Elixinol Global Limited Annual Report 2020

Letter from Chair and Global CEO continued CHANNEL GROWTH IN E-COMMERCE 2020 has also seen a shift in strategy towards ‘digital first’. Having a direct consumer relationship has become an essential attribute to generating value and improving profitability. Our focus on building our e-commerce capabilities has been rewarded, with this channel contributing 30% of overall Group revenues in FY2020, up from 25% in FY2019. During the year, Elixinol bedded down the Magento e-commerce platform and progressed its transition to an integrated in-house, web services and digital marketing team. This has enabled us to reduce external agency costs and provide the ongoing agility needed to successfully compete in a digital environment. Importantly, we have gained a wealth of new consumer insights, allowing us to become more relevant and targeted in our marketing whilst improving return on marketing investment. These changes couldn’t have come at a better time given COVID-19’s effects on consumer buying behaviour, and they were beginning to positively impact e-commerce customer acquisition and online purchases at the time of writing. HEMP FOODS AUSTRALIA PERFORMS ABOVE EXPECTATIONS Hemp Foods Australia has been a category leader and strong consumer wellness brand since it was founded over 20 years ago. Despite the earlier decision having been made to divest Hemp Foods Australia, after renewed business appraisal and a rapidly accelerating trend towards plant based super foods, the Board made a decision during the reporting period to retain this business within the Group. This strategy shift was carefully considered as your Board saw in HFA further potential to improve profitability via improving business fundamentals and to leverage its operations to support an Australasian strategy for Elixinol CBD products. HFA achieved strong growth in FY2020 and now, with leaner operations and improved margins, accounts for one third of group revenue. It is the largest and one of the most recognisable hemp food brands in Australia and we look forward to seeing the business continue to improve into FY2021. COMPANY OVERV I EW 6 Elixinol Global Limited | Annual Report 2020