Kanabo Group (KNB ) has described the six months to 30 June 2021 as an “exciting” period as the business highlighted the “significant progress” made since its IPO earlier this year.
Today, the Israeli-based medicinal cannabis firm which made its debut on London’s main market in February 2021 said it remains committed to building an integrated platform ‘that will generate value from new product development through to production and distribution.’
In the six months to 30 June, Kanabo executed a Reverse Take-Over of Kanabo Research Ltd on 16 February 2021, raising £6.0 million gross through a placing and subscription.
Later in May 2021, the company raised an additional £1.0 million and used £750,000 of the funds to cover the costs of its Pre-IPO acquisition investment in Hellenic Dynamics S.A..
Under the terms of the deal, UK SPAC will acquire 100% of Hellenic Dynamics, a cultivation company which entered into a memorandum of understanding with Kanabo in May 2021.
Founded in March 2019, Hellenic is based in a 200,000 square meter facility in Northern Greece and plans to grow, manufacture, process and sell THC-dominant dried medicinal cannabis flowers and related extracted oils for export initially into the German market.
While Hellenic is aiming to provide a medicinal cannabis oil extract product for the envisaged domestic Greek market, it also intends to secure further export markets elsewhere in Europe.
According to a report published by ResearchAndMarkets.com, the European medicinal cannabis market was worth £2.5bn in 2019 and is expected to reach £26.4bn by 2027.
A further £374,000 was raised during the period and by period end its cash balance stood at £5.9m. Kanabo’s pre-revenue status is reflected in the operating loss of £1.2m under review as the Group continued to lay the foundations for a successful full year and beyond,’ it noted.
Since its flotation to London’s Stock Exchange back in February 2021, shares in Kanabo Group have seen an over three-fold increase from its entry price of 6.5p to 16.25p.
Kanabo reported a total loss for this period of £2.4m, which the Company said was largely due to the one-off costs associated with the reverse acquisition of Kanabo Research.
Post-period, Kanabo unveiled the proposed acquisition of Materia, a European-focused medical cannabis and CBD company, back in July 2021. As reported by the Times, the deal to acquire Materia is expected to make Kanabo Europe’s biggest publicly traded cannabis firm..
At the time, Kanabo said the proposed acquisition was a reflection of the company’s ongoing efforts to actively explore new partnerships to accelerate its growth and market penetration.
The Board believes that Materia’s complementary infrastructure will be crucial to expanding and strengthening its existing supply value chain of medical cannabis and CBD products.
Kanabo said it believes the acquisition will be “transformational” for Kanabo, bringing in both senior level management expertise in the cannabis agri-chem industry and an EU GMP licensed production facility in Malta from which it intends to supply its key markets.
The Company highlighted to investors that Materia’s facility in Malta has the ability to process around 6,000kg of cannabis flowers from dozens of cultivators which, at capacity and based on current market rates, ‘could deliver revenues of around £30 million per annum,’ it noted.
Kanabo said the ‘growing relationship’ between the Company and Materia has already borne fruit following the successful launch of Kanabo’s products on one of the leading online marketplaces for CBD, HandpickedcCBD.com, which is wholly owned by Materia.
’Whilst the nature and structure of this acquisition makes it particularly complex, I am pleased to report that good progress is being made. In addition to the acquisition of
Materia, the Company is also pursuing other opportunities with the potential to add supply and production capacity or to expand Kanabo’s routes to markets.” said Non-Executive Chairman, David Tsur.
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