Sativa Group Plc (AQSE:SATI), the UK’s leading quoted CBD wellness and medicinal cannabis company, has announced its audited results from the year ended 31 December 2019, and draft unaudited Quarter 1 2020 interim management results.
· Revenue increased by greater than five-fold from £0.26m to £1.45 million in the year to 31 December 2019, representing an increase of 190% on the annualised run rate of the revenue reported in H2 2018.
· Gross profit margin improved from 42% to 52%, due to a decrease in the cost of CBD extract and production efficiencies, within market expectations.
· The Group continues to expand its range of products, with the launch of the flagship Goodbody Botanicals brand, targeted at high-street pharmacies, grocers and independent pharmacies, and Goodbody Wellness, the premium health and beauty range.
· The Tessellate Collective business was launched in Q2, opening up a new revenue stream as the direct selling channel.
· Distribution partnership agreement signed with SHS Retail & Distribution a leader in distribution to high street grocers and pharmacies.
· Sativa Cultivation & Extraction awarded a Home Office Controlled Drug licence, to fulfil its research partnership agreement with King’s College London.
· Henry Lees-Buckley appointed as Chief Executive Officer in August. Henry was previously CEO of Uni-Select [TSX:UNS], a Canadian TSX quoted company.
· Clive Page OBE, Professor of Pharmacology at King’s College London, appointed to Scientific Advisory Board.
· PhytoVista Laboratories, increasingly recognised as a leading UK analytical laboratory for the testing of cannabinoids and terpenes, completed it’s 3,000th cumulative sample test in December, 90% of which was for external CBD and food manufacturers.
· The Company completed a £1.38 million (before costs) share placement and subscription in December, the majority of which came from existing shareholders.
Post year end:
· On 2 June 2020, the Group signed a Bid Conduct Agreement and plan to announce the receipt of a firm offer from Stillcanna Inc. on 3 June 2020 to implement a UK Scheme of Arrangement. The transaction is analogous to a reverse takeover in that the Company’s shareholders will acquire a controlling interest of approximately 65% of all Stillcanna shares following completion, on a fully diluted basis.
· Goodbody Botanicals signed a distribution agreement with Alliance Healthcare, the leader in distribution to independent pharmacies across the UK, and secured its first product listing with WH Smith Travel via the SHS agreement.
· Goodbody Botanicals commenced production of cannabigerol (CBG) and alcohol-based hand sanitisers in response to the increased need for hand sanitation as a result of COVID-19.
· PhytoVista Laboratories completed its 4,000th sample test in March 2020.
The Directors do not recommend a payment of a dividend for the year ended 31 December 2019.
Quarter 1 2020:
Subsequent to the announcement of a firm offer for the Sativa Group Plc by Stillcanna Inc. (“Stillcanna”), the Group will publish unaudited Q1 2020 primary statements for inclusion in Stillcanna’s Information Circular document to be distributed to Stillcanna shareholders in June ahead of a Shareholder Meeting to vote on the approval of the offer.
The following highlights of the Quarter 1 2020 interim results represent unaudited, draft management accounts, that are subject to further review and amendments:
· Revenue of £0.36m recognised in the quarter, representing growth of 49% on the prior period. The results were in-line with management expectations for January and February but missed March expectations due to the impact of COVID-19 global pandemic restrictions.
· Gross Profit of £0.21m was recognised, representing a gross-profit margin of 59%, ahead of management expectations, due to efficiency gains.
· EBITDA loss (loss from operating activities before depreciation, share-based payments and exceptional items) of £0.76m was recognised in the quarter, which was ahead of management expectations mainly due to significant operating cost savings implemented by management to address the COVID-19 trading environment.
· Cash and cash equivalents of £1.1m.
Henry Lees-Buckley, CEO of Sativa Group Plc, said:
“While we experienced very solid revenue and gross margin growth in 2019, we were building a strong foundation for accelerating sales in 2020 and beyond. Building leading brands for multiple consumer channels and online is the priority. Highlights in the year included the launch of the Goodbody Botanicals brand for high street pharmacies and grocers and the launch of the Goodbody Wellness brand to support the health, beauty and high-end retail segments. We continued to focus on developing and producing high quality and compliant products for all markets. PhytoVista Laboratories continues to support not only our quality commitment but also other industry participants.
As we look at Q1 2020, we started the year by enhancing our distribution and winning new business. As with the rest of the world, we have been affected by the slow down related to COVID 19. We took the necessary cost reductions and again adapted pivoted to utilise our skills and capacity to produce hand sanitiser products to consumers and corporate customers in the UK.
In Q1 we at Sativa Group Plc decided to combine resources with the Canadian group, Stillcanna Inc., a European CBD producer. We believe that creating a true European seed to consumer group is critical and this combination provides cultivation, extraction and laboratory capacity to produce high quality and compliant CBD from Stillcanna coupled with Sativa’s quality products, production, testing and consumer brands.”