TIDMKNB
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 MONTHSED 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 GBP0.45m (H1 2022: GBP0.24m),
demonstrating ongoing commercial progress.
-- Operating loss reduced 63 % to GBP 1.4 m (H1 2022: GBP3.72m),
with strategic initiatives driving improved financial
performance.
-- Cash at 30 June 2023 of GBP4.4m (31 Dec 2022: GBP3.2m) , to
support the Group's growth plans.
-- Completed a GBP2.74m 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)
Eran Zucker / Lucy Williams / Charles Goodfellow +44 (0)20 7469 0930
Vigo Consulting (Financial Public Relations/Investor
Relations)
Jeremy Garcia / Fiona Hetherington / Verity
Snow +44 (0)20 7390
kanabo@vigoconsulting.com 0230
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 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 GBP0.45m (H1 2022:
GBP0.24m).
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 GBP2.74 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] .
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] , and the digital
health market in the UK is expected to reach GBP25 billion by 2025
[3] . 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
For the six months year ended
ended 30 June 31 December
---------------------- --------------
2023 2022 2022
--------- ----------- --------------
GBP 000 GBP 000 GBP 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
--------- ----------- --------------
( 1,360
Operating loss ) (3,716) (6,781)
Net finance expenses (201) (57) (89)
--------- ----------- --------------
Loss before taxation from continuing (1, 561
operations ) (3,773) (6,870)
Income tax benefits - (*)- -
(1, 561
Loss for the period ) (3,773) (6,870)
========= =========== ==============
Attributable to:
(1, 557
Equity holders of the parent ) (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 (0. 35
(pence per share) ) (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
GBP 000 GBP 000 GBP 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 Share Foreign
Share based to be Reverse currency
Share premium Merger payments issued acquisition translation Retained Non-controlling Total
capital account reserve reserve reserve reserve reserve deficit Total interests equity
-------- -------- -------- --------- -------- ------------ ------------ ---------- ---------- ---------------- ----------
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 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 Share to
based be Reverse Foreign
Share Share Merger payments issued acquisition exchange Retained
capital premium reserve reserve reserve reserve reserve deficit Total
---------- ---------- --------- --------- --------- ------------ --------- --------- --------
GBP '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
------------------ ----------------
GBP 000 GBP 000 GBP 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 GBP4,441
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 Secondary Adjustments
care care Total segments and eliminations Consolidated
--------- ---------- --------------- ------------------ -------------
GBP '000
-------------------------------------------------------------------------
Revenue
External customer 395 54 449 - 449
Inter-segment - - - - -
Total revenue 395 54 449 - 449
========= ========== =============== ================== =============
Results
( 1, 009 ( 552 (1, 561 (1, 561
Segment loss ) ) ) - )
========= ========== =============== ================== =============
For the six months ended 30 June 2022:
Primary Secondary Adjustments
care care Total segments and eliminations Consolidated
-------- ---------- --------------- ------------------ -------------
GBP '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 Secondary Adjustments
care care Total segments and eliminations Consolidated
-------- ---------- --------------- ------------------ -------------
GBP '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 Secondary Adjustments
care care Total segments and eliminations Consolidated
------------- ---------- --------------- ------------------ -------------
GBP '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 GBP 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 For the year
30 June ended 31 December
--------------------------- -------------------
2023 2022 2022
---------------- --------- -------------------
GBP '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 For the year
ended 30 June ended 31 December
--------------------- -------------------
2023 2022 2022
----------- -------- -------------------
GBP '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 For the year
30 June ended 31 December
--------------------------- -------------------
2023 2022 2022
------------- ------------ -------------------
GBP '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 For the year
ended 30 June ended 31 December
-------------------------- -------------------
2023 2022 2022
------------ ------------ -------------------
Unaudited Audited
-------------------------- -------------------
Loss attributable to equity
holders of the Company (1, 561
(GBP'000) ) (3,773) (6,870)
Weighted average number
of shares in issue 445,982,665 408,018,768 415,187,814
------------ ------------ -------------------
(0. 35
Loss per share pence ) (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 GBP2,740 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
GBP524 thousand booked under " Other expenses " .
***
[1]
https://www.statista.com/statistics/1096946/legal-cannabis-market-in-europe-forecast/
[2]
https://digital.nhs.uk/data-and-information/publications/statistical/patients-registered-at-a-gp-practice
[3]
https://www.statista.com/outlook/dmo/digital-health/united-kingdom
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END
IR SEUFWAEDSESU
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