Half Year Report and Financial Results

The following are attached in relation to Cannasouth's 2020 Half Year Report and Financial Results: * 2020 Half Year Review of Operations * 2020 Half Year Financial Statements * 2020 Half Year Results Announcement 28 August 2020 Cannasouth Limited and Group CEO's Review of Operations For the six months ended 30 June 2020 Cannasouth's operations continued to track our business plans despite the impacts of COVID-19. The Company reported an operating loss for the six months to 30 June 2020 was $1,451,650 (2019: $821,175). The result was in line with the Group's business plan and represents the significant investment we are making in developing Cannasouth into New Zealand's leading medicinal cannabis company. Cash on hand as at 30 June 2020 was $10.18 million (2019: $10.77 million). We achieved key milestones during the six months to 30 June 2020. It was an exciting period for the Company. The New Zealand Medicinal Cannabis Scheme came into effect on 1 April. This provides guidance of how the New Zealand Medicinal Cannabis industry will be required to operate to. The Group will require various licences under the scheme to cover aspects of its vertical integration business strategy - from cannabis cultivation, to the sale of finished medicinal cannabis products. Cannasouth Limited (and group companies) has been working through the new medicinal cannabis licencing programme and has begun submitting licence applications to cover its commercial activities. Cannasouth remains focussed on a vertically integrated commercial strategy and continues its commitment to producing medicinal cannabis products in New Zealand from locally produced raw materials. One of Cannasouth's initial business objectives for the year was to fast-track pharmaceutical grade medicinal cannabis products to New Zealand patients, prior to producing its own products. To this end, Cannasouth announced in May it had entered into a supply agreement with MediPharm Labs Australia Pty Ltd for the supply of white label medicinal cannabis products. In early May 2020, the Company successfully completed a Share Purchase Plan (SPP). The SPP provided eligible shareholders with an opportunity to purchase additional fully paid ordinary shares in Cannasouth at the same price offered to institutional investors, but without brokerage or transaction costs. Cannasouth received over subscriptions under the SPP and further funds from several wholesale investors. The Board resolved to place those over subscriptions, and in aggregate, Cannasouth raised $6,024,853. The funds raised allows the Group to focus on fast-tracking the implementation of its business plan. We thank our shareholders and investors for their support of the Company and sharing this exciting journey with us. During the half year, the Company welcomed Colin Foster (Chief Financial Officer). Mr Foster succeeded Rob Braithwaite, who had been working with the team since its inception and played an important role in preparing the company for its public listing in June 2019. Colin's appointment is an important and logical progression as Cannasouth grows from a research-based organisation into an integrated commercial enterprise. In addition, John Sanders has been appointed as Chief Commercial Officer. John will be responsible for developing and implementing marketing and sales strategies for the company's first medicinal cannabis products. He brings to Cannasouth more than 20 years of commercial, sales and marketing experience, both globally and in New Zealand, with blue chip pharmaceutical and health supplement companies such as Bayer, Merck, Wyeth and Roche. The Covid-19 lockdown during the six-month period to 30 June 2020 had varying impacts on the Group's entities. Fortunately, Cannasouth has developed a modern working environment with IT systems and infrastructure to accommodate agile work practices. Our team uses video conferencing and online communications daily, so we enjoyed a seamless transition to mandatory working from home. Midwest Pharmaceutics NZ Limited (Midwest) continued its operations as an essential service provider producing health sector medicines. The Cultivation JV (Cannasouth Cultivation Ltd or CCL) put on hold the construction of its state-of-the-art hybrid greenhouse cultivation facility during the Covid-19 lockdown. The project team made further progress with planning and system design for the new facility while working from home. In July, CCL appointed USA expert EAH Enterprises LLC, trading as Vera Cultivation in Colorado, to finalise the design of CCL's cultivation facility, develop (licensed) operating systems and procedures, and provide support for the rapid and successful implementation of CCL's state-of-the art growing facilities. We are looking forward to sharing with you more key milestones in the coming months as we complete key components of the business. -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:00358912 For:CBD Type:HALFYR Time:2020-08-28 16:00:32