PERTH: Elixinol Global Limited (EXL) has decided to continue the Hemp Foods Australia (HFA) operations, whilst exploring potential to leverage the cost base and skill set in the HFA business to support opportunities emerging in the Australian cannabidiol (CBD) landscape.
Elixinol Global Limited (EXL) provided an update regarding the Board’s ongoing review of one of the Company’s subsidiaries, Hemp Foods Australia (HFA).
Elixinol Global announced that the share purchase agreement (SPA) for the sale of HFA was terminated by the buyer due to non-satisfaction of a condition precedent in the SPA, citing COVID-19 impacts. At the time the SPA termination was announced, the Company said it would continue to operate the HFA business pending an evaluation of all opportunities to capitalise on HFA’s established position as one of Australia’s strongest hemp foods brand.
In H1 FY2020 the HFA business reported revenues of $2.0m (unaudited) compared with $1.6m in H1 FY2019. EBITDA losses have been significantly reduced to a loss of $0.3m (unaudited) in H1 FY2020 compared with a loss of $1.8m in full year FY2019.
Despite the sale process having been in progress since 2019 and associated disruption to the business throughout that period, in recent months a significant improvement in the HFA business fundamentals has been realised and HFA will now be accounted for as a continuing business rather than a discontinuing business in the Group’s financial statements.
Given the improved dynamics and outlook, the Company has decided to continue the HFA operations, whilst exploring potential to leverage the cost base and skill set in the HFA business to support opportunities emerging in the Australian cannabidiol (CBD) landscape.
Elixinol Global’s Group CEO, Mr Oliver Horn, commented: “Under strong management, HFA has delivered improving performance and we have put in place measures to further optimise the HFA business. As a result of the stronger performance, we are now working towards harnessing this positive momentum. With the TGA potentially relaxing Australian CBD regulations we are also exploring further synergies with HFA in bringing Elixinol branded products to market.”