The Hydroponics Company bulks up balance sheet with $16.7 million revaluation
The Hydroponics Company has revalued its Southport pharmaceutical manufacturing facility by $14.58m.
Medicinal cannabis developer The Hydroponics Company (ASX: THC) has updated its shareholders with the news that it had revalued its Southport pharmaceutical manufacturing facility by $14.58 million, supported by “an unmatched domestic manufacturing capability.”
In addition to the land and taking into account the acquisition price, THC says the combined value of the facility could add as much as $16.7 million to its balance sheet.
Back in April, The Hydroponics Company completed its flagship acquisition of one of the largest pharmaceutical botanicals extraction and refinement plants in the southern hemisphere for $2.55 million from LEO Pharma.
Since completing the acquisition of its “game-changing” facility, THC’s board has sought an independent external valuation from global valuation firm AON Valuation Services, regarding THC’s Southport Manufacturing Facility assets in Queensland.
The report submitted by AON values the Southport Manufacturing Facility assets at $14.58 million at market value. With land and building at acquisition price, the combined value of THC’s Southport Manufacturing Facility is expected to be recognised in THC’s June 2018 half-year accounts at $16.68 million.
Having been advised of the costs of constructing the Southport manufacturing facility by its previous owner, THC has assessed the replacement value to be in the range of $35 million and has insured the property on that basis.
Boardroom tweaking
The past few months have also been significant for THC from a personnel perspective. The company has brought in several names at the top of the organisation to lead its leadership team.
Following an “extensive executive search”, THC appointed Ken Charteris as the Group’s CEO as of today. However, there have been other acquisitions made with THC making several key strategic appointments, including Dr Andrew Beehag and Brett Svedinek who join other recently-appointed individuals such as Dr Michael Harrison and Katy Williams Day.
Overall, THC’s medicinal cannabis leadership team consists of Dr Andrew Beehag as Lead of its Medicinal Cannabis Division, Katy Williams Day as Product & Regulatory Affairs Manager, John Hall as an expert in cannabis strain development and agronomy, Dr Michael Harrison as THC’s API Manager of its Southport manufacturing facility and, last but not least; Brett Svedinek, Julie Trask and Pavel Lukl as the management team that will operate the company’s Southport site.
Ken Charteris will lead THC’s global corporate strategy, focusing on building its medicinal cannabis business from the ground up. With several commercial partners already buzzing in the air and THC having secured significant growing capacity, THC’s global hydroponics business looks to be taking flight.
Medical cannabis plan
To date, THC has secured significant growing capacity, has imported products for Australian patients, is currently progressing export and off-take agreements and forming international commercial partnerships.
THC now has completed end-to-end growing and manufacturing facilities capable of large-scale operation and cultivation of high-grade cannabis. The completion of full vertically-integrated infrastructure for pharma-grade product propels THC into an elite global group of companies able to cultivate medical cannabis at a large scale.
Its vertically-integrated infrastructure incorporates licenced Bundaberg facilities for cannabis R&D and growing, a 60,000 square-metre site for the growing of medicinal cannabis soon be secured by THC, and the industry-leading Southport manufacturing facility.
THC has moved to quickly secure a medicinal cannabis manufacturing licence application over the Southport manufacturing facility, which is currently under review.
Assuming THC received final approval to commence cultivation operations at its newly-acquired site, the company will be capable of cultivating approximately 600,000 plants per year under organic production in greenhouses or 300,000 plants per year in the open field. THC is also exploring innovative indoor growing technologies to boost cultivation output.
The site complements THC’s high-value strain R&D and grow facility in Bundaberg which has the capacity to produce an expected 850,000 strain clones per year capable of seeding the company’s Northern NSW growing site and 20,000 square metres of THC’s growing partners sites.
“Having secured significant medicinal cannabis growing capability and a manufacturing facility with industry-leading capacity, THC has a clear path to a revenue-generating medicinal cannabis business in the near term, with the ability to service domestic patients and export into other markets,” said Steven Xu, chairman of The Hydroponic Company.
“Securing key commercial partners from the global medicinal cannabis industry such as Endoca, BOL Pharma, and Ascent places THC in prime position to take advantage of its production-ready capabilities. The increase in shareholder value from the acquisition of THC’s Southport Manufacturing Facility highlights THC’s prudent investment and corporate strategy,” said Mr Xu.