMENTS (CONTINUED)

Group – 2020

Revenue

Sales to external customers

Total revenue

Adjusted EBITDA

Depreciation and amortisation

Impairment of intangibles

Impairment of assets

Interest income

Finance costs

Share-based payments

Loss before income tax expense

Income tax expense

Loss after income tax expense

Assets

Segment assets

Total assets

Liabilities

Segment liabilities

Total liabilities

Geographical information

Americas

Australia

Europe

Unallocated

Americas
$’000

Australia
$’000

Europe
$’000

Unallocated
$’000

Total
$’000

8,510

8,510

4,156

4,156

2,344

2,344

–

–

15,010

15,010

(14,170)

(283)

(4,470)

(4,300)

(23,223)

(3,213)

(39,178)

(35,008)

100

(49)

293

(100,278)

(4,200)

(104,478)

42,470

42,470

6,819

6,819

2020
$’000

6,476

76

416

148

11,565

1,533

2,469

26,903

3,243

1,107

946

1,523

Sales to 
external 
customers

Geographical 
non-current 
assets*

2020
$’000

8,510

4,156

2,344

–

2021
$’000

4,663

758

–

323

2021
$’000

4,783

4,086

469

–

*

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.

9,338

15,010

5,744

7,116

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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 2021

NOTE 5: REVENUE

Sale of goods

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

Group

2021
$’000

2020
$’000

9,338 

15,010 

Group – 2021

Geographical regions

Americas

Australia

Europe

* Other includes bulk and private label.

Group – 2020

Geographical regions

Americas

Australia

Europe

* Other includes bulk and private label.

e-Commerce
$’000

Retail
$’000

Other*
$’000

Total
$’000

3,027

470

154

3,651

4,236

345

320

4,901

1,503

2,821

315

4,639

2,944

2,876

1,882

7,702

253

795

–

1,048

4,783

4,086

469

9,338

1,330

935

142

8,510

4,156

2,344

2,407

15,010

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

NOTE 6: OTHER INCOME

Net foreign exchange gain/(loss)

Net loss on disposal of property, plant and equipment

Government grants (COVID-19)

Sub-lease income and other

Other income

Group

2021
$’000

84 

(76)

1,984 

437 

2,429 

2020
$’000

(67)

(262)

365 

224 

260 

50

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

NOTE 6: OTHER INCOME (CONTINUED)

Government grants (COVID-19)
During the year the Group received payments from the Australian Government amounting to $nil (31 December 2020: 
$188,000) 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 year, the Group has received JobKeeper support payments from the Australian Government amounting 
to $42,000 (31 December 2020: $177,000) 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.

During the year, the Group has received a Business Growth Grant from the Australian Government amounting to $64,000 
(31 December 2020: $nil) which was in relation to marketing and export of goods. This grant has been recognised as 
government grants in the ﬁnancial statements and recorded as other income. The grant is taxable.

During the year, the Group received NSW COVID-19 Business Grant and NSW COVID-19 JobSaver Payment from 
the NSW Government amounting to $248,000 which was in relation to COVID-19 relief from decline in turnover from 
extended lockdowns impacting the business. These grants have been recognised as government grants in the ﬁnancial 
statements and recorded as other income. These grants are taxable.

During the year, the Group has accrued US Employee Retention Credits totalling $1,630,000 (31 December 2020: $nil) 
which is in relation to the application for refundable tax credits which were made available under the Coronavirus Aid, 
Relief, and Economic Security Act (CARES Act). Due to an extensive processing backlog at the Internal Revenue Service 
(‘IRS’) no cash has yet been received and the total $1.6 million is now expected to be received in FY2022.

NOTE 7: EXPENSES

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Loss before income tax includes the following specific expenses:

Cost of sales

Cost of sales

Depreciation and amortisation

Property, plant and equipment (Note 14)

Right-of-use assets (Note 15)

Intangibles (Note 16)

Total depreciation and amortisation

Impairment of intangibles

Goodwill

Website and software

Patents and trademarks

Customer relationships

Brand names

Total impairment of intangibles

Group

2021
$’000

2020
$’000

4,442

8,344 

346

713 

431 

1,490 

–

204 

(18)

–

–

1,495 

1,181 

537 

3,213 

28,712 

–

–

1,187

9,279 

186 

39,178 

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51

 
 
 
 
 
 
 
 
 
 
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 2021

NOTE 7: EXPENSES (CONTINUED)

Impairment of other assets

Inventory

Leasehold improvements

Motor vehicles

Computer equipment

Machinery

Land and buildings - right-of-use

Prepayments, deposits and other

Investments accounted for using the equity method

Total impairment of other assets

Finance costs

Interest and finance charges paid/payable on lease liabilities

Superannuation expense

Defined contribution superannuation expense

Group

2021
$’000

2020
$’000

2,778 

(42)

3 

11 

596 

–

333

– 

18,853 

2,937 

–

–

3,079 

704 

4,701 

4,734 

3,679 

35,008 

92 

49 

195 

184 

52

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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)

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

Decrease in deferred tax assets

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

Loss before income tax benefit/(expense)

Tax at the statutory tax rate of 25% (2020: 26%)

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

Income tax expense/(benefit)

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

Group

2021
$’000

2020
$’000

4 

–

(69)

(65)

(435)

4,626 

9 

4,200 

– 

4,626 

(17,090)

(100,278)

(4,273)

(26,072)

– 

10,186 

(227)

(312)

17 

– 

35 

54 

(4,483)

(16,109)

(69)

6,157 

(2,137)

– 

– 

467 

(65)

9 

8,489 

5,250 

4,402 

(95)

2,254 

4,200 

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

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

The Group has a $18,140,000 (31 December 2020: $14,664,000) of of tax effected revenue losses which have not been 
brought to account at 31 December 2021.

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.

Income tax refund due

Income tax refund due

Group

2021
$’000

2020
$’000

541 

509 

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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 2021

NOTE 8:

INCOME TAX (CONTINUED)

Provision for income tax

Provision for income tax

NOTE 9: CASH AND CASH EQUIVALENTS

Current assets

Cash at bank

NOTE 10: TRADE AND OTHER RECEIVABLES

Current assets

Trade receivables

Less: Allowance for expected credit losses

Government grant receivable

Other receivables

GST recoverable

Receivable from sub-lease

Interest receivable

Non-current assets

Receivable from sub-lease

Group

2021
$’000

2020
$’000

– 

29 

Group

2021
$’000

2020
$’000

12,649 

27,743 

Group

2021
$’000

2020
$’000

1,001

(468)

533

1,647

562

133 

95

–

2,245

(1,249)

996

– 

65

126 

–

4 

2,970

1,191 

183

–

Allowance for expected credit losses
The Group has recognised a loss of $62,000 (31 December 2020: $855,000) in proﬁt or loss in respect of the expected 
credit losses for the year ended 31 December 2021.

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

Expected credit loss rate

Carrying amount

Group

Not overdue

1 to 30 days overdue

31 to 60 days overdue

61 to 90 days overdue

Over 90 days overdue

54

Elixinol Wellness Limited | Annual Report 2021

2021
%

1% 

1% 

6% 

8% 

2020
%

2021
$’000

1% 

1% 

6% 

8% 

278

232

11

14

466

1,001

99% 

95% 

Allowance for expected credit 
losses

2021
$’000

2020
$’000

3

2

1

1

461

468

4

5

11

4

1,225

1,249

2020
$’000

378

339

185

50

1,293

2,245

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

NOTE 10: 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 11. 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

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

Group

2021
$’000

1,249 

62 

(843)

468

2020
$’000

1,103 

855 

(709)

1,249

Group

2021
$’000

2020
$’000

7,514 

(7,331)

183 

302 

(266)

36 

2,176 

(380)

1,796 

186 

2,201 

18,216 

(16,269)

1,947 

1,977 

(1,338)

639 

5,025 

(3,226)

1,799 

350 

4,735 

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. With the transition to a fully outsourced, remaining raw materials on hand at 31 December 2021 
fully impaired will be scrapped or disposed off in Q1 FY2022.

Since the 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 and the 
demand has been slower to recover than expected. 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. The Company has also sought to sell the excess raw materials and bulk materials in 
the market. 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 has been recognised in the 
ﬁnancial statements.

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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 2021

NOTE 12: PREPAYMENTS, DEPOSITS AND OTHER

Current assets

Prepayments

Security deposits

Other deposits

NOTE 13: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Non-current assets

Investment in associate - Altmed Pets LLC

Group

2021
$’000

2020
$’000

1,057 

170 

– 

1,227

893 

198 

85 

1,176

Group

2021
$’000

2020
$’000

2,617 

2,316 

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

Summarised ﬁnancial information

Principal place of business /
Country of incorporation

United States of America

United States of America

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 before income tax

Other comprehensive income

Total comprehensive loss

Ownership interest

2021
%

–

25.43% 

2020
%

19.88% 

25.43% 

Altmed Pets LLC

2021
$’000

2020
 $’000

2,207

383

2,590

1,552

–

1,552

1,038

13,035

(13,510)

(475)

–

(475)

3,890

130

4,020

1,788

704

2,492

1,528

12,180

(15,495)

(3,315)

–

(3,315)

56

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

NOTE 13: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)

Reconciliation of the Group's carrying amount

Opening carrying amount

Share of loss after income tax

Impairment of investment

Reversal of impairment of investment

Related party eliminations

Foreign exchange 

Closing carrying amount

NOTE 14: PROPERTY, PLANT AND EQUIPMENT

Non-current assets

Land - at cost

Leasehold improvements - at cost

Less: Accumulated depreciation

Less: Impairment

Furniture, fittings and equipment - at cost

Less: Accumulated depreciation

Motor vehicles - at cost

Less: Accumulated depreciation

Computer equipment - at cost

Less: Accumulated depreciation

Machinery - at cost

Less: Accumulated depreciation

Less: Impairment

Altmed Pets LLC

2021
$’000

2020
 $’000

2,316

(121)

–

121

96

205

2,617

8,095

(795)

(4,734)

–

–

(250)

2,316

Group

2021
$’000

2020
$’000

– 

364 

(183)

(124)

57 

162 

(126)

36 

59 

(44)

15 

693 

(639)

54 

5,776 

(1,063)

(3,567)

1,146 

1,308 

376 

360 

(116)

(165)

79 

174 

(102)

72 

63 

(34)

29 

737 

(523)

214 

5,711 

(1,039)

(2,971)

1,701 

2,471 

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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 2021

NOTE 14: 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:

Group

Balance at 
1 January 2020

Additions

Disposals

De-classified as 
held-for-sale

Exchange 
differences

Impairment of 
assets

Depreciation 
expense

Balance at 
31 December 
2020

Additions

Disposals

De-classified as 
held-for-sale

Exchange 
differences

Impairment of 
assets

Depreciation 
expense

Balance at 
31 December 2021

–

(2,611)

–

(38)

–

–

376

–

(401)

–

25

–

–

–

Leasehold 
improve-
ments
$’000

Furniture, 
fittings and
equipment
$’000

Land
$’000

Motor
vehicles
$’000

Computer
equipment
$’000

Machinery
$’000

Total
$’000

3,025

3,262

110

–

–

13

49

(2,937)

1

(8)

25

(4)

–

46

–

–

–

(3)

–

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)

79

–

–

–

(6)

42

(58)

57

72

5

(3)

–

(3)

–

(35)

36

29

–

–

–

2

(3)

(13)

15

214

8

(11)

–

4

1,701

171

(156)

–

116

2,471

184

(571)

–

138

(11)

(596)

(568)

(150)

(90)

(346)

54

1,146

1,308

NOTE 15: RIGHT-OF-USE ASSETS

Non-current assets

Land and buildings - right-of-use

Less: Accumulated depreciation

Less: Impairment

Group

2021
$’000

2020
$’000

4,039

(2,162)

(704)

1,173 

4,540 

(2,424)

(704)

1,412 

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.

58

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

NOTE 15: RIGHT-OF-USE ASSETS (CONTINUED)

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 2020

Disposals

De-classified as held for sale

Exchange differences

Impairment of assets

Depreciation expense

Balance at 31 December 2020

Lease liability remeasured

Disposals

Exchange differences

Depreciation expense

Balance at 31 December 2021

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 20 for lease liabilities at 31 December 2021;
– Refer to Note 24 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

4,323

(1,007)

187

(206)

(704)

(1,181)

1,412

450

(36)

60

(713)

1,173

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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 2021

NOTE 16: 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

Group

2021
$’000

2020
$’000

76,191 

(76,191)

– 

1,195

(634)

(245)

316 

149 

(2)

147 

2,475 

(1,256)

(1,219)

– 

10,668 

(10,668)

– 

463 

76,191 

(76,191)

– 

1,068 

(370)

(41)

657 

125 

(2)

123 

2,470 

(1,114)

(1,219)

137 

10,668 

(10,668)

– 

917 

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 2020

Additions

Exchange differences

Impairment of assets*

Amortisation expense

Balance at 31 December 2020

Additions

Disposals

Exchange differences

Impairment of assets

Amortisation expense

Balance at 31 December 2021

*

All impairment in 2020 relates to the Americas CGU segment.

60

Elixinol Wellness Limited | Annual Report 2021

Goodwill
$’000

28,226

–

486

(28,712)

–

–

–

–

–

–

–

–

Website 
and
software
$’000

Patents 
and
trademarks
$’000

Customer 
relation-
ships
$’000

Brand
names
$’000

Total
$’000

993

–

(50)

–

(286)

657

127

–

25

(204)

(289)

316

90

33

–

–

–

123

23

(17)

–

18

–

147

1,563

9,122

39,994

–

12

–

157

33

605

(1,187)

(9,279)

(39,178)

(251)

137

–

–

5

–

(142)

–

–

–

–

–

–

–

–

–

(537)

917

150

(17)

30

(186)

(431)

463

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

NOTE 16: INTANGIBLES (CONTINUED)

Impairment testing of goodwill
Goodwill was fully impaired in FY2020 and this impairment cannot be reversed. Refer below for the key assumptions and 
determination of recoverable amount in FY2020.

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 based its cash flow projections when determining the value in calculations 
for Elixinol LLC are set out below. These assumptions were considered to be consistent with industry market participant 
expectations.

– the revenue growth reflected management’s expectation of growth in the short to medium term based on market 

growth expectations;

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

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 in FY2020.

NOTE 17: TRADE AND OTHER PAYABLES

Current liabilities

Trade payables

GST and sales tax payable

Credit cards

Other payables

Refer to Note 24 for further information on ﬁnancial instruments.

Group

2021
$’000

2020
$’000

1,362 

1,818 

43 

179 

624 

128 

144 

705 

2,208 

2,795 

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61

 
 
 
 
 
 
 
 
 
 
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 2021

NOTE 18: 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

Group

2021
$’000

2020
$’000

94 

89 

89 

94 

(89)

94 

157 

89 

(157)

89 

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 $94,000 as at 31 December 2021 ($89,000 as at 31 December 2020) and is expected to be 
recognised as revenue in future periods as follows:

Within 6 months

NOTE 19: BORROWINGS

Current liabilities

Insurance premium funding

Non-current liabilities

Related party loan from Raw With Life

Group

2021
$’000

94 

2020
$’000

89 

Group

2021
$’000

2020
$’000

428 

–

250

250

Refer to Note 24 for further information on ﬁnancial instruments.

Prior to its acquisition by Elixinol Wellness 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 Wellness 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.

62

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

NOTE 20: LEASE LIABILITIES

Current liabilities

Lease liability

Non-current liabilities

Lease liability

Lease make good provision

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

Group

2021
$’000

2020
$’000

747

920 

1,223 

67 

1,290 

1,482 

92 

1,574 

Refer to Note 24 for further information on ﬁnancial instruments.

NOTE 21: ISSUED CAPITAL

Ordinary shares - fully paid

315,778,066 313,227,117

218,058 

217,730 

Group

2021
Shares

2020
Shares

2021
$’000

2020
$’000

Movements in ordinary share capital

Details

Balance

Institutional Entitlement Offer

Retail Entitlement Offer

Issue of Shares

Share Purchase Plan Offer

Share issue transaction costs

Share issue transaction costs

Performance rights exercised

Performance rights exercised

Performance rights exercised

Performance rights exercised

Performance rights exercised

Balance

Date

Shares

Issue price

$'000

1 January 2020

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

31 January 2021

28 February 2021

31 May 2021

31 August 2021

21 October 2021

468,750

854,430

379,747

379,272

468,750

$0.200 

$0.200 

$0.170 

$0.170 

$0.000

$0.000

$0.000

$0.000

$0.000

188,771

5,343

5,646

8,196

12,293

(2,519)

217,730

(110)

87

135

60

69

87

Balance

31 December 2020

313,227,117

31 December 2021

315,778,066

218,058

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.

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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 2021

NOTE 21: 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.

The capital risk management policy remains unchanged from the 31 December 2020 Annual Report.

NOTE 22: RESERVES

Foreign currency translation reserve

Share-based payments reserve

Group

2021
$’000

8,675 

419 

9,094 

2020
$’000

8,308 

663 

8,971 

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

NOTE 24: 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 and evaluates ﬁnancial risks within the Group’s operating units. 
Finance provides reports to the Board on a monthly basis.

Market risk

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

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

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

64

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

NOTE 24: FINANCIAL INSTRUMENTS (CONTINUED)
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

2021
$’000

2020
$’000

–

12

–

12

43

30

53

126

2021
$’000

184

–

–

184

2020
$’000

405

43

20

468

The Group had net liabilities denominated in foreign currencies of $172,000 (assets of $12,000 less liabilities of $184,000) 
as at 31 December 2021 (31 December 2020: net liabilities of $342,000 (assets of $126,000 less liabilities of $468,000)). 
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 - 2021

US dollars

Euros

Pounds Sterling

Group - 2020

US dollars

Euros

Pounds Sterling

AUD strengthened

Effect on 
profit before 
tax
$’000

Effect on 
equity
$’000

% change

5% 

5% 

5% 

9

(1)

–

8

9

(1)

–

8

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 weakened

Effect on 
profit before 
tax
$’000

Effect on 
equity
$’000

(9)

1

–

(8)

(9)

1

–

(8)

AUD weakened

Effect on 
profit before 
tax
$’000

(17)

(1)

2

(16)

Effect on 
equity
$’000

(17)

(1)

2

(16)

% change

5% 

5% 

5% 

% change

5% 

5% 

5% 

The percentage change is the expected overall volatility of the signiﬁcant currencies, which is based on management’s 
assessment of reasonable possible fluctuations taking into consideration movements over the last year and the spot 
rate at the reporting date. A positive number indicates an increase in proﬁt, a negative number indicates a decrease in 
proﬁt. The actual foreign exchange loss for the year ended 31 December 2021 was $35,000 (31 December 2020: loss of 
$32,000).

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.

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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 2021

NOTE 24: FINANCIAL INSTRUMENTS (CONTINUED)

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.

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

Group - 2021

Non-derivatives

Non-interest bearing

Trade payables

Other payables

Interest-bearing - variable

Lease liability

Interest-bearing - fixed rate

–

–

1,362

803

–

–

–

–

3.29% 

747

1,016

207

–

–

–

–

–

1,362

803

1,970

428

4,563

Insurance premium funding

3.03% 

Total non-derivatives

428

3,340

–

1,016

–

207

66

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

NOTE 24: FINANCIAL INSTRUMENTS (CONTINUED)

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

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

NOTE 25: 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 26:  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:

Audit services - BDO Audit Pty Ltd

Audit or review of the financial statements

Other services - BDO Services Pty Ltd

Taxation compliance services

Other advisory services

Other services - network firms

Taxation services

NOTE 27: CONTINGENT LIABILITIES
The Group had no contingent liabilities as at 31 December 2021 and 31 December 2020.

Group

2021
$

2020
$

234,351 

252,119 

9,472 

18,733 

63,525

– 

72,997

18,733 

76,389 

19,813 

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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 2021

NOTE 28: COMMITMENTS

Group

2021
$’000

2020
$’000

Capital commitments

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

Inventory purchases under contract

71 

243 

NOTE 29: 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

2021
$

2020
$

972,010 

860,950 

66,746 

–

–

72,213 

29,152 

463,562 

36,092 

(320,066)

1,074,848 

1,105,811 

Short-term employee benefits

Post-employment benefits

Long-term benefits

Termination benefits

Share-based payments

NOTE 30: RELATED PARTY TRANSACTIONS

Parent entity
Elixinol Wellness Limited is the parent entity.

Subsidiaries
Interests in subsidiaries are set out in Note 32.

Associates and other investee
Interests in associates are set out in Note 13.

Key management personnel
Disclosures relating to key management personnel are set out in Note 29 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.

68

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

Group

2021
$

2020
$

–

–

20,128 

4,316 

NOTE 30: 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

Payment for goods and services:

Purchase of goods from associates

Receivable from and payable to related parties
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:

Non-current borrowings:

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

Group

2021
$

2020
$

250,000 

250,000 

Prior to its acquisition by Elixinol Wellness 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 9.25% of the shares in Elixinol Wellness 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.

Loan transactions were made on negotiated terms and conditions.

NOTE 31: 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

Parent

2021
$’000

2020
$’000

(16,658)

(16,658)

(91,098)

(91,098)

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69

 
 
 
 
 
 
 
 
 
 
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 2021

NOTE 31: PARENT ENTITY INFORMATION (CONTINUED)

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

2021
$’000

12,265 

20,895

1,365 

1,818 

2020
$’000

26,744 

37,172

863 

1,520 

218,735 

218,408 

419 

663 

(200,077)

(183,419)

19,077 

35,652 

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 33, the parent entity had no other guarantees in relation to the 
debts of its subsidiaries as at 31 December 2021 and 31 December 2020.

Contingent liabilities
The parent entity had no contingent liabilities as at 31 December 2021 and 31 December 2020.

Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 December 2021 and
31 December 2020.

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

70

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

NOTE 32: 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 Wellness (Corporate Services) Pty 
Ltd ***

Elixinol Wellness (Byron Bay) Pty Ltd 
(trading as Hemp Foods Australia) **

Elixinol Investments Pty Ltd *

Elixinol BV

Elixinol Ltd

Australia

Australia

Australia

Netherlands

United Kingdom

*

**

Elixinol Investment Pty Ltd was dissolved on 11 February 2021

Formerly known as Hemp Foods Australia Pty Ltd

*** Formerly known as Elixinol Australia Pty Ltd

Ownership interest

2021
%

100% 

100% 

100% 

2020
%

100% 

100% 

100% 

100% 

100% 

–

100% 

100% 

100% 

100% 

100% 

NOTE 33: DEED OF CROSS GUARANTEE
The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the 
others:

Elixinol Wellness Limited
Elixinol Wellness (Corporate Services) Pty Ltd (formerly known as Elixinol Australia Pty Ltd)
Elixinol Investments Pty Ltd
Elixinol Wellness (Byron Bay) Pty Ltd (formerly known as Hemp Foods Australia Pty Ltd)
Elixinol LLC
EXL International Holdings LLC
Elixinol BV
Elixinol Limited

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 Wellness Limited, they also represent the 
‘Extended Closed Group’.

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 consolidated statement of proﬁt or loss and other comprehensive income and consolidated statement of ﬁnancial 
position are substantially the same as the Group and therefore have not been separately disclosed.

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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 2021

NOTE 34: CASH FLOW INFORMATION

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

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

Adjustments for:

Depreciation and amortisation

Impairment of non-current assets

Impairment of intangibles

Impairment of inventory

Net loss on disposal of property, plant and equipment

Share of loss - associates

Share of loss - joint ventures

Share-based payments

Doubtful debts

Others

Change in operating assets and liabilities:

Decrease/(increase) in trade and other receivables

Increase in inventories

Increase in income tax refund due

Decrease in deferred tax assets

Decrease/(increase) in prepayments, deposits and other

Decrease in trade and other payables

Increase/(decrease) in contract liabilities

Increase/(decrease) in provision for income tax

Increase/(decrease) in other provisions

Increase/(decrease) in accrued expenses

Increase in premium funding

Net cash used in operating activities

Group

2021
$’000

2020
$’000

(17,025)

(104,478)

1,490

771 

186 

2,778 

76 

–

–

194 

62 

(51)

(2,014)

(244)

–

–

(51)

(619)

5 

(29)

(115)

87 

428 

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)

–

(14,071)

(22,621)

72

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

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

NOTE 34: 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 2020

Net cash used in financing activities

Disposals

Changes through discontinued operations 

Exchange differences

Balance at 31 December 2020

Net cash used in financing activities

Lease liability remeasured

Exchange differences

Balance at 31 December 2021

NOTE 35: EARNINGS PER SHARE

Loss after income tax

Non-controlling interest

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

Loan with 
Raw With Life
$’000

Lease 
liabilities
$’000

–

–

–

250

–

250

–

–

–

4,665

(1,414)

(704)

–

(53)

2,494

(1,047)

450

140

Total
$’000

4,665

(1,414)

(704)

250

(53)

2,744

(1,047)

450

140

250

2,037

2,287

Group

2021
$’000

2020
$’000

(17,025)

(104,478)

–

(28)

(17,025)

(104,506)

Number

Number

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

314,819,959 179,421,047

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

314,819,959 179,421,047

Basic loss per share

Diluted loss per share

Cents

Cents

(5.41)

(5.41)

(58.25)

(58.25)

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

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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 2021

NOTE 36: 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 6,694,468 performance rights were issued for nil consideration and the share-based payment 
debit in the proﬁt and loss was $194,000 that included $182,000 credit for forfeitures and $376,000 debit current period 
expense. The equity movement was a credit of $194,000 that included $438,000 credit for performance rights exercised 
as issued capital and $244,000 movement in the share-based payments reserve. 

During the prior year 3,699,220 performance rights were issued for nil consideration and the share-based payment 
credited in the proﬁt or loss was $293,000 that included $815,000 credit for forfeitures and $522,000 debit for current 
period expense. The equity movement was a debit of $293,000. 

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

The performance period of 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 performance period of share rights granted in 2021 is from 1 January 2021 to 31 December 2023.

The vesting dates are as follows:

Tranche

Tranche 1

Tranche 2

Tranche 3

Vesting date
Share Rights granted in 
2018

Vesting date
Share Rights granted in 
2019

Vesting date
Share Rights granted in 
2020

Vesting date
Share Rights granted in 
2021

28 February 2020 
(lapsed)

28 February 2021 
(lapsed)

28 February 2022 
(lapsed)

28 February 2021 
(lapsed)

28 February 2022 
(lapsed)

28 February 2023

28 February 2023

28 February 2024

Tranche 4

28 February 2023

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

2021

Grant date

Expiry date

03/04/2018

15/05/2018

21/09/2019

30/07/2020

30/07/2020

16/10/2020

07/07/2021

07/07/2021

07/07/2021

03/07/2023

15/08/2023

21/12/2024

30/10/2025

30/10/2025

02/01/2026

07/10/2026

07/10/2026

07/10/2026

Balance at 
the start of 
the year

60,224

450,000

35,166

937,500

1,356,923

1,234,177

Granted

Exercised

Expired/ 
forfeited/
 other

Balance at 
the end of 
the year

–

–

–

–

–

–

–

–

–

(30,112)

30,112

(225,000)

225,000

(25,568)

9,598

(937,500)

–

–

–

(446,269)

910,654

(1,234,177)

–

–

–

–

–

751,439

(379,272)

(17,772)

354,395

4,609,442

1,333,587

–

–

(1,484,461)

3,124,981

(1,333,587)

–

4,073,990

6,694,468

(2,550,949)

(3,562,769) 4,654,740

74

Elixinol Wellness Limited | Annual Report 2021

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

NOTE 36: SHARE-BASED PAYMENTS (CONTINUED)

2020

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

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

–

–

–

–

–

–

–

–

937,500

1,527,543

1,234,177

2,635,185

3,699,220

–

–

–

–

–

–

–

–

–

(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

Grant date

Expiry date

03/04/2018

15/05/2018

01/11/2018

23/05/2019

21/09/2019

30/07/2020

30/07/2020

16/10/2020

03/07/2023

15/08/2023

01/02/2024

23/08/2024

21/12/2024

30/10/2025

30/10/2025

02/01/2026

The weighted average remaining contractual life of performance rights outstanding at the end of the ﬁnancial year was 
3.65 years (31 December 2020: 3.97 years).

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

07/07/2021

07/10/2026

$0.115 

95.60% 

–

–

$0.076 

* 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 (e.g. 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 37: EVENTS AFTER THE REPORTING PERIOD
No matter or circumstance has arisen since 31 December 2021 that has signiﬁcantly affected, or may signiﬁcantly affect 
the Group’s operations, the results of those operations, or the Group’s state of affairs in future ﬁnancial years.

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75

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

Directors’ Declaration

31 December 2021

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 2021 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 33 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

25 February 2022
Sydney

76

Elixinol Wellness Limited | Annual Report 2021

Independent Auditor’s Report

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

INDEPENDENT AUDITOR'S REPORT

To the members of Elixinol Wellness Limited

Report on the Audit of the Financial Report

Opinion 

We have audited the financial report of Elixinol Wellness Limited (the Company) and its subsidiaries 
(the Group), which comprises the consolidated statement of financial position as at 31 December 2021, 
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 2021 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 membe r 
firms. Liability limited by a scheme approved under Professional Standards Legislation.

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77

 
 
 
 
 
 
 
 
 
 
Independent Auditor’s Report

continued

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.  

Going concern 

Key audit matter  

How the matter was addressed in our audit 

For the year ended 31 December 2021, the 

Our procedures included, but were not limited to: 

Group incurred a net loss of $17m and net 

cash outflows of $15m indicating a 

potential going concern issue.  

The financial report has been prepared on 

a going concern basis and as the directors’ 

assessment of the Group’s ability to 

continue as a going concern can be highly 

judgemental we identified going concern 

as a significant risk requiring special audit 

consideration.  

Due to these factors, we considered this 

area to be a key audit matter. 

• 

• 

• 

• 

An evaluation of the directors’ assessment of the Group’s 
ability to continue as a going concern. In particular we 
reviewed management prepared cashflow forecast for the 
period to end February 2023; 

Reviewed the inputs to the cashflow forecast including 
comparing to prior periods, and known business plans for 
the future; 

Assessed management’s ability to accurately forecasting, 
by review of current performance to prior period forecast; 
and 

Reviewed the disclosures in the financial statements to 
determine whether they are adequate. 

The directors assessment of going concern is included in note 2 to 
the financial report.  

Impairment / Recoverability of non-current assets 

Key audit matter  

How the matter was addressed in our audit 

There is a risk that carrying value of the 

Our procedures included, but were not limited to: 

Group’s non-current assets might be 

impaired if they are unlikely to produce 

economic benefits in excess of their 

carrying value. 

The Group has seen lower than expected 

revenue growth and demand for its 

products. Based on these factors, it was 

identified that impairment indicators 

exist. 

Due to the significant assumptions and 

judgments that are involved in impairment 

assessments, we have determined that this 

is a key audit matter. 

• 

• 

• 

Reviewed and analysed the Group’s value-in-use cash flow 
models to support the carrying value of non-current-assets; 

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

Enquired with management, corroborating assumptions with 
audit evidence and assessed the judgements made in 
respect of non-current asset impairment assessments 
prepared by the Group; 

• 

Assessed management’s ability to accurately forecast, by 
review of current performance to prior period forecast. 

78

FINANCIAL REPORTElixinol Wellness Limited | Annual Report 2021 
 
 
F I N A N C I A L R E P O R T

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 2021, 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. 

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.

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79

 
 
 
 
 
 
 
 
 
 
Independent Auditor’s Report

continued

Report on the Remuneration Report 

Opinion on the Remuneration Report  

We have audited the Remuneration Report included in pages 21 to 29 of the directors’ report for the 
year ended 31 December 2021. 

In our opinion, the Remuneration Report of Elixinol Wellness Limited, for the year ended 31 December 
2021, 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 2022 

80

FINANCIAL REPORTElixinol Wellness Limited | Annual Report 2021 
 
 
 
 
 
 
Shareholder Information

31 December 2021

The shareholder information set out below was applicable as at 15 February 2022. 

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:

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

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

CITICORP NOMINEES PTY LIMITED

MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED

D & G HEALTH LLC

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM

BNP PARIBAS NOMS PTY LTD (DRP)

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

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

MR ERIC CHI KEUNG WONG

PANTHER TRADING PTY LTD (PANTHER A/C)

MR JYOTINDRA SUBEDI

MR JIA HONG ZHANG

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

MS XIAO LAN WANG

SLT CAPITAL MANAGEMENT PTY LTD

MR MICHAEL ERNEST GRANATA (THE GRANATA FAMILY A/C)

MR RICHARD FREDERICK DRENNAN

MR RONG SEN HUANG

SHAREHOLDER I NFORMATIO N

Ordinary shares

Number
of holders

3,281

2,815

1,331

2,670

433

10,530

6,776

% of total
shares
issued

0.44

2.50

3.35

25.26

68.45

100.00

4.32

Ordinary shares

Number held

29,873,698

29,209,217

10,470,605

8,827,697

6,187,688

5,371,421

4,396,957

3,269,386

2,394,216

2,261,302

1,775,226

1,576,471

1,500,283

1,428,888

1,236,061

1,195,288

1,176,471

1,100,000

1,000,000

1,000,000

% of total 
shares
issued

9.46

9.25

3.31

2.79

1.96

1.70

1.39

1.03

0.76

0.72

0.56

0.50

0.47

0.45

0.39

0.38

0.37

0.35

0.32

0.32

115,250,875

36.48

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81

 
 
 
 
 
 
 
 
 
 
SHA R EHOL DER  I NFO RMATIO N

Shareholder Information

continued

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:

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

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

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

Number
on issue

Number
of holders

16,177,774

28

Ordinary shares

Number held

29,873,698

29,209,217

% of total 
shares
issued

9.46

9.25

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.

Corporate Directory

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

Chief Financial Officer 
Ron Dufficy 

Company Secretary 
Teresa Cleary
Kim Bradley-Ware

Registered office 
Level 12, 680 George Street
Sydney NSW 2000

Tel: 
Tel: 

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

Mailing address
PO Box 20547
World Square NSW 2002

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

SHAREHOLDER I NFORMATIO N

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

Website
www.elixinolwellness.com

Twitter
EXLWellness

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://www.elixinolwellness.com/site/About-Us/corporate-governance

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83

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
www.elixinolwellness.com