Change of Accounting Policy to 2019 Preliminary Results

On 28 February Cannasouth Limited (NZX:CBD) released to the market its preliminary results for the year ended 31 December 2019 ("Preliminary Results"). The financial information contained in the Preliminary Results were compiled and finalised applying the accounting policies and treatments agreed in advance with CBD's auditors. Following the release of the Preliminary Results, CBD has been notified by its auditors that it has revised its view on the manner in which the financial statements for CBD, and its subsidiary companies were to be constructed and presented. The Preliminary Results were prepared on the basis that CBD's investment in two of it partly owned subsidiary companies - Cannasouth Cultivation Limited (50% owned) and Midwest Pharmaceutics NZ Limited (60% owned) - were consolidated into CBD's financial statements. CBD's auditors have now advised that CBD should apply the equity method of accounting for its investment in these two entities. The effect of this change in accounting policy on the Preliminary Results is that the two entities in question will now not be consolidated into the CBD Group. The de-consolidation of the two investments will not have any material change to the reported loss but will amend the previously announced consolidated assets and liabilities of the CBD Group. CBD will now take up an additional reported asset on its balance sheet of Investment in associated entities. An amended Preliminary Result will be released to the market shortly. -ENDS- For further information visit www.cannasouth.co.nz or contact: Mark Lucas CEO, Cannasouth Limited Email: mark.lucas@cannasouth.co.nz Mobile: 021 484 649 Colin Foster CFO, Cannasouth Limited Email: colin.foster@cannasouth.co.nz Mobile: 027 577 1498 End CA:00350305 For:CBD Type:AUDITORS Time:2020-03-20 09:09:20