TIDMCBX
RNS Number : 5641Z
Cellular Goods PLC
25 May 2021
Press release
25 May 2021
Cellular Goods PLC
("Cellular Goods" or "the Company")
Interim results
Cellular Goods, a UK-based provider of premium consumer products
based on lab-made cannabinoids (LSE: CBX), announces its half-year
results to 28 February 2021.
Highlights:
-- Raised GBP13 million before expenses through a significantly
oversubscribed flotation on the main market of the London Stock
Exchange on 26 February 2021, with proceeds received after the
period-end
-- Became the first provider of premium consumer products based
on lab-made cannabinoids to join the London Stock Exchange
-- Secured David Beckham's DB Ventures as a significant equity investor with a 5% shareholding
-- Loss before tax increased to GBP2.12m (H1 2020: GBP0.14m)
reflecting business set-up costs and a one-off non-cash charge for
share-based incentives for the team in the form of warrants
-- Net cash as at 28 February amounted to GBP1.433m (H1 2020:
GBP40,000). Net cash as at 25 May 2021 was GBP11.28m inclusive of
IPO proceeds
Post-period highlights
-- Commenced planned scale-up and investment in the Company's
operational infrastructure with five senior hires to strengthen
product development, marketing, and sales functions
-- Proprietary product formulations, supply chain and
manufacturing agreements, together with go-to-market sales
strategy, are at advanced stages of being developed and
finalised
-- Secured services of expert advisors from skincare, sports medicine, and veterinary sectors.
Outlook
-- On track for roll-out of the first consumer product range in
Autumn 2021, starting with the launch of three skincare products
followed by a 'movement' product range for the after-sport recovery
market in Spring 2022
-- With excellent progress being made across the business,
together with growing public acceptance and scientific validation
of the benefits of cannabinoids such as CBD and CBG, the Company
looks to the future with confidence
Commenting on the results, Alexis Abraham, chief executive of
Cellular Goods said: "The most significant milestone we achieved in
the first half was our heavily oversubscribed flotation on the
London Stock Exchange which has provided us with a strong
foundation and public profile to become the leading and front of
mind brand for consumer cannabinoid products.
"The notable support for an IPO of our size validates the
growing acceptance and potentially huge demand for
cannabinoid-based products over the long term. Though it is still
early days for Cellular Goods, we are making excellent progress in
executing on our strategy, have a strong balance sheet and there
are compelling industry fundamentals; all of this provides the
Board with great confidence."
For further information please contact:
Cellular Goods
Alexis Abraham +44 207 031 6871
Chief Executive
Neil Thapar
Investor Relations +44 787 645 5323
-------------------
Tennyson Securities
-------------------
Corporate Broker
Peter Krens +44 207 186 9030
-------------------
Novum Securities
-------------------
Corporate Broker
Colin Rowbury
Jon Belliss +44 207 399 9427
-------------------
Tancredi Intelligent Communication
-------------------
Media Relations
Helen Humphrey
Edward Daly +44 744 922 6720
Salamander Davoudi +44 786 143 0057
cellulargoods@tancredigroup.com +44 795 754 9906
-------------------
CHAIRMAN'S STATEMENT
Introduction
I am delighted to report the Company's first set of results
since its debut on the main market of the London Stock Exchange on
26 February 2021; this means that the period under review covers
only three days of activities as a listed plc.
No revenue was generated and a loss before tax of GBP2.12m was
incurred in the first half (H1 2020: GBP0.14m loss) as the
management team focussed on developing a business strategy and
raising capital to fund the expansion of the Company.
Our vision is to establish Cellular as the leading UK-based
brand for consumer products incorporating lab-made cannabinoids
which are legally compliant, independently tested for quality,
environmentally friendly, and not tested on animals.
A major milestone in realising that goal was achieved with our
stock market listing, which raised additional capital of GBP13m
before expenses and sparked an unprecedented level of public
interest in an initial public offering of our size. The IPO was
significantly oversubscribed, with more than 6,000 applications
received from small investors. Share allocations were scaled down
to maximise the opportunity for small investors to become
shareholders in Cellular Goods and gain exposure to a major new
trend in consumer products that is being driven by changing
attitudes to, and greater understanding of, the benefits of
cannabinoids.
Market size and strategy
According to BDS Analytics and Arcview Market Research, the
market for annual CBD sales in the USA will surpass $20 billion by
2024, while New York-based investment bank Cowen & Co estimated
that the US CBD market could be $15 billion per annum by 2025.
Meanwhile, the Centre for Medicinal Cannabis estimated that 1.3
million British consumers were using CBD products, the market was
growing at double digits annually, and could be worth almost GBP1bn
a year by 2025.
These growth projections, allied with the disparity in the
quality and consistency of products currently on the market, has
opened an opportunity for a supplier of premium cannabinoid-based
products with known and verifiable provenance to differentiate
itself in the market.
Cellular Goods was established to develop efficacy-led and
research-backed cannabinoid products leveraging lab-made
cannabinoids such as CBD and CBG; the manufacturing process does
not involve the cultivation or processing of the cannabis sativa
plant. The Company's strategic decision to source lab-made
cannabinoids offers significant quality advantages, is ethically
and environmentally friendly, and mitigates the regulatory risks
associated with the sourcing of plant-sourced cannabinoids.
Operational review
Solid progress has been made across the business since the IPO,
with a growing team executing on our growth strategy. The initial
focus is on two product verticals: a premium skincare range to be
launched this Autumn followed by topical athletic recovery products
in Q1 of 2022, with a pet care range anticipated in late 2022.
The initial skin care range comprises a serum, a face-oil and an
after-shaving moisturiser. Formulations for each of these products
are due to be finalised this week after several months of extensive
development in-house and at our UK-based contract manufacturer.
Cellular Goods has progressed from prototype development to the
advanced stages of formulation development and product testing.
These formulations are based on the Company's proprietary
formulations incorporating lab-made cannabinoids; compounds which
have demonstrated anti-inflammatory, anti-oxidant and
anti-microbial properties. The next and final step in the rigorous
product development process will commence shortly focusing on
product quality, consistency, performance and other key
attributes.
In line with industry best practice, the Company will conduct
trials and consumer surveys for all the new products to obtain
feedback to substantiate product claims. These steps are expected
to take approximately three months to complete after which all
notifications concerning cosmetic products will be filed in
accordance with UK/EU regulations. The culmination of this process
is the completion of all necessary steps for the approval and
release of the first product range.
Branding and packaging design for the skincare range, led by
creative director Sara Hemming, has gone through several iterations
and the packaging design has now been finalised and is ready for
launch upon completion of the requisite product development steps.
Hemming has an established track record, having worked with luxury
and lifestyle brands such as Stella McCartney and Jimmy Choo, and
as creative director for David Beckham.
Development of the first two products in the 'movement' range
for sports recovery and daily body maintenance is also moving at
pace. The formulations for this range are currently undergoing
in-vitro testing to validate the use of cannabinoid-based products
for relieving muscle strain and pain relief after physical
activity, an area which is already supported by a wealth of
anecdotal evidence.
The skincare range is expected to go on sale initially in the UK
and Europe direct to consumers through the Company's website and
leading social media channels, prioritising its marketing on
channels which produce the greatest customer engagement and return
on investment. The existing Company website is being redeveloped to
include a fully transactional platform in time for the market
launch. In addition, several micro-sites tailored for social media
are under development to maximise the online opportunity.
At the same time, the Company is continuing to evaluate the
optimal partners through whom to sell its products via third party
online retailers and traditional bricks-and-mortar players who will
contribute to broader exposure, and consumer recognition and
acceptance.
The Company is currently partnered with four leading cannabinoid
producers and moving forward on volume supply agreements to ensure
security of supply of cannabinoids including CBD and CBG. Purchase
orders relating to the initial run of skincare products have been
placed with two of these suppliers. We anticipate that these two
volume supply agreements will be executed in the next
fortnight.
All four of the producers have experience and expertise in the
manufacture of pharmaceutical grade cannabinoid compounds through
lab-based processes, thereby securing a consistent supply of
legally compliant raw materials that are not derived from plant
material.
In April 2021, the Company strengthened its operational
capability with the appointment of Istok Nahtigal as the head of
process and applied sciences with responsibility for developing,
monitoring and optimising the Company's relationships with its
manufacturing partners. Two further senior hires were made to the
product development team to support quality assurance and project
delivery. In addition, the Company also contracted three expert
consultants to advise on the development of athletic recovery, pet
care and skincare ranges.
Financial Review
No revenue was generated and a loss before tax of GBP2.12m was
incurred in the first half (H1 2020: GBP143,000 loss). These
reflect start-up costs of the business, professional fees
principally connected with the flotation and other expenses
relating to the development of the Company's business strategy.
Administrative expenses increased from GBP143,000 to GBP2.12m,
partly reflecting a one-off, non-cash charge of GBP1.227m for
share-based incentives to attract and retain management, advisers
and staff.
Loss per share amounted to 0.012 pence (H1 2020: a loss of 0.001
pence).
Net cash was GBP1.433m at 28 February 2021 and stood at
GBP11.28m at 25 May 2021 following receipt of net IPO proceeds.
Outlook
The tremendous public interest in Cellular Goods' launch on the
London Stock Exchange has provided a strong foundation for the
Company to execute on its long-term growth strategy.
Excellent progress is being made for the roll-out of the first
consumer product range starting with the launch of a trio of
skincare products in Autumn 2021 followed by a 'movement' line-up
for the sports recovery and daily body maintenance markets in Q1 of
2022.
With Cellular Goods on track to deliver on its launch strategy,
together with the continued tailwinds provided by growing public
acceptance and scientific validation of the benefits of
cannabinoids, the Company looks to the future with great
confidence.
STATEMENT OF COMPREHENSIVE INCOME
Period 1 September Period 1 September Year to 31
2020 to 28 2019 to 29 August 2020
Notes February 2021 February 2020
GBP GBP GBP
Revenue 4 - - -
Cost of sales - - -
------------------- ------------------- -------------
Gross profit - - -
Administrative
expenses (2,119,043) (142,747) (329,949)
------------------- ------------------- -------------
Operating loss 5 (2,119,043) (142,747) (329,949)
Finance income - - 63
------------------- ------------------- -------------
Loss before taxation (2,119,043) (142,747) (329,886)
Taxation - - -
------------------- ------------------- -------------
Loss for the period (2,119,043) (142,747) (329,886)
------------------- ------------------- -------------
Basic and diluted
loss per share
- pence 6 0.012 0.001 0.257
------------------- ------------------- -------------
All transactions arise from continuing operations.
The company has no other recognised gains or losses for the
current period.
The accompanying accounting policies and notes form an integral
part of these unaudited interim financial statements.
STATEMENT OF FINANCIAL POSITION
As at 28 As at 29 February As at 31
February 2020 August 2020
2021
Notes GBP GBP GBP
ASSETS
Current assets
Trade and other receivables 7 11,309,040 90,241 89,828
Cash and cash equivalents 1,433,055 39,909 9,224
------------ ------------------ -------------
TOTAL ASSETS 12,742,095 130,150 99,052
------------ ------------------ -------------
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables 8 (657,044) (26,250) (182,291)
------------ ------------------ -------------
TOTAL LIABILITIES (657,044) (26,250) (182,291)
------------ ------------------ -------------
NET ASSETS/(LIABILITIES) 12,085,051 103,900 (83,239)
------------ ------------------ -------------
EQUITY ATTRIBUTABLE
TO SHAREHOLDERS
Share capital 9 504,750 128,750 128,750
Share premium 12,879,176 195,025 195,025
Retained earnings (1,298,875) (219,875) (407,014)
------------ ------------------ -------------
TOTAL EQUITY 12,085,051 103,900 (83,239)
------------ ------------------ -------------
The accompanying accounting policies and notes form an integral
part of these unaudited interim financial statements.
STATEMENT OF CHANGES IN EQUITY
Ordinary Share premium Retained earnings Total
share capital
GBP GBP GBP GBP
Balance at 1 September
2019 103,250 29,250 (77,128) (55,372)
Loss for the period - - (142,747) (142,747)
--------------- -------------- ------------------ ------------
Total comprehensive
income for the period - - (142,747) (142,747)
--------------- -------------- ------------------ ------------
Shares issued 25,500 165,775 - 191,275
--------------- -------------- ------------------ ------------
Total contributions
by owners 25,500 165,775 - 191,275
--------------- -------------- ------------------ ------------
Balance at 29 February
2020 128,750 195,025 (219,876) 103,900
--------------- -------------- ------------------ ------------
Balance at 1 March
2020 128,750 195,025 (219,876) 103,900
Loss for the period - - (187,139) (187,139)
--------------- -------------- ------------------ ------------
Total comprehensive
income for the period - - (187,139) (183,138)
--------------- -------------- ------------------ ------------
Balance at 31 August
2020 128,750 195,025 (219,876) (83,239)
--------------- -------------- ------------------ ------------
Balance at 1 September
2020 128,750 195,025 (407,014) (83,239)
Loss for the period - - (2,119,043) (2,119,043)
--------------- -------------- ------------------ ------------
Total comprehensive
income for the period - - (2,119,043) (2,119,043)
--------------- -------------- ------------------ ------------
Shares issued 376,000 13,784,000 - 14,160,000
Share issue expenses - (1,099,849) - (1,099,849)
Share-based payments - - 1,227,182 1,227,182
--------------- -------------- ------------------ ------------
Total contribution
by owners 376,000 12,684,151 1,227,182 14,287,333
--------------- -------------- ------------------ ------------
Balance at 28 February
2021 504,750 12,879,176 (1,298,875) 12,085,051
--------------- -------------- ------------------ ------------
The accompanying accounting policies and notes form an integral
part of these unaudited interim financial statements.
STATEMENT OF CASH FLOWS
6 months 6 months to Year to 31
to 28 February 29 February August 2020
2021 2020
GBP GBP GBP
Cashflow from operating activities
Loss before income tax (2,119,043) (142,748) (329,886)
Add: non-cash share-based payment
charge 1,227,182 - -
Increase in trade and other
receivables (247,712) (15,241) (12,877)
Increase in trade and other
payables 458,186 1,952 156,041
---------------- ------------- -------------
Net cash flows from operating
activities (681,387) (156,037) (186,722)
---------------- ------------- -------------
Cash flows from financing activities
Proceeds from issue of shares 2,166,000 191,275 191,275
Share issue expenses (60,782) - -
---------------- ------------- -------------
Net cash inflow from financing
activities 2,105,218 191,275 191,275
---------------- ------------- -------------
Net movement in cash and cash
equivalents 1,423,831 35,238 4,553
Opening cash and cash equivalents 9,224 4,671 4,671
---------------- ------------- -------------
Opening cash and cash equivalents 1,433,055 39,909 9,224
---------------- ------------- -------------
The accompanying accounting policies and notes form an integral
part of these unaudited interim financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. Information on the Company
The Company was incorporated in England and Wales on 25 August
2018 as Leaf Studios Limited, but subsequently re-registered as a
public limited company and renamed as Leaf Studios PLC. On 29
September 2020, the Company's name was changed to Cellular Goods
PLC.
The registered office is 9th Floor, 16 Great Queen Street,
London, WC2B 5DG. The principal activity of the Company is
establishing a biosynthetic CBD retail business. The Company gained
admission to the Official List (by way of a Standard Listing under
Chapter 14 of the Listings Rules) and trading on the London Stock
Exchange on 26 February 2021.
2. Basis of preparation and principal accounting policies
This condensed consolidated interim financial information was
approved for issue by the Board on 24 May 2021.
The Company's directors are responsible for the preparation of
the unaudited interim financial statements.
The preparation of unaudited interim financial statements in
conformity with IFRSs requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities at the
date of the unaudited interim financial statements and the reported
amounts of expenses during the period. Although these estimates are
based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from those
estimates.
The Directors consider that in the proper preparation of the
unaudited interim financial statements there were no critical or
significant areas which required the use of accounting estimates
and exercise of judgement by management while applying the
Company's accounting policies.
This condensed consolidated interim financial information has
not been audited and does not include all of the information
required for full annual financial statements. The financial
figures included within this interim report have been computed in
accordance with IFRS applicable to interim periods, and this report
constitutes an interim financial report as set out in International
Accounting Standard 34: Interim Financial Reporting.
There is no material difference between the fair value of
financial assets and liabilities and their carrying amount.
The functional and presentational currency is UK Sterling.
3. Going concern
The Directors have assessed the current financial position of
the Company, along with future cash flow requirements, to determine
if the Company has the financial resources to continue as a going
concern for the foreseeable future.
The conclusion of this assessment is that it is appropriate that
the Company be considered a going concern. For this reason, the
Directors continue to adopt the going concern basis in preparing
the unaudited interim financial statements.
4. Revenue
The Company did not generate revenue during the period (29
February 2020 and 31 August 2020: nil).
5. Operating loss
Total administrative expenses include share-based payments of
GBP1,227,182. The related credit to equity is taken to retained
earnings.
6. Loss per share
Basic earnings per share is calculated by dividing the loss
attributable to equity holders of the company by the weighted
average number of Ordinary Shares in issue during the period.
28 February 29 February 31 August
2021 2020 2020
GBP GBP GBP
Loss used to calculate basic and diluted
earnings per share (2,119,043) (142,747) (329,886)
Weighted average number of shares used
in calculating basic earnings per share 171,448,611 121,202,778 128,416,667
Weighted average number of shares used
in calculating diluted earnings per share 171,448,611 121,202,778 128,416,667
Basic loss per share (pence) (0.012) (0.001) (0.257)
------------ ------------ --------------
Diluted loss per share (pence) (0.012) (0.001) (0.257)
------------ ------------ --------------
7. Trade and other receivables
28 February 29 February 31 August
2021 2020 2020
GBP GBP GBP
VAT debtor 128,084 10,241 -
Prepayments 134,456 - -
Share capital unpaid 11,045,500 - -
Other debtors 1,000 80,000 89,828
------------ ------------ ----------
11,309,040 90,241 89,828
------------ ------------ ----------
There were no receivables that were past due or considered to be
impaired. There is no significant difference between the fair value
of the other receivables and the values stated above.
8. Trade and other payables
28 February 29 February 31 August
2021 2020 2020
GBP GBP GBP
Trade creditors 511,283 26,250 -
Accruals 145,761 - 182,291
------------ ------------ ----------
657,044 26,250 182,291
------------ ------------ ----------
All liabilities are payable on demand or have payment terms of
less than 90 days.
9. Share Capital
28 February 29 February 31 August
2021 2020 2020
GBP GBP GBP
504,750,000 (February 2020 and August
2020: 128,750,000) Ordinary shares of
GBP0.001 each 504,750 128,750 128,750
------------ ------------ ----------
In the six months to 28 February 2021, the Company issued
376,000,000 Ordinary shares of GBP0.001 each, at an average price
of GBP0.03766, raising GBP14,160,000 before share issue
expenses.
The Ordinary Shares have been classified as Equity. The Ordinary
Shares have attached to them full voting and capital distribution
rights.
10. Capital and reserves
Share capital represents issued Ordinary shares of GBP0.001
each, all of which are fully paid.
Share premium is the amount subscribed for share capital in
excess of nominal value less attributable share issue expenses.
Retained earnings is the cumulative loss of the Company
attributable to equity shareholders.
11. Share-based payments
The Company has issued 52,460,000 warrants to subscribe for
additional share capital of the Company. Each warrant entitles the
holder to subscribe for one ordinary equity share in the Company.
The right to convert each warrant is unconditional.
The right to subscribe for ordinary shares in the Company is
subject to minimum vesting periods of up to three years. Relevant
warrants are subject to a lock-in period of 12 months from 26
February 2021, the Company's date of admission to trading on the
London Stock Exchange. This restriction applies to all warrants,
exercised or otherwise.
Equity-settled share-based payments are measured at fair-value
(excluding the effect of non-market-based vesting conditions) as
determined through use of the Black-Scholes technique, at the date
of issue.
Warrants issued Weighted 28 February 29 February 31 August
Average Exercise 2021 2020 2020
price
Number Number Number
At the beginning of the
period -
pence - - -
Issued in the period -
pence 2.903p 52,460,000 - -
------------------ ------------ ------------ ----------
At the end of the period
- pence 2.903p 52,460,000 - -
------------------ ------------ ------------ ----------
The total share-based payment charge for warrants in the period
was GBP1,227,182, all of which has been charged to administrative
expenses. The share-based payment charge was calculated using the
Black-Scholes model. All warrants have an exercise period between
one and three years from the date of issue.
Volatility for the calculation of the share-based payment charge
in respect of the warrants issued was determined by reference to
movements in the relative share prices of a selected peer-group of
companies listed on the London Stock Exchange.
The inputs into the Black-Scholes model for the warrants issued
in the period are as follows:
28 February
2021
Warrants
issued
Weighted average share price at grant date - pence 5.0
Weighted average exercise prices - pence 2.9
Weighted average volatility 75%
Expected life in years 2.13
Weighted average contractual life in years 2.13
Risk-free interest rate 1.5%
Expected dividend yield 0%
Weighted average fair-value of warrants granted (pence) 2.63
------------
The warrants were issued in three placements.
The share price at the date of grant for each of these was 5
pence.
The warrant exercise prices at the date of grant were 1 pence or
5 pence.
The share-based payment charge has been simultaneously credited
to retained earnings.
The total number of warrants issued to directors was
24,000,000.
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IR PPUMCAUPGUMC
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