ELIXINOL GLOBAL LIMITED (ASX: EXL; OTCQX: ELLXF)
3Q FY2018 APPENDIX 4C AND QUARTERLY BUSINESS UPDATE – REVENUE GROWTH OF 159% ON PCP
- Revenue of $10.4m for 3Q FY2018, representing 159% growth on prior corresponding period (PCP) and 27% growth vs 2Q FY2018 (December year end)
- Elixinol Global raised $40m to accelerate international growth via a placement to
new and existing domestic and international institutional and sophisticated investors (funds received in October)
- Ownership in Elixinol Japan increasing to 50.5%, funding working capital to scale the business for anticipated growth for hemp-derived CBD, foods and skincare in the Japanese market
- Elixinol Global commenced trading on the OTCQX exchange to make the Company
more accessible to US investors Elixinol Global Limited (EXL or the Company), a global company operating in the industrial hemp and emerging medicinal cannabis sectors, is pleased to release its business review and Appendix 4C cash flow statement for the quarter ending 30 September 2018 (3Q FY2018).
Sustained revenue growth reported in 3Q FY2018
During the September quarter, EXL group revenue was reported at $10.4m1 representing 159% growth on the prior corresponding period and 27% growth vs 2Q FY2018.
Elixinol USA (hemp-derived CBD dietary supplements)
The Company's strong revenue growth was primarily driven by Elixinol USA where demand
for hemp-derived cannabidiol (CBD) dietary supplements and skincare products continues to grow strongly.
The first harvest of high-CBD premium hemp has been completed by the NCHPP Joint
Venture (post quarter end). The harvest by the Colorado based joint venture with Kersey Ag follows planting of the first crop in Q2 FY2018. The NCHPP joint venture will provide ongoing supply of raw material for Elixinol USA's products.
During the quarter, a new US National Account Manager was hired to be responsible for the
growth of regional and national sales. Their primary goal will be to enhance brand value and relationships with national health food and chain stores.
Hemp Foods Australia (hemp-derived foods and skin care)
Hemp Foods Australia also continues to report strong revenue growth. Hemp Seed Oil and
Hemp Protein products delivered strong sales during the quarter through Hemp Foods
Australia's distributors. Bulk sales also continued to grow across all product ranges.
Immediately following 3Q FY2018, the first range of finished products was launched under the brand Essential HempTM. The range of health bars, which was developed with a holistic
nutritionist, is available in three flavours: Salted Caramel Crunch, Ginger Macadamia Turmeric and Choc Banana Coconut. The Essential Hemp health bars are available through health food stores nationwide and via www.hempfoods.com.au.
Elixinol Australia (pharmaceutical medical cannabis)
Elixinol Australia's licence submissions for the cultivation and manufacturing of medicinal
cannabis are under review by the Office of Drug Control (ODC). During the quarter an
information request (s14J) was received from the ODC. There is no update on potential timing of receiving licences however the Company will update investors accordingly once further information is obtained.
Late in the quarter, EXL announced an equity capital raising of $40m to accelerate
international growth. The capital raising was conducted via a placement to new and existing domestic and international institutional and sophisticated investors. Proceeds from the placement were received on 3 October 2018 and the placement shares issued 4 October 2018.
Proceeds from the placement will be used to:
- Support the growth of Elixinol USA's hemp-derived CBD business including ramping
up sales and marketing efforts and further expanding Elixinol USA's production
- Expand Elixinol's sales and marketing activities in Europe
- Provide general working capital, including for the funding of strategic investment
On 24 September 2018, the Company announced that it planned to increase its ownership in Elixinol Japan to 50.5% for $2.2m. The funds provided by the Company will be applied to
working capital to scale Elixinol Japan for anticipated growth in the Japanese market for hempderived CBD, food products and skincare. The transaction is expected to complete 4Q
OTCQX trading in the USA
During the quarter, EXL commenced trading on the OTCQX exchange. This is expected to
bring awareness of EXL to the US market and broaden the investor base.
Capital expenditure during 3Q FY2018 totalled $1.5m which included:
- Payments for equipment for the Colorado production facility – $0.8m
- Settlement of land purchased – $0.4m
- Website development to support eCommerce – $0.3m
A capital contribution of $1.0m to the NCHPP joint venture that was anticipated to occur during 3Q FY2018 was deferred to 4Q FY2018. Instalment payments for equipment and fit out of the Colorado stage 2 production facility, totaling $1.3m were also deferred to 4Q FY2018.
Gross cash outflows for the 4Q FY2018 are estimated at $19.9m (excluding cash inflows).
These gross outflows include $13.8m for ongoing operating costs and inventory purchases
including funding an expansion of sales and marketing activities to support further significant top line growth. Capital expenditure of $5.9m is estimated for 4Q FY2018 predominantly relating to equipment and fit out of the new Colorado stage 2 production facility (includes payments deferred from 3Q FY2018).
At the end of the September quarter, EXL held $10.7m cash at bank and $0.25m in debt. The Company has a pro forma cash balance of $48.6m which includes cash at the end of 3Q FY2018 and net proceeds of $37.9m received from the capital raising on 3 October 2018.
About Elixinol Global
Elixinol Global Limited (ASX: EXL; OTCQX: ELLXF) through its businesses has a global presence in the cannabis industry including hemp-derived CBD dietary supplements, hemp
food and wellness products, as well as cultivation and manufacture of medicinal cannabis
products. Elixinol Global's businesses include:
- Elixinol USA (hemp-derived CBD dietary supplements), which was founded in 2014, is a
manufacturer and global distributor of industrial hemp based dietary supplement and
skincare products, with operations based out of Colorado, USA.
- Hemp Foods Australia (hemp-derived foods and skincare), which was founded in 1999, is a leading hemp food wholesaler, retailer, manufacturer and exporter of bulk and branded raw materials, and finished products.
- Elixinol Australia (pharmaceutical medical cannabis), which was founded in 2014 to
participate in the emerging Australian medicinal cannabis market has applications pendingnfor cultivation and manufacturing licences.
See more at www.elixinolglobal.com
Quarterly report for entities subject to Listing Rule 4.7B
Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16
1. The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.
2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.
3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.
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