Labat says Sweet Water and Cannafrica Now Profitable, Plans to Launch German Medical Cannabis Company in the New Year
Labat has confirmed to shareholders on 30 November 2022 that it lost R34 million in the nine months ending May 2022, but says it has now turned the corner and plans to make inroads into the German medical cannabis market in a new venture early in the new year.
5 December 2022 at 10:00:00
Labat Africa says it has invested R25 million of its own resources in building a cannabis value chain and that two of its five subsidiaries are now profitable.
In a statement issued on 30 November 2022, the company said the group’s main revenue drivers were its cultivation operation, Sweet Water Aquaponics in the Eastern Cape, and its Cannafrica retail operations.
The group, which has a dual listing on the Johannesburg and Frankfort Stock Exchanges, confirmed it had raked up a R34 million comprehensive loss for the period September 2021 to May 2022. It said it had adjusted its financial year end to May in order to align reporting within the group.
Of the loss, it said “R16m was due to impairments in line with IFRS accounting standards and an additional R12.5m related to the further investments into the healthcare (cannabis) operations”.
Labat says that “revenue generating activities have been increasing month-on-month” since the start of its adjusted financial year on 1 June 2022.
Labat says it will be launching a pharmaceutical sales, marketing and distribution business in Germany in January 2023. It says it is in the process of setting up a direct distribution line into the European market and that the new company will be run by a former vice president of a major pharmaceutical corporation in Germany.
“We are pleased to announce that all the building blocks have been put in place and the company is poised to generate significant revenues this financial year and into the future and will continue to strengthen its footprint in the cannabis economy in South Africa and the rest of the world” it said.
It says it has spent R11,5 million in purchasing and upgrading Sweet Waters and will start construction next month of a medical cannabis extraction lab on site and this should be operational by April 2023. Labat says Sweet Waters has secured a Swiss offtake agreement for 200 kgs of medical cannabis flower in addition to the 200 kgs offtake it has with Australian firm PharmaCann.
On the retail front, Labat says its three corporate-owned Cannafrica stores are all operating profitabilly and it hopes to have another seven open within the next six months. During the past year it opened stores in Springs (Gauteng), Ballito (KwaZulu Natal) and Boardwalk (Port Elizabeth, Eastern Cape). The company aims to open a total of 10 stores by the end of the financial year.
It says that its subsidiary Biodata received an extension in July 2022 for its medical cannabis trials for a further 12 months.
“Following the renewal Biodata has reached an agreement with Reimed Clinical research who will act as the company’s clinical research organization for the study. The company is also in process of developing an app based technology platform which will be designed to onboard patients, gather data and ensure compliance with SAHPRA regulations. Since the beginning of the financial year the company has received 800 applications for the Biodata research project”.
The Company’s cannabis supply chain is outlined below:
African Cannabis Enterprises- Genetics and Retail (100% owned)
Lima Romeo Air t/a Sweet Waters Aquaponics- Medicinal Cannabis Cultivation (80% owned)
Medical Extracts- Cannabis Extraction (50% owned)
Biodata- Cannabis research, observational and clinical studies (70% owned)
Cannafrica- Retail, Franchise Model (70% owned)
Echo Life- Retail, offshore in Miami USA (100% owned)
It’ share price was trading at 0,9 c a share on 5 December 2022.
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