REG - Kanabo Group PLC - Half-year Report
30/09/2024 15:00
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RNS Number : 2951G Kanabo Group PLC 30 September 2024
30 September 2024
Kanabo Group Plc
("Kanabo", the "Group" or the "Company")
UNAUDITED HALF-YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
Kanabo Group plc (LSE: KNB), a health tech company with digital health
services and specialist medicines, announces results for the six months ended
30 June 2024 ("H1 2024").
Throughout H1 2024, Kanabo has continued its mission to be a key player in
advancing innovative and accessible healthcare solutions and treatments. This
comprises digital primary and secondary care clinics, including The GP Service
telehealth platform and the Treat-It clinics, which are integrated with a
supply chain that delivers medications directly to patients and includes
Kanabo's unique metered dose inhaler products.
Kanabo's major achievement in H1 2024 was to launch the first Treat-It clinic,
a walk-in clinic offering specialised medicines, including medicinal cannabis,
for pain and mental health concerns. Over the course of H1 2024, the Treat-It
clinic franchise has been expanded to 14 further in-person locations. These
walk-in pain clinics will leverage the online Treat-It services to address
pain and mental health concerns. This forms part of Kanabo's expansion plan,
as set out in the 2023 yearly report, to expand the in-pharmacy clinic
franchise and provide accessible healthcare solutions.
Kanabo has also made significant progress in its ambitions to introduce safe
yet innovative technologies to the digital health space. These include:
· A new pilot programme was launched for an AI chat-to-prescription
service, which has already seen some prescriptions successfully dispensed. The
Company believes this could assist medical professionals with the triage
process and help streamline prescriptions.
· The G.P. Services (UK) Ltd, the Company's fully owned subsidiary, has
upgraded the e-Script system, allowing patients to have their prescription
filled at any pharmacy in the UK.
Other H1 2024 Highlights:
● Kanabo signed with over 250 referral pharmacies, who will be able to
refer patients to the online Treat-It clinic, further expanding the reach and
accessibility of Kanabo's services, as announced on 4 June 2024.
● Kanabo has introduced a new medical cannabis formulary system, with
real-time supply chain inventory management which will improve both product
information availability for medical professionals and product access for
patients, to select partners as part of an initial trial.
● Kanabo's partially owned subsidiary, Kanabo Agritec Ltd ("Agritec"),
received a payment of approximately €292 from the project during H1 2024,
representing 77% of the payments of Phase 1. The Group continue to work with
Taima to complete Phase 1 of the project, at which point, the Spanish Agency
of Medicines and Medical Devices ("AEMPS") will inspect the facility. Subject
to successfully passing the inspection, AEMPS will grant a licence for the
production and manufacturing of cannabis and its products. With the Group's
support, Taima will then move on to the delivery of Phase 2, which - upon
successful conclusions would result in the facility being fully operational
for the production of cannabis flowers.
H1 2024 Financial update:
● Kanabo achieved a substantial 55% increase in revenues over the same
period last year, reaching £694k in H1 2024 (H1 2023: £449k), demonstrating
ongoing commercial progress.
● The operating EBITDA loss for H1 2024 was £0.98m; this was reduced
10% compared to H1 2023 (£1.1m) and 42% compared to H1 2022 (£1.7m) with
strategic initiatives driving improved financial performance.
● On 30 June 2024, the cash position of the group was £2,086,000
(cash and cash equivalents of £1,544,000 and short-term deposits of
£542,000).
Post Period End and Outlook:
● Medical inhaler certification pending - Our partner team,
responsible for corresponding with the Notified Body, has submitted revisions
to the application file for our medical device, pursuant to a request from the
Notified Body. At this time the issuance of a certification is pending the
Notified Body's further review of the application.
● Positive outlook for growth - The Board remains confident in both
the short and medium-term prospects for the Company. We believe our innovative
new products and commitment to technological innovation will help the Company
grow during this period of sustained pressure on the medical sector.
Looking forward, the company aims to build upon the strategic goals set out in
the 2024 annual financial report, including:
1. Launching New Medical Cannabis Products to enhance patient offerings
and increase profit margins.
2. Expanding adoption of our E-script system across more pharmacies in
the U.K. and exploring international opportunities.
3. Move from pilot to full-scale launch by year-end, enhancing
consultation capacity and patient retention.
4. Expanding distribution in Germany led by the medical device vape once
fully certified and registerd.
Avihu Tamir, Chief Executive Officer of Kanabo, commented:
"The first half of 2024 has been a key milestone for Kanabo Group as we
continue to advance our strategic plan. Achieving a 55% increase in revenues
underscores the strong demand for our digital health services and specialised
medicines. After a period of infrastructure building, our development and
clinical teams are now executing exceptionally well. Our expansion of
in-pharmacy clinics and the launch of innovative systems, like our upgraded
e-script and AI-powered services, will greatly improve patient access and
operational efficiency. These developments will strengthen our revenue streams
and enhance our market position, providing greater value to our shareholders."
Enquiries:
Kanabo Group plc
Avihu Tamir, Chief Executive Officer
Ian Mattioli, Non-Executive Chair of the Board
Peterhouse Capital Ltd (Financial Adviser) +44 (0)20 7469 0930
Eran Zucker / Lucy Williams / Charles Goodfellow
About Kanabo Group plc
Kanabo Group plc (LSE: KNB) is a digital health company committed to
transforming patient care through its innovative technology platform and
specialised treatment offerings. Since its inception in 2017, Kanabo has been
focused on researching, developing, and commercialising regulated medicinal
cannabis-derived formulations and therapeutic inhalation devices.
Kanabo's NHS-approved online telehealth platform, The GP Service, provides
patients with video consultations, online prescriptions, and primary care
services. Leveraging its telehealth capabilities, in February 2023, Kanabo
launched Treat-It, an online clinic focused on chronic pain management that
provides patients with secondary care. In June 2024, the Treat-It partnership
was expanded to 14 other in-pharmacy locations.
With its two complementary business divisions, Kanabo has established itself
as an end-to-end digital health provider. It offers telehealth consultations,
prescriptions and tailor-made treatments.
The Company's partially owned subsidiary, Kanabo Agritec Ltd, is a cultivation
consultancy supporting cannabis businesses in developing new farms through
infrastructural, research, and product guidance. These farms deliver
high-quality raw materials for Kanabo's formulas and product line.
At Kanabo Group Plc, we are dedicated to providing patients with the highest
quality medical treatments and more accessible healthcare experiences.
Visit (http://www.kanabogroup.com/) www.kanabogroup.com
(http://www.kanabogroup.com/) for more information.
Operational Review
We are pleased to report significant progress during the H1 2024 as we
continue to establish Kanabo Group as a leading end-to-end provider of digital
health services and specialised medicines. Leveraging our extensive pharmacy
network and innovative platforms, we have expanded the reach of our digital
health services and enhanced our medicinal cannabis product portfolio. We are
focused on delivering steady financial growth and improving the operational
efficiencies.
Our operations remain concentrated on two core divisions:
1. Digital Health Services
2. Specialised Medicines, including medicinal cannabis
Digital Health Services
Development and Pilot of AI-powered Chat-to-Prescription Service
The Company has been developing an AI-powered chat-to-prescription service for
streamlined triage in medicinal consultations. We have made significant
progress in the development and deployment of this service:
· Pilot Program Initiated: The Company has started the pilot with
our first client and have observed patients successfully receiving medication
through our service.
· Future Plans:
· The Board believes the gross margin from the new service could be
300% higher than that of some traditional video- based healthcare services.
· The Board believes that by the end of 2024, 70% of The GP Service
patients will be using the new AI-powered chat-to-prescription service.
The Board believes this innovative service lays the groundwork for scaling our
consultation services and enhances efficiency in patient care.
Expansion of In-Pharmacy Clinics and Strengthening Referral Network
In alignment with our strategic goals, the Company has significantly expanded
our in-pharmacy clinic network and strengthened our referral network:
· We launched 14 new in-pharmacy clinics across the U.K.,
complementing our online consultation services.
· We also opened a physical clinic in partnership with 360 Med
Medical Centre in Muswell Hill, London, on 4 June 2024.
· Our referral network has grown to over 250 pharmacies in the
U.K., enabling seamless patient referrals to our Treat-It online clinic.
These clinics enhance patient access to medical cannabis treatments and offer
in-person consultations for those who prefer face-to-face interactions. The
360 Med Medical Centre provides a broad range of services, including primary
care, mental health, women's health, men's health, pain management, and health
screening tests.
Upgrade of the E-Script System
Our subsidiary, The G.P. Service (U.K.) Ltd has developed and launched a pilot
for an upgraded e-script system for secure prescription dispensing:
· Launched across the U.K. in September 2024, this upgrade enables
patients to use their prescriptions at any pharmacy in the U.K.
· Key benefits include:
· Secure, efficient, and accurate prescription dispensing across
pharmacies;
· Compliance with all relevant healthcare regulations and data
protection standards;
· Potential to significantly reduce prescription errors and improve
patient safety; and
· Enhanced patient convenience by allowing prescription fulfilment
at any pharmacy nationwide.
We expect this upgraded system to mark a significant advancement in digital
healthcare solutions, enhancing the efficiency of our services and further
solidifying our position as a leader in digital health.
Specialised Medicines
Introduction of Medical Cannabis Formulary System
Continuing our commitment to technological innovation, we have unveiled an
advanced medical cannabis formulary system featuring real-time supply chain
inventory management to address challenges in the U.K. medical cannabis supply
chain:
· Key features include:
· Real-time inventory tracking from pharmacies to doctors and
patients.
· Enables healthcare providers to make informed prescribing
decisions based on current product availability.
· Improves patient access to medicinal cannabis products.
· Rollout:
· Currently being rolled out to select partners, with plans for
wider implementation in the coming weeks.
The Directors believe this system represents an advancement in the medical
cannabis sector, streamlining the prescription process and enhancing supply
chain efficiency to overcome existing challenges.
New medical cannabis products in the UK market
The Company has signed a distribution agreement with a German wholesaler to
bring new premium medical cannabis flowers to the U.K. market, expected to be
available by the end of the year. This partnership will enhance the offering
to patients and increase profit margins for the Company.
Medical Device CE Mark Progress
The Company has made progress towards obtaining CE Mark accreditation for the
medicinal inhaler device.
· The Notified Body has reviewed the device file and requested
revisions. Our team and partners have addressed these corrections to ensure
compliance.
· After submitting the updated documentation, we await the Notified
Body's response. Although the certification process has been delayed, we
remain focused on obtaining the CE Mark accreditation.
Kanabo Agritec ("Agritec")
Our partially owned subsidiary (40%), Agritec, continues to make progress:
● Development of Indoor Medical Cannabis Cultivation Facility:
Progressing with the development of a cannabis cultivation facility in Madrid,
Spain, in partnership with Taima Growth S.L.; This highlights Kanabo's
agricultural technology and consultancy growth, and a revenue in a total
amount of €380K is expected to be recorded.
● Financial Milestones: Received a payment of €292,000 from the
project during H1 2024, and additional €29,000 from the project during Q3
2024 (out of €380,000), with additional payments in a total amount of
€59,000 expected in Q4 2024 or early Q1 2025.
● Project Timeline: Completion of the build is expected by October
2024, after which an inspection by the Spanish Agency of Medicines and Medical
Devices (AEMPS) will take place.
● Operational Plans: Cultivation and production are scheduled to
commence within 3-6 months following successful inspection and licensing.
● Production Capacity: Upon successful licensing and being fully
operational, the facility will have the capacity to yield up to 3,000 kg of
cannabis flowers annually.
Corporate Activity
Significant Cost Efficiency Improvements Through Automation
Operational efficiency activities have marked significant advancements, driven
by the recent implementation of automation across our business functions.
Since May 2024, Kanabo has embarked on a strategic cost-saving initiative that
has enhanced the Company's cost efficiency and should position the Company for
sustained growth.
· Strategic Automation Implementation:
· Initiated in May 2024, our automation strategy targets key
business areas to optimise operations and reduce costs.
· Focus Areas: Customer Support and Clinical Activities.
· Key Achievements and Benefits:
· Cost Reduction: Implementing advanced I.T. automation tools has
led to cost savings in customer support and clinical operations. We anticipate
these savings will improve our overall profitability.
· Scalability: The automation tools deployed are scalable, enabling
Kanabo to efficiently manage growth and expand our services without
proportionate increases in operational costs.
· Financial Impact and Future Outlook:
· Cost Efficiency: Early indicators show a reduction in operational
costs within the first few months of automation implementation.
R&D / Investment
the Company's commitment to innovation remains unwavering.
· The Company is continuously seeking to enhance its development
capabilities and have a better capacity and speed for development.
· The Company has also upgraded the e-script system, the medical
cannabis formulary system, and the AI-powered chat-to-prescription service,
which the is expects to give the Company technological advancements in
prescription management, supply chain efficiency, and patient triage.
Post Period End
Since 30 June 2024, we have:
· Upgraded the e-script system in September 2024, enhancing our
service delivery and operational efficiency.
· Introduced the medical cannabis formulary system, currently
rolling out to select partners.
· Initiated the pilot of our AI-powered chat-to-prescription
service, with successful adoption by the first client, enhancing patient
access and operational efficiency.
· Launch of new medical cannabis products in the U.K. market.
Summary and Outlook
Reflecting on our objectives set six months ago, we have achieved significant
milestones:
1. In-Pharmacy Clinic Expansion
· The Company has exceeded its target by launching 14 new clinics,
ahead of schedule.
2. Primary Care Platform Expansion
· Successfully initiated the pilot of the Company's AI-powered
chat-to-prescription service with the first client, observing successful
adoption.
3. German Market Distribution Launch
· Prepared for distribution expansion into Germany upon CE Mark
approval.
4. Treat-It Platform Expansion
· Launching a Software as a Service (SaaS) solution to enable other
providers to utilize the Treat-It platform, which is expected to launch by the
end of the year.
· Extends service capabilities beyond direct offerings.
Future Milestones for 2024
1. Launch of New Medical Cannabis Products in the UK Market
· Introduce new premium medical cannabis flowers to enhance patient
offerings and increase profit margins.
2. Full Deployment of AI-powered Chat-to-Prescription Service
· Transition 70% of The GP Service patients to the new AI-powered
chat-to-prescription service by the end of 2024.
· Capitalise on the potential 300% increase in gross margin
compared to some traditional video-based healthcare services.
3. Wider Implementation of Technological Innovations
· E-script system: Expand adoption across more pharmacies in the
U.K. and explore international opportunities.
· AI-powered chat-to-prescription service: Move from pilot to
full-scale launch by year-end, enhancing consultation capacity and patient
retention.
The Directors believe that the persistent pressures on the UK's National
Health Service (NHS) will likely sustain and increase the demand for
independent healthcare services like ours.
The recent upgrade of the Company's state of the art e-script system (a new
pilot programme), coupled with its innovative medical cannabis formulary
system and AI-powered chat-to-prescription service (a new pilot programme),
positions the Company firmly within the market.
These advancements streamline the prescription and supply chain processes and
improve patient access and satisfaction, thereby driving growth and
profitability. As a result, the Directors believe Kanabo Group is
well-equipped to meet the evolving demands of the healthcare sector and
deliver substantial value for shareholders.
The Board remains steadfast in its confidence in our strategic direction and
ability to scale the business effectively. We are committed to addressing the
dynamic needs of the healthcare industry through continuous innovation and
operational excellence. We greatly value the continued support of shareholders
and are excited to share future successes as we advance our mission to
transform healthcare.
Ian Mattioli & Avihu Tamir
Chair of the Board & Chief Executive Officer
30 September 2024
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 profit and loss for the period ended 30 June 2024
For the six months ended 30 June For the year ended 31 December
2024 2023 2023
£ 000 £ 000 £ 000
Revenue 694 449 895
Cost of sales 661 372 761
Gross profit 33 77 134
Research and development expenses 96 214 312
Sales and marketing expenses 272 275 598
General and administration expenses 1,399 1,270 2,978
Reversal of impairment - - (82)
Impairment of intangible assets and goodwill - - 4,448
Other gains - including acquisition and listing costs (38) (322) (327)
Operating loss (1,696) (1,360) (7,793)
Net finance expenses (59) (201) (202)
Loss before income tax expense (1,755) (1,561) (7,995)
Income tax expense - - -
Loss for the period (1,755) (1,561) (7,995)
Attributable to:
Equity holders of the parent (1,751) (1,557) (7,987)
Non-controlling interests (4) (4) (8)
(1,755) (1,561) (7,995)
Loss (basic and diluted) per share from continuing operations attributable to
the equity owners
Basic and diluted loss per share (pence per share) (0.28) (0.35) (1.49)
Unaudited consolidated statement of comprehensive loss for the period ended 30 June 2024
For the six months ended 30 June For the year ended 31 December
2024 2023 2023
£ 000 £ 000 £ 000
Loss for the period (1,755) (1,561) (7,995)
Other comprehensive income for the period
Items that may be subsequently reclassified to the profit or loss:
Foreign operations - foreign currency translation differences 59 169 117
Total items that may be reclassified to profit or loss 59 169 117
Total comprehensive loss (1,696) (1,392) (7,878)
Attributable to:
Equity holders of the parent (1,692) (1,388) (7,870)
Non-controlling interests (4) (4) (8)
(1,696) (1,392) (7,878)
Unaudited consolidated statement of financial position as at 30 June 2024
30 June 31 December
2024 2023 2023
Unaudited Unaudited Audited
£ 000 £ 000 £ 000
ASSETS
Non-current assets
Intangible assets and goodwill 4,380 9,575 4,726
Property, plant, and equipment 36 82 49
Right-of-use asset - 255 -
Long-term deposit - 28 -
4,416 9,940 4,775
Current assets
Inventories 52 77 56
Trade receivables 10 42 20
Other receivables 298 259 290
Short-term deposits 542 13 1,529
Cash and cash equivalents 1,544 4,441 1,681
2,446 4,832 3,576
Total assets 6,862 14,772 8,351
EQUITY AND LIABILITIES
Equity
Issued capital 15,811 14,331 15,811
Share premium account 7,251 7,169 7,251
Merger reserve 17,495 15,957 17,495
Share-based payments reserve 666 963 925
Share to be issued reserve 1,591 4,691 1,591
Reverse acquisition reserve (14,968) (14,968) (14,968)
Foreign currency translation reserve 190 183 131
Accumulated loss (22,112) (14,541) (20,723)
Equity attributable to equity holders of the parent 5,924 13,785 7,513
Non-controlling interests (15) (7) (11)
Total equity 5,909 13,778 7,502
Non- current liabilities
Interest-bearing loan and borrowings 73 397 139
73 397 139
Current liabilities
Trade payables 377 88 163
Other payables 370 317 414
Interest-bearing loan and borrowings 133 192 133
880 597 710
Total liabilities 953 994 849
Total equity and liabilities 6,862 14,772 8,351
Unaudited consolidated statement of changes in equity for the period ended 30 June 2024
Attributable to owners of the Company
Share capital Share premium account Merger reserve Share based payments reserve Share to be issued reserve Reverse acquisition reserve Foreign currency translation reserve Accumulated loss Total Non-controlling interests Total equity
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
As at 1 January 2023 (audited) 10,573 6,850 11,393 1,715 10,476 (14,968) 14 (13,605) 12,448 (3) 12,445
Loss for the year - - - - - - - (7,987) (7,987) (8) (7,995)
Other comprehensive income - - - - - - 117 - 117 - 117
Total comprehensive loss - - - - - - 117 (7,987) (7,870) (8) (7,878)
Issue of share capital 2,378 281 - - - - - - 2,659 - 2,659
Acquisition of a subsidiary 2,783 - 6,102 - (8,885) - - - - - -
Debt settlements 77 120 - - - - - - 197 - 197
Options expiration - - - (869) - - - 869 - - -
Share-based payments - - - 79 - - - - 79 - 79
As at 31 December 2023 (audited) 15,811 7,251 17,495 925 1,591 (14,968) 131 (20,723) 7,513 (11) 7,502
Loss for the period - - - - - - - (1,751) (1,751) (4) (1,755)
Other comprehensive income - - - - - - 59 - 59 - 59
Total comprehensive loss - - - - - - 59 (1,751) (1,692) (4) (1,696)
Options expiration - - - (362) - - - 362 - - -
Share-based payments - - - 103 - - - - 103 - 103
As at 30 June 2024 (unaudited) 15,811 7,251 17,495 666 1,591 (14,968) 190 (22,112) 5,924 (15) 5,909
Attributable to owners of the Company
Share capital Share premium account Merger reserve Share based payments reserve Share to be issued reserve Reverse acquisition reserve Foreign currency translation reserve Accumulated loss Total Non-controlling interests Total equity
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
As at 1 January 2023 (audited) 10,573 6,850 11,393 1,715 10,476 (14,968) 14 (13,605) 12,448 (3) 12,445
Loss for the period - - - - - - - (1,557) (1,557) (4) (1,561)
Other comprehensive income - - - - - - 169 - 169 - 169
Total comprehensive loss - - - - - - 169 (1,557) (1,388) (4) (1,392)
Acquisition of a subsidiary 1,821 - 4,564 - (6,385) - - - - - -
Issue of share capital 1,910 210 - - 540 - - - 2,660 - 2,660
Debt settlements 27 109 - - 60 - - - 196 - 196
Share-based payments - - - (131) - - - - (131) - (131)
As at 30 June 2023 (unaudited) 14,331 7,169 15,957 963 4,691 (14,968) 183 (14,541) 13,785 (7) 13,778
Unaudited consolidated statement of cash flows for the period ended 30 June 2024
For the six months ended 30 June For the year ended 31 December
2024 2023 2023
£ 000 £ 000 £ 000
Operating activities
Loss before tax (1,755) (1,561) (7,995)
Adjustments to reconcile profit before tax to net cash flows:
Reversal of impairment - - (82)
Share-based payment expense / (gain) 103 (131) 79
Depreciation of property, plant and equipment and right-of-use asset 11 38 74
Amortisation of intangible assets and impairment of goodwill 636 678 1,378
Impairment charge on receivables 2 1 -
Loss on current financial asset - 158 158
Net finance (income)/ expenses (13) 27 31
Impairment of intangible assets and goodwill - - 4,448
Loss/(gain) from sale of property, plant and equipment (1) - 41
Other gain - - (20)
Working capital changes:
Change in trade receivable 8 - 23
Change in other receivable (8) (103) (103)
Change in inventories 4 4 25
Change in trade payables 216 (65) 10
Change in other payables (44) (634) (536)
(841) (1,588) (2,469)
Interest paid (11) (27) (51)
Net cash flows used in operating activities (852) (1,615) (2,520)
Investing activities
Purchase of property, plant, and equipment - (3) (25)
Proceeds from sale of property, plant and equipment 2 - 5
Proceeds from sale financial asset - 333 333
Investment in short term deposits 1,011 14 (1,500)
Development expenditures (291) (209) (508)
Net cash flows from/ (used in) investing activities 722 135 (1,695)
Financing activities
Share issue net of issuing cost - 2,660 2,740
Share issuing cost - - (81)
Receipts of short and long-term loans - - 82
Repayment of lease liability - (22) (43)
Repayment of borrowings (66) (67) (133)
Net cash flows (used in)/ from financing activities (66) 2,571 2,565
Net increase (decrease) in cash and cash equivalents (196) 1,091 (1,650)
Net foreign exchange difference 59 146 127
Cash and cash equivalents at 1 January 1,681 3,204 3,204
Cash and cash equivalents at end of the period 1,544 4,441 1,681
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 2024 were authorised for issue in accordance with a resolution of the
Directors on 30 September 2024.
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 2024 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
2023.
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 2023.
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 2023.
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 2023. There have been
no changes in any risk management policies since the year end.
5. Going concern
The preparation of the financial statements requires an assessment on the
validity of the going concern assumption.
The Board of Directors is required to satisfy themselves that it is reasonable
for them to conclude whether it is appropriate to prepare the financial
statements on a going concern basis, and as part of that process they have
followed the Financial Reporting Council's guidelines ("Guidance on the
Going concern Basis of Accounting and Reporting on Solvency and Liquidity
Risk" issued April 2016).
As at 30 June 2024, the Group's cash position was £2,086,000 (cash and cash
equivalents of £1,544,000 and short-term deposits of £542,000). Based on the
above and the Group's current cash reserves and detailed cash forecasts
produced, the Board of Directors is confident that the Group will be able to
meet its obligations as they fall due over the course of the next 12 months at
the current rate of expenses, due to the expected income streams, possible
fund raise and the low level of committed expenditure relative to the
forecasted discretionary expenditure, which could be reduced or deferred.
However, the uncertainty relating to the timing of the new income streams and
any possible fund raise might cast a material doubt over the Group's ability
to continue as a going concern. The Chair of the Group committed to providing
financial support to the Group up to the maximum required amount in order to
allow its ongoing operations over the next twelve (12) months from the 30
September 2024, in accordance with the detailed cash forecasts produced.
6. Segment information
Following the acquisition of GP Service (UK) Limited ("The GP Service"),
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
The GP Service.
- 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 2024:
For the six months ended 30 June 2024:
Primary care Secondary care including development Total segments Adjustments and eliminations Consolidated
£ '000
Revenue
External customer 413 (*) 280 694 - 694
Inter-segment - - - - -
Total revenue 413 280 694 - 694
Results
Segment loss (1,233) (522) (1,755) - (1,755)
(*) Including income from Agritec in a total amount of £226,000.
For the six months ended 30 June 2023:
Primary care Secondary care Total segments Adjustments and eliminations Consolidated
£ '000
Revenue
External customer 395 54 449 - 449
Inter-segment - - - - -
Total revenue 395 54 449 - 449
Results
Segment loss (1,009) (552) (1,561) - (1,561)
The following table presents assets and liabilities information for the
Group's operating segments.
As at 30 June 2024:
Primary care Secondary care including development Total segments Adjustments and eliminations Consolidated
£ '000
Assets 4,815 5,191 10,006 (3,144) 6,981
Liabilities 3,613 484 4,097 (3,144) 1,072
As at 30 June 2023:
Primary care Secondary care Total segments Adjustments and eliminations Consolidated
£ '000
Assets 10,051 6,472 16,523 (1,751) 14,772
Liabilities 2,211 534 2,745 (1,751) 994
7. Share-based payments
The total share-based payment charge in the period was £103,000 (loss). The
share-based payment charge was calculated using the Black-Scholes model. All
granted options have an exercise period between two and three years from the
date of issue. The total of the share-based payment charge has been
simultaneously credited to retained earnings.
As of 30 June 2024, none of the options or warrants have been converted into
shares.
Share-based payments charge for the reporting period:
For the six months ended 30 June For the year ended 31 December
2024 2023 2023
£ '000
Cost of sales 3 8 14
Research and development 6 20 49
Sales and marketing 15 (75) (40)
General and administration 79 (84) 56
Total 103 (131) 79
8. General and administration
For the six months ended 30 June For the year ended 31 December
2024 2023 2023
£ '000
Salaries and related expenses 199 240 505
Share-based payment expense 79 (84) 56
Insurance 49 49 101
Professional services 267 209 528
Rent and related expenses 15 34 100
Depreciation 11 38 74
Amortisation 636 678 1,378
IT Development and licenses 47 28 70
Travel and accommodation 36 53 90
Other 60 25 76
Total 1,399 1,270 2,978
9. Other expenses
For the six months ended 30 June For the year ended 31 December
2024 2023 2023
£ '000
Acquisition and listing costs - 158 224
Reverse provision for agent fees - (524) (524)
Loss/(gain) from sale of property, plant, and equipment (1) - 41
Other gain - - (20)
Accrued income from R&D refund (37) (114) (206)
Loss on current financial asset - 158 158
Total (38) (322) (327)
10. 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
2024 2023 2023
Unaudited Audited
Loss attributable to equity holders of the Company (£'000) (1,755) (1,561) (7,987)
Weighted average number of shares in issue 632,427,870 445,982,665 536,803,686
Loss per share pence (0.28) (0.35) (1.49)
Due to the loss incurred in the period under review, the dilutive securities
have no effect on 30 June 2024.
11. Events after the reporting period
In August 2024, the Group's Chair and the Group's CTO purchased 150,000 and
75,187 the Group's ordinary shares, at the shares price of £0.0123 and
£0.0133, respectively.
After the purchase both hold 2.85% and 1.81%, respectively, of the issued
share capital of the Company.
***
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