Elixinol Global (EXL) will retain its Hemp Foods Australia business, due to recent “enhanced performance”, the company said. In February, EXL announced the company would be sold for $500,000 to a Shanghai-based buyer, however, the sale was terminated in May.
The EXL board said it was no longer seeking to exit the Hemp Foods Australia business and that “additional optimisation initiatives” were under way. In H1 FY20, Hemp Foods Australia reported $2 million in revenue, compared with $1.6 million in revenue for H1 FY19.
On May 25, EXL announced the share purchase agreement (SPA) for the sale of Hemp Foods Australia was terminated by a subsidiary of Shanghai Shunho New Materials Technology Co., which cited “non-satisfaction of a condition precedent in the SPA, citing COVID-19 impacts” as reason for terminating the sale.
EXL said it will continue the Hemp Foods Australia operations and explore “potential to leverage the cost base and skillset in the HFA business to support opportunities emerging in the Australian cannabidiol (CBD) landscape”.
“Under strong management, HFA has delivered improving performance and we have put in place measures to further optimise the HFA business,” said Elixinol Global Group CEO Oliver Horn.
“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.”
Horn told Food & Drink Business the key reasons for HFA’s strong revenue growth has been “profitable product lines and reduced cost of goods resulting in improved margins”.
“We’ve been focusing on building distribution whilst reducing our cost, thus driving improved revenues,” said Horn.
“For the Elixinol Global (EXL) business, we believe it could be an asset to have an operating business unit (HFA) in market if and when we seek to bring our Elixinol branded products to market in Australia. Through HFA we could potentially market our products to consumers and retailers alike.”
