The Netherlands
May 4, 2021

Financial highlights for the year ended 31 December 2020:

• 10th year of top-line growth, with full year revenues up 43% to €14.5m (FY19: €10.1m)
• EBITDA increased 63% to €1.8m (FY19: €1.1m), the Group’s second year of profit
• EBITDA margin increased to 12.7% (FY19: 11.1%)
• Profit before tax up 616% to €659,000 (FY19: €92,000)

Divisional performance during the period:

• Revenue growth across every channel (CBD, Hemp-Based Plastic Replacement, Construction, Animal Care, Horticulture and Genetics & Cultivation)
• 1,089% increase in sales of the Group’s construction materials, arising from the acquisition of Thermo Natur in May 2020
• 12% increase in sales of HempFlax hemp fibre as rising shipping costs increased demand for local fibre sourcing
  • Sales further bolstered by demand for hemp fibres as an alternative to glass fibre in automotive production, such as in the Porsche Cayman GT4
• 42% increase in sales of CBD as consumers prioritise personal wellness throughout the COVID-19 pandemic
  • Sales further bolstered by increased sales of Jacob Hooy CBD1 through Holland & Barrett stores
• 14% increase in animal bedding as 3.2 million households in the UK acquired a pet since the start of the pandemic2

Key developments during the period:

• Adapted quickly and decisively to remain fully operational throughout the COVID-19 pandemic
• Acquisition of the assets, licencing, brand and certifications of Thermo-Natur, a German manufacturer of natural fibre insulation
• Reaccreditation of the Group’s fibres as part of the International Sustainability and Carbon Certification (ISCC) PLUS from DEKRA
• Launch of CanCheck.org, a free-to-use online CBD search tool that enables consumers to trace CBD products from the shelf to seed, with every link along the supply chain verified by blockchain

Developments since period end:

Mark Reinders, HempFlax’s CEO, commented:

“The growing of hemp reduces the amount of CO2 in the atmosphere. For too long, doing the right thing by the planet has eaten into company profits. Hemp, grown and processed by HempFlax, bucks this trend: 2020 marks the fourth year that HempFlax has profitably grown, and trading since the start of the year indicates this success will continue throughout 2021. We have spent 25 years making hemp a profitable endeavour. Through consistent investment and intense learning, HempFlax has achieved a vertically integrated supply chain able to produce natural products that hold their own against unsustainable alternatives in a range of industries from construction, to automobiles, to animal care.

“This has been achieved against the unfortunate backdrop of regulatory uncertainty - notably in the CBD sector, but also present across the whole industrial hemp industry – which threatens to stifle innovation and competitiveness. UK and EU lawmakers urgently need to permit maximum THC levels of 0.3% in the field, thus facilitating the breeding of more varieties and aligning the European regulatory framework with other international jurisdictions, notably the US. Direct government funding is also needed to incentivise the development of carbon-negative hemp supply chains across the region.”

Thermo Natur acquisition

During the period, HempFlax launched its building supplies division, HempFlax Building Solutions GmbH, following the acquisition of the assets, licencing, brand and certifications of Thermo Natur GmbH & Co. KG (“Thermo Natur”), a manufacturer of natural fibre insulation materials. The products of HempFlax Building Solutions GmbH offer consumers an excellent alternative to existing mineral-based insulation materials***.

Research and development

HempFlax is a member of the European Industrial Hemp Association (EIHA), Europe’s foremost coalition of industrial hemp companies. EIHA’s Novel Food Consortium, of which HempFlax is a founding member, has submitted UK and EU novel food applications, with the UK application recently receiving confirmation that it has passed key FSA administrative checks, allowing members’ CBD products to remain on UK shelves. As part of this, EIHA will undertake €3.5 million of THC and CBD toxicology testing.

HempFlax remains committed to improving the understanding of the hemp plant and the products that can be derived from it. The Group is a proud member of the Innovation Hub Oost Groningen (IHOG), a research initiative exploring new commercial uses for natural raw materials. Together with the other corporate members - AVEBE and Nedmag - research is being carried out into innovations based on the raw materials of the three partners.

During the period, HempFlax’s natural hemp fibres were, for the fourth year running, awarded the International Sustainability and Carbon Certification (ISCC) PLUS certificate. The scheme ensures:

• Compliance with high ecological and social sustainability requirements;
• Greenhouse gas emissions savings; and
• Traceability throughout the supply chain.

HempFlax is the only company globally with ISCC-certified hemp fibres, thus providing a truly sustainable alternative to synthetic, mineral and wood fibres.

In 2021, the Group will modernise its headquarters in Oude Pekela, Holland. As part of this refurbishment, the roof and roof structure of the facility will be renewed so that it can accommodate solar panels, making the Group completely self-sufficient in terms of energy. In addition, further improvements will be made in modernising the Group’s German operations.

Cancheck.org

In a move that drives unprecedented levels of transparency and accountability, the Cannabinoid Association of the Netherlands (CAN), a consortium of Dutch cannabidiol (CBD) producers, launched CanCheck.org, a free-to-use online CBD search tool that enables Dutch consumers to trace CBD products from the shelf to seed, with every link along the supply chain verified by blockchain. HempFlax, a founding member of CAN, was the first company to have CAN-certified products on shelves in August 2020. As the white label supplier to Jacob Hooy, one of the UK’s best-selling CBD brands, HempFlax’s CBD oil and capsules represent a significant portion of the UK CBD market and can be found at Holland & Barrett, in-store and online.

Website: https://www.hempflax.com/en/

Published: May 4, 2021