REG - Kanabo Group PLC - Half-Year Results
29/09/2023 07:00
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RNS Number : 0720O Kanabo Group PLC 29 September 2023
29 September 2023
Kanabo Group Plc
("Kanabo", the "Group" or the "Company")
UNAUDITED HALF-YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2023
Kanabo Group plc (LSE: KNB), the patient-focused provider of digital health
services and specialist medicines, including medicinal cannabis, announces
results for the six months ended 30 June 2023 ("H1 2023").
Kanabo has evolved to be a digital health platform and is seeking to be a key
player in advancing innovative and accessible healthcare solutions and
treatments. Headquartered in the UK, Kanabo provides patients with accessible,
personalised care through its innovative end-to-end platform across both
digital primary and secondary care clinics. Primary care services provide
the first point of contact in the healthcare system and secondary care
services is the provision of more specialist expertise and care in respect of
a particular medical problem. The Group delivers digital primary care via The
GP Service telehealth platform and the recently launched Treat It online pain
clinic provides personalised secondary care services. Both are integrated
with a supply chain that delivers medications directly to patients and
includes Kanabo's unique metered dose inhaler products.
Through its end-to-end solution, Kanabo enables patients to seamlessly access
consultations, prescriptions, and treatments tailored to their needs. The
Company is continually identifying additional treatments not readily available
through traditional NHS channels to add to its portfolio, responding to
growing patient demand for personalised care and medicine.
As a patient-first business, Kanabo aims to empower people with their own
healthcare choices and make the process efficient, educational and accessible
for all.
H1 2023 Key Highlights:
● Revenue increased 88% to £0.45m (H1 2022: £0.24m), demonstrating
ongoing commercial progress.
● Operating loss reduced 63% to £1.4m (H1 2022: £3.72m), with
strategic initiatives driving improved financial performance.
● Cash at 30 June 2023 of £4.4m (31 Dec 2022: £3.2m), to support
the Group's growth plans.
● Completed a £2.74m fundraising by way of an oversubscribed
Placing in April 2023, reflecting investor confidence.
● Strengthened the Board with the Appointment of Ian Mattioli as
Chair and Sharon Malka as Non-Executive Director
Post Period End and Outlook:
● Medical inhaler completes all necessary stages for CE Mark,
certification pending - Our distinctive medical device inhaler has
successfully completed all necessary stages to become the first of its kind to
achieve CE mark certification. We anticipate formal certification to be
awarded in the coming months.
● Major contract for Kanabo Agritec ("Agritec") - In July, Agritec
secured a landmark deal to provide consultancy services for a cultivation and
production facility in Madrid.
● Kanabo now focused on growing two distinct but highly complementary
divisions which are founded on the team's combined knowledge of the medicinal
cannabis industry and digital health services.
● Positive outlook for growth - The Board remains confident in both
the short and medium-term prospects for the Company. We remain steadfast in
our commitment to increasing sales in existing markets while exploring
opportunities to expand into new geographies, whilst simultaneously further
developing our product and service offering.
Future milestones:
Over the next six months, our key priorities include:
· Expansion of primary care platform - launching a significant
expansion of our primary care platform, enhancing the patient experience by
facilitating direct access to treatments and medications without a preliminary
consultation. The initiative implements cutting edge technology to streamline
the process, which in turn will expand patient capacity in our clinics.
· Expansion of secondary care platform - leveraging our technology and
experience with launching Treat It to launch a similar service to tackle
additional areas where there is a significant unmet medical need. We have
identified the UK's mental health sector as the first additional sector into
which we will roll out our services. The UK mental health sector is under
well-documented pressure, and our intention is to expand our services in the
coming months to that area, addressing patient demand.
· Partnership with UK high street pharmacies - undertake a pilot
programme that will see Kanabo collaborate with physical high street
pharmacies to trial in-pharmacy consultations via our Treat It clinic, tapping
into the pharmacies' existing patient networks to broaden Kanabo's outreach
and addressable market.
· EU product expansion - pending receipt of CE mark for our VapePod MD
medical device inhaler, build on our UK footprint and expand our distributor
network outside of the UK across Europe to launch into appropriate new
territories, expanding our footprint and driving geographic diversification.
Avihu Tamir, Chief Executive Officer of Kanabo, commented:
"I'm excited about the progress we made in the first half of 2023, as we build
our position as a key player in primary and secondary digital health services
in the UK. With The GP Service and 'Treat It' fully integrated, we're not just
broadening our reach but also enhancing our capabilities. We're in the final
stages of rolling out new technology that will improve patient access to GP
treatments, making healthcare more accessible than ever.
"In addition to revolutionising secondary care with affordable, quick,
specialist consultations, we're exploring opportunities to expand beyond pain
management into other medical fields with significant unmet demand. As we look
ahead, our focus remains on growing our patient numbers and revenue while
staying committed to personalised, accessible healthcare."
Enquiries:
Kanabo Group plc via Vigo Consulting
Avihu Tamir, Chief Executive Officer +44 (0)20 7390 0230
Assaf Vardimon, Chief Financial 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
Vigo Consulting (Financial Public Relations/Investor Relations) +44 (0)20 7390 0230
Jeremy Garcia / Fiona Hetherington / Verity Snow
kanabo@vigoconsulting.com (mailto:kanabo@vigoconsulting.com)
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
providing patients with secondary care.
With its two complementary business divisions, Kanabo has established itself
as an end-to-end digital health provider, offering telehealth consultations,
prescriptions, alongside the delivery of tailored 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
I am delighted to report that Kanabo has continued to make significant
progress in the first half of 2023 and continued its strategic evolution to
becoming a digital health provider, giving patients access to a wide range of
treatment pathways, including primary and secondary care. The Group has
delivered a strong performance across both operating divisions in H1 2023,
resulting in an increase in revenues of 88% to £0.45m (H1 2022: £0.24m).
The Group has now fully embedded The GP Service (acquired in February 2022)
into its operations, creating a balanced business with two distinct but
complementary operating divisions with significant overlap: medicinal cannabis
and digital health services. Within the medicinal cannabis division, we have
continued to launch new products and deliver strong sales. Additionally,
Kanabo now has an established digital health services platform, which provides
customers access to online consultations with healthcare professionals. In
March of this year, we announced the launch of Treat It, our online medicinal
cannabis clinic, which symbolised the combination of both divisions. Patients
seeking treatment plans for chronic pain management are able to access online
consultations with healthcare professionals who, in turn, are able to
prescribe medicinal cannabis products, among others, as part of an innovative
treatment pathway, which is currently unavailable through other channels.
The Group remains focused on building an end-to-end digital health services
company that enables patients to take control of their own healthcare pathway
through providing access to personalised medical treatments and innovative
healthcare solutions, including medicinal cannabis. Furthermore, we are
developing additional technologies for the digital health platform that will
further improve access to secondary care - seeking to offer affordable
specialist consultations at a fraction of the cost and without the traditional
waiting times. Additionally, we are exploring opportunities to leverage our
expertise with our online chronic pain clinic and expand into complementary
medical fields.
Digital Health Services
We are delighted to report the digital health services division continues to
perform strongly following the integration of The GP Service. We are cognisant
of the platform's need to deliver a high-quality and seamless interface for
our customers and, to that end, we have invested in the suite of technology
tools, which enables customers to benefit from video consultations, digital
prescriptions and access to primary and secondary care services. Looking
forward, we will seek to expand the breadth of our online health services,
aiming to increase our addressable market and boost revenue through medication
sales.
Since the integration of The GP Service, we have seen demand for online
consultations increase exponentially, and the platform is now delivering more
than 1,000 monthly consultations (H1 2022: ~700 monthly consultations).
Furthermore, the network of pharmacies connected to our NHS-approved digital
health platform has grown to over 4,000 pharmacies.
In March 2023, we announced an exciting expansion of the online consultation
service with the launch of Treat It, Kanabo's dedicated online medicinal
cannabis clinic. The clinic - which is regulated by the Care Quality
Commission ("CQC") - aims to directly address the issue of limited access to
pain management treatments for those suffering from chronic pain. There are
estimated to be more than 8 million chronic pain patients in the UK, and they
often face difficulties accessing medical treatment as a result of long
waiting times, bureaucracy and affordability. The Treat It clinic enables
patients to access healthcare professionals via our digital healthcare
platform, who are able to prescribe a wide range of personalised treatments,
including the prescription of medicinal cannabis where appropriate.
As well as providing access to GP appointments for private individuals, the
Group also has a number of agreements with UK corporations to provide services
to its employees as part of a broader benefits package. Given the continued
pressures being experienced by the National Health Service in the UK, we
anticipate further demand for our online consultations going forward.
Specialised Medications
Kanabo's research and development ("R&D") team continue to develop and
launch additional products into the Group's portfolio, and in January
announced the launch of two new medicinal cannabis extract formulas for
inhalation. These have been specifically developed for patients suffering from
severe pain and are delivered via the Group's VapePod MD delivery device, our
medical-grade vaporiser, that ensures precise dosing. The R&D team
continually develops new formulae and products to ensure Kanabo retains its
reputation as a developer of innovative and cutting-edge products.
Post-period end, we were informed that the Group's VapePod MD delivery device
has made further progress towards achieving CE Mark approval. We expect the
device to be the first medical device-certified cannabis inhaler of its kind
to have achieved the CE Mark status, which will open up a wealth of
opportunities for Kanabo to expand its footprint across Europe. Upon receipt
of a CE Mark accreditation, the Group intends to progress the rollout across
certain European markets and will make further announcements in due course.
During the first half, the Group established a strategic partnership with the
largest independent wholesaler of medications to UK pharmacies. This, in turn,
provides Kanabo with robust import and distribution capabilities across the
country. This new partnership validates our truly end-to-end solution by
solidifying last-mile delivery and enabling future import of additional
specialised medications as we expand our online clinic offerings.
Kanabo Agritec
Kanabo Agritec ("Agritec") - a cannabis cultivation consultancy firm in which
Kanabo has a 40% stake -delivered first contract win in July 2023. Agritec
will work alongside its Spanish partner, Taima Growth S.L. ("Taima") to
establish a cultivation centre and will receive payment upon achieving certain
milestones across the project. Agritec is a dedicated consultancy focused on
the design build, operation and management of medicinal cannabis facilities.
The contract with Taima is for the development of an indoor medicinal cannabis
cultivation and processing facility in Madrid, Spain. The contract - split
over two phases - will see the facility granted a license for production and
manufacturing of cannabis, and once completed, will be capable of producing up
to 3,000kg of cannabis flowers annually.
Through our involvement with Agritec, Kanabo is not only able to leverage its
extensive knowledge and experience in establishing and optimising medicinal
cannabis facilities, but it also ensures that the Group has a diversified
supply chain through key offtake agreements.
Directorate & Personnel Changes
Over the course of the first half, we have significantly strengthened our
Board, most notably with the appointment of Ian Mattioli as Non-Executive
Chair. As co-founder and CEO of a leading UK pensions and wealth management
consultancy, Ian brings extensive experience in financial services, wealth
management and capital markets. Following Ian's appointment, Mr David Tsur,
who has served as Kanabo's Non-Executive Chair, moved to the role of Deputy
Chair, where we can continue to benefit from his knowledge and expertise as we
have done since the Company came to market.
Additionally, we announced the appointment of Sharon Malka, who has gained
significant experience with international healthcare and technology companies,
as Non-Executive Director.
We would like to thank both Dan Poulter and Gil Efron, who both stepped down
from the Board in the first half for their contributions to the business. We
wish Dan all the best as he focuses on his existing commitments outside of the
business and continue to send our best wishes to Gil as he continues with
rehabilitation following his accident.
Across the period, the Group has also transitioned a number of key roles out
of Israel, where employees typically command a higher salary, to the UK. This
move has not only simplified the operating structure of the business but has
also immediately triggered a reduction in the cost base.
Corporate activity
In May 2023, we announced a £2.74 million fundraising, which received strong
support from both existing and new investors, and also saw participation from
key members of the team, including Ian Mattioli (Chair), David Tsur (Deputy
Chair), Avihu Tamir (CEO) and Suleman Sacranie (CTO and Founder of The GP
Service).
Proceeds of this fundraising will enable Kanabo to pursue its key strategic
initiatives: to capitalise on the opportunity in both digital healthcare
services and the rising demand for medicinal cannabis products and other
innovative products. Proceeds have been allocated to expand the digital health
services division and to invest in product development, technology and network
growth.
The Group appointed MHA MacIntyre Hudson ("MHA") in March as the Company's
auditors, replacing Jeffreys Henry LLP ("Jeffreys Henry"), the Company's
previous auditors, following Jeffreys Henry's decision not to register
themselves with the Financial Reporting Council as an eligible auditor to
undertake Public Interest Entity audits.
Summary & Outlook
Kanabo is a well-balanced business boasting growing primary and secondary
digital healthcare services, alongside our core cannabis product development
competencies.
Our development and launch of new products remain a cornerstone of our
business and in maintaining our market leading position. We are recognised for
having cutting edge products and solutions and, to that end, our R&D team
continues to focus on the delivery of innovative formulae aimed at both the
medical and wellness markets.
The recently launched Treat It platform, which combines both elements of our
business, is also extremely well placed for growth. According to Statista, the
value of the medicinal cannabis market in Europe is expected to grow from $300
million in 2019 to over $2.5 billion in 2024 1 (#_ftn1) .
Furthermore, there is increased demand in the UK for private health services,
as outlined previously. Over 8 million people in the UK used online GP
services last year 2 (#_ftn2) , and the digital health market in the UK is
expected to reach £25 billion by 2025 3 (#_ftn3) . With our innovative
end-to-end solution, Kanabo is well-placed to benefit from this shift and
demand for accessible, personalised digital healthcare.
Over the next six months, our key priorities include:
· Expansion of primary care platform - launching a significant
expansion of our primary care platform, enhancing the patient experience by
facilitating direct access to treatments and medications without a preliminary
consultation. The initiative implements cutting edge technology to streamline
the process, which in turn will expand patient capacity in our clinics.
· Expansion of secondary care platform - leveraging our technology and
experience with launching Treat It to launch a similar service to tackle
additional areas where there is a significant unmet medical need. We have
identified the UK's mental health sector as the first additional sector into
which we will roll out our services. The UK mental health sector is under
well-documented pressure, and our intention is to expand our services in the
coming months to that area, addressing patient demand.
· Partnership with UK high street pharmacies - undertake a pilot
programme that will see Kanabo collaborate with physical high street
pharmacies to trial in-pharmacy consultations via our Treat It clinic, tapping
into the pharmacies' existing patient networks to broaden Kanabo's outreach
and addressable market.
· EU product expansion - pending receipt of CE mark for our VapePod MD
medical device inhaler, build on our UK footprint and expand our distributor
network outside of the UK across Europe to launch into appropriate new
territories, expanding our footprint and driving geographic diversification.
As a team, Kanabo believes there is a significant market opportunity for the
Group across both divisions. Demand for access to healthcare professionals
continues to rise, with the widely reported pressures on national health
systems resulting in increased waiting times and frustration from patients,
particularly those suffering from chronic pain. Our medicinal cannabis
products are also gaining traction in a growing market, and we believe there
is a real opportunity to expand our sales channels to other geographies both
within and outside of Europe.
Whilst we recognise the broader socio-economic pressures that are being felt
worldwide, the Board of Kanabo believe we are well placed to develop a scaled
business addressing demand across our sector, and in capitalising on a number
of near-term growth opportunities. We thank shareholders for their continued
support and look forward to continuing to update them on our progress.
Ian Mattioli & Avihu Tamir
Chair of the Board & Chief Executive Officer
29 September 2023
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 2023
For the six months ended 30 June For the year ended 31 December
2023 2022 2022
£ 000 £ 000 £ 000
Revenue 449 239 603
Cost of sales 372 151 404
Gross profit 77 88 199
Research and development expenses 214 181 597
Sales and marketing expenses 275 511 1,190
General and administration expenses 1,270 (*) 2,045 3,804
Reverse impairment of financial assets carried at amortised cost - - (59)
Other expenses (gains) - including acquisition and listing costs (322) 1,067 1,448
Operating loss (1,360) (3,716) (6,781)
Net finance expenses (201) (57) (89)
Loss before taxation from continuing operations (1,561) (3,773) (6,870)
Income tax benefits - (*)- -
Loss for the period (1,561) (3,773) (6,870)
Attributable to:
Equity holders of the parent (1,557) (3,778) (6,867)
Non-controlling interests (4) 5 (3)
(1,561) (3,773) (6,870)
Loss (basic and diluted) per share from continuing operations attributable to
the equity owners
Basic and diluted loss per share (pence per share) (0.35) (0.92) (1.65)
(*) A reclassification was carried out in accordance with 2022 audited annual
reports.
Unaudited consolidated statement of financial position as at 30 June 2023
30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
£ 000 £ 000 £ 000
ASSETS
Non-current assets
Intangible assets and goodwill 9,575 (*)13,286 10,044
Property, plant, and equipment 82 100 96
Right-of-use asset 255 309 282
Long-term deposit 28 - 31
Non-current financial asset - 750 -
9,940 14,445 10,453
Current assets
Inventories 77 69 81
Trade receivables 42 18 43
Other receivables 259 254 156
Current financial asset - - 491
Short-term deposits 13 51 24
Cash and cash equivalents 4,441 4,959 3,204
4,832 5,351 3,999
Total assets 14,772 19,796 14,452
EQUITY AND LIABILITIES
Equity
Issued capital 14,331 10,573 10,573
Share premium account 7,169 (*) 6,850 6,850
Merger reserve 15,957 (*) 14,221 11,393
Share-based payments reserve 963 1,077 1,715
Share to be issued reserve 4,691 (*)10,476 10,476
Reverse acquisition reserve (14,968) (14,968) (14,968)
Foreign currency translation reserve 183 (2) 14
Retained deficit (14,541) (10,491) (13,605)
Equity attributable to equity holders of the parent 13,785 17,736 12,448
Non-controlling interests (7) 5 (3)
Total equity 13,778 17,741 12,445
Non- current liabilities
Interest-bearing loan and borrowings 397 568 509
397 568 509
Current liabilities
Trade payables 88 139 153
Other payables 317 1,096 1,147
Interest-bearing loan and borrowings 192 252 198
597 1,487 1,498
Total liabilities 994 2,055 2,007
Total equity and liabilities 14,772 19,796 14,452
(*) A reclassification was carried out in accordance with 2022 audited annual
reports.
Unaudited consolidated statement of changes in equity for the period ended 30 June 2023
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 Retained deficit Total Non-controlling interests Total equity
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
As at 1 January 2022 (audited) 9,249 5,169 9,231 758 2,500 (14,968) (7) (6,748) 5,184 - 5,184
Loss for the year - - - - - - - (6,867) (6,867) (3) (6,870)
Other comprehensive income - - - - - - 21 - 21 - 21
Total comprehensive loss - - - - - - 21 (6,867) (6,846) (3) (6,849)
Acquisition of a subsidiary 533 - 2,162 - 7,976 - - - 10,671 - 10,671
Issue of share capital 703 1,434 - - - - - - 2,137 - 2,137
Exercise of options 7 5 - (10) - - - 10 12 - 12
Exercise of warrants 81 242 - - - - - - 323 - 323
Share-based payments - - - 967 - - - - 967 - 967
As at 31 December 2022 (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)
Issue of share capital 1,910 210 - - 540 - - - 2,660 - 2,660
Acquisition of a subsidiary 1,821 - 4,564 - (6,385) - - - - - -
Debt settlements 27 109 - - 60 - - - 196 - 196
Expiration of options - - - (621) - - - 621 - - -
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
Attributable to owners of the Company
Share capital Share premium Merger reserve 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 (*)5.169 (*) 9,231 758 2,500 (14,968) (7) (6,748) 5,184
Loss for the period - - - - - - - (3,773) (3,773)
Other comprehensive income - - - - - - 5 - 5
Total comprehensive loss - - - - - - 5 (3773) (3,768)
Acquisition of a subsidiary 533 - 4,990 - 7,976 - - - 13,499
Issue of share capital 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
As at 30 June 2022 (unaudited) 10,573 6,850 14,221 1,077 10,476 (14,968) (2) (10,486) 17,741
(*) A reclassification was carried out in accordance with 2022 audited annual
reports.
Unaudited consolidated statement of cash flows for the period ended 30 June 2023
For the six months ended 30 June For the year ended 31 December
2023 2022 2022
£ 000 £ 000 £ 000
Operating activities
Loss before tax (1,561) (3,773) (6,870)
Adjustments to reconcile profit before tax to net cash flows:
Net reverse losses on financial assets - - (59)
Share-based payment expense (131) 354 967
Depreciation of property, plant and equipment and right-of-use assets 38 27 69
Amortisation of intangible assets and impairment of goodwill 678 559 976
Provision for bad debts 1 - 3
Loss on current financial asset 158 - 259
Net finance expenses 27 30 56
Working capital changes:
Change in trade receivable - 5 (3)
Change in other receivable (103) 60 155
Change in inventories 4 (6) (18)
Change in trade payables (65) 78 92
Change in other payables (634) 646 677
Change in long term deposit 3 (31) (31)
(1,585) (2,051) (3,727)
Interest paid (27) (19) (52)
Net cash flows used in operating activities (1,612) (2,070) (3,779)
Investing activities
Purchase of property, plant, and equipment (3) (58) (68)
Proceeds from sale financial asset 333 - -
Acquisition of a subsidiary, net of cash acquired - 235 235
Investment in short term deposits 11 - (4)
Development expenditures (209) (86) (86)
Net cash flows from investing activities 132 91 77
Financing activities
Share issue net of issuing cost 2,660 2,137 2,137
Proceeds from exercise of warrants - 323 323
Proceeds from exercise of share options - 12 12
Receipts of short and long-term loans - 9 68
Repayment of lease liability (22) (14) (37)
Repayment of borrowings (67) (17) (100)
Net cash flows from financing activities 2,571 2,450 2,403
Net increase (decrease) in cash and cash equivalents 1,091 471 (1,299)
Net foreign exchange difference 146 11 26
Cash and cash equivalents at 1 January 3,204 4,477 4,477
Cash and cash equivalents at end of the period 4,441 4,959 3,204
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 2023 were authorized for issue in accordance with a resolution of the
directors on 27 September 2023.
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 2023 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
2022.
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 2022, except for the adoption of new standards
effective as of 1 January 2023. 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 2023, 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 2022.
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 2022. There have been
no changes in any risk management policies since the year end or as disclosed
in the prospectus.
5. Going concern
The preparation of the financial statements requires an assessment on the
validity of the going concern assumption.
The Directors are 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 2023, the Group's cash position was £4,441 thousand and it was
in a strong net current asset position. Based on the above, 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 their obligations as they fall due in the event of
no further funding being obtained due to the low level of committed
expenditure relative to the forecasted discretionary expenditure, which could
be reduced or deferred.
The impact of the risk factors such as high-interest rates and high inflation,
declining consumer power, Russia's invasion of Ukraine, and supply chain
disruptions had little effect on the business of the Group during 2022 and the
first half of 2023, following that the Directors do not believe that these
risks will have a significantly adverse impact on the Group in the foreseeable
future.
6. Segment information
Following the acquisition of GP Service (UK) Limited ("GPS"), 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 2023:
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)
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 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
As at 30 June 2022:
Primary care Secondary care Total segments Adjustments and eliminations Consolidated
£ '000
Assets (*) 13,841 6,445 20,286 (490) 19,796
Liabilities (*) 1,114 1,431 2,545 (490) 2,055
(*) A reclassification was carried out in accordance with 2022 audited annual
reports.
7. Share-based payments
During the reporting period, 25,050,00 share options were granted to employees
and senior executives under the options plans.
The total share-based payment charge in the period was £131 thousand (gain).
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.
During the reporting period, 34,722,222 warrants were granted to investors.
After the reporting period addition 12,847,221 warrants were granted see note
11.a. 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.
As of 30 June 2023, 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
2023 2022 2022
£ '000
Cost of sales 8 - 13
Research and development 20 17 68
Sales and marketing (75) 129 349
General and administration (84) 208 537
Total (131) 354 967
8. General and administration
For the six months ended 30 June For the year ended 31 December
2023 2022 2022
£ '000
Salaries and related expenses 240 431 778
Share-based payment expense (84) 208 537
Insurance 49 35 82
Professional services 209 610 1,005
Rent and related expenses 34 40 81
Depreciation 38 27 69
Amortization 678 680 976
IT Development and licenses 28 45 45
Travel and accommodation 53 70 128
Other 25 20 103
Total 1,270 2,166 3,804
9. Other expenses
For the six months ended 30 June For the year ended 31 December
2023 2022 2022
£ '000
Acquisition and listing costs 158 395 514
Loss on current financial asset 158 - 259
Expense (reverse) provision for brokerage fees (524) 675 675
Research and development tax credit (114) - -
Total (322) 1,067 1,448
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
2023 2022 2022
Unaudited Audited
Loss attributable to equity holders of the Company (£'000) (1,561) (3,773) (6,870)
Weighted average number of shares in issue 445,982,665 408,018,768 415,187,814
Loss per share pence (0.35) (0.92) (1.65)
Due to the loss incurred in the period under review, the dilutive securities
have no effect on 30 June 2023.
11. Events during the reporting period
a. On 9 May 2023 and 10 May 2023 ("admission dates"), the Company
raised £2,740 thousand (before costs) by the issue of 95,138,889 ordinary
shares of 2.5 pence each. 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 5.76 pence for 24 months following the Admission Dates.
Participants in the fundraising include a new institutional investor as well
as the Group's Directors and Senior Officers of the Company. The issue of the
shares to the Directors and Senior Officers of the Company in the fundraise
was conditional upon the approval by the Company's shareholders of certain
resolutions to be proposed at the annual general meeting of the Group (the
"AGM").
On 30 June 2023, the AGM approved the issue of the shares as a result, after
the reporting period additional 18,749,999 ordinary shares of 2.5 pence each
out of the 95,138,889 have been issued.
The total warrants issued sum to 47,569,443 (see also note 7).
b. On 13 June 2023, the Company published a prospectus (the
"Prospectus") in relation to the proposed issue of 38,461,492 Ordinary Shares
("2020 Deferred Consideration Shares") in connection with the acquisition
of Kanabo Research Limited for 6.5 pence and proposed issue of 72,831,186
Ordinary Shares ("Outstanding Consideration Shares") in connection with the
acquisition of The GP Service (UK) Ltd at for 12.65 pence.
On 28 June 2023 the "Outstanding Consideration Shares" were issued.
On 10 July 2023 the "The 2020 Deferred Consideration Shares" were issued.
c. On 23 May 2023 the Company signed a settlement agreement with one
of its previous service providers. According to the agreement, the Company
will issue 5,000,000 new ordinary shares in exchange for removing all mutual
claims.
The shares will be issued for the provision of brokerage services in relation
to the acquisition of The GP Service ("GPS"). 4LLC will receive their shares
in two tranches, with 3,000,000 shares ("First Tranche") and the remaining
2,000,000 shares ("Second Tranche") to be received within three months.
Of the First Tranche, 337,192 new ordinary shares ("4LLC Shares") were issued
by the Company. The remaining 2,662,808 ordinary shares of the First Tranche
will be transferred from the shares previously held by Mr. Atul Devani,
Co-founder of GPS., Based on the compromise agreement signed with Mr. Devani,
on his leaving the Company he returned 25% of the shares received as
consideration for the acquisition of GPS. As such, in the settlement of the
First Tranche, the Company issued only 337,192 new ordinary shares.
After the reporting period, the shares agreed on the Second Tranche have been
issued.
Following the settlement agreement, the company reversed the previous booked
provision and as a result, recorded income of £524 thousand booked under
"Other expenses".
***
1 (#_ftnref1)
https://www.statista.com/statistics/1096946/legal-cannabis-market-in-europe-forecast/
(https://www.statista.com/statistics/1096946/legal-cannabis-market-in-europe-forecast/)
2 (#_ftnref2)
https://digital.nhs.uk/data-and-information/publications/statistical/patients-registered-at-a-gp-practice
(https://digital.nhs.uk/data-and-information/publications/statistical/patients-registered-at-a-gp-practice)
3 (#_ftnref3)
https://www.statista.com/outlook/dmo/digital-health/united-kingdom
(https://www.statista.com/outlook/dmo/digital-health/united-kingdom)
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