Elixinol Wellness Limited
ABN 34 621 479 794
Annual Report - 31 December 2023
Elixinol Wellness Limited
Contents
31 December 2023
Directors' report
Auditor's independence declaration
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Note 1. General information
Note 2. Material accounting policy information
Note 3. Critical accounting judgements, estimates and assumptions
Note 4. Operating segments
Note 5. Revenue
Note 6. Other income
Note 7. Expenses
Note 8. Income tax
Note 9. Cash and cash equivalents
Note 10. Trade and other receivables
Note 11. Inventories
Note 12. Prepayments, deposits and other
Note 13. Non-current assets classified as held for sale
Note 14. Investments accounted for using the equity method
Note 15. Property, plant and equipment
Note 16. Right-of-use assets
Note 17. Intangibles
Note 18. Trade and other payables
Note 19. Contract liabilities
Note 20. Borrowings
Note 21. Lease liabilities
Note 22. Issued capital
Note 23. Reserves
Note 24. Dividends
Note 25. Financial instruments
Note 26. Fair value measurement
Note 27. Remuneration of auditors
Note 28. Contingent liabilities
Note 29. Commitments
Note 30. Key management personnel disclosures
Note 31. Related party transactions
Note 32. Parent entity information
Note 33. Business combinations
Note 34. Interests in subsidiaries
Note 35. Deed of cross guarantee
Note 36. Cash flow information
Note 37. Earnings per share
Note 38. Share-based payments
Note 39. Events after the reporting period
Directors' declaration
Independent auditor's report to the members of Elixinol Wellness Limited
Shareholder information
Corporate directory
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Elixinol Wellness Limited
Directors' report
31 December 2023
Your directors present their report, together with the financial statements for Elixinol Wellness Limited ('Elixinol Wellness', the
'Company') and its controlled entities ('Consolidated Entity' or 'Group') for the financial year ended 31 December 2023 ('FY23').
Directors
The names of the Directors of the Company in office during the financial year and up to the date of this report are as follows.
Directors were in office for the entire period unless otherwise stated.
David Fenlon
Ronald Dufficy
Pauline Gately
Independent Non-Executive Chair (appointed 30 September 2023)
Independent Non-Executive Director (1 January 2023 to 29 September 2023)
Group Chief Executive Officer
Managing Director (appointed 6 April 2023)
Non-Executive Director (appointed 17 August 2023)
Helen Wiseman
Paul Benhaim
Oliver Horn
Independent Non-Executive Chair (resigned 30 September 2023)
Non-Executive Director (resigned 6 April 2023)
Non-Executive Director (resigned 6 April 2023)
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, Mt Elephant, Field Day and The
Australian Superfood Co, The Sustainable Nutrition Group Pty Ltd, The Sustainable Nutrition Group (Australia) Pty Ltd
(together 'Australia') and Elixinol BV and Elixinol Limited (together 'Elixinol Europe').
The principal activities of the Group are:
Australia (hemp-derived nutrition and skincare products)
Australia operates a vertically integrated business which produces, manufactures, and distributes a range of highly
complementary products delivered across four verticals – human nutrition, human wellness, pet wellness and superfood
ingredients. Brands include Hemp Foods Australia, Mt Elephant and Field Day, and are sold through grocery, wholesale, and
eCommerce channels. Additionally, the Australian Superfood Co. supplies Australian native and superfood ingredients to
white label customers as well as food, beverage, and beauty manufacturers. Manufacturing and distribution operations are
based in Geelong, Victoria, servicing customers throughout Australia.
Elixinol Americas (hemp-derived cannabidiol (‘CBD’) dietary supplements and topicals)
Established in 2014, Elixinol Americas is based in the United States and specialises in marketing and distributing products
made from premium quality, predominantly 'whole plant' full spectrum CBD, which is extracted from US grown industrial hemp.
Rest of World (hemp-derived cannabidiol ('CBD') food and cosmetics)
Rest of World includes Elixinol Europe, based in Utrecht (The Netherlands), and in London (United Kingdom). Elixinol Europe
was established in 2018 specialising in the development, sourcing, marketing and distribution of hemp-derived CBD products,
including skincare. Rest of the World moved to a licensing business model in 2021 covering Elixinol Europe, Japan and South
Africa.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
Operating and financial review
The FY23 loss for the Group after providing for income tax and non-controlling interest amounted to $7,507,000 (31 December
2022: $10,571,000).
The Group revenue from continuing operations for the year ended 31 December 2023 was $8,269,000 (31 December 2022:
$7,055,000).
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Elixinol Wellness Limited
Directors' report
31 December 2023
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 2023
was an Adjusted EBITDA loss of $4,626,000 (31 December 2022: Adjusted EBITDA loss of $8,538,000). EBITDA and
Adjusted EBITDA are financial measures which are not prescribed by Australian Accounting Standards (‘AAS’) and represent
the statutory result under AAS, adjusted for certain items. The directors consider EBITDA and Adjusted EBITDA to reflect core
earnings of the Group.
A reconciliation of Adjusted EBITDA from continuing operations to statutory loss is detailed below:
Loss after income tax
Add back/(deduct):
Income tax expense/(benefit)
Finance costs
Interest income
Depreciation and amortisation
EBITDA
Add back/(deduct):
Impairment of intangibles
Impairment of other assets
Share-based payments
Adjusted EBITDA
2023
$'000
Group
2022
$'000
(7,507)
(10,571)
3
101
(213)
597
(7,019)
-
1,718
675
2
71
(22)
721
(9,799)
234
786
241
(4,626)
(8,538)
Group cash used in operations for the year ended 31 December 2023 was $2,758,000 (31 December 2022: $8,152,000),
which included $190,000 of non-recurring transaction costs.
The Group also recognised non-cash impairments of intangibles (including goodwill) of $nil (31 December 2022: $234,000)
for the year ended 31 December 2023 related to the Elixinol Americas cash-generating unit ('CGU').
Group non-cash impairment of other assets of $1,718,000 (31 December 2022: $786,000) for the year ended 31 December
2023 relate to the write-down of the Company’s non-core asset investment in Altmed Pets LLC. Subsequent to year end, on
21 February 2024, the Company entered into a binding agreement, subject to finance, to sell this investment for approximately
$2,300,000, an amount equal to the revised value in the Company’s financial statements.
Australia
Australia comprises trading results from Elixinol Wellness (Byron Bay) Pty Ltd trading as Hemp Foods Australia, Mt Elephant,
Field Day, and The Australian Superfood Co, The Sustainable Nutrition Group Pty Ltd, and The Sustainable Nutrition Group
(Australia) Pty Ltd.
Australia reported revenue for the year ended 31 December 2023 of $5,587,000 (31 December 2022: $3,691,000) and
Adjusted EBITDA loss of $1,115,000 (31 December 2022: $704,000 Adjusted EBITDA loss).
In H1 FY23, Hemp Foods Australia recorded strong sales of its Seed Mix range through Coles nationally, the rollout of Hemp
Seed Oil across Woolworths stores nationally and promotional activity with Costco. The national Woolworths roll-out of Hemp
Foods Australia’s product range also coincided with the launch of its rebrand and fresh look for its Hemp Foods Australia
brand. Other highlights include the launch of the Group’s TGA-approved range of Hemp Gold® Seed Oil capsules in August
through health food and specialty stores as well as online channels.
With an expanded brand portfolio, following the acquisition of The Sustainable Nutrition Group Ltd ('TSN') effective 17 August
2023, Australian-based revenue increased to $3,487,000 in H2 FY23, an increase of 66% compared with H1 FY23 revenue
of $2,100,000. On a full year basis, Hemp Foods Australia branded Business to Consumer ('B2C') revenue climbed 25%
compared with FY22.
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Elixinol Wellness Limited
Directors' report
31 December 2023
During H2 FY23, the Group was notified of successful ranging of its Mt Elephant products with Coles. Coles will range 4 Mt
Elephant SKUs from April 2024 augmenting the 10 Mt Elephant SKUs already sold in Woolworths stores nationally.
During H2 FY23, the Company also confirmed online distribution with Chemist Warehouse. From February 2024, Hemp Foods
Australia’s Plant-Based Omega and its Pain Relief capsules will be available via www.chemistwarehouse.com.au. Additionally,
from April 2024, a unique 1kg pack of Hemp Foods Australia’s flavoured proteins and a new Plant-Based Collagen product
will also be available online.
Americas
The Americas segment comprises the trading results of Elixinol LLC and its investments in Pet Releaf ('Elixinol Americas'). A
binding agreement to dispose of the investment in Pet Releaf was entered into on 21 February 2024 and as a result, the
investment has been classified as non-current asset, held of sale. There was no impact on the trading results of Elixinol
Americas.
Elixinol Americas reported revenue of $2,638,000 in FY23, a 20% decline compared with the prior year (FY22: $3,318,000).
Traditional retail channels for Elixinol branded CBD products continue to underperform due to the unclear regulatory status of
CBD products in the USA. Revenues from eCommerce were maintained from a cost base which was 42% lower than the
previous year. This was achieved by servicing the Company’s customer base and through subscription-based ordering, which
contributed approximately one-third of eCommerce revenue for the year. The Americas’ business has transitioned to a lean
eCommerce business and moves into FY24 contributing positively to Group EBITDA.
Share of associates' loss
Share of associates loss during the year ended 31 December 2023 was $nil (31 December 2022: $73,000).
Review of financial position
As at 31 December 2023, Group net assets were $6,462,000, including $708,000 in cash and cash equivalents. The key
impact during the period was a loss of $7,437,000.
Business strategies and future prospects
During FY23, the Company repositioned its business to become a house of branded consumer goods in addition to its
Business to Business ('B2B') ingredients business and CBD portfolio. Revenue growth and substantial cost reductions
culminated in improved cash flow during the financial year. The Company’s strategy is to build a global, wellness consumer
products company, with a stated vision of creating healthier lives through the power of plant-based products.
Building on the Company’s FY22 Strategic Review, its cost base was refined further with a streamlined organisational structure
that combines corporate and business unit functions. Importantly, this structure supports the Company’s strategy of
diversifying towards natural and plant-based wellness products, and reducing reliance on its CBD portfolio.
The Company remains focused on driving cost efficiencies and strengthening its balance sheet to create value for all
shareholders.
To this end, the Company’s recently announced acquisition of Ananda Food Pty Ltd ('Ananda Food') adds further scale to
enhance Group profitability. The acquisition strengthens the Company’s leadership position in the Australian hemp market
and leverage across the supply chain. Highly complementary product ranges have the ability to accelerate sales through
cross-selling, significantly improve unit economics through improved yields, increase asset utilisation and sale of by-products,
and create immediate cost synergies.
Vision and mission
The Company’s vision and purpose are the cornerstone of its strategy, which is underpinned by the following:
Company Vision:
Purpose:
To create healthier everyday lives through the power of plant-based products.
Changing lives naturally.
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Elixinol Wellness Limited
Directors' report
31 December 2023
Key strategic objectives identified
The Group remains positive about market opportunities for plant-based products, and its ability to leverage its strong brands
and reputation for high quality products. The Group’s strategic focus is predicated on the following strategic initiatives to
support revenue growth, margin improvement and deliver sustainable profit:
●
Bring to market new products developed through innovation in functional plant-based foods, while further increasing
leadership in hemp led consumer products;
● Merge the Ananda Food business (proposed acquisition announced 12 February 2024) with the Australian product
offering to realise synergies and economics of scale, and broaden national retail distribution through Woolworths, Coles,
Costco and pharmacy chains;
Relentless focus on improving capital efficiency - long term focus on improving cash flow, driving margin accretion, and
tightly controlling expenditures, optimise and systemise the supply chain, empowering the sales and marketing teams;
Continue to operate the Elixinol Americas business with a leaner and capital light business model; and,
Develop an Environmental Social Governance ('ESG') agenda.
●
●
●
Principal risks and uncertainties
Acquisition risk
Completion of the Ananda Food acquisition is conditional on raising sufficient funds under the Rights Issue Offer and the
satisfaction of a number of customary conditions.
Integration risk
Assuming the Ananda Food acquisition completes, substantial effort and cost will be required to integrate the two businesses.
The anticipated benefits arising from the acquisition could either not be achieved or achievement could be delayed.
Agricultural risk and climate change risk
The Group is exposed to agricultural risk as the business is reliant on agricultural products. As such, the business is 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 has arrangements with a number of key suppliers. To the extent that Group entities cannot secure and retain key
suppliers, their respective ability to maintain consistent production levels may be compromised, which in turn may have an
adverse impact on the financial performance and position of Elixinol Wellness.
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 Elixinol Wellness could cause serious or
unexpected side effects, including risk or injury to consumers. Should any of Elixinol Wellness’ 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 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.
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Elixinol Wellness Limited
Directors' report
31 December 2023
Change to laws or regulations
The Group’s operations are highly regulated and 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 the Group 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 United Kingdom. It is likely that governments worldwide will
continue to explore the benefits, risks and operations of companies involved in the hemp sector. The Group’s business,
prospects, reputation, performance and financial condition could all be affected by changes to law and regulation, changes to
policies, and changes in the supervisory activities and expectations of its regulators across all of the jurisdictions in which it
operates. In particular, the regulation of hemp is developing and, as a result, a change in government or increase in political
lobbying may result in a change in government policy and an amendment of legislation and/or regulation. For example, there
is a risk that the allowable levels of THC in hemp products sold in the US may change. This could potentially result in additional
processing costs and impact the overall financial performance of the Group.
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’ regulation, nutrition and allergen labelling,
and label claim regulations and safety requirements including, as applicable, ‘new dietary ingredient’ and ‘generally recognised
as safe’ 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 the Group, could impact adversely on the assets, operations, and the financial performance of the Group and the industry
in general. Regulatory compliance and the management of regulatory change are an important part of the Group’s planning
processes.
The Group intends to 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. Failure 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, and this could in turn lead to a financial impact and loss in revenue and profitability.
Loss of key relationships
The hemp-derived CBD industry is undergoing rapid growth and change, which has resulted in increasing consolidation and
formation of strategic relationships. It is expected that this consolidation and strategic partnering will continue. Acquisitions or
other consolidating transactions could harm the Group in a number of ways. The Group may lose strategic relationships if
third parties with whom the Group has arrangements with are acquired by or enter into relationships with a competitor (which
could cause the Group to lose access to necessary resources). The Group’s current competitors could become stronger, or
new competitors could form from consolidations. This could cause the Group to lose access to markets or expend greater
resources in order to stay competitive. Separately, the relationship between the Group and third parties may deteriorate
organically, which may have an adverse impact on the business of the Group.
Production risk
The ability for Group entities to cultivate and produce products is dependent on a number of key inputs and their related costs.
These key inputs include raw materials, electricity, water, other utilities and skilled labour. Any significant interruption or
negative change in the availability or cost of these inputs could materially impact the production of the business and
subsequently, the operating results of the Group. In particular, given the nature of the raw materials used by each of the Group
entities, supply may be limited to a single or limited number of suppliers, with access to these raw materials more competitive
than conventional ingredients. As a result, there is an enhanced risk of difficulties in securing the required supplies, or to do
so on appropriate terms.
Reputational risk
There is a risk that incidents beyond the control of the Group entities could occur which would have the effect of reducing
patient, medical/scientific or regulatory confidence, or preferences for cannabis or medicinal cannabis products generally. This
reputational risk could result from incidents involving members of the Group or other non-related industry participants.
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Elixinol Wellness Limited
Directors' report
31 December 2023
Protection of intellectual property
The Group’s success will depend on, in part, its ability to protect its intellectual property, including its trade marks, copyright,
trade secrets and know-how. To the extent the Group fails to protect its intellectual property or infringes a third party’s
intellectual property, the Group may face increased competition from similar products, have to cease using certain intellectual
property or be liable for damages. In the event that this occurs, there is a risk that it has a materially adverse impact on the
Group’s operations, financial performance and future prospects.
Competition risk
The industries in which the current Group entities are involved is subject to domestic and international competition. While the
entities will undertake all reasonable due diligence in their business decisions and operations, they will have no influence or
control over the activities or actions of their competitors, which activities or actions may, positively or negatively, affect the
operating and financial performance of the Group. Some of the Group’s competitors and potential competitors may have
significantly more financial resources and marketing experience than EXL which may lead to reduced margins and loss of
revenue or loss of market share for the Group. Further, Group revenues in the future may be reduced as the industry
consolidates and seeks revenue accretion at the expense of profit margin.
Uncontracted sales
A material proportion of the Group’s revenue is derived from uncontracted customer relationships, with sales made under
standard terms and conditions. There is a risk that these customer relationships may not be able to be maintained, or new
relationships may not be formed, on terms acceptable to the Group. Additionally, given the uncontracted nature of these
relationships, it is not possible to guarantee consistency of sales volumes, price or terms going forward. The Group’s financial
performance could be materially and adversely impacted by wholesale customers:
● Materially changing their trading terms;
●
●
Promoting the products of one or more of the Group’s competitors; or
Refusing to promote or stock the Group’s products or significantly reducing orders for its products.
Contracts and agreements
There are a number of risks associated with the Group’s existing contracts and agreements, including those related to previous
supply arrangements and property leases. There is a risk that the Group’s existing contracts may be terminated, lost or
impaired, or renewed on less favourable terms. Some of the Group’s contracts can be terminated without cause or on short
notice periods (depending on events and circumstances), and although the relevant parties may continue to operate on
existing commercial terms, a number of its existing contracts have expired or will shortly expire. A loss of any of the Group’s
contracts could have an adverse effect on its business, operating and financial performance. Similarly, there is a risk that the
Group may not meet its existing obligations under current contracts and agreements. Should this be the case, the Group may
be liable (to varying extents) under indemnity provisions in a number of contract and agreements. Any failure to meet these
obligations could adversely impact the financial position of the Group.
Counterparty risks
The Group has entered, and may enter, into several commercial agreements and arrangements (including licences) with third
parties that are, or could be, material to the financial performance and prospects of its business. There is a risk that
counterparties may not execute such agreements or, in respect of agreements that have been executed or are executed in
the future, the counterparty may fail to meet their obligations under those agreements and arrangements. Negative commercial
consequences will, or are likely to, result from the non-execution of such an agreement or any non-observance of obligations
under such agreements. These consequences may include preventing the relevant Group entity from executing a part, or
parts, of its business plan. This in turn may result in an adverse effect on the Group’s proposed activities and operations,
financial performance and prospects.
Significant changes in the state of affairs
On 14 February 2023, the Company announced that the dispute between CannaCare Health GmbH ('CannaCare') and the
Company’s wholly owned subsidiary, Elixinol BV, had been successfully concluded, with an arbitration award made in the
Company’s favour to the tune of approximately 543,000 EUR ($835,000).
On 6 April 2023, as part of the Company’s long-term strategy to reduce corporate costs, Directors Mr Paul Benhaim and Mr
Oliver Horn notified the Company of their intention to retire as Non-Executive Directors. Both Mr Benhaim and Mr Horn brought
significant experience and expertise to Elixinol Wellness in management roles and as long-standing members of the Board.
On 6 April 2023, additionally, the Board expanded Group CEO Ron Dufficy’s role to include the role of Managing Director. Mr
Dufficy’s terms of employment, as announced to the market on 29 July 2022, remain unchanged as a result of his role
expansion.
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Elixinol Wellness Limited
Directors' report
31 December 2023
On 19 April 2023, Ms Kim Bradley-Ware of Company Matters resigned as joint Company Secretary of the Company. Ms Sarah
Prince from Company Matters was appointed as joint Company Secretary.
On 23 May 2023, Ms Teresa Cleary resigned as Company Secretary of the Company and Ms Josephine Lorenz, the
Company’s Group Chief Financial Officer, was appointed as joint Company Secretary.
Placement and Underwritten Share Purchase Plan Successfully Completed
On 5 April 2023, Elixinol Wellness announced that it had successfully completed a $1.25m placement ('Placement') with
support from new and existing institutional and sophisticated investors, and that it would undertake an underwritten Share
Purchase Plan ('SPP') on the same terms to existing shareholders.
Placement shares were offered to sophisticated and institutional investors at the offer price of $0.018 per share, representing
a 25% discount to the last price close on 31 March 2023 ($0.024 per share) and a 19.2% discount to the volume weighted
average price of shares over the five-day and fifteen-day periods up to the last close on 31 March 2023 ($0.022 per share). A
total of 69,444,445 New Shares were issued within the Company’s placement capacity under ASX Listing Rules 7.1 and 7.1A.
Participants in the Placement and SPP were entitled to subscribe for one Attaching Option for every New Share issued. Each
Attaching Option is exercisable for one share at an exercise price of $0.02 and will expire two years after the date of issue.
On 24 May 2023, Elixinol Wellness announced successful completion of the SPP which was fully underwritten by Canaccord
Genuity (Australia) Limited ('Canaccord') to raise $1.0 million. Approval of this underwriting was approved by the Company’s
shareholders at the Annual General Meeting (AGM) held on 31 May 2023.
Acquisition of The Sustainable Nutrition Group
On 17 August 2023, the scheme of arrangement to acquire 100% of the ordinary shares of The Sustainable Nutrition Group
Ltd ('TSN'), that was approved by holders of TSN shares on 2 August 2023 and by the Federal Court of Australia on 7 August
2023 ('Scheme'), was implemented. As a result, on the 17 August 2023, 158,163,595 ordinary shares were issued as
consideration to Scheme Participants (other than ineligible shareholders) who held TSN shares at the record date of 10 August
2023, at a value of $0.012.
Also, following implementation of the scheme of arrangement, Ms Pauline Gately was appointed as a Non-Executive Director
on 17 August 2023.
The acquisition of TSN increased the Group’s scale and ownership of brands across four key verticals: plant-based food and
nutrition, hemp-based nutraceuticals (including cannabinoids such as CBD), pet nutritional supplements and skin health. The
TSN brands acquired include Australian Primary Hemp, Mt Elephant, Field Day and The Australian Superfood Company.
On 17 August 2023, 9,036,068 ordinary shares were issued as consideration for corporate advisory services provided in
relation to the scheme of arrangement of TSN.
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
On 12 February 2024, Elixinol Wellness announced that it entered into a Share Purchase Agreement ('Share Purchase
Agreement') with Ecofibre Limited ACN 140 245 263 (ASX: EOF) to purchase Ananda Food Pty Ltd ACN 107 362 863 (a
wholly owned subsidiary of Ecofibre).
Ananda Food Pty Ltd ('Ananda Food') is one of Australia’s largest hemp producers. Ananda Food is focused on low-cost,
high-quality production of hemp ingredients and products for bulk, branded and private label customers. Ananda Food
produces a range of Australian grown hemp-derived products and food which is complementary and expands on Elixinol
Wellness’ own range of hemp products.
The Company has undertaken a fully underwritten non-renounceable rights issue to raise $3.16 million ('Entitlement Offer') to
complete the acquisition of Ananda Food, support additional marketing and for general working capital.
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Elixinol Wellness Limited
Directors' report
31 December 2023
The Entitlement Offer price of 0.5 cents for one (1) new fully paid ordinary share ('New Share') for every one (1) share held,
together with one (1) free attaching listed option for every two (2) New Shares subscribed for and issued ('Attaching Options').
Attaching Options are exercisable at 0.75 cents each and will expire 36 months from the date of issue ('New Options'). The
Company will apply for the Attaching Options to be quoted on the ASX. Furthermore, sub-underwriter(s) to the Entitlement
Offer will receive a one (1) for two (2) sub-underwriter option for each share sub-underwritten ('Sub-underwriter Options'),
issued on the same terms as the Attaching Options. Sub-underwriter Options are subject to shareholder approval.
The Entitlement Offer and acquisition are expected to be complete by the end of March 2024.
On 20 February 2024, Elixinol Wellness also announced it had entered into a binding purchase agreement to divest the
Group’s minority interest in Altmed Pets, LLC. The agreement, which is subject to financing, is expected to realise
approximately $2.3 million in cash prior to 30 April 2024 and will be used to accelerate the Group’s growth opportunities.
No other matter or circumstance has arisen since 31 December 2023 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 and plant-based 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:
●
●
Bringing to market an extensive new product pipeline to generate growth at premium margins;
Entering new plant-based segment (cat litter) with private label supply arrangement in place with Woolworths through the
Ananda Food acquisition;
Seeking new opportunities to increase scale of the US business whilst continuing to maintain a lean cost base;
Consolidation of the Ananda Food and hemp foods operation and 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 brands in core markets of Australia and US and maintain brand presence in other
select markets; and,
Supply chain optimisation - seeking new opportunities to shorten supply chain and reduce cost of goods.
●
●
●
●
●
Also refer to 'Business strategies and future prospects' included under 'Review of operations' section above.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State/Territory laws.
9
Elixinol Wellness Limited
Directors' report
31 December 2023
Information on Directors
Name:
Title:
Qualifications:
Experience and expertise:
David Fenlon
Independent Non-Executive Chair (effective 30 September 2023
Independent Non-Executive Director (March 2022 to 29 September 2023)
B.Bus
David Fenlon has over 30 years of world-wide experience in the FMCG and consumer
sectors. He is currently: Non-Executive Chair of Nutritional Growth Solutions (ASX:
NGS) and a Non-Executive Director of Quest for Life Foundation. David was previously
CEO of The Platform Alliance Group, and Group CEO and Managing Director of BWX
Limited (ASX: BWX). Prior to this, he was Managing Director for Australia and New
Zealand at Blackmores Limited (ASX: BKL). David has worked with leading retail brands
both in Australia and offshore, with a strong focus on strategic planning and business
transformation including in key positions with Tesco throughout Europe and Safeway in
the UK. David was a member of the Board of Directors for the Special Olympics from
May 2017 until June 2019.
Nutritional Growth Solutions (ASX: NGS)
Chair of Remuneration and Nomination Committee and Member of Audit and Risk
Committee
1,250,000
1,250,000
1,715,753 performance rights
Other current directorships:
Former directorships (last 3 years): BWX Ltd (ASX: BWX)
Special responsibilities:
Interests in shares:
Interests in options:
Interests in rights:
Name:
Title:
Qualifications:
Experience and expertise:
Ronald Dufficy
Group Chief Executive Officer
Managing Director (appointed 6 April 2023)
BEc, MCom, FCPA, MAICD
Ron is a senior finance executive having held various financial leadership roles with
ASX-listed companies such as CSR Ltd (ASX: CSR) and Aristocrat Leisure Ltd (ASX:
ALL). Ron has significant experience in regulated markets, including being based in the
USA for 9 years, most recently as Chief Financial Officer for Aristocrat's largest and
most profitable division, responsible for developing and implementing strategies to
improve profit margins, grow market share and creating a global shared services
organisation. Ron joined the Company in 2017 with a focus on the administrative,
financial, and risk management operations of the Group.
Other current directorships:
None
Former directorships (last 3 years): None
None
Special responsibilities:
7,920,391
Interests in shares:
2,361,112
Interests in options:
3,171,994 performance rights
Interests in rights:
10
Elixinol Wellness Limited
Directors' report
31 December 2023
Name:
Title:
Qualifications:
Experience and expertise:
Pauline Gately
Non-Executive Director (appointed 17 August 2023)
Graduate and Member of the Australian Institute of Company Directors (GAICD), BA
Hons Economics and Graduate Diploma in Law and Financial Study: Accounting
After leading the merger process of The Sustainable Nutrition Group Ltd, Pauline was
appointed a Non-Executive Director of Elixinol Wellness. She is currently Non-executive
Chair of Kalgoorlie Gold Mining Ltd (ASX: KAL) and a Non-Executive Director of Pioneer
Credit Ltd (ASX:PNC) Pauline is an experienced director who brings a sharp commercial
focus to strategy with demonstrated success in funding, business development, and
strategic transformation having led companies through IPO, business recalibration and
mergers and acquisitions. Her Board contributions are also underpinned by senior roles
in international investment banking across the Asia Pacific region.
Kalgoorlie Gold Mining Ltd (ASX:KAL) and Pioneer Credit Ltd (ASX: PNC)
Chair of Audit and Risk Committee and Member of Remuneration and Nomination
Committee
9,930,583
None
None
Other current directorships:
Former directorships (last 3 years): Ardiden Ltd (ASX: ADV)
Special responsibilities:
Interests in shares:
Interests in options:
Interests in 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.
Executives
Group Chief Financial Officer
Name:
Title:
Qualifications:
Experience and expertise:
Company secretaries
Name:
Title:
Qualifications:
Experience and expertise:
Josephine Lorenz
Group Chief Financial Officer
Joint Company Secretary (effective 23 May 2023)
BCom, Chartered Accountants Australia and New Zealand – Fellow
Josephine has over 20 years' global finance experience, having held senior finance
positions in various sectors including the role of Group Financial Controller for Network
Ten and Nine Entertainment Co. (ASX: NEC). She was also formerly the Head of
Finance at Independent Television News Limited in London and has held various roles
at Deloitte in both London and Melbourne, Australia. Josephine joined Elixinol Wellness
in November 2017.
Sarah Prince
Joint Company Secretary (appointed 19 April 2023)
BA / LLB, Grad. Dip. Legal Practice, Grad. Dip. Applied Corporate Governance
Sarah is an experienced Company Secretary and has worked with ASX-listed entities in
the biotech,
resources
funds,
industries. Sarah is a fellow of The Governance Institute of Australia and is admitted as
a Solicitor of the Supreme Court of New South Wales.
legal and mining and
technology, managed
Josephine Lorenz was appointed Joint Company Secretary on 23 May 2023. Josephine's experience and expertise is detailed
in the Executives section above.
11
Elixinol Wellness Limited
Directors' report
31 December 2023
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 2023, and the number of meetings attended by each Director were:
D Fenlon
R Dufficy
P Gately
P Benhaim
O Horn
H Wiseman
Attended
Full Board
Held
Remuneration and
Nomination Committee
Held
Attended
Audit and Risk Committee
Held
Attended
19
16
4
7
7
20
23
16
4
7
7
20
2
-
1
1
1
1
2
-
1
1
1
1
3
-
1
-
1
2
3
-
1
-
1
2
Held: represents the number of meetings held during the time the Director held office or was a member of the relevant
committee.
12
Elixinol Wellness Limited
Directors' report
31 December 2023
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:
●
●
David Fenlon - Independent Non-Executive Director (effective 28 March 2022) and Chair (effective 30 September 2023);
Ronald Dufficy - Group Chief Executive Officer and appointed Managing Director (effective 6 April 2023) and formerly
Group Chief Executive Officer (effective 8 April 2022) and formally Global Chief Financial Officer (ended effective 8 April
2022);
Pauline Gately - Non-Executive Director (effective 17 August 2023);
Paul Benhaim - Former Non-Executive Director (resigned 6 April 2023);
Oliver Horn - Former Non-Executive Director (effective 8 April 2022 to 6 April 2023) and former Executive Director and
former Global Chief Executive Officer (ended effective 8 April 2022)
Helen Wiseman - Former Independent Non-Executive Director and Chair (ended effective 30 September 2023)
●
●
●
●
And the following executive of Elixinol Wellness Limited:
●
Josephine Lorenz - Group 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.
●
13
Elixinol Wellness Limited
Directors' report
31 December 2023
Additionally, the reward framework enhances executives' interests by:
●
●
●
Rewarding capability and experience;
Reflecting competitive reward for contribution to growth in shareholder wealth; and,
Providing a clear structure for earning rewards.
Non-Executive Directors' remuneration
Fees and payments to Non-Executive Directors reflect the demands and responsibilities of their role. Non-Executive Directors'
fees and payments are 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 are determined
independently to the fees of other Non-Executive Directors based on comparative roles in the external market. The Chair is
not present at any discussions relating to the determination of their own remuneration.
The Constitution provides that 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, Non-Executive Directors can 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 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 90% (65% in 2022) to Group financial measures and 10% (35% in 2022) to individual measures for
Executive KMPs.
STIP Opportunity (at target) is 25-50% (25%-40% for 2022) of Total Fixed remuneration for Executive KMPs.
14
Elixinol Wellness Limited
Directors' report
31 December 2023
Group financial measures are set out below:
●
●
Group Adjusted EBITDA (90% of the STIP);
Group Adjusted EBITDA was chosen to align executive performance with the key drivers of shareholder value and reflect
the short-term performance of the business. Group financial performance measures for future years will be determined
annually; and,
● Minimum threshold performance will be 100% of the on-target performance level of Group Adjusted EDITBA metrics.
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 (80% for 2022).
●
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 equity will be issued as performance rights and will vest 75%
following the release of the relevant financial statements and 25%, 12 months later 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. Where performance is
above the threshold, the STIP will be paid in cash or equity, subject to Board discretion.
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 whole or 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 Performance 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 2022 Share Rights grant made during 2022, the performance period of the grant is three financial years in one tranche
following the performance period. The performance period is from 1 January 2022 to 31 December 2024.
15
Elixinol Wellness Limited
Directors' report
31 December 2023
Share Rights granted during 2023 were issued in two equal tranches. The performance period for Tranche 1 is 18 months
from 1 January 2023 to 30 June 2024 and the performance period for Tranche 2 is 3 years from 1 January 2023 to 31
December 2025.
Vesting dates
Share Rights granted in 2022
Share Rights granted in 2023
Vesting date
28 February 2025
Vesting date
Tranche 1 - 30 August 2024
Tranche 2 - 28 February 2026
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 0%
Greater than 0% but less than 10%
Greater than 10% but less than 20%
Equal to or greater than 20%
0% of the TSR share rights will vest
Between 0% and 100% of the TSR share rights will vest
Between 100% and 200% of the TSR share rights will vest
200% 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
In the event of a Takeover Event or Control Event, all unvested Share Rights will fully vest.
Use of remuneration consultants
During the financial period ended 31 December 2023, the Board did not consult or did not engage remuneration advisors for
benchmarking of executive remuneration.
Voting and comments made at the Company's 31 May 2023 AGM
At the 31 May 2023 AGM, 83.41% of the votes received supported the adoption of the remuneration report for the year ended
31 December 2022. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
16
Elixinol Wellness Limited
Directors' report
31 December 2023
Linking remuneration and company performance
Impact of the Group’s 2023 performance on remuneration
With an expanded brand portfolio following the acquisition of The Sustainable Nutrition Group Ltd ('TSN') (effective 17 August
2023), Australian-based revenue increased by 51% compared with the prior year. The Americas business continued to face
a challenging environment and a lack of regulatory development contributed significantly towards revenue growth targets not
being achieved during 2023. However, overall, Group revenue grew 17%, and following a focus on cost reduction and margin
improvement, the Group delivered on its EBITDA targets with a 45% improvement in Adjusted EBITDA. The Group also
delivered numerous strategic objectives designed to position it for future growth, including the acquisition of The Sustainable
Nutrition Group Ltd.
The link between Executive KMP remuneration and Group financial performance is detailed below:
Revenue
Adjusted EBITDA
Net loss after tax
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Opening share price
Closing share price on 31 December
2023
$'000
8,269
(4,626)
(7,507)
(1.59)
(1.59)
$0.021
$0.090
2022
$'000
7,055
(8,538)
(10,571)
(3.34)
(3.34)
$0.072
$0.021
2021
$'000
9,338
(11,496)
(17,025)
(5.41)
(5.41)
$0.175
$0.072
2020
$'000
15,010
(22,930)
(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
There were no dividends declared or paid during the financial year.
17
Elixinol Wellness Limited
Directors' report
31 December 2023
Details of remuneration
Amounts of remuneration
Short-term benefits
Post-employment
benefits
Cash
salary and
fees
$
Cash
bonus
$
Super-
annuation
$
Termina-
tion
benefits
$
Long
service
leave
$
Salary
sacrifice -
Equity
settled
perform-
ance
rights
$
Long-term benefits
Equity
settled
perform-
ance
rights
$
Deferred
STI(c)
$
Total
$
67,751
19,151
18,100
18,100
68,750
191,852
266,154
225,776
683,782
-
-
-
-
-
-
-
-
-
7,249
2,107
1,900
1,900
-
13,156
26,346
24,551
64,053
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,750
11,373
-
-
11,458
41,581
-
-
-
-
-
-
24,525
-
(15,658)
-
(25,754)
(16,887)
118,275
32,631
4,342
20,000
54,454
229,702
27,083
142,132
(40,471)
421,244
-
79,854
12,130
342,311
68,664
221,986
(45,228)
993,257
2023
Non-Executive
Directors:
D Fenlon
P Gately(b)
P Benhaim(a)
O Horn(a)
H Wiseman(a)
Executive
Directors:
R Dufficy(d)
Other KMP:
J Lorenz
(a)
(b)
(c)
Remuneration is from 1 January 2023 to date of cessation as Director or KMP.
Remuneration is from date of appointment to 31 December 2023.
100% of the current year STI to be settled as Equity-settled Performance Rights with 75% vesting on 31 March 2024 and 25% with a vesting date on 31 March 2025. Ron Dufficy's STI
is subject to shareholder approval with a proposed vesting of 75% following shareholding approval and 25% with a vesting date on 31 March 2025.
(d)
R Dufficy changed from Key Management Personnel to Executive Director on 6 April 2023. Remuneration reflects whole year remuneration.
18
Elixinol Wellness Limited
Directors' report
31 December 2023
Short-term benefits
Post-employment
benefits
Cash
salary and
fees
$
Cash
bonus
$
Super-
annuation
$
Termina-
tion
benefits
$
Long
service
leave
$
Salary
sacrifice -
Equity
settled
perform-
ance
rights
$
Long-term benefits
Equity
settled
perform-
ance
rights
$
Deferred
STI(c)
$
Total
$
59,380
76,138
54,980
122,046
312,544
112,134
-
-
-
-
-
-
6,133
7,801
5,686
3,873
23,493
-
-
-
-
-
7,856
65,833
283,586
155,505
439,091
37,015
23,419
60,434
24,430
16,082
40,512
-
-
-
863,769
60,434
71,861
65,833
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,684
11,171
-
17,513
35,368
72,197
95,110
60,666
143,432
371,405
(65,500)
120,323
73,054
46,221
119,275
(121,598)
6,172
(115,426)
296,487
247,399
543,886
119,275
(145,558) 1,035,614
2022
Non-Executive
Directors:
D Fenlon(b)
P Benhaim
O Horn(a)
H Wiseman
Executive
Directors:
O Horn(a)
Other KMP:
R Dufficy
J Lorenz(b)
(a)
(b)
(c)
O Horn changed from Executive Director to Non-Executive Director on 8 April 2022. Remuneration reflects periods as to which O Horn was in those positions.
Remuneration is from date of appointment to 31 December 2022.
66,4% of the year STI to be settled as Equity-settled Performance Rights with a vesting date of 31 March 2023.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
D Fenlon
P Gately
P Benhaim
O Horn
H Wiseman
Executive Directors:
R Dufficy
O Horn
Other KMP:
R Dufficy
J Lorenz
2023
21%
-
-
-
-
45%
-
-
27%
At risk - LTI
2022
9%
-
12%
-
12%
-
-
25%
21%
Fixed remuneration
2022
2023
2023
At risk - STI
2022
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12%
9%
79%
100%
100%
100%
100%
55%
-
-
73%
91%
-
88%
100%
88%
-
100%
63%
70%
19
Elixinol Wellness Limited
Directors' report
31 December 2023
The proportion of the cash bonus paid/payable or forfeited is as follows:
Name
Executive Directors:
R Dufficy
Other KMP:
R Dufficy
J Lorenz
Cash bonus paid/payable
2022
2023
Cash bonus forfeited
2022
2023
-
-
-
-
100%
-
28%
28%
-
100%
72%
72%
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 2023 are as follows:
Fixed
Remuneration
$ (a)
Target STI
$
Notice Period Notice Period
by Company
by Executive
months
months
Restraint
Period
months
Ron Dufficy (b)
Josephine Lorenz (b)
325,000
260,850
162,500
91,298
6
3
6
3
12
3
(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 2023 are
set out below:
Name
J Lorenz
R Dufficy
D Fenlon
H Wiseman
R Dufficy
R Dufficy
J Lorenz
D Fenlon
R Dufficy
Date
27 April 2023
31 May 2023
31 August 2023
31 August 2023
31 August 2023
3 October 2023
3 October 2023
23 November 2023
23 November 2023
Shares
Issue price
$
2,201,006
3,478,785
625,000
763,889
902,778
1,300,000
940,000
625,000
902,778
$0.020
$0.018
$0.015
$0.015
$0.015
$0.015
$0.020
$0.015
$0.015
44,020
62,618
9,375
11,458
13,512
19,500
18,800
9,375
13,512
20
Elixinol Wellness Limited
Directors' report
31 December 2023
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of Directors and other key
management personnel in this financial year or future reporting years are as follows:
Name
D Fenlon
H Wiseman
R Dufficy
D Fenlon
R Dufficy
Number of
options
granted Grant date
Vesting date and
exercisable date
Expiry date
Exercise price
Fair value
per option
at grant date
Various
625,000 31 August 2023
Various
763,889 31 August 2023
902,778 31 August 2023
Various
625,000 23 November 2023 Various
902,778 23 November 2023 Various
31 August 2025
31 August 2025
31 August 2025
23 November 2025
23 November 2025
$0.020
$0.020
$0.020
$0.020
$0.020
$0.0046
$0.0046
$0.0046
$0.0070
$0.0070
Options granted carry no dividend or voting rights.
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
J Lorenz
D Fenlon
D Fenlon
D Fenlon
R Dufficy
R Dufficy
J Lorenz
J Lorenz
J Lorenz
J Lorenz
Number of
rights
granted Grant date
1,366,438 21 January 2022
698,625 21 January 2022
465,753 26 May 2022
625,000 31 May 2023
625,000 31 May 2023
902,778 31 May 2023
902,778 31 May 2023
7,608,125 30 September 2023
2,536,042 30 September 2023
3,622,917 30 September 2023
3,622,916 30 September 2023
Vesting date and
exercisable date
28 February 2025
28 February 2025
28 February 2026
31 March 2024
30 June 2024
31 March 2024
30 June 2024
31 March 2024
31 March 2025
30 August 2024
28 February 2026
Expiry date
21 April 2027
21 April 2027
21 April 2027
31 August 2028
31 August 2028
31 August 2028
31 August 2028
30 December 2028
30 December 2028
30 December 2028
30 December 2028
Fair value
per right
at grant date
$0.1150
$0.1150
$0.0570
$0.0150
$0.0150
$0.0150
$0.0150
$0.0090
$0.0090
$0.0070
$0.0110
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 2023.
Shares issued in the past financial year were approved under section 10.14 of the ASX Listing Rules.
21
Elixinol Wellness Limited
Directors' report
31 December 2023
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
D Fenlon
P Gately(c)
P Benhaim(a)
O Horn
H Wiseman
R Dufficy
J Lorenz
Balance at
the start of
the year
Received
as part of
remuneration
Additions
Disposals/
other(b)
Balance at
the end of
the year
-
-
29,209,217
1,203,971
280,132
780,494
99,670
31,573,484
1,250,000
-
-
-
763,889
6,584,341
3,141,006
11,739,236
-
13,280,164
-
-
-
555,556
-
13,835,720
-
(3,349,581)
(29,209,217)
(1,203,971)
(1,044,021)
-
-
(34,806,790)
1,250,000
9,930,583
-
-
-
7,920,391
3,240,676
22,341,650
(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.
Disposal includes shares held on date ceased being a Director.
Addition of ordinary shares includes held on becoming Director on 17 August 2023.
(b)
(c)
Option holding
The number of options over ordinary shares in the Company held during the financial year by each Director and other members
of key management personnel of the Group, including their personally related parties, is set out below:
Options over ordinary shares
D Fenlon
H Wiseman(b)
R Dufficy(b)
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other(a)
Balance at
the end of
the year
-
-
-
-
1,250,000
1,319,445
2,361,112
4,930,557
-
-
-
-
-
(1,319,445)
-
(1,319,445)
1,250,000
-
2,361,112
3,611,112
(a)
(b)
Expired/forfeited/other includes options held on date ceased being a Director.
Granted includes 555,556 options each that H Wiseman and R Dufficy purchased in participation of the SSP in May 2023 as part of the capital raise.
22
Elixinol Wellness Limited
Directors' report
31 December 2023
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
D Fenlon
P Gately
P Benhaim (b)
O Horn
H Wiseman (a)
R Dufficy
J Lorenz (c)
Balance at
the start of
the year
465,753
-
652,566
-
1,043,424
1,914,515
978,843
5,055,101
Granted
Vested
Expired/
forfeited/
other
Balance at
the end of
the year
2,500,000
-
-
-
3,055,556
8,389,897
20,531,006
34,476,459
(1,250,000)
-
-
-
(763,889)
(6,584,341)
(3,141,006)
(11,739,236)
-
-
(652,566)
-
(3,335,091)
(548,077)
(280,218)
(4,815,952)
1,715,753
-
-
-
-
3,171,994
18,088,625
22,976,372
(a)
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 was obtained at the Company’s annual general meeting in May 2022
and as such the options have not included in the table above as granted in the current year.
(b)
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 was obtained at the Company’s annual general meeting on XX May
2022 and as such the options have been included in the table above as granted in the current year.
(c)
Performance rights granted includes performance rights held on becoming KMP on 8 April 2022.
Loans to key management personnel and their related parties
There are no loans to key management personnel and their related parties.
This concludes the remuneration report, which has been audited.
23
Elixinol Wellness Limited
Directors' report
31 December 2023
Shares under option
Unissued ordinary shares of Elixinol Wellness Limited under option at the date of this report are as follows:
Grant date
7 June 2023
31 August 2023
23 November 2023
Expiry date
7 June 2025
31 August 2025
23 November 2025
Exercise
price
Number
under option
$0.020 131,000,001
2,291,667
$0.020
1,527,778
$0.020
134,819,446
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
Company or of any other body corporate.
Shares under performance rights
Unissued ordinary shares of Elixinol Wellness Limited under performance rights at the date of this report are as follows:
Grant date
27 May 2022
31 May 2023
3 October 2023
Expiry date
27 August 2027
31 August 2028
31 August 2028
Number
under rights
465,753
3,055,556
60,590,177
64,111,486
No person entitled to exercise the option or performance rights had or has any right by virtue of the option or performance
right to participate in any share issue of the Company or of any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of Elixinol Wellness Limited issued on the exercise of options during the year ended 31
December 2023 and up to the date of this report.
Shares issued on the exercise of performance rights
The following ordinary shares of Elixinol Wellness Limited were issued during the year ended 31 December 2023 and up to
the date of this report on the exercise of performance rights granted:
Date performance rights granted
21 April 2023
21 April 2023
31 May 2023
31 May 2023
Exercise
Number of
price shares issued
$0.020
$0.015
$0.020
$0.015
9,247,011
3,478,785
3,561,137
1,300,000
17,586,933
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.
24
Elixinol Wellness Limited
Directors' report
31 December 2023
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 27 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 27 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.
●
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
___________________________
David Fenlon
Independent Non-Executive Director and Chair
12 March 2024
25
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret Street
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY LEAH RUSSELL TO THE DIRECTORS OF ELIXINOL WELLNESS
LIMITED
As lead auditor of Elixinol Wellness Limited for the year ended 31 December 2023, I declare that, to
the best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Elixinol Wellness Limited and the entities it controlled during the
period.
Leah Russell
Director
BDO Audit Pty Ltd
Sydney
12 March 2024
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
Elixinol Wellness Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 December 2023
Revenue
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
Other expenses
Finance costs
Loss before income tax expense
Income tax expense
Loss after income tax expense for the year attributable to the owners of Elixinol
Wellness Limited
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 attributable to the owners of Elixinol
Wellness Limited
Note
2023
$'000
Group
2022
$'000
5
6
7
7
7
7
8
8,269
7,055
564
213
502
22
(4,849)
(3,952)
(675)
(597)
-
(1,718)
(1,271)
(1,056)
(1,540)
(762)
(29)
(101)
(3,817)
(5,542)
(241)
(721)
(234)
(786)
(2,150)
(1,480)
(2,292)
(814)
-
(71)
(7,504)
(10,569)
(3)
(2)
(7,507)
(10,571)
70
70
411
411
(7,437)
(10,160)
Cents
Cents
Basic loss per share
Diluted loss per share
37
37
(1.59)
(1.59)
(3.34)
(3.34)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
27
Elixinol Wellness Limited
Consolidated statement of financial position
As at 31 December 2023
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax refund due
Prepayments, deposits and other
Non-current assets classified as held for sale
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
Prepayments, deposits and other
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
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
2023
$'000
Group
2022
$'000
2,864
3,974
1,740
59
675
9,312
-
9,312
83
2,826
375
737
152
-
4,173
708
1,706
3,664
13
558
6,649
1,526
8,175
-
-
903
282
2,297
54
3,536
11,711
13,485
2,128
522
525
545
-
289
979
4,988
178
14
69
261
5,249
6,462
1,379
22
320
697
(2)
216
808
3,440
250
637
-
887
4,327
9,158
222,573
10,042
(226,153)
218,122
9,682
(218,646)
6,462
9,158
9
10
11
8
12
13
10
14
15
16
17
12
18
19
20
21
8
20
21
22
23
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
28
Elixinol Wellness Limited
Consolidated statement of changes in equity
For the year ended 31 December 2023
Group
Foreign
currency
translation
reserve
$'000
Issued
capital
$'000
Share-based
payments Accumulated
reserve
$'000
losses Total equity
$'000
$'000
Balance at 1 January 2022
218,058
8,675
419
(208,075)
19,077
Loss after income tax expense for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income/(loss) for the year
Share-based payments (note 38)
-
-
-
64
-
411
411
-
Balance at 31 December 2022
218,122
9,086
-
-
-
177
596
(10,571)
(10,571)
-
411
(10,571)
(10,160)
-
241
(218,646)
9,158
Group
Foreign
currency
translation
reserve
$'000
Issued
capital
$'000
Share-based
payments Accumulated
reserve
$'000
losses Total equity
$'000
$'000
Balance at 1 January 2023
218,122
9,086
596
(218,646)
9,158
Loss after income tax expense for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income/(loss) for the year
Share-based payments (note 38)
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs
(note 22)
-
-
-
385
4,066
-
70
70
-
-
-
-
-
290
-
(7,507)
(7,507)
-
70
(7,507)
(7,437)
-
-
675
4,066
6,462
Balance at 31 December 2023
222,573
9,156
886
(226,153)
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
29
Elixinol Wellness Limited
Consolidated statement of cash flows
For the year ended 31 December 2023
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
Net cash used in operating activities
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Payments for property, plant and equipment
Payments for intangibles
Payments for loans in other entities
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Proceeds from borrowings
Repayment of lease liabilities
Net cash from/(used in) financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Note
2023
$'000
7,949
(12,232)
1,451
108
(81)
47
Group
2022
$'000
6,999
(15,989)
364
22
(71)
523
6
36
33
10
(2,758)
(8,152)
192
(12)
(5)
(1,251)
32
(1,044)
2,250
(199)
300
(738)
1,613
(2,189)
2,864
33
-
(5)
(7)
(1,148)
291
(869)
-
-
-
(757)
(757)
(9,778)
12,649
(7)
Cash and cash equivalents at the end of the financial year
9
708
2,864
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
30
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 1. General information
The financial statements cover Elixinol Wellness Limited as a group consisting of Elixinol Wellness Limited ('Company' or
'parent entity') and the entities it controlled at the end of, or during, the period ('Group'). The financial statements are presented
in Australian dollars, which is Elixinol Wellness Limited's functional and presentation currency.
Elixinol Wellness Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office 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 12 March 2024. The
Directors have the power to amend and reissue the financial statements.
Note 2. Material accounting policy information
The accounting policies that are material to the Group are set out below. The accounting policies adopted are consistent with
those of the previous financial year, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these Accounting
Standards and Interpretations did not have any significant impact on the financial performance or position of the Group.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The following Accounting Standards and Interpretations are most relevant to the Group:
AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current and
AASB 2022-6 Amendments to Australian Accounting Standards - Non-current Liabilities with Covenants
AASB 2020-1 was issued in March 2020 and is applicable to annual periods beginning on or after 1 January 2023, as extended
by AASB 2020-6. Early adoption is permitted. AASB 2022-6 was issued in December 2022 and is applicable to annual periods
beginning on or after 1 January 2023. Early adoption is permitted where AASB 2020-1 is also early adopted.
These standards amend AASB 101 ‘Presentation of Financial Statements’ to clarify requirements for the presentation of
liabilities in the statement of financial position as current or non-current. The amendments clarify that a liability is classified as
non-current if an entity has the right at the end of the reporting period to defer settlement of the liability for at least 12 months
after the reporting period. If the deferral right is subject to the entity complying with covenants in the loan arrangement based
on information up to and including reporting date, the deferral right will exist where the entity is able to comply with the covenant
on or before the end of the reporting date even if compliance is assessed after the reporting date. The deferral right will be
deemed to exist at reporting date if the entity is required to comply with the covenant only after the reporting date based on
post-reporting date information. Additional disclosure is required about loan arrangements classified as non-current liabilities
in such circumstances which enables users of financial statements to understand the risk that the liabilities could become
repayable within twelve months after the reporting period. Classification of a liability as non-current is unaffected by the
likelihood that the entity will exercise its right to defer settlement of the liability for at least 12 months after the reporting date
or even if the entity settles the liability prior to issue of the financial statements. The meaning of settlement of a liability is also
clarified.
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 2023, the Group incurred a net loss before tax of $7,507,000 (31 December 2022:
$10,571,000). During the year, net cash outflows from operating activities were $2,758,000 (31 December 2022: $8,152,000).
31
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 2. Material accounting policy information (continued)
The directors believe that there are reasonable grounds to believe that the entity 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 cashflow
forecast following:
●
As a result of the acquisition of The Sustainable Nutrition Group ('TSN') the size and scale of the Australia operations
has increased and economies of scale are to be realised through the combined group.
Directors continue to monitor costs, and minimise where possible. The net loss before tax has been significantly reduced
in FY23 from that recorded in FY22 and the net cash outflow from operating activities reduced to $669,000 in Q4 FY23
as expenditure was reduced and the scale of the business operations was reset, particularly in America and the synergies
from TSN beginning to be realised.
At year end had net current assets of $3,187,000 including cash of $708,000, along with access to unused debt facilities.
On 20 December 2023, a Trade Debtor Finance facility of up to $1,500,000 and $300,000 for Trade finance was
established with Scottish Pacific Business Finance Pty Ltd ('ScotPac'), the largest non-bank business lender in Australia.
As at 31 December 2023, $300,000 was drawn down against this facility and the total amount available to drawdown
was $797,000 providing an additional $497,000 of unused finance facilities.
The Directors regularly monitor the Group’s cash position on an ongoing basis and continues to explore debt funding and
capital markets to support the going concern and working capital requirements associated with its revenue base. There
is a history of successful capital raising.
Subsequent to year end, on 12 February 2024, Elixinol Wellness announced that it entered into a Share Purchase
Agreement with Ecofibre Limited to purchase Ananda Food Pty Ltd (a wholly owned subsidiary of Ecofibre) for initial
consideration of $2.0 million and up to a further $1.0 million earn-out payable approximately 12 months later (subject to
conditions). The Company has undertaken a fully underwritten non-renounceable rights issue to raise $3.16 million
('Entitlement Offer') will be used to complete the acquisition of Ananda Food Pty Ltd and for general working capital.
On 20 February 2024, Elixinol Wellness also announced it had entered into a binding purchase agreement to divest the
Group’s minority interest in Altmed Pets, LLC. The agreement, which is subject to financing, is expected to realise
approximately $2.3 million in cash prior to 30 April 2024 and will be used to accelerate the Group’s growth opportunities,
noting this is part of the net current asset position.
●
●
●
●
●
However, there is a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern
and therefore the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.
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 32.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Elixinol Wellness Limited as
at 31 December 2023 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.
32
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 2. Material accounting policy information (continued)
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.
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.
33
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 2. Material accounting policy information (continued)
Sale of goods
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 and eCommerce 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.
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.
34
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 2. Material accounting policy information (continued)
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.
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.
35
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 2. Material accounting policy information (continued)
Non-current assets or disposal groups classified as held for sale
Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continued use. They are measured at the lower of their carrying
amount and fair value less costs of disposal. For non-current assets or assets of disposal groups to be classified as held for
sale, they must be available for immediate sale in their present condition and their sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write down of the non-current assets and assets of disposal
groups to fair value less costs of disposal. A gain is recognised for any subsequent increases in fair value less costs of disposal
of a non-current assets and assets of disposal groups, but not in excess of any cumulative impairment loss previously
recognised.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses
attributable to the liabilities of assets held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of disposal groups classified as held for sale are presented
separately on the face of the statement of financial position, in current assets. The liabilities of disposal groups classified as
held for sale are presented separately on the face of the statement of financial position, in current liabilities.
Associates
Associates are entities over which the Group has significant influence but not control or joint control. Investments in associates
are accounted for using the equity method. Under the equity method, the share of the profits or losses of the associate is
recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income.
Investments in associates are carried in the statement of financial position at cost plus post-acquisition changes in the Group's
share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment
and is neither amortised nor individually tested for impairment. Dividends received or receivable from associates reduce the
carrying amount of the investment.
When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured
long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on
behalf of the associate.
The Group discontinues the use of the equity method upon the loss of significant influence over the associate and recognises
any retained investment at its fair value. Any difference between the associate's carrying amount, fair value of the retained
investment and proceeds from disposal is recognised in profit or loss.
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
Motor vehicles
Machinery
over the unexpired period of the lease
12 to 30%
30 to 50%
17%
20%
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets,
whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
36
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 2. Material accounting policy information (continued)
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.
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.
Trademarks
Significant costs associated with 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. Trademarks are tested annually for
impairment.
Other intangible assets
Costs in relation to other intangible assets are capitalised as an asset. These costs are not subsequently amortised.
Impairment of non-financial assets
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
Trade and other payables 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.
37
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 2. Material accounting policy information (continued)
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration
(or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods
or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is
earlier). Contract liabilities are recognised as revenue when the Group performs under the contract.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective interest method.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed payments
less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid
under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to
occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are
expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if
there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee;
lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is
made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written
down.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the
period in which they are incurred.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled
wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and
periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate
bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
the Monte Carlo option pricing model that takes into account the exercise price, the term of the option, the impact of dilution,
the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free
interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives
the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
38
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 2. Material accounting policy information (continued)
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.
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 additional ordinary shares that would have been outstanding assuming conversion of all 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.
39
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 2. Material accounting policy information (continued)
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 2023. The Group's assessment
of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out
below.
AASB 2023-1 Amendments to Australian Accounting Standards - Supplier Finance Arrangements
AASB 2023-1 was issued in June 2023 and is applicable for annual reporting periods beginning on or after 1 January 2024.
Early adoption is permitted.
This standard makes amendments to AASB 7 ‘Financial Instruments: Disclosures’ and AASB 107 ‘Statement of Cash Flows’
to require an entity to provide additional disclosures about its supplier finance arrangements. The additional information will
enable users of financial statements to assess how supplier finance arrangements affect an entity’s liabilities, cash flows and
exposure to liquidity risk. The amendments require an entity to disclose the terms and conditions of the arrangements, the
carrying amount of the liabilities that are part of the arrangements, the carrying amounts of those liabilities for which the
suppliers have already received payment from the finance providers, the range of payment due dates and the effect of non-
cash changes.
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.
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 and historical collection rates.
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.
40
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
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 17.
Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining
the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business
for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on
the Group's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying
amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is
made. Refer to note 8.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future
taxable amounts will be available to utilise those temporary differences and losses. Refer to note 8.
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into three operating segments: Australia, Americas and Rest of World. 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:
Australia
Americas
Rest of World
This includes the results from operations of Elixinol Wellness (Byron Bay) Pty Ltd and The
Sustainable Nutrition Group Pty Ltd and its subsidiaries ('TSN').
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 trading operations of Elixinol BV and Elixinol Ltd (together
'Elixinol Europe') and through the manufacture and distribution of hemp-derived CBD
products, and licencing agreements in place across the rest of the world.
'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.
41
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 4. Operating segments (continued)
Major customers
During the year ended 31 December 2023, 24% of sales were derived from three major customers (31 December 2022: 22%
of sales were derived from three major customers).
Operating segment information - Continuing operations
Group - 2023
Revenue
Sales to external customers
Licence revenue
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
*
Refer to note 7 for details of CGU allocation of impairment
Australia
$'000
Americas Rest of World
$'000
$'000
Unallocated
$'000
Total
$'000
5,587
-
5,587
2,638
-
2,638
-
44
44
-
-
-
(1,115)
(1,365)
172
(2,318)
8,376
2,561
3,203
867
16
67
758
1,112
8,225
44
8,269
(4,626)
(597)
-
(1,718)
213
(101)
(675)
(7,504)
(3)
(7,507)
11,711
11,711
5,249
5,249
42
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 4. Operating segments (continued)
Group - 2022
Revenue
Sales to external customers
Licence revenue
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
*
Refer to note 7 for details of CGU allocation of impairment
Geographical information
Australia
Americas
Rest of World
Unallocated
Australia
$'000
Americas Rest of World
$'000
$'000
Unallocated
$'000
3,691
-
3,691
3,318
-
3,318
-
46
46
-
-
-
(704)
(3,568)
(135)
(4,131)
2,832
6,578
618
3,457
1,388
1,343
101
1,495
Total
$'000
7,009
46
7,055
(8,538)
(721)
(234)
(786)
22
(71)
(241)
(10,569)
(2)
(10,571)
13,485
13,485
4,327
4,327
Sales to external customers
2022
$'000
2023
$'000
Geographical non-current
assets
2022
$'000
2023
$'000
5,587
2,638
44
-
8,269
3,691
3,318
46
-
7,055
3,139
247
-
149
3,535
544
3,404
-
224
4,172
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.
Note 5. Revenue
Sale of goods
Licence revenue
Revenue
2023
$'000
8,225
44
8,269
Group
2022
$'000
7,009
46
7,055
43
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 5. Revenue (continued)
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Group - 2023
Geographical regions
Australia
Americas
Rest of World
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
* Other includes bulk and private label
Group - 2022
Geographical regions
Australia
Americas
Rest of World
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
* Other includes bulk and private label.
Note 6. Other income
Net foreign exchange loss
Net (loss)/gain on disposal of property, plant and equipment
Government grants
Sub-lease income and other
eCommerce
$'000
Retail
$'000
Other *
$'000
Total
$'000
562
2,038
-
2,600
2,600
-
2,600
4,165
544
-
4,709
4,709
-
4,709
860
56
44
960
916
44
960
5,587
2,638
44
8,269
8,225
44
8,269
eCommerce
$'000
Retail
$'000
Other *
$'000
Total
$'000
427
2,314
-
2,741
2,741
-
2,741
2,726
852
-
3,578
3,578
-
3,578
538
152
46
736
690
46
736
2023
$'000
(6)
(2)
47
525
564
3,691
3,318
46
7,055
7,009
46
7,055
Group
2022
$'000
(41)
30
55
458
502
Government grants
During the year, the Group received a Business Growth Grant from the Australian Government amounting to $21,000 (31
December 2022: $15,000) 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.
44
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 6. Other income (continued)
During the year, the Group received Service NSW flood recovery grant of $nil (31 December 2022: $8,000) which was in
relation to damages to flood affected areas of Northern NSW. 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 the Export Market Development Grant ('EMDG') of $25,000 (31 December 2022:
$25,000). Grant total over 3 years is $73,800 which was in relation to promotional activities for eligible products in foreign
countries. 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 Wage Subsidies $nil (31 December 2022: $7,000) which was in relation to hiring eligible
job-seekers. This grant has been recognised as government grants in the financial statements and recorded as other income.
The grant is taxable.
Note 7. Expenses
Loss before income tax includes the following specific expenses:
Cost of sales
Cost of sales
Depreciation and amortisation
Property, plant and equipment (note 15)
Right-of-use assets (note 16)
Intangibles (note 17)
Total depreciation and amortisation
Impairment of intangibles
Website and software
Total impairment of intangibles*
Impairment of other assets
Inventory
Leasehold improvements
Machinery
Land and buildings - right-of-use
Investments accounted for using the equity method
Total impairment of other assets*
Finance costs
Interest and finance charges paid/payable on lease liabilities
Interest and finance charges paid/payable on Premium Funding
Interest and finance charges paid/payable on Trade Facility
Interest and finance charges paid/payable on TSN Loan
Finance costs expensed
Superannuation expense
Defined contribution superannuation expense
45
2023
$'000
Group
2022
$'000
4,849
3,817
123
474
-
597
-
-
154
54
-
184
1,326
1,718
33
16
22
30
101
177
453
91
721
234
234
253
-
530
3
-
786
52
19
-
-
71
220
219
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 7. Expenses (continued)
* Impairment allocation to CGUs
Impairment of intangibles is allocated to the following CGUs:
Americas
Impairment of qother assets is allocated to the following CGUs:
Australia
Americas
Note 8. Income tax
Income tax expense
Current tax
Aggregate income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 25%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Other non-deductible permanent differences
Current year tax losses not recognised
Current year temporary differences not recognised
Difference in overseas tax rates
Income tax expense
2023
$'000
Group
2022
$'000
-
234
119
1,599
1,718
2023
$'000
3
3
9
777
786
Group
2022
$'000
2
2
(7,504)
(10,569)
(1,876)
(2,642)
-
11
(1,876)
1,092
632
155
(2,631)
4,558
(2,028)
103
3
2
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 $25,130,000 (31 December 2022: $24,077,000) of tax effected revenue losses which have not been brought
to account at 31 December 2023.
Income tax refund due
Income tax refund due
46
2023
$'000
Group
2022
$'000
13
59
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 8. Income tax (continued)
Provision for income tax
Provision for income tax
Note 9. Cash and cash equivalents
Current assets
Cash at bank
Cash on deposit
Note 10. Trade and other receivables
Current assets
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Loan to The Sustainable Nutrition Group
GST recoverable
Employee tax credits receivable
Receivable from sub-lease
2023
$'000
Group
2022
$'000
-
(2)
2023
$'000
585
123
708
2023
$'000
1,644
(168)
1,476
-
-
148
-
82
1,706
Group
2022
$'000
2,746
118
2,864
Group
2022
$'000
759
(140)
619
564
1,148
128
1,416
99
3,974
Non-current assets
Receivable from sub-lease
-
83
Allowance for expected credit losses
The Group has recognised a net loss of $15,000 (31 December 2022: net profit of $261,000) in profit or loss in respect of the
expected credit losses for the year ended 31 December 2023.
47
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 10. Trade and other receivables (continued)
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Expected credit loss rate
2022
%
2023
%
Carrying amount
2022
$'000
2023
$'000
Allowance for expected
credit losses
2022
$'000
2023
$'000
Group
Not overdue
1 to 30 days overdue
31 to 60 days overdue
61 to 90 days overdue
Over 90 days overdue
1%
1%
6%
8%
95%
1%
1%
6%
8%
91%
697
202
26
32
687
1,644
417
173
14
5
150
759
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Additions through business combinations
Receivables written off during the year as uncollectable
Unused amounts reversed
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
7
2
2
3
154
168
2023
$'000
140
10
18
-
-
168
2023
$'000
1,718
(243)
1,475
513
-
513
1,771
(357)
1,414
262
2
1
1
-
136
140
Group
2022
$'000
468
64
-
(67)
(325)
140
Group
2022
$'000
87
-
87
621
(172)
449
1,016
(30)
986
218
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.
3,664
1,740
48
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 12. Prepayments, deposits and other
Current assets
Prepayments
Security deposits
Other deposits
Non-current assets
Security deposits
Other deposits
Note 13. Non-current assets classified as held for sale
2023
$'000
266
161
131
558
8
46
54
2023
$'000
Group
2022
$'000
509
166
-
675
-
-
-
Group
2022
$'000
Current assets
Investment in associate - Altmed Pets LLC
1,526
-
On 20 February 2024, Elixinol Wellness also announced it had entered into a binding purchase agreement to divest the
Group’s minority interest in Altmed Pets, LLC. The agreement, which is subject to financing, is expected to realise
approximately $2.2 million in cash prior to 30 April 2024, based on 31 December 2023 exchange rate, and will be used to
accelerate the Group’s growth opportunities. The Investment held for sale has an historical credit adjustment for Treasury
shares held by Altmed Pets LLC in Elixinol Wellness of $678,000. This will be reversed against issued capital when the
investment is disposed and is non-cash and will have no impact on the statement of financial position.
Note 14. Investments accounted for using the equity method
Non-current assets
Investment in associate - Altmed Pets LLC
2023
$'000
Group
2022
$'000
-
2,826
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
Altmed Pets LLC*
*
Holding through Elixinol LLC
Principal place of business /
Country of incorporation
Ownership interest
2022
2023
%
%
United States of America
25.43%
25.43%
49
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 14. Investments accounted for using the equity method (continued)
Summarised financial information
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
Profit/(loss) before income tax
Other comprehensive income
Total comprehensive income/(loss)
Reconciliation of the Group's carrying amount
Opening carrying amount
Share of profit/(loss) after income tax
Impairment of investment
Reversal of impairment of investment
Foreign exchange
Classified as held for sale (note 13)
Closing carrying amount
Altmed Pets LLC
2022
$'000
2023
$'000
3,043
487
3,530
1,709
92
1,801
1,729
2,388
767
3,155
2,133
290
2,423
732
12,938
(11,807)
14,896
(15,182)
1,131
(286)
-
-
1,131
(286)
2,826
288
(1,614)
-
26
(1,526)
-
2,617
(73)
-
73
209
-
2,826
50
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 15. Property, plant and equipment
Non-current assets
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
2023
$'000
363
(195)
(124)
44
185
(148)
37
38
(21)
17
670
(655)
15
2,447
(883)
(774)
790
903
Group
2022
$'000
279
(127)
(124)
28
134
(119)
15
-
-
-
707
(693)
14
1,929
(848)
(763)
318
375
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 2022
Additions
Disposals
Exchange differences
Impairment of assets
Depreciation expense
Balance at 31 December 2022
Additions
Additions through business
combinations (note 33)
Disposals
Exchange differences
Impairment of assets
Depreciation expense
Balance at 31 December 2023
Leasehold
improve-
ments
$'000
Furniture,
fittings and
equipment
$'000
Motor
vehicles
$'000
Computer
equipment
$'000
Machinery
$'000
15
-
(5)
-
-
(10)
-
-
38
-
-
-
(21)
17
54
3
-
1
-
(44)
14
1
-
-
-
-
-
15
1,146
4
(49)
52
(763)
(72)
318
-
690
(172)
-
(11)
(35)
790
57
-
(3)
-
-
(26)
28
54
-
-
-
-
(38)
44
36
7
(3)
-
-
(25)
15
51
-
-
-
-
(29)
37
51
Total
$'000
1,308
14
(60)
53
(763)
(177)
375
106
728
(172)
-
(11)
(123)
903
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 16. Right-of-use assets
Non-current assets
Land and buildings - right-of-use
Less: Accumulated depreciation
Less: Impairment
2023
$'000
3,049
(2,063)
(704)
Group
2022
$'000
3,351
(1,910)
(704)
282
737
The Group leases land and buildings for its offices, warehouses and retail outlets under agreements of between 2 to 5 years
with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are
renegotiated.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Group
Balance at 1 January 2022
Modification of lease assumptions
Exchange differences
Impairment of assets
Depreciation expense
Balance at 31 December 2022
Additions through business combinations (note 33)
Modification of lease assumptions
Disposals
Exchange differences
Depreciation expense
Balance at 31 December 2023
For other AASB 16 and lease related disclosures refer to the following:
●
●
●
●
Refer to note 7 for interest on lease liabilities and other lease payments;
Refer to note 21 for lease liabilities at 31 December 2023;
Refer to note 25 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
1,173
(12)
32
(3)
(453)
737
82
43
(115)
9
(474)
282
52
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 17. Intangibles
Non-current assets
Website and software - at cost
Less: Accumulated amortisation
Less: Impairment
Trademarks - at cost
Other intangible assets - at cost
2023
$'000
-
-
-
-
155
2,142
2,297
Group
2022
$'000
1,049
(808)
(241)
-
152
-
152
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Website and
software
$'000
Trademarks
$'000
Other
intangible
assets
$'000
316
-
9
(234)
(91)
-
-
-
-
147
5
-
-
-
152
3
-
155
-
-
-
-
-
-
5
2,137
2,142
2023
$'000
1,760
15
73
280
2,128
Total
$'000
463
5
9
(234)
(91)
152
8
2,137
2,297
Group
2022
$'000
1,076
28
53
222
1,379
Group
Balance at 1 January 2022
Additions
Exchange differences
Impairment of assets
Amortisation expense
Balance at 31 December 2022
Additions
Additions through business combinations (note 33)
Balance at 31 December 2023
Note 18. Trade and other payables
Current liabilities
Trade payables
GST and sales tax payable
Credit cards
Other payables
Refer to note 25 for further information on financial instruments.
53
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 19. Contract liabilities
Current liabilities
Contract liabilities
Reconciliation
Reconciliation of the written down values at the beginning and end of the current and
previous financial year are set out below:
Opening balance
Payments received or invoiced in advance
Transfer to revenue - performance obligations satisfied in previous periods
Closing balance
2023
$'000
Group
2022
$'000
522
22
22
521
(21)
522
94
22
(94)
22
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 $522,000 as at 31 December 2023 ($22,000 as at 31 December 2022) and is expected to be recognised
as revenue in future periods as follows:
Within 6 months
6 to 12 months
Note 20. Borrowings
Current liabilities
Loans - Raw With Life
Insurance premium funding
Trade financing
Non-current liabilities
Loans - Raw With Life
2023
$'000
335
187
522
2023
$'000
48
155
322
525
Group
2022
$'000
22
-
22
Group
2022
$'000
-
320
-
320
178
250
Refer to note 25 for further information on financial instruments.
Loans - Raw With Life
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. The Group assessed the fair value of the loan at the
reporting date and the amount is not materially different from its carrying value. The loan is being repaid at $4,000 per month,
subject to certain conditions.
54
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 20. Borrowings (continued)
Trade financing
Debt facility of up to $1,500,000 established with Scottish Pacific Business Finance Pty Ltd ('ScotPac'), the largest non-bank
business lender in Australia, to fuel long-term business growth. In addition, an additional $300,000 for trade finance facility is
available. The facilities, provide early access to trade debtors and extend payment terms for inventory purchases. At 31
December, $797,000 was available and $300,000 was drawdown. Balance included $22,000 of one-off establishment charges
at 31 December 2023.
Note 21. Lease liabilities
Current liabilities
Lease liability
Non-current liabilities
Lease liability
Lease make good provision
2023
$'000
Group
2022
$'000
545
697
-
14
14
568
69
637
Refer to note 25 for further information on financial instruments.
Note 22. Issued capital
2023
Shares
2022
Shares
2023
$'000
Group
2022
$'000
Ordinary shares - fully paid
632,738,503
316,132,461
222,573
218,122
Movements in ordinary share capital
Details
Date
Shares
Issue price
$'000
Balance
Issue of shares on exercise of performance rights
1 January 2022
28 February 2022
Balance
Issue of shares - Placement
Issue of shares - Vested performance rights
Issue of shares - Share Purchase Plan offer
Issue of shares - Vested performance rights
Issue of shares - Underwritten
Issue of shares - Underwriting fee to Canaccord
Issue of shares - Acquisition of The Sustainable
Nutrition Group
Issue of shares - In lieu of cash consideration for
corporate advisory
Issue of shares - Director fee rights - Q3
Issue of shares - Vested performance rights
Issue of shares - Vested performance rights
Issue of shares - Director fee rights - Q4
Share issue transaction costs
31 December 2022
14 April 2023
27 April 2023
26 May 2023
31 May 2023
7 June 2023
7 June 2023
315,778,066
354,395
316,132,461
69,444,445
9,247,011
38,055,603
3,478,785
17,499,953
3,000,000
$0.000
$0.018
$0.020
$0.018
$0.015
$0.018
$0.018
218,058
64
218,122
1,250
185
685
52
315
54
17 August 2023
158,163,595
$0.012
1,898
17 August 2023
31 August 2023
3 October 2023
3 October 2023
23 November 2023
9,036,068
2,291,667
3,561,137
1,300,000
1,527,778
$0.013
$0.015
$0.020
$0.015
$0.015
117
34
71
20
23
(253)
Balance
31 December 2023
632,738,503
222,573
55
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 22. Issued capital (continued)
Balance of issued capital reflects Treasury shares on acquisition of Altmed Pet LLC on 24 April 2019 of 133,110 shares.
Treasure shares are ordinary shares of the parent entity held by subsidiaries and /or associates
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.
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 2022 Annual Report.
Note 23. Reserves
Foreign currency translation reserve
Share-based payments reserve
2023
$'000
9,156
886
10,042
Group
2022
$'000
9,086
596
9,682
Foreign currency translation reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and Directors as part of their remuneration,
and other parties as part of their compensation for services.
Note 24. Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
56
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 25. 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.
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
2023
$'000
146
-
146
Assets
2022
$'000
2023
$'000
Liabilities
2022
$'000
-
-
-
1
-
1
217
1
218
The Group had net liabilities denominated in foreign currencies of $145,000 (assets of $146,000 less liabilities of $1,000) as
at 31 December 2023 (31 December 2022: net liabilities of $218,000 (assets of $nil less liabilities of $218,000)). 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).
AUD strengthened
AUD weakened
Group - 2023
% change
US dollars
Euros
5%
5%
% change
5%
5%
Effect on
profit before
tax
$'000
Effect on
equity
$'000
7
-
7
7
-
7
Effect on
profit before
tax
$'000
Effect on
equity
$'000
7
-
7
7
-
7
57
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 25. Financial instruments (continued)
AUD strengthened
AUD weakened
Group - 2022
% change
Effect on
profit before
tax
$'000
Effect on
equity
$'000
US dollars
Euros
5%
5%
11
-
11
11
-
11
% change
5%
5%
Effect on
profit before
tax
$'000
Effect on
equity
$'000
(11)
-
(11)
(11)
-
(11)
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 2023 was $41,000 (31 December 2022: gain of $84,000).
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group is not exposed to any significant interest rate risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The Group has a strict code of credit, including obtaining agency credit information, confirming references and setting
appropriate credit limits. The maximum exposure to credit risk at the reporting date to recognised financial assets is the
carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and
notes to the financial statements. The Group does not hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through
the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative
across all customers of the Group based on recent sales experience, historical collection rates and forward-looking information
that is available.
Consistent with our credit procedures we categorise our receivables based on days past due and we adjust our expected
credit losses in relation to those receivables as and when there is a change in days past due in expected receivables.
Expected credit loss is initially recognised in respect to a receivable when it is 30 days past due.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents)
to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast cash
flows and matching the maturity profiles of financial assets and liabilities.
58
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 25. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Group - 2023
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Loans
Interest-bearing - variable
Lease liability
Trade financing
Interest-bearing - fixed rate
Credit cards*
Insurance premium funding
Total non-derivatives
Weighted
average
interest rate 1 year or less
$'000
%
Between 1
and 2 years
$'000
Between 2
and 5 years Over 5 years
$'000
$'000
Remaining
contractual
maturities
$'000
-
-
-
3.26%
10.74%
21.72%
5.19%
1,760
280
48
545
322
73
155
3,183
-
-
178
14
-
-
-
192
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,760
280
226
559
322
73
155
3,375
*
Credit card balances are paid in full each month in accordance with their interest-free period and no interest has been charged during the year.
Group - 2022
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Loans
Interest-bearing - variable
Lease liability
Interest-bearing - fixed rate
Credit cards*
Insurance premium funding
Total non-derivatives
Weighted
average
interest rate 1 year or less
$'000
%
Between 1
and 2 years
$'000
Between 2
and 5 years Over 5 years
$'000
$'000
Remaining
contractual
maturities
$'000
-
-
-
1,076
273
-
3.26%
697
18.94%
8.30%
53
320
2,419
-
-
-
568
-
-
568
-
-
250
-
-
-
250
-
-
-
-
-
-
-
1,076
273
250
1,265
53
320
3,237
*
Credit card balances are paid in full each month in accordance with their interest-free period and no interest has been charged during the year.
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
Note 26. 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.
59
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 27. 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 Audit Pty Ltd
Taxation compliance services
Other advisory services
Other services - network firms
Taxation services
Note 28. Contingent liabilities
The Group had no contingent liabilities as at 31 December 2023 and 31 December 2022.
Note 29. Commitments
Inventory purchase commitments
Committed at the reporting date but not recognised as liabilities, payable:
Inventory purchases under contract
Note 30. Key management personnel disclosures
2023
$
Group
2022
$
221,500
255,219
23,261
6,560
39,495
145,578
29,821
185,073
251,321
440,292
84,108
78,811
2023
$'000
Group
2022
$'000
1,009
1,081
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the Group is set out
below:
Short-term employee benefits
Post-employment benefits
Share-based payments
2023
$
683,782
64,053
245,422
Group
2022
$
924,203
137,694
(26,283)
993,257
1,035,614
60
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 31. Related party transactions
Parent entity
Elixinol Wellness Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 34.
Associates and other investee
Interests in associates are set out in note 14.
Key management personnel
Disclosures relating to key management personnel are set out in note 30 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.
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
*
Paul Benhaim is no longer a director as at 31 December 2023. As such, the loan is no longer classified as a related party.
Loan transactions were made on negotiated terms and conditions.
Note 32. 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
2023
$
Group
2022
$
-
250,000
2023
$'000
Parent
2022
$'000
(7,436)
(10,161)
(7,436)
(10,161)
61
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 32. 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
2023
$'000
650
Parent
2022
$'000
2,634
7,577
10,657
1,099
1,114
1,286
1,499
223,251
886
(217,674)
218,800
596
(210,238)
6,463
9,158
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
Except for the deed of cross guarantee, as detailed in note 35, the parent entity had no other guarantees in relation to the
debts of its subsidiaries as at 31 December 2023 and 31 December 2022.
Contingent liabilities
The parent entity had no contingent liabilities as at 31 December 2023 and 31 December 2022.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 December 2023 and 31 December
2022.
Material accounting policy information
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the
following:
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment
Note 33. Business combinations
The Sustainable Nutrition Group Ltd
On 17 August 2023, Elixinol Wellness Limited acquired 100% of the ordinary shares of The Sustainable Nutrition Group Ltd
('TSN') for the total consideration transferred of $1,898,000. The acquisition increases size and scale for both Elixinol Wellness
and TSN and will see the Group expand to own and operate brands across four key verticals: plant-based food and nutrition,
hemp-based nutraceuticals (including cannabinoids such as CBD), pet nutritional supplements and skin health. TSN brands
include Australian Primary Hemp, Mt Elephant, Field Day and The Australian Superfood Company. The acquired business
contributed revenues of $10,000 and loss after tax of $272,000 to the Group for the period from 17 August 2023 to 31
December 2023. If the acquisition occurred on 1 January 2023, the full year contributions would have been revenues of
$3,640,000 and profit after tax of $1,297,000. The values identified in relation to the acquisition of The Sustainable Nutrition
Group are provisional as at 31 December 2023 as the Group has not yet finalised the valuation report.
62
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 33. Business combinations (continued)
Details of the acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Inventories (provisional)
Property, plant and equipment
Right-of-use assets
Other intangible assets (provisional)
Security deposits
Trade and other payables
Employee benefits
Loan to Elixinol Wellness Limited
Commercial loans
Lease liability
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Elixinol Wellness Limited shares issued to vendor
Acquisition costs expensed to profit or loss
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: cash and cash equivalents
Less: shares issued by Company as part of consideration
Net cash received
Note 34. Interests in subsidiaries
Fair value
$'000
191
201
2,514
728
82
2,137
940
(1,244)
(117)
(2,571)
(880)
(83)
1,898
-
1,898
-
1,898
1,898
-
1,898
(192)
(1,898)
(192)
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
EXL International Holdings LLC
Elixinol Wellness (Corporate Services) Pty Ltd
Elixinol Wellness (Byron Bay) Pty Ltd
Elixinol BV
Elixinol Ltd
The Sustainable Nutrition Group Pty Ltd
The Sustainable Nutrition Group (Australia) Pty Ltd
Alchemia Oncology Pty Ltd
Principal place of
business / Country of
incorporation
United States of America
United States of America
Australia
Australia
Netherlands
United Kingdom
Australia
Australia
Australia
Ownership interest
2022
2023
%
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
63
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 35. 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
Elixinol Wellness (Byron Bay) Pty Ltd
Elixinol LLC
EXL International Holdings LLC
Elixinol BV
Elixinol Ltd
The Sustainable Nutrition Group Pty Ltd
The Sustainable Nutrition Group (Australia) Pty Ltd
Alchemia Oncology Pty Ltd
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.
Note 36. Cash flow information
Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Impairment of non-current assets
Impairment of right-of-use assets
Impairment of intangibles
Impairment of inventory
Net loss on disposal of property, plant and equipment
Share-based payments
Doubtful debts
Non-operating interest
Others
Change in operating assets and liabilities:
Decrease in trade and other receivables
Decrease in inventories
Decrease in income tax refund due
Decrease/(increase) in prepayments, deposits and other
Decrease in trade and other payables
Increase/(decrease) in contract liabilities
Increase/(decrease) in other provisions
Increase/(decrease) in accrued expenses
Decrease in premium funding
2023
$'000
Group
2022
$'000
(7,507)
(10,571)
597
1,414
184
-
120
2
675
-
(178)
(33)
1,321
470
46
63
(493)
530
25
171
(165)
721
533
-
234
253
61
241
64
-
132
144
227
482
552
(831)
(72)
(13)
(201)
(108)
Net cash used in operating activities
(2,758)
(8,152)
64
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 36. Cash flow information (continued)
Changes in liabilities arising from financing activities
The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified
in the Group's consolidated statement of cash flows as cash flows from financing activities.
Group
Balance at 1 January 2022
Net cash used in financing activities
Exchange differences
Balance at 31 December 2022
Net cash from/(used in) financing activities
Exchange differences
Other changes
Balance at 31 December 2023
Note 37. Earnings per share
Loan with
Raw With Life
$'000
Trade
financing
$'000
Lease
liabilities
$'000
250
-
-
250
-
-
(24)
226
-
-
-
-
300
-
22
322
2,037
(757)
(15)
1,265
(738)
18
-
545
2023
$'000
Total
$'000
2,287
(757)
(15)
1,515
(438)
18
(2)
1,093
Group
2022
$'000
Loss after income tax attributable to the owners of Elixinol Wellness Limited
(7,507)
(10,571)
Weighted average number of ordinary shares used in calculating basic earnings per share
473,417,780
316,076,146
Weighted average number of ordinary shares used in calculating diluted earnings per share
473,417,780
316,076,146
Number
Number
Basic loss per share
Diluted loss per share
Cents
Cents
(1.59)
(1.59)
(3.34)
(3.34)
Performance rights (note 38) have not been included in the calculation diluted earnings per share as their inclusion would be
anti-dilutive to the Group as at 31 December 2023 and 31 December 2022.
Note 38. Share-based payments
The Group has established a long-term incentive share-based payment ('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 95,903,647 performance rights were issued for $nil consideration and the share-based payment debit
in profit or loss was $675,000, that included $181,000 credit for forfeitures and $856,000 debit for current period expense. The
equity movement was a credit of $675,000 that included $385,000 credit for performance rights exercised as issued capital,
and $290,000 movement in the share-based payment reserve.
During the prior year 13,767,195 performance rights were issued for $nil consideration and the share-based payment debit in
profit or loss was $128,000, that included $212,000 credit for forfeitures and $340,000 debit for prior period expense. The
equity movement was a credit of $126,000 that included $64,000 credit for performance rights exercised as issued capital,
and $331,000 movement in the share-based payment reserve.
65
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 38. Share-based payments (continued)
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.
For the 2022 Share Rights grant made during 2022, the performance period of the grant is three financial years in one tranche
following the performance period. The performance period is from 1 January 2022 to 31 December 2024.
Share Rights granted during 2023 were issued in two equal tranches. The performance period for Tranche 1 is 18 months
from 1 January 2023 to 30 June 2024 and the performance period for Tranche 2 is 3 years from 1 January 2023 to 31
December 2025.
The vesting dates are as follows:
Share Rights granted in 2022
Share Rights granted in 2023
Vesting date
28 February 2025
Vesting date
Tranche 1 - 30 August 2024
Tranche 2 - 28 February 2026
Grant dates and details
Set out below are summaries of options granted:
2023
Grant date
Expiry date
07/06/2023
17/08/2023
31/08/2023
23/11/2023
07/06/2025
22/10/2023
31/08/2025
23/11/2025
Exercise
price
$0.020
$0.232
$0.020
$0.020
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
-
131,000,001
374,915
2,291,667
1,527,778
135,194,361
-
-
-
-
-
-
(374,915)
-
-
131,000,001
-
2,291,667
1,527,778
(374,915) 134,819,446
The weighted average share price during the financial year was $0.015.
The weighted average remaining contractual life of options outstanding at the end of the financial year was 1.67 years.
Set out below are summaries of performance rights granted:
2023
Grant date
Expiry date
30/07/2020
07/07/2021
27/05/2022
21/01/2022
27/05/2022
21/04/2023
21/04/2023
31/05/2023
31/05/2023
03/10/2023
30/10/2025
07/10/2026
27/08/2027
21/04/2027
27/08/2027
22/07/2028
22/07/2028
31/08/2028
31/08/2028
31/08/2028
Granted
Exercised
-
-
-
-
-
9,247,011
5,582,545
4,778,785
9,166,668
67,128,638
95,903,647
-
-
-
-
-
(9,247,011)
(3,561,137)
(4,778,785)
-
-
(17,586,933)
Expired/
forfeited/
other
Balance at
the end of
the year
-
(662,828)
(2,914,450)
(186,813)
(465,753)
-
(2,021,408)
-
-
-
(6,251,252)
62,271
1,547,376
4,842,305
280,879
1,166,027
-
-
-
9,166,668
67,128,638
84,194,164
Balance at
the start of
the year
62,271
2,210,204
7,756,755
467,692
1,631,780
-
-
-
-
-
12,128,702
66
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 38. Share-based payments (continued)
2022
Grant date
Expiry date
03/04/2018
15/05/2018
21/09/2019
30/07/2020
07/07/2021
07/07/2021
21/01/2022
26/05/2022
26/05/2022
26/05/2022
03/07/2023
15/08/2023
21/12/2024
30/10/2025
07/10/2026
07/10/2026
21/04/2027
26/08/2027
26/08/2027
26/08/2027
Balance at
the start of
the year
30,112
225,000
9,598
910,654
354,395
3,124,981
-
-
-
-
4,654,740
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
-
-
11,523,034
144,689
467,692
1,631,780
13,767,195
-
-
-
-
(354,395)
-
-
-
-
-
(354,395)
(30,112)
(225,000)
(9,598)
(848,383)
-
(914,777)
(3,766,279)
(144,689)
-
-
(5,938,838)
-
-
-
62,271
-
2,210,204
7,756,755
-
467,692
1,631,780
12,128,702
The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 3.04
years (31 December 2022: 2.39 years).
Valuation model inputs
For the options 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
07/06/2023
17/08/2023
31/08/2023
23/11/2023
07/06/2025
22/10/2023
31/08/2025
23/11/2025
Share price
at grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value
at grant date
$0.014
$0.012
$0.010
$0.014
$0.020
$0.232
$0.020
$0.020
105.80%
-
-
-
-
-
-
-
3.57%
-
-
-
$0.0097
$0.0000
$0.0000
$0.0000
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
21/04/2023
21/04/2023
31/05/2023
31/05/2023
03/10/2023
22/07/2028
22/07/2028
31/08/2028
31/08/2028
31/08/2028
Share price
at grant date
Expected
volatility*
Dividend
Risk-free
yield interest rate*
Fair value
at grant date
$0.019
$0.019
$0.015
$0.015
$0.007
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$0.0200
$0.0200
$0.0150
$0.0150
$0.0000
*
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 39. Events after the reporting period
On 12 February 2024, Elixinol Wellness announced that it entered into a Share Purchase Agreement ('Share Purchase
Agreement') with Ecofibre Limited ACN 140 245 263 (ASX: EOF) to purchase Ananda Food Pty Ltd ACN 107 362 863 (a
wholly owned subsidiary of Ecofibre).
67
Elixinol Wellness Limited
Notes to the consolidated financial statements
31 December 2023
Note 39. Events after the reporting period (continued)
Ananda Food Pty Ltd ('Ananda Food') is one of Australia’s largest hemp producers. Ananda Food is focused on low-cost,
high-quality production of hemp ingredients and products for bulk, branded and private label customers. Ananda Food
produces a range of Australian grown hemp-derived products and food which is complementary and expands on Elixinol
Wellness’ own range of hemp products.
The Company has undertaken a fully underwritten non-renounceable rights issue to raise $3.16 million ('Entitlement Offer') to
complete the acquisition of Ananda Food, support additional marketing and for general working capital.
The Entitlement Offer price of 0.5 cents for one (1) new fully paid ordinary share ('New Share') for every one (1) share held,
together with one (1) free attaching listed option for every two (2) New Shares subscribed for and issued ('Attaching Options').
Attaching Options are exercisable at 0.75 cents each and will expire 36 months from the date of issue ('New Options'). The
Company will apply for the Attaching Options to be quoted on the ASX. Furthermore, sub-underwriter(s) to the Entitlement
Offer will receive a one (1) for two (2) sub-underwriter option for each share sub-underwritten ('Sub-underwriter Options'),
issued on the same terms as the Attaching Options. Sub-underwriter Options are subject to shareholder approval.
The Entitlement Offer and acquisition are expected to be complete by the end of March 2024.
On 20 February 2024, Elixinol Wellness also announced it had entered into a binding purchase agreement to divest the
Group’s minority interest in Altmed Pets, LLC. The agreement, which is subject to financing, is expected to realise
approximately $2.3 million in cash prior to 30 April 2024 and will be used to accelerate the Group’s growth opportunities.
No other matter or circumstance has arisen since 31 December 2023 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.
68
Elixinol Wellness Limited
Directors' declaration
31 December 2023
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
2023 and of its performance for the financial year ended on that date;
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable; and
At the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group
will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross
guarantee described in note 35 to the financial statements.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Directors
___________________________
David Fenlon
Independent Non-Executive Director and Chair
12 March 2024
69
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret Street
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 2023,
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 material accounting policy information and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 31 December 2023 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.
Material uncertainty related to going concern
We draw attention to Note 2 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the Group’s
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.
ability to continue as a going concern and therefore the Group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
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. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Accounting for the acquisition of The Sustainable Nutrition Group
Key audit matter
How the matter was addressed in our audit
As disclosed in note 33 in the financial statements, on
Our procedures included but were not limited to:
17 August 2023, the Group completed the acquisition
of The Sustainable Nutrition Group.
Reviewing the purchase agreements in relation to
the acquisition;
Given the significance of the transaction and the
complexities associated with accounting for the
acquisition in accordance with AASB 3 Business
Combinations, the acquisition accounting is a
significant area of focus for the audit.
Reviewing the accounting treatment for the
acquisition;
Performing testing on the fair value of the net
assets acquired on acquisition date;
Assessing the fair value of consideration paid;
Confirming the date of acquisition;
Confirming that the acquisition was a business
acquisition in accordance with AASB 3 Business
Combinations; and
Ensuring that the provisional accounting was
allowable.
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 2023, 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.
2
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 at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included the directors’ report for the year ended 31
December 2023.
In our opinion, the Remuneration Report of Elixinol Wellness Limited, for the year ended 31 December
2023, 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
3
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 12 March 2024
4
Elixinol Wellness Limited
Shareholder information
31 December 2023
The shareholder information set out below was applicable as at 7 March 2024.
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:
Ordinary shares
% of total
shares
issued
Number
of holders
3,015
2,318
1,024
2,239
776
9,372
8,273
0.20
1.01
1.28
11.79
85.72
100.00
10.06
Ordinary shares
% of total
shares
issued
Number held
CG NOMINEES (AUSTRALIA) PTY LTD
UBS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
ROSEDALE SUPER PTY LTD (ROSEDALE SUPER FUND A/C)
RAW WITH LIFE PTY LTD (BENHAIM TRADING A/C)
JAMES ROBERT HOOD PTY LTD (BLUESTONE A/C)
MR STUART RESECK & MRS NICOLE DEANNE RESECK (RESECK SUPER FUND A/C)
MS PAULINE THERESE GATELY
INTERDALE PTY LTD (MAPLE SUPER A/C)
MR KIERAN JOHN O'BRIEN
MR ASHLEY HARDWICK
JASFORCE PTY LTD
MR RONALD MICHAEL DUFFICY
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
COTTON ON INNOVATION FUND PTY LTD
D & G HEALTH LLC
KANEDEN ENTERPRISES PTY LTD (ROSEBURGH FAMILY SUPER A/C)
MR NICKY ALFRED KLEYN
COTTON ON INNOVATION FUND PTY LTD
31,074,072
20,945,417
18,698,448
18,181,816
16,871,048
16,692,881
11,387,115
11,000,000
9,930,583
7,035,496
6,021,500
5,402,778
5,049,873
4,814,835
4,539,590
4,472,461
4,119,229
4,000,000
4,000,000
3,928,750
4.91
3.31
2.95
2.87
2.67
2.64
1.80
1.74
1.57
1.11
0.95
0.85
0.80
0.76
0.72
0.71
0.65
0.63
0.63
0.62
Unquoted equity securities
Options over ordinary shares issued
Performance rights issued
74
208,165,892
32.89
Number
on issue
Number
of holders
134,819,446
64,111,486
170
19
Elixinol Wellness Limited
Shareholder information
31 December 2023
There were no person that holds 20% or more of unquoted performance rights.
Substantial holders
There are no substantial holders in the Company.
Voting rights
The voting rights attached to ordinary shares are set out below:
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.
75
Elixinol Wellness Limited
Corporate directory
31 December 2023
Directors
David Fenlon - Independent Non-Executive Director and Chair
Ron Dufficy - Group Chief Executive Officer and Managing Director
Pauline Gately - Non-Executive Director
Group Chief Executive Officer
Ron Dufficy
Group Chief Financial Officer
Josephine Lorenz
Company secretaries
Registered office
Mailing address
Share register
Auditor
Josephine Lorenz
Sarah Prince
Level 12
680 George Street
Sydney NSW 2000
Tel: (02) 9161 4275 (within Australia)
Tel: +61 (0) 2 9161 4275 (outside Australia)
PO Box 20547
World Square NSW 2002
Automic Pty Ltd
Level 5
126 Phillip Street
Sydney NSW 2000
Tel: 1300 288 664 (within Australia)
Tel: +61 (0) 2 9698 5414 (outside Australia)
BDO Audit Pty Ltd
Level 11
1 Margaret Street
Sydney NSW 2000
Stock exchange listing
Elixinol Wellness Limited shares are listed on the Australian Securities Exchange
(ASX code: EXL)
Website
www.elixinolwellness.com
X (formerly known as 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
76