REG - Kanabo Group PLC - Half-year Report
30/09/2022 07:01
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220930:nRSd2439Ba&default-theme=true
RNS Number : 2439B Kanabo Group PLC 30 September 2022
Kanabo Group PLC
("Kanabo" or the "Company"),
Half Yearly Report (Unaudited)
For the Period Ended 30 June 2022
Kanabo Group plc (LSE:KNB) the pan-European medical cannabis company that
focuses on developing and commercialising cannabis-derived products for
medical patients and wellness consumers, announces its half yearly results for
the period ended 30 June 2022.
Operating Highlights
· Acquisition of the entire share capital of the GP Service Ltd ("GPS")
· Expanded sales and service teams across the group to support
accelerated growth
· Formation of Agritec Ltd as a consulting company which will secure
supply of high-quality medicinal cannabis to Kanabo
· Appointment of a UK specialist doctor as the clinical Director to
manage medicinal cannabis compliance policies and procedures for GPS
Financial Highlights
· Revenue increased to £0.24m (H1 21: £0.02m) post acquisition of GPS
· Underlying operating loss, before exceptional costs relating to the
placing and acquisition, of £2.77m (H1 21: £1.19m)
· Reported loss per share of 0.92p (H1 21:0.85p)
· Cash and cash equivalents as of 30 June 2022 of £4.96m (FY 21:
£4.48m)
Chief Executive, Avihu Tamir, commented; "The first half of 2021 was an
extremely busy and productive period for the Company. Most importantly, the
integration of GPS has gone according to plan, and I wish to give my thanks to
all the staff at GPS for their assistance on making this as seamless as
possible.
Our highly differentiated value proposition of Telehealth with a fully
compliant medicinal Cannabis prescription platform paves the way for us to
leverage our IP to demonstrate the intrinsic value of full supply chain
ownership, from manufacturing to delivery. We will now focus our efforts
during the second half of the year to scaling our capacity to meet anticipated
demand from both our primary and secondary healthcare and wellbeing markets."
Kanabo Group Plc
Avihu Tamir, CEO Via Vox Markets
Peterhouse Capital Ltd (Financial Adviser) Tel: +44 (0)20 7469 0930
Eran Zucker / Lauren Riley
Vox Markets (Investor Relations)
Kat Perez / Richard Fabris KanaboGroup@voxmarkets.co.uk
About Kanabo Group Plc
Kanabo Group Plc is a leading developer and distributer of cannabis-derived
products and inhalation technologies for medical patients and wellness
consumers. Kanabo Group Plc, which was the first medicinal cannabis company to
complete an IPO on the London Stock Exchange, is a vertically integrated
platform comprising cultivation consultancy, product R&D and formula
development, and marketing and distribution. Its subsidiaries include:
· Kanabo Agritec Ltd, a cultivation consultancy supporting cannabis
businesses in developing new farms through infrastructure, research, and
product guidance. These farms deliver high-quality raw materials for Kanabo's
formulas and product line.
· Kanabo Research Ltd, a wholly owned subsidiary of Kanabo Group Plc,
responsible for R&D, regulation, and quality assurance procedures.
· The GP Service - a Kanabo Group Plc owned telehealth provider,
offering NHS approved online consultations, online prescriptions, treatment
forms and access to both Kanabo medical-cannabis & wellbeing products.
CHAIRMAN'S STATEMENT
The first half of 2022 was transformational for the Group with the successful
acquisition and integration of The GP Service ("GPS"). GPS will form an
integral part of the group providing both the technology and services required
to bring medicinal cannabis prescriptions to the mainstream in the UK.
The Company also successfully completed an equity placing and converted
certain tranches of warrants to raise £2.46m (net) in aggregate which ensured
the Company is well funded to execute its strategy to become a leading
vertically integrated European medicinal cannabis Company.
The Board of Kanabo was strengthened during the period with the appointment of
Gil Efron as a non-executive director. Gil is currently serving as President
and Chief Financial Officer of NASDAQ and TASE dual-listed Purple Biotech
Ltd., a clinical-stage company (PPBT) since June 2021, having previously held
the position of Deputy Chief Executive Officer and Chief Financial Officer
from October 2018. Prior to his current tenure at Purple Biotech, Gil served
as Deputy CEO and CFO of Kamada Ltd., a NASDAQ and TASE dual-listed
plasma-derived protein therapeutics company between 2011 and 2017.
Gil therefore brings Kanabo a wealth of experience across both healthcare and
equity capital markets, which I believe will be invaluable for the Company
going forward. Gil will also take over as chair of the Audit Committee.
Following the successful integration of the GPS into the wider Group, GPS's
CEO has now handed over day to day control of GPS to Kanabo Group's CEO and is
leaving the Group. I would like to take this opportunity to thank GPS's CEO
for his contribution throughout the integration process and wish him well with
his other business interests.
The Group continues to build a disruptive healthcare business that harnesses
cutting edge technology and product innovation around medicinal cannabis to
meet the substantial unmet need from patients and consumers alike who are
seeking to enhance their overall wellness.
We will continue to challenge the norms of traditional healthcare and
wellbeing delivery, providing new points of access to benefit patients.
Whilst I would not normally comment on the equity markets in general or our
share price in particular, I think it's important for investors to understand
that we continually review our performance and one of the measures we monitor
is our share price. We are therefore extremely disappointed, as I'm sure are
you, in our recent share price performance.
As the Cannabis industry matures, and more companies engaged in similar
activities to Kanabo list on the London Stock Exchange, we will be better able
to compare our performance against our peers. Indeed, along with the wider
equity markets around the world, I can confirm as of today Kanabo and our
currently listed peers have all suffered double digit decreases in share
prices over the period. Whilst it is little comfort to know we are not alone,
we remain committed to our strategic plan which should generate significant
returns for our shareholders.
Outlook
We are aiming for another period of operational and financial growth through
the second half of the current fiscal year as revenue from GPS continues to
increase, we continue to work toward achieving CE accreditation for our
VapePod medical device and further develop our vertically integrated business
model.
I therefore look forward to updating shareholders throughout the remainder of
the year as to the continued product development and the progress made
building our routes to market as regulation around medicinal cannabis matures
across Europe and the UK.
In the interim, the launch of our UK ecommerce site, will enable sales of our
cannabis-derived wellness products to build within the recreational markets of
Europe, UK, and Israel.
Despite the difficult macro-economic environment around the globe, I believe
Kanabo remains well positioned to deliver attractive returns for our
shareholders.
Chairman,
David Tsur
CHIEF EXECUTIVE'S REPORT
The six-month period under review was obviously dominated by the acquisition
and integration of the GP Service (GPS), which is transformational for the
Group.
However, in addition to this acquisition, we also continued to deliver our
stated growth strategy. We signed a strategic MoU with Forbe Ltd for the sale
of wellness products in Israel, formed a new subsidiary, Agritec Ltd, to
secure supply of medicinal cannabis and took the strategic decision to abort
the highly dilutive acquisition of Materia.
Operating Review
The strategy to build a fully vertically integrated cannabis-derived product
company for the global health and wellness markets continues to be executed at
an increasing pace.
Perhaps most importantly, the acquisition of GPS has been transformational for
the Group and fully aligned with our long-term mission to enable greater
patient access to medicinal cannabis products across the UK.
The acquisition and integration of GPS has been a complete success with both
companies now working seamlessly together according to our original plan set
out at the beginning of the year. The objective during the second half of the
current financial year for GPS is to rapidly scale its existing digital and
telemedicine business whilst establishing a fully compliant channel to market
for our medicinal cannabis products.
As mentioned before, we believe by improving patient access to regulated
medicinal cannabis with dosing controlled by medical grade devices, the
Company can make a substantial contribution to improving outcomes for
thousands of patients across the UK and Europe and beyond.
To ensure the Company remains at the forefront of medicinal cannabis supply,
the Company formed Agritec Ltd, a subsidiary dedicated to providing the
know-how needed the design, built, operating, and management of the production
of medicinal cannabis. Agritec signed its first agreement with a Spanish
operator and expecting to generate revenues toward the beginning of 2023.
The Company also demonstrated its international reach by signing a Memorandum
of Understanding for the marketing and distribution of its cannabis-derived
wellness products with Forbe Ltd, thereby taking the Company into the emerging
consumer market in Israel. We expect this MoU to immediately position the
Company as a leader in this high growth market where the regulatory landscape
for the sale of cannabis-derived wellness products is on an increasingly
positive trajectory. Israel's deregulated market is now estimated to be worth
up to US$475 million by 2025, which provides the Company ample opportunity to
rapidly grow.
During the period we also launched the Company's first dedicated eCommerce
platform, 'The Kanabo Store', for the distribution of cannabis derived
wellness products to consumers. The roll-out plan will have an initial focus
on the UK before the website launches across Europe, clearly demonstrating how
focused we are to bringing our proprietary wellness products to market with an
accelerated path to commercial sales volumes during 2023.
FINANCIAL REVIEW
On 21 February 2022, the Company acquired 100% of the voting rights of GP
Service (UK) Limited ("GPS") at a price of 12.65 pence per share. The net
consideration of £13,499,000 was settled with the issue of 106,708,577
shares, of which 21,302,460 have already been issued. The book value of the
acquisition sum to net liabilities was £144,000.
This is therefore the first period we are reporting with business combinations
of Kanabo and the GP Service (UK) Ltd post acquisition. Segmental information
is therefore now presented in terms of Primary and Secondary care:
· Primary Care - Tele pharma services provided by GPS
· Secondary Care - Development and distribution of cannabis derived
medical and wellness products
Total revenue for the six-month period was £239,000, of which £208,000 came
from the sale of Primary Care services with the remaining £31,000 from
Secondary Care, predominantly being the sale of wellness products.
Cost of Sales, which comprised mostly of the provision of telemedicine
services, resulting in total gross profit for the Group of £88,000.
During the period, the Company invested £181,000 (H1 21; £116,000) in
Research & Development. £153,000 of which was directly related to staff
compensation, including salaries and share based payments, with approximately
£19,000 invested in laboratory and testing equipment.
Sales and Marketing expense increased during the period to £511,000 (H1 21;
£187,000). £294,000 of which was directly related to staff compensation with
the remaining £217,000 due to the increased marketing costs for wellness
products following the launch of the Company's UK eCommerce site.
Underlying General & Administrative costs increased to approximately
£2,166,000 (H1 21: £888,000) during the period, largely due to the addition
of the GP Service. £639,000 of which was directly related to staff and share
based payments. However, the Company incurred circa £610,000 of exceptional
professional services costs (consulting, legal and accounting). £680,000
non-cash expenses generated from amortization goodwill and intangible assets.
Acquisition-related exceptional costs, related to the acquisition of GPS, was
£1,067,000 and is presented as "other expenses" in the income statement.
Reported operating loss was therefore £3,837,000 with Net Loss of £3,773,000
after £57,000 finance costs, including £20,000 loss in foreign exchange, and
taxation of £121,000 generated from movements in deferred taxes during the
period.
Loss per share reduced to 0.92p per share due to the weighted average shares
in issue increasing to 28,125,000 and the issue of 21,302,460 to satisfy the
net consideration of the GP service.
Net cash outflow from operating activities for the period was £2,039,000.
However, the balance sheet remained strong by raising £2,137,000 of net new
capital by way of a placing of 28,125,000 new ordinary shares in the Company
at a price of 8 pence per share and raising a further £323,000 via the
exercise of certain warrants in the Company resulting in reported cash and
cash equivalents, as of 30 June 2022, of £4,959,000.
On 25 July 2021, the Company signed a head of terms agreement for the
acquisition of 11157353 Canada Corp. a company incorporated in Canada
("Materia"). During these negotiations, the Company loaned Materia CAD$1.0m.
During the audit of FY21, the Company prudently fully impaired the loan based
on the Directors assessment of Materia's ability to repay the debt.
During the period the Company decided not to proceed with the proposed
acquisition of Materia while continuing negotiations for full repayments of
the loans granted during 2021. During the reporting period, the Company has
received interest payments of CAD$ 55,000 and remains in negotiations for full
repayment of the loans.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting'.
(b) the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year; and
(c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
CAUTIONARY STATEMENT
This Interim Management Report (IMR) has been prepared solely to provide
additional information to shareholders to assess the Company's strategies and
the potential for those strategies to succeed. The IMR should not be relied on
by any other party or for any other purpose.
Unaudited consolidated statement of comprehensive income for the period ended 30 June 2022
For the six months ended 30 June For the year ended 31 December
2022 2021 2021
Unaudited Audited
Note £ '000
Revenue 239 15 73
Cost of sales 151 19 66
Gross profit (loss) 88 (4) 7
Research and development 181 116 242
Sales and marketing 511 187 569
General and administration 9 2,166 888 2,000
Other expenses 10 1,067 - -
Net impairment losses on financial assets 14.a - - 598
Operating loss (3,837) (1,195) (3,402)
Reverse acquisition expenses - (1,172) (1,172)
Finance income/(expense) (57) (10) 23
Loss before taxation from continuing operations (3,894) (2,377) (4,551)
Taxation 121 - -
Loss for the period (3,773) (2,377) (4,551)
Other comprehensive income for the period
Foreign operations - foreign currency translation differences 5 45 (82)
Total items that may be reclassified to profit or loss 5 45 (82)
Total comprehensive loss (3,768) (2,332) (4,633)
Loss (basic and diluted) per share from continuing operations attributable to
the equity owners
Basic and diluted loss per share (pence per share) 11 (0.92) (0.85) (1.40)
Unaudited consolidated statement of financial position as at 30 June 2022
30 June 31 December
2022 2021 2021
Unaudited Audited
Note £ '000
ASSETS
Non-current assets
Intangible assets and goodwill 7 14,876 - -
Property, plant, and equipment 100 34 42
Right-of-use assets 13.b 309 - -
Financial asset held at fair value through other comprehensive income 750 750 750
Long term deposit - 13 -
16,035 797 792
Current assets
Inventories 69 59 63
Trade receivables 18 4 10
Other receivables 254 85 237
Short-term deposits 51 7 20
Cash and cash equivalents 4,959 5,945 4,477
5,351 6,100 4,807
Total assets 21,386 6,897 5,599
EQUITY
Equity attributable to shareholders
Issued capital 10,573 9,213 9,249
Share premium 26,912 14,190 14,400
Share-based payments reserve 1,077 266 758
Share to be issued reserve 4,635 2,500 2,500
Reverse acquisition reserve (14,968) (14,968) (14,968)
Foreign currency reserve (2) 30 (7)
Retained deficit (10,486) (4,582) (6,748)
Total equity 17,741 6,649 5,184
LIABILITIES
Non- current liabilities
Interest-bearing loan 12 312 - -
Lease liability 13.b 256 - -
Deferred taxes 1,590 - -
2,158 - -
Current liabilities
Trade payables 139 33 42
Other payables 1,096 215 373
Interest-bearing loan and borrowings 12, 13.b 252 - -
1,487 248 415
Total liabilities 3,645 248 415
Total equity and liabilities 21,386 6,897 5,599
Unaudited consolidated statement of changes in equity for the period ended 30 June 2022
Attributable to owners of the Company
Share capital Share premium Share based payments reserve Share to be issued reserve Reverse acquisition reserve Foreign exchange reserve Retained deficit Total
£ '000
As at 1 January 2022 (audited) 9,249 14,400 758 2,500 (14,968) (7) (6,748) 5,184
Total comprehensive loss for the period - - - - - 5 (3,773) (3,768)
Acquisition of a subsidiary 533 10,831 - 2,135 - - - 13,499
Shares issued 703 1,434 - - - - - 2,137
Exercise of options 7 5 (10) - - - 10 12
Exercise of warrants 81 242 - - - - - 323
Share-based payments - - 329 - - - 25 354
Total transactions with owners, recognised in equity 1,324 12,512 319 2,135 - 5 (3,738) 12,557
As at 30 June 2022 (unaudited) 10,573 26,912 1,077 4,635 (14,968) (2) (10,486) 17,741
Attributable to owners of the Company
Share capital Share premium Share based payments reserve Share to be issued reserve Reverse acquisition reserve Foreign exchange reserve Retained deficit Total
£ '000
As at 1 January 2021 (audited) - 2,098 805 - - 75 (3,017) (39)
Total comprehensive loss for the period - - - - - (45) (2,377) (2,422)
Transfer to reverse acquisition reserve - (2,098) - - 2,098 - - -
Exercise of options - - (812) - - - 812 -
Recognition of plc equity at acquisition date 735 592 - - 434 - - 1,761
Acquisition of a subsidiary 5,769 9,231 - - (15,000) - - -
Shares issued 2,600 4,775 - - - - - 7,375
Shares to be issued - - - 2,500 (2,500) - - -
Exercise of warrants 94 314 - - - - - 408
Issue of shares in settlement of fees 15 25 - - - - - 40
Cost of share issue - (747) - - - - - (747)
Issue of warrants - - 113 - - - - 113
Share-based payments - - 160 - - - - 160
Total transactions with owners, recognised in equity 9,213 12,092 (539) 2,500 (14,968) (45) (1,565) 6,688
As at 30 June 2021 (unaudited) 9,213 14,190 266 2,500 (14,968) 30 (4,582) 6,649
Attributable to owners of the Company
Share capital Share premium Share based payments reserve Share to be issued reserve Reverse acquisition reserve Foreign exchange reserve Retained deficit Total
£ '000
As at 1 January 2021 (audited) - 2,098 805 - - 75 (3,017) (39)
Total comprehensive loss for the year - - - - - (82) (4,551) (4,633)
Transfer to reverse acquisition reserve - (2,098) - - 2,098 - - -
Exercise of options 4 - (820) - - - 820 4
Recognition of plc equity at acquisition date 735 592 - - 434 - - 1,761
Acquisition of a subsidiary 5,769 9,231 - - (15,000) - - -
Shares issued 2,600 4,775 - - - - - 7,375
Shares to be issued - - - 2,500 (2,500) - - -
Exercise of warrants 126 411 - - - - - 537
Issue of shares in settlement of fees 15 25 - - - - - 40
Cost of share issue - (634) - - - - - (634)
Issue of warrants - - 113 - - - - 113
Share-based payments - - 660 - - - - 660
Total transactions with owners, recognised in equity 9,249 12,302 (47) 2,500 (14,968) (82) (3,731) 5,223
As at 31 December 2021 (audited) 9,249 14,400 758 2,500 (14,968) (7) (6,748) 5,184
Unaudited consolidated statement of cash flows for the period ended 30 June 2022
For the six months ended 30 June For the year ended 31 December
2022 2021 2021
Unaudited Audited
Note £ '000
Operating activities
Loss for the period (3,773) (2,377) (4,551)
Adjustments to reconcile profit before tax to net cash flows:
Reverse acquisition share-based payment expense - 1,172 1,172
Net impairment losses on financial assets - - 598
Share-based payment expense 354 160 660
Depreciation of property, plant and equipment and right-of-use assets 27 5 7
Amortisation goodwill and intangible assets 680 - -
Finance income, net 30 11 13
Taxation (121) - -
Working capital changes:
Change in trade receivable 5 (4) (10)
Change in other receivable 60 (46) (194)
Change in inventories (6) (32) (35)
Change in trade payables 78 (1) 6
Change in other payables 646 107 256
(2,020) (1,005) (2,078)
Interest paid (19) - -
Net cash flows used in operating activities (2,039) (1,005) (2,078)
Investing activities
Purchase of property, plant, and equipment (58) (24) (35)
Investment in financial asset held at fair value through other comprehensive - (750) (750)
income
Acquisition of a subsidiary, net of cash acquired 7 235 358 358
Investment in short term deposits (31) (2) (2)
Investment in intangible assets (86) - -
Short term loan - - (582)
Net cash flows from/ (used in) investing activities 60 (418) (1,011)
Financing activities
Share Issue, net of issuing cost 13.a 2,137 6,520 6,608
Proceeds from exercise of warrants 323 374 529
Proceeds from exercise of share options 12 98 102
Receipts of long-term loans 13.c 9 - -
Repayment of lease liability 13.b (14) - -
Repayment of interest-bearing loan 12 (17) - -
Net cash flows from financing activities 2,450 6,992 7,239
Net increase in cash and cash equivalents 471 5,569 4,150
Net foreign exchange difference 11 (4) (53)
Cash and cash equivalents at beginning of the period 4,477 380 380
Cash and cash equivalents at end of the period 4,959 5,945 4,477
Notes to the consolidated financial statements
1. Corporate information
The interim condensed consolidated financial statements of Kanabo Group Plc.
and its subsidiaries (collectively, the Group) for the six months ended 30
June 2022 were authorized for issue in accordance with a resolution of the
directors on 28 September 2022.
Kanabo Group Plc. (the Company) is a limited company, incorporated and
domiciled in England and Wales, whose shares are publicly traded on the London
Stock Exchange in the standard segment.
The registered office is located at Churchill House, 137-139 Brent Street,
London, NW4 4DJ.
The Group principal activities are the distribution and development of
cannabis derived medical and wellness products.
2. Basis of preparation and changes to the Group's accounting policies
a. Basis of preparation
The interim condensed consolidated financial statements for the six months
ended 30 June 2022 have been prepared in accordance with IAS 34 Interim
Financial Reporting. The Group has prepared the financial statements on the
basis that it will continue to operate as a going concern. The Directors
consider that there are no material uncertainties that may cast significant
doubt over this assumption. They have formed a judgement that there is a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future, and not less than 12 months
from the end of the reporting period. The interim condensed consolidated
financial statements do not include all the information and disclosures
required in the annual financial statements, and should be read in conjunction
with the Group's annual consolidated financial statements as at 31 December
2021
b. New standards, interpretations and amendments adopted by the Group
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are consistent with those followed in the
preparation of the Group's annual consolidated financial statements for the
year ended 31 December 2021, except for the adoption of new standards
effective as of 1 January 2022. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet effective.
Several amendments apply for the first time in 2022, but do not have an impact
on the interim condensed consolidated financial statements of the Group.
3. Estimates and Judgements
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense.
Actual results may differ from these estimates. In preparing these condensed
consolidated interim financial statements, the significant judgements made by
management in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the financial
statements for the year ended 31 December 2021.
4. Financial risk management
The Group's activities expose it to a variety of financial risks, including -
market risk (including currency risk and interest rate risk), credit risk and
liquidity risk. The condensed consolidated interim financial statements do not
include all financial risk management information and disclosures required in
the annual financial statements; they should be read in conjunction with the
Group's annual financial statements as at 31 December 2021. There have been no
changes in any risk management policies since the year end or as disclosed in
the prospectus.
5. Going concern
As at 30 June 2022, the Group's cash position totaling £4,959 thousand and it
was in a strong net current asset position. Based on the Group's current cash
reserves and detailed cash forecasts produced, the Directors are confident
that the Group will be able to meet its obligations as they fall due over the
course of the next 12 months. Whilst the Group may seek to raise further funds
in the next 12 months, the Directors are confident that the Group would be
able to meet its obligations as they fall due in the event that no further
funding is obtained because of low level committed expenditure relative to the
forecasted discretionary expenditure, which could be reduced or deferred.
The Directors also acknowledge that the COVID-19 pandemic has had, and will
likely continue to have, adverse impacts on the global economy and capital
markets. However, the Directors are confident that the Group will continue to
remain a going concern as they do not believe the Group is dependent on
raising further funds to remain a going concern.
6. Segment information
Following the acquisition of GP Service (UK) Limited ("GPS") (see note 7),
for management purposes, the Group is organized into business units based on
its products and services and has two reportable segments, as follows:
- Primary case segment - the tele pharma services provided by GPS.
- Secondary case segment - distribution and development of cannabis
derived medical and wellness products.
No operating segments have been aggregated to form the above reportable
operating segments.
The following tables present revenue and loss information for the Group's
operating segments for the six months ended 30 June 2022:
Primary care Secondary care Total segments Adjustments and eliminations Consolidated
£ '000
Revenue
External customer 208 31 239 - 239
Inter-segment - - - - -
Total revenue 208 31 239 - 239
Results
Segment loss (932) (2,841) (3,773) - (3,773)
The following table presents assets and liabilities information for the
Group's operating segments as at 30 June 2022:
Primary care Secondary care Total segments Adjustments and eliminations Consolidated
£ '000
Assets
30 June 2022 15,431 6,445 21,876 (490) 21,386
Liabilities
30 June 2022 2,704 1,431 4,135 (490) 3,645
7. Business combinations
Acquisition of GP Service (UK) Limited
On 21 February 2022, the Company acquired 100% of the voting rights of
GP Service (UK) Limited ("GPS") a non-listed company based in UK and
specialising in care telemedicine provider in exchange for a net consideration
of £13,498 thousand ("Net Consideration"). The Net Consideration was
satisfied by the allotment of 94,133,645 B ordinary shares of 0.00001 pence
each in the capital of Kanabo GP Limited, a subsidiary of Kanabo Group Plc,
at a price of 12.65 pence per share ("Consideration Shares"). It has been
agreed as part of the acquisition that the principal and interest owed as at
completion by GPS to MEIF WM Debt LP (£1,591 thousand) will be repayable
by the Company by the allotment of 12,574,931 ordinary shares within 18
months based on the same price of 12.65 pence per share.
The fair values of the identifiable assets and liabilities of GPS as at the
date of acquisition were:
Fair value recognised
on acquisition
£'000
Assets
Property, plant, and equipment 11
Intangible assets 116
Cash and cash equivalents 235
Trade receivables 13
Other receivables 77
452
Liabilities
Interest-bearing loan (500)
Trade payables (19)
Other payables (77)
Total liabilities (596)
Total identifiable net liabilities at fair value (144)
Other intangible assets arising on acquisition 9,007
Deferred taxes over amortised assets (1,711)
Goodwill arising on acquisition 6,347
Purchase consideration transferred 13,499
Other intangible assets arising on acquisition include the technology and
GPS's brand which was acquired through business combinations. The management
assessment the lifetime of these assets for a minimum of 5 years and as a
result recorded amortizations expenses in the amount of £758 thousands.
8. Share-based payments
a. Warrants
During the reporting period 3,231,501 warrants exercise to shares, the net
proceeds summed to £323 thousands. In addition, 6,422,711 warrants forfeited.
See note 9.a regarding warrants issued during the reporting period.
b. Options
During the reporting period 290,818 options exercise to shares, the net
proceeds summed to £12 thousands.
No new options were issued during the reporting period.
After the reporting period, 22,759,150 share options were granted to employees
and senior executives under the options plans.
The total share-based payment charge in the period was £354 thousand. The
share-based payment charge was calculated using the Black-Scholes model. All
warrants and options have an exercise period between one and three years from
the date of issue. The total of the share-based payment charge has been
simultaneously credited to retained earnings.
Share-based payments charge for the reporting period:
For the six months ended 30 June For the year ended 31 December
2022 2021 2021
£ '000
Research and development 17 3 6
Sales and marketing 129 41 218
General and administration 208 116 436
354 160 660
9. General and administration
For the six months ended 30 June For the year ended 31 December
2022 2021 2021
£ '000
Salaries and related expenses 431 295 676
Share-based payment expense 208 116 436
Insurance 35 82 100
Professional services (*) 610 324 599
Rent and related expenses 40 20 52
Depreciation 27 5 7
Amortization 680 - -
IT Development and Licenses 45 4 12
Travel and accommodation 70 9 54
Patent - 8 13
Other 20 25 51
Total 2,166 888 2,000
10. Other expenses
Other expenses include acquisition-related transaction costs which were
expensed as incurred and included as other expenses in total amount of £1,067
thousands.
11. Loss per share
The basic earnings per share is calculated by dividing the loss attributable
to the ordinary shareholders of the Company by the weighted average number of
Ordinary shares in issue during the period, excluding Ordinary shares
purchased by the Company and held as treasury shares.
For the six months ended 30 June For the year ended 31 December
2022 2021 2021
Unaudited Audited
Loss attributable to equity holders of the Company (£'000) (3,773) (2,377) (4,551)
Weighted average number of shares in issue 408,018,768 278,192,783 324,287,001
Loss per share pence (0.92) (0.85) (1.40)
Due to the loss incurred in the period under review, the dilutive securities
have no effect at 30 June 2022.
12. Interest bearing loan
Interest-bearing loan represent a Coronavirus Business Interruption Loan
Scheme (CBILS) granted to GP Service (UK) Limited on 22 January 2021, carry a
fixed rate interest of 9% and repayable by instalments over a 3-year period
commencing March 2022.
13. Events during reporting period
a. On 21 February 2022 ("admission date"), the authorized share capital
was increased by £2,250 thousand (before costs) by the issue of 28,125,000
ordinary shares of 2.5 pence each. On the admission date, the Group
additionally granted a half warrant to the noteholders to subscribe for an
additional half a new ordinary share at an exercise price of 16 pence for
period of 18 months following Admission Date. And additional half warrant to
the noteholders to subscribe for an additional half a new ordinary share at an
exercise price of 24 pence for period of 18 months following Admission Date.
Total warrants issued sum to 28,125,000. The warrants were not issued for
goods or services provided and therefore fall outside the scope of IFRS 2 and
do not require fair valuing.
b. On 22 December 2021, Kanabo Research Ltd ("Kanabo Research") (a
wholly owned subsidiary of the Company) signed a lease agreement with a third
party to rent space in Israel, in exchange for a total ILS 24 thousand per
month linked to the Consumer Price Index. The start date of the rental
agreement was agreed between the parties on 17 March 2022. The lease agreement
is for three years and includes an extension option for three more years. If
the Kanabo Research exercising the rent extension option, the monthly rent
will be updated with an increase of 6%. Kanabo Research exercises significant
discretion in examining whether it is reasonably certain that extension option
will be exercised. At date the lease began, the company recognized a right of
use in the property against a lease obligation in the amount of £327 thousand
(ILS 1,399 thousand). To secure the lease agreement, the company provided a
deposit in the amount of £33 thousand (ILS 132 thousand).
During 2022, the Kanabo Research recognized depreciation expenses in the
amount of approximately £18 thousand as well as financing expenses in the
amount of £12 thousand. The annual interest rate for capitalization that was
applied for the purpose of calculating the obligation at the start of the
lease was 7.5%.
c. In March 2022, Kanabo Research Ltd ("Kanabo Research") (a wholly
owned subsidiary of the Company) ("Kanabo Research") and a third-party
partners formed an entity, Kanabo Agritec Ltd. ("Agritec"), to enter into
agreements with third parties at minimal cost to leverage the Company's
Intellectual Property for the cultivation, processing, and production of
cannabis products. Kanabo Research holds 40% of the voting shares in this
entity. The third-party hold the remaining 60% of the voting shares. Kanabo
Research committed to finance Agritic up to an amount equal to 75% of the
principal amount requested by Agritc, the other Founders, together, will lend
up to the remaining 25% of the principal amount in equal portions among them.
As of the reporting period Kanabo Research loaned Agritec total amount of ILS
100 thousand (approximately £24 thousand).
Under the contractual arrangement with the third-party partners, Kanabo
Research has a majority representation on the entity's board of directors and
the Kanabo Research's approval is required for all major operational
decisions, the Kanabo Research assessed that the voting rights in Agritc are
not the dominant factor in deciding who controls the entity. Therefore, the
Kanabo Research concluded Agritc is a structured entity under IFRS 10
Consolidated Financial Statements and that the Kanabo Research controls it
with no non-controlling interests. The voting shares of the third-party
partner are accounted for as a financial liability. Therefore, Agritc is
consolidated in the Group's consolidated financial statements. The shares of
the third-party partner are recorded as a long-term loan and the return on
investment is recorded as interest expense.
14. Subsequent events
a. On 25 July 2021 the Company signed a head of agreement with 11157353
Canada Corp. a company incorporated in Canada ("Materia"). During the
reporting period the Company decided not to proceed with the proposed
acquisition of Materia. The Company has now decided that the benefits of
working with Materia, including its GMP facility in Malta, are now most
effectively executed through a non-dilutive Strategic Partnership between the
two independent companies, as opposed to the previously proposed all-share
acquisition. The Company started the negotiations with Materia for full
repayments of the loans granted during 2021 in the total amount of CAD 1,000
thousand. After the reported period a repayment of CAD 55 thousand has been
received. The parties remain in negotiations for full repayment of the loans.
During the annual reports of 2021, following the assessment of the Company,
the loan receivable has been impaired in full following assessment made by the
Directors.
b. After the reporting period, the Company signed a compromise agreement
with GPS's founder and former CEO under which he left the Group's employment.
Under the agreement, he will return 25% of the shares in the Company that he
received as consideration for the acquisition. The Company also agreed to make
a one-off termination payment of £25 thousands in exchange for a waiver of
all potential claims.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR BKCBPABKDQCBRecent news on Kanabo
See all newsREG - Kanabo Group PLC - Annual Financial Report
AnnouncementREG - Kanabo Group PLC - Expansion of Treat It to Mental Health Treatments
AnnouncementREG - Kanabo Group PLC ICU Holdings Limited - Holding(s) in Company
AnnouncementRCS - Kanabo Group PLC - Germany Medical Cannabis Legislation Reform
AnnouncementREG - Kanabo Group PLC - Agritec Update
Announcement