Elixinol Global Limited Annual Report 2020

A SHIFTING REGULATORY ENVIRONMENT The regulatory environment for cannabis and hemp shifted positively in FY2020, driven by the United Nations, the World Health Organisation and the US Federal Government election. In December 2020, The United Nations Commission on Narcotic Drugs (CND) accepted a World Health Organisation (WHO) recommendation to remove cannabis and cannabis resin from Schedule IV of the 1961 Single Convention on Narcotic Drugs. This down- scheduling is expected to lead to a novel foods regime for CBD being implemented across Europe. A novel food application to support Elixinol’s product range has already been submitted to the Food Standards Agency in the UK. The CND vote recognises CBD’s potential and this improving regulatory environment makes Europe a very attractive growth market. Due to Elixinol’s strong balance sheet, we are now in prime position to evaluate new organic and inorganic opportunities to accelerate our global expansion. In the US, we see the new democratic government driving a more favourable agenda when it comes to hemp derived CBD products. While nobody can predict timing, we feel confident that much needed regulatory certainty for the industry will be accelerated and this will have a positive impact on our Elixinol business. In Australia, the Therapeutic Goods Administration confirmed the de-scheduling of CBD from Schedule 4 to Schedule 3, thus enabling CBD products that are registered with the TGA to be widely distributed across pharmacies. It is our current view that the pre-existing Special Access Scheme o¡ers a more immediate opportunity for Elixinol products. We are leveraging the knowledge and skillset of our local HFA team to develop bespoke products to meet the needs of healthcare practitioners. LOOKING AFTEROUR PEOPLE AND CULTURE A sustainable business is built on engaged and high- performing teams. A high growth wellness industry is naturally attractive to employees but cost reduction measures coupled with severe impacts and limitations due to COVID-19 restrictions led to a challenging working environment for so many people around the world. Add to this a challenging economic environment and the pressure to not only perform, but also maintain a well- balanced life was unprecedented in FY2020. We are grateful to, and proud of our teams across the Group who worked tirelessly throughout the year, finding opportunities to innovate around challenges, and adapting to changes at the macro level whilst navigating very demanding situations in their personal lives. In recognition of the importance to invest in people’s wellbeing at work, and the fact that there has been a lot of discretionary e¡ort to drive the business forward, we put new initiatives in place to not only retain our people but support them in becoming the best version of themselves. We introduced non-financial incentive structures that align with our company ethos of helping to improve people’s wellbeing, designed to ultimately improve employee engagement. We are pleased to have had strong feedback on these improvements to date, indicating that we are retaining and attracting talent. LOOKING AHEAD Elixinol’s FY2021 priorities will continue to reflect our transformation into a leading global hemp derived nutraceutical and food products company, with a strong reputation for quality and innovation. The year ahead will be one of further portfolio development and product innovation, as we increase our emphasis on developing di¡erentiated consumer products that support the overall health and wellbeing of our customers. We are now in an incredible advantageous position to complete our transformation; we have the team, product portfolio, financial stability, systems & processes and a favourable regulatory outlook to create a sustainable and profitable wellness business. Our long-term funding position has been substantially strengthened through an oversubscribed capital raise, providing the funding headroom to withstand further short-term impacts from the COVID-19 trading environment. We sincerely thank all those investors who supported the recent raise and are supporting the Company more generally. DELIVERING VALUE FOROUR STAKEHOLDERS Our well-considered and concerted e¡orts throughout 2020 have placed Elixinol Global on solid footing. We will continue to work hard to convert these strong foundations into the delivery of sustainable returns for all our shareholders. We are committed to having a long-term positive impact on all stakeholders connected to our business, including our valued employees, our customers and our business partners. In closing, we would like to thank our incredible teams around the world for all their e¡orts, resilience, energy and enthusiasm. We would also like to o¡er gratitude to our shareholders who backed our business transformation through FY2020 with continued support and confidence. Yours sincerely Helen Wiseman Oliver Horn Chair Global CEO COMPANY OVERV I EW Company Overview Financial Report Shareholder Information 7 FY2020 Milestones Strategy and Market Update