Australian medicinal cannabis producer Little Green Pharma (ASX: LGP) has recorded a healthy FY 2021 performance, generating over $7 million in revenue to 30 June and banking a record profit after tax of $24.6 million.
The company’s revenue from ordinary activities exceeded the previous year’s loss of $9.3 million and included gains on the $24.9 million “bargain purchase” of a growing facility in Denmark; the accrual of $1.89 million in relation to a government research and development incentive grant; share-based payments of $2.8 million; depreciation and amortisation of $685,266; and a $1.5 million gain on changes in the fair value of biological assets.
The year saw strong growth in underlying demand from the Australian market with the number of patients increasing to 15,000 by 30 June, compared to just 4,550 for the previous corresponding period.
Progress was also made in international markets with products being delivered to Germany, the UK, France, New Zealand and Brazil.
Little Green Pharma was buoyed by the signing of a five-year distribution agreement with Balancial in Denmark and an exclusive distribution agreement for Poland with a subsidiary of Pelion SA, which is the largest operator in the Polish and Lithuanian healthcare sector.
The company’s gross margin continued to improve as a result of increasing scale and operational efficiencies, growing from 51% to 61% (excluding changes to the fair value of biological assets) and increasing from 52% to 82% (including these changes).
At 30 June 2021, the group had a cash position of $40.2 million.
During the reporting period, the company’s key focus was on expanding its manufacturing operations in Western Australia, acquiring additional production capacity in the European Union, and further developing sales channels across the globe.
The company’s research and development activities continued to be directed towards the development of new and innovative drug delivery systems and products to meet current market demand.
Key achievements during the 2021 financial year were the acquisition of the Denmark facility which can produce more than 20 tonnes of biomass per year (including 12t per year of dried cannabis flower); a $54.3 million capital raising which included a $15 million commitment by Hancock Prospecting; and the receipt of purchase orders from German distribution partner Demecan which effectively utilise the group’s entire WA flower production capacity.
Other highlights comprised a partnership with Health Insurance Fund to support improved access to medicinal cannabis including through the payment of rebates for cannabis medicines to eligible fund members; the October re-rating of production capacity and granting of a GMP (good manufacturing practice) licence for Little Green Pharma’s WA growing facility; and the January award of primary supplier status for a national medicinal cannabis pilot program in France, in partnership with pharmaceutical distributor Intsel Chimos.
Following the reporting period, Little Green Pharma acquired 16,000 square metres of land underlying its WA production facilities, as well as two adjoining properties for a total $6 million.
The transaction will eliminate rental expenses of $170,000 per annum; and provide rental income from tenants on the adjoining properties.