Elixinol Global Limited Annual Report 2020

NOTE 1: GENERAL INFORMATION The financial statements cover Elixinol Global Limited as a Group consisting of Elixinol Global Limited (‘Company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the period (‘Group’). The financial statements are presented in Australian dollars, which is Elixinol Global Limited’s functional and presentation currency. Elixinol Global Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered o’ce is: Level 12 680 George Street Sydney NSW 2000 A description of the nature of the Group’s operations and its principal activities are included in the directors’ report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 25 February 2021. The directors have the power to amend and reissue the financial statements. NOTE 2: SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following Accounting Standards and Interpretations are most relevant to the Group: Conceptual Framework for Financial Reporting (Conceptual Framework) The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020 and early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that a”ects several Accounting Standards. The application of the Conceptual Framework did not have a material impact on the Group’s financial statements. Going concern The annual financial statements have been prepared on a going concern basis, which contemplates the continuation of normal business operations and the realisation of assets and settlement of liabilities in the normal course of business. During the year ended 31 December 2020, the Group incurred a net loss before tax of $100.3 million with $85.6 million of this loss recognised in the first half of the year. During the year net cash outflows from operating activities were $22.6 million with $15.2 million occurring in the first half of the year. The coronavirus (‘COVID-19’) was declared a pandemic on 11 March 2020 by the World Health Organisation (‘WHO’). During the year ended 31 December 2020 there have been considerable economic impacts in Australia and globally arising from the outbreak of COVID-19 and Government action to reduce the spread of the virus. The outbreak of COVID-19 and the subsequent quarantine measures imposed by the Australian and other governments as well as the travel and trade restrictions imposed in 2020 have caused disruption to businesses and economic activity. COVID-19 has had an impact on the operations of the Group as core operations are located in USA, Australia, Europe and the United Kingdom. All businesses within the Group have continued to operate, however, due to the reduced retail demand in the markets and the Group’s current inventory holdings, particularly in USA, the Group has decided to cease production activities and transition to an outsourced capital light operations model. At present the Group’s ability to ship and receive goods has not been impacted. As at 31 December 2020, the Group has net assets of $35.7 million including cash of $27.7 million. The Directors regularly monitor the Company’s cash position on an ongoing basis and the Group has demonstrated a successful track record of raising capital and funding when required, included completing two capital raises totalling $28.9 million during the pandemic. In addition, the net loss before tax has been reduced in H2 FY2020 from that recorded in H1 FY2020 and the net cash outflow from operating activities reduced to $7.4 million for H2 FY2020 as expenditure was reduced and the scale of the business operations was reset. The current cash flow forecasts support the business as a going concern and the Group has the capacity, if necessary, to defer discretionary expenditure in the current cash flow forecast period to take steps to moderate the cash outflows of the business as needed. F INANCI AL REPORT Company Overview Financial Report Shareholder Information FY2020 Milestones 43 Strategy and Market Update