Elixinol Wellness Limited ($EXL)

Good morning, and welcome to the Annual General Meeting of Elixinol Wellness Limited. My name is Gavin Evans, Chair of Elixinol and Chair of today's meeting. I'd like to start by acknowledging and paying respect to the traditional custodians of the land, wherever those participating in this meeting are located. This meeting is being held virtually and shareholders will be able to participate, ask questions and cast direct votes at the appropriate times while the meeting is in progress. As the time is now 10 a.m., the company is complied with the relevant requirements for convening this meeting and a quorum is present. I formally declare the meeting open. I'm joined today by my fellow Board members, Natalie Butler, Executive Director; and Pauline Gately, Non-Executive Director. Also present are Adam Dimitropoulos, our CFO; and Tony Di Pietro; and Mariia Skorikova, our Joint Company Secretaries. Billy Chan, the company audit partner from RSM Australia, is also in attendance and will make himself available to answer any questions on the accounts at the appropriate time. The notice of meeting has been given in accordance with the company's constitution and copies of the notice are available on the company's website, the share registry's online voting site and on the ASX market announcements platform. Unless there are any objections, I'll take the notice of meeting and explanatory statements as read. As to the format of today's meeting, Tony Di Pietro, our Company Secretary, will start off by explaining the meeting participation process. I will follow with my Chair address, followed by a presentation on the operations of the business by our Chief Executive Officer, Natalie Butler. You will then have a chance to ask any questions relating to the operational side of the business. We'll then address the formal business on today's agenda, and this will be followed by another Q&A session on the formal items of the business, following which shareholders will be provided an extra 30 seconds to finalize voting on today's resolutions. In order to ascertain the true intention of shareholders and to reflect our focus on transparent governance in accordance with the company's constitution, the outcome of resolutions put to shareholders at today's meeting are to be decided by poll. I will now hand over to our Company Secretary, Tony Di Pietro, to outline the questions and poll procedure for today's meeting. Over to you, Tony.

Thank you, Gavin. Shareholders will be able to comment, ask questions and cast votes at the appropriate time for each item of business. Visitors are reminded that whilst we welcome you at the meeting, this is a shareholders' meeting, and you may not make comments or ask questions. We may experience some time lag, and this may cause some delay in your text questions or comments coming to our attention. We encourage you to lodge them as early as you can. [Operator Instructions] Regarding voting on today's resolutions, all shareholders, proxy holders and authorized corporate representatives and attorneys of shareholders who are entitled to vote will be able to do so via the webinar poll. It is important to note that if you lodged your proxy form and voted prior to the meeting, you do not need to vote again at this meeting unless you wish to change your proxy instruction. For those proxy holders, shareholders and authorized corporate representatives who have not yet voted prior to the meeting, please cast your votes on each of the resolutions when the poll is open. For proxy holders, you will have a summary of proxy votes, which detail the voting instructions, if any, for the items of business. By completing the voting via the webinar poll when instructed to vote in a particular manner, you are deemed to have voted in accordance with those instructions. Where the Chair has been appointed proxy on behalf of the shareholder, Gavin Evans as Chair of the meeting intends to vote these in favor of all of the resolutions. With regards to the poll procedure, we will open voting shortly so that you can -- your votes can be cast during the formal business section of the meeting. When the poll is declared open, a poll window will appear. To vote, simply select the direction in which you wish to cast your vote. The selected option will be marked. To submit your vote, simply click the submit button. You'll have the ability to change your vote -- the ability to change your vote up until the time voting is closed. Back to you, Gavin.

Thanks, Tony. Before we get into the formal part of the meeting, I'd first like to take a step back and look at the bigger picture to remind shareholders where we have come from, what we are building and most importantly, where we are going from here. Over the past year, the Board and management team have taken decisive action to stabilize the business, restore financial discipline, reduce costs, sharpen the strategic focus and reposition the company for sustainable growth. FY '25 was a year in which the business moved from survival to stability, and that is the key message that I want shareholders to take away today. Elixinol is a more focused, more disciplined and more capital-efficient business than it was 12 months ago. We have simplified the operating model, improved the quality of the revenue, strengthened gross margins and reduced the cost base. We now have clear operational momentum with the addition of new retail channels, and we have a clear path to profitability. So who are we today? Elixinol Wellness is a diversified health and nutrition platform built for longevity and everyday wellness. Our core verticals span across nutrition, supplements and superfoods, and we operate multiple brands within each vertical. We really like this everyday wellness market as it has very strong market tailwinds with strong consumer demand and the potential for premium pricing and penetration into export markets. And we think this platform is a great foundation for future expansion, both organically and through M&A. A really important part of our business model is our diversified distribution channels to both B2B and B2C. We have retail partners such as Woolworths, Coles and Priceline. We also sell through our e-commerce channels, and we sell white label products, particularly with our hemp range. We can use e-commerce channels to test our new product innovations to generate higher-margin revenue, and then we can access retail channels for broader market awareness and larger sales volumes. That diversification is important. It provides multiple pathways to growth while also reducing the reliance on any single product category, customer or channel. I'll let Nat go into the operational detail for FY '25 year shortly, but I wanted to give shareholders confidence in the longer-term strategy, which is really all about repositioning the business for sustainable growth in FY '26 and beyond. Although there is still lots of work to do, we are pleased with the substantial progress that we made in FY '25, which has continued into Q1 of FY '26. We have a sharper strategic focus with our shift to higher-margin categories and channels. We're generating higher-margin revenue, predominantly through e-commerce sales of The Healthy Chef. We have improved the gross margins to 45% in Q1. We have a structurally lower cost base, and we have delivered a second consecutive quarter of underlying cash flow positive. We were very pleased to announce the national rollout of The Healthy Chef premium product range into Priceline stores a few weeks ago in early May, and Nat will go into more detail on this shortly. And we have multiple short-term catalysts, including strong revenue outlook in Q2 and beyond that we think our investors will be happy to see. So all of this hard work and operational progress is aligned with our big picture vision for a healthy food rollout. Our aspiration is to build a portfolio of premium branded health food assets with Australian manufacturing capabilities and global growth potential. This strategy is aligned with powerful consumer trends. The wellness market in Australia is large and growing. Wellness is no longer a niche category. It's becoming part of everyday spending. Consumers are increasingly prioritizing preventative health, functional foods and clean label products. They are looking for simple, convenient products that support daily routines. So we believe that we are targeting the right segment of the market at the right time and that we're well positioned to benefit from these health tailwinds. And now I will hand over to Executive Director and CEO, Natalie Butler, to go into more detail about the operations.

Thank you, Gavin, and good morning, everyone. As Gavin outlined, FY '25 was a year of operational reset and repositioning for Elixinol. A major focus for management was really around simplifying the business, improving operational discipline and shifting the company towards a higher-margin category and channel. Importantly, we are now beginning to see the benefits of these changes translate into stronger commercial and financial outcomes. FY '25 was not about chasing growth at any cost. It was about improving the quality of the business. Over the last 12 months, we've simplified operations, reduced duplication across the group and lowered the operating cost base and focused the business on higher quality revenue streams. Importantly, the additional operating expenditure incurred during FY '25 was largely associated with doing the heavy lifting required to simplify the business. That included restructuring operations and teams, consolidating facilities, streamlining entities and resetting the operational platform for future growth. It was not always pretty or exciting work, but it was necessary work. And importantly, much of that reset is now behind us. We saw measurable evidence of improvement towards the end of '25, supporting that the strategy was working. Australian e-commerce sales increased by 163% year-on-year to $4.3 million, and this was primarily driven by The Healthy Chef acquisition. Gross margins improved materially throughout the second half, exiting FY '25 at 42% compared with a 39% full year average. And by Q4, operating expenses had reduced approximately 30% compared with the prior corresponding period. And that was really -- and we saw that the business delivered a positive adjusted EBITDA for that quarter. These are important indicators that the operational reset improved business fundamentals. Alongside the operational improvements, we are also seeing strong commercial momentum across our brands and retail partnerships in 2026. The Healthy Chef continues to perform strongly, and we are very pleased to be launching a national Priceline rollout across approximately 410 stores from Q3 this year. This represents an important milestone for the brand and materially expands our reach to that premium wellness consumer. For Mt Elephant's, 3 new products are launching into more than 800 Coles stores presently with Metcash distribution also rolling out in this quarter. This reinforces that retailers continue to back innovation, particularly with clean label and functional wellness positioning. With our Hemp Foods Australia business, we continue to strengthen our market position through established ranging across major retailers, including Costco and Coles. Further to this, Australian primary hemp has secured contracted hemp supply for the 2 major supermarkets, supporting reliable revenue visibility well into 2027. Collectively, these milestones reinforce growing retailer and partner confidence in our brands, innovation pipeline and category positioning. Looking ahead, we believe Elixinol is now operating from a significantly stronger position. Gross margins improved further to 45% in Q1 '26, reflecting a better revenue mix, pricing discipline and operational efficiencies. The business is now operating from a structurally lower cost base with operating expenses down 29% year-on-year in Q1. At the same time, retail expansion across Priceline, Coles and Metcash continues supporting brand momentum and growth. Importantly, we are operating within attractive long-term wellness categories, supported by consumer trends towards preventative health, functional nutrition and everyday wellness. While there is still work ahead, we believe the foundations are now in place to support more disciplined, scalable and sustainable growth over time. Thanks, and I'll hand back to Gavin now.

Thanks, Nat. Some great exciting initiatives underway there. So before we begin the formal business for today, we'll address any questions that shareholders may have on operations or the business in general. Shareholders are now invited to ask general questions in relation to the operations. I note that there are no questions in the Q&A section of the meeting, but would ask if there are anyone who wanted to ask a question that they do so now. So there's no questions. So as there are no questions, we'll now move on to the formal business of today's meeting. Before opening the poll, I wish to remind shareholders that the poll will remain open for an additional 30 seconds after we've considered all resolutions. I now declare the poll open. The first item of business is to receive and consider the financial statements of the company for the year ended 31st of December 2025, together with the directors' report and the auditor's report as set out in the annual report, a copy of which has been made available to shareholders online. There is no requirement for shareholders to vote on these reports. No written questions to the order were received before this meeting. If you have a question on this item of business, please follow the questions process, which was previously outlined by our Company Secretary. Pause there. But at this stage, it looks like there's no questions, so I'll move forward. As this matter does not require a vote, we'll now move on to the first resolution. I now refer to Resolution 1, which is to consider the adoption of the remuneration report forming part of the directors' report for the financial year ended 31 December 2025. The remuneration report is set out in the directors' report in the company's 2025 annual report. The remuneration report sets out the company's remuneration arrangements for the directors and key management personnel of the company. The vote on this resolution is advisory only and does not bind the directors or the company. The full resolution is displayed on your screen along with the proxy votes received for this resolution. I move that the shareholders consider and, if thought fit, pass the ordinary resolution. Since the next resolution concerns myself, I now hand the meeting over to Tony.

Okay. Thank you. Thanks, Gavin. I now refer to Resolution 2, which relates to the election of Gavin Evans as a Director of the company. Mr. Evans' profile has been provided on Page 10 of the Notice of Meeting. The full resolution is displayed on your screen with the proxy votes received for this resolution. I move that shareholders consider and if thought fit, pass the ordinary resolution. And back to you for the next resolution, Gavin.

Thanks, Tony. I now refer to Resolution 3, which relates to the reelection of Ms. Pauline Gately as a Director of the company. Ms. Gately's profile has been provided on Page 11 of the Notice of Meeting. The full resolution is displayed on your screen along with the proxy votes received for this resolution. I move that the shareholders consider and, if thought fit, pass the ordinary resolution. I now refer to Resolution 4, which relates to the approval of proposed issue of up to 400 million shares or 800 million options under the proposed capital raising. The full resolution is displayed on your screen along with the proxy votes received for this resolution. I move that shareholders consider and if thought fit, pass the ordinary resolution. I now refer to Resolution 5, which relates to the approval of proposed issue of up to 2 million convertible notes. The full resolution is displayed on your screen along with the proxy votes received for this resolution. I move that shareholders consider and, if thought fit, pass the ordinary resolution. Since the next resolution concerns myself, I will now hand the meeting back to Tony.

Thanks, Gavin. I now refer to Resolution 6, which relates to the approval of a proposed issue of new shares, options and/or convertible notes of up to a maximum value of $50,000 in aggregate under a proposed capital raising to Mr. Gavin Evans as a Director of the company. The full resolution is displayed on your screen, along with the proxy votes received for this resolution. I move that shareholders consider and if thought fit, pass the ordinary resolution. Thank you. Gavin, back to you.

I now refer to Resolution 7, which relates to the appointment of RSM Australia Partners as auditors of the company. The full resolution is displayed on your screen along with the proxy votes received for this resolution. I move that the shareholders consider and, if thought fit, pass the ordinary resolution. I now refer to the final item of business, Resolution 8, which relates to the approval of the company's 10% placement facility under ASX Listing Rule 7.1A. The full resolution is displayed on your screen along with the proxy votes received for this resolution. As this resolution is a special resolution, it requires 75% of votes cast in favor to be deemed passed. I move that shareholders consider and, if thought fit, pass the special resolution. So we will now go to shareholders' questions on the formal items of business. And again, it appears there's no questions in the Q&A panel. I'll ask for anyone who wishes to raise a question verbally to do so now. Otherwise, we will move on from the Q&A session on the formal items of business. Okay? So we will now provide shareholders with an additional 30 seconds for poll voting to be completed, sorry, and pause for that. [Voting]

As the additional 30 seconds is now up and there have been no request for additional time, I now declare the poll closed. Once the poll results have been processed, we'll announce the results later today on the ASX market announcements platform. This concludes the formal business part of the meeting. And since the company has not received notice of any other business, I declare the meeting closed. After the votes have been counted, the results of the poll will be released to the ASX later today. Thank you for your attendance and continued support.